Filed Pursuant to Rule No. 424(b)(5)
                                                    Registration No. 33-75893
 
PROSPECTUS
 
                                 PROLOGIS TRUST
 
               1999 DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN
 
   ProLogis Trust has established the 1999 Dividend Reinvestment and Share
Purchase Plan. The plan amends the existing ProLogis dividend reinvestment and
share purchase plan and is designed to provide participants with a convenient
and economical method to purchase ProLogis common shares of beneficial interest
and to reinvest all or a portion of their cash distributions in additional
ProLogis common shares. The plan also allows persons who are not already
shareholders of ProLogis to purchase ProLogis common shares under the plan. The
plan will be administered by an agent, BankBoston, N.A., or any successor bank
or trust company as may from time to time be designated by ProLogis. The
administrative support to the agent may be performed by EquiServe, L.P., a
registered transfer agent.
 
   The agent will buy, at ProLogis' option, newly issued common shares directly
from ProLogis or common shares in the open market or in negotiated transactions
with third parties. ProLogis common shares purchased directly from ProLogis
under the plan will be priced at a 2% discount from market prices at the time
of the investment, determined in accordance with the plan. See "Description of
the plan, Question 17."
 
 
    These securities have not been approved or disapproved by the Securities
 and Exchange Commission or any state securities commission nor has the
 Securities and Exchange Commission or any State Securities Commission passed
 upon the accuracy or adequacy of this prospectus. Any representation to the
 contrary is a criminal offense.
 
 
 
 
 
                 The date of this Prospectus is April 27, 1999

 
                                 PROLOGIS TRUST
 
ProLogis
 
   ProLogis is a real estate investment trust organized under Maryland law and
has elected to be taxed as a real estate investment trust under the Internal
Revenue Code of 1986, as amended. Effective March 30, 1999, Meridian Industrial
Trust, Inc., a Maryland corporation, merged with and into ProLogis. ProLogis
deploys capital in markets that ProLogis believes have excellent long-term
growth prospects and in markets where ProLogis believes it can achieve a strong
position through the acquisition and development of flexible facilities
designed for both warehousing and light manufacturing uses. ProLogis is an
international company focused exclusively on meeting the distribution space
needs of international, national, regional and local industrial real estate
users through the ProLogis Operating System(TM) and believes it has
distinguished itself from its competition by being the only entity that
combines all of the following:
 
      (1) An international operating platform dedicated to providing
  distribution facilities to a targeted customer base of the 1,000 largest
  users of distribution facilities worldwide, 419 of which are currently
  ProLogis customers;
 
      (2) An organizational structure and service delivery system built
  around the customer--ProLogis believes its service approach is unique to
  the real estate industry as it combines international scope and expertise
  with strong local presence in each of its target markets; and
 
      (3) A disciplined investment strategy based on proprietary research
  that identifies high growth markets with sustainable demand for ProLogis'
  distribution facilities.
 
   After completion of the merger, ProLogis' real estate assets, including
assets held by unconsolidated subsidiaries and joint ventures, consisted of
approximately 142.0 million square feet of operating distribution facilities
and approximately 16.4 million square feet of refrigerated distribution
facilities. In addition, ProLogis had 10.8 million square feet of distribution
facilities under development at a total expected investment of $473.1 million.
ProLogis has facilities in 94 North American and European Markets. Also,
ProLogis owned or controlled approximately 5,100 acres of land for future
development of approximately 87.9 million square feet of distribution
facilities.
 
   ProLogis' objective is to increase shareholder value by achieving long-term
sustainable growth in cash flow. To accomplish this objective ProLogis has
developed a business strategy that combines an operational plan, an investment
plan and a financing plan to achieve its overall objective.
 
   ProLogis was originally formed in June 1991 to take advantage of two
strategic opportunities identified as a result of extensive market research:
 
  . the opportunity to build a distribution and light manufacturing asset
    base at costs significantly below replacement cost and a land inventory
    at attractive prices; and
 
  . the opportunity to create, for the first time, a national operating
    company which would differentiate itself from its competition through its
    ability to meet a corporate customer's distribution facility requirements
    on a national, regional and local basis.
 
   In 1997, ProLogis began expanding its operations into Mexico and Europe to
meet the needs of its targeted national and international customers as they
expanded and reconfigured their distribution facility requirements globally.
Consistent with ProLogis' objective of expanding its services platform for its
targeted customer base, in 1997 and 1998 ProLogis further expanded to serve the
refrigerated logistics needs of its customers by acquiring an international
refrigerated distribution network. Today, ProLogis' business is organized into
the following segments:
 
  . acquisition and development of industrial distribution facilities for
    long-term ownership and leasing in the United States, Europe, a portion
    of which is owned through an unconsolidated subsidiary, and Mexico;

 
  . operation of refrigerated distribution facilities through unconsolidated
    subsidiaries, one operating in the United States and Canada and one
    operating in nine countries in Europe; and
 
  . development of distribution facilities for future sale or on a fee basis
    in the United States and Mexico and in the United Kingdom through an
    unconsolidated subsidiary.
 
   This global network of distribution facilities has ProLogis well positioned
to become the global leader in this rapidly consolidating industry.
 
                                       2

 
                            DESCRIPTION OF THE PLAN
 
   The following questions and answers describe the plan.
 
Purposes and advantages
 
   1. What are the purposes of the plan?
 
   The purposes of the plan are to provide participants with a simple and
convenient method of investing in common shares without payment of any
brokerage commissions, service charges or other expenses. In addition, common
shares purchased directly from ProLogis under the plan may be purchased at a 2%
discount from market prices at the time of the investment, as described in
Question 17.
 
   2. How may shareholders purchase common shares under the plan?
 
   Shareholders may purchase common shares in the following ways:
 
     (1) have cash distributions received on all or a portion of the common
  shares registered in their name, automatically reinvested in additional
  common shares, up to the distribution limit of a maximum quarterly amount
  of 300,000 common shares, which may be changed at any time in ProLogis'
  sole discretion, unless ProLogis approves reinvestment on a greater number
  of common shares, as described in Question 9;
 
     (2) continue to receive cash distributions on common shares registered
  in their name and purchase common shares by making optional cash payments
  of not less than the minimum amount, which initially is $200 plus any
  initial enrollment fee if applicable, nor more than the maximum amount,
  which initially is $5,000, in any calendar month, except in cases covered
  by a request for waiver, as described in Question 13, which minimum amount
  and maximum amount may be changed at any time in ProLogis' sole discretion;
  or
 
     (3) invest both cash distributions and optional cash payments.
 
Beneficial owners of common shares registered in the name of a broker, bank or
other nominee or trustee may participate in the distribution reinvestment
portion of the plan either by having their common shares transferred into their
own names or by making appropriate arrangements with their record holder to
participate on their behalf.
 
   3. How may persons who are not already shareholders purchase common shares
under the plan?
 
   Persons who are not already shareholders may purchase common shares under
the plan by making optional cash payments of not less than the minimum amount,
which initially is $200 plus any initial enrollment fee if applicable, nor more
than the maximum amount, which initially is $5,000, in any calendar month,
except in cases covered by a request for waiver, as described in Question 13,
which minimum amount and maximum amount may be changed at any time in ProLogis'
sole discretion.
 
   4. What are the advantages and disadvantages of participation in the plan?
 
   Participants in the plan receive full investment of their distributions and
optional cash payments because they are not required to pay brokerage
commissions or other expenses in connection with the purchase of common shares
under the plan, except with respect to optional cash payments if the common
shares are purchased in the open market, and because the plan permits
fractional common shares as well as whole common shares to be purchased. Also,
common shares purchased directly from ProLogis under the plan may be purchased
at a 2% discount from market prices at the time of the investment, as described
in Question 17. In addition, distributions on all whole and fractional common
shares purchased under the plan are automatically reinvested in additional
common shares, subject to the distribution limit. Participants also avoid the
necessity
 
                                       3

 
for safe-keeping certificates representing the common shares purchased pursuant
to the plan and have increased protection against loss, theft or destruction of
those certificates. Furthermore, certificates for underlying common shares may
be deposited for safe-keeping as described in Question 24. A regular statement
for each account provides the participant with a record of each transaction.
 
   The plan has some disadvantages as compared to purchases of common shares
through brokers or otherwise. No interest will be paid by ProLogis or the agent
on distributions held pending reinvestment or on any optional cash payments.
The agent, not the participant, determines the timing of investments, as
described in Question 16. Accordingly, the purchase price for the common shares
may vary from that which would otherwise have been obtained by directing a
purchase through a broker or in a negotiated transaction, and the actual number
of shares acquired by the participant will not be known until after the common
shares are purchased by the agent, as described in Question 18. Optional cash
payments of less than the minimum amount may be returned to the participant,
and the portion of any optional cash payment which exceeds the maximum amount
may be returned to the participant if the participant did not obtain ProLogis'
prior approval pursuant to a request for waiver or if the threshold price is
not met, as described in Question 13. Any discount from market prices at the
time of the investment on common shares purchased under the plan, as described
in Question 17, may create additional taxable income to the participant, and
commissions paid by ProLogis in connection with the reinvestment of
distributions if the common shares are purchased in the open market will be
taxable income to the participant, as described under "Federal income tax
considerations relating to the plan."
 
Eligibility and participation
 
   5. Who is eligible to become a participant?
 
   Any person who has reached the age of majority in his or her state of
residence is eligible to participate in the plan through optional cash
payments. In addition, any shareholder who has reached the age of majority may
elect to participate in the distribution reinvestment portion of the plan. If a
beneficial owner has common shares registered in a name other than his or her
own, such as that of a broker, bank or other nominee or trustee, the beneficial
owner may be able to arrange for that entity to handle the reinvestment of
distributions. Shareholders should consult directly with the entity holding
their common shares to determine if they can enroll in the plan. If not, the
shareholder should request his or her broker, bank or other nominee or trustee
to transfer some or all of the common shares into the beneficial owner's own
name in order to participate directly. Participation in the plan is subject to
the payment of an initial enrollment fee and a termination fee.
 
   Shareholders who are citizens or residents of a country other than the
United States, its territories and possessions should make certain that their
participation does not violate local laws governing such things as taxes,
currency and exchange controls, share registration, foreign investments and
related matters.
 
   6. How does an eligible person become a participant?
 
   An eligible person may elect to become a participant in the plan at any
time, subject to ProLogis' right to modify, suspend, terminate or refuse
participation in the plan. To become a participant, complete an authorization
form and mail it to the agent in care of BankBoston, N.A., c/o EquiServe, L.P.,
P.O. Box 8040, Boston, Massachusetts 02266-8040. Authorization forms may be
requested by calling, toll free, 1-800-956-3378.
 
   Shareholders who participated in the 1995 Dividend Reinvestment Plan, as
well as, the former holders of common stock of Meridian Industrial Trust, Inc.
who participated in the Meridian 1996 Dividend Reinvestment Plan, are
automatically enrolled in the plan and need take no action to participate in
the plan.
 
   7. What does the authorization form provide?
 
   The authorization form authorizes the agent to apply any optional cash
payments made by the participant and/or distributions received on common shares
registered in the participant's name, less any initial enrollment fee, to the
purchase of common shares for the participant's account under the plan. The
authorization form offers the following investment options:
 
                                       4

 
  . Full distribution reinvestment. To reinvest automatically all cash
    distributions received on all common shares registered in the
    participant's name, subject to the distribution limit.
 
  . Partial distribution reinvestment. To receive cash distributions on a
    specified number of common shares registered in the participant's name
    and to automatically reinvest distributions on any remaining common
    shares subject to the distribution limit.
 
  . Optional cash payments. To make optional cash payments of not less than
    the minimum amount which initially is $200 in any calendar month, nor
    more than the maximum amount, which initially is $5,000 in any calendar
    month, to purchase common shares.
 
   In addition, the authorization form provides participants with the option of
depositing certificates for common shares with the agent for safe-keeping, as
described in Question 24. Finally, the authorization form provides that a
participant may make optional cash payments by automatic debit from the
participant's bank account.
 
   A participant may change his or her election by completing and signing a new
authorization form and returning it to the agent. Any election or change of
election concerning the reinvestment of distributions must be received by the
agent at least one trading day prior to the record date for the distribution
payment in order for the election or change to become effective with that
distribution. A trading day means a day on which the New York Stock Exchange is
open for business. If a participant signs and returns an authorization form
without checking a desired option, or checks a partial distribution
reinvestment option without specifying a number of shares, the participant will
be deemed to have selected the full distribution reinvestment option, subject
to the distribution limit.
 
   Regardless of which method of participation is selected, all cash
distributions paid on whole or fractional common shares purchased pursuant to
the plan will be reinvested automatically, subject to the distribution limit.
 
Reinvestment of distributions
 
   8. When will distributions be reinvested?
 
   If a properly completed authorization form specifying "full distribution
reinvestment" or "partial distribution reinvestment" is received by the agent
at least one trading day prior to the record date established for a particular
distribution payment, reinvestment of distributions will begin with that
distribution payment. If the authorization form is received after one trading
day prior to the record date established for a particular distribution payment,
that distribution will be paid in cash and reinvestment of distributions will
not begin until the next succeeding distribution payment. A distribution record
date normally precedes the payment of distributions by approximately two weeks.
A schedule of the anticipated record dates for the 1999 and 2000 distribution
payments is set forth on Appendix A, subject to change at ProLogis' discretion.
For future periods, ProLogis will provide participants a schedule of the
relevant record dates.
 
   9. What limitations apply to reinvestment of distributions?
 
   Reinvestment of distributions is subject to a maximum quarterly distribution
limit of the number of common shares on which dividends may be reinvested
initially 300,000 common shares, which may be changed at any time in ProLogis'
sole discretion. For purposes of this limitation, all plan accounts under
common control or management of a participant will be aggregated. In addition,
participants may not acquire more than 9.8% of the outstanding common shares
and preferred shares of beneficial interest of ProLogis, as described in
Question 39. Reinvestment of distributions in excess of the distribution limit
may be made by a participant only with ProLogis' prior approval. This approval
must be obtained each quarter prior to the relevant record date. Participants
interested in investing distributions in excess of the distribution limit
should contact ProLogis' Share Purchase Plan Representative at (303) 576-2622.
 
                                       5

 
Optional cash payments
 
   10. Who is eligible to make optional cash payments?
 
   Any person who has submitted a signed authorization form is eligible to make
optional cash payments, whether or not the person is already a shareholder,
subject to ProLogis' right to modify, suspend, terminate or refuse
participation in the plan. Shareholders may make optional cash payments whether
or not they have also elected to reinvest distributions received on common
shares registered in their name.
 
   11. How does the optional cash payment option work?
 
   Each participant may purchase additional common shares by sending optional
cash payments to the agent at any time and the amount of each cash payment may
vary. Participants have no obligation to make any cash payments. Participants
may make an optional cash payment by sending to the agent
 
     (1) a check or money order made payable to BankBoston, N.A. or an
  authorization to debit the participant's bank account or, if the optional
  cash payment is being made pursuant to a request for waiver which has been
  granted by ProLogis, a wire transfer to the account of the agent, as
  specified in the request for waiver, and
 
     (2) if the participant is enrolling, a completed authorization form or,
  if the participant is already enrolled, an optional cash payment form,
  which will be attached to each statement of account sent to the
  participant.
 
   The agent will apply any optional cash payments received from a participant
before the close of business on optional cash payment due date, which is the
trading day prior to the beginning of the relevant investment period, to the
purchase of common shares for the account of the participant, as described in
Question 12.
 
   Optional cash payments must be in United States dollars. Do not send cash.
All checks for optional cash payments in excess of the maximum amount pursuant
to a request for waiver which has been granted by ProLogis will not be invested
until the funds have been collected. In the event that any deposit is returned
unpaid for any reason, the agent will consider the request for investment of
such money null and void and shall immediately remove from the participant's
account, shares if any, purchased upon the prior credit of such money. The
agent shall thereupon be entitled to sell these shares to satisfy any
uncollected amounts. If the net proceeds of the sale of such shares are
insufficient to satisfy the balance of such uncollected amounts, the agent
shall be entitled to sell such additional shares from the participant's account
to satisfy the uncollected balance. A $25.00 fee will be charged for any
deposit returned unpaid. Checks should be made payable to BankBoston, N. A. and
should be made out in United States funds drawn on a United States bank. Checks
not drawn on a United States bank are subject to collection fees and will not
be invested until the funds have been collected.
 
   12. When will optional cash payments received by the agent be invested?
 
   Common shares to be purchased by the agent directly from ProLogis pursuant
to optional cash payments will be purchased on an investment date. The
investment period is the last ten consecutive trading days of each calendar
month, where, in the case of optional cash payments not exceeding the maximum
amount, the last trading day of the investment period is the investment date
and where, in the case of optional cash payments exceeding the maximum amount
pursuant to a request for waiver which has been granted by ProLogis, each
trading day of the investment period is an investment date. A schedule of the
anticipated investment period dates for 1999 and 2000 is set forth on Appendix
A, subject to change at ProLogis' discretion. For future periods, ProLogis will
provide participants a schedule of the relevant dates. Accordingly, for
optional cash payments not exceeding the maximum amount, the entire investment
will be made on the investment date which is the last trading day of the
investment period. For optional cash payments exceeding the maximum amount
pursuant to a request for waiver which has been granted by ProLogis, 1/10 of
the investment will be made on each investment date of the investment period.
 
   Common shares to be purchased by the agent on the open market or in
negotiated transactions with third parties pursuant to optional cash payments
will begin on the last investment date of the relevant investment period and
will be completed no later than 30 days after that date, except where
completion at a later date is necessary or advisable under any applicable
securities laws or regulations.
 
                                       6

 
No interest will be paid on funds held by the agent pending investment.
 
   13. What limitations apply to optional cash payments?
 
   Each optional cash payment is subject to a minimum purchase limit of the
minimum amount which initially is $200 in any calendar month and a maximum
purchase limit of the maximum amount which initially is $5,000 in any calendar
month both of which may be changed at any time in ProLogis' sole discretion.
For purposes of these limitations, all plan accounts under the common control
or management of a participant will be aggregated. Optional cash payments of
less than the minimum amount and the portion of any optional cash payment which
exceeds the maximum amount, unless that limit has been waived by ProLogis
pursuant to a request for waiver, may be returned to the participant without
interest. Participants may make optional cash payments of up to the maximum
amount each calendar month without the prior approval of ProLogis, subject to
ProLogis' right to modify, suspend, terminate or refuse participation in the
plan in its sole discretion.
 
   Optional cash payments in excess of the maximum amount may be made by a
participant only upon acceptance by ProLogis of a written request for waiver by
that participant. No pre-established maximum limit applies to optional cash
payments which may be made pursuant to a request for waiver; however,
participants may not acquire more than 9.8% of the outstanding common shares
and preferred shares of beneficial interest of ProLogis, as described in
Question 39. Acceptance of a request for waiver with respect to the amount of
the optional cash payment must be obtained each calendar month before the
beginning of the relevant investment period. Participants interested in making
optional cash payments in excess of the maximum amount can obtain a request for
waiver by contacting ProLogis' Share Purchase Plan Representative at (303) 576-
2622, and completed requests for waivers should be mailed or faxed to: ProLogis
Trust, 14100 East 35th Place, Aurora, Colorado 80011, Fax: (303) 576-2600,
Attention: Share Purchase Plan Representative.
 
   A request for waiver will be considered on the basis of a variety of
factors, which may include: ProLogis' current and projected capital
requirements, alternatives available to ProLogis to meet those requirements,
prevailing market prices for the common shares and other securities of
ProLogis, general economic and market conditions, expected aberrations in the
price or trading volume of ProLogis' securities, the number of shares held by
the participant submitting the request for waiver, the aggregate amount of
optional cash payments for which requests for waiver have been submitted and
the administrative constraints associated with granting requests for waiver. In
addition to the considerations described above for evaluation of requests for
waiver, any request may be denied if ProLogis believes the investor is making
excessive optional cash payments through multiple shareholder accounts, is
engaging in arbitrage activities such as "flipping" or is otherwise engaging in
activities under the plan in a manner which is not in the best interest of
ProLogis or which may cause the participant to be treated as an underwriter
under the federal securities laws. Persons who acquire common shares through
the plan and resell them shortly after acquiring them, including coverage of
short positions, under some circumstances, may be participating in a
distribution of securities which would require compliance with Regulation M
under the Securities Exchange Act of 1934, and may be considered to be
underwriters within the meaning of the Securities Act of 1933. ProLogis will
not extend to any such person any rights or privileges other than those to
which it would be entitled as a participant in the plan, nor will ProLogis
enter into any agreement with any such person regarding that person's purchase
of those shares or any resale or distribution thereof. If requests for waiver
are submitted for any calendar month for an aggregate amount in excess of the
amount ProLogis is willing to accept, ProLogis may honor those requests in
order of receipt, pro rata or by any other method which ProLogis determines to
be appropriate. Grants of requests for waivers will be made in ProLogis' sole
discretion and may be revoked by ProLogis in its sole discretion at any time
until the close of business on the trading day prior to the beginning of the
relevant investment period.
 
   Unless it waives its right to do so, ProLogis may establish from time to
time a minimum price, or the threshold price, which applies only to the
investment of optional cash payments in excess of the maximum amount made
pursuant to a request for waiver. The threshold price will be a stated dollar
amount that the average of the high and low sale prices of the common shares on
the New York Stock Exchange for each trading day of the investment period must
equal or exceed. If no sales occur on any trading day of an
 
                                       7

 
investment period, the average of the high and low sale prices of the common
shares on that trading day will be assumed to be less than the threshold price.
ProLogis reserves the right to change the threshold price at any time until the
close of business on the third trading day prior to the beginning of the
investment period, as set forth on Appendix A. The threshold price will be
determined in ProLogis' sole discretion after a review of current market
conditions and other relevant factors.
 
   If the threshold price is not satisfied for a trading day in the investment
period, then no investment will occur on that investment date. For each trading
day on which the threshold price is not satisfied, 1/10 of each optional cash
payment made by a participant pursuant to a request for waiver will be returned
to that participant, without interest, as soon as practicable after the end of
the relevant investment period. For example, if the threshold price is not
satisfied for two of the ten trading days in an investment period, 2/10 of each
participant's optional cash payment made pursuant to a request for waiver will
be returned to that participant by check, or by wire transfer, if payment was
received by wire transfer, without interest, as soon as practicable after the
end of the relevant investment period. The agent expects to send payments
within five to ten trading days after the end of the relevant investment
period. This return procedure will apply only when shares are purchased by the
agent directly from ProLogis. Only optional cash payments in excess of the
maximum amount are affected by the return procedure and the threshold price
provision described above. All other optional cash payments will be made
without regard to the threshold price provision. For any investment period,
ProLogis may waive its right to set a threshold price for optional cash
payments in excess of the maximum amount. Setting a threshold price for an
investment period will not affect the setting of a threshold price for any
subsequent investment period. Participants may obtain the threshold price
applicable to the next investment period by telephoning ProLogis' Share
Purchase Plan Representative at (303) 576-2622.
 
   14. May optional cash payments be returned to a participant?
 
   Optional cash payments received by the agent will be returned to a
participant upon written request received by the agent before the close of
business on the trading day prior to the beginning of the investment period.
Optional cash payments of less than the minimum amount, which initially is $200
in any calendar month, may be returned by check, without interest, as soon as
practicable after the end of the relevant investment period. Additionally, the
portion of each optional cash payment which exceeds the maximum amount, which
initially is $5,000 in any calendar month, may be returned by check, or by wire
transfer, if payment was received by wire transfer, without interest, as soon
as practicable after the end of the relevant investment period if a request for
waiver is not granted or is revoked or if the relevant threshold price is not
met, as described in Question 13. Each optional cash payment may be returned to
the participant in circumstances as described in Question 13.
 
Purchases
 
   15. What is the source of common shares purchased under the plan?
 
   Purchases of common shares by the agent for the plan may be made, at
ProLogis' option, either directly from ProLogis out of its authorized but
unissued common shares or in the open market or in negotiated transactions with
third parties. Initially, ProLogis anticipates that the common shares will be
purchased by the agent for the plan directly from ProLogis, but this may change
from time to time at ProLogis' election.
 
   16. When will common shares be purchased for a participant's account?
 
   Purchases of common shares directly from ProLogis will be made on the
relevant distribution payment date or on the relevant investment date or dates.
Purchases in the open market will begin on the relevant distribution payment
date or on the last investment date of the relevant investment period and will
be completed no later than 30 days after that date, except where completion at
a later date is necessary or advisable under any applicable securities laws or
regulations. The exact timing of open market purchases, including determining
the number of common shares, if any, to be purchased on any day or at any time
on that
 
                                       8

 
day, the prices paid for those common shares, the markets on which the
purchases are made and the persons, including brokers and dealers, from or
through which the purchases are made, will be determined by the agent or the
broker selected by it for that purpose. Neither ProLogis nor the agent will be
liable when conditions, including compliance with the rules and regulations of
the Securities and Exchange Commission, prevent the purchase of common shares
or interfere with the timing of the purchases. The agent may purchase common
shares in advance of a distribution payment date or investment date for
settlement on or after that date.
 
   Notwithstanding the above, funds will be returned to participants if not
used to purchase common shares within 35 days of receipt of optional cash
payments or within 30 days of the distribution payment date for distribution
reinvestments.
 
   In making purchases for a participant's account, the agent may commingle the
participant's funds with those of other participants in the plan.
 
   17. What is the purchase price of common shares purchased by participants
under the plan?
 
   When common shares are purchased directly from ProLogis, there are three
types of discounts which may be available to participants. First, common shares
purchased directly from ProLogis under the plan in connection with the
reinvestment of distributions may be purchased at a 2% distribution
reinvestment discount from the average of the high and low sale prices of the
common shares on the New York Stock Exchange on the distribution payment date,
as set forth on Appendix A.
 
   Second, common shares purchased directly from ProLogis under the plan in
connection with optional cash payments of not more than the maximum amount,
which initially is $5,000 in any calendar month, may be purchased at an
optional 2% cash payment discount from the average of the high and low sale
prices of the common shares on the New York Stock Exchange on the relevant
investment date.
 
   Third, ProLogis may establish a 2% waiver discount from the average of the
daily high and low sale prices of the common shares on the New York Stock
Exchange for each of the ten investment dates of the relevant investment
period, regarding common shares purchased directly from ProLogis in connection
with optional cash payments exceeding the maximum amount and approved by
ProLogis pursuant to a request for waiver, as described in Question 13.
 
   ProLogis may change its determination that common shares will be purchased
by the agent directly from ProLogis and instead determine that common shares
will be purchased by the agent in the open market or in negotiated
transactions, without prior notice to participants. The price of common shares
purchased in the open market or in negotiated transactions with third parties
with either reinvested cash distributions or optional cash payments will be the
weighted-average cost, for all common shares purchased under the plan in
connection with the relevant distribution payment date or investment period.
 
   18. How many common shares will be purchased for a participant?
 
   The number of common shares to be purchased for a participant's account as
of any distribution payment date or investment date will be equal to the total
dollar amount to be invested for the participant, less any initial enrollment
fees if applicable, divided by the applicable purchase price computed to the
fourth decimal place. For a participant who has elected to reinvest
distributions received on common shares registered in his or her name, the
total dollar amount to be invested as of any distribution payment date will be
the sum, subject to the distribution limit, of all or the specified portion of
the cash distributions received on common shares registered in the
participant's own name and all cash distributions received on common shares
previously purchased by the participant under the plan, other than common
shares purchased pursuant to requests for waiver, unless the participant has
elected to reinvest distributions received on those common shares.
 
   The amount to be invested for a participant with reinvested cash
distributions will also be reduced by any amount ProLogis is required to deduct
for federal tax withholding purposes.
 
                                       9

 
Plan administration
 
   19. Who administers the plan?
 
   BankBoston, as agent for the participants, administers the plan, keeps
records, sends statements of account to participants and performs other duties
relating to the plan. All costs of administering the plan are paid by ProLogis,
except as provided in this prospectus.
 
   The following address may be used to obtain information about the plan:
BankBoston, N.A., c/o EquiServe, L.P., P.O. Box 8040, Boston, Massachusetts
02266-8040 or call, toll free, 1-800-956-3378.
 
   20. What reports are sent to participants in the plan?
 
   After an investment is made for a participant's plan account, whether by
reinvestment of distributions or by optional cash payment, the participant will
be sent a statement which will provide a record of the costs of the common
shares purchased for that account, the purchase date, the number of common
shares purchased and the number of common shares in that account. These
statements should be retained for income tax purposes. In addition, each
participant will be sent information sent to every holder of common shares,
including ProLogis' annual report, notice of annual meeting and proxy statement
and income tax information for reporting distributions received.
 
   All reports and notices from the agent to a participant will be addressed to
the participant's last known address. Participants should notify the agent
promptly in writing of any change of address.
 
   21. What is the responsibility of ProLogis and the agent under the plan?
 
   ProLogis and the agent, in administering the plan, are not liable for any
act done in good faith or for any good faith omission to act, including,
without limitation, any claim of liability
 
     (1) with respect to the prices and times at which common shares are
  purchased or sold for a participant,
 
     (2) with respect to any fluctuation in market value before or after any
  purchase or sale of common shares, or
 
     (3) arising out of any failure to terminate a participant's account upon
  that participant's death prior to receipt by the agent of notice in writing
  of the death.
 
   Neither ProLogis nor the agent can provide any assurance of a profit, or
protect a participant from a loss, on common shares purchased under the plan.
These limitations of liability do not affect any liabilities arising under the
federal securities laws, including the Securities Act of 1933.
 
   The agent may resign as administrator of the plan at any time, in which case
ProLogis will appoint a successor administrator. In addition, ProLogis may
replace the agent with a successor administrator at any time.
 
Common share certificates
 
   22. Are certificates issued to participants for common shares purchased
under the plan?
 
   A certificate for any number of whole common shares purchased by a
participant under the plan or deposited with the agent for safe-keeping will be
issued to the participant upon written request by the participant to the agent.
These requests will be handled by the agent, normally within two weeks, at no
charge to the participant. Any remaining whole common shares and any fractional
common shares will continue to be held in the participant's plan account.
Certificates for fractional common shares will not be issued under any
circumstances.
 
 
                                       10

 
   23. What is the effect on a participant's plan account if a participant
requests a certificate for whole common shares held in the account?
 
   If a participant requests a certificate for whole common shares held in his
or her account, distributions on those common shares will continue to be
reinvested under the plan in the same manner as prior to the request so long as
the common shares remain registered in the participant's name, subject to the
distribution limit.
 
   24. May common shares held in certificate form be deposited in a
participant's plan account?
 
   Yes, whether or not the participant has previously authorized reinvestment
of distributions, certificates registered in the participant's name may be
surrendered to the agent for deposit in the participant's plan account. All
distributions on any common shares evidenced by certificates deposited in
accordance with the plan will automatically be reinvested, subject to the
distribution limit. The participant should contact the agent for the proper
procedure to deposit certificates.
 
Withdrawal from the plan
 
   25. May a participant withdraw from the plan?
 
   Yes, by providing written notice instructing the agent to terminate the
participant's plan account and by paying the relevant termination fee.
 
   26. What happens when a participant terminates an account?
 
   If a participant's notice of termination is received by the agent at least
five trading days prior to the record date for the next distribution payment,
reinvestment of distributions will cease as of the date notice of termination
is received by the agent. If the notice of termination is received later than
five trading days prior to the record date for a distribution payment, the
termination may not become effective until after the reinvestment of any
distributions on that distribution payment date. Optional cash payments can be
refunded if the written notice of termination is received by the agent at least
one trading day prior to the beginning of the relevant investment period.
 
   As soon as practicable after notice of termination is received, the agent
will send to the participant a certificate for all whole common shares held in
the account and a check representing any uninvested optional cash payments
remaining in the account and the value of any fractional common shares held in
the account. After an account is terminated, all distributions for the
terminated account will be paid to the participant unless the participant re-
elects to participate in the plan.
 
   When terminating an account, the participant may request that all common
shares, both whole and fractional, held in the plan account be sold, or that
certain of the common shares be sold and a certificate be issued for the
remaining common shares. The agent will remit to the participant the proceeds
of any sale of common shares, less any related trading fees, transfer tax or
other fees incurred by the agent allocable to the sale of those common shares.
 
   27. When may a former participant re-elect to participate in the plan?
 
   Generally, any former participant may re-elect to participate at any time.
However, the agent reserves the right to reject any authorization form on the
grounds of excessive joining and withdrawing. This reservation is intended to
minimize unnecessary administrative expense and to encourage use of the plan as
a long-term investment service.
 
Sale of common shares
 
   28. May a participant request that common shares held in a plan account be
sold?
 
   Yes, a participant may request that all or any number of common shares held
in a plan account be sold, either when an account is being terminated, as
described in Question 26, or without terminating the account. However,
fractional common shares will not be sold unless all common shares held in the
account are sold.
 
                                       11

 
   Within seven days after receipt of a participant's written request to sell
common shares held in a plan account, the agent will place a sell order through
a broker or dealer designated by the agent. The participant will receive the
proceeds of the sale, less any trading fees, transfer tax or other fees
incurred by the agent allocable to the sale of those common shares. No
participant will have the authority or power to direct the date or price at
which common shares may be sold. Proceeds of the sale will be forwarded by the
agent to the participant within 30 days after receipt of the participant's
request to sell.
 
   29. What happens when a participant sells or transfers all common shares
registered in the participant's name?
 
   Once a shareholder becomes a participant in the plan, the shareholder may
remain a participant even if the participant thereafter disposes of all common
shares registered in the participant's name. If a participant disposes of all
common shares registered in the participant's name, the participant may
continue to make optional cash payments, and the agent will continue to
reinvest the distributions on the common shares purchased under the plan, other
than common shares purchased pursuant to requests for waiver, unless the
participant has elected to reinvest distributions received on those common
shares, unless the participant notifies the agent that he or she wishes to
terminate the account.
 
Other information
 
   30. May common shares held in the plan be pledged or transferred?
 
   Common shares held in the plan may not be pledged, sold or otherwise
transferred, and any such purported pledge or sale will be void. A participant
who wishes to pledge, sell or transfer common shares must request that a
certificate for those common shares first be issued in the participant's name.
 
   31. What happens if ProLogis authorizes a share distribution or splits its
shares?
 
   If there is a distribution payable in common shares or a common share split,
the agent will receive and credit to the participant's plan account the
applicable number of whole and/or fractional common shares based on the number
of common shares held in the participant's plan account.
 
   32. What happens if ProLogis has a rights offering?
 
   If ProLogis has a rights offering in which separately tradeable and
exercisable rights are issued to registered holders of common shares, the
rights attributable to whole common shares held in a participant's plan account
will be transferred to the plan participant as promptly as practicable after
the rights are issued.
 
   33. How are the participant's common shares voted at shareholder meetings?
 
   Common shares held for a participant in the plan will be voted at
shareholder meetings as that participant directs. Participants will receive
proxy materials from ProLogis. Common shares held in a participant's plan
account may also be voted in person at the meeting.
 
   34. May the plan be suspended or terminated?
 
   While ProLogis expects to continue the plan indefinitely, ProLogis may
suspend or terminate the plan at any time. ProLogis also reserves the right to
modify, suspend, terminate or refuse participation in the plan to any person at
any time, as described in Question 13. ProLogis may modify, suspend, terminate
or refuse participation in the plan to any person at any time, if
participation, or any increase in the number of common shares held by that
person, would, in the opinion of the Board of Trustees of ProLogis, jeopardize
the status of ProLogis as a real estate investment trust under the Internal
Revenue Code of 1986.
 
                                       12

 
   35. May the plan be amended?
 
   The plan may be amended or supplemented by ProLogis at any time. Any
amendment or supplement will only be effective upon mailing appropriate written
notice at least 30 days prior to the effective date thereof to each
participant. Written notice is not required when an amendment or supplement is
necessary or appropriate to comply with the rules or policies of the Securities
and Exchange Commission, the Internal Revenue Service or other regulatory
authority or law, or when an amendment or supplement does not materially affect
the rights of participants. The amendment or supplement will be deemed to be
accepted by a participant unless prior to the effective date thereof, the agent
receives written notice of the termination of a participant's plan account. Any
amendment may include an appointment by the agent or by ProLogis of a successor
bank or agent, in which event ProLogis is authorized to pay that successor bank
or agent for the account of the participant all distributions and distributions
payable on common shares held by the participant for application by that
successor bank or agent as provided in the plan.
 
   36. What happens if the plan is terminated?
 
   If the plan is terminated, each participant will receive a certificate for
all whole common shares held in the participant's plan account, and a check
representing the value of any fractional common shares held in the
participant's plan account based on the average of the high and low sale prices
of common shares on the New York Stock Exchange on the termination date and any
uninvested distributions or optional cash payments held in the account.
 
   37. Who interprets and regulates the plan?
 
   ProLogis is authorized to issue such interpretations, adopt such regulations
and take such action as it may deem reasonably necessary to effectuate the
plan. Any action to effectuate the plan taken by ProLogis or the agent in the
good faith exercise of its judgment will be binding on participants.
 
   38. What law governs the plan?
 
   The terms and conditions of the plan and its operation will be governed by
the laws of the State of Maryland.
 
   39. How does the ownership limit set forth in ProLogis' declaration of trust
affect purchases of common shares under the plan?
 
   Subject to the exceptions specified in ProLogis' declaration of trust, no
shareholder may own, or be deemed to own, more than 9.8% of the number or value
of ProLogis' outstanding common shares and preferred shares of beneficial
interest. To the extent any reinvestment of distributions elected by a
shareholder or investment of an optional cash payment would cause any
shareholder, or any other person, to exceed the ownership limit or otherwise
violate ProLogis' declaration of trust, the reinvestment or investment, as the
case may be, will be void ab initio, and the shareholder will be entitled to
receive cash distributions or a refund of his or her optional cash payment,
each without interest, in lieu of the reinvestment or investment.
 
Individual retirement accounts
 
   40. May a participant open an individual retirement account with the agent?
 
   Yes. The agent offers an individual retirement account that invests in
ProLogis' common shares through the plan. After receiving a copy of this
prospectus, the agent's individual retirement account program plan and trust
agreement and disclosure statement, a participant may open an individual
retirement account by completing and signing an individual retirement account
enrollment form and returning it to the agent with an initial contribution. The
minimum initial investment for the individual retirement account program is
$200. Individual retirement account enrollment forms are available upon request
from the agent.
 
                                       13

 
   Some of the options and services generally available to plan participants
may not be applicable to the individual retirement account program. Please
refer to the individual retirement account program plan and trust agreement and
disclosure statement for individual retirement account program details. The
agent has the right to charge reasonable fees for its individual retirement
account services. Such fees are described in the individual retirement account
disclosure statement as in effect from time to time. ProLogis assumes no
responsibility for the operation or administration of the individual retirement
account program.
 
   The Taxpayer Relief Act of 1997 has expanded the options for retirement
savings. You may establish an individual retirement account which invests in
ProLogis common shares through the plan by either returning a completed
individual retirement account enrollment form and making an initial investment
to the individual retirement account of at least $200 or transferring funds
from an existing individual retirement account that have a fair market value of
at least $200 on the enrollment date and completing an individual retirement
account enrollment form and individual retirement account transfer form. These
forms and a disclosure statement are available from EquiServe. An annual fee of
$35 will be charged to you by EquiServe.
 
  Three individual retirement account options:
 
   Traditional individual retirement account. Traditional individual retirement
account contributions are allowed for individuals under age 70 who have taxable
compensation. Tax-deductible contributions are subject to new adjusted gross
income phase-out levels, while non-deductible contributions are allowed
regardless of income level. The maximum individual contribution is $2,000
annually, with tax-deferred growth of investment. Beginning in 1998, penalty-
free withdrawals can be made to help pay for first home purchases or higher
education expenses.
 
   Roth individual retirement account. Effective for the 1998 tax year,
contributions are allowed for individuals of any age with an adjusted gross
income below $160,000, for those filing joint returns, or $110,000, for those
filing single returns, but allowed contributions begin to phase out at an
adjusted gross income of $150,000, for those filing joint returns, and $95,000,
for those filing single returns. A maximum individual contribution is $2,000
annually. Investments and earnings grow tax-free. Contributions are not tax-
deductible, but if the investment stays in the Roth individual retirement
account for five years or more, qualified withdrawals are distributed tax-free,
and free of penalty in most cases. There are no requirements to begin
distributions at age 70. Penalty-free withdrawals can be made to help pay for
first home purchases or higher education expenses. Maximum annual contribution
between traditional and Roth individual retirement accounts is $2,000.
 
   Education individual retirement account. Effective for the 1998 tax year,
any individual of any age may contribute, subject to the same income ranges as
the Roth individual retirement account, to an education individual retirement
account for a child. Contributions of up to $500 annually can be made for
secondary education expenses for a child beneficiary under 18. Contributions
are not tax deductible, but investments grow tax-free and are not taxed when
withdrawn for higher education expenses, including tuition, room and board,
books and supplies. Withdrawals must be made by age 30 or the investment will
be taxed to the child and will be subject to a 10% penalty. Unused account
balances may be transferred to another family member's education individual
retirement account.
 
             FEDERAL INCOME TAX CONSIDERATIONS RELATING TO THE PLAN
 
   Participants are encouraged to consult their personal tax advisors with
specific reference to their own tax situations and potential changes in the
applicable law as to all federal, state, local, foreign and other tax matters
in connection with the reinvestment of distributions and purchase of common
shares under the plan, the participant's tax basis and holding period for
common shares acquired under the plan and the character, amount and tax
treatment of any gain or loss realized on the disposition of common shares. The
following is a brief summary of the material federal income tax considerations
applicable to the plan, is for general information only, and is not tax advice.
 
                                       14

 
Tax consequences of distribution reinvestment
 
   In the case of common shares purchased by the agent from ProLogis, a
participant will be treated for federal income tax purposes as having received
a distribution equal to the fair market value, as of the investment date, of
the common shares purchased with reinvested distributions. The 2% discount will
be treated as being part of the distribution received. With respect to common
shares purchased by the agent in open market transactions or in negotiated
transactions with third parties, the Internal Revenue Service has indicated in
somewhat similar situations that the amount of distribution received by a
participant would include the fair market value of the common shares purchased
with reinvested distributions and a pro rata share of any brokerage commission
or other related charges paid by ProLogis in connection with the agent's
purchase of the common shares on behalf of the participant. As in the case of
non-reinvested cash distributions, the distributions described above will
constitute taxable "distribution" income to participants to the extent of
ProLogis' current and accumulated earnings and profits allocable to the
distributions and any excess distributions will constitute a return of capital
which reduces the basis of a participant's common shares or results in gain to
the extent that excess distribution exceeds the participant's tax basis in his
or her common shares. In addition, if ProLogis designates part or all of its
distributions as capital gain distributions, those designated amounts would be
treated by a participant as long-term capital gains.
 
   A participant's tax basis in his or her common shares acquired under the
plan will generally equal the total amount of distributions a participant is
treated as receiving, as described above. A participant's holding period in his
or her common shares generally begins on the day following the date on which
the common shares are credited to the participant's plan account.
 
Tax consequences of optional cash payments
 
   The Internal Revenue Service has indicated in somewhat similar situations
that a participant who makes an optional cash purchase of common shares under
the plan will be treated as having received a distribution equal to the excess,
if any of the fair market value on the investment date of the common shares
over the amount of the optional cash payment made by the participant. Also, if
the common shares are acquired by the agent in an open market transaction or in
a negotiated transaction with third parties, then the Internal Revenue Service
may assert that a participant will be treated as receiving a distribution equal
to a pro rata share of any brokerage commission or other related charges paid
by ProLogis on behalf of the participant. The plan currently provides that
ProLogis will pay such amounts for purchase of common shares with optional cash
payments. ProLogis will pay such amounts in connection with the reinvestment of
distributions. Any distributions which the participant is treated as receiving,
including the 2% discount would be taxable income or gain or reduce basis in
common shares, or some combination thereof, under the rules described above.
 
   In Private Letter Ruling 9837008, the Internal Revenue Service held that a
shareholder who participated in both the dividend reinvestment and stock
purchase aspects of a dividend reinvestment and cash option purchase plan
offered by a real estate investment trust under the Internal Revenue Code,
pursuant to which stock could be acquired at a discount, would be treated in
the case of a cash option purchase as having received at the time of the
purchase a distribution from the real estate investment trust of the discount
amount which was taxable to the shareholder in the manner described above, but
a shareholder who participated solely in the cash purchase part of the plan
would not be treated as having received a distribution of the discount amount
and, therefore, would realize no income upon purchase attributable to the
discount. In addition, the Internal Revenue Service held that a shareholder who
participated solely in the dividend reinvestment part of the plan would be
treated as having received the fair market value of the shares received plus
any fee or commission that is paid by the company to acquire such shares.
Although not specifically discussed in the ruling, it seems likely that even if
the only dividends reinvested in stock by a shareholder who participated in the
cash purchase part of the plan were dividends on the stock which the
shareholder had purchased under the plan, the Internal Revenue Service would
have concluded that the shareholder should be treated as receiving a
distribution equal to the discount on the purchased shares which was taxable in
the manner described above. Private letter rulings are not considered precedent
by the Internal Revenue Service and no assurance can be given that the Internal
Revenue Service would take this position with respect to other transactions,
including those under the plan.
 
                                       15

 
   A participant's tax basis in his or her common shares acquired through an
optional cash purchase under the plan will generally equal the total amount of
distributions a participant is treated as receiving, as described above, plus
the amount of the optional cash payment. A participant's holding period for
common shares purchased under the plan generally will begin on the day
following the date on which common shares are credited to the participant's
plan account.
 
   In addition, all cash distributions paid with respect to all common shares
credited to a participant's plan account will be reinvested automatically. In
that regard, see "--Tax Consequences of Distribution Reinvestment" above.
 
Backup withholding and administrative expenses
 
   In general, any distribution reinvested under the plan is not subject to
federal income tax withholding. ProLogis or the agent may be required, however,
to deduct as "backup withholding" 31% of all distributions paid to any
shareholder, regardless of whether those distributions are reinvested pursuant
to the plan. Similarly, the agent may be required to deduct backup withholding
from all proceeds of sales of common shares held in a plan account. A
participant is subject to backup withholding if:
 
     (1) the participant has failed to properly furnish ProLogis and the
  agent with his or her correct identification number;
 
     (2) the Internal Revenue Service notifies ProLogis or the agent that the
  identification number furnished by the participant is incorrect;
 
     (3) the Internal Revenue Service notifies ProLogis or the agent that
  backup withholding should be commenced because the participant failed to
  report properly distributions paid to him or her; or
 
     (4) when required to do so, the participant fails to certify, under
  penalties of perjury, that the participant is not subject to backup
  withholding.
 
Backup withholding amounts will be withheld from distributions before those
distributions are reinvested under the plan. Therefore, distributions to be
reinvested under the plan by participants who are subject to backup withholding
will be reduced by the backup withholding amount. The withheld amounts
constitute a credit on the participant's income tax return.
 
   While the matter is not free from doubt, based on Private Letter Ruling
9837008, ProLogis intends to take the position that administrative expenses of
the plan paid by ProLogis are not constructive distributions to participants.
 
Tax consequences of dispositions
 
   A participant may recognize a gain or loss upon receipt of a cash payment
for a fractional common share credited to a plan account or when the common
shares held in an account are sold at the request of the participant. A gain or
loss may also be recognized upon a participant's disposition of common shares
received from the plan. The amount of any such gain or loss will be the
difference between the amount realized, generally the amount of cash received,
for the whole or fractional common shares and the tax basis of those common
shares. Generally, gain or loss recognized on the disposition of common shares
acquired under the plan will be treated for federal income tax purposes as a
capital gain or loss.
 
                       FEDERAL INCOME TAX CONSIDERATIONS
                   RELATING TO PROLOGIS' TREATMENT AS A REIT
 
   ProLogis intends to operate in a manner that permits it to satisfy the
requirements for taxation as a real estate investment trust under the
applicable provisions of the Internal Revenue Code of 1986. No assurance can be
given, however, that such requirements will be met. The following is a
description of the federal income tax
 
                                       16

 
consequences to ProLogis and its shareholders of the treatment of ProLogis as a
real estate investment trust. Since these provisions are highly technical and
complex, each prospective purchaser of the ProLogis common shares is urged to
consult his or her own tax advisor with respect to the federal, state, local,
foreign and other tax consequences of the purchase, ownership and disposition
of the ProLogis common shares.
 
   Based upon representations of ProLogis with respect to the facts as set
forth and explained in the discussion below, in the opinion of Mayer, Brown &
Platt, counsel to ProLogis, ProLogis has been organized in conformity with the
requirements for qualification as a real estate investment trust beginning with
its taxable year ending December 31, 1993, and its actual and proposed method
of operation described in this prospectus and as represented by management will
enable it to satisfy the requirements for such qualification.
 
   This opinion is based on representations made by ProLogis as to factual
matters relating to ProLogis' organization and intended or expected manner of
operation. In addition, this opinion is based on the law existing and in effect
on the date of this prospectus. ProLogis' qualification and taxation as a real
estate investment trust will depend upon ProLogis' ability to meet on a
continuing basis, through actual operating results, asset composition,
distribution levels and diversity of stock ownership, the various qualification
tests imposed under the Internal Revenue Code discussed below. Mayer, Brown &
Platt will not review compliance with these tests on a continuing basis. No
assurance can be given that ProLogis will satisfy such tests on a continuing
basis.
 
   In brief, if the conditions imposed by the real estate investment trust
provisions of the Internal Revenue Code are met, entities, such as ProLogis,
that invest primarily in real estate and that otherwise would be treated for
federal income tax purposes as corporations, are generally not taxed at the
corporate level on their "real estate investment trust taxable income" that is
currently distributed to shareholders. This treatment substantially eliminates
the "double taxation," at both the corporate and shareholder levels that
generally results from the use of corporations.
 
   If ProLogis fails to qualify as a real estate investment trust in any year,
however, it will be subject to federal income taxation as if it were a domestic
corporation, and its shareholders will be taxed in the same manner as
shareholders of ordinary corporations. In this event, ProLogis could be subject
to potentially significant tax liabilities, and therefore the amount of cash
available for distribution to its shareholders would be reduced or eliminated.
 
   ProLogis elected real estate investment trust status effective beginning
with its taxable year ended December 31, 1993 and the ProLogis board of
trustees believes that ProLogis has operated and currently intends that
ProLogis will operate in a manner that permits it to qualify as a real estate
investment trust in each taxable year thereafter. There can be no assurance,
however, that this expectation will be fulfilled, since qualification as a real
estate investment trust depends on ProLogis continuing to satisfy numerous
asset, income and distribution tests described below, which in turn will be
dependent in part on ProLogis' operating results.
 
   The following summary is based on the Internal Revenue Code, its legislative
history, administrative pronouncements, judicial decisions and Treasury
regulations, subsequent changes to any of which may affect the tax consequences
described herein, possibly on a retroactive basis. The following summary is not
exhaustive of all possible tax considerations and does not give a detailed
discussion of any state, local, or foreign tax considerations, nor does it
discuss all of the aspects of federal income taxation that may be relevant to a
prospective shareholder in light of his or her particular circumstances or to
various types of shareholders, including insurance companies, tax-exempt
entities, financial institutions or broker-dealers, foreign corporations and
persons who are not citizens or residents of the United States, subject to
special treatment under the federal income tax laws.
 
Taxation of ProLogis
 
 General
 
   In any year in which ProLogis qualifies as a real estate investment trust,
in general it will not be subject to federal income tax on that portion of its
real estate investment trust taxable income or capital gain which is
 
                                       17

 
distributed to shareholders. ProLogis may, however, be subject to tax at normal
corporate rates upon any taxable income or capital gain not distributed.
 
   Notwithstanding its qualification as a real estate investment trust,
ProLogis may also be subject to taxation in other circumstances. If ProLogis
should fail to satisfy either the 75% or the 95% gross income test, as
discussed below, and nonetheless maintains its qualification as a real estate
investment trust because other requirements are met, it will be subject to a
100% tax on the greater of the amount by which ProLogis fails to satisfy either
the 75% test or the 95% test, multiplied by a fraction intended to reflect
ProLogis' profitability. ProLogis will also be subject to a tax of 100% on net
income from any "prohibited transaction," as described below, and if ProLogis
has net income from the sale or other disposition of "foreclosure property"
which is held primarily for sale to customers in the ordinary course of
business or other non-qualifying income from foreclosure property, it will be
subject to tax on such income from foreclosure property at the highest
corporate rate. In addition, if ProLogis should fail to distribute during each
calendar year at least the sum of:
 
     (1) 85% of its real estate investment trust ordinary income for such
  year;
 
     (2) 95% of its real estate investment trust capital gain net income for
  such year, other than capital gains ProLogis elects to retain and pay tax
  on as described below; and
 
     (3) any undistributed taxable income from prior years,
 
ProLogis would be subject to a 4% excise tax on the excess of such required
distribution over the amounts actually distributed.
 
   The Taxpayer Relief Act of 1997 permits a real estate investment trust, to
designate in a notice mailed to shareholders within 60 days of the end of the
taxable year, or in a notice mailed with its annual report for the taxable
year, such amount of undistributed net long-term capital gains it received
during the taxable year, which its shareholders are to include in their taxable
income as long-term capital gains. Thus, if ProLogis made this designation, the
shareholders of ProLogis would include in their income as long-term capital
gains their proportionate share of the undistributed net capital gains as
designated by ProLogis and ProLogis would have to pay the tax on such gains
within 30 days of the close of its taxable year. Each shareholder of ProLogis
would be deemed to have paid such shareholder's share of the tax paid by
ProLogis on such gains, which tax would be credited or refunded to the
shareholder. A shareholder would increase his tax basis in his ProLogis stock
by the difference between the amount of income to the holder resulting from the
designation less the holder's credit or refund for the tax paid by ProLogis.
ProLogis may also be subject to the corporate "alternative minimum tax," as
well as tax in various situations and on some types of transactions not
presently contemplated. ProLogis will use the calendar year both for federal
income tax purposes and for financial reporting purposes.
 
   In order to qualify as a real estate investment trust, ProLogis must meet,
among others, the following requirements:
 
 Share ownership test
 
   ProLogis' shares must be held by a minimum of 100 persons for at least 335
days in each taxable year or a proportional number of days in any short taxable
year. In addition, at all times during the second half of each taxable year, no
more than 50% in value of the stock of ProLogis may be owned, directly or
indirectly and by applying constructive ownership rules, by five or fewer
individuals, which for this purpose includes some tax-exempt entities. Any
stock held by a qualified domestic pension or other retirement trust will be
treated as held directly by its beneficiaries in proportion to their actuarial
interest in such trust rather than by such trust. Pursuant to the constructive
ownership rules, Security Capital's ownership of shares is attributed to its
shareholders for purposes of the 50% test. Under the Taxpayer Relief Act, for
taxable years beginning after August 5, 1997, if ProLogis complies with the
Treasury regulations for ascertaining its actual ownership and did not know, or
exercising reasonable diligence would not have reason to know, that more than
50% in value of its outstanding shares of stock were held, actually or
constructively, by five or fewer individuals, then ProLogis will be treated as
meeting such requirement.
 
                                       18

 
   In order to ensure compliance with the 50% test ProLogis has placed
restrictions on the transfer of the shares of its stock to prevent additional
concentration of ownership. Moreover, to evidence compliance with these
requirements under Treasury regulations, ProLogis must maintain records which
disclose the actual ownership of its outstanding shares of stock and such
regulations impose penalties against ProLogis for failing to do so. In
fulfilling its obligations to maintain records, ProLogis must and will demand
written statements each year from the record holders of designated percentages
of shares of its stock disclosing the actual owners of such shares as
prescribed by Treasury regulations. A list of those persons failing or refusing
to comply with such demand must be maintained as a part of ProLogis' records. A
shareholder failing or refusing to comply with ProLogis' written demand must
submit with his or her tax returns a similar statement disclosing the actual
ownership of shares of ProLogis' stock and other information. In addition,
ProLogis' declaration of trust provides restrictions regarding the transfer of
shares that are intended to assist ProLogis in continuing to satisfy the share
ownership requirements. ProLogis intends to enforce the 9.8% limitation on
ownership of shares of its stock to assure that its qualification as a real
estate investment trust will not be compromised.
 
 Asset tests
 
   At the close of each quarter of ProLogis' taxable year, ProLogis must
satisfy tests relating to the nature of its assets determined in accordance
with generally accepted accounting principles. First, at least 75% of the value
of ProLogis' total assets must be represented by interests in real property,
interests in mortgages on real property, shares in other real estate investment
trusts, cash, cash items, and government securities, and qualified temporary
investments. Second, although the remaining 25% of ProLogis' assets generally
may be invested without restriction, securities in this class may not exceed
either, in the case of securities of any non-government issuer, 5% of the value
of ProLogis' total assets, or 10% of the outstanding voting securities of any
one issuer.
 
 Gross income tests
 
   There are currently two separate percentage tests relating to the sources of
ProLogis' gross income which must be satisfied for each taxable year. Prior to
taxable years beginning August 5, 1997, there were three separate percentage
tests relating to the sources of ProLogis' gross income which must have been
satisfied for each prior taxable year. For purposes of these tests, where
ProLogis invests in a partnership, ProLogis will be treated as receiving its
share of the income and loss of the partnership, and the gross income of the
partnership will retain the same character in the hands of ProLogis as it has
in the hands of the partnership. The three tests are as follows:
 
   1. The 75% Test. At least 75% of ProLogis' gross income for the taxable year
must be "qualifying income." Qualifying income generally includes:
 
     (1) rents from real property, except as modified below;
 
     (2) interest on obligations collateralized by mortgages on, or interests
  in, real property;
 
     (3) gains from the sale or other disposition of non-"dealer property,"
  which means interests in real property and real estate mortgages, other
  than gain from property held primarily for sale to customers in the
  ordinary course of ProLogis' trade or business;
 
     (4) dividends or other distributions on shares in other real estate
  investment trust, as well as gain from the sale of such shares;
 
     (5) abatements and refunds of real property taxes;
 
     (6) income from the operation, and gain from the sale, of "foreclosure
  property," which means property acquired at or in lieu of a foreclosure of
  the mortgage collateralized by such property; and
 
     (7) commitment fees received for agreeing to make loans collateralized
  by mortgages on real property or to purchase or lease real property.
 
                                       19

 
   Rents received from a tenant will not however, qualify as rents from real
property in satisfying the 75% test, or the 95% gross income test described
below, if ProLogis, or an owner of 10% or more of ProLogis, directly or
constructively owns 10% or more of such tenant. In addition, if rent
attributable to personal property leased in connection with a lease of real
property is greater than 15% of the total rent received under the lease, then
the portion of rent attributable to such personal property will not qualify as
rents from real property. Moreover, an amount received or accrued will not
qualify as rents from real property or as interest income for purposes of the
75% and 95% gross income tests if it is based in whole or in part on the income
or profits of any person, although an amount received or accrued generally will
not be excluded from "rents from real property" solely by reason of being based
on a fixed percentage or percentages of receipts or sales. Finally, for rents
received to qualify as rents from real property, ProLogis generally must not
operate or manage the property or furnish or render services to tenants, other
than through an "independent contractor" from whom ProLogis derives no income,
except that the "independent contractor" requirement does not apply to the
extent that the services provided by ProLogis are "usually or customarily
rendered" in connection with the rental of properties for occupancy only, or
are not otherwise considered "rendered to the occupant for his convenience."
For taxable years beginning after August 5, 1997, a real estate investment
trust is permitted to render a de minimis amount of impermissible services to
tenants, or in connection with the management of property, and still treat
amounts received with respect to that property as rent from real property. The
amount received or accrued by the real estate investment trust during the
taxable year for the impermissible services with respect to a property may not
exceed one percent of all amounts received or accrued by the real estate
investment trust directly or indirectly from the property. The amount received
for any service or management operation for this purpose shall be deemed to be
not less than 150% of the direct cost of the real estate investment trust in
furnishing or rendering the service or providing the management or operation.
 
   2. The 95% Test. In addition to deriving 75% of its gross income from the
sources listed above, at least 95% of ProLogis' gross income for the taxable
year must be derived from the above-described qualifying income, or from
dividends, interest or gains from the sale or disposition of stock or other
securities that are not dealer property. Dividends, other than on real estate
investment trust shares, and interest on any obligations not collateralized by
an interest in real property are included for purposes of the 95% test, but not
for purposes of the 75% test. In addition, payments to ProLogis under an
interest rate swap, cap agreement, option, futures contract, forward rate
agreement or any similar financial instrument entered into by ProLogis to hedge
indebtedness incurred or to be incurred, and any gain from the sale or other
disposition of these instruments, are treated as qualifying income for purposes
of the 95% test, but not for purposes of the 75% test.
 
   For purposes of determining whether ProLogis complies with the 75% and 95%
income tests, gross income does not include income from prohibited
transactions. A "prohibited transaction" is a sale of dealer property,
excluding foreclosure property, unless such property is held by ProLogis for at
least four years and other requirements relating to the number of properties
sold in a year, their tax bases, and the cost of improvements made thereto are
satisfied. See "--Taxation of ProLogis--General."
 
   Even if ProLogis fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it may still qualify as a real estate investment
trust for such year if it is entitled to relief under provisions of the
Internal Revenue Code. These relief provisions will generally be available if:
 
     (1) ProLogis' failure to comply was due to reasonable cause and not to
  willful neglect;
 
     (2) ProLogis reports the nature and amount of each item of its income
  included in the tests on a schedule attached to its tax return; and
 
     (3) any incorrect information on this schedule is not due to fraud with
  intent to evade tax.
 
If these relief provisions apply, however, ProLogis will nonetheless be subject
to a special tax upon the greater of the amount by which it fails either the
75% or 95% gross income test for that year.
 
   3. The 30% Test. For taxable years beginning prior to August 5, 1997,
ProLogis must have derived less than 30% of its gross income for each taxable
year from the sale or other disposition of:
 
     (1) real property held for less than four years, other than foreclosure
  property and involuntary conversions;
 
                                       20

 
     (2) stock or securities held for less than one year; and
 
     (3) property in a prohibited transaction.
 
The 30% gross income test has been repealed by the Taxpayer Relief Act for
taxable years beginning after August 5, 1997.
 
 Annual distribution requirements
 
   In order to qualify as a real estate investment trust, ProLogis is required
to make distributions, other than capital gain dividends, to its shareholders
each year in an amount at least equal to the sum of 95% of ProLogis' real
estate investment trust taxable income, computed without regard to the
dividends paid deduction and real estate investment trust net capital gain,
plus 95% of its net income after tax, if any, from foreclosure property, minus
the sum of some items of non-cash income. Such distributions must be paid in
the taxable year to which they relate, or in the following taxable year if
declared before ProLogis timely files its tax return for such year and if paid
on or before the first regular dividend payment after such declaration. To the
extent that ProLogis does not distribute all of its net capital gain or
distributes at least 95%, but less than 100%, of its real estate investment
trust taxable income, as adjusted, it will be subject to tax on the
undistributed amount at regular capital gains or ordinary corporate tax rates,
as the case may be. For taxable years beginning after August 5, 1997, the
Taxpayer Relief Act permits a real estate investment trust, with respect to
undistributed net long-term capital gains it received during the taxable year,
to designate in a notice mailed to shareholders within 60 days of the end of
the taxable year, or in a notice mailed with its annual report for the taxable
year, such amount of such gains which its shareholders are to include in their
taxable income as long-term capital gains. Thus, if ProLogis made this
designation, the shareholders of ProLogis would include in their income as
long-term capital gains their proportionate share of the undistributed net
capital gains as designated by ProLogis and ProLogis would have to pay the tax
on such gains within 30 days of the close of its taxable year. Each shareholder
of ProLogis would be deemed to have paid such shareholder's share of the tax
paid by ProLogis on such gains, which tax would be credited or refunded to the
shareholder. A shareholder would increase his tax basis in his ProLogis stock
by the difference between the amount of income to the holder resulting from the
designation less the holder's credit or refund for the tax paid by ProLogis.
 
   ProLogis intends to make timely distributions sufficient to satisfy the
annual distribution requirements. It is possible that ProLogis may not have
sufficient cash or other liquid assets to meet the 95% distribution
requirement, due to timing differences between the actual receipt of income and
actual payment of expenses on the one hand, and the inclusion of such income
and deduction of such expenses in computing ProLogis' real estate investment
trust taxable income on the other hand. To avoid any problem with the 95%
distribution requirement, ProLogis will closely monitor the relationship
between its real estate investment trust taxable income and cash flow and, if
necessary, intends to borrow funds in order to satisfy the distribution
requirement. However, there can be no assurance that such borrowing would be
available at such time.
 
   If ProLogis fails to meet the 95% distribution requirement as a result of an
adjustment to ProLogis' tax return by the Internal Revenue Service, ProLogis
may retroactively cure the failure by paying a "deficiency dividend," plus
applicable penalties and interest, within a specified period.
 
 Tax aspects of ProLogis' investments in partnerships
 
   A significant portion of ProLogis' investments are through ProLogis Limited
Partnership-I, ProLogis Limited Partnership-II, ProLogis Limited Partnership-
III and ProLogis Limited Partnership-IV. ProLogis will include its
proportionate share of each partnership's income, gains, losses, deductions and
credits for purposes of the various real estate investment trust gross income
tests and in its computation of its real estate investment trust taxable income
and the assets held by each partnership for purposes of the real estate
investment trust asset tests.
 
                                       21

 
   ProLogis' interest in the partnerships involves special tax considerations,
including the possibility of a challenge by the Internal Revenue Service of the
status of the partnerships as partnerships, as opposed to associations taxable
as corporations, for federal income tax purposes. If a partnership were to be
treated as an association, such partnership would be taxable as a corporation
and therefore subject to an entity-level tax on its income. In such a
situation, the character of ProLogis' assets and items of gross income would
change, which may preclude ProLogis from satisfying the real estate investment
trust asset tests and may preclude ProLogis from satisfying the real estate
investment trust gross income tests. See "--Failure to Qualify" below, for a
discussion of the effect of ProLogis' failure to meet such tests. Based on
factual representations of ProLogis, in the opinion of Mayer, Brown, & Platt,
under existing federal income tax law and regulations, the partnerships will be
treated for federal income tax purposes as partnerships, and not as
associations taxable as corporations. Such opinion, however, is not binding on
the Internal Revenue Service.
 
 Failure to qualify
 
   If ProLogis fails to qualify for taxation as a real estate investment trust
in any taxable year and relief provisions do not apply, ProLogis will be
subject to tax, including applicable alternative minimum tax, on its taxable
income at regular corporate rates. Distributions to shareholders in any year in
which ProLogis fails to qualify as a real estate investment trust will not be
deductible by ProLogis, nor generally will they be required to be made under
the Internal Revenue Code. In such event, to the extent of current and
accumulated earnings and profits, all distributions to shareholders will be
taxable as ordinary income, and subject to limitations in the Internal Revenue
Code, corporate distributees may be eligible for the dividends-received
deduction. Unless entitled to relief under specific statutory provisions,
ProLogis also will be disqualified from re-electing taxation as a real estate
investment trust for the four taxable years following the year during which
qualification was lost.
 
Taxation of ProLogis' shareholders
 
 Taxation of taxable domestic shareholders
 
   As long as ProLogis qualifies as a real estate investment trust,
distributions made to ProLogis' taxable domestic shareholders out of current or
accumulated earnings and profits, and not designated as capital gain dividends,
will be taken into account by them as ordinary income and will not be eligible
for the dividends-received deduction for corporations. Distributions, and for
tax years beginning after August 5, 1997, undistributed amounts, that are
designated as capital gain dividends will be taxed as long-term capital gains,
to the extent they do not exceed ProLogis' actual net capital gain for the
taxable year, without regard to the period for which the shareholder has held
its shares. However, corporate shareholders may be required to treat up to 20%
of some capital gain dividends as ordinary income. To the extent that ProLogis
makes distributions in excess of current and accumulated earnings and profits,
these distributions are treated first as a tax-free return of capital to the
shareholder, reducing the tax basis of a shareholder's shares by the amount of
such distribution, but not below zero, with distributions in excess of the
shareholder's tax basis taxable as capital gains, if the shares are held as a
capital asset. In addition, any dividend declared by ProLogis in October,
November or December of any year and payable to a shareholder of record on a
specific date in any such month shall be treated as both paid by ProLogis and
received by the shareholder on December 31 of such year, provided that the
dividend is actually paid by ProLogis during January of the following calendar
year. Shareholders may not include in their individual income tax returns any
net operating losses or capital losses of ProLogis. Federal income tax rules
may also require that minimum tax adjustments and preferences be apportioned to
ProLogis shareholders.
 
   In general, any loss upon a sale or exchange of shares by a shareholder who
has held such shares for six months or less, after applying holding period
rules, will be treated as a long-term capital loss, to the extent of
distributions from ProLogis required to be treated by such shareholder as long-
term capital gains.
 
   The Internal Revenue Service Restructuring and Reform Act of 1998 provides
that gain from the sale or exchange of shares held for more than one year is
taxed at a maximum capital gain rate of 20%. Pursuant to
 
                                       22

 
Internal Revenue Service guidance, ProLogis may classify portions of its
capital gain dividends as gains eligible for the 20% capital gains rate or as
unrecaptured Internal Revenue Code Section 1250 gain taxable at a maximum rate
of 25%.
 
   Shareholders of ProLogis should consult their tax advisor with regard to the
application of the changes made by the Internal Revenue Service Restructuring
and Reform Act of 1988 with respect to taxation of capital gains and capital
gain dividends and with regard to state, local and foreign taxes on capital
gains.
 
 Backup withholding
 
   ProLogis will report to its domestic shareholders and to the Internal
Revenue Service the amount of distributions paid during each calendar year, and
the amount of tax withheld, if any, with respect thereto. Under the backup
withholding rules, a shareholder may be subject to backup withholding at
applicable rates with respect to distributions paid unless such shareholder is
a corporation or comes within other exempt categories and, when required,
demonstrates this fact or provides a taxpayer identification number, certifies
as to no loss of exemption from backup withholding, and otherwise complies with
applicable requirements of the backup withholding rules. A shareholder that
does not provide ProLogis with its correct taxpayer identification number may
also be subject to penalties imposed by the Internal Revenue Service. Any
amount paid as backup withholding will be credited against the shareholder's
income tax liability. In addition, ProLogis may be required to withhold a
portion of capital gain distributions made to any shareholders who fail to
certify their non-foreign status to ProLogis.
 
 Taxation of tax-exempt shareholders
 
   The Internal Revenue Service has issued a revenue ruling in which it held
that amounts distributed by a real estate investment trust to a tax-exempt
employees' pension trust do not constitute unrelated business taxable income.
Subject to the discussion below regarding a "pension-held real estate
investment trust," based upon the ruling, the analysis therein and the
statutory framework of the Internal Revenue Code, distributions by ProLogis to
a shareholder that is a tax-exempt entity should also not constitute unrelated
business taxable income, provided that the tax-exempt entity has not financed
the acquisition of its shares with "acquisition indebtedness" within the
meaning of the Internal Revenue Code, and that the shares are not otherwise
used in an unrelated trade or business of the tax-exempt entity, and that
ProLogis, consistent with its present intent, does not hold a residual interest
in a real estate mortgage investment conduit.
 
   However, if any pension or other retirement trust that qualifies under
Section 401(a) of the Internal Revenue Code holds more than 10% by value of the
interests in a "pension-held real estate investment trust" at any time during a
taxable year, a portion of the dividends paid to the qualified pension trust by
such real estate investment trust may constitute unrelated business taxable
income. For these purposes, a "pension-held real estate investment trust" is
defined as a real estate investment trust if such real estate investment trust
would not have qualified as a real estate investment trust but for the
provisions of the Internal Revenue Code which look through such a qualified
pension trust in determining ownership of stock of the real estate investment
trust and at least one qualified pension trust holds more than 25% by value of
the interests of such real estate investment trust or one or more qualified
pension trusts, each owning more than a 10% interest by value in the real
estate investment trust, hold in the aggregate more than 50% by value of the
interests in such real estate investment trust.
 
 Taxation of foreign shareholders
 
   ProLogis will qualify as a "domestically-controlled real estate investment
trust" so long as less than 50% in value of its Shares is held by foreign
persons, for example, nonresident aliens and foreign corporations,
partnerships, trust and estates. It is currently anticipated that ProLogis will
qualify as a domestically controlled real estate investment trust. Under these
circumstances, gain from the sale of the shares by a foreign person should not
be subject to U.S. taxation, unless such gain is effectively connected with
such person's U.S. business or, in the case of an individual foreign person,
such person is present within the U.S. for more than 182 days in such taxable
year.
 
                                       23

 
   Distributions of cash generated by ProLogis' real estate operations, but not
by its sale or exchange of such properties, that are paid to foreign persons
generally will be subject to U.S. withholding tax at a rate of 30%, unless an
applicable tax treaty reduces that tax and the foreign shareholder files with
ProLogis the required form evidencing such lower rate or unless the foreign
shareholder files an Internal Revenue Service Form 4224 with ProLogis claiming
that the distribution is "effectively connected" income. Recently promulgated
Treasury Regulations revise in some respects the rules applicable to foreign
shareholders with respect to payments made after December 31, 1999.
 
   Distributions of proceeds attributable to the sale or exchange by ProLogis
of U.S. real property interests are subject to income and withholding taxes
pursuant to the Foreign Investment in Real Property Tax Act of 1980, and may be
subject to branch profits tax in the hands of a shareholder which is a foreign
corporation if it is not entitled to treaty relief or exemption. ProLogis is
required by applicable Treasury regulations to withhold 35% of any distribution
to a foreign person that could be designated by ProLogis as a capital gain
dividend; this amount is creditable against the foreign shareholder's Foreign
Investment in Real Property Tax Act tax liability.
 
   The federal income taxation of foreign persons is a highly complex matter
that may be affected by many other considerations. Accordingly, foreign
investors in ProLogis should consult their own tax advisors regarding the
income and withholding tax considerations with respect to their investment in
ProLogis.
 
Other tax considerations
 
 ProLogis Development Services Incorporated and ProLogis Logistics Services
Incorporated
 
   ProLogis Development Services Incorporated and ProLogis Logistics Services
Incorporated will pay federal and state income taxes at the full applicable
corporate rates on its income prior to payment of any dividends. ProLogis
Development Services Incorporated and ProLogis Logistics Services Incorporated
will attempt to minimize the amount of such taxes, but there can be no
assurance whether or the extent to which measures taken to minimize taxes will
be successful. To the extent that ProLogis Development Services Incorporated or
ProLogis Logistics Services Incorporated is required to pay federal, state or
local taxes, the cash available for distribution by either company to its
shareholders will be reduced accordingly.
 
 Tax on built-in gain
 
 
   Pursuant to Notice 88-19. 1988-1 C.B. 486, a C corporation that elects to be
taxed as a real estate investment trust has to recognize any gain that would
have been realized if the C corporation had sold all of its assets for their
respective fair market values at the end of its last taxable year before the
taxable year in which it qualifies to be taxed as a real estate investment
trust and immediately liquidated unless the real estate investment trust elects
to be taxed under rules similar to the rules of Section 1374 of the Internal
Revenue Code.
 
   Since ProLogis has made this election, if during the "recognition period,"
being the 10-year period beginning on the first day of the first taxable year
for which ProLogis qualifies as a real estate investment trust, ProLogis
recognizes gain on the disposition of any asset held by ProLogis as of the
beginning of the recognition period, then, to the extent of the excess of the
fair market value of such asset as of the beginning of the recognition period
over ProLogis' adjusted basis in such asset as of the beginning of the
recognition period, such gain will be subject to tax at the highest regular
corporate rate. Because ProLogis acquires many of its properties in fully
taxable transactions and presently expects to hold each property beyond the
recognition period, it is not anticipated that ProLogis will pay a substantial
corporate level tax on its built-in gain.
 
 Possible legislative or other actions affecting tax consequences
 
   Prospective shareholders should recognize that the present federal income
tax treatment of an investment in ProLogis may be modified by legislative,
judicial or administrative action at any time and that any such
 
                                       24

 
action may affect investments and commitments previously made. The rules
dealing with federal income taxation are constantly under review by persons
involved in the legislative process and by the Internal Revenue Service and the
Treasury, resulting in revisions of regulations and revised interpretations of
established concepts as well as statutory changes. Revisions in federal tax
laws and interpretations thereof could adversely affect the tax consequences of
an investment in ProLogis.
 
 State and local taxes
 
   ProLogis and its shareholders may be subject to state or local taxation in
various jurisdictions, including those in which it or they transact business or
reside. The state and local tax treatment of ProLogis and its shareholders may
not conform to the federal income tax consequences discussed above.
Consequently, prospective shareholders should consult their own tax advisors
regarding the effect of state and local tax laws on an investment in the
offered securities of ProLogis.
 
 Foreign taxes
 
   Frigoscandia S.A., a Luxembourg corporation, Garonor S.A., a Luxembourg
corporation, Kingspark Holding S.A., a Luxembourg corporation, and ProLogis
International Incorporated, a Delaware corporation, and each of their
subsidiaries and affiliates, may be subject to taxation in various foreign
jurisdictions. Each of the foregoing parties will pay any such foreign taxes
prior to payment of any dividends. Each entity will attempt to minimize the
amount of such taxes, but there can be no assurance whether or the extent to
which measures taken to minimize taxes will be successful. To the extent that
any of the foregoing entities is required to pay foreign taxes, the cash
available for distribution to its shareholders will be reduced accordingly.
 
   Each prospective purchaser is advised to consult with his or her tax advisor
regarding the specific tax consequences to him or her of the purchase,
ownership, and sales of ProLogis common shares, including the federal, state,
local, foreign, and other tax consequences of such purchase, ownership, sale
and election and of potential changes in applicable tax laws.
 
                                USE OF PROCEEDS
 
   The net proceeds from the sale of common shares purchased by the agent
directly from ProLogis will be used for the development and acquisition of
additional distribution facilities, as suitable opportunities arise, for the
repayment of outstanding indebtedness at the time and for working capital
purposes. ProLogis will not receive any proceeds from purchases of common
shares by the agent in the open market or in negotiated transactions with third
parties.
 
                      WHERE YOU CAN FIND MORE INFORMATION
 
   ProLogis is subject to the reporting requirements of the Securities Exchange
Act of 1934, and files reports, proxy statements and other information with the
Securities and Exchange Commission. You may read and copy any materials
ProLogis files with the Securities and Exchange Commission at the its Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may
obtain information on the operation of the Public Reference Room by calling the
Securities and Exchange Commission at 1-800-SEC-0330. In addition, the
Securities and Exchange Commission maintains an Internet site that contains
reports, proxies, information statements, and other information regarding
issuers that file electronically, and the address of that site is
http://www.sec.gov. ProLogis' outstanding common shares are listed on the New
York Stock Exchange under the symbol "PLD", and all reports, proxy statements
and other information filed by ProLogis with the New York Stock Exchange may be
inspected at the New York Stock Exchange's offices at 20 Broad Street, New
York, New York 10005.
 
                                       25

 
   ProLogis has filed with the Securities and Exchange Commission a
registration statement on Form S-3 under the Securities Act of 1933, with
respect to the common shares of ProLogis being offered. This prospectus, which
constitutes part of the registration statement, does not contain all of the
information set forth in the registration statement. Parts of the registration
statement are omitted from this prospectus in accordance with the rules and
regulations of the Securities and Exchange Commission. For further information,
your attention is directed to the registration statement. Statements made in
this prospectus concerning the contents of any documents referred to herein are
not necessarily complete, and in each case are qualified in all respects by
reference to the copy of such document filed with the Securities and Exchange
Commission.
 
   The Securities and Exchange Commission allows ProLogis to "incorporate by
reference" the information ProLogis files with the Securities and Exchange
Commission, which means that ProLogis can disclose important information to you
by referring you to those documents. The information incorporated by reference
is an important part of this prospectus, and information that ProLogis files
later with the Securities and Exchange Commission will automatically update and
supersede this information.
 
   ProLogis incorporates by reference the documents listed below:
 
      (a) ProLogis' annual report on Form 10-K for the year ended December
  31, 1998;
 
      (b) ProLogis' current reports on Form 8-K filed March 24, and March 31,
  1999; and
 
      (c) The description of the ProLogis common shares and preferred share
  purchase rights contained or incorporated by reference in ProLogis'
  registration statement on Form 8-A filed February 23, 1994.
 
   The Securities and Exchange Commission has assigned file number 1-12846 to
the reports and other information that ProLogis files with the Securities and
Exchange Commission.
 
   You may request a copy of each of the above-listed ProLogis documents at no
cost, by writing or telephoning ProLogis at the following address or telephone
number.
 
       Investor Relations Department
       ProLogis Trust
       14100 East 35th Place
       Aurora, Colorado 80011
       (303) 375-9292
       (800) 820-0181
       www.prologis.com
 
   All documents subsequently filed by the registrant pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act, prior to the
termination of the offering, shall be deemed to be incorporated by reference
into this prospectus.
 
   Any statement contained in a document incorporated or deemed to be
incorporated herein shall be deemed modified or superseded for purposes of this
prospectus to the extent that a statement contained herein or in any other
subsequently filed document that is deemed to be incorporated herein modifies
or supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
prospectus.
 
   You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is inconsistent with information contained in this document or
any document incorporated herein. This prospectus is not an offer to sell these
securities in any state where the offer and sale of these securities is not
permitted. The information in this prospectus is current as of the date it is
mailed to security holders, and not necessarily as of any later date. If any
material change occurs during the period that this prospectus is required to be
delivered, this prospectus will be supplemented or amended.
 
                                       26

 
                                    EXPERTS
 
   The consolidated financial statements and schedule of ProLogis as of
December 31, 1998 and 1997, and for each of the years in the three-year period
ending December 31, 1998 incorporated by reference herein and in this
registration statement on Form S-3 filed by ProLogis have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
 
                                 LEGAL MATTERS
 
   The validity of the common shares offered pursuant to this prospectus will
be passed on for ProLogis by Mayer, Brown & Platt, Chicago, Illinois. Mayer,
Brown & Platt has in the past represented and is currently representing
ProLogis and some of its affiliates.
 
                       SOURCES OF INFORMATION ON THE PLAN
 
   Authorization forms, optional cash payment forms, changes in name or
address, notices of termination, requests for refunds of payments to purchase
common shares, common share certificates or the sale of common shares held in
the plan should be directed to, and may be obtained from, and inquiries
regarding the distribution reinvestment discount and the optional cash payment
discount or any other questions about the plan should be directed to:
 
                BankBoston, N.A.,
                c/o EquiServe, L.P.
                P. O. Box 8040
                Boston, Massachusetts 02266-8040
                Telephone: 1-800-956-3378
 
   Requests for waivers should be directed to, and may be obtained from, and
inquiries regarding the distribution limit, the threshold price and the waiver
discount should be directed to:
 
                ProLogis Trust
                14100 East 35th Place
                Aurora, Colorado 80011
                Phone: (303) 576-2622
                Fax: (303) 576-2600
                Attention: Share Purchase Plan Representative
 
                                       27

 
                                   APPENDIX A
 
                         REINVESTMENT OF DISTRIBUTIONS
 


        Distribution                                           Distribution
         Record Date                                           Payment Date
        ------------                                           ------------
                                                          
        May 13, 1999                                           May 27, 1999
       August 12, 1999                                        August 26, 1999
      November 9, 1999                                       November 24, 1999
      February 2, 2000                                       February 23, 2000
        May 11, 2000                                           May 25, 2000
       August 10, 2000                                        August 24, 2000
      November 11, 2000                                      November 22, 2000

 
                             OPTIONAL CASH PAYMENTS
 


    Threshold       Optional Cash Payment     Investment     Investment Period
     Set Date             Due Date        Commencement Date   Conclusion Date
    ---------       --------------------- -----------------  -----------------
                                                    
June 14, 1999        June 16, 1999        June 17, 1999      June 30, 1999
July 14, 1999        July 16, 1999        July 19, 1999      July 30, 1999
August 13, 1999      August 17, 1999      August 18, 1999    August 31, 1999
September 14, 1999   September 16, 1999   September 17, 1999 September 30, 1999
October 13, 1999     October 15, 1999     October 18, 1999   October 29, 1999
November 11, 1999    November 15, 1999    November 16, 1999  November 30, 1999
December 14, 1999    December 16, 1999    December 17, 1999  December 31, 1999
January 12, 2000     January 14, 2000     January 18, 2000   January 31, 2000
February 10, 2000    February 15, 2000    February 16, 2000  February 29, 2000
March 15, 2000       March 17, 2000       March 20, 2000     March 31, 2000
April 11, 2000       April 13, 2000       April 14, 2000     April 28, 2000
May 12, 2000         May 16, 2000         May 17, 2000       May 31, 2000
June 14, 2000        June 16, 2000        June 19, 2000      June 30, 1999
July 13, 2000        July 17, 2000        July 18, 2000      July 31, 2000
August 15, 2000      August 17, 2000      August 18, 2000    August 31, 2000
September 13, 2000   September 15, 2000   September 18, 2000 September 29, 2000
October 13, 2000     October 17, 2000     October 18, 2000   October 31, 2000
November 13, 2000    November 15, 2000    November 16, 2000  November 30, 2000
December 12, 2000    December 14, 2000    December 15, 2000  December 29, 2000

- --------
*  Assumes that the New York Stock Exchange will not be open for business on
   either December 24, 1999 or December 27, 1999. If the New York Stock
   Exchange is open for business on both of those dates, each of the dates
   marked with an asterisk will instead be the following trading day.
 
 
                                      A-1