- 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.