NOTE 3. UNCONSOLIDATED ENTITIES

Summary of Investments

We have investments in entities through a variety of ventures. We co-invest in entities that own multiple properties with partners and investors and provide asset and property management services to these entities, which we refer to as co-investment ventures. These entities may be consolidated or unconsolidated, depending on the structure, our partner’s participation and other rights and our level of control of the entity. This note details our investments in unconsolidated co-investment ventures, which are accounted for using the equity method of accounting. See Note 6 for more detail regarding our consolidated investments.

We also have other ventures, generally with one partner and that we do not manage, which we account for using the equity method. We refer to our investments in all entities accounted for using the equity method, both unconsolidated co-investment ventures and other ventures, collectively, as unconsolidated entities.

The following table summarizes our investments in and advances to our unconsolidated entities (in thousands):

	March 31,		December 31,
	2017		2016
Unconsolidated co-investment ventures	$	4,096,173	$	4,057,524
Other ventures		209,708		172,905
Totals	$	4,305,881	$	4,230,429

Unconsolidated Co-Investment Ventures

The amounts recognized in Strategic Capital Revenues and Earnings from Unconsolidated Entities, Net depend on the size and operations of the co-investment ventures, the timing of revenues earned through promotes during the life of a venture or upon liquidation, as well as fluctuations in foreign currency exchange rates. We recognized Strategic Capital Expenses for direct costs associated with the asset management of these ventures and allocated property-level management costs for the properties owned by the ventures. Our ownership interest in these ventures also impacts the earnings we recognize.

The following table summarizes the amounts we recognized in the Consolidated Statements of Income related to the unconsolidated co-investment ventures (in thousands):

	Three Months Ended March 31,
	2017		2016
Strategic capital revenues from unconsolidated co-investment ventures, net:
U.S.	$	11,058	$	8,995
Other Americas		6,051		5,386
Europe		26,170		22,333
Asia		12,655		13,601
Total strategic capital revenues from unconsolidated co-investment ventures, net	$	55,934	$	50,315

Earnings from unconsolidated co-investment ventures, net:
U.S.	$	4,946	$	6,659
Other Americas		6,570		5,299
Europe		29,905		31,579
Asia		4,029		3,655
Total earnings from unconsolidated co-investment ventures, net	$	45,450	$	47,192

The following tables summarize the operating information and financial position of our unconsolidated co-investment ventures (not our proportionate share), as presented at our adjusted basis derived from the ventures’ U.S. GAAP information:

	March 31,			December 31,			March 31,
(dollars and square feet in millions)	2017			2016			2016
U.S.:
Number of ventures		1			1			1
Number of operating properties owned		381			369			381
Square feet		51			50			50
Total assets	$	4,293		$	4,238		$	4,382
Third-party debt	$	1,340		$	1,414		$	1,447
Total liabilities	$	1,424		$	1,540		$	1,528
Our investment balance (1)	$	430		$	435		$	688
Our weighted average ownership (2)		14.2	%		14.9	%		22.5	%
Other Americas:
Number of ventures		2			2			2
Number of operating properties owned		214			213			206
Square feet		43			42			39
Total assets	$	2,836		$	2,793		$	2,600
Third-party debt	$	737		$	739		$	659
Total liabilities	$	812		$	814		$	756
Our investment balance (1)	$	849		$	845		$	817
Our weighted average ownership (2)		43.9	%		43.9	%		43.7	%
Europe:
Number of ventures (3) (4)		4			4			4
Number of operating properties owned		702			700			688
Square feet		165			163			159
Total assets	$	11,596		$	10,853		$	11,538
Third-party debt	$	2,546		$	2,446		$	2,511
Total liabilities	$	3,463		$	3,283		$	3,448
Our investment balance (1)	$	2,353		$	2,327		$	2,759
Our weighted average ownership (2)		33.2	%		35.1	%		38.5	%
Asia:
Number of ventures		2			2			2
Number of operating properties owned		85			85			73
Square feet		37			36			32
Total assets	$	5,361		$	5,173		$	4,911
Third-party debt	$	2,055		$	1,947		$	1,779
Total liabilities	$	2,347		$	2,239		$	2,023
Our investment balance (1)	$	464		$	451		$	448
Our weighted average ownership (2)		15.1	%		15.1	%		15.0	%
Total:
Number of ventures		9			9			9
Number of operating properties owned		1,382			1,367			1,348
Square feet		296			291			280
Total assets	$	24,086		$	23,057		$	23,431
Third-party debt	$	6,678		$	6,546		$	6,396
Total liabilities	$	8,046		$	7,876		$	7,755
Our investment balance (1)	$	4,096		$	4,058		$	4,712
Our weighted average ownership (2)		26.9	%		27.9	%		31.1	%

	Three Months Ended March 31,
(in millions)	2017		2016
Revenues:
U.S.	$	104	$	98
Other Americas		64		57
Europe		244		244
Asia		88		76
Total revenues	$	500	$	475

Net earnings:
U.S.	$	36	$	30
Other Americas		17		14
Europe		73		73
Asia		24		22
Total net earnings	$	150	$	139

(1)

The difference between our ownership interest of a venture’s equity and our investment balance at March 31, 2017, and December 31, 2016, results principally from three types of transactions: (i) deferring a portion of the gains we recognize from a contribution of a property to a venture ($465.3 million and $469.9 million, respectively); (ii) recording additional costs associated with our investment in a venture ($124.4 million and $124.1 million, respectively); and (iii) advances to a venture ($155.1 million and $166.1 million, respectively). Included in the advances to our ventures at March 31, 2017, and December 31, 2016, were receivables from Nippon Prologis REIT, Inc. (“NPR”) of $102.3 million and $96.9 million, respectively, related to customer security deposits that originated through a leasing company owned by us that pertain to properties owned by NPR. We have a corresponding payable to NPR’s customers in Other Liabilities.

(2)	Represents our weighted average ownership interest in all co-investment ventures based on each entity’s contribution of total assets, before depreciation, net of other liabilities.

(3)	In January 2017, we sold our investment in ELV to our fund partner for $84.3 million and ELV contributed its properties to Prologis Targeted Europe Logistics Fund (“PTELF”) in exchange for equity interests.

(4)

In February 2017, we formed the Prologis United Kingdom Logistics Venture (“UKLV”), an unconsolidated co-investment venture in which we have a 15.0% ownership interest. UKLV will acquire land, develop buildings and operate and hold logistics real estate assets in the United Kingdom (“U.K.”). Upon formation, we, along with our venture partner, committed £380.0 million ($474.9 million at March 31, 2017), of which our share is £57.0 million ($71.2 million at March 31, 2017). In February 2017, we contributed a portfolio of 3.9 million square feet of stabilized properties, properties under development and land for approximately £202.9 million ($252.1 million). We expect to continue to contribute properties into UKLV as they become stabilized, along with land.

Equity Commitments Related to Certain Unconsolidated Co-Investment Ventures

The following table summarizes the remaining equity commitments at March 31, 2017 (in millions):

	Equity Commitments						Expiration Date for Remaining Commitments
	Prologis		Venture Partners		Total
Prologis Targeted U.S. Logistics Fund	$	-	$	6	$	6	2017-2018
Prologis Targeted Europe Logistics Fund (1)		-		388		388	2017-2018
Prologis United Kingdom Logistics Venture (2)		36		204		240	2021
Prologis China Logistics Venture		294		1,665		1,959	2017
Totals	$	330	$	2,263	$	2,593

(1)	Equity commitments are denominated in euro and reported in U.S. dollars based on an exchange rate of $1.07 U.S. dollars to the euro.

(2)	As discussed above, this co-investment venture was formed in February 2017. Equity commitments are denominated in British pounds sterling and reported in U.S. dollars based on an exchange rate of $1.25 U.S. dollars to the British pound sterling.