ProLogis Reports Second Quarter 2008 Results

- First Half FFO Results Up from 2007 -

- Company Confirms Full-year 2008 Guidance -

TOKYO, July 24 /PRNewswire-FirstCall/ -- ProLogis (NYSE: PLD), the world's largest owner, manager and developer of distribution facilities, today reported funds from operations as defined by ProLogis (FFO) for the quarter ended June 30, 2008, of $1.06 per diluted share, down from $1.16 in 2007. Growth in income from the company's Investment Management business was offset by lower CDFS gains, as well as a reduced level of property income due to disposition activity in the second quarter of 2007. Net earnings per diluted share for the quarter were $0.80, compared with $1.50 in 2007. Net earnings in the second quarter of 2007 included approximately $0.56 of gains associated with the disposition of non-CDFS properties, which are not included in FFO, compared with $0.02 of similar gains during the same period in 2008.

For the six months ended June 30, 2008, FFO was $2.44 per diluted share, up from $2.41 in the first six months of 2007. Net earnings per diluted share for the six months ended June 30, 2008, were $1.53, compared with $2.39 in the same period of 2007, primarily due to the non-CDFS gains noted above.

"Our solid results for the second quarter reflect the geographically diversified nature of our global logistics infrastructure platform," Jeffrey H. Schwartz, ProLogis chairman and chief executive officer, said from Tokyo. "Throughout Asia and Central Europe, growing domestic consumption, exports and the lack of modern distribution space continue to support strong demand. Operating property fundamentals held up well, despite a difficult financial environment, and further signs of moderating demand for industrial space in the United States and the United Kingdom.

"We continue to pursue our disciplined investment strategy, deploying capital in the areas of the world where we see the greatest risk-adjusted returns and the strongest logistics market opportunities. The breadth of our platform allows us to take advantage of these opportunities."

During the second quarter, the company recognized increases in FFO and fees from its Investment Management business and achieved growth in leased space, rents and net operating income in its same-store pool. "Development margins are moving toward more normalized levels, reflecting our sustainable expectations for the business. New supply and the potential for overbuilding have been significantly reduced by the return to historic margin levels and continued capacity constraints in the debt markets. Ultimately, we believe these factors will result in healthier market conditions, and those companies with access to capital will be well positioned to capture opportunities," Schwartz added.

Company Confirms 2008 Guidance

The company confirms its guidance for 2008 FFO of $4.65 to $4.85 per share and net earnings of $3.15 to $3.35 per share. In addition, the company stated that it slightly exceeded its prior expectations for first half 2008 profitability primarily due to the recognition of certain CDFS gains, which had originally been anticipated in the third quarter, as well as lower losses related to the company's share of remeasurement and settlement losses on interest rate derivative contracts entered into by ProLogis' unconsolidated property funds. As a result, the company now anticipates that approximately 47 to 49 percent of full-year FFO per share will be recognized in the second half of the year, with roughly two-thirds of that amount being recognized in the fourth quarter, due to a larger expected volume of CDFS contributions. The weighting of earnings per share is expected to be similar to the distribution of FFO per share for the remaining quarters.

Continued Strength in International Demand

The company noted that global trade continues to be relatively strong, particularly throughout Asia, driving demand for distribution space in key global logistics markets. "Our concentration of existing facilities and land positions near major seaports, inland ports and rail-served locations allows us to address this demand and drives our development business," said Ted R. Antenucci, ProLogis president and chief investment officer. "While there is a greater degree of market uncertainty in the United States and the United Kingdom, over 87 percent of our development starts year to date are in markets outside these countries."

ProLogis began construction of $1.01 billion of new development during the second quarter, including development within its retail and mixed-use and industrial joint ventures, bringing the company's total CDFS asset pipeline to $8.65 billion at June 30, 2008. Of this amount, total expected investment in projects currently under construction is $4.47 billion, while the space associated with the remaining $4.18 billion of completed developments and repositioned properties was 55.1 percent leased at quarter end based on expected investment, up from 53.7 percent at March 31, 2008.

During the quarter, the company signed approximately 34.3 million square feet of leases worldwide, bringing the total for the first half of the year to 60.8 million square feet. Of that total, 14.6 million square feet were new CDFS leases, including those second quarter transactions with repeat customers such as: Amazon.com in Las Vegas, Nippon Express in Nagoya, Volkswagen in Beijing and Schenker in Paris.

Overall US Markets Impacted by Economic Conditions

"Compared with previous US downturns, industrial supply and demand are better balanced, reflecting a significant decrease in new speculative development activity," said Walter C. Rakowich, president and chief operating officer. During the second quarter, the company reported that overall net absorption in the top 30 North American logistics markets declined to roughly 10.8 million square feet, and vacancies in these 30 markets increased to 8.5 percent from 7.9 percent at March 31, 2008.

"Our stabilized North American portfolio remains well leased at 94.4 percent. During the second quarter, all of our US development starts were preleased, while we started two inventory projects outside the United States in Toronto and Mexico City -- both relatively healthy markets," said Diane S. Paddison, executive director of global operations.

Selected Financial and Operating Information

-- Increased same-store net operating income in the quarter by 1.6 percent, resulting from 1.3 percent growth in leased space and rent growth on turnovers of 3.1 percent. For the first six months, same-store net operating income increased 2.4 percent, resulting from a 1.6 percent increase in leased space and rent growth on turnovers of 4.7 percent.

-- Maintained strong occupancy in the global stabilized portfolio of 94.2 percent, compared with 94.6 percent at March 31, 2008.

-- Recycled a total of $1.30 billion of capital through contributions and dispositions during the quarter. Of the total, $1.28 billion was from CDFS dispositions, with $79.8 million of that from acquired property portfolios. The remaining $20.5 million was from non-CDFS dispositions. Year-to-date total dispositions were $2.76 billion, with $2.70 billion from CDFS dispositions.

-- Realized FFO from CDFS dispositions of $200.3 million for the quarter. Pre-deferral, post-tax margins for developed and repositioned properties during the second quarter averaged 24.5 percent, while post-tax, post-deferral margins were 19.6 percent.

-- Increased total assets owned and under management to $40.4 billion, up from $36.3 billion at December 31, 2007, a year-to-date increase of 11.3 percent.

-- Grew ProLogis' share of FFO from property funds to $41.1 million for the quarter, compared with $33.2 million for the second quarter of 2007, an increase of 23.8 percent.

-- Recognized fee income from property funds of $32.6 million, compared with $23.9 million for the second quarter of 2007, an increase of 36.4 percent.

Copies of ProLogis' second quarter 2008 supplemental information will be available from the company's website at http://ir.prologis.com. The supplemental information also is available on the SEC's website at http://www.sec.gov. The related conference call will be available via a live webcast on the company's website at http://ir.prologis.com at 10:00 a.m. Eastern Time on Thursday, July 24, 2008. A replay of the webcast will be available on the company's website until September 30, 2008. Additionally, a podcast of the company's conference call will be available on the company's website as well as on the REITCafe website located at http://www.REITcafe.com.

About ProLogis

ProLogis is the world's largest owner, manager and developer of distribution facilities, with operations in 132 markets across North America, Europe and Asia. The company has $40.4 billion of assets owned, managed and under development, comprising 542.3 million square feet (50.4 million square meters) in 2,884 properties as of June 30, 2008. ProLogis' customers include manufacturers, retailers, transportation companies, third-party logistics providers and other enterprises with large-scale distribution needs. Headquartered in Denver, Colorado, ProLogis employs over 1,500 people worldwide.

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 under "Item 1A -Risk Factors" in ProLogis' Annual Report on Form 10-K for the year ended December 31, 2007.



                                   ProLogis

                              Second Quarter 2008
                          Unaudited Financial Results

                        Selected Financial Information
           (in thousands, except per share amounts and percentages)

                                Three Months Ended     Six Months Ended
       SUMMARY OF RESULTS            June 30,               June 30,
                                  2008      2007       2008         2007

    Net earnings attributable
     to common shares:
     Net earnings attributable
      to common shares          $217,392  $400,104    $411,397    $636,195
     Net earnings per share
      attributable to common
      shares - diluted             $0.80     $1.50       $1.53       $2.39

    FFO:
     FFO attributable to
      common shares             $288,365  $309,905    $657,486    $639,618
     FFO per share
      attributable to common
      shares - diluted             $1.06     $1.16       $2.44       $2.41

    Distributions declared
     per common share (1)        $0.5175     $0.46      $1.035       $0.92


       OPERATING METRICS          Three Months Ended     Six Months Ended
                                       June 30,               June 30,
                                    2008      2007       2008         2007

    Same Store:

     NOI                          + 1.62%   + 6.16%     + 2.43%     + 5.89%

     Rental Rates                 + 3.06%   + 8.26%     + 4.65%     + 7.80%

     Average Leasing              + 1.29%   + 2.66%     + 1.58%     + 2.92%

    Total Expected Investment
     of Development Starts    $1,013,127  $687,811  $1,942,731  $1,303,411



    See our definition of FFO and our definition of EBITDA.

    Footnotes follow Consolidated Balance Sheets.



                                     ProLogis

                               Second Quarter 2008
                           Unaudited Financial Results

                       Consolidated Statements of Earnings
                                  (in thousands)

                                    Three Months Ended     Six Months Ended
                                         June 30,              June 30,
                                      2008       2007      2008       2007

     Revenues:
       Rental income (2)             $262,380  $270,840   $531,090   $527,386
       CDFS disposition proceeds:
         Developed and repositioned
          properties                1,136,655   686,715  2,400,068  1,356,653
         Acquired property
          portfolios                   79,843         -    163,175          -
       Property management and
        other fees and incentives      32,580    23,937     62,070     45,584
       Development management and
        other income                    3,374     6,176     10,531     13,615
          Total revenues            1,514,832   987,668  3,166,934  1,943,238

     Expenses:
       Rental expenses                 86,186    75,052    177,159    142,180
       Cost of CDFS dispositions:
         Developed and repositioned
          properties                  936,610   476,684  1,921,917    915,675
         Acquired property
          portfolios                   79,843         -    163,175          -
       General and administrative(3)   59,215    48,423    115,687     96,765
       Depreciation and amortization   84,866    74,004    162,238    151,973
       Other expenses                   5,633    15,068      8,103     17,934
         Total expenses             1,252,353   689,231  2,548,279  1,324,527

     Operating income                 262,479   298,437    618,655    618,711

     Other income (expense):
       Earnings from unconsolidated
        property funds (4)             36,553    15,804     17,986     34,768
       (Losses) earnings from CDFS
        joint ventures and other
        unconsolidated investees       (6,878)    1,773     (3,606)     2,317
       Interest expense (5)           (84,136)  (90,640)  (169,260)  (179,291)
       Interest and other income, net   9,644     9,735     15,260     20,909
         Total other income(expense)  (44,817)  (63,328)  (139,620)  (121,297)

     Earnings before minority
      interest                        217,662   235,109    479,035    497,414
     Minority interest share in
      loss (income)                     4,585      (723)     3,479       (896)

     Earnings before certain net
      gains                           222,247   234,386    482,514    496,518
     Gains recognized on
      dispositions of certain non-
      CDFS business assets (6)          4,662   124,085      4,662    124,085
     Foreign currency exchange
      gains (losses), net              12,095    22,706    (24,606)     9,154
     Earnings before income taxes     239,004   381,177    462,570    629,757
     Income taxes:
       Current income tax expense      12,692    26,645     37,524     44,745
       Deferred income tax expense
        (benefit)                       6,236    (9,503)     8,736     (6,182)
         Total income taxes            18,928    17,142     46,260     38,563
     Earnings from continuing
      operations                      220,076   364,035    416,310    591,194
     Discontinued operations (7):
       (Loss) income attributable
        to disposed properties and
        assets held for sale             (150)    1,069         32      3,050
       Gains recognized on
        dispositions:
         Non-CDFS business assets       1,856    27,161      5,669     32,125
         CDFS business assets           1,994    14,196      2,124     22,537
           Total discontinued
            operations                  3,700    42,426      7,825     57,712
     Net earnings                     223,776   406,461    424,135    648,906
     Less preferred share dividends     6,384     6,357     12,738     12,711
     Net earnings attributable to
      common shares                  $217,392  $400,104   $411,397   $636,195

    Weighted average common shares
     outstanding - Basic              262,715   257,086    260,827    255,677
    Weighted average common shares
     outstanding - Diluted            272,317   267,880    270,370    266,723

    Net earnings per share
     attributable to common shares
     - Basic:
      Continuing operations             $0.82     $1.39      $1.55      $2.26
      Discontinued operations            0.01      0.17       0.03       0.23
        Net earnings per share
         attributable to common shares -
         Basic                          $0.83     $1.56      $1.58      $2.49

    Net earnings per share
     attributable to common shares
     - Diluted:
      Continuing operations             $0.79     $1.34      $1.50      $2.17
      Discontinued operations            0.01      0.16       0.03       0.22
        Net earnings per share
         attributable to common shares
         - Diluted                      $0.80     $1.50      $1.53      $2.39


         Calculation of Net Earnings per Share Attributable to Common
                               Shares - Diluted
                   (in thousands, except per share amounts)

                                      Three Months Ended    Six Months Ended
                                           June 30,             June 30,
                                       2008      2007       2008        2007
    Net earnings attributable to
     common shares - Basic           $217,392  $400,104   $411,397   $636,195
    Minority interest (a)               1,087     1,474      2,238      2,462
    Adjusted net earnings attributable
     to common shares - Diluted      $218,479  $401,578   $413,635   $638,657

    Weighted average common shares
     outstanding - Basic              262,715   257,086    260,827    255,677
    Incremental weighted average
     effect of conversion of limited
     partnership units                  5,053     5,108      5,053      5,124
    Incremental weighted average
     effect of potentially dilutive
     instruments (b)                    4,549     5,686      4,490      5,922
    Weighted average common shares
     outstanding - Diluted            272,317   267,880    270,370    266,723

    Net earnings per share
     attributable to common shares -
     Diluted                            $0.80     $1.50      $1.53      $2.39

    COMMENTS
    (a) Includes only the minority interest related to the convertible limited
        partnership units.

    (b) Total weighted average potentially dilutive instruments outstanding
        were 10,276 and 10,283 for the three months ended June 30, 2008 and
        2007, respectively, and 10,453 and 10,557 for the six months ended
        June 30, 2008 and 2007, respectively.  Substantially all were dilutive
        for all periods.

    Footnotes follow Consolidated Balance Sheets.



                                     ProLogis

                               Second Quarter 2008
                           Unaudited Financial Results

              Consolidated Statements of Funds From Operations (FFO)
                     (in thousands, except per share amounts)

                                    Three Months Ended     Six Months Ended
                                         June 30,              June 30,
                                     2008        2007       2008       2007

     Revenues:
       Rental income                $262,501   $274,751   $531,977   $537,052
       CDFS disposition proceeds:
         Developed and
          repositioned properties  1,151,862    792,524  2,415,275  1,529,951
         Acquired property
          portfolios                  79,843          -    163,175          -
       Property management and
        other fees and incentives     32,580     23,937     62,070     45,584
       Development management and
        other income                   3,374      6,176     10,531     13,615
         Total revenues            1,530,160  1,097,388  3,183,028  2,126,202

     Expenses:
       Rental expenses                86,302     76,653    177,653    145,828
       Cost of CDFS dispositions:
         Developed and
          repositioned properties    951,533    568,297  1,936,710  1,068,773
         Acquired property
          portfolios                  79,843          -    163,175          -
       General and administrative(3)  59,215     48,423    115,687     96,765
       Depreciation of corporate
        assets                         4,731      2,585      8,151      5,291
       Other expenses                  5,633     15,068      8,103     17,934
         Total expenses            1,187,257    711,026  2,409,479  1,334,591

                                     342,903    386,362    773,549    791,611
     Other income (expense):
       FFO from unconsolidated
        property funds (4)            41,075     33,249     78,387     63,869
       FFO from CDFS joint
        ventures and other
        unconsolidated investees      (4,685)     3,920        480      6,056
       Interest expense (5)          (84,136)   (90,640)  (169,260)  (179,291)
       Interest and other income, net  9,644      9,735     15,260     20,909
       Foreign currency exchange
        losses, net                   (1,945)    (2,034)    (3,805)    (8,222)
       Current income tax expense    (12,692)   (23,607)   (27,866)   (41,707)
         Total other income
          (expense)                  (52,739)   (69,377)  (106,804)  (138,386)

     FFO                             290,164    316,985    666,745    653,225

     Less preferred share
      dividends                        6,384      6,357     12,738     12,711
     Less minority interest share
      in (loss) income                (4,585)       723     (3,479)       896
     FFO attributable to common
      shares                        $288,365   $309,905   $657,486   $639,618

     Weighted average common
      shares outstanding - Basic     262,715    257,086    260,827    255,677
     Weighted average common
      shares outstanding - Diluted   272,317    267,880    270,370    266,723

     FFO per share attributable to
      common shares:
       Basic                           $1.10      $1.21      $2.52      $2.50
       Diluted                         $1.06      $1.16      $2.44      $2.41



       Calculation of FFO per Share Attributable to Common Shares - Diluted
                     (in thousands, except per share amounts)

                                       Three Months Ended   Six Months Ended
                                            June 30,            June 30,
                                         2008      2007      2008      2007

    FFO attributable to common shares
     - Basic                           $288,365  $309,905  $657,486  $639,618
    Minority interest attributable to
     convertible limited partnership
     units                                1,087     1,474     2,238     2,462
    FFO attributable to common shares
     - Diluted                         $289,452  $311,379   659,724   642,080

    Weighted average common shares
     outstanding - Diluted              272,317   267,880   270,370   266,723


    FFO per share attributable to
     common shares - Diluted              $1.06     $1.16     $2.44     $2.41


    See Consolidated Statements of Earnings and the Reconciliations of Net
    Earnings to FFO.

    See our definition of FFO and our definition of EBITDA.

    Footnotes follow Consolidated Balance Sheets.

                                Definition of FFO

    FFO is a non-Generally Accepted Accounting Principles (GAAP) measure that
    is commonly used in the real estate industry. The most directly comparable
    GAAP measure to FFO is net earnings. Although the National Association of
    Real Estate Investment Trusts (NAREIT) has published a definition of FFO,
    modifications to the NAREIT calculation of FFO are common among REITs, as
    companies seek to provide financial measures that meaningfully reflect
    their business. FFO, as we define it, is presented as a supplemental
    financial measure. FFO is not used by us as, nor should it be considered
    to be, an alternative to net earnings computed under GAAP as an indicator
    of our operating performance or as an alternative to cash from operating
    activities computed under GAAP as an indicator of our ability to fund our
    cash needs.

    FFO is not meant to represent a comprehensive system of financial
    reporting and does not present, nor do we intend it to present, a complete
    picture of our financial condition and operating performance. We believe
    that GAAP net earnings remains the primary measure of performance and that
    FFO is only meaningful when it is used in conjunction with GAAP net
    earnings. Further, we believe that our consolidated financial statements,
    prepared in accordance with GAAP, provide the most meaningful picture of
    our financial condition and our operating performance.

    NAREIT's FFO measure adjusts GAAP net earnings to exclude historical cost
    depreciation and gains from the sale of previously depreciated properties.
    In addition to the NAREIT adjustments, we exclude additional items from
    GAAP net earnings, although not infrequent or unusual, that are subject to
    significant fluctuations from period to period that cause both positive
    and negative effects on our results of operations, in inconsistent and
    unpredictable directions, such as deferred income tax, current income tax
    related to the reversal of any acquired tax liabilities in an acquisition,
    foreign currency exchange gains/losses related to certain debt
    transactions and gains/losses from remeasurement of certain derivative
    instruments. We include gains from dispositions of properties acquired or
    developed in our CDFS business segment in our definition of FFO. We
    calculate FFO from our unconsolidated investees on the same basis.

    We believe our adjustments to GAAP net earnings that are included in
    arriving at our FFO measure are helpful to management in making real
    estate investment decisions and evaluating our current operating
    performance. We believe these adjustments are also helpful to industry
    analysts, potential investors and shareholders in their understanding and
    evaluation of our performance on the key measures of net asset value and
    current operating returns generated on real estate investments. While we
    believe that our defined FFO measure is an important supplemental measure,
    neither NAREIT's nor our measure of FFO should be used alone because they
    exclude significant economic components of GAAP net earnings and are,
    therefore, limited as an analytical tool.



                                     ProLogis

                               Second Quarter 2008
                           Unaudited Financial Results

                      Reconciliations of Net Earnings to FFO
                                  (in thousands)

                                       Three Months Ended   Six Months Ended
                                            June 30,            June 30,
                                         2008      2007      2008      2007

    Reconciliation of net earnings to FFO:
     Net earnings attributable to
      common shares                    $217,392  $400,104  $411,397  $636,195
     Add (deduct) NAREIT defined
      adjustments:
       Real estate related
        depreciation and amortization    80,135    71,419   154,087   146,682
       Adjustments to gains on CDFS
        dispositions for depreciation    (1,710)        -    (1,710)   (2,337)
       Gains recognized on
        dispositions of certain non-
        CDFS business assets             (4,662) (124,085)   (4,662) (124,085)
       Reconciling items attributable
        to discontinued operations(7):
         Gains recognized on dispositions
          of non-CDFS business assets    (1,856)  (27,161)   (5,669)  (32,125)
         Real estate related depreciation
          and amortization                  155     1,241       361     2,968
           Total discontinued operations (1,701)  (25,920)   (5,308)  (29,157)
       Our share of reconciling items
        from unconsolidated investees:
         Real estate related depreciation
          and amortization               33,494    20,368    66,312    39,209
         (Gains) adjustments on
          dispositions of non-CDFS
          business assets                  (111)       11      (165)   (1,888)
         Other amortization items        (3,860)   (2,040)   (8,070)   (3,949)
           Total unconsolidated
            investees                    29,523    18,339    58,077    33,372

             Total NAREIT defined
              adjustments               101,585   (60,247)  200,484    24,475

               Subtotal-NAREIT defined
                FFO                     318,977   339,857   611,881   660,670

     Add (deduct) our defined
      adjustments:
       Foreign currency exchange
        (gains) losses, net             (14,040)  (24,740)   20,801   (17,376)
       Current income tax expense (8)         -     3,038     9,658     3,038
       Deferred income tax expense
        (benefit)                         6,236    (9,503)    8,736    (6,182)
       Our share of reconciling items
        from unconsolidated investees:
         Foreign currency exchange
          losses (gains), net               943     1,156     1,460      (173)
         Unrealized (gains) losses on
          derivative contracts (4)      (23,817)        -     4,815         -
         Deferred income tax expense
          (benefit)                          66        97       135      (359)
           Total unconsolidated
            investees                   (22,808)    1,253     6,410      (532)

             Total our defined
              adjustments               (30,612)  (29,952)   45,605   (21,052)

    FFO attributable to common shares  $288,365  $309,905  $657,486  $639,618

    See Consolidated Statements of Earnings, Consolidated Statements of FFO
    and the definition of FFO.

    See our definition of FFO and our definition of EBITDA.

    Footnotes follow Consolidated Balance Sheets.


                                     ProLogis

                               Second Quarter 2008
                           Unaudited Financial Results

                    Reconciliations of Net Earnings to EBITDA
                                  (in thousands)

                                       Three Months Ended   Six Months Ended
                                            June 30,            June 30,
                                         2008      2007      2008      2007

    Reconciliation of net earnings to
     EBITDA:
     Net earnings attributable to
      common shares                    $217,392  $400,104  $411,397  $636,195
       Add (deduct):
         NAREIT defined adjustments to
          compute FFO                   101,585   (60,247)  200,484    24,475
         Our defined adjustments to
          compute FFO                   (30,612)  (29,952)   45,605   (21,052)
       Add:
         Interest expense                84,136    90,640   169,260   179,291
         Depreciation of corporate
          assets                          4,731     2,585     8,151     5,291
         Current income tax expense
          included in FFO                12,692    23,607    27,866    41,707
         Adjustments to CDFS gains on
          dispositions for interest
          capitalized                    16,134     9,375    32,800    18,145
         Preferred share dividends        6,384     6,357    12,738    12,711
         Impairment charges                   -    12,600         -    12,600
         Share of reconciling items
          from unconsolidated
          investees                      47,131    26,415    87,534    49,977
    EBITDA                             $459,573  $481,484  $995,835  $959,340

    See Consolidated Statements of Earnings and the Reconciliations of Net
    Earnings to FFO.

    See our definition of FFO and our definition of EBITDA.

    Definition of EBITDA (Earnings before Interest, Taxes, Depreciation and
    Amortization):

    We use earnings before interest, taxes, depreciation and amortization,
    preferred dividends, unrealized foreign currency exchange gains/losses,
    impairment charges and non-CDFS gains, or EBITDA, to measure both our
    operating performance and liquidity. In addition, we adjust the gains from
    the contributions and sales of developed properties recognized as CDFS
    income to reflect these gains as if no interest cost had been capitalized
    during the development of the properties. EBITDA of our unconsolidated
    investees is calculated on the same basis. We consider EBITDA to provide
    investors relevant and useful information because it permits fixed income
    investors to view income from operations on an unleveraged basis before
    the effects of non-operating related items.

    By excluding interest expense, EBITDA allows investors to measure our
    operating performance independent of our capital structure and
    indebtedness and, therefore, allows for a more meaningful comparison of
    our operating performance between periods and to compare our operating
    performance to that of other companies. We consider EBITDA to be a useful
    supplemental measure for reviewing our comparative performance with other
    companies because, by excluding non-cash depreciation expense, EBITDA can
    help the investing public compare the performance of a real estate company
    to that of companies in other industries. As a liquidity measure, we
    believe that EBITDA helps investors to analyze our ability to meet debt
    service obligations and to make quarterly distributions.

    We use EBITDA when measuring our operating performance and liquidity;
    specifically when assessing our operating performance, and comparing that
    performance to other companies, both in the real estate industry and in
    other industries, and when evaluating our ability to meet debt service
    obligations and to make quarterly share distributions. We believe
    investors should consider EBITDA, which has limitations as an analytical
    tool, in conjunction with net income (the primary measure of our
    performance) and other GAAP measures of our performance and liquidity, to
    improve their understanding of our operating results and liquidity, and to
    make more meaningful comparisons of the performance of our assets between
    periods and against other companies.



                                     ProLogis

                               Second Quarter 2008
                           Unaudited Financial Results

                           Consolidated Balance Sheets
                      (in thousands, except per share data)

                                                 June 30,         December 31,
                                                   2008               2007
    Assets:
       Investments in real estate assets:
          Industrial operating properties       $10,986,903       $11,000,079
          Retail operating properties               331,497           328,420
          Land subject to ground leases and other   453,834           458,782
          Properties under development
           (including cost of land)               2,122,533         1,986,285
          Land held for development               2,477,318         2,152,960
          Other investments                         733,895           652,319
                                                 17,105,980        16,578,845
          Less accumulated depreciation           1,469,495         1,368,458
             Net investments in real estate
              assets                             15,636,485        15,210,387

       Investments in and advances to
        unconsolidated investees:
          Property funds                          1,860,473         1,755,113
          CDFS joint ventures and other
           unconsolidated investees                 661,328           590,164
             Total investments in and advances
              to unconsolidated investees         2,521,801         2,345,277

       Cash and cash equivalents                    523,846           399,910
       Accounts and notes receivable                349,791           340,039
       Other assets                               1,434,482         1,408,814
       Discontinued operations - assets held
        for sale (7)                                  6,368            19,607
             Total assets                       $20,472,773       $19,724,034

    Liabilities and Shareholders' Equity:
       Liabilities:
          Lines of credit                        $2,162,153        $1,955,138
          Senior notes and other unsecured debt   4,795,286         4,891,106
          Convertible debt                        2,881,710         2,332,905
          Secured debt and assessment bonds         950,051         1,326,919
          Accounts payable and accrued expenses     874,462           933,075
          Other liabilities                         763,014           769,408
          Discontinued operations - assets
           held for sale (7)                            153               424
             Total liabilities                   12,426,829        12,208,975

       Minority interest                            115,582            78,661

       Shareholders' equity:
          Series C preferred shares at stated
           liquidation preference of $50 per share  100,000           100,000
          Series F preferred shares at stated
           liquidation preference of $25 per share  125,000           125,000
          Series G preferred shares at stated
           liquidation preference of $25 per share  125,000           125,000
          Common shares at $.01 par value per share   2,625             2,577
          Additional paid-in capital              6,646,669         6,412,473
          Accumulated other comprehensive income    401,228           275,322
          Retained earnings                         529,840           396,026
             Total shareholders' equity           7,930,362         7,436,398
             Total liabilities and
              shareholders' equity              $20,472,773       $19,724,034




                                     ProLogis

                               Second Quarter 2008
                           Unaudited Financial Results

                    Notes to Consolidated Financial Statements


       ***  Please also refer to our annual and quarterly financial statements
            filed with the Securities and Exchange Commission on Forms 10-K
            and 10-Q for further information on ProLogis and our business.
            Certain 2007 amounts included in this Supplemental Information
            package have been reclassified to conform to the 2008
            presentation.

       (1)  The annual distribution rate for 2008 is $2.07 per common share.
            The payment of common share distributions is dependent upon our
            financial condition and operating results and may be adjusted at
            the discretion of the Board of Trustees during the year.

       (2)  In our Consolidated Statements of Earnings, rental income includes
            the following (in thousands):

                                       Three Months Ended   Six Months Ended
                                            June 30,            June 30,
                                         2008      2007      2008      2007

          Rental income               $189,967  $203,904   $392,560  $399,206
          Rental expense recoveries     63,474    56,652    122,777   104,933
          Straight-lined rents           8,939    10,284     15,753    23,247
                                      $262,380  $270,840   $531,090  $527,386

      (3)  During the first six months of 2008 and 2007, we recorded $4.0
           million and $8.0 million, respectively, of employee departure
           costs. In 2008, these costs relate to the planned retirement of our
           Chief Operating Officer in January 2009. In 2007, these costs
           include $5.0 million related to the departure of our Chief
           Financial Officer in March 2007 and $3.0 million related to other
           employees.

      (4)  The unconsolidated property funds that we manage, and in which we
           have an equity ownership, may enter into interest rate swap
           contracts that are designated as cash flow hedges to mitigate
           interest expense volatility associated with movements of interest
           rates for future debt issuances.

           In 2007, certain of the property funds in North America issued
           short-term bridge financing to finance their acquisitions of
           properties from us and third parties. Based on the anticipated
           refinancing of the bridge financings with long-term debt issuances,
           certain of these derivative contracts no longer met the
           requirements for hedge accounting and, therefore, the change in the
           fair value of these contracts was recorded through earnings, along
           with the gain or loss on settlement of certain contracts. Included
           in earnings from unconsolidated property funds, in our Consolidated
           Statements of Earnings for the three and six months ended June 30,
           2008, are gains of $6.6 million and losses of $14.7 million,
           respectively, representing our share of the remeasurement and
           settlement gains or losses.  When the contracts are settled, we
           include the realized gain or loss in our calculation of FFO, which
           amounted to losses of $2.8 million and $5.8 million during the
           three and six months ended June 30, 2008, respectively.

           In Japan, the property funds may enter into swap contracts that fix
           the interest rate of their variable rate debt. As these contracts
           did not qualify for hedge accounting, any change in value of these
           contracts is recognized as an unrealized gain or loss on
           remeasurement. These contracts have no cash settlement at the end
           of the contract, and therefore, no impact on FFO. Included in
           earnings from unconsolidated property funds, in our Consolidated
           Statements of Earnings, are remeasurement gains of $14.3 million
           and $4.0 million for the three and six months ended June 30, 2008,
           respectively, representing our share of the remeasurement gains or
           losses of these contracts.

      (5)  The following table presents the components of interest expense as
           reflected in our Consolidated Statements of Earnings (in
           thousands).  The increase in interest expense before capitalization
           is primarily the result of increased debt levels (a function of
           increased development activities, partially offset by contribution
           activity) offset by a decrease in our weighted-average borrowing
           rate.  The increase in development activities also accounts for the
           increased capitalized interest.



                                       Three Months Ended   Six Months Ended
                                            June 30,            June 30,
                                         2008      2007      2008      2007

          Gross interest expense       $120,903  $117,854  $245,046  $232,876
          Net premium amortization       (1,958)   (2,592)   (2,550)   (5,687)
          Amortization of deferred
           loan costs                     3,040     2,862     5,952     5,291
            Interest expense before
             capitalization             121,985   118,124   248,448   232,480
          Less: capitalized amounts     (37,849)  (27,484)  (79,188)  (53,189)
            Net interest expense        $84,136   $90,640  $169,260  $179,291



           In May 2008, the Financial Accounting Standards Board ("FASB")
           issued FASB Staff Position No. APB 14-1 "Accounting for Convertible
           Debt Instruments that May Be Settled in Cash Upon Conversion
           (Including Partial Cash Settlement)" that requires separate
           accounting for the debt and equity components of convertible debt.
           The value assigned to the debt component is the estimated fair
           value of a similar bond without the conversion feature, which would
           result in the debt being recorded at a discount. The resulting debt
           discount would be amortized over the period during which the debt
           is expected to be outstanding (i.e., through the first optional
           redemption date) as additional non-cash interest expense. The
           effective date is January 1, 2009 with the application of the new
           accounting applied retrospectively to both new and existing
           convertible instruments, including the notes issued in 2007 and
           2008.  As a result of the new accounting, beginning in 2009, we
           will recognize an additional non-cash interest expense of between
           $64 million and $82 million per annum, prior to the capitalization
           of interest due to our development activities. Prior periods will
           be restated for the partial year impact.

      (6)  In addition to contributions of CDFS properties, from time to
           time, we contribute properties from our property operations
           segment to unconsolidated property funds in which we have
           continuing interests through our equity ownership. During the
           three and six months ended June 30, 2008, we contributed one such
           property to the ProLogis Mexico Industrial Fund. During the three
           and six months ended June 30, 2007, we contributed 66 non -CDFS
           properties to ProLogis North American Industrial Fund.  The gains
           related to the dispositions of properties from our property
           operations segment are included in earnings but are not included
           in our calculation of FFO. See our definition of FFO.

      (7)  The operations of the properties held for sale or disposed of to
           third parties and the aggregate net gains recognized upon their
           disposition are presented as discontinued operations in our
           Consolidated Statements of Earnings for all periods presented.
           During the first half of 2008, we disposed of five properties to
           third parties, one of which was a CDFS property, as well as land
           subject to a ground lease. During the full year of 2007, we
           disposed of 80 properties to third parties, five of which were
           CDFS properties, as well as land subject to ground leases. We had
           one property and two properties classified as held for sale on
           our Consolidated Balance Sheets as of June 30, 2008 and December
           31, 2007, respectively.  The two properties classified as held
           for sale at December 31, 2007 were sold during the first quarter
           of 2008.


           The components that are presented as discontinued operations
           (excluding the gains recognized upon disposition) are as follows
           (in thousands):

                                          Three Months Ended  Six Months Ended
                                               June 30,          June 30,
                                            2008     2007     2008      2007

           Rental income                    $121    $3,911    $887    $9,666
           Rental expenses                  (116)   (1,601)   (494)   (3,648)
           Depreciation and amortization    (155)   (1,241)   (361)   (2,968)
                                           $(150)   $1,069     $32    $3,050

           For purposes of our Consolidated Statements of FFO, we do not
           segregate discontinued operations.  In addition, we include the
           disposition proceeds and the cost of dispositions for all CDFS
           properties disposed of during the period in the calculation of
           FFO, including those classified as discontinued operations.

      (8)  In connection with purchase accounting, we record all of the
           acquired assets and liabilities at the estimated fair values at
           the date of acquisition. For our taxable subsidiaries, we
           generally recognize the deferred tax liabilities that represent
           the tax effect of the difference between the tax basis carried
           over and the fair values of these assets at the date of
           acquisition. As taxable income is generated in these
           subsidiaries, we recognize a deferred tax benefit in earnings as
           a result of the reversal of the deferred tax liability
           previously recorded at the acquisition date and we record current
           income tax expense representing the entire current income tax
           liability. In our calculation of FFO, we only include the current
           income tax expense to the extent the associated income is
           recognized for financial reporting purposes.

SOURCE ProLogis