8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 23, 2012

PROLOGIS, INC.

PROLOGIS, L.P.

(Exact name of registrant as specified in charter)

Maryland (Prologis, Inc.) Delaware (Prologis, L.P.)	001-13545 (Prologis, Inc.) 001-14245 (Prologis, L.P.)	94-3281941 (Prologis, Inc.) 94-3285362 (Prologis, L.P.)
(State or other jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

Pier 1, Bay 1, San Francisco, California	94111
(Address of Principal Executive Offices)	(Zip Code)

Registrants’ Telephone Number, including Area Code: (415) 394-9000

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition (Prologis, Inc.) and

Item 7.01. Regulation FD Disclosure (Prologis, Inc. and Prologis, L.P.).

On October 23, 2012, Prologis, Inc., the general partner of Prologis, L.P., issued a press release announcing third quarter 2012 financial results. A copy of the press release as well as supplemental information is furnished with this report as Exhibit 99.1, and is incorporated herein by reference.

The information in this report and the exhibits attached hereto is being furnished, not filed, for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and pursuant to Items 2.02 and 7.01 of Form 8-K will not be incorporated by reference into any filing under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits

Exhibit No.	Description
99.1	Press Release, dated October 23, 2012, and supplemental information.

1

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.

	PROLOGIS, INC.
October 23, 2012	By:	/s/ Thomas S. Olinger
		Name: Thomas S. Olinger
		Title: Chief Financial Officer
	PROLOGIS, L.P.,
October 23, 2012	By:	Prologis, Inc., its general partner
	By:	/s/ Thomas S. Olinger
		Name: Thomas S. Olinger
		Title: Chief Financial Officer

2

EX-99.1

Earnings

Release

and

Supplemental

Information

Unaudited

Third Quarter 2012

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Table of Contents

Overview

Press Release

1

Highlights

Company Profile

4

Financial Information

Consolidated Balance Sheets

6

Consolidated Statements of Operations

7

Reconciliation of Net Earnings (Loss) to FFO

8

EBITDA Reconciliation

9

Pro-rata Information

10

Operations Overview

Operating Portfolio

12

Operating Metrics

15

Customer Information

16

Capital Deployment

Building Dispositions and Contributions

17

Building Acquisitions

18

Development Starts

19

Development Portfolio

21

Land Portfolio

22

Private Capital

Detail Fund Information

24

Fund Operating and Balance Sheet Information

25

Capitalization

Debt and Equity Summary

26

Debt Covenants and Other Metrics

27

Assets Under Management

28

Net Asset Value

Components

29

Notes and Definitions

31

Prologis

Rancho

Cucamonga,

Prologis

Park

Yokohama

Tsurumi,

Prologis

Swindon,

Cover: Prologis CCP Cajamar Park, São Paulo, Brazil

CA,

United

States

Japan

North

Hampton,

United

Kingdom

Copyright ©

2012 Prologis

Prologis, Inc. Announces Third Quarter 2012 Earnings Results

-

Record 39 million square feet of leasing -

-

Same Store NOI increases 2.7% over the third quarter 2011 -

-

Occupancy increases to 93.1 percent, 210 basis points over the third quarter 2011-

SAN FRANCISCO, Oct. 23, 2012 --

Prologis, Inc. (NYSE: PLD), the leading

global owner, operator and developer of industrial real estate, today reported

results for the third quarter 2012, the first period of year-over-year comparable

results for the combined company.

Core funds from operations (Core FFO) per fully diluted share was $0.49 for the

third quarter 2012 compared to $0.44 for the same period in 2011. The results

included a tax benefit of $0.06 per share in 2012 and $0.03 per share in 2011. 

Net loss per fully diluted share was $0.10 per share for the third quarter 2012

compared

to

net

income

of

$0.12

per

share

for

the

same

period

in

2011.

The

year-over-year change was primarily due to an unrealized gain on exchangeable

debt that was included in the 2011 results. 

“We delivered strong quarterly results highlighted by record leasing, as well as

increases in occupancy and effective rents,”

said Hamid R. Moghadam,

chairman and co-chief executive officer, Prologis. “A dearth of new construction,

supply chain reconfiguration, and growth in consumption are driving demand for

our properties around the world, even in the face of a slowing global economy.

Prologis has the highest-quality facilities located in the strongest global markets,

and we are well-positioned to capitalize on these market drivers moving

forward.”

Operating Portfolio Metrics 

During the quarter, the company leased a record 39.0 million square feet (3.6

million

square

meters)

in

its

combined

operating

and

development

portfolios.  Prologis ended the quarter above its forecast with 93.1 percent

occupancy in its operating portfolio, up 70 basis points over the prior quarter.

Tenant retention in the quarter was 87.5 percent, with renewals totaling 25.6

million square feet (2.4 million square meters).

Same-store net operating income (NOI) increased 2.7 percent over the third

quarter 2011, compared to an increase of 0.4 percent in the second quarter of 

2012. Rental rates  on leases signed in the third quarter same-store pool

decreased by 1.8 percent from in-place rents, as compared to a decrease of 3.9

percent in the second quarter 2012.

“One

of

the

main

storylines

coming

out

of

operations

this

quarter

is

the

improvement in rent change on rollover," said Moghadam. "Following three

years of rent roll downs, we appear to be at a positive inflection point. The

trend line is very clear and we expect rent change on rollovers

to be positive

for 2013.”

Dispositions and Contributions

During the quarter, the company completed approximately $174 million in

dispositions and contributions, of which $141 million was Prologis' share. The

building sales and contributions reflect a weighted average stabilized

capitalization rate of 7.0 percent. 

Development Starts and Building Acquisitions

Committed capital during the third quarter 2012 totaled approximately $620

million, of which $483 million was Prologis' share, including:

Development starts of $386 million, of which $332 million was Prologis’

share. These starts totaled 4.4 million square feet (408,000 square

meters), and monetized $91 million of land. Of the total expected

investment, 66 percent was in build-to-suit projects. The company’s

estimated share of value creation on development starts in the third

quarter is $72 million.

Acquisitions of $234 million, including $112 million in buildings with a

stabilized capitalization rate of 7.0 percent and an investment of $122

million in land and land infrastructure. Of the total acquisitions, $152

million was Prologis’

share.

At quarter end, Prologis' global development pipeline comprised 16.3 million

square feet (1.5 million square meters), with a total expected investment of

$1.5 billion, of which Prologis' share is $1.4 billion. The company’s share of

estimated value creation at stabilization is expected to be $259

million, with

a stabilized yield of 7.7 percent and a margin of approximately 18.5 percent.

1

Copyright ©

2012 Prologis

“A lack of supply and increasing demand for large, Class-A facilities is driving

stronger build-to-suit activity,”

said Walter C. Rakowich, co-chief executive

officer, Prologis. “Two-thirds of our development starts this quarter were for build-

to-suits in Japan, the United Kingdom and Mexico. Our global platform and

strategic

land

holdings

uniquely

position

us

to

fulfill

our

customers’

logistics

needs on a real-time basis.”

Private Capital Activity

Year-to-date through September 30, Prologis raised or received commitments for

$330 million in new third-party equity in its private capital business. In addition,

during the quarter, Prologis assumed all of ProLogis European Properties'

(PEPR) assets and liabilities and is actively working toward recapitalizing its

European platform.

Capital Markets

During the quarter, Prologis completed $378 million of debt financings, re-

financings and pay-downs on behalf of its property funds.

Guidance for 2012 

Prologis is increasing its full-year 2012 Core FFO guidance range to $1.72 to

$1.74 per diluted share, from $1.64 to $1.70 per diluted share. The company also

expects to recognize net earnings, for GAAP purposes, of $0.23 to $0.25 per

share. The difference between the company's Core FFO and net earnings

guidance for 2012 predominantly relates to real estate depreciation, recognized

gains on real estate transactions and merger-related expenses. 

The Core FFO and earnings guidance reflected above excludes any potential

future gains (losses) recognized from real estate transactions. In reconciling from

net earnings to Core FFO, Prologis makes certain adjustments, including but not

limited to real estate depreciation and amortization expense, impairment

charges, deferred taxes, and unrealized gains or losses on foreign currency or

derivative activity, as well as merger and integration costs. 

Webcast and Conference Call Information 

The company will host a webcast /conference call to discuss quarterly results,

current market conditions and future outlook today, October 23, 2012, at 12:00

p.m. U.S. Eastern Time. Interested parties are encouraged to access the live

webcast by clicking the microphone icon located near the top of the opening

page

of

the

Prologis

Investor

Relations  website

(http://ir.prologis.com).

Interested parties also can participate via conference call by dialing +1 877-447-

8218 (from the U.S. and Canada toll free) or +1 973-409-9692 (from all other

countries) and enter reservation code 34781721.

A telephonic replay will be available from October 23 through November 23, at

+1 855-859-2056 (from the U.S. and Canada) or +1 404-537-3406 (from all other

countries), with reservation code 34781721. The webcast and podcast replay will be

posted when available in the "Financial Information" section of Investor Relations on the

Prologis website.

About Prologis

Prologis, Inc., is the leading owner, operator and developer of industrial real estate,

focused on global and regional markets across the Americas, Europe and Asia. As of

September 30, 2012, Prologis owned or had investments in, on a consolidated basis or

through unconsolidated joint ventures, properties and development projects expected to

total

approximately

565

million

square

feet

(52.5

million

square

meters)

in

21

countries.

The company leases modern distribution facilities to more than 4,500 customers,

including manufacturers, retailers, transportation companies, third-party logistics

providers and other enterprises.

The

statements

in

this

release

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. Such statements 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, disposition activity, general conditions in

the geographic areas where we operate, synergies to be realized from our recent merger

transaction, our debt and financial position, our ability to form new property funds 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

2

Copyright ©

2012 Prologis

unanticipated competition for our properties, (iv) risks associated with acquisitions,

dispositions and development of properties, (v) maintenance of real estate investment

trust ("REIT") status and tax structuring, (vi) availability of financing and capital, the levels

of debt that we maintain and our credit ratings, (vii) risks related to our investments in our

co-investment ventures and funds, including our ability to establish new co-investment

ventures and funds, (viii) risks of doing business internationally, including currency risks,

(ix) environmental uncertainties, including risks of natural disasters, and (x) 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 release.

Media Contacts

Tracy A. Ward

SVP, IR & Corporate Communications

Direct: +1 415 733 9565  

Email: tward@prologis.com 

Atle Erlingsson

VP, Corporate Communications

Direct: +1 415 733 9495

Email: aerlingsson@prologis.com

3

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Prologis, Inc. is the leading owner, operator and developer of industrial real estate, focused on global and regional markets across the Americas, Europe and Asia.

As of September 30, 2012, Prologis owned or had investments in, on a consolidated basis or through unconsolidated joint ventures, properties and development

projects totaling 565 million square feet (52.5 million square meters) in 21 countries. The company leases modern distribution facilities to more than 4,500

customers, including manufacturers, retailers, transportation companies, third-party logistics providers and other enterprises.

Highlights

Company Profile

4

(A)

Generally represents properties in which Prologis has an ownership interest but doesn’t manage (10 msf) and other properties owned by Prologis (9 msf), which includes properties held for

sale (7 msf).

(B)

Original cost basis for the total land portfolio is $3.1 billion.

Number of operating portfolio buildings

2,397

587

77

367

136

27

8

2

6

12

6

1

Total (msf)

387

144

34

$471

$179

$882

6,897

3,543

129

$1,111

$759

$138

Land (acres)

Land gross book value (millions) (B)

AMERICAS (4 countries)

ASIA (3 countries)

EUROPE (14 countries)

Operating Portfolio (msf)

Development Portfolio (msf)

Other (msf)  (A)

Development portfolio TEI (millions)

TOTAL

530

2,008

$         

1,532

$         

19

16

565

10,569

3,061

Third Quarter 2012 Report

2012

2011

2012

2011 (A)

512,105

$   

469,137

$   

1,511,045

$

1,008,382

$

(46,526)

55,436

147,767

(142,651)

205,891

207,730

640,634

278,071

231,962

206,433

618,047

390,502

170,001

147,546

452,395

284,047

393,371

386,321

1,175,922

1,122,800

Net earnings (loss) available for common stockholders

(0.10)

$       

0.12

$         

0.32

$        

(0.42)

$       

FFO, as defined by Prologis

0.44

0.45

1.37

0.81

Core FFO (B)

0.49

0.44

1.32

1.13

Three months ended September 30,

Nine months ended September 30,

Revenues

Net earnings (loss) available for common stockholders

(dollars in thousands, except per share data)

Per common share -

diluted:

FFO, as defined by Prologis

Core FFO

AFFO

Core EBITDA

$200

-

Highlights

Company Profile

5

(A)

AMB and Prologis completed a merger (the “Merger”) in June 2011. The financial results presented throughout this supplemental include Prologis for the full period and AMB results from the

date of the Merger going forward. See the Notes and Definitions for more information.

(B)

Included

in

the

results

for

the

three

months

ended

September

30,

2012

and

2011

is

a

benefit

in

current

income

tax

expense

of

$.06

per

share

and

$.03

per

share,

respectively.

$-

$50

$100

$150

$200

$250

$300

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Funds from Operations (in millions)

Core FFO

FFO, as defined by Prologis

92.2%

92.3%

92.4%

93.1%

85%

90%

95%

100%

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Period Ending Occupancy %

Operating Portfolio -

Owned and Managed

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Financial Information

Consolidated Balance Sheets

6

(in thousands)

$

23,304,246

$

23,442,394

$

21,552,548

774,821

656,561

860,531

1,924,626

1,881,062

1,984,233

457,373

442,280

390,225

26,461,066

26,422,297

24,787,537

2,389,214

2,256,101

2,157,907

Net investments in properties

24,071,852

24,166,196

22,629,630

2,242,075

2,220,172

2,857,755

243,979

245,654

322,834

376,642

50,672

444,850

Net investments in real estate

26,934,548

26,682,694

26,255,069

158,188

293,631

176,072

172,515

151,184

71,992

181,855

168,008

147,999

1,129,316

1,120,046

1,072,780

Total assets

$

28,576,422

$

28,415,563

$

27,723,912

$

12,578,060

$

12,433,585

$

11,382,408

1,823,841

1,812,411

1,886,030

Total liabilities

14,401,901

14,245,996

13,268,438

582,200

582,200

582,200

4,609

4,606

4,594

16,395,797

16,373,438

16,349,328

(165,100)

(333,811)

(182,321)

(3,335,757)

(3,159,462)

(3,092,162)

Total stockholders' equity

13,481,749

13,466,971

13,661,639

639,631

649,389

735,222

53,141

53,207

58,613

Total equity

14,174,521

14,169,567

14,455,474

Total liabilities and equity

$

28,576,422

$

28,415,563

$

27,723,912

Noncontrolling interests - limited partnership unitholders

Preferred stock

Accounts payable, accrued expenses, and other liabilities

Debt

Distributions in excess of net earnings

Equity:

Common stock

Additional paid-in capital

Accumulated other comprehensive loss

Noncontrolling interests

Stockholders' equity:

Other assets

Liabilities:

Less accumulated depreciation

Restricted cash

Accounts receivable

Cash and cash equivalents

Liabilities and Equity:

December 31, 2011

Investments in and advances to unconsolidated entities

Land

Assets held for sale

Operating properties

Development portfolio

Notes receivable backed by real estate

September 30, 2012

Investments in real estate assets:

June 30, 2012

Assets:

Other real estate investments

Copyright ©

2012 Prologis

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Financial Information

Consolidated Statements of Operations

7

(A) The financial results include Prologis for the full period and AMB and PEPR results from approximately June 1, 2011.

(B) See Calculation of Per Share Amounts in the Notes and Definitions.

(in thousands, except per share amounts)

$

479,374

$

430,283

$

1,410,122

$

893,478

31,714

34,578

95,064

97,389

1,017

4,276

5,859

17,515

512,105

469,137

1,511,045

1,008,382

130,820

119,949

382,679

254,078

15,730

17,080

47,686

39,228

55,886

53,341

167,460

144,364

20,659

12,683

52,573

121,723

9,778

-

12,963

-

194,622

182,774

560,563

377,193

5,580

3,971

17,142

14,242

433,075

389,798

1,241,066

950,828

79,030

79,339

269,979

57,554

2,378

27,855

15,289

48,422

185

3,120

5,158

7,593

6,399

4,960

17,192

14,063

(123,161)

(135,863)

(384,489)

(339,306)

-

-

(16,135)

(103,823)

12,677

8,396

280,968

114,650

(3,549)

52,208

(17,351)

36,921

-

(298)

4,919

(298)

(105,071)

(39,622)

(94,449)

(221,778)

(26,041)

39,717

175,530

(164,224)

(19,983)

(2,838)

216

9,960

(6,058)

42,555

175,314

(174,184)

4,618

11,903

19,889

34,716

(31,458)

11,410

(10,335)

21,545

(26,840)

23,313

9,554

56,261

(32,898)

65,868

184,868

(117,923)

(3,323)

(23)

(6,180)

(308)

(36,221)

65,845

178,688

(118,231)

10,305

10,409

30,921

24,420

$

(46,526)

$

55,436

$

147,767

$

(142,651)

460,079

462,408

464,938

340,923

$

(0.10)

$

0.12

$

0.32

$

(0.42)

Less preferred stock dividends

Net earnings (loss) available for common stockholders

Total discontinued operations

Net earnings (loss) per share available for common stockholders - Diluted

Weighted average common shares outstanding - Diluted (B)

Income attributable to disposed properties and assets held for sale

Net gain (loss) on dispositions, including related impairment charges and taxes

Consolidated net earnings (loss)

Net earnings attributable to noncontrolling interests

Net earnings (loss) attributable to controlling interests

Discontinued operations:

Impairment of other assets

Gain on acquisitions and dispositions of investments in real estate, net

Foreign currency and derivative gains (losses) and other income (expenses), net

Gain (loss) on early extinguishment of debt, net

Total other income (expense)

Earnings (loss) before income taxes

Income tax expense (benefit) - current and deferred

Earnings (loss) from continuing operations

Interest expense

Earnings from other unconsolidated entities, net

Rental expenses

Private capital expenses

General and administrative expenses

Impairment of real estate properties

Depreciation and amortization

Merger, acquisition and other integration expenses

Total expenses

Operating income

Other income (expense):

Earnings from unconsolidated co-investment ventures, net

Interest income

Other expenses

2012

2011 (A)

Nine Months Ended

September 30,

Expenses:

2012

2011

Revenues:

Rental income

Private capital revenue

Development management and other income

Total revenues

Three Months Ended

September 30,

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Financial Information

Reconciliations of Net Earnings (Loss) to FFO

8

(A) The financial results include Prologis for the full period and AMB and PEPR results from approximately June 1, 2011.

(in thousands)

$

(46,526)

$

55,436

$

147,767

$

(142,651)

190,063

176,719

547,654

363,072

21,660

-

21,660

-

6,622

6,468

(165,238)

7,954

(6,084)

(8,756)

(22,088)

(11,160)

35,309

31,393

104,291

103,730

201,044

261,260

634,046

320,945

5,841

(53,688)

15,558

(45,036)

(1,884)

1,773

(6,642)

2,755

890

(1,615)

(2,328)

(593)

205,891

207,730

640,634

278,071

15,527

-

34,847

106,482

-

(400)

-

5,210

20,659

12,683

52,573

121,723

(11,575)

(11,018)

(115,468)

(120,338)

-

298

(4,919)

298

-

-

-

1,916

Our share of reconciling items included in earnings from unconsolidated entities

1,460

(2,860)

10,380

(2,860)

26,071

(1,297)

(22,587)

112,431

$

231,962

$

206,433

$

618,047

$

390,502

(4,217)

(10,540)

(22,210)

(33,609)

(25,938)

(24,939)

(54,107)

(43,445)

(22,459)

(18,569)

(68,596)

(41,417)

(14,031)

(12,500)

(37,148)

(29,166)

Amortization of management contracts

1,606

3,496

4,614

4,824

Amortization of debt discounts/(premiums) and financing costs, net of capitalization

(5,359)

(4,841)

(12,811)

14,731

Stock compensation expense

8,438

9,008

24,605

21,626

AFFO

$

170,002

$

147,548

$

452,394

$

284,046

Common stock dividends

$

129,769

$

128,731

$

391,362

$

257,760

2011 (A)

Nine Months Ended

September 30,

2012

2011

Three Months Ended

September 30,

Unrealized foreign currency and derivative losses (gains), net

Deferred income tax expense (benefit)

Our share of reconciling items included in earnings from unconsolidated entities

Impairment charges on certain real estate properties

2012

Straight-lined rents and amortization of lease intangibles

Property improvements

Tenant improvements

Leasing commissions

Reconciliation of net earnings (loss) to FFO

Subtotal-NAREIT defined FFO

FFO, as defined by Prologis

Reconciling items related to noncontrolling interests

Core FFO

Net earnings (loss) available for common stockholders

Add (deduct) NAREIT defined adjustments:

Add (deduct) our defined adjustments:

Real estate related depreciation and amortization

Net loss (gain) on non-FFO dispositions and acquisitions

Our share of reconciling items included in earnings from unconsolidated entities

Adjustments to arrive at Adjusted FFO ("AFFO"), including our share of unconsolidated entities:

Adjustments to arrive at Core FFO, including our share of unconsolidated entities:

Adjustments to arrive at Core FFO

Impairment charges

Japan disaster expenses

Merger, acquisition and other integration expenses

Loss (gain) on early extinguishment of debt, net

Income tax expense on dispositions

Gain on acquisitions and dispositions of investments in real estate, net

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Financial Information

EBITDA Reconciliation

9

(A) Adjustments for the effects of the Prologis North American Industrial Fund II and Prologis California acquisitions to reflect NOI for the full period. See Notes and Definitions for more detail.

(in thousands)

Reconciliation of consolidated net earnings (loss) to Core EBITDA

$

(46,526)

$

55,436

$

147,767

$

(142,651)

(8,628)

(19,806)

(298,042)

(140,770)

194,622

182,774

560,563

377,193

123,161

135,863

384,489

339,306

37,187

-

56,507

106,482

20,659

12,683

52,573

121,723

-

298

(4,919)

298

(19,983)

(2,838)

216

11,876

-

-

12,352

263,994

(4,618)

(11,903)

(19,889)

(34,716)

6,917

2,200

22,056

3,322

3,323

23

6,180

308

10,305

10,409

30,921

24,420

14,279

(44,680)

40,163

(23,410)

-

(400)

-

5,210

330,698

320,059

990,937

912,585

357

(2,860)

1,695

(2,860)

35,309

31,393

101,284

103,730

22,328

38,043

69,722

105,051

-

-

5,999

-

1,563

-

3,146

-

2,226

1,301

5,467

4,661

890

(1,615)

(2,328)

(593)

-

-

-

226

$

393,371

$

386,321

$

1,175,922

$

1,122,800

Our share of reconciling items from unconsolidated entities:

Income attributable to disposed properties and assets held for sale

Net losses (gains) on disposition of real estate, net

Other adjustments made to arrive at Core FFO

Core EBITDA, prior to our share of unconsolidated entities

Unrealized losses (gains) and stock compensation expense, net

Loss on early extinguishment of debt

Net earnings attributable to noncontrolling interest

Preferred stock dividends

Impairment of real estate properties and other assets

NOI attributable to assets held for sale

Loss (gain) on early extinguishment of debt

Core EBITDA

Interest expense

Current income tax expense

Realized losses on derivative activity

Depreciation and amortization

Unrealized

losses

(gains)

and

deferred

income

tax

expense

(benefit)

Nine Months Ended

September 30,

2012

2011

Net

gain

on

acquisitions

and

dispositions

of

investments

in

real

estate

Net earnings (loss) available for common stockholders

Three Months Ended

September 30,

Depreciation and amortization from continuing operations

Pro forma adjustment (A)

2011

2012

Interest expense from continuing operations

Current and deferred income tax expense (benefit)

Impairment charges

Merger, acquisition and other integration expenses

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Financial Information

Pro-rata Balance Sheet Information

10

(in thousands)

$

23,304,246

$

(911,895)

$

4,547,125

$

26,939,476

$

14,251,233

$

41,190,709

3,156,820

(46,167)

70,479

3,181,132

152,231

3,333,363

(2,389,214)

30,922

(386,046)

(2,744,338)

(1,160,790)

(3,905,128)

24,071,852

(927,140)

4,231,558

27,376,270

13,242,674

40,618,944

2,242,075

(60,997)

(2,181,078)

-

60,997

60,997

2,262,495

(146,125)

23,939

2,140,309

927,726

3,068,035

Total assets

$

28,576,422

$

(1,134,262)

$

2,074,419

$

29,516,579

$

14,231,397

$

43,747,976

-

Liabilities:

$

12,578,060

$

(390,402)

$

1,817,868

$

14,005,526

$

5,811,349

$

19,816,875

1,823,841

(51,088)

256,551

2,029,304

818,316

2,847,620

Total liabilities

14,401,901

(441,490)

2,074,419

16,034,830

6,629,665

22,664,495

Equity:

13,481,749

-

-

13,481,749

7,601,732

21,083,481

692,772

(692,772)

-

-

-

-

Total equity

14,174,521

(692,772)

-

13,481,749

7,601,732

21,083,481

Total liabilities and equity

$

28,576,422

$

(1,134,262)

$

2,074,419

$

29,516,579

$

14,231,397

$

43,747,976

Plus PLD Share of

Unconsolidated

Co-Investment

Ventures

Other liabilities

Gross operating properties

Other real estate

Less accumulated depreciation

Debt

Stockholders' / partners' equity

PLD Total

Share

Investors'

Share of

Ventures

Total Owned

and Managed

Assets:

Net investments in properties

Pro-rata Balance Sheet Information as of

September 30, 2012

Consolidated

Less Non

Controlling

Interest

Noncontrolling interests

Investments in unconsolidated investees

Other assets

Liabilities and Equity:

On this page and the following page, we present balance sheet and income statement information on a pro-rata basis reflecting our proportionate economic

ownership of each entity included in our Total Owned and Managed portfolio. 

The consolidated amounts shown are derived from, and prepared on a consistent basis with, our consolidated financial statements. The PLD Share of

Unconsolidated Co-Investment Ventures column was derived on an entity-by-entity basis by applying our ownership percentage to each line item to calculate

our share of that line item. For purposes of balance sheet data, we used our ownership percentage at the end of the period and for operating information, we

used our average ownership percentage for the period, consistent with how we calculate our share of net income (loss) during the period.  We used a similar

calculation to derive the noncontrolling interests’ share of each line item. In order to present the total Owned and Managed portfolio, we added our investors’

share of each line item in the unconsolidated co-investment ventures and the noncontrolling interests share of each line item to the PLD Total Share.

Copyright ©

2012 Prologis

Third Quarter 2012 Report

479,374

(19,708)

85,594

545,260

270,382

815,642

31,714

-

-

31,714

-

31,714

1,017

-

233

1,250

221

1,471

512,105

(19,708)

85,827

578,224

270,603

848,827

-

130,820

(5,282)

19,951

145,489

64,168

209,657

15,730

-

-

15,730

-

15,730

55,886

(553)

3,934

59,267

11,886

71,153

20,659

-

-

20,659

-

20,659

9,778

-

1,563

11,341

4,142

15,483

194,622

(6,464)

31,556

219,714

98,937

318,651

5,580

(469)

696

5,807

3,404

9,211

433,075

(12,768)

57,700

478,007

182,537

660,544

79,030

(6,940)

28,127

100,217

88,066

188,283

65,051

-

(65,051)

-

-

-

249,290

(8,776)

36,924

277,438

107,798

385,236

393,371

(15,716)

-

377,655

195,864

573,519

-

-

343,991

(13,957)

65,180

395,214

203,031

598,245

15,984

-

-

15,984

-

15,984

65,051

-

(65,051)

-

-

-

(31,655)

(1,759)

(129)

(33,543)

(7,167)

(40,710)

393,371

(15,716)

-

377,655

195,864

573,519

Total reconciling items to Core EBITDA

Core EBITDA (A)

Core EBITDA

Private Capital NOI

General and aministrative and other expenses

Our share of co-investment ventures

Core EBITDA by segment:

Real Estate Operations NOI

Total Owned

and Managed

Plus PLD Share of

Unconsolidated

Co-Investment

Ventures

PLD Total

Share

Impairment of real estate properties

Less Non

Controlling

Interest

Total revenues

Pro-rata Operating Information for

Three Months Ended September 30, 2012

Consolidated

General and administrative expenses

Merger, acquisition and other integration expenses

Depreciation and amortization

Other expenses

Total expenses

Operating income

Our share of co-investment ventures

Investors'

Share of

Ventures

Development management and other income

Expenses:

Rental expenses

Private capital expenses

Revenues:

Rental income

Private capital revenue

$-

$100

$200

$300

$400

$500

Financial Information

Pro-rata Operating Information

(in thousands)

(A)

See

reconciliation

of

Net

Earnings

(Loss)

to

Core

EBITDA

on

page

9.

(B)

Represents Value Creation for development properties that reached Stabilization during the quarter and moved into the Operating Portfolio.

Prologis’

Share (in millions)

Real Estate Operations NOI

Private Capital NOI

Development Value Creation  (B)

$ 395.2 (97%)

$ 16.0 (3%)

$ 19.9

11

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Operations Overview

Operating Portfolio –

Square Feet, Occupied and Leased

12

(A)  Selected and ordered by Prologis share of NOI ($).

(square feet in thousands)

Region

# of Buildings

Total Owned and

Managed

Prologis

Share

Prologis

Share (%)

%  of Total

Total Owned and

Managed

Prologis

Share

Total Owned and

Managed

Prologis

Share

Atlanta

East

125

15,973

12,048

75.4%

3.2%

84.7%

84.5%

84.9%

84.7%

Baltimore/Washington

East

68

8,095

5,361

66.2%

1.4%

92.8%

93.8%

92.9%

93.9%

Central Valley

Northwest

24

8,970

7,128

79.5%

1.9%

91.3%

91.3%

91.3%

91.3%

Central & Eastern PA

East

27

14,049

7,137

50.8%

1.9%

95.9%

96.8%

95.9%

96.8%

Chicago

Central

211

35,573

27,521

77.4%

7.4%

89.5%

91.1%

90.0%

91.6%

Dallas/Ft. Worth

Central

160

23,240

18,747

80.7%

5.0%

94.3%

95.0%

94.4%

95.1%

Houston

Central

82

9,838

7,111

72.3%

1.9%

98.0%

98.4%

98.1%

98.5%

New Jersey/New York City

East

182

22,353

16,042

71.8%

4.3%

94.2%

93.2%

94.2%

93.2%

San Francisco Bay Area

Northwest

242

19,803

17,071

86.2%

4.6%

92.8%

92.9%

93.1%

93.2%

Seattle

Northwest

70

8,643

4,774

55.2%

1.3%

92.7%

93.3%

92.7%

93.3%

South Florida

East

91

10,553

7,611

72.1%

2.0%

95.8%

95.3%

95.8%

95.3%

Southern California

Southwest

308

56,708

46,435

81.9%

12.4%

97.6%

98.0%

97.9%

98.3%

On Tarmac

Various

31

2,598

2,376

91.5%

0.6%

91.9%

91.2%

92.0%

91.3%

East

19

6,383

5,081

79.6%

1.4%

99.5%

99.4%

99.5%

99.4%

Latin America

183

29,703

17,105

57.6%

4.6%

92.2%

92.0%

92.8%

92.6%

Latin America

6

1,845

365

19.8%

0.1%

100.0%

100.0%

100.0%

100.0%

Americas total

1,829

274,327

201,913

73.6%

54.0%

93.7%

94.0%

93.9%

94.3%

Northern

9

2,016

1,654

82.0%

0.4%

99.6%

99.6%

99.6%

99.6%

Southern

128

30,185

21,412

70.9%

5.7%

94.4%

93.6%

94.6%

93.8%

Northern

85

17,626

8,475

48.1%

2.3%

98.2%

96.5%

98.2%

96.5%

Northern

53

10,720

6,457

60.2%

1.7%

89.2%

89.8%

91.8%

92.1%

CEE

96

20,779

12,382

59.6%

3.3%

86.0%

83.9%

88.3%

86.4%

Southern

26

7,126

6,006

84.3%

1.6%

76.5%

77.1%

83.2%

80.0%

UK

73

17,194

10,483

61.0%

2.8%

95.7%

95.0%

95.7%

95.0%

470

105,646

66,869

63.3%

17.8%

92.0%

90.7%

93.2%

91.7%

China

25

5,499

2,312

42.0%

0.6%

91.9%

95.8%

91.9%

95.8%

Japan

47

20,781

14,977

72.1%

4.0%

97.6%

97.4%

97.6%

97.4%

Singapore

5

942

942

100.0%

0.3%

100.0%

100.0%

100.0%

100.0%

77

27,222

18,231

67.0%

4.9%

96.5%

97.4%

96.5%

97.4%

2,376

407,195

287,013

70.5%

76.7%

93.4%

93.4%

93.9%

93.9%

Southern

27

8,378

7,690

91.8%

2.1%

89.6%

89.4%

89.6%

89.4%

CEE

29

6,821

5,096

74.7%

1.4%

91.3%

88.4%

91.8%

89.1%

Central

60

6,298

4,878

77.5%

1.3%

93.3%

93.1%

93.5%

93.4%

Central

39

10,309

8,046

78.0%

2.2%

95.8%

94.6%

96.4%

95.4%

Northern

10

3,808

2,738

71.9%

0.7%

100.0%

100.0%

100.0%

100.0%

CEE

30

5,346

3,822

71.5%

1.0%

85.2%

87.1%

87.7%

89.8%

Northwest

33

5,208

4,138

79.5%

1.1%

93.9%

93.0%

94.7%

93.8%

Central

17

6,270

5,475

87.3%

1.5%

100.0%

100.0%

100.0%

100.0%

Central

27

6,663

4,144

62.2%

1.1%

97.3%

95.6%

98.9%

98.2%

Central

11

4,341

3,810

87.8%

1.0%

93.3%

93.5%

93.3%

93.5%

Various

114

18,516

11,497

62.1%

3.1%

93.6%

90.9%

93.9%

91.2%

397

81,958

61,334

74.8%

16.5%

93.8%

92.8%

94.4%

93.4%

Various

288

41,131

24,838

60.4%

6.8%

88.8%

91.6%

89.2%

91.9%

3,061

530,284

373,185

70.4%

100.0%

93.1%

93.2%

93.6%

93.7%

Italy -

Europe

Columbus -

Americas

San Antonio -

Americas

Louisville -

Americas

Regional markets total

Remaining other regional (5 markets)

Denver -

Americas

Cincinnati -

Americas

Memphis -

Americas

Hungary -

Europe

Czech Republic -

Europe

Sweden -

Europe

Other markets (18 markets)

Total operating portfolio -

owned and managed

Regional markets (A)

Asia total

Total global markets

Occupied

Leased

Japan

Global Markets

U.S.

Canada

Belgium

Mexico 

Brazil

Square Feet

Netherlands

Poland

Spain

Europe total

United Kingdom

Singapore

China

France

Germany

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Operations Overview

Operating Portfolio –

NOI and Gross Book Value

13

(A)  Selected and ordered by Prologis share of NOI ($).

(dollars in thousands)

Region

Atlanta

East

$8,923

$6,447

72.3%

1.6%

$697,177

$497,708

71.4%

1.8%

Baltimore/Washington

East

10,215

6,743

66.0%

1.7%

618,744

375,349

60.7%

1.3%

Central Valley

Northwest

6,690

5,463

81.7%

1.3%

468,905

363,990

77.6%

1.3%

Central & Eastern PA

East

12,632

6,316

50.0%

1.6%

867,258

405,031

46.7%

1.5%

Chicago

Central

24,472

17,924

73.2%

4.4%

2,143,922

1,608,178

75.0%

5.8%

Dallas/Ft. Worth

Central

14,577

11,257

77.2%

2.8%

1,109,690

846,422

76.3%

3.0%

Houston

Central

8,792

5,955

67.7%

1.5%

532,164

333,000

62.6%

1.2%

New Jersey/New York City

East

26,248

17,449

66.5%

4.3%

1,962,078

1,300,591

66.3%

4.7%

San Francisco Bay Area

Northwest

27,704

22,697

81.9%

5.6%

1,954,729

1,681,713

86.0%

6.0%

Seattle

Northwest

10,214

5,496

53.8%

1.4%

818,764

445,618

54.4%

1.6%

South Florida

East

13,256

9,677

73.0%

2.4%

1,026,564

767,747

74.8%

2.8%

Southern California

Southwest

63,777

52,596

82.5%

12.9%

5,065,090

4,102,355

81.0%

14.8%

On Tarmac

Various

7,604

6,784

89.2%

1.7%

313,351

275,467

87.9%

1.0%

East

9,421

7,493

79.5%

1.8%

648,377

511,787

78.9%

1.8%

Latin America

31,192

16,255

52.1%

4.0%

1,766,689

968,724

54.8%

3.5%

Latin America

3,223

161

5.0%

0.0%

166,123

30,464

18.3%

0.1%

278,940

198,713

71.2%

49.0%

20,159,625

14,514,144

72.0%

52.2%

Northern

2,759

2,139

77.5%

0.5%

168,135

131,484

78.2%

0.5%

Southern

36,962

24,804

67.1%

6.1%

2,524,390

1,716,202

68.0%

6.2%

Northern

25,117

12,039

47.9%

3.0%

1,500,816

691,448

46.1%

2.5%

Northern

14,603

8,313

56.9%

2.1%

1,006,015

559,926

55.7%

2.0%

CEE

17,947

10,502

58.5%

2.6%

1,362,427

739,458

54.3%

2.7%

Southern

8,276

7,366

89.0%

1.8%

601,717

526,847

87.6%

1.9%

UK

32,748

19,303

58.9%

4.8%

2,078,581

1,157,578

55.7%

4.2%

138,412

84,466

61.0%

20.9%

9,242,081

5,522,943

59.8%

20.0%

China

4,142

1,347

32.5%

0.3%

282,643

88,651

31.4%

0.3%

Japan

67,221

47,716

71.0%

11.8%

4,510,810

3,149,239

69.8%

11.3%

Singapore

2,389

2,389

100.0%

0.6%

148,647

148,647

100.0%

0.5%

73,752

51,452

69.8%

12.7%

4,942,100

3,386,537

68.5%

12.1%

491,104

334,631

68.1%

82.6%

34,343,806

23,423,624

68.2%

84.3%

Southern

7,521

6,837

90.9%

1.7%

545,588

492,648

90.3%

1.8%

CEE

7,857

5,740

73.1%

1.4%

542,947

386,583

71.2%

1.4%

Central

5,502

4,326

78.6%

1.1%

282,779

208,533

73.7%

0.7%

Central

5,917

4,312

72.9%

1.1%

389,569

294,728

75.7%

1.1%

Northern

5,625

3,993

71.0%

1.0%

350,964

247,518

70.5%

0.9%

CEE

5,295

3,794

71.7%

0.9%

375,078

238,445

63.6%

0.9%

Northwest

4,379

3,489

79.7%

0.8%

291,192

236,204

81.1%

0.8%

Central

3,475

3,008

86.6%

0.7%

206,822

178,716

86.4%

0.6%

Central

5,088

2,796

55.0%

0.7%

267,710

150,391

56.2%

0.5%

Central

2,865

2,496

87.1%

0.6%

174,623

154,571

88.5%

0.6%

Various

14,110

7,588

53.8%

1.9%

934,916

536,353

57.4%

1.9%

67,634

48,379

71.5%

11.9%

4,362,188

3,124,690

71.6%

11.2%

Various

35,668

22,239

62.4%

5.5%

2,423,777

1,262,445

52.1%

4.5%

$594,406

$405,249

68.2%

100.0%

$41,129,771

$27,810,759

67.6%

100.0%

Third Quarter NOI

Total Owned and

Managed

Prologis

Share ($)

Prologis

Share (%)

%  of Total

Total Owned and

Managed

Prologis

Share ($)

Prologis

Share (%)

Gross Book Value

%  of Total

Global Markets

U.S.

Canada

Mexico 

Brazil

Americas total

Belgium

France

Germany

Netherlands

Poland

Spain

United Kingdom

Europe total

China

Italy -

Europe

Sweden -

Europe

Columbus -

Americas

San Antonio -

Americas

Japan

Singapore

Asia total

Total global markets

Regional markets (A)

Hungary -

Europe

Cincinnati -

Americas

Czech Republic -

Europe

Louisville -

Americas

Regional markets total

Denver -

Americas

Memphis -

Americas

Remaining other regional (5 markets)

Other markets (18 markets)

Total operating portfolio -

owned and managed

Copyright ©

2012 Prologis

Third Quarter 2012 Report

14

Operations Overview

Operating Portfolio –

Summary by Region

(square feet and dollars in thousands)

# of Buildings

Total Owned

and Managed

Prologis

Share

Prologis

Share (%)

% of Total

Total Owned

and Managed

Prologis

Share

Total Owned

and Managed

Prologis

Share

1,567

234,268

234,268

100.0%

62.8%

93.9%

93.9%

94.3%

94.3%

294

69,149

69,149

100.0%

18.5%

89.8%

89.8%

90.6%

90.6%

33

16,218

16,218

100.0%

4.4%

97.6%

97.6%

97.6%

97.6%

Total

operating

portfolio

-

consolidated

1,894

319,635

319,635

100.0%

85.7%

93.2%

93.2%

93.6%

93.6%

830

133,162

31,699

23.8%

8.5%

92.2%

92.4%

92.4%

92.6%

293

66,483

19,838

29.8%

5.3%

94.3%

94.2%

95.7%

95.6%

44

11,004

2,013

18.3%

0.5%

94.9%

95.4%

94.9%

95.4%

Total

operating

portfolio

-

unconsolidated

1,167

210,649

53,550

25.4%

14.3%

93.0%

93.2%

93.6%

93.8%

2,397

367,430

265,967

72.4%

71.3%

93.3%

93.7%

93.6%

94.1%

587

135,632

88,987

65.6%

23.8%

92.0%

90.8%

93.1%

91.7%

77

27,222

18,231

67.0%

4.9%

96.5%

97.4%

96.5%

97.4%

Total

operating

portfolio

-

owned

and

managed

3,061

530,284

373,185

70.4%

100.0%

93.1%

93.2%

93.6%

93.7%

4

706

706

100.0%

9.1%

9.1%

9.1%

9.1%

4

372

93

25.0%

11.8%

11.8%

11.8%

11.8%

Total owned and managed

3,069

531,362

373,984

70.4%

93.0%

93.0%

93.4%

93.5%

$213,899

$213,899

100.0%

52.8%

$15,082,154

$15,082,154

100.0%

54.2%

81,010

81,010

100.0%

20.0%

5,176,335

5,176,335

100.0%

18.6%

46,082

46,082

100.0%

11.3%

3,011,911

3,011,911

100.0%

10.8%

$340,991

$340,991

100.0%

84.1%

$23,270,400

$23,270,400

100.0%

83.6%

$135,335

$31,741

23.5%

7.8%

$9,688,543

$2,291,255

23.6%

8.3%

90,410

27,147

30.0%

6.7%

6,240,639

1,874,478

30.0%

6.8%

27,670

5,370

19.4%

1.4%

1,930,189

374,626

19.4%

1.3%

$253,415

$64,258

25.4%

15.9%

$17,859,371

$4,540,359

25.4%

16.4%

$349,234

$245,640

70.3%

60.6%

$24,770,697

$17,373,409

70.1%

62.5%

171,420

108,157

63.1%

26.7%

11,416,974

7,050,813

61.8%

25.4%

73,752

51,452

69.8%

12.7%

4,942,100

3,386,537

68.5%

12.1%

$594,406

$405,249

68.2%

100.0%

$41,129,771

$27,810,759

67.6%

100.0%

(215)

(215)

100.0%

33,846

33,846

100.0%

(61)

(15)

24.6%

27,092

6,766

25.0%

$594,130

$405,019

68.2%

$41,190,709

$27,851,371

67.6%

Occupied

Leased

Europe

Consolidated

Europe

Total

operating

portfolio

-

consolidated

Americas

Asia

Americas

Consolidated

Americas

Europe

Asia

Unconsolidated

Total Owned

and Managed

Value

added

properties

-

unconsolidated

Asia

Total 

Total

operating

portfolio

-

owned

and

managed

Unconsolidated

Europe

Asia

Total

operating

portfolio

-

unconsolidated

Americas

Americas

% of Total

Prologis

Share ($)

Prologis

Share (%)

% of Total

Total Owned

and Managed

Value

added

properties

-

consolidated

Value

added

properties

-

unconsolidated

Total

owned

and

managed

Square Feet

Gross Book Value

Prologis

Share ($)

Prologis

Share (%)

Europe

Asia

Third Quarter NOI

Americas

Europe

Asia

Total 

Value

added

properties

-

consolidated

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Operations Overview

Operating Metrics –

Owned and Managed

15

(square feet and dollars in thousands)

92.2%

91.6%

96.0%

92.2%

92.1%

92.1%

96.2%

92.3%

92.2%

92.1%

96.8%

92.4%

93.3%

92.0%

96.5%

93.1%

85%

90%

95%

100%

Q4 2011   Q1 2012  

Q2 2012   Q3 2012

Q4 2011   Q1 2012  

Q2 2012   Q3 2012

Q4 2011   Q1 2012  

Q2 2012   Q3 2012

Q4 2011   Q1 2012  

Q2 2012   Q3 2012

(A)   See the Notes and Definitions for further explanations.

(B)   Turnover costs per foot represent expected costs based on the leases signed during the quarter, rather than costs incurred as presented in the “Capital Expenditures Incurred” section.

(C)   This metric is calculated using the trailing twelve month NOI based on pro forma information for the pre-Merger period.

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2011

Q1 2012

Q2 2012

Q3 2012

1,365

1,017

2,863

2,279

538,400

522,571

519,939

514,031

New leases

13,663

10,023

11,947

12,102

0.9%

(0.6%)

1.5%

2.3%

Renewals

22,533

19,812

20,189

24,599

2.0%

(6.6%)

4.8%

1.1%

37,561

30,852

34,999

38,980

0.4%

1.7%

0.4%

2.7%

80.1%

78.3%

82.4%

87.5%

Net

operating

income

-

adjusted

cash

N/A

3.1%

2.3%

3.0%

$        1.40

$        1.14

$        1.50

$        1.50

1.6%

2.6%

2.9%

2.3%

32,159

28,227

30,127

33,852

Q4 2011

Q1 2012

Q2 2012

Q3 2012

(4.5%)

(1.1%)

(3.9%)

(1.8%)

32,297

$  

17,100

$  

21,056

$  

33,704

$  

0.06

$           

0.03

$           

0.04

$           

0.06

$           

29,418

28,598

29,243

31,515

23,674

16,401

18,523

21,483

Total turnover costs

53,092

44,999

47,766

52,998

85,389

$  

62,099

$  

68,822

$  

86,702

$  

11.5%

(C)

11.9%

(C)

12.0%

(C)

12.7%

66.5%

76.9%

72.2%

72.0%

56,770

$  

47,734

$  

49,689

$  

62,428

$  

Percentage change in rental rates

Tenant improvements

Capital Expenditures Incurred

Square feet of leases signed:

Square feet of population

Percentage change:

Net

operating

income

-

GAAP

Square feet of leasing activity

Turnover costs (per square foot) (B)

Rental income

Rental expenses

Operating properties:

Weighted average customer retention

Same Store Information (A)

Prologis share

Weighted average ownership percent

Leasing Activity

Total square feet of leases signed

Properties under development

Trailing four quarters -

% of gross NOI

$ per square foot

Average occupancy

Total capital expenditures

Leasing commissions

Property improvements

Period Ending Occupancy by Region

Total

Asia

Americas

Europe

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Operations Overview

Customer

Information

–

Owned

and

Managed

16

(square feet and dollars in thousands)

1

DHL

2.2%

11,887

Month to month customers

$

48,256

1.7%

11,865

2.4%

2

Kuehne & Nagel

1.3%

7,140

2012

48,522

1.7%

8,663

1.8%

3

CEVA Logistics

1.3%

6,916

2013

421,081

14.9%

75,205

15.2%

4

Geodis

1.1%

5,666

2014

442,099

15.6%

77,694

15.7%

5

Amazon.com, Inc.

0.9%

3,664

2015

397,437

14.1%

75,610

15.3%

6

Home Depot, Inc.

0.8%

4,317

2016

343,681

12.2%

60,520

12.3%

7

Panasonic Logistics Co. Ltd.

0.8%

2,143

Thereafter

1,126,933

39.8%

184,273

37.3%

8

United States Government

0.8%

1,833

Total

$

2,828,009

100%

493,830

100%

9

FedEx Corporation

0.7%

2,172

10

PepsiCo

0.7%

4,126

10.6%

49,864

11

Tesco PLC

0.7%

2,693

12

Nippon Express Group

0.6%

1,419

Month to month customers

$

27,839

1.4%

8,599

2.5%

13

Sagawa Express

0.6%

935

2012

36,993

1.9%

6,500

1.8%

14

Kraft Foods, Inc.

0.6%

3,530

2013

305,355

15.7%

54,807

15.7%

15

Hitachi Ltd

0.6%

1,541

2014

311,574

16.0%

58,376

16.8%

16

Wal-Mart Stores

0.5%

3,234

2015

275,194

14.1%

53,563

15.4%

17

Panalpina, Inc.

0.5%

2,359

2016

249,663

12.8%

44,773

12.9%

18

Catepillar Logistics Services

0.5%

1,344

Thereafter

741,017

38.1%

121,235

34.9%

19

Unilever

0.5%

3,920

Total

$

1,947,635

100%

347,853

100%

20

DB Schenker

0.4%

2,410

21

ND Logistics

0.4%

2,356

22

LG

0.4%

2,540

23

UPS SCS (United Parcel Service Inc.)

0.4%

2,169

24

Schneider Electric S.A.

0.4%

1,646

25

La Poste

0.4%

1,278

18.1%

83,238

Percentage

of Total

Top Customers

Lease Expirations -

Owned and Managed

Year

Percentage

of Total

% of Annual

Base Rent

Total Square

Feet

Occupied

Square Feet

Annual Base

Rent

Top 10 Customers

Top 25 Customers

Lease Expirations -

Prologis Share

Year

Annual Base

Rent

Percentage

of Total

Occupied

Square Feet

Percentage

of Total

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Capital Deployment

Building Dispositions and Contributions (A)

17

(A)

Amounts

include

industrial

building

dispositions,

but

do

not

include

dispositions

of

non-industrial

buildings

or

land

subject

to

ground

leases

of

$7.0

million

for

the

quarter

and

$13.4

million

year

to

date,

of

which

$7.0

million

and

$12.1

million

is

Prologis’

share,

respectively.

(B) Prologis share reflects actual ownership on consolidated funds. For contributions, this amount reflects cash proceeds to Prologis (net of units received for partial consideration).

(C) This is a consolidated fund.

(D) This was a consolidated fund through the second quarter of 2012. Beginning in the third quarter, the assets and liabilities of this fund are now wholly owned.

(square feet and dollars in thousands)

Prologis wholly owned

2,123

2,123

78,971

78,971

100.0%

7,198

7,198

381,887

381,887

100.0%

Prologis Institutional Alliance Fund II (C)

-

-

-

-

-

430

121

29,000

8,164

28.2%

Prologis North American Properties Fund XI

100

20

3,597

719

20.0%

3,616

723

138,959

27,791

20.0%

Prologis North American Industrial Fund

-

-

-

-

-

60

14

2,400

554

23.1%

Prologis Targeted U.S. Logistics Fund

66

16

3,632

907

25.0%

66

16

3,632

907

25.0%

Total Americas

2,289

2,159

86,200

80,597

93.5%

11,370

8,072

555,878

419,303

75.4%

Prologis wholly owned

-

-

-

-

-

2,176

2,176

135,022

135,022

100.0%

Prologis European Properties (D)

-

-

-

-

-

3,670

3,439

338,862

317,513

93.7%

Prologis European Properties Fund II

-

-

-

-

-

2,043

608

150,174

44,630

29.7%

Prologis Targeted Europe Logistics Fund

217

70

8,368

2,686

32.1%

217

70

8,368

2,686

32.1%

Total Europe

217

70

8,368

2,686

32.1%

8,106

6,293

632,426

499,851

79.0%

Asia

Prologis wholly owned

-

-

-

-

-

592

592

36,938

36,938

100.0%

Prologis Japan Fund 1

8

2

993

199

20.0%

8

2

993

199

20.0%

Total Asia

8

2

993

199

20.0%

600

594

37,931

37,137

97.9%

Total Third Party Building Dispositions

2,514

2,231

$95,561

$83,482

87.4%

20,076

14,959

$1,226,235

$956,291

78.0%

Brazil Fund and related joint ventures

300

75

28,362

7,091

25.0%

300

75

28,362

7,091

25.0%

Prologis Mexico Fondo Logistico (C)

-

-

-

-

-

755

755

40,650

32,520

80.0%

Total Americas

300

75

28,362

7,091

25.0%

1,055

830

69,012

39,611

57.4%

Prologis European Properties Fund II

136

136

16,014

16,014

100.0%

136

136

16,014

16,014

100.0%

Europe Logistics Venture 1

-

-

-

-

-

139

139

16,875

14,343

85.0%

Total Europe

136

136

16,014

16,014

100.0%

275

275

32,889

30,357

92.3%

Asia

Total Asia

-

-

-

-

-

-

-

-

-

-

436

211

$44,376

$23,105

52.1%

1,330

1,105

$101,901

$69,968

68.7%

2,950

2,442

$139,937

$106,587

76.2%

21,406

16,064

$1,328,136

$1,026,259

77.3%

7.0%

7.2%

Building Contributions and Dispositions to Co-Investment Ventures

Third Party Building Dispositions

Americas

Europe

Square Feet

Weighted average stabilized cap rate

Americas

Europe

Total Contributions and Dispositions to Co-Investment Ventures

Total Building Dispositions and Contributions

Prologis Share

of Square Feet

Prologis Share

of Proceeds ($)

Total Proceeds

Q3 2012

FY 2012

Prologis Share of

Proceeds (%)

Prologis Share

of Square Feet

Prologis Share of

Proceeds (%) (B)

Total Proceeds

Prologis Share

of Proceeds ($)

Square Feet

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Capital Deployment

Third Party Building Acquisitions

18

(square feet and dollars in thousands)

(A) This is a consolidated fund.

Prologis Share of

Prologis Share of

Acquisition

Cost (%)

Acquisition

Cost (%)

Third Party Building Acquisitions

Prologis wholly owned

132

132

$  10,401

$  10,401

100.0%

1,007

1,007

$  57,043

$  57,043

100.0%

Prologis Mexico Fondo Logistico (A)

290

58

10,275

2,055

20.0%

290

58

10,275

2,055

20.0%

Prologis North American Industrial Fund

-

-

-

-

-

41

9

2,886

667

23.1%

Prologis Targeted U.S. Logistics Fund

424

106

65,307

16,311

25.0%

971

254

109,961

28,333

25.8%

Total Americas

846

296

85,983

28,767

33.5%

2,309

1,328

180,165

88,098

48.9%

Europe Logistics Venture 1

415

62

25,901

3,885

15.0%

762

114

50,194

7,529

15.0%

Prologis European Properties Fund II

-

-

-

-

-

717

213

36,812

10,940

29.7%

Total Europe

415

62

25,901

3,885

15.0%

1,479

327

87,006

18,469

21.2%

Asia

-

-

-

-

-

-

-

-

-

-

1,261

358

$  111,884

$  32,652

29.2%

3,788

1,655

$  267,171

$  106,567

39.9%

7.0%

7.0%

Americas

Weighted average stabilized cap rate

Prologis Share

of Square

Feet

Total Third Party Acquisitions

Europe

Q3 2012

FY 2012

Prologis Share of

Acquisition     

Cost ($)

Prologis

Share of

Square Feet

Square Feet

Acquisition

Cost

Prologis Share of

Acquisition     

Cost ($)

Acquisition

Cost

Square Feet

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Capital Deployment

Development Starts –

Current Quarter

19

Square Feet

Total Expected

Investment

Cost Per

Square Foot

Leased % at

Start

Square Feet

Total Expected

Investment

Cost Per

Square Foot

Leased % at

Start

Square Feet

Total Expected

Investment

Americas

1,806

$105,173

$58

5.5%

1,806

$105,173

$58

5.5%

100.0%

100.0%

Brazil Fund and related joint ventures

415

34,319

83

100.0%

104

8,580

83

100.0%

25.0%

25.0%

Total Americas

2,221

139,492

63

23.2%

1,910

113,753

60

10.7%

86.0%

81.5%

Europe

375

34,746

93

100.0%

375

34,746

93

100.0%

100.0%

100.0%

375

34,746

93

100.0%

375

34,746

93

100.0%

100.0%

100.0%

Asia

1,161

177,983

153

100.0%

1,161

177,983

153

100.0%

100.0%

100.0%

Prologis China Logisitics Venture I

598

33,774

56

0.0%

90

5,066

56

0.0%

15.0%

15.0%

1,759

211,757

120

66.0%

1,251

183,049

146

92.8%

71.1%

86.4%

Total

4,355

$385,995

$89

47.1%

3,536

$331,548

$94

49.2%

81.2%

85.9%

Weighted average estimated stabilized yield

8.2%

$31,652

Weighted average estimated cap rate at stabilization

6.7%

$86,423

Estimated development margin

22.4%

Prologis share of value creation on development starts (A)

83.4%

Prologis share of value creation on development starts (A)

$72,077

Prologis share of value creation realized on VACs (B)

22,844

$72,330

Prologis Share ($) - Q3

Prologis Share (%) - Q3

Consolidated

Total Europe

Consolidated

Total Prologis share of estimated and realized value creation

this quarter

Pro forma NOI

Estimated value creation (A)

Total Asia

Total Q3 2012

Consolidated

(in thousands, except percent and per square foot)

(A) Value creation excludes fees or promotes that we may earn. See complete definition in the Notes and Definitions section.

Copyright ©

2012 Prologis

Third Quarter 2012 Report

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

2009

2010

2011

Q3 -

YTD

Americas

Europe

Asia

Capital Deployment

Development

Starts

–

Year

to

Date

20

Year to Date 2012 Development Starts

Historical Development Starts (TEI)

(in thousands, except percent and per square foot)

$313,877

$758,905

$1,016,763

$825,594

Americas

Europe

Asia

Prologis Share

Partners’

Share

Speculative

Build to Suit

Square Feet

Total Expected

Investment

Cost Per

Square Foot

Leased % at

Start

Square Feet

Total Expected

Investment

Cost Per

Square Foot

Leased % at

Start

Square Feet

Total Expected

Investment

Americas

4,853

$234,603

$48

33.3%

4,853

$234,603

$48

33.3%

100.0%

100.0%

Brazil Fund and related joint ventures

732

68,254

93

100.0%

183

17,064

93

100.0%

25.0%

25.0%

Total Americas

5,585

302,857

54

42.0%

5,036

251,667

50

35.7%

90.2%

83.1%

Europe

889

63,553

71

70.3%

889

63,553

71

70.3%

100.0%

100.0%

889

63,553

71

70.3%

889

63,553

71

70.3%

100.0%

100.0%

Asia

2,551

425,410

167

100.0%

2,551

425,410

167

100.0%

100.0%

100.0%

Prologis China Logisitics Venture I

598

33,774

56

0.0%

90

5,066

56

0.0%

15.0%

15.0%

3,149

459,184

146

81.0%

2,641

430,476

163

96.6%

83.9%

93.7%

Total

9,623

$825,594

$86

57.4%

8,566

$745,696

$87

58.1%

89.0%

90.3%

Weighted average estimated stabilized yield

7.9%

$65,222

Weighted average estimated cap rate at stabilization

6.5%

$177,822

Estimated development margin

21.5%

Prologis share of value creation on development starts (A)

88.1%

Prologis share of value creation on development starts (A)

$156,661

Prologis share of value creation realized on VAC buildings (B)

10,954

$167,615

Total Prologis share of estimated and realized value creation

year to date

Pro forma NOI

Estimated value creation (A)

Total Asia

Total YTD 2012

Consolidated

Prologis Share ($) -

YTD 2012

Prologis Share (%) -

YTD 2012

Consolidated

Total Europe

Consolidated

$459,184

56%

$302,857

37%

$79,898

9%

$63,553

7%

$745,696

91%

$216,107

27%

$609,487

73%

Value creation excludes fees or promotes that we may earn. See complete definition in the Notes and Definitions section.

This represents the economic gain realized from the sale of a Value Added Conversion “VAC” property during the year.  The gain represents the amount by which the sales proceeds exceeds 

the amount included in NAV for this property. 

(A)

(B)

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Capital Deployment

Development Portfolio

21

(in thousands, except percent)

(A) Value creation excludes fees or promotes that we may earn. See complete definition in the Notes and Definitions section.

Sq Ft

TEI $

Sq Ft

TEI $

Sq Ft

TEI $

Sq Ft

TEI $

TEI $

Prologis share of

TEI $

%  of Total

Leased %

147

$7,731

-

$-

1,052

$41,086

1,052

$41,086

$48,817

$48,817

3.6%

41.6%

706

73,111

-

-

1,612

69,163

1,612

69,163

142,274

142,274

10.4%

63.7%

-

-

-

-

241

16,141

241

16,141

16,141

16,141

1.2%

0.0%

415

26,637

-

-

800

48,128

800

48,128

74,765

74,765

5.5%

0.0%

U.S. Total

1,268

107,479

-

-

3,705

174,518

3,705

174,518

281,997

281,997

20.7%

39.7%

140

6,324

383

19,414

279

18,175

662

37,589

43,913

43,913

3.2%

27.4%

Americas total

1,408

113,803

383

19,414

3,984

192,693

4,367

212,107

325,910

325,910

23.9%

38.0%

659

49,467

-

-

-

-

-

-

49,467

49,467

3.6%

50.1%

507

37,874

-

-

-

-

-

-

37,874

37,874

2.8%

21.8%

-

-

201

9,919

74

4,254

275

14,173

14,173

14,173

1.0%

100.0%

-

-

-

-

331

33,270

331

33,270

33,270

33,270

2.5%

100.0%

Europe total

1,166

87,341

201

9,919

405

37,524

606

47,443

134,784

134,784

9.9%

59.1%

2,163

353,725

-

-

2,551

435,409

2,551

435,409

789,134

789,134

57.8%

77.7%

Asia total

2,163

353,725

-

-

2,551

435,409

2,551

435,409

57.8%

77.7%

4,737

554,869

584

29,333

6,940

665,626

7,524

694,959

1,249,828

1,249,828

91.6%

56.3%

-

-

-

-

486

22,729

486

22,729

22,729

22,729

1.7%

0.0%

264

14,441

-

-

-

-

-

-

14,441

14,441

1.1%

0.0%

264

14,441

-

-

486

22,729

486

22,729

37,170

37,170

2.8%

0.0%

5,001

569,310

584

29,333

7,426

688,355

8,010

717,688

1,286,998

1,286,998

94.4%

53.1%

Prologis Targeted U.S. Logistics Fund

272

29,378

-

-

-

-

-

-

29,378

7,338

0.5%

0.0%

Brazil Fund and related joint ventures

-

-

672

59,144

415

34,318

1,087

93,462

93,462

46,731

3.4%

67.3%

Prologis Targeted Europe Logistics Fund

-

-

48

5,214

249

24,230

297

29,444

29,444

9,464

0.7%

0.0%

Prologis China Logistics Venture I

-

-

-

-

1,676

92,528

1,676

92,528

92,528

13,879

1.0%

0.0%

272

29,378

720

64,358

2,340

151,076

3,060

215,434

244,812

77,412

5.6%

22.0%

5,273

$ 598,688

1,304

$        93,691

9,766

$       839,431

11,070

$      933,122

$     1,531,810

$    1,364,410

100.0%

46.7%

5,069

576,647

935

60,581

7,965

727,182

8,900

787,763

1,364,410

52.1%

96.1%

96.3%

71.7%

64.7%

81.6%

86.6%

80.4%

84.4%

89.1%

$     48,082

$        32,036

$      547,478

$      579,514

$        627,596

$     45,402

$        19,570

$      478,515

$      498,085

$        543,487

3.44%

25.6%

76.7%

72.7%

43.5%

n/a

39.7%

51.1%

49.7%

7.4%

11.2%

7.6%

7.9%

7.7%

117,949

Weighted average estimated cap rate at stabilization

6.5%

$       282,790

Estimated development margin

18.5%

259,318

91.7%

Total unconsolidated development portfolio

Total regional and other markets

Regional and other markets

Americas

Unconsolidated

Total consolidated development portfolio

Total Development Portfolio

Consolidated

Total Under

Development

U.S.

2013 and thereafter

Expected Completion

2012 Expected

Completion

Pre-Stabilized

Developments

Central Europe

Prologis share of value creation (A)

Prologis share of cost to complete

Percent build to suit (based on Prologis share)

Pre-leased percent

Prologis share of value creation (A)

Pro forma NOI

Estimated value creation (A)

Weighted average estimated stabilized yield

Japan

Asia

Total global markets

Total

development

portfolio

-

Prologisshare (%)

Under Development

Total

development

portfolio

-

owned

&

managed

Total

development

portfolio

-

Prologisshare

Cost to complete

Central

East

Northwest

United Kingdom

Europe

Southwest

Northern Europe

Southern Europe

Latin America

Europe

789,134

789,134

$

$

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Capital Deployment

Land Portfolio –

Owned and Managed

22

(A) Ordered by our share of current book value.

(dollars in thousands)

Region

Prologis

Prologis

Prologis

Prologis

% of

Share 

Share (%)

Share ($)

Share (%)

Total

Atlanta

616

616

100.0%

$  25,132

$  25,132

100.0%

1.3%

Baltimore/Washington

106

106

100.0%

14,645

14,645

100.0%

0.7%

Central Valley

183

183

100.0%

17,897

17,897

100.0%

0.9%

Central & Eastern PA

311

311

100.0%

26,770

26,770

100.0%

1.4%

Chicago

626

626

100.0%

61,402

61,402

100.0%

3.1%

Dallas/Ft. Worth

398

398

100.0%

22,094

22,094

100.0%

1.1%

Houston

65

65

100.0%

7,918

7,918

100.0%

0.4%

New Jersey/New York City

372

372

100.0%

146,601

146,601

100.0%

7.5%

South Florida

377

377

100.0%

147,116

147,116

100.0%

7.5%

Southern California

843

843

100.0%

144,729

144,729

100.0%

7.4%

228

228

100.0%

115,444

115,444

100.0%

5.9%

939

939

100.0%

189,037

189,037

100.0%

9.6%

353

177

50.0%

79,354

39,677

50.0%

2.0%

5,417

5,241

96.8%

998,139

958,462

96.0%

48.8%

30

30

100.0%

10,238

10,238

100.0%

0.5%

503

503

100.0%

87,476

87,476

100.0%

4.5%

156

156

100.0%

36,203

36,203

100.0%

1.8%

63

63

100.0%

57,911

57,911

100.0%

2.9%

807

807

100.0%

114,057

114,057

100.0%

5.8%

100

100

100.0%

19,995

19,995

100.0%

1.0%

979

979

100.0%

271,806

271,806

100.0%

13.8%

2,638

2,638

100.0%

597,686

597,686

100.0%

30.3%

50

43

86.0%

15,687

12,338

78.7%

0.6%

79

79

100.0%

122,352

122,352

100.0%

6.2%

129

122

94.6%

138,039

134,690

97.6%

6.8%

8,184

8,001

97.8%

1,733,864

1,690,838

97.5%

85.9%

338

338

100.0%

46,526

46,526

100.0%

2.4%

247

247

100.0%

39,402

39,402

100.0%

2.0%

107

107

100.0%

32,065

32,065

100.0%

1.6%

129

129

100.0%

25,686

25,686

100.0%

1.3%

95

95

100.0%

16,439

16,439

100.0%

0.9%

229

229

100.0%

13,097

13,097

100.0%

0.7%

66

66

100.0%

8,727

8,727

100.0%

0.5%

165

165

100.0%

7,293

7,293

100.0%

0.4%

199

199

100.0%

6,692

6,692

100.0%

0.3%

127

127

100.0%

4,472

4,472

100.0%

0.2%

15

15

100.0%

1,316

1,316

100.0%

0.1%

13

13

100.0%

425

425

100.0%

0.0%

1,730

1,730

100.0%

202,140

202,140

100.0%

10.4%

Total other markets

(11 markets)

655

655

100.0%

71,916

71,916

100.0%

3.7%

Total

land

portfolio

-

owned

and

managed

10,569

10,386

98.3%

$  2,007,920

$  1,964,894

97.9%

100.0%

Original Cost Basis

$  3,115,835

$  3,074,359

Denver

Columbus

Regional markets (A)

Netherlands

Poland

Spain

Total global markets

China

Japan

Asia total

Europe total

United Kingdom

Land by Market

Total Owned &

Managed

Current Book Value

Brazil

Mexico 

Acres

Global markets

U.S.

Canada

Cincinnati

Americas total

Total Owned &

Managed

Louisville

Total regional markets

Central Florida

Savannah

Slovakia

Memphis

Indianapolis

Czech Republic

Italy

Hungary

Belgium

France

Germany

East

East

Northwest

East

Central

Central

Central

East

East

Southwest

Canada

Mexico

Brazil

Northern

Southern

Northern

Northern

CEE

Southern

UK

China

Japan

C.E.E.

C.E.E.

Southern

East

C.E.E.

East

Northwest

Central

Central

Central

Central

Central

Various

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Capital Deployment

Land

Portfolio

–

Summary

and

Roll

Forward

23

Investment at

Acres

% of Total

September 30, 2012

% of Total

6,544

61.9%

1,032,025

$                

51.4%

Brazil Fund and related joint ventures

353

3.4%

79,354

4.0%

Total Americas

6,897

65.3%

1,111,379

55.4%

3,543

33.5%

758,502

37.8%

121

1.1%

134,099

6.7%

Prologis China Logistics Venture 1

8

0.1%

3,940

0.1%

Total Asia

129

1.2%

138,039

6.8%

10,569

100.0%

2,007,920

$                

100.0%

Americas

Europe

Asia

Total

1,077,799

$                

736,182

$                    

160,794

$                    

1,974,775

$                

Acquisitions

39,968

28,517

22,006

90,491

Dispositions (A)

(9,872)

(8,951)

-

(18,823)

Development starts

(36,709)

(9,494)

(44,793)

(90,996)

Infrastructure costs

28,163

2,626

528

31,317

Reclasses

5,733

-

(749)

4,984

Impairment charges

(535)

(6,148)

-

(6,683)

Effect of changes in foreign exchange rates and other

6,832

18,368

253

25,453

Reclass to "Assets Held for Sale"

-

(2,598)

-

(2,598)

1,111,379

$                

758,502

$                    

138,039

$                    

2,007,920

$                

Land Portfolio Summary

Consolidated

Americas

Total land portfolio - owned and managed

Consolidated

Europe

Asia

Consolidated

As of September 30, 2012

Land Roll Forward - Owned and Managed

As of June 30, 2012

(dollars in thousands)

(A) Includes 278 acres that were sold for $27.2 million in proceeds.

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Private Capital

Detail Fund Information

24

(A) These

funds

are

or

will

be

actively

investing

in

new

properties

through

acquisition

and/or

development

activities,

whereas

the

remaining

funds

do

not

expect

to

be

actively

investing

in

new

properties.

(B) We have a 50% ownership interest in and consolidate an entity that in turn owns 50% of an entity that is accounted for on the equity method (“Brazil Fund”). The Brazil Fund develops industrial

Fund Investment Information

Co-Investment Ventures

Type

Investment Type

Geographic Focus

Ownership

Date Established

Term

Prologis Institutional Alliance Fund II

Core

Consolidated

US

28.2%

June 2001

Closed end

Prologis AMS

Core

Consolidated

US

38.5%

June 2004

Closed end

Prologis Mexico Fondo Logistico (A)

Core/Development

Consolidated

Mexico

20.0%

July 2010

Closed end

Prologis North American Properties Fund I

Core

Unconsolidated

US

41.3%

June 2000

Closed end

Prologis Targeted U.S. Logistics Fund (A)

Core

Unconsolidated

US

25.0%

October 2004

Open end

Prologis North American Industrial Fund

Core

Unconsolidated

US

23.1%

March 2006

Open end

Prologis DFS Fund I

Development

Unconsolidated

US

15.0%

October 2006

Closed end

Prologis North American Industrial Fund III

Core

Unconsolidated

US

20.0%

July 2007

Closed end

Prologis SGP Mexico (A)

Core

Unconsolidated

Mexico

21.6%

December 2004

Closed end

Prologis Mexico Industrial Fund

Core

Unconsolidated

Mexico

20.0%

August 2007

Closed end

Prologis Brazil Logistics Partners Fund I (A)(B)

Development

Unconsolidated

Brazil

50.0%

December 2010

Closed end

Prologis Targeted Europe Logistics Fund (A)

Core

Unconsolidated

Europe

32.1%

June 2007

Open end

Prologis European Properties Fund II (A)

Core

Unconsolidated

Europe

29.7%

August 2007

Open end

Europe Logistics Venture 1 (A)

Core

Unconsolidated

Europe

15.0%

February 2011

Open end

Prologis Japan Fund 1

Core

Unconsolidated

Japan

20.0%

June 2005

Closed end

Prologis China Logistics Venture 1 (A)

Core/Development

Unconsolidated

China

15.0%

March 2011

Closed end

(C) Values

represent

Prologis’

stepped

up

basis

and

may

not

be

comparable

to

values

reflected

in

the

entities’

stand

alone

financial

statements

calculated

on

a

different

basis.

properties

in

Brazil.

During

2011

and

2012,

the

Brazil

Fund

sold

90%

of

four

operating

properties

to

a

third

party

and

retained

a

10%

ownership

interest

in

the

properties

(“Brazil

JVs”).

Therefore,

we

effectively

own

25%

of

the

Brazil

Fund

and

2.5%

of

the

operating

properties

in

the

Brazil

JVs,

which

are

included

in

our

Owned

and

Managed

operating

pool.

Prologis Investment In

and Advances To

6,239

$4,864

$267,074

$107,444

$2,010

$8,040

$44,374

$433

$32,999

48,881

41,426

2,966,444

1,192,165

9,569

38,276

274,913

4,953

212,750

17,655

13,247

1,281,857

648,596

2,650

10,600

129,719

(3,536)

22,775

43,039

53,636

4,028,440

1,512,907

13,396

53,584

377,870

(2,050)

653,265

9,500

8,585

593,662

214,149

1,717

6,868

42,830

1,103

51,562

6,374

10,293

412,035

216,183

2,223

8,892

46,696

(11,149)

34,007

1,846

3,223

166,123

-

161

644

-

3,716

112,497

Americas

133,534

135,274

9,715,635

3,891,444

31,726

126,904

916,402

(6,530)

1,119,855

53,725

68,778

4,664,683

1,646,943

20,441

81,764

489,471

(19,661)

395,308

11,416

20,192

1,468,570

639,601

6,490

25,960

205,579

(19,986)

236,415

Europe Logistics Venture I

1,342

1,440

107,386

-

216

864

-

2,068

16,674

Europe

66,483

90,410

6,240,639

2,286,544

27,147

108,588

695,050

(37,579)

648,397

7,255

24,382

1,701,963

945,827

4,877

19,508

189,165

18,107

165,883

3,749

3,288

228,226

115,000

493

1,972

17,250

3,890

31,599

Asia

11,004

27,670

1,930,189

1,060,827

5,370

21,480

206,415

21,997

197,482

211,021

$253,354

$17,886,463

$7,238,815

$64,243

$256,972

$1,817,867

$(22,112)

$1,965,734

Pro forma NOI

Debt

Assets (Liabilities)

Total

Prologis North American Industrial Fund III

Prologis Targeted U.S. Logistics Fund

Prologis Mexico Industrial Fund

Prologis SGP Mexico

Brazil Fund and related joint ventures

Prologis European Properties Fund II

Prologis Targeted Europe Logistics Fund

Prologis Japan Fund 1

Prologis China Logistics Venture 1

Prologis North American Properties Fund I

Prologis North American Industrial Fund

Information by Unconsolidated Co-investment Venture (C):

Prologis' Share

Third

Gross Book Value of

Third

Annualized

Total Other Tangible

Debt

Quarter NOI

(in thousands)

Square Feet

Quarter NOI

Operating Buildings

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Private Capital

Fund Operating and Balance Sheet Information

25

(A)

Includes the unconsolidated co-investment ventures listed on the previous page.

(B)

Represents the entire entity, not our proportionate share.

(dollars in thousands)

$

184,809

$

115,502

$

35,957

$

336,268

(47,540)

(23,064)

(8,233)

(78,837)

137,269

92,438

27,724

257,431

6,562

(2,612)

265

4,215

(8,280)

4,826

(85)

(3,539)

(7,055)

(12,929)

(5,112)

(25,096)

(59,694)

(24,962)

(5,263)

(89,919)

(3,513)

(2,400)

(809)

(6,722)

65,289

54,361

16,720

136,370

(74,165)

(37,804)

(12,060)

(124,029)

60

(800)

(285)

(1,025)

(8,127)

(6,123)

-

(14,250)

242

-

(168)

74

$

(16,701)

$

9,634

$

4,207

$

(2,860)

$

15,183

$

16,444

$

3,696

$

35,323

550

8

56

614

15,733

16,452

3,752

35,937

16,937

9,546

5,131

31,614

$

32,670

$

25,998

$

8,883

$

67,551

$

(4,462)

$

5,850

$

376

$

1,764

550

8

56

614

(3,912)

5,858

432

2,378

16,937

9,546

5,131

31,614

$

13,025

$

15,404

$

5,563

$

33,992

$

9,715,634

$

6,240,639

$

1,930,190

$

17,886,463

(995,809)

(444,198)

(75,907)

(1,515,914)

131,513

20,064

32,453

184,030

434,404

438,342

210,897

1,083,643

$

9,285,742

$

6,254,847

$

2,097,633

$

17,638,222

$

3,891,444

2,286,544

1,060,827

$

7,238,815

321,218

528,645

100,864

950,727

$

4,212,662

$

2,815,189

$

1,161,691

$

8,189,542

23.9%

30.0%

19.3%

25.5%

Foreign currency exchange and unrealized derivative gains (losses), net

Earnings (loss) from unconsolidated co-investment ventures, net

Weighted average ownership

Other assets

Other liabilities

Total liabilities

Fees earned by Prologis

Condensed Balance Sheet of the Unconsolidated Co-Investment Ventures, Aggregated (A)(B)

Total earnings recognized by Prologis, net

As of September 30, 2012

Third party debt

Total assets

Operating industrial properties, before depreciation

Accumulated depreciation

Properties under development and land

Prologis' share of the co-investment ventures' net earnings (loss)

Interest income

Prologis' share of the co-investment ventures' FFO

Interest income

Fees earned by Prologis

Total FFO recognized by Prologis, net

FFO from unconsolidated co-investment ventures, net

For the Three Months Ended September 30, 2012

Prologis' Share of FFO and Net Earnings (Loss) of the Unconsolidated Co-Investment Ventures (A)

Loss on dispositions of investments in real estate, net

Deferred tax benefit (expense) and other income (expense), net

Net earnings (loss) of the unconsolidated co-investment ventures

Interest expense

Current income tax expense

FFO of the unconsolidated co-investment ventures

Real estate related depreciation and amortization

General and administrative expenses

Americas

Europe

Asia

Total

Rental income

For the Three Months Ended September 30, 2012

FFO and Net Earnings (Loss) of the Co-Investment Ventures, Aggregated (A)(B)

Rental expenses

Net operating income from properties

Other income (expense), net

Gain (loss) on dispositions of investments in real estate, impairment charges and early extinguishment of debt, net

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Capitalization

Debt and Equity Summary

26

(dollars and shares in millions)

$0

$0

-

$0

$9

$9

$34

$43

$238

$281

$98

34.9%

376

483

-

1

518

1,378

255

1,633

1,516

3,149

1,821

57.8%

903

-

465

645

1,137

3,150

62

3,212

1,056

4,268

3,457

81.0%

287

460

744

1

214

1,706

27

1,733

994

2,727

2,007

73.6%

640

-

-

1

316

957

123

1,080

1,265

2,345

1,282

54.7%

700

9

-

1

579

1,289

3

1,292

778

2,070

1,459

70.5%

900

-

-

1

330

1,231

73

1,304

265

1,569

1,310

83.5%

647

-

-

1

528

1,176

1

1,177

220

1,397

1,241

88.8%

690

-

-

1

10

701

1

702

408

1,110

801

72.2%

-

-

-

-

171

171

1

172

333

505

258

51.1%

-

-

-

10

143

153

1

154

139

293

190

64.8%

Subtotal

5,143

952

1,209

662

$3,955

11,921

581

12,502

$7,212

19,714

13,924

70.6%

87

(70)

-

-

56

73

3

76

27

103

81

78.6%

Subtotal

5,230

882

1,209

662

4,011

11,994

584

12,578

7,239

19,817

$14,005

70.7%

-

-

-

-

-

-

(391)

(391)

(5,421)

(5,812)

Prologis share of debt

$5,230

$882

$1,209

$662

$4,011

$11,994

$193

$12,187

$1,818

$14,005

$4,552

$882

$308

$30

$1,728

$7,500

$160

$7,660

$924

9,395

$   

$8,584

548

-

235

470

689

1,942

30

1,972

553

2,887

2,525

-

-

1

-

182

183

-

183

139

533

322

130

-

665

162

1,389

2,346

-

2,346

189

1,617

2,535

-

-

-

-

23

23

3

26

13

35

39

Prologis share of debt

$5,230

$882

$1,209

$662

$4,011

$11,994

$193

$12,187

$1,818

$14,005

5.6%

4.6%

1.4%

1.8%

4.0%

4.4%

4.4%

4.4%

4.6%

5.0%

4.3%

4.6

1.5

2.0

1.8

4.0

3.7

2.5

3.7

3.4

4.1

3.7

Weighted average interest rate (A)

Weighted average remaining maturity in years

Unamortized net (discounts) premiums

Third party share of debt

Prologis share of debt by local currency

Dollars

Euro

GBP

2019

2020

2021

Yen

Other

Thereafter

2018

Entities

Consolidated

Entities

2016

Debt

Debt

Debt

Maturity

Debt

Debt

2012

2013

2014

2015

Total

Mortgage

Debt

2017

Facilities

Debt

Senior

Convertible

Credit

Other

Prologis

Unsecured

Consolidated

Total

Unconsolidated

Secured

Prologis

Share (%)

Prologis

Total

Share of

Debt

Total Debt

(A) Interest rate is based on the effective rate (which includes the amortization of related premiums and discounts) and weighted based on borrowings outstanding.

Dividend

Security

Shares

Value

Series

Rate

Value

Common Stock

460.1

$35.03

$16,117

Series L

6.5%

$49

$2,179

Partnership Units

3.2

$35.03

112

Series M

6.8%

58

Total

463.3

$16,229

Series O

7.0%

75

Borrowings outstanding

1,209

Series P

6.9%

50

Outstanding letters of credit

67

Series Q

8.5%

100

$903

Series R

6.8%

125

Series S

6.8%

125

158

7.1%

$582

$1,061

Less:

Current availability

Unrestricted cash

Total liquidity

Market Equity

Preferred Stock

Liquidity

Price

Aggregate lender commitments

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Capitalization

Debt Covenants and Other Metrics

27

(A)

These calculations are made in accordance with the respective debt agreements, may be different than other covenants or metrics presented and are not calculated in accordance with the

applicable SEC rules.

(B)

All metrics include both consolidated and Prologis share of unconsolidated entities.

(C)

See Notes and Definitions for calculation of amounts.

(dollars in thousands)

Covenant

Actual

Covenant

Actual

<60%

40.5%

<60%

40.5%

>1.5x

2.82x

>1.5x

2.81x

<40%

14.8%

<40%

14.8%

>150%

267.5%

>150%

267.5%

Covenant

Actual

<60%

45.0%

>1.5x

2.99x

>1.5x

3.50x

<35%

16.2%

>$10.0 billion

$15.8 billion

Third Quarter

Second Quarter

44.7%

44.2%

19.5%

19.5%

227.1%

227.5%

2.25x

2.20x

9.00x

8.76x

Unencumbered

Encumbered

Total

13,940,332

$           

9,363,914

$             

23,304,246

$           

774,821

-

774,821

1,890,340

34,286

1,924,626

457,373

-

457,373

-

243,979

243,979

358,974

17,668

376,642

Total consolidated

17,421,840

9,659,847

27,081,687

1,002,117

3,545,008

4,547,125

65,330

5,149

70,479

Gross real estate assets

18,489,287

$           

13,210,004

$           

31,699,291

$           

Unsecured

Secured

Debt

Mortgage Debt

Total

7,966,094

$             

3,954,580

$             

11,920,674

$           

67,937

512,965

580,902

109,033

1,701,638

1,810,671

Total debt -

at par

8,143,064

6,169,183

14,312,247

(50,249)

(338,564)

(388,813)

8,092,815

5,830,619

13,923,434

17,613

58,871

76,484

-

(2,015)

(2,015)

-

7,197

7,197

Total debt, net of premium (discount)

8,110,428

$             

5,894,672

$             

14,005,100

$           

New Prologis Indenture

Legacy AMB Indenture

Debt as % of gross real estate assets

Debt/Core EBITDA

Unencumbered debt service coverage ratio

Outstanding indebtedness to adjusted total assets

Maximum consolidated leverage to total asset value

Global Line

Debt Metrics (A) (B) (C)

Fixed charge coverage ratio

2012

Covenants as of September 30, 2012 (A)

Minimum net worth

Fixed charge coverage ratio

Maximum secured debt to adjusted total assets

Unencumbered assets ratio to unsecured debt

Fixed charge coverage ratio

Maximum secured debt to total asset value

Unconsolidated

development

portfolio

and

land

-

Prologis'

share

Operating properties

Unconsolidated

operating

properties

-

Prologis'

share

Encumbrances as of September 30, 2012

Secured debt as % of gross real estate assets

Unencumbered gross real estate assets to unsecured debt

Consolidated:

Development portfolio

Land

Other real estate investments

Notes receivable backed by real estate

Assets held for sale

Our

share

of

premium

(discount)

-

unconsolidated

Premium

(discount)

-

consolidated

Secured and Unsecured Debt as of September 30, 2012

Prologis debt

Consolidated entities debt

Our share of unconsolidated entities debt

Third party share of premium (discount)

Third

party

share

of

consolidated

debt

Total

Prologis

share

of

debt

-

at

par

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Capitalization

Assets  Under Management

28

Total Enterprise Value

Total AUM by Division

Assets Under Management

(dollars in millions)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Europe

26.0%                 

Asia

14.4%                 

$ 30,816

$ 44,995

Debt

$14,005

Committed Equity/Investment

$2,080

Americas

59.6%             

$ 44,995

Direct owned and other 

assets

$26,635

Equity

Cap

$16,229

AUM

Private

Capital

$18,360

Preferred Shares

$582

Investors'  share of assets

in JVs/funds

$12,099

Prologis share of assets

in JVs/funds $4,181

Total

Enterprise

Value

$30,816

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Net Asset Value

Components

29

(in thousands, except for percentages and per square foot)

224,888

$

14,592,018

$

65

$

224,826

$

224,826

$

899,304

95.9%

64,190

4,863,985

76

88,238

88,238

352,952

95.4%

16,218

3,011,911

186

47,145

47,145

188,580

97.6%

685

2,740

305,296

22,467,914

74

360,209

360,894

1,443,576

96.0%

9,380

490,136

52

(3,609)

46.4%

4,959

312,350

63

(1,600)

17.6%

14,339

802,486

56

(5,209)

36.5%

319,635

$

23,270,400

$

73

$

355,000

$

360,894

$

1,443,576

93.2%

31,699

$

2,291,255

$

72

$

31,217

$

31,217

$

124,868

92.4%

19,838

1,874,478

94

29,865

29,865

119,460

94.2%

2,013

374,626

186

5,463

5,463

21,852

95.4%

276

1,104

53,550

$

4,540,359

$

85

$

66,545

$

66,821

$

267,284

93.2%

373,185

$

27,810,759

$

75

$

421,545

$

427,715

$

1,710,860

93.2%

Square Feet

1,408

$

96,462

$

113,803

$

81

$

7,849

34.4%

1,430

91,092

101,782

71

8,802

7.7%

2,163

335,082

353,725

164

25,542

40.8%

29.5%

4,853

70,233

234,836

48

17,424

606

21,692

47,443

78

3,284

2,551

160,260

435,409

171

32,459

13,011

$

774,821

$

1,286,998

$

99

$

95,360

612

$

19,485

$

54,069

$

88

3,305

95

6,449

9,464

100

558

251

4,277

13,879

55

1,139

958

$

30,211

$

77,412

$

81

$

5,002

13,969

$

805,032

$

1,364,410

$

98

$

100,362

Prologis share of unconsolidated operating portfolio

Americas

Asia

Properties under development

Total operating portfolio

CONSOLIDATED

Prestabilized

Annualized

Adjusted  Cash

NOI

CONSOLIDATED OPERATING PORTFOLIO

Third Quarter

Adjusted  Cash

NOI (Actual)

Americas

Gross Book Value

Americas

Europe

Prologis interest in unconsolidated operating portfolio

UNCONSOLIDATED OPERATING PORTFOLIO (Prologis Share)

Europe

Properties generating net operating loss

Sub-total

Sub-total

Pro forma adjustment for mid-quarter acquisitions/development completions

Total consolidated portfolio

Square Feet

Real Estate Operations

Europe

Asia

Properties generating net operating income

Percent

Occupied

GBV per Sq. Ft.

Third Quarter

Adjusted  Cash

NOI (Pro Forma)

Development

TEI per Sq Ft.

Percent

Occupied

Investment

Balance

TEI

Pro forma adjustment for mid-quarter acquisitions/development completions

Prologis share of unconsolidated development portfolio

Europe

Asia

Annualized Pro

Forma NOI

Europe

Asia

Americas

Europe

Total development portfolio

Total consolidated portfolio

Asia

Americas

Development Platform (see development and pro rata operating information pages)

Americas

UNCONSOLIDATED (Prologis Share)

Prologis interest in unconsolidated development portfolio

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Net Asset Value

Components -

Continued

30

(in thousands)

$

158,188

172,515

555,696

457,373

40,612

181,855

243,979

16,102

Investments in and advances to other unconsolidated entities

276,341

342,325

$

2,444,986

625,873

564,266

28,687

184,151

386,547

692,772

$

2,482,296

$

(22,112)

$

3,074,359

$

1,924,626

40,268

$

1,964,894

Private capital revenue

$

31,714

$

126,856

Private capital expenses

(15,730)

(62,920)

Private capital NOI

$

15,984

$

63,936

$

1,017

$

4,068

$

11,920,674

Consolidated

investee

debt

-

at

par

580,902

1,810,671

14,312,247

582,200

$

14,894,447

Outstanding

shares

of

common

stock

460,093

Preferred

stock

Total

debt

and

preferred

stock

Debt and Preferred Stock

Private capital

Development management income

As of September 30,

2012

Prologis

debt

-

at

par

Prologis

share

of

unconsolidated

debt

-

at

par

Subtotal

debt

-

at

par

Current book value of land

Total

Private Capital / Development Management

Third Quarter

Annualized

Prologis share of book value of land in unconsolidated entities

Our share of original land basis

Tenant security deposits

Other liabilities

Noncontrolling interests

UNCONSOLIDATED

Prologis share of net assets (liabilities)

Land

Investment Balance

Total liabilities and noncontrolling interests

Value added tax and other tax liabilities

Deferred income taxes

Restricted cash

Deposits, prepaid assets and other tangible assets

Other real estate investments

Accounts receivable

Notes receivable backed by real estate

Assets held for sale, net of liabilities

Total other assets

Other liabilities

Prologis receivable from unconsolidated co-investment ventures

Accounts payable and other current liabilities

Prologis' share of value added operating properties

Cash and cash equivalents

Balance Sheet and Other Items

As of September 30,

2012

CONSOLIDATED

Other assets

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Notes and Definitions

31

2012

2011

2012

2011

Rental income ……………………………………………………………

Rental expenses …………………………………………………………

Depreciation and amortization …………………………………..……..

Interest expense ………………………………………………..….…….

-

held for sale

$ 11,903

Income attributablle to disposed properties and assets

Three Months Ended

September 30,

Three Months Ended

September 30,

$ 4,618

$ 19,889

$ 34,716

$ 50,830

(3,674)

(2,975)

(17,335)

$ 11,267

(161)

(13,445)

$ 86,479

(28,387)

(503)

(22,873)

$ 36,671

(15,256)

(325)

(9,187)

We include the gains or losses from disposition and impairment charges of land parcels and development

properties in the calculation of FFO as defined by Prologis, including those classified as discontinued

operations.

Assets

Under

Management

(“AUM”)

represents

the

estimated

value

of

the

real

estate

we

own

or

manage through our consolidated entities and unconsolidated entities. We calculate AUM by adding

the

noncontrolling

interests’

share

of

the

estimated

fair

value

of

the

real

estate

investment

to

our

share of total market capitalization.

The operations of the properties held for sale and properties that were disposed of to third parties during a

period, including the aggregate net gains or losses 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 (in thousands):

Please refer to our annual and quarterly financial statements filed with the Securities 

and Exchange Commission on Forms 10-K and 10-Q and other public reports for further

information about us and our business. Certain amounts from previous periods presented in the

Supplemental Information have been reclassified to conform to the current presentation. 

Our real estate operations segment represents the direct, long-term ownership of industrial

properties. Our investment strategy in this segment focuses primarily on the ownership and leasing

of industrial properties in global and regional markets. Our intent is to hold and use these properties;

however, depending on market and other conditions, we may contribute or sell these properties to

co-investment ventures or sell to third parties.  When we contribute to an unconsolidated co-

investment venture or sell properties we have developed, we recognize FFO to the extent the

proceeds received exceed our original investment (i.e. prior to depreciation) and present the results

as  Gains (Losses) on Acquisition and Dispositions of Investments in Real  Estate, Net.  We have

industrial properties that are currently under development and land available for development that

are part of this segment as well.  We may develop the land or sell to third parties, depending on

market conditions, customer demand and other factors. The private capital segment represents the

long-term management of unconsolidated co-investment ventures and other joint ventures.

In June 2011, AMB Property Corporation (“AMB”) and ProLogis combined through a merger of

equals (the “Merger”).  As a result of the Merger, each outstanding ProLogis common share was

converted into 0.4464 shares of AMB common stock.  At the time of the Merger, AMB changed its

name to Prologis, Inc.  After consideration of all applicable factors pursuant to the business

combination accounting rules, the Merger resulted in a reverse acquisition in which AMB was

considered the “legal acquirer” and ProLogis was considered the “accounting acquirer”. As such, the

historical results of AMB have not been included in the 2011 results.

During the second quarter of 2011, we increased our ownership of ProLogis European Properties

(“PEPR”), through open market purchases and a mandatory tender offer. Pursuant to the tender

offer and open-market purchases made during the tender period, we acquired additional ordinary

units and convertible preferred units of PEPR that were funded through borrowings under our

existing credit facilities and a new €500 million bridge facility, which was subsequently repaid with

proceeds received from our June 2011 equity offering. After completion of the tender offer, we

began consolidating PEPR. Subsequently in connection with the liquidation, we have acquired all of

the assets and liabilities of PEPR during the third quarter of 2012.

During the first quarter of 2012, we acquired our partner’s 63% interest in and now own 100% of

Prologis North American Industrial Fund II. We also acquired our share of the assets and liabilities in

Prologis California. These two transactions increased our real estate by $2.1 billion and debt by

$1.0 billion. 

During the nine months ended September 30, 2012, we recorded a gain of $17.1 million on

the  disposition of 113 properties aggregating 14.4 million square feet to third parties. In

addition, we recorded impairment charges of $27.4 million on assets held for sale at

September 30, 2012. During all of 2011, we disposed of land subject to ground leases and 94

properties aggregating 10.7 million square feet to third parties.

Acquisition

cost

represents

economic

cost

and

not

necessarily

what

is

capitalized.

It

includes the initial purchase price; the effects of marking assumed debt to market; if

applicable, all due diligence and closing costs; lease intangibles; and estimated acquisition

capital expenditures including leasing costs to achieve stabilization.

Assets

Held

For

Sale

and

Discontinued

Operations.

As

of

September

30,

2012,

we

had

land

and

23 operating properties totaling 7.4 million square feet that met the criteria to be presented

as held for sale.  The amounts included in Assets Held for Sale include real estate investment

balances and the related assets and liabilities for each property.

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Notes and Definitions

32

Three Months Ended

Nine Months Ended

September 30,

September 30,

2012(a)

2011

2012

2011(a)

Net earnings (loss)

Net earnings (loss) ……………………………………………………………..

$ (46,526)

$ 55,436

$ 147,767

$ (142,651)

Noncontrolling

interest attributable

to

exchangeable

limited partnership

units

-

(485)

935

-

Adjusted

net

earnings

(loss)

-

Diluted

$ (46,526)

$ 54,951

$ 148,702

$ (142,651)

Weighted

average

common

shares

outstanding

-

Basic …………………..

460,079

458,256

459,720

340,923

Incremental weighted average effect on exchange of limited partnership

units  ……………………………………………………………………………..

-

3,362

3,260

-

Incremental

weighted

average

effect

of

stock

awards

……………………..

-

790

1,958

-

Weighted average common shares outstanding

-

Diluted

460,079

462,408

464,938

340,923

Net

earnings

(loss)

per

share

-

Basic

$ (0.10)

$ 0.12

$ 0.32

$ (0.42)

Net

earnings

(loss)

per

share

-

Diluted

$ (0.10)

$ 0.12

$ 0.32

$ (0.42)

FFO, as defined by Prologis

FFO, as defined by Prologis ……………………………………………………

$ 205,891

$ 207,730

$ 640,634

$ 278,071

Noncontrolling interest attributable

to exchangeable

limited partnership

units

(134)

(485)

935

(349)

Interest expense on exchangeable debt assumed converted ………………

4,229

4,114

12,661

-

FFO -

Diluted, as defined by Prologis

$ 209,986

$ 211,359

$ 654,230

$ 277,722

Weighted

average

common

shares

outstanding

-

Basic

…………………

460,079

458,256

459,720

340,923

Incremental weighted average effect of exchange of limited partnership

units ……………………………………………………………………………..

3,185

3,362

3,260

1,668

Incremental weighted average effect of stock awards …………………….

1,882

790

1,958

1,070

Incremental weighted average effect of exchange of certain

exchangeable debt …………………………………………………………….

11,879

11,879

11,879

-

Weighted

average

common

shares

outstanding

-

Diluted

477,025

474,287

476,817

343,661

FFO per share

-

Diluted, as defined by

Prologis

$ 0.44

$ 0.45

$ 1.37

$ 0.81

Core FFO

Core FFO …………………………………………………………………………

$ 231,962

$ 206,433

$ 618,047

$ 390,502

Noncontrolling interest attributable

to

exchangeable

limited partnership units

(134)

(485)

935

(349)

Interest

expense

on

exchangeable

debt

assumed

converted

…………….…..

4,229

4,114

12,661

12,659

Core FFO -

Diluted

$ 236,057

$ 210,062

$ 631,643

$ 402,812

Weighted

average

common

shares

outstanding

-

Basic

…………………

460,079

458,256

459,720

340,923

Incremental weighted average effect of exchange of limited partnership

units ……………………………………………………………………………..

3,185

3,362

3,260

1,668

Incremental

weighted

average

effect

of

stock

awards

…………………….

1,882

790

1,958

1,070

Incremental weighted average effect of exchange of certain

exchangeable debt ……………………………………………………………...

11,879

11,879

11,879

11,879

Weighted

average

common

shares

outstanding

-

Diluted

477,025

474,287

476,817

355,540

Core FFO per share -

Diluted

$ 0.49

$ 0.44

$ 1.32

$ 1.13

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.

(a)

We consider Core EBITDA to provide investors relevant and useful information

because it permits investors to view income from operations on an unleveraged basis

before the effects of income tax,non-cash depreciation and amortization expense and

other items (including stock-based compensation amortization and certain unrealized

gains and losses), gains or losses from the acquisition or disposition of investments in

real estate, items that affect comparability, and other significant non-cash items. We

also included a pro forma adjustment in Core EBITDA to reflect a full period of NOI on

the operating properties we acquire in a significant transaction, such as the Merger,

PEPR acquisition, acquisition of our share of the assets from Prologis California and

the acquisition of Prologis North American Industrial Fund II.  In addition, we excluded

Merger, Acquisition and Other Integration Expenses and costs associated with the 

natural disaster that occurred in first quarter 2011 in Japan. 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 to that of other companies,

both in the real estate industry and in other industries. Gains and losses on the early

extinguishment of debt generally included the costs of repurchasing debt securities.

Although difficult to predict, these items may be recurring given the uncertainty of the 

current economic climate and its adverse effects on the real estate and financial

markets. While not infrequent or unusual in nature, these items result from market

fluctuations that can have inconsistent effects on our results of operations. The

economics underlying these items reflect market and financing conditions in the short-

term but can obscure our performance and the value of our long-term investment

decisions and strategies.

We believe that Core EBITDA helps investors to analyze our ability to meet

interest payment obligations and to make quarterly preferred share dividends. We

believe that investors should consider Core EBITDA in conjunction with net

earnings (the primary measure of our performance) and the other required

Generally Accepted Accounting Principles (“GAAP”) measures of our performance

and liquidity, to improve their understanding of our operating results and liquidity,

and to make more meaningful comparisons of our performance against other

companies. By using Core EBITDA an investor is assessing the earnings

generated by our operations, but not taking into account the eliminated expenses

or gains incurred in connection with such operations.  As a result, Core EBITDA

has limitations as an analytical tool and should be used in conjunction with our 

required GAAP presentations. Core EBITDA does not reflect our historical cash

expenditures or future cash requirements for working capital, capital expenditures

distribution requirements or contractual commitments. Core EBITDA, also does

not reflect the cash required to make interest and principal payments on our

outstanding debt.  

While EBITDA is a relevant and widely used measure of operating

performance, it does not represent net income or cash flow from operations as

defined by GAAP and it should not be considered as an alternative to those

indicators in evaluating operating performance or liquidity. Further, our

computation of Core EBITDA may not be comparable to EBITDA reported by

other companies. We compensate for the limitations of Core EBITDA by

providing investors with financial statements prepared according to GAAP,

along with this detailed discussion of Core EBITDA and a reconciliation of

Core EBITDA to consolidated net earnings (loss), a GAAP measurement.

We use Core EBITDA to measure both our operating performance and 

liquidity. We calculate Core EBITDA beginning with consolidated net earnings (loss) and 

removing the affect of interest, income taxes, depreciation and amortization, impairment 

charges, gains or losses from the acquisition or disposition of investments in real estate, 

gains or losses on early extinguishment of debt and derivative contracts (including cash 

charges), similar adjustments we make to our Core FFO (see definition below), and other 

non-cash charges or gains (such as stock based compensation amortization and unrealized 

gains or losses on foreign currency and derivative activity), including our share of these items

from unconsolidated entities.

is as follows (in thousands, except per share amounts):

Calculation of Per Share Amounts

Core EBITDA.

Copyright ©

2012 Prologis

Third Quarter 2012 Report

FFO is not mean 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 net

earnings computed under GAAP remains the primary measure of performance and that FFO is only

meaningful when it is used in conjunction with net earnings computed under GAAP. Further, we believe 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 net earnings computed under GAAP to exclude historical cost depreciation

and gains and losses from the sales, along with impairment charges, of previously depreciated properties.

We agree that these NAREIT adjustments are useful to investors for the following reasons:  

historical cost accounting for real estate assets in accordance with GAAP assumes, through 

depreciation charges, that the value of real estate assets diminishes predictably over time. NAREIT

stated in its White Paper on FFO “since real estate asset values have historically risen or fallen with

market conditions, many industry investors have considered presentations of operating results for real

estate companies that use historical cost accounting to be insufficient by themselves.” Consequently,

NAREIT’s definition of FFO reflects the fact that real estate, as an asset class, generally appreciates

over time and depreciation charges required by GAAP do not reflect the underlying economic realities.  

REITs were created as a legal form of organization in order to encourage public ownership of real estate

as an asset class through investment in firms that were in the business of long-term ownership and

management of real estate. The exclusion, in NAREIT’s definition of FFO, of gains and losses from the

sales, along with impairment charges, of previously depreciated operating real estate assets allows

investors and analysts to readily identify the operating results of the long-term assets that form the core

of a REIT’s activity and assists in comparing those operating results between periods. We include the

gains and losses from dispositions and impairment charges of land and development properties, as well

as our proportionate share of the gains and losses from dispositions and impairment charges recognized

by our unconsolidated entities, in our definition of FFO.  

Our FFO Measures  

At the same time that NAREIT created and defined its FFO measure for the REIT industry, it also recognized

that “management of each of its member companies has the responsibility and authority to publish financial

information that it regards as useful to the financial community.” We believe stockholders, potential investors

and financial analysts who review our operating results are best served by a defined FFO measure that

includes other adjustments to net earnings computed under GAAP in addition to those included in the NAREIT

defined measure of FFO.  Our FFO measures are used by management in analyzing our business and the

performance of our properties and we believe that it is important that stockholders, potential investors and

financial analysts understand the measures management uses.  

We use these FFO measures, including by segment and region, to: (i) evaluate our performance and the

performance of our properties in comparison to expected results and results of previous periods, relative to

resource allocation decisions; (ii) evaluate the performance of our management; (iii) budget and forecast

future results to assist in the allocation of resources; (iv) assess our performance as compared to similar real

estate companies and the industry in general; and (v) evaluate how a specific potential investment will impact

our future results. Because we make decisions with regard to our performance with a long-term outlook, we

believe it is appropriate to remove the effects of short-term items that we do not expect to affect the

underlying long-term performance of the properties. The long-term performance of our properties is

principally driven by rental income. While not infrequent or unusual, these additional items we exclude in

calculating FFO, as defined by Prologis, are subject to significant fluctuations from period to period that

cause both positive and negative short-term effects on our results of operations in inconsistent and

unpredictable directions that are not relevant to our long-term outlook. 

Committed Equity/Investment  

acquired through the use of the equity commitments from our property fund or co-investment 

venture partners, plus our funding obligations and estimated debt capitalization.

FFO, as defined by Prologis; Core FFO; AFFO (collectively referred to as “FFO”). 

FFO is a non-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.

Notes and Definitions

33

Debt Metrics.

See below for the detailed calculations for the three months ended for the respective

period (

dollars

in

thousands

Three Months Ended

Sept. 30

June 30

2012

2012

Debt as a % of gross real estate assets:

Total

debt

-

at

par…………………………………………………………………………….

$

$

14,137,793

Less: cash and cash equivalents ………………………………………………..……….…

(158,188)

(293,631)

Total

debt,

net

of

cash

……………………………………………………………………..

$

14,154,059

$

Gross real

estate

assets

…………………………………………………………………..

$

31,699,291

$

44.7%

44.2%

Secured debt as a % of gross real estate assets:

Secured debt

-

at

par

……………………………………….…………………………….

$

$

6,117,614

Gross

real

estate

assets

…………………………………………………………………..

$

31,699,291

$

Secured debt as a % of gross real estate assets

19.5%

19.5%

Unencumbered gross real estate assets to unsecured debt:

Unencumbered

gross

real

estate

assets

…………………………………………………

$

$

18,246,262

Unsecured debt

-

at par ….………………………………………………………..……...

$

8,143,064

$

8,020,179

Unencumbered gross real

estate assets to unsecured debt

227.1%

227.5%

Fixed Charge Coverage ratio:

Core EBITDA………………………………………………………………………………..

..

$

393,371

$

395,147

Interest expense……………………………………………………………………………….$

123,161

$

128,042

Amortization and write-off of deferred loan costs …………………..…………………..….

(3,902)

(4,175)

Amortization

of

debt

premium

(discount),

net

…………………….………………………

9,925

9,753

Capitalized interest …………………………………………………….…….………………

13,488

12,946

Preferred

stock

dividends

……………………………………………………….………….

10,305

10,049

Our share of fixed charges from unconsolidated entities ………….…..….……………..…

22,744

Total

fixed

charges

………….………………………………………………………….….

$

174,529

$

179,359

Fixed

charge coverage ratio

2.25x

2.20x

Debt to Core EBITDA:

Total

debt,

net

of

cash

………………………………………………………………….….

$

$

13,844,162

Core EBITDA-annualized…………………………………………………………………...

$

1,573,484

$

1,580,588

9.00x

8.76x

-

18,489,287

Debt to Core EBITDA ratio

6,169,183

31,318,125

14,312,247

13,844,162

31,318,125

14,154,059

21,552

Debt as a % of gross real estate assets

Committed

Equity/Investment

(i)

(ii)

):

is

our

estimate

of

the

gross

real

estate,

which

could

be

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Notes and Definitions

34

We use our FFO measures as supplemental financial measures of operating performance. We do

not use our FFO measures as, nor should they be considered to be, alternatives to net earnings

computed under GAAP, as indicators of our operating performance, as alternatives to cash from

operating activities computed under GAAP or as indicators of our ability to fund our cash needs.

FFO, as defined by Prologis

To arrive at FFO, as defined by Prologis, we adjust the NAREIT defined FFO measure to exclude:

(i)

deferred

income tax benefits and deferred income tax expenses recognized by our

subsidiaries;

(ii)

current income tax expense related to acquired tax liabilities that were recorded as deferred

tax liabilities in an acquisition, to the extent the expense is offset with a deferred income tax

benefit in GAAP earnings that is excluded from our defined FFO measure;

(iii)

foreign currency exchange gains and losses resulting from debt transactions between us and

our foreign consolidated subsidiaries and our foreign unconsolidated entities;

(iv)

foreign currency exchange gains and losses from the remeasurement (based on current

foreign currency exchange rates) of certain third party debt of our foreign consolidated

subsidiaries and our foreign unconsolidated entities; and  

(v)

mark-to-market adjustments associated with derivative financial instruments.

We calculate FFO, as defined by Prologis for our unconsolidated entities on the same basis as we

calculate our FFO, as defined by Prologis. 

We believe investors are best served if the information that is made available to them allows them

to align their analysis and evaluation of our operating results along the same lines that our

management uses in planning and executing our business strategy.

Core FFO

In addition to FFO, as defined by Prologis, we also use Core FFO. To arrive at Core FFO, we

adjust FFO, as defined by Prologis, to exclude the following recurring and non-recurring items that

we recognized directly or our share recognized by our unconsolidated entities to the extent they are

included in FFO, as defined by Prologis:

(i)

gains or losses from acquisition, contribution or sale of land or development properties;

(ii)

income tax expense related to the sale of investments in real estate;

(iii)

impairment charges recognized related to our investments in  real estate (either directly

or through our investments in unconsolidated entities) generally as a result of our change

in intent to contribute or sell these properties; 

(iv)

impairment charges of goodwill and other assets;

(v)

gains or losses from the early extinguishment of debt;

(vi)

merger, acquisition and other integration expenses; and

(vii)

expenses related to natural disasters

We believe it is appropriate to further adjust our FFO, as defined by Prologis for certain recurring

items as they were driven by transactional activity and factors relating to the financial and real

estate markets,  rather than factors specific to the on-going operating performance of our

properties or investments. The impairment charges we recognized were primarily based on

valuations of real estate, which had declined due to market conditions, that we no longer expected

to hold for long-term investment. We currently have and have had over the past several years a

stated priority to strengthen our financial position. We expect to accomplish this by reducing our

debt,  our investment in certain low yielding assets, such as land that we decide not to develop and

our exposure to foreign currency exchange fluctuations. As a result, we have sold to third parties or

contributed to unconsolidated entities  real estate properties that, depending on market conditions,

might result in a gain or loss. The impairment charges related to goodwill and other assets that we

have recognized were similarly caused by the decline in the real estate markets. Also in connection

with our stated priority to reduce debt and extend debt maturities, we have purchased portions of

our debt securities. As a result, we recognized net gains or losses on the early extinguishment of

certain debt due to the financial market conditions at that time. 

We have also adjusted for some non-recurring items. The merger, acquisition and other integration

expenses include costs we incurred in 2011 and that we expect to incur in 2012 associated with the

Merger and PEPR Acquisition and the integration of our systems and processes. We have not

adjusted for the acquisition costs that we have incurred as a result of routine acquisitions but only

the costs associated with significant business combinations that we would expect to be infrequent

in nature. Similarly, the expenses related to the natural disaster in Japan that we recognized in

2011 are a rare occurrence but we may incur similar expenses again in the future. 

We analyze our operating performance primarily by the rental income of our real estate and the

revenue driven by our private capital business, net of operating, administrative and financing

expenses. This income stream is not directly impacted by fluctuations in the market value of our

investments in real estate or debt securities.  As a result, although these items have had a material

impact on our operations and are reflected in our financial statements, the removal of the effects of

these items allows us to better understand the core operating performance of our properties over

the long-term. 

We use Core FFO, including by segment and region, to: (i) evaluate our performance and the

performance of our properties in comparison to expected results and results of previous periods,

relative to resource allocation decisions; (ii) evaluate the performance of our management; (iii)

budget and forecast future results to assist in the allocation of resources; (iv) provide guidance to

the financial markets to understand our expected operating performance; (v) assess our operating

performance as compared  to similar real estate companies and the industry in general; and (vi)

evaluate how a specific potential investment will impact our future results. Because we make

decisions with regard to our performance with a long-term outlook, we believe it is appropriate to

remove the effects of items that we do not expect to affect the underlying long-term performance of

the properties we own. As noted above, we believe the long-term performance of our properties is

principally driven by rental income. We believe investors are best served if the information that is

made available to them allows them to align their analysis and evaluation of our operating results

along the same lines that our management uses in planning and executing our business strategy.  

AFFO

To arrive at AFFO, we adjust Core FFO  to further exclude; (i) straight-line rents; (ii) amortization of

above- and below-market lease intangibles; (iii) recurring capital expenditures; (iv) amortization of

management contracts; (v) amortization of debt premiums and discounts, net of amounts

capitalized, and; (vi) stock compensation expense.

We believe AFFO provides a meaningful indicator of our ability to fund cash needs, including cash

distributions to our stockholders. 

Limitations on Use of our FFO Measures

While we believe our defined FFO measures are important supplemental measures, neither

NAREIT’s nor our measures of FFO should be used alone because they exclude significant

economic components of net earnings computed under GAAP and are, therefore, limited as an

analytical tool. Accordingly, they are two of many measures we use when analyzing our business.

Some of these limitations are:

The current income tax expenses that are excluded from our defined FFO measures

represent the taxes that are payable.

Depreciation and amortization of real estate assets are economic costs that are excluded from

FFO. FFO is limited, as it does not reflect the cash requirements that may be necessary for

future replacements of the real estate assets. Further, the amortization of capital expenditures

and leasing costs necessary to maintain the operating performance of industrial properties are

not reflected in FFO.

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Notes and Definitions

35

Gross G&A expense .............................................................

Reported as rental expense ................................................

Reported as private capital expenses ................................

Capitalized amounts .............................................................

Net G&A

Three Months Ended

Nine Months Ended

Gross interest expense .........................................................

Amortization of discount (premium), net ............................

Amortization of deferred loan costs ...................................

Interest

expense before capitalization  ...............................

Capitalized amounts ...........................................................

Net interest expense

Termination, severance and transitional employee costs .......

Professional fees .........................................................................

Office closure, travel and other costs

........................................

Total

2012

2011

2012

2011

$

142,672

154,123

$

437,925

$

355,796

(9,925)

(7,079)

(26,415)

5,910

3,902

3,572

13,033

16,160

136,649

150,616

424,543

377,866

(13,488)

(14,753)

(40,054)

(38,560)

$

123,161

$

135,863

$

384,489

$

339,306

$

Three Months Ended

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

$

95,486

94,741

$

287,967

$

243,373

(9,430)

(7,192)

(26,438)

(17,257)

(15,730)

(17,080)

(47,686)

(39,228)

$

(14,440)

(17,128)

(46,383)

(42,524)

$

55,886

53,341

$

167,460

$

$

144,364

Three Months Ended

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

$

14,757

$

11,107

$

34,294

$

45,444

3,718

909

12,672

42,398

2,184

667

5,607

23,012

-

-

-

10,869

$

20,659

$

12,683

$

52,573

$

121,723

Gains or losses from property acquisitions and dispositions or impairment charges related to

expected dispositions represent changes in the value of the properties. By excluding these

gains and losses, FFO does not capture realized changes in the value of acquired or disposed

properties arising from changes in market conditions. 

The deferred income tax benefits and expenses that are excluded from our defined FFO

measures result from the creation of a deferred income tax asset or liability that may have to be

settled at some future point. Our defined FFO measures do not currently reflect any income or

expense that may result from such settlement. 

The foreign currency exchange gains and losses that are excluded from our defined FFO

measures are generally recognized based on movements in foreign currency exchange rates

through a specific point in time. The ultimate settlement of our foreign currency-denominated

net assets is indefinite as to timing and amount. Our FFO measures are limited in that they do

not reflect the current period changes in these net assets that result from periodic foreign

currency exchange rate movements.   

The impairment charges of goodwill and other assets that we exclude from Core FFO, have

been or may be realized as a loss in the future upon the ultimate disposition of the related

investments or other assets through the form of lower cash proceeds.   

The gains and losses on extinguishment of debt that we exclude from our Core FFO, may

provide a benefit or cost to us as we may be settling our debt at less or more than our future

obligation.  

The Merger, acquisition and other integration expenses and the natural disaster expenses that

we exclude from Core FFO are costs that we have incurred.  

We compensate for these limitations by using our FFO measures only in conjunction with net

earnings computed under GAAP when making our decisions. To assist investors in compensating

for these limitations, we reconcile our defined FFO measures to our net earnings computed under

GAAP. This information should be read with our complete financial statements prepared under

GAAP. 

September 30,

September 30,

is defined as the total number of outstanding shares of our common stock and

common limited partnership units multiplied by the closing price per share of our common stock

at period end.  

     In connection with the Merger, we

have incurred significant transaction, integration, and transitional costs. These costs include

investment banker advisory fees; legal, tax, accounting and valuation fees; termination and

severance costs (both cash and stock based compensation awards) for terminated and

transitional employees; system conversion; and other integration costs. Certain of these costs

were obligations of AMB and were expensed prior to the closing of the Merger by AMB. The

remainder of the costs  are being expensed by us as incurred, which in some cases will be

through the end of 2012. In addition, we have included costs associated with the acquisition of a

controlling interest in PEPR and reduction in workforce charges associated with dispositions

made in 2011. The following is a breakdown of the costs incurred: 

Global Markets

comprise the largest, most liquid markets benefiting from demand tied to global

trade. These markets are defined by large population centers with high consumption per capita and

typically feature major seaports, airports, and other transportation infrastructure tied to global trade. 

While initial returns might be lower, global markets tend to outperform overall markets in terms of

growth and total return.

Interest

Expense

consisted

of

the

following

(in

thousands):

Net Asset Value (“NAV”).

We consider NAV to be a useful supplemental measure of our operating

performance because it enables both management and investors to estimate the fair value of our

business. The assessment of the fair value of a particular segment of our business is subjective in that

it involves estimates and can be calculated using various methods. Therefore, in this supplemental

report, we have presented the financial results and investments related to our business segments that

we believe are important in calculating our NAV but have not presented any specific methodology nor

provided any guidance on the assumptions or estimates that should be used in the calculation.

The components of NAV do not consider the potential changes in rental and fee income streams or the

franchise value associated with our global operating platform, private capital platform, or development

platform. 

Net

Gains

on

Acquisitions

and

Dispositions

of

Investments

in

Real

Estate

includes

the

gains

we

recognized from the acquisition of our share of the real estate properties in one of our unconsolidated

co-investment

ventures,

Prologis

California

in

the

first

quarter

of

2012.

Net

Operating

Income

(“NOI”)

represents

rental

income

a

rental

expenses.

Fixed

Charge Coverage

is defined as Core EBITDA divided by total fixed charges. Fixed charges

consist of net interest expense adjusted for amortization of finance costs and debt discount

(premium), capitalized interest, and preferred stock dividends. Prologis uses fixed charge coverage

to measure its liquidity. Prologis believes that the fixed charge coverage is relevant and useful to

investors

because

it

allows

fixed

income

investors

to

measure

Prologis’

ability to meet its interest

payments on outstanding debt, make distributions to its preferred unitholders and pay dividends to

its

preferred

stockholders.

Prologis’

computation of fixed charge coverage is not calculated in

accordance with applicable SEC rules and may not be comparable to fixed charge coverage

reported by other companies.

Market Equity

Merger, Acquisition and Other Integration Expenses.

Write-off of deferred loan costs

.................................................

General

and

Administrative

Expenses

(“G&A”)

consisted

of

the

following

(In

thousands):

Copyright ©

2012 Prologis

Third Quarter 2012 Report

(in thousands)

Reconciliation of NOI

Rental income

Rental expenses

NOI

Net termination fees and adjustments (a)

Less: Actual NOI for development portfolio and other

Less: NOI on contributed properties (b)

Straight-lined rents and amortization of lease intangibles (c)

Third quarter adjusted cash NOI

Rental Income

includes the following (in thousands):

Three Months Ended

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

$

(130,820)

348,554

$

479,374

15,038

(5,772)

(2,784)

(36)

339,962

355,000

Rental income

Amortization of lease intangibles

Rental expense recoveries

Straight-lined rents

Total

$

479,374

11,822

97,081

(10,239)

$

380,710

$

$

335,403

(11,479)

89,165

17,194

430,283

$

1,109,262

(30,245)

285,469

45,636

$

1,410,122

$

684,416

(13,572)

185,734

36,900

$

893,478

Operating

Portfolio

includes

stabilized

operating

industrial

properties

we

own

or

that

we

manage

and

are

owned by an unconsolidated investee accounted for by the equity method of accounting.

Operating

Segments

–

Real

Estate

Operations

represents

the

direct

long-term

ownership

of

industrial

properties, including land and the development of properties. 

Operating

Segments

–

Private

Capital

represents

the

management

of

unconsolidated

co-investment

ventures and other joint ventures and the properties they own. 

Pre-stabilized

Development

represents

properties

that

are

complete

but

have

not

yet

reached

Stabilization.

Private

Capital

NOI

represents

private

capital

revenue

less

private

capital

expeditures.

Pro

forma

NOI

reflects

the

NOI

for

a

full

quarter

of

operating

properties

that

were

acquired,

contributed

or

stabilized during the quarter. Pro forma NOI for the properties in our development portfolio is based on

current total expected investment and an estimated stabilized yield. 

A reconciliation of our rental income and rental expenses, computed under GAAP, to adjusted net operating

income

(NOI)

for

the

operating

portfolio

for

purposes

of

the

Net

Asset

Value

calculation

is

as

follows:

(a)     Net

termination

fees

generally

represent

the

gross

fee

negotiated

at

the

time

a

customer

is

allowed

to

terminate

its

lease

agreement

offset

by

that

customer's

rent

leveling

asset

or

liability,

if

any,

that

has

been

previously

recognized

under

GAAP.

Removing

the

net

termination

fees

from

rental

income

allows

for

the

calculation

of

pro

forma

NOI

to

include

only

rental

income

that

is

indicative

of

the

property's

recurring

operating

performance.

(b) 

The

actual

NOI

for

properties

that

were

contributed

and

not

part

of

discontinued

operations

during

the

three-month

period is removed.

(c)

Straight-lined

rents,

net

of

free

rent

amounts,

and

amortization

of

above

and

below

market

leases

are

removed

from

rental income computed under GAAP to allow for the calculation of a cash yield.

Regional

Markets,

similar

to

global

markets,

also

benefit

from

large-population

centers

and

demand.

They

are located at key crossroads in the supply chain and/or near economic centers for leading national or global

industries. Our assets reflect the highest quality class-A product in that market and are often less supply-

constrained and focus on delivering bulk goods to customers. 

Same

Store.

We

evaluate

the

operating

performance

of

the

industrial

operating

properties

we

own

and

manage

using

a

“same

store”

analysis

because

the

population

of

properties

in

this

analysis

is

consistent

from period to period, thereby eliminating the effects of changes in the composition of the portfolio on

performance measures. We include all consolidated properties, and properties owned by property funds

and joint ventures that are managed by us and in which we have an equity interest (referred to as

“unconsolidated entities”), in our same store analysis. We have defined the same store portfolio, for the

quarter ended September 30, 2012, as those operating properties in operation at January 1, 2011 that

were in operation throughout the full periods in both 2011 and 2012 either by Prologis or AMB or their

unconsolidated entities. We have removed all properties that were disposed of to a third party from the

population for both periods. We believe the factors that impact rental income, rental expenses and net

operating income in the same store portfolio are generally the same as for the total operating portfolio. In

order to derive an appropriate measure of period-to-period operating performance, we remove the effects

of

foreign

currency

exchange

rate

movements

by

using

the

current

exchange

rate

to

translate

from

local

currency

into

U.S.

dollars,

for

both

periods,

to

derive

the

same

store

results. 

Same

Store

Average

Occupancy

represents

the

average

occupied

percentage

for

the

period.

Same

Store

Rental

Expense

represents

gross

property

operating

expenses.

In

computing

the

percentage change in rental expenses for the same store analysis, rental expenses include property

management

expenses

for

our

direct

owned

properties

based

on

the

property

management

fee

that

has

been computed as provided in the individual agreements under which our wholly owned management

companies provide property management services to each property (generally, the fee is based on a

percentage of revenues).

Same

Store

Change

in

Rental

Rate

represents

the

change

in

effective

rental

rates

(average

rate

over

the lease term) on new leases signed during the period as compared with the previous effective rental

rates in that same space.

Same

Store

Rental

Income

includes

the

amount

of

rental

expenses

that

are

recovered

from

customers

under the terms of their respective lease agreements. In computing the percentage change in rental

income for the same store analysis, rental income (as computed under GAAP) is adjusted to remove the

net termination fees recognized for each period. Removing the net termination fees for the same store

calculation allows us to evaluate the growth or decline in each property's rental income without regard to

items that are not indicative of the property's recurring operating performance.

Stabilization

is

defined

when

a

property

that

was

developed

has

been

completed

for

one

year

or

is

90%

occupied. Upon stabilization, a property is moved into our operating portfolio.

Tenant

Retention

is

the

square

footage

of

all

leases

rented

by

existing

tenants

divided

by

the

square

footage of all expiring and rented leases during the reporting period, excluding the square footage of

tenants that default or buy-out prior to expiration of their lease, short-term tenants and the square footage

of month-to-month leases.

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Notes and Definitions

Copyright ©

2012 Prologis

Third Quarter 2012 Report

Notes and Definitions

Total

Estimated

Investment

(“TEI”)

represents

total

estimated

cost

of

development or expansion, including land, development and leasing costs. TEI is

based on current projections and is subject to change. Non-U.S. Dollar

investments

are

translated

to

U.S.

Dollars

using

the

exchange

rate

at

period

end

or

the

date

of

development

start

for

purposes

of

calculating

development

starts in any

period.

Total

Market

Capitalization

is

defined

as

market

equity

plus

our

share

of

total debt

and preferred stock.

Turnover Costs

represent the costs incurred in connection with the signing of a

lease, including leasing commissions and tenant improvements.  Tenant improvements

include costs to prepare a space for a new tenant and for a lease renewal with the

same tenant. It excludes costs to prepare a space that is being leased for the first time

(i.e. in a new development property). 

Value-Added

Acquisitions

(“VAA”)

are

properties

which

Prologis

acquires

as

part of management’s current belief that the discount in pricing attributed to the

operating challenges of the property could provide greater returns, once stabilized,

than the returns of stabilized properties, which are not value added acquisitions.  Value

Added Acquisitions must have one or more of the following characteristics: (i) existing

vacancy in excess of 20%; (ii) short-term lease roll-over, typically during the first two

years of ownership; (iii) significant capital improvement requirements in excess of 10%

of the purchase price and must be invested within the first two years of ownership

Value-Added

Conversions

(“VAC”)

represent

the

repurposing

of

industrial

properties to a higher and better use, including office, residential, retail,

research

and

development,

data

center,

self

storage

or

manufacturing

with

the intent

to ultimately sell the property once repositioned.  Activities required to prepare the

property for conversion to a higher and better use may include such activities as re-

zoning, re-designing, re-constructing, and re-tenanting. The economic gain on sales of

value added conversions represents the amount by which the

sales proceeds

exceed

our

original

cost

in

dollars

and

percentages.

Value

Creation

represents

the

value

that

will

be

created

through

our development

and leasing activities at stabilization. We calculate value by estimating the NOI that the

property will generate at Stabilization and applying an estimated stabilized cap rate

applicable to that property. The value creation is calculated as

the amount by which

the estimated value exceeds our total expected investment and does not include any

fees or promotes we may earn. 

Weighted

Average

Estimated

Stabilized

Yield

is

calculated

as

NOI adjusted  to

reflect stabilized occupancy divided by Acquisition Cost or TEI,

as applicable.

37