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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes þ No o

Based on the closing price of the registrant’s shares on June 30, 2003, the aggregate market value of the voting common equity held by non-affiliates of the registrant was $4,447,834,700.

At March 5, 2004, there were outstanding approximately 181,071,178 common shares of beneficial interest of the registrant.

Portion of the registrant’s definitive proxy statement for the 2004 annual meeting of its shareholders are incorporated by reference in Part III of this report.

ProLogis (collectively with its consolidated subsidiaries and partnerships, “ProLogis”) is a real estate investment trust (“REIT”) that operates a global network of industrial distribution properties. ProLogis’ business strategy is designed to achieve long-term sustainable growth in cash flow and increase the overall return on equity for its shareholders. ProLogis manages its business by utilizing the ProLogis Operating System®, an organizational structure and service delivery system that ProLogis built around its customers. When combined with ProLogis’ international network of distribution properties, the ProLogis Operating System enables ProLogis to meet its customers’ distribution space needs on a global basis. ProLogis believes that, by integrating international scope and expertise with a strong local presence in its markets, it has become an attractive choice for the largest global users of distribution space, its targeted customer base.

ProLogis is organized under Maryland law and has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). ProLogis’ world headquarters and North American customer service headquarters are located in Aurora, Colorado. ProLogis’ European headquarters are located in Luxembourg while its European customer service headquarters are located in Amsterdam, The Netherlands. ProLogis’ Asian headquarters are located in Tokyo, Japan. ProLogis’ common shares of beneficial interest, par value $0.01 per share (“Common Shares”) were first listed on the New York Stock Exchange (“NYSE”) in March 1994.

This report on Form 10-K includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in global economic, business, competitive, market and regulatory factors. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Factors.”

A copy of this Annual Report on Form 10-K, as well as ProLogis’ Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to such reports are available, free of charge, on the Internet in the Investor Relations section of ProLogis’ website. All required reports are made available on the website as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission (the “SEC”). ProLogis’ website address is www.prologis.com. The reference to ProLogis’ website address does not constitute incorporation by reference of the information contained in the website and such information should not be considered to be part of this document.

ProLogis was formed in 1991 with the primary objective of creating an operating company in the United States that would differentiate itself from its competition through its ability to meet a corporate customer’s distribution space requirements on a national, regional and local basis, with the added benefit of providing consistent levels of service throughout the country. ProLogis’ initial business strategy involved the acquisition and development of industrial distribution properties that it would operate and lease to customers in the United States. These properties represented one operating segment — the property operations segment — as ProLogis’ intent was, and continues to be, to hold certain investments on a long-term basis while generating income from leasing the properties to customers.

An integral part of ProLogis’ customer service focus has always been to have a portfolio of properties that meets the distribution space needs of its existing customers, as well as meeting the needs of targeted national and international companies. As distribution space users expanded and managed their businesses for greater profitability, their distribution networks expanded and were reconfigured, including their distribution networks outside of the United States. In order to meet the growing distribution space needs of these companies, ProLogis expanded its operations to Mexico in 1996, to Europe in 1997 and to Japan in 2001. In April 2003,

ProLogis opened a representative office in Shanghai, China to evaluate opportunities to initially serve customers in three targeted areas of China: Guangdong Province and the Shanghai and Beijing regions.

In 1995, ProLogis expanded its business to include the corporate distribution facilities services (“CDFS business”) operating segment. The CDFS business segment began utilizing ProLogis’ existing development capabilities, which had been focused only on the development of properties for direct, long-term investment, to develop properties for sale to third parties. As with ProLogis’ property operations segment, the CDFS business segment operated initially only in the United States. In 1998, ProLogis expanded its CDFS business segment activities to Europe to complement its European property operations. The acquisition of an established industrial development business in the United Kingdom in August 1998 provided ProLogis with access to strategic land positions in a country where previously it had only limited investments and where significant barriers for initial start-up activities existed. With both property operations and CDFS business segments in operation in the United Kingdom and Continental Europe, ProLogis was positioned to be a single-source pan-European provider of distribution space to global users.

Because ProLogis, as a REIT, must distribute rather than reinvest substantial amounts of its internally generated capital, it must find public or private sources of capital to fund development activities and to grow its portfolio. Sales of properties to third parties in the CDFS business segment enabled ProLogis to begin recycling capital to fund some of its future development activities. This ability to recycle funds in the CDFS business segment became a more integral part of ProLogis’ business strategy in early 1999 when the public equity markets became an increasingly costly method of raising capital. As such, it was necessary for ProLogis to increase the volume of its CDFS business segment transactions so that it could self-fund its development activities. Therefore, ProLogis shifted the focus of its CDFS business segment from developing and selling properties to third parties to developing properties that would be contributed to property funds — property funds that would be formed by ProLogis by accessing private equity capital and that would be managed by ProLogis. And, to supplement the private equity investments in each property fund, the property funds were positioned to obtain secured debt financing by using their properties as security. Today, the property funds’ leverage ratios typically range from 40% to 75%.

The first property fund was formed in August 1999 primarily with operating properties from ProLogis’ property operations segment. However, the formation of ProLogis European Properties Fund in September 1999 embodied ProLogis’ overall property fund strategy that: (i) allows ProLogis to realize, for financial reporting purposes, a portion of the development profits from its CDFS business activities by contributing its developed properties to a property fund (profits are recognized to the extent of third party investment in the property fund); (ii) provides a source of private capital to ProLogis; (iii) allows ProLogis to maintain a long-term ownership position in the properties; and (iv) allows ProLogis, as the manager of the property fund, to maintain the market presence and customer relationships that are the key drivers of the ProLogis Operating System. Five of ProLogis’ property funds, all in the United States, were formed with a specific amount of private capital that allowed the property fund to generally make one portfolio acquisition from ProLogis. In addition to its ownership positions, ProLogis provides these property funds with management services. Three property funds, one each in North America, Europe and Japan, were formed with third party capital commitments that are available to the property fund over time to allow these property funds to acquire properties as ProLogis’ CDFS business segment makes them available.

ProLogis’ business strategy has evolved to fit the environment in which it operates. The primary driver in this evolution has been ProLogis’ focus on its customers’ needs for distribution space. After 12 years in operation, that focus has enabled ProLogis to become a leading global provider of distribution space operating on three continents.

ProLogis’ business is organized into two operating segments: property operations and the CDFS business.

The property operations segment represents the long-term ownership, management and leasing of industrial distribution properties. ProLogis’ property operations segment at December 31, 2003 (including assets owned by eight property funds in which ProLogis has ownership interests) consisted of 1,737 operating properties aggregating 230.4 million square feet in North America (the United States and Mexico), 11 countries in Europe and in Japan. ProLogis presents its investments in the property funds under the equity method. Of the total operating properties, ProLogis directly owned 1,252 operating properties aggregating 133.1 million square feet. ProLogis’ ownership interests in its eight property funds ranged from 14% to 50% at December 31, 2003. ProLogis’ investment strategy in the property operations segment focuses primarily on generic industrial distribution properties in key distribution markets.

ProLogis develops distribution properties in its other operating segment, the CDFS business segment, with the intent to contribute the property to a property fund or to sell the property to a third party. Also in the CDFS business segment, ProLogis acquires properties with the intent to contribute them to a property fund, generally after rehabilitation and/or repositioning activities have been completed. These properties, along with their operations, are included in the property operations segment after they are completed or acquired through the date they are contributed or sold. The gains and losses realized from the contributions or sales of these properties are included in the CDFS business segment’s income because they were developed or acquired in that segment. At December 31, 2003, there were 119 CDFS business segment operating properties aggregating 20.4 million square feet at a total investment of $928.3 million that were included in the property operations segment’s investments on an interim basis.


	•	Acquisition of two properties aggregating 0.2 million square feet at a total acquisition cost of $13.3 million with the intent to own these properties directly in the property operations segment rather than to contribute these properties to property funds.

	•	Disposition of 13 properties aggregating 0.8 million square feet generating aggregate net proceeds of $60.2 million that were direct, long-term investments in the property operations segment.

	•	In North America, ProLogis North American Properties Fund V acquired 33 properties aggregating 8.7 million square feet at a total investment of $362.5 million from ProLogis; ProLogis’ other property funds, all operating only in the United States, maintained their existing portfolio sizes.

	•	In Europe, ProLogis European Properties Fund acquired 24 properties aggregating 6.6 million square feet at a total investment of $385.1 million, including 17 properties aggregating 4.0 million square feet at a total investment of $279.5 million that were acquired from ProLogis. Also, ProLogis European Properties Fund disposed of 13 properties in the United Kingdom aggregating 2.1 million square feet generating aggregate net proceeds of $320.0 million.

	•	ProLogis Japan Properties Fund acquired four properties aggregating 1.4 million square feet at a total investment of $264.9 million, including three properties aggregating 0.9 million square feet at a total investment of $162.6 million that were acquired from ProLogis.

See “Item 2. Properties — Properties,” “Item 2. Properties — Unconsolidated Investees — Property Operations” and Notes 4 and 10 to ProLogis’ Consolidated Financial Statements in Item 8.

The property operations segment generates income from rents and reimbursements of property operating expenses from unaffiliated customers who lease ProLogis’ distribution space. Also, the operating income of the

property operations segment includes ProLogis’ proportionate shares of the net earnings or losses of the property funds recognized under the equity method, along with the fee income that ProLogis earns for managing the properties owned by the property funds. In addition to property and asset management fees, ProLogis also earns fees for performing other services to the property funds, including, but not limited to, development, leasing and acquisition activities.

The net earnings or losses generated by operating properties developed or acquired in the CDFS business segment that are included in the property operations segment on an interim basis prior to their contribution or sale are also included in the operating income of the property operations segment. The resulting gains or losses from the contributions or sales of these properties are included in the operating income of the CDFS business segment.

In 2003, 2002 and 2001, the property operations segment’s operating income was $480.7 million, $477.6 million and $477.5 million, respectively. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Property Operations” and Note 10 to ProLogis’ Consolidated Financial Statements in Item 8.


	•	ProLogis’ stabilized operating portfolio of 226.4 million square feet (including properties owned by the property funds) was 90.2% leased and 89.6% occupied at December 31, 2003. ProLogis’ total operating portfolio of 230.4 million square feet (including properties owned by the property funds) was 89.1% leased and 88.5% occupied at December 31, 2003. ProLogis defines its stabilized properties as those properties where the capital improvements, repositioning efforts, new management and new marketing programs for acquisitions, or the marketing programs in the case of newly developed properties, have been in effect for a sufficient period of time, generally 12 months. A property enters the stabilized pool at the earlier of 12 months or when it is substantially leased, which is defined by ProLogis generally as 93%. Overall occupancy levels decreased in 2003 from prior periods. ProLogis’ leased percentage for the stabilized portfolio at December 31, 2003 was approximately 1.0% lower than the 2002 percentage.

	•	ProLogis leased 56.9 million square feet of distribution space in 1,527 leasing transactions in its properties and in the properties owned by the property funds. Rental rates decreased by 4.8% for 2003 transactions involving previously leased space. ProLogis’ weighted average customer retention rate was 71.4% for all properties in 2003. In 2002, ProLogis’ rental rate growth for transactions involving previously leased space was 2.0% and its weighted average customer retention rate was 64.7%.

	•	ProLogis’ same store portfolio of operating properties (properties owned by ProLogis and the property funds that were operating throughout all of 2003 and 2002) aggregated 179.3 million square feet. Rental income, excluding termination and renegotiation fees, less rental expenses of the same store portfolio increased by 0.09% in 2003 from 2002. For the same store portfolio applicable to 2002, rental revenues, excluding termination and renegotiation fees, less rental expenses decreased by 0.90% in 2002 from 2001. See the discussion of ProLogis’ same store portfolio at “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Property Operations.”

	•	ProLogis earned termination and renegotiation fees of $5.6 million related to leases in its directly owned properties in 2003. Such fees in 2002 were $14.6 million. In certain leasing situations, ProLogis finds it advantageous to negotiate lease terminations with a customer, particularly when the customer is experiencing financial difficulties or when ProLogis believes that it can re-lease the space at rates that, when combined with the termination fee, provides a total return to ProLogis in excess of that which was being earned under the original lease terms.

	•	ProLogis earned various fees from the property funds, primarily from property management and asset management services, of $44.2 million in 2003 as compared to $34.5 million in 2002.

ProLogis has generally invested in distribution markets in North America, Europe and Japan in which it has identified strong distribution dynamics as well as supply and demand factors. In making its investment decisions, ProLogis evaluates market conditions that indicate favorable distribution growth prospects including, but not limited to: (i) growth in imports and exports; (ii) long-term cost and quality of labor advantages for domestic and international manufacturers; (iii) proximity to large regional and local population centers with good access to transportation networks; (iv) expansion and contraction needs of distribution space users located in the market; and (v) an historically high ratio of distribution space per capita.

ProLogis assesses its market presence not only in terms of its investments in the market, but also by the extent it has developed relationships with customers that have distribution space requirements in such markets. ProLogis believes it can maintain these relationships by offering operating properties that are functional and cost-effective, complemented by a comprehensive level of customer service. ProLogis believes that by being a significant local owner and developer in multiple markets it has the ability to increase customer retention because it can meet its customers’ needs to either expand or contract through its network of distribution properties and land positions. This network allows ProLogis to retain the customer by relocating the customer within its existing inventory of distribution space or readily developing a new property for the customer.

At December 31, 2003, the 1,252 properties aggregating 133.1 million square feet in the property operations segment that are owned directly by ProLogis are located in 37 markets in the United States, four markets in Mexico and 16 markets in seven countries in Europe. All of ProLogis’ operating properties in Japan are owned by a property fund. ProLogis’ largest markets in the United States (based on investment in directly owned properties) are Atlanta, Chicago, Dallas/ Fort Worth, Houston and San Francisco (both South Bay and East Bay markets). ProLogis also has large holdings in several markets in the United Kingdom. See “Item 2. Properties — Geographic Distribution” and “Item 2. Properties — Properties.”

The operating properties owned by the property funds at December 31, 2003 were as follows (square feet in thousands):


(1)	All properties are located in the Los Angeles/ Orange County market.

(2)	Properties are located in 16 markets in the United States.

(3)	Properties are located in 13 markets in the United States.

(4)	Properties are located in 15 markets in the United States.

(5)	Properties are located in 10 markets in the United States.

(6)	Properties are located in 24 markets in the United States and in three markets in Mexico.

(7)	Properties are located in 25 markets in 11 countries in Europe (67 properties, 11.8 million square feet located in the Central France market, primarily in Paris).

(8)	Properties are located in Tokyo, Japan.

See “Item 2. Properties — Geographic Distribution” for a discussion of ProLogis’ defined markets and “Item 2. Properties — Unconsolidated Investees — Property Operations” for additional information on the operating properties owned by the property funds.

In general, numerous other industrial distribution properties are located in close proximity to ProLogis’ properties. The amount of rentable distribution space available in any market could have a material effect on ProLogis’ ability to rent space and on the rents that ProLogis can charge. In addition, in many of ProLogis’ submarkets, institutional investors and owners and developers of industrial distribution properties (including other REITs) compete for the acquisition, development and leasing of distribution space. Many of these entities have substantial resources and experience. Competition in acquiring existing distribution properties and land, both from institutional capital sources and from other REITs, has been very strong over the past several years.

ProLogis’ business strategy includes a customer service focus that requires ProLogis to provide responsive, professional and effective property management services at the local level. To enhance its management services, ProLogis has developed and implemented proprietary operating and training systems to achieve consistent levels of performance and professionalism in all markets and to enable its property management team members to give the proper level of attention to ProLogis’ customers throughout its network. ProLogis manages substantially all of its directly owned operating properties and all of the operating properties owned by the property funds.

ProLogis has sought to develop a customer base in each market that is diverse in terms of industry concentration and that represents a broad spectrum of international, national, regional and local distribution space users. At December 31, 2003, ProLogis and the property funds had 3,785 customers occupying 203.8 million square feet of distribution space. Including customers leasing space in properties owned by the property funds, the largest customer and the 25 largest customers accounted for 2.38% and 21.8%, respectively, of the annualized collected base rents of ProLogis and the property funds at December 31, 2003. When the customers leasing space in the properties owned by the property funds are excluded, ProLogis’ largest customer and its 25 largest customers accounted for 1.21% and 15.2%, respectively, of ProLogis’ annualized collected base rents at December 31, 2003.

ProLogis directly employs approximately 725 persons. ProLogis’ employees work in North America (approximately 460 persons), in nine countries in Europe (approximately 240 persons) and in Asia, primarily in Japan (approximately 25 persons). Of the total, approximately 350 employees are assigned to the property operations segment. ProLogis’ other employees may assist with property operations segment activities. ProLogis believes that its relationships with its employees are good. ProLogis’ employees are not represented by a collective bargaining agreement.

ProLogis believes that its current level of direct investment in the property operations segment enables it to serve its customers at a high level and increase returns to its shareholders. ProLogis’ business plan with respect to direct investments in the property operations segment allows for the expansion of its network of operating properties on a limited basis and only as necessary to: (i) address the specific expansion needs of a

customer; (ii) enhance its market presence in a specific country, market or submarket; or (iii) take advantage of opportunities where ProLogis believes it has the ability to achieve favorable returns.

ProLogis plans to continue with its current business strategy with respect to the growth in assets held by property funds. ProLogis expects to achieve this growth primarily through the property funds’ acquisition of properties developed or acquired by ProLogis in the CDFS business segment, but also by their direct acquisition of properties from third parties. ProLogis expects that the fee income it earns from the property funds will increase in 2004 over the 2003 levels as the sizes of the portfolios of operating properties in the property funds increase. Also, depending on capital availability, the number of property funds could increase in 2004. Properties contributed to property funds must generally meet certain leasing criteria. ProLogis observed a slowing in its customers’ decision making processes and in overall leasing activity in 2003 that it believes were primarily the result of weak economic conditions in the United States and certain Western European countries. ProLogis’ business plan for 2004 with respect to property fund contributions does not anticipate a significant improvement in prevailing economic conditions. However, ProLogis’ market research and customer feedback indicates that the consolidation and reconfiguration of distribution networks in Europe and Japan have been, and will continue to be, key drivers in leasing decisions. ProLogis believes that being a single-source provider of state-of-the-art distribution properties in Europe and Japan positions it to take advantage of these trends to the extent they continue in 2004.

ProLogis intends to fund its investment activities in the property operations segment in 2004 with operating cash flow from this operating segment, its short-term borrowing facilities and the proceeds from contributions and sales of properties (properties that have been directly owned, long-term investments in the property operations segment, as well as CDFS business segment properties that are included in the property operations segment on an interim basis prior to their contribution or sale).

See the discussion of factors that could affect the future plans of ProLogis and the property funds in the property operations segment at “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Factors.”

The CDFS business segment encompasses those activities that ProLogis engages in that are not primarily associated with the long-term ownership, management and leasing of industrial distribution properties. Within this operating segment, ProLogis develops distribution properties that are either contributed to property funds or sold to third parties and acquires distribution properties that are contributed to property funds. Properties that are acquired by ProLogis in this segment are generally rehabilitated and/or repositioned prior to their contribution to a property fund.

At December 31, 2003, ProLogis had 27 distribution properties aggregating 9.8 million square feet under development at a total expected cost at completion of $678.5 million. These properties are all being developed with the objective that they will be contributed to a property fund or sold to a third party. ProLogis’ properties under development at December 31, 2003 include:


	•	North America: eight properties; 3.2 million square feet; $101.0 million total expected cost (approximately 15% of the total);

	•	Europe: 15 properties in six countries; 4.0 million square feet; $246.3 million total expected cost (approximately 36% of the total); and

	•	Japan: four properties; 2.6 million square feet; $331.2 million total expected cost (approximately 49% of the total).

At December 31, 2003, ProLogis had land positions, including land controlled through contracts, options or letters of intent, aggregating 4,549 acres with the capacity for the development of approximately 76.8 million square feet of distribution properties. Of these land positions ProLogis owned 2,706 acres with the

capacity for the development of approximately 48.2 million square feet of distribution properties. At December 31, 2003, ProLogis had begun development on all of its land holdings in Japan. ProLogis’ land positions (owned and under control) at December 31, 2003 included:


	•	North America: 2,655 acres with the capacity for the development of approximately 45.0 million square feet of distribution properties and

	•	Europe: 1,894 acres in 12 countries with the capacity for the development of approximately 31.8 million square feet of distribution properties.


	•	Development starts aggregated 13.2 million square feet at a total expected cost at completion of $674.1 million including:


	•	North America: 4.9 million square feet at a total expected cost of $157.1 million;

	•	Europe: 6.3 million square feet at a total expected cost of $305.0 million; and

	•	Japan: 2.0 million square feet at a total expected cost of $212.0 million.


	•	Development completions aggregated 12.4 million square feet at a total cost of $643.8 million including:


	•	North America: 5.2 million square feet at a total cost of $175.3 million;

	•	Europe: 6.3 million square feet at a total cost of $348.2 million; and

	•	Japan: 0.9 million square feet at a total cost of $120.3 million.


	•	Acquisition of 36 operating properties aggregating 6.2 million square feet at a total acquisition cost of $194.9 million with the intent to contribute the properties to a property fund (including properties where rehabilitation and/or repositioning efforts are needed prior to contribution).

	•	Contributions and sales of 66 properties aggregating 14.2 million square feet that were developed or acquired by ProLogis in the CDFS business segment. These transactions, the discontinuation of ProLogis’ participation and significant reduction of its investment in a joint venture and dispositions of land parcels that no longer fit in ProLogis’ development plans generated net proceeds to ProLogis of $894.9 million.

	•	Acquisition of 1,077 acres of land: 651 acres in North America (all in the United States), 400 acres in seven countries in Europe and 26 acres in Japan. This land can be used for the development of approximately 20.5 million square feet of distribution properties.

The operating income of the CDFS business segment consists primarily of the net gains and losses recognized from the contributions and sales of developed properties to property funds and third parties and from the contributions to property funds of operating properties that were acquired with that intent. ProLogis uses its development and leasing expertise to rehabilitate and/or reposition certain of the properties that it acquires such that the subsequent contribution of the property is expected to generate a profit to ProLogis. ProLogis also earns fees from customers for development activities performed on their behalf and recognizes gains and losses from sales of land parcels when ProLogis’ development plans no longer include these parcels.

In 2003, 2002 and 2001, the CDFS business segment’s operating income was $124.8 million, $152.3 million and $151.7 million, respectively. In 2003, 39% of the operating income of this operating segment was generated in North America, 39% was generated in Europe and 22% was generated in Japan. In 2002 and 2001, 36% and 43%, respectively, of the operating income of this operating segment was generated in North America. In 2002, Europe generated 60% of the operating income of this operating segment and Japan generated the remaining 4%. In 2001, Europe generated the remaining portion of the CDFS business segment’s operating income.


	•	Recognition of net gains of $132.8 million (including amounts that had been previously deferred); $118.6 million related to sales and contributions of developed properties, $6.2 million related to contributions of acquired properties, $6.3 million related to dispositions of land parcels and $1.7 million related to the discontinuation of participation and significant reduction of investment in a joint venture.

	•	Earned $2.0 million of fees from the development of 0.8 million square feet of distribution properties on behalf of customers under development management agreements.

	•	Incurred expenses and other charges of $11.1 million

See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — CDFS Business” and Note 10 to ProLogis’ Consolidated Financial Statements in Item 8.

ProLogis’ CDFS business segment operates in substantially all of ProLogis’ property operations segment’s markets. At December 31, 2003, ProLogis had properties under development in six markets in the United States, two markets in Mexico, 12 markets in six countries in Europe and in Japan (Tokyo, Nagoya and Osaka). At December 31, 2003, the land positions owned by ProLogis were located in 27 markets in the United States, four markets in Mexico and 19 markets in ten countries in Europe. At December 31, 2003, ProLogis had begun development on all of its land holdings in Japan.

Until recently, ProLogis has been the only owner of distribution properties and provider of services operating on a global basis. As such, ProLogis believes it has differentiated itself from many of its competitors.

There are a number of other national, regional and local developers engaged in industrial distribution property development in the North American markets where ProLogis conducts business. ProLogis competes with these developers for land acquisition and development opportunities. The disposition market in North America is very competitive and is driven by the supply of new developments, access to capital and interest rate levels. A key component of ProLogis’ success in the CDFS business segment in North America will continue to be its ability to develop and timely lease properties that will generate profits when contributed or sold and its ability to continue to access private capital that allows for the continued acquisition of ProLogis’ properties by the property funds.

ProLogis’ competition in the CDFS business segment in Europe generally comes from local and regional developers in its target markets as opposed to pan-European real estate companies. As in North America, the disposition market in Europe is very competitive and is driven by the supply of new developments, access to capital and interest rate levels. With respect to its development activities in Europe, ProLogis believes that it has a competitive advantage due to the strategic locations of its land positions owned or under control in Europe and due to its personnel who are experienced in the land entitlement process.

ProLogis has identified one other North American industrial distribution development company who is in direct competition with its CDFS business segment in Japan. ProLogis believes that it has an advantage over the local development companies in Japan due to its global experience in the development of industrial distribution properties and its global customer base.

ProLogis uses the customer relationships that it has developed through its property operations segment activities and the ProLogis Operating System in marketing its CDFS business. See “— Property Operations — Customers” and “— ProLogis Management.” In 2003, approximately 51% of the customers that leased distribution space in ProLogis’ CDFS business segment properties were repeat customers of ProLogis.

ProLogis directly employs approximately 725 persons. ProLogis’ employees work in North America (approximately 460 persons), in nine countries in Europe (approximately 240 persons) and in Asia, primarily in Japan (approximately 25 persons). Of the total, approximately 115 employees are assigned to the CDFS business segment. ProLogis’ other employees may assist with CDFS business segment activities. ProLogis believes that its relationships with its employees are good. ProLogis’ employees are not represented by a collective bargaining agreement.

The demand for industrial distribution properties that are developed or acquired in the CDFS business segment is not seasonal in nature. However, the development process can be impeded by weather in certain markets, particularly during the winter months, affecting the scheduling of development activities and potentially delaying construction completions.

ProLogis’ success in the CDFS business segment depends on its ability to develop and timely lease properties and its access to private capital that can be used by a property fund to acquire properties that have been developed or acquired in this segment. ProLogis believes that the reconfiguration of supply chains driven by the need for distribution space users to add efficiencies within their distribution networks will continue to favorably impact the demand for distribution properties and the distribution-related services that ProLogis offers in the CDFS business segment. Also, the limited supply of state-of-the-art distribution space in Europe and Japan could also provide opportunities within this operating segment.

ProLogis intends to utilize the capital generated through the contributions and sales of properties, the proceeds from public debt offerings that take advantage of favorable market conditions and its short-term borrowing facilities to fund its future CDFS business activities.

ProLogis is committed to offer to contribute its stabilized developed properties available in specific markets in Europe to ProLogis European Properties Fund through September 2019 and all of its stabilized developed properties available in Japan to ProLogis Japan Properties Fund through June 2006. ProLogis believes that, while the current capital commitments and borrowing capacities of these property funds will be expended prior to the expiration dates of these commitments, each property fund does have sufficient capital to acquire the properties that ProLogis expects to have available during 2004.

ProLogis’ commitment to offer to contribute certain of its stabilized developed properties in North America to ProLogis North American Properties Fund V expired at the end of 2003. However, ProLogis North American Properties Fund V did acquire two properties from ProLogis in January 2004. While ProLogis North American Properties Fund V’s majority owner is a listed property trust in Australia that is able to raise capital in the public market, there can be no assurance that ProLogis North American Properties Fund V will have the available capital to acquire additional properties from ProLogis in 2004 or, if capital is available, that ProLogis North American Properties Fund V will want to use its capital to acquire properties from ProLogis. Further, there can be no assurance that ProLogis will continue to offer to contribute properties to ProLogis North American Properties Fund V.

There can be no assurance that if existing property funds do not continue to acquire the properties that ProLogis has available, that ProLogis will be able to secure other sources of private equity capital such that it can contribute or sell these properties in a timely manner and allow ProLogis to continue to generate profits from its development activities in a particular reporting period.

See the discussion of factors that could affect the future plans of ProLogis, in the CDFS business segment at “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Factors.”

ProLogis’ management team is headed by its Chairman and Chief Executive Officer, K. Dane Brooksher and its Vice Chairman and Chief Investment Officer, Irving F. Lyons III. Mr. Brooksher and Mr. Lyons are members of ProLogis’ Board of Trustees (the “Board”). On March 25, 2003, ProLogis announced that Mr. Brooksher would relinquish his role as Chief Executive Officer of ProLogis on December 31, 2004 and that Mr. Lyons would relinquish his role as Vice Chairman and Chief Investment Officer of ProLogis on that same date. Mr. Brooksher will remain as ProLogis’ Chairman of the Board and Mr. Lyons will remain as a member of the Board and will serve as Chairman of the Board’s investment committee. The Board’s succession committee has been working with the full Board on succession planning and transition issues.

ProLogis’ investments and operations are overseen by Jeffrey H. Schwartz, President of International Operations and President and Chief Operating Officer — Asia, John W. Seiple, Jr., President and Chief Investment Officer — North America, Robert J. Watson, President of North American Operations and Steven K. Meyer, President and Chief Operating Officer — Europe. Further, in North America, each of ProLogis’ four regions (Mid-Atlantic, Southeast, Central/ Mexico and Pacific) is led by two senior members of the management team — one who is responsible for capital management and one who is responsible for capital deployment. The three regions in Europe (Northern and Central Europe, Southern Europe and the United Kingdom) are each led by a senior officer who has both capital management and capital deployment responsibilities. In Japan, the capital management and capital deployment responsibilities are primarily those of Mr. Schwartz and there are two senior officers in Japan who work closely with Mr. Schwartz, primarily in the area of capital deployment. This structure will continue in Japan until such time as the volume of investments and the level of operations demonstrate the need for additional managers. At this time, ProLogis has one senior officer in China.

ProLogis maintains a Code of Ethics and Business Conduct applicable to its Board and all of its officers and employees, including the principal executive officer, the principal financial officer, the principal accounting officer, the controller or persons performing similar functions. A copy of ProLogis’ Code of Ethics and Business Conduct is available on ProLogis’ website, www.prologis.com. In addition to being accessible through ProLogis’ website, copies of ProLogis’ Code of Ethics and Business Conduct can be obtained, free of charge, upon written request to Investor Relations, 14100 East 35th Place, Aurora, Colorado 80011. Any amendments to or waivers of ProLogis’ Code of Ethics and Business Conduct that apply to the principal executive officer, the principal financial officer, the principal accounting officer, the controller or persons performing similar functions and that relate to any matter enumerated in Item 406(b) of Regulation S-K, will be disclosed on ProLogis’ website.

The reference to ProLogis’ website address does not constitute incorporation by reference of the information contained in the website and such information should not be considered to be part of this document.

ProLogis’ management team is responsible for overseeing the use the ProLogis Operating System, the cornerstone of ProLogis’ business strategy, to allow ProLogis to achieve long-term sustainable growth in cash flow and increase the overall return on equity for its shareholders. The ProLogis Operating System is a proprietary property management and customer service delivery system that has been designed to assist ProLogis’ professional management team in providing a unique and disciplined approach to serving existing and prospective customers. ProLogis believes that, through the ProLogis Operating System, it is, and will continue to be, well positioned to leverage its customer relationships to generate additional business opportunities.

Within the ProLogis Operating System, ProLogis has a team of professionals who are responsible for managing and leasing the properties owned by ProLogis and the property funds. These capital management team members are part of the Market Services Group. ProLogis has 38 Market Officers who are primarily

responsible for understanding and meeting the needs of existing and prospective customers in their respective markets. The Market Officers, along with their team of property management and leasing professionals, use their knowledge of local market conditions to assist the Global Services Group in identifying and accommodating those customers with multiple market requirements and assist in the marketing efforts directed at those customers. The Market Officers’ ability to serve customers in the local market is enhanced by their access to ProLogis’ national and international resources. The focus of the Market Officers has been, and continues to be, on: (i) managing the capital invested in their markets; (ii) creating and maintaining relationships with customers, potential customers and industrial brokers; (iii) leasing ProLogis’ properties; and (iv) identifying potential acquisition and development opportunities in their markets.

Capital deployment is the responsibility of a team of professionals who focus on ensuring that ProLogis’ capital resources are deployed in an efficient and productive manner that will best serve ProLogis’ long-term objective of increasing shareholder value. The team members responsible for capital deployment evaluate both acquisition and development opportunities in light of the market conditions in their respective regions and ProLogis’ overall goals and objectives. In North America the capital deployment and capital management functions are divided between two senior officers in each region due to the level of investments in each region. In Europe, the responsibilities for capital deployment and capital management are shared by one senior officer in each region who rely heavily on country officers to assist them in carrying out their responsibilities. Capital deployment officers work closely with the Global Development Group on creating industry-leading distribution properties and master-planned distribution parks utilizing the extensive experience of the Global Development team members in the development and construction of generic industrial distribution properties that appeal to a wide variety of customers. The Global Development Group incorporates the latest technology with respect to building design and systems and has developed standards and procedures that it strictly adheres to in the development of all properties to ensure that properties developed by ProLogis are of a consistent quality.

The Global Services Group provides service to a group of the largest users of distribution space that ProLogis has identified as its targeted customer base. The Global Services Group’s primary focus is to position ProLogis as the preferred provider of distribution space to these targeted customers. The professionals in the Global Services Group also seek to build long-term relationships with ProLogis’ existing customers. The Global Services Group is dedicated to providing a single point of contact for multi-location global users of distribution space to simplify and streamline the execution of such customers’ distribution space plans.

The ProLogis Solutions Group was formed to address ProLogis’ customers’ distribution and logistics needs by consulting with them on distribution network matters and by providing them with access to material handling equipment. The distribution-related consulting services available to customers by the ProLogis Solutions Group includes network optimization tools, strategic site selection, business location services (including tax incentive analysis and tax negotiation consulting) and design consulting services. ProLogis believes that the services provided by the ProLogis Solutions Group can strengthen its customer relationships.

K. Dane Brooksher — 65 — Mr. Brooksher has served as a Trustee since October 1993. Mr. Brooksher has been Chairman and Chief Executive Officer of ProLogis since March 1999 and he was Co-Chairman and Chief Operating Officer of ProLogis from November 1993 to March 1999. Prior to joining ProLogis, Mr. Brooksher was Area Managing Partner and Chicago Office Managing Partner of KPMG Peat Marwick (now KPMG LLP), independent public accountants, where he served on the Board of Directors and Management Committee and as International Development Partner for Belgium and The Netherlands. Mr. Brooksher is a Director of Butler Manufacturing Company, the National Association of Manufacturers, Pactiv Corporation and Colorado Forum, a not-for-profit organization. Mr. Brooksher serves as an Advisory Board Member of the J.L. Kellogg School of Management of Northwestern University. Mr. Brooksher will begin a term as a Director of Qwest Communications International, Inc. in April 2004. Mr. Brooksher’s term as Trustee expires in 2005.

Irving F. Lyons, III — 54 — Mr. Lyons has served as a Trustee since March 1996. Mr. Lyons has been Vice Chairman of ProLogis since December 2001 and Chief Investment Officer of ProLogis since March 1997. Mr. Lyons was President of ProLogis from March 1999 to December 2001, Co-Chairman of ProLogis from March 1997 to March 1999 and Managing Director of ProLogis from December 1993 to March 1997. Prior to joining ProLogis, Mr. Lyons was the Managing Partner of King & Lyons, a San Francisco Bay Area industrial real estate development and management company, since its inception in 1979. Mr. Lyons’ term as Trustee expires in 2006.

Stephen L. Feinberg — 59 — Mr. Feinberg has served as a Trustee since January 1993. Mr. Feinberg has been Chairman of the Board and Chief Executive Officer of Dorsar Investment Co., Inc., a diversified holding company with interests in real estate and venture capital, since 1970. Mr. Feinberg is also a Director of Security Capital Preferred Growth, an affiliate of Security Capital Group Incorporated (“Security Capital”), previously ProLogis’ largest shareholder (see Note 7 to ProLogis’ Consolidated Financial Statements in Item 8), Continental Transmission Corporation, MetaMetrics, Inc., St. John’s College, The Santa Fe Institute and The Feinberg Foundation, Inc. He was formerly Chairman of the Board of St. John’s College and a former Director of Farrar, Strauss and Giroux, Inc. (a private publishing company), Molecular Informatics, Inc., Border Steel Mills, Inc., Springer Building Materials Corporation, Circle K Corporation, EnerServ Products, Inc. and Texas Commerce Bank-First State. Mr. Feinberg’s term as Trustee expires in 2004.

George L. Fotiades — 50 — Mr. Fotiades has served as a Trustee since December 2001. Mr. Fotiades is President and Chief Operating Officer of Cardinal Health, Inc., a provider of services supporting the health-care industry. Prior thereto, Mr. Fotiades was President and Chief Executive Officer of Life Services Products and Services, a unit of Cardinal Health Inc. Mr. Fotiades was President and Chief Operating Officer of R. P. Scherer Corporation (which was merged into Cardinal Health, Inc. in August 1998), Executive Vice President and Group President from 1996 to 1998 and Group President of the Americas and Asia Pacific from 1996 to 1998. Mr. Fotiades’ term as Trustee expires in 2006.

Donald P. Jacobs — 76 — Mr. Jacobs has served as a Trustee since February 1996. Mr. Jacobs has been a faculty member of the J.L. Kellogg School of Management of Northwestern University since 1957 and Mr. Jacobs is currently Dean Emeritus, having served as Dean from 1975 until 2001. Mr. Jacobs is a Director of Hartmarx Corporation, Terex Corporation and CDW Computer Centers. Mr. Jacobs was formerly a Director of Commonwealth Edison and its parent company, Unicom and he was formerly the Chairman of the Public Review Board of Andersen Worldwide. Mr. Jacobs was Chairman of the Advisory Committee of the Oversight Board of the Resolution Trust Corporation for the third region from 1990 to 1992, Chairman of the Board of AMTRAK from 1975 to 1979, Co-Staff Director of the Presidential Commission on Financial Structure and Regulation from 1970 to 1971 and Senior Economist for the Banking and Currency Committee of the U.S. House of Representatives from 1963 to 1964. Mr. Jacobs’ term as Trustee expires in 2004.

Neelie Kroes — 62 — Ms. Kroes was appointed as a Trustee in May 2002. Ms. Kroes is a member of the Supervisory Boards of Volvo Group (Sweden) and the Thales Group. Ms. Kroes served as President of Nyenrode University, a private university in The Netherlands, from May 1991 to April 2000. Prior thereto, Ms. Kroes held various logistics-related positions in the Dutch government, including Cabinet Minister of Transportation, Public Works and Telecommunication. Ms. Kroes was an assistant professor for transport areas at Erasmus University in Rotterdam, The Netherlands from May 1965 to August 1971. Ms. Kroes serves on various advisory boards including P&O Nedlloyd, Lucent Technologies B.V. and Nederlands Spoorwegen NV (Dutch Railways). Ms. Kroes’ term as Trustee expires in 2005.

Kenneth N. Stensby — 64 — Mr. Stensby has served as a Trustee since March 1999. Mr. Stensby has been Senior Vice President, Mortgage Origination, with Heitman Real Estate Investment Management since September 2003. Mr. Stensby was a Director of Meridian Industrial Trust Inc. from 1996 to March 1999, when it was merged with and into ProLogis. Mr. Stensby was President and Chief Executive Officer of United Properties, a Minneapolis-based diversified real estate company, from 1974 until his retirement in January 1995. Mr. Stensby is past President of the National Association of Industrial and Office Parks and was a

D. Michael Steuert — 55 — Mr. Steuert was appointed as a Trustee in September 2003. Mr. Steuert has been Senior Vice President and Chief Financial Officer of Fluor Corporation, a publicly owned engineering and construction firm, since 2001. Mr. Steuert was Senior Vice President and Chief Financial Officer of Litton Industries, Inc. from 1999 to 2001. Prior thereto, Mr. Steuert was Senior Vice President and Chief Financial Officer for GenCorp, Inc. Mr. Steuert has served as a Trustee of the Mental Health Association of Summit County (Ohio), regional director of the Financial Executive’s Institute and Director of GenCorp, Inc. board of directors. Mr. Steuert’s term as Trustee expires in 2004.

J. André Teixeira — 51 — Mr. Teixeira has served as a Trustee since February 1999. Mr. Teixeira is Vice President, Global Innovation and Development, Interbrew, Belgium, a publicly traded brewer. He was Chairman and Senior Partner with BBL Partners LLC, Moscow, Russia, a consulting and trading company specializing in the food and food ingredient industry, from 2001 to 2002 and he was the President of Coca-Cola for the Russia and Ukraine region, General Manager of Coca-Cola Russia, Ukraine and Belarus and Head of Representation for the Coca-Cola Export Corporation, Moscow from 2000 to 2001. Mr. Teixeira was General Manager/ President of the Coca-Cola Ukraine and Belarus region, Kiev from 1998 to 2000 and was with Coca-Cola in various capacities since 1978. Mr. Teixeira’s term as Trustee expires in 2004.

William D. Zollars — 56 — Mr. Zollars has served as a Trustee since June 2001. Mr. Zollars has been Chairman, President and Chief Executive Officer of Yellow Corporation, a holding company specializing in transportation of industrial, commercial and retail goods, since 1999. From 1996 to 1999, Mr. Zollars was President of Yellow Freight System Inc., Yellow Corporation’s principal operating subsidiary, and he was a Senior Vice President of Ryder Integrated Logistics, Inc. from 1994 to 1996. Mr. Zollars is a Director of Butler Manufacturing Co. Mr. Zollars’ term as Trustee expires in 2006.

Jeffrey H. Schwartz — 44 — President of International Operations since March 2003 and President and Chief Operating Officer — Asia since March 2002. Mr. Schwartz was President and Chief Executive Officer of Vizional Technologies, Inc. (“Vizional Technologies”), an unconsolidated investee of ProLogis (see Note 4 to ProLogis’ Consolidated Financial Statements in Item 8) from September 2000 to February 2002. From October 1994 to August 2000, Mr. Schwartz was with ProLogis, most recently as Vice Chairman for International Operations. Prior to originally joining ProLogis in October 1994, Mr. Schwartz was a founder and managing partner of The Krauss/ Schwartz Company, an industrial real estate developer in Florida.

Steven K. Meyer — 55 — President and Chief Operating Officer — Europe since January 2004. Mr. Meyer was Managing Director of ProLogis from December 1998 to January 2004, where he had capital deployment responsibilities for the Central/ Mexico region and has been with ProLogis in various capacities since September 1994. Prior to joining ProLogis, Mr. Meyer was an Executive Vice President with Trammell Crow Company, a diversified commercial real estate company in North America.

John W. Seiple, Jr. — 45 — President of North America since December 2001 and Chief Investment Officer — North America since February 2004. Mr. Seiple was Chief Operating Officer — North America of ProLogis from December 1998 to February 2004 and has been with ProLogis in various capacities since October 1993. Mr. Seiple is a Director of Insight Inc. (an unconsolidated investee of ProLogis — see Note 4 to ProLogis’ Consolidated Financial Statements in Item 8). Prior to joining ProLogis, Mr. Seiple was a Senior Vice President with Trammell Crow Company, a diversified commercial real estate company in North America.

Robert J. Watson — 54 — President of North American Operations since February 2004. Mr. Watson was President and Chief Operating Officer — Europe of ProLogis from December 1998 to January 2004 and has been with ProLogis in various capacities since November 1992. Prior to joining ProLogis, Mr. Watson was the Regional Partner for Southwest United States Real Estate with Trammell Crow Company, a diversified commercial real estate company in North America.

Walter C. Rakowich — 46 — Managing Director and Chief Financial Officer of ProLogis since December 1998, where he is responsible for worldwide corporate finance. Mr. Rakowich has been with ProLogis in various capacities since July 1994. Prior to joining ProLogis, Mr. Rakowich was a consultant to ProLogis in the area of due diligence and acquisitions and he was a Principal with Trammell Crow Company, a diversified commercial real estate company in North America.

Edward S. Nekritz — 38 — Managing Director of ProLogis since December 2002, General Counsel of ProLogis since December 1998 and Secretary of ProLogis since March 1999, where he oversees the provision of all legal services for ProLogis and is responsible for ProLogis’ Risk Management and Asset Services departments. Mr. Nekritz has been with ProLogis in various capacities since September 1995. Prior to joining ProLogis, Mr. Nekritz was an attorney with Mayer, Brown & Platt (now Mayer, Brown, Rowe & Maw LLP).

Paul C. Congleton — 49 — Managing Director of ProLogis since September 1999, where he is responsible for Fund Management and Real Estate Research in North America. Mr. Congleton has been with ProLogis in various capacities since January 1995. Prior to joining ProLogis, Mr. Congleton was Managing Principal with Overland Company, a property management, leasing and consulting company based in Arizona.

Alan J. Curtis — 56 — Managing Director of ProLogis since December 2002, where he has capital management and deployment responsibilities for the United Kingdom. Mr. Curtis has been with ProLogis or an investee of ProLogis in various capacities since June 1997. Prior thereto, Mr. Curtis was with Gazely Properties as a Senior Development Surveyor with responsibilities for the Midlands market of the United Kingdom.

Ranald A. Hahn — 48 — Managing Director of ProLogis since December 2002, where he has capital management and deployment responsibilities for Southern Europe. Mr. Hahn has been with ProLogis in various capacities since March 1999. Prior to joining ProLogis, Mr. Hahn was the International Business Development Director of GSE, a French logistics construction company.

John R. Rizzo — 54 — Managing Director of ProLogis since December 2000, where he is responsible for the Global Development Group in North America. Mr. Rizzo has been with ProLogis in various capacities since January 1999. Prior to joining ProLogis, Mr. Rizzo was Senior Vice President and Chief Operating Officer of Perini Management Services Incorporated, an affiliate of Perini Corporation which is a construction management and general contracting firm.

Robin P. R. von Weiler — 47 — Managing Director of ProLogis since December 1999, where he has capital management and deployment responsibilities for Northern and Central Europe. Mr. von Weiler has been with ProLogis in various capacities since October 1997. Prior to joining ProLogis, Mr. von Weiler was with DTZ Zadelhoff V.O.F., part of DTZ Debenham Tie Lung, in Rotterdam, The Netherlands, most recently as Vice Managing Director, Real Estate Agent and Corporate Advisor.

Gary E. Anderson — 38 — Senior Vice President of ProLogis since May 2003, where he has capital deployment responsibilities for the Central/ Mexico region. Previously, Mr. Anderson was a Market Officer for ProLogis’ New Jersey markets and he has been with ProLogis in various capacities since August 1994. Prior to joining ProLogis, Mr. Anderson was with Security Capital, previously ProLogis’ largest shareholder, as a member of its Management Development Program.

Bert Angel — 47 — Senior Vice President of ProLogis since December 2003, where he oversees the Global Services Group in Europe. Previously, Mr. Angel was a First Vice President of ProLogis with similar responsibilities and he has been with ProLogis in various capacities since May 1998. Prior to joining ProLogis, Mr. Angel was the International Marketing and Sales Director for the Port of Rotterdam, the largest port in the world.

Gregory J. Arnold — 48 — Senior Vice President of ProLogis since December 2001, where he oversees the Global Services Group in North America. Mr. Arnold has been with ProLogis in various capacities since May 1994. Prior to joining ProLogis, Mr. Arnold was an Equity Vice President with LaSalle Partners (now Jones Lang LaSalle), a corporate real estate advisory firm.

Patrick J. Boot — 39 — Senior Vice President of ProLogis since January 2003, where he has responsibility for Real Estate Research in China and for the establishment of ProLogis’ operations in China. Prior to joining ProLogis, Mr. Boot was Executive Vice President and Executive Director of Property Investment Advisors Indonesia/ P.T. Sanggraha Daksamitra, a real estate development and leasing company in Indonesia.

Eric D. Brown — 43 — Senior Vice President of ProLogis since January 2004, where he has capital management responsibilities for the Central/ Mexico region. Previously, Mr. Brown was a Market Officer for ProLogis’ San Antonio and Reynosa, Mexico markets and he has been with ProLogis in capacities since May 1994. Prior to joining ProLogis, Mr. Brown was a Partner and Vice President of Crow Barshop Properties, Inc., an industrial real estate management and leasing company in San Antonio.

Ken R. Hall — 53 — Senior Vice President of ProLogis since December 2002, where he oversees the Global Development Group in Europe. Mr. Hall has been with ProLogis or an investee of ProLogis in various capacities since July 1998. Prior thereto, Mr. Hall was a Managing Director of Birse Construction, a development company in the United Kingdom.

Larry H. Harmsen — 43 — Senior Vice President of ProLogis since December 2001, where he has capital deployment responsibilities for the Pacific region. Mr. Harmsen has been with ProLogis in various capacities since February 1995. Prior to joining ProLogis, Mr. Harmsen was a Vice President and General Partner with Lincoln Property Company, a diversified national real estate operating company.

M. Gordon Keiser, Jr. — 59 — Senior Vice President of ProLogis since October 1995 and Treasurer of ProLogis since December 1998, where he is responsible for relationships with ProLogis’ lenders. Mr. Keiser has been with ProLogis in various capacities since October 1995. Prior to joining ProLogis, Mr. Keiser was Senior Vice President of JMB Realty Corporation with responsibilities for corporate finance and capital markets financing.

Douglas A. Kiersey, Jr. — 43 — Senior Vice President of ProLogis since December 2001, where he has capital deployment responsibilities for the Mid-Atlantic region. Mr. Kiersey has been with ProLogis in various capacities since May 1994. Prior to joining ProLogis, Mr. Kiersey was a member of the Industrial/ Technology Group at Cushman & Wakefield of Oregon, Inc., a real estate brokerage and services company.

W. Scott Lamson — 41 — Senior Vice President of ProLogis since March 2003, where he has capital management responsibilities for the Pacific region. Previously, Mr. Lamson was a Market Officer for ProLogis’ San Francisco markets and he has been with ProLogis in various capacities since June 1995. Prior to joining ProLogis, Mr. Lamson was a Vice President with Commercial Property Services, a commercial real estate company with responsibilities in the San Francisco market.

Luke A. Lands — 47 — Senior Vice President and Controller of ProLogis since August 2000, where he supervises ProLogis’ accounting, financial reporting and financial forecasting functions. Mr. Lands has been with ProLogis in various capacities since January 1996. Prior to joining ProLogis, Mr. Lands was Vice President of SCG Realty Services, an affiliate of Security Capital. Prior thereto, Mr. Lands was Vice President and Controller for Lincoln Property Company, a diversified national real estate operating company. Mr. Lands is a Certified Public Accountant.

Brian N. Marsh — 39 — Senior Vice President of ProLogis since January 2004 where he has capital management responsibilities for the Mid-Atlantic Region. Previously, Mr. Marsh was a Market Officer for ProLogis’ Columbus, Ohio market and he has been with ProLogis in various capacities since January 1995. Prior to joining ProLogis, Mr. Marsh was an Associate with The Pizzuti Companies, an industrial real estate company in Columbus, Ohio.

Debra A. McRight — 44 — Senior Vice President of ProLogis since December 1999, where she is responsible for client services and property management operations in North America. Ms. McRight has been with ProLogis in various capacities since September 1995. Prior to joining ProLogis, Ms. McRight was with Paragon Group, Inc., a full service real estate company, where she was responsible for property management operations in St. Louis, Missouri.

Masato Miki — 39 — Senior Vice President of ProLogis since January 2004, where he is responsible for acquisition activities and capital raising in Japan. Previously, Mr. Miki was a First Vice President of ProLogis with similar responsibilities in Japan and he has been with ProLogis since August 2002. Prior to joining ProLogis, Mr. Miki was Vice President of Mitsui Fudosan Investment Advisors, Inc., an affiliate of Mitsui Fudosa Co., Ltd., a comprehensive real estate company in Japan.

Charles E. Sullivan — 46 — Senior Vice President of ProLogis since December 2001, where he has capital management responsibilities for the Southeast region. Mr. Sullivan has been with ProLogis in various capacities since October 1994. Prior to joining ProLogis, Mr. Sullivan was an Industrial Broker with Cushman & Wakefield of Florida, a real estate brokerage and services company.

Neville D. E. Teagarden — 40 — Senior Vice President and Chief Information Officer of ProLogis since September 2003, where he is responsible for development and implementation of ProLogis’ global business technology systems. Prior to joining ProLogis, Mr. Teagarden was the Chief Information Officer of Navigant International, a provider of travel management services.

Peter R. S. Wittendorp — 38 — Senior Vice President of ProLogis since December 2003 where he has Global Capital and Fund Management responsibilities in Europe. Previously, Mr. Wittendorp was a First Vice President of ProLogis with similar responsibilities in Europe and he has been with ProLogis since September 2001. Prior to joining ProLogis, Mr. Wittendorp was an independent real estate consultant and he also served as Coordinating Fund Manager and Executive Vice President of the real estate investment group of ABP Investments.

Mike Yamada — 50 — Senior Vice President of ProLogis since January 2004, where he is responsible for development activities in Japan. Previously, Mr. Yamada was a First Vice President of ProLogis with similar responsibilities in Japan and he has been with ProLogis since April 2002. Prior to joining ProLogis, Mr. Yamada was a Senior Officer of Fujita Corporation, a construction company in Japan.

Under various federal, state and local laws, ordinances and regulations, a current or previous owner, developer or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, under or in its property. The costs of removal or remediation of such substances could be substantial. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of such hazardous substances. The presence of such substances may adversely affect the owner’s ability to sell such real estate or to borrow funds by using such real estate as collateral. ProLogis has not been notified by any governmental authority of any non-compliance, liability or other claim in connection with any of the properties owned (directly or through investments in property funds), or being acquired, as of December 31, 2003, and ProLogis is not aware of any environmental condition with respect to any of its properties that is likely to have a material adverse effect on ProLogis’ business, financial condition or results of operations. ProLogis or the predecessor owners have subjected each of its properties to an environmental assessment (which may not involve invasive procedures such as soil sampling or ground water analysis) by independent consultants. While some of these assessments have led to further investigation and sampling, none of these environmental assessments have revealed, nor is ProLogis aware of, any environmental liability (including asbestos-related liability) that ProLogis believes would have a material adverse effect on its business, financial condition or results of operations. No assurance can be given, however, that these assessments and investigations have revealed or will reveal all potential environmental liabilities, that no prior owner or operator created any material environmental condition not known to ProLogis or the independent consultants or that future uses or conditions (including, without limitation, customer actions or changes in applicable environmental laws and regulations) will not result in unreimbursed costs relating to environmental liabilities. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Factors.”

ProLogis and its unconsolidated investees carry comprehensive insurance coverage. ProLogis determines the type of coverage and the policy specifications and limits based on what it deems to be the risks associated with its ownership of properties and other of its business operations in specific markets. Such coverage includes property, liability, fire, flood, earthquake, environmental, terrorism, extended coverage and rental loss. ProLogis believes that its insurance coverage contains policy specifications and insured limits that are customary for similar properties, business activities and markets and ProLogis believes its properties and the properties of its unconsolidated investees are adequately insured. However, an uninsured loss could result in loss of capital investment and anticipated profits. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Factors.”

ProLogis has directly invested in real estate assets that are primarily generic industrial distribution properties. Due to the costs associated with retrofitting service center space for new customers, ProLogis has acquired properties containing service center space on a very limited basis. Generally, service center space has been acquired as part of portfolio acquisitions in which the majority of the properties being acquired were generic industrial distribution properties. In Japan, ProLogis’ distribution properties will generally be multi-level centers, which is common in Japan due to the high cost and limited availability of land. ProLogis’ properties are typically used for storage, packaging, assembly, distribution and light manufacturing of consumer and industrial products. Based on the square footage of operating properties directly owned by ProLogis at December 31, 2003, 87% of ProLogis’ properties are used for bulk distribution with the remaining properties used for light manufacturing and assembly (11%) and for other purposes, primarily service centers, (2%).

All operating properties are part of the property operations segment. ProLogis has commitments with certain property funds that require ProLogis to offer to contribute certain of its stabilized developed properties to those property funds, subject to certain conditions, upon completion. All properties under development are part of the CDFS business segment. Regardless of ProLogis’ intent with respect to a property (i.e., direct, long-term investment or expectation of future contribution or sale), all properties that are classified as operating properties are included in the property operations segment while they are directly owned by ProLogis.

ProLogis has direct ownership of 1,279 distribution properties (operating and under development) in North America, Europe and Japan at December 31, 2003. In North America, properties that are owned directly by ProLogis are located in 38 markets (including three cities that are not target markets) in 23 states and the District of Columbia in the United States, and in four markets in Mexico. In Europe, the properties that are owned directly by ProLogis are located in 19 markets in eight countries. In Japan, the properties that are owned directly by ProLogis are currently reflected in one market that includes Tokyo, Osaka and Nagoya. ProLogis defines its markets based on the concentration of properties in a specific area. A market, as defined by ProLogis, can be a metropolitan area, a city, a subsection of a metropolitan area, a subsection of a city or a region of a state or country. Accordingly, the actual location of each market may not be easily identifiable by the name given to the market by ProLogis. Such markets are identified below along with the major

The table below illustrates the geographic distribution of ProLogis’ portfolio of directly owned operating properties and properties under development. The table excludes land held for future development. The table includes properties owned by ProLogis and its consolidated subsidiaries and partnerships, which may not be 100% owned by ProLogis (see “— Real Estate Partnerships”). The table does not include properties that are owned by the property funds or ProLogis’ other unconsolidated investees which are discussed under “— Unconsolidated Investees.”


(1)	Properties under development are reflected at their total expected cost at completion, rather than at the cost incurred as of the dates presented.

(2)	ProLogis California has the right of first offer with respect properties that ProLogis develops, excluding properties developed under build to suit agreements, in certain counties included in ProLogis’ Los Angeles/ Orange County market, subject to the property meeting certain specified criteria, including leasing criteria.


(3)	Includes one property in each of the Akron, Ohio, Birmingham, Alabama and Brownsville, Texas markets, none of which are considered to be target markets of ProLogis.

(4)	ProLogis is committed to offer to contribute all of the properties that it develops and stabilizes in specific markets in Europe to ProLogis European Properties Fund through September 2019, subject to the property meeting certain specified criteria, including leasing criteria.

(5)	ProLogis is committed to offer to contribute all of the properties that it develops and stabilizes in Japan to ProLogis Japan Properties Fund through June 2006, subject to the property meeting certain specified criteria, including leasing criteria.

(6)	Includes 27 properties under development at December 31, 2003 and 37 properties under development at December 31, 2002.

The information in the following tables is as of December 31, 2003 for the properties and land directly owned by ProLogis and its consolidated subsidiaries and partnerships, which may not be 100% owned by ProLogis (see “— Real Estate Partnerships”). No individual property or group of properties operated as a single business unit amounted to 10% or more of ProLogis’ consolidated total assets at December 31, 2003 or generated income equal to 10% or more of ProLogis’ consolidated gross revenues or total income for the year ended December 31, 2003. The table does not include properties that are owned by property funds or by ProLogis’ other unconsolidated investees which are discussed under “— Unconsolidated Investees.”


n/a	Not Applicable

(1)	The percentage occupancy presented is the physical occupancy at December 31, 2003. Operating properties at December 31, 2003 include recently completed development properties that may be in the initial lease-up phase, including properties aggregating 3.3 million square feet that were completed in 2003. The inclusion of properties in the initial lease-up phase can reduce the overall occupancy percentage.

(2)	Investment represents ProLogis’ carrying value of the properties, before depreciation, at December 31, 2003.

(3)	Certain properties are pledged as security under ProLogis’ secured debt and assessment bonds at December 31, 2003. For purposes of this table, the total principal balance of a debt issuance that is secured by a pool of properties is allocated among the properties in the pool based on each property’s investment balance. See Schedule III — Real Estate and Accumulated Depreciation to ProLogis’ Consolidated Financial Statements in Item 8 for additional identification of the properties pledged.

(4)	All operating properties are included in the property operations segment. See “Item 1. Business — ProLogis’ Operating Segments — Property Operations.”

(5)	Includes 88 properties aggregating 14.0 million square feet at total investment of $448.0 million that were developed in the CDFS business segment that are pending contribution to a property fund or sale to a third party or that were acquired in the CDFS business segment that are pending contribution to a property fund. See “Item 1. Business — ProLogis’ Operating Segments — CDFS Business.”

(6)	Includes one property in each of the Akron, Ohio and Brownsville, Texas markets, neither of which are considered to be target markets of ProLogis.

(7)	Includes 31 properties aggregating 6.4 million square feet at a total investment of $480.3 million that were developed in the CDFS business segment that are pending contribution to a property fund or sale to a third party. See “Item 1. Business — ProLogis’ Operating Segments — CDFS Business.”

(8)	Includes a 0.7 million square foot property at an investment of $21.8 million that was previously presented under the equity method in the temperature-controlled distribution segment. See Notes 2, 4 and 10 to ProLogis’ Consolidated Financial Statements in Item 8.

(9)	Includes a 0.1 million square foot property at an investment of $1.9 million that was previously presented under the equity method in the temperature-controlled distribution segment. See Notes 2, 4 and 10 to ProLogis’ Consolidated Financial Statements in Item 8.


(10)	Includes a 0.2 million square foot property at an investment of $13.1 million that was previously presented under the equity method in the temperature-controlled distribution segment. See Notes 2, 4 and 10 to ProLogis’ Consolidated Financial statements in Item 8.


(11)	Represents the total expected cost at completion for properties under development, including the cost of land, fees, permits, payments to contractors, architectural and engineering fees and interest and property taxes to be capitalized during construction, rather than actual costs incurred to date.

(12)	All of the properties under development are included in the CDFS business segment. See “Item 1. Business — ProLogis’ Operating Segments — CDFS Business.”

(13)	Includes ten properties aggregating 3.2 million square feet that are in the design and permitting stage.

(14)	Includes one property in Birmingham, Alabama that ProLogis was developing under a pre-sale agreement with a customer. Birmingham is not considered to be a target market of ProLogis.

(15)	All of the land held for future development is included in the CDFS business segment. The land owned can be used for the development of approximately 48.2 million square feet of distribution properties. See “Item 1. Business — ProLogis’ Operating Segments — CDFS Business.” Does not include 1,388 acres of land controlled directly by ProLogis under option, letter of intent or contingent contract with the capacity for the development of approximately 20.7 million square feet of distribution properties. Does not include 455 acres of land owned or controlled by unconsolidated investees of ProLogis with the capacity for the development of approximately 7.9 million square feet of distribution properties. See “— Unconsolidated Investees — CDFS Business.”

(16)	Includes 18 acres of land at an investment of $0.2 million that were previously presented under the equity method in the temperature-controlled distribution segment. See Notes 2, 4 and 10 to ProLogis’ Consolidated Financial Statements in Item 8.

(17)	Other investments include: (i) earnest money deposits associated with potential acquisitions; (ii) costs incurred during the pre-acquisition due diligence process; and (iii) costs incurred during the pre-construction phase related to future development projects.

At December 31, 2003, ProLogis held a majority ownership interest in and controlled five real estate partnerships (collectively, the “Partnerships”). For financial reporting purposes, the assets, liabilities, results of operations and cash flows of each of the Partnerships are included in ProLogis’ Consolidated Financial Statements and in the preceding real estate tables. The interests of the limited partners are reflected as minority interest in ProLogis’ Consolidated Balance Sheet.

Generally, pursuant to partnership agreements, ProLogis or a wholly owned subsidiary of ProLogis is the sole controlling general partner of each of the Partnerships with all management powers over the business and affairs of the Partnership. The limited partners of each Partnership generally do not have the authority to transact business for, or participate in the management decisions of, the Partnerships. The general partner in each of the Partnerships may not, without the written consent of all of the limited partners: (i) take any action that would prevent the Partnership from conducting its business; (ii) possess the property of the Partnership; (iii) admit an additional partner; or (iv) subject a limited partner to the liability of a general partner. In each Partnership, ProLogis or a wholly owned subsidiary may not voluntarily withdraw from the Partnership or transfer or assign its interests in the Partnership without the consent of all of the limited partners. The limited partners may freely transfer their partnership units to their affiliates, provided that the transfer does not cause a termination of the Partnership under the Code and does not cause ProLogis to cease to comply with the REIT requirements of the Code. The limited partners in each of the Partnerships are entitled to redeem their partnership units for Common Shares. Additionally, the limited partners are entitled to receive preferential cumulative quarterly distributions per outstanding unit equal to the quarterly distributions paid on Common Shares.


	(1)	Irving F. Lyons, III, ProLogis’ Vice Chairman and Chief Investment Officer, had an effective ownership in ProLogis Limited Partnership-I of 1.8% at December 31, 2003.

	(2)	These properties cannot be sold, prior to the occurrence of certain events, without the consent of the limited partners, other than in tax-deferred exchanges. The Partnership Agreement provides that a minimum level of debt must be maintained within the Partnership, which can include intercompany debt to ProLogis.

	(3)	One property is located in the Tampa market; all other properties are located in San Francisco (the East Bay and South Bay markets).

	(4)	These properties are located in the Charlotte, Dallas/ Ft. Worth, Denver, El Paso, San Francisco (East Bay), St. Louis and Washington, D.C./ Baltimore markets.

	(5)	Jeffrey H. Schwartz, ProLogis’ President of International Operations and President and Chief Operating Officer — Asia, owned 4.75% of ProLogis Limited Partnership-III and 1.0% of ProLogis Limited Partnership-IV at December 31, 2003.

	(6)	These properties are located in the Chicago, Orlando, San Antonio and Tampa markets.

	(7)	ProLogis Limited Partnership-IV was formed through a cash contribution from a wholly owned subsidiary of ProLogis, ProLogis IV, Inc., and through the contribution of properties from the limited partner. ProLogis Limited Partnership-IV and ProLogis IV, Inc. are legal entities that are separate and distinct from ProLogis, its affiliates and each other, and each has separate assets, liabilities, business functions and operations. At December 31, 2003, the sole asset of ProLogis IV, Inc. was its interest in ProLogis Limited Partnership-IV. At December 31, 2003, ProLogis IV, Inc. had outstanding borrowings from ProLogis of $0.9 million.

	(8)	These properties are located in the Cincinnati, Dallas/ Ft. Worth, Ft. Lauderdale/ Miami, I-95 Corridor (New Jersey), Orlando and Tampa markets and one property is located in Akron, Ohio.

	(9)	This partnership was formed by another REIT that was merged with and into ProLogis in 1999.

At December 31, 2003, ProLogis’ investments in and advances to unconsolidated investees (entities that ProLogis present under the equity method rather than on a consolidated basis) totaled $677.3 million. ProLogis’ investments in and advances to property funds discussed below under “— Property Operations” totaled $548.2 million at December 31, 2003. ProLogis’ investments in and advances to its entities operating in the CDFS business segment totaled $12.8 million at December 31, 2003. ProLogis’ investment in and advances to a temperature-controlled distribution company was $113.8 million at December 31, 2003. ProLogis’ investments in and advances to other companies that do not own and operate real estate totaled

$2.5 million at December 31, 2003. ProLogis’ unconsolidated investees are discussed in Note 4 to ProLogis’ Consolidated Financial Statements in Item 8. See also “Item 1. Business — ProLogis’ Operating Segments.”

ProLogis’ investments in unconsolidated investees, other than the property funds, were structured to allow ProLogis to comply with the REIT requirements of the Code. Certain of these investees produce income that is not REIT qualifying income (i.e., not rental income or mortgage interest income). To maintain its qualification as a REIT, ProLogis can collectively invest in these companies and other taxable REIT subsidiaries in amounts up to 20% of the fair market value of ProLogis’ total assets.

With respect to the property funds, maintaining an ownership interest of 50% or less is integral to ProLogis’ business strategy. This business strategy allows ProLogis to: (i) realize, for financial reporting purposes, a portion of the profits from its CDFS business activities upon contribution of a property to a property fund; (ii) earn fees from the property funds; (iii) raise private capital to fund its future CDFS business activities; (iv) maintain an ownership interest in its developed properties; and (v) maintain relationships with its customers.


Maryland		74-2604728
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification no.)


	Name of each exchange
Title of Each Class	on which registered

Common Shares of Beneficial Interest, par value $0.01 per share		New York Stock Exchange
Series F Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per share		New York Stock Exchange
Series G Cumulative Redeemable Preferred Shares of Beneficial Interest par value $0.01 per share		New York Stock Exchange


		Number		Square Feet

ProLogis California(1)			79		13,017
ProLogis North American Properties Fund I(2)			36		9,406
ProLogis North American Properties Fund II(3)			27		4,477
ProLogis North American Properties Fund III(4)			34		4,380
ProLogis North American Properties Fund IV(5)			17		3,475
ProLogis North American Properties Fund V(6)			90		20,737
ProLogis European Properties Fund(7)			197		40,108
ProLogis Japan Properties Fund(8)			5		1,619

	Totals		485		97,219


United States:
	I-81 Corridor, Pennsylvania		Allentown, Bethlehem, Harrisburg
	I-95 Corridor, New Jersey		Cranbury, Newark, Secaucus, Trenton
	Los Angeles/ Orange County, California		Los Angeles and Orange County metropolitan areas
Europe:
	France:
		Central	Orleans, Paris, Vatry
		East	Metz
		North	Lille, Le Havre
		South	Lyon, Marseille
	Germany:
		Rhine/ Main	Frankfurt
		Rhine/ Ruhr	Cologne, Dortmund, Dusseldorf
		South	Munich
	Netherlands:
		South	Haaften, Tilburg, Veghel, Venlo
	Poland:
		Central	Piotrkow
		South	Bedzin
		West	Poznan
	United Kingdom:
		East Midlands	Bedfordshire, Coalville, Corby, Daventry, Leicester, Northampton
		London and Southeast	London, Hemel Hempstead, Thurrock
		North	Leeds, Wakefield, Crewe
		West Midlands	Banbury, Birmingham, Coventry, Rugby
Asia:
	Japan		Nagoya, Osaka, Tokyo



		December 31,


		2003					2002

				Percentage of					Percentage of
		Number of		Assets Based			Number of		Assets Based
		Properties		on Cost(1)			Properties		on Cost(1)

North American Markets:
United States:
	Atlanta, Georgia		80		4.89	%		84		5.22	%
	Austin, Texas		27		1.24			27		1.31
	Charlotte, North Carolina		33		2.58			30		2.20

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Item	Description		Page

PART I
1.	Business			1
		ProLogis		1
		ProLogis’ Operating Segments		3
		ProLogis Management		11
		Environmental Matters		17
		Insurance Coverage		18
2.	Properties			18
		Industrial Distribution Properties		18
		Geographic Distribution		18
		Properties		22
		Real Estate Partnerships		28
		Unconsolidated Investees		29
3.	Legal Proceedings			34
4.	Submission of Matters to a Vote of Security Holders			34
PART II
5.	Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters			35
		Market Information and Holders		35
		Distributions and Dividends		35
		Securities Authorized for Issuance Under Equity Compensation Plans		37
		Other Shareholder Matters		37
6.	Selected Financial Data			38
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			43
		Overview		44
		Critical Accounting Policies		44
		Results of Operations		46
		Environmental Matters		58
		Liquidity and Capital Resources		58
		Funds from Operations		65
		Risk Factors		68
7A.	Quantitative and Qualitative Disclosure About Market Risk			74
8.	Financial Statements and Supplementary Data			76
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Matters			76
9A.	Controls and Procedures			76
PART III
10.	Directors and Executive Officers of the Registrant			76
11.	Executive Compensation			77
12.	Security Ownership of Certain Beneficial Owners and Management			77
13.	Certain Relationships and Related Transactions			77
14.	Principal Accountant Fees and Services			77
PART IV
15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K			78
Computation of Ratio of Earnings - Fixed Charges
Computation of Ratio of Earnings - Combined Fixed
Subsidiaries
Consent of KPMG LLP - Stockholm, Sweden
Report of KPMG LLP - Stockholm, Sweden
Consent of KPMG LLP - New York, New York
Report of KPMG LLP - New York, New York
Consent of KPMG LLP - San Diego, California
Certification of Chief Executive Officer
Certification of Chief Financial Officer
Certification of Chief Executive Officer- Sec. 906
Certification of Chief Financial Officer- Sec. 906


								Rentable
			No. of		Percentage			Square
			Bldgs.		Occupancy(1)			Footage		Investment(2)		Encumbrances(3)

Operating Properties Directly Owned at December 31, 2003(4):
	North American Markets(5):
	United States:
		Atlanta, Georgia		80		80.24	%		8,504,171	$	271,202,953	$	35,618,033
		Austin, Texas		27		83.05			1,759,309		68,920,961		—
		Charlotte, North Carolina		33		88.75			4,603,630		143,120,391		41,371,602
		Chattanooga, Tennessee		5		96.50			1,147,872		15,923,237		—
		Chicago, Illinois		60		84.77			7,832,665		330,136,091		44,688,271
		Cincinnati, Ohio		42		81.50			4,486,846		121,398,240		40,924,343
		Columbus, Ohio		31		94.73			5,272,331		169,576,695		30,840,379
		Dallas/ Fort Worth, Texas		124		82.96			13,104,598		434,549,171		63,086,584
		Denver, Colorado		25		82.75			2,849,696		81,087,292		—
		El Paso, Texas		18		73.48			2,596,483		74,386,024		1,964,447
		Ft. Lauderdale/ Miami, Florida		14		92.47			1,137,689		65,902,493		1,606,815
		Houston, Texas		91		86.82			8,400,201		254,264,097		45,590,711
		I-81 Corridor, Pennsylvania		3		100.00			1,068,420		48,304,131		—
		I-95 Corridor, New Jersey		26		99.53			3,608,653		138,895,232		28,141,909
		Indianapolis, Indiana		43		82.11			4,184,599		135,849,021		—
		Kansas City, Kansas/ Missouri		29		93.41			1,578,487		63,610,026		11,512,592
		Las Vegas, Nevada		17		96.69			2,061,291		95,112,389		16,728,554
		Los Angeles/ Orange County, California		1		100.00			249,283		11,145,451		—
		Louisville, Kentucky		7		87.05			1,469,988		36,661,395		6,406,868
		Memphis, Tennessee		47		86.92			7,309,879		192,753,408		9,881,854
		Nashville, Tennessee		41		80.00			4,439,170		114,271,012		6,930,533


			Acreage		Investment(2)		Encumbrances(3)

Land Held for Development at December 31, 2003(15):
	North American Markets:
	United States:
		Atlanta, Georgia		234.2	$	19,398,395	$	—
		Austin, Texas		7.2		775,877		—
		Charlotte, North Carolina		17.3		1,519,348		—
		Chicago, Illinois		83.2		15,869,604		—
		Cincinnati, Ohio		97.3		8,821,438		—
		Columbus, Ohio		15.9		935,447		—
		Dallas/ Ft. Worth, Texas		155.4		15,336,833		—
		Denver, Colorado		118.9		4,637,979		—
		El Paso, Texas		85.2		5,459,775		—
		Houston, Texas		56.0		5,272,379		—
		I-81 Corridor, Pennsylvania		153.2		6,727,276		—
		I-95 Corridor, New Jersey		10.1		545,585		—
		Indianapolis, Indiana		149.6		10,370,109		—
		Kansas City, Kansas/ Missouri		16.6		1,526,602		—
		Las Vegas, Nevada		34.6		4,935,847		239,326
		Los Angeles/ Orange County, California		91.7		8,197,369		—
		Louisville, Kentucky		90.1		7,064,424		—
		Memphis, Tennessee		120.6		7,083,218		—
		Orlando, Florida		28.1		2,841,892		—
		Portland, Oregon		10.3		1,753,655		—
		Reno, Nevada		30.1		4,275,700		—
		Salt Lake City, Utah		28.3		2,095,715		—
		San Antonio, Texas		57.7		4,383,139		—
		San Francisco (East Bay) California		77.6		6,593,262		—
		Seattle, Washington		10.6		2,020,161		—
		Tampa, Florida		48.4		3,396,123		—
		Washington D.C./ Baltimore, Maryland		30.8		5,306,550		—
	Mexico:
		Juarez		47.3		7,809,319		—
		Monterrey		12.8		1,759,700		—


								Real Estate
	Formation			Number of		Rentable		Assets			ProLogis’
	Date			Properties		Square Footage		(in millions)			Ownership

ProLogis Limited Partnership-I(1)		1993			74		3,904,336	$	217.9	(2)(3)		68.65%
ProLogis Limited Partnership-II		1994			28		1,925,902		57.2	(4)		99.99%
ProLogis Limited Partnership-III(5)		1994			17		1,004,120		36.3	(6)		95.25%
ProLogis Limited Partnership-IV(5)(7)		1994			46		2,801,617		94.9	(8)		98.87%
Meridian Realty Partners Limited Partnership		(9	)		1		249,283		11.1	(10)		87.00%

					166		9,885,258	$	417.4


(10)	This property is located in the Los Angeles/ Orange County market.


	Business Strategy and Global Presence


	Property Operations


	Investments


	Market Presence