AURORA, CO-ProLogis, the world's largest industrial real estate investment trust, reports adjusted funds from operations at 75 cents per diluted share for the second quarter, a 15.4% increase from 65 cents in the second quarter of 2004. After relocation charges and recognition of cumulative translation losses related to the sale of its temperature-controlled business, funds from operations for the second quarter were 67 cents per share. Net earnings per diluted share were 40 cents for the second quarter, compared with 42 cents for the same period in 2004.

For the six months ended June 30, adjusted FFO was $1.37 per diluted share, up 18.1% from $1.16 in the first six months of 2004. After the charges, the FFO was $1.22, compared with $1.14 in the prior year. Net earnings per diluted share for the six months ended June 30, 2005, were 69 cents, compared with 66 cents in the comparable period of 2004.

"Market conditions continue to improve, supporting another quarter of exceptionally strong development starts and record leasing activity," says Jeffrey H. Schwartz, CEO. "Globally, we are experiencing further strengthening of property operations with increased occupancies, stable-to-improving rental rates and positive net absorption. We also are very excited about the opportunities to strengthen our overall business as a result of the Catellus merger, announced earlier in the quarter , and expect to complete the merger in September."

During the quarter, ProLogis began new developments with a total expected investment of more than $730 million, bringing its year-to-date total to $1.48 billion. "This solid momentum early in the year supports an increase in our development start guidance to $1.9 billion to $2 billion in 2005," says Schwartz. "In turn, growth in development gains and improving property performance supports an increase in our full-year guidance for adjusted FFO per share to $2.60 to $2.68 and earnings per share to $1.60 to $1.80."

Previous guidance was for $2.55 to $2.65 per share and $1.40 to $1.60 per share, respectively. The company added that its FFO per share guidance is prior to expected one-time merger integration costs, corporate relocation and temperature-controlled charges.

The company also reports a 2.98% increase in same-store net operatingincome (a 4.07% increase when straight-lined rents are excluded) and a 2.35% increase in same-store average occupancies when compared with the second quarter of 2004. The company also achieved a 62 basis point improvement in its stabilized leased percentage over the first quarter of 2005, reaching 92.8%--its highest level since the fourth quarter of 2001.

"The trends we're seeing in improved property performance are supported by strong customer demand globally," Schwartz says. "In the majority of North American markets, occupancies are up, and we are seeing rent growth in an increasing number of markets."

Schwartz says in Europe, where the company has significantly increased its development pipeline, customers continue to actively reconfigure their distribution operations for greater efficiency, despite economic softness in some regions. And in Japan and China, where there is a shortage of modern logistics space, Schwartz says customer requirements have driven year-to-date development starts of more than $450 million, with strong leasing of recently completed facilities.