NOTE 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 partners and investors and provide asset and property management services to these entities, which we refer to as co-investment ventures. These entities may be consolidated or unconsolidated, depending on the structure, our partner’s participation and other rights 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, which we account for using the equity method. We refer to our investments in all entities accounted for using the equity method, both unconsolidated co-investment ventures and other ventures, collectively, as unconsolidated entities.

The following table summarizes our investments in and advances to our unconsolidated entities (in thousands):

	June 30,		December 31,
	2016		2015
Unconsolidated co-investment ventures	$	4,328,459	$	4,585,427
Other ventures		155,345		170,193
Totals	$	4,483,804	$	4,755,620

Unconsolidated Co-Investment Ventures

The amounts recognized in Strategic Capital Revenue and Earnings from Unconsolidated Entities, Net depend on the size and operations of the co-investment ventures, the timing of revenues earned through incentive fees during the life of a venture or upon liquidation (“promotes”), as well as fluctuations in foreign currency exchange rates. Our ownership interest in these ventures also impacts the equity in earnings we recognize. We recognized Strategic Capital Expenses for direct costs associated with the asset management of these ventures and allocated property-level management costs for the properties owed by the ventures. The co-investment venture information below represents the venture’s information (not our proportionate share) prepared on a GAAP basis.

The following tables summarize these unconsolidated co-investment ventures:

	June 30,			December 31,			June 30,
(dollars and square feet in millions)	2016			2015			2015
U.S.:
Number of ventures		1			1			1
Number of properties owned		379			391			399
Square feet		49			50			51
Total assets	$	4,228		$	4,408		$	4,405
Third-party debt	$	1,425		$	1,433		$	1,509
Total liabilities	$	1,504		$	1,550		$	1,589
Our investment balance (1) (3)	$	518		$	690		$	697
Our weighted average ownership (2) (3)		17.6	%		22.5	%		23.1	%
Other Americas:
Number of ventures		2			2			2
Number of properties owned		209			205			201
Square feet		41			39			38
Total assets	$	2,694		$	2,482		$	2,509
Third-party debt	$	677		$	657		$	572
Total liabilities	$	772		$	708		$	624
Our investment balance (1)	$	848		$	786		$	827
Our weighted average ownership (2)		43.6	%		43.8	%		43.2	%
Europe:
Number of ventures		4			4			4
Number of properties owned		690			688			669
Square feet		160			159			155
Total assets	$	11,188		$	11,343		$	11,427
Third-party debt	$	2,566		$	2,640		$	2,533
Total liabilities	$	3,521		$	3,584		$	3,484
Our investment balance (1) (3)	$	2,464		$	2,707		$	2,844
Our weighted average ownership (2) (3)		36.2	%		38.9	%		39.4	%
Asia:
Number of ventures		2			2			2
Number of properties owned		77			66			56
Square feet		34			29			27
Total assets	$	5,346		$	4,320		$	4,203
Third-party debt	$	1,952		$	1,520		$	1,701
Total liabilities	$	2,250		$	1,751		$	1,946
Our investment balance (1)	$	498		$	402		$	359
Our weighted average ownership (2)		15.0	%		15.0	%		15.0	%
Total:
Number of ventures		9			9			9
Number of properties owned		1,355			1,350			1,325
Square feet		284			277			271
Total assets	$	23,456		$	22,553		$	22,544
Third-party debt	$	6,620		$	6,250		$	6,315
Total liabilities	$	8,047		$	7,593		$	7,643
Our investment balance (1)	$	4,328		$	4,585		$	4,727
Our weighted average ownership (2)		28.8	%		31.6	%		32.0	%

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2016		2015		2016		2015
U.S.:
Revenues	$	98,009	$	93,825	$	195,970	$	187,370
Net operating income (4)		69,848		66,179		138,142		130,150
Net earnings		5,285		3,771		35,860		5,803
Other Americas:
Revenues	$	59,669	$	61,013	$	116,083	$	117,482
Net operating income (4)		51,018		51,208		99,851		99,320
Net earnings		19,451		24,374		33,349		38,242
Europe:
Revenues	$	247,264	$	230,145	$	491,583	$	464,858
Net operating income (4)		192,696		181,094		381,673		361,926
Net earnings		68,567		67,484		141,399		118,443
Asia:
Revenues	$	86,412	$	68,260	$	162,262	$	136,178
Net operating income (4)		67,083		52,747		126,347		105,981
Net earnings		21,773		22,230		43,849		45,620
Total:
Revenues	$	491,354	$	453,243	$	965,898	$	905,888
Net operating income (4)	$	380,645	$	351,228	$	746,013	$	697,377
Net earnings	$	115,076	$	117,859	$	254,457	$	208,108

(1)

The difference between our ownership interest of a venture’s equity and our investment balance, at June 30, 2016 and December 31, 2015, results principally from three types of transactions: (i) deferring a portion of the gains we recognize from a contribution of a property to a venture ($429.7 million and $430.7 million, respectively); (ii) recording additional costs associated with our investment in a venture ($123.9 million and $122.1 million, respectively); and (iii) advances to a venture ($165.2 million and $189.7 million, respectively). Included in the advances to our ventures at June 30, 2016 and December 31, 2015 were receivables from Nippon Prologis REIT, Inc. (“NPR”) of $109.5 million and $85.2 million, respectively, related to customer security deposits that originated through a leasing company owned by us that pertain to properties owned by NPR. We have a corresponding payable to NPR’s customers in Other Liabilities.

(2)	Represents our weighted average ownership interest in all co-investment ventures based on each entity’s contribution of total assets, before depreciation, net of other liabilities.

(3)

In April 2016, we redeemed a portion of our investment in Prologis Targeted European Logistics Fund (“PTELF”) and Prologis Targeted U.S. Logistics Fund (“USLF”) for €185.0 million ($210.6 million) and $200.0 million, respectively, and recorded a gain of $86.6 million, which is included in Gains on the Dispositions of Investments in Real Estate, Net. The amounts received for the redemptions were included in Return of Investment from Unconsolidated Entities. Also in April 2016, PTELF received an additional €120.0 million ($135.0 million) from third-party investors. As a result of these transactions, our ownership percentage in these funds decreased to 27.9% and 17.6% in PTELF and USLF, respectively.

In June 2016, we submitted additional redemption requests for €90.0 million ($99.9 million at June 30, 2016) and $100 million in PTELF and USLF, respectively. We expect the requests to close in the second half of 2016 and they will be fulfilled by other investors so our ownership percentage will decrease.

(4)	Net operating income represents rental revenues less rental expenses.

The following table summarizes the amounts we recognized in the Consolidated Statements of Income related to the unconsolidated co-investment ventures (in thousands)

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Earnings from unconsolidated co-investment ventures, net:
U.S.	$	718	$	669	$	7,377	$	961
Other Americas		7,509		9,091		12,808		13,597
Europe		29,014		27,306		60,593		48,814
Asia		3,693		3,785		7,348		7,715
Total earnings from unconsolidated co-investment ventures, net	$	40,934	$	40,851	$	88,126	$	71,087

Strategic capital revenue and other revenue:
U.S.	$	9,179	$	9,601	$	18,174	$	18,161
Other Americas		5,693		7,013		11,058		12,814
Europe		25,428		21,001		47,447		39,394
Asia		10,448		8,856		23,047		17,405
Total strategic capital revenue		50,748		46,471		99,726		87,774
Development management and other revenue		2,787		1,546		4,348		3,186
Total strategic capital revenue and other revenue	$	53,535	$	48,017	$	104,074	$	90,960

Equity Commitments Related to Certain Unconsolidated Co-Investment Ventures

The following table summarizes the remaining equity commitments at June 30, 2016 (in millions):

	Equity Commitments						Expiration Date for Remaining Commitments
	Prologis		Venture Partners		Total
Prologis Targeted U.S. Logistics Fund	$	-	$	214	$	214	2016 - 2017
Prologis Targeted Europe Logistics Fund (1)		-		479		479	2016 - 2017
Prologis China Logistics Venture (2)		301		1,708		2,009	2016 - 2017
Totals	$	301	$	2,401	$	2,702

(1)	Equity commitments are denominated in euro and reported in U.S. dollars based on an exchange rate of $1.11 U.S. dollars to the euro.

(2)	In January 2016, we reached an agreement with our partner in this venture to increase the equity commitments by $882.4 million, of which our share is $132.4 million, to fund future developments in China.

During the first quarter of 2016, we satisfied our remaining commitment to Prologis European Logistics Partners with the contribution of $46.9 million for the repayment of third-party debt by the venture.