ProLogis Reports First Quarter Results

- Financial Results in Line with Company Expectations -

- Overall Market Fundamentals Continue Steady Improvement -

- Sale of Majority of Catellus Retail / Mixed-Use Assets Closed During Quarter -

DENVER, April 20, 2011 /PRNewswire/ -- ProLogis (NYSE: PLD), the leading global provider of distribution facilities, today reported funds from operations excluding gains as defined by ProLogis (core FFO) of $0.13 per diluted share for the first quarter of 2011, compared with core FFO of $0.11 per diluted share for the same period in 2010. Core FFO for the 2011 period excluded approximately $12.9 million, or $0.02 per diluted share, of charges related to merger integration, workforce reduction associated with the sale of Catellus and expected clean-up and repair costs related to the Japan earthquake and tsunami. In the first quarter of 2010, core FFO excluded net gains of $9.5 million, or $0.02 per share, and charges of $54.7 million, or $0.12 per diluted share, related to losses on early extinguishment of debt and the company's share of fund-related derivative losses. ProLogis reported a net loss of $0.08 per diluted share for the first quarter of 2011, compared with a net loss of $0.19 for the same period in 2010.

First quarter financial results were in line with the company's expectations, reflecting: the full quarter effect of the company's October 2010 equity offering; lower operating income due to property dispositions completed in the fourth quarter of 2010 and the first quarter of 2011; and lower management and development fees. These impacts were somewhat offset by lower interest expense related to significantly reduced debt levels in the current period.

Pace of Market Recovery Steady

"Globally, the gradual recovery in industrial real estate continues, with new supply in the major logistics markets still constrained and demand remaining stable," said Walter C. Rakowich, chief executive officer. "However, macroeconomic issues contributed to a slower pace of improvement in the first quarter as the market assessed the impact of continued concerns about sovereign debt issues, rising energy costs, global military actions and the devastation and loss caused by the earthquake and tsunami in Japan. While customers remain optimistic about the overall global recovery, we sensed a slightly slower pace with respect to certain leasing decisions."

The company's total industrial operating portfolio was 90.7 percent leased, down 30 basis points from the fourth quarter of 2010, principally as a result of expected lower levels of leasing velocity typical of the first calendar quarter. However, the total operating portfolio leased percentage was 147 basis points higher than in the first quarter of 2010. Same-store net operating income for the first quarter increased 1.0 percent, while rental rates on turnovers in the same-store portfolio declined 9.2 percent, an improvement over both the fourth quarter of 2010 and the year-ago period.

"Throughout our European markets, conditions continue to improve, with Germany, France and Central Europe all benefiting from the global recovery. Italy, Spain and the Benelux region remain a bit softer, while the UK is still reacting to recently implemented austerity measures," Rakowich noted. "In North America, market conditions are pointed in the right direction, with a modest increase in overall national occupancy levels in the first quarter. In Japan, the real estate market was showing some strength prior to the recent catastrophic events, and subsequently we have seen greater momentum as a result of the quality and location of our facilities."

Events in Japan

"Our colleagues in Japan worked tirelessly following the recent earthquake and tsunami, first to ensure the safety of our employees and customers and then to minimize the impact of these events on our customers' operations," said Rakowich. "Because of the superior earthquake protection engineered into our buildings and the extraordinary commitment of our people, the majority of ProLogis customers were operational within 24 to 48 hours."

Clean-up efforts continue at ProLogis Parc Iwanuma I in Sendai, the area hit hardest by the tsunami. The building suffered minimal structural damage but is in need of substantial clean up and repair due to the flooding. Total costs for clean up and repairs in our Japan portfolio is expected to be approximately $7 million, which was accrued for during the quarter.

Development-Related Activity

The company started development on four facilities in Europe during the quarter representing 1.2 million square feet, including a 457,500-square-foot facility for BMW in the United Kingdom and a 240,600-square-foot facility for a third-party logistics provider in the Czech Republic. Since quarter end, an additional build-to-suit was signed with a third-party logistics provider for a major auto manufacturer in Germany. "Inquiries in Japan have risen dramatically as companies look to rebuild their distribution networks. Discussions are underway with a number of ProLogis' global customers on how we can help them with both their short- and long-term distribution needs," said Michael S. Curless, managing director of global investments.

Development starts were $99 million for the quarter, which along with dispositions monetized a total of $31 million of land. "The number of requests for build-to-suit proposals and increasing opportunities for development in stronger target markets supports our expectation of $800 million to $1 billion of starts this year with related land monetization of $200 to $250 million. We believe that a number of third-party development decisions were slowed down in the first quarter principally due to the uncertainty caused by world events; however, the underlying requirements for high-quality distribution space have not changed. We expect to see development ramp up as the year progresses, which will contribute to our target to monetize approximately $200 million of land through third-party land sales," concluded Curless.

The company completed the sale of a majority of the Catellus retail and mixed-use assets during the quarter, generating net proceeds of $357 million. Combined with additional third-party and fund sales, total gross disposition proceeds were $409 million, representing approximately 60 percent of the mid-point of the company's 2011 full-year range of $650 to $750 million.

Anticipated Results

"We remain comfortable with our guidance for 2011 core FFO per share of $0.62 to $0.66 per share on a standalone basis," said William E. Sullivan, chief financial officer. "As we progress through the year, we expect the quarterly core FFO run rate to increase gradually reflecting occupancy gains, the impact of development completions and lower interest and G&A expenses."

Webcast and Conference Call Information

The company will host a webcast/conference call to discuss quarterly results, current market conditions and future outlook on Wednesday, April 20, 2011, at 10:00 a.m. Eastern Time. Interested parties are encouraged to access the live webcast by clicking the microphone icon located near the top of the opening page at http://ir.prologis.com. Interested parties also can participate via conference call by dialing (866) 305-2304 domestically or (660) 422-4873 internationally.

Replay Information

A replay of the conference call will be posted after 1:00 p.m. Eastern Time on Wednesday, April 20, 2011. The replay will be available until midnight Eastern Time on Thursday, May 5, 2011, and can be accessed by dialing (800) 642-1687 domestically or (706) 645-9291 internationally and entering passcode 53819903. A transcript of the call and the webcast replay, including a podcast format, will be posted when available in the "Financial Information" section of the ProLogis Investor Relations website.

About ProLogis

ProLogis is the leading global provider of distribution facilities, with more than 435 million square feet of industrial space owned and managed (40 million square meters) in markets across North America, Europe and Asia. The company leases its industrial facilities to more than 3,800 customers, including manufacturers, retailers, transportation companies, third-party logistics providers and other enterprises with large-scale distribution needs. For additional information about the company, go to www.prologis.com.

Follow ProLogis on Twitter: http://twitter.com/ProLogis

The statements above that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which ProLogis operates, management's beliefs and assumptions made by management, they involve uncertainties that could significantly impact ProLogis' financial results. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements, which generally are not historical in nature. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future – including statements relating to rent and occupancy growth, development activity and changes in sales or contribution volume of developed properties, general conditions in the geographic areas where we operate and the availability of capital in existing or new property funds – are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained and therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Some of the factors that may affect outcomes and results include, but are not limited to: (i) national, international, regional and local economic climates, (ii) changes in financial markets, interest rates and foreign currency exchange rates, (iii) increased or unanticipated competition for our properties, (iv) risks associated with acquisitions, (v) maintenance of real estate investment trust ("REIT") status, (vi) availability of financing and capital, (vii) changes in demand for developed properties, and (viii) those additional factors discussed in reports filed with the Securities and Exchange Commission by ProLogis under the heading "Risk Factors." ProLogis undertakes no duty to update any forward-looking statements appearing in this press release.


Overview

(in thousands, except per share amounts)

Summary of Results

                                            Three Months Ended

                                            March 31,

                                              2011        2010

Revenues                                    $ 238,800   $ 217,283

Net loss attributable to common shares      $ (46,616)  $ (91,129)

FFO, as defined by ProLogis                 $ 62,146    $ 7,117

 Adjustments                                  -           15,808

 FFO, excluding significant non-cash items    62,146      22,925

 Adjustments                                  12,261      29,412

Core FFO                                    $ 74,407    $ 52,337



Per share - Diluted:

 Net loss attributable to common shares     $ (0.08)    $ (0.19)

 FFO, as defined by ProLogis                $ 0.11      $ 0.01

 Core FFO                                   $ 0.13      $ 0.11



Footnotes follow Financial Statements






Consolidated Balance Sheets

(in thousands)

                                                   March 31,      December 31,

                                                   2011           2010



Assets:

 Investments in real estate assets:

  Industrial properties:

   Core                                            $ 10,807,183   $ 10,714,799

   Properties under development                      452,813        365,362

  Land                                               1,599,966      1,533,611

  Other real estate investments                      281,546        265,869

                                                     13,141,508     12,879,641

  Less accumulated depreciation                      1,656,781      1,595,678

    Net investments in properties                    11,484,727     11,283,963

 Investments in and advances to unconsolidated
 investees                                           2,084,696      2,024,661

 Notes receivable backed by real estate              358,323        302,144

 Assets held for sale (1)                            215,714        574,791

    Net investments in real estate                   14,143,460     14,185,559



 Cash and cash equivalents                           24,744         37,634

 Restricted cash                                     34,088         27,081

 Accounts receivable                                 95,538         58,979

 Other assets                                        637,865        593,414

    Total assets                                   $ 14,935,695   $ 14,902,667



Liabilities and Equity:

 Liabilities:

  Debt                                             $ 6,415,034    $ 6,506,029

  Accounts payable and accrued expenses              394,862        388,536

  Other liabilities                                  496,946        467,998

  Liabilities related to assets held for sale (1)    2,464          19,749

    Total liabilities                                7,309,306      7,382,312



 Equity:

  ProLogis shareholders' equity:

   Preferred shares                                  350,000        350,000

   Common shares                                     5,706          5,701

   Additional paid-in capital                        9,665,861      9,668,404

   Accumulated other comprehensive income (loss)     213,465        (3,160)

   Distributions in excess of net earnings           (2,626,381)    (2,515,722)

    Total ProLogis shareholders' equity              7,608,651      7,505,223

  Noncontrolling interests                           17,738         15,132

    Total equity                                     7,626,389      7,520,355

    Total liabilities and equity                   $ 14,935,695   $ 14,902,667



Footnotes follow Financial Statements








Consolidated Statements of Operations

(in thousands, except per share amounts)

                                                         Three Months Ended

                                                         March 31,

                                                         2011       2010

 Revenues:

  Rental income (2)                                      $ 205,311  $ 187,545

  Property management and other fees and incentives        29,170     28,662

  Development management and other income                  4,319      1,076

   Total revenues                                          238,800    217,283



 Expenses:

  Rental expenses                                          63,342     56,264

  Investment management expenses                           10,552     10,319

  General and administrative (3)                           39,183     42,006

  Merger integration expenses and reduction in workforce
  (4)                                                      5,988      -

  Depreciation and amortization                            82,693     75,166

  Other expenses                                           4,684      4,267

   Total expenses                                          206,442    188,022



 Operating income                                          32,358     29,261



 Other income (expense):

  Earnings from unconsolidated investees, net              13,641     7,973

  Interest income                                          4,436      310

  Interest expense (5)                                     (90,562)   (109,979)

  Other expense, net (6)                                   (7,015)    (482)

  Net gains on dispositions of investments in real
  estate                                                   3,725      11,807

  Foreign currency exchange gains, net                     1,374      3,688

  Loss on early extinguishment of debt, net (7)            -          (47,633)

   Total other income (expense)                            (74,401)   (134,316)



 Loss before income taxes                                  (42,043)   (105,055)

  Current income tax expense                               5,505      9,753

  Deferred income tax expense (benefit)                    864        (1,551)

   Total income taxes                                      6,369      8,202

 Loss from continuing operations                           (48,412)   (113,257)

 Discontinued operations (1):

  Income attributable to disposed properties and assets
  held for sale                                            6,288      20,602

  Net gains on dispositions of properties and other real
  estate investments, net of taxes                         1,960      8,148





    Total discontinued operations                          8,248      28,750

 Consolidated net loss                                     (40,164)   (84,507)

 Net earnings attributable to noncontrolling interests     (83)       (253)

 Net loss attributable to controlling interests            (40,247)   (84,760)

 Less preferred share dividends                            6,369      6,369

 Net loss attributable to common shares                  $ (46,616) $ (91,129)



 Weighted average common shares outstanding - Basic        570,559    474,991

 Weighted average common shares outstanding - Diluted      570,559    474,991



 Net earnings (loss) per share attributable to common
 shares - Basic:

  Continuing operations                                  $ (0.09)   $ (0.25)

  Discontinued operations                                  0.01       0.06

   Net loss per share attributable to common shares -
   Basic                                                 $ (0.08)   $ (0.19)



 Net earnings (loss) per share attributable to common
 shares - Diluted:

  Continuing operations                                  $ (0.09)   $ (0.25)

  Discontinued operations                                  0.01       0.06

   Net loss per share attributable to common shares -
   Diluted                                               $ (0.08)   $ (0.19)



Footnotes follow Financial Statements






Consolidated Statements of Funds From Operations (FFO)

(in thousands)



                                                         Three Months Ended

                                                         March 31,

                                                         2011       2010

 Revenues:

  Rental income                                          $ 215,372  $ 230,918

  Property management and other fees and incentives        29,170     28,662

  Development management and other income                  4,319      1,076

    Total revenues                                         248,861    260,656



 Expenses:

  Rental expenses                                          66,687     67,886

  Investment management expenses                           10,552     10,319

  General and administrative (3)                           39,183     42,006

  Merger integration expenses and reduction in workforce
  (4)                                                      5,988      -

  Depreciation of corporate assets                         3,609      3,395

  Other expenses                                           4,684      4,267

    Total expenses                                         130,703    127,873



 Operating FFO                                             118,158    132,783



 Other income (expense):

  FFO from unconsolidated investees                        48,695     37,668

  Interest income                                          4,436      310

  Interest expense                                         (90,562)   (109,979)

  Other expense, net (6)                                   (7,015)    (482)

  Net gains on dispositions of investments in real
  estate                                                   2,568      10,346

  Foreign currency exchange gains (losses), net            (261)      479

  Loss on early extinguishment of debt, net (7)            -          (47,633)

  Current income tax expense

   Income tax expense on dispositions                      (1,916)    (851)

   Income tax expense - other                              (5,505)    (8,902)

    Total other income (expense)                           (49,560)   (119,044)



 FFO                                                       68,598     13,739



 Less preferred share dividends                            6,369      6,369

 Less net earnings attributable to noncontrolling
 interests                                                 83         253



 FFO attributable to common shares, as defined by
 ProLogis                                                $ 62,146   $ 7,117



Footnotes follow Financial Statements






Reconciliations of Net Loss to FFO

(in thousands, except per share amount)

Reconciliations to FFO

                                                         Three Months Ended

                                                         March 31,

                                                         2011       2010

Net loss attributable to common shares                   $ (46,616) $ (91,129)

 Add (deduct) NAREIT defined adjustments:

  Real estate related depreciation and amortization        79,084     71,771

  Adjustments to gains on dispositions for depreciation    (327)      (1,629)

  Adjustments to dispositions of non-development
  properties                                               (830)      103

  Reconciling items attributable to discontinued
  operations:

   Gains on dispositions of non-development properties     (3,876)    (8,083)

   Real estate related depreciation and amortization       428        11,149

  Our share of reconciling items from unconsolidated
  investees:

   Real estate related depreciation and amortization       39,233     37,641

   Other amortization items                                (3,556)    (3,474)

     Subtotal-NAREIT defined FFO                           63,540     16,349



 Add (deduct) our defined adjustments:

  Foreign currency exchange gains, net                     (1,635)    (3,209)

  Deferred income tax expense (benefit)                    864        (1,551)

  Our share of reconciling items from unconsolidated
  investees:

   Foreign currency exchange gains, net                    (196)      (787)

   Unrealized gains on derivative contracts, net           -          (4,060)

   Deferred income tax expense (benefit)                   (427)      375

FFO, as defined by ProLogis                                62,146     7,117



 Adjustments made in 2010, not applicable to 2011          -          15,808

 FFO, excluding significant non-cash items in 2010         62,146     22,925



 Adjustments:

  Japan disaster expenses                                  6,925      -

  Merger integration expenses and reduction in workforce   5,988      -

  Net gains on dispositions of real estate properties      (2,568)    (10,346)

  Income tax expense related to dispositions               1,916      851

  Adjustments made in 2010, not applicable in 2011         -          38,907

Core FFO                                                 $ 74,407   $ 52,337





Per diluted share:

 FFO, as defined by ProLogis                             $ 0.11     $ 0.01

 Core FFO                                                $ 0.13     $ 0.11



See Consolidated Statements of Operations and Consolidated Statements of FFO

Footnotes follow Financial Statements


















Other Financial Metrics

(dollars in thousands)

Reconciliation of Consolidated Net Loss to Core EBITDA, as adjusted

                                                  Three Months Ended

                                                  March 31,

                                                  2011          2010

Consolidated net loss                             $ (40,164)    $ (84,507)

 Gains from dispositions of investments in real
 estate, net                                        (7,601)       (19,955)

 Depreciation and amortization                      82,693        75,166

 Interest expense                                   90,562        109,979

 Loss on early extinguishment of debt               -             47,633

 Current and deferred income tax expense            8,285         8,202

 Adjustments made in 2010, not applicable in 2011   -             15,808

 Income on properties sold during the quarter
 included in discontinued operations                (6,288)       (343)

 Other non-cash charges                             2,977         2,472

 Other adjustments made to Core FFO                 12,913        -

Core EBITDA, as adjusted, prior to our share of
unconsolidated investees                            143,377       154,455



 Our share of reconciling items from
 unconsolidated investees:

  Depreciation and amortization                     35,677        34,167

  Other non-cash charges                            (623)         (3,897)

  Realized losses on derivative activity            226           6,507

Core EBITDA, as adjusted                          $ 178,657     $ 191,232





ProLogis debt to core EBITDA:

 Core EBITDA, as adjusted - annualized            $ 714,628     $ 764,928

 ProLogis debt as of March 31                     $ 6,415,034   $ 8,112,712

  ProLogis debt to core EBITDA ratio                8.98      x   10.61      x



Debt to core EBITDA, including our share of
unconsolidated investees:

 Core EBITDA, as adjusted - annualized            $ 714,628     $ 764,928

 Our share of interest and current income taxes
 from unconsolidated investees                      156,900       179,840

  Core EBITDA, as adjusted                        $ 871,528     $ 944,768



 ProLogis debt as of March 31                     $ 6,415,034   $ 8,112,712

 Our share of debt of unconsolidated investees as
 of March 31                                        2,406,534     2,655,794

  Debt                                            $ 8,821,568   $ 10,768,506

  Debt to core EBITDA ratio                         10.12     x   11.40      x






Calculation of Per Share Amounts



(in thousands, except per share amounts)



Net Earnings (Loss) Per Share

                                                         Three Months Ended

                                                         March 31,

                                                           2011 (a) 2010 (a)

Net loss (b)                                             $ (46,616) $ (91,129)

Noncontrolling interest attributable to convertible
limited partnership units (c)                              -          -

Adjusted net loss - Diluted (b)                          $ (46,616) $ (91,129)



Weighted average common shares outstanding - Basic         570,559    474,991

Incremental weighted average effect of conversion of
limited partnership units (c)                              -          -

Incremental weighted average effect of stock awards

                                                           -          -

Weighted average common shares outstanding - Diluted (d)   570,559    474,991



Net loss per share - Diluted (b)                         $ (0.08)   $ (0.19)



FFO Per Share, as defined by ProLogis

                                                           Three Months Ended

                                                           March 31,

                                                           2011     2010

FFO, as defined by ProLogis (b)                          $ 62,146   $ 7,117

Noncontrolling interest attributable to convertible
limited partnership units (c)                              67         -

FFO, as defined by ProLogis - Diluted (b)                $ 62,213   $ 7,117



Weighted average common shares outstanding - Basic         570,559    474,991

Incremental weighted average effect of conversion of
limited partnership units (c)                              760        -

Incremental weighted average effect of stock awards        2,605      3,004

Weighted average common shares outstanding - Diluted       573,924    477,995



FFO per share, as defined by ProLogis - Diluted (b)      $ 0.11     $ 0.01



Core FFO Per Share

                                                           Three Months Ended

                                                           March 31,

                                                           2011     2010

Core FFO (b)                                             $ 74,407   $ 52,337

Noncontrolling interest attributable to convertible
limited partnership units (c)                              67         -

Core FFO - Diluted (b)                                   $ 74,474   $ 52,337



Weighted average common shares outstanding - Basic         570,559    474,991

Incremental weighted average effect of conversion of
limited partnership units (c)                              760        -

Incremental weighted average effect of stock awards        2,605      3,004

Weighted average common shares outstanding - Diluted       573,924    477,995



Core FFO per share - Diluted (b)                         $ 0.13     $ 0.11



(a) In periods with a net loss, the inclusion of any incremental shares is
anti-dilutive, and therefore, both basic and diluted shares are the same.

(b) Attributable to common shares.

(c) If the impact of the conversion of limited partnership units or
convertible debt is anti-dilutive, the income impact and shares are not
included in the diluted per share calculation.







Notes to Section II – Financial Statements

(1)  As of March 31, 2011, we have eight land parcels and six operating properties that met the criteria as held for sale. We also have certain other non-core assets, which are part of a definitive agreement signed in December 2010 and expected to close in the second quarter of 2011, that met the criteria as held for sale.  The amounts included in Assets Held for Sale as of March 31, 2011 include real estate investment balances and the related assets and liabilities for each property.

During the three months ended March 31, 2011, we disposed of 33 non-development properties aggregating 2.2 million square feet to third parties, including 30 properties aggregating 1.2 million square feet that were included in Assets Held for Sale at December 31, 2010. During all of 2010, we disposed of land subject to ground leases and 205 properties aggregating 25.4 million square feet to third parties, 2 of which were development properties.

The operations of the properties held for sale and properties that are disposed of to third parties during a period including the aggregate net gains recognized upon their disposition, are presented as discontinued operations in our Consolidated Statements of Operations for all periods presented. The income attributable to these properties was as follows:


                                                       Three Months Ended

                                                       March 31,

                                                       2011       2010

 Rental income                                         $ 10,061   $ 43,373

 Rental expenses                                         (3,345)    (11,622)

 Depreciation and amortization                           (428)      (11,149)

 Income attributable to disposed properties and assets
 held for sale                                         $ 6,288    $ 20,602





For purposes of our Consolidated Statements of FFO, we do not segregate discontinued operations.  In addition, we include the gains from disposition of land parcels and development properties in the calculation of FFO, including those classified as discontinued operations.

(2) In our Consolidated Statements of Operations, Rental Income includes the following (in thousands):




                           Three Months Ended

                           March 31,

                             2011       2010

 Rental income             $ 147,724  $ 135,758

 Rental expense recoveries   44,856     41,474

 Straight-lined rents        12,731     10,313

                           $ 205,311  $ 187,545





(3) Our General and Administrative Expenses ("G&A") included in our Statements of Operations consisted of the following (in thousands):


                                            Three Months Ended

                                            March 31,

                                              2011        2010

 Gross G&A expense                          $ 66,543    $ 66,853

 Reported as rental expense                   (4,911)     (5,001)

 Reported as investment management expenses   (10,552)    (10,319)

 Capitalized amounts                          (11,897)    (9,527)

 Net G&A                                    $ 39,183    $ 42,006





(4) During the first quarter of 2011, we incurred expenses in connection with the expected merger with AMB Property Corporation and a reduction in workforce associated with certain recent or expected dispositions.

(5) The following table presents the components of Interest Expense as reflected in our Consolidated Statements of Operations (in thousands):


                                         Three Months Ended

                                         March 31,

                                           2011        2010

 Gross interest expense                  $ 89,058    $ 105,009

 Amortization of discount, net             7,838       15,334

 Amortization of deferred loan costs       4,997       6,482

  Interest expense before capitalization   101,893     126,825

 Capitalized amounts                       (11,331)    (16,846)

 Net interest expense                    $ 90,562    $ 109,979



Gross interest expense decreased in 2011 from 2010 due primarily to
lower debt levels as a result of the 2010 debt repurchases. The decrease
in capitalized amounts in 2011 from 2010 is due to less development
activity.







(6) Included in this amount is a $6.9 million charge related primarily to one of our buildings in Japan that was damaged from the earthquake and related tsunami in March 2011.

(7) During the three months ended March 31, 2010, in connection with our announced initiatives to stagger and extend our debt maturities and reduce debt, we repurchased certain senior and convertible senior notes outstanding with maturities in 2012 and 2013 (we did not repurchase any debt in 2011). We utilized proceeds from borrowings under the Global Line to repurchase the senior notes. In addition, in 2010 we repaid certain secured mortgage debt in connection with the sale of a property in Japan. The activity is summarized as follows (in thousands):


                                                          Three Months Ended

                                                        March 31, 2010

 Convertible Senior Notes (a):

  Original principal amount                             $ 490,039

  Cash purchase price                                   $ 465,094

 Senior Notes:

  Original principal amount                             $ 422,476

  Cash purchase price                                   $ 449,382

 Secured Mortgage Debt:

  Original principal amount                             $ 45,140

  Cash repayment price                                  $ 46,659



 Total:

  Original principal amount                             $ 957,655

  Cash purchase / repayment price                       $ 961,135

  Gain (loss) on early extinguishment of debt, net (b)  $ (47,633)

________








(a) Although the purchase price is less than the principal amount outstanding,
    the repurchase of these notes resulted in a non-cash loss in 2010 due to
    the non-cash discount. Therefore, we adjusted for this non-cash loss to
    arrive at FFO, excluding significant non-cash items.

(b) Represents the difference between the recorded debt (including unamortized
    related debt issuance costs, premiums and discounts) and the consideration
    we paid to retire the debt. Of the loss we referred to above, the non-cash
    loss of $15.2 million for the three months ended March 31, 2010, is
    adjusted back to arrive at FFO, excluding significant non-cash items.





SOURCE ProLogis