Company Overview

[2.1-2.4] ProLogis is a leading global provider of distribution facilities, with more than 475 million square feet (44 million square meters)* of industrial space in markets all across North America, Europe and Asia, as of December 31, 2008. Headquartered in Denver, Colorado USA, ProLogis is a FORTUNE 500 company and a member of the S&P 500.

[2.8] ProLogis has a presence in 18 countries and has 1,480* employees worldwide. The company leases its industrial facilities to more than 4,500 customers, including manufacturers, retailers, transportation companies, third-party logistics providers and other enterprises with large-scale distribution needs. In addition to our core industrial business, we are active in retail and mixed-use development in Europe and throughout North America as Catellus Development Group, a ProLogis company. Information on the company's financial performance, dividend and market capitalization can be found in the economic section of this report.

[2.6] ProLogis is a Maryland real estate investment trust and has elected to be taxed as such under the Internal Revenue Code of 1986, as amended. Our world headquarters is located in Denver, Colorado. Our European headquarters is located in the Grand Duchy of Luxembourg with our European customer service headquarters located in Amsterdam, the Netherlands. Our primary office in Asia is located in Tokyo, Japan.

We were formed in 1991, primarily as a long-term owner of industrial distribution space operating in the United States. Over time, our business strategy evolved to include the development of properties for contribution to property funds in which we maintain an ownership interest and the management of those property funds and the properties they own. Recently, the global financial markets have been undergoing pervasive and fundamental disruptions, which began to impact us late in the third quarter of 2008. As the global credit crisis worsened in the fourth quarter, it was necessary for us to modify our business strategy. As such, we discontinued most of our new development activities and for the near term will focus on our core business of owning and managing industrial properties.

Currently, our business is organized into two reportable business segments: direct-owned and investment management. Our business was previously organized into three reportable business segments: direct-owned (previously called property operations); investment management; and development or CDFS business. Due to the recent economic conditions, we have modified our business strategy and, as a result, will no longer perform the investment and development activities within our CDFS business segment. Additionally, we transferred all of our real estate and other assets that were in our development pipeline to our direct-owned segment and transferred our investments in industrial and retail joint ventures to our investment management segment.

Direct-Owned

Our direct-owned segment represents the long-term ownership of industrial properties. Our investment strategy in this segment focuses primarily on the ownership and leasing of industrial and retail properties in key distribution markets. We consider these properties to be our Core Properties. Also included in this segment are real estate properties that were previously acquired or developed within our CDFS business segment and that, because of changes in our business strategy, were transferred to this segment due to our current intent to hold and operate these assets on a long-term basis. These include operating properties that we previously developed with the intent to contribute to an unconsolidated property fund. We now refer to these properties as Completed Development Properties. We also have industrial properties that are currently under development and land available for development that are part of this segment, the majority of which we plan to hold and use in this segment.

Investment Management

The investment management segment represents the investment management of unconsolidated property funds and certain joint ventures and the properties they own. We utilize our investment management expertise to manage the property funds and certain joint ventures, and we utilize our leasing and property management expertise to manage the properties owned by these entities. We report the property management costs, for both our direct-owned segment and the properties owned by the property funds, in rental expenses in the direct-owned segment, and we include the fund management costs in general and administrative expenses.

Catellus

Catellus Development Group is a business unit of ProLogis focused on mixed-use and retail in North America. In 2005, Catellus merged with ProLogis; today, Catellus continues to manage its portfolio of mixed-use and retail properties under the umbrella of ProLogis.