Climate Change and Related Economic Implications

[EC2] Universal climate change has the potential to impact our business in many forms. ProLogis is continually assessing business risks and opportunities associated with climate change while evaluating appropriate responsive actions. Our consideration includes:

• Further adoption and regulation of green building standards set by national, state and local municipalities leading to stricter building codes.
• Enhanced regulation of carbon dioxide emissions.
• Increased cost of energy-intensive construction materials (most notably concrete and steel).
• Higher fuel costs increasing operating and construction costs.
• Rare and severe weather patterns leading to potential asset damage.
• Overall increased preference for businesses to associate with other sustainability-conscious companies.

[EC2] Because ProLogis' sustainability practices are advanced, especially compared to our peers, we feel that we are prepared to react quickly should any of the above considerations prove to become viable business risks. Our evaluation is constant and we are aware of trends as they begin to form. As such, our business practices are frequently evolving.

[EC2] For example, stricter building codes continue to be enforced. Fortunately for ProLogis, we are already experts at green building practices, with more than 20 million square feet (1.8 million square meters) of space registered or certified as "green" worldwide, with more in the process of certification. For additional information on our building practices, please refer to the Environmental Section of this report.

[EC2] We believe demand for green buildings will continue to increase and that we will realize financial returns from building energy-efficient facilities. In studies conducted by McGraw-Hill and CoStar, LEED office buildings have shown evidence of receiving higher rents and selling at larger profit margins. We realize that there is no comprehensive data specifically for the industrial market; however, we have experienced early anecdotal evidence of these trends in our own operations.

[EC2] For more insight on ProLogis' risk assessment process, please refer to the company’s 2009 response to the annual Carbon Disclosure Project Report. The Carbon Disclosure Project (CDP) is an independent, not-for-profit organization that acts as an intermediary between shareholders and corporations on all climate change related issues. Its mission is to collect and distribute high quality information that motivates investors, corporations and governments to take action to prevent climate change. We respond to CDP because we think it is important to disclose our risks and opportunities related to climate change to our investors and the public, and we plan to submit our fourth response this year.