================================================================================


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   ----------

                                  FORM 10-Q/A#1

                                   ----------

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001
                                       OR
             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

          FOR THE TRANSITION PERIOD FROM _____________ TO _____________

                         COMMISSION FILE NUMBER 01-12846


                                 PROLOGIS TRUST
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


                 MARYLAND                                       74-2604728
      (STATE OR OTHER JURISDICTION OF                        (I.R.S. EMPLOYER
      INCORPORATION OR ORGANIZATION)                        IDENTIFICATION NO.)

  14100 EAST 35TH PLACE, AURORA, COLORADO                          80011
 (ADDRESS OR PRINCIPAL EXECUTIVE OFFICES)                       (ZIP CODE)

                                 (303) 375-9292
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

              (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
                          IF CHANGED SINCE LAST REPORT)


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing for the past 90 days. Yes  X  No
                                 ---    ---

         The number of shares outstanding of the Registrant's common stock as of
August 9, 2001 was 174,251,253.


================================================================================





                                 PROLOGIS TRUST

                                      INDEX




                                                                                                                       PAGE
                                                                                                                     NUMBER(S)
                                                                                                                     ---------
                                                                                                                  
PART I.   FINANCIAL INFORMATION

     Item 1.    Consolidated Condensed Financial Statements:
                Consolidated Condensed Balance Sheets--June 30, 2001 and December 31, 2000.........................       3
                Consolidated Condensed Statements of Earnings and Comprehensive Income
                    --Three and six months ended June 30, 2001 and 2000............................................       4
                Consolidated Condensed Statements of Cash Flows--Six months ended
                    June 30, 2001 and 2000.........................................................................       5
                Notes to Consolidated Condensed Financial Statements...............................................     6 - 21
                Report of Independent Public Accountants...........................................................      22
     Item 2.    Management's Discussion and Analysis of Financial Condition and Results of
                    Operations.....................................................................................    23 - 31
     Item 3.    Quantitative and Qualitative Disclosures About Market Risk.........................................      32

PART II.   OTHER INFORMATION

     Item 4.    Submission of Matters to a Vote of Securities Holders..............................................      32
     Item 5.    Other Information..................................................................................      32
     Item 6.    Exhibits...........................................................................................      32




                                       2


                                 PROLOGIS TRUST

                      CONSOLIDATED CONDENSED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)



                                         ASSETS

                                                                                    JUNE 30,        DECEMBER 31,
                                                                                      2001              2000
                                                                                  ------------      ------------
                                                                                  (UNAUDITED)         (AUDITED)
                                                                                              

Real estate .................................................................     $  4,552,088      $  4,689,492
  Less accumulated depreciation .............................................          532,036           476,982
                                                                                  ------------      ------------
                                                                                     4,020,052         4,212,510
Investments in and advances to unconsolidated entities ......................        1,283,822         1,453,148
Cash and cash equivalents ...................................................           53,239            57,870
Accounts and notes receivable ...............................................           37,729            50,856
Other assets ................................................................          192,596           171,950
                                                                                  ------------      ------------
         Total assets .......................................................     $  5,587,438      $  5,946,334
                                                                                  ============      ============

                           LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
  Lines of credit ...........................................................     $    306,086      $    439,822
  Senior unsecured debt .....................................................        1,670,184         1,699,989
  Mortgage notes and other secured debt .....................................          540,722           537,925
  Accounts payable and accrued expenses .....................................          117,512           107,494
  Construction payable ......................................................           20,312            40,925
  Distributions and dividends payable .......................................              729            57,739
  Other liabilities .........................................................          105,257            88,439
                                                                                  ------------      ------------
         Total liabilities ..................................................        2,760,802         2,972,333
                                                                                  ------------      ------------
Minority interest ...........................................................           46,106            46,630
Shareholders' equity:
  Series A Preferred Shares; $0.01 par value; 5,400,000
shares issued .and outstanding at December 31, 2000; stated
liquidation preference of $25.00 per share ..................................               --           135,000
  Series B Preferred Shares; $0.01 par value; 6,256,100 shares issued
    and outstanding at December 31, 2000; stated liquidation preference
    of $25.00 per share .....................................................               --           156,403
  Series C Preferred Shares; $0.01 par value; 2,000,000 shares issued
    and outstanding at June 30, 2001 and December 31, 2000; stated
    liquidation preference of $50.00 per share ..............................          100,000           100,000
  Series D Preferred Shares; $0.01 par value; 10,000,000 shares issued
    and outstanding at June 30, 2001 and December 31, 2000; stated
    liquidation preference of $25.00 per share ..............................          250,000           250,000
  Series E Preferred Shares; $0.01 par value; 2,000,000 shares issued
    and outstanding at June 30, 2001 and December 31, 2000; stated
    liquidation preference of $25.00 per share ..............................           50,000            50,000
  Common shares of beneficial interest; $0.01 par value; 174,085,313
    shares issued and outstanding at June 30, 2001 and 165,287,358
    shares issued and outstanding at December 31, 2000 ......................            1,741             1,653
Additional paid-in capital ..................................................        2,918,031         2,740,136
Employee share purchase notes ...............................................          (17,703)          (18,556)
Accumulated other comprehensive income ......................................          (96,398)          (33,768)
Distributions in excess of net earnings .....................................         (425,141)         (453,497)
                                                                                  ------------      ------------
         Total shareholders' equity .........................................        2,780,530         2,927,371
                                                                                  ------------      ------------
         Total liabilities and shareholders' equity .........................     $  5,587,438      $  5,946,334
                                                                                  ============      ============


        The accompanying notes are an integral part of these consolidated
                         condensed financial statements.


                                       3


                                 PROLOGIS TRUST

                  CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
                            AND COMPREHENSIVE INCOME
                                   (UNAUDITED)
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)




                                                                      THREE MONTHS ENDED               SIX MONTHS ENDED
                                                                           JUNE 30,                         JUNE 30,
                                                                -----------------------------     -----------------------------
                                                                    2001             2000             2001             2000
                                                                ------------     ------------     ------------     ------------
                                                                                                       

Income:
  Rental income ............................................    $    117,147     $    119,696     $    236,391     $    240,505
  Other real estate income .................................          29,081           27,289           60,205           46,234
  Income from unconsolidated entities ......................           4,778            4,022           12,935           25,389
  Interest .................................................           1,483            2,349            2,607            4,220
                                                                ------------     ------------     ------------     ------------
         Total income ......................................         152,489          153,356          312,138          316,348
                                                                ------------     ------------     ------------     ------------
Expenses:
  Rental expenses, net of recoveries of $23,888 and
    $48,752 for the three and six months in 2001,
    respectively, and $22,575 and $45,737 for the
    three and six months in 2000, respectively, and
    including amounts paid to affiliate of $174 for
    the six months in 2001 and $319 and $625 for the
    three and six months in 2000, respectively .............           6,920            7,584           13,682           14,131
  General and administrative, including amounts paid
    to affiliate of $170 for the six months in 2001
    and $243 and $467 for the three and six months
    in 2000, respectively  months in 1999, respectively ....          12,694           11,281           27,111           22,522
  Depreciation and amortization ............................          32,503           37,591           70,363           77,065
  Interest .................................................          40,644           42,856           82,166           84,842
  Other ....................................................             749            1,432            1,992            2,650
                                                                ------------     ------------     ------------     ------------
         Total expenses ....................................          93,510          100,744          195,314          201,210
                                                                ------------     ------------     ------------     ------------
Earnings before minority interest ..........................          58,979           52,612          116,824          115,138
Minority interest share in earnings ........................           1,458            1,435            2,834            3,089
                                                                ------------     ------------     ------------     ------------
Earnings before gain (loss) on disposition of real
   estate and foreign currency exchange losses .............          57,521           51,177          113,990          112,049

Gain (loss) on disposition of real estate ..................          (1,427)          (4,801)          (2,625)             307
Foreign currency exchange gains (losses), net ..............           1,652          (11,929)           4,309          (18,449)
                                                                ------------     ------------     ------------     ------------
Earnings before income taxes ...............................          57,746           34,447          115,674           93,907
Income taxes:
  Current income tax expense ...............................             329              541            1,909              658
  Deferred income tax expense ..............................           3,346              167            4,255              167
                                                                ------------     ------------     ------------     ------------
         Total income taxes ................................           3,675              708            6,164              825
                                                                ------------     ------------     ------------     ------------
Net earnings ...............................................          54,071           33,739          109,510           93,082
Less preferred share dividends .............................           9,519           14,150           20,951           28,555
                                                                ------------     ------------     ------------     ------------
Net earnings attributable to Common Shares .................          44,552           19,589           88,559           64,527

Other comprehensive income:
  Foreign currency translation adjustments .................         (19,946)          11,224          (62,630)         (11,350)
                                                                ------------     ------------     ------------     ------------
Comprehensive income .......................................    $     24,606     $     30,813     $     25,929     $     53,177
                                                                ============     ============     ============     ============

Weighted average Common Shares outstanding - Basic .........         173,913          163,148          170,624          162,644
                                                                ============     ============     ============     ============
Weighted average Common Shares outstanding - Diluted .......         174,696          163,730          174,563          163,370
                                                                ============     ============     ============     ============

Per Common Share:
  Basic net earnings attributable to Common Shares .........    $       0.26     $       0.12     $       0.52     $       0.40
                                                                ============     ============     ============     ============
  Diluted net earnings attributable to Common Shares .......    $       0.26     $       0.12     $       0.51     $       0.39
                                                                ============     ============     ============     ============

  Distributions ............................................    $      0.345     $      0.335     $      0.690     $      0.670
                                                                ============     ============     ============     ============


        The accompanying notes are an integral part of these consolidated
                         condensed financial statements.


                                       4


                                 PROLOGIS TRUST
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)




                                                                                                     SIX MONTHS ENDED,
                                                                                                          JUNE 30,
                                                                                               ------------------------------
                                                                                                   2001              2000
                                                                                               ------------      ------------
                                                                                                           

Operating activities:
  Net earnings ...........................................................................     $    109,510      $     93,082
  Minority interest share in earnings ....................................................            2,834             3,089
  Adjustments to reconcile net earnings to net cash provided by operating activities:
       Depreciation and amortization .....................................................           70,363            77,065
       (Gain) loss on disposition of real estate .........................................            2,625              (307)
       Straight-lined rents ..............................................................           (3,385)           (3,690)
       Amortization of deferred loan costs ...............................................            2,357             2,020
       Stock-based compensation ..........................................................            3,385             1,325
       Income from unconsolidated entities ...............................................           (5,781)          (19,940)
       Foreign currency exchange (gains) losses, net .....................................           (5,642)           13,687
       Deferred income tax expense .......................................................            4,255               167
  Increase in accounts receivable and other assets .......................................          (19,561)          (22,530)
  Increase in accounts payable, accrued expenses and other liabilities ...................           28,286            45,395
                                                                                               ------------      ------------
        Net cash provided by operating activities ........................................          189,246           189,363
                                                                                               ------------      ------------
Investing activities:
  Real estate investments ................................................................         (395,954)         (304,848)
  Tenant improvements and lease commissions on previously leased space ...................           (9,702)          (10,821)
  Recurring capital expenditures .........................................................          (12,979)          (12,762)
  Proceeds from dispositions of real estate ..............................................          475,812           242,798
  Net (advances to) amounts received from unconsolidated entities ........................          170,167           (48,524)
  Proceeds from repayment of note receivable .............................................            7,500                --
  Cash balances contributed as part of ProLogis European Properties S.a.r.l ..............               --           (17,968)
                                                                                               ------------      ------------
        Net cash provided by (used in) investing activities ..............................          234,844          (152,125)
                                                                                               ------------      ------------
Financing activities:
  Proceeds from exercised options and dividend reinvestment and share
     purchase plans ......................................................................           27,034            10,628
  Repurchase of Common Shares ............................................................           (7,146)               --
  Redemption of Series A preferred shares ................................................         (135,000)               --
  Redemption of Series B convertible preferred shares ....................................           (4,583)               --
  Debt issuance and other transaction costs incurred .....................................               --            (4,212)
  Distributions paid on Common Shares ....................................................         (117,213)         (109,037)
  Distributions paid to minority interest holders ........................................           (3,496)           (3,728)
  Distributions paid on preferred shares .................................................          (20,951)          (28,555)
  Principal payments on senior unsecured debt ............................................          (30,000)          (30,000)
  Principal payments received on employee share purchase notes ...........................              853             2,076
  Proceeds from settlement of derivative financial instruments ...........................              106               366
  Proceeds from lines of credit ..........................................................          579,509           465,829
  Payments on lines of credit ............................................................         (713,245)         (302,250)
  Regularly scheduled principal payments on mortgage notes ...............................           (3,839)           (3,597)
  Principal prepayments on mortgage notes ................................................             (750)             (750)
                                                                                               ------------      ------------
        Net cash used in financing activities ............................................         (428,721)           (3,230)
                                                                                               ------------      ------------
Net increase (decrease) in cash and cash equivalents .....................................           (4,631)           34,008
Cash and cash equivalents, beginning of period ...........................................           57,870            69,338
                                                                                               ------------      ------------
Cash and cash equivalents, end of period .................................................     $     53,239      $    103,346
                                                                                               ============      ============


See Note 9 for information on non-cash investing and financing activities.

        The accompanying notes are an integral part of these consolidated
                         condensed financial statements.


                                       5


                                 PROLOGIS TRUST

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                  JUNE 30, 2001
                                   (UNAUDITED)


1. GENERAL:

   Business

     ProLogis Trust (collectively with its consolidated subsidiaries and
partnerships "ProLogis") is a publicly held real estate investment trust
("REIT") that owns and operates a network of industrial distribution facilities
in North America and Europe. The ProLogis Operating System(TM), comprised of the
Market Services Group, the Global Services Group, the Global Development Group
and the Integrated Solutions Group, utilizes ProLogis' international network of
distribution facilities to meet its customers' distribution space needs
globally. ProLogis has organized its business into three operating segments:
property operations, corporate distribution facilities services business ("CDFS
business") and temperature-controlled distribution operations. See Note 8.

   Principles of Financial Presentation

     The consolidated condensed financial statements of ProLogis as of June 30,
2001 and for the three and six months ended June 30, 2001 and 2000 are unaudited
and, pursuant to the rules of the Securities and Exchange Commission, certain
information and footnote disclosures normally included in financial statements
have been omitted. While management of ProLogis believes that the disclosures
presented are adequate, these interim consolidated condensed financial
statements should be read in conjunction with ProLogis' December 31, 2000
audited consolidated financial statements contained in ProLogis' 2000 Annual
Report on Form 10-K, as amended.

     In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of ProLogis'
consolidated financial position and results of operations for the interim
periods. The consolidated results of operations for the three and six months
ended June 30, 2001 and 2000 are not necessarily indicative of the results to be
expected for the entire year. Certain of the 2000 amounts have been reclassified
to conform to the 2001 financial statement presentation.

     The preparation of consolidated condensed financial statements in
conformity with United States generally accepted accounting principles ("GAAP")
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated condensed financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

         Statements of Financial Accounting Standards ("SFAS") No. 141,
"Business Combinations" and No. 142, "Goodwill and Other Intangible Assets" were
issued on June 30, 2001. Both standards are effective for fiscal years beginning
after December 15, 2001. SFAS No. 141 requires that all business combinations
initiated after June 30, 2001 be accounted for using the purchase method. SFAS
No. 142 provides that goodwill is no longer subject to amortization over its
estimated useful life. Rather, goodwill will be subject to at least an annual
assessment for impairment by applying a fair-value-based-test (the impairment
guidance in existing rules for equity method goodwill will continue to apply).
Also, under SFAS No. 142, the rules concerning the recognition of acquired
intangible assets other than goodwill have changed. However, intangible assets
will continue to be amortized over their useful lives. Management is still
evaluating the effects these standards will have, if any, on ProLogis'
consolidated financial position, results of operations or financial statement
disclosures. For the six months ended June 30, 2001 and 2000, ProLogis
recognized amortization expense related to recognized goodwill of $0.3 million
and $1.6 million, respectively, as a component of "Depreciation and
Amortization" in its Consolidated Condensed Statements of Earnings and
Comprehensive Income".

Interest Expense

    Interest expense was $82.2 million and $84.8 million for the six months in
2001 and 2000, respectively, which is net of capitalized interest of $12.4
million and $8.4 million, respectively. Amortization of deferred loan costs
included in interest expense was $2.4 million and $2.0 million for the six
months in 2001 and 2000, respectively. Total interest paid in cash on all
outstanding debt was $92.7 million and $83.8 million during 2001 and 2000,
respectively.



                                       6


Financial Instruments

     In the normal course of business, ProLogis uses certain derivative
financial instruments for the purpose of foreign currency exchange rate and
interest rate risk management. All derivative financial instruments are
accounted for at fair value with changes in fair value recognized immediately in
accumulated other comprehensive income or income.

     ProLogis adopted SFAS No. 133, "Accounting for Derivative Instruments and
for Hedging Activities," as amended, on January 1, 2001. SFAS No. 133 provides
comprehensive guidelines for the recognition and measurement of derivatives and
hedging activities and, specifically, requires all derivatives to be recorded on
the balance sheet at fair value as an asset or liability, with an offset to
accumulated other comprehensive income or income. ProLogis' only derivative
financial instruments in effect at June 30, 2001 were foreign currency put
option contracts that were marked to market through income in 2000 because they
did not qualify for hedge accounting treatment at that time. Under SFAS No. 133,
these contracts also do not qualify for hedge accounting treatment.
Consequently, ProLogis has continued to mark these contracts to market through
income during the six months ended June 30, 2001. ProLogis' unconsolidated
entities also adopted SFAS No. 133 on January 1, 2001. The effect to ProLogis of
their adoption of SFAS No. 133 was immaterial as these entities utilize
derivative financial instruments on a limited basis.

     In assessing the fair value of its financial instruments, both derivative
and non-derivative, ProLogis uses a variety of methods and assumptions that are
based on market conditions and risks existing at each balance sheet date.
Primarily, ProLogis uses quoted market prices or quotes from brokers or dealers
for the same or similar instruments. These values represent a general
approximation of possible value and may never actually be realized.

Foreign Currency Exchange Gains or Losses

     ProLogis' consolidated subsidiaries whose functional currency is not the
U.S. dollar translate their financial statements into U.S. dollars. Assets and
liabilities are translated at the exchange rate in effect as of the financial
statement date. Income statement accounts are translated using the average
exchange rate for the period. Income statement accounts that represent
significant, nonrecurring transactions are translated at the rate in effect as
of the date of the transaction. Gains and losses resulting from the translation
are included in accumulated other comprehensive income as a separate component
of shareholders' equity. ProLogis and its foreign subsidiaries have certain
transactions denominated in currencies other than their functional currency. In
these instances, nonmonetary assets and liabilities are remeasured at the
historical exchange rate, monetary assets and liabilities are remeasured at the
exchange rate in effect at the end of the period, and income statement accounts
are remeasured at the average exchange rate for the period. Gains and losses
from remeasurement are included in ProLogis' results of operations. In addition,
gains or losses are recorded in the income statement when a transaction with a
third party, denominated in a currency other than the functional currency, is
settled and the functional currency cash flows realized are more or less than
expected based upon the exchange rate in effect when the transaction was
initiated.

     The net foreign currency exchange gains and losses recognized in ProLogis'
results of operations were as follows for the periods indicated (in thousands of
U.S. dollars):



                                                                             THREE MONTHS ENDED              SIX MONTHS ENDED
                                                                                  JUNE 30,                       JUNE 30,
                                                                         --------------------------     --------------------------
                                                                            2001            2000           2001            2000
                                                                         ----------      ----------     ----------      ----------
                                                                                                            
     Gains (losses) from the remeasurement of third party debt
       and remeasurement and settlement of intercompany
       debt, net ......................................................  $    2,112      $  (11,984)    $    3,984      $  (19,008)
     Mark to market gains on foreign currency put option
       contracts (1) ..................................................          50             (86)         1,062             416
     Gains (losses) from the settlement of foreign currency
       put option contracts, net (1) ..................................        (326)            143           (581)            178
     Other losses, net ................................................        (184)             (2)          (156)            (35)
                                                                         ----------      ----------     ----------      ----------
                                                                         $    1,652      $  (11,929)    $    4,309      $  (18,449)
                                                                         ==========      ==========     ==========      ==========


----------

(1)  Upon settlement, the mark to market adjustments are reversed and the total
     realized gain or loss is recognized.


                                       7


2. AMENDED QUARTERLY REPORT ON FORM 10-Q/A#1

     ProLogis' Quarterly Report on Form 10-Q for the period ended June 30, 2001
originally filed on August 10, 2001 included the financial position and results
of operations of ProLogis' subsidiary, Kingspark Holding S.A. and subsidiaries
("Kingspark S.A."), in its unaudited consolidated condensed financial statements
on a consolidated basis. Until January 5, 2001, ProLogis owned only the
non-voting preferred stock of Kingspark S.A. and reported its investment in
Kingspark S.A. under the equity method. On that date, ProLogis acquired an
indirect interest in the voting common stock of Kingspark S.A. and began
consolidating it in its financial statements along with its other majority-owned
and controlled subsidiaries and partnerships. After reconsideration of the facts
underlying its ownership position, ProLogis determined that its indirect
ownership interest in the voting common stock of Kingspark S.A. does not give it
control such that consolidation is the appropriate method of reporting.
Therefore, ProLogis has amended its unaudited consolidated condensed financial
statements as of and for the six months ended June 30, 2001 included in this
Form 10-Q/A#1 to reflect its investment in Kingspark S.A. on the equity method,
consistent with its reporting of this investment prior to January 5, 2001.
Further, ProLogis has amended its unaudited consolidated condensed financial
statements as of and for the three and six months ended June 30, 2001 included
in this Form 10-Q/A#1 to reflect its investments in two other entities, whose
sole purpose is to hold preferred stock in technology companies, under the
equity method. ProLogis began consolidating these entities in 2001, but as with
Kingspark S.A., subsequently determined that its ownership interest did not give
it control. These changes in reporting have no effect on ProLogis' shareholders
equity as of June 30, 2001 or its net earnings attributable to Common Shares,
net earnings attributable to Common Shares per share or comprehensive income for
the three and six months ended June 30, 2001. These changes in reporting did
result in changes in certain financial statement amounts. The most significant
of which are as follows (in thousands):



                                                                                    JUNE 30, 2001
                                                                            -----------------------------
                                                                                AS            PREVIOUSLY
                                                                              AMENDED          REPORTED
                                                                            ------------     ------------
                                                                                       
     Real estate ......................................................     $  4,552,008     $  4,905,991
     Investments in and advances to unconsolidated entities ...........     $  1,283,822     $    812,451




                                                            THREE MONTHS ENDED                  SIX MONTHS ENDED
                                                              JUNE 30, 2001                      JUNE 30, 2001
                                                      -----------------------------     -----------------------------
                                                          AS            PREVIOUSLY          AS            PREVIOUSLY
                                                        AMENDED          REPORTED         AMENDED          REPORTED
                                                      ------------     ------------     ------------     ------------
                                                                                             
     Other real estate income ...................     $     29,081     $     32,560     $     60,205     $     75,414
     Income from unconsolidated entities ........     $      4,778     $     11,349     $     12,935     $      9,305
     Loss on investment .........................     $         --     $      7,456     $         --     $      7,456


3. REAL ESTATE:

Real Estate Investments

     Real estate investments consisting of income producing industrial
distribution facilities, facilities under development and land held for future
development, at cost, are summarized as follows (in thousands):



                                                                        JUNE 30,             DECEMBER 31,
                                                                          2001                   2000
                                                                      ------------           ------------
                                                                                       
     Operating facilities:
       Improved land ............................................     $    631,226(1)        $    648,950(1)
       Buildings and improvements ...............................        3,510,229(1)           3,619,543(1)
                                                                      ------------           ------------
                                                                         4,141,455              4,268,493
                                                                      ------------           ------------
     Facilities under development (including cost of land) ......          125,824(2)(3)          186,020(2)
     Land held for development ..................................          174,325(4)             187,405(4)
     Capitalized preacquisition costs ...........................          110,484(5)              47,574(5)
                                                                      ------------           ------------
               Total real estate ................................        4,552,088              4,689,492
     Less accumulated depreciation ..............................          532,036                476,982
                                                                      ------------           ------------
               Net real estate ..................................     $  4,020,052           $  4,212,510
                                                                      ============           ============


----------

(1)  As of June 30, 2001 and December 31, 2000, ProLogis had 1,214 and 1,244
     operating facilities, respectively, consisting of 123,719,000 and
     126,275,000 square feet, respectively.

(2)  Facilities under development consist of 50 facilities aggregating
     10,706,000 square feet as of June 30, 2001 and 41 facilities aggregating
     8,711,000 square feet as of December 31, 2000.

(3)  In addition to the June 30, 2001 construction payable of $20.3 million,
     ProLogis had unfunded commitments on its contracts for facilities under
     construction totaling $197.6 million.



                                       8


(4)  Land held for future development consists of 1,968 acres as of June 30,
     2001 and 2,047 acres as of December 31, 2000.

(5)  Capitalized preacquisition costs include $97.7 million and $32.5 million of
     funds on deposit with title companies as of June 30, 2001 and December 31,
     2000, respectively.

     ProLogis' operating facilities, facilities under development and land held
for future development are located in North America (the United States and
Mexico) and eight countries in Europe. No individual market represents more than
10% of ProLogis' real estate assets. In July 2001, ProLogis acquired land for
future development in Japan.

Operating Lease Agreements

     ProLogis leases its facilities to customers under agreements, which are
classified as operating leases. The leases generally provide for payment of all
or a portion of utilities, property taxes and insurance by the tenant. As of
June 30, 2001, minimum lease payments on leases with lease periods greater than
one year are as follows (in thousands):


                                       
     Remainder of 2001 ..............     $  217,795
     2002 ...........................        373,573
     2003 ...........................        291,310
     2004 ...........................        207,957
     2005 ...........................        144,262
     2006 and thereafter ............        276,157
                                          ----------
                                          $1,511,054
                                          ==========


     ProLogis' largest customer (based on rental income) accounted for 1.6% of
ProLogis' rental income (on an annualized basis) for the six months ended June
30, 2001. The annualized base rent for ProLogis' 25 largest customers (based on
rental income) accounted for 13.3% of ProLogis' rental income (on an annualized
basis) for the six months ended June 30, 2001.

4. UNCONSOLIDATED ENTITIES:

Investments In and Advances To Unconsolidated Entities

     Investments in and advances to unconsolidated entities are as follows (in
thousands):



                                                                    JUNE 30,      DECEMBER 31,
                                                                     2001             2000
                                                                 ------------     ------------
                                                                           
     Temperature-controlled distribution
     companies:
       CSI/Frigo LLC (1) ...................................     $      2,544     $         --
       ProLogis Logistics (1) (2) ..........................          125,705          231,053
       Frigoscandia S.A. (1) (3) ...........................          180,906          191,981
                                                                 ------------     ------------
                                                                      309,155          423,034
                                                                 ------------     ------------
     Distribution real estate entities:
       ProLogis California (4) .............................          119,752          132,243
       ProLogis North American Properties Fund I (5) .......           44,723           10,369
       ProLogis North American Properties Fund II (6) ......            9,051           13,408
       ProLogis North American Properties Fund III (7) .....            6,837               --
       ProLogis European Properties Fund (8) ...............          216,643          147,938
       ProLogis European Properties S.a.r.l. (8) ...........               --           84,767
                                                                 ------------     ------------
                                                                      397,006          388,725
                                                                 ------------     ------------
     CDFS business:
        Kingspark LLC (9) ..................................            8,202               --
        Kingspark S. A. (9) ................................          509,200          570,582
                                                                 ------------     ------------
                                                                      517,402          570,582
                                                                 ------------     ------------
     Insight (10) ..........................................            2,459            2,470
     ProLogis Equipment Services (11) ......................            1,616              450
     GoProLogis (12) .......................................           56,184           56,315
     ProLogis Phatpipe (13) ................................               --           11,572
                                                                 ------------     ------------
              Total ........................................     $  1,283,822     $  1,453,148
                                                                 ============     ============


----------

(1)  CSI/Frigo LLC, a limited liability company, owns 100% of the voting common
     stock of both ProLogis Logistics Services Incorporated ("ProLogis
     Logistics") and Frigoscandia Holding S.A. ("Frigoscandia S.A.). ProLogis
     directly owns all of the non-voting preferred stock of both ProLogis
     Logistics and Frigoscandia S.A. representing a 95% interest in the earnings
     of these entities.


                                       9


     ProLogis owns 89% of the membership interests (all non-voting) in CSI/Frigo
     LLC and K. Dane Brooksher, ProLogis' chairman and chief executive officer,
     owns the remaining 11% of the membership interests (all voting) and is the
     managing member. ProLogis has a note agreement with CSI/Frigo LLC that
     allows ProLogis to participate in its earnings such that ProLogis
     recognizes 95% of the earnings of CSI/Frigo LLC. Mr. Brooksher may transfer
     his membership interest, subject to certain conditions, including the
     approval of ProLogis. There are no provisions that give ProLogis the right
     to acquire Mr. Brooksher's membership interest. Mr. Brooksher does not
     receive compensation in connection with being the managing member. Mr.
     Brooksher invested $50,000 in CSI/Frigo LLC. Mr. Brooksher's membership
     interests and the terms of the participating note entitle him to receive
     dividends equal to 5% of the net cash flow of CSI/Frigo LLC, as defined, if
     any. ProLogis' ownership interests in CSI/Frigo LLC, ProLogis Logistics and
     Frigoscandia S.A. do not result in ProLogis having ownership of or control
     of the voting common stock or voting membership interests of these
     entities; therefore, they are not consolidated in ProLogis' condensed
     financial statements. See Note 10.

     Prior to January 5, 2001, the common stock of ProLogis Logistics was owned
     by unrelated third parties and the common stock of Frigoscandia S.A. was
     owned by a limited liability company in which unrelated third parties owned
     100% of the voting interests and Security Capital Group Incorporated
     ("Security Capital"), ProLogis' largest shareholder, owned 100% of the
     non-voting interests. On January 5, 2001, the common stock of both ProLogis
     Logistics and Frigoscandia S.A. was acquired by CSI/Frigo LLC for an
     aggregate purchase price of $3.3 million.

(2)  ProLogis Logistics owns 100% of CS Integrated LLC ("CSI"), a
     temperature-controlled distribution company operating in the United States.
     As of June 30, 2001, CSI owned or operated under lease agreements
     facilities aggregating 178.4 million cubic feet (including 35.5 million
     cubic feet of dry distribution space located in temperature-controlled
     facilities).

(3)  Frigoscandia S.A., through its wholly owned subsidiaries, owns 100% of
     Frigoscandia AB, a temperature-controlled distribution company operating in
     ten countries in Europe. As of June 30, 2001, Frigoscandia AB owned or
     operated under lease agreements facilities aggregating 155.9 million cubic
     feet.

(4)  ProLogis California I LLC ("ProLogis California") owned 79 operating
     facilities aggregating 13.1 million square feet as of June 30, 2001, all
     located in the Los Angeles/Orange County market. ProLogis had a 50%
     ownership interest in ProLogis California as of June 30, 2001.

(5)  ProLogis North American Properties Fund I LLC owned 36 operating facilities
     aggregating 9.0 million square feet as of June 30, 2001 in 16 markets
     (including three operating facilities contributed to ProLogis North
     American Properties Fund I for an additional equity interest of $34.1
     million in January 2001). The January contribution increased the combined
     ownership interests of ProLogis and ProLogis Development Services in
     ProLogis North American Properties Fund I to 41.3% from 20%.

(6)  ProLogis Iowa LLC ("ProLogis Principal") was formed on June 30, 2000, as a
     limited liability company whose members were ProLogis with 20% of the
     membership interests and Principal Financial Group with 80% of the
     membership interests. ProLogis Principal owned three operating facilities,
     all acquired from ProLogis, aggregating 440,000 square feet. On March 27,
     2001, First Islamic Investment Bank E.C. acquired the membership interest
     held by Principal Financial Group. Also on that date, this entity, under
     the name ProLogis First US Properties LP ("ProLogis North American
     Properties Fund II") acquired 24 additional operating facilities
     aggregating 4.0 million square feet from ProLogis and ProLogis Development
     Services, bringing its total portfolio to 27 operating facilities
     aggregating 4.5 million square feet in 12 markets as of June 30, 2001.

(7)  ProLogis Second US Properties LP ("ProLogis North American Properties Fund
     III") was formed on June 15, 2001, as a limited liability company whose
     members are ProLogis and ProLogis Development Services Incorporated
     ("ProLogis Development Services") with a combined 20% membership interest
     and First Islamic Investment Bank E. C. with 80% of the membership
     interests. This entity acquired 34 operating facilities aggregating 4.4
     million square feet in 16 markets from ProLogis and ProLogis Development
     Services in June 2001. ProLogis Development Services is a consolidated
     taxable subsidiary of ProLogis that engages in CDFS business activities in
     North America.


                                       10


(8)  ProLogis European Properties Fund owned 114 operating facilities
     aggregating 17.0 million square feet in 17 markets as of June 30, 2001,
     including facilities owned by ProLogis European Properties S.a.r.l. On
     January 7, 2001, ProLogis contributed the remaining 49.9% of the common
     stock of ProLogis European Properties S.a.r.l. to ProLogis European
     Properties Fund for an additional equity interest. ProLogis had contributed
     50.1% of the common stock of this entity to ProLogis European Properties
     Fund on January 7, 2000. As of June 30, 2001, ProLogis European Properties
     Fund, in which ProLogis had a 39.7% ownership, owned 100% of ProLogis
     European Properties S.a.r.l. ProLogis recognized a gain of $0.5 million
     related to the January 2001 transaction (total gain of $9.8 million net of
     $9.3 million which does not qualify for current income recognition due to
     ProLogis' continuing ownership in ProLogis European Properties Fund).

(9)  ProLogis directly owns all of the non-voting preferred stock of Kingspark
     S.A., representing a 95% interest in its earnings. Kingspark LLC, a limited
     liability company owns 100% of the voting common stock of Kingspark S.A.
     ProLogis owns 95% of the membership interests (all non-voting) in Kingspark
     LLC and K. Dane Brooksher, ProLogis' chairman and chief executive officer,
     owns the remaining 5% of the membership interests (all voting) and is the
     managing member. Mr. Brooksher may transfer his membership interest,
     subject to certain conditions, including the approval of ProLogis. There
     are no provisions that give ProLogis the right to acquire Mr. Brooksher's
     membership interests. Mr. Brooksher does not receive compensation in
     connection with being the managing member. Mr. Brooksher invested $40,557
     in Kingspark LLC which was loaned to him by ProLogis. The recourse loan is
     payable on January 5, 2006 and bears interest at an annual rate of 8.0%.
     Mr. Brooksher's membership interests entitle him to receive dividends equal
     to 5% of the net cash flow of Kingspark LLC, as defined, if any. Neither
     ProLogis' ownership interests in Kingspark LLC and Kingspark S.A., nor its
     loan to Mr. Brooksher, result in ProLogis having ownership of or control of
     the voting common stock or voting membership interests of these entities;
     therefore, they are not consolidated in ProLogis' financial statements. See
     Note 10.

     Prior to January 5, 2001, the common stock of Kingspark S.A. was owned by a
     limited liability company in which unrelated third parties owned 100% of
     the voting interests and Security Capital, ProLogis' largest shareholder,
     owned 100% of the non-voting interests. On January 5, 2001, the common
     stock of Kingspark S.A. was acquired by Kingspark LLC for $8.1 million.

(10) Investment represents ProLogis Development Services' equity investment in
     the common stock of Insight, Inc. ("Insight"), a privately owned logistics
     optimization consulting company, as adjusted for ProLogis Development
     Services' share of Insight's earnings or loss. ProLogis Development
     Services had a 33.3% ownership interest in Insight as of June 30, 2001.

(11) Investment represents ProLogis Development Services' equity investment in
     ProLogis Equipment Services LLC, a limited liability company whose other
     member is a subsidiary of Dana Commercial Credit Corporation, as adjusted
     for ProLogis Development Services' share of the earnings or loss of
     ProLogis Equipment Services. ProLogis Equipment Services began operations
     on April 26, 2000 for the purpose of acquiring, leasing and selling
     material handling equipment and providing asset management services for
     such equipment. ProLogis Development Services had a 50% ownership interest
     in ProLogis Equipment Services as of June 30, 2001.

(12) ProLogis owns 100% of the non-voting preferred stock ($25.0 million of cash
     invested and $30.4 million of preferred stock received under a license fee
     agreement) of GoProLogis Incorporated ("GoProLogis") that has invested
     $25.0 million in the non-cumulative preferred stock of Vizional
     Technologies, Inc. (formerly GoWarehouse.com, Inc.) ("Vizional
     Technologies"), a provider of integrated global logistics network
     technology services. GoProLogis also received $30.4 million of
     non-cumulative preferred stock of Vizional Technologies under a license
     agreement for the non-exclusive use of the ProLogis Operating System(TM)
     over a five-year period. Investment amount also includes $0.9 million of
     other costs associated with this investment. This investment was made on
     July 21, 2000. The income related to the license agreement was deferred at
     the inception of the agreement in 2000 and was being recognized over the
     five-year term of the agreement. ProLogis accounts for its investment in
     GoProLogis under the equity method. GoProLogis has not received any
     dividends from its preferred stock investment in Vizional Technologies
     since the investment was made in 2000. As of June 30, 2001, ProLogis had
     deferred $24.7 million of income related to the license fee agreement.
     ProLogis' net investment in GoProLogis was $31.6 million as of June 30,
     2001 ($55.4 million of non-cumulative preferred stock and $0.9 million
     of additional costs offset by $24.7 million of deferred income). ProLogis'
     investment in the non-voting preferred stock of GoProLogis represents a
     98% interest in its earnings. The voting interest of GoProLogis represents
     a 2% interest in its earnings. K. Dane Brooksher, ProLogis' chairman and
     chief executive officer, holds the voting interest and is entitled to
     receive dividends equal to 2% of the net cash flow of GoProLogis, as
     defined, if any. Mr. Brooksher contributed a $1.1 million recourse
     promissory note to


                                       11


     GoProLogis in exchange for his interest in the entity, which note is
     payable on July 18, 2005 and bears interest at an Annual rate of 8.0%. Mr.
     Brooksher is not restricted from transferring his ownership interest in
     GoProLogis but ProLogis does have an option to acquire his interest
     beginning in 2001 at a price equal to the principal amount plus accrued
     interest under the promissory note. See Note 10.

(13) ProLogis owns 100% of the non-voting preferred stock ($6.0 million of cash
     invested and $6.0 million of preferred stock received under a
     license fee agreement) of ProLogis Broadband (1) Incorporated ("ProLogis
     PhatPipe") that has invested $6.0 million in the non-cumulative preferred
     stock of PhatPipe, Inc. ("PhatPipe"), a real estate technology company.
     ProLogis PhatPipe also received $6.0 million of non-cumulative preferred
     stock of PhatPipe and a receivable for $2.0 million, both under a license
     agreement for the non-exclusive use of the ProLogis Operating System(TM)
     over a three-year period. Investment amount also includes $50,000 of other
     costs associated with this investment. The income related to the license
     agreement was deferred at the inception of the agreement in 2000 and was
     being recognized over the three-year term of the agreement. This investment
     was made on September 20, 2000. ProLogis accounts for its investment in
     ProLogis PhatPipe under the equity method and its carrying value at June
     30, 2001 was zero after ProLogis recognized its share of an impairment
     adjustment recorded by ProLogis PhatPipe related to its investment in
     PhatPipe. ProLogis PhatPipe has not received any dividends from its
     preferred stock investment in PhatPipe since the investment was made in
     2000. ProLogis' investment in the non-voting preferred stock of ProLogis
     PhatPipe represents a 98% interest in its earnings. The voting interest of
     ProLogis PhatPipe represents a 2% interest in its earnings. K. Dane
     Brooksher, ProLogis' chairman and chief executive officer, holds the voting
     interest and is entitled to receive dividends equal to 2% of the net cash
     flow of ProLogis PhatPipe, as defined, if any. Mr. Brooksher contributed
     recourse promissory notes with an aggregate of $122,449 principal amount to
     ProLogis PhatPipe in exchange for his interest in the entity. A promissory
     note with the principal amount of $71,429 is due September 20, 2005 and a
     promissory note with the principal amount of $51,020 is due January 4,
     2006. Both notes bear interest at an annual rate of 8.0%. Mr. Brooksher is
     not restricted from transferring his ownership interest in ProLogis
     PhatPipe but ProLogis does have an option to acquire his interest beginning
     in 2001 at a price equal to the principal amount plus accrued interest
     under the promissory notes. See Note 10.

     ProLogis' net equity investment in ProLogis PhatPipe was $7.5 million in
     the second quarter of 2001 (net of $6.6 million of income related to the
     license fee agreement that had been deferred) when ProLogis, through its
     investment in ProLogis PhatPipe, recognized its share of an impairment
     adjustment of $7.5 million, representing the write-down of ProLogis
     PhatPipe's entire net investment in PhatPipe.

Income (Loss) from Unconsolidated Entities

     ProLogis recognized income (loss) from its investments in unconsolidated
entities as follows (in thousands):



                                                                      THREE MONTHS ENDED                SIX MONTHS ENDED
                                                                            JUNE 30,                       JUNE 30,
                                                                  --------------------------      --------------------------
                                                                     2001            2000            2001            2000
                                                                  ----------      ----------      ----------      ----------
                                                                                                     
    Temperature-controlled distribution
     companies:
       CSI/Frigo LLC (1) ...................................     $     (283)     $       --      $     (793)     $       --
       ProLogis Logistics (2) ..............................           (870)          3,000          (2,600)          5,871
       Frigoscandia S.A (2) ................................         (2,763)         (3,377)         (9,995)         (5,051)
                                                                 ----------      ----------      ----------      ----------
                                                                     (3,916)           (377)        (13,388)            820
                                                                 ----------      ----------      ----------      ----------
     Distribution real estate entities:
       ProLogis California (3) .............................          4,052           2,955           7,119           6,054
       ProLogis North American Properties Fund I (4) .......          1,242              --           2,594              --
       ProLogis North American Properties Fund II (5) ......            565              --             906              --
       ProLogis North American Properties Fund III (6) .....             40              --              40              --
       ProLogis European Properties Fund (7) ...............          6,449          (3,012)          6,851           4,312
       ProLogis European Properties S.a.r.l. (8) ...........             --             (52)             36           4,875
                                                                 ----------      ----------      ----------      ----------
                                                                     12,348            (109)         17,546          15,241
                                                                 ----------      ----------      ----------      ----------
     Kingspark S.A. (9) ....................................          2,436           4,510          12,689           9,330
     Insight ...............................................             --              (2)            (10)             (2)
     ProLogis Equipment Services ...........................           (155)             --            (155)             --
     GoProLogis (10) .......................................          1,521              --           3,042              --
     ProLogis PhatPipe (11) ................................         (7,456)             --          (6,789)             --
                                                                 ----------      ----------      ----------      ----------
                                                                 $    4,778      $    4,022      $   12,935      $   25,389
                                                                 ==========      ==========      ==========      ==========


----------

(1)  CSI/Frigo LLC recognizes its share of the losses of ProLogis Logistics and
     Frigoscandia S. A. under the equity method. Amounts represent ProLogis'
     share of the losses of CSI/Frigo LLC for the periods presented.

(2)  Represents ProLogis' share of the losses of ProLogis Logistics and
     Frigoscandia S. A. recognized under the equity method based on its
     ownership of the preferred stock of each entity.

(3)  Income includes management, leasing and development fees of $908,000 and
     $1,574,000 for the three and six months ended June 30, 2001, respectively,
     and $617,000 and $1,282,000 for the three and six months ended June 30,
     2000, respectively. ProLogis has had a 50% ownership interest in ProLogis
     California since its inception.


                                       12


(4)  ProLogis North American Properties Fund I was formed on June 30, 2000.
     Income includes management fees of $616,000 and $1,128,000 for the three
     and six months ended June 30, 2001, respectively. ProLogis and ProLogis
     Development Services had a combined 41.3% ownership interest in ProLogis
     North American Properties Fund I as of June 30, 2001.

(5)  ProLogis North American Properties Fund II was originally formed as
     ProLogis Principal on June 30, 2000. Income includes management fees of
     $501,000 and $546,000 for the three and six months ended June 30, 2001,
     respectively. ProLogis and ProLogis Development Services have had a
     combined 20% ownership interest in ProLogis North American Properties Fund
     II since its inception.

(6)  ProLogis North American Properties Fund III was formed on June 15, 2001.
     ProLogis and ProLogis Development Services had a combined 20% ownership
     interest in ProLogis North American Properties Fund III as of June 30,
     2001.

(7)  Income or loss includes management fees of $1,782,000 and $3,504,000 for
     the three and six months ended June 30, 2001, respectively, and $1,162,000
     and $2,304,000 for the three and six months ended June 30, 2000,
     respectively. ProLogis had a 39.7% ownership interest in ProLogis European
     Properties Fund as of June 30, 2001.

(8)  Represents income from ProLogis' investment in 49.9% of the common stock of
     ProLogis European Properties S.a.r.l. in 2000 for the period from January
     7, 2000 to June 30, 2000 and in 2001 for the period from January 1, 2001 to
     January 6, 2001.

(9)  Represents ProLogis' share of the earnings of Kingspark LLC and Kingspark
     S.A. recognized under the equity method based on its ownership of each
     entity.

(10) Represents ProLogis' share of the income of GoProLogis, primarily license
     fees earned for the non-exclusive use of the ProLogis Operating System(TM)
     under license agreements entered into in the third quarter of 2000.

(11) Represents ProLogis' share of the losses of ProLogis PhatPipe, primarily
     due to the write-down of ProLogis PhatPipe's investment in PhatPipe.

Temperature-Controlled Distribution Companies

     ProLogis' total investment in its temperature-controlled distribution
companies as of June 30, 2001 consisted of (in millions of U.S. dollars):



                                                            CSI/FRIGO        PROLOGIS      FRIGOSCANDIA
                                                               LLC         LOGISTICS(1)       S.A.(2)
                                                            ----------     ------------    ------------
                                                                                  
     Equity interest ..................................     $      0.4      $    135.8      $     17.7
     Notes receivable .................................            3.1              --           210.4
     Other receivables ................................           (0.1)            5.2            37.8
     ProLogis' share of the earnings of the entity ....           (0.9)          (15.3)          (85.0)
                                                            ----------      ----------      ----------
            Total .....................................     $      2.5      $    125.7      $    180.9
                                                            ==========      ==========      ==========


----------

(1)  On January 2, 2001, ProLogis Logistics borrowed $125.0 million under
     ProLogis' $475.0 million unsecured credit agreement as a designated
     subsidiary borrower. The proceeds from this borrowing were used to repay
     $125.0 million of the outstanding notes and accrued interest due to
     ProLogis. The remaining amounts due to ProLogis were converted to preferred
     stock on January 2, 2001. Additionally, ProLogis Logistics had $90.0
     million of direct borrowings outstanding under a credit agreement as of
     June 30, 2001 that have been guaranteed by ProLogis.

(2)  As of June 30, 2001, Frigoscandia AB had a 185.0 million euro credit
     agreement under which the currency equivalent of approximately $157.9
     million was outstanding. All of the borrowings outstanding have been
     guaranteed by ProLogis. The agreement expires on September 28, 2001 and
     contains a provision to extend the due date until December 28, 2001, at
     ProLogis' option.

Distribution Real Estate Entities

     ProLogis' total investment in its distribution real estate entities as of
June 30, 2001 consisted of (in millions of U. S. dollars):


                                       13




                                                                      PROLOGIS        PROLOGIS        PROLOGIS        PROLOGIS
                                                                       NORTH           NORTH           NORTH          EUROPEAN
                                                                      AMERICAN        AMERICAN        AMERICAN       PROPERTIES
                                                      PROLOGIS       PROPERTIES      PROPERTIES      PROPERTIES      PROPERTIES
                                                     CALIFORNIA        FUND I          FUND II       FUND III(1)       FUND(2)
                                                     -----------     -----------     -----------     -----------     -----------
                                                                                                      

     Equity interest ............................    $     160.6     $      52.6     $      14.3     $      11.7     $     266.4
     Distributions ..............................          (32.2)           (3.5)           (0.7)             --            (9.3)
     ProLogis' share of the earnings of the
       entity, excluding fees earned ............           17.8             1.6             0.1             0.1            13.8
                                                     -----------     -----------     -----------     -----------     -----------
            Subtotal ............................          146.2            50.7            13.7            11.8           270.9
     Adjustments to carrying value (3) ..........          (28.1)           (9.5)           (6.6)           (5.8)          (32.4)
     Other (including acquisitions costs), net ..            1.5             2.4             1.3             0.8           (25.9)
                                                     -----------     -----------     -----------     -----------     -----------
            Subtotal ............................          119.6            43.6             8.4             6.8           212.6
     Other receivables ..........................            0.2             1.1             0.7              --             4.0
                                                     -----------     -----------     -----------     -----------     -----------
            Total ...............................    $     119.8     $      44.7     $       9.1     $       6.8     $     216.6
                                                     ===========     ===========     ===========     ===========     ===========


----------

(1)  As of June 30, 2001, ProLogis North American Properties Fund III had $150.0
     million of short-term borrowings outstanding under an agreement that
     matures on September 13, 2001. The agreement provides for a 45-day
     extension at ProLogis North American Properties Fund III's option. ProLogis
     North American Properties Fund III intends to obtain permanent secured
     financing which will be used to repay these short-term borrowings. ProLogis
     has guaranteed the entire amount outstanding.

(2)  Third parties (19 institutional investors) have invested 414.7 million
     euros (the currency equivalent of approximately $355.7 million as of June
     30, 2001) in ProLogis European Properties Fund and have committed to fund
     an additional 645.6 million euros (the currency equivalent of approximately
     $553.9 million as of June 30, 2001) through 2002. ProLogis has also entered
     into a subscription agreement to make additional capital contributions of
     82.2 million euros (the currency equivalent of approximately $72.4 million
     as of June 30, 2001) through 2002.

     As of June 30, 2001, 39.0 million euros and 17.0 million pound sterling
     were outstanding on ProLogis European Properties Fund's 400.0 million euro
     multi-currency, secured, revolving credit facility (the currency equivalent
     of approximately $57.2 million as of June 30, 2001), all of which has been
     guaranteed by ProLogis.

(3)  Reflects the reduction in carrying value for amount of net gain on the
     disposition of facilities to each entity that does not qualify for current
     income recognition due to ProLogis' continuing ownership in each entity.

Kingspark S.A.

     On August 14, 1998, Kingspark S.A., a Luxembourg company, acquired an
industrial distribution facility development company operating in the United
Kingdom, Kingspark Group Holdings Limited ("ProLogis Kingspark"). ProLogis had
the following investments in Kingspark S.A. and Kingspark LLC accounted under
the equity method as of June 30, 2001:

     o    Investment in 100% of the non-voting preferred stock of Kingspark S.A.
          and in 95% of the membership interests (all non-voting) of Kingspark
          LLC, which owns the voting common stock of Kingspark S.A. These
          combined investments entitle ProLogis to recognize 99.75% of the
          combined earnings of these entities.

     o    153.5 million pound sterling (the currency equivalent of approximately
          $215.2 million as of June 30, 2001) outstanding on an unsecured
          revolving loan facility from ProLogis to Kingspark S.A.; interest at
          6.3% per annum for borrowings outstanding at June 30, 2001; due on
          demand;

     o    $130.9 million unsecured note from Kingspark S.A.; interest at 5.0%
          per annum; due on demand; and

     o    85.6 million pound sterling (the currency equivalent of approximately
          $120.0 million as of June 30, 2001) mortgage note from Kingspark S.A.;
          secured by land parcels and facilities under development; interest at
          7.5% per annum; due on demand.

     As of June 30, 2001, Kingspark S.A. had 1.2 million square feet of
operating facilities at an investment of $105.6 million and 0.7 million square
feet of facilities under development with a total budgeted cost of $72.1
million. Additionally, as of June 30, 2001, Kingspark S.A. owned 236 acres of
land and controlled 2,025 acres of land through purchase options, letters of
intent or contingent contracts. The land owned and controlled by Kingspark S.A.
has the capacity for the future development of approximately 32.7 million square
feet of facilities.


                                       14


     ProLogis Kingspark has a line of credit agreement with a bank in the United
Kingdom. The line of credit agreement provides for borrowings of up to 15.0
million pounds sterling (the currency equivalent of approximately $21.0 million
as of June 30, 2001) and has been guaranteed by ProLogis. As of June 30, 2001,
no borrowings were outstanding on the line of credit. However, as of June 30,
2001, ProLogis Kingspark had the currency equivalent of approximately $7.1
million of letters of credit outstanding that reduce the amount of available
borrowings on the line of credit.

Summarized Financial Information

     Summarized financial information for ProLogis' unconsolidated entities as
of and for the six months ended June 30, 2001 is presented below (in millions of
U.S. dollars). The information presented is for the entire entity.



                                                                                PROLOGIS       PROLOGIS       PROLOGIS
                                                                                 NORTH          NORTH          NORTH
                                                                                AMERICAN       AMERICAN       AMERICAN
                                 PROLOGIS      FRIGOSCANDIA      PROLOGIS      PROPERTIES     PROPERTIES     PROPERTIES
                               LOGISTICS(1)       S.A.(1)      CALIFORNIA(2)    FUND I(3)     FUND II(4)     FUND III(4)
                               ------------    ------------    -------------   -----------    -----------    -----------
                                                                                          

Total assets ...............    $     376.9     $     449.1     $     592.5    $     440.3    $     237.8    $     211.4
Total liabilities (6) ......    $     255.3     $     523.3     $     300.0    $     319.0    $     169.0    $     152.5
Minority interest ..........    $        --     $       0.3     $        --    $        --    $        --    $        --
Equity .....................    $     121.6     $     (74.5)    $     292.5    $     121.3    $      68.8    $      58.9
Revenues ...................    $     155.5     $     184.0     $      33.9    $      22.0    $       7.8    $       0.5
Net earnings (loss) (7) ....    $      (2.7)    $     (16.4)    $      10.4    $       3.2    $       0.2    $       0.1



                                 PROLOGIS
                                 EUROPEAN
                                PROPERTIES      KINGSPARK
                                  FUND(5)        S.A.(1)
                                -----------    -----------
                                        

Total assets ...............    $   1,001.1    $     566.9
Total liabilities (6) ......    $     434.6    $     520.8
Minority interest ..........    $        --             --
Equity .....................    $     566.5    $      46.1
Revenues ...................    $      39.4    $      25.5
Net earnings (loss) (7) ....    $      13.1    $       5.6


----------

(1)  ProLogis had an ownership interest in excess of 99% in each entity as of
     June 30, 2001.

(2)  ProLogis had a 50% ownership interest in this entity as of June 30, 2001.

(3)  ProLogis and ProLogis Development Services had a combined 41.3% ownership
     interest in this entity as of June 30, 2001.

(4)  ProLogis and ProLogis Development Services had a combined 20.0% ownership
     interest in each entity as of June 30, 2001.

(5)  ProLogis had a 39.7% ownership interest in this entity as of June 30, 2001.
     Includes the ProLogis European Properties S.a.r.l. which is wholly owned by
     ProLogis European Properties Fund as of June 30, 2001.

(6)  Includes amounts due to ProLogis of $5.2 million from ProLogis Logistics,
     $248.3 million from Frigoscandia S.A., $0.2 million from ProLogis
     California, $1.1 million from ProLogis North American Properties Fund I,
     $0.7 million for ProLogis North American Properties Fund II, $4.0 million
     from ProLogis European Properties Fund and $481.7 million from Kingspark
     S.A. Includes loans due to third parties (including accrued interest) of
     $217.7 million for ProLogis Logistics, $160.8 million for Frigoscandia
     S.A., $294.9 million for ProLogis California, $233.6 million for ProLogis
     North American Properties Fund I, $165.0 million for ProLogis North
     American Properties Fund II, $150.0 million for ProLogis North American
     Properties Fund III and $383.7 million for ProLogis European Properties
     Fund.

(7)  ProLogis' share of the net earnings (loss) of the respective entities and
     interest income on notes and mortgage notes due to ProLogis are recognized
     in the Consolidated Condensed Statements of Earnings and Comprehensive
     Income as "Income from unconsolidated entities." The net earnings (loss) of
     each entity includes interest expense on amounts due to ProLogis, as
     applicable. Includes net foreign currency exchange losses of $0.6 million
     for Frigoscandia S.A., $5.5 million for ProLogis European Properties Fund
     and $8.9 million for Kingspark S.A.

5. SHAREHOLDERS' EQUITY:

     During the six months ended June 30, 2001, ProLogis generated net proceeds
of $27.0 million from the issuance of 1,220,000 common shares of beneficial
interest, $0.01 par value ("Common Shares") under its 1999 Dividend Reinvestment
and Share Purchase Plan and issued 68,000 Common Shares upon the exercise of
stock options.

     On January 11, 2001, ProLogis announced a Common Share repurchase program
under which it may repurchase up to $100.0 million of its Common Shares. The
Common Shares will be repurchased from time to time in the open market and in
privately negotiated transactions, depending on market prices and other
conditions. As of June 30, 2001, 345,100 Common Shares had been repurchased at a
total cost of $7.1 million.


                                       15


     ProLogis called for the redemption of all of its outstanding Series B
cumulative convertible redeemable preferred shares ("Series B preferred shares")
as of March 20, 2001. Subsequent to the call for redemption on February 12,
2001, 5,908,971 Series B preferred shares were converted into 7,575,301 Common
Shares. The remaining 183,302 Series B preferred shares outstanding on March 20,
2001 were redeemed at a price of $25.00 per share, plus $0.442 in accrued and
unpaid dividends, for an aggregate redemption price of $25.442 per share.

     On March 30, 2001, ProLogis called for the redemption of its outstanding
Series A cumulative redeemable preferred shares of beneficial interest at the
price of $25.00 per share, plus $0.2481 in accrued and unpaid dividends, for an
aggregate redemption price of $25.2481 per share (the "Redemption Price"). The
shares were redeemed on May 8, 2001 at a total cost of $136.3 million.

6. DISTRIBUTIONS AND DIVIDENDS:

   Common Distributions

     On February 23, 2001 and May 25, 2001, ProLogis paid a quarterly
distribution of $0.345 per Common Share to shareholders of record on February 9,
2001 and May 14, 2001, respectively. The distribution level for 2001 was set by
ProLogis' Board of Trustees in December 2000 at $1.38 per Common Share.

   Preferred Dividends

     The annual dividend rates on ProLogis' preferred shares are $4.27 per
Series C cumulative redeemable preferred share, $1.98 per Series D cumulative
redeemable preferred share and $2.1875 per Series E cumulative redeemable
preferred share.

     On January 31, 2001 and April 30, 2001, ProLogis paid quarterly dividends
of $0.5469 per Series E cumulative redeemable preferred share. On March 30,
2001, ProLogis paid quarterly dividends of $0.5875 per Series A cumulative
redeemable preferred share. On March 30, 2001 and June 29, 2001, ProLogis paid
quarterly dividends of $1.0675 per Series C cumulative redeemable preferred
share and $0.495 per Series D cumulative redeemable preferred share.

     Pursuant to the terms of its preferred shares, ProLogis is restricted from
declaring or paying any distribution with respect to the Common Shares unless
all cumulative dividends with respect to the preferred shares have been paid and
sufficient funds have been set aside for dividends that have been declared for
the then-current dividend period with respect to the preferred shares.

7. EARNINGS PER COMMON SHARE:

     A reconciliation of the denominator used to calculate basic earnings per
Common Share to the denominator used to calculate diluted earnings per Common
Share for the periods indicated (in thousands, except per share amounts) is as
follows:



                                                                          THREE MONTHS ENDED            SIX MONTHS ENDED
                                                                              JUNE 30,                      JUNE 30,
                                                                      -------------------------     -------------------------
                                                                         2001           2000           2001           2000
                                                                      ----------     ----------     ----------     ----------
                                                                                                       
     Net earnings attributable to Common Shares .................     $   44,552     $   19,589     $   88,559     $   64,527
     Add:  Series B preferred share dividends ...................             --             --             81             --
                                                                      ----------     ----------     ----------     ----------
     Adjusted net earnings attributable to Common Shares ........     $   44,552     $   19,589     $   88,640     $   64,527
                                                                      ==========     ==========     ==========     ==========

     Weighted average Common Shares outstanding - Basic .........        173,913        163,148        170,624        162,644

     Incremental weighted average effect of common share
          equivalents and contingently issuable shares ..........            783            582            825            726
     Weighted average Series B preferred shares .................             --             --          3,114             --
                                                                      ----------     ----------     ----------     ----------
     Adjusted weighted average Common Shares outstanding -
          Diluted ...............................................        174,696        163,730        174,563        163,370
                                                                      ==========     ==========     ==========     ==========
     Per share net earnings attributable to Common Shares:
          Basic .................................................     $     0.26     $     0.12     $     0.52     $     0.40
                                                                      ==========     ==========     ==========     ==========
          Diluted ...............................................     $     0.26     $     0.12     $     0.51     $     0.39
                                                                      ==========     ==========     ==========     ==========


     For the periods indicated, the following weighted average convertible
securities were not included in the calculation of diluted per share net
earnings attributable to Common Shares as the effect, on an as-converted basis,
was antidilutive (in thousands):



                                               THREE MONTHS ENDED            SIX MONTHS ENDED
                                                    JUNE 30,                     JUNE 30,
                                           -------------------------     -------------------------
                                              2001           2000           2001           2000
                                           ----------     ----------     ----------     ----------
                                                                            

     Series B preferred shares .......             --          8,543             --          8,755
                                           ==========     ==========     ==========     ==========

     Limited partnership units .......          5,088          5,558          5,088          5,573
                                           ==========     ==========     ==========     ==========



                                       16


8. BUSINESS SEGMENTS:

     ProLogis has three reportable business segments:

     o    Property operations represents the long-term ownership and leasing of
          industrial distribution facilities in the United States (portions of
          which are owned through ProLogis California, ProLogis North American
          Properties Fund I, ProLogis North American Properties Fund II and
          ProLogis North American Properties Fund III -- See Note 3), Mexico and
          Europe (portions of which are owned through ProLogis European
          Properties Fund and ProLogis European Properties S.a.r.l. -- See Note
          4); each operating facility is considered to be an individual
          operating segment having similar economic characteristics which are
          combined within the reportable segment based upon geographic location;

     o    CDFS business represents the development of industrial distribution
          facilities by ProLogis and Kingspark S.A. (which is not consolidated
          in ProLogis' Financial Statements) in the United States, Mexico
          and Europe (see Note 4) that are often disposed of to third parties
          or entities in which ProLogis has an ownership interest and the
          development of industrial distribution facilities by ProLogis and
          Kingspark S.A. on a fee basis for third parties in the United States,
          Mexico and Europe; the development activities of ProLogis and
          Kingspark S.A. are considered to be individual operating segments
          having similar economic characteristics which are combined within the
          reportable segment based upon geographic location; and

     o    Temperature-controlled distribution operations represents the
          operation of a temperature-controlled distribution and logistics
          network through investments in unconsolidated entities in the United
          States (ProLogis Logistics) and Europe (Frigoscandia S.A.). The
          operations of these entities are considered to be one operating
          segment. See Note 4.

     Reconciliations of the three reportable segments': (i) income from external
customers to ProLogis' total income; (ii) net operating income from external
customers to ProLogis' earnings before minority interest (ProLogis' chief
operating decision makers rely primarily on net operating income and related
measures to make decisions about allocating resources and assessing segment
performance); and (iii) assets to ProLogis' total assets are as follows (in
thousands):



                                                                        SIX MONTHS ENDED
                                                                            JUNE 30,
                                                                 ------------------------------
                                                                     2001              2000
                                                                 ------------      ------------
                                                                             
     Income:
       Property operations:
          United States (1) ................................     $    236,087      $    238,173
          Mexico ...........................................            8,912             6,933
          Europe (2) .......................................            8,938            10,641
                                                                 ------------      ------------
            Total property operations segment ..............          253,937           255,747
                                                                 ------------      ------------
       CDFS business:
          United States (3) ................................           52,062            38,239
          Mexico ...........................................              (10)            1,284
          Europe (4) (5) ...................................           20,841            16,038
                                                                 ------------      ------------
            Total CDFS business segment ....................           72,893            55,561
                                                                 ------------      ------------
       Temperature-controlled distribution operations:
          United States (6) ................................           (2,620)            5,871
          Europe (7) .......................................          (10,768)           (5,051)
                                                                 ------------      ------------
            Total temperature-controlled distribution
              operations segment ...........................          (13,388)              820
                                                                 ------------      ------------
       Reconciling items:
          Interest income ..................................            2,607             4,220
          Income (loss) from unconsolidated entities .......           (3,911)               --
                                                                 ------------      ------------
            Total reconciling items ........................           (1,304)            4,220
                                                                 ------------      ------------
            Total income ...................................     $    312,138      $    316,348
                                                                 ============      ============
     Net operating income:
       Property operations:
          United States (1) ................................     $    222,799      $    223,464
          Mexico ...........................................            9,067             6,763
          Europe (2) .......................................            8,389            11,388
                                                                 ------------      ------------
            Total property operations segment ..............          240,255           241,615
                                                                 ------------      ------------
       CDFS business:
          United States (3) ................................           50,247            36,659
          Mexico ...........................................              (84)            1,268
          Europe (4) (5) ...................................           20,742            15,907
                                                                 ------------      ------------
            Total CDFS business segment ....................           70,905            53,834
                                                                 ------------      ------------
       Temperature-controlled distribution operations:
          United States (6) ................................           (2,620)            5,871
          Europe (7) .......................................          (10,768)           (5,051)
                                                                 ------------      ------------
            Total temperature-controlled distribution
              operations segment ...........................          (13,388)              820
                                                                 ------------      ------------
       Reconciling items:
          Interest income ..................................            2,607             4,220
          Income (loss) from unconsolidated entities .......           (3,911)               (2)
          General and administrative expense ...............          (27,111)          (22,522)
          Depreciation and amortization ....................          (70,363)          (77,065)
          Interest expense .................................          (82,166)          (84,842)
          Other ............................................               (4)             (920)
                                                                 ------------      ------------
            Total reconciling items ........................         (180,948)         (181,131)
                                                                 ------------      ------------
            Earnings before minority interest ..............     $    116,824      $    115,138
                                                                 ============      ============




                                       17




                                                                   JUNE 30,        DECEMBER 31,
                                                                     2001              2000
                                                                 ------------      ------------
                                                                             
      Assets:
       Property operations:
         United States (8) .................................     $  3,781,849      $  3,887,601
         Mexico ............................................          121,790           113,538
         Europe ............................................          293,512           308,457
                                                                 ------------      ------------
              Total property operations segment ............        4,197,151         4,309,596
                                                                 ------------      ------------
       CDFS business:
         United States .....................................          201,272           304,697
         Mexico ............................................           33,995            26,288
         Europe(8) .........................................          658,348           637,207
                                                                 ------------      ------------
              Total CDFS business segment ..................          893,615           968,192
                                                                 ------------      ------------
       Temperature controlled distribution operations:
         United States (8) .................................          127,341           231,053
         Europe (8) ........................................          181,814           191,981
                                                                 ------------      ------------
              Total temperature controlled distribution
                operations segment .........................          309,155           423,034
                                                                 ------------      ------------
       Reconciling items:
         Investment in and advances to unconsolidated
           entities ........................................           60,260            70,807
         Cash ..............................................           53,239            57,870
         Accounts and notes receivable .....................           27,505            43,040
         Other assets ......................................           46,513            73,795
                                                                 ------------      ------------
              Total reconciling items ......................          187,517           245,512
                                                                 ------------      ------------
              Total assets .................................     $  5,587,438      $  5,946,334
                                                                 ============      ============


----------

(1)  In addition to the operations of ProLogis that are reported on a
     consolidated basis, includes amounts recognized under the equity method
     related to ProLogis' investment in ProLogis California, ProLogis North
     American Properties Fund I, ProLogis North American Properties Fund II and
     ProLogis North American Properties Fund III in 2001 and ProLogis California
     in 2000. See Note 3 for summarized financial information of ProLogis
     California, ProLogis North American Properties Fund I, ProLogis North
     American Properties Fund II and ProLogis North American Properties Fund
     III.

(2)  In addition to the operations of ProLogis that are reported on a
     consolidated basis, includes amounts recognized under the equity method
     related to ProLogis' investment in ProLogis European Properties Fund
     (including net foreign currency exchange gains of $2.3 million in 2001 and
     net foreign currency losses of $2.6 million in 2000) and ProLogis European
     Properties S.a.r.l. (including net foreign currency exchange gains of $1.5
     million in 2000). See Note 4 for summarized financial information of
     ProLogis European Properties Fund.

(3)  In 2001, includes $20.8 million and $67.4 million of net gains recognized
     by ProLogis related to the disposition of facilities to ProLogis North
     American Properties Fund II and ProLogis North American Properties Fund
     III, respectively.

(4)  Includes amounts recognized under the equity method related to ProLogis'
     investment in Kingspark S.A. (including $8.9 million of foreign currency
     exchange losses and $0.5 million of net foreign currency exchange gains in
     2001 and 2000, respectively). See Note 4.

(5)  Includes $6.4 million and $5.3 million of net gains recognized by ProLogis
     related to the disposition of facilities to ProLogis European Properties
     Fund in 2001 and 2000, respectively. In addition, includes $10.7 million
     and $0.8 million of net gains recognized under the equity method related to
     the disposition of facilities to ProLogis European Properties Fund by the
     Kingspark entities in 2001 and 2000, respectively.


                                       18


(6)  Represents amounts recognized under the equity method related to ProLogis'
     investments in ProLogis Logistics in 2001 and 2000 and CSI/Frigo LLC in
     2001. CSI/Frigo LLC recognizes income under the equity method based on its
     common stock investment in ProLogis Logistics. See Note 3 for summarized
     financial information of ProLogis Logistics.

(7)  Represents amounts recognized under the equity method related to ProLogis'
     investments in Frigoscandia S.A. (including $0.6 million of net foreign
     currency exchange losses in 2001 and $1.7 million of net foreign exchange
     gains in 2000) and CSI/Frigo LLC in 2001. CSI/Frigo LLC recognizes income
     under the equity method based on its common stock investment in
     Frigoscandia S.A. See Note 3 for summarized financial information of
     Frigoscandia S.A.

(8)  Amounts include investments in unconsolidated entities accounted for under
     the equity method. See Note 4 for summarized financial information of these
     unconsolidated entities as of and for the six months ended June 30, 2001.

9. SUPPLEMENTAL CASH FLOW INFORMATION:

     Non-cash investing and financing activities for the six months ended June
30, 2001, and 2000 are as follows:

     o    In 2001, ProLogis contributed its 49.9% of the common stock of
          ProLogis European Properties S.a.r.l. to ProLogis European Properties
          Fund for an additional equity interest in ProLogis European Properties
          Fund of $83.0 million. In 2000, in connection with ProLogis' initial
          contribution of 50.1% of the common stock of ProLogis European
          Properties S.a.r.l. to ProLogis European Properties Fund, ProLogis
          received an equity interest in ProLogis European Properties Fund of
          approximately $78.0 million. ProLogis European Properties S.a.r.l. had
          total assets of $403.9 million and total liabilities of $248.1
          million. ProLogis recognized its investment in the remaining 49.9% of
          the common stock under the equity method from January 7, 2000 through
          January 6, 2001. See Note 3.

     o    ProLogis received $4.2 million, $34.1 million, $13.7 million and $11.7
          million of the proceeds from its disposition of facilities to ProLogis
          European Properties Fund, ProLogis North American Properties Fund I,
          ProLogis North American Properties Fund II and ProLogis North American
          Properties Fund III, respectively, in the form of an equity interest
          in these entities during 2001. ProLogis received $4.4 million, $13.8
          million, $14.8 million and $0.6 million of the proceeds from its
          disposition of facilities to ProLogis European Properties Fund,
          ProLogis California, ProLogis North American Properties Fund I and
          ProLogis Principal in the form of an equity interest during 2000.

     o    ProLogis received $4.2 million of the proceeds from its disposition of
          facilities to ProLogis European Properties Fund in the form of a note
          receivable during 2001. ProLogis received $15.6 million, $44.6 million
          and $13.2 million of the proceeds from its disposition of facilities
          to ProLogis European Properties Fund, ProLogis North American
          Properties Fund I and ProLogis Principal, respectively, in the form of
          notes receivable from these entities during 2000.

     o    ProLogis received $10.8 million and $7.7 million of the proceeds from
          its disposition of facilities to a third parties in the form of notes
          receivable in 2001 and 2000, respectively.

     o    In connection with the acquisition of a facility, ProLogis assumed a
          $7.7 million mortgage note in 2001.

     o    In connection with the agreement for the acquisition of Kingspark
          S.A., ProLogis issued approximately 67,000 and 201,000 Common Shares
          valued at $1.5 million and $3.9 million, respectively, in 2001 and
          2000, respectively.

     o    Series B preferred shares aggregating $151.8 million and $1.0 million
          were converted into Common Shares in 2001 and 2000, respectively.

     o    Net foreign currency translation adjustments of $(62,630,000) and
          $(11,350,000) were recognized in 2001 and 2000, respectively.



                                       19


10. RELATED PARTY TRANSACTIONS

Transactions with Chief Executive Officer and Chairman

     ProLogis has invested in the non-voting preferred stock of certain entities
that have ownership interests in companies that produce income that is not REIT
qualifying income (i.e., rental income and mortgage interest income) under the
Internal Revenue Code of 1986, as amended (the "Code"). Therefore, the voting
common stock of these companies was held by third parties including entities in
which Security Capital, ProLogis' largest shareholder, held non-voting
interests. The Code, as amended in 2001, allows for ProLogis to have a voting
ownership interest in these entities. ProLogis began negotiations to acquire the
voting ownership interests in these entities during 2000. Before the
acquisitions were completed it was determined that the state income tax laws
governing REITs were not all going to be changed to coincide with the amendments
to the Code. Therefore, K. Dane Brooksher, ProLogis' chairman and chief
executive officer acquired the voting ownership interests in Frigoscandia S.A.,
ProLogis Logistics and Kingspark S.A. from the third parties and Security
Capital. See Note 4.

     Mr. Brooksher's voting ownership interests in the entities in which
ProLogis has only non-voting ownership interests are:

     o    Kingspark LLC, a limited liability company formed on January 5, 2001,
          acquired the voting common stock of Kingspark S.A. (an entity in which
          ProLogis owns all of the non-voting preferred stock) for $8.1 million.
          ProLogis funded the entire purchase price either directly or through
          loans to Kingspark LLC or Mr. Brooksher. The ProLogis loan to
          Kingspark LLC is in the principal amount of $7.3 million, is due
          January 5, 2006 and bears interest at an annual rate of 8.0%. ProLogis
          made a direct capital contribution to Kingspark LLC in the amount of
          $770,973. Mr. Brooksher's $40,557 capital contribution to Kingspark
          LLC was loaned to him by ProLogis, which recourse loan is payable on
          January 5, 2006 and bears interest at an annual rate of 8%. Mr.
          Brooksher's membership interest entitles him to receive dividends
          equal to 5% of the net cash flow of Kingspark LLC, as defined, if any.
          Mr. Brooksher is the managing member and he may transfer his
          membership interest, subject to certain conditions, including the
          approval of ProLogis. There are no provisions that give ProLogis the
          right to acquire Mr. Brooksher's membership interest. Mr. Brooksher
          does not receive compensation in connection with being the managing
          member. See Note 4.

     o    CSI/Frigo LLC, a limited liability company formed on January 5, 2001,
          acquired the voting common stock of Frigoscandia S.A. and ProLogis
          Logistics (both entities in which ProLogis owns all of the non-voting
          preferred stock) for $3.3 million. ProLogis loaned $2.9 million to
          CSI/Frigo LLC, which loan is due January 5, 2011 and bears interest at
          an annual rate of 8.0%. ProLogis also made a capital contribution to
          CSI/Frigo LLC in the amount of $404,545 and Mr. Brooksher made a
          $50,000 capital contribution to CSI/Frigo LLC. Mr. Brooksher's
          membership interests (after considering the terms of the participating
          note from CSI/Frigo LLC to ProLogis) entitles him to receive dividends
          equal to 5% of the net cash flow of CSI/Frigo LLC, as defined, if any.
          Mr. Brooksher is the managing member and he may transfer his
          membership interest, subject to certain conditions, including the
          approval of ProLogis. There are no provisions that give ProLogis the
          right to acquire Mr. Brooksher's membership interest. Mr. Brooksher
          does not receive compensation in connection with being the managing
          member.

     As a result of the foregoing transactions, Mr. Brooksher has an effective
0.04% interest in the earnings of ProLogis Logistics, an effective 0.25%
interest in the earnings of Frigoscandia S.A. and an effective 0.25% interest in
the earnings of Kingspark S.A.

     In 2000, ProLogis invested in GoProLogis and ProLogis PhatPipe, whose
income is not REIT qualifying income under the Code (amendments to the Code and
state income tax laws governing REITs were not in effect at this time). These
investments were structured whereby ProLogis would have only a non-voting
preferred stock ownership interest. To complete the transactions, Mr. Brooksher
acquired the voting ownership interest in each entity as noted below.

     o    GoProLogis owns preferred stock in Vizional Technologies. Mr.
          Brooksher owns all of the voting common stock of GoProLogis,
          representing a 2% interest in the earnings of GoProLogis and he is
          entitled to receive dividends equal to 2% of the net cash flow of
          GoProLogis, as defined, if any. ProLogis owns all of the non-voting
          preferred stock of GoProLogis, representing a 98% interest in the
          earnings of GoProLogis and ProLogis is entitled to receive dividends
          equal to the remaining 98% of net cash flow, as defined, if any. Mr.
          Brooksher contributed a $1.1 million recourse promissory note to
          GoProLogis in exchange for his interest in the entity, which note is
          payable on July 18, 2005 and bears interest at an annual rate of 8.0%.
          Mr. Brooksher is not restricted from transferring his ownership
          interest in GoProLogis and ProLogis has the right to acquire Mr.
          Brooksher's ownership interest beginning in 2001 for a price equal to
          the outstanding principal amount of the promissory note plus accrued
          and unpaid interest. See Note 4.


                                       20


     o    ProLogis PhatPipe owns preferred stock in PhatPipe. Mr. Brooksher owns
          all of the voting common stock of ProLogis PhatPipe, representing a 2%
          interest in the earnings of ProLogis PhatPipe and he is entitled to
          receive dividends equal to 2% of the net cash flow of GoProLogis, as
          defined, if any. ProLogis owns all of the non-voting preferred stock
          of ProLogis PhatPipe, representing a 98% interest in the earnings of
          ProLogis PhatPipe and ProLogis is entitled to receive dividends equal
          to the remaining 98% of net cash flow, as defined, if any. Mr.
          Brooksher contributed recourse promissory notes with the aggregate
          principal amount of $122,449 to ProLogis PhatPipe in exchange for his
          interest in the entity, which note is payable on September 20, 2005
          ($71,429 principal amount) and January 4, 2006 ($51,020 principal
          amount). Both notes bear interest at an annual rate of 8.0%. Mr.
          Brooksher is not restricted from transferring his ownership interest
          in ProLogis PhatPipe and ProLogis has the right to acquire Mr.
          Brooksher's ownership interest beginning in 2001 for a price equal to
          the outstanding aggregate principal amount of the promissory notes
          plus accrued and unpaid interest. See Note 4.

     As of June 30, 2001, ProLogis had other loans outstanding from
Mr. Brooksher with an aggregate principal amount of $2,100,000. Of these,
$1,863,000 was loaned to Mr. Brooksher under ProLogis' employee share purchase
plan.

11. COMMITMENTS AND CONTINGENCIES:

Environmental Matters

     All of the facilities acquired by ProLogis have been subjected to
environmental reviews by ProLogis or predecessor owners. While some of these
assessments have led to further investigation and sampling, none of the
environmental assessments has revealed, nor is ProLogis aware of any
environmental liability (including asbestos related liability) that ProLogis
believes would have a material adverse effect on ProLogis' business, financial
condition or results of operations.



                                       21


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Board of Trustees and Shareholders of
    ProLogis Trust:

         We have reviewed the accompanying consolidated condensed balance sheets
of ProLogis Trust and subsidiaries as of June 30, 2001, and the related
consolidated condensed statements of earnings and comprehensive income for the
three and six months ended June 30, 2001 and 2000 and the consolidated condensed
statements of cash flows for the six months ended June 30, 2001 and 2000. These
financial statements are the responsibility of the Trust's management.

         We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.

         Based on our review, we are not aware of any material modifications
that should be made to the financial statements referred to above for them to be
in conformity with accounting principles generally accepted in the United
States.

         We have previously audited, in accordance with auditing standards
generally accepted in the United States, the consolidated balance sheet of
ProLogis Trust and subsidiaries as of December 31, 2000, and in our report dated
March 15, 2001, we expressed an unqualified opinion on that statement. In our
opinion, the information set forth in the accompanying consolidated condensed
balance sheet as of December 31, 2000, is fairly stated in all material
respects, in relation to the consolidated balance sheet from which it has been
derived.


                                        ARTHUR ANDERSEN LLP


Chicago, Illinois
August 10, 2001
(except with respect to
Note 2 as to which the
date is April 3, 2002)



                                       22


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     The following discussion should be read in conjunction with ProLogis'
Consolidated Condensed Financial Statements and the notes thereto included in
Item 1 of this report. See also ProLogis' 2000 Annual Report on Form 10-K, as
amended

     The statements contained in this discussion that are not historical facts
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. These forward-looking statements are based on current
expectations, estimates and projections about the industry and markets in which
ProLogis operates, management's beliefs, and assumptions made by management.
Words such as "expects", "anticipates", "intends", "plans", "believes", "seeks",
"estimates", variations of such words and similar expressions are intended to
identify such forward-looking statements. These statements are not guarantees of
future performance and involve certain risks, uncertainties and assumptions that
are difficult to predict. Therefore, actual outcomes and results may differ
materially from what is expressed or forecasted in such forward-looking
statements. Factors which may affect outcomes and results include: (i) changes
in general economic conditions in ProLogis' markets that could adversely affect
demand for ProLogis' facilities and the creditworthiness of ProLogis' customers,
(ii) changes in financial markets, interest rates and foreign currency exchange
rates that could adversely affect ProLogis' cost of capital and its ability to
meet its financial needs and obligations, (iii) increased or unanticipated
competition for distribution facilities in ProLogis' target market cities; and
(iv) those factors discussed in ProLogis' 2000 Annual Report on Form 10-K, as
amended.

RESULTS OF OPERATIONS

Six Months Ended June 30, 2001 and 2000

     ProLogis' net earnings attributable to Common Shares were $88.6 million for
the six months ended June 30, 2001 as compared to $64.5 million for the same
period in 2000. For the six months ended June 30, 2001, basic and diluted per
share net earnings attributable to Common Shares were $0.52 and $0.51 per share,
respectively. Basic and diluted per share net earnings attributable to Common
Shares were $0.40 and $0.39 per share, respectively, for the same period in
2000.

     The CDFS business segment provides capital for ProLogis to redeploy into
its development activities in addition to generating profits that contribute to
ProLogis' total income. ProLogis' net operating income from this segment
increased by $17.1 million in 2001 over 2000, primarily the result of the number
of dispositions of facilities developed by ProLogis to entities in which
ProLogis maintains an ownership interest, such as ProLogis North American
Properties Fund II, ProLogis North American Properties Fund III and ProLogis
European Properties Fund, as well as to third parties. ProLogis' property
operations segment net operating income was $240.2 million for 2001 and $241.6
million for 2000. This operating segment's net income includes rental income and
net rental expenses from facilities directly owned by ProLogis and also its
share of the income of its unconsolidated entities that engage in property
operations segment activities. Income from ProLogis' temperature-controlled
distribution operations decreased in 2001 from 2000 by $14.2 million. See
"--Property Operations", "-- CDFS Business" and "-- Temperature-Controlled
Distribution Operations".

Property Operations

     ProLogis owned or had ownership interests in the following operating
facilities as of the dates indicated (square footage in thousands):



                                                                                    JUNE 30,
                                                            -------------------------------------------------------
                                                                      2001                          2000
                                                            -------------------------     -------------------------
                                                                             SQUARE                        SQUARE
                                                              NUMBER        FOOTAGE         NUMBER        FOOTAGE
                                                            ----------     ----------     ----------     ----------
                                                                                            

     Direct ownership (1) .............................          1,214        123,719          1,249        126,723
     ProLogis California (2) ..........................             79         13,052             79         12,494
     ProLogis North American Properties Fund I
        (1)(3) ........................................             36          8,963             17          3,836
     ProLogis North American Properties Fund II
        (1)(4) ........................................             27          4,477              3            440
     ProLogis North American Properties Fund III
        (1)(5) ........................................             34          4,380             --             --
     ProLogis European Properties Fund and
     ProLogis
        European Properties S.a.r.l. (6) ..............            114         17,028             90         11,707
                                                            ----------     ----------     ----------     ----------
                                                                 1,504        171,619          1,438        155,200
                                                            ==========     ==========     ==========     ==========




                                       23


----------

(1)  Includes operating facilities owned by ProLogis and its consolidated
     entities. The decrease in 2001 from 2000 is primarily the result of the
     formation of certain of ProLogis' distribution real estate entities
     beginning in June 2000 whose entire portfolios consist of operating
     facilities that were previously directly owned by ProLogis.

(2)  ProLogis has had a 50% ownership interest in ProLogis California since its
     inception. See Note 3 to ProLogis' Consolidated Condensed Financial
     Statements in Item 1.

(3)  ProLogis had a 41.3% ownership interest in ProLogis North American
     Properties Fund I as of June 30, 2001. This entity was formed on June 30,
     2000. All operating facilities owned by this entity were previously
     directly owned by ProLogis. See Note 3 to ProLogis' Consolidated Condensed
     Financial Statements in Item 1.

(4)  ProLogis had a 20% ownership interest in ProLogis North American Properties
     Fund II as of June 30, 2001. This entity was originally formed on June 30,
     2000. All operating facilities owned by this entity were previously
     directly owned by ProLogis. See Note 3 to ProLogis' Consolidated Condensed
     Financial Statements in Item 1.

(5)  ProLogis had a 20.0% ownership interest in ProLogis North American
     Properties Fund III as of June 30, 2001. This entity was formed in June
     2001 with the acquisition of 34 operating facilities from ProLogis. See
     Note 3 to ProLogis' Consolidated Condensed Financial Statements in Item 1.

(6)  As of June 30, 2001, ProLogis' ownership interest in ProLogis European
     Properties Fund is 39.7%. As of June 30, 2000, ProLogis had a 42.1%
     ownership interest in the ProLogis European Properties Fund. Includes
     facilities owned by ProLogis European Properties S.a.r.l. in which ProLogis
     had a direct 49.9% ownership interest as of June 30, 2000. See Note 4 to
     ProLogis' Consolidated Condensed Financial Statements in Item 1.

     ProLogis' property operations segment income consists of the: (i) net
operating income from the operating facilities that are owned by ProLogis
directly or through its consolidated entities, and (ii) the income recognized by
ProLogis under the equity method from its investments in unconsolidated entities
engaged in property operations. See Note 8 to ProLogis' Consolidated Condensed
Financial Statements in Item 1. The amounts recognized under the equity method
are based on the net earnings of each unconsolidated entity and include:
interest income and interest expense, depreciation and amortization expenses,
general and administrative expenses, income taxes and foreign currency exchange
gains and losses (with respect to ProLogis European Properties Fund and ProLogis
European Properties S.a.r.l.). ProLogis' net operating income from the property
operations segment was as follows (in thousands):



                                                                                SIX MONTHS ENDED
                                                                                    JUNE 30,
                                                                            -------------------------
                                                                               2001           2000
                                                                            ----------     ----------
                                                                                     
     Facilities directly owned by ProLogis and its consolidated entities
       Rental income ..................................................     $  236,391     $  240,505
       Property operating expenses ....................................         13,682         14,131
                                                                            ----------     ----------
          Net operating income (1) ....................................        222,709        226,374
                                                                            ----------     ----------
     Income from the ProLogis California ..............................          7,119          6,054
     Income from ProLogis North American Properties Fund I (2) ........          2,594             --
     Income from ProLogis North American Properties Fund II (2) .......            906             --
     Income from ProLogis North American Properties Fund III (3) ......             40             --
     Income from ProLogis European Properties Fund (4) ................          6,851          4,312
     Income from ProLogis European Properties S.a.r.l. (4) ............             36          4,875
                                                                            ----------     ----------
          Total property operations segment ...........................     $  240,255     $  241,615
                                                                            ==========     ==========


----------

(1)  The fluctuations in rental expenses between years is primarily the result
     of the changes in the composition of the directly owned facilities in each
     year in addition to increased rental expense recoveries (as a percentage of
     total rental expenses) in each year. Rental expenses, before recoveries
     from tenants, were 26.4% of rental income in 2001 and 24.9% rental income
     for 2000. Rental expenses, after recoveries from tenants, were 5.8% of
     rental income in 2001 and 5.9% of rental income in 2000. Total rental
     expense recoveries were 78.1% and 76.4% of total rental expenses in 2001
     and 2000, respectively. The increase in rental expense recoveries as a
     percentage of total rental expenses reflects ProLogis' emphasis on on-site
     property management teams and the effectiveness of the ProLogis Operating
     System(TM).

(2)  ProLogis North American Properties Fund I and ProLogis North American
     Properties Fund II began operations on June 30, 2000.

(3)  ProLogis North American Properties Fund III began operations on June 15,
     2001.


                                       24


(4)  In 2001, ProLogis' share of the income of ProLogis European Properties Fund
     includes net foreign currency gains of $2.3 million. In 2000, ProLogis'
     share of the income of ProLogis European Properties Fund and ProLogis
     European Properties S.a.r.l. includes net foreign currency losses of $0.7
     million and net foreign currency gains of $0.8 million, respectively.
     Excluding net foreign currency exchange gains and losses, ProLogis' share
     of the income of ProLogis European Properties Fund would have been $4.6
     million and $5.0 million for 2001 and 2000, respectively. Excluding net
     foreign currency exchange gains and losses, ProLogis' share of the income
     of ProLogis European Properties S.a.r.l. would have been $4.1 million for
     2000. ProLogis' combined share of the income of ProLogis European
     Properties Fund and ProLogis European Properties S.a.r.l. decreased in 2001
     from 2000 primarily due to higher interest expense in 2001 as the use of
     debt proceeds to fund acquisitions increased in the second half of 2000 and
     in 2001. ProLogis recognized income under the equity method related to
     ProLogis European Properties S.a.r.l. in 2001 for only six days.

     The operating facilities in ProLogis' portfolio are classified as either
stable or pre-stable facilities. Stabilized operating facilities are those
facilities where the capital improvements, repositioning and management and
marketing programs have been in effect for a sufficient period of time
(generally 12 months) to achieve a stabilized occupancy (typically 93%, but
ranging from 90% to 95%, depending on the submarket and product type).
Pre-stable facilities are generally newly developed or acquired facilities that
are usually underleased at the time they are completed or acquired. ProLogis,
utilizing its ProLogis Operating System(TM), has been successful in increasing
occupancies on such facilities during their initial months of operation.
ProLogis' stabilized operating facilities (facilities owned by ProLogis and its
consolidated and unconsolidated entities) were 94.0% occupied and 95.0% leased
as of June 30, 2001. ProLogis' stabilized occupancy levels have decreased
slightly during the first six months of 2001 (95.4% occupied and 96.2% leased as
of December 31, 2000). ProLogis believes that economic conditions in North
America have led to a slowing in customer leasing decisions and in the
absorption of new facilities in the market. However, ProLogis believes that it
will benefit from the ProLogis Operating System(TM) during this period, as it
has allowed ProLogis to build a strong local market presence and develop strong
customer relationships.

    The average increase in rental rates for both new and renewed leases on
previously leased space (20.3 million square feet) for all facilities including
those owned by ProLogis' consolidated and unconsolidated entities during 2001
was 18.3% (up from 15.5% for all of 2000). During the six months ended June 30,
2001, the net operating income (rental income less net rental expenses)
generated by ProLogis' "same store" portfolio of operating facilities
(facilities owned by ProLogis and its consolidated and unconsolidated entities
that were in operation throughout both six month periods in 2001 and 2000)
increased by 2.81% over the same period in 2000 (as compared to an increase of
6.89% during the six months ended June 30, 2000 as compared to the same period,
in 1999). The population of same-store facilities has a greater percentage of
stabilized facilities in 2001 than in 2000. Stabilized facilities have generally
already reached an occupancy level of 93%, resulting in fewer opportunities for
these facilities to generate net operating income growth from occupancy
increases.

CDFS Business

     Net operating income from ProLogis' CDFS business segment consists
primarily of: (i) profits from the disposition of land parcels and facilities
that were developed by ProLogis and disposed of to customers or to entities in
which ProLogis has an ownership interest; (ii) development fees earned by
ProLogis; and (iii) income recognized under the equity method from ProLogis'
investment in Kingspark S.A.. Kingspark S.A. engages in CDFS business activities
in the United Kingdom similar to those activities performed directly by ProLogis
in other locations. ProLogis recognizes 99.75% of the net earnings of Kingspark
S.A. under the equity method that includes: interest income and interest expense
(net of capitalized amounts), general and administrative expense (net of
capitalized amounts), income taxes and foreign currency exchange gains and
losses.

     The CDFS business segment operations increased in volume for the six months
in 2001 over the same period in 2000; consequently, ProLogis' income from this
segment has increased in 2001 over 2000. The CDFS business segment's net
operating income is comprised of the following (in thousands):


                                       25




                                                                                 SIX MONTHS ENDED
                                                                                     JUNE 30,
                                                                            --------------------------
                                                                               2001            2000
                                                                            ----------      ----------
                                                                                     
     Net gains on disposition of land parcels and facilities
        developed (1) .................................................     $   56,081      $   43,187
     Development fees and other, net ..................................          1,830           2,042
     Income from Kingspark S.A.(2)(3) .................................         12,689           9,330
     Miscellaneous income .............................................          2,294           1,005
     Other expenses (4) ...............................................         (1,989)         (1,730)
                                                                            ----------      ----------
                                                                            $   70,905      $   53,834
                                                                            ==========      ==========


----------

(1)  Represents gains from the disposition of land parcels and facilities
     developed as follows:

     o    2001: 138 acres; 8.9 million square feet; $452.9 million of proceeds,
          and

     o    2000: 158 acres; 5.9 million square feet; $268.2 million of proceeds.

(2)  The Kingspark entities' income in 2001 includes:

     o    Gains from the disposition of facilities developed (1.4 million square
          feet; $141.4 million of proceeds; net gains of $12.1 million);

     o    Development fees and other miscellaneous net income of $6.4 million;

     o    Deferred and current income tax benefit of $1.0 million; and

     o    Foreign currency exchange losses of $8.9 million.

(3)  Kingspark S. A. and its subsidiaries' income in 2000 includes:

     o    Gains from the disposition of land parcels and facilities developed
          (11 acres; 0.4 million square feet; $38.8 million of proceeds; net
          gains of $5.9 million);

     o    Development fees and other miscellaneous net income of $2.5 million;

     o    Deferred and current income tax expense of $1.9 million; and

     o    Foreign currency exchange gains of $0.5 million.

(4)  Includes land holding costs of $1.1 million in 2001 and $0.7 million in
     2000 and the write-off of previously capitalized pursuit costs related to
     potential CDFS business segment projects of $0.9 million in 2001 and $1.0
     million in 2000.

Temperature-Controlled Distribution Operations

     ProLogis recognizes net operating income from the temperature-controlled
distribution operations segment of its business under the equity method.
ProLogis' share of the total income or loss of CSI/Frigo LLC, ProLogis Logistics
and Frigoscandia S.A. was as follows (in thousands) (see Notes 4 and 8 to
ProLogis' Consolidated Condensed Financial Statements in Item 1):



                                                                           SIX MONTHS ENDED
                                                                               JUNE 30,
                                                                      --------------------------
                                                                         2001            2000
                                                                      ----------      ----------
                                                                                

     Loss from CSI/Frigo LLC ....................................     $     (793)     $       --
     Income (loss) from ProLogis Logistics ......................     $   (2,600)     $    5,871
     Loss from Frigoscandia S.A .................................         (9,995)         (5,051)
                                                                      ----------      ----------
     Total temperature-controlled distribution operations
          segment ...............................................     $  (13,388)     $      820
                                                                      ==========      ==========


     Amounts recognized under the equity method from CSI/Frigo LLC include
ProLogis' share of this entity's share of the income or loss of ProLogis
Logistics and Frigoscandia S.A. Amounts recognized under the equity method for
ProLogis Logistics and Frigoscandia S.A. include interest income and interest
expense, depreciation and amortization expense, general and administrative
expense, income taxes and foreign currency exchange gains and losses (with
respect to Frigoscandia). ProLogis recognizes in excess of 99% the net earnings
of each entity in 2001 as compared to 95% in 2000.


                                       26


     CSI's operating capacity was comparable in both six-month periods. The
decrease in ProLogis' share of ProLogis Logistics' net earnings from 2000 to
2001 of $8.5 million is attributable to: (i) higher interest expense as a result
of increasing external debt by $125.0 million, and (ii) a decrease in operating
income as a result of lower occupancy levels in certain markets in 2001. The
proceeds from the borrowings of ProLogis Logistics were used to repay $125.0
million of outstanding notes and accrued interest due to ProLogis. See "--
Liquidity and Capital Resources -- Credit Facilities".

     Frigoscandia's operating capacity was comparable in both six-month periods
with the exception of the disposition in May 2001 of the directly owned German
facilities. ProLogis' share of Frigoscandia S.A.'s net losses includes net
foreign currency exchange losses of $0.6 million and $1.7 million in 2001 and
2000, respectively. Excluding these foreign currency exchange losses, ProLogis
recognized $6.0 million less income under the equity method in 2001 than it
recognized in 2000 from its investment in Frigoscandia S.A. The increase in
Frigoscandia S.A.'s net loss in 2001 from the loss recognized in 2000 is
attributable to: (i) lower occupancy levels, principally the result of the
reduction in inventories of beef and pork products by the German and French
governments, and (ii) a loss recognized on the disposal of Frigoscandia's
directly-owned facilities located in Germany of approximately $2.4 million. The
disposition of the directly owned German facilities was completed as the mix of
facilities and customers no longer met ProLogis' strategic objective in this
business segment, which is to concentrate on the distribution and logistics part
of the supply chain rather than on storage. ProLogis is continuing to evaluate
its temperature-controlled distribution operations in light of this strategic
objective.

     ProLogis believes that the factors that contributed to the decline in
operating performance of Frigoscandia are temporary and can be partially
mitigated in the short-term by reductions in general and administrative costs
and other operating costs. However, there is no assurance that these factors are
temporary or that some or all of these factors will not continue past 2001.
ProLogis and Frigoscandia are currently monitoring the recent outbreak of foot
and mouth disease in Europe. At this time, the effect (positive or negative), if
any, on the demand for temperature-controlled distribution services and the
related transportation services offered by Frigoscandia cannot be determined.

Other Income and Expense Items

Income (Loss) from Unconsolidated Entities

     Income (loss) from unconsolidated entities that is not directly
attributable to any of ProLogis' three business segments was a loss of $3.9
million for the six months ended June 30, 2001. See Note 8 to ProLogis'
Consolidated Condensed Financial Statements in Item 1. This amount is made up of
the following:

     o    ProLogis PhatPipe: a loss of $6.8 million ($0.7 million of income
          recognized in the first quarter and a loss of $7.5 million recognized
          in the second quarter); the loss represents ProLogis' share of
          ProLogis PhatPipe's impairment charge resulting from the write-down of
          its preferred stock investment in PhatPipe, offset by $0.7 million of
          license fee income recognized under an agreement for the non-exclusive
          use of the ProLogis Operating System(TM); no additional license fee
          income will be recognized by ProLogis PhatPipe;

     o    GoProLogis: income of $3.0 million represents ProLogis' share of
          GoProLogis' income, primarily license fee income recognized under an
          agreement for the non-exclusive use of the ProLogis Operating
          System(TM) ($1.5 million of income recognized in each of the first and
          second quarters); GoProLogis does not expect that it will continue to
          recognize license fee income from Vizional Technologies after the
          second quarter of 2001;

     o    ProLogis Equipment Services: a loss of $155,000 (all recognized in the
          second quarter); and

     o    Insight: a loss of $10,000 (all recognized in the first quarter).

Interest Expense

     Interest expense is a function of the level of borrowings outstanding
offset by interest capitalization with respect to development activities.
Interest expense was $82.2 million in 2001 and $84.8 million in 2000.
Capitalized interest was $12.4 million in 2001 and $8.4 million in 2000.
Capitalized interest levels are reflective of ProLogis' cost of funds and the
level of development activity in each year.

Gain (Loss) on Disposition of Real Estate

     Gain (loss) on disposition of real estate represents the net gains or
losses from the disposition of operating facilities that were acquired or
developed within the property operations segment. Generally, ProLogis disposes
of facilities in the property operations segment because such facilities are
considered to be non-strategic facilities or to complement the portfolio of
developed facilities that are acquired by entities in which ProLogis maintains
an ownership interest. Non-strategic facilities are assets located in markets or
submarkets that are no longer considered target markets as well as assets that
were acquired as part of previous portfolio acquisitions that are not consistent
with ProLogis' core portfolio based on the asset's size or configuration.


                                       27


     Property operations segment dispositions were as follows:

     o    2001: 2.3 million square feet; $95.2 million of proceeds; net loss of
          $3.2 million (offset by a gain of $0.5 million recognized upon the
          contribution of ProLogis' 49.9% investment in the common stock of
          ProLogis European Properties S.a.r.l. to ProLogis European Properties
          Fund), and

     o    2000: 2.5 million square feet; $98.5 million of proceeds; net gains of
          $0.3 million.

Foreign Currency Exchange Losses

     ProLogis recognized net foreign currency exchange gains of $4.3 million and
foreign currency exchange losses of $18.4 million for 2001 and 2000,
respectively. Foreign currency exchange gains and losses are primarily the
result of the remeasurement and settlement of intercompany debt and the
remeasurement of third party debt of ProLogis' foreign subsidiaries.
Fluctuations in the foreign currency exchange gains and losses recognized in
each period are a product of movements in certain foreign currency exchange
rates, primarily the euro and the pound sterling and the level of intercompany
and third party debt outstanding that is denominated in currencies other than
the U.S. dollar. In 2000, the euro and pound sterling currencies both devalued
against the U.S. dollar which resulted in losses to ProLogis to the extent that
it had made loans denominated in those currencies.

Income Taxes

     ProLogis is taxed as a REIT for federal income tax purposes and is not
required to pay federal income taxes if minimum distribution and income, asset
and shareholder tests are met. ProLogis Development Services is not a qualified
REIT subsidiary for tax purposes. Also, the foreign countries in which ProLogis
operates do not recognize REITs under their respective tax laws. Accordingly,
ProLogis recognizes income taxes as appropriate and in accordance with GAAP with
respect to the taxable earnings of ProLogis Development Services and its foreign
subsidiaries.

     Current income tax expense recognized in 2001 and 2000 was $1.9 million and
$0.7 million respectively. Current income tax expense is higher in 2001
primarily due to the increased level of income recognized by ProLogis' taxable
subsidiaries in the CDFS business segment. Deferred income tax expense was $4.2
million and $0.2 million in 2001 and 2000, respectively. ProLogis' deferred tax
component of total income taxes is a function of each year's temporary
differences (items that are treated differently for tax purposes than for book
purposes) as well as the need for a deferred tax valuation allowance to adjust
certain deferred tax assets (primarily deferred tax assets created by tax net
operating losses) to their estimated realizable value.

Three Months Ended June 30, 2001 and 2000

     The changes in net earnings attributable to Common Shares and its
components for the three months ended June 30, 2001 compared to the three months
ended June 30, 2000 are similar to the changes for the six month periods ended
on the same dates and the three-month period changes are attributable to the
same reasons discussed under "--Six Months Ended June 20, 2001 and 2000" except
as specifically discussed under "--Income (Loss) from Unconsolidated Entities".

ENVIRONMENTAL MATTERS

     ProLogis has not experienced any environmental condition on its facilities,
which materially adversely affected its results of operations or financial
position nor is ProLogis aware of any environmental liability that ProLogis
believes would have a material adverse effect on its business, financial
condition or results of operations.

LIQUIDITY AND CAPITAL RESOURCES

Overview

     ProLogis considers its liquidity and ability to generate cash from
operations as well as its financing capabilities (including proceeds from the
disposition of facilities) to be adequate and ProLogis expects to be able to
continue to meet its anticipated development, acquisition, operating and debt
service needs as well as its shareholder distribution requirements.


                                       28


     ProLogis' future investing activities are expected to consist of: (i)
acquisitions of existing facilities in key distribution markets in the property
operations segment; (ii) the acquisition of land for future development and the
development of distribution facilities in the CDFS business segment for future
disposition to entities in which ProLogis maintains an ownership interest or to
third parties; and (iii) to a limited extent, certain temperature-controlled
distribution facility expansions and investments in additional
temperature-controlled distribution facilities. Temperature-controlled
investments will be made as deemed necessary to achieve strategic objectives
with respect to targeted markets in the United States or to address specific
customer needs in the United States and Europe. ProLogis' future investing
activities are expected to be primarily funded with:

     o    cash generated by operations;

     o    the proceeds from the disposition of facilities developed by ProLogis
          to third parties;

     o    the proceeds from the disposition of facilities to entities in which
          ProLogis maintains an ownership interest, such as ProLogis European
          Properties Fund or other real estate distribution entities that may be
          formed in the future; and

     o    utilization of ProLogis' revolving credit facilities.

     In July 2001, ProLogis acquired a land parcel for the development of a
196,000 square feet facility in Tokyo, Japan. This facility, which has been
leased under a 20-year agreement and is expected to be completed in 2002,
represents ProLogis' first investment in Japan. ProLogis' investment strategy in
Japan is to only develop facilities under pre-lease arrangements.

     In the short-term, borrowings on and subsequent repayments of ProLogis'
unsecured revolving credit facilities will provide ProLogis with adequate
liquidity and financial flexibility to efficiently respond to market
opportunities. As of August 9, 2001, on a combined basis, ProLogis had
approximately $369.6 million of short-term borrowing capacity available under
its U.S. dollar denominated and multi-currency unsecured revolving credit
facilities (see "--Credit Facilities"). ProLogis will continue to evaluate the
public debt markets with the objective of reducing its short-term borrowings and
extending debt maturities on favorable terms.

Cash Operating Activities

     Net cash provided by operating activities for the six months ended June 30,
2001 was $189.2 million and $189.4 million, respectively. See "--Results of
Operations -- Property Operations". Cash provided by operating activities
exceeded the cash distributions paid on Common Shares in 2001 and 2000. See
ProLogis's Consolidated Condensed Statements of Cash Flows in Item 1.

Cash Investing and Cash Financing Activities

     In 2001, ProLogis' investing activities provided net cash of $234.8 million
and financing activities used net cash of $428.7 million. Proceeds received from
the dispositions of real estate and the repayments of loans by and distributions
received from ProLogis' unconsolidated entities were used to fund real estate
investments and repay borrowings on ProLogis' lines of credit. In 2000, ProLogis
used net cash of $152.1 million in its investing activities and $3.2 million in
its financing activities. Investing activities in 2000 were primarily funded by
lines of credit borrowings and proceeds from dispositions of real estate. See
ProLogis' Consolidated Condensed Statements of Cash Flows in Item 1.

Credit Facilities

     As of June 30, 2001, ProLogis' combined direct borrowings on its lines of
credit were $306.1 million (a combined $100.0 million borrowed under its $475.0
million revolving line of credit and $60.0 million discretionary line of credit)
and $206.1 million under its 325.0 million euro revolving line of credit.
ProLogis was in compliance with all covenants contained in its credit agreements
as of June 30, 2001.

     ProLogis Logistics and ProLogis Development Services may also borrow under
the $475.0 million credit agreement, with such borrowings guaranteed by
ProLogis. As of June 30, 2001, ProLogis Logistics, an unconsolidated entity, had
borrowed $125.0 million under the credit agreement and ProLogis Development
Services had no borrowings under the credit agreement.


                                       29


Commitments

     As of June 30, 2001, ProLogis had letters of intent or contingent
contracts, subject to ProLogis' final due diligence, for the acquisition of 2.0
million square feet of operating facilities at an estimated acquisition cost of
$80.2 million. The foregoing transactions are subject to a number of conditions,
and ProLogis cannot predict with certainty that they will be consummated.
ProLogis has sufficient funds escrowed as the result of tax-deferred exchange
transactions to acquire these assets. In addition, as of June 30, 2001, ProLogis
had $315.5 million of budgeted development costs for developments in process, of
which $197.6 million was unfunded.

     On January 11, 2001, ProLogis announced a Common Share repurchase program
under which it may repurchase up to $100.0 million of its Common Shares. The
Common Shares will be repurchased from time to time in the open market and in
privately negotiated transactions, depending on market prices and other
conditions. As of June 30, 2001, 345,100 Common Shares had been repurchased at a
total cost of $7.1 million.

     ProLogis has entered into a subscription agreement to make additional
capital contributions to ProLogis European Properties Fund of 82.2 million euros
(the currency equivalent of approximately $72.4 million as of June 30, 2001)
through 2002.

     As of June 30, 2001, ProLogis Logistics had $90.0 million of direct
borrowings outstanding under a credit agreement that has been guaranteed by
ProLogis.

     As of June 30, 2001, Frigoscandia AB had a 185.0 million euro credit
agreement under which the currency equivalent of approximately $157.9 million
was outstanding. All of the borrowings outstanding have been guaranteed by
ProLogis. The agreement expires on September 28, 2001 and contains a provision
to extend the due date until December 28, 2001, at ProLogis' option.

     As of June 30, 2001, ProLogis North American Properties Fund III had $150.0
million of short-term borrowings outstanding under an agreement that matures on
September 13, 2001. The agreement provides for a 45-day extension at ProLogis
North American Properties Fund III's option. ProLogis North American Properties
Fund III intends to obtain permanent secured financing which will be used to
repay these short-term borrowings. ProLogis has guaranteed the entire amount
outstanding.

     As of June 30, 2001, 39.0 million euros and 17.0 million pound sterling
were outstanding on ProLogis European Properties Fund's 400.0 million euro
multi-currency, secured, revolving credit facility (the currency equivalent of
approximately $57.2 million as of June 30, 2001), all of which has guaranteed by
ProLogis.

     ProLogis Kingspark has a line of credit agreement with a bank in the United
Kingdom that has been guaranteed by ProLogis and provides for borrowings of up
to 15.0 million pounds sterling (the currency equivalent of approximately $21.0
million as of June 30, 2001). As of June 30, 2001, no borrowings were
outstanding on the line of credit. However, ProLogis Kingspark had the currency
equivalent of approximately $7.1 million of letters of credit outstanding that
reduce the amount of available borrowings on the line of credit.

     ProLogis has guaranteed a 110.0 million French franc (the currency
equivalent of approximately $14.4 million as of June 30, 2001) unsecured loan
outstanding of ProLogis European Properties S.a.r.l. ProLogis European
Properties S.a.r.l. made a principal payment of 80.0 million French francs in
July 2001.

Distribution and Dividend Requirements

     ProLogis' current distribution policy is to pay quarterly distributions to
shareholders based upon what it considers to be a reasonable percentage of cash
flow and at the level that will allow ProLogis to continue to qualify as a REIT
for tax purposes. Because depreciation is a non-cash expense, cash flow
typically will be greater than earnings from operations and net earnings.
Therefore, annual distributions are expected to be consistently higher than
annual earnings.

     On February 23, 2001 and May 25, 2001, ProLogis paid a quarterly
distribution of $0.345 per Common Share to shareholders of record on February 9,
2001 and May 14, 2001, respectively. The distribution level for 2001 was set by
ProLogis' Board of Trustees in December 2000 at $1.38 per Common Share.

     The annual dividend rates on ProLogis' preferred shares are $4.27 per
Series C cumulative redeemable preferred share, $1.98 per Series D cumulative
redeemable preferred share and $2.1875 per Series E cumulative redeemable
preferred share.


                                       30


     On January 31, 2001 and April 30, 2001, ProLogis paid quarterly dividends
of $0.5469 per Series E cumulative redeemable preferred share. On March 30,
2001, ProLogis paid quarterly dividends of $0.5875 per Series A cumulative
redeemable preferred share. On March 30, 2001 and June 29, 3001, ProLogis paid
quarterly dividends of $1.0675 per Series C cumulative redeemable preferred
share and $0.495 per Series D cumulative redeemable preferred share.

     Pursuant to the terms of its preferred shares, ProLogis is restricted from
declaring or paying any distribution with respect to the Common Shares unless
and until all cumulative dividends with respect to the Preferred Shares have
been paid and sufficient funds have been set aside for dividends for the then
current dividend period with respect to the preferred shares.

FUNDS FROM OPERATIONS

     Funds from operations attributable to Common Shares increased $14.5 million
to $196.1 million for 2001 from $181.6 million for 2000.

     Funds from operations does not represent net income or cash from operating
activities in accordance with GAAP and is not necessarily indicative of cash
available to fund cash needs, which is presented in the Consolidated Condensed
Statements of Cash Flows in Item 1. Funds from operations should not be
considered as an alternative to net income as an indicator of ProLogis'
operating performance or as an alternative to cash flows from operating,
investing or financing activities as a measure of liquidity. Additionally, the
funds from operations measure presented by ProLogis will not necessarily be
comparable to similarly titled measures of other REITs. ProLogis considers funds
from operations to be a useful supplemental measure of comparative period
operating performance and as a supplemental measure to provide management,
financial analysts, potential investors and shareholders with an indication of
ProLogis' ability to fund its capital expenditures and investment activities and
to fund other cash needs.

     Funds from operations is defined by the National Association of Real Estate
Investment Trusts ("NAREIT") generally as net income (computed in accordance
with GAAP), excluding real estate related depreciation and amortization, gains
and losses from sales of properties, except those gains and losses from sales of
properties upon completion or stabilization under pre-sale agreements and after
adjustments for unconsolidated entities to reflect their funds from operations
on the same basis. ProLogis includes gains and losses from the disposition of
its CDFS business segment assets in funds from operations.

     Funds from operations, as used by ProLogis, is modified from the NAREIT
definition. ProLogis' funds from operations measure does not include: (i)
deferred income tax benefits and deferred income tax expenses of ProLogis'
taxable subsidiaries; (ii) foreign currency exchange gains and losses resulting
from debt transactions between ProLogis and its consolidated and unconsolidated
entities; (iii) foreign currency exchange gains and losses from the
remeasurement (based on current foreign currency exchange rates) of third party
debt of ProLogis' foreign consolidated and unconsolidated entities; and (iv)
mark to market adjustments related to derivative financial instruments utilized
to manage ProLogis' foreign currency risks. These adjustments to the NAREIT
definition are made to reflect ProLogis' funds from operations on a comparable
basis with the other REITs that do not engage in the types of transactions that
give rise to these items.

     Funds from operations is as follows (in thousands):



                                                                                 SIX MONTHS ENDED
                                                                                    JUNE 30,
                                                                            ------------------------
                                                                               2001           2000
                                                                            ---------      ---------
                                                                                     

     Net earnings attributable to Common Shares .......................     $  88,559      $  64,527
       Add (Deduct):
          Real estate related depreciation and amortization ...........        67,299         75,057
          Gain (loss) on disposition of non-CDFS business
             segment assets ...........................................         2,625           (307)
          Foreign currency exchange (gains) losses, net ...............        (5,044)        18,592
          Deferred income tax expense .................................         4,254            167
          ProLogis' share of reconciling items of unconsolidated
             entities
             Real estate related depreciation and amortization ........        34,049         28,535
             Loss on disposition of non-CDFS business segment
               assets .................................................         2,426             26
             Foreign currency exchange (gains) losses, net ............         8,294         (1,971)
             Deferred income tax expense benefit ......................        (6,343)        (3,064)
                                                                            ---------      ---------
       Funds from operations attributable to Common Shares ............     $ 196,119      $ 181,562
                                                                            =========      =========



                                       31


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     As of June 30, 2001, no significant change had occurred in ProLogis'
interest rate risk or foreign currency risk as discussed in ProLogis' 2000
Annual Report on Form 10-K.

PART II

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITIES HOLDERS

     At a meeting on May 17, 2001, the shareholders of ProLogis elected the
following Trustees to office (of the total 173,736,419 Common Shares outstanding
on the record date of April 3, 2001, 152,000,189 Common Shares were voted at the
meeting):

          o    151,628,484 Common Shares were voted for the election of Mr. C.
               Ronald Blankenship as a Class II Trustee to serve until the
               annual meeting of shareholders in the year 2004, 371,705 Common
               Shares voted against;

          o    151,649,679 Common Shares were voted for the election of Mr.
               Stephen L. Feinberg as a Class II Trustee to serve until the
               annual meeting of shareholders in the year 2004, 350,510 Common
               Shares voted against;

          o    151,648,334 Common Shares were voted for the election of Mr.
               Donald P. Jacobs as a Class II Trustee to serve until the annual
               meeting of shareholders in the year 2004, 351,855 Common Shares
               voted against; and

          o    151,652,546 Common Shares were voted for the election of Mr. J.
               Andre Teixeira as a Class II Trustee to serve until the annual
               meeting of shareholders in the year 2004, 347,643 Common Shares
               voted against.

     In addition, at the May 17, 2001 meeting, ProLogis' shareholders approved
and adopted the ProLogis Trust Employee Share Purchase Plan. There were
147,323,467 Common Shares in favor, 4,548,877 Common Shares against, 126,561
Common Shares abstaining from the proposal and Broker non-votes aggregated 1,284
Common Shares.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits:

12.1     Computation of Ratio of Earnings to Fixed Charges

12.2     Computation of Ratio of Earnings to Combined Fixed Charges and
         Preferred Share Dividends

15.1     Letter from Arthur Andersen LLP regarding unaudited financial
         information dated April 3, 2002

99.1     Letter dated April 3, 2002 to the United States Securities and Exchange
         Commission related to the review performed by Arthur Andersen LLP

(b)      Reports on Form 8-K:



                                                 ITEMS                  FINANCIAL
                        DATE                    REPORTED                STATEMENTS
                        ----                    --------                ----------
                                                                  

                        None



                                       32


                                   SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                                  PROLOGIS TRUST



                                BY:  /s/ WALTER C. RAKOWICH
                                     ------------------------------------------
                                                Walter C. Rakowich
                                               Managing Director and
                                              Chief Financial Officer
                                            (Principal Financial Officer)



                                BY:  /s/ LUKE A. LANDS
                                     ------------------------------------------
                                                   Luke A. Lands
                                       Senior Vice President and Controller



                                BY:  /s/ SHARI J. JONES
                                     ------------------------------------------
                                                  Shari J. Jones
                                                  Vice President
                                          (Principal Accounting Officer)


Date: April 5, 2002


                                       33



                               INDEX TO EXHIBITS



EXHIBIT
NUMBER                   DESCRIPTION
-------                  -----------
                      

   12.1                  Computation of Ratio of Earnings to Fixed Charges

   12.2                  Computation of Ratio of Earnings to Combined Fixed
                         Charges and Preferred Share Dividends

   15.1                  Letter from Arthur Andersen LLP regarding unaudited
                         financial information dated April 3, 2002

   99.1                  Letter dated April 3, 2002 to the United States
                         Securities and Exchange Commission related to the
                         review performed by Arthur Andersen LLP