1

Changing Financial Strategy to Drive Changing Financial Strategy to Drive GrowthGrowth

Leeds School of Business - University of Colorado

Walter C. Rakowich – President and COO

October 22, 2007

2

ProLogis - 1996

• 36 markets• 86.5 msf• $2.5B of wholly owned assets

3

Financial Structure - 1997

Market Value of Common Equity $3.0 Billion65% Premium to Book

Direct Debt$0.9 B

Preferreds$0.4 B

Book Value Common

Equity$1.8 B

$3.1 Billion Book Value of Assets Owned, Managed and Under Development

4

ProLogis-European Opportunity

Opportunity:

Dominant regional distribution hubs emerging to efficiently serve unified marketplace

Major companies consolidating and reconfiguring distribution networks

Functional obsolescence of much existing stock

Growing need for state-of-the-art Pan-European distribution facilities

Strategy:

Employ a local team of nationals in each market

Control land for new development

Leverage off of established global customer relationships for growth

Develop new facilities in major distribution hubs

Estimated at the time to be a $3+ billion opportunity

5

$10

$15

$20

$25

$30

Mar-94 Mar-95 Mar-96 Mar-97 Mar-98 Mar-99

$0.80

$0.90

$1.00

$1.10

$1.20

$1.30

$1.40

PLD Common Share Price PLD Annual FFO Per Share

ProLogis Stock Price

Significant decline in multiple renders common equity too expensive for growth

ProLogis Common Share Price

ProLogis Annual FFO Per Share

6

ProLogis Property Fund Business

Strategy

Raise private equity primarily from institutional investors looking for long-term stable returns

Develop facilities on our balance sheet at wholesale value Create value through leasing and contribute to property funds at

retail value Co-invest profit and receive cash for wholesale value thereby

recycling capital Manage the properties in funds for fees thereby creating higher

returns on invested capital

Benefits Access a broader, less dilutive base of equity for growth Retain customer relationships Grow platform globally in a more capital-light manner which

increases return on equity

7

Property Fund Example

PLD Fund

$1,000

$1,200

$1,000

$200

Development Cost

Asset Value

Return of Capital

Gross Profit

$1,200

$600 $600

$200 $400

Debt(50%)

Equity

PLD Equity(33%)

Investor Equity(67%)

-

=

Contributi

on

8

Property Fund Example

Return on Equity within the Fund:

Equity Partners ProLogis TotalPercentage Ownership 67% 33% 100%

Debt $400 $200 $600Equity 400 200 600 Total Investment $800 $400 $1,200

Unleveraged Return (8.5%) $68 $34 $102Mgmt Fees (Avg 75 bps on Value) (6) (3) (9)Interest Expense (at 5%) (20) (10) (30)

$42 $21 $63Add Back Mgmt Fees 9

$30

Return on Equity 10.5% 15.0%

9

ProLogis European Properties Fund I – Initial Structure

Fund equity commitments: Initial equity raise of €1.04 billion in 1999 from 19 institutional investors

ProLogis ownership: Largest owner of the Fund, 20% minimum long-term ownership

Leverage: 60% maximum

Investment criteria: Fund to purchase stabilized distribution facilities in identified target markets

Management: ProLogis to manage day-to-day operations of the Fund within the ProLogis Operating System® pursuant to 20-year management contract

Management fees: ProLogis to receive asset management fees and property management fees equal to approximately 75 bps per year on total value

ProLogis incentive return: ProLogis to receive 20% incentive return above 12% internal rate of return

Initial term/liquidity: Potential IPO in 7-10 years

10

As of 6/30/07:

950 properties, 13 funds, $14.2B in assets under management

50% leverage

23% average PLD ownership

$1.5B invested by ProLogis

Fund fees projected in 2007: $98 – $104M

PLD’s portion of NOI: $140 - $145M

Superior Growth – Investment Management Business

$0.7B

$1.7B

$2.9B

$4.6B

$5.7B

$9.4B$9.9B

$12.3B

$14.2B

CAGR – 49%

1999 2000 2001 2002 2003 2004 2005 2006 2Q07

North Amercia Europe Asia

Investment Management Asset Growth

Note: All figures estimated as of year end 2007, unless noted

11

ProLogis Property Funds

at 6/30/07 Year of Sq. Feet InvestmentInception (In Millions) (in $Billions)

European Properties Fund 1999 62.0 $5.2

California LLC 1999 14.2 0.7

North American Fund I 2000 9.4 0.4

North American Fund V 2002 36.1 1.5

North American Funds VI-X 2004 25.4 1.5

North American Funds XI 2004 4.3 0.3

North American Industrial Fund 2006 35.7 2.0

Japan Properties Fund I 2002 7.1 1.1

Japan Properties Fund II 2005 10.1 1.5

Totals 204.3 $14.2

Created 5 new funds in 3Q07 with additional capacity of $16.2B

12

Diverse Global Capital Relationships

By Investor TypeBy Investor Location

49 Institutional Investors

26% in multiple funds

28%North America

26%Asia

44%Europe

2%Middle East

33%Pension Plans

– Gov’t

5%Investment Mgrs

10%R/E

Funds

26%Gov’t

Investment Authorities

11% Insurance Co

12%Banks

2%Pension

Plans - Corp1%

Other

13

Potential to More Than Double Investment Management Business

Additional fund launches since 6/30/07 add to current capacity

Expected AUM growth of $23B - $25B in next 3 years

Accelerated growth in management fees

6/30/2007 2008 2009 2010Potential

North America Europe Asia

Investment Management Platform

$14.2B

$37B - $40B

14

Unmatched Global Platform

Over 2,500 distribution facilities serving more than 4,700 customers in 20 countries

Over $29B of Total Assets

Asia 26 markets

39.7 msf

$4.4B invested in facilities and land

North America 42 markets

306.2 msf

$16.4B invested in facilities and land

Europe 37 markets

101.0 msf

$9.1B invested in facilities and land

15

Financial Structure at 6/30/07

Wholly Owned Assets $15.1 B

Fund Assets $14.2 B

Development JVs $0.6 B

Fund Equity $6.6B

Direct Debt $9.6B

Direct Pfd $0.4B

Book Value Direct Equity $5.7B

Fund Debt $7.6B

Market Value of Common Equity on 10/12/07 $18.8 Billion230% Premium to Book

$29.9 Billion of Assets Owned, Managed and Under Development Sources of Funding

16

Delivering Superior Returns

$10

$20

$30

$40

$50

$60

$70

$80

IPO $11.50

10/12/07$71.75

Over 20% Compound Annual Return since IPO