<PAGE>
As filed with the Securities and Exchange Commission on April 8, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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PROLOGIS TRUST
(Exact name of registrant as specified in its charter)
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Maryland 6719 74-6056896
(State or other (Primary Standard (I.R.S. Employer
jurisdiction Industrial Identification No.)
of incorporation or Classification Code
organization) Number)
14100 East 35th Place
Aurora, Colorado 80011
(303) 375-9292
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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Secretary
ProLogis Trust
14100 East 35th Place
Aurora, Colorado 80011
(303) 375-9292
(Name, address, including zip code, and telephone number, including area code,
of agent for service):
Copies to:
Michael T. Blair
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
(312) 782-0600
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Approximate date of commencement of proposed sale to the public: From time
to time after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [X]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed Maximum
Title of Each Class of Proposed Maximum Aggregate Amount of
Security to be Amount to be Offering Price Offering Registration
Registered Registered Per Share(1) Price(1) Fee
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<S> <C> <C> <C> <C>
Common Shares of
Beneficial Interest,
par value $0.01 per
share................. 675,298 shares $19.50 $13,168,311 $3,660.79
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Preferred Share Purchase
Rights................ 675,298 N/A N/A N/A
</TABLE>
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Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus
constituting a part of this Registration Statement also relates to 1,324,702 of
the Registrant's securities registered on Registration Statement No. 33-91366.
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(1) Estimated solely for the purpose of determining the registration fee in
accordance with Rule 457(c), based on the average of the high and low sales
prices on April 5, 1999.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
PROSPECTUS
PROLOGIS TRUST
1999 DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN
ProLogis Trust has established the 1999 Dividend Reinvestment and Share
Purchase Plan. The plan amends the existing ProLogis dividend reinvestment and
share purchase plan and is designed to provide participants with a convenient
and economical method to purchase ProLogis common shares of beneficial interest
and to reinvest all or a portion of their cash distributions in additional
ProLogis common shares. The plan also allows persons who are not already
shareholders of ProLogis to purchase ProLogis common shares under the plan. The
plan will be administered by an agent, BankBoston, N.A., or any successor bank
or trust company as may from time to time be designated by ProLogis. The
administrative support to the agent may be performed by EquiServe, L.P., a
registered transfer agent.
The agent will buy, at ProLogis' option, newly issued common shares directly
from ProLogis or common shares in the open market or in negotiated transactions
with third parties. ProLogis common shares purchased directly from ProLogis
under the plan will be priced at a 2% discount from market prices at the time
of the investment, determined in accordance with the plan. See "Description of
the plan, Question 17."
These securities have not been approved or disapproved by the Securities
and Exchange Commission or any state securities commission nor has the
Securities and Exchange Commission or any State Securities Commission passed
upon the accuracy or adequacy of this prospectus. Any representation to the
contrary is a criminal offense.
The date of this Prospectus is April 8, 1999
<PAGE>
PROLOGIS TRUST
ProLogis
ProLogis is a real estate investment trust organized under Maryland law and
has elected to be taxed as a real estate investment trust under the Internal
Revenue Code of 1986, as amended. Effective March 30, 1999, Meridian Industrial
Trust, Inc., a Maryland corporation, merged with and into ProLogis. ProLogis
deploys capital in markets that ProLogis believes have excellent long-term
growth prospects and in markets where ProLogis believes it can achieve a strong
position through the acquisition and development of flexible facilities
designed for both warehousing and light manufacturing uses. ProLogis is an
international company focused exclusively on meeting the distribution space
needs of international, national, regional and local industrial real estate
users through the ProLogis Operating System(TM) and believes it has
distinguished itself from its competition by being the only entity that
combines all of the following:
(1) An international operating platform dedicated to providing
distribution facilities to a targeted customer base of the 1,000 largest
users of distribution facilities worldwide, 419 of which are currently
ProLogis customers;
(2) An organizational structure and service delivery system built
around the customer--ProLogis believes its service approach is unique to
the real estate industry as it combines international scope and expertise
with strong local presence in each of its target markets; and
(3) A disciplined investment strategy based on proprietary research
that identifies high growth markets with sustainable demand for ProLogis'
distribution facilities.
After completion of the merger, ProLogis' real estate assets, including
assets held by unconsolidated subsidiaries and joint ventures, consisted of
approximately 142.0 million square feet of operating distribution facilities
and approximately 16.4 million square feet of refrigerated distribution
facilities. In addition, ProLogis had 10.8 million square feet of distribution
facilities under development at a total expected investment of $473.1 million.
ProLogis has facilities in 94 North American and European Markets. Also,
ProLogis owned or controlled approximately 5,100 acres of land for future
development of approximately 87.9 million square feet of distribution
facilities.
ProLogis' objective is to increase shareholder value by achieving long-term
sustainable growth in cash flow. To accomplish this objective ProLogis has
developed a business strategy that combines an operational plan, an investment
plan and a financing plan to achieve its overall objective.
ProLogis was originally formed in June 1991 to take advantage of two
strategic opportunities identified as a result of extensive market research:
. the opportunity to build a distribution and light manufacturing asset
base at costs significantly below replacement cost and a land inventory
at attractive prices; and
. the opportunity to create, for the first time, a national operating
company which would differentiate itself from its competition through its
ability to meet a corporate customer's distribution facility requirements
on a national, regional and local basis.
In 1997, ProLogis began expanding its operations into Mexico and Europe to
meet the needs of its targeted national and international customers as they
expanded and reconfigured their distribution facility requirements globally.
Consistent with ProLogis' objective of expanding its services platform for its
targeted customer base, in 1997 and 1998 ProLogis further expanded to serve the
refrigerated logistics needs of its customers by acquiring an international
refrigerated distribution network. Today, ProLogis' business is organized into
the following segments:
. acquisition and development of industrial distribution facilities for
long-term ownership and leasing in the United States, Europe, a portion
of which is owned through an unconsolidated subsidiary, and Mexico;
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. operation of refrigerated distribution facilities through unconsolidated
subsidiaries, one operating in the United States and Canada and one
operating in nine countries in Europe; and
. development of distribution facilities for future sale or on a fee basis
in the United States and Mexico and in the United Kingdom through an
unconsolidated subsidiary.
This global network of distribution facilities has ProLogis well positioned
to become the global leader in this rapidly consolidating industry.
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DESCRIPTION OF THE PLAN
The following questions and answers describe the plan.
Purposes and advantages
1. What are the purposes of the plan?
The purposes of the plan are to provide participants with a simple and
convenient method of investing in common shares without payment of any
brokerage commissions, service charges or other expenses. In addition, common
shares purchased directly from ProLogis under the plan may be purchased at a 2%
discount from market prices at the time of the investment, as described in
Question 17.
2. How may shareholders purchase common shares under the plan?
Shareholders may purchase common shares in the following ways:
(1) have cash distributions received on all or a portion of the common
shares registered in their name, automatically reinvested in additional
common shares, up to the distribution limit of a maximum quarterly amount
of 300,000 common shares, which may be changed at any time in ProLogis'
sole discretion, unless ProLogis approves reinvestment on a greater number
of common shares, as described in Question 9;
(2) continue to receive cash distributions on common shares registered
in their name and purchase common shares by making optional cash payments
of not less than the minimum amount, which initially is $200 plus any
initial enrollment fee if applicable, nor more than the maximum amount,
which initially is $5,000, in any calendar month, except in cases covered
by a request for waiver, as described in Question 13, which minimum amount
and maximum amount may be changed at any time in ProLogis' sole discretion;
or
(3) invest both cash distributions and optional cash payments.
Beneficial owners of common shares registered in the name of a broker, bank or
other nominee or trustee may participate in the distribution reinvestment
portion of the plan either by having their common shares transferred into their
own names or by making appropriate arrangements with their record holder to
participate on their behalf.
3. How may persons who are not already shareholders purchase common shares
under the plan?
Persons who are not already shareholders may purchase common shares under
the plan by making optional cash payments of not less than the minimum amount,
which initially is $200 plus any initial enrollment fee if applicable, nor more
than the maximum amount, which initially is $5,000, in any calendar month,
except in cases covered by a request for waiver, as described in Question 13,
which minimum amount and maximum amount may be changed at any time in ProLogis'
sole discretion.
4. What are the advantages and disadvantages of participation in the plan?
Participants in the plan receive full investment of their distributions and
optional cash payments because they are not required to pay brokerage
commissions or other expenses in connection with the purchase of common shares
under the plan, except with respect to optional cash payments if the common
shares are purchased in the open market, and because the plan permits
fractional common shares as well as whole common shares to be purchased. Also,
common shares purchased directly from ProLogis under the plan may be purchased
at a 2% discount from market prices at the time of the investment, as described
in Question 17. In addition, distributions on all whole and fractional common
shares purchased under the plan are automatically reinvested in additional
common shares, subject to the distribution limit. Participants also avoid the
necessity
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for safe-keeping certificates representing the common shares purchased pursuant
to the plan and have increased protection against loss, theft or destruction of
those certificates. Furthermore, certificates for underlying common shares may
be deposited for safe-keeping as described in Question 24. A regular statement
for each account provides the participant with a record of each transaction.
The plan has some disadvantages as compared to purchases of common shares
through brokers or otherwise. No interest will be paid by ProLogis or the agent
on distributions held pending reinvestment or on any optional cash payments.
The agent, not the participant, determines the timing of investments, as
described in Question 16. Accordingly, the purchase price for the common shares
may vary from that which would otherwise have been obtained by directing a
purchase through a broker or in a negotiated transaction, and the actual number
of shares acquired by the participant will not be known until after the common
shares are purchased by the agent, as described in Question 18. Optional cash
payments of less than the minimum amount may be returned to the participant,
and the portion of any optional cash payment which exceeds the maximum amount
may be returned to the participant if the participant did not obtain ProLogis'
prior approval pursuant to a request for waiver or if the threshold price is
not met, as described in Question 13. Any discount from market prices at the
time of the investment on common shares purchased under the plan, as described
in Question 17, may create additional taxable income to the participant, and
commissions paid by ProLogis in connection with the reinvestment of
distributions if the common shares are purchased in the open market will be
taxable income to the participant, as described under "Federal income tax
considerations relating to the plan."
Eligibility and participation
5. Who is eligible to become a participant?
Any person who has reached the age of majority in his or her state of
residence is eligible to participate in the plan through optional cash
payments. In addition, any shareholder who has reached the age of majority may
elect to participate in the distribution reinvestment portion of the plan. If a
beneficial owner has common shares registered in a name other than his or her
own, such as that of a broker, bank or other nominee or trustee, the beneficial
owner may be able to arrange for that entity to handle the reinvestment of
distributions. Shareholders should consult directly with the entity holding
their common shares to determine if they can enroll in the plan. If not, the
shareholder should request his or her broker, bank or other nominee or trustee
to transfer some or all of the common shares into the beneficial owner's own
name in order to participate directly. Participation in the plan is subject to
the payment of an initial enrollment fee and a termination fee.
Shareholders who are citizens or residents of a country other than the
United States, its territories and possessions should make certain that their
participation does not violate local laws governing such things as taxes,
currency and exchange controls, share registration, foreign investments and
related matters.
6. How does an eligible person become a participant?
An eligible person may elect to become a participant in the plan at any
time, subject to ProLogis' right to modify, suspend, terminate or refuse
participation in the plan. To become a participant, complete an authorization
form and mail it to the agent in care of BankBoston, N.A., c/o EquiServe, L.P.,
P.O. Box xxxx, Boston, Massachusetts 02266-8040. Authorization forms may be
requested by calling, toll free, 1-800-xxx-xxxx.
Shareholders who participated in the 1995 Dividend Reinvestment Plan, as
well as, the former holders of common stock of Meridian Industrial Trust, Inc.
who participated in the Meridian 1996 Dividend Reinvestment Plan, are
automatically enrolled in the plan and need take no action to participate in
the plan.
7. What does the authorization form provide?
The authorization form authorizes the agent to apply any optional cash
payments made by the participant and/or distributions received on common shares
registered in the participant's name, less any initial enrollment fee, to the
purchase of common shares for the participant's account under the plan. The
authorization form offers the following investment options:
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. Full distribution reinvestment. To reinvest automatically all cash
distributions received on all common shares registered in the
participant's name, subject to the distribution limit.
. Partial distribution reinvestment. To receive cash distributions on a
specified number of common shares registered in the participant's name
and to automatically reinvest distributions on any remaining common
shares subject to the distribution limit.
. Optional cash payments. To make optional cash payments of not less than
the minimum amount which initially is $200 in any calendar month, nor
more than the maximum amount, which initially is $5,000 in any calendar
month, to purchase common shares.
In addition, the authorization form provides participants with the option of
depositing certificates for common shares with the agent for safe-keeping, as
described in Question 24. Finally, the authorization form provides that a
participant may make optional cash payments by automatic debit from the
participant's bank account.
A participant may change his or her election by completing and signing a new
authorization form and returning it to the agent. Any election or change of
election concerning the reinvestment of distributions must be received by the
agent at least one trading day prior to the record date for the distribution
payment in order for the election or change to become effective with that
distribution. A trading day means a day on which the New York Stock Exchange is
open for business. If a participant signs and returns an authorization form
without checking a desired option, or checks a partial distribution
reinvestment option without specifying a number of shares, the participant will
be deemed to have selected the full distribution reinvestment option, subject
to the distribution limit.
Regardless of which method of participation is selected, all cash
distributions paid on whole or fractional common shares purchased pursuant to
the plan will be reinvested automatically, subject to the distribution limit.
Reinvestment of distributions
8. When will distributions be reinvested?
If a properly completed authorization form specifying "full distribution
reinvestment" or "partial distribution reinvestment" is received by the agent
at least one trading day prior to the record date established for a particular
distribution payment, reinvestment of distributions will begin with that
distribution payment. If the authorization form is received after one trading
day prior to the record date established for a particular distribution payment,
that distribution will be paid in cash and reinvestment of distributions will
not begin until the next succeeding distribution payment. A distribution record
date normally precedes the payment of distributions by approximately two weeks.
A schedule of the anticipated record dates for the 1999 and 2000 distribution
payments is set forth on Appendix A, subject to change at ProLogis' discretion.
For future periods, ProLogis will provide participants a schedule of the
relevant record dates.
9. What limitations apply to reinvestment of distributions?
Reinvestment of distributions is subject to a maximum quarterly distribution
limit of the number of common shares on which dividends may be reinvested
initially 300,000 common shares, which may be changed at any time in ProLogis'
sole discretion. For purposes of this limitation, all plan accounts under
common control or management of a participant will be aggregated. In addition,
participants may not acquire more than 9.8% of the outstanding common shares
and preferred shares of beneficial interest of ProLogis, as described in
Question 39. Reinvestment of distributions in excess of the distribution limit
may be made by a participant only with ProLogis' prior approval. This approval
must be obtained each quarter prior to the relevant record date. Participants
interested in investing distributions in excess of the distribution limit
should contact ProLogis' Share Purchase Plan Representative at (303) 576-2622.
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Optional cash payments
10. Who is eligible to make optional cash payments?
Any person who has submitted a signed authorization form is eligible to make
optional cash payments, whether or not the person is already a shareholder,
subject to ProLogis' right to modify, suspend, terminate or refuse
participation in the plan. Shareholders may make optional cash payments whether
or not they have also elected to reinvest distributions received on common
shares registered in their name.
11. How does the optional cash payment option work?
Each participant may purchase additional common shares by sending optional
cash payments to the agent at any time and the amount of each cash payment may
vary. Participants have no obligation to make any cash payments. Participants
may make an optional cash payment by sending to the agent
(1) a check or money order made payable to BankBoston, N.A. or an
authorization to debit the participant's bank account or, if the optional
cash payment is being made pursuant to a request for waiver which has been
granted by ProLogis, a wire transfer to the account of the agent, as
specified in the request for waiver, and
(2) if the participant is enrolling, a completed authorization form or,
if the participant is already enrolled, an optional cash payment form,
which will be attached to each statement of account sent to the
participant.
The agent will apply any optional cash payments received from a participant
before the close of business on optional cash payment due date, which is the
trading day prior to the beginning of the relevant investment period, to the
purchase of common shares for the account of the participant, as described in
Question 12.
Optional cash payments must be in United States dollars. Do not send cash.
All checks for optional cash payments in excess of the maximum amount pursuant
to a request for waiver which has been granted by ProLogis will not be invested
until the funds have been collected. In the event that any deposit is returned
unpaid for any reason, the agent will consider the request for investment of
such money null and void and shall immediately remove from the participant's
account, shares if any, purchased upon the prior credit of such money. The
agent shall thereupon be entitled to sell these shares to satisfy any
uncollected amounts. If the net proceeds of the sale of such shares are
insufficient to satisfy the balance of such uncollected amounts, the agent
shall be entitled to sell such additional shares from the participant's account
to satisfy the uncollected balance. A $25.00 fee will be charged for any
deposit returned unpaid. Checks should be made payable to BankBoston, N. A. and
should be made out in United States funds drawn on a United States bank. Checks
not drawn on a United States bank are subject to collection fees and will not
be invested until the funds have been collected.
12. When will optional cash payments received by the agent be invested?
Common shares to be purchased by the agent directly from ProLogis pursuant
to optional cash payments will be purchased on an investment date. The
investment period is the last ten consecutive trading days of each calendar
month, where, in the case of optional cash payments not exceeding the maximum
amount, the last trading day of the investment period is the investment date
and where, in the case of optional cash payments exceeding the maximum amount
pursuant to a request for waiver which has been granted by ProLogis, each
trading day of the investment period is an investment date. A schedule of the
anticipated investment period dates for 1999 and 2000 is set forth on Appendix
A, subject to change at ProLogis' discretion. For future periods, ProLogis will
provide participants a schedule of the relevant dates. Accordingly, for
optional cash payments not exceeding the maximum amount, the entire investment
will be made on the investment date which is the last trading day of the
investment period. For optional cash payments exceeding the maximum amount
pursuant to a request for waiver which has been granted by ProLogis, 1/10 of
the investment will be made on each investment date of the investment period.
Common shares to be purchased by the agent on the open market or in
negotiated transactions with third parties pursuant to optional cash payments
will begin on the last investment date of the relevant investment period and
will be completed no later than 30 days after that date, except where
completion at a later date is necessary or advisable under any applicable
securities laws or regulations.
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No interest will be paid on funds held by the agent pending investment.
13. What limitations apply to optional cash payments?
Each optional cash payment is subject to a minimum purchase limit of the
minimum amount which initially is $200 in any calendar month and a maximum
purchase limit of the maximum amount which initially is $5,000 in any calendar
month both of which may be changed at any time in ProLogis' sole discretion.
For purposes of these limitations, all plan accounts under the common control
or management of a participant will be aggregated. Optional cash payments of
less than the minimum amount and the portion of any optional cash payment which
exceeds the maximum amount, unless that limit has been waived by ProLogis
pursuant to a request for waiver, may be returned to the participant without
interest. Participants may make optional cash payments of up to the maximum
amount each calendar month without the prior approval of ProLogis, subject to
ProLogis' right to modify, suspend, terminate or refuse participation in the
plan in its sole discretion.
Optional cash payments in excess of the maximum amount may be made by a
participant only upon acceptance by ProLogis of a written request for waiver by
that participant. No pre-established maximum limit applies to optional cash
payments which may be made pursuant to a request for waiver; however,
participants may not acquire more than 9.8% of the outstanding common shares
and preferred shares of beneficial interest of ProLogis, as described in
Question 39. Acceptance of a request for waiver with respect to the amount of
the optional cash payment must be obtained each calendar month before the
beginning of the relevant investment period. Participants interested in making
optional cash payments in excess of the maximum amount can obtain a request for
waiver by contacting ProLogis' Share Purchase Plan Representative at (303) 576-
2622, and completed requests for waivers should be mailed or faxed to: ProLogis
Trust, 14100 East 35th Place, Aurora, Colorado 80011, Fax: (303) 576-2600,
Attention: Share Purchase Plan Representative.
A request for waiver will be considered on the basis of a variety of
factors, which may include: ProLogis' current and projected capital
requirements, alternatives available to ProLogis to meet those requirements,
prevailing market prices for the common shares and other securities of
ProLogis, general economic and market conditions, expected aberrations in the
price or trading volume of ProLogis' securities, the number of shares held by
the participant submitting the request for waiver, the aggregate amount of
optional cash payments for which requests for waiver have been submitted and
the administrative constraints associated with granting requests for waiver. In
addition to the considerations described above for evaluation of requests for
waiver, any request may be denied if ProLogis believes the investor is making
excessive optional cash payments through multiple shareholder accounts, is
engaging in arbitrage activities such as "flipping" or is otherwise engaging in
activities under the plan in a manner which is not in the best interest of
ProLogis or which may cause the participant to be treated as an underwriter
under the federal securities laws. Persons who acquire common shares through
the plan and resell them shortly after acquiring them, including coverage of
short positions, under some circumstances, may be participating in a
distribution of securities which would require compliance with Regulation M
under the Securities Exchange Act of 1934, and may be considered to be
underwriters within the meaning of the Securities Act of 1933. ProLogis will
not extend to any such person any rights or privileges other than those to
which it would be entitled as a participant in the plan, nor will ProLogis
enter into any agreement with any such person regarding that person's purchase
of those shares or any resale or distribution thereof. If requests for waiver
are submitted for any calendar month for an aggregate amount in excess of the
amount ProLogis is willing to accept, ProLogis may honor those requests in
order of receipt, pro rata or by any other method which ProLogis determines to
be appropriate. Grants of requests for waivers will be made in ProLogis' sole
discretion and may be revoked by ProLogis in its sole discretion at any time
until the close of business on the trading day prior to the beginning of the
relevant investment period.
Unless it waives its right to do so, ProLogis may establish from time to
time a minimum price, or the threshold price, which applies only to the
investment of optional cash payments in excess of the maximum amount made
pursuant to a request for waiver. The threshold price will be a stated dollar
amount that the average of the high and low sale prices of the common shares on
the New York Stock Exchange for each trading day of the investment period must
equal or exceed. If no sales occur on any trading day of an
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investment period, the average of the high and low sale prices of the common
shares on that trading day will be assumed to be less than the threshold price.
ProLogis reserves the right to change the threshold price at any time until the
close of business on the third trading day prior to the beginning of the
investment period, as set forth on Appendix A. The threshold price will be
determined in ProLogis' sole discretion after a review of current market
conditions and other relevant factors.
If the threshold price is not satisfied for a trading day in the investment
period, then no investment will occur on that investment date. For each trading
day on which the threshold price is not satisfied, 1/10 of each optional cash
payment made by a participant pursuant to a request for waiver will be returned
to that participant, without interest, as soon as practicable after the end of
the relevant investment period. For example, if the threshold price is not
satisfied for two of the ten trading days in an investment period, 2/10 of each
participant's optional cash payment made pursuant to a request for waiver will
be returned to that participant by check, or by wire transfer, if payment was
received by wire transfer, without interest, as soon as practicable after the
end of the relevant investment period. The agent expects to send payments
within five to ten trading days after the end of the relevant investment
period. This return procedure will apply only when shares are purchased by the
agent directly from ProLogis. Only optional cash payments in excess of the
maximum amount are affected by the return procedure and the threshold price
provision described above. All other optional cash payments will be made
without regard to the threshold price provision. For any investment period,
ProLogis may waive its right to set a threshold price for optional cash
payments in excess of the maximum amount. Setting a threshold price for an
investment period will not affect the setting of a threshold price for any
subsequent investment period. Participants may obtain the threshold price
applicable to the next investment period by telephoning ProLogis' Share
Purchase Plan Representative at (303) 576-2622.
14. May optional cash payments be returned to a participant?
Optional cash payments received by the agent will be returned to a
participant upon written request received by the agent before the close of
business on the trading day prior to the beginning of the investment period.
Optional cash payments of less than the minimum amount, which initially is $200
in any calendar month, may be returned by check, without interest, as soon as
practicable after the end of the relevant investment period. Additionally, the
portion of each optional cash payment which exceeds the maximum amount, which
initially is $5,000 in any calendar month, may be returned by check, or by wire
transfer, if payment was received by wire transfer, without interest, as soon
as practicable after the end of the relevant investment period if a request for
waiver is not granted or is revoked or if the relevant threshold price is not
met, as described in Question 13. Each optional cash payment may be returned to
the participant in circumstances as described in Question 13.
Purchases
15. What is the source of common shares purchased under the plan?
Purchases of common shares by the agent for the plan may be made, at
ProLogis' option, either directly from ProLogis out of its authorized but
unissued common shares or in the open market or in negotiated transactions with
third parties. Initially, ProLogis anticipates that the common shares will be
purchased by the agent for the plan directly from ProLogis, but this may change
from time to time at ProLogis' election.
16. When will common shares be purchased for a participant's account?
Purchases of common shares directly from ProLogis will be made on the
relevant distribution payment date or on the relevant investment date or dates.
Purchases in the open market will begin on the relevant distribution payment
date or on the last investment date of the relevant investment period and will
be completed no later than 30 days after that date, except where completion at
a later date is necessary or advisable under any applicable securities laws or
regulations. The exact timing of open market purchases, including determining
the number of common shares, if any, to be purchased on any day or at any time
on that
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day, the prices paid for those common shares, the markets on which the
purchases are made and the persons, including brokers and dealers, from or
through which the purchases are made, will be determined by the agent or the
broker selected by it for that purpose. Neither ProLogis nor the agent will be
liable when conditions, including compliance with the rules and regulations of
the Securities and Exchange Commission, prevent the purchase of common shares
or interfere with the timing of the purchases. The agent may purchase common
shares in advance of a distribution payment date or investment date for
settlement on or after that date.
Notwithstanding the above, funds will be returned to participants if not
used to purchase common shares within 35 days of receipt of optional cash
payments or within 30 days of the distribution payment date for distribution
reinvestments.
In making purchases for a participant's account, the agent may commingle the
participant's funds with those of other participants in the plan.
17. What is the purchase price of common shares purchased by participants
under the plan?
When common shares are purchased directly from ProLogis, there are three
types of discounts which may be available to participants. First, common shares
purchased directly from ProLogis under the plan in connection with the
reinvestment of distributions may be purchased at a 2% distribution
reinvestment discount from the average of the high and low sale prices of the
common shares on the New York Stock Exchange on the distribution payment date,
as set forth on Appendix A.
Second, common shares purchased directly from ProLogis under the plan in
connection with optional cash payments of not more than the maximum amount,
which initially is $5,000 in any calendar month, may be purchased at an
optional 2% cash payment discount from the average of the high and low sale
prices of the common shares on the New York Stock Exchange on the relevant
investment date.
Third, ProLogis may establish a 2% waiver discount from the average of the
daily high and low sale prices of the common shares on the New York Stock
Exchange for each of the ten investment dates of the relevant investment
period, regarding common shares purchased directly from ProLogis in connection
with optional cash payments exceeding the maximum amount and approved by
ProLogis pursuant to a request for waiver, as described in Question 13.
ProLogis may change its determination that common shares will be purchased
by the agent directly from ProLogis and instead determine that common shares
will be purchased by the agent in the open market or in negotiated
transactions, without prior notice to participants. The price of common shares
purchased in the open market or in negotiated transactions with third parties
with either reinvested cash distributions or optional cash payments will be the
weighted-average cost, for all common shares purchased under the plan in
connection with the relevant distribution payment date or investment period.
18. How many common shares will be purchased for a participant?
The number of common shares to be purchased for a participant's account as
of any distribution payment date or investment date will be equal to the total
dollar amount to be invested for the participant, less any initial enrollment
fees if applicable, divided by the applicable purchase price computed to the
fourth decimal place. For a participant who has elected to reinvest
distributions received on common shares registered in his or her name, the
total dollar amount to be invested as of any distribution payment date will be
the sum, subject to the distribution limit, of all or the specified portion of
the cash distributions received on common shares registered in the
participant's own name and all cash distributions received on common shares
previously purchased by the participant under the plan, other than common
shares purchased pursuant to requests for waiver, unless the participant has
elected to reinvest distributions received on those common shares.
The amount to be invested for a participant with reinvested cash
distributions will also be reduced by any amount ProLogis is required to deduct
for federal tax withholding purposes.
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Plan administration
19. Who administers the plan?
BankBoston, as agent for the participants, administers the plan, keeps
records, sends statements of account to participants and performs other duties
relating to the plan. All costs of administering the plan are paid by ProLogis,
except as provided in this prospectus.
The following address may be used to obtain information about the plan:
BankBoston, N.A., c/o EquiServe, L.P., P.O. Box xxxx, Boston, Massachusetts
02266-8040 or call, toll free, 1-800-xxx-xxxx.
20. What reports are sent to participants in the plan?
After an investment is made for a participant's plan account, whether by
reinvestment of distributions or by optional cash payment, the participant will
be sent a statement which will provide a record of the costs of the common
shares purchased for that account, the purchase date, the number of common
shares purchased and the number of common shares in that account. These
statements should be retained for income tax purposes. In addition, each
participant will be sent information sent to every holder of common shares,
including ProLogis' annual report, notice of annual meeting and proxy statement
and income tax information for reporting distributions received.
All reports and notices from the agent to a participant will be addressed to
the participant's last known address. Participants should notify the agent
promptly in writing of any change of address.
21. What is the responsibility of ProLogis and the agent under the plan?
ProLogis and the agent, in administering the plan, are not liable for any
act done in good faith or for any good faith omission to act, including,
without limitation, any claim of liability
(1) with respect to the prices and times at which common shares are
purchased or sold for a participant,
(2) with respect to any fluctuation in market value before or after any
purchase or sale of common shares, or
(3) arising out of any failure to terminate a participant's account upon
that participant's death prior to receipt by the agent of notice in writing
of the death.
Neither ProLogis nor the agent can provide any assurance of a profit, or
protect a participant from a loss, on common shares purchased under the plan.
These limitations of liability do not affect any liabilities arising under the
federal securities laws, including the Securities Act of 1933.
The agent may resign as administrator of the plan at any time, in which case
ProLogis will appoint a successor administrator. In addition, ProLogis may
replace the agent with a successor administrator at any time.
Common share certificates
22. Are certificates issued to participants for common shares purchased
under the plan?
A certificate for any number of whole common shares purchased by a
participant under the plan or deposited with the agent for safe-keeping will be
issued to the participant upon written request by the participant to the agent.
These requests will be handled by the agent, normally within two weeks, at no
charge to the participant. Any remaining whole common shares and any fractional
common shares will continue to be held in the participant's plan account.
Certificates for fractional common shares will not be issued under any
circumstances.
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23. What is the effect on a participant's plan account if a participant
requests a certificate for whole common shares held in the account?
If a participant requests a certificate for whole common shares held in his
or her account, distributions on those common shares will continue to be
reinvested under the plan in the same manner as prior to the request so long as
the common shares remain registered in the participant's name, subject to the
distribution limit.
24. May common shares held in certificate form be deposited in a
participant's plan account?
Yes, whether or not the participant has previously authorized reinvestment
of distributions, certificates registered in the participant's name may be
surrendered to the agent for deposit in the participant's plan account. All
distributions on any common shares evidenced by certificates deposited in
accordance with the plan will automatically be reinvested, subject to the
distribution limit. The participant should contact the agent for the proper
procedure to deposit certificates.
Withdrawal from the plan
25. May a participant withdraw from the plan?
Yes, by providing written notice instructing the agent to terminate the
participant's plan account and by paying the relevant termination fee.
26. What happens when a participant terminates an account?
If a participant's notice of termination is received by the agent at least
five trading days prior to the record date for the next distribution payment,
reinvestment of distributions will cease as of the date notice of termination
is received by the agent. If the notice of termination is received later than
five trading days prior to the record date for a distribution payment, the
termination may not become effective until after the reinvestment of any
distributions on that distribution payment date. Optional cash payments can be
refunded if the written notice of termination is received by the agent at least
one trading day prior to the beginning of the relevant investment period.
As soon as practicable after notice of termination is received, the agent
will send to the participant a certificate for all whole common shares held in
the account and a check representing any uninvested optional cash payments
remaining in the account and the value of any fractional common shares held in
the account. After an account is terminated, all distributions for the
terminated account will be paid to the participant unless the participant re-
elects to participate in the plan.
When terminating an account, the participant may request that all common
shares, both whole and fractional, held in the plan account be sold, or that
certain of the common shares be sold and a certificate be issued for the
remaining common shares. The agent will remit to the participant the proceeds
of any sale of common shares, less any related trading fees, transfer tax or
other fees incurred by the agent allocable to the sale of those common shares.
27. When may a former participant re-elect to participate in the plan?
Generally, any former participant may re-elect to participate at any time.
However, the agent reserves the right to reject any authorization form on the
grounds of excessive joining and withdrawing. This reservation is intended to
minimize unnecessary administrative expense and to encourage use of the plan as
a long-term investment service.
Sale of common shares
28. May a participant request that common shares held in a plan account be
sold?
Yes, a participant may request that all or any number of common shares held
in a plan account be sold, either when an account is being terminated, as
described in Question 26, or without terminating the account. However,
fractional common shares will not be sold unless all common shares held in the
account are sold.
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Within seven days after receipt of a participant's written request to sell
common shares held in a plan account, the agent will place a sell order through
a broker or dealer designated by the agent. The participant will receive the
proceeds of the sale, less any trading fees, transfer tax or other fees
incurred by the agent allocable to the sale of those common shares. No
participant will have the authority or power to direct the date or price at
which common shares may be sold. Proceeds of the sale will be forwarded by the
agent to the participant within 30 days after receipt of the participant's
request to sell.
29. What happens when a participant sells or transfers all common shares
registered in the participant's name?
Once a shareholder becomes a participant in the plan, the shareholder may
remain a participant even if the participant thereafter disposes of all common
shares registered in the participant's name. If a participant disposes of all
common shares registered in the participant's name, the participant may
continue to make optional cash payments, and the agent will continue to
reinvest the distributions on the common shares purchased under the plan, other
than common shares purchased pursuant to requests for waiver, unless the
participant has elected to reinvest distributions received on those common
shares, unless the participant notifies the agent that he or she wishes to
terminate the account.
Other information
30. May common shares held in the plan be pledged or transferred?
Common shares held in the plan may not be pledged, sold or otherwise
transferred, and any such purported pledge or sale will be void. A participant
who wishes to pledge, sell or transfer common shares must request that a
certificate for those common shares first be issued in the participant's name.
31. What happens if ProLogis authorizes a share distribution or splits its
shares?
If there is a distribution payable in common shares or a common share split,
the agent will receive and credit to the participant's plan account the
applicable number of whole and/or fractional common shares based on the number
of common shares held in the participant's plan account.
32. What happens if ProLogis has a rights offering?
If ProLogis has a rights offering in which separately tradeable and
exercisable rights are issued to registered holders of common shares, the
rights attributable to whole common shares held in a participant's plan account
will be transferred to the plan participant as promptly as practicable after
the rights are issued.
33. How are the participant's common shares voted at shareholder meetings?
Common shares held for a participant in the plan will be voted at
shareholder meetings as that participant directs. Participants will receive
proxy materials from ProLogis. Common shares held in a participant's plan
account may also be voted in person at the meeting.
34. May the plan be suspended or terminated?
While ProLogis expects to continue the plan indefinitely, ProLogis may
suspend or terminate the plan at any time. ProLogis also reserves the right to
modify, suspend, terminate or refuse participation in the plan to any person at
any time, as described in Question 13. ProLogis may modify, suspend, terminate
or refuse participation in the plan to any person at any time, if
participation, or any increase in the number of common shares held by that
person, would, in the opinion of the Board of Trustees of ProLogis, jeopardize
the status of ProLogis as a real estate investment trust under the Internal
Revenue Code of 1986.
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35. May the plan be amended?
The plan may be amended or supplemented by ProLogis at any time. Any
amendment or supplement will only be effective upon mailing appropriate written
notice at least 30 days prior to the effective date thereof to each
participant. Written notice is not required when an amendment or supplement is
necessary or appropriate to comply with the rules or policies of the Securities
and Exchange Commission, the Internal Revenue Service or other regulatory
authority or law, or when an amendment or supplement does not materially affect
the rights of participants. The amendment or supplement will be deemed to be
accepted by a participant unless prior to the effective date thereof, the agent
receives written notice of the termination of a participant's plan account. Any
amendment may include an appointment by the agent or by ProLogis of a successor
bank or agent, in which event ProLogis is authorized to pay that successor bank
or agent for the account of the participant all distributions and distributions
payable on common shares held by the participant for application by that
successor bank or agent as provided in the plan.
36. What happens if the plan is terminated?
If the plan is terminated, each participant will receive a certificate for
all whole common shares held in the participant's plan account, and a check
representing the value of any fractional common shares held in the
participant's plan account based on the average of the high and low sale prices
of common shares on the New York Stock Exchange on the termination date and any
uninvested distributions or optional cash payments held in the account.
37. Who interprets and regulates the plan?
ProLogis is authorized to issue such interpretations, adopt such regulations
and take such action as it may deem reasonably necessary to effectuate the
plan. Any action to effectuate the plan taken by ProLogis or the agent in the
good faith exercise of its judgment will be binding on participants.
38. What law governs the plan?
The terms and conditions of the plan and its operation will be governed by
the laws of the State of Maryland.
39. How does the ownership limit set forth in ProLogis' declaration of trust
affect purchases of common shares under the plan?
Subject to the exceptions specified in ProLogis' declaration of trust, no
shareholder may own, or be deemed to own, more than 9.8% of the number or value
of ProLogis' outstanding common shares and preferred shares of beneficial
interest. To the extent any reinvestment of distributions elected by a
shareholder or investment of an optional cash payment would cause any
shareholder, or any other person, to exceed the ownership limit or otherwise
violate ProLogis' declaration of trust, the reinvestment or investment, as the
case may be, will be void ab initio, and the shareholder will be entitled to
receive cash distributions or a refund of his or her optional cash payment,
each without interest, in lieu of the reinvestment or investment.
Individual retirement accounts
40. May a participant open an individual retirement account with the agent?
Yes. The agent offers an individual retirement account that invests in
ProLogis' common shares through the plan. After receiving a copy of this
prospectus, the agent's individual retirement account program plan and trust
agreement and disclosure statement, a participant may open an individual
retirement account by completing and signing an individual retirement account
enrollment form and returning it to the agent with an initial contribution. The
minimum initial investment for the individual retirement account program is
$200. Individual retirement account enrollment forms are available upon request
from the agent.
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Some of the options and services generally available to plan participants
may not be applicable to the individual retirement account program. Please
refer to the individual retirement account program plan and trust agreement and
disclosure statement for individual retirement account program details. The
agent has the right to charge reasonable fees for its individual retirement
account services. Such fees are described in the individual retirement account
disclosure statement as in effect from time to time. ProLogis assumes no
responsibility for the operation or administration of the individual retirement
account program.
The Taxpayer Relief Act of 1997 has expanded the options for retirement
savings. You may establish an individual retirement account which invests in
ProLogis common shares through the plan by either returning a completed
individual retirement account enrollment form and making an initial investment
to the individual retirement account of at least $200 or transferring funds
from an existing individual retirement account that have a fair market value of
at least $200 on the enrollment date and completing an individual retirement
account enrollment form and individual retirement account transfer form. These
forms and a disclosure statement are available from EquiServe. An annual fee of
$35 will be charged to you by EquiServe.
Three individual retirement account options:
Traditional individual retirement account. Traditional individual retirement
account contributions are allowed for individuals under age 70 who have taxable
compensation. Tax-deductible contributions are subject to new adjusted gross
income phase-out levels, while non-deductible contributions are allowed
regardless of income level. The maximum individual contribution is $2,000
annually, with tax-deferred growth of investment. Beginning in 1998, penalty-
free withdrawals can be made to help pay for first home purchases or higher
education expenses.
Roth individual retirement account. Effective for the 1998 tax year,
contributions are allowed for individuals of any age with an adjusted gross
income below $160,000, for those filing joint returns, or $110,000, for those
filing single returns, but allowed contributions begin to phase out at an
adjusted gross income of $150,000, for those filing joint returns, and $95,000,
for those filing single returns. A maximum individual contribution is $2,000
annually. Investments and earnings grow tax-free. Contributions are not tax-
deductible, but if the investment stays in the Roth individual retirement
account for five years or more, qualified withdrawals are distributed tax-free,
and free of penalty in most cases. There are no requirements to begin
distributions at age 70. Penalty-free withdrawals can be made to help pay for
first home purchases or higher education expenses. Maximum annual contribution
between traditional and Roth individual retirement accounts is $2,000.
Education individual retirement account. Effective for the 1998 tax year,
any individual of any age may contribute, subject to the same income ranges as
the Roth individual retirement account, to an education individual retirement
account for a child. Contributions of up to $500 annually can be made for
secondary education expenses for a child beneficiary under 18. Contributions
are not tax deductible, but investments grow tax-free and are not taxed when
withdrawn for higher education expenses, including tuition, room and board,
books and supplies. Withdrawals must be made by age 30 or the investment will
be taxed to the child and will be subject to a 105% penalty. Unused account
balances may be transferred to another family member's education individual
retirement account.
FEDERAL INCOME TAX CONSIDERATIONS RELATING TO THE PLAN
Participants are encouraged to consult their personal tax advisors with
specific reference to their own tax situations and potential changes in the
applicable law as to all federal, state, local, foreign and other tax matters
in connection with the reinvestment of distributions and purchase of common
shares under the plan, the participant's tax basis and holding period for
common shares acquired under the plan and the character, amount and tax
treatment of any gain or loss realized on the disposition of common shares. The
following is a brief summary of the material federal income tax considerations
applicable to the plan, is for general information only, and is not tax advice.
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Tax consequences of distribution reinvestment
In the case of common shares purchased by the agent from ProLogis, a
participant will be treated for federal income tax purposes as having received
a distribution equal to the fair market value, as of the investment date, of
the common shares purchased with reinvested distributions. The 2% discount will
be treated as being part of the distribution received. With respect to common
shares purchased by the agent in open market transactions or in negotiated
transactions with third parties, the Internal Revenue Service has indicated in
somewhat similar situations that the amount of distribution received by a
participant would include the fair market value of the common shares purchased
with reinvested distributions and a pro rata share of any brokerage commission
or other related charges paid by ProLogis in connection with the agent's
purchase of the common shares on behalf of the participant. As in the case of
non-reinvested cash distributions, the distributions described above will
constitute taxable "distribution" income to participants to the extent of
ProLogis' current and accumulated earnings and profits allocable to the
distributions and any excess distributions will constitute a return of capital
which reduces the basis of a participant's common shares or results in gain to
the extent that excess distribution exceeds the participant's tax basis in his
or her common shares. In addition, if ProLogis designates part or all of its
distributions as capital gain distributions, those designated amounts would be
treated by a participant as long-term capital gains.
A participant's tax basis in his or her common shares acquired under the
plan will generally equal the total amount of distributions a participant is
treated as receiving, as described above. A participant's holding period in his
or her common shares generally begins on the day following the date on which
the common shares are credited to the participant's plan account.
Tax consequences of optional cash payments
The Internal Revenue Service has indicated in somewhat similar situations
that a participant who makes an optional cash purchase of common shares under
the plan will be treated as having received a distribution equal to the excess,
if any of the fair market value on the investment date of the common shares
over the amount of the optional cash payment made by the participant. Also, if
the common shares are acquired by the agent in an open market transaction or in
a negotiated transaction with third parties, then the Internal Revenue Service
may assert that a participant will be treated as receiving a distribution equal
to a pro rata share of any brokerage commission or other related charges paid
by ProLogis on behalf of the participant. The plan currently provides that
ProLogis will pay such amounts for purchase of common shares with optional cash
payments. ProLogis will pay such amounts in connection with the reinvestment of
distributions. Any distributions which the participant is treated as receiving,
including the 2% discount would be taxable income or gain or reduce basis in
common shares, or some combination thereof, under the rules described above.
In Private Letter Ruling 9837008, the Internal Revenue Service held that a
shareholder who participated in both the dividend reinvestment and stock
purchase aspects of a dividend reinvestment and cash option purchase plan
offered by a real estate investment trust under the Internal Revenue Code,
pursuant to which stock could be acquired at a discount, would be treated in
the case of a cash option purchase as having received at the time of the
purchase a distribution from the real estate investment trust of the discount
amount which was taxable to the shareholder in the manner described above, but
a shareholder who participated solely in the cash purchase part of the plan
would not be treated as having received a distribution of the discount amount
and, therefore, would realize no income upon purchase attributable to the
discount. In addition, the Internal Revenue Service held that a shareholder who
participated solely in the dividend reinvestment part of the plan would be
treated as having received the fair market value of the shares received plus
any fee or commission that is paid by the company to acquire such shares.
Although not specifically discussed in the ruling, it seems likely that even if
the only dividends reinvested in stock by a shareholder who participated in the
cash purchase part of the plan were dividends on the stock which the
shareholder had purchased under the plan, the Internal Revenue Service would
have concluded that the shareholder should be treated as receiving a
distribution equal to the discount on the purchased shares which was taxable in
the manner described above. Private letter rulings are not considered precedent
by the Internal Revenue Service and no assurance can be given that the Internal
Revenue Service would take this position with respect to other transactions,
including those under the plan.
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A participant's tax basis in his or her common shares acquired through an
optional cash purchase under the plan will generally equal the total amount of
distributions a participant is treated as receiving, as described above, plus
the amount of the optional cash payment. A participant's holding period for
common shares purchased under the plan generally will begin on the day
following the date on which common shares are credited to the participant's
plan account.
In addition, all cash distributions paid with respect to all common shares
credited to a participant's plan account will be reinvested automatically. In
that regard, see "--Tax Consequences of Distribution Reinvestment" above.
Backup withholding and administrative expenses
In general, any distribution reinvested under the plan is not subject to
federal income tax withholding. ProLogis or the agent may be required, however,
to deduct as "backup withholding" 31% of all distributions paid to any
shareholder, regardless of whether those distributions are reinvested pursuant
to the plan. Similarly, the agent may be required to deduct backup withholding
from all proceeds of sales of common shares held in a plan account. A
participant is subject to backup withholding if:
(1) the participant has failed to properly furnish ProLogis and the
agent with his or her correct identification number;
(2) the Internal Revenue Service notifies ProLogis or the agent that the
identification number furnished by the participant is incorrect;
(3) the Internal Revenue Service notifies ProLogis or the agent that
backup withholding should be commenced because the participant failed to
report properly distributions paid to him or her; or
(4) when required to do so, the participant fails to certify, under
penalties of perjury, that the participant is not subject to backup
withholding.
Backup withholding amounts will be withheld from distributions before those
distributions are reinvested under the plan. Therefore, distributions to be
reinvested under the plan by participants who are subject to backup withholding
will be reduced by the backup withholding amount. The withheld amounts
constitute a credit on the participant's income tax return.
While the matter is not free from doubt, based on Private Letter Ruling
9837008, ProLogis intends to take the position that administrative expenses of
the plan paid by ProLogis are not constructive distributions to participants.
Tax consequences of dispositions
A participant may recognize a gain or loss upon receipt of a cash payment
for a fractional common share credited to a plan account or when the common
shares held in an account are sold at the request of the participant. A gain or
loss may also be recognized upon a participant's disposition of common shares
received from the plan. The amount of any such gain or loss will be the
difference between the amount realized, generally the amount of cash received,
for the whole or fractional common shares and the tax basis of those common
shares. Generally, gain or loss recognized on the disposition of common shares
acquired under the plan will be treated for federal income tax purposes as a
capital gain or loss.
FEDERAL INCOME TAX CONSIDERATIONS
RELATING TO PROLOGIS' TREATMENT AS A REIT
ProLogis intends to operate in a manner that permits it to satisfy the
requirements for taxation as a real estate investment trust under the
applicable provisions of the Internal Revenue Code of 1986. No assurance can be
given, however, that such requirements will be met. The following is a
description of the federal income tax
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consequences to ProLogis and its shareholders of the treatment of ProLogis as a
real estate investment trust. Since these provisions are highly technical and
complex, each prospective purchaser of the ProLogis common shares is urged to
consult his or her own tax advisor with respect to the federal, state, local,
foreign and other tax consequences of the purchase, ownership and disposition
of the ProLogis common shares.
Based upon representations of ProLogis with respect to the facts as set
forth and explained in the discussion below, in the opinion of Mayer, Brown &
Platt, counsel to ProLogis, ProLogis has been organized in conformity with the
requirements for qualification as a real estate investment trust beginning with
its taxable year ending December 31, 1993, and its actual and proposed method
of operation described in this prospectus and as represented by management will
enable it to satisfy the requirements for such qualification.
This opinion is based on representations made by ProLogis as to factual
matters relating to ProLogis' organization and intended or expected manner of
operation. In addition, this opinion is based on the law existing and in effect
on the date of this prospectus. ProLogis' qualification and taxation as a real
estate investment trust will depend upon ProLogis' ability to meet on a
continuing basis, through actual operating results, asset composition,
distribution levels and diversity of stock ownership, the various qualification
tests imposed under the Internal Revenue Code discussed below. Mayer, Brown &
Platt will not review compliance with these tests on a continuing basis. No
assurance can be given that ProLogis will satisfy such tests on a continuing
basis.
In brief, if the conditions imposed by the real estate investment trust
provisions of the Internal Revenue Code are met, entities, such as ProLogis,
that invest primarily in real estate and that otherwise would be treated for
federal income tax purposes as corporations, are generally not taxed at the
corporate level on their "real estate investment trust taxable income" that is
currently distributed to shareholders. This treatment substantially eliminates
the "double taxation," at both the corporate and shareholder levels that
generally results from the use of corporations.
If ProLogis fails to qualify as a real estate investment trust in any year,
however, it will be subject to federal income taxation as if it were a domestic
corporation, and its shareholders will be taxed in the same manner as
shareholders of ordinary corporations. In this event, ProLogis could be subject
to potentially significant tax liabilities, and therefore the amount of cash
available for distribution to its shareholders would be reduced or eliminated.
ProLogis elected real estate investment trust status effective beginning
with its taxable year ended December 31, 1993 and the ProLogis board of
trustees believes that ProLogis has operated and currently intends that
ProLogis will operate in a manner that permits it to qualify as a real estate
investment trust in each taxable year thereafter. There can be no assurance,
however, that this expectation will be fulfilled, since qualification as a real
estate investment trust depends on ProLogis continuing to satisfy numerous
asset, income and distribution tests described below, which in turn will be
dependent in part on ProLogis' operating results.
The following summary is based on the Internal Revenue Code, its legislative
history, administrative pronouncements, judicial decisions and Treasury
regulations, subsequent changes to any of which may affect the tax consequences
described herein, possibly on a retroactive basis. The following summary is not
exhaustive of all possible tax considerations and does not give a detailed
discussion of any state, local, or foreign tax considerations, nor does it
discuss all of the aspects of federal income taxation that may be relevant to a
prospective shareholder in light of his or her particular circumstances or to
various types of shareholders, including insurance companies, tax-exempt
entities, financial institutions or broker-dealers, foreign corporations and
persons who are not citizens or residents of the United States, subject to
special treatment under the federal income tax laws.
Taxation of ProLogis
General
In any year in which ProLogis qualifies as a real estate investment trust,
in general it will not be subject to federal income tax on that portion of its
real estate investment trust taxable income or capital gain which is
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distributed to shareholders. ProLogis may, however, be subject to tax at normal
corporate rates upon any taxable income or capital gain not distributed.
Notwithstanding its qualification as a real estate investment trust,
ProLogis may also be subject to taxation in other circumstances. If ProLogis
should fail to satisfy either the 75% or the 95% gross income test, as
discussed below, and nonetheless maintains its qualification as a real estate
investment trust because other requirements are met, it will be subject to a
100% tax on the greater of the amount by which ProLogis fails to satisfy either
the 75% test or the 95% test, multiplied by a fraction intended to reflect
ProLogis' profitability. ProLogis will also be subject to a tax of 100% on net
income from any "prohibited transaction," as described below, and if ProLogis
has net income from the sale or other disposition of "foreclosure property"
which is held primarily for sale to customers in the ordinary course of
business or other non-qualifying income from foreclosure property, it will be
subject to tax on such income from foreclosure property at the highest
corporate rate. In addition, if ProLogis should fail to distribute during each
calendar year at least the sum of:
(1) 85% of its real estate investment trust ordinary income for such
year;
(2) 95% of its real estate investment trust capital gain net income for
such year, other than capital gains ProLogis elects to retain and pay tax
on as described below; and
(3) any undistributed taxable income from prior years,
ProLogis would be subject to a 4% excise tax on the excess of such required
distribution over the amounts actually distributed.
The Taxpayer Relief Act of 1997 permits a real estate investment trust, to
designate in a notice mailed to shareholders within 60 days of the end of the
taxable year, or in a notice mailed with its annual report for the taxable
year, such amount of undistributed net long-term capital gains it received
during the taxable year, which its shareholders are to include in their taxable
income as long-term capital gains. Thus, if ProLogis made this designation, the
shareholders of ProLogis would include in their income as long-term capital
gains their proportionate share of the undistributed net capital gains as
designated by ProLogis and ProLogis would have to pay the tax on such gains
within 30 days of the close of its taxable year. Each shareholder of ProLogis
would be deemed to have paid such shareholder's share of the tax paid by
ProLogis on such gains, which tax would be credited or refunded to the
shareholder. A shareholder would increase his tax basis in his ProLogis stock
by the difference between the amount of income to the holder resulting from the
designation less the holder's credit or refund for the tax paid by ProLogis.
ProLogis may also be subject to the corporate "alternative minimum tax," as
well as tax in various situations and on some types of transactions not
presently contemplated. ProLogis will use the calendar year both for federal
income tax purposes and for financial reporting purposes.
In order to qualify as a real estate investment trust, ProLogis must meet,
among others, the following requirements:
Share ownership test
ProLogis' shares must be held by a minimum of 100 persons for at least 335
days in each taxable year or a proportional number of days in any short taxable
year. In addition, at all times during the second half of each taxable year, no
more than 50% in value of the stock of ProLogis may be owned, directly or
indirectly and by applying constructive ownership rules, by five or fewer
individuals, which for this purpose includes some tax-exempt entities. Any
stock held by a qualified domestic pension or other retirement trust will be
treated as held directly by its beneficiaries in proportion to their actuarial
interest in such trust rather than by such trust. Pursuant to the constructive
ownership rules, Security Capital's ownership of shares is attributed to its
shareholders for purposes of the 50% test. Under the Taxpayer Relief Act, for
taxable years beginning after August 5, 1997, if ProLogis complies with the
Treasury regulations for ascertaining its actual ownership and did not know, or
exercising reasonable diligence would not have reason to know, that more than
50% in value of its outstanding shares of stock were held, actually or
constructively, by five or fewer individuals, then ProLogis will be treated as
meeting such requirement.
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In order to ensure compliance with the 50% test ProLogis has placed
restrictions on the transfer of the shares of its stock to prevent additional
concentration of ownership. Moreover, to evidence compliance with these
requirements under Treasury regulations, ProLogis must maintain records which
disclose the actual ownership of its outstanding shares of stock and such
regulations impose penalties against ProLogis for failing to do so. In
fulfilling its obligations to maintain records, ProLogis must and will demand
written statements each year from the record holders of designated percentages
of shares of its stock disclosing the actual owners of such shares as
prescribed by Treasury regulations. A list of those persons failing or refusing
to comply with such demand must be maintained as a part of ProLogis' records. A
shareholder failing or refusing to comply with ProLogis' written demand must
submit with his or her tax returns a similar statement disclosing the actual
ownership of shares of ProLogis' stock and other information. In addition,
ProLogis' declaration of trust provides restrictions regarding the transfer of
shares that are intended to assist ProLogis in continuing to satisfy the share
ownership requirements. ProLogis intends to enforce the 9.8% limitation on
ownership of shares of its stock to assure that its qualification as a real
estate investment trust will not be compromised.
Asset tests
At the close of each quarter of ProLogis' taxable year, ProLogis must
satisfy tests relating to the nature of its assets determined in accordance
with generally accepted accounting principles. First, at least 75% of the value
of ProLogis' total assets must be represented by interests in real property,
interests in mortgages on real property, shares in other real estate investment
trusts, cash, cash items, and government securities, and qualified temporary
investments. Second, although the remaining 25% of ProLogis' assets generally
may be invested without restriction, securities in this class may not exceed
either, in the case of securities of any non-government issuer, 5% of the value
of ProLogis' total assets, or 10% of the outstanding voting securities of any
one issuer.
Gross income tests
There are currently two separate percentage tests relating to the sources of
ProLogis' gross income which must be satisfied for each taxable year. Prior to
taxable years beginning August 5, 1997, there were three separate percentage
tests relating to the sources of ProLogis' gross income which must have been
satisfied for each prior taxable year. For purposes of these tests, where
ProLogis invests in a partnership, ProLogis will be treated as receiving its
share of the income and loss of the partnership, and the gross income of the
partnership will retain the same character in the hands of ProLogis as it has
in the hands of the partnership. The three tests are as follows:
1. The 75% Test. At least 75% of ProLogis' gross income for the taxable year
must be "qualifying income." Qualifying income generally includes:
(1) rents from real property, except as modified below;
(2) interest on obligations collateralized by mortgages on, or interests
in, real property;
(3) gains from the sale or other disposition of non-"dealer property,"
which means interests in real property and real estate mortgages, other
than gain from property held primarily for sale to customers in the
ordinary course of ProLogis' trade or business;
(4) dividends or other distributions on shares in other real estate
investment trust, as well as gain from the sale of such shares;
(5) abatements and refunds of real property taxes;
(6) income from the operation, and gain from the sale, of "foreclosure
property," which means property acquired at or in lieu of a foreclosure of
the mortgage collateralized by such property; and
(7) commitment fees received for agreeing to make loans collateralized
by mortgages on real property or to purchase or lease real property.
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Rents received from a tenant will not however, qualify as rents from real
property in satisfying the 75% test, or the 95% gross income test described
below, if ProLogis, or an owner of 10% or more of ProLogis, directly or
constructively owns 10% or more of such tenant. In addition, if rent
attributable to personal property leased in connection with a lease of real
property is greater than 15% of the total rent received under the lease, then
the portion of rent attributable to such personal property will not qualify as
rents from real property. Moreover, an amount received or accrued will not
qualify as rents from real property or as interest income for purposes of the
75% and 95% gross income tests if it is based in whole or in part on the income
or profits of any person, although an amount received or accrued generally will
not be excluded from "rents from real property" solely by reason of being based
on a fixed percentage or percentages of receipts or sales. Finally, for rents
received to qualify as rents from real property, ProLogis generally must not
operate or manage the property or furnish or render services to tenants, other
than through an "independent contractor" from whom ProLogis derives no income,
except that the "independent contractor" requirement does not apply to the
extent that the services provided by ProLogis are "usually or customarily
rendered" in connection with the rental of properties for occupancy only, or
are not otherwise considered "rendered to the occupant for his convenience."
For taxable years beginning after August 5, 1997, a real estate investment
trust is permitted to render a de minimis amount of impermissible services to
tenants, or in connection with the management of property, and still treat
amounts received with respect to that property as rent from real property. The
amount received or accrued by the real estate investment trust during the
taxable year for the impermissible services with respect to a property may not
exceed one percent of all amounts received or accrued by the real estate
investment trust directly or indirectly from the property. The amount received
for any service or management operation for this purpose shall be deemed to be
not less than 150% of the direct cost of the real estate investment trust in
furnishing or rendering the service or providing the management or operation.
2. The 95% Test. In addition to deriving 75% of its gross income from the
sources listed above, at least 95% of ProLogis' gross income for the taxable
year must be derived from the above-described qualifying income, or from
dividends, interest or gains from the sale or disposition of stock or other
securities that are not dealer property. Dividends, other than on real estate
investment trust shares, and interest on any obligations not collateralized by
an interest in real property are included for purposes of the 95% test, but not
for purposes of the 75% test. In addition, payments to ProLogis under an
interest rate swap, cap agreement, option, futures contract, forward rate
agreement or any similar financial instrument entered into by ProLogis to hedge
indebtedness incurred or to be incurred, and any gain from the sale or other
disposition of these instruments, are treated as qualifying income for purposes
of the 95% test, but not for purposes of the 75% test.
For purposes of determining whether ProLogis complies with the 75% and 95%
income tests, gross income does not include income from prohibited
transactions. A "prohibited transaction" is a sale of dealer property,
excluding foreclosure property, unless such property is held by ProLogis for at
least four years and other requirements relating to the number of properties
sold in a year, their tax bases, and the cost of improvements made thereto are
satisfied. See "--Taxation of ProLogis--General."
Even if ProLogis fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it may still qualify as a real estate investment
trust for such year if it is entitled to relief under provisions of the
Internal Revenue Code. These relief provisions will generally be available if:
(1) ProLogis' failure to comply was due to reasonable cause and not to
willful neglect;
(2) ProLogis reports the nature and amount of each item of its income
included in the tests on a schedule attached to its tax return; and
(3) any incorrect information on this schedule is not due to fraud with
intent to evade tax.
If these relief provisions apply, however, ProLogis will nonetheless be subject
to a special tax upon the greater of the amount by which it fails either the
75% or 95% gross income test for that year.
3. The 30% Test. For taxable years beginning prior to August 5, 1997,
ProLogis must have derived less than 30% of its gross income for each taxable
year from the sale or other disposition of:
(1) real property held for less than four years, other than foreclosure
property and involuntary conversions;
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(2) stock or securities held for less than one year; and
(3) property in a prohibited transaction.
The 30% gross income test has been repealed by the Taxpayer Relief Act for
taxable years beginning after August 5, 1997.
Annual distribution requirements
In order to qualify as a real estate investment trust, ProLogis is required
to make distributions, other than capital gain dividends, to its shareholders
each year in an amount at least equal to the sum of 95% of ProLogis' real
estate investment trust taxable income, computed without regard to the
dividends paid deduction and real estate investment trust net capital gain,
plus 95% of its net income after tax, if any, from foreclosure property, minus
the sum of some items of non-cash income. Such distributions must be paid in
the taxable year to which they relate, or in the following taxable year if
declared before ProLogis timely files its tax return for such year and if paid
on or before the first regular dividend payment after such declaration. To the
extent that ProLogis does not distribute all of its net capital gain or
distributes at least 95%, but less than 100%, of its real estate investment
trust taxable income, as adjusted, it will be subject to tax on the
undistributed amount at regular capital gains or ordinary corporate tax rates,
as the case may be. For taxable years beginning after August 5, 1997, the
Taxpayer Relief Act permits a real estate investment trust, with respect to
undistributed net long-term capital gains it received during the taxable year,
to designate in a notice mailed to shareholders within 60 days of the end of
the taxable year, or in a notice mailed with its annual report for the taxable
year, such amount of such gains which its shareholders are to include in their
taxable income as long-term capital gains. Thus, if ProLogis made this
designation, the shareholders of ProLogis would include in their income as
long-term capital gains their proportionate share of the undistributed net
capital gains as designated by ProLogis and ProLogis would have to pay the tax
on such gains within 30 days of the close of its taxable year. Each shareholder
of ProLogis would be deemed to have paid such shareholder's share of the tax
paid by ProLogis on such gains, which tax would be credited or refunded to the
shareholder. A shareholder would increase his tax basis in his ProLogis stock
by the difference between the amount of income to the holder resulting from the
designation less the holder's credit or refund for the tax paid by ProLogis.
ProLogis intends to make timely distributions sufficient to satisfy the
annual distribution requirements. It is possible that ProLogis may not have
sufficient cash or other liquid assets to meet the 95% distribution
requirement, due to timing differences between the actual receipt of income and
actual payment of expenses on the one hand, and the inclusion of such income
and deduction of such expenses in computing ProLogis' real estate investment
trust taxable income on the other hand. To avoid any problem with the 95%
distribution requirement, ProLogis will closely monitor the relationship
between its real estate investment trust taxable income and cash flow and, if
necessary, intends to borrow funds in order to satisfy the distribution
requirement. However, there can be no assurance that such borrowing would be
available at such time.
If ProLogis fails to meet the 95% distribution requirement as a result of an
adjustment to ProLogis' tax return by the Internal Revenue Service, ProLogis
may retroactively cure the failure by paying a "deficiency dividend," plus
applicable penalties and interest, within a specified period.
Tax aspects of ProLogis' investments in partnerships
A significant portion of ProLogis' investments are through ProLogis Limited
Partnership-I, ProLogis Limited Partnership-II, ProLogis Limited Partnership-
III and ProLogis Limited Partnership-IV. ProLogis will include its
proportionate share of each partnership's income, gains, losses, deductions and
credits for purposes of the various real estate investment trust gross income
tests and in its computation of its real estate investment trust taxable income
and the assets held by each partnership for purposes of the real estate
investment trust asset tests.
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ProLogis' interest in the partnerships involves special tax considerations,
including the possibility of a challenge by the Internal Revenue Service of the
status of the partnerships as partnerships, as opposed to associations taxable
as corporations, for federal income tax purposes. If a partnership were to be
treated as an association, such partnership would be taxable as a corporation
and therefore subject to an entity-level tax on its income. In such a
situation, the character of ProLogis' assets and items of gross income would
change, which may preclude ProLogis from satisfying the real estate investment
trust asset tests and may preclude ProLogis from satisfying the real estate
investment trust gross income tests. See "--Failure to Qualify" below, for a
discussion of the effect of ProLogis' failure to meet such tests. Based on
factual representations of ProLogis, in the opinion of Mayer, Brown, & Platt,
under existing federal income tax law and regulations, the partnerships will be
treated for federal income tax purposes as partnerships, and not as
associations taxable as corporations. Such opinion, however, is not binding on
the Internal Revenue Service.
Failure to qualify
If ProLogis fails to qualify for taxation as a real estate investment trust
in any taxable year and relief provisions do not apply, ProLogis will be
subject to tax, including applicable alternative minimum tax, on its taxable
income at regular corporate rates. Distributions to shareholders in any year in
which ProLogis fails to qualify as a real estate investment trust will not be
deductible by ProLogis, nor generally will they be required to be made under
the Internal Revenue Code. In such event, to the extent of current and
accumulated earnings and profits, all distributions to shareholders will be
taxable as ordinary income, and subject to limitations in the Internal Revenue
Code, corporate distributees may be eligible for the dividends-received
deduction. Unless entitled to relief under specific statutory provisions,
ProLogis also will be disqualified from re-electing taxation as a real estate
investment trust for the four taxable years following the year during which
qualification was lost.
Taxation of ProLogis' shareholders
Taxation of taxable domestic shareholders
As long as ProLogis qualifies as a real estate investment trust,
distributions made to ProLogis' taxable domestic shareholders out of current or
accumulated earnings and profits, and not designated as capital gain dividends,
will be taken into account by them as ordinary income and will not be eligible
for the dividends-received deduction for corporations. Distributions, and for
tax years beginning after August 5, 1997, undistributed amounts, that are
designated as capital gain dividends will be taxed as long-term capital gains,
to the extent they do not exceed ProLogis' actual net capital gain for the
taxable year, without regard to the period for which the shareholder has held
its shares. However, corporate shareholders may be required to treat up to 20%
of some capital gain dividends as ordinary income. To the extent that ProLogis
makes distributions in excess of current and accumulated earnings and profits,
these distributions are treated first as a tax-free return of capital to the
shareholder, reducing the tax basis of a shareholder's shares by the amount of
such distribution, but not below zero, with distributions in excess of the
shareholder's tax basis taxable as capital gains, if the shares are held as a
capital asset. In addition, any dividend declared by ProLogis in October,
November or December of any year and payable to a shareholder of record on a
specific date in any such month shall be treated as both paid by ProLogis and
received by the shareholder on December 31 of such year, provided that the
dividend is actually paid by ProLogis during January of the following calendar
year. Shareholders may not include in their individual income tax returns any
net operating losses or capital losses of ProLogis. Federal income tax rules
may also require that minimum tax adjustments and preferences be apportioned to
ProLogis shareholders.
In general, any loss upon a sale or exchange of shares by a shareholder who
has held such shares for six months or less, after applying holding period
rules, will be treated as a long-term capital loss, to the extent of
distributions from ProLogis required to be treated by such shareholder as long-
term capital gains.
The Internal Revenue Service Restructuring and Reform Act of 1998 provides
that gain from the sale or exchange of shares held for more than one year is
taxed at a maximum capital gain rate of 20%. Pursuant to
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Internal Revenue Service guidance, ProLogis may classify portions of its
capital gain dividends as gains eligible for the 20% capital gains rate or as
unrecaptured Internal Revenue Code Section 1250 gain taxable at a maximum rate
of 25%.
Shareholders of ProLogis should consult their tax advisor with regard to the
application of the changes made by the Internal Revenue Service Restructuring
and Reform Act of 1988 with respect to taxation of capital gains and capital
gain dividends and with regard to state, local and foreign taxes on capital
gains.
Backup withholding
ProLogis will report to its domestic shareholders and to the Internal
Revenue Service the amount of distributions paid during each calendar year, and
the amount of tax withheld, if any, with respect thereto. Under the backup
withholding rules, a shareholder may be subject to backup withholding at
applicable rates with respect to distributions paid unless such shareholder is
a corporation or comes within other exempt categories and, when required,
demonstrates this fact or provides a taxpayer identification number, certifies
as to no loss of exemption from backup withholding, and otherwise complies with
applicable requirements of the backup withholding rules. A shareholder that
does not provide ProLogis with its correct taxpayer identification number may
also be subject to penalties imposed by the Internal Revenue Service. Any
amount paid as backup withholding will be credited against the shareholder's
income tax liability. In addition, ProLogis may be required to withhold a
portion of capital gain distributions made to any shareholders who fail to
certify their non-foreign status to ProLogis.
Taxation of tax-exempt shareholders
The Internal Revenue Service has issued a revenue ruling in which it held
that amounts distributed by a real estate investment trust to a tax-exempt
employees' pension trust do not constitute unrelated business taxable income.
Subject to the discussion below regarding a "pension-held real estate
investment trust," based upon the ruling, the analysis therein and the
statutory framework of the Internal Revenue Code, distributions by ProLogis to
a shareholder that is a tax-exempt entity should also not constitute unrelated
business taxable income, provided that the tax-exempt entity has not financed
the acquisition of its shares with "acquisition indebtedness" within the
meaning of the Internal Revenue Code, and that the shares are not otherwise
used in an unrelated trade or business of the tax-exempt entity, and that
ProLogis, consistent with its present intent, does not hold a residual interest
in a real estate mortgage investment conduit.
However, if any pension or other retirement trust that qualifies under
Section 401(a) of the Internal Revenue Code holds more than 10% by value of the
interests in a "pension-held real estate investment trust" at any time during a
taxable year, a portion of the dividends paid to the qualified pension trust by
such real estate investment trust may constitute unrelated business taxable
income. For these purposes, a "pension-held real estate investment trust" is
defined as a real estate investment trust if such real estate investment trust
would not have qualified as a real estate investment trust but for the
provisions of the Internal Revenue Code which look through such a qualified
pension trust in determining ownership of stock of the real estate investment
trust and at least one qualified pension trust holds more than 25% by value of
the interests of such real estate investment trust or one or more qualified
pension trusts, each owning more than a 10% interest by value in the real
estate investment trust, hold in the aggregate more than 50% by value of the
interests in such real estate investment trust.
Taxation of foreign shareholders
ProLogis will qualify as a "domestically-controlled real estate investment
trust" so long as less than 50% in value of its Shares is held by foreign
persons, for example, nonresident aliens and foreign corporations,
partnerships, trust and estates. It is currently anticipated that ProLogis will
qualify as a domestically controlled real estate investment trust. Under these
circumstances, gain from the sale of the shares by a foreign person should not
be subject to U.S. taxation, unless such gain is effectively connected with
such person's U.S. business or, in the case of an individual foreign person,
such person is present within the U.S. for more than 182 days in such taxable
year.
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Distributions of cash generated by ProLogis' real estate operations, but not
by its sale or exchange of such properties, that are paid to foreign persons
generally will be subject to U.S. withholding tax at a rate of 30%, unless an
applicable tax treaty reduces that tax and the foreign shareholder files with
ProLogis the required form evidencing such lower rate or unless the foreign
shareholder files an Internal Revenue Service Form 4224 with ProLogis claiming
that the distribution is "effectively connected" income. Recently promulgated
Treasury Regulations revise in some respects the rules applicable to foreign
shareholders with respect to payments made after December 31, 1999.
Distributions of proceeds attributable to the sale or exchange by ProLogis
of U.S. real property interests are subject to income and withholding taxes
pursuant to the Foreign Investment in Real Property Tax Act of 1980, and may be
subject to branch profits tax in the hands of a shareholder which is a foreign
corporation if it is not entitled to treaty relief or exemption. ProLogis is
required by applicable Treasury regulations to withhold 35% of any distribution
to a foreign person that could be designated by ProLogis as a capital gain
dividend; this amount is creditable against the foreign shareholder's Foreign
Investment in Real Property Tax Act tax liability.
The federal income taxation of foreign persons is a highly complex matter
that may be affected by many other considerations. Accordingly, foreign
investors in ProLogis should consult their own tax advisors regarding the
income and withholding tax considerations with respect to their investment in
ProLogis.
Other tax considerations
ProLogis Development Services Incorporated and ProLogis Logistics Services
Incorporated
ProLogis Development Services Incorporated and ProLogis Logistics Services
Incorporated will pay federal and state income taxes at the full applicable
corporate rates on its income prior to payment of any dividends. ProLogis
Development Services Incorporated and ProLogis Logistics Services Incorporated
will attempt to minimize the amount of such taxes, but there can be no
assurance whether or the extent to which measures taken to minimize taxes will
be successful. To the extent that ProLogis Development Services Incorporated or
ProLogis Logistics Services Incorporated is required to pay federal, state or
local taxes, the cash available for distribution by either company to its
shareholders will be reduced accordingly.
Tax on built-in gain
Pursuant to Notice 88-19. 1988-1 C.B. 486, a C corporation that elects to be
taxed as a real estate investment trust has to recognize any gain that would
have been realized if the C corporation had sold all of its assets for their
respective fair market values at the end of its last taxable year before the
taxable year in which it qualifies to be taxed as a real estate investment
trust and immediately liquidated unless the real estate investment trust elects
to be taxed under rules similar to the rules of Section 1374 of the Internal
Revenue Code.
Since ProLogis has made this election, if during the "recognition period,"
being the 10-year period beginning on the first day of the first taxable year
for which ProLogis qualifies as a real estate investment trust, ProLogis
recognizes gain on the disposition of any asset held by ProLogis as of the
beginning of the recognition period, then, to the extent of the excess of the
fair market value of such asset as of the beginning of the recognition period
over ProLogis' adjusted basis in such asset as of the beginning of the
recognition period, such gain will be subject to tax at the highest regular
corporate rate. Because ProLogis acquires many of its properties in fully
taxable transactions and presently expects to hold each property beyond the
recognition period, it is not anticipated that ProLogis will pay a substantial
corporate level tax on its built-in gain.
Possible legislative or other actions affecting tax consequences
Prospective shareholders should recognize that the present federal income
tax treatment of an investment in ProLogis may be modified by legislative,
judicial or administrative action at any time and that any such
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action may affect investments and commitments previously made. The rules
dealing with federal income taxation are constantly under review by persons
involved in the legislative process and by the Internal Revenue Service and the
Treasury, resulting in revisions of regulations and revised interpretations of
established concepts as well as statutory changes. Revisions in federal tax
laws and interpretations thereof could adversely affect the tax consequences of
an investment in ProLogis.
State and local taxes
ProLogis and its shareholders may be subject to state or local taxation in
various jurisdictions, including those in which it or they transact business or
reside. The state and local tax treatment of ProLogis and its shareholders may
not conform to the federal income tax consequences discussed above.
Consequently, prospective shareholders should consult their own tax advisors
regarding the effect of state and local tax laws on an investment in the
offered securities of ProLogis.
Foreign taxes
Frigoscandia S.A., a Luxembourg corporation, Garonor S.A., a Luxembourg
corporation, Kingspark Holding S.A., a Luxembourg corporation, and ProLogis
International Incorporated, a Delaware corporation, and each of their
subsidiaries and affiliates, may be subject to taxation in various foreign
jurisdictions. Each of the foregoing parties will pay any such foreign taxes
prior to payment of any dividends. Each entity will attempt to minimize the
amount of such taxes, but there can be no assurance whether or the extent to
which measures taken to minimize taxes will be successful. To the extent that
any of the foregoing entities is required to pay foreign taxes, the cash
available for distribution to its shareholders will be reduced accordingly.
Each prospective purchaser is advised to consult with his or her tax advisor
regarding the specific tax consequences to him or her of the purchase,
ownership, and sales of ProLogis common shares, including the federal, state,
local, foreign, and other tax consequences of such purchase, ownership, sale
and election and of potential changes in applicable tax laws.
USE OF PROCEEDS
The net proceeds from the sale of common shares purchased by the agent
directly from ProLogis will be used for the development and acquisition of
additional distribution facilities, as suitable opportunities arise, for the
repayment of outstanding indebtedness at the time and for working capital
purposes. ProLogis will not receive any proceeds from purchases of common
shares by the agent in the open market or in negotiated transactions with third
parties.
WHERE YOU CAN FIND MORE INFORMATION
ProLogis is subject to the reporting requirements of the Securities Exchange
Act of 1934, and files reports, proxy statements and other information with the
Securities and Exchange Commission. You may read and copy any materials
ProLogis files with the Securities and Exchange Commission at the its Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may
obtain information on the operation of the Public Reference Room by calling the
Securities and Exchange Commission at 1-800-SEC-0330. In addition, the
Securities and Exchange Commission maintains an Internet site that contains
reports, proxies, information statements, and other information regarding
issuers that file electronically, and the address of that site is
http://www.sec.gov. ProLogis' outstanding common shares are listed on the New
York Stock Exchange under the symbol "PLD", and all reports, proxy statements
and other information filed by ProLogis with the New York Stock Exchange may be
inspected at the New York Stock Exchange's offices at 20 Broad Street, New
York, New York 10005.
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ProLogis has filed with the Securities and Exchange Commission a
registration statement on Form S-3 under the Securities Act of 1933, with
respect to the common shares of ProLogis being offered. This prospectus, which
constitutes part of the registration statement, does not contain all of the
information set forth in the registration statement. Parts of the registration
statement are omitted from this prospectus in accordance with the rules and
regulations of the Securities and Exchange Commission. For further information,
your attention is directed to the registration statement. Statements made in
this prospectus concerning the contents of any documents referred to herein are
not necessarily complete, and in each case are qualified in all respects by
reference to the copy of such document filed with the Securities and Exchange
Commission.
The Securities and Exchange Commission allows ProLogis to "incorporate by
reference" the information ProLogis files with the Securities and Exchange
Commission, which means that ProLogis can disclose important information to you
by referring you to those documents. The information incorporated by reference
is an important part of this prospectus, and information that ProLogis files
later with the Securities and Exchange Commission will automatically update and
supersede this information.
ProLogis incorporates by reference the documents listed below:
(a) ProLogis' annual report on Form 10-K for the year ended December
31, 1998;
(b) ProLogis' current reports on Form 8-K filed March 24, and March 31,
1999; and
(c) The description of the ProLogis common shares and preferred share
purchase rights contained or incorporated by reference in ProLogis'
registration statement on Form 8-A filed February 23, 1994.
The Securities and Exchange Commission has assigned file number 1-12846 to
the reports and other information that ProLogis files with the Securities and
Exchange Commission.
You may request a copy of each of the above-listed ProLogis documents at no
cost, by writing or telephoning ProLogis at the following address or telephone
number.
Investor Relations Department
ProLogis Trust
14100 East 35th Place
Aurora, Colorado 80011
(303) 375-9292
(800) 820-0181
www.prologis.com
All documents subsequently filed by the registrant pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act, prior to the
termination of the offering, shall be deemed to be incorporated by reference
into this prospectus.
Any statement contained in a document incorporated or deemed to be
incorporated herein shall be deemed modified or superseded for purposes of this
prospectus to the extent that a statement contained herein or in any other
subsequently filed document that is deemed to be incorporated herein modifies
or supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
prospectus.
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is inconsistent with information contained in this document or
any document incorporated herein. This prospectus is not an offer to sell these
securities in any state where the offer and sale of these securities is not
permitted. The information in this prospectus is current as of the date it is
mailed to security holders, and not necessarily as of any later date. If any
material change occurs during the period that this prospectus is required to be
delivered, this prospectus will be supplemented or amended.
27
<PAGE>
EXPERTS
The consolidated financial statements and schedule of ProLogis as of
December 31, 1998 and 1997, and for each of the years in the three-year period
ending December 31, 1998 incorporated by reference herein and in this
registration statement on Form S-3 filed by ProLogis have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
LEGAL MATTERS
The validity of the common shares offered pursuant to this prospectus will
be passed on for ProLogis by Mayer, Brown & Platt, Chicago, Illinois. Mayer,
Brown & Platt has in the past represented and is currently representing
ProLogis and some of its affiliates.
SOURCES OF INFORMATION ON THE PLAN
Authorization forms, optional cash payment forms, changes in name or
address, notices of termination, requests for refunds of payments to purchase
common shares, common share certificates or the sale of common shares held in
the plan should be directed to, and may be obtained from, and inquiries
regarding the distribution reinvestment discount and the optional cash payment
discount or any other questions about the plan should be directed to:
BankBoston, N.A.,
c/o EquiServe, L.P.
P. O. Box xxxx
Boston, Massachusetts 02266-8040
Telephone: 1-800-xxx-xxxx
Requests for waivers should be directed to, and may be obtained from, and
inquiries regarding the distribution limit, the threshold price and the waiver
discount should be directed to:
ProLogis Trust
14100 East 35th Place
Aurora, Colorado 80011
Phone: (303) 576-2622
Fax: (303) 576-2600
Attention: Share Purchase Plan Representative
28
<PAGE>
APPENDIX A
REINVESTMENT OF DISTRIBUTIONS
<TABLE>
<CAPTION>
Distribution Distribution
Record Date Payment Date
------------ ------------
<S> <C>
May 13, 1999 May 27, 1999
August 12, 1999 August 26, 1999
November 9, 1999 November 24, 1999
February 2, 2000 February 23, 2000
May 11, 2000 May 25, 2000
August 10, 2000 August 24, 2000
November 11, 2000 November 22, 2000
</TABLE>
OPTIONAL CASH PAYMENTS
<TABLE>
<CAPTION>
Threshold Optional Cash Payment Investment Investment Period
Set Date Due Date Commencement Date Conclusion Date
--------- --------------------- ----------------- -----------------
<S> <C> <C> <C>
June 14, 1999 June 16, 1999 June 17, 1999 June 30, 1999
July 14, 1999 July 16, 1999 July 19, 1999 July 30, 1999
August 13, 1999 August 17, 1999 August 18, 1999 August 31, 1999
September 14, 1999 September 16, 1999 September 17, 1999 September 30, 1999
October 13, 1999 October 15, 1999 October 18, 1999 October 29, 1999
November 11, 1999 November 15, 1999 November 16, 1999 November 30, 1999
December 14, 1999 December 16, 1999 December 17, 1999 December 31, 1999
January 12, 2000 January 14, 2000 January 18, 2000 January 31, 2000
February 10, 2000 February 15, 2000 February 16, 2000 February 29, 2000
March 15, 2000 March 17, 2000 March 20, 2000 March 31, 2000
April 11, 2000 April 13, 2000 April 14, 2000 April 28, 2000
May 12, 2000 May 16, 2000 May 17, 2000 May 31, 2000
June 14, 2000 June 16, 2000 June 19, 2000 June 30, 1999
July 13, 2000 July 17, 2000 July 18, 2000 July 31, 2000
August 15, 2000 August 17, 2000 August 18, 2000 August 31, 2000
September 13, 2000 September 15, 2000 September 18, 2000 September 29, 2000
October 13, 2000 October 17, 2000 October 18, 2000 October 31, 2000
November 13, 2000 November 15, 2000 November 16, 2000 November 30, 2000
December 12, 2000 December 14, 2000 December 15, 2000 December 29, 2000
</TABLE>
- --------
* Assumes that the New York Stock Exchange will not be open for business on
either December 24, 1999 or December 27, 1999. If the New York Stock
Exchange is open for business on both of those dates, each of the dates
marked with an asterisk will instead be the following trading day.
A-1
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection with the
issuance and distribution of the securities registered hereby, all of which
will be paid by the Registrant:
<TABLE>
<S> <C>
SEC registration fee.......................................... $ 3,660.79
Printing and duplicating expenses............................. 20,000.00
Legal fees and expenses....................................... 10,000.00
Accounting fees and expenses.................................. 5,000.00
Miscellaneous expenses........................................ 6,339.21
----------
Total..................................................... $45,000.00
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF TRUSTEES AND OFFICERS.
Article 4, Section 11, of the ProLogis declaration of trust provides as
follows with respect to indemnification of Trustees:
"The Trust shall indemnify and hold harmless each Trustee from and
against all claims and liabilities, whether they proceed to judgment or are
settled, to which such Trustee may become subject by reason of his being or
having been a Trustee, or by reason of any action alleged to have been
taken or omitted by him as Trustee, and shall reimburse him for all legal
and other expenses reasonably incurred by him in connection with any such
claim or liability, including any claim or liability arising under the
provisions of federal or state securities laws; provided, however, that no
Trustee shall be indemnified or reimbursed under the foregoing provisions
in relation to any mater unless it shall have been adjudicated that his
action or omission did not constitute willful misfeasance, bad faith or
gross negligence in the conduct of his duties, or, unless, in the absence
of such an adjudication, the Trust shall have received a written opinion
from independent counsel, approved by the Trustees, to the effect that if
the matter of willful misfeasance, bad faith or gross negligence in the
conduct of duties had been adjudicated, it would have been adjudicated in
favor of such Trustee. The Trust, without requiring a preliminary
determination of the ultimate entitlement to indemnification, shall pay or
reimburse reasonable expenses incurred by any Trustee in connection with
any threatened, pending or completed action, suit or proceeding to which
such Trustee is, was or at any time becomes a party or is threatened to be
made a party, as a result directly or indirectly, of serving at any time as
a Trustee. The rights accruing to a Trustee under these provisions shall
not exclude any other right to which he may be lawfully entitled, nor shall
anything herein contained restrict the right of the Trust to indemnify or
reimburse such Trustee in any proper cause even though not specifically
provided for herein."
Article 9, Section 1 of the ProLogis declaration of trust provides as
follows with respect to the limitation of liability of Trustees and officers
and indemnification:
"A Trustee or officer of the Trust shall not be liable for monetary
damages to the Trust or its shareholders for any act or omission in the
performance of his duties unless:
(1) The Trustee or officer actually received an improper benefit in
money, property or services in which case, such liability shall be for
the amount of the benefit in money, property or services actually
received;
(2) The Trustee's or officer's action or failure to act was the
result of active and deliberate dishonesty and was material to the
cause of action being adjudicated;
(3) The Trustee's or officer's action or failure to act constitutes
willful misconduct or deliberate recklessness; or
II-1
<PAGE>
(4) Such liability to the Trust is specifically imposed upon
Trustees or officers by statute."
Article 9, Section 6 of the declaration of trust provides as follows with
respect to the indemnification of trustees and officers:
"Notwithstanding any other provisions of this Declaration of Trust, the
Trust, for the purpose of providing indemnification for its Trustees and
officers, shall have the authority, without specific shareholder approval,
to enter into insurance or other arrangements, with persons or entities
which are not regularly engaged in the business of providing insurance
coverage, to indemnify all Trustees and officers of the Trust against any
and all liabilities and expenses incurred by them by reason of their being
Trustees or officers of the Trust, whether or not the Trust would otherwise
have the power under this Declaration of Trust or under Maryland law to
indemnify such persons against such liability. Without limiting the power
of the Trust to procure or maintain any kind of insurance or other
arrangement, the Trust may, for the benefit of persons indemnified by it,
(i) create a trust fund, (ii) establish any form of self-insurance, (iii)
secure its indemnity obligation by grant of any security interest or other
lien on the assets of the corporation, or (iv) establish a letter of
credit, guaranty or surety arrangement. Any such insurance or other
arrangement may be procured, maintained or established within the Trust or
with any insurer or other person deemed appropriate by the board of
trustees regardless of whether all or part of the stock or other securities
thereof are owned in whole or in part by the Trust. In the absence of
fraud, the judgment of the board of trustees as to the terms and conditions
of insurance or other arrangement and the identity of the insurer or other
person participating in any arrangement shall be conclusive, and such
insurance or other arrangement shall not be subject to voidability, nor
subject the Trustees approving such insurance or other arrangement to
liability, on any ground, regardless of whether Trustees participating and
approving such insurance or other arrangement shall be beneficiaries
thereof."
ProLogis has entered into indemnity agreements with each of its officers and
trustees which provide for reimbursement of all expenses and liabilities of
such officer or trustee, arising out of any lawsuit or claim against such
officer or trustee due to the fact that he was or is serving as an officer or
trustee, except for such liabilities and expenses (a) the payment of which is
judicially determined to be unlawful, (b) relating to claims under Section
16(b) of the Securities Exchange Act of 1934, as amended, or (c) relating to
judicially determined criminal violations. In addition, ProLogis has entered
into indemnity agreements with each of its trustees who is not also an officer
of ProLogis which provide for indemnification and advancement of expenses to
the fullest lawful extent permitted by Maryland law in connection with any
pending or completed action, suit or proceeding by reason of serving as a
trustee and ProLogis has established a trust to fund payments under the
indemnification agreements.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
See the Exhibit Index included herewith which is incorporated herein by
reference.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any Prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the
II-2
<PAGE>
Securities and Exchange Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration
Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
Provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
Registration Statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by the Registrant pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the Registration Statement.
(b) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to Trustees, officers and controlling persons of the
Registrant pursuant to the provisions set forth or described in Item 15 of this
Registration Statement, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. If a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a Trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
ProLogis has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized in the City of Aurora, State of
Colorado, on April 6, 1999.
PROLOGIS TRUST
/s/ K. Dane Brooksher
By: _________________________________
K. Dane Brooksher
Chairman, Chief Executive Officer
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of ProLogis Trust, a Maryland real
estate investment trust, and the undersigned trustees and officers of ProLogis
Trust, hereby constitutes and appoints K. Dane Brooksher, M. Gordon Keiser,
Jr., Edward F. Long, and Edward S. Nekritz, its or his true and lawful
attorneys-in-fact and agents, for it or him and in its or his name, place and
stead, in any and all capacities, with full power to act alone, to sign any and
all amendments to this report, and to file each such amendment to this report,
with all exhibits thereto, and any and all documents in connection therewith,
with the Securities and Exchange Commission, hereby granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as it or he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1993, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ K. Dane Brooksher Chairman, Chief Executive April 6, 1999
____________________________________ Officer and Trustee
K. Dane Brooksher
/s/ Irving F. Lyons III President, Chief Investment April 6, 1999
____________________________________ Officer and Trustee
Irving F. Lyons III
/s/ Walter C. Rakowich Chief Financial Officer and April 6, 1999
____________________________________ Managing Director
Walter C. Rakowich
/s/ Shari J. Jones Vice President April 6, 1999
____________________________________ (Principal Accounting
Shari J. Jones Officer)
/s/ Thomas G. Wattles Trustee April 6, 1999
____________________________________
Thomas G. Wattles
/s/ Stephen L. Feinberg Trustee April 6, 1999
____________________________________
Stephen L. Feinberg
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Donald P. Jacobs Trustee April 6, 1999
____________________________________
Donald P. Jacobs
/s/ William G. Myers Trustee April 6, 1999
____________________________________
William G. Myers
/s/ John E. Robson Trustee April 6, 1999
____________________________________
John E. Robson
/s/ J. Andre Teixeira Trustee April 6, 1999
____________________________________
J. Andre Teixeira
Trustee April 6, 1999
____________________________________
John S. Moody
Trustee April 6, 1999
____________________________________
Kenneth N. Stensby
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<C> <S>
3.1 Amended and Restated Declaration of Trust of ProLogis (Incorporated
by reference to exhibit 4.1 to ProLogis' registration statement No.
33-73382)
3.2 First Certificate of Amendment of Amended and Restated Declaration
of Trust of ProLogis (Incorporated by reference to exhibit 3.1 to
ProLogis' Form 8-K dated June 14, 1994)
3.3 Second Articles of Amendment of Restated Declaration of Trust of
ProLogis (Incorporated by reference to exhibit 4.3 to ProLogis'
Registration Statement No. 33-87306)
3.4 Articles Supplementary relating to ProLogis' Series A Cumulative
Redeemable Preferred Shares of Beneficial Interest (Incorporated by
reference to exhibit 4.8 to ProLogis' Form 8-A registration
statement relating to such shares)
3.5 First Articles of Amendment to Articles Supplementary relating to
ProLogis' Series A Cumulative Redeemable Preferred Shares of
Beneficial Interest (Incorporated by reference to exhibit 10.3 to
ProLogis' Form 10-Q for the quarter ended September 30, 1995)
3.6 Articles Supplementary relating to ProLogis' Series B Cumulative
Convertible Redeemable Preferred Shares of Beneficial Interest
(Incorporated by reference to exhibit 4.1 to ProLogis' Form 8-K
dated February 14, 1996)
3.7 Articles Supplementary with respect to ProLogis' Series C Cumulative
Redeemable Preferred Shares of Beneficial Interest (Incorporated by
reference to exhibit 4.8 to ProLogis' Form 8-A dated November 13,
1996)
3.8 Articles Supplementary with respect to ProLogis' Series D Cumulative
Redeemable Preferred Shares of Beneficial Interest (Incorporated by
reference to exhibit 4.10 to ProLogis' Form 8-A filed on April 8,
1998)
3.9 Form of Articles Supplementary with respect to ProLogis' Series E
Cumulative Redeemable Preferred Shares of Beneficial Interest
(Incorporated by reference to exhibit 3.9 to ProLogis' registration
statement No. 333-69001)
3.10 Form of Articles of Merger (Incorporated by reference to exhibit 3.9
to ProLogis' registration statement No. 333-69001)
3.11 Articles of Amendment of Amended and Restated Declaration of Trust
of ProLogis Trust (Incorporated by reference to exhibit 3.1
ProLogis' Form 10-Q for the quarter ended June 30, 1998)
3.12 Articles of Supplementary Rights of Series A Junior Participating
Preferred Shares of ProLogis Trust (Incorporated by reference to
Exhibit 3.2 to ProLogis' Form 10-Q for the quarter ended June 30,
1998)
3.13 Certificate of Amendment of Amended and Restated Declaration of
Trust of ProLogis Trust (Incorporated by reference to Exhibit 3.2 to
ProLogis' Form 10-Q for the quarter ended June 30, 1998)
3.14 Bylaws of ProLogis (Incorporated by reference to exhibit 4.3 to
ProLogis' registration statement No. 33-83208)
4.1 Rights Agreement, dated as of December 31, 1993, between ProLogis
and State Street Bank and Trust Company, as Rights Agent, including
form of Rights Certificate (Incorporated by reference to exhibit 4.4
to ProLogis' registration statement No. 33-78080)
4.2 First Amendment to Rights Amendment, dated as of February 15, 1995,
between SCI, State Street Bank and Trust Company and The First
National Bank of Boston, as successor Rights Agent (Incorporated by
reference to exhibit 3.1 to SCI's Form 10-Q for the quarter ended
September 30, 1995)
4.3 Second Amendment to Rights Agreement, dated as of June 22, 1995,
between ProLogis State Street Bank and Trust Company and The First
National Bank of Boston (Incorporated by reference to Exhibit 3.1 to
ProLogis' Form 10-Q for the quarter ended September 30, 1995)
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<C> <S>
4.4 Form of share certificate for Common Shares of Beneficial Interest
of ProLogis (Incorporated by reference to exhibit 4.4 to ProLogis'
registration statement No. 33-73382)
4.5 Form of share certificate for Series A Cumulative Redeemable
Preferred Shares of Beneficial Interest of ProLogis (Incorporated
by reference to exhibit 4.7 to ProLogis' Form 8-A registration
statement relating to such shares)
4.6 8.72% Note due March 1, 2009 (Incorporated by reference to exhibit
4.7 to ProLogis' Form 10-K for the year ended December 31, 1994)
4.7 Form of share certificate for Series B Cumulative Convertible
Redeemable Preferred Shares of Beneficial Interest of ProLogis
(Incorporated by reference to exhibit 4.8 to ProLogis' Form 8-A
registration statement relating to such shares)
4.8 Form of share certificate for Series C Cumulative Redeemable
Preferred Shares of Beneficial Interest of ProLogis (Incorporated
by reference to exhibit 4.8 to ProLogis' Form 10-K for the year
ended December 31, 1996)
4.9 9.34% Note due March 1, 2015 (Incorporated by reference to exhibit
4.8 to ProLogis' Form 10-K for the year ended December 31, 1994)
4.10 7.875% Note due May 15, 2009 (Incorporated by reference to exhibit
4.4 to ProLogis' Form 8-K dated May 9, 1995)
4.11 7.30% Note due May 15, 2001 (Incorporated by reference to exhibit
4.3 to ProLogis' Form 8-K dated May 9, 1995)
4.12 7.25% Note due May 15, 2000 (Incorporated by reference to exhibit
4.2 to ProLogis' Form 8-K dated May 9, 1995)
4.13 7.125% Note due May 15, 1998 (Incorporated by reference to exhibit
4.1 to ProLogis' Form 8-K dated May 9, 1995)
4.14 7.25% Note due May 15, 2002 (Incorporated by reference to exhibit
4.1 to ProLogis' Form 10-Q for the quarter ended June 30, 1996)
4.15 7.95% Note due May 15, 2008 (Incorporated by reference to exhibit
4.2 to ProLogis' Form 10-Q for the quarter ended June 30, 1996)
4.16 8.65% Note due May 15, 2016 (Incorporated by reference to exhibit
4.3 to ProLogis' Form 10-Q for the quarter ended June 30, 1996)
4.17 7.81% Medium-Term Notes, Series A, due February 1, 2015
(Incorporated by reference to exhibit 4.17 to ProLogis' Form 10-K
for the year ended December 31, 1996)
4.18 Indenture, dated as of March 1, 1995, between ProLogis and State
Street Bank and Trust Company, as Trustee (Incorporated by
reference to exhibit 4.9 to ProLogis' Form 10-K for the year ended
December 31, 1994)
4.19 Collateral Trust Indenture, dated as of July 22, 1993, between
Krauss/Schwartz Properties, Ltd. and NationsBank of Virginia, N.A.,
as Trustee (Incorporated by reference to exhibit 4.10 to ProLogis'
Form 10-K for the year ended December 31, 1994)
4.20 First Supplemental Collateral Trust Indenture, dated as of October
28, 1994, among ProLogis Limited Partnership-IV, Krauss/Schwartz
Properties, Ltd., and NationsBank of Virginia, N.A., as Trustee
(Incorporated by reference to exhibit 10.6 to ProLogis' Form 10-Q
for the quarter ended September 30, 1994)
5.1 Opinion of Mayer, Brown & Platt as to the validity of the shares
being offered
8.1 Opinion of Mayer, Brown & Platt as to certain tax matters
23.1 Consent of Arthur Andersen LLP, Chicago, Illinois
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<C> <S>
23.2 Consent of KPMG LLP, Stockholm
23.3 Consent of Mayer, Brown & Platt (included in Exhibits 5.1 and 8.1)
24.1 Power of Attorney (included at page II-4)
99.1 Form of Initial Purchase form
99.2 Form of Broker & Nominee form
99.3 Form of Request for Waiver form
99.4 Form of Notice of Waiver Acceptance
99.5 Form of Authorization form
99.6 Form of Letter to ProLogis Shareholders
</TABLE>
II-8
<PAGE>
EXHIBIT 5.1
April 6, 1999
The Board of Trustees
ProLogis Trust
14100 East 35th Place
Aurora, Colorado 80011
Gentlemen:
We have acted as counsel to ProLogis Trust, a Maryland real estate
investment trust (the "Company"), in connection with the proposed offering of
675,298 common shares of beneficial interest, $0.01 par value per share (the
"Shares"), of the Company as described in the Registration Statement filed on
the date hereof on Form S-3 with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, (together with all amendments thereto,
the "Registration Statement"). Capitalized terms used herein, unless otherwise
defined, shall have the meaning set forth in the Registration Statement.
As counsel to the Company, we have examined originals or copies certified
to our satisfaction of the Company's Amended and Restated Declaration of Trust,
as amended and supplemented (the "Declaration of Trust"), and Bylaws,
resolutions of the Board of Trustees, and such other Company records,
instruments, certificates and documents as we considered necessary to enable us
to express this opinion. As to certain facts material to our opinion, we have
relied, to the extent we deem such reliance proper, upon certificates of public
officials and officers of the Company. In rendering this opinion, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity to authentic original documents
of photostatic copies.
Based upon and subject to the foregoing and to the assumptions, limitations
and conditions set forth herein, we are of the opinion that, the Shares, when
issued and when sold in the manner described in the Registration Statement, will
be duly authorized, validly issued and outstanding, fully paid and, except as
described below, non-assessable.
<PAGE>
The Board of Trustees
ProLogis Trust
April 6, 1999
Page 2
Our opinion relating to the nonassessability of the Shares does not pertain
to the potential liability of shareholders of ProLogis for debts of ProLogis.
Section 5-419(a) of the Maryland Courts and Judicial Proceedings Code provides
that "a shareholder . . . of a real estate investment [trust] . . . is not
personally liable for the obligations of the real estate investment trust." The
Declaration of Trust provides that no shareholder shall be personally or
individually liable in any manner whatsoever for any debt, act, omission or
obligation incurred by ProLogis or ProLogis' Board of Trustees. The Declaration
of Trust further provides that ProLogis shall indemnify and hold harmless
shareholders against all claims and liabilities and related reasonable expenses
to which they become subject by virtue of their status as current or former
shareholders. In addition, we have been advised that ProLogis, as a matter of
practice, inserts a clause in its business, management and other contracts that
provides that shareholders shall not be personally liable thereunder.
Accordingly, no personal liability should attach to ProLogis' shareholders for
contract claims under any contract containing such a clause where adequate
notice is given. However, with respect to tort claims, contract claims where
shareholder liability is not so negated, claims for taxes and certain statutory
liability, the shareholders may, in some jurisdictions, be personally liable for
such claims and liabilities.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to all references to our firm in the Registration
Statement.
Very truly yours,
MAYER, BROWN & PLATT
<PAGE>
Exhibit 8.1
April 6, 1999
ProLogis Trust
14100 East 35th Place
Aurora, Colorado 80011
Re: Partnership Classification; Status as a Real Estate Investment Trust
("REIT"); Information in the Registration Statement under "FEDERAL
INCOME TAX CONSIDERATIONS RELATING TO THE PLAN" and "FEDERAL INCOME
TAX CONSIDERATIONS RELATING TO PROLOGIS' TREATMENT AS A REIT"
--------------------------------------------------------------------
Gentlemen:
In connection with the filing of a Registration Statement with the
Securities and Exchange Commission on the date hereof (the "Registration
Statement"), by ProLogis Trust, a Maryland real estate investment trust (the
"Company"), you have requested our opinions concerning (i) the treatment of
ProLogis Limited Partnership-I, ProLogis Limited Partnership-II, ProLogis
Limited Partnership-III, and ProLogis Limited Partnership-IV (collectively, the
"Partnerships") as partnerships for Federal income tax purposes, and not as
associations taxable as corporations; (ii) the qualification and taxation of the
Company as a REIT; and (iii) the information in the Registration Statement under
the headings "FEDERAL INCOME TAX CONSIDERATIONS RELATING TO THE PLAN" and
"FEDERAL INCOME TAX CONSIDERATIONS RELATING TO PROLOGIS' TREATMENT AS A REIT."
In formulating our opinions, we have reviewed and relied upon the
partnership agreements of the Partnerships, the Registration Statement, such
other documents and information provided by you, and such applicable provisions
of law as we have considered necessary or desirable for purposes of the opinions
expressed herein.
In addition, we have relied upon certain representations made by the
Company relating to the organization and actual and proposed operation of the
Company and the Partnerships. For purposes of our opinions, we have not made an
independent investigation of the facts set forth in such documents,
representations from the Company, the partnership agreements for the
Partnerships or the Registration Statement. We have, consequently, relied upon
your representations that the information presented in such documents or
otherwise furnished to us accurately and completely describes all material
facts.
<PAGE>
ProLogis Trust
April 6, 1999
Page 2
In rendering these opinions, we have assumed that the transactions
contemplated by the foregoing documents will be consummated in accordance with
the operative documents, and that such documents accurately reflect the material
facts of such transactions. In addition, the opinions are based on the
correctness of the following specific assumptions: (i) the Company and the
Partnerships have operated and will continue to each be operated in the manner
described in the applicable partnership agreement or other organizational
documents and in the Registration Statement, and all terms and provisions of
such agreements and documents have been and will continue to be complied with by
all parties thereto; and (ii) each partner in the Partnerships has been
motivated in acquiring its partnership interest by its anticipation of economic
rewards apart from tax considerations. Our opinions expressed herein are based
on the applicable laws of the States of Maryland and Delaware, the Code, the
Treasury regulations promulgated thereunder, and the interpretations of the Code
and such regulations by the courts and the Internal Revenue Service, all as they
are in effect and exist at the date of this letter. It should be noted that
statutes, regulations, judicial decisions, and administrative interpretations
are subject to change at any time and, in some circumstances, with retroactive
effect. A material change that is made after the date hereof in any of the
foregoing bases for our opinions, could adversely affect our conclusions.
Based upon and subject to the foregoing, it is our opinion that:
1. The Partnerships will be treated, for Federal income tax purposes, as
partnerships, and not as associations taxable as corporations.
2. Beginning with the Company's taxable year ending December 31, 1993, the
Company has been organized in conformity with the requirements for qualification
as a REIT under the Code, and the Company's actual and proposed method of
operation, as described in the Registration Statement and as represented by the
Company, has enabled it and will continue to enable it to satisfy the
requirements for qualification as a REIT.
3. The information in the Registration Statement under the headings
"FEDERAL INCOME TAX CONSIDERATIONS RELATING TO THE PLAN" and "FEDERAL INCOME TAX
CONSIDERATIONS RELATING TO PROLOGIS' TREATMENT AS A REIT," to the extent that it
constitutes matters
<PAGE>
ProLogis Trust
April 6, 1999
Page 2
of law or legal conclusions, has been reviewed by us and is correct in all
material respects.
Other than as expressly stated above, we express no opinion on any issue
relating to the Company and the Partnerships or to any investment therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of the name of our firm therein and under
the caption "FEDERAL INCOME TAX CONSIDERATIONS RELATING TO PROLOGIS' TREATMENT
AS A REIT" in the Registration Statement.
Very truly yours,
MAYER, BROWN & PLATT
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accounts, we hereby consent to the incorporation by
reference in this registration statement of our report dated March 5, 1998
included in ProLogis Trust's Form 10-K for the year ended December 31, 1998, and
to all references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
Chicago, Illinois
April 6, 1999
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants of Frigoscandia Holding AB, we hereby
consent to the incorporation of our report dated January 28, 1999 included in
the ProLogis Trust's Form 10-K for the year ended December 31, 1998 into the
ProLogis Trust registration statement on Form S-3 relating to its Dividend
Reinvestment and Share Purchase Plan. It should be noted that we have not
audited any financial statements of the company subsequent to December 31, 1998
or performed any audit procedures subsequent to the date of our report.
/s/ KPMG LLP
Stockholm, April 6, 1999
<PAGE>
Exhibit 99.1
PROLOGIS TRUST
INITIAL PURCHASE FORM
c/o EquiServe, L.P.
P.O. Box XXXX
Boston, Massachusetts 02266-8040
Any questions, please call toll free: 1-800-XXX-XXXX (Please use enclosed
envelope).
Enrolling in the plan. I wish to enroll in the ProLogis Trust Dividend
Reinvestment and Share Purchase Plan available to interested investors by making
an initial investment. Enclosed is a check or money order for $_______ ($200
minimum/$5,000 maximum in any calendar month) payable to "BankBoston, N.A."
Please enclose an additional $10 for the initial enrollment fee. Check must be
received at least one business day prior to the commencement of the related
investment period as described in the plan prospectus.
Please note any address corrections directly on this form to the left.
Please provide your day and evening phone numbers to assist us in
processing your enrollment:
Daytime Phone: (___) - ___-____
Evening Phone: (___) - ___-____
Account Registration. Please check one box and provide all requested
information. Please print clearly.
[_] Check here if registration desired matches mailing information above.
Social Security Number: ________________________________
[_] INDIVIDUAL OR JOINT. Joint accounts will be presumed to be joint tenants
unless restricted by applicable state law or otherwise indicated. Only one
Social Security Number is required for tax reporting.
___________________________________________________________________
Owner's First Name Middle Initial Last Name
____________________________________________
Owner's Social Security Number
___________________________________________________________________
Joint Owner's First Name Middle Initial Last Name
[_] CUSTODIAL. A minor is the beneficial owner of the account with an adult
Custodian managing the account until the minor becomes of age, as specified
in the Uniform Gifts/Transfers to Minor Act in the minor's state of
residence.
___________________________________________________________________
Custodian's First Name Middle Initial Last Name
<PAGE>
___________________________________________________________________
Minor's First Name Middle Initial Last Name
____________________________________________
Minor's Social Security Number
____________________________________________
Minor's State of Residence
[_] TRUST. Account is established in accordance with provisions of a trust
agreement.
___________________________________________________________________
Trustee Name
___________________________________________________________________
Name of Trust
_____________ _________________________
Trust Date Tax ID Number
___________________________________________________________________
Beneficiary
Dividend Election. Please check one box and provide the requested
information.
You may choose to reinvest all, a portion or none of the dividends paid on
ProLogis shares registered in your name and held by you under the program. If
you do not indicate a choice, you automatically will default into the full
dividend reinvestment election with all dividends reinvested.
[_] Full Dividend Reinvestment. I wish to reinvest all of my common share
dividends in additional common shares. I may also make optional payments to
the program. (You will not receive a dividend check.)
[_] Partial Dividend Reinvestment. I wish to have cash dividends on _______
whole shares of common shares sent to me in cash, and dividends on the rest
of my common shares reinvested in additional common shares. I may also make
optional payments to the program.
[_] Optional Cash Only. I wish to make only optional cash payments to the
program. (You will receive a dividend check for all shares.)
Signatures. By signing this form, I request enrollment, certify that I have
received and read the prospectus describing the plan and agree to abide by the
terms and conditions of the plan. I hereby appoint BankBoston, N.A. as my agent
to apply dividends and any investment I may make to the purchase of shares under
the plan. I understand that I may revoke this authorization at any time by
written notice to BankBoston, N.A.
All joint owners must sign.
Under penalties of perjury, I also certify that: A. The number shown on
this form is my/our correct Social Security Number or Taxpayer ID Number, B. I
am not subject to backup withholding either because (1) I have not been notified
by the Internal Revenue Service (IRS) that I am subject to backup withholding as
a result of a failure to report all interest or dividends, or (2) the IRS has
notified me that I am no longer subject to backup withholding. (Check here ___
if you have been notified by the IRS that you are subject to backup withholding
because of under reporting of interest or dividends on your tax returns.)
<PAGE>
______________________________________________________
Signature Date
______________________________________________________
Signature Date
[_] Automatic Investment. You may authorize monthly deductions from your
personal bank account. BankBoston, N.A. will invest these deductions in
ProLogis shares and credit the account you designate above. To initiate
these deductions, please complete the reverse side of this form and check
this box. Your authorized monthly deduction from your back account must be
for at least $200 and cannot exceed $5,000 in any calendar month.
<PAGE>
[BACK]
Please complete the information below to commence automatic withdrawals
from your bank account to purchase additional shares. Deductions and Investments
will continue until you notify BankBoston, N.A. to change or discontinue them.
You must notify the bank by telephone or written request at least one (1)
business days prior to the beginning of the relevant investment period for any
change to be effective. Should your Bank account contain insufficient funds to
cover the authorized deduction, no investment will occur. In such event, you
will be charged a $25.00 fee by BankBoston, N.A. and you may be charged an
additional fee by your bank for insufficient funds.
Please see sample below illustrating where these numbers can be found.
ABA Routing Number Checking or Money Market Savings
[_][_][_][_][_][_][_][_][_] [_] [_]
Bank Account Number
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Amount to be Withdrawn
[_], [_][_][_].[_][_] ($200 minimum, $5,000 maximum in any calendar month)
I hereby authorize BankBoston, N.A. to make monthly automatic transfers of funds
from my savings/checking account in the amount indicated on this form. These
funds will be used to purchase common shares for my account. Note: If joint
account, both holders must sign.
____________________________________ ______________________________
Name on Account (Please Print) Name of Financial Institution
____________________________________
Mailing Address of Financial Institution
____________________________________
City State Zip
_____________________________ ____________________________________
Signature Date Signature Date
[diagram of a check]
<PAGE>
EXHIBIT 99.2
PROLOGIS TRUST
Dividend Reinvestment and Stock Purchase Plan
Broker and Nominee Form
By Mail:
To: BankBoston, N.A.
c/o Boston EquiServe, L.P.
P.O. Box XXXX
Boston, MA 02266-8040
Telephone: (800) XXX-XXXX
Instructions Dated: ____________
As provided in the prospectus dated April 8, 1999 relating to the ProLogis
Trust Dividend Reinvestment and Share Purchase Plan this form is to be used only
by a broker, bank, or other nominee directing the reinvestment of all or a
portion of the dividends payable to, or making an optional cash purchase under
the plan on behalf of, one or more, a beneficial owner(s) whose shares are held
in the name of a securities depository.
The broker, bank, or other nominee submitting this form hereby certifies
that (a) the information contained herein is true and correct as of the date of
this form; (b) a current copy of the prospectus has been delivered to each
beneficial owner on whose behalf the optional cash purchase or initial cash
purchase listed below is being transmitted; and (c) the amount of the optional
cash purchase listed below does not exceed $5,000 for each beneficial owner
represented. BankBoston, N.A. is hereby appointed as agent to apply any optional
cash purchases or initial cash purchases toward the purchase of shares under the
plan.
A new broker and nominee form must be completed and submitted each month
that an optional cash purchase or initial cash purchase is submitted. This form
will not be accepted unless it is completed in its entirety and accompanies the
full amount of the optional cash purchase or initial cash purchase.
For further information about the plan please call (800) XXX-XXXX.
______________________________________________________________________________
Total Initial Cash Purchase or Optional Cash Purchase Amount to be Credited
______________________________________________________________________________
Name of Depository Participant Submitting Payment
______________________________________________________________________________
Participant Number with Depository
______________________________________________________________________________
Contact
______________________________________________________________________________
Name of Depository
______________________________________________________________________________
Name of Beneficial Owner Represented
<PAGE>
Address
_______________________________________________
City State Zip
_______________________________________________
Tax I. D. Number
_____________________ _____________________
Telephone Fax
________________________________________________
Date
[_] Check if you have not previously participated in either the ProLogis or
Meridian Industrial Trust, Inc. plans. Enclose an additional $10 for the
initial enrollment fee.
Method of Payment:
Check Money Order Other (Specify)
[_] [_] [_]
*If Investment amount exceeds $5,000 for any beneficial owner a completed
"Request for Waiver Form" must accompany this form.
Please enroll my account in the plan as indicated below:
Full Distribution Reinvestment Partial Distribution Optional Cash Only
[_] [_] [_]
If you do not indicate a choice, you automatically will default into the full
reinvestment election with all dividends reinvested.
_______________________________
Name of Broker, Bank or Nominee
By:____________________________
Name:__________________________
Title:_________________________
<PAGE>
EXHIBIT 99.3
PROLOGIS TRUST
DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN
REQUEST FOR WAIVER FORM
To: Share Purchase Plan Representative Telephone: (303) 576-2622
ProLogis Trust Fax: (303) 375-2600
14100 East 35th Place
Aurora, Colorado 80011
This form is to be used only by participants in the ProLogis Trust 1999 Dividend
Reinvestment and Share Purchase Plan who are requesting acceptance from ProLogis
to make an optional cash payment under the plan in excess of the $5,000 monthly
maximum.
ProLogis will set a threshold, or minimum, price at which investments of
optional cash payments in excess of the monthly maximum can be made, pursuant to
a request for waiver, by 5:00 PM Mountain Time on the third trading day prior to
the beginning of the relevant investment period of 10 trading days. This form
should be completed and returned by 5:00 PM Mountain Time on the second trading
day prior to the beginning of the investment period. Notification of whether the
request for waiver is accepted will occur by ____:____ __m Mountain Time on the
_____________________________ trading day prior to the beginning of the
investment period.
GOOD FUNDS ON ALL ACCEPTED REQUESTS FOR WAIVER MUST BE RECEIVED BY EQUISERVE,
L.P. SHAREHOLDER SERVICES NOT LATER THAN 5:00 PM EASTERN TIME ON THE TRADING DAY
PRIOR TO THE BEGINNING OF THE RELEVANT INVESTMENT PERIOD IN ORDER FOR SUCH FUNDS
TO BE INVESTED ON THE RELEVANT INVESTMENT DATE.
A new form must be completed each month the participant wishes to make an
optional case payment in excess of the $5,000 monthly maximum. This form will
not be accepted by ProLogis unless it is completed in its entirety.
The participant submitting this form hereby certifies that the information
contained herein is true and correct as of the date of this form and the
participant has received a current copy of the prospectus relating to the plan.
Further, the participant certifies that BankBoston, N.A. is hereby appointed as
agent to apply any cash investments toward the purchase of common shares under
the plan.
BankBoston will deliver whole shares via DWAC. Any fractional shares will be
returned via cash in lieu of shares to the address listed below.
<TABLE>
<CAPTION>
REQUEST FOR WAIVER TO BE COMPLETED BY WAIVER APPLICANT
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
$_______________________________________________________ __________________________________________________%
Optional Cash Payment Amount Requested Waiver Discount
$_______________________________________________________ ___________________________________________________
Threshold Price Title of Account to Which Shares Are to Be Credited
________________________________________________________ ___________________________________________________
Name of Depository Participant Submitting Payment Tax I.D. Number
________________________________________________________ ___________________________________________________
Participant number with depository Street Address
________________________________________________________ ___________________________________________________
Name of Contact (Please Print) City, State and Zip Code
________________________________________________________ ___________________________________________________
Title of Contact Phone Number
________________________________________________________ ___________________________________________________
Signature of Contact on Behalf of Broker, Bank or Other Fax Number
Nominees
________________________________________________________
Date
Method of Payment ( ) Wire ( ) Other (specify)
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
__________________________________________________________________________________________________
ACCEPTANCE SECTION TO BE COMPLETED BY PROLOGIS TRUST
<S> <C>
$_____________________________________________ Approval:_____________________________
Optional Cash Payment Amount Approved
Name: ________________________________
______________________________________________ Title:________________________________
Form of Payment Approved Approval:_____________________________
__________________________________________________________________________________________________
</TABLE>
<PAGE>
EXHIBIT 99.4
NOTICE OF WAIVER ACCEPTANCE
PROLOGIS TRUST
Dividend Reinvestment and Share Purchase Plan
DATE:
TO:
FIRM:
VIA FAX #
COPY TO: BankBoston, N.A., Agent
c/o Boston EquiServe, L. P.
Via Fax #
We are pleased to inform you that your waiver for participation in the
ProLogis Trust Dividend Reinvestment and Share Purchase Program has been granted
for the __________ investment period in the amount of _____________. Please be
advised that for this pricing period the discount rate is _____ and the
threshold price is ___________. The ten days of this pricing period are
__________________.
All monies must be wired to BankBoston, N.A. by 5 p.m. Eastern Time on
___________ (at least one (1) trading day prior to the relevant investment
period). Please find the wiring instructions below:
Send funds to: BankBoston, N.A.
100 Federal Street
Boston, MA 02110
ABA No: [forthcoming]
For Credit to:
Please be advised that any uninvested monies will be returned after the
conclusion of the pricing period.
Thank you for your participation. Please call me at (303) 576-2622 with any
questions.
Sincerely,
[ProLogis Trust Officer]
<PAGE>
Exhibit 99.5
[FRONT]
PROLOGIS TRUST
Dividend Reinvestment and Share Purchase Plan Authorization Form
Please enroll my account in the Dividend Reinvestment and Share Purchase Plan as
indicated on this form. This form authorizes the agent to enroll your account in
the plan.
Check One Box Only.
[_] Full Dividend Reinvestment - I wish to reinvest all dividends for the
account. I may also make optional cash payments of a minimum of $200 to a
maximum of $5,000 in any calendar month.
[_] Partial Dividend Reinvestment - I wish to receive cash dividends on
_________ shares and to reinvest my cash dividends on the remainder of any
shares for this account. I may also make optional cash payments.
[_] Optional Cash Only - I wish to make only optional cash payments to the
plan. I will receive a dividend check for all shares so purchased.
[_] Optional Cash Payment Enclosed
[_] Withdrawal - I wish to withdraw from participation in the plan.
[_] Withdrawal Fee of $15 Enclosed.
All persons whose names appear on this form must sign this authorization.
Please see reverse of form.
THIS IS NOT A PROXY
PLEASE READ CAREFULLY BEFORE SIGNING.
_______________________________________________
Shareholder Date
_______________________________________________
Shareholder Date
<PAGE>
[BACK]
INVESTMENT OPTIONS UNDER THE PLAN
Full Dividend Reinvestment - The dividends on all ProLogis Trust shares for this
account as well as dividends on shares credited to your account under the plan
will be invested to purchase additional shares. You may also invest by making
optional cash payments of at least $200 up to a maximum of $5,000 in any
calendar month.
Partial Dividend Reinvestment - The dividends on less than all ProLogis Trust
shares that you own may be reinvested in the plan. For example, if you own 300
shares and want to receive cash dividends on 100 shares, check off the "Partial
Dividend Reinvestment" box and fill in 100 on the blank line. (The cash
dividends you wish to receive must be on full shares.) Dividends on the
remaining 200 shares will be reinvested to purchase additional shares. You may
also invest by making optional cash payments of at least $200 to a maximum of
$5,000 in any calendar month.
Optional Cash Only - You may make optional payments of at least $200 to a
maximum of $5,000 in any calendar month without the reinvestment of dividends.
Any shares purchased through optional payments will be credited to your account
under the plan. Dividends on all ProLogis Trust shares credited to your account
under the plan will be paid to you in cash automatically. Optional payments must
be received by the agent one business day prior to the commencement of the
related investment period as described in the plan prospectus.
Your participation in the plan is subject to the terms set forth in the
accompanying prospectus. You may terminate participation in the plan at any time
by written notice to BankBoston, N.A. c/o EquiServe, L.P. Dividend Reinvestment
Plan, P.O. Box XXXX, Boston, MA 02268-8040.
Do not return this form unless you intend to participate in the plan since this
form authorized BankBoston, N.A. to enroll your account in the plan. If this
form is signed but no box checked, you will be enrolled in the plan under the
"Full Dividend Reinvestment" option.
<PAGE>
EXHIBIT 99.6
Dear ProLogis Shareholders:
We are pleased to offer our shareholders and other eligible persons the
opportunity to invest in ProLogis common shares of beneficial interest more
economically and conveniently than ever before through our new Dividend
Reinvestment and Share Purchase Plan. A copy of the plan prospectus in enclosed
for your review along with the authorization form. Some of the highlights of the
plan are as follows:
. You may purchase additional common shares at a 2% discount by automatically
reinvesting all or a portion of your cash dividends on common stock through
the plan. Additionally, by making optional cash payments of $200 to $5,000
in any calendar month, you may purchase common shares at a 2% discount and
without brokerage commissions. You also may make optional cash payments in
excess of $5,000 in any calendar month with ProLogis' prior approval.
. You may sign up to have automatic optional cash payments deducted directly
from your bank account.
. You may purchase shares to be held in an individual retirement account.
. You may deposit your common share certificates for safekeeping with the
plan agent.
As a participant in the ProLogis 1995 Dividend Reinvestment Plan, you are
automatically enrolled in this new plan with your dividend election as
previously indicated and you need not take any action. If you wish to change
your election option, please indicate your new instructions on the enclosed
authorization form and return it in the enclosed envelope to the agent,
EquiServe, L.P.
Following the merger of Meridian Industrial Trust, Inc. into ProLogis on March
30, 1999, shares of Meridian common stock held by participants in the Meridian
1996 Dividend Reinvestment Plan were automatically converted into 1.1 ProLogis
common shares and $2.00 in cash, for each share of Meridian common stock.
Participants were automatically enrolled in the plan with dividend elections as
previously indicated. If you wish to change your election option or do not wish
to participate in the plan (Meridian participants who elect to withdrawal prior
to June 1, 1999 will not be subject to the withdrawal fee), please indicate your
new instructions on the enclosed authorization form and return it in the
enclosed envelope to the agent, EquiServe, L.P.
Meridian's first quarter dividend of $.33 per share was declared on February 26,
1999 to stockholders of record on March 19, 1999, payable on May 3, 1999. Due
to the timing of the transaction, Meridian's first quarter dividend will not be
reinvested in additional common shares. Instead, dividends will be distributed
in cash to the participants of the Meridian plan. Thereafter, ProLogis dividends
will be distributed in accordance with your instructions as previously indicated
or as indicated on the enclosed authorization form.
If you are not already enrolled in the ProLogis plan and after reading the
enclosed prospectus you would like to enroll, please complete the authorization
form as indicated and return it in the enclosed envelope to the agent,
EquiServe, L.P. There is a one-time enrollment fee of $10.00 per account.
If you have any questions regarding the plan, please contact EquiServe, L.P. at
1-800-XXX-XXXX. We hope that you take advantage of some of the new features
offered in this plan and thank you for your continued support of ProLogis.
Sincerely,
K. Dane Brooksher
Chairman and Chief Executive Officer
