4.	Unconsolidated Entities

Summary of Investments

We have investments in entities through a variety of ventures. We co-invest in entities that own multiple properties with strategic capital investors and provide asset and property management services to these entities. We refer to these entities as co-investment ventures. These entities may be consolidated or unconsolidated, depending on the structure, our partner’s rights and participation and our level of control of the entity. This note details our investments in unconsolidated co-investment ventures, which are accounted for using the equity method of accounting. See Note 8 for more detail regarding our consolidated investments.

We also have other ventures, generally with one partner and that we do not manage. We refer to our investments in the entities accounted for on the equity method, both unconsolidated co-investment ventures and other ventures, collectively, as unconsolidated entities.

Our investments in and advances to our unconsolidated entities are summarized below (in thousands):


	June 30,		December 31,
	2014		2013
Unconsolidated co-investment ventures	$	5,400,293	$	4,250,015
Other ventures		175,130		180,224

Totals	$	5,575,423	$	4,430,239

Unconsolidated Co-Investment Ventures

As of June 30, 2014, we had investments in and managed unconsolidated co-investment ventures that own portfolios of operating industrial properties and may also develop properties. We account for our investments in these ventures under the equity method of accounting and, therefore, we record our share of each venture’s net earnings or loss as Earnings from Unconsolidated Entities, Net in the Consolidated Statements of Operations. We earn fees for the services we provide to these ventures. These fees are recognized as earned and may include property and asset management fees or transactional fees for leasing, acquisition, construction, financing, legal and tax services. We may also earn promote fees based on the venture’s cumulative returns to the investors over time. We report these fees in Strategic Capital Income in the Consolidated Statements of Operations. In addition, we may earn fees for services provided to develop a building within these ventures and those fees are reflected in Development Management and Other Income in the Consolidated Statements of Operations.

During the second quarter of 2014, we increased our ownership of Prologis North American Industrial Fund to 41.9% by acquiring the equity units from two partners for $274.7 million. Our investment is still accounted for under the equity method. In 2014, we also invested our proportionate ownership interest in certain other co-investment ventures for the acquisition of properties and repayment of debt, primarily in Europe.

As discussed in Note 3, we started a co-investment venture in Mexico in June 2014. During the first quarter of 2013, we started two co-investment ventures, one in Europe and one in Japan. We account for these ventures under the equity method and recognize strategic capital income from these co-investment ventures.

Summarized information regarding the amounts we recognized in the Consolidated Statements of Operations from our investments in the unconsolidated co-investment ventures was as follows (in thousands):


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Earnings (loss) from unconsolidated co-investment ventures:
Americas (1)	$	(8,526	)	$	(874	)	$	(8,855	)	$	13,394
Europe		26,742			8,761			52,237			16,303
Asia		2,838			(16	)		6,503			2,469

Total earnings from unconsolidated co-investment ventures, net	$	21,054		$	7,871		$	49,885		$	32,166

Strategic capital and other income:
Americas (2)	$	47,230		$	14,818		$	61,555		$	30,895
Europe		19,453			13,854			41,153			24,467
Asia (3)		9,410			14,239			18,207			20,981

Total strategic capital income		76,093			42,911			120,915			76,343
Development management and other income		874			333			1,581			1,380

Total strategic capital and other income	$	76,967		$	43,244		$	122,496		$	77,723

(1)	In June 2014, we recognized our share of acquisition costs that were expensed by FIBRA upon acquisition of its initial portfolio. During 2014 and 2013, we recognized earnings of $4.8 million and $8.7 million, respectively, representing our share of the gains from the disposition of properties.

(2)

In June 2014, we earned a promote fee from the Prologis Targeted U.S. Logistics Fund of $42.1 million, which was based on the venture’s cumulative returns to the investors over the last three years. Of that amount, $31.3 million represented the third party investors’ portion and is reflected in Strategic Capital Income in the Consolidated Statement of Operations. We also recognized $6.2 million of expense, during the three months ended June 30, 2014, and is reflected in Strategic Capital Expenses in the Consolidated Statements of Operations, representing an estimate of the associated cash bonus earned pursuant to the terms of the Prologis Promote Plan.

(3)	In June 2013, we earned acquisition fees of $5.8 million from Nippon Prologis REIT (“NPR”) in connection with the acquisition of eight properties from another co-investment venture.

The amounts of strategic capital income and proportionate earnings we recognize depend on the size of co-investment ventures that we manage and in which we have an equity interest. A summary of our outstanding unconsolidated co-investment ventures was as follows (square feet and total assets in thousands and represents 100% of the venture):


	June 30, 2014		December 31, 2013		June 30, 2013
Americas:
Number of properties owned		808		709		805
Square feet		128,962		108,537		128,422
Total assets	$	9,450,029	$	8,014,339	$	9,074,309
Europe:
Number of properties owned		589		571		510
Square feet		137,802		132,876		119,829
Total assets	$	12,235,906	$	11,818,786	$	9,937,366
Asia:
Number of properties owned		46		43		38
Square feet		23,553		22,880		17,710
Total assets	$	4,269,690	$	4,032,125	$	3,440,894
Total:
Number of properties owned		1,443		1,323		1,353
Square feet		290,317		264,293		265,961
Total assets	$	25,955,625	$	23,865,250	$	22,452,569

The following is summarized financial information of the unconsolidated co-investment ventures and our investment (dollars in millions). The co-investment venture information represents the venture’s information (not our proportionate share) based on our U.S. GAAP basis in the entity.


2014 (1)	Americas			Europe			Asia			Total
For the three months ended June 30, 2014:
Revenues	$	178.7		$	252.3		$	69.7		$	500.7
Net operating income		132.2			196.8			53.7			382.7
Net earnings (loss) (2)	$	(9.7	)	$	65.6		$	16.5		$	72.4
For the six months ended June 30, 2014:
Revenues	$	346.9		$	499.0		$	138.2		$	984.1
Net operating income	$	251.4		$	392.9		$	107.3		$	751.6
Net earnings (loss)	$	(7.5	)	$	128.2		$	38.5		$	159.2
As of June 30, 2014:
Amounts due to us (3)	$	47.1		$	28.8		$	105.5		$	181.4
Third party debt (4)	$	3,334.4		$	2,703.8		$	1,807.0		$	7,845.2
Total liabilities	$	3,584.1		$	3,895.7		$	2,048.9		$	9,528.7
Our weighted average ownership		27.7	%		38.7	%		15.0	%		30.7	%
Our investment balance	$	2,067.4		$	2,969.4		$	363.5		$	5,400.3
Deferred gains, net of amortization (5)	$	121.4		$	198.0		$	93.3		$	412.7

2013 (1)	Americas			Europe			Asia			Total
For the three months ended June 30, 2013:
Revenues	$	183.1		$	206.9		$	53.8		$	443.8
Net operating income	$	134.2		$	159.4		$	40.5		$	334.1
Net earnings	$	3.5		$	14.2		$	8.2		$	25.9
For the six months ended June 30, 2013:
Revenues	$	365.2		$	355.3		$	99.1		$	819.6
Net operating income	$	267.3		$	264.7		$	76.7		$	608.7
Net earnings (2)	$	33.8		$	44.8		$	12.4		$	91.0
As of December 31, 2013:
Amounts due to us (3)	$	10.3		$	43.7		$	110.0		$	164.0
Third party debt (4)	$	2,999.1		$	2,998.2		$	1,715.2		$	7,712.5
Total liabilities	$	3,177.1		$	4,113.6		$	1,899.2		$	9,189.9
Our weighted average ownership		22.7	%		39.0	%		15.0	%		29.2	%
Our investment balance	$	1,194.0		$	2,703.3		$	352.7		$	4,250.0
Deferred gains, net of amortization (5)	$	139.6		$	196.7		$	94.8		$	431.1

(1)

We had significant activity with our unconsolidated co-investment ventures in 2014 and 2013. As described above, we started FIBRA in June 2014. In connection with this transaction, we concluded our unconsolidated co-investment venture in Mexico. During 2013, we concluded three co-investment ventures and we started two new co-investment ventures.

(2)

During the second quarter of 2014, two ventures in the Americas recorded net gains of $14.2 million from the disposition of 12 properties and FIBRA recorded acquisition costs of $36.8 million ($16.5 million was our share). During the first quarter of 2013, one venture in the Americas recorded net gains of $21.1 million from the disposition of two properties.

(3)

At June 30, 2014, we had a receivable of $42.1 million from one of our ventures in the Americas for a promote fee earned, as discussed above. As of June 30, 2014 and December 31, 2013, we had receivables from NPR of $88.5 million related to customer security deposits that are made through a leasing company owned by Prologis that pertain to properties owned by NPR. There is a corresponding payable to NPR’s customers in Other Liabilities in the Consolidated Balance Sheets. As of December 31, 2013, we had receivables from Prologis European Logistics Partners Sàrl (“PELP”) for remaining sale proceeds of $35.5 million that were received in the first quarter of 2014. The remaining amounts generally represent current balances for services provided by us to the co-investment ventures.

(4)	As of June 30, 2014 and December 31, 2013, we did not guarantee any third party debt of our co-investment ventures.

(5)	This amount is recorded as a reduction to our investment and represents the gains that were deferred when we contributed a property to a venture due to our continuing ownership in the property.

Equity Commitments Related to Certain Unconsolidated Co-Investment Ventures

Certain co-investment ventures have equity commitments from us and our venture partners. Our venture partners fulfill their equity commitment with cash. We may fulfill our equity commitment through contributions of properties or cash. The venture may obtain financing for the properties and therefore the acquisition price of additional investments that the venture could make may be more than the equity commitment. Depending on market conditions, the investment objectives of the ventures, our liquidity needs and other factors, we may make contributions of properties to these ventures through the remaining commitment period and we may make additional cash investments in these ventures.

The following table is a summary of remaining equity commitments as of June 30, 2014 (in millions):


	Equity commitments						Expiration date for remaining commitments
	Prologis		Venture Partners		Total
Prologis Targeted U.S. Logistics Fund	$	—	$	453.3	$	453.3	2014-2015
Prologis Targeted Europe Logistics Fund (1)		165.1		219.1		384.2	June 2015
Prologis European Properties Fund II (1)		96.7		253.0		349.7	September 2015
Europe Logistics Venture 1 (1)		23.7		134.5		158.2	December 2014
Prologis European Logistics Partners (2)		113.5		113.5		227.0	February 2016
Prologis China Logistics Venture (3)		142.1		805.3		947.4	2015 and 2017

Total	$	541.1	$	1,978.7	$	2,519.8

(1)	Equity commitments are denominated in euro and reported above in U.S. dollars based on an exchange rate of 1.37 U.S. dollars to the euro.

(2)	The equity commitments for this venture are expected to fund the future repayment of debt and are denominated in British pounds sterling, will be called in euros and are reported above in U.S. dollars using an exchange rate of 1.70 U.S. dollars to the British pounds sterling.

(3)	In July 2014, we secured a $500 million increase in committed third-party equity for this venture.