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As filed with the Securities and Exchange Commission on January 31, 2000
Registration No. 333- ______
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
________________
PROLOGIS TRUST
(Exact name of registrant as specified in its charter)
________________
Maryland 74-2604728
(State of organization) (I.R.S. Employer
Identification No.)
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)
________________
Edward S. Nekritz, Secretary
ProLogis Trust
14100 E. 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
________________
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. [_]
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, check the following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, please check the following box
and list the Securities Act of 1933 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(c) under
the Securities Act of 1933, check the following box and list the Securities Act
of 1933 registration statement number of the earlier effective registration
statement for the same offering. [_]
________________
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
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Common Shares of Beneficial Interest, 200,535 $18.9375 $3,797,631.56 1,002.57
par value $0.01 per share................
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Preferred Shares Purchase Rights......... 200,535 N/A N/A N/A
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(1) Estimated solely for the purpose of determining the registration fee.
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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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
PROSPECTUS
SUBJECT TO COMPLETION DATED JANUARY 31, 2000
[LOGO OF PROLOGIS TRUST]
ProLogis Trust
14100 East 35th Place
Aurora, Colorado 80011
(303) 375-9292
200,535 Common Shares
_______________
The shareholders of ProLogis Trust identified in this prospectus are
offering and selling common shares of beneficial interest of ProLogis. The
ProLogis common shares being offered by this prospectus were acquired by the
selling shareholders upon the conversion of their interests in a loan agreement
between an unconsolidated subsidiary of ProLogis and the selling shareholders.
The selling shareholders may offer their ProLogis common shares through
public or private transactions, on or off of the New York Stock Exchange, at
prevailing market prices, or at privately negotiated prices.
Our common shares are listed on the New York Stock Exchange under the
symbol "PLD". On January 28, 2000, the last reported sale price of our common
shares on the New York Stock Exchange was $18.9375 per share.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed on the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
_______________
The date of this prospectus is , 2000.
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We have not authorized any person to give any information or to make any
representation not contained in this prospectus in connection with any offering
of these common shares. This prospectus is not an offer to sell any security
other than these common shares and it is not soliciting an offer to buy any
security other than these common shares. This prospectus is not an offer to sell
these common shares to any person and it is not soliciting an offer from any
person to buy these common shares in any jurisdiction where the offer or sale to
that person is not permitted. You should not assume that the information
contained in this prospectus is correct on any date after the date of this
prospectus, even though this prospectus is delivered or these common shares are
offered or sold on a later date.
TABLE OF CONTENTS
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Page
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PROLOGIS TRUST............................................................. 1
USE OF PROCEEDS............................................................ 2
DESCRIPTION OF COMMON SHARES............................................... 2
DESCRIPTION OF PROVISIONS OF MARYLAND LAW AND OF
PROLOGIS' DECLARATION OF TRUST AND BYLAWS............................. 6
FEDERAL INCOME TAX CONSIDERATIONS.......................................... 9
SELLING SHAREHOLDERS....................................................... 18
PLAN OF DISTRIBUTION....................................................... 19
EXPERTS.................................................................... 20
LEGAL MATTERS.............................................................. 20
WHERE YOU CAN FIND MORE INFORMATION........................................ 20
INCORPORATION BY REFERENCE................................................. 21
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PROLOGIS TRUST
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. 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 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, 444 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.
As of December 31, 1999, ProLogis owned or controlled the following assets,
including assets held by unconsolidated subsidiaries and joint ventures.
ProLogis' real estate assets consisted of approximately 149.1 million square
feet of operating distribution facilities and approximately 17.6 million square
feet of refrigerated distribution facilities. In addition, ProLogis had 11.9
million square feet of distribution facilities under development at a total
expected investment of $591.9 million. ProLogis has 1,636 facilities in 94 North
American and European Markets. Also, ProLogis owned or controlled approximately
4,800 acres of land for future development of approximately 50.5 million square
feet of distribution facilities. ProLogis' objective is to increase shareholder
value by achieving long-term sustainable growth in cash flow.
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 North America and Europe;
. operation of refrigerated distribution facilities through unconsolidated
subsidiaries, one operating in North America and one operating in nine
countries in Europe; and
. development of distribution facilities for future sale or on a fee basis
in North America and, through an unconsolidated subsidiary, in the
United Kingdom.
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This global network of distribution facilities has ProLogis well positioned
to become the global leader in this rapidly consolidating industry.
USE OF PROCEEDS
All net proceeds from the sale of ProLogis common shares will go to the
shareholders which are offering their shares under this prospectus.
Accordingly, ProLogis will not receive any proceeds from the sale of ProLogis
common shares under this prospectus.
DESCRIPTION OF COMMON SHARES
General
ProLogis' declaration of trust authorizes ProLogis to issue up to
275,000,000 shares of beneficial interest, par value $0.01 per share, consisting
of common shares, preferred shares and such other types or classes of shares of
beneficial interest as ProLogis' board of trustees may create and authorize from
time to time. ProLogis' board of trustees may amend ProLogis' declaration of
trust without shareholder consent to increase or decrease the aggregate number
of shares or the shares of any class which ProLogis has authority to issue. At
January 27, 2000, 161,833,801 common shares were issued and outstanding and held
of record by approximately 11,379 shareholders.
The following description of the general terms and provisions of the common
shares is not complete and you should refer to ProLogis' declaration of trust
and bylaws for more information.
The outstanding common shares are fully paid and, except as set forth below
under "--Shareholder liability," non-assessable. Each common share entitles the
holder to one vote on all matters requiring a vote of shareholders, including
the election of trustees. Holders of common shares do not have the right to
cumulate their votes in the election of trustees, which means that the holders
of a majority of the outstanding common shares can elect all of the trustees
then standing for election. Holders of common shares are entitled to such
distributions as may be declared from time to time by the board of trustees out
of funds legally available for the payment of distributions. Holders of common
shares have no conversion, redemption, preemptive or exchange rights to
subscribe to any securities of ProLogis. In the event of a liquidation,
dissolution or winding up of the affairs of ProLogis, the holders of the common
shares are entitled to share ratably in the assets of ProLogis remaining after
provision for payment of all liabilities to creditors and payment of liquidation
preferences and accrued dividends, if any, on the Series A cumulative redeemable
preferred shares, Series B cumulative convertible redeemable preferred shares,
Series C cumulative redeemable preferred shares, Series D cumulative redeemable
preferred shares and Series E cumulative redeemable preferred shares, and
subject to the rights of holders of other series of preferred shares, if any.
The right of holders of the common shares are subject to the rights and
preferences established by the board of trustees for the Series A preferred
shares, Series B preferred shares, Series C preferred shares, Series D preferred
shares and Series E preferred shares and any other series of preferred shares
which may subsequently be issued by ProLogis.
Purchase rights
On December 7, 1993, the board of trustees declared a dividend of one
preferred share purchase right for each common share outstanding, payable to
holders of common shares of record at the close of business on December 31,
1993. The holders of any additional common shares issued after such date and
before the redemption or expiration of the purchase rights are also entitled to
receive one purchase right for each such additional common share. Each purchase
right entitles the holder under set circumstances to purchase from ProLogis one
one-hundredth of a share of Series A junior participating preferred shares, par
value $0.01 per share at a price of $40.00 per one one-hundredth of a Series A
junior preferred share, subject to adjustment. Purchase rights are exercisable
when a person or group of persons, other than Security Capital Group
Incorporated, acquires 20% or more of the outstanding common shares or announces
a tender offer or exchange offer for 25% or more of the outstanding common
shares. Under set circumstances, each purchase right entitles the holder to
purchase, at the purchase right's then current exercise price, a number of
common shares having a market value of twice the purchase right's exercise
price. The acquisition of ProLogis pursuant to some types mergers or other
business transactions would entitle each holder to purchase, at the purchase
right's then current exercise price, a number of the acquiring company's common
shares having a market value at that time equal to twice the purchase right's
exercise price. The purchase rights held by 20%
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shareholders, other than Security Capital Group would not be exercisable. The
purchase rights will expire on December 7, 2003 and are subject to redemption in
whole, but not in part, at a price of $0.01 per purchase right payable in cash,
shares of ProLogis or any other form of consideration determined by the board of
trustees.
Transfer agent
The transfer agent and registrar for the common shares is BankBoston, N.A.,
150 Royall Street, Canton, Massachusetts 02021. The common shares are listed on
the New York Stock Exchange under the symbol "PLD."
Restriction on size of holdings
The ProLogis declaration of trust restricts beneficial ownership, or deemed
ownership by virtue of the attribution provisions of the Internal Revenue Code
or Section 13(d) of the Securities Exchange Act of 1934, of ProLogis'
outstanding shares of beneficial interest by a single person, or persons acting
as a group, to 9.8% of such shares. The purposes of the restriction are to
assist in protecting and preserving ProLogis' real estate investment trust
status under the Internal Revenue Code and to protect the interest of
shareholders in takeover transactions by preventing the acquisition of a
substantial block of shares unless the acquiror makes a cash tender offer for
all outstanding shares. For ProLogis to qualify as a real estate investment
trust under the Internal Revenue Code, not more than 50% in value of its
outstanding shares of beneficial interest may be owned by five or fewer
individuals at any time during the last half of any taxable year. The
restriction permits five persons to acquire up to a maximum of 9.8% each, or an
aggregate of 49% of the outstanding shares, and, thus, assists the board of
trustees in protecting and preserving ProLogis' real estate investment trust
status under the Internal Revenue Code.
The ownership restriction does not apply to Security Capital Group, which
counts as numerous holders for purposes of the tax rule, because its shares are
attributed to its shareholders for purposes of this rule. Additionally, the
ownership limit is subject to an exception for holders who were the beneficial
owners of shares, or who possessed securities convertible into shares, in excess
of the ownership limit on and immediately after the adoption of ProLogis'
declaration of trust by the board of trustees on June 24, 1999.
These holders may beneficially own shares or possess securities convertible
into shares, only up to their respective existing holder limits. The existing
holder limit for any such holder is equal to the percentage of outstanding
shares beneficially owned, or which would be beneficially owned upon the
exchange of convertible securities, by the holder on and immediately after the
adoption of the declaration of trust.
ProLogis' board of trustees, upon receipt of a ruling from the Internal
Revenue Service or an opinion of counsel or other evidence satisfactory to
ProLogis' board of trustees and upon such other conditions as ProLogis' board of
trustees may direct, may exempt a proposed transferee from the ownership limit.
The proposed transferee must give written notice to ProLogis of the proposed
transfer at least 30 days prior to any transfer which, if consummated, would
result in the proposed transferee owning ProLogis' shares in excess of the
ownership limit. ProLogis' board of trustees may require such opinions of
counsel, affidavits, undertakings or agreements as it determines to be necessary
or advisable in order to determine or ensure ProLogis' status as a real estate
investment trust.
Any transfer of ProLogis' shares that would:
(1) create a direct or indirect ownership of shares in excess of the
ownership limit or excess holder limits;
(2) result in ProLogis' shares being beneficially owned by fewer than 100
persons, determined without reference to any rules of attribution, as
provided in Section 856(a) of the Internal Revenue Code;
(3) result in ProLogis being "closely held" within the meaning of Section
856(h) of the Internal Revenue Code;
(4) result in a non-U.S. person, other than Security Capital Group, owning
50% or more of the market value of the issued and outstanding ProLogis
shares;
(5) create an ownership of shares by a party that has a 9.9% or greater
interest in a tenant of ProLogis; or
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(6) result in the disqualification of ProLogis as a real estate investment
trust under the Internal Revenue Code.
will not have any effect, and the intended transferee will acquire no rights to
the shares.
These restrictions on transferability and ownership will not apply if
ProLogis' board of trustees determines that it is no longer in the best
interests of ProLogis to attempt to qualify, or to continue to qualify, as a
real estate investment trust under the Internal Revenue Code.
Notwithstanding the previous restrictions, any purported transfer of
ProLogis' shares or event which would
(1) result in a person owning ProLogis' shares in excess of the ownership
limit or the existing holder limits;
(2) cause ProLogis to become "closely held" under Section 856(h) of the
Internal Revenue Code;
(3) result in 50% or more of the outstanding shares being held by a person,
as defined in section 7701(a)(30) of the Internal Revenue Code;
(4) result in 9.9% or more of the outstanding shares being held by a person
that constructively owns 9.9% or more of the voting power, shares or
assets of a ProLogis tenant; or
(5) result in the disqualification of ProLogis as a real estate investment
trust under the Internal Revenue Code
will result in those shares being constituting excess shares which will be
transferred pursuant to ProLogis' declaration of trust to a party not affiliated
with ProLogis designated by ProLogis as the trustee of a trust for the exclusive
benefit of an organization or organizations described in Sections 170(b)(1)(A)
and 170(c) of the Internal Revenue Code and identified by ProLogis' board of
trustees as the charitable beneficiary or beneficiaries of the trust, until such
time as the excess shares are transferred to a person whose ownership will not
violate the restrictions on ownership. While these excess shares are held in
trust, ProLogis will pay any distributions on the excess shares to the trust for
the benefit of the charitable beneficiary and the excess shares may only be
voted by the trustee for the benefit of the charitable beneficiary.
Subject to the ownership limit, the trustee will transfer the excess shares
at the direction of ProLogis to any person if the excess shares would not be
excess shares in the hands of that person. The purported transferee will receive
the lesser of:
(1) the price paid by the purported transferee for the excess shares or,
if no consideration was paid, the fair market value of the excess
shares on the day of the event which caused the excess shares to be
held in trust; and
(2) the price received from the sale or other disposition of the excess
shares.
Any dividend or distribution paid to the purported transferee which the
purported transferee was obligated to repay to the trustee, shall be subtracted
from this payment.
The trustee will pay any proceeds from the sale or other disposition of the
excess shares in excess of the amount payable to the purported transferee to the
charitable beneficiary. In addition, ProLogis will have the right to purchase
the excess shares held in trust for a 90-day period at a purchase price equal to
the lesser of:
(1) the price paid by the purported transferee for the excess shares or,
if no consideration was paid, the fair market value of the excess
shares on the day of the event which caused the excess shares to be
held in trust; and
(2) the fair market value of the excess shares on the date ProLogis
elects to purchase them.
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Fair market value, for these purposes, means the last reported sales price
on the New York Stock Exchange on the trading day immediately preceding the
relevant date, or if those shares are not then traded on the New York Stock
Exchange, the last reported sales price on the trading day immediately preceding
the relevant date as reported on any exchange or quotation system on which those
shares are then traded. If the shares are not then traded on any exchange or
quotation system, the fair market value will be the market price on the relevant
date as determined in good faith by ProLogis' board of trustees.
From and after the purported transfer to the purported transferee of the
excess shares, the purported transferee will cease to be entitled to
distributions voting rights and other benefits with respect to the excess shares
except the right to payment on the transfer of the excess shares as described
above; however, the purported transferee remains entitled to liquidation
distributions. If the purported transferee receives any distributions on excess
shares prior to ProLogis' discovery that those excess shares have been
transferred in violation of the provisions of ProLogis' declaration of trust,
the purported transferee must repay those distributions to ProLogis upon demand,
and ProLogis will pay those amounts to the trust for the benefit of the
charitable beneficiary. If the restrictions on transferability and ownership are
determined to be void, invalid or unenforceable by any court of competent
jurisdiction, then ProLogis may treat the purported transferee of any excess
shares to have acted as an agent on behalf of ProLogis in acquiring those excess
shares and to hold those excess shares on behalf of ProLogis.
All certificates evidencing shares will bear a legend referring to the
restrictions described above.
All persons who own, directly or by virtue of the attribution provisions of
the Internal Revenue Code, more than 5%, or such other percentage between 0.5%
and 5%, as provided in the rules and regulations of the Internal Revenue Code,
of the number or value of ProLogis' outstanding shares must give a written
notice containing certain information to ProLogis by January 31 of each year. In
addition, each shareholder is upon demand required to disclose to ProLogis in
writing such information with respect to its direct, indirect and constructive
ownership of ProLogis' shares as ProLogis' board of trustees deems reasonably
necessary to comply with the provisions of the Internal Revenue Code applicable
to a real estate investment trust, to determine ProLogis' status as a real
estate investment trust to comply with the requirements of any taxing authority
or governmental agency or to determine any such compliance.
The restrictions on share ownership in ProLogis' declaration of trust are
designed to protect the real estate investment trust status of ProLogis. The
restrictions could have the effect of discouraging a takeover or other
transaction in which holders of some, or a majority, of the common shares might
receive a premium for their shares over the then prevailing market price or
which such holders might believe to be otherwise in their best interest.
Indemnification of trustees and officers
The Maryland statutory law governing real estate investment trusts permits
a real estate investment trust to indemnify or advance expenses to trustees,
officers, employees and agents of the real estate investment trust to the same
extent as is permitted for directors, officers, employees and agents of a
Maryland corporation under Maryland statutory law. Under ProLogis' declaration
of trust, ProLogis is required to indemnify each trustee, and may indemnify each
officer, employee and agent to the fullest extent permitted by Maryland law, as
amended from time to time, in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or she was a trustee, officer,
employee or agent of ProLogis or is or was serving at the request of ProLogis as
a director, trustee, officer, partner, employee or agent of another foreign or
domestic corporation, partnership, joint venture, limited liability company,
trust, other enterprise or employee benefit plan, from all claims and
liabilities to which such person may become subject by reason of service in that
capacity and to pay or reimburse reasonable expenses, as those expenses are
incurred, of each trustee, officer, employee and agent in connection with any of
those proceedings. ProLogis' board of trustees believes that the indemnification
provision enhances ProLogis' ability to attract and retain superior trustees and
officers for ProLogis and its subsidiaries.
ProLogis has entered into indemnity agreements with each of its officers
and trustees which provide for reimbursement of all expenses and liabilities of
the officer or trustee, arising out of any lawsuit or claim against the officer
or trustee due to the fact that he was or is serving as an officer or trustee,
except for liabilities and expenses, the payment of which is judicially
determined to be unlawful, relating to claims under Section 16(b) of the
Securities Exchange Act of 1934 or 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
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indemnification and advancement of expenses to the fullest 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.
Shareholder liability
Both the Maryland statutory law governing real estate investment trusts and
ProLogis' declaration of trust provide that shareholders shall not be personally
or individually liable for any debt, act, omission or obligation of ProLogis or
ProLogis' board of trustees. ProLogis' declaration of trust further provides
that ProLogis shall indemnify and hold each shareholder harmless from and
against all claims and liabilities, whether they proceed to judgment or are
settled or otherwise brought to a conclusion, to which the shareholder may
become subject by reason of his or her being or having been a shareholder and
that ProLogis shall reimburse each shareholder for all legal and other expenses
reasonably incurred by the shareholder in connection with any such claim or
liability; provided that the shareholder gives ProLogis prompt notice of any
such claim or liability and permits ProLogis to conduct the defense of the claim
or liability. In addition, ProLogis is required to, and as a matter or practice
does, insert a clause in its management and other contracts providing that
shareholders assume no personal liability for obligations entered into on behalf
of ProLogis. Nevertheless, with respect to tort claims, contractual claims where
shareholder liability is not so negated, claims for taxes and some statutory
liabilities, the shareholders may, in some jurisdictions, be personally liable
to the extent that those claims are not satisfied by ProLogis. Inasmuch as
ProLogis carries public liability insurance which it considers adequate, any
risk of personal liability to shareholders is limited to situations in which
ProLogis' assets plus its insurance coverage would be insufficient to satisfy
the claims against ProLogis and its shareholders.
DESCRIPTION OF PROVISIONS OF MARYLAND LAW AND OF
PROLOGIS' DECLARATION OF TRUST AND BYLAWS
The following description of some general provisions of Maryland law and of
ProLogis' declaration of trust and bylaws is not complete and you should refer
to Maryland law, ProLogis' declaration of trust and ProLogis' bylaws for more
information.
Board of trustees
ProLogis' declaration of trust provides that ProLogis' board of trustees
will have not less than three nor more than fifteen trustees, as determined from
time to time by ProLogis' board of trustees. The trustees are divided into three
classes. Each trustee will hold office for three years and until his or her
successor is duly elected and qualifies. The term of the Class I Trustees will
expire at the annual meeting of shareholders in 2000, the term of the Class II
Trustees will expire at the annual meeting of shareholders in 2001 and the term
of the Class III Trustees will expire at the annual meeting of shareholders in
2002. At each annual meeting of shareholders, the successors to the class of
trustees whose term expires at that meeting will be elected to hold office for
three years. Whenever there is a vacancy or vacancies on the board of trustees,
including vacancies resulting from an increase in the number of trustees, the
vacancy may be filled at a special meeting of the shareholders called for the
purpose of electing trustees to fill the vacancy, by the trustees then in office
or at the next annual meeting of the shareholders. Any trustees elected at
special meetings of the shareholders to fill vacancies or appointed by the
trustees then in office will hold office until the next annual meeting of
shareholders.
The classified board provision may have the effect of making it more
difficult for a third party to acquire control of ProLogis without the consent
of ProLogis' board of trustees, even if a change in control would be beneficial
to ProLogis and its shareholders.
Business combinations
Under Maryland law, "business combinations," between a Maryland real estate
investment trust and an "interested shareholder" or an affiliate of an
interested shareholder are prohibited for five years after the most recent date
on which the interested shareholder became an interested shareholder. A business
combination may include including a merger, consolidation, share exchange, or,
in some circumstances, an asset transfer or issuance or reclassification of
equity securities. After the five-year period, these business combinations must
be recommended
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by the board of trustees of the real estate investment trust and approved by at
least 80% of the votes entitled to be cast by shareholders of the real estate
investment trust, including at least two-thirds of the votes entitled to be cast
by shareholders other than the interested shareholder with whom the business
combination is to be effected, unless, among other things, the real estate
investment trust's common shareholders receive a minimum price, as defined under
Maryland law, for their shares and they receive the consideration in cash or in
the same form as previously paid by the interested shareholder for its shares.
An "interested shareholder" is a person who either beneficially owns 10% or more
of the voting power of the real estate investment trust's outstanding shares or
is an affiliate of the real estate investment trust and, at any time during the
prior two years, beneficially owned 10% or more of the voting power of the real
estate investment trust's then outstanding shares. These provisions of Maryland
law do not apply, however, to business combinations which are approved or
exempted by the board of trustees of the real estate investment trust prior to
the time that the interested shareholder becomes an interested shareholder.
ProLogis' declaration of trust exempts any business combination with
Security Capital Group and its affiliates and successors from these provisions
of Maryland law.
Control share acquisitions
Maryland law provides that "control shares" of a Maryland real estate
investment trust acquired in a "control share acquisition" have no voting rights
except to the extent approved by a vote of two-thirds of the votes entitled to
be cast by shareholders, other than the acquiror or officers or trustees who are
employees of the real estate investment trust. "Control shares" are voting
shares which, if aggregated with all other voting shares previously acquired by
the acquiror or in respect of which the acquiror is able to exercise voting
power, would entitle the acquiror to exercise at least one- fifth of the voting
power in electing trustees. Control shares do not include shares the acquiring
person is then entitled to vote as a result of having previously obtained
shareholder approval. A "control share acquisition" means the acquisition of
control shares, subject to certain exceptions.
A person who has made or proposes to make a control share acquisition, upon
satisfaction of certain conditions, including an undertaking to pay expenses,
may compel the board of trustees of the real estate investment trust to call a
special meeting of shareholders to be held within 50 days of demand to consider
voting rights for the shares. If no request for a meeting is made, the real
estate investment trust may itself present the question at any shareholders'
meeting.
If the shareholders do not approve voting rights at the meeting or if the
acquiring person does not deliver an acquiring person statement as required by
Maryland law, then, subject to certain conditions and limitations, the real
estate investment trust may redeem any or all of the control shares, except
those for which voting rights have previously been approved, for fair market
value. Fair market value will be determined without regard to the absence of
voting rights for the control shares as of the date of the last control share
acquisition by the acquiror or of any meeting of shareholders at which the
voting rights of those shares were considered and not approved. If the
shareholders approve voting rights for control shares and the acquiror becomes
entitled to exercise a majority of the voting power in electing trustees, all
other shareholders may exercise appraisal rights. The fair value of the shares
for purposes of the appraisal rights may not be less than the highest price per
share paid by the acquiror for the control shares.
The control share acquisition law does not apply to shares acquired in a
merger, consolidation or share exchange if the real estate investment trust is a
party to the transaction, or to acquisitions approved or exempted by the
declaration of trust or bylaws of the real estate investment trust.
ProLogis' declaration of trust exempts Security Capital Group and its
affiliates and successors from these provisions of Maryland law. Additionally,
through the bylaws, the board of trustees has provided that these provisions of
Maryland will not apply to any acquisition of ProLogis shares by any person.
However, this exemption may be repealed, in whole or in part, at any time
whether before or after an acquisition of control shares, and upon the repeal,
may, to the extent provided by any successor bylaw, apply to any prior or
subsequent control share acquisition.
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Amendments to ProLogis' declaration of trust
Maryland law requires the shareholder of a real estate investment trust to
approve any amendment to its declaration of trust, with some exceptions. As
permitted by Maryland law, ProLogis' declaration of trust permits ProLogis'
board of trustees, without any action by the shareholders, to amend ProLogis'
declaration of trust to increase or decrease the aggregate number of shares or
the number of shares of any class which ProLogis may issue. The board of
trustees also may change the par value of any class or series of shares and the
aggregate par value of the shares and the board of trustees may classify or
reclassify any unissued shares from time to time by setting or changing the
preferences, conversion or other rights, voting powers, restrictions limitations
as to dividends or distributions, qualifications or terms or conditions of the
redemption of the shares by filing articles supplementary pursuant to Maryland
law. Also, as permitted by Maryland law, ProLogis' declaration of trust permits
ProLogis' board of trustees, by a two-thirds vote, to amend ProLogis'
declaration of trust to enable ProLogis to qualify as a real estate investment
trust. A majority of the votes entitled to be cast by shareholders must approve
any other amendment to ProLogis' declaration of trust.
Termination of ProLogis
ProLogis has a perpetual term and intends to continue its operations for an
indefinite time period. However, the ProLogis declaration of trust provides
that, subject to the provisions of any class or series of shares at the time
outstanding, after approval by a majority of the entire board of trustees,
ProLogis may be terminated at any meeting of shareholders called for the purpose
of voting on the termination by the affirmative vote of the holders of not less
than a majority of the outstanding shares entitled to vote.
In connection with the termination of ProLogis, the ProLogis declaration of
trust provides that the board of trustees, upon receipt of releases or indemnity
as they deem necessary for their protection, may, without the need to obtain
shareholder approval, convey the property of ProLogis to one or more persons,
entities, trusts or corporations for consideration consisting in whole or in
part of cash, shares of stock or other property of any kind, and distribute the
net proceeds among the shareholders ratably, at valuations fixed by the board of
trustees, in cash or in kind, or partly in cash and partly in kind.
Advance notice of trustee nominations and new business
For a shareholder to properly bring nominations or other business before an
annual meeting of shareholders, ProLogis' bylaws require that shareholder to
deliver a notice to the secretary, absent specified circumstances, not less than
90 days nor more than 120 days prior to the first anniversary of the preceding
year's annual meeting setting forth:
(1) as to each person whom the shareholder proposes to nominate for
election or reelection as a trustee, all information relating to that
person which is required to be disclosed in solicitations of proxies
for the election of trustees, or is otherwise required, pursuant to
Regulation 14A of the Securities Exchange Act of 1934;
(2) as to any other business which the shareholder proposes to bring before
the meeting, a brief description of the business desired to be brought
before the meeting, the reasons for conducting that business at the
meeting and any material interest of that shareholder and of the
beneficial owner, if any, on whose behalf the proposal is made; and
(3) as to the shareholder giving the notice and the beneficial owner, if
any, on whose behalf the nomination or proposal is made, the name and
address of that shareholder as they appear on ProLogis' books; and of
that beneficial owner, the number of shares of each class of ProLogis
which are owned beneficially and of record by that shareholder and that
beneficial owner; and in the case of a nomination, a description of all
arrangements or understandings between the shareholder and each
proposed nominee and any other person or persons pursuant to which the
nomination is made by that person, a representation that the
shareholder intends to appear in person or by proxy at the meeting, if
there is a meeting, to nominate the person named in the notice and any
other information relating to the shareholder that would be required to
be disclosed in a proxy statement or other filings required to be
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made in connection with solicitations of proxies for the election of
trustees pursuant to Section 14 of the Securities Exchange Act of 1934
and the rules and regulations of that section.
FEDERAL INCOME TAX CONSIDERATIONS
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. No assurance can be given, however,
that such requirements will be met. The following is a description of the
federal income tax 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 in this prospectus, possibly on a retroactive basis. The
following summary is not exhaustive of all possible tax considerations and does
not give a detailed discussion of any state, local, or foreign tax
considerations, nor does it discuss all of the aspects of 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.
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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 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.
A real estate investment trust is permitted to designate in a notice mailed
to shareholders within 60 days of the end of the taxable year, or in a notice
mailed with its annual report for the taxable year, such amount of undistributed
net long-term capital gains it received during the taxable year, which its
shareholders are to include in their taxable income as long-term capital gains.
Thus, if ProLogis made this designation, the shareholders of ProLogis would
include in their income as long-term capital gains their proportionate share of
the undistributed net capital gains as designated by ProLogis and ProLogis would
have to pay the tax on such gains within 30 days of the close of its taxable
year. Each shareholder of ProLogis would be deemed to have paid such
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 shares 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 ProLogis shares may be owned, directly or
indirectly and by applying constructive ownership rules, by five or fewer
individuals, which for this purpose includes some tax-exempt entities. Any stock
held by a qualified domestic pension or other retirement trust will be treated
as held directly by its beneficiaries in proportion to their actuarial interest
in such trust rather than by such trust. Pursuant to the constructive ownership
rules, Security Capital's ownership of shares is attributed to its shareholders
for purposes of
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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.
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 percentage limitations
on ownership of shares of its stock to assure that its qualification as a real
estate investment trust will not be compromised.
Asset tests
At the close of each quarter of ProLogis' taxable year, ProLogis must
satisfy tests relating to the nature of its assets determined in accordance with
generally accepted accounting principles. 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. 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;
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(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.
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 1% 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 to the property 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.
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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%, or 90% for taxable
years beginning after December 31, 2000, 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%, or 90% for taxable
years beginning after December 31, 2000, of its net income after tax, if any,
from foreclosure property, minus the sum of some items of excess non-cash
income. Such distributions must be paid in the taxable year to which they
relate, or in the following taxable year if declared before ProLogis timely
files its tax return for such year and if paid on or before the first regular
dividend payment after such declaration. To the extent that ProLogis does not
distribute all of its net capital gain or distributes at least 95%, or 90% for
taxable years beginning after December 31, 2000, 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, a
real estate investment trust is permitted, with respect to undistributed net
long-term capital gains it received during the taxable year, to designate in a
notice mailed to shareholders within 60 days of the end of the taxable year, or
in a 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%, or 90% for taxable years
beginning after December 31, 2000, 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%, or 90% for taxable years beginning
after December 31, 2000, 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%, or 90% for taxable years beginning after
December 31, 2000, 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 owned through various
limited partnerships. 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.
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,
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Brown, & Platt, under existing federal income tax law and regulations, ProLogis
Limited Partnership-I, ProLogis Limited Partnership-II, ProLogis Limited
Partnership- III and ProLogis Limited Partnership-IV 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 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 1998 with respect to taxation of capital gains
and capital gain dividends and with regard to state, local and foreign taxes on
capital gains.
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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 to the paid distributions.
Under the backup withholding rules, a shareholder may be subject to backup
withholding at applicable rates with respect to distributions paid unless such
shareholder is a corporation or comes within other exempt categories and, when
required, demonstrates this fact or provides a taxpayer identification number,
certifies as to no loss of exemption from backup withholding, and otherwise
complies with applicable requirements of the backup withholding rules. A
shareholder that does not provide ProLogis with its correct taxpayer
identification number may also be subject to penalties imposed by the Internal
Revenue Service. Any amount paid as backup withholding will be credited against
the 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 in the ruling and the statutory
framework of the Internal Revenue Code, distributions by ProLogis to a
shareholder that is a tax-exempt entity should also not constitute unrelated
business taxable income, provided that the tax-exempt entity has not financed
the acquisition of its shares with "acquisition indebtedness" within the meaning
of the Internal Revenue Code, and that the shares are not otherwise used in an
unrelated trade or business of the tax-exempt entity, and that ProLogis,
consistent with its present intent, does not hold a residual interest in a real
estate mortgage investment conduit.
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.
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 or Internal Revenue
Service Form W-8ECI with ProLogis claiming that the distribution is "effectively
connected" income. Under applicable Treasury regulations, foreign shareholders
generally have to provide the Internal Revenue Service Form 8-W8ECI in lieu of
Internal Revenue Service Form 4224 beginning January 1, 2000 and every three
years thereafter unless the information on the form changes before that date.
An Internal Revenue Service Form 4224 existing on January 1, 2000 will continue
to be effective until December 31, 2000.
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<PAGE>
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
Investments in taxable subsidiaries
ProLogis Development Services Incorporated, ProLogis Logistics Services
Incorporated and Meridian Refrigerated, Inc. will pay federal and state income
taxes at the full applicable corporate rates on their income prior to payment of
any dividends. ProLogis Development Services Incorporated, ProLogis Logistics
Services Incorporated and Meridian Refrigerated, Inc. 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, ProLogis Logistics Services
Incorporated or Meridian Refrigerated, Inc. 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 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 of these laws could adversely affect the tax consequences of an
investment in ProLogis.
In this connection, Congress has recently passed and the President has
signed the Tax Relief Extension Act of 1999 (the "1999 Act") which contains
several provisions affecting real estate investment trusts. One provision under
the 1999 Act will prohibit a real estate investment trust from holding
securities representing more than 10% of the vote or value of the outstanding
securities of any corporation other than a qualified real estate investment
trust subsidiary, another real estate investment trust or corporations known as
"taxable REIT subsidiaries" (the "Taxable
16
<PAGE>
REIT Subsidiary Provision"). In addition, under the 1999 Act, not more than 20%
of the value of a real estate investment trust's total assets may be represented
by securities of one or more taxable REIT subsidiaries. Taxable REIT
subsidiaries will be subject to full corporate level taxation on their earnings,
but would be permitted to engage in certain types of activities, such as those
performed by ProLogis Development Services Incorporated, ProLogis Logistics
Services Incorporated and Meridian Refrigerated, Inc., which cannot currently be
performed by real estate investment trusts or their controlled subsidiaries
without jeopardizing their real estate investment trust status. Taxable REIT
subsidiaries will be subject to limitations on the deductibility of payments
made to the associated real estate investment trust which could materially
increase the taxable income of the taxable REIT subsidiary and will be subject
to prohibited transaction taxes on certain other payments made to the associated
real estate investment trust.
Under the Taxable REIT Subsidiary Provision, ProLogis and each of ProLogis
Development Services Incorporated, ProLogis Logistics Services Incorporated and
Meridian Refrigerated, Inc. will be allowed to jointly elect to treat ProLogis
Development Services Incorporated, ProLogis Logistics Services Incorporated and
Meridian Refrigerated, Inc. as "taxable REIT subsidiaries" for taxable years
beginning after December 31, 2000. Further, although ProLogis owns more than
10% of the value of the outstanding securities of ProLogis Development Services
Incorporated, ProLogis Logistics Services Incorporated and Meridian
Refrigerated, Inc. which, absent a taxable REIT subsidiary election, would
violate the provisions of the 1999 Act, the Taxable REIT Subsidiary Provision
contains "grandfather" rules which would make the limitations on stock ownership
described above inapplicable to ProLogis' ownership of ProLogis Development
Services Incorporated, ProLogis Logistics Services Incorporated and Meridian
Refrigerated, Inc., even in the absence of an election to treat the such
companies as "taxable REIT subsidiaries." In such case, however, the Taxable
REIT Subsidiary Provision would terminate ProLogis' ability to rely on the
grandfather rule if either ProLogis Development Services Incorporated, ProLogis
Logistics Services Incorporated or Meridian Refrigerated, Inc. were either to
engage in new trades or businesses or acquire substantial new assets.
Accordingly, in the absence of such an election, the Taxable REIT Subsidiary
Provision may limit the future activities and growth of ProLogis Development
Services Incorporated, ProLogis Logistics Services Incorporated and Meridian
Refrigerated, Inc.
As noted in "--Taxation of the Company - Annual Distribution Requirements,"
another provision under the 1999 Act amends certain real estate investment trust
distribution requirements to conform such requirements to the regulated
investment company rules under the Internal Revenue Code. These amendments are
also effective for taxable years beginning after December 31, 2000.
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 Holdings 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 parties will pay any such foreign taxes prior to
payment of any dividends. Each entity will attempt to minimize the amount of
such taxes, but there can be no assurance whether or the extent to which
measures taken to minimize taxes will be successful. To the extent that any of
these entities is required to pay foreign taxes, the cash available for
distribution to 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.
17
<PAGE>
SELLING SHAREHOLDERS
The table below sets forth the name of each selling shareholder and
relationship, if any, with ProLogis. The table also shows the number of ProLogis
common shares beneficially owned by the selling shareholders as of December 31,
1999, assuming no shares have been sold under this prospectus as of that date,
the maximum number of ProLogis common shares which may be offered for the
account of each selling shareholder under the prospectus, and the amount and
percentage of ProLogis common shares to be owned by the selling shareholders
assuming the sale of all of the ProLogis common shares which may be offered
under this prospectus.
The selling shareholders beneficial ownership is attributable to the
interests they hold in a loan agreement between Kingspark Holding S.A., an
unconsolidated subsidiary of ProLogis. The interests in the loan agreement are
convertible into ProLogis common shares.
<TABLE>
<CAPTION>
Amount and
Shares Percentage of Shares
Beneficially Owned Shares Beneficially Owned
Selling Shareholder Prior to Offering Being Offered(1) After Offering(1)
- ------------------- ----------------- ---------------- -----------------
<S> <C> <C> <C>
Paragon Holdings Limited 23,708 23,708 0
95/97 Halkett Place
St. Helier
Jersey, Channel Islands
Parlen Investments S.A. 23,708 23,708 0
Arias Fabrega & Fabrega
The Bank of America Building
50th Street
Panama City,
Republic of Panama
The Regent Trust Company 7,147 7,147 0
Limited
Le Gallais Chambers
54 Bath Street
St. Helier
Jersey, Channel Islands
John Cutts 65,940(2) 62,147 0
Tudor Gables
Old Warwick Road
Lapworth, Solihull B94 6AY
Greg Court 37,057(3) 34,686 0
The Maples
Church Lane
Lapworth, Solihull B94 5NN
David Keir 37,057(3) 34,686 0
Laird Manoch
Church Lane
Harrington NN6 9NX
David Clements 7,317(4) 5,420 0
Magnolia House
6 Ferndale Drive
Kenilworth CV8 2PF
</TABLE>
18
<PAGE>
<TABLE>
<S> <C> <C> <C>
Peter Roberts 11,404(3) 9,033 0
10 Chadwick Manor
Chadwick End
Knowle B93 OAT
</TABLE>
_______________
(1) Assumes the sale of all ProLogis common shares offered by this prospectus,
although none of the selling shareholders are under any obligation know to
ProLogis to sell any ProLogis common shares.
(2) Beneficial ownership of 3,793 of the common shares is attributable to
options to purchase ProLogis common shares awarded pursuant to the ProLogis
Trust 1997 Long Term Incentive Plan.
(3) Beneficial ownership of 2,371 of the common shares is attributable to
options to purchase ProLogis common shares awarded pursuant to the ProLogis
Trust 1997 Long Term Incentive Plan.
(4) Beneficial ownership of 1,897 of the common shares is attributable to
options to purchase ProLogis common shares awarded pursuant to the ProLogis
Trust 1997 Long Term Incentive Plan.
PLAN OF DISTRIBUTION
Any of the selling shareholders may sell any of their ProLogis common
shares offered under this prospectus from time to time. Sales may be made
directly or through brokers or dealers in connection with trades by the selling
shareholders through the New York Stock Exchange or otherwise. To the extent
required by applicable law, a prospectus supplement with respect to the ProLogis
common shares being offered will set forth the terms of the offering of the
ProLogis common shares, including the name or names of any dealers or agents the
purchase price of the ProLogis common shares and the proceeds to the selling
shareholders from such sale, any delayed delivery arrangements, any underwriting
discounts and other items constituting underwriters' compensation, the initial
public offering price, and any discounts or concessions allowed or reallowed or
paid to dealers.
If dealers are used in the sale of ProLogis common shares with respect to
which this prospectus is delivered or with respect to any block trades, the
selling shareholder will sell such ProLogis common shares to the dealers as
principals. The dealers may then resell such ProLogis common shares to the
public at varying prices to be determined by such dealers at the time of resale.
The name of the dealers and the terms of the transaction will be set forth in
the prospectus supplement relating thereto.
In connection with the sale of the ProLogis common shares or agents may
receive compensation from the selling shareholders or from purchasers of
ProLogis common shares for whom they may act as agents in the form of discounts,
concessions, or commissions. Agents and dealers participating in the
distribution of the ProLogis common shares may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, and any discounts or
commissions received by them from the selling shareholders and any profit on the
resale of the ProLogis common shares by them may be deemed to be underwriting
discounts or commissions under the Securities Act of 1933.
Upon ProLogis' being notified by a selling shareholder of any change in the
identity of the selling shareholder or that any material arrangement has been
entered into with a broker or dealer for the sale of any ProLogis common shares
through a secondary distribution, or a purchase by a broker or dealer, a
prospectus supplement will be filed, if required, pursuant to Rule 424(b) under
the Securities Act of 1933, disclosing:
(1) the names of such brokers or dealers, the number of ProLogis common
shares to be sold;
(2) the price at which such ProLogis common shares are being sold;
(3) the commissions paid or the discounts or concessions allowed to such
brokers or dealers;
(4) where applicable, that such broker or dealer did not conduct any
investigation to verify the information set out or incorporated by
reference in this prospectus, as supplemented or amended;
(5) any change in the identity of the selling shareholder; and
(6) other facts material to the transaction.
19
<PAGE>
Agents and dealers may be entitled under agreements entered into with the
selling shareholders to indemnification by the selling shareholders against
civil liabilities, including liabilities under the Securities Act of 1933, or to
contribution with respect to payments that such agents, dealers, or underwriters
may be required to make with respect thereto. Agents and dealers may be
customers of, engage in transactions with, or perform services for ProLogis
and/or the selling shareholders in the ordinary course of business.
EXPERTS
The financial statements and related schedules of ProLogis incorporated by
reference in this prospectus and in the registration statement have been audited
by Arthur Andersen LLP, independent public accountants, to the extent and for
the periods indicated in their reports. In those reports, Arthur Andersen LLP
states that with respect to a subsidiary accounted for under the equity method,
its opinion is based on the report of other independent public accountants,
namely KPMG. Additionally, the financial statements and related schedules of
Meridian Industrial Trust, Inc. for the years ending December 31, 1997 and 1998,
which ProLogis has included in its current report on Form 8-K dated April 13,
1999, have been audited by Arthur Andersen LLP. The financial statements and
related schedules referred to above have been incorporated by reference in this
prospectus and in the registration statement in reliance upon the authority of
those firms as experts in accounting and auditing in giving the reports.
With respect to the unaudited interim financial information for the quarter
ended September 30, 1999, Arthur Andersen LLP has applied limited procedures in
accordance with professional standards for a review of that information.
However, their separate report thereon states that they did not audit and they
do not express an opinion on that interim financial information. Accordingly,
the degree of reliance on their report on that information should be restricted
in light of the limited nature of the review procedures applied. In addition,
the accountants are not subject to the liability provisions of Section 11 of the
Securities Act of 1933 for their report on the unaudited interim financial
information because that report is not a "report" or a "part" of the
registration statement prepared or certified by the accountants within the
meaning of Sections 7 and 11 of the Securities Act of 1933.
LEGAL MATTERS
The validity of the offered securities will be passed upon 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,
including Security Capital Group.
WHERE YOU CAN FIND MORE INFORMATION
ProLogis is subject to the informational requirements of the Securities
Exchange Act of 1934 and, in accordance therewith, files reports, proxy
statements and other information with the Securities and Exchange Commission.
Such reports, proxy statements and other information can be inspected and copied
at the public reference facilities maintained by the Securities and Exchange
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549; Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and 7 World Trade
Center, 13th Floor, New York, New York 10048. Copies of such material can be
obtained at prescribed rates from the Public Reference Room of the Securities
and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 or by
calling the Securities and Exchange Commission at 1-800-SEC-0330. Such material
can also be obtained from the Securities and Exchange Commission's worldwide web
site at http://www.sec.gov. ProLogis' outstanding common shares, Series A
cumulative redeemable preferred shares of beneficial interest, Series B
cumulative convertible redeemable preferred shares of beneficial interest,
Series D cumulative redeemable preferred shares of beneficial interest and
Series E cumulative redeemable preferred shares of beneficial interest, are
listed on the New York Stock Exchange under the symbols "PLD", "PLD-PRA", "PLD-
PRB", "PLD-PRD" and "PLD-PRE", respectively, and all such 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. You can also obtain information about ProLogis
at its website, www.prologis.com.
This prospectus constitutes part of a registration statement on Form S-3
filed by ProLogis with the Securities and Exchange Commission under the
Securities Act of 1933. This prospectus does not contain all of the
20
<PAGE>
information set forth in the registration statement, parts of which are omitted
in accordance with the rules and regulations of the Securities and Exchange
Commission. For further information, reference is made to the registration
statement.
INCORPORATION BY REFERENCE
There are incorporated by reference in this prospectus the following
documents previously filed by ProLogis with the Securities and Exchange
Commission.
(a) ProLogis' Annual Report on Form 10-K for the fiscal year ended December
31, 1998 and amended by Form 10-K/A filed April 30, 1999;
(b) ProLogis' Quarterly Reports on Form 10-Q for the fiscal quarters ending
March 31, 1999, June 30, 1999 and September 30, 1999;
(c) ProLogis' Current Reports on Form 8-K filed March 24, 1999, March 31,
1999, April 13, 1999, April 15, 1999, and April 16, 1999, and Form 8-
K/A filed April 22, 1999;
(d) The description of the common shares contained in ProLogis'
registration statement on Form 8-A, as amended; and
(e) The description of ProLogis' preferred share purchase rights contained
in ProLogis' registration statement on Form 8-A, as amended.
The Securities and Exchange Commission has assigned file number 1-12846 to
reports and other information that ProLogis files with the Securities and
Exchange Commission.
All documents subsequently filed by ProLogis pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act of 1934 prior to the termination of the
offering of the offered securities, shall be deemed to be incorporated by
reference in this prospectus and to be a part of this prospectus from the date
of filing of such documents. Any statement contained in this prospectus or in a
document incorporated or deemed to be incorporated by reference in this
prospectus shall be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this prospectus, or in
any subsequently filed document which is incorporated or deemed to be
incorporated by reference in this prospectus, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this prospectus.
ProLogis will provide without charge to each person, including any
beneficial owner, to whom a copy of this prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the documents
incorporated by reference in this prospectus, other than exhibits to such
documents unless such exhibits are specifically incorporated by reference into
such documents. Requests should be addressed to:
Secretary
ProLogis Trust
14100 East 35th Place
Aurora, Colorado 80011
(303) 375-9292
21
<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 registration and sale of the shares registered hereby, all of which will be
paid by the registrant, except as noted in the prospectus:
SEC registration fee......................................... $ 1,002.57
New York Stock Exchange fees................................. $ 700.00
Transfer agent's fees........................................ $ 2,500.00
Legal fees and expenses...................................... $ 5,000.00
Accounting fees and expenses................................. $ 2,500.00
Miscellaneous expenses....................................... $ 297.43
----------
Total........................................................ $12,000.00
==========
ITEM 15. INDEMNIFICATION OF TRUSTEES AND OFFICERS.
Article 4, Section 10 of the Declaration of Trust provides as follows with
respect to the limitation of liability of Trustees:
"To the maximum extent that Maryland law in effect from time to time
permits limitation of the liability of trustees of a real estate investment
trust, no Trustee of the Trust shall be liable to the Trust or to any
Shareholder for money damages. Neither the amendment nor repeal of this Section
10, nor the adoption or amendment of any other provision of this Declaration of
Trust inconsistent with this Section 10, shall apply to or affect in any respect
the applicability of the preceding sentence with respect to any act or failure
to act which occurred prior to such amendment, repeal or adoption. In the
absence of any Maryland statute limiting the liability of trustees of a Maryland
real estate investment trust for money damages in a suit by or on behalf of the
Trust or by any Shareholder, no Trustee of the Trust shall be liable to the
Trust or to any Shareholder for money damages except to the extent that (i) the
Trustee actually received an improper benefit or profit in money, property or
services, for the amount of the benefit or profit in money, property or services
actually received; or (ii) a judgment or other final adjudication adverse to the
Trustee is entered in a proceeding based on a finding in the proceeding that the
Trustee's action or failure to act was the result of active and deliberate
dishonesty and was material to the cause of action adjudicated in the
proceeding."
Article 4, Section 11 of the Declaration of Trust provides as follows with
respect to the indemnification of Trustees:
"The Trust shall indemnify each Trustee, to the fullest extent permitted by
Maryland law, as amended from time to time, in connection with any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or she was a
Trustee of the Trust or is or was serving at the request of the Trust as a
director, trustee, officer, partner, manager, member, employee or agent of
another foreign or domestic corporation, partnership, joint venture, trust,
limited liability company, other enterprise or employee benefit plan, from all
claims and liabilities to which such person may become subject by reason of
service in such capacity and shall pay or reimburse reasonable expenses, as such
expenses are incurred, of each Trustee in connection with any such proceedings."
Article 8, Section 1 of the Declaration of Trust provides as follows with
respect to the limitation of liability of officers and employees:
II-1
<PAGE>
"To the maximum extent that Maryland law in effect from time to time
permits limitation of the liability of officers of a real estate investment
trust, no officer of the Trust shall be liable to the Trust or to any
Shareholder for money damages. Neither the amendment nor repeal of this Section
1, nor the adoption or amendment of any other provision of this Declaration of
Trust inconsistent with this Section 1, shall apply to or affect in any respect
the applicability of the preceding sentence with respect to any act or failure
to act which occurred prior to such amendment, repeal or adoption. In the
absence of any Maryland statute limiting the liability of officers of a Maryland
real estate investment trust for money damages in a suit by or on behalf of the
Trust or by any Shareholder, no officer of the Trust shall be liable to the
Trust or to any Shareholder for money damages except to the extent that (i) the
officer actually received an improper benefit or profit in money, property or
services, for the amount of the benefit or profit in money, property or services
actually received; or (ii) a judgment or other final adjudication adverse to the
officer is entered in a proceeding based on a finding in the proceeding that the
officer's action or failure to act was the result of active and deliberate
dishonesty and was material to the cause of action adjudicated in the
proceeding."
Article 8, Section 2 of the Declaration of Trust provides as follows with
respect to the indemnification of Trustees:
"The Trust shall have the power to indemnify each officer, employee and
agent, to the fullest extent permitted by Maryland law, as amended from time to
time, in connection with any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he or she was an officer, employee or agent of the Trust or is
or was serving at the request of the Trust as a director, trustee, officer,
partner, manager, member, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust, limited liability company, other
enterprise or employee benefit plan, from all claims and liabilities to which
such person may become subject by reason of service in such capacity and shall
pay or reimburse reasonable expenses, as such expenses are incurred, of each
officer, employee or agent in connection with any such proceedings."
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 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.
See the Exhibit Index which is hereby 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 the 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
II-2
<PAGE>
reflected in the form of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 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 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.
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 Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that 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 January 31, 2000.
ProLogis Trust
By: /s/ K. Dane Brooksher
-----------------------------------------
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.
SIGNATURE TITLE DATE
/s/ K. Dane Brooksher Chairman, Chief Executive January 31, 2000
- --------------------------- Officer and Trustee
K. Dane Brooksher
/s/ Irving F. Lyons III President, Chief Investment January 31, 2000
- --------------------------- Officer and Trustee
Irving F. Lyons III
/s/ Walter C. Rakowich Chief Financial Officer January 31, 2000
- --------------------------- and Managing Director
Walter C. Rakowich
/s/ Shari J. Jones Vice President January 31, 2000
- --------------------------- (Principal Accounting Officer)
Shari J. Jones
II-4
<PAGE>
/s/ Thomas G. Wattles Trustee January 31, 2000
- ----------------------------
Thomas G. Wattles
/s/ Stephen L. Feinberg Trustee January 31, 2000
- ----------------------------
Stephen L. Feinberg
Trustee January 31, 2000
- ----------------------------
Donald P. Jacobs
/s/ William G. Myers Trustee January 31, 2000
- ----------------------------
William G. Myers
Trustee January 31, 2000
- ----------------------------
John E. Robson
Trustee January 31, 2000
- ----------------------------
J. Andre Teixeira
/s/ John S. Moody Trustee January 31, 2000
- ----------------------------
John S. Moody
/s/ Kenneth N. Stensby Trustee January 31, 2000
- ----------------------------
Kenneth N. Stensby
II-5
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
4.1 Articles of Amendment and Restatement of ProLogis Trust
(Incorporated by reference to Exhibit 3.1 to ProLogis' Form 10-Q
for the period ending June 30, 1999)
4.1 Amended and Restated Bylaws of ProLogis Trust (Incorporated by
reference to Exhibit 3.2 to ProLogis' Form 10-Q for the period
ending June 30, 1999)
4.3 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)
4.4 First Amendment to Rights Amendment, dated as of February 15, 1995,
between ProLogis, 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 ProLogis' Form 10-Q for the quarter
ended September 30, 1995)
4.5 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)
4.6 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)
4.7 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)
4.8 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)
4.9 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)
4.10 Form of share certificate for Series D Cumulative Redeemable
Preferred Shares of Beneficial Interest of ProLogis (Incorporated
by reference to exhibit 4.21 to ProLogis' registration statement
No. 69001)
4.11 Form of share certificate for Series E Cumulative Redeemable
Preferred Shares of Beneficial Interest of ProLogis (Incorporated
by reference to exhibit 4.22 to ProLogis' registration statement
No. 69001)
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
15 Letter regarding unaudited interim financial information
23.1 Consent of Arthur Andersen LLP, Chicago, Illinois
23.2 Consent of KPMG LLP, Stockholm, Sweden
23.3 Consent of Mayer, Brown & Platt (included in Exhibits 5.1 and 8.1)
24.1 Power of Attorney (included on signature to this registration
statement)
II-6
<PAGE>
EXHIBIT 5.1
[LETTERHEAD APPEARS HERE]
January 31, 2000
The Board of Trustees
ProLogis Trust
14100 East 35th Place
Aurora, Colorado 80011
Re: ProLogis Trust Registration Statement on Form S-3
-------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to ProLogis Trust, a Maryland real estate
investment trust ("ProLogis"), in connection with the registration of up to
200,535 common shares of beneficial interest, par value $0.01 per share, of
ProLogis (the "Common Shares"), 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").
As special counsel to ProLogis, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of ProLogis' declaration
of trust and bylaws, the resolutions of ProLogis' Board of Trustees and such of
ProLogis' records, certificates and other documents and such questions of law as
we considered necessary or appropriate for the purpose of 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
ProLogis. 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 all documents submitted to us
as copies.
Based upon and subject to the foregoing and to the assumptions, conditions
and limitations set forth herein, we are of the opinion that the Common Shares
have been duly authorized and, when the Common Shares are issued and sold in the
manner described in the Registration Statement, will be legally issued, fully
paid and, except as described in the Registration Statement, nonassessable.
<PAGE>
ProLogis Trust
January 31, 200
Page 2
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.
The opinions contained herein are limited to Federal laws of the United
States, the laws of the State of Illinois and the laws of the State of Maryland
governing real estate investment trusts. We are not purporting to opine on any
matter to the extent that it involves the laws of any other jurisdiction.
These opinions are furnished to you solely for your benefit in connection
with the transactions described herein and are not to be used for any other
purpose without our prior written consent.
Very truly yours,
/s/ MAYER, BROWN & PLATT
<PAGE>
Exhibit 8.1
[LETTERHEAD OF MAYER, BROWN & PLATT APPEARS HERE}
January 31, 2000
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"
--------------------------------------------------------------------
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 heading "FEDERAL INCOME TAX CONSIDERATIONS."
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. We
<PAGE>
MAYER, BROWN & PLATT
ProLogis Trust
January 31, 200
Page 2
have also relied upon the opinion of Vinson & Elkins L.L.P., dated March 30,
1999, with respect to the qualification as a real estate investment trust of
Meridian Industrial Trust, Inc., a Maryland corporation, for its taxable years
ending December 31, 1995, 1996, 1997, 1998 and its taxable year ending March 30,
1999.
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.
<PAGE>
MAYER, BROWN & PLATT
ProLogis Trust
January 31, 2000
Page 3
3. The information in the Registration Statement under the headings
"FEDERAL INCOME TAX CONSIDERATIONS," to the extent that it constitutes matters
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" in the Registration Statement.
Very truly yours,
/s/ MAYER, BROWN & PLATT
<PAGE>
[LETTERHEAD OF ARTHUR ANDERSEN]
EXHIBIT 15
January 25, 2000
Board of Trustees and Shareholders of
ProLogis Trust:
We are aware that ProLogis Trust has incorporated by reference in its
Registration Statement Nos. 33-91366, 33-92490, 333-4961, 333-31421, 333-39797,
333-38515, 333-52867, 333-26597, 333-74917, 333-75893 and 333-79813 its Form 10-
Q for the quarters ended March 31, 1999, June 30, 1999 and September 30, 1999,
which includes our reports dated May 13, 1999, August 11, 1999 and November 10,
1999, covering the unaudited interim financial information contained therein.
Pursuant to Regulation C of the Securities Act of 1933 (the "Act"), those
reports are not considered a part of the registration statements prepared or
certified by our firm or a report prepared or certified by our firm within the
meaning of Sections 7 and 11 of the Act.
Very truly yours,
/s/ ARTHUR ANDERSEN LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our reports dated March 5, 1999,
included in ProLogis Trust's Form 10-K for the year ended December 31, 1998, and
to our report dated March 26, 1999, included in ProLogis Trust's Form 8-K dated
April 13, 1999, and to all references to our Firm included in this registration
statement.
/s/ Arthur Andersen LLP
Chicago, Illinois
January 25, 2000
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants of Frigoscandi Holding AB, we hereby
consent to the incorporation of our report dated January 28, 1999, included in
ProLogis Trust's Form 10-K for the year ended December 31, 1998, into ProLogis
Trust's registration statement on Form S-3. 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
Stockholm, Sweden January 28, 2000
