Leeds School of Business University of Colorado

October 20, 2004

Walter C. Rakowich

ProLogis - 1996

• 36 markets • 86.5 million square feet • $2.5 Billion of wholly owned assets

ProLogis-European Opportunity

Opportunity:  Dominant regional distribution hubs emerging to efficiently serve unified marketplace  Major companies consolidating and reconfiguring distribution networks   Functional obsolescence of much existing stock Growing need for single-source provider of Pan European distribution space Strategy:  Establish market-leading positions in major distribution hubs     Employ a local team of nationals in each market Control land for new development Leverage off of established global customer relationships for growth Identify a capital source to help fund growth

Estimated to be a $3+ billion opportunity

ProLogis Stock Price

ProLogis Common Stock Share Price $30 ProLogis Annual FFO Per Share $1.40

$1.30

$25 $20 $15 $1.20

$1.10

$1.00

$0.90

$10 Mar-94 Mar-95 Mar-96 Mar-97 Mar-98 $0.80

Mar-99 PLD Common Share Price PLD Annual FFO Per Share

Significant decline in multiple renders common equity too expensive for growth

ProLogis Property Fund Business

• • • •

Strategy

• • Raise private equity primarily from institutional investors looking for long-term stable returns Develop facilities on our balance sheet at wholesale value Create value through leasing Contribute to property funds at retail value Co-invest profit and receive cash for wholesale value thereby recycling capital Manage the properties in funds for fees thereby increasing returns on invested capital

Benefits

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

Property Fund Example

Development Cost:

Land Building Soft Costs Total Building Cost Appraised Value Profit $200 500 300 $1,000 $1,200 $200

Composition of Consideration:

Equity Investors (Cash) ProLogis (Units) Total Equity Debt (Cash) Total Consideration $400 200 $600 600 $1,200 Assume 10% NOI Return = $100/yr Equivalent to 8.3% NOI Return

Property Fund Example

Return on Equity:

Percentage Ownership Total Investment Debt Equity Unleveraged NOI Return (8.3%) Mgmt Fees (Avg 75 bps on Value) Interest Expense (at 5%) Fund Level Income Add Back Mgmt Fees ProLogis Income Return on Equity Equity Partners 67% $800 $400 $400 $67 (6) (20) $41 10% ProLogis 33% $400 $200 $200 $33 (3) (10) $20 9 $29 15% Total 100% $1,200 $600 $600 $100 (9) (30) $61

ProLogis European Properties Fund - Structure

Fund equity commitments: ProLogis ownership: Leverage: Investment criteria: Management: Management fees: ProLogis incentive return: Governance: Initial term/liquidity: Initial equity raise of €1.04 billion in 1999 from 19 institutional investors. Subsequent equity raise of €637 million, expected total capacity of €4.2 billion ($5.2 billion) Largest owner of the Fund, 20% minimum long-term ownership, 22.5% ownership as of 6/30/04 60% maximum, 52% as of 6/30/04 Fund will purchase stabilized distribution facilities in identified target markets ProLogis will manage day-to-day operations of the Fund within the ProLogis Operating System® pursuant to a 20-year management contract ProLogis receives asset management fees and property management fees and incentive management fees ProLogis receives 20% incentive return above 12% internal rate of return to common equity unitholders (including ProLogis) determined at liquidation Seven-member committee (ProLogis has three representatives) Potential IPO in 7-10 years. No puts to ProLogis but ProLogis has buyout option at NAV at termination

ProLogis European Properties Fund

Debt Overview:   Warehouse Facility of €500 million in total capacity • Private financing with two banks • • • Purchase of properties is financed with combination of equity and debt proceeds from the warehouse facility Extremely competitive pricing of EURIBOR + 35 bps Warehouse facility debt is refinanced with CMBS or local mortgage debt once critical mass of properties is achieved CMBS (Commercial Mortgage Backed Security) Debt • Permanent public financing, generally seven year terms and rated by rating agencies • • Pricing range of 35 – 90 bps over EURIBOR swap rates for A, AA and AAA tranches Four issuances totaling over €900 million, fifth issuance expected in 2H04 ( € Billions)

Fund Assets

Equity Debt

€ 2.5

€ 3.0

€ 4.5

€ 0.3

€ 0.9

€ 1.4

YE

99 00 01 02 03 24 Fund Investors Total Capacity 4 1 14 5

ProLogis Property Funds (Post Keystone Acquisition)

ProLogis European Properties Fund ProLogis California LLC ProLogis North American Fund I ProLogis North American Fund II ProLogis North American Fund III ProLogis North American Fund IV ProLogis North American Fund V ProLogis North American Funds VI-X ProLogis North American Funds XI – XII ProLogis Japan Properties Fund Totals

Year of Inception Sq. Feet (Millions) Investment ($ Millions)

1999 1999 2000 2001 2001 2001 2002 2004 2004 2002 43.6

13.0

9.4

4.5

4.4

3.5

25.3

25.4

7.7

2.5

139.3

$3,186 622 376 235 209 141 1,038 1,499 485 546 $8,337

ProLogis - Today

• • • • ASIA 3 Active markets in Japan (and 3 targeted in China) 6.4 MSF $462 M wholly owned $546 M fund owned • • • • NORTH AMERICA 42 Markets 225 MSF $4.7 B wholly owned $4.6 B fund owned

Over $14 Billion of Total Assets Today

• • • • EUROPE 26 Markets 54.7 MSF $728 M wholly owned $3.2 B fund owned

Growth in Return on Equity

20% 18% 16% 14% 12% 10% 8% 6% 4% Implementation of Property Fund Strategy Last public equity offering – April 1998

1996 1997 1998 1999 2000 2001 2002

14.2%

2003

ProLogis Stock Price

$40 $35 $30 $25 $20 $15 $10 M ar 94 Se p 94 M ar 95 Se p 95 M ar 96 Se p 96 M ar 97 Se p 97 M ar 98 Se p 98 M ar 99 Se p 99 M ar 00 Se p 00 M ar 01 Se p 01 M ar 02 Se p 02 M ar 03 Se p 03 M ar 04 Se p 04

S t r a t e g i c ProLogis World Headquarters 14100 East 35 th Place Aurora, CO 80011 (303) 375-9292 prologis.com

G l o b a l