<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 26, 2000
REGISTRATION NO. 333- 36578
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PROLOGIS TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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MARYLAND 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)
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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
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Approximate Date of Commencement of Proposed Sale to the Public: From time to
time after the Registration Statement becomes effective.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
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. [ ]
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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. [ ]
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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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PROSPECTUS
[LOGO OF PROLOGIS TRUST]
PROLOGIS TRUST
14100 East 35th Place
Aurora, Colorado 80011
(303) 375-9292
36,228 Common Shares
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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 operating partnership units in
MDN/JSC-II Limited Partnership. ProLogis, through a wholly-owned subsidiary, is
the general partner of MDN/JSC-II.
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 May 25, 2000, the last reported sale price of our common shares
on the New York Stock Exchange was $20.625 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 May 30, 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
<TABLE>
<CAPTION>
Page
----
<S> <C>
PROLOGIS TRUST ............................................................1
USE OF PROCEEDS ...........................................................2
SELLING SHAREHOLDERS ......................................................3
PLAN OF DISTRIBUTION ......................................................3
FEDERAL INCOME TAX CONSIDERATIONS .........................................4
EXPERTS ..................................................................14
LEGAL MATTERS ............................................................14
WHERE YOU CAN FIND MORE INFORMATION ......................................14
INCORPORATION BY REFERENCE ...............................................14
</TABLE>
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PROLOGIS TRUST
ProLogis Trust is a real estate investment trust that operates a global
network of industrial distribution facilities. We own, directly, through
consolidated entities or through investments in other real estate entities
accounted for under the equity method, 162.7 million square feet of industrial
distribution facilities operating or under development and 372.5 million cubic
feet of temperature-controlled distribution facilities operating or under
development, including 35.5 million cubic feet of dry distribution space located
in temperature-controlled facilities, which are located throughout North America
and Europe. This network of distribution facilities makes us the largest
publicly held U.S.-based, global owner and lessor of industrial distribution and
temperature-controlled distribution facilities. The ProLogis Operating
System(TM), comprised of the Market Services Group, the Global Services Group,
the Global Development Group and the Integrated Solutions Group, utilizes our
international network of distribution facilities to meet our customers'
distribution space needs globally. We believe that we have distinguished
ourselves from our competition by developing an organizational structure and
service delivery system built around our customers. We believe that our service
approach, which combines international scope and expertise and a strong local
presence in each of our target markets, makes us attractive to our targeted
customer base which includes the largest global users of distribution
facilities. ProLogis is 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.
Our business strategy is designed to: achieve long-term sustainable
growth in cash flow; reduce the need for us to issue additional public debt or
public equity capital; and increase the overall return on equity for our
shareholders. We have organized our business into three operating segments. The
segments consist of property operations, corporate distribution facilities
services business and temperature-controlled distribution operations.
BUSINESS STRATEGY
ProLogis was originally formed in 1991 with the objective of building a
distribution and light manufacturing asset base at costs significantly below
replacement cost and a land inventory for the future development of distribution
facilities. Additionally, we intended to create a national operating company
that would differentiate ourselves from our competition through our ability to
meet a corporate customer's distribution facility requirements on a national,
regional and local basis. In 1997, we expanded our property operations into
Mexico and Europe to meet the needs of our targeted national and international
customers as we expanded and reconfigured our distribution facility requirements
globally. To enhance our North American property operations and service
platform, we completed a merger with Meridian Industrial Trust, Inc., a publicly
held real estate investment trust, in March 1999. The merger with Meridian added
32.2 million square feet of operating facilities, 228 acres of land for future
development and 15.2 million cubic feet of temperature-controlled distribution
facilities to our holdings.
Having established our core property operations business, in 1997 and
1998 we expanded our service platform by acquiring an international
temperature-controlled distribution network. Also, to enhance our corporate
distribution facilities services business, we acquired an industrial
distribution development company with extensive holdings in the United Kingdom
in August 1998.
To further our objective of increasing cash flows without the need to
raise additional capital through direct public debt and public equity offerings,
we expanded our operations in Europe through the formation of the ProLogis
European Properties Fund in September 1999. Our ownership interest in the
ProLogis European Properties Fund enables us to take advantage of the growth
opportunities in the European industrial distribution industry by accessing over
1.06 billion euros of third party equity capital that has been committed to the
ProLogis European Properties Fund by a group of institutional investors.
Formation of the ProLogis European Properties Fund enhances the ProLogis
Operating System(TM) because the capital commitments secured through this entity
will allow us to expand our operating platform in Europe. Additionally, in the
third quarter of 1999, we sold over $550 million of real estate assets to a
limited liability company in which we have a 50% equity interest. The formation
of this company and subsequent sale of assets allowed us to privately raise
additional capital to be used for our investment activities. Also in 1999, we
formed our Integrated Solutions Group with the objective of increasing our
service income thereby growing cash flows in a less capital intensive manner.
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PROLOGIS OPERATING SYSTEM(TM)
The cornerstone of our business strategy is the ProLogis Operating
System(TM). The ProLogis Operating System(TM) is comprised of the Market
Services Group, the Global Services Group, the Global Development Group and the
newly formed Integrated Solutions Group. The ProLogis Operating System(TM) is a
customer service delivery system that has been designed to provide substantial
benefits to our existing and prospective customers, including:
o Relocation Capability. Because user requirements can change
frequently, our presence throughout 50 North American and European
markets permits us to accommodate the reconfiguration needs of our
customers by relocating an existing customer within a market or
between markets both nationally and globally.
o Expansion Capability. Through our development program, land
inventory and existing facilities, we can work effectively with
our existing and prospective customers whose growing business
needs require them to expand their distribution facilities. This
expansion may result in relocating the customer to larger spaces
within a market or in developing a facility specifically for the
customer.
o Development Capability. Our team of development professionals
builds generic facilities that will appeal to a wide variety of
customers. In addition, we also will build facilities to
specifically meet our customers' needs. We incorporate the latest
technology with respect to building design and building systems
and have developed consistent standards and procedures that we
strictly adhere to in the development of all of our facilities.
o Centrally Coordinated Program. We provide a single point of
contact for multi-location global users of distribution facilities
through the Global Services Group, whose members are responsible
for building long-term customer relationships and ensuring that
all of our services and products are consistent in quality. Our
experience to date suggests that many major corporate customers
are limiting the number of services providers that they work with
to meet their distribution facility requirements.
The customer focus of the ProLogis Operating System(TM) provides for a
high-quality service level and a single point of contact for distribution
solutions on a global basis and positions us to build customer relationships
that will generate additional business opportunities.
USE OF PROCEEDS
All net proceeds from the sale of our common shares will go to the
shareholders which are offering their shares under this prospectus. Accordingly,
we will not receive any proceeds from the sale of ProLogis common shares under
this prospectus.
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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 May 26, 2000,
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.
<TABLE>
<CAPTION>
AMOUNT AND
SHARES PERCENTAGE OF SHARES
BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED AFTER
SELLING SHAREHOLDER PRIOR TO OFFERING BEING OFFERED(1) OFFERING(1)
- ------------------- ----------------- ---------------- -----------
<S> <C> <C> <C>
J. Michael Bray....................... 21,276 21,276 0
4890 Alpha Road, Suite 100
Dallas, Texas, 75244
SSN ###-##-####
Jesse W. Pettit....................... 14,952 14,952 0
4890 Alpha Road, Suite 100
Dallas, Texas, 75244
SSN ###-##-####
</TABLE>
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(1) Assumes the sale of all ProLogis common shares offered by this
prospectus, although none of the selling shareholders are under any
obligation known to ProLogis to sell any ProLogis common shares.
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 underwriters,
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 to the extent required by law.
In connection with the sale of the ProLogis common shares 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
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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.
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.
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.
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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.
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,
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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 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.
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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;
(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
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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 due 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.
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
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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, 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
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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.
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
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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.
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.
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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 Ticket to Work and Work Incentives Improvement 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 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
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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,
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state, local, foreign, and other tax consequences of such purchase, ownership,
sale and election and of potential changes in applicable tax laws.
EXPERTS
The consolidated balance sheets as of December 31, 1999 and 1998, and
the consolidated statements of operations, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1999 and schedule
of ProLogis incorporated by reference in this prospectus and elsewhere in the
registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as set forth in their reports. In those reports, that firm
states that with respect to certain subsidiaries, its opinion is based on the
reports of other independent public accountants, namely KPMG LLP. The financial
statements and supporting schedules referred to above have been incorporated by
reference herein in reliance upon the authority of those firms as experts in
giving said reports.
With respect to the unaudited interim financial information for the
quarters ended March 31, 1999 and 2000, 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 Act.
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 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.
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(a) ProLogis' Annual Report on Form 10-K for the fiscal year ended
December 31, 1999;
(b) ProLogis' Quarterly Report on Form 10-Q for the quarter ended
March 31, 2000;
(c) The description of the common shares contained in ProLogis'
registration statement on Form 8-A, as amended; and
(d) 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
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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:
<TABLE>
<CAPTION>
Company
-------
<S> <C>
SEC registration fee ................................. $ 195.49
New York Stock Exchange fees ......................... $ 135.00
Transfer agent's fees ................................ $ 2,500.00
Legal fees and expenses .............................. $ 7,500.00
Accounting fees and expenses ......................... $ 2,500.00
Miscellaneous expenses ............................... $ 1,169.51
Total ................................................ $14,000.00
</TABLE>
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
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<PAGE> 20
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:
"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:
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<PAGE> 21
(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 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.
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<PAGE> 22
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 May 26, 2000.
ProLogis Trust
By: /s/ Edward S. Nekritz
-------------------------------------
Edward S. Nekritz
Senior Vice President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1993, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
* Chairman, Chief Executive
- ------------------------------------ Officer and Trustee
K. Dane Brooksher
* President, Chief Investment
- ------------------------------------ Officer and Trustee
Irving F. Lyons III
* Chief Financial Officer
- ------------------------------------ and Managing Director
Walter C. Rakowich
* Vice President
- ------------------------------------ (Principal Accounting Officer)
Shari J. Jones
</TABLE>
<PAGE> 23
<TABLE>
<S> <C> <C>
* Trustee
- ------------------------------------
Thomas G. Wattles
* Trustee
- ------------------------------------
Stephen L. Feinberg
* Trustee
- ------------------------------------
Donald P. Jacobs
* Trustee
- ------------------------------------
William G. Myers
* Trustee
- ------------------------------------
John E. Robson
* Trustee
- ------------------------------------
J. Andre Teixeira
* Trustee
- ------------------------------------
John S. Moody
* Trustee
- ------------------------------------
Kenneth N. Stensby
*By: /s/ Edward S. Nekritz May 26, 2000
--------------------------------
Attorney-in-Fact
</TABLE>
<PAGE> 24
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
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
15.1 Letter regarding unaudited financial information
23.1 Consent of Arthur Andersen LLP, Chicago, Illinois
23.2 Consent of KPMG LLP, Stockholm, Sweden
23.3 Consent of KPMG LLP, New York, New York
23.4 Consent of Mayer, Brown & Platt (included in Exhibits 5.1 and
8.1)
24.1+ Power of Attorney
</TABLE>
- -------------
+ Previously filed.
<PAGE> 1
Exhibit 15
May 23, 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, 333-38515,
333-52867, 333-26597, 333-74917, 333-75893, 333-79813, 333-69001, 333-86081,
333-95739 and 333-36578 its Form 10-Q for the quarter ended March 31, 2000,
which includes our report dated May 9, 2000, 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> 1
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 report dated March 21, 2000,
included in ProLogis Trust's Form 10-K for the year ended December 31, 1999 and
to all references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
Chicago, Illinois
May 23, 2000
<PAGE> 1
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 24, 2000, included in
ProLogis Trust's Form 10-K for the year ended December 31, 1999, 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, 1999,
or performed any audit procedures subsequent to the date of our report.
/s/ KPMG LLP
Stockholm, May 23, 2000
<PAGE> 1
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to incorporation by reference in Amendment No. 1 to the registration
statement # 333-36578 on Form S-3 of ProLogis Trust of our report dated January
24, 2000, except as to the fourth paragraph of note 4 which is as of March 21,
2000, relating to the consolidated balance sheets of CS Integrated LLC and
subsidiaries as of December 31, 1999 and 1998 and the related consolidated
statements of income, changes in members' equity, and cash flows for the years
then ended included in ProLogis Trust's Form 10-K for the year ended December
31, 1999 and to the reference of our Firm under the heading "Experts" in the
prospectus.
/s/ KPMG LLC
New York, New York
May 23, 2000
