SAN FRANCISCO, July 19, 2016 /PRNewswire/ -- Prologis, Inc. (NYSE: PLD), the global leader in logistics real estate, today reported results for the second quarter of 2016. Net earnings per share was $0.52 compared with $0.27 for the same period in 2015. Core funds from operations per diluted share was $0.60 compared with $0.52 for the same period in 2015.

HIGHLIGHTS (Prologis Share)


    --  Net effective same store NOI increased 6.1 percent
    --  Net effective rent change on rollover was +17.8 percent
    --  Stabilized $621 million in development projects, with an estimated
        margin of 25.7 percent
    --  Liquidity of more than $3.7 billion, the highest level in the company's
        history

"The incredible effort the team has made to position our portfolio and to optimize our business is paying off," said Hamid Moghadam, chairman and CEO, Prologis. "We delivered another great quarter and we remain focused on refining our portfolio consistent with our investment strategy, further strengthening our balance sheet and increasing operational efficiencies. These efforts keep us on the path for above-average earnings growth across the business cycle."

Moghadam added: "Demand remains ahead of supply in both the U.S. and Europe, leading to all-time low vacancy rates. In spite of Brexit, our key business drivers remain intact, and we do not anticipate a material operational impact. Consumers continue to migrate toward e-commerce, and companies still need to adapt their supply chain strategies, driving demand for high-quality, well-located logistics facilities."

ROBUST RESULTS REFLECT CONTINUED STRENGTH IN FUNDAMENTALS FOR HIGH-QUALITY ASSETS



    Owned &
     Managed         2Q16             2Q15                      Notes
    --------         ----             ----                      -----

    Period End            96.1%            95.4%   Europe increased 130 bps year-
     Occupancy                                     over-year
    ----------             ----             ----  -------------------------------

    Leases     49MSF            45MSF              Record leasing volume, including
     Signed                                        9 msf of development leasing
    ------                -----            -----  ---------------------------------

    Customer
     Retention            82.6%            79.0%
    ----------             ----              ----




    Prologis Share            2Q16       2Q15               Notes
    --------------            ----       ----               -----

    Net Effective Rent Change      17.8%      16.6%   Led by the U.S. at
                                                                   23.5%
    -------------------------       ----       ----  -------------------

    Cash Rent Change                7.9%       5.2%
    ----------------                 ---         ---

    Net Effective Same Store        6.1%       5.9%   Led by the U.S. at
     NOI                                                            7.5%
    ------------------------         ---        ---  -------------------

    Cash Same Store NOI             5.3%       5.2%
    -------------------              ---         ---

SELF-FUNDING CONTINUES AS DISPOSITIONS AND DEVELOPMENT STARTS ACCELERATE



    Prologis Share                         2Q16                 Notes
    --------------                         ----                 -----

    Building Acquisitions                        $58M
    ---------------------                        ----

         Weighted avg stabilized cap rate        6.4%
         --------------------------------         ---

    Development Stabilizations                  $621M
    --------------------------                  -----

         Estimated weighted avg yield            6.8%
         ----------------------------             ---

         Estimated weighted avg margin          25.7%
         -----------------------------           ----

         Estimated value creation               $159M
         ------------------------               -----

    Development Starts                          $465M
    ------------------                          -----

         Estimated weighted avg margin          17.6%
         -----------------------------           ----

         Estimated value creation                $82M
         ------------------------                ----

          % Build-to-suit                       49.8%
          ---------------                        ----

    Total Dispositions and
     Contributions                              $558M
    ----------------------                      -----

          Weighted avg stabilized cap rate       6.5% Excludes land and other
                                                      real estate
          --------------------------------        --- -----------------------

    Total Fund Ownership Rebalances             $411M
    -------------------------------             -----

STRONG LIQUIDITY POSITION CONTINUES TO BUILD
Prologis increased its total liquidity to $3.7 billion. During the second quarter, notable capital markets activities included the recast and upsize of the company's Global Line of Credit to $3.0 billion.

"Our balance sheet and liquidity have never been stronger," said Thomas S. Olinger, chief financial officer, Prologis. "We expect our financial position to continue to improve with additional capital proceeds in the back half of the year. We plan to generate proceeds above our prior forecast from incremental dispositions and contributions as well as from $200 million of additional ownership rebalancing across two of our co-investment ventures."

GUIDANCE UPDATED FOR 2016
Net earnings guidance increased $0.89 at the midpoint, primarily a result of an increase in expected gains from the disposition of real estate.

"We anticipate meaningful outperformance from operations," Olinger said. "This performance will more than offset the incremental dilution from the increase in dispositions, contributions and fund ownership rebalances. Additionally, we modestly lowered our net promote income, principally driven by a negative debt mark-to-market adjustment and the weakening of the pound against the euro. With respect to guidance, these changes offset one another, and we are holding the midpoint of our Core FFO guidance constant."



    Per diluted share Previous          Revised
    ----------------- --------          -------

    GAAP Net Earnings    $0.87 to $0.95   $1.70 to $1.90
    -----------------    --------------   --------------

    Core FFO             $2.50 to $2.60   $2.52 to $2.58
    --------             --------------   --------------


    Operations                      Previous            Revised
    ----------                      --------            -------

    Same Store NOI - Prologis share        4.0% to 4.5% 4.75% to 5.25%
    -------------------------------         -----------   -------------



       Other Assumptions (in millions) Previous          Revised
        ------------------------------ --------          -------

    Strategic capital revenue               $180 to $190    $190 to $200
    -------------------------               ------------    ------------

    Net promote income                       $90 to $100      $75 to $85
    ------------------                       -----------      ----------

    Realized development gains              $150 to $200    $200 to $250
    --------------------------              ------------    ------------


    Liquidity                                     $3,700           $4,000
    ---------                                     ------           ------



    Capital Deployment (in millions) Previous           Revised
    -------------------------------  --------           -------

    Development stabilizations (85%
     Prologis share)                  $2,000 to $2,200 $2,200 to $2,400
    -------------------------------   ---------------- ----------------

    Development starts (85% Prologis
     share)                           $1,800 to $2,300 $2,000 to $2,300
    --------------------------------  ---------------- ----------------

    Building acquisitions (50%
     Prologis share)                      $400 to $700     $300 to $500
    --------------------------            ------------     ------------

    Building and land dispositions
     (75% Prologis share)             $1,700 to $2,200 $2,000 to $2,300
    ------------------------------    ---------------- ----------------

    Building contributions (75%
     Prologis share, net of retained
     ownership)                         $900 to $1,200 $1,100 to $1,400
    --------------------------------    -------------- ----------------

The earnings guidance described above includes potential future gains (losses) recognized from real estate transactions but excludes any future foreign currency or derivative gains or losses as these items are difficult to predict. In reconciling from net earnings to Core FFO, Prologis makes certain adjustments, including but not limited to real estate depreciation and amortization expense, gains (losses) recognized from real estate transactions and early extinguishment of debt, acquisition costs, impairment charges, deferred taxes and unrealized gains or losses on foreign currency or derivative activity. The difference between the company's Core FFO and net earnings guidance for 2016 relates predominantly to these items. Refer to our second quarter Supplemental Information that is available on our Investor Relations website at www.ir.prologis.com and on the SEC's website at www.sec.gov for a definition of Core FFO and other non-GAAP measures used by Prologis, along with reconciliations of these items to the closest GAAP measure for our results and guidance.

WEBCAST & CONFERENCE CALL INFORMATION
Prologis will host a live webcast and conference call to discuss quarterly results, current market conditions and future outlook. Here are the event details:


    --  Tuesday, July 19, 2016, at 12 p.m. U.S. Eastern Time.
    --  Live webcast at http://ir.prologis.com by clicking Investors>Investor
        Events and Presentations.
    --  Dial in: +1 877-256-7020 or +1 973-409-9692 and enter Passcode 37196022.

A telephonic replay will be available July 19-26 at +1 (855) 859-2056 (from the United States and Canada) or +1 (404) 537-3406 (from all other countries) using conference code 37196022. The webcast replay will be posted when available in the Investor Relations "Events & Presentations" section.

ABOUT PROLOGIS
Prologis, Inc. is the global leader in logistics real estate with a focus on high-barrier, high-growth markets. As of June 30, 2016, the company owned or had investments in, on a wholly owned basis or through co-investment ventures, properties and development projects expected to total approximately 666 million square feet (62 million square meters) in 20 countries. Prologis leases modern distribution facilities to a diverse base of approximately 5,200 customers across two major categories: business-to-business and retail/online fulfillment.

FORWARD-LOOKING STATEMENTS
The statements in this document that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which we operate as well as management's beliefs and assumptions. Such statements involve uncertainties that could significantly impact our financial results. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and variations of such words and similar expressions are intended to identify such forward-looking statements, which generally are not historical in nature. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future -- including statements relating to rent and occupancy growth, development activity and changes in sales or contribution volume of properties, disposition activity, general conditions in the geographic areas where we operate, our debt, capital structure and financial position, our ability to form new co-investment ventures and the availability of capital in existing or new co-investment ventures -- are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained and therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Some of the factors that may affect outcomes and results include, but are not limited to: (i) national, international, regional and local economic climates, (ii) changes in financial markets, interest rates and foreign currency exchange rates, (iii) increased or unanticipated competition for our properties, (iv) risks associated with acquisitions, dispositions and development of properties, (v) maintenance of real estate investment trust status, tax structuring and income tax rates (vi) availability of financing and capital, the levels of debt that we maintain and our credit ratings, (vii) risks related to our investments in our co-investment ventures, including our ability to establish new co-investment ventures and funds, (viii) risks of doing business internationally, including currency risks, (ix) environmental uncertainties, including risks of natural disasters, and (x) those additional factors discussed in reports filed with the Securities and Exchange Commission by us under the heading "Risk Factors." We undertake no duty to update any forward-looking statements appearing in this document.


    dollars in millions, except per share/
     unit data                                                              Three Months ended               Six Months ended
                                                                                 June 30,                        June 30,
    ---                                                                          --------                        --------

                                                                                              2016     2015                        2016     2015

                       Revenues                                        $602                       $510                      $1,208     $973

                        Revenues -Prologis
                        share                                           674                        610                       1,351    1,189

                        Net earnings
                        attributable to
                        common
                        stockholders                                    275                        140                         483      485

                       Core FFO                                         324                        274                         654      528

                       AFFO                                             260                        292                         606      503

                       Adjusted EBITDA                                  459                        490                       1,009      858

                        Estimated value
                        creation from
                        development starts
                        -Prologis share                                  82                        156                         121      202

                       Common stock
                        dividends and
                        common limited
                        partnership unit
                        distributions                                   231                        189                         461      378


                        Per common share -
                        diluted:

                        Net earnings
                        attributable to
                        common
                        stockholders                                  $0.52                      $0.27                       $0.92    $0.92

                       Core FFO                                        0.60                       0.52                        1.20     1.01

                       AFFO                                            0.48                       0.55                        1.12     0.96

                        Business line
                        reporting:

                                           Real estate operations                                0.54     0.48                        1.10     0.93

                                           Strategic capital                                     0.06     0.04                        0.10     0.08
                                                                                                 ----     ----                        ----     ----

                                           Core FFO                                              0.60     0.52                        1.20     1.01

                                            Realized development gains, net
                                            of taxes                                             0.02     0.14                        0.18     0.15

                        Dividends and
                        distributions per
                        common share/unit                              0.42                       0.36                        0.84     0.72


    in thousands                                        June 30,                                         March 31,               December 31,
                                                                 2016                                           2016                       2015
    ---                                                          ----                                           ----                       ----

    Assets:

                             Investments in real
                             estate properties:

                            Operating properties                                                      $23,913,335                $23,788,600                $23,735,745

                             Development
                             portfolio                                                                  1,770,771                  1,923,362                  1,872,903

                            Land                                                                        1,322,214                  1,341,600                  1,359,794

                             Other real estate
                             investments                                                                  550,090                    575,118                    552,926
                                                                                                          -------                    -------                    -------

                                                                                                                      27,556,410                 27,628,680                27,521,368

                             Less accumulated
                             depreciation                                                               3,521,198                  3,424,143                  3,274,284
                                                                                                        ---------                  ---------                  ---------

                                                                       Net investments in real estate
                                                                       properties                                     24,035,212                 24,204,537                24,247,084

                             Investments in and
                             advances to
                             unconsolidated entities                                                    4,483,804                  4,866,664                  4,755,620

                            Assets held for sale                                                          393,434                    431,332                    378,423

                             Notes receivable backed
                             by real estate                                                                33,800                     37,550                    235,050


                                                                      Net investments in real estate                  28,946,250                 29,540,083                29,616,177


                             Cash and cash
                             equivalents                                                                  332,221                    369,737                    264,080

                            Other assets                                                                1,467,463                  1,465,928                  1,514,510

                                                                      Total assets                                   $30,745,934                $31,375,748               $31,394,767


    Liabilities and Equity:

                            Liabilities:

                            Debt                                                                      $11,139,415                $11,687,171                $11,626,831

                             Accounts payable,
                             accrued expenses
                             and other
                             liabilities                                                                1,323,485                  1,347,953                  1,347,100

                                                                      Total liabilities                               12,462,900                 13,035,124                12,973,931
                                                                                                                      ----------                 ----------                ----------


                            Equity:

                             Stockholders'
                             equity:

                                                   Preferred stock                                           78,235                     78,235                     78,235

                                                   Common stock                                               5,265                      5,251                      5,245

                                                    Additional paid-
                                                    in capital                                           19,361,787                 19,302,387                 19,302,367

                                                    Accumulated other
                                                    comprehensive
                                                    loss                                                  (848,079)                 (813,900)                 (791,429)

                                                    Distributions in
                                                    excess of net
                                                    earnings                                            (3,885,017)                (3,939,312)               (3,926,483)
                                                                                                         ----------                 ----------                 ----------

                                                                      Total stockholders' equity                      14,712,191                 14,632,661                14,667,935

                             Noncontrolling
                             interests                                                                  3,154,205                  3,264,088                  3,320,227

                             Noncontrolling
                             interests -limited
                             partnership
                             unitholders                                                                  416,638                    443,875                    432,674
                                                                                                          -------                    -------                    -------

                                                                      Total equity                                    18,283,034                 18,340,624                18,420,836
                                                                                                                      ----------                 ----------                ----------


                                                                      Total liabilities and equity                   $30,745,934                $31,375,748               $31,394,767


    in thousands, except per share
     amounts                                               Three Months Ended                        Six Months Ended

                                                                   June 30,                                 June 30,
                                                                   --------                                 --------

                                                                 2016           2015                       2016           2015

    Revenues:

                               Rental           $546,131      $461,444                 $1,100,247       $880,246

                                Strategic
                                capital           51,322        47,046                    100,988         89,071

                                Development
                                management and
                                other              4,702         1,914                      7,220          3,934

                                Total
                                 revenues        602,155       510,404                  1,208,455        973,251
                                                 -------       -------                  ---------        -------


    Expenses:

                               Rental            140,725       125,820                    287,306        252,915

                                Strategic
                                capital           27,866        24,947                     53,159         50,129

                                General and
                                administrative    56,934        51,974                    107,477        103,280

                                Depreciation
                                and
                                amortization     230,382       190,188                    480,382        359,996

                               Other               3,900        30,127                      8,585         35,702

                                Total
                                expenses         459,807       423,056                    936,909        802,022
                                                 -------       -------                    -------        -------


    Operating income                                       142,348         87,348                    271,546        171,229


    Other income (expense):

                                Earnings from
                                unconsolidated
                                entities, net     41,454        41,784                     99,765         72,826

                                Interest
                                expense         (76,455)     (68,902)                 (157,267)     (137,663)

                               Gains on
                                dispositions
                                of development
                                properties and
                                land, net         12,299        74,236                    106,284         75,067

                               Gains on
                                dispositions
                                of real
                                estate, net
                                (excluding
                                development
                                properties and
                                land)            188,051        34,546                    238,383        311,430

                               Foreign
                                currency and
                                derivative
                                gains (losses)
                                and interest
                                and other
                                income
                                (expense), net   (8,808)     (23,665)                  (20,428)        21,950

                                Gain (losses)
                                on early
                                extinguishment
                                of debt, net       2,044         (236)                       992       (16,525)
                               -----------         -----                                     ---

                                Total other
                                income           158,585        57,763                    267,729        327,085
                                                 -------        ------                    -------        -------


    Earnings before income taxes                           300,933        145,111                    539,275        498,314

                                Current income
                                tax expense      (9,125)      (4,706)                  (25,281)       (5,545)

                                Deferred income
                                tax benefit
                                (expense)          3,983         (145)                     4,602        (1,197)
                               -----------         -----                                   -----

    Consolidated net earnings                              295,791        140,260                    518,596        491,572

    Net loss (earnings) attributable
     to noncontrolling interests                          (18,712)         1,658                   (31,787)       (2,778)
                                                           -------          -----                    -------         ------

    Net earnings attributable to
     controlling interests                                 277,079        141,918                    486,809        488,794

    Preferred stock dividends                              (1,696)       (1,678)                   (3,385)       (3,348)

    Net earnings attributable to
     common stockholders                                  $275,383       $140,240                   $483,424       $485,446

    Weighted average common shares
     outstanding -Diluted                                  545,388        530,640                    544,293        529,827

    Net earnings per share
     attributable to common
     stockholders -Diluted                $0.52     $0.27                       $0.92        $0.92


    in thousands                                                         Three Months Ended                     Six Months Ended

                                                                                 June 30,                              June 30,
                                                                                 --------                              --------

                                                                               2016           2015                    2016           2015



    Net earnings attributable to common
     stockholders                                                       $275,383       $140,240                $483,424       $485,446

    Add (deduct) NAREIT defined adjustments:

                                             Real estate
                                              related
                                              depreciation
                                              and
                                              amortization      221,233      183,237                   464,825      347,488

                                             Gains on
                                              dispositions
                                              of real
                                              estate, net
                                              (excluding
                                              development
                                              properties and
                                              land)           (188,051)    (34,546)                (238,383)    (311,430)

                                             Reconciling
                                              items related
                                              to
                                              noncontrolling
                                              interests        (24,015)    (20,781)                 (64,290)    (32,293)

                                             Our share of
                                              reconciling
                                              items related
                                              to
                                              unconsolidated
                                              co-investment
                                              ventures           40,027       47,578                    80,027       94,950

                                             Our share of
                                              reconciling
                                              items related
                                              to other
                                              unconsolidated
                                              ventures            1,522        1,577                     (984)       3,298

    Subtotal-NAREIT defined FFO                                         $326,099       $317,305                $724,619       $587,459


    Add (deduct) our defined adjustments:

                                             Unrealized
                                              foreign
                                              currency and
                                              derivative
                                              losses
                                              (gains), net        8,451       29,354                    23,779      (3,506)

                                              Deferred income
                                              tax expense
                                              (benefit)         (3,983)         145                   (4,602)       1,197

                                             Reconciling
                                              items related
                                              to
                                              noncontrolling
                                              interests             803          776                     1,286        (792)

                                             Our share of
                                              reconciling
                                              items related
                                              to
                                              unconsolidated
                                              co-investment
                                              ventures            2,314     (15,836)                      340     (13,887)

    FFO, as defined by Prologis                                         $333,684       $331,744                $745,422       $570,471


    Adjustments to arrive at Core FFO:

                                             Net gain on
                                              dispositions
                                              of development
                                              properties and
                                              land, net of
                                              taxes            (10,503)    (76,306)                 (96,165)    (79,540)

                                              Acquisition
                                              expenses              967       26,130                     2,228       27,434

                                              Losses (gains)
                                              on early
                                              extinguishment
                                              of debt, net      (2,044)         236                     (992)      16,525

                                             Reconciling
                                              items related
                                              to
                                              noncontrolling
                                              interests             966     (10,198)                    1,056     (12,227)

                                             Our share of
                                              reconciling
                                              items related
                                              to
                                              unconsolidated
                                              entities              855        2,279                     2,009        5,601

    Core FFO                                                            $323,925       $273,885                $653,558       $528,264


    Adjustments to arrive at Adjusted FFO
     ("AFFO"), including our share of
     unconsolidated co-investment ventures
     less third party share of consolidated
     entities:

                                             Net gains on
                                              dispositions
                                              of development
                                              properties and
                                              land, net of
                                              taxes              10,503       76,306                    96,165       79,540

                                             Straight-lined
                                              rents and
                                              amortization
                                              of lease
                                              intangibles      (22,830)    (10,528)                 (54,391)    (15,360)

                                              Property
                                              improvements     (20,700)    (14,487)                 (27,957)    (25,957)

                                              Tenant
                                              improvements     (26,592)    (18,390)                 (46,881)    (36,724)

                                              Leasing
                                              commissions      (20,558)    (16,187)                 (41,838)    (28,613)

                                              Amortization of
                                              management
                                              contracts             938        1,351                     1,854        2,295

                                              Amortization of
                                              debt premiums
                                              and financing
                                              costs, net        (4,225)     (7,967)                  (9,616)    (14,386)

                                              Stock
                                              compensation
                                              expense            16,747       13,484                    29,212       26,718

                                             Reconciling
                                              items related
                                              to
                                              noncontrolling
                                              interests          14,587        9,993                    32,028       17,775

                                             Our share of
                                              reconciling
                                              items related
                                              to
                                              unconsolidated
                                              co-investment
                                              ventures         (11,526)    (15,680)                 (26,190)    (30,448)

    AFFO                                                                   $260,269       $291,780                $605,944       $503,104


    in thousands                                                         Three Months Ended                        Six Months Ended

                                                                                 June 30,                                 June 30,
                                                                                 --------                                 --------

                                                                               2016           2015                        2016           2015


    Net earnings attributable to common
     stockholders                                   $275,383   $140,240                    $483,424     $485,446

                                           Gains on
                                            dispositions
                                            of real
                                            estate, net
                                            (excluding
                                            development
                                            properties
                                            and land)        (188,051)     (34,546)                 (238,383)       (311,430)

                                            Depreciation
                                            and
                                            amortization
                                            expenses           230,382       190,188                    480,382         359,996

                                            Interest
                                            expense             76,455        68,902                    157,267         137,663

                                            Losses (gains)
                                            on early
                                            extinguishment
                                            of debt, net       (2,044)          236                      (992)         16,525

                                            Current and
                                            deferred
                                            income tax
                                            expense, net         5,142         4,851                     20,679           6,742

                                           Reconciling
                                            items related
                                            to
                                            noncontrolling
                                            interests -
                                            limited
                                            partnership
                                            unitholders          8,316         1,298                     14,550           2,580

                                            Pro forma
                                            adjustments        (1,069)       28,675                    (7,004)         29,415

                                            Preferred
                                            stock
                                            dividends            1,696         1,678                      3,385           3,348

                                           Unrealized
                                            foreign
                                            currency and
                                            derivative
                                            losses
                                            (gains), net         8,451        29,354                     23,779         (3,506)

                                            Stock
                                            compensation
                                            expense             16,747        13,484                     29,212          26,718

                                            Acquisition
                                            expenses               967        26,130                      2,228          27,434

    Adjusted EBITDA, consolidated                                       $432,375       $470,490                    $968,527       $780,931


    Our share of reconciling items from
     unconsolidated entities less third
     party share of consolidated entities:

                                           Losses (gains)
                                            on
                                            dispositions
                                            of real
                                            estate, net
                                            (excluding
                                            development
                                            properties
                                            and land)          (3,842)          472                   (15,181)            477

                                            Depreciation
                                            and
                                            amortization
                                            expenses            12,240        26,953                     17,456          65,134

                                            Interest
                                            expense              8,656        10,870                     18,814          24,643

                                            Losses on
                                            early
                                            extinguishment
                                            of debt, net         1,155           711                      2,699           1,053

                                            Current income
                                            tax expense          4,308         4,475                      9,885           6,664

                                           Unrealized
                                            foreign
                                            currency and
                                            derivative
                                            losses
                                            (gains) and
                                            deferred
                                            income tax
                                            expense, net         3,117      (15,060)                     4,608        (14,679)

                                            Acquisition
                                            expenses             1,349       (8,578)                     1,774         (6,612)

    Adjusted EBITDA                                                     $459,358       $490,333                  $1,008,582       $857,611

Adjusted EBITDA. We use Adjusted EBITDA to measure our operating performance. We calculate Adjusted EBITDA beginning with consolidated net earnings (loss) attributable to common stockholders and removing the effect of interest, income taxes, depreciation and amortization, impairment charges, third party acquisition expenses related to the acquisition of real estate, gains or losses from the acquisition or disposition of investments in real estate (other than from land and development properties), gains from the revaluation of equity investments upon acquisition of a controlling interest, gains or losses on early extinguishment of debt and derivative contracts (including cash charges), similar adjustments we make to our FFO measures (see definition below), and other non-cash charges or gains (such as stock based compensation and unrealized gains or losses on foreign currency and derivative activity). We make adjustments to reflect our economic ownership in each entity in which we invest, whether consolidated or unconsolidated.

We consider Adjusted EBITDA to provide investors relevant and useful information because it permits investors to view our operating performance on an unleveraged basis before the effects of income tax, non-cash depreciation and amortization expense, gains and losses on the disposition of non-development properties and other items (outlined above), items that affect comparability, and other significant non-cash items. We also include a pro forma adjustment in Adjusted EBITDA to reflect a full period of NOI on the operating properties we acquire and stabilize and to remove NOI on properties we dispose of during the quarter assuming the transaction occurred at the beginning of the quarter. By excluding interest expense, Adjusted EBITDA allows investors to measure our operating performance independent of our capital structure and indebtedness and, therefore, allows for a more meaningful comparison of our operating performance to that of other companies, both in the real estate industry and in other industries. Gains and losses on the early extinguishment of debt generally include the costs of repurchasing debt securities. While not infrequent or unusual in nature, these items result from market fluctuations that can have inconsistent effects on our results of operations. The economics underlying these items reflect market and financing conditions in the short-term but can obscure our performance and the value of our long-term investment decisions and strategies.

We believe that Adjusted EBITDA helps investors to analyze our ability to meet interest payment obligations and to make quarterly preferred share dividends. We believe that investors should consider Adjusted EBITDA in conjunction with net earnings and the other required Generally Accepted Accounting Principles ("GAAP") measures of our performance to improve their understanding of our operating results, and to make more meaningful comparisons of our performance against other companies. By using Adjusted EBITDA, an investor is assessing the earnings generated by our operations but not taking into account the eliminated expenses or gains incurred in connection with such operations. As a result, Adjusted EBITDA has limitations as an analytical tool and should be used in conjunction with our GAAP presentations. Adjusted EBITDA does not reflect our historical cash expenditures or future cash requirements for working capital, capital expenditures, distribution requirements, contractual commitments or interest and principal payments on our outstanding debt.

While EBITDA is a relevant and widely used measure of operating performance, it does not represent net income as defined by GAAP and it should not be considered as an alternative to those indicators in evaluating operating performance or liquidity. Further, our computation of Adjusted EBITDA may not be comparable to EBITDA reported by other companies. We compensate for the limitations of Adjusted EBITDA by providing investors with financial statements prepared according to GAAP, along with this detailed discussion of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to consolidated net earnings (loss), a GAAP measurement.

Business Line Reporting. Core FFO and development gains are generated by our three lines of business: (i) real estate operations; (ii) strategic capital; and (iii) development. Real estate operations represents total Prologis Core FFO, less the amount allocated to the Strategic Capital line of business. The amount of Core FFO allocated to the Strategic Capital line of business represents the third party share of the asset management related fees we earn from our co-investment ventures (both consolidated and unconsolidated) less costs directly associated to our strategic capital group, plus development management income. Development gains include our share of gains on dispositions of development properties and land, net of taxes. To calculate the per share amount, the amount generated by each line of business is divided by the weighted average diluted common shares outstanding used in our Core FFO calculation of per share amounts. Management believes evaluating our results by line of business is a useful supplemental measure of our operating performance because it helps the investing public compare the operating performance of Prologis' respective businesses to other companies' comparable businesses. Prologis' computation of FFO by line of business may not be comparable to that reported by other real estate investment trusts as they may use different methodologies in computing such measures.



    Calculation of Per Share Amounts


    in thousands, except per share
     amount                          Three Months Ended          Six Months Ended

                                          June 30,                   June 30,
                                          --------                   --------

                                               2016         2015                      2016       2015

    Net earnings
    ------------

    Net earnings                           $275,383     $140,240                  $483,424   $485,446

    Noncontrolling interest
     attributable to exchangeable
     limited partnership units                9,085        1,623                    15,694      3,273

    Gains, net of expenses,
     associated with exchangeable
     debt assumed exchanged                       -           -                        -   (1,614)
                                                ---         ---                      ---    ------

    Adjusted net earnings -
     Diluted                               $284,468     $141,863                  $499,118   $487,105
                                           ========     ========                  ========   ========

    Weighted average common shares
     outstanding -Basic                     524,842      523,476                   524,540    518,791

    Incremental weighted average
     effect on exchange of limited
     partnership units                       17,703        5,431                    17,623      4,617

    Incremental weighted average
     effect of stock awards                   2,843        1,733                     2,130      2,037

    Incremental weighted average
     effect on exchangeable debt
     assumed exchanged (a)                        -           -                        -     4,382
                                                ---         ---                      ---     -----

    Weighted average common shares
     outstanding -Diluted                   545,388      530,640                   544,293    529,827
                                            =======      =======                   =======    =======

    Net earnings per share - Basic            $0.52        $0.27                     $0.92      $0.94
                                              =====        =====                     =====      =====

    Net earnings per share -
     Diluted                                  $0.52        $0.27                     $0.92      $0.92
                                              =====        =====                     =====      =====

    Core FFO
    --------

    Core FFO                               $323,925     $273,885                  $653,558   $528,264

    Noncontrolling interest
     attributable to exchangeable
     limited partnership units                   47          902                        93      1,782

    Interest expense on
     exchangeable debt assumed
     exchanged                                    -           -                        -     3,506
                                                ---         ---                      ---     -----

    Core FFO - Diluted                     $323,972     $274,787                  $653,651   $533,552
                                           ========     ========                  ========   ========

    Weighted average common shares
     outstanding -Basic                     524,842      523,476                   524,540    518,791

    Incremental weighted average
     effect on exchange of limited
     partnership units                       16,037        5,431                    15,957      4,617

    Incremental weighted average
     effect of stock awards                   2,843        1,733                     2,130      2,037

    Incremental weighted average
     effect on exchangeable debt
     assumed exchanged (a)                        -           -                        -     4,382
                                                ---         ---                      ---     -----

    Weighted average common shares
     outstanding -Diluted                   543,722      530,640                   542,627    529,827
                                            =======      =======                   =======    =======

    Core FFO per share - Diluted              $0.60        $0.52                     $1.20      $1.01
    ----------------------------              -----        -----                     -----      -----

    AFFO                                   $260,269     $291,780                  $605,944   $503,104

    Noncontrolling interest
     attributable to exchangeable
     limited partnership units                   47          902                        93        112

    Interest expense on
     exchangeable debt assumed
     exchanged                                    -           -                        -     3,113
                                                ---         ---                      ---     -----

    AFFO - Diluted                         $260,316     $292,682                  $606,037   $506,329
                                           ========     ========                  ========   ========

    Weighted average common shares
     outstanding -Basic                     524,842      523,476                   524,540    518,791

    Incremental weighted average
     effect on exchange of limited
     partnership units                       16,037        5,431                    15,957      2,939

    Incremental weighted average
     effect of stock awards                   2,843        1,733                     2,130      2,037

    Incremental weighted average
     effect on exchangeable debt
     assumed exchanged (a)                        -           -                        -     4,382
                                                ---         ---                      ---     -----

    Weighted average common shares
     outstanding -Diluted                   543,722      530,640                   542,627    528,149
                                            =======      =======                   =======    =======

    AFFO per share - Diluted                  $0.48        $0.55                     $1.12      $0.96
    ------------------------                  -----        -----                     -----      -----



    (a) In March 2015, the exchangeable
     debt was settled primarily through
     the issuance of common stock. The
     adjustment in 2015 assumes the
     exchange occurred on January 1,
     2015.

FFO, as defined by Prologis attributable to common stockholders/unitholders ("FFO, as defined by Prologis"); Core FFO attributable to common stockholders/unitholders ("Core FFO"); AFFO (collectively referred to as "FFO"). FFO is a financial measure that is not determined in accordance with GAAP, but is a measure that is commonly used in the real estate industry. The most directly comparable GAAP measure to FFO is net earnings. Although the National Association of Real Estate Investment Trusts ("NAREIT") has published a definition of FFO, modifications to the NAREIT calculation of FFO are common among REITs, as companies seek to provide financial measures that meaningfully reflect their business.

FFO is not meant to represent a comprehensive system of financial reporting and does not present, nor do we intend it to present, a complete picture of our financial condition and operating performance. We believe that FFO is only meaningful when it is used in conjunction with net earnings computed under GAAP. Furthermore, we believe the consolidated financial statements, prepared in accordance with GAAP, provide the most meaningful picture of our financial condition.

NAREIT's FFO measure adjusts net earnings computed under GAAP to exclude historical cost depreciation and gains and losses from the sales, along with impairment charges, of previously depreciated properties. We agree that these NAREIT adjustments are useful to investors for the following reasons:



    (i)              historical cost accounting for real
                     estate assets in accordance with
                     GAAP assumes, through depreciation
                     charges, that the value of real
                     estate assets diminishes predictably
                     over time. NAREIT stated in its
                     White Paper on FFO "since real
                     estate asset values have
                     historically risen or fallen with
                     market conditions, many industry
                     investors have considered
                     presentations of operating results
                     for real estate companies that use
                     historical cost accounting to be
                     insufficient by themselves."
                     Consequently, NAREIT's definition of
                     FFO reflects the fact that real
                     estate, as an asset class, generally
                     appreciates over time and
                     depreciation charges required by
                     GAAP do not reflect the underlying
                     economic realities. We exclude
                     depreciation from our unconsolidated
                     entities and the third parties'
                     share of our consolidated ventures.

    (ii)             REITs were created in order to
                     encourage public ownership of real
                     estate as an asset class through
                     investment in firms that were in the
                     business of long-term ownership and
                     management of real estate. The
                     exclusion, in NAREIT's definition of
                     FFO, of gains and losses from the
                     sales, along with impairment
                     charges, of previously depreciated
                     operating real estate assets allows
                     investors and analysts to readily
                     identify the operating results of
                     the long-term assets that form the
                     core of a REIT's activity and
                     assists in comparing those operating
                     results between periods. We include
                     the gains and losses (including
                     impairment charges) from
                     dispositions of land and development
                     properties, as well as our
                     proportionate share of the gains and
                     losses (including impairment
                     charges) from dispositions of
                     development properties recognized by
                     our unconsolidated and consolidated
                     entities, in our definition of FFO.
                     We exclude the gain on revaluation
                     of equity investments upon
                     acquisition of a controlling
                     interest from our definition of FFO.

Our FFO Measures

At the same time that NAREIT created and defined its FFO measure for the REIT industry, it also recognized that "management of each of its member companies has the responsibility and authority to publish financial information that it regards as useful to the financial community." We believe stockholders, potential investors and financial analysts who review our operating results are best served by a defined FFO measure that includes other adjustments to net earnings computed under GAAP in addition to those included in the NAREIT defined measure of FFO. Our FFO measures are used by management in analyzing our business and the performance of our properties and we believe that it is important that stockholders, potential investors and financial analysts understand the measures management uses.

We calculate our FFO measures, as defined below, based on our proportionate ownership share of both our unconsolidated and consolidated ventures. We reflect our share of our FFO measures for unconsolidated ventures by applying our average ownership percentage for the period to the applicable reconciling items on an entity by entity basis. We reflect our share for consolidated ventures in which we do not own 100% of the equity by adjusting our FFO measures to remove the third party ownership share of the applicable reconciling items based on average ownership percentage for the applicable periods.

We use these FFO measures, including by segment and region, to: (i) evaluate our performance and the performance of our properties in comparison with expected results and results of previous periods, relative to resource allocation decisions; (ii) evaluate the performance of our management; (iii) budget and forecast future results to assist in the allocation of resources; (iv) assess our performance as compared with similar real estate companies and the industry in general; and (v) evaluate how a specific potential investment will impact our future results. Because we make decisions with regard to our performance with a long-term outlook, we believe it is appropriate to remove the effects of short-term items that we do not expect to affect the underlying long-term performance of the properties. The long-term performance of our properties is principally driven by rental revenue. While not infrequent or unusual, these additional items we exclude in calculating FFO, as defined by Prologis, defined below, are subject to significant fluctuations from period to period that cause both positive and negative short-term effects on our results of operations in inconsistent and unpredictable directions that are not relevant to our long-term outlook.

We use our FFO measures as supplemental financial measures of operating performance. We do not use our FFO measures as, nor should they be considered to be, alternatives to net earnings computed under GAAP, as indicators of our operating performance, as alternatives to cash from operating activities computed under GAAP or as indicators of our ability to fund our cash needs.

FFO, as defined by Prologis

To arrive at FFO, as defined by Prologis, we adjust the NAREIT defined FFO measure to exclude:



    (i)               deferred income tax benefits and
                      deferred income tax expenses
                      recognized by our subsidiaries;

    (ii)              current income tax expense related to
                      acquired tax liabilities that were
                      recorded as deferred tax liabilities
                      in an acquisition, to the extent the
                      expense is offset with a deferred
                      income tax benefit in GAAP earnings
                      that is excluded from our defined
                      FFO measure;

    (iii)             unhedged foreign currency exchange
                      gains and losses resulting from debt
                      transactions between us and our
                      foreign consolidated subsidiaries
                      and our foreign unconsolidated
                      entities;

    (iv)              foreign currency exchange gains and
                      losses from the remeasurement (based
                      on current foreign currency exchange
                      rates) of certain third party debt
                      of our foreign consolidated
                      subsidiaries and our foreign
                      unconsolidated entities; and

    (v)               mark-to-market adjustments
                      associated with derivative financial
                      instruments.

We believe investors are best served if the information that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in planning and executing our business strategy.

Core FFO

In addition to FFO, as defined by Prologis, we also use Core FFO. To arrive at Core FFO, we adjust FFO, as defined by Prologis, to exclude the following recurring and nonrecurring items that we recognized directly in FFO, as defined by Prologis:



    (i)                gains or losses from contribution or
                       sale of land or development
                       properties;

    (ii)               income tax expense related to the
                       sale of investments in real estate
                       and third-party acquisition costs
                       related to the acquisition of real
                       estate;

    (iii)              impairment charges recognized
                       related to our investments in real
                       estate generally as a result of our
                       change in intent to contribute or
                       sell these properties;

    (iv)               gains or losses from the early
                       extinguishment of debt and
                       redemption and repurchase of
                       preferred stock; and

    (v)                expenses related to natural
                       disasters.

AFFO

To arrive at AFFO, we adjust Core FFO to include realized gains from the disposition of land and development properties and our share of recurring capital expenditures and exclude our share of the impact of; (i) straight-line rents; (ii) amortization of above- and below-market lease intangibles; (iii) amortization of management contracts; (iv) amortization of debt premiums and discounts and financing costs, net of amounts capitalized, and; (v) stock compensation expense.

We believe it is appropriate to further adjust our FFO, as defined by Prologis for certain recurring items as they were driven by transactional activity and factors relating to the financial and real estate markets, rather than factors specific to the on-going operating performance of our properties or investments. The impairment charges we have recognized were primarily based on valuations of real estate, which had declined due to market conditions, that we no longer expected to hold for long-term investment. Over the last few years, we made it a priority to strengthen our financial position by reducing our debt, our investment in certain low yielding assets and our exposure to foreign currency exchange fluctuations. As a result, we changed our intent to sell or contribute certain of our real estate properties and recorded impairment charges when we did not expect to recover the costs of our investment. Also, we purchased portions of our debt securities when we believed it was advantageous to do so, which was based on market conditions, and in an effort to lower our borrowing costs and extend our debt maturities. As a result, we have recognized net gains or losses on the early extinguishment of certain debt due to the financial market conditions at that time.

We analyze our operating performance primarily by the rental revenue of our real estate and the revenue driven by our strategic capital business, net of operating, administrative and financing expenses. This income stream is not directly impacted by fluctuations in the market value of our investments in real estate or debt securities. Although these items discussed above have had a material impact on our operations and are reflected in our financial statements, the removal of the effects of these items allows us to better understand the core operating performance of our properties over the long term.

We use Core FFO and AFFO, including by segment and region, to: (i) evaluate our performance and the performance of our properties in comparison to expected results and results of previous periods, relative to resource allocation decisions; (ii) evaluate the performance of our management; (iii) budget and forecast future results to assist in the allocation of resources; (iv) provide guidance to the financial markets to understand our expected operating performance; (v) assess our operating performance as compared to similar real estate companies and the industry in general; and (vi) evaluate how a specific potential investment will impact our future results. Because we make decisions with regard to our performance with a long-term outlook, we believe it is appropriate to remove the effects of items that we do not expect to affect the underlying long-term performance of the properties we own. As noted above, we believe the long-term performance of our properties is principally driven by rental revenue. We believe investors are best served if the information that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in planning and executing our business strategy.

As discussed above, we believe AFFO is a supplemental measure of operating performance, although we also believe AFFO provides a meaningful indicator of our ability to fund our distributions to our stockholders.

Limitations on the use of our FFO measures

While we believe our defined FFO measures are important supplemental measures, neither NAREIT's nor our measures of FFO should be used alone because they exclude significant economic components of net earnings computed under GAAP and are, therefore, limited as an analytical tool. Accordingly, these are only a few of the many measures we use when analyzing our business. Some of these limitations are:


    --  The current income tax expenses and acquisition costs that are excluded
        from our defined FFO measures represent the taxes and transaction costs
        that are payable.
    --  Depreciation and amortization of real estate assets are economic costs
        that are excluded from FFO. FFO is limited, as it does not reflect the
        cash requirements that may be necessary for future replacements of the
        real estate assets. Furthermore, the amortization of capital
        expenditures and leasing costs necessary to maintain the operating
        performance of industrial properties are not reflected in FFO.
    --  Gains or losses from non-development property acquisitions and
        dispositions or impairment charges related to expected dispositions
        represent changes in value of the properties. By excluding these gains
        and losses, FFO does not capture realized changes in the value of
        acquired or disposed properties arising from changes in market
        conditions.
    --  The deferred income tax benefits and expenses that are excluded from our
        defined FFO measures result from the creation of a deferred income tax
        asset or liability that may have to be settled at some future point. Our
        defined FFO measures do not currently reflect any income or expense that
        may result from such settlement.
    --  The foreign currency exchange gains and losses that are excluded from
        our defined FFO measures are generally recognized based on movements in
        foreign currency exchange rates through a specific point in time. The
        ultimate settlement of our foreign currency-denominated net assets is
        indefinite as to timing and amount. Our FFO measures are limited in that
        they do not reflect the current period changes in these net assets that
        result from periodic foreign currency exchange rate movements.
    --  The gains and losses on extinguishment of debt that we exclude from our
        Core FFO, may provide a benefit or cost to us as we may be settling our
        debt at less or more than our future obligation.
    --  The natural disaster expenses that we exclude from Core FFO are costs
        that we have incurred.

We compensate for these limitations by using our FFO measures only in conjunction with net earnings computed under GAAP when making our decisions. This information should be read with our complete consolidated financial statements prepared under GAAP. To assist investors in compensating for these limitations, we reconcile our defined FFO measures to our net earnings computed under GAAP.

Prologis Share represents our proportionate economic ownership of each entity included in our total owned and managed portfolio whether consolidated or unconsolidated.

Same Store. We evaluate the operating performance of the operating properties we own and manage using a "Same Store" analysis because the population of properties in this analysis is consistent from period to period, thereby eliminating the effects of changes in the composition of the portfolio on performance measures. We include the properties included in our owned and managed portfolio that were in operation (including development properties that have been completed and available for lease) at January 1, 2015 and throughout the full periods in both 2015 and 2016. We have removed all properties that were disposed of to a third party from the population for both periods. We believe the factors that impact rental income, rental expenses and NOI in the Same Store portfolio are generally the same as for the total operating portfolio. In order to derive an appropriate measure of period-to-period operating performance, we remove the effects of foreign currency exchange rate movements by using the current exchange rate to translate from local currency into U.S. dollars, for both periods.

Our same store measures are non-GAAP measures that are commonly used in the real estate industry and are calculated beginning with rental income and rental expenses from the financial statements prepared in accordance with GAAP. It is also common in the real estate industry and expected from the analyst and investor community that these numbers be further adjusted to remove certain non-cash items included in the financial statements prepared in accordance with GAAP to reflect a cash same store number. In order to clearly label these metrics, we call one Same Store NOI and one Same Store NOI- Cash. As these are non-GAAP measures they have certain limitations as an analytical tool and may vary among real estate companies. As a result, we provide a reconciliation from our financial statements prepared in accordance with GAAP to Same Store NOI and then to Same Store NOI- Cash with explanations of how these metrics are calculated and adjusted.

The following is a reconciliation of our consolidated rental income, rental expenses and NOI, as included in the Consolidated Statements of Operations, to the respective amounts in our Same Store portfolio analysis:



     dollars
     in
     thousands           Three Months Ended

                              June 30,
                              --------

                    2016                              2015 Change          (%)

     Rental
     Revenue:

     Rental
     Revenue                                 $426,150             $357,829

     Rental
     Recoveries                               119,981              103,615
                                              -------              -------

     Rental
     Revenue
     per
     the
     Consolidated
     Statements
     of
     Operations                               546,131              461,444

     Properties
     not
     included
     and
     other
     adjustments
     (a)                                    (153,644)            (81,594)

     Unconsolidated
     Co-
     Investment
     Ventures                                 447,530              429,785
                                              -------              -------

    Same
     Store
     -
     Rental
     Income                                  $840,017             $809,635     3.8%
    -------                                  --------             --------      ---


     Rental
     Expense:

    Per
     the
     Consolidated
     Statements
     of
     Operations                              $140,725             $125,820

     Properties
     not
     included
     and
     other
     adjustments
     (b)                                     (29,884)            (13,990)

     Unconsolidated
     Co-
     Investment
     Ventures                                 100,528               97,210
                                              -------               ------

    Same
     Store
     -
     Rental
     Expense                                 $211,369             $209,040     1.1%
    --------                                 --------             --------      ---


    NOI:

    Per
     the
     Consolidated
     Statements
     of
     Operations                              $405,406             $335,624

     Properties
     not
     included
     and
     other
     adjustments                            (123,760)            (67,604)

     Unconsolidated
     Co-
     Investment
     Ventures                                 347,002              332,575
                                              -------              -------

    Same
     Store
     -
     NOI                                     $628,648             $600,595     4.7%

    Same
     Store
     -
     NOI
     -
     Prologis
     Share
     (c)                                     $362,766             $341,857     6.1%
    ---------                                --------             --------      ---


    NOI-
     Cash:

    Same
     store-
      NOI                                    $628,648             $600,595

     Straight-
     line
     rent
     adjustments
     (d)                                    $(12,033)           $(13,829)

    Fair
     value
     lease
     adjustments
     (d)                                      (1,154)               2,593
                                               ------                -----

    Same
     Store
     -
     NOI-

      Cash                                   $615,461             $589,359     4.4%

    Same
     Store
     -
     NOI-

      Prologis
     Share
     (c)                                     $354,103             $336,401     5.3%
    ----------                               --------             --------      ---



    (a)                 To calculate Same Store rental
                        income, we exclude the net
                        termination and renegotiation fees
                        to allow us to evaluate the growth
                        or decline in each property's rental
                        income without regard to items that
                        are not indicative of the property's
                        recurring operating performance.

    (b)                 To calculate Same Store rental
                        expense, we include an allocation of
                        the property management expenses for
                        our consolidated properties based on
                        the property management fee that is
                        provided for in the individual
                        management agreements under which
                        our wholly owned management
                        companies provide property
                        management services (generally the
                        fee is based on a percentage of
                        revenue). On consolidation, the
                        management fee income and expenses
                        are eliminated and the actual cost
                        of providing property management
                        services is recognized.

    (c)                 Prologis share of Same Store is
                        calculated using the underlying
                        building information from the Same
                        Store NOI and NOI -Cash
                        calculations and applying our
                        ownership percentage as of June 30,
                        2016 to the NOI of each building for
                        both periods.

    (d)                 In order to derive Same Store- NOI
                        - Cash, we adjust Same Store- NOI
                        to exclude non-cash items included
                        in our rental income in our
                        financial statements, including
                        straight line rent adjustments and
                        adjustments related to purchase
                        accounting to reflect leases at
                        fair value at the time of
                        acquisition.

Value Creation represents the value that we will create through our development and leasing activities. We calculate value creation by estimating the stabilized NOI that the property will generate and applying a stabilized capitalization rate applicable to that property. The value creation is calculated as the amount by which the value exceeds our total expected investment and does not include any fees or promotes we may earn. Value Creation for our value-added conversion properties includes the realized economic gain.

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SOURCE Prologis, Inc.