e424b3
Filed Pursuant to
Rule 424(b)(3)
Commission File No. 333-102166
PROSPECTUS
1999 Dividend
Reinvestment and Share Purchase Plan
ProLogis previously established the 1999 Dividend Reinvestment
and Share Purchase Plan. This prospectus amends and restates the
plan.
The ProLogis Dividend Reinvestment and Share Purchase Plan is
designed to promote long-term investing in ProLogis common
shares. Current shareholders can conveniently and economically
purchase ProLogis common shares of beneficial interest by
reinvesting all or a portion of their cash distributions and
submitting optional cash payments. In addition, persons who are
not already shareholders of ProLogis can purchase their first
common shares through the plan. The plan will be administered by
an agent, Computershare Trust Company, N.A., or any successor
bank or trust company as may from time to time be designated by
ProLogis.
At ProLogis discretion, the agent will purchase common
shares in one of the following manners:
|
|
|
|
|
directly from ProLogis;
|
|
|
|
in the open market; or
|
|
|
|
in negotiated transactions with third parties.
|
ProLogis common shares purchased directly from ProLogis under
the plan may be priced at a discount from market prices at the
time of the investment, as described in Question 16 under
Description of the Plan.
ProLogis common shares are listed on the New York Stock Exchange
under the symbol PLD.
These securities have not been approved or disapproved by the
Securities and Exchange Commission or any State Securities
Commission nor has the Securities and Exchange Commission or any
State Securities Commission passed upon the accuracy or adequacy
of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is January 4, 2007
PROLOGIS
We are a real estate investment trust that operates a global
network of real estate properties, primarily industrial
distribution properties. Our business strategy is designed to
achieve long-term sustainable growth in cash flow and sustain a
high level of return for our shareholders. We manage our
business by utilizing the ProLogis Operating
System®,
an organizational structure and service delivery system that we
built around our customers. When combined with our international
network of distribution properties, the ProLogis Operating
System enables us to meet our customers distribution space
needs on a global basis. We believe that by integrating
international scope and expertise with a strong local presence
in our markets, we have become an attractive choice for our
targeted customer base, the largest global users of distribution
space.
We are organized under Maryland law and have elected to be taxed
as a REIT under the Internal Revenue Code of 1986, as amended.
Our world headquarters are located in Denver, Colorado. Our
European headquarters are located in the Grand Duchy of
Luxembourg with our European customer service headquarters
located in Amsterdam, the Netherlands. Our regional offices in
Asia are located in Tokyo, Japan and Shanghai, China. Our common
shares were first listed on the New York Stock Exchange in March
1994 and now trade under the ticker symbol PLD. Our
Series F cumulative redeemable preferred shares of
beneficial interest and Series G cumulative redeemable
preferred shares of beneficial interest, are listed on the New
York Stock Exchange under the symbols PLD-PRF and
PLD-PRG, respectively.
DESCRIPTION OF
THE PLAN
The following questions and answers describe the plan.
Purposes and
advantages
|
|
1.
|
What is the
purpose of the plan?
|
The purpose of the plan is to provide current shareholders and
interested investors with a convenient and economical method to
invest in common shares of ProLogis and to build their
investment over time.
|
|
2.
|
How may
shareholders purchase common shares under the plan?
|
Shareholders may purchase common shares under the plan by:
(1) having cash distributions on some or all of their
common shares (up to a maximum of 300,000 common shares)
automatically reinvested in additional common shares; or
(2) making optional cash payments of not less than
$200 per payment nor more than $10,000 per month.
The minimum and maximum dollar amounts for optional cash
payments may be changed at any time at ProLogis sole
discretion.
2
|
|
3.
|
What are the
advantages and disadvantages of participation in the
plan?
|
The advantages of participation in the plan include:
|
|
|
|
|
full investment of distributions and optional cash payments
because participants are not required to pay brokerage
commissions, except with respect to common shares purchased in
the open market with optional cash payments, or other expenses,
except with respect to initial cash payments, in connection with
the purchase of common shares under the plan;
|
|
|
|
the plan permits fractional common shares as well as whole
common shares to be purchased;
|
|
|
|
common shares purchased directly from ProLogis under the plan
may be purchased at a discount from market prices at the time of
the investment, as described in Question 16;
|
|
|
|
distributions on all whole and fractional dividend reinvestment
plan shares are automatically reinvested in additional common
shares;
|
|
|
|
participants avoid the necessity for safekeeping certificates
representing the common shares purchased pursuant to the plan;
|
|
|
|
certificates for underlying common shares may be deposited for
safekeeping in order to protect against loss, theft or
destruction of those certificates as described in Question
23; and
|
|
|
|
statements provide participants with a record of each
transaction.
|
The plan, however, has some disadvantages as compared to
purchases of common shares through brokers or otherwise. They
include the following:
|
|
|
|
|
no interest is paid by ProLogis or the agent on any
distributions or optional cash payments held pending investment;
|
|
|
|
the agent, not the participant, determines the timing of
investments, as described in Question 15, and, as a result,
the purchase price for the common shares may vary from that
which would otherwise have been obtained by directing a purchase
through a broker or in a negotiated transaction;
|
|
|
|
the actual number of shares acquired by the participant will not
be known until after the common shares are purchased by the
agent, as described in Question 17;
|
|
|
|
optional cash payments of less than the minimum amount will be
returned to the participant without interest, as will the
portion of any optional cash payment which exceeds the maximum
monthly amount;
|
|
|
|
participants can not be assured of the availability or the
amount of the discount as it may range between 0% and 2% at
ProLogis sole discretion, as described in Question 16;
|
|
|
|
any discount from market prices at the time of the investment on
common shares purchased under the plan, as described in
Question 16, may create additional taxable income to the
participant, as described under Federal Income Tax
Considerations Relating to the Plan; and
|
|
|
|
commissions paid by ProLogis in connection with the reinvestment
of distributions, if the common shares are purchased in the open
market, will be taxable income to the participant, as described
under Federal Income Tax Considerations Relating to the
Plan.
|
3
Eligibility and
participation
|
|
4.
|
Who is eligible
to become a participant?
|
Any person who has reached the age of majority in his or her
state of residence, whether he, she or it (in the case of an
entity) is currently a shareholder of ProLogis, is eligible to
participate in the plan.
Persons who are citizens or residents of a country other than
the United States, its territories and possessions and are
interested in becoming participants in the plan should make
certain that their participation would not violate local laws
governing such things as taxes, currency and exchange controls,
share registration, foreign investments and related matters.
|
|
5.
|
How does an
eligible person become a participant?
|
After reading this prospectus, an eligible person may become a
participant in the plan by following the appropriate procedures
set forth below.
Registered
Holder:
A registered holder (a shareholder whose common shares are
registered on the share transfer books of ProLogis in his, her
or its name) may elect to become a participant in the plan at
any time, subject to ProLogis right to modify, suspend,
terminate or refuse participation in the plan. In order to
become a participant, a registered holder can enroll online at
www.computershare.com, over the telephone at
(800) 956-3378
or through the mail by completing a shareholder enrollment form
and returning it to the agent at Computershare Trust Company,
N.A., P.O. Box 43078, Providence, RI
02940-3078.
If the shares are registered in more than one name (e.g., joint
tenants, trustees, etc.) all registered holders of such shares
must sign the shareholder enrollment form exactly as their names
appear on the account registration. Shareholder enrollment forms
can be obtained by contacting the agent.
Beneficial
Owner:
A beneficial owner (a shareholder whose common shares are
registered in a name other than the name of such person; for
example, in the name of a broker, bank or other nominee) may
elect to become a participant in the plan only after instructing
his, her or its financial intermediary to re-register all or a
portion of the shares into his, her or its own name. Any costs
associated with that re-registration will be borne solely by the
beneficial owner. Once such shares have been re-registered, the
shareholder can follow the instructions listed above for a
registered holder in order to become a participant in the plan.
Alternatively, beneficial owners may enroll in the plan in the
same manner as someone who is not currently a shareholder as
described below.
Only shares registered on the share transfer books of ProLogis
in a shareholders name (not that of a bank, broker or
other nominee) are eligible for participation. Distributions on
common shares that remain registered in a name other than that
of the shareholder will not be reinvested under the plan.
4
Interested
Investors who do not currently own ProLogis common
shares:
A person who is not already a shareholder of ProLogis may
purchase common shares under the plan in either of the following
ways:
(1) Going to www.computershare.com and following the
instructions provided for opening an account online. The
investor will be asked to complete an online enrollment form and
to submit an initial investment of not less than $200 nor more
than $10,000. To make an initial investment, the person may
|
|
|
|
|
authorize a one-time deduction from his, her or its
U.S. bank account or
|
|
|
|
establish an automatic monthly investment from a qualified
financial institution, as described in Question 10.
|
(2) Submitting a completed initial enrollment form to the
agent along with his, her or its initial investment of not less
than $200 nor more than $10,000. To make an initial investment,
the person may
|
|
|
|
|
enclose a check payable in U.S. dollars, drawn against a
U.S. bank and made payable to
Computershare ProLogis or
|
|
|
|
authorize an automatic monthly deduction from a qualified
financial institution by completing the direct debit
authorization form enclosed with the initial enrollment form and
enclosing a voided blank check (if a checking account) or
deposit slip (if a savings account), as described in Question 10.
|
Interested investors choosing to make their initial investment
through the automatic monthly investment feature should note
that automatic monthly deductions will continue indefinitely,
beyond the initial investment, until the agent is notified to
discontinue such deductions. In addition, the minimum and
maximum dollar amounts for initial investments may be changed at
any time at ProLogis sole discretion.
For an initial investment, investors should include an
additional $10.00 for the initial enrollment fee.
|
|
6.
|
What do the
shareholder enrollment and initial enrollment forms
provide?
|
The shareholder enrollment and initial enrollment forms
authorize the agent to apply all or a portion of the
distributions received for an account registered on the share
transfer books of ProLogis in a shareholders name to the
purchase of additional common shares. Shareholders may choose
their desired level of participation by selecting one of the
three distribution reinvestment elections offered under the
plan. Prior to selecting an election, however, shareholders
should note the following share types and how they function
under the distribution reinvestment portion of the plan.
(a) CERTIFICATE SHARES: Shares held by
the shareholder in certificate form. Participants can choose to
reinvest or receive distributions on these shares.
(b) BOOK SHARES: Shares held
electronically by the agent. Like certificate shares,
participants can choose to reinvest or receive distributions on
these shares.
(c) DIVIDEND REINVESTMENT PLAN
SHARES: Shares purchased under the plan or
deposited into the plan through its safekeeping feature. Like
book shares, dividend reinvestment plan shares
5
are held electronically by the agent; however, distributions on
all dividend reinvestment plan shares will automatically be
reinvested.
As outlined in the shareholder enrollment and initial enrollment
forms, the plan offers the following distribution reinvestment
elections:
|
|
|
|
|
FULL DISTRIBUTION REINVESTMENT: Under this
election, cash distributions on all common shares held in
certificate and book form and distributions on all dividend
reinvestment plan shares (up to an aggregate total of 300,000
certificate, book and dividend reinvestment plan shares) will
automatically be reinvested to purchase additional common
shares. Participants enrolled in this investment election may
also make optional cash payments of not less than $200 per
payment, nor more than an aggregate maximum monthly amount of
$10,000.
|
|
|
|
PARTIAL DISTRIBUTION REINVESTMENT: Under this
election, cash distributions on a specified number of shares
will be paid to the participant by check or direct deposit. The
specified number of shares must be less than the combined total
of the participants certificate and book shares. Cash
distributions on the remaining common shares held in certificate
and book form and distributions on all dividend reinvestment
plan shares (up to an aggregate total of 300,000 certificate,
book and dividend reinvestment plan shares) will automatically
be reinvested to purchase additional common shares. Participants
enrolled in this investment election may also make optional cash
payments of not less than $200 per payment, nor more than
an aggregate maximum monthly amount of $10,000.
|
|
|
|
CASH DISTRIBUTION: Under this election, cash
distributions on all common shares held in certificate and book
form will be paid to the participant by check or direct deposit.
Distributions on all dividend reinvestment plan shares (up to a
total of 300,000 dividend reinvestment plan shares) will
automatically be reinvested to purchase additional common
shares. Participants enrolled in this investment election may
also make optional cash payments of not less than $200 per
payment, nor more than an aggregate maximum monthly amount of
$10,000.
|
Regardless of which method of participation is selected,
distributions paid on all whole
and/or
fractional dividend reinvestment plan shares will be reinvested
automatically.
A participant may change his, her or its distribution election
online at www.computershare.com, over the telephone at
(800) 956-3378
or through the mail by completing a new shareholder enrollment
form and returning it to the address provided in Question 18.
Any election or change of election concerning the reinvestment
of distributions must be received by the agent prior to the
established record date for a particular distribution payment in
order for the election or change in election to become effective
with that distribution. If the request is received on or after
the record date established for a particular distribution
payment, the election or change in election may not be effective
until the following distribution payment. A trading day is a day
on which the New York Stock Exchange is open for business. A
distribution record date normally precedes the payment of
distributions by approximately two weeks. A schedule of the
anticipated distribution record and payment dates is set forth
in Exhibit A, subject to change at ProLogis
discretion. For future periods not covered in Exhibit A,
ProLogis will provide participants a schedule of the relevant
record and payment dates.
If a participant signs and returns a shareholder enrollment or
initial enrollment form without checking a desired option, or
checks the partial distribution reinvestment election without
specifying a
6
number of shares, the participant will be deemed to have
selected the full distribution reinvestment option.
Reinvestment of
distributions
|
|
7.
|
What limitations
apply to the reinvestment of distributions?
|
For each distribution payment, a participant can reinvest cash
distributions on any number of common shares up to a maximum of
300,000 certificate, book and dividend reinvestment plan shares.
This limit is subject to change at any time at ProLogis
sole discretion. For purposes of applying this limitation, all
plan accounts considered to be under the common control or
management of a participant may be aggregated. Distributions on
any common shares for an account (or combination of accounts
considered to be under common control or management) in excess
of the 300,000 common share participation limitation will not be
reinvested; instead such distributions will be paid to the
participant by check or direct deposit. In addition,
participants may not acquire more than 9.8% of the number or
value of the outstanding common shares and preferred shares of
beneficial interest of ProLogis, as described in Question 38.
|
|
8.
|
When will
distributions be reinvested?
|
Purchases of common shares directly from ProLogis using cash
distributions will be made on the relevant distribution payment
date. Newly issued shares will be credited to participants
accounts as of such date. Purchases in the open market using
cash distributions will begin on the relevant distribution
payment date and will be completed no later than 30 days
after such date, except where completion at a later date is
necessary or advisable under any applicable securities laws or
regulations. Shares purchased in the open market will be
credited to participants accounts after the transaction
settles. Settlement usually occurs three business days after the
purchase is completed.
Participants should note that distributions are paid as and when
declared by ProLogis Board of Trustees. There can be no
assurance as to the declaration or payment of a distribution and
nothing contained in the plan obligates ProLogis to declare or
pay any distribution on the common shares. The plan does not
represent a guarantee of future distributions.
Optional cash
payments
|
|
9.
|
Who may make
optional cash payments?
|
Any eligible person, as described in Question 4, may make
optional cash payments, whether or not the person is already a
shareholder, subject to ProLogis right to modify, suspend,
terminate or refuse participation in the plan. Investors may
make optional cash payments regardless of which method of
participation they have elected.
|
|
10.
|
How does the
optional cash payment option work?
|
Interested investors may make their first optional cash payment
(i.e., their initial investment) concurrently with establishing
a plan account by following the procedures provided in Question
5. Once enrolled in the plan, any participant may purchase
additional common shares by sending optional cash payments to
the agent at any time. The amount of each optional cash payment
may vary but the total of all optional cash payments may not
exceed $10,000 per month, as described in
7
Question 12. For purposes of applying this limitation, all plan
accounts considered to be under the common control or management
of a participant may be aggregated. A participant may make
optional cash payments in the following ways:
(1) Accessing his, her or its plan account online at
www.computershare.com and authorizing a one-time optional
cash investment for a minimum of $200 from his, her or its
U.S. bank account.
(2) Remitting a check to the agent for a minimum investment
amount of $200. All checks should be accompanied by a cash
investment form (or the shareholder enrollment form, if
submitted at the time of enrollment) and mailed to the address
indicated on the form. A cash investment form is attached to
each plan statement. All checks must be payable to
Computershare ProLogis, payable in
U.S. funds and drawn against U.S. banks. Checks drawn
against
non-U.S. banks
or not payable in U.S. funds will be returned to the
participant without interest as will any cash or third-party
checks.
(3) Establishing an automatic monthly investment for a
minimum of $200. By electing this option, a participant is
authorizing the agent to automatically withdraw a designated
dollar amount every month from his, her or its bank account at a
qualified financial institution. Participants may establish an
automatic monthly investment online at www.computershare.com
or by completing an automatic monthly investment form and
returning it to the agent at the address provided in Question
18. The automatic monthly investment form (or the initial
purchase form, if a new investor) should be accompanied by a
voided blank check (for a checking account) or deposit slip (for
a savings account) for bank account and routing number
verification. Automatic monthly investment forms may be obtained
by contacting the agent. Participants should allow 4 to
6 weeks for the first investment to be initiated. Once
established, funds will be deducted from the participants
designated bank account on the 6th day of each month. If
the 6th day of any month is not a business day, funds will
be deducted the following business day. Participants may change
their automatic monthly investment information or terminate
their automatic monthly deduction by contacting the agent as
described above. In order for any change in the amount of funds
withdrawn or for any termination to be effective for a
particular month, the agent should receive notification at least
7 business days prior to the debit date. Changes in bank
information (routing and account number), however, may require 4
to 6 weeks to take effect.
All optional cash payments must be payable in U.S. dollars
and drawn against a U.S. bank. Do not send cash,
travelers checks, money orders or third-party checks.
In the event that any deposit is returned unpaid for any reason,
the agent will consider the request for investment of such money
null and void and will immediately remove from the
participants account shares, if any, purchased upon the
prior credit of such money. The agent will thereupon be entitled
to sell these shares to satisfy any uncollected amounts. If the
net proceeds of the sale of such shares are insufficient to
satisfy the balance of the uncollected amount, the agent shall
be entitled to sell such additional shares from the
participants account to satisfy the uncollected balance.
In addition, a $25.00 returned funds fee will be charged for any
deposit returned unpaid.
Plan participants should note that ProLogis reserves the right
to terminate any account or deny any request for investment if
ProLogis believes the investor is making excessive optional cash
payments through multiple shareholder accounts, is engaging in
arbitrage activities such as flipping or is
otherwise engaging in activities under the plan in a manner
which is not in the best interest of
8
ProLogis or which may cause the participant to be treated as an
underwriter under the federal securities laws. For purposes of
terminating any account or denying any request for investment,
all plan accounts considered to be under the common control or
management of a participant may be aggregated. Persons who
acquire common shares through the plan and resell them shortly
after acquiring them, including coverage of short positions,
under some circumstances, may be participating in a distribution
of securities which would require compliance with
Regulation M under the Securities Exchange Act of 1934, and
may be considered to be underwriters within the meaning of the
Securities Act of 1933. ProLogis will not extend to any such
person any rights or privileges other than those to which it
would be entitled as a participant in the plan, nor will
ProLogis enter into any agreement with any such person regarding
that persons purchase of those shares or any resale or
distribution thereof.
Participants have no obligation to make any optional cash
payments.
|
|
11.
|
When will
optional cash payments received by the agent be
invested?
|
In the case of optional cash payments , ProLogis has set two
investment dates for each month. The investment dates typically
occur on or around the 15th and last business day of each
month; however, the investment dates have been adjusted in
distribution paying months so optional cash payments may be
commingled with the distribution funds and invested on the
distribution payment date. Expected investment dates are
outlined in Exhibit A and are subject to change at
ProLogis discretion. For future investment dates, ProLogis
will provide participants a schedule of the relevant investment
dates.
Optional cash payments received by the agent will be invested
according to the following procedures:
If a participant authorizes a one-time investment online at
www.computershare.com, the estimated debit date and
investment date are provided on the confirmation page at the
conclusion of the online purchase process. Participants should
review this information carefully prior to confirming an online
purchase request.
If a participant submits a check to purchase additional common
shares, the agent will apply the optional cash payment to the
purchase of common shares on the next investment date provided
the agent receives the check at least two business days prior to
the investment date. Any optional cash payment received less
than two business days prior to the next investment date will be
held by the agent and will be applied to the purchase of shares
on the following investment date.
|
|
|
|
|
Automatic monthly investments
|
If a participant has authorized automatic monthly investments
from his, her or its U.S. bank account, the agent will
invest the funds received on the first investment date of each
month.
Common shares to be purchased by the agent directly from
ProLogis will be purchased on the applicable investment date.
Accordingly, the entire investment will be made on the
applicable investment date and newly issued shares will be
credited to participants accounts as of such date.
9
Common Shares to be purchased by the agent on the open market or
in negotiated transactions with third parties will begin on the
applicable investment date and will be completed no later than
30 days after that date, except where completion at a later
date is necessary or advisable under any applicable securities
laws or regulations. Shares purchased on the open market will be
credited to participants accounts after the transaction
settles. Settlement usually occurs three business days after the
purchase is completed.
|
|
12.
|
What limitations
apply to optional cash payments?
|
Optional cash payments are subject to a minimum of $200 per
payment and a maximum of $10,000 per month. For purposes of
applying the maximum monthly amount, all optional cash payments,
including initial investments, will be aggregated. In addition,
all plan accounts considered to be under the common control or
management of a participant will be combined. ProLogis reserves
the right to terminate any account that ProLogis considers to be
making excessive optional cash payments through multiple
shareholder accounts. The minimum and maximum amounts for
optional cash payments may be changed at any time at
ProLogis sole discretion.
Optional cash payments of less than the minimum amount and the
portion of any optional cash payment that exceeds the maximum
monthly amount will be returned to the participant by check,
without interest, as soon as practicable. Participants may make
optional cash payments of up to the aggregate maximum monthly
amount without the prior approval of ProLogis, subject to
ProLogis right to modify, suspend, terminate or refuse
participation in the plan at its sole discretion.
|
|
13.
|
May optional cash
payments be returned to a participant?
|
Uninvested optional cash payments will be returned to the
participant without interest upon his, her or its written
request provided the request is received by the agent at least
five business days prior to the applicable investment date.
Purchases
|
|
14.
|
What is the
source of common shares purchased under the plan?
|
At ProLogis option, the agent may purchase common shares
for the plan directly from ProLogis out of its authorized but
unissued common shares, in the open market or in negotiated
transactions with third parties. Initially, ProLogis anticipates
that the agent will purchase common shares for the plan directly
from ProLogis, but this may change from time to time at
ProLogis election.
|
|
15.
|
When will common
shares be purchased for a participants account?
|
As previously indicated, purchases of common shares directly
from ProLogis will be made on the relevant distribution payment
date or on the relevant investment date. Purchases in the open
market will begin on the relevant distribution payment date or
on the relevant investment date and will be completed no later
than 30 days after that date, except where completion at a
later date is necessary or advisable under any applicable
securities laws or regulations. The exact timing of open market
purchases, including determining the number of common shares, if
any, to be purchased on any day or at any time on that day, the
prices paid for those common shares, the markets on which the
purchases are made and the persons, including brokers and
dealers, from or through which the purchases are made, will be
determined by the agent or the broker selected by it for that
purpose.
10
Neither ProLogis nor the agent will be liable when conditions,
including compliance with the rules and regulations of the
Securities and Exchange Commission, prevent the purchase of
common shares or interfere with the timing of the purchases. The
agent may purchase common shares in advance of a distribution
payment date or investment date for settlement on or after that
date.
Notwithstanding the above, funds will be returned to
participants if not used to purchase common shares within
30 days of the investment date for optional cash payments
or within 30 days of the distribution payment date for
distribution reinvestments.
In making purchases for a participants account, the agent
may commingle the participants funds with those of other
participants in the plan.
|
|
16.
|
What is the
purchase price of common shares purchased by participants under
the plan?
|
Common shares purchased directly from ProLogis may be priced at
a discount from the market price at the time of the investment.
Information on any applicable discounts may be found on
ProLogis website at
http://ir.prologis.com
under the Dividend Reinvestment & Direct Purchase Plan
section. There are two types of discounts that may be available
to participants:
|
|
|
|
|
Distribution reinvestment discount
|
Common shares purchased directly from ProLogis under the plan in
connection with the reinvestment of distributions may be
purchased at a discount ranging from 0% to 2%. Therefore, the
purchase price will be equal to the average of the high and low
sale prices of the common shares as reported in the New York
Stock Exchange Composite Transactions list on the distribution
payment date, less the distribution reinvestment discount as
determined by ProLogis at its sole discretion.
|
|
|
|
|
Optional cash payment discount
|
Common shares purchased directly from ProLogis under the plan in
connection with optional cash payments may be purchased at a
discount ranging from 0% to 2%. Therefore, the purchase price
will be equal to the average of the high and low sale prices of
the common shares as reported in the New York Stock Exchange
Composite Transactions list on the relevant investment date,
less the optional cash payment discount as determined by
ProLogis at its sole discretion.
Setting a discount for a distribution payment date, an
investment date or an investment period will not affect the
setting of a discount for any subsequent distribution payment
dates, investment dates or investment periods.
In the event that common shares are purchased in the open market
or in negotiated transactions with third parties, the purchase
price will be:
|
|
|
|
|
Distribution reinvestment
|
The weighted average cost for all common shares purchased under
the plan on the relevant distribution payment date (and any
subsequent trading days needed to complete the purchase order).
The weighted average cost less brokerage commissions (currently
$0.05 per share, subject to change), for all common shares
purchased under the plan on the relevant investment date (and
any subsequent trading days needed to complete the purchase
order).
11
Common shares will not be purchased on the open market or in
negotiated transactions with third parties with cash payments.
Participants will not be able to instruct the agent to purchase
shares at a specific time or at a specific price or through a
specific broker.
|
|
17.
|
How many common
shares will be purchased for a participant?
|
The number of common shares to be purchased for a
participants account as of any distribution payment date
or investment date will be equal to the total dollar amount to
be invested for the participant divided by the applicable
purchase price, as described in Question 16. For new investors,
the total dollar amount to be invested will be equal to the
amount submitted less the $10.00 initial enrollment fee as
described in Question 5.
The amount to be invested for a participant with reinvested cash
distributions will be reduced by any amount ProLogis is required
to deduct for U.S. federal tax withholding purposes.
Plan
administration
|
|
18.
|
Who administers
the plan?
|
Computershare Trust Company, N.A., as agent for participants,
administers the plan, keeps records, sends statements of account
to participants and performs other duties relating to the plan.
All costs of administering the plan are paid by ProLogis, except
as provided in this prospectus.
The following address may be used to contact the plan agent:
Computershare Trust Company, N.A., P.O. Box 43078,
Providence, RI
02940-3078
or call toll free
(800) 956-3378.
Participants should be sure to include a reference to ProLogis
in any correspondence.
Participants may also obtain information about their accounts
and perform a variety of transactions online at
www.computershare.com. To access their accounts,
participants will need ProLogis New York Stock Exchange
symbol, PLD, their account number, which can be found on their
distribution check or statement, and their password. If a
participant does not know or has not received his, her or its
password, a new one can be requested online or over the
telephone.
|
|
19.
|
What reports are
sent to participants in the plan?
|
After an investment is made for a participants plan
account, whether by reinvestment of distributions or investment
of optional cash payments, the participant will be sent a plan
statement which will provide a record of the costs of the common
shares purchased for that account, the purchase date, the number
of common shares purchased and the number of common shares in
that account. These statements should be retained for income tax
purposes as there may be a fee incurred if the agent must supply
an additional account history. Each plan statement will include
a tear off coupon which can be completed and returned to the
agent when submitting an optional cash payment, depositing
certificates for safekeeping, requesting the sale of shares,
requesting a stock certificate or terminating a plan account. In
addition, each participant will be sent the same information
sent to every holder of common shares, including but not limited
to ProLogis notice of annual meeting and proxy statement
and income tax information for reporting distributions received
and proceeds derived from the sale of any dividend reinvestment
plan shares.
12
All reports and notices from the agent to a participant will be
addressed to the participants last known address.
Participants should notify the agent promptly of any change in
address.
|
|
20.
|
What are the
responsibilities of ProLogis and the agent under the
plan?
|
ProLogis and the agent, in administering the plan, are not
liable for any act done in good faith or for any good faith
omission to act, including, without limitation, any claim of
liability:
(1) with respect to the prices and times at which common
shares are purchased or sold for a participant;
(2) with respect to any fluctuation in market value before
or after any purchase or sale of common shares; or
(3) arising out of any failure to terminate a
participants account upon that participants death or
adjudicated incompetence prior to receipt by the agent of notice
in writing of the death or adjudicated incompetence.
Neither ProLogis nor the agent can provide any assurance of a
profit or protect a participant from a loss on common shares
purchased under the plan. These limitations of liability do not
affect any liabilities arising under the federal securities
laws, including the Securities Act of 1933.
The agent may resign as administrator of the plan at any time,
in which case ProLogis will appoint a successor administrator.
In addition, ProLogis may replace the agent with a successor
administrator at any time.
Common share
certificates
|
|
21.
|
Are certificates
issued to participants for common shares purchased under the
plan?
|
Normally, stock certificates for shares purchased under the plan
will not be issued. Instead, such shares will be held
electronically by the agent on behalf of the participant as
dividend reinvestment plan shares. The agent will send each
participant a plan statement reporting the number of shares
(including fractional shares) credited to his, her or its
account as promptly as practicable after each purchase.
In order to request a certificate, participants may access their
accounts online at www.computershare.com, call the agent
at
(800) 956-3378
or complete and return the transaction form attached to each
plan statement. The agent will issue a certificate for any
number of whole common shares within 5 business days of receipt
of a participants request. Any remaining whole and
fractional common shares will continue to be held as dividend
reinvestment plan shares by the agent. Certificates for
fractional common shares will not be issued under any
circumstances. There is no fee for this service.
|
|
22.
|
What happens to
the reinvestment of distributions when a participant requests a
certificate for a portion of his, her or its dividend
reinvestment plan shares?
|
Cash distributions paid on all dividend reinvestment plan shares
are automatically reinvested. When a participant requests a
certificate for a portion of his, her or its dividend
reinvestment plan
13
shares and the issued shares remain registered in the
participants name, the reinvestment of distributions is
effected in the following manner:
(a) If the participant is enrolled in full distribution
reinvestment, distributions paid on the issued shares will
continue to be reinvested under the plan in the same manner as
prior to the request;
(b) If the participant is enrolled in partial distribution
reinvestment, distributions paid on the issued shares may or may
not continue to be reinvested depending on the number of common
shares specified for payment; or
(c) If a participant is enrolled in cash distribution,
distributions paid on the issued shares will no longer be
reinvested under the plan; instead, such distributions will be
sent to the participant by check or direct deposit.
|
|
23.
|
May common shares
held in certificate form be deposited in a participants
plan account?
|
Yes, regardless of which investment option is selected,
certificates registered in the participants name may be
surrendered to the agent for deposit into the participants
plan account, free of charge. All distributions on any common
shares evidenced by certificates deposited in accordance with
the plan will automatically be reinvested. Since the participant
bears the risk of loss in transit, certificates should be sent
to Computershare Trust Company, N.A., P.O. Box 43078,
Providence, RI
02940-3078
by registered or certified mail, with return receipt requested,
or some other form of traceable mail, and properly insured.
Participants should include a letter of instruction with the
certificates. The transaction form attached to each plan
statement may be used for this purpose. Participants should
not endorse the certificates.
Termination
|
|
24.
|
May a participant
terminate participation in the plan?
|
Yes, a participant may terminate his, her or its participation
in the plan at any time. Participants can make such a request
online at www.computershare.com, over the telephone at
(800) 956-3378
or in writing by completing the transaction form attached to
each plan statement and returning it to the address provided in
Question 18.
|
|
25.
|
What happens when
a participant terminates his, her or its plan account?
|
As soon as practicable after notice of termination is received,
the agent will move all whole shares from the plan to non-plan
book shares or send a certificate, as directed by the
participant. If no direction is received, the agent will move
the whole shares to non-plan book shares. Additionally the agent
will send a check representing the then current market value of
any fraction of a dividend reinvestment plan share. After an
account is terminated, all distributions will be paid to the
shareholder unless the shareholder re-elects to participate in
the plan.
Alternatively, a participant may terminate his, her or its plan
account by requesting the agent to sell all dividend
reinvestment plan shares, both whole and fractional, or to issue
a certificate for a certain number of dividend reinvestment plan
shares and to sell the remaining shares. The agent will remit to
the participant the proceeds of any sale of common shares, less
a service fee and any related
14
trading fees, transfer taxes or other fees incurred by the agent
allocable to the sale of those common shares. See Sale of
common shares.
In order to ensure termination for a particular distribution
payment, the agent must receive a participants request
prior to the to the distribution record date.
In addition, pending optional cash payments may affect the
termination of a plan account. Therefore, participants, if
applicable, should expressly request the return of any optional
cash payment prior to submitting a request for termination.
Optional cash payments will be refunded if a written request to
return the cash payment is received by the agent at least 5
trading days prior to the relevant investment date.
Participants should note that the agent is authorized to
terminate any account that contains less than five full common
shares of ProLogis. The agent will terminate the account by
selling the shares and fraction of a share and mailing a check
to the participant for the proceeds of the sale, less any
related trading fees, transfer taxes or other fees incurred by
the agent allocable to the sale of those common shares.
|
|
26.
|
When may a former
participant re-elect to participate in the plan?
|
Generally, any former participant may re-elect to participate in
the plan at any time. However, the agent reserves the right to
reject any shareholder authorization or initial purchase form on
the grounds of excessive joining and withdrawing. This
reservation is intended to minimize unnecessary administrative
expense and to encourage use of the plan as a long-term
investment service.
Sale of common
shares
|
|
27.
|
May a participant
request that common shares held in a plan account be
sold?
|
Yes, a participant may request that all or any number of
dividend reinvestment plan shares held by the agent be sold.
Within 5 business days after receipt of a participants
request to sell dividend reinvestment plan shares, the agent
will place a sell order through a broker or dealer designated by
the agent. If the dollar value of the sale is expected to be
$25,000 or less, participants can request to sell shares online
at www.computershare.com or over the telephone at
(800) 956-3378.
If the dollar value of the sale is expected to be greater than
$25,000, participants must submit their sale request in writing
to the address provided in Question 18. Participants must also
submit a written request to sell shares if they have changed
their address within 30 days of the sale request.
The participant will receive the proceeds of the sale, less a
service fee and any trading fees, transfer taxes or other fees
incurred by the agent allocable to the sale of those common
shares. No participant will have the authority or power to
direct the date or price at which common shares may be sold. The
sale price will equal the weighted average price for all shares
sold by the agent on the day of the sale less brokerage
commissions, currently $0.12 per share, subject to change.
Proceeds of the sale, less a $15.00 service fee and applicable
transfer taxes, will be forwarded by the agent to the
participant within 10 business days after receipt of the
participants request to sell.
15
|
|
28.
|
What happens when
a participant sells or transfers all of his, her or its
certificate and book shares?
|
If a participant disposes of all his, her or its certificate and
book shares, the agent will continue to reinvest the
distributions on his, her or its dividend reinvestment plan
shares and the participant may continue to make optional cash
payments, unless the participant notifies the agent that he, she
or it wishes to terminate his, her or its participation in the
plan.
In the event that a participant disposes of his, her or its
whole common shares and only a fractional common share remains
in the participants account, the agent is authorized to
terminate the account as provided in Question 25.
Other
information
|
|
29.
|
May common shares
held in the plan be pledged?
|
Book shares held in the plan may not be pledged and any
such purported pledge will be void. A participant who wishes to
pledge book shares must request that a certificate for those
book shares first be issued in the participants name.
30. What
happens if ProLogis authorizes a share distribution or splits
its shares?
If there is a distribution payable in common shares or a common
share split, the agent will receive and credit to the
participants plan account the applicable number of whole
and/or
fractional common shares based on the number of dividend
reinvestment plan shares.
31. What
happens if ProLogis has a rights offering?
If ProLogis has a rights offering in which separately tradable
and exercisable rights are issued to registered holders of
common shares, the rights attributable to whole common shares
held in a participants plan account will be transferred to
the plan participant as promptly as practicable after the rights
are issued.
32. How
are the participants common shares voted at shareholder
meetings?
Common shares held for a participant in the plan will be voted
at shareholder meetings only as that participant directs.
Participants will receive proxy materials from ProLogis. Common
shares held in a participants plan account may also be
voted in person at the meeting.
33. May
the plan be suspended or terminated?
While ProLogis expects to continue the plan indefinitely,
ProLogis may suspend or terminate the plan at any time. ProLogis
also reserves the right to modify, suspend, terminate or refuse
participation in the plan to any person, at any time as
described in this prospectus. In addition, ProLogis may modify,
suspend, terminate or refuse participation in the plan to any
person at any time, if participation, or any increase in the
number of common shares held by that person, would, in the
opinion of the Board of Trustees of ProLogis, jeopardize the
status of ProLogis as a real estate investment trust under the
Internal Revenue Code of 1986.
16
34. May
the plan be amended?
The plan may be amended or supplemented by ProLogis at any time.
Any amendment or supplement will only be effective upon notice
at least 30 days prior to the effective date thereof.
Notice is not required when an amendment or supplement is
necessary or appropriate to comply with the rules or policies of
the Securities and Exchange Commission, the Internal Revenue
Service or other regulatory authority or law, or when an
amendment or supplement does not materially affect the rights of
participants. The amendment or supplement will be deemed to be
accepted by a participant unless prior to the effective date
thereof, the agent receives notice of the termination of a
participants plan account. Any amendment may include an
appointment by the agent or by ProLogis of a successor bank or
agent, in which event ProLogis is authorized to pay that
successor bank or agent for the account of the participant all
distributions and distributions payable on common shares held by
the participant for application by that successor bank or agent
as provided in the plan.
35. What
happens if the plan is terminated?
If the plan is terminated, whole shares will continue to be held
by the agent in book form or distributed to each participant in
certificate form at the discretion of ProLogis. Fractional
shares will be sold based on the price of the actual trade for
the shares and a check representing the value of the fraction of
a share will be issued to each applicable participant. A check
representing any uninvested distributions or optional cash
payments held in the account will also be issued.
36. Who
interprets and regulates the plan?
ProLogis is authorized to issue interpretations, adopt
regulations and take such action as it may deem reasonably
necessary to effectuate the plan. Any action to effectuate the
plan taken by ProLogis or the agent in good faith exercise of
its judgment will be binding on participants.
37. What
law governs the plan?
The terms and conditions of the plan and its operation will be
governed by the laws of the State of Maryland.
|
|
38.
|
How does the
ownership limit set forth in ProLogis declaration of trust
affect purchases of common shares under the plan?
|
Subject to the exceptions specified in ProLogis
declaration of trust, no shareholder may own, or be deemed to
own, more than 9.8% of the number or value of ProLogis
outstanding common shares and preferred shares of beneficial
interest. To the extent any reinvestment of distributions
elected by a shareholder or investment of an optional cash
payment would cause any shareholder, or any other person, to
exceed the ownership limit or otherwise violate ProLogis
declaration of trust, the reinvestment or investment, as the
case may be, will be void ab initio, and the shareholder will be
entitled to receive cash distributions or a refund of his, her
or its optional cash payment, each without interest, in lieu of
the reinvestment or investment.
17
Individual
retirement accounts
39. May
a participant open an individual retirement account with the
agent?
Yes. The agent offers an individual retirement account
(IRA) that invests in ProLogis common shares
through the plan. After receiving a copy of this prospectus and
the agents IRA trust agreement and disclosure statement, a
participant may open an individual retirement account by
completing and signing an IRA enrollment form and returning it
to the agent with an initial contribution. The minimum initial
contribution for the IRA program is $200. Enrollment forms and
trust agreement and disclosure statements are available upon
request from the agent.
Some of the options and services generally available to plan
participants may not be applicable to the IRA program. Please
refer to the IRA trust agreement and disclosure statement for
individual retirement account program details.
The three individual retirement account options are:
|
|
|
|
|
Traditional Individual Retirement Account
|
|
|
|
Roth Individual Retirement Account
|
|
|
|
Coverdell Education Savings Account (formerly known as Education
IRA)
|
The agent has the right to charge reasonable fees for its
individual retirement account services. Such fees are described
in the IRA disclosure statement as in effect from time to time.
To obtain more information about individual retirement accounts,
participants may call the agents IRA department at
(800) 472-7428.
Participation in the IRA constitutes a separate agreement
between the participant and Computershare. Such agreement is
administered by Computershare separate from its administration
of the plan, as agent on behalf of ProLogis. ProLogis assumes no
responsibility for the operation or administration of the
individual retirement account program nor is ProLogis
responsible for the contents of the trust agreement or
disclosure statements. The trust agreement and disclosure
statements do not constitute a part of this prospectus.
FEDERAL INCOME
TAX CONSIDERATIONS RELATING TO THE PLAN
Participants are encouraged to consult their personal tax
advisors with specific reference to their own tax situations and
potential changes in the applicable law as to all
U.S. federal, state, local, foreign and other tax matters
in connection with the reinvestment of distributions and
purchase of common shares under the plan, the participants
tax basis and holding period for common shares acquired under
the plan and the character, amount and tax treatment of any gain
or loss realized on the disposition of common shares. The
following is a brief summary of the material U.S. federal
income tax considerations applicable to the plan, is for general
information only, and is not tax advice.
Tax consequences
of distribution reinvestment
In the case of common shares purchased by the agent from
ProLogis, a participant will be treated for U.S. federal
income tax purposes as having received a distribution equal to
the fair market value, as of the investment date, of the common
shares purchased with reinvested distributions. The discount, if
any, will be treated as being part of the distribution received.
The fair market value will
18
equal the average of the high and low of the sale prices on the
applicable distribution payment date as reported in the New York
Stock Exchange Composite Transactions list.
With respect to common shares purchased by the agent in open
market transactions or in negotiated transactions with third
parties, the Internal Revenue Service has indicated in somewhat
similar situations that the amount of distribution received by a
participant would include the fair market value of the common
shares purchased with reinvested distributions and a pro rata
share of any brokerage commission or other related charges paid
by ProLogis in connection with the agents purchase of the
common shares on behalf of the participant. The plan currently
provides that ProLogis will pay such brokerage commissions for
the purchase of common shares with distributions in the open
market or in negotiated transactions with third parties.
As in the case of non-reinvested cash distributions, the
distributions described above will constitute taxable
distribution income to participants to the extent of
ProLogis current and accumulated earnings and profits
allocable to the distributions and any excess distributions will
constitute a return of capital which reduces the basis of a
participants common shares or results in gain to the
extent that excess distribution exceeds the participants
tax basis in his, her or its common shares. In addition, if
ProLogis designates part or all of its distributions as capital
gains distributions, those designated amounts would be treated
by a participant as long-term capital gains.
A participants tax basis in his, her or its common shares
acquired under the plan will generally equal the total amount of
distributions a participant is treated as receiving, as
described above. A participants holding period in his, her
or its common shares generally begins on the day following the
date on which the common shares are credited to the
participants plan account.
Tax consequences
of optional cash payments
The Internal Revenue Service has indicated in somewhat similar
situations that a participant who makes an optional cash
purchase of common shares under the plan will be treated as
having received a distribution equal to the excess, if any, of
the fair market value on the investment date of the common
shares over the amount of the optional cash payment made by the
participant. The fair market value will equal the average of the
high and low of the sale prices on the applicable investment
date for optional cash payments as reported in the New York
Stock Exchange Composite Transactions list.
Also, if the common shares are acquired by the agent in an open
market transaction or in a negotiated transaction with third
parties, then the Internal Revenue Service may assert that a
participant will be treated as receiving a distribution equal to
a pro rata share of any brokerage commission or other related
charges paid by ProLogis on behalf of the participant. The plan
currently provides that ProLogis will not pay such brokerage
commissions for the purchase of common shares with optional cash
payments in the open market or in negotiated transactions with
third parties.
Any distributions which the participant is treated as receiving,
including the discount, would be taxable income or gain or
reduce the basis in common shares, or some combination thereof,
under the rules described above.
In Private Letter Ruling 9837008, the Internal Revenue Service
held that a shareholder who participated in both the dividend
reinvestment and stock purchase aspects of a dividend
reinvestment and cash option purchase plan offered by a real
estate investment trust under the Internal Revenue
19
Code, pursuant to which stock could be acquired at a discount,
would be treated in the case of a cash option purchase as having
received at the time of the purchase a distribution from the
real estate investment trust of the discount amount which was
taxable to the shareholder in the manner described above, but a
shareholder who participated solely in the cash purchase part of
the plan would not be treated as having received a distribution
of the discount amount and, therefore, would realize no income
upon purchase attributable to the discount. In addition, the
Internal Revenue Service held that a shareholder who
participated solely in the dividend reinvestment part of the
plan would be treated as having received the fair market value
of the shares received plus any fee or commission that is paid
by the company to acquire such shares. In Private Letter Ruling
200052031, the Internal Revenue Service held that even if the
only dividends reinvested in stock by a shareholder who
participated in the cash purchase part of the plan were
dividends on the stock which the shareholder had purchased under
the plan, the shareholder would be treated as receiving a
distribution equal to the discount on the purchased shares which
was taxable in the manner described above. Private letter
rulings are not considered precedent by the Internal Revenue
Service and no assurance can be given that the Internal Revenue
Service would take this position with respect to other
transactions, including those under the plan.
A participants tax basis in his, her or its common shares
acquired through an optional cash purchase under the plan will
generally equal the total amount of distributions a participant
is treated as receiving, as described above, plus the amount of
the optional cash payment. A participants holding period
for common shares purchased under the plan generally will begin
on the day following the date on which common shares are
credited to the participants plan account.
In addition, all cash distributions paid with respect to all
dividend reinvestment plan shares will be reinvested
automatically. In that regard, see Tax Consequences of
Distribution Reinvestment above.
Backup
withholding and administrative expenses
In general, any distribution reinvested under the plan is not
subject to U.S. federal income tax withholding. ProLogis or
the agent may be required, however, to deduct as backup
withholding (currently at a rate of 28%) of all
distributions paid to any shareholder, regardless of whether
those distributions are reinvested pursuant to the plan.
Similarly, the agent may be required to deduct backup
withholding from all proceeds of sales of common shares held in
a plan account. A participant is subject to backup withholding
if:
(1) the participant has failed to properly furnish ProLogis
and the agent with his, her or its correct taxpayer
identification number;
(2) the Internal Revenue Service notifies ProLogis or the
agent that the identification number furnished by the
participant is incorrect;
(3) the Internal Revenue Service notifies ProLogis or the
agent that backup withholding should be commenced because the
participant failed to report properly distributions paid to him,
her or it; or
(4) when required to do so, the participant fails to
certify, under penalties of perjury, that the participant is not
subject to backup withholding.
Backup withholding amounts will be withheld from distributions
before those distributions are reinvested under the plan.
Therefore, distributions to be reinvested under the plan by
participants who
20
are subject to backup withholding will be reduced by the backup
withholding amount. The withheld amounts constitute a credit on
the participants income tax return.
Backup withholding will not apply, however, if the participant:
(1) furnishes a correct taxpayer identification number and
certifies that he, she or it is not subject to backup
withholding on Internal Revenue Service
Form W-9,
or an appropriate substitute form;
(2) provides a certificate of foreign status on Internal
Revenue Service
Form W-8BEN,
or an appropriate substitute form; or
(3) is otherwise exempt from backup withholding.
While the matter is not free from doubt, based on Private Letter
Rulings 9837008 and 200052031, ProLogis intends to take the
position that administrative expenses of the plan paid by
ProLogis are not constructive distributions to participants.
Tax consequences
of dispositions
A participant may recognize a gain or loss upon receipt of a
cash payment for a fractional common share credited to a plan
account or when the common shares held in an account are sold at
the request of the participant. A gain or loss may also be
recognized upon a participants disposition of common
shares received from the plan. The amount of any such gain or
loss will be the difference between the amount realized,
generally the amount of cash received, for the whole or
fractional common shares and the tax basis of those common
shares. Generally, gain or loss recognized on the disposition of
common shares acquired under the plan will be treated for
U.S. federal income tax purposes as a capital gain or loss
to the extent the holder of such shares has not held such shares
as a dealer. The capital gain or loss will be taxed as long-term
gain or loss if the participants holding period for the
shares exceeds twelve months.
FEDERAL INCOME
TAX CONSIDERATIONS
RELATING TO PROLOGIS TREATMENT AS A REIT
ProLogis intends to operate in a manner that permits it to
satisfy the requirements for qualification and taxation as a
real estate investment trust under the applicable provisions of
the Internal Revenue Code. No assurance can be given, however,
that such requirements will be met. The following is a
description of (a) the U.S. federal income tax
consequences to ProLogis and its shareholders of the treatment
of ProLogis as a real estate investment trust and (b) the
U.S. federal income tax consequences of the ownership and
disposition of ProLogis shares. Since these provisions are
highly technical and complex, each prospective purchaser the
common shares is urged to consult his, her or its own tax
advisor with respect to the U.S. federal, state, local,
foreign and other tax consequences of the purchase, ownership
and disposition of the common shares.
Based upon representations of ProLogis with respect to the facts
as set forth and explained in the discussion below, in the
opinion of Mayer, Brown, Rowe & Maw LLP, counsel to
ProLogis, ProLogis has been organized and has operated in
conformity with the requirements for qualification as a real
estate investment trust beginning with its taxable year ended
December 31, 2000 through and including its taxable year
ended December 31, 2005, and its actual and proposed method
of operation
21
described in this prospectus and as represented by management
will enable it to satisfy the requirements for qualification and
taxation as a real estate investment trust commencing with its
taxable year ending on December 31, 2006 and each year
thereafter.
This opinion is based on representations made by ProLogis as to
factual matters relating to ProLogis organization and its
actual and intended or expected manner of operation. In
addition, this opinion is based on the law existing and in
effect on the date of this prospectus. ProLogis
qualification and taxation as a real estate investment trust
will depend upon ProLogis ability to meet on a continuing
basis, through actual operating results, asset composition,
distribution levels and diversity of stock ownership, the
various qualification tests imposed under the Internal Revenue
Code discussed below. Mayer, Brown, Rowe & Maw LLP will
not review compliance with these tests on a continuing basis. No
assurance can be given that ProLogis will satisfy such tests on
a continuing basis.
In brief, if the conditions imposed by the real estate
investment trust provisions of the Internal Revenue Code are
met, entities, such as ProLogis, that invest primarily in real
estate and that otherwise would be treated for U.S. federal
income tax purposes as corporations, are allowed a deduction for
dividends paid to shareholders. This treatment substantially
eliminates the double taxation at both the corporate
and shareholder levels that generally results from the use of
corporations. However, as discussed in greater detail below,
entities, such as ProLogis, remain subject to tax in certain
circumstances even if they qualify as a real estate investment
trust.
If ProLogis fails to qualify as a real estate investment trust
in any year, however, it will be subject to U.S. federal
income taxation as if it were a domestic corporation, and its
shareholders will be taxed in the same manner as shareholders of
ordinary corporations. In this event, ProLogis could be subject
to potentially significant tax liabilities, and therefore the
amount of cash available for distribution to its shareholders
would be reduced or eliminated. In addition, ProLogis would not
be obligated to make distributions to shareholders.
ProLogis elected real estate investment trust status effective
beginning with its taxable year ended December 31, 1993,
and the ProLogis board of trustees believes that ProLogis has
operated and currently intends that ProLogis will operate in a
manner that permits it to qualify as a real estate investment
trust in each taxable year thereafter. There can be no
assurance, however, that this expectation will be fulfilled,
since qualification as a real estate investment trust depends on
ProLogis continuing to satisfy numerous asset, income and
distribution tests described below, which in turn will be
dependent in part on ProLogis operating results.
The following summary is based on the Internal Revenue Code, its
legislative history, administrative pronouncements, judicial
decisions and Treasury regulations, subsequent changes to any of
which may affect the tax consequences described in this
prospectus, possibly on a retroactive basis. The following
summary is not exhaustive of all possible tax considerations and
does not give a detailed discussion of any state, local, or
foreign tax considerations, nor does it discuss all of the
aspects of U.S. federal income taxation that may be
relevant to a prospective shareholder in light of his, her or
its particular circumstances or to various types of
shareholders, including insurance companies, tax-exempt
entities, financial institutions or broker-dealers, foreign
corporations and persons who are not citizens or residents of
the United States, subject to special treatment under the
U.S. federal income tax laws.
22
The following summary applies only to shareholders who hold the
common shares as capital assets. For purposes of the following
summary, a U.S. shareholder is a beneficial owner of common
shares that for U.S. federal income tax purposes is: a
citizen of the United States or an individual who is a resident
of the United States, a corporation (or other entity treated as
a corporation) created or organized under the laws of the United
States or any political subdivision thereof, an estate, the
income of which is subject to U.S. federal income taxation
regardless of its source, or a trust, if either it is eligible
to elect and has validly elected to continue to be treated as a
U.S. person under prior law or a court within the United
States is able to exercise primary supervision over the
administration of the trust and one or more U.S. persons
have the authority to control all substantial decisions of the
trust. A foreign shareholder is any shareholder that is not a
U.S. shareholder. For U.S. federal income tax
purposes, income earned through a foreign or domestic
partnership or other flow-through entity is attributed to its
owners. Accordingly, if a partnership or other flow-through
entity holds stock, the tax treatment of the shareholder will
generally depend on the status of the partner or other owner and
the activities of the partnership or other entity.
Taxation of
ProLogis
General
In any year in which ProLogis qualifies as a real estate
investment trust, in general it will not be subject to
U.S. federal income tax on that portion of its real estate
investment trust taxable income or capital gain that is
distributed to shareholders. ProLogis may, however, be subject
to U.S. federal income tax at normal corporate rates upon
any taxable income or capital gain not distributed.
A real estate investment trust is permitted to designate in a
notice mailed to shareholders within 60 days of the end of
the taxable year, or in a notice mailed with its annual report
for the taxable year, such amount of undistributed net long-term
capital gains it received during the taxable year, which its
shareholders are to include in their taxable income as long-term
capital gains. Thus, if ProLogis made this designation, the
shareholders of ProLogis would include in their income as
long-term capital gains their proportionate share of the
undistributed net capital gains as designated by ProLogis and
ProLogis would have to pay the tax on such gains within
30 days of the close of its taxable year. Each shareholder
of ProLogis would be deemed to have paid such shareholders
share of the tax paid by ProLogis on such gains, which tax would
be credited or refunded to the shareholder. A shareholder would
increase his, her or its tax basis in his, her or its ProLogis
shares by the difference between the amount of income to the
holder resulting from the designation less the holders
credit or refund for the tax paid by ProLogis.
Notwithstanding its qualification as a real estate investment
trust, ProLogis may also be subject to taxation in other
circumstances. If ProLogis should fail to satisfy either the 75%
or the 95% gross income test, as discussed below, and
nonetheless maintains its qualification as a real estate
investment trust because other requirements are met, it will be
subject to a 100% tax on the greater of the amount by which
ProLogis fails to satisfy either the 75% or the 95% gross income
test, multiplied by a fraction intended to reflect
ProLogis profitability. Furthermore, if ProLogis fails to
satisfy the 5% asset test or the 10% vote and value test (and
does not qualify for a de minimis safe harbor) or fails to
satisfy the other asset tests, each of which are discussed
below, and nonetheless maintains its qualification as a real
estate investment trust because certain other requirements are
met, ProLogis will be subject to a tax equal to the greater of
$50,000 or an amount determined (pursuant to regulations
prescribed by the Treasury) by multiplying the highest corporate
tax rate by the net income
23
generated by the assets that caused the failure for the period
beginning on the first date of the failure to meet the tests and
ending on the date (which must be within 6 months after the
last day of the quarter in which the failure is identified) that
ProLogis disposes of the assets or otherwise satisfies the
tests. If ProLogis fails to satisfy one or more real estate
investment trust requirements other than the 75% or the 95%
gross income tests and other than the asset tests, but
nonetheless maintains its qualification as a real estate
investment trust because certain other requirements are met,
ProLogis will be subject to a penalty of $50,000 for each such
failure. ProLogis will also be subject to a tax of 100% on net
income from any prohibited transaction, as described
below, and if ProLogis has net income from the sale or other
disposition of foreclosure property, which is held
primarily for sale to customers in the ordinary course of
business or other nonqualifying income from foreclosure
property, it will be subject to tax on such income from
foreclosure property at the highest corporate rate. ProLogis
will also be subject to a tax of 100% on the amount of any rents
from real property, deductions or excess interest that would be
reapportioned under Internal Revenue Code Section 482 to
one of its taxable REIT subsidiaries in order to
more clearly reflect income of the taxable REIT subsidiary. A
taxable REIT subsidiary is any corporation for which a joint
election has been made by a real estate investment trust and
such corporation to treat such corporation as a taxable REIT
subsidiary with respect to such real estate investment trust.
See Other Tax Considerations
Investments in taxable REIT subsidiaries. In addition, if
ProLogis should fail to distribute during each calendar year at
least the sum of:
(1) 85% of its real estate investment trust ordinary income
for such year;
(2) 95% of its real estate investment trust capital gain
net income for such year, other than capital gains ProLogis
elects to retain and pay tax on as described below; and
(3) any undistributed taxable income from prior years,
ProLogis would be subject to a 4% excise tax on the excess of
such required distribution over the amounts actually
distributed. To the extent that ProLogis elects to retain and
pay income tax on its long-term capital gain, such retained
amounts will be treated as having been distributed for purposes
of the 4% excise tax. ProLogis may also be subject to the
corporate alternative minimum tax, as well as tax in
various situations and on some types of transactions not
presently contemplated. ProLogis will use the calendar year both
for U.S. federal income tax purposes and for financial
reporting purposes.
In order to qualify as a real estate investment trust, ProLogis
must meet, among others, the following requirements:
Share ownership
test
ProLogis shares must be held by a minimum of 100 persons
for at least 335 days in each taxable year or a
proportional number of days in any short taxable year. In
addition, at all times during the second half of each taxable
year, no more than 50% in value of the ProLogis shares may be
owned, directly or indirectly and by applying constructive
ownership rules, by five or fewer individuals, which for this
purpose includes some tax-exempt entities. Any stock held by a
qualified domestic pension or other retirement trust will be
treated as held directly by its beneficiaries in proportion to
their actuarial interest in such trust rather than by such
trust. If ProLogis complies with the Treasury regulations for
ascertaining its actual ownership and did not know, or
exercising reasonable diligence would not have
24
reason to know, that more than 50% in value of its outstanding
shares was held, actually or constructively, by five or fewer
individuals, then it will be treated as meeting such requirement.
In order to ensure compliance with the 50% test, ProLogis has
placed restrictions on the transfer of the shares of its stock
to prevent additional concentration of ownership. Moreover, to
evidence compliance with these requirements under Treasury
regulations, ProLogis must maintain records which disclose the
actual ownership of its outstanding shares of stock and such
regulations impose penalties against ProLogis for failing to do
so. In fulfilling its obligations to maintain records, ProLogis
must and will demand written statements each year from the
record holders of designated percentages of shares of its stock
disclosing the actual owners of such shares as prescribed by
Treasury regulations. A list of those persons failing or
refusing to comply with such demand must be maintained as a part
of ProLogis records. A shareholder failing or refusing to
comply with ProLogis written demand must submit with his,
her or its tax returns a similar statement disclosing the actual
ownership of shares of ProLogis stock and other
information. In addition, ProLogis declaration of trust
provides restrictions regarding the transfer of shares that are
intended to assist ProLogis in continuing to satisfy the share
ownership requirements. ProLogis intends to enforce the
percentage limitations on ownership of shares of its stock to
assure that its qualification as a real estate investment trust
will not be compromised.
Asset
tests
At the close of each quarter of ProLogis taxable year,
ProLogis must satisfy tests relating to the nature of its assets
determined in accordance with generally accepted accounting
principles. Where ProLogis invests in a partnership or limited
liability company taxed as a partnership or disregarded entity,
ProLogis will be deemed to own a proportionate share of the
partnerships or limited liability companys assets.
In addition, when ProLogis owns 100% of a corporation that is
not a taxable REIT subsidiary, it will be deemed to own 100% of
the corporations assets. First, at least 75% of the value
of ProLogis total assets must be represented by interests
in real property, interests in mortgages on real property,
shares in other real estate investment trusts, cash, cash items,
and government securities, and qualified temporary investments.
Second, although the remaining 25% of ProLogis assets
generally may be invested without restriction.
ProLogis is prohibited from owning securities representing more
than 10% of either the vote or value of the outstanding
securities of any issuer other than a qualified real estate
investment trust subsidiary, another real estate investment
trust or a taxable REIT subsidiary. Further, no more than 20% of
the value of ProLogis total assets may be represented by
securities of one or more taxable REIT subsidiaries, and no more
than 5% of the value of ProLogis total assets may be
represented by securities of any non-government issuer other
than a taxable REIT subsidiary.
As discussed above, ProLogis generally may not own more than 10%
by vote or value of any one issuers securities and no more
than 5% of the value of the total assets of ProLogis generally
may be represented by the securities of any issuer. If ProLogis
fails to meet either of these tests at the end of any quarter
and such failure is not cured within 30 days thereafter,
ProLogis would fail to qualify as a real estate investment
trust. After the
30-day cure
period, ProLogis could dispose of sufficient assets to cure such
a violation that does not exceed the lesser of 1% of
ProLogis assets at the end of the relevant quarter or
$10,000,000 if the disposition occurs within 6 months after
the last day of the calendar quarter in which ProLogis
identifies the violation. For violations of these tests that are
larger than this amount and for violations of the other asset
tests described above, where such violations are
25
due to reasonable cause and not willful neglect, ProLogis can
avoid disqualification as a real estate investment trust, after
the 30-day
cure period, by taking steps including the disposition of
sufficient assets to meet the asset test (within 6 months
after the last day of the calendar quarter in which ProLogis
identifies the violation) and paying a tax equal to the greater
of $50,000 or an amount determined (pursuant to Treasury
regulations) by multiplying the highest corporate tax rate by
the net income generated by the non-qualifying assets for the
period beginning on the first date of the failure to meet the
tests and ending on the date that ProLogis disposes of the
assets or otherwise satisfies the asset tests.
Gross income
tests
There are currently two separate percentage tests relating to
the sources of ProLogis gross income that must be
satisfied for each taxable year. For purposes of these tests,
where ProLogis invests in a partnership or limited liability
company taxed as a partnership or disregarded entity, ProLogis
will be treated as receiving its share of the income and loss of
the partnership or limited liability company, and the gross
income of the partnership or limited liability company will
retain the same character in the hands of ProLogis as it has in
the hands of the partnership or limited liability company. The
two tests are as follows:
1. The 75% Gross Income Test. At least
75% of ProLogis gross income for the taxable year must be
qualifying income. Qualifying income generally
includes:
(1) rents from real property, except as modified below;
(2) interest on obligations secured by mortgages on, or
interests in, real property;
(3) gains from the sale or other disposition of
non-dealer property, which means interests in real
property and real estate mortgages, other than gain from
property held primarily for sale to customers in the ordinary
course of ProLogis trade or business;
(4) dividends or other distributions on shares in other
real estate investment trusts, as well as gain from the sale of
such shares;
(5) abatements and refunds of real property taxes;
(6) income from the operation, and gain from the sale, of
foreclosure property, which means property acquired
at or in lieu of a foreclosure of the mortgage secured by such
property;
(7) commitment fees received for agreeing to make loans
secured by mortgages on real property, or to purchase or lease
real property; and
(8) certain qualified temporary investment income
attributable to the investment of new capital received by
ProLogis in exchange for its shares or certain publicly offered
debt, which income is received or accrued during the one-year
period following the receipt of such capital.
Rents received from a tenant will not, however, qualify as rents
from real property in satisfying the 75% or the 95% gross income
test described below, if ProLogis, or an owner of 10% or more of
ProLogis, directly or constructively owns 10% or more of such
tenant, unless the tenant is a taxable REIT subsidiary of
ProLogis and certain other requirements are met with
26
respect to the real property being rented. In addition, if rent
attributable to personal property leased in connection with a
lease of real property is greater than 15% of the total rent
received under the lease, then the portion of rent attributable
to such personal property will not qualify as rents from real
property. Moreover, an amount received or accrued will not
qualify as rents from real property or as interest income for
purposes of the 75% and 95% gross income tests if it is based in
whole or in part on the income or profits of any person,
although an amount received or accrued generally will not be
excluded from rents from real property solely by
reason of being based on a fixed percentage or percentages of
receipts or sales. Finally, for rents received to qualify as
rents from real property, ProLogis generally must not furnish or
render services to tenants, other than through a taxable REIT
subsidiary, or an independent contractor from whom
ProLogis derives no income, except that ProLogis may directly
provide services that are usually or customarily
rendered in connection with the rental of properties for
occupancy only, or are not otherwise considered rendered
to the occupant for his convenience. A real estate
investment trust is permitted to render a de minimis amount of
impermissible services to tenants, or in connection with the
management of property, and still treat amounts received with
respect to that property (other than the amounts attributable to
the provision of the de minimis impermissible services) as rent
from real property. The amount received or accrued by the real
estate investment trust during the taxable year for the
impermissible services with respect to a property may not exceed
1% of all amounts received or accrued by the real estate
investment trust directly or indirectly from the property. If
this 1% threshold is exceeded, none of the amounts received with
respect to that property will qualify as rent from real
property. The amount received for any service or management
operation for this purpose shall be deemed to be not less than
150% of the direct cost of the real estate investment trust in
furnishing or rendering the service or providing the management
or operation. Furthermore, ProLogis may furnish such
impermissible services to tenants through a taxable REIT
subsidiary and still treat amounts otherwise received with
respect to the property as rent from real property.
2. The 95% Gross Income Test. In addition
to deriving 75% of its gross income from the sources listed
above, at least 95% of ProLogis gross income for the
taxable year must be derived from the above-described qualifying
income, or from dividends, interest or gains from the sale or
disposition of stock or other securities that are not dealer
property. Dividends, other than on real estate investment trust
shares, and interest on any obligations not secured by an
interest in real property are included for purposes of the 95%
gross income test, but not for purposes of the 75% gross income
test. Any income from a hedging transaction that is clearly and
timely identified and hedges indebtedness incurred or to be
incurred to acquire or carry real estate assets will not
constitute gross income, rather than being treated as qualifying
income or non-qualifying income, for purposes of the 95% gross
income test. Income from a hedging transaction that does not
meet these requirements will be treated as non-qualifying income
for purposes of the 95% gross income test.
For purposes of determining whether ProLogis complies with the
75% and 95% gross income tests, gross income does not include
income from prohibited transactions. A prohibited
transaction is a sale of property held primarily for sale
to customers in the ordinary course of a trade or business,
excluding foreclosure property (described below), unless such
property is held by ProLogis for at least four years and other
requirements relating to the number of properties sold in a
year, their tax bases, and the cost of improvements made to the
property are satisfied. See Taxation of
ProLogis General.
27
Foreclosure property is real property (including interests in
real property) and any personal property incident to such real
property (i) that is acquired by a real estate investment
trust as a result of the real estate investment trust having bid
in the property at foreclosure, or having otherwise reduced the
property to ownership or possession by agreement or process of
law, after there was a default (or default was imminent) on a
lease of the property or a mortgage loan held by the real estate
investment trust and secured by the property, (ii) for
which the related loan or lease was made, entered into or
acquired by the real estate investment trust at a time when
default was not imminent or anticipated and (iii) for which
such real estate investment trust makes an election to treat the
property as foreclosure property. Real estate investment trusts
generally are subject to tax at the maximum corporate tax rate
(currently 35%) on any net income from foreclosure property,
including any gain from the disposition of the foreclosure
property, other than income that would otherwise be qualifying
income for purposes of the 75% gross income test. Any gain from
the sale of property for which a foreclosure property election
has been made will not be subject to the 100% penalty tax on
gains from prohibited transactions described below, even if the
property was held primarily for sale to customers in the
ordinary course of a trade or business.
Even if ProLogis fails to satisfy one or both of the 75% or 95%
gross income tests for any taxable year, it may still qualify as
a real estate investment trust for such year if it is entitled
to relief under provisions of the Internal Revenue Code. These
relief provisions, as modified by the 2004 Act, will generally
be available if:
(1) following ProLogis identification of the failure,
it files a schedule with a description of each item of gross
income that caused the failure in accordance with regulations
prescribed by the Treasury; and
(2) ProLogis failure to comply was due to reasonable
cause and not due to willful neglect.
If these relief provisions apply, however, ProLogis will
nonetheless be subject to a special tax upon the greater of the
amount by which it fails either the 75% or 95% gross income test
for that year.
Annual
distribution requirements
In order to qualify as a real estate investment trust, ProLogis
is required to make distributions, other than capital gain
dividends, to its shareholders each year in an amount at least
equal to the sum of 90% of ProLogis real estate investment
trust taxable income, computed without regard to the dividends
paid deduction and real estate investment trust net capital
gain, plus 90% of its net income after tax, if any, from
foreclosure property, minus the sum of some items of excess
non-cash income. Such distributions must be paid in the taxable
year to which they relate, or in the following taxable year if
declared before ProLogis timely files its tax return for such
year and if paid on or before the first regular dividend payment
after such declaration. To the extent that ProLogis does not
distribute all of its net capital gain or distributes at least
90%, but less than 100%, of its real estate investment trust
taxable income, as adjusted, it will be subject to tax on the
undistributed amount at regular capital gains or ordinary
corporate tax rates, as the case may be. A real estate
investment trust is permitted, with respect to undistributed net
long-term capital gains it received during the taxable year, to
designate in a notice mailed to shareholders within 60 days
of the end of the taxable year, or in a
28
notice mailed with its annual report for the taxable year, such
amount of such gains which its shareholders are to include in
their taxable income as long-term capital gains. Thus, if
ProLogis made this designation, the shareholders of ProLogis
would include in their income as long-term capital gains their
proportionate share of the undistributed net capital gains as
designated by ProLogis and ProLogis would have to pay the tax on
such gains within 30 days of the close of its taxable year.
Each shareholder of ProLogis would be deemed to have paid such
shareholders share of the tax paid by ProLogis on such
gains, which tax would be credited or refunded to the
shareholder. A shareholder would increase his, her or its tax
basis in his, her or its ProLogis shares by the difference
between the amount of income to the holder resulting from the
designation less the shareholders credit or refund for the
tax paid by ProLogis.
ProLogis intends to make timely distributions sufficient to
satisfy the annual distribution requirements. It is possible
that ProLogis may not have sufficient cash or other liquid
assets to meet the 90% distribution requirement, due to timing
differences between the actual receipt of income and actual
payment of expenses on the one hand, and the inclusion of such
income and deduction of such expenses in computing
ProLogis real estate investment trust taxable income on
the other hand. To avoid any problem with the 90% distribution
requirement, ProLogis will closely monitor the relationship
between its real estate investment trust taxable income and cash
flow and, if necessary, intends to borrow funds in order to
satisfy the distribution requirement. However, there can be no
assurance that such borrowing would be available at such time.
ProLogis generally must make distributions during the taxable
year to which they relate. ProLogis may pay dividends in the
following year in two circumstances. First, ProLogis may declare
and pay dividends in the following year if the dividends are
declared before it timely files its tax return for the year and
if it pays the dividends before the first regular dividend
payment made after such declaration. Second, if ProLogis
declares a dividend in October, November, or December of any
year with a record date in one of these months and pays the
dividend on or before January 31 of the following year, it will
be treated as having paid the dividend on December 31 of
the year in which the dividend was declared. To the extent that
ProLogis does not distribute all of its net capital gain or if
it distributes at least 90%, but less than 100% of its real
estate investment trust taxable income, as adjusted, it will be
subject to tax on the undistributed amount at regular capital
gains or ordinary corporate tax rates, as the case may be.
If ProLogis fails to meet the 90% distribution requirement as a
result of an adjustment to ProLogis tax return by the
Internal Revenue Service, or if ProLogis determines that it has
failed to meet the 90% distribution requirement in a prior
taxable year, ProLogis may retroactively cure the failure by
paying a deficiency dividend, plus applicable
penalties and interest, within a specified period.
Tax aspects of
ProLogis investments in partnerships
A portion of ProLogis investments are owned through
various partnerships. ProLogis will include its proportionate
share of (i) each partnerships income, gains, losses,
deductions and credits for purposes of the various real estate
investment trust gross income tests and in its computation of
its real estate investment trust taxable income and
(ii) the assets held by each partnership for purposes of
the real estate investment trust asset tests.
ProLogis interest in the partnerships involves special tax
considerations, including the possibility of a challenge by the
Internal Revenue Service of the status of the partnerships as
partnerships, as
29
opposed to associations taxable as corporations, for
U.S. federal income tax purposes. If a partnership were to
be treated as an association, such partnership would be taxable
as a corporation and therefore subject to an entity-level tax on
its income. In such a situation, the character of ProLogis
assets and items of gross income would change, which may
preclude ProLogis from satisfying the real estate investment
trust asset tests and may preclude ProLogis from satisfying the
real estate investment trust gross income tests. See
Failure to qualify below, for a
discussion of the effect of ProLogis failure to meet such
tests.
Failure to
qualify
If ProLogis fails to qualify for taxation as a real estate
investment trust in any taxable year and relief provisions do
not apply, ProLogis will be subject to tax, including applicable
alternative minimum tax, on its taxable income at regular
corporate rates. Distributions to shareholders in any year in
which ProLogis fails to qualify as a real estate investment
trust will not be deductible by ProLogis, nor generally will
they be required to be made under the Internal Revenue Code. In
such event, to the extent of current and accumulated earnings
and profits, all distributions to shareholders will be taxable
as ordinary income, and subject to limitations in the Internal
Revenue Code, corporate distributees may be eligible for the
dividends-received deduction. Unless entitled to relief under
specific statutory provisions, ProLogis also will be
disqualified from re-electing taxation as a real estate
investment trust for the four taxable years following the year
during which qualification was lost.
In the event that ProLogis fails to satisfy one or more
requirements for qualification as a real estate investment
trust, other than the 75% and the 95% gross income tests and
other than the asset tests, each of which is subject to the cure
provisions described above, ProLogis will retain its real estate
investment trust qualification if (i) the violation is due
to reasonable cause and not willful neglect and
(ii) ProLogis pays a penalty of $50,000 for each failure to
satisfy the provision.
Taxation of
ProLogis shareholders
Taxation of
U.S. shareholders
As long as ProLogis qualifies as a real estate investment trust,
distributions made to ProLogis U.S. shareholders out
of current or accumulated earnings and profits, and not
designated as capital gain dividends, will be taken into account
by them as ordinary dividends and will not be eligible for the
dividends-received deduction for corporations. Ordinary
dividends will be taxable to ProLogis
U.S. shareholders as ordinary income, except that prior to
January 1, 2011, such dividends will be taxed at the rate
applicable to long-term capital gains to the extent that such
dividends are attributable to dividends received by ProLogis
from non-real estate investment trust corporations (such as
taxable REIT subsidiaries) or are attributable to income upon
which ProLogis has paid corporate income tax (e.g., to the
extent that ProLogis distributes less than 100% of its taxable
income). Distributions and undistributed amounts that are
designated as capital gain dividends will be taxed as long-term
capital gains, to the extent they do not exceed ProLogis
actual net capital gain for the taxable year, without regard to
the period for which the shareholder has held his, her or its
shares. However, corporate shareholders may be required to treat
up to 20% of some capital gain dividends as ordinary income. To
the extent that ProLogis makes distributions in excess of
current and accumulated earnings and profits, these
distributions are treated first as a tax-free return of capital
to the shareholder, reducing the tax basis of a
shareholders shares by the amount of such distribution,
but not below zero, with distributions in excess of the
shareholders tax basis taxable as capital gains, if the
shares are held as
30
a capital asset. In addition, any dividend declared by ProLogis
in October, November or December of any year and payable to a
shareholder of record on a specific date in any such month shall
be treated as both paid by ProLogis and received by the
shareholder on December 31 of such year, provided that the
dividend is actually paid by ProLogis during January of the
following calendar year. Shareholders may not include in their
individual income tax returns any net operating losses or
capital losses of ProLogis. Instead, ProLogis will generally
carry over these losses for potential offset against its future
taxable income. U.S. federal income tax rules may also
require that minimum tax adjustments and preferences be
apportioned to ProLogis shareholders.
In general, any loss upon a sale or exchange of shares by a
shareholder who has held such shares for six months or less,
after applying holding period rules, will be treated as a
long-term capital loss, to the extent of distributions from
ProLogis required to be treated by such shareholder as long-term
capital gains. In addition, under the so-called wash
sale rules, all or a portion of any loss that a
shareholder realizes upon a taxable disposition of ProLogis
common shares may be disallowed if the shareholder purchases
other common stock within 30 days before or after the
disposition. A non-corporate taxpayer may deduct capital losses
not offset by capital gains against ordinary income only up to a
maximum annual amount of $3,000. A non-corporate taxpayer may
carry forward unused capital losses indefinitely. A corporate
taxpayer must pay tax on its net capital gain at ordinary
corporate rates. A corporate taxpayer may deduct capital losses
only to the extent of capital gains, with unused losses being
carried back three years and forward five years.
Gain from the sale or exchange of shares held for more than one
year is taxed as long-term capital gain. Net long-term capital
gains of non-corporate taxpayers are taxed at a maximum capital
gain rate of 15% for sales or exchanges occurring prior to
January 1, 2011 (and 20% for sales or exchanges occurring
thereafter). Pursuant to Internal Revenue Service guidance,
ProLogis may classify portions of its capital gain dividends as
gains eligible for the 15% (or 20%) maximum capital gains rate
or as unrecaptured Internal Revenue Code Section 1250 gain
taxable at a maximum rate of 25%.
Shareholders of ProLogis should consult their tax advisors with
respect to taxation of capital gains and capital gain dividends
and with regard to state, local and foreign taxes on capital
gains.
Taxable distributions that ProLogis pays and gain from the
disposition of its common shares will not be treated as passive
activity income and, therefore, shareholders generally will not
be able to apply any passive activity losses, such
as losses from certain types of limited partnerships in which
the shareholder is a limited partner, against such income or
gain. In addition, taxable distributions that ProLogis pays and
gain from the disposition of its common shares generally will be
treated as investment income for purposes of the investment
interest limitations. ProLogis will notify shareholders after
the close of its taxable year as to the portions of the
distributions attributable to that year that constitute ordinary
income, return of capital and capital gain.
If a U.S. shareholder recognizes a loss upon a subsequent
disposition of ProLogis common shares in an amount that
exceeds a prescribed threshold, it is possible that the
provisions of recently adopted Treasury regulations involving
reportable transactions could apply, with a
resulting requirement to separately disclose the loss generating
transactions to the Internal Revenue Service. While these
regulations are directed towards tax shelters, they
are written quite broadly, and apply to transactions that would
not typically be considered tax shelters. Significant penalties
apply for failure to comply with these requirements. You should
consult your tax advisor concerning any possible
31
disclosure obligation with respect to the receipt or disposition
of ProLogis common shares, or transactions that might be
undertaken directly or indirectly by ProLogis. Moreover, you
should be aware that ProLogis and other participants in
transactions involving ProLogis (including their advisors) might
be subject to disclosure or other requirements pursuant to these
regulations.
Information and
reporting and backup withholding
ProLogis will report to its U.S. shareholders and to the
Internal Revenue Service the amount of distributions paid during
each calendar year, and the amount of tax withheld, if any, with
respect to the paid distributions. Under the backup withholding
rules, a shareholder may be subject to backup withholding at
applicable rates with respect to distributions paid unless such
shareholder is a corporation or comes within other exempt
categories and, when required, demonstrates this fact or
provides a taxpayer identification number, certifies as to no
loss of exemption from backup withholding, and otherwise
complies with applicable requirements of the backup withholding
rules. A shareholder that does not provide ProLogis with its
correct taxpayer identification number may also be subject to
penalties imposed by the Internal Revenue Service. Any amount
paid as backup withholding will be credited against the
shareholders income tax liability. In addition, ProLogis
may be required to withhold a portion of capital gain
distributions made to any shareholders who fail to certify their
non-foreign status to ProLogis.
Taxation of
tax-exempt shareholders
The Internal Revenue Service has issued a revenue ruling in
which it held that amounts distributed by a real estate
investment trust to a tax-exempt employees pension trust
do not constitute unrelated business taxable income. Subject to
the discussion below regarding a pension-held real estate
investment trust, based upon the ruling, the analysis in
the ruling and the statutory framework of the Internal Revenue
Code, distributions by ProLogis to a shareholder that is a
tax-exempt entity should also not constitute unrelated business
taxable income, provided that the tax-exempt entity has not
financed the acquisition of its shares with acquisition
indebtedness within the meaning of the Internal Revenue
Code, and that the shares are not otherwise used in an unrelated
trade or business of the tax-exempt entity, and that ProLogis,
consistent with its present intent, does not hold a residual
interest in a real estate mortgage investment conduit. Social
clubs, voluntary employee benefit associations, supplemental
unemployment benefit trusts, and qualified group legal services
plans that are exempt from taxation under special provisions of
the U.S. federal income tax laws are subject to different
unrelated business taxable income rules, which generally will
require them to characterize distributions that they receive
from ProLogis as unrelated business taxable income.
However, if any pension or other retirement trust that qualifies
under Section 401(a) of the Internal Revenue Code holds
more than 10% by value of the interests in a pension-held
real estate investment trust at any time during a taxable
year, a portion of the dividends paid to the qualified pension
trust by such real estate investment trust may constitute
unrelated business taxable income. For these purposes, a
pension-held real estate investment trust is defined
as a real estate investment trust if such real estate investment
trust would not have qualified as a real estate investment trust
but for the provisions of the Internal Revenue Code which look
through such a qualified pension trust in determining ownership
of stock of the real estate investment trust and at least one
qualified pension trust holds more than 25% by value of the
interests of such real estate investment trust or one or more
qualified pension trusts, each owning more than a 10% interest
by
32
value in the real estate investment trust, hold in the aggregate
more than 50% by value of the interests in such real estate
investment trust. ProLogis believes that it is not a
pension-held real estate investment trust.
Taxation of
foreign shareholders
Distributions of cash generated by ProLogis real estate
operations, but not by its sale or exchange of such properties,
that are paid to foreign persons generally will be subject to
U.S. withholding tax at a rate of 30%, unless an applicable
tax treaty reduces that tax and the foreign shareholder files an
Internal Revenue Service
Form W-8BEN
with ProLogis or unless the foreign shareholder files an
Internal Revenue Service
Form W-8ECI
with ProLogis claiming that the distribution is
effectively connected income. Under applicable
Treasury regulations, foreign shareholders generally have to
provide the Internal Revenue Service
Form W-8ECI
or
Form W-8BEN
beginning January 1, 2000 and every three years thereafter
unless the information on the form changes before that date. If
a distribution is treated as effectively connected with a
foreign shareholders conduct of a U.S. trade or
business, the foreign shareholder generally will be subject to
U.S. federal income tax on the distribution at graduated
rates, in the same manner as U.S. shareholders are taxed on
distributions, and also may be subject to the 30% branch profits
tax in the case of a foreign shareholder that is a corporation.
A foreign shareholder will not incur tax on a distribution in
excess of ProLogis current and accumulated earnings and
profits if the excess portion of the distribution does not
exceed the adjusted tax basis of the shareholders common
shares. Instead, the excess portion of the distribution will
reduce the foreign shareholders adjusted tax basis for its
common shares. A foreign shareholder will be subject to tax on a
distribution that exceeds both ProLogis current and
accumulated earnings and profits and the adjusted tax basis for
its common shares, if the foreign shareholder otherwise would be
subject to tax on gain from the disposition of its common shares
as described herein. Because ProLogis generally cannot determine
at the time it makes a distribution whether or not the
distribution will exceed its current and accumulated earnings
and profits, it generally will withhold tax on the entire amount
of any distribution at the same rate at which it would withhold
on a dividend. However, a foreign shareholder may obtain a
refund of amounts that ProLogis withholds if it is subsequently
determined that a distribution was in excess of ProLogis
current and accumulated earnings and profits.
Distributions of proceeds attributable to the sale or exchange
by ProLogis of U.S. real property interests are subject to
income and withholding taxes pursuant to the Foreign Investment
in Real Property Tax Act of 1980, (FIRPTA). Under
FIRPTA, gains are considered effectively connected with a
U.S. trade or business of the foreign shareholder and are
taxed at the normal graduated rates applicable to
U.S. shareholders. Moreover, gains may be subject to branch
profits tax in the hands of a shareholder that is a foreign
corporation if it is not entitled to treaty relief or exemption.
However, distributions of proceeds attributable to the sale or
exchange by ProLogis of U.S. real property interests will
not be subject to tax under FIRPTA or the branch profits tax,
and will instead be taxed in the same manner as distributions of
cash generated by ProLogis real estate operations other
than the sale or exchange of properties (as described above) if
(i) the distribution is made with regard to a class of
shares that is regularly traded on an established securities
market in the United States and (ii) the recipient
shareholder does not own more than 5% of that class of shares at
any time during the year within which the distribution is
received. ProLogis is required by applicable Treasury
33
regulations to withhold 35% of any distribution to a foreign
person owning more than 5% of the relevant class of shares that
could be designated by ProLogis as a capital gain dividend; this
amount is creditable against the foreign shareholders
FIRPTA tax liability.
ProLogis will qualify as a domestically controlled
qualified investment entity so long as it qualifies as a
real estate investment trust and less than 50% in value of its
shares is held by foreign persons, for example, nonresident
aliens and foreign corporations, partnerships, trust and
estates. It is currently anticipated that ProLogis will qualify
as a domestically controlled qualified investment entity. Under
these circumstances, except as described in the next sentence,
gain from the sale of the shares by a foreign person should not
be subject to U.S. taxation, unless such gain is
effectively connected with such persons U.S. trade or
business or, in the case of an individual foreign person, such
person is present within the U.S. for 183 days or more
in such taxable year. Even if ProLogis is a domestically
controlled qualified investment entity, upon a foreign
shareholders disposition of its common shares (subject to
the 5% exception applicable to regularly traded
shares described below), such foreign shareholder may be treated
as having taxable gain from the sale or exchange of a
U.S. real property interest (within the meaning of FIRPTA)
if the foreign shareholder (i) disposes of ProLogis
common shares within a
30-day
period preceding the ex-dividend date of a distribution, any
portion of which, but for the disposition, would have been
treated as gain from the sale or exchange of a U.S. real
property interest (within the meaning of FIRPTA) and
(ii) acquires, or enters into a contract or option to
acquire, other common shares of ProLogis within 30 days
after such ex-dividend date.
In the event that ProLogis does not constitute a domestically
controlled qualified investment entity, a foreign
shareholders sale of his, her or its common shares
nonetheless will generally not be subject to tax under FIRPTA as
a sale of a U.S. real property interest (within the meaning
of FIRPTA) provided that (i) ProLogis common shares
are regularly traded (as defined by applicable
Treasury Regulations) on an established securities market and
(ii) the selling foreign shareholder held (taking into
account constructive ownership rules) 5% or less of
ProLogis outstanding common shares at all times during a
specified testing period. If gain on a foreign
shareholders sale of ProLogis common shares were
subject to taxation under FIRPTA, the foreign shareholder would
be subject to the same treatment as a U.S. shareholder with
respect to such gain (subject to applicable alternative minimum
tax and a special alternative minimum tax in the case of
nonresident alien individuals). In addition, the purchaser of
the common shares could be required to withhold 10% of the
purchase price and remit such amount to the Internal Revenue
Service.
The U.S. federal income taxation of foreign shareholders is
a highly complex matter that may be affected by many other
considerations. Accordingly, foreign investors in ProLogis
should consult their own tax advisors regarding the income and
withholding tax considerations with respect to their investment
in ProLogis.
Tax
Rates
Long-term capital gains and qualified dividends
received by an individual are generally subject to
U.S. federal income tax at a maximum rate of 15%. Because
ProLogis is not generally subject to U.S. federal income
tax on the portion of its real estate investment trust taxable
income or capital gains distributed to its shareholders,
ProLogis dividends generally are not eligible for the 15%
maximum tax rate on dividends. As a result, ProLogis
ordinary real estate investment trust dividends
34
continue to be taxed at the higher tax rates applicable to
ordinary income. However, the 15% maximum tax rate for long-term
capital gains and qualified dividends generally applies to:
|
|
|
|
|
a shareholders long-term capital gains, if any, recognized
on the disposition of ProLogis shares;
|
|
|
|
ProLogis distributions designated as long-term capital
gain dividends (except to the extent attributable to real estate
depreciation, in which case such distributions continue to be
subject to a 25% tax rate);
|
|
|
|
ProLogis distributions attributable to dividends received
by ProLogis from non-real estate investment trust corporations,
such as taxable REIT subsidiaries; and
|
|
|
|
ProLogis distributions to the extent attributable to
income upon which ProLogis has paid corporate income tax (e.g.,
to the extent that ProLogis distributes less than 100% of its
taxable income).
|
Without future congressional action, the maximum tax rate on
long-term capital gains will increase to 20% in 2011, and the
maximum rate on dividends will increase to 39.6% in 2011.
Other Tax
Considerations
Investments in
taxable REIT subsidiaries
Several ProLogis subsidiaries have made timely elections to be
treated as taxable REIT subsidiaries of ProLogis. As taxable
REIT subsidiaries of ProLogis, these entities will pay federal
and state income taxes at the full applicable corporate rates on
their income prior to payment of any dividends. ProLogis
taxable REIT subsidiaries will attempt to minimize the amount of
such taxes, but there can be no assurance whether or the extent
to which measures taken to minimize taxes will be successful. To
the extent a taxable REIT subsidiary of ProLogis is required to
pay federal, state or local taxes, the cash available for
distribution by such taxable REIT subsidiary to its
shareholders, including ProLogis, will be reduced accordingly.
Taxable REIT subsidiaries are subject to full corporate level
taxation on their earnings, but are permitted to engage in
certain types of activities that cannot be performed directly by
real estate investment trusts without jeopardizing their real
estate investment trust status. Taxable REIT subsidiaries are
subject to limitations on the deductibility of payments made to
the associated real estate investment trust that could
materially increase the taxable income of the taxable REIT
subsidiary and are subject to prohibited transaction taxes on
certain other payments made to the associated real estate
investment trust. ProLogis will be subject to a tax of 100% on
the amount of any rents from real property, deductions or excess
interest that would be reapportioned under Section 482 of
the Internal Revenue Code to one of its taxable REIT
subsidiaries in order to more clearly reflect income of the
taxable REIT subsidiary.
Under the taxable REIT subsidiary provision, ProLogis and any
taxable entity in which ProLogis owns an interest are allowed to
jointly elect to treat such entity as a taxable REIT
subsidiary. In addition, if any of ProLogis taxable
REIT subsidiaries owns, directly or indirectly, securities
representing 35% or more of the vote or value of an entity
treated as a corporation for tax purposes, that subsidiary will
also automatically be treated as a taxable REIT subsidiary of
ProLogis. As described above, taxable REIT subsidiary elections
have been made for certain entities in which ProLogis owns
35
an interest. Additional taxable REIT subsidiary elections may be
made in the future for additional entities in which ProLogis
owns an interest.
Tax on built-in
gain
ProLogis has previously acquired assets from taxable
C-corporations in carry-over basis transactions, and may acquire
additional assets in such manner in the future. As a result of
such acquisitions, ProLogis could be liable for specified
liabilities that are inherited from such C-corporations. If
ProLogis recognizes gain on the disposition of such assets
during the
10-year
period beginning on the date on which such assets were acquired
by ProLogis, then to the extent of such assets
built-in gains (in other words, the excess of the
fair market value of such assets at the time of the acquisition
by ProLogis over the adjusted basis of such assets, determined
at the time of such acquisition), ProLogis will be subject to
tax on such gain at the highest corporate rate applicable. The
results described above with respect to the recognition of
built-in gain assume that the C-corporation whose assets are
acquired does not make an election to recognize such built-in
gain at the time of such acquisition.
Affiliated real
estate investment trust
Palmtree Acquisition Corporation is a corporate subsidiary of
ProLogis which intends to qualify as a real estate investment
trust for U.S. federal income tax purposes. Palmtree
Acquisition Corporation therefore needs to satisfy the real
estate investment trust tests discussed in this prospectus. The
failure of Palmtree Acquisition Corporation to qualify as a real
estate investment trust could cause ProLogis to fail to qualify
as a real estate investment trust because ProLogis would then
own more than 10% of the securities of an issuer that was not a
real estate investment trust, a qualified real estate investment
trust subsidiary or a taxable REIT subsidiary. ProLogis believes
that Palmtree Acquisition Corporation has been organized and
operated in a manner that will permit it to qualify as a real
estate investment trust. As a real estate investment trust,
Palmtree Acquisition Corporation will be subject to the built-in
gain rules discussed in the section entitled
Tax on built-in gain above. Palmtree
Acquisition Corporation is the successor of Catellus Development
Corporation, which was a C-corporation that elected to be
treated as a real estate investment trust for U.S. federal
income tax purposes effective January 1, 2004. Therefore,
Palmtree Acquisition Corporation could be subject to a
U.S. federal corporate level tax at the highest regular
corporate rate (currently 35%) on any gain recognized within ten
years of Catellus Development Corporations conversion to a
real estate investment trust from the sale of any assets that
Catellus Development Corporation held at the effective time of
its election to be a real estate investment trust, but only to
the extent of the built-in gain based on the fair market value
of those assets as of the effective date of the real estate
investment trust election. ProLogis does not currently expect
Palmtree Acquisition Corporation to dispose of any assets if
such disposition would result in the imposition of a material
tax liability unless ProLogis can effect a tax-deferred exchange
of the property. However, certain assets are subject to third
party purchase options that may require Palmtree Acquisition
Corporation to sell such assets, and those assets may carry
deferred tax liabilities that would be triggered on such sales.
Possible
legislative or other actions affecting tax
consequences
Prospective shareholders should recognize that the present
U.S. federal income tax treatment of an investment in
ProLogis may be modified by legislative, judicial or
administrative action at any time and that any such action may
affect investments and commitments previously made. The rules
dealing
36
with U.S. federal income taxation are constantly under
review by persons involved in the legislative process and by the
Internal Revenue Service and the Treasury, resulting in
revisions of regulations and revised interpretations of
established concepts as well as statutory changes. Revisions in
U.S. federal tax laws and interpretations of these laws
could adversely affect the tax consequences of an investment in
ProLogis.
State and local
taxes
ProLogis and its shareholders may be subject to state or local
taxation in various jurisdictions, including those in which it
or they transact business or reside. The state and local tax
treatment of ProLogis and its shareholders may not conform to
the U.S. federal income tax consequences discussed above.
Consequently, prospective shareholders should consult their own
tax advisors regarding the effect of state and local tax laws on
an investment in the offered securities of ProLogis.
Foreign
taxes
Various ProLogis subsidiaries and entities in which ProLogis and
its subsidiaries invest may be subject to taxation in various
foreign jurisdictions. Each of the parties will pay any such
foreign taxes prior to payment of any dividends. Each entity
will attempt to minimize the amount of such taxes, but there can
be no assurance whether or the extent to which measures taken to
minimize taxes will be successful. To the extent that any of
these entities is required to pay foreign taxes, the cash
available for distribution to ProLogis shareholders will be
reduced accordingly.
You are advised to consult with your own tax advisor
regarding the specific tax consequences to you of the ownership
and sales of ProLogis common shares, including the
U.S. federal, state, local, foreign, and other tax
consequences of such purchase and ownership and of potential
changes in applicable tax laws.
USE OF
PROCEEDS
The net proceeds from the sale of common shares purchased by the
agent directly from ProLogis will be used for the development
and acquisition of additional distribution facilities, as
suitable opportunities arise, for the repayment of outstanding
indebtedness at the time and for working general corporate
purposes. ProLogis will not receive any proceeds from purchases
of common shares by the agent in the open market or in
negotiated transactions with third parties.
WHERE YOU CAN
FIND MORE INFORMATION
We are subject to the informational requirements of the
Securities Exchange Act of 1934 and, in accordance therewith,
file reports, proxy statements and other information with the
Securities and Exchange Commission. Such reports, proxy
statements and other information can be inspected and copied at
the public reference facilities maintained by the Securities and
Exchange Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such material can be
obtained at prescribed rates from the Public Reference Room of
the Securities and Exchange Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 or by calling the Securities
and Exchange Commission at
1-800-SEC-0330.
Such material can also be obtained from the Securities and
Exchange Commissions worldwide web site at
http://www.sec.gov. Our outstanding common shares, Series F
37
cumulative redeemable preferred shares of beneficial interest
and Series G cumulative redeemable preferred shares of
beneficial interest, are listed on the New York Stock Exchange
under the symbols PLD, PLD-PRF and
PLD-PRG, respectively, and all such reports, proxy
statements and other information filed by us with the New York
Stock Exchange may be inspected at the New York Stock
Exchanges offices at 20 Broad Street, New York, New
York 10005. You can also obtain information about us at our
website, http://ir.prologis.com.
We have filed with the Securities and Exchange Commission a
registration statement on
Form S-3
under the Securities Act of 1933 with respect to the common
shares of ProLogis being offered. This prospectus, which
constitutes part of the registration statement, does not contain
all of the information set forth in the registration statement.
Parts of the registration statement are omitted from this
prospectus in accordance with the rules and regulations of the
Securities and Exchange Commission. For further information,
your attention is directed to the registration statement.
Statements made in this prospectus concerning the contents of
any documents referred to herein are not necessarily complete,
and in each case are qualified in all respects by reference to
the copy of such document filed with the Securities and Exchange
Commission.
The Securities and Exchange Commission allows us to
incorporate by reference the information we file
with the Securities and Exchange Commission, which means that we
can disclose important information to you by referring you to
those documents. The information incorporated by reference is an
important part of this prospectus, and information that we file
later with the Securities and Exchange Commission will
automatically update and supersede this information.
ProLogis incorporates by reference the documents listed below:
(a) Our annual report on
Form 10-K
for the year ended December 31, 2005;
(b) Our quarterly reports on
Form 10-Q
for the fiscal quarters ended March 31, 2006, June 30,
2006 and September 30, 2006;
(c) Our periodic reports on
Form 8-K
filed September 20, 2005, January 10, 2006,
March 13, 2006, March 17, 2006, March 21, 2006,
March 27, 2006, April 6, 2006, June 2, 2006,
July 3, 2006, August 23, 2006, August 29, 2006,
September 27, 2006, November 14, 2006 and
December 22, 2006; and
(d) The description of our common shares contained or
incorporated by reference in ProLogis registration
statement on
Form 8-A
filed February 23, 1994.
The Securities and Exchange Commission has assigned file number
1-12846 to the reports and other information that ProLogis files
with the Securities and Exchange Commission.
You may request a copy of each of the above-listed ProLogis
documents, at no cost, by writing or telephoning ProLogis at the
following address or telephone number.
Investor Relations Department
ProLogis
4545 Airport Way
Denver, Colorado 80239
(800) 820-0181
http://ir.prologis.com
38
All documents subsequently filed by ProLogis pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act, prior to the termination of the offering, shall be
deemed to be incorporated by reference into this prospectus.
Any statement contained in a document incorporated or deemed to
be incorporated herein shall be deemed modified or superseded
for purposes of this prospectus to the extent that a statement
contained herein or in any other subsequently filed document
that is deemed to be incorporated herein modifies or supersedes
such statement. Any statement so modified or superseded shall
not be deemed, except as so modified or superseded, to
constitute a part of this prospectus.
You should rely only on the information contained in this
document or to which we have referred you. We have not
authorized anyone to provide you with information that is
inconsistent with information contained in this document or any
document incorporated herein. This prospectus is not an offer to
sell these securities in any state where the offer and sale of
these securities is not permitted. The information in this
prospectus is current as of the date it is mailed to security
holders, and not necessarily as of any later date. If any
material change occurs during the period that this prospectus is
required to be delivered, this prospectus will be supplemented
or amended.
EXPERTS
The consolidated financial statements and related financial
statement schedule of ProLogis as of December 31, 2005 and
2004, and for each of the years in the three-year period ended
December 31, 2005 and ProLogis managements assessment
of the effectiveness of internal control over financial
reporting as of December 31, 2005, have been incorporated
by reference herein in reliance upon the reports of KPMG LLP,
independent registered public accounting firm, incorporated by
reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The audited historical financial statements and
managements assessment of the effectiveness of internal
control over financial reporting of Catellus Development
Corporation included on pages 2 and 3 of Exhibit 99.2
of ProLogis Current Report on
Form 8-K
dated September 20, 2005 have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, an
independent registered public accounting firm, given on the
authority of said firm as experts in auditing and accounting.
With respect to the unaudited interim financial information of
ProLogis for the periods ended September 30, 2006 and 2005,
June 30, 2006 and 2005, and March 31, 2006 and 2005,
incorporated by reference in this prospectus, the independent
registered public accounting firm has reported that they applied
limited procedures in accordance with professional standards for
a review of such information. However, their separate reports
included in ProLogis quarterly reports on
Form 10-Q
for the quarters ended September 30, 2006, June 30,
2006 and March 31, 2006, incorporated by reference in this
prospectus, state that they did not audit and they do not
express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on such
information should be restricted in light of the limited nature
of the review procedures applied. The accountant is not subject
to the liability provisions of Section 11 of the Securities
Act of 1933 for their report on the unaudited interim financial
information because their report is not a report or
a part of the registration statement prepared or
certified by the accountants within the meaning of
Sections 7 and 11 of the Securities Act of 1933.
39
LEGAL
MATTERS
The validity of the common shares offered pursuant to this
prospectus will be passed on for ProLogis by Mayer, Brown,
Rowe & Maw LLP, Chicago, Illinois.
SOURCES OF
INFORMATION ON THE PLAN
Enrollment forms, optional cash payment forms, changes in name
or address, notices of termination, requests for refunds of
payments to purchase common shares, common share certificates or
the sale of common shares held in the plan should be directed
to, and may be obtained from, and inquiries regarding the
distribution reinvestment discount and the optional cash payment
discount or any other questions about the plan should be
directed to:
Computershare Trust Company, N.A.
P.O. Box 43078
Providence, RI
02940-3078
Telephone:
(800) 956-3378
Web Site: www.computershare.com
40
EXHIBIT A
REINVESTMENT OF
DISTRIBUTIONS
|
|
|
Distribution
Record Date
|
|
Distribution
Payment Date
|
|
February 14, 2007
|
|
February 28, 2007
|
May 16, 2007
|
|
May 31, 2007
|
August 16, 2007
|
|
August 31, 2007
|
November 14, 2007
|
|
November 30, 2007
|
February 15, 2008
|
|
February 29, 2008
|
May 15, 2008
|
|
May 30, 2008
|
August 15, 2008
|
|
August 29, 2008
|
November 12, 2008
|
|
November 26, 2008
|
A-1
OPTIONAL CASH
PAYMENTS*
|
|
|
2007 Investment
Dates
|
|
2008 Investment
Dates
|
|
January 16, 2007
|
|
January 16, 2008
|
January 31, 2007
|
|
January 31, 2008
|
February 14, 2007
|
|
February 15, 2008
|
February 28, 2007
|
|
February 29, 2008
|
March 15, 2007
|
|
March 17, 2008
|
March 30, 2007
|
|
March 31, 2008
|
April 16 2007
|
|
April 15, 2008
|
April 30, 2007
|
|
April 30, 2008
|
May 16, 2007
|
|
May 15, 2008
|
May 31, 2007
|
|
May 30, 2008
|
June 15, 2007
|
|
June 16, 2008
|
June 29, 2007
|
|
June 30, 2008
|
July 16, 2007
|
|
July 16, 2008
|
July 31, 2007
|
|
July 31, 2008
|
August 16, 2007
|
|
August 15, 2008
|
August 31, 2007
|
|
August 29, 2008
|
September 14, 2007
|
|
September 15, 2008
|
September 28, 2007
|
|
September 30, 2008
|
October 17, 2007
|
|
October 16, 2008
|
October 31, 2007
|
|
October 31, 2008
|
November 14, 2007
|
|
November 12, 2008
|
November 30, 2007
|
|
November 26, 2008
|
December 17, 2007
|
|
December 17, 2008
|
December 31, 2007
|
|
December 31, 2008
|
|
|
|
* |
|
If investing by mail, the agent must receive the check at least
two business days prior to the desired investment date. If
investing online, participants should refer to their
confirmation page for the next eligible investment date for
online purchases. |
A-2
(THIS PAGE
INTENTIONALLY LEFT BLANK)
TABLE OF
CONTENTS
|
|
|
|
|
|
|
|
2
|
|
|
|
|
2
|
|
|
|
|
4
|
|
|
|
|
7
|
|
|
|
|
7
|
|
|
|
|
10
|
|
|
|
|
12
|
|
|
|
|
13
|
|
|
|
|
14
|
|
|
|
|
15
|
|
|
|
|
16
|
|
|
|
|
18
|
|
|
|
|
18
|
|
|
|
|
21
|
|
|
|
|
37
|
|
|
|
|
37
|
|
|
|
|
39
|
|
|
|
|
40
|
|
|
|
|
40
|
|
|
|
|
A-1
|
|
|
|
|
A-2
|
|
002CS60299
PROSPECTUS
January 4, 2007