10.

Noncontrolling Interests

Operating Partnership

We report noncontrolling interests related to several entities we consolidate but do not own 100% of the common equity. These entities include three real estate partnerships that have issued limited partnership units to third parties. Depending on the specific partnership agreements, these limited partnership units are exchangeable into shares of our common stock (or cash), generally at a rate of one share of common stock to one unit. We evaluated the noncontrolling interests with redemption provisions that permit the issuer to settle in either cash or common stock at the option of the issuer to determine whether temporary or permanent equity classification on the balance sheet is appropriate, including the requirement to settle in unregistered shares, and determined that these units meet the requirements to qualify for presentation as permanent equity.

We also consolidate several entities in which we do not own 100% but the units are not exchangeable into our common stock. If we contribute a property to a consolidated co-investment venture, the property is still reflected in our Consolidated Financial Statements, but due to our ownership of less than 100%, there is an increase in noncontrolling interest related to the contributed properties, which represents the cash we receive from our partners.

REIT

The noncontrolling interest of the REIT includes the noncontrolling interests presented in the Operating Partnership, as well as the common limited partnership units in the Operating Partnership that are not owned by the REIT. As of September 30, 2012, the REIT owned approximately 99.59% of the common partnership units of the Operating Partnership.

The following is a summary of the noncontrolling interest and the consolidated entity’s total investment in real estate and debt at September 30, 2012 and December 31, 2011 (dollars in thousands):


	Our Ownership Percentage						Noncontrolling Interests				Consolidated Entity Total Investment In Real Estate				Consolidated Entity Debt
	2012			2011			2012		2011		2012		2011		2012		2011
Partnerships with exchangeable units (1)		various			various		$	43,303	$	11,173	$	828,112	$	827,263	$	26,417	$	26,417
Prologis Institutional Alliance Fund II (2)		28.2	%		24.1	%		291,271		324,721		600,439		624,318		196,291		220,625
PEPR (3)		100.0	%		93.7	%		—		106,759		—		4,047,329		—		1,699,587
Mexico Fondo Logistico (AFORES) (4)		20.0	%		20.0	%		144,916		118,580		371,820		312,914		215,356		177,000
Prologis AMS (5)		38.6	%		38.5	%		62,515		83,897		175,209		211,627		74,656		77,041
Other consolidated entities		various			various			97,626		90,092		569,296		620,052		71,428		70,140

Operating Partnership noncontrolling interests								639,631		735,222		2,544,876		6,643,503		584,148		2,270,810
Limited partners in the Operating Partnership (6)								53,141		58,613		—		—		—		—

REIT noncontrolling interests							$	692,772	$	793,835	$	2,544,876	$	6,643,503	$	584,148	$	2,270,810

(1)

At September 30, 2012 and December 31, 2011, there were 1,285,312 and 1,302,238 limited partnership units, respectively, that were exchangeable into an equal number of shares of the REIT’s common stock. In the first quarter of 2012, 16,926 limited partnership units were exchanged for cash. The majority of the outstanding limited partnership units are entitled to quarterly cash distributions equal to the quarterly dividends paid on our common stock. In 2012, we recorded an additional purchase accounting adjustment of $32.9 million associated with the Merger.

(2)	In the second quarter of 2012, we purchased an additional interest in the fund from one of our partners for $14.1 million increasing our ownership to 28.2%.

(3)

In June 2012, the unitholders of PEPR passed a resolution to wind-up the entity, pursuant to which we opted for in-kind distribution of assets with responsibility for all liabilities of PEPR. In September 2012, PEPR completed its delisting from two European stock exchanges, completed a distribution to the remaining common and preferred unitholders and have acquired the remaining assets and liabilities.

(4)

In the second quarter of 2012, we contributed four properties aggregating 0.8 million square feet to this entity for $40.6 million. As this entity is consolidated, we did not record a gain on this transaction and the noncontrolling interests increased $15.7 million, which is primarily due to our partners’ investment in cash.

(5)	In 2012, we recorded additional purchase accounting adjustments of $22.7 million associated with the Merger.

(6)

At September 30, 2012 and December 31, 2011, 1,898,699 and 2,058,730 units were associated with the common limited partners in the Operating Partnership and exchangeable into an equal number of shares of the REIT’s common stock. During the nine months ended September 30, 2012, 160,031 units were exchanged for cash in the amount of $5.6 million. The majority of the outstanding limited partnership units are entitled to quarterly cash distributions equal to the quarterly distributions paid on our common stock.