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DENVER-Locally based ProLogis had a gangbuster 2005, the year it completed its merger of Catellus, making what was already the world’s largest industrial REIT even bigger. Its net income in 2005 rose to $370.75 million last year, an 82.7% jump from the $202.813 million in 2004, according to a 10-K report filed with the Securities and Exchange Commission on Thursday. The REITs net earnings per share rose to $1.82 from $1.11. And the amount of real estate it owns, excluding land held for development, before deprecation, rose 88.7% to $10.83 billion from $5.73 billion in 2004, according.

“The fundamentals of our business were strong in 2005,” the company states in the SEC document. “We increased our total operating portfolio of industrial distribution and retail properties owned or managed, including direct-owned properties, and properties owned by the property funds and CDFS (Corporate Distribution Facilities Services) joint ventures, to 349.7 million sf at Dec. 31, 2005 from 284.3 million sf at Dec. 31, 2004. We increased our same-store net operating income by 1.5% in 2005 over 2004.”

Although the company posted negative 1.5% growth in same store rent growth in 2005, that was an improvement of the 5.8% drop in 2004 and a negative 5% in 2003. “The negative trend in rental rates started to reverse in the third and fourth quarters of 2005 when we had positive same store rent growth of 1% and 1.3%, respectively, for the first time since the second quarter of 2002,” ProLogis execs say in the SEC filing. “The stabilized leased percentage as 94.5% at Dec. 31, 2005, compared with 92.3% at Dec. 31, 2004.”

The company goes on to say that its net operating income of the CDFS business segment increased 44.9% compared to 2004 primarily due to the higher gross margins that were earned on contributions and increased development fees and interest income. “We started the development of projects with a total expected cost at completion of $2.1 billion and completed development projects at a total cost of $1.4 billion in 2005,” the document states. “This compares with 2004 when we started development projects with a total expected cost at completion of $1.2 billion and completed development projects at a total cost of $900 million.”

The increased development activity, company execs say, was spurred by increased demand for industrial distribution properties in North America, Europe and Asia. In January 2006, the company announced its first development in South Korea, which is expected for completion in the first half of 2007. The strong development activity, along with the changes in economic conditions will generally impact customer leasing decisions and absorption of new distribution properties.

The company is bullish about 2006. “We expect that the overall economic improvements experienced in 2005 will continue into 2006,” ProLogis says in the SEC document. “Accordingly, we believe the positive trends in occupancy in North America and Europe will continue in 2006.”

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