NOTE 8. NONCONTROLLING INTERESTS

Prologis, L.P.

We report noncontrolling interests related to several entities we consolidate but of which we do not own 100% of the equity. These entities include two 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 the Parent’s common stock (or cash), generally at a rate of one share of common stock to one unit. We also consolidate several entities in which we do not own 100% of the equity and the units of the entity are not exchangeable into our common stock.

As discussed in Note 1, the Parent has complete responsibility, power and discretion in the day-to-day management of the Operating Partnership. The Parent, through its majority interest, has the right to receive benefits from and incur losses of the Operating Partnership. In addition, the Operating Partnership does not have either substantive liquidation rights or substantive kick-out rights without cause or substantive participating rights that could be exercised by a simple majority of noncontrolling interests. The absence of such rights renders the Operating Partnership as a VIE. Accordingly, the Parent is the primary beneficiary of and consolidates the Operating Partnership.

Prologis, Inc.

The noncontrolling interests of the Parent include 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 Parent.

The following table summarizes our noncontrolling interests and the consolidated entity’s total assets and total liabilities at March 31, 2016, and December 31, 2015 (dollars and units in thousands):

	Our Ownership Percentage						Noncontrolling Interests				Total Assets				Total Liabilities
	2016			2015			2016		2015		2016		2015		2016		2015
Prologis U.S. Logistics Venture		55.0	%		55.0	%	$	2,621,183	$	2,677,642	$	6,646,160	$	6,788,968	$	825,656	$	847,084
Prologis North American Industrial Fund (1)		66.1	%		66.1	%		489,727		490,444		2,597,338		2,619,241		1,157,999		1,165,617
Prologis Brazil Logistics Partners Fund I (1) (2)		50.0	%		50.0	%		52,547		49,313		112,766		100,836		225		192
Other consolidated entities (3)	various			various				100,631		102,828		967,408		985,188		45,851		42,811
Prologis, L.P. noncontrolling interests								3,264,088		3,320,227		10,323,672		10,494,233		2,029,731		2,055,704
Limited partners in Prologis, L.P. (4) (5)								443,875		432,674		-		-		-		-
Prologis, Inc. noncontrolling interests							$	3,707,963	$	3,752,901	$	10,323,672	$	10,494,233	$	2,029,731	$	2,055,704

(1)

These ventures are considered VIE’s under the new consolidation guidance discussed in Note 1. Based on our evaluation, the noncontrolling interests in these ventures do not hold substantive participating or kick-out rights and therefore as a group they lack the power to direct the significant activities of these ventures that most significantly impact the venture’s economic performance. We have both the power to direct the significant activities and the obligation to absorb losses and the rights to receive benefits from these ventures. As a result, we are the primary beneficiary of both ventures and consistent with prior reporting periods, we consolidate each venture within our financial statements.

(2)	The assets of Prologis Brazil Logistics Partners Fund I (“Brazil Fund”) are primarily investments in unconsolidated entities of $108.4 million and $103.1 million at March 31, 2016, and December 31, 2015, respectively. For additional information on our unconsolidated investments, see Note 4.

(3)

This line item includes our two partnerships that have issued limited partnership units to third parties, as discussed above, along with various other consolidated entities. At March 31, 2016, and December 31, 2015, limited partnership units were exchangeable into cash or, at our option, 1,835 shares of the Parent’s common stock. All of these outstanding limited partnership units receive quarterly cash distributions equal to the quarterly dividends paid on our common stock pursuant to the terms of the applicable partnership agreements.

(4)	At March 31, 2016, and December 31, 2015, we had 8.9 million Class A Units that were convertible into 8.8 million common limited partnership units of the Operating Partnership.

(5)

At March 31, 2016, and December 31, 2015, excluding the Class A Units, there were common limited partnership units in the Operating Partnership that were exchangeable into cash or, at our option, 6.4 million shares of the Parent’s common stock with a fair value of $284.1 million and $275.0 million, respectively, based on the closing stock price of the Parent’s common stock. At March 31, 2016, and December 31, 2015, there were 2.0 million and 1.2 million LTIP Units (as defined in Note 9) outstanding, respectively, associated with our long-term compensation plan that are exchangeable into common units of the Operating Partnership and redeemable into the Parent’s common stock after they vest and other applicable conditions are met. All of these outstanding limited partnership units receive quarterly cash distributions equal to the quarterly distributions paid on our common stock pursuant to the terms of the partnership agreement.