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


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                 ---------------

                                    FORM 10-Q
                                 ---------------



     [X]        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                OF THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended March 31, 2002

     [  ]       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 May
13, 2002 was 177,969,319.

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








                                 PROLOGIS TRUST

                                      INDEX

                                                                       Page
                                                                     Number(s)
                                                                     --------
PART I. Financial Information
          Item 1. Consolidated Condensed Financial Statements:
                  Consolidated Condensed Balance Sheets--March 31,
                    2002 and December 31, 2001........................   3
                  Consolidated Condensed Statements of Earnings
                    and Comprehensive Income--Three Months Ended
                    March 31, 2002 and 2001...........................   4
                  Consolidated Condensed Statements of Cash Flows--
                    Three Months Ended March 31, 2002 and 2001........   5
                  Notes to Consolidated Condensed Financial
                    Statements........................................ 6 - 18
                  Independent Accountants' Review Report..............   19
          Item 2. Management's Discussion and Analysis of Financial
                    Condition and Results of Operations...............20 - 31
          Item 3. Quantitative and Qualitative Disclosures About
                    Market Risk.......................................   31

PART II.Other Information
          Item 4. Submission of Matters to a Vote of Securities
                    Holders...........................................   32
          Item 5. Other Information...................................   32
          Item 6. Exhibits and Reports on Form 8-K....................   32












































                                       2



                                 PROLOGIS TRUST

                      CONSOLIDATED CONDENSED BALANCE SHEETS
                        (In thousands, except share data)




                                                                                         March 31,     December 31,
                                                                                           2002           2001
                                                                                        (Unaudited)     (Audited)
                                                                                       -------------  -------------
                                     ASSETS
                                                                                                
Real estate.......................................................................     $   4,497,621  $   4,588,193
  Less accumulated depreciation...................................................           605,510        574,871
                                                                                           3,892,111      4,013,322
Investments in and advances to unconsolidated entities............................         1,348,154      1,310,735
Cash and cash equivalents.........................................................            59,689         27,989
Accounts and notes receivable.....................................................            27,699         23,829
Other assets......................................................................           169,804        183,988
                                                                                       -------------  -------------
          Total assets............................................................     $   5,497,457  $   5,559,863
                                                                                       =============  =============
                        LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
  Lines of credit.................................................................     $     322,881  $     375,875
  Senior unsecured debt...........................................................         1,651,699      1,670,359
  Mortgage notes and other secured debt...........................................           530,281        532,106
  Accounts payable and accrued expenses...........................................           102,184        116,931
  Construction costs payable......................................................            10,806         19,805
  Distributions and dividends payable.............................................               729         63,169
  Other liabilities...............................................................            80,454         59,980
                                                                                       -------------  -------------
          Total liabilities.......................................................         2,699,034      2,838,225
                                                                                       -------------  -------------
Minority interest.................................................................            45,058         45,639
Shareholder' equity:
  Series C Preferred Shares; $0.01 par value; 2,000,000 shares issued and
     outstanding at March 31, 2002 and December
     31, 2001; 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 March 31, 2002 and December 31,
     2001; 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 March 31, 2002 and
     December 31, 2001; stated liquidation preference of
     $25.00 per share.............................................................            50,000         50,000
  Common shares of beneficial interest; $0.01 par value;
     177,477,667 shares issued and outstanding at March 31,
     2002 and 175,888,391 shares issued and outstanding at
     December 31, 2001............................................................             1,775          1,759
Additional paid-in capital........................................................         2,998,408      2,958,613
Employee share purchase notes.....................................................           (14,042)       (14,810)
Accumulated other comprehensive loss..............................................           (81,877)       (63,780)
Distributions in excess of net earnings...........................................          (550,899)      (605,783)
                                                                                       -------------  -------------
          Total shareholders' equity..............................................         2,753,365      2,675,999
                                                                                       -------------  -------------
          Total liabilities and shareholders' equity..............................     $   5,497,457  $   5,559,863
                                                                                       =============  =============








              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
                                                                                           March 31,
                                                                                  -------------------------
                                                                                      2002          2001
                                                                                  -----------   -----------
                                                                                          
Income:
  Rental income..............................................................     $   112,929   $   119,244
  Other real estate income...................................................          26,416        31,124
  Income from unconsolidated entities........................................          32,345         8,157
  Interest and other income..................................................             570         1,124
                                                                                  -----------   -----------
          Total income.......................................................         172,260       159,649
                                                                                  -----------   -----------
Expenses:
  Rental expenses, net of recoveries of $23,628 in 2002 and
     $24,864 in 2001, including amounts paid to affiliate of
     $89 in 2001.............................................................           7,741         6,762
  General and administrative, including amounts paid to
     affiliate of $102 in 2002 and $313 in 2001..............................          12,927        14,417
  Depreciation and amortization..............................................          36,231        37,860
  Interest...................................................................          40,830        41,522
  Other......................................................................             821         1,243
                                                                                  -----------   -----------
          Total expenses.....................................................          98,550       101,804
                                                                                  -----------   -----------
Earnings before minority interest............................................          73,710        57,845
Minority interest share in earnings..........................................           1,282         1,376
                                                                                  -----------   -----------
Earnings before loss on disposition of real estate
  and foreign currency exchange gains (losses)...............................          72,428        56,469
Loss on disposition of real estate...........................................            (153)       (1,198)
Foreign currency exchange gains (losses), net................................            (339)        2,657
                                                                                  -----------   -----------
Earnings before income taxes.................................................          71,936        57,928
Income taxes:
  Current income tax expense.................................................           1,060         1,580
  Deferred income tax expense................................................           7,701           909
                                                                                  -----------   -----------
          Total income taxes.................................................           8,761         2,489
                                                                                  -----------   -----------
Net earnings.................................................................          63,175        55,439
Less preferred share dividends...............................................           8,179        11,432
                                                                                  -----------   -----------
Net earnings attributable to Common Shares...................................          54,996        44,007
Other comprehensive income:
  Foreign currency translation adjustments...................................         (18,097)      (42,684)
                                                                                  -----------   -----------
Comprehensive income.........................................................     $    36,899   $     1,323
                                                                                  ===========   ===========

Weighted average Common Shares outstanding-- Basic...........................         176,523       167,297
                                                                                  ===========   ===========
Weighted average Common Shares outstanding-- Diluted.........................         183,182       174,371
                                                                                  ===========   ===========

Basic net earnings attributable to Common Shares.............................     $      0.31   $      0.26
                                                                                  ===========   ===========
Diluted net earnings attributable to Common Shares...........................     $      0.31   $      0.25
                                                                                  ===========   ===========
Distributions per Common Share...............................................     $     0.355   $     0.345
                                                                                  ===========   ===========










              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)




                                                                                         Three Months Ended,
                                                                                              March 31,
                                                                                    ---------------------------
                                                                                        2002           2001
                                                                                    ------------   ------------
                                                                                             
Operating activities:
  Net earnings.................................................................     $     63,175   $     55,439
  Minority interest share in earnings..........................................            1,282          1,376
  Adjustments to reconcile net earnings to net cash provided
     by operating activities:
     Depreciation and amortization.............................................           36,231         37,860
     Loss on disposition of real estate........................................              153          1,198
     Straight-lined rents......................................................           (1,352)        (1,649)
     Amortization of deferred loan costs.......................................            1,409          1,222
     Stock-based compensation..................................................            2,912          1,614
     Income from unconsolidated entities.......................................          (26,795)        (4,949)
     Foreign currency exchange (gains) losses, net.............................              329         (3,274)
     Deferred income tax expense...............................................            7,701            909
  Decrease in accounts receivable and other assets.............................            4,636              2
  Increase (decrease) in accounts payable and accrued expenses and other
     liabilities...............................................................           (1,509)        15,045
                                                                                    ------------   ------------
          Net cash provided by operating activities ...........................           88,172        104,793
                                                                                    ------------   ------------
Investing activities:
  Real estate investments......................................................         (128,642)      (185,098)
  Tenant improvements and lease commissions on previously
     leased space..............................................................           (1,781)        (4,312)
  Recurring capital expenditures...............................................           (7,071)        (3,936)
  Proceeds from dispositions of real estate....................................          203,484        236,900
  Net (advances to) amounts received from unconsolidated entities..............          (12,481)       209,783
                                                                                    ------------   ------------
          Net cash provided by investing activities............................           53,509        253,337
                                                                                    ------------   ------------

Financing activities:
  Net proceeds from Common Share plans.........................................           35,096         13,150
  Redemption of Series B Convertible Preferred Shares..........................               --         (4,583)
  Distributions paid on Common Shares..........................................          (62,552)       (57,158)
  Distributions paid to minority interest holders..............................           (1,871)        (1,752)
  Distributions paid on preferred shares.......................................           (8,179)       (11,432)
  Principal payments on senior unsecured debt..................................          (18,750)            --
  Principal payments received on employee share purchase notes.................              768            507
  Proceeds from settlement of derivative financial instruments.................              160             --
  Proceeds from lines of credit................................................          168,675        200,920
  Payments on lines of credit..................................................         (221,669)      (520,532)
  Regularly scheduled principal payments on mortgage notes.....................           (1,659)        (1,598)
                                                                                    ------------   ------------
          Net cash used in financing activities................................         (109,981)      (382,478)
                                                                                    ------------   ------------


Net increase (decrease) in cash and cash equivalents...........................           31,700        (24,348)
Cash and cash equivalents, beginning of period.................................           27,989         57,870
                                                                                    ------------   ------------
Cash and cash equivalents, end of period.......................................     $     59,689   $     33,522
                                                                                    ============   ============


    See Note 8 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
                                 March 31, 2002
                                   (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, operates and develops industrial  distribution facilities in
North  America (the United  States and  Mexico),  Europe and Asia  (Japan).  The
ProLogis Operating System(R), comprised of the Market Services Group, the Global
Services Group, the Global  Development Group and the ProLogis  Solutions Group,
utilizes ProLogis'  international network of distribution facilities to meet its
customers'  distribution  space needs globally.  ProLogis'  business consists of
three reportable business segments: property operations,  corporate distribution
facilities  services  business  ("CDFS  business")  and   temperature-controlled
distribution operations. See Note 7.

  Principles of Financial Presentation

     The consolidated condensed financial statements of ProLogis as of March 31,
2002 and for the three months ended March 31, 2002 and 2001 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,  2001
audited  consolidated  financial  statements  contained in ProLogis' 2001 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 months ended March
31, 2002 and 2001 are not  necessarily  indicative of the results to be expected
for the entire  year.  Certain of the 2001  amounts  have been  reclassified  to
conform to the 2002 financial statement presentation.

     The  preparation  of  consolidated   condensed   financial   statements  in
conformity with generally accepted accounting  principles ("GAAP") in the United
States  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  financial  statements and the
reported  amounts of revenues and expenses during the reporting  period.  Actual
results could differ from those estimates.

  Interest Expense

     Interest  expense  recognized  after  capitalization  was $40.8 million and
$41.5  million  for the three  months in 2002 and  2001,  respectively.  Amounts
capitalized  for the three  months in 2002 and 2001 were $5.5  million  and $5.9
million, respectively.  Amortization of deferred loan costs included in interest
expense  recognized  was $1.4  million and $1.2  million for the three months in
2002 and 2001, respectively. Total interest paid in cash on all outstanding debt
was $39.5  million  and  $38.9  million  for the three  months in 2002 and 2001,
respectively.

   Recently Adopted Accounting Standards

     On January 1, 2002,  ProLogis  adopted  Statement of  Financial  Accounting
Standards  ("SFAS") No. 142, "Goodwill and Other Intangible Assets" and SFAS No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets".

     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.  SFAS No.  142  requires  that  goodwill  balances  be  assessed  for
impairment  during 2002.  ProLogis had not performed this assessment as of March
31,  2002.  SFAS No. 142 also  changes  the rules for  recognition  of  acquired
intangible  assets other than goodwill but continues to require that intangibles
assets be amortized  over their useful  lives.  ProLogis and its  unconsolidated
entities do not have any acquired intangibles other than goodwill.  Had SFAS No.
142 been  applicable  for the  three  months  in 2001,  ProLogis'  net  earnings
attributable  to Common  Shares for the three  months ended March 31, 2001 would
have changed as follows (in thousands except per share amounts):






                                       6



                                                        
Net earnings attributable to Common Shares.......          $   44,007
Goodwill amortization(1).........................               2,551
                                                           ----------
Adjusted net earnings attributable to
  Common Shares..................................          $   46,558
                                                           ==========

                                                       Basic       Diluted
                                                     --------      --------
Per share net earnings attributable to
  Common Shares..................................    $   0.26      $   0.25
Goodwill amortization(1).........................        0.02          0.02
                                                     --------      --------
Adjusted per share net earnings attributable
  to Common Shares...............................    $   0.28      $   0.27
                                                     ========      ========

----------

(1)  Includes  ProLogis' share of the  amortization  expense related to goodwill
     recognized by its unconsolidated entities.


     SFAS No. 144 establishes a single accounting model for long-lived assets to
be disposed of by sale and  provides  implementation  guidance  with  respect to
accounting  for  impairment  of  long-lived  assets.  In  management's  opinion,
ProLogis'  long-lived  assets are not carried at amounts in excess of their fair
values. Also, SFAS No. 144 requires that discontinued  operations be measured at
the lower of  carrying  amount or fair value  less cost to sell,  similar to the
basis used for other long-lived  assets,  rather than at net realizable value as
previously  required.  Additionally,  future  operating  losses of  discontinued
operations are no longer recognized  before they occur.  Under SFAS No. 144, the
facilities  sold by ProLogis to third parties are considered to be  discontinued
operations  unless such facilities  were developed  under a pre-sale  agreement.
Facilities  contributed  to entities in which  ProLogis  maintains  an ownership
interest are not considered to be discontinued operations under SFAS No. 144 due
to  ProLogis'  continuing  involvement.  Facilities  disposed  of  by  ProLogis'
unconsolidated  entities also are not considered to be  discontinued  operations
under SFAS No. 144. For the three  months ended March 31, 2002,  ProLogis is not
reporting  discontinued  operations  for the one facility  sold to a third party
during the period as the effect on ProLogis' Consolidated Condensed Statement of
Earnings and Comprehensive Income is not material.

2.  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):


                                                    March 31,   December 31,
                                                      2002          2001
                                                  -----------   ------------
                                                          
Distribution facilities(1):
  Improved land.................................. $   632,587   $   645,343
  Buildings and improvements.....................   3,518,283     3,517,859
                                                  -----------   -----------
                                                    4,150,870     4,163,202
                                                  -----------   -----------
  Facilities under development (including
    cost of land)(2)(3)..........................     118,234       131,545
  Land held for development(4)...................     186,529       200,737
  Other costs (pre-construction and
    pre-acquisition)(5)..........................      41,988        92,709
                                                  -----------   -----------
            Total real estate....................   4,497,621     4,588,193
  Less accumulated depreciation..................     605,510       574,871
                                                  -----------   -----------
            Net real estate...................... $ 3,892,111   $ 4,013,322
                                                  ===========   ===========
----------

(1)  As of March 31, 2002 and December  31,  2001,  ProLogis had 1,200 and 1,208
     directly  owned  distribution  facilities,   respectively,   consisting  of
     122,846,000 and 123,356,000 square feet, respectively.

(2)  Facilities under development consist of 20 buildings  aggregating 4,187,000
     square feet as of March 31,  2002 and 16  buildings  aggregating  5,357,000
     square feet as of December 31, 2001.

                                       7


(3)  In addition to the March 31, 2002  construction  costs  payable  balance of
     $10.8  million,  ProLogis had unfunded  commitments  on its  contracts  for
     facilities under construction totaling $104.0 million as of March 31, 2002.

(4)  Land held for future  development  consists  of 1,909 acres as of March 31,
     2002 and 1,976 acres as of December 31, 2001.

(5)  Other costs include $1.0 million and $65.0 million of funds on deposit with
     title companies as of March 31, 2002 and December 31, 2001, respectively.


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

  Operating Lease Agreements

     ProLogis  leases its  facilities  to customers  under  agreements  that are
classified as operating leases. As of March 31, 2002,  minimum lease payments on
leases with lease periods greater than one year for space in ProLogis'  directly
owned  facilities  during  each of the  years  in the  five-year  period  ending
December 31, 2006 and thereafter are as follows (in thousands):

                                                        
     Remainder of 2002...................................  $   306,642
     2003................................................      339,515
     2004................................................      255,456
     2005................................................      179,939
     2006................................................      120,778
     2007 and thereafter.................................      211,940
                                                           -----------
                                                           $ 1,414,270
                                                           ===========

     ProLogis'  largest  customer (based on rental income) in its directly owned
facilities  accounted  for 0.88% of ProLogis'  annualized  rental income for the
three months ended March 31, 2002.  The  annualized  base rent for  ProLogis' 25
largest  customers  (based on rental  income)  accounted  for 13.8% of ProLogis'
annualized rental income for the three months ended March 31, 2002.

3. Unconsolidated Entities:

Investments In and Advances To Unconsolidated Entities

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


                                                      March 31,    December 31,
                                                        2002          2001
                                                     ----------    -----------
                                                             
Temperature-controlled distribution companies:
  CSI/Frigo LLC....................................  $   (2,690)   $   (2,492)
  ProLogis Logistics(1)............................     209,901       174,295
  Frigoscandia S.A.(2).............................     175,317       186,168
                                                     ----------    ----------
                                                        382,528       357,971
                                                     ----------    ----------
Real estate funds:
  ProLogis California(3)...........................     123,318       118,846
  ProLogis North American Properties Fund I........      47,291        45,331
  ProLogis North American Properties Fund II.......       8,285         8,210
  ProLogis North American Properties Fund III......       6,012         6,273
  ProLogis North American Properties Fund IV.......       4,528         4,747
  ProLogis North American Properties Fund V(4).....       8,716            --
  ProLogis European Properties Fund(5).............     271,222       263,114
                                                     ----------    ----------
                                                        469,372       446,521
                                                     ----------    ----------
CDFS business:
  Kingspark LLC....................................      10,057         9,937
  Kingspark S.A....................................     482,035       490,074
                                                     ----------    ----------
                                                        492,092       500,011
                                                     ----------    ----------

Insight............................................       2,482         2,479
ProLogis Equipment Services........................       1,680         1,680
GoProLogis(6)......................................          --         2,073
                                                     ----------    ----------
               Total...............................  $1,348,154    $1,310,735
                                                     ==========    ==========
                                      8


----------

(1)  ProLogis made an additional  equity investment of $31.5 million in ProLogis
     Logistics  Services  Incorporated  ("ProLogis  Logistics") during the three
     months ended March 31, 2002.  ProLogis  Logistics  owns CS  Integrated  LLC
     ("CSI"),  a  temperature-controlled  distribution  company operating in the
     United  States.  As of March 31, 2002,  substantially  all of the operating
     assets of CSI were classified as held for sale.

(2)  During the three  months ended March 31,  2002,  Frigoscandia  S.A. and its
     wholly owned subsidiaries  disposed of 37.8 million cubic feet of operating
     facilities  representing  all of its  assets in Sweden,  Denmark,  Finland,
     Norway and the  Netherlands  and all of its  remaining  assets in  Germany.
     These dispositions generated net proceeds of $102.0 million which were used
     to repay outstanding  third party debt. As of March 31, 2002,  Frigoscandia
     S.A.  and its wholly owned  subsidiaries  owned or operated  115.0  million
     cubic feet of temperature-controlled  distribution facilities, of which 8.7
     million  cubic  feet of  operating  facilities  in  Spain  and  Italy  were
     classified as held for sale.

(3)  ProLogis  California I LLC ("ProLogis  California")  acquired an additional
     177,000  square  foot  facility  for a total  cost of  $13.0  million  from
     ProLogis  during the three months ended March 31,  2002.  ProLogis  made an
     additional  equity  investment  of $6.4 million in ProLogis  California  in
     connection  with  this  acquisition.  Also  during  this  period,  ProLogis
     California  disposed  of two  facilities  aggregating  348,000  square feet
     generating net proceeds of $14.3 million and a gain of $1.6 million.

(4)  ProLogis-Macquarie  Fund ("ProLogis North American  Properties Fund V") was
     formed on March 28, 2002 as a partnership  between  Macquarie  Bank Limited
     with an 85% ownership interest and ProLogis with a 15% ownership  interest.
     Macquarie   Bank  Limited  is  an  affiliate  of  Security   Capital  Group
     Incorporated ("Security Capital"),  ProLogis' largest shareholder (see Note
     11). On formation,  ProLogis North American  Properties  Fund V acquired 22
     distribution  facilities  aggregating 3.9 million square feet in 12 markets
     in  the  United  States  and  two  markets  in  Mexico.  Investment  amount
     represents  ProLogis'  investment  in this  entity,  including  acquisition
     costs, as adjusted for ProLogis'  share of cumulative  earnings of ProLogis
     North American Properties Fund V and the portion of the gain resulting from
     the  disposition  of  ProLogis'   facilities  to  ProLogis  North  American
     Properties Fund V that does not qualify for income  recognition by ProLogis
     due to its continuing  ownership in ProLogis North American Properties Fund
     V.

(5)  ProLogis European  Properties Fund acquired two additional  facilities from
     ProLogis  aggregating 567,000 square feet for a total cost of $26.6 million
     during the three  months  ended March 31,  2002.  Also during this  period,
     ProLogis  European  Properties  Fund  acquired two  facilities  aggregating
     227,000  square  feet for a total  cost of  $31.0  million  from  Kingspark
     Holding  S.A.  and  its  wholly  owned  subsidiaries   ("Kingspark  S.A.").
     Kingspark  S.A.  is an  unconsolidated  entity of  ProLogis.  ProLogis  and
     Kingspark S.A. made  additional  equity  investments  in ProLogis  European
     Properties  Fund   aggregating   $6.8  million  in  connection  with  these
     acquisitions.  ProLogis  also made an additional  cash  investment of $11.4
     million in ProLogis European  Properties Fund during the three months ended
     March 31, 2002.

(6)  During the three months ended March 31,  2002,  ProLogis,  under the equity
     method,  recognized  its share of an  impairment  adjustment  recognized by
     GoProLogis Incorporated ("GoProLogis").  This impairment adjustment reduced
     GoProLogis'  investment in the  non-cumulative  preferred stock of Vizional
     Technologies  Inc.  ("Vizional  Technologies")  to zero.  The investment in
     Vizional Technologies is GoProLogis' only asset.


Income (Loss) from Unconsolidated Entities

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












                                       9




                                                       Three Months Ended
                                                             March 31,
                                                      ----------------------
                                                         2002         2001
                                                      ---------    ---------
                                                             
Temperature-controlled distribution companies:
  CSI/Frigo LLC(1).................................   $     233    $    (509)
  ProLogis Logistics(2)............................       3,702       (1,730)
  Frigoscandia S.A.(2).............................       6,741       (7,233)
                                                      ---------    ---------
                                                         10,676       (9,472)

                                                      ---------    ---------
Real estate funds:
  ProLogis California(3)...........................       4,055        3,067
  ProLogis North American Properties Fund I(4).....       1,444        1,352
  ProLogis North American Properties Fund II(5)....         797          341
  ProLogis North American Properties Fund III(6)...         675           --
  ProLogis North American Properties Fund IV(7)....         531           --
  ProLogis North American Properties Fund V(8).....           6           --
  ProLogis European Properties Fund(9).............       6,748          402
  ProLogis European Properties S.a.r.l.(10)........          --           36
                                                      ---------    ---------
                                                         14,256        5,198
                                                      ---------    ---------
CDFS business:
  Kingspark LLC(11)................................         173          503
  Kingspark S.A.(12)...............................       9,309        9,750
                                                      ---------    ---------
                                                          9,482       10,253
                                                      ---------    ---------

Insight............................................           4          (10)
GoProLogis(13).....................................      (2,073)       1,521
ProLogis PhatPipe..................................          --          667
                                                      ---------    ---------
                                                      $  32,345    $   8,157
                                                      =========    =========
----------

(1)  Amounts  represent  ProLogis'  share of the earnings or losses of CSI/Frigo
     LLC recognized under the equity method based upon its ownership interest in
     CSI/Frigo LLC (effectively  95%) and interest income on outstanding  notes.
     CSI/Frigo  LLC  recognizes  its share of the earnings or losses of ProLogis
     Logistics and  Frigoscandia S. A. under the equity method based upon its 5%
     ownership interest in each entity.

(2)  ProLogis  recognizes its direct share of the earnings or losses of ProLogis
     Logistics  and  Frigoscandia  S.A.  under the equity  method based upon its
     direct 95% ownership  interest in each entity and also recognizes  interest
     income on outstanding notes, if any.

(3)  Income includes  property and asset  management,  leasing,  development and
     other fees of $768,000  and $666,000 for the three months in 2002 and 2001,
     respectively.  ProLogis  has  had  a 50%  ownership  interest  in  ProLogis
     California since its inception.

(4)  Income  includes  property and asset  management  leasing,  development and
     other fees of $909,000  and $512,000 for the three months in 2002 and 2001,
     respectively.  ProLogis  had a 20%  ownership  interest in  ProLogis  North
     American  Properties  Fund I until  January  14,  2001  and has had a 41.3%
     ownership interest since that date.

(5)  Income  includes  property and asset  management and other fees of $534,000
     and $45,000 for the three months in 2002 and 2001, respectively. No leasing
     fees  were  earned  in  either  period.  ProLogis  has had a 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.
     Income includes  property and asset  management,  leasing and other fees of
     $512,000  for the three months in 2002.  ProLogis  has had a 20%  ownership
     interest  in  ProLogis  North  American   Properties  Fund  III  since  its
     inception.

(7)  ProLogis  North  American  Properties  Fund IV was formed on September  21,
     2001. Income includes property and asset management, leasing and other fees
     of $323,000 for the three months in 2002.  ProLogis has had a 20% ownership
     interest in ProLogis North American Properties Fund IV since its inception.

(8)  ProLogis  North  American  Properties  Fund V was formed on March 28, 2002.
     ProLogis has a 15% ownership interest in ProLogis North American Properties
     Fund V.

                                       10


(9)  Income  includes  property and asset  management  fees of  $3,284,000,  and
     $1,722,000  for the three months in 2002 and 2001,  respectively.  ProLogis
     recognizes  its  share of the  earnings  or  losses  of  ProLogis  European
     Properties  Fund  based  on  its  average  ownership  interest  during  the
     respective  period.  ProLogis'  ownership  interest  in  ProLogis  European
     Properties  Fund  was  33.1%  and  41.8%  as of March  31,  2002 and  2001,
     respectively.

(10) Amount in 2001 represents income from ProLogis'  investment in 49.9% of the
     common stock of ProLogis European Properties  S.a.r.l.  for the period from
     January  1, 2001 to January  6,  2001.  As of  January  7,  2001,  ProLogis
     European Properties S.a.r.l. was 100% owned by ProLogis European Properties
     Fund.

(11) Amounts  represent  ProLogis'  share of the earnings or losses of Kingspark
     LLC  recognized  under  the  equity  method  based  upon its 95%  ownership
     interest  in  Kingspark  LLC.  Kingspark  LLC  recognizes  its share of the
     earnings or losses of Kingspark S.A. under the equity method based upon its
     5% ownership interest in Kingspark S.A.

(12) ProLogis recognizes its direct share of the earnings or losses of Kingspark
     S.A.  under the equity method based upon its direct 95% ownership  interest
     in Kingspark S.A.

(13) For the three months in 2002, the amount consists of ProLogis' share of the
     loss of GoProLogis  recognized  under the equity method.  GoProLogis'  loss
     consists  entirely of an impairment  adjustment that reduces its investment
     in Vizional  Technologies to zero. For the three months in 2001, the amount
     consists of ProLogis'  share of the income of GoProLogis  recognized  under
     the equity method.  GoProLogis' income represents license fee income earned
     from  Vizional  Technologies  for  the  non-exclusive  use of the  ProLogis
     Operating Systems(R).



Temperature-Controlled Distribution Companies

     ProLogis'  total  investment  in  its  temperature-controlled  distribution
companies as of March 31, 2002 consisted of (in millions of U.S. dollars):


                                               CSI/Frigo  ProLogis  Frigoscandia
                                                 LLC(1)  Logistics(2)  S.A.(3)
                                               --------- ---------  ------------
                                                             
Equity interest................................ $   0.4   $  263.4    $  22.6
ProLogis' share of the earnings of the entity..    (6.0)     (64.9)    (119.9)
                                                -------   --------    -------
     Subtotal..................................    (5.6)     198.5      (97.3)
Other (including acquisition costs), net.......    (0.3)        --      (11.1)
                                                -------   --------    -------
     Subtotal..................................    (5.9)     198.5     (108.4)
Notes and other receivables....................     3.2       11.4(4)   283.7(5)
                                                -------   --------    --------
          Total................................ $  (2.7)  $  209.9    $  175.3
                                                =======   ========    ========
----------

(1)  ProLogis owns 89% of the membership  interests (all non-voting) and K. Dane
     Brooksher,  ProLogis' chairman and chief executive officer, owns 11% of the
     membership  interests  (all voting) of CSI/Frigo  LLC, a limited  liability
     company.  Additionally,  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.  ProLogis  does not have
     control of CSI/Frigo LLC,  therefore,  ProLogis accounts for its investment
     in this entity under the equity method.

(2)  ProLogis  directly owns all of the non-voting  preferred  stock of ProLogis
     Logistics,  representing  a 99.23%  interest  in the  earnings  of ProLogis
     Logistics.  ProLogis  Logistics owns 100% of CSI, a  temperature-controlled
     distribution  company  operating in the United  States.  The voting  common
     stock of ProLogis  Logistics is owned by CSI/Frigo  LLC.  ProLogis does not
     have control of ProLogis  Logistics  therefore,  ProLogis  accounts for its
     investment in this entity under the equity method.

(3)  ProLogis   directly  owns  all  of  the  non-voting   preferred   stock  of
     Frigoscandia  S.A.,   representing  a  95%  interest  in  the  earnings  of
     Frigoscandia  S.A., a Luxembourg  company that owns,  through  wholly owned
     subsidiaries,  temperature-controlled  distribution  companies operating in
     five countries in Europe.  The voting common stock of Frigoscandia  S.A. is
     owned by CSI/Frigo  LLC.  ProLogis  does not have  control of  Frigoscandia
     S.A., therefore,  ProLogis accounts for its investment in this entity under
     the equity method.

                                       11


     Frigoscandia S.A., through its wholly owned subsidiary, Frigo S.a.r.l., had
     a credit  agreement with Bank of America N.A.  ("Bank of America") as agent
     for a bank  group,  under  which  borrowings  of 102.5  million  euros (the
     currency  equivalent of approximately $90.4 million) were outstanding as of
     December 31, 2001. All of the  borrowings  outstanding  were  guaranteed by
     ProLogis.  All borrowings  under the credit  agreement were repaid in March
     2002 with the proceeds  from the sale of operating  assets of  Frigoscandia
     S.A. and its wholly owned  subsidiaries.  Frigo S.a.r.l.  cannot borrow any
     additional  amounts under the credit  agreement  prior to its expiration on
     June 28, 2002.

(4) Represents other receivables only.

(5)  In addition  to other  receivables  aggregating  $46.1  million  (primarily
     interest on notes receivable) the balance includes:

     o    776.6 million Swedish krona (the currency  equivalent of approximately
          $75.0 million as of March 31, 2002) unsecured note from a wholly owned
          subsidiary  of Frigo  S.a.r.l.;  interest  at 5.0% per  annum;  due on
          demand;

     o    12.8 million euro (the  currency  equivalent  of  approximately  $11.1
          million  as of March 31,  2002)  unsecured  note  from a wholly  owned
          subsidiary  of Frigo  S.a.r.l.;  interest  at 5.0% per  annum;  due on
          demand;

     o    $115.5 million unsecured note from Frigoscandia S.A., interest at 5.0%
          per annum;  $80.0  million due July 15, 2008 with the remainder due on
          demand; and

     o    41.2 million euro (the  currency  equivalent  of  approximately  $36.0
          million as of March 31,  2002)  unsecured  note from  Frigo  S.a.r.l.;
          interest at 5.0% per annum; due on demand.


Real Estate Funds

     ProLogis'  total  investment  in real  estate  funds as of March  31,  2002
consisted of (in millions of U.S. dollars):


                                                    ProLogis   ProLogis   ProLogis   ProLogis   ProLogis
                                                      North      North      North      North      North    ProLogis
                                                    American   American   American   American   American   European
                                         ProLogis  Properties Properties Properties Properties Properties Properties
                                        California   Fund I     Fund II   Fund III    Fund IV    Fund V     Fund(1)
                                        ---------- ---------- ---------- ---------- ---------- ---------- ----------
                                                                                      
   Equity interest....................   $ 167.5    $  56.4    $  14.3    $  12.1    $   8.4    $   8.5    $ 337.5
   Distributions......................     (42.3)      (6.5)      (1.9)      (1.5)      (0.5)        --      (26.9)
   ProLogis' share of the earnings
     of the entity, excluding fees
     earned...........................      25.1        3.2        0.6        0.2        0.4         --       21.2
                                         -------    -------    -------    -------    -------    -------    -------
          Subtotal....................     150.3       53.1       13.0       10.8        8.3        8.5      331.8
   Adjustments to carrying value(2)...     (28.7)      (9.5)      (6.5)      (5.9)      (4.6)      (4.0)     (43.4)
   Other, net(3)......................       1.5        2.0        1.3        1.0        0.7        1.2      (20.0)
                                         -------    -------    -------    -------    -------    -------    -------
          Subtotal....................     123.1       45.6        7.8        5.9        4.4        5.7      268.4
   Other receivables..................       0.2        1.7        0.5        0.1        0.1        3.0        2.8
                                         -------    -------    -------    -------    -------    -------    -------
             Total....................   $ 123.3    $  47.3    $   8.3    $   6.0    $   4.5    $   8.7    $ 271.2
                                         =======    =======    =======    =======    =======    =======    =======
----------

(1)  Third parties (21  institutional  investors)  have  invested  709.4 million
     euros (the currency equivalent of approximately  $618.2 million as of March
     31, 2002) in ProLogis  European  Properties Fund and have committed to fund
     an additional 350.9 million euros (the currency equivalent of approximately
     $305.8 million as of March 31, 2002) through  September  2002.  ProLogis is
     committed  under  a  subscription  agreement  to  make  additional  capital
     contributions   of  46.0  million   euros  (the   currency   equivalent  of
     approximately $40.0 million as of March 31, 2002) through September 2002.

(2)  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  by ProLogis due to ProLogis'  continuing  ownership in
     each entity.

(3)  Includes  acquisition costs for all entities in addition to ProLogis' share
     of the cumulative  translation  adjustments of ProLogis European Properties
     Fund.


                                       12


Kingspark S.A.

     ProLogis owns all of the non-voting  preferred  stock of Kingspark S.A. and
all of the non-voting  membership interests of Kingspark LLC. Kingspark LLC owns
the voting  common stock of Kingspark  S.A.  The voting  membership  interest of
Kingspark  LLC is owned by K.  Dane  Brooksher,  ProLogis'  chairman  and  chief
executive  officer.  These combined  investments do not give ProLogis control of
these entities.  Therefore, ProLogis recognizes its 99.75% share of the combined
earnings or losses of these  entities  under the equity  method.  Kingspark S.A.
owns Kingspark Group Holdings Limited ("ProLogis Kingspark"), a CDFS business in
the United Kingdom.  In addition to its equity investments and other receivables
of $17.2  million  (primarily  interest on notes  receivable),  ProLogis had the
following  amounts due from  Kingspark  S.A. and  Kingspark  LLC as of March 31,
2002:

     o    59.0 million pound sterling (the currency  equivalent of approximately
          $84.1  million  as of March  31,  2002)  outstanding  on an  unsecured
          revolving loan facility from ProLogis to Kingspark  S.A.;  interest at
          5.5% per annum; due on demand;

     o    $117.3 million  unsecured note from Kingspark  S.A.;  interest at 5.0%
          per annum; due on demand;

     o    143.5 million pound sterling (the currency equivalent of approximately
          $204.5  million as of March 31,  2002)  mortgage  note from  Kingspark
          S.A.;  secured by land  parcels;  interest  at 5.1% per annum;  due on
          demand; and

     o    $7.3 million  unsecured note from Kingspark LLC;  interest at 8.0% per
          annum; due in January 2006.

     As of March 31,  2002,  Kingspark  S.A.  owned 2.1  million  square feet of
distribution  facilities  at an  investment  of $187.9  million  and 2.1 million
square feet of facilities under development with a total budgeted cost of $233.9
million.  Additionally,  as of March 31, 2002, Kingspark S.A. owned 243 acres of
land and controlled  1,610 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 26.7 million square
feet of facilities.

     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 25.0
million pounds sterling (the currency  equivalent of approximately $35.6 million
as of March 31, 2002) and has been guaranteed by ProLogis. As of March 31, 2002,
no borrowings were outstanding on the line of credit.  However,  as of March 31,
2002,  ProLogis  Kingspark  had the currency  equivalent of  approximately  $4.8
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 certain of ProLogis'  unconsolidated
entities as of March 31, 2002 and for the three  months then ended is  presented
below (in millions of U.S. dollars). The information presented is for the entire
entity.


                                                       ProLogis   ProLogis    ProLogis   ProLogis   ProLogis
                                                         North      North       North      North      North    ProLogis
                                                        American   American   American   American   American   European
                     ProLogis   Frigoscandia ProLogis  Properties Properties Properties Properties Properties Properties Kingspark
                    Logistics(1)  S.A.(1)   California  Fund I(3) Fund II(4) Fund III(4)Fund IV(4)  Fund V(5)    Fund(6)    S.A.(1)
                    ----------- ------------ --------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
                                                                                            
Total assets........   $327.9     $ 246.8     $ 602.6    $ 363.9   $ 233.5    $ 208.2    $ 145.3    $ 180.1    $1,601.2   $ 637.5
Total liabilities
  (7)(8)............   $129.5     $ 364.9     $ 302.1    $ 238.7   $ 168.0    $ 152.7    $ 104.8    $ 123.1    $ 715.7    $ 552.4
Minority interest...   $ --       $   0.2     $  --      $  --     $  --      $  --      $  --      $  --      $  --      $  --
Equity..............   $198.4     $(118.3)    $ 300.5    $ 125.2   $  65.5    $  55.5    $  40.5    $  57.0    $ 885.5    $  85.1
Revenues............   $ 76.9     $  48.3     $  17.0    $  10.5   $   7.0    $   6.4    $   4.6    $   0.1    $  31.1    $   7.1
Net earnings(9).....   $  3.5     $   4.3     $   6.2    $   1.2   $   1.1    $   0.7    $   1.0    $  -- (10) $   9.7    $   3.6

----------

(1)  ProLogis  had an  ownership  interest in excess of 99% in each entity as of
     March 31, 2002.

(2)  ProLogis had a 50% ownership interest in this entity as of March 31, 2002.

(3)  ProLogis  had a 41.3%  ownership  interest  in this  entity as of March 31,
     2002.

(4)  ProLogis had a 20% ownership interest in each entity as of March 31, 2002.

(5)  ProLogis had a 15% ownership interest in this entity as of March 31, 2002.

(6)  ProLogis had a 33.1% ownership interest in this entity as of March 31, 2002.

                                       13


(7)  Includes amounts due to ProLogis of $11.4 million from ProLogis  Logistics,
     $283.7  million  from   Frigoscandia   S.A.,  $0.2  million  from  ProLogis
     California,  $1.7 million from ProLogis North American  Properties  Fund I,
     $0.5 million for ProLogis North American  Properties  Fund II, $0.1 million
     from  ProLogis  North  American  Properties  Fund III,  $0.1  million  from
     ProLogis  North  American  Properties  Fund IV, $3.0 million from  ProLogis
     North  American  Properties  Fund V, $2.8  million from  ProLogis  European
     Properties Fund and $423.1 million due from Kingspark S.A.

(8)  Includes loans due to third parties of $91.5 million for ProLogis Logistics
     ($90.0 million guaranteed by ProLogis), $1.0 million for Frigoscandia S.A.,
     $293.0 million for ProLogis  California,  $232.6 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,  $103.0 million for ProLogis North American  Properties  Fund IV,
     $120.0 million for ProLogis North American Properties Fund V (guaranteed by
     ProLogis),  $632.2 million for ProLogis European  Properties Fund and $57.7
     million for Kingspark S. A. (guaranteed by ProLogis).

(9)  ProLogis' share of the net earnings of the respective entities and interest
     income on  amounts  due to  ProLogis  are  recognized  in the  Consolidated
     Statements   of  Earnings   and   Comprehensive   Income  as  "Income  from
     unconsolidated entities." The net earnings of each entity includes interest
     expense on amounts due to ProLogis, as applicable, and includes net foreign
     currency  exchange gains of $4.7 million and $0.7 million for  Frigoscandia
     S.A. and ProLogis European Properties Fund, respectively, and a net foreign
     currency exchange loss of $1.1 million for Kingspark S.A.

(10) Net earnings of this entity were  $38,000 for the period from  inception on
     March 28, 2002 to March 31, 2002.


4.  Shareholders' Equity:

     During the three  months  ended  March 31,  2002,  ProLogis  generated  net
proceeds of $35.1  million  from the  issuance  of  1,325,000  common  shares of
beneficial  interest,  $0.01 par value ("Common Shares") under its 1999 Dividend
Reinvestment  and Share  Purchase Plan and the issuance of 264,000 Common Shares
under other Common Share plans.

     ProLogis  has  a  Common  Share  repurchase  program  under  which  it  may
repurchase  up to $100.0  million of its Common  Shares.  The Common Shares have
been and, to the extent these repurchases  continue,  will be repurchased in the
open market and in privately negotiated transactions, depending on market prices
and  other  conditions.  As of  March  31,  2002,  778,000  Common  Shares  were
repurchased under this program at a total cost of $16.0 million.  No repurchases
occurred during the three months ended March 31, 2002.

5.  Distributions and Dividends:

   Common Distributions

     On February 28, 2002, ProLogis paid a quarterly  distribution of $0.355 per
Common Share to  shareholders  of record on February 14, 2002. The  distribution
level for 2002 was set by ProLogis'  Board of Trustees in December 2001 at $1.42
per Common Share.

   Preferred Dividends

     The annual  dividend  rates on ProLogis'  cumulative  redeemable  preferred
shares are $4.27 per share  (Series C), $1.98 per share (Series D) and $2.19 per
share (Series E).

     On January 31,  2002,  ProLogis  paid a  quarterly  dividend of $0.5469 per
cumulative redeemable Series E preferred share. On March 29, 2002, ProLogis paid
quarterly  dividends  of $1.0675 per  cumulative  redeemable  Series C preferred
share and $0.495 per cumulative redeemable Series D 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.

6.  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:






                                       14



                                                          Three Months Ended
                                                                March 31,
                                                       -----------------------
                                                          2002         2001
                                                       ----------   ----------
                                                              
Net earnings attributable to Common Shares...........  $   54,996   $   44,007
Minority interest share in earnings..................       1,282           --
Series B preferred share dividends...................          --           81
                                                       ----------   ----------
Adjusted net earnings attributable to Common
  Shares.............................................  $   56,278   $   44,088
                                                       ==========   ==========

Weighted average Common Shares outstanding--Basic....     176,523      167,297
Weighted average convertible limited partnership
  units..............................................       5,063           --
Weighted average convertible Series B preferred
  shares.............................................          --        6,263
Incremental weighted average effect of
...potentially dilutive instruments...................       1,596          811
                                                       ----------   ----------
Adjusted weighted average Common Shares
  outstanding-- Diluted..............................     183,182      174,371
                                                       ==========   ==========

Per share net earnings attributable to Common Shares:
  Basic..............................................  $     0.31   $     0.26
                                                       ==========   ==========
  Diluted............................................  $     0.31   $     0.25
                                                       ==========   ==========


     For the  three  months  ended  March 31,  2001,  weighted  average  limited
partnership  units of 5,088,000 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.

7.  Business Segments:

    ProLogis has three reportable business segments:

     o    Property   operations   represents  the  long-term  ownership  (either
          directly or through  investments in unconsolidated real estate funds),
          management  and  leasing  of  distribution  facilities  in the  United
          States, Mexico and Europe. Each operating facility is considered to be
          an   individual    operating    segment   having   similar    economic
          characteristics  that are combined within the reportable segment based
          upon geographic location.

     o    CDFS business represents the development of distribution facilities by
          ProLogis and Kingspark S.A.  (which is not  consolidated  in ProLogis'
          financial  statements) in the United States,  Mexico, Europe and Japan
          that are often sold to third parties or contributed to  unconsolidated
          real estate funds in which ProLogis has an ownership interest and acts
          as manager.  Additionally,  in the United  States,  Mexico and Europe,
          ProLogis and Kingspark  S.A. earn fees for  development  activities on
          behalf of customers and realize  profits from the sale of land parcels
          when their CDFS business plans no longer include  development of these
          parcels.  The  operations  of this  segment are  considered  to be one
          operating segment.

     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.

     Reconciliations  of the  following  items for  ProLogis'  three  reportable
segments' are presented below:  (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. All amounts are in thousands of U.S. dollars.







                                       15



                                                          Three Months Ended
                                                               March 31,
                                                       ------------------------
                                                          2002          2001
                                                       ----------    ----------
                                                               
Income:
  Property operations:
     United States(1)................................  $  114,610    $  119,091
     Mexico..........................................       5,518         4,230
     Europe(1)(2)....................................       7,057         1,121
                                                       ----------    ----------
          Total property operations segment..........     127,185       124,442
                                                       ----------    ----------
  CDFS business:
     United States(3)................................      18,363        28,253
     Mexico(4).......................................       3,556           (10)
     Europe(5)(6)....................................      13,979        13,134
                                                       ----------    ----------
          Total CDFS business segment................      35,898        41,377
                                                       ----------    ----------
  Temperature-controlled distribution operations:
     United States(7)................................       3,729        (1,744)
     Europe(8).......................................       6,947        (7,728)
                                                       ----------    ----------
          Total temperature-controlled distribution
           operations segment.......................       10,676        (9,472)
                                                       ----------    ----------
  Reconciling items:
     Income (loss) from unconsolidated entities......      (2,069)        2,178
     Interest and other income.......................         570         1,124
                                                       ----------    ----------
          Total reconciling items....................      (1,499)        3,302
                                                       ----------    ----------
          Total income...............................  $  172,260    $  159,649
                                                       ==========    ==========

                                                          Three Months Ended
                                                               March 31,
                                                       ------------------------
                                                          2002          2001
                                                       ----------    ----------
Net operating income:
  Property operations:
     United States(1)................................  $  105,833    $  112,424
     Mexico..........................................       6,686         4,434
     Europe(1)(2)....................................       6,925           822
                                                       ----------    ----------
          Total property operations segment..........     119,444       117,680
                                                       ----------    ----------
  CDFS business:
     United States(3)................................      17,555        27,139
     Mexico(4).......................................       3,554           (72)
     Europe(5)(6)....................................      13,968        13,081
                                                       ----------    ----------
          Total CDFS business segment................      35,077        40,148
                                                       ----------    ----------
  Temperature-controlled distribution operations:
     United States(7)................................       3,729        (1,744)
     Europe(8).......................................       6,947        (7,728)
                                                       ----------    ----------
          Total temperature-controlled distribution
            operations segment.......................      10,676        (9,472)
                                                       ----------    ----------
  Reconciling items:
     Income (loss) from unconsolidated entities......      (2,069)        2,178
     Interest and other income.......................         570         1,124
     General and administrative expense..............     (12,927)      (14,417)
     Depreciation and amortization...................     (36,231)      (37,860)
     Interest expense................................     (40,830)      (41,522)
     Other expenses..................................          --           (14)
                                                       ----------    ----------
          Total reconciling items....................     (91,487)      (90,511)
                                                       ----------    ----------
          Earnings before minority interest..........  $   73,710    $   57,845
                                                       ==========    ==========







                                       16

                                                         March 31,  December 31,
                                                           2002         2001
                                                       -----------  -----------
Assets:
Property operations:
  United States(9)...................................  $3,688,050    $3,754,960
  Mexico.............................................     123,705       149,225
  Europe(9)..........................................     320,787       316,025
                                                       ----------    ----------
          Total property operations segment..........   4,132,542     4,220,210
                                                       ----------    ----------
CDFS business:
  United States......................................     159,527       189,752
  Mexico.............................................      17,727        17,390
  Europe(9)..........................................     622,954       628,764
  Japan..............................................      43,482        43,030
                                                       ----------    ----------
          Total CDFS business segment................     843,690       878,936
                                                       ----------    ----------
Temperature-controlled distribution operations:
  United States(9)...................................     209,877       174,244
  Europe(9)..........................................     172,651       183,727
                                                       ----------    ----------
          Total temperature-controlled distribution
            operations segment.......................     382,528       357,971
                                                       ----------    ----------
Reconciling items:
  Investments in unconsolidated entities (9).........       4,162         6,232
  Cash and cash equivalents..........................      59,689        27,989
  Accounts and notes receivable......................      11,080         1,880
  Other assets.......................................      63,766        66,645
                                                       ----------    ----------
          Total reconciling items....................     138,697       102,746
                                                       ----------    ----------
          Total assets...............................  $5,497,457    $5,559,863
                                                       ==========    ==========
----------

(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  unconsolidated  real estate funds. See
     Note 3 for summarized financial information of these entities.

(2)  Amounts  recognized  under the equity method  include net foreign  currency
     exchange  gains of $0.2  million and $0.8  million for the three  months in
     2002  and  2001,   respectively.   See  Note  3  for  summarized  financial
     information of ProLogis European Properties Fund.

(3)  Includes  $17.1  million  and  $20.4  million  of net gains  recognized  by
     ProLogis  related to the disposition of facilities to  unconsolidated  real
     estate funds for the three months in 2002 and 2001, respectively.

(4)  Includes $3.4 million of net gains  recognized  by ProLogis  related to the
     disposition of facilities to ProLogis North American  Properties Fund V for
     the three months in 2002.

(5)  Includes  amounts  recognized  under the equity method related to ProLogis'
     investment in Kingspark S.A. and Kingspark LLC  (including  $1.1 million of
     net  foreign  currency  exchange  losses and $5.8  million  of net  foreign
     currency   exchange   gains  for  the  three   months  in  2002  and  2001,
     respectively). See Note 3 for summarized financial information of Kingspark
     S.A.

(6)  Includes $4.4 million and $1.9 million of net gains  recognized by ProLogis
     related to the  disposition of facilities to ProLogis  European  Properties
     Fund for the  three  months in 2002 and 2001,  respectively.  In  addition,
     includes $2.7 million and $10.3 million of net gains  recognized  under the
     equity method related to the disposition of facilities to ProLogis European
     Properties  Fund by  Kingspark  S.A. for the three months in 2002 and 2001,
     respectively.

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

(8)  Represents  amounts recognized under the equity method related to ProLogis'
     investment in Frigoscandia S.A. and CSI/Frigo LLC. CSI/Frigo LLC recognizes
     income under the equity  method based upon its common stock  investment  in
     Frigoscandia  S.A.  Includes $4.7 million of net foreign currency  exchange
     gains for the three months in 2002 and $1.4 million of net foreign currency
     exchange  losses for the three  months in 2001.  See Note 3 for  summarized
     financial information of Frigoscandia S.A.


                                       17



(9)  Amounts include investments in unconsolidated  entities accounted for under
     the equity method. See Note 3 for summarized financial information of these
     entities.



8.  Supplemental Cash Flow Information

    Non-cash investing and financing activities for the three months ended March
31, 2002, and 2001 are as follows:

     o    ProLogis received $16.2 million and $49.1 million of the proceeds from
          its disposition of facilities to  unconsolidated  real estate funds in
          the form of an equity  interest  in these  entities  during  the three
          months in 2002 and 2001, respectively.

     o    ProLogis  received $10.8 million of the proceeds from its  disposition
          of a facility to a third party in the form of a note receivable during
          the three months in 2001.

     o    Series  B   cumulative   convertible   redeemable   preferred   shares
          aggregating  $151.8  million were  converted into Common Shares during
          the three months in 2001.

     o    Net foreign  currency  translation  adjustments of  $(18,097,000)  and
          $(42,684,000)  were  recognized for the three months in 2002 and 2001,
          respectively.

     o    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 and cash of $16.8  million  during the three  months in
          2001.  ProLogis'  basis in this investment  prior to contribution  was
          $84.8 million.

9.   Related Party Transactions

     During the three months ended March 31, 2002,  ProLogis  paid a fee of $1.2
million to an affiliate of Security Capital,  ProLogis' largest shareholder (see
Note 11), related to capital raised in ProLogis North American Properties Fund V
(see Note 3).

10.  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.

11.  Subsequent Event:

     On May 14, 2002, Security Capital, ProLogis' largest shareholder,  became
a  wholly  owned  subsidiary  of  General  Electric  Capital   Corporation  ("GE
Capital"). Under the terms of the merger agreement, GE Capital made a portion of
the  ProLogis  Common  Shares  owned by  Security  Capital a part of the  merger
consideration to be paid to Security Capital's shareholders.  After these Common
Shares are  distributed,  GE Capital is expected to own no more than 9.8% of the
total outstanding Common Shares of ProLogis.



















                                       18






                     Independent Accountants' Review Report







The Board of Trustees and Shareholders
ProLogis Trust:

     We have reviewed the accompanying  consolidated  condensed balance sheet of
ProLogis  Trust  and  subsidiaries  as  of  March  31,  2002,  and  the  related
consolidated  condensed  statement of earnings and comprehensive  income and the
consolidated  condensed statement of cash flows for the three-month period ended
March 31,  2002.  These  consolidated  condensed  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 of
America,  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 consolidated  condensed  financial  statements referred to
above for them to be in conformity with accounting principles generally accepted
in the United States of America.

                                    KPMG LLP



San Diego, California
May 1, 2002 except as to
Note 11 which is as of May 14, 2002



































                                       19



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'  2001 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.  Specifically, but not limited to, comments concerning
Prologis' expectations with respect to the United States economy, its ability to
raise private capital and generate  income in the CDFS business  segment and its
plans for its investment in the  temperature-controlled  distribution operations
segment are forward-looking  statements.  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' 2001 Annual
Report on Form 10-K, as amended.

Results of Operations

   Three Months Ended March 31, 2002 and 2001

     ProLogis' net earnings attributable to Common Shares were $55.0 million for
the three  months in 2002 as  compared  to $44.0  million for the same period in
2001.  ProLogis adopted SFAS No. 142 on January 1, 2002.  Accordingly,  ProLogis
and its unconsolidated  entities did not recognize  amortization expense related
to goodwill  for the three  months  ended March 31, 2002 of  approximately  $1.9
million  ($1.8  million  of which  represents  ProLogis'  share of  amortization
expense  related to  goodwill  of its  unconsolidated  entities).  See Note 1 to
ProLogis'  Consolidated  Condensed Financial Statements in Item 1. For the three
months in 2002, basic and diluted per share net earnings  attributable to Common
Shares  were  $0.31  per  share.  Basic  and  diluted  per  share  net  earnings
attributable to Common Shares were $0.26 and $0.25 per share, respectively,  for
the same period in 2001.

     Net operating  income from  ProLogis'  temperature-controlled  distribution
operations  segment was the primary  source of the  increase  in  ProLogis'  net
earnings  for the  three  months  in 2002  over the  same  period  in 2001.  Net
operating  income in this segment  increased  by $20.1  million in 2002 over the
same  period in 2001.  This  increase  is the  result of (i)  operating  profits
generated  in 2002 as compared  to  operating  losses  generated  in 2001;  (ii)
reduced  interest  expense  due to a  shifting  of third  party  debt from these
entities to ProLogis;  (iii) reduced  depreciation expense as certain assets are
classified  as held for sale and are no  longer  depreciated;  and (iv)  reduced
general and administrative  expenses.  The CDFS business segment, which provides
capital  for  ProLogis  to  fund  its  development  activities  in  addition  to
generating  profits that  contribute to ProLogis'  net  earnings,  generated net
operating  income of $35.1  million for the three  months in 2002 as compared to
net  operating  income  of $40.1  million  for the  three  months  in 2001.  Net
operating  income in this segment is dependent on the volume of contributions of
facilities  developed  by ProLogis and  Kingspark  S.A. to  unconsolidated  real
estate funds in which ProLogis  maintains an ownership  interest,  as well as to
third parties.  Net operating income from ProLogis' property  operations segment
increased  for the three  months  in 2002  over the same  period in 2001 by $1.8
million.  ProLogis' property operations  segment's net operating income consists
of rental  income and net rental  expenses  from  facilities  directly  owned by
ProLogis,  ProLogis'  share of the  earnings of its  unconsolidated  real estate
funds that engage in property operations segment activities and fees earned from
these  entities.  See  "--Property  Operations",  "--  CDFS  Business"  and  "--
Temperature-Controlled Distribution Operations".








                                       20


Property Operations

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


                                                                March 31,
                                                   -----------------------------------
                                                        2002               2001
                                                   ----------------   ----------------
                                                            Square             Square
                                                   Number   Footage   Number   Footage
                                                   ------   -------   ------   -------
                                                                   
Direct ownership(1)..............................   1,200   122,846    1,231   125,175
ProLogis California(2)...........................      78    12,882       78    12,720
ProLogis North American Properties Fund I(3).....      36     8,962       36     8,962
ProLogis North American Properties Fund II(4)....      27     4,477       26     4,163
ProLogis North American Properties Fund III(5)...      34     4,381       --        --
ProLogis North American Properties Fund IV(6)....      17     3,475       --        --
ProLogis North American Properties Fund V(7).....      22     3,851       --        --
ProLogis European Properties Fund(8).............     154    25,579      110    15,959
                                                   ------   -------   ------   -------
                                                    1,568   186,453    1,481   166,979
                                                   ======   =======   ======   =======
----------

(1)  Includes  distribution  facilities  owned by ProLogis and its  consolidated
     entities.  The  decrease in 2002 from 2001 is  primarily  the result of the
     formation of new  unconsolidated  real estate funds subsequent to March 31,
     2001.  The  entire  portfolios  of  these  entities  generally  consist  of
     distribution facilities that were previously directly owned by ProLogis.

(2)  ProLogis has had a 50% ownership interest in ProLogis  California since its
     inception.

(3)  ProLogis  has had a 41.3%  ownership  interest in ProLogis  North  American
     Properties  Fund I since  January 15,  2001 (prior to that date,  ProLogis'
     ownership  interest was 20%).  All  distribution  facilities  owned by this
     entity were previously directly owned by ProLogis.

(4)  ProLogis  has had a 20%  ownership  interest  in  ProLogis  North  American
     Properties Fund II since its inception.  All distribution  facilities owned
     by this entity were previously directly owned by ProLogis.

(5)  ProLogis  has had a 20%  ownership  interest  in  ProLogis  North  American
     Properties Fund III since its inception on June 15, 2001. All  distribution
     facilities owned by this entity were previously directly owned by ProLogis.

(6)  ProLogis  has had a 20%  ownership  interest  in  ProLogis  North  American
     Properties  Fund  IV  since  its  inception  on  September  21,  2001.  All
     distribution facilities owned by this entity were previously directly owned
     by ProLogis.

(7)  ProLogis  has had a 15%  ownership  interest  in  ProLogis  North  American
     Properties  Fund V since its inception on March 28, 2002. All  distribution
     facilities owned by this entity were previously directly owned by ProLogis.

(8)  As of March 31,  2002 and 2001,  ProLogis'  ownership  interest in ProLogis
     European Properties Fund was 33.1% and 41.8%, respectively.



     See also Note 3 to ProLogis' Consolidated Condensed Financial Statements in
Item 1.

     ProLogis'  property  operations  segment  income  consists of the:  (i) net
operating  income (rental income less net rental expenses) from the distribution
facilities that are owned by ProLogis directly and (ii) the income recognized by
ProLogis  under the equity method from its  investments in  unconsolidated  real
estate funds  engaged in property  operations  and fee income  earned from these
entities.  The net  operating  income  from  distribution  facilities  that  are
developed  by  ProLogis  in its CDFS  business  segment is  included  in the net
operating  income of the property  operations  segment until the  facilities are
contributed  to an entity in which ProLogis  maintains an ownership  interest or
are  sold to a third  party.  See  Note 7 to  ProLogis'  Consolidated  Condensed
Financial  Statements in Item 1. The amounts  recognized under the equity method
are  based on the net  earnings  or  losses of each  unconsolidated  entity  and
include: net operating income, interest income,  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).  ProLogis' net operating income from the property  operations
segment is presented below (in thousands).  See Note 7 to ProLogis' Consolidated
Condensed Financial Statements in Item 1.

                                       21



                                                            Three Months Ended
                                                                  March 31,
                                                            -------------------
                                                               2002      2001
                                                            --------- ---------
                                                                
Facilities directly owned by ProLogis and its consolidated
  entities:
  Rental income(1)......................................... $ 112,929 $ 119,244
  Property operating expenses(2)...........................     7,741     6,762
                                                            --------- ---------
          Net operating income.............................   105,188   112,482
                                                            --------- ---------
Income from the ProLogis California........................     4,055     3,067
Income from ProLogis North American Properties Fund I......     1,444     1,352
Income from ProLogis North American Properties Fund II.....       797       341
Income from ProLogis North American Properties Fund III(3).       675        --
Income from ProLogis North American Properties Fund IV(4)..       531        --
Income from ProLogis North American Properties Fund V(5)...         6        --
Income from ProLogis European Properties Fund(6)...........     6,748       402
Income from ProLogis European Properties S.a.r.l.(7).......        --        36
                                                            --------- ---------
          Total property operations segment................ $ 119,444 $ 117,680
                                                            ========= =========
----------

(1)  The decrease in rental income  between the periods  presented is due to the
     changes in the number and  composition of the directly owned  facilities in
     each period and to lower  average  occupancy  levels of the directly  owned
     facilities in 2002 as compared to 2001.

(2)  The $1.0  million  increase in property  operating  expenses  for the three
     months in 2002 as compared to the same period in 2001 is a function of: (i)
     an increase in bad debt  expense (bad debt expense was $0.4 million for the
     three months in 2002 and $0.1 million for the same period in 2001) and (ii)
     an overall increase in operating costs (rental expenses, excluding bad debt
     and before  recoveries  from  tenants,  were 27.4% of rental income for the
     three  months in 2002 as compared  to 26.4% of rental  income for the three
     months in 2001) offset by (iii) a decrease in the number of directly  owned
     facilities  in 2002 as compared to 2001.  The  increase in bad debt expense
     and operating  costs is primarily  due to the downturn in general  economic
     conditions  in the United  States  experienced  in the latter part of 2001.
     Total  rental  expense  recoveries  were  75.3% and  78.6% of total  rental
     expenses for the three months in 2002 and 2001, respectively. This decrease
     in rental expense  recoveries is primarily  attributable to lower occupancy
     levels which results in fewer  customers  available from whom certain fixed
     costs may be recovered.

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

(4)  ProLogis North American  Properties  Fund IV began  operations on September
     21, 2001.

(5)  ProLogis North  American  Properties  Fund V began  operations on March 28,
     2002.

(6)  For the three months in 2002 and 2001,  ProLogis'  share of the earnings of
     ProLogis  European  Properties Fund includes net foreign  currency gains of
     $0.2  million and net foreign  currency  exchange  losses 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 $6.5  million and $1.2  million for the three  months in 2002 and
     2001, respectively. The increase in ProLogis' combined share of the income,
     excluding   foreign  currency  gains  and  losses,   of  ProLogis  European
     Properties  Fund  for the  three  months  in 2002  over  2001 is due to the
     additional  facilities owned in 2002 as compared to 2001 and lower interest
     costs  reflecting the lower interest rates in effect in 2002. See Note 3 to
     ProLogis' Consolidated Condensed Financial Statements in Item 1.

(7)  ProLogis  European  Properties  S.a.r.l.  has been 100%  owned by  ProLogis
     European  Properties  Fund  since  January  7,  2001.  The  amount  in 2001
     represents  ProLogis' share of the earnings of ProLogis European Properties
     S.a.r.l.  based on its 49.9%  ownership  interest  in this  entity  for the
     period from January 1, 2001 to January 7, 2001.


     ProLogis' stabilized  distribution facilities (facilities owned by ProLogis
and the unconsolidated  real estate funds), were 91.0% occupied and 91.9% leased
as of March 31, 2002.  ProLogis'  stabilized  occupancy levels have decreased as
compared to 2001 (94.6% occupied and 95.6% leased). The term "stabilized" means,
for  acquisitions,  any  necessary  capital  improvements,   repositioning,  new
management  and new  marketing  programs  and,  in the case of  newly  developed
facilities,  construction  and  marketing,  have been in effect for a sufficient
period of time (generally 12 months) to achieve stabilized  occupancy (typically
93%, but ranging from 90% to 95%, depending on the submarket and product type).

                                       22


     ProLogis  believes that the decrease in its stabilized  occupancy levels in
2002 is the result of the current economic  conditions in the United States that
have led to a slowing  in  customer  leasing  decisions  and in a slowing in the
absorption  of new  distribution  facilities  in the market.  ProLogis  does not
expect market conditions  affected by the United States economy to improve until
the end of 2002 and believes that  occupancies  could continue to decline during
the remainder of 2002.  However,  ProLogis  believes  that its global  operating
platform  and the  ProLogis  Operating  System (R) will  partially  mitigate the
effects of these  occupancy  decreases,  as they have allowed  ProLogis to build
strong  local  market  presence and strong  customer  relationships  across many
global  markets.  In Europe,  leasing  activity  has  remained  constant and 1.4
million  square  feet of leases were  signed  during the first  quarter of 2002.
ProLogis believes the leasing activity in Europe is currently affected more by a
shift in  distribution  patterns  of its  customers  and  their  need to  reduce
distribution costs than it is by the effects of general economic conditions.

     The  average  increase in rental  rates for both new and renewed  leases on
previously leased space (9.4 million square feet) for all facilities,  including
those owned by ProLogis'  unconsolidated real estate funds, for the three months
in 2002 was 4.4% as compared to 20.2% for the same period in 2001. This decrease
is reflective of current economic conditions.  For the three months in 2002, the
net  operating  income  (rental  income less net rental  expenses)  generated by
ProLogis' "same store" portfolio of distribution facilities (facilities owned by
ProLogis  and the  unconsolidated  real  estate  funds  that  were in  operation
throughout both three month periods in 2002 and 2001) increased by 0.7% over the
same period in 2001 (as  compared to an increase of 3.3% during the three months
in 2001 as compared to the same period in 2000). The decrease in the growth rate
in same store net operating  income is due to increased bad debt expense in 2002
and to lower occupancy levels in the same store portfolio in 2002 as compared to
2001.

CDFS Business

     Net  operating   income  from  ProLogis'  CDFS  business  segment  consists
primarily  of:  (i)  the  profits  from  the  disposition  of land  parcels  and
distribution  facilities  that  were  developed  by  ProLogis  and sold to third
parties or  contributed  to  unconsolidated  real estate funds in which ProLogis
maintains an ownership  interest;  (ii)  development  management  fees earned by
ProLogis;  and (iii) income  recognized  under the equity method from  ProLogis'
investment in Kingspark S.A.

     ProLogis  recognizes  99.75% of the  earnings of Kingspark  S.A.  under the
equity method (including its share recognized through its ownership in Kingspark
LLC) which includes net operating income, interest income, interest expense (net
of amounts  capitalized),  general and  administrative  expense  (net of amounts
capitalized),  income taxes and foreign currency exchange gains and losses.  See
Note 3 to ProLogis' Consolidated Condensed Financial Statements in Item 1.

     Income from the CDFS business segment is dependent on ProLogis'  ability to
develop and lease  distribution  facilities  that can be disposed of to generate
profits and its ability to raise private  capital  through the formation of real
estate funds or other  sources.  There can be no assurance that ProLogis will be
able to maintain the level of profits in this business segment.

     The CDFS  business  segment  operations  decreased  during the three months
ended  March 31, 2002 from the same period in 2001.  The CDFS  business  segment
income is comprised of the following (in thousands):


                                                        Three Months Ended
                                                              March 31,
                                                     -----------------------
                                                        2002          2001
                                                     ---------     ---------
                                                             
Net gains on disposition of land parcels
  and facilities developed(1).....................   $  24,952     $  28,720
Development management fees.......................         517           941
Income from Kingspark S.A.(2)(3)..................       9,482        10,253
Miscellaneous fees and other income...............         947         1,463
Other expenses(4).................................        (821)       (1,229)
                                                     ---------     ---------
                                                     $  35,077     $  40,148
                                                     =========     =========
----------

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

     o    2002: 12 acres; 4.6 million square feet; $218.2 million of proceeds.

     o    2001: 76 acres; 4.3 million square feet; $231.9 million of proceeds.

(2)  ProLogis'  share of  Kingspark  S.A.'s  income for the three months in 2002
     (including  ProLogis' share of Kingspark S.A.'s income  recognized  through
     its ownership in Kingspark LLC) includes, among other items:

                                       23

     o    Gains from the disposition of land parcels and facilities developed (3
          acres; 0.2 million square feet;  $33.6 million of proceeds;  net gains
          of $3.4 million);

     o    Development fees and other miscellaneous income of $3.9 million;

     o    Deferred and current income tax expense of $0.9 million; and

     o    Foreign currency exchange losses of $1.1 million.

(3)  ProLogis'  share of  Kingspark  S.A.'s  income for the three months in 2001
     (including  ProLogis' share of Kingspark S.A.' s income recognized  through
     its ownership in Kingspark LLC) includes, among other items:

     o    Gains from the  disposition of land parcels and  facilities  developed
          (1.3 million  square feet;  $133.1  million of proceeds;  net gains of
          $11.7 million);

     o    Deferred and current income tax expense of $2.5 million; and

     o    Foreign currency exchange gains of $5.8 million.

(4)  Includes  land holding costs of $0.6 million and $0.5 million for the three
     months in 2002 and  2001,  respectively  and the  write-off  of  previously
     capitalized  pursuit  costs of $0.2  million and $0.7 million for the three
     months in 2002 and 2001, respectively.


     During  2001,  ProLogis  began to  direct  the  focus of its CDFS  business
segment  operations  from  North  America  to  Europe,  given the  deteriorating
economic  conditions in North  America.  As of March 31, 2002,  74% of ProLogis'
CDFS  business  segment  assets were located in Europe with 21% located in North
America  and the  remaining  5% located  in Japan.  ProLogis  believes  that the
continuing demand for  state-of-the-art  distribution  facilities in Europe will
continue to provide it with  opportunities to expand its CDFS business.  Further
to this  objective,  with  2,884  acres of land  owned or  controlled  in Europe
including  1,853  acres of land owned and  controlled  in the United  Kingdom by
Kingspark S.A.,  ProLogis  believes it will not be affected by land  entitlement
constraints  that currently  exist in Europe.  ProLogis will continue to monitor
leasing  activity and general  economic  conditions  in the United  States as it
pertains to its CDFS business segment  operations.  In 2001,  ProLogis began its
first development project in Japan. As in Europe,  ProLogis believes that demand
for state-of-the-art distribution facilities in Japan will provide opportunities
for ProLogis to expand its CDFS business.

Temperature-Controlled Distribution Operations

     ProLogis  recognizes  income from the  temperature-controlled  distribution
operations  segment of its business under the equity method.  In March 2002, all
of the temperature-controlled  distribution operating assets in Sweden, Denmark,
Finland,  Norway and the Netherlands,  and the remaining  temperature-controlled
distribution  operating  assets in Germany  owned by  Frigoscandia  S.A. and its
wholly  owned  subsidiaries  were  sold.  Negotiations  related  to the  sale of
substantially all of the temperature-controlled distribution operating assets in
the  United  States  owned  by CSI and the  temperature-controlled  distribution
operating  assets in Spain and Italy owned by  Frigoscandia  S.A. and its wholly
owned  subsidiaries  are  continuing.  ProLogis' share of the earnings or losses
from  this  operating  segment  is below  (in  thousands).  See Notes 3 and 7 to
ProLogis' Consolidated Condensed Financial Statements in Item 1.


                                                         Three Months Ended
                                                               March 31,
                                                        ----------------------
                                                          2002         2001
                                                        ---------    ---------
                                                               
Income (loss) from ProLogis Logistics(1)..............  $   3,729    $  (1,744)
Income (loss) from Frigoscandia S.A(1)................      6,947       (7,728)
                                                        ---------    ---------
          Total temperature-controlled distribution
             operations segment.......................  $  10,676    $  (9,472)
                                                        =========    =========
----------

(1)  Includes  ProLogis'  direct  share of the earnings or losses of each entity
     and  ProLogis'  share of the  earnings  or losses of each  entity  based on
     ProLogis'  ownership in CSI/Frigo LLC.  CSI/Frigo LLC, a limited  liability
     company,  owns all of the voting  common  stock of ProLogis  Logistics  and
     Frigoscandia  S. A.  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).  ProLogis has a note agreement with CSI/Frigo LLC that allows
     ProLogis to  participate  in its earnings such that ProLogis will recognize
     95% of the earnings of  CSI/Frigo  LLC.  ProLogis  does not have control of
     CSI/Frigo  LLC,  therefore,  ProLogis  accounts for its  investment in this
     entity  under  the  equity  method.  See Note 7 to  ProLogis'  Consolidated
     Condensed Financial Statements in Item 1.


                                       24

     Amounts  recognized  by ProLogis and  CSI/Frigo LLC under the equity method
from their respective  investments in ProLogis  Logistics and Frigoscandia  S.A.
include: net operating income, interest income,  interest expense,  depreciation
and amortization  expense,  general and  administrative  expense,  income taxes,
foreign currency exchange gains and losses (with respect to Frigoscandia  S.A.).
ProLogis  recognized  in excess of 99% of the  earnings  of each  entity for the
three months in 2002 and 2001.

     ProLogis'  share of ProLogis  Logistics' net earnings  (including its share
recognized  through its ownership in CSI/Frigo LLC) for the three months in 2002
increased  over  the same  period  in 2001 by $5.5  million.  This  increase  is
primarily  attributable to the  classification of CSI's operating assets as held
for sale.  This  classification  under GAAP requires that all  depreciation  and
amortization associated with these assets cease. Consequently, CSI recognized no
depreciation or amortization expense for the three months in 2002 as compared to
the $5.0 million of depreciation and amortization expense recognized in 2001.

     ProLogis' share of Frigoscandia S.A.'s net earnings for the three months in
2002  (including  its share  recognized  through its ownership in CSI/Frigo LLC)
includes a net foreign currency  exchange gain of $4.7 million.  ProLogis' share
of  Frigoscandia  S.A.'s net loss for the three  months in 2001  (including  its
share recognized  through its ownership in CSI/Frigo LLC) includes a net foreign
currency  loss of $1.4  million.  Excluding  these  foreign  exchange  gains and
losses, ProLogis recognized $8.5 million more income under the equity method, in
2002 than it  recognized  for the three  months in 2001 from its  investment  in
Frigoscandia  S.A. The increase in ProLogis'  share of  Frigoscandia  S.A.'s net
earnings in 2002 from 2001 is a function of: (i) improved operating results from
assets in service in both periods;  (ii) lower  interest  expense in 2002 due to
lower debt balances and lower  interest  rates;  (iii) the  recognition  of less
depreciation and amortization  expense in 2002; offset by (iv) lower income from
operations  due to sales of  assets  after  March  31,  2001.  The  decrease  in
depreciation  and  amortization  expense in 2002 is due to the reduced amount of
assets in  operation  in that period and also to the  classification  of certain
assets  as held for sale  under  GAAP.  This  classification  requires  that all
depreciation and amortization associated with those assets cease.

   Other Income and Expense Items

    General and Administrative Expense

     General and  administrative  expense was $12.9 million for the three months
in 2002 and $14.4 million for the three months in 2001.  The decrease in general
and  administrative  expense is  primarily  attributable  to the timing of costs
incurred. ProLogis does not expect this trend to continue throughout 2002.

    Depreciation and Amortization

     Depreciation  and  amortization  expense  was $36.2  million  for the three
months in 2002 and $37.9  million for the three months in 2001.  The decrease in
this  expense is a function of the number of  distribution  facilities  directly
owned by ProLogis in each period (see "-- Property Operations") and the adoption
of SFAS No. 142 which eliminated  amortization  related to goodwill beginning on
January 1, 2002.

    Interest Expense

     Interest  expense is a function of the level of borrowings  outstanding and
interest rates charged on  borrowings,  offset by interest  capitalization  with
respect to development activities. Interest cost before capitalization was $46.3
million for the three  months in 2002 and $47.4  million for the three months in
2001. The decrease in 2002 from 2001 is primarily due to lower average  interest
rates and lower average borrowings outstanding on ProLogis' lines of credit.

     Interest expense recognized on borrowings is offset by interest capitalized
with respect to ProLogis' development activities.  Capitalized interest was $5.5
million  in 2002 and $5.9  million  in 2001.  Capitalized  interest  levels  are
reflective of ProLogis' cost of funds and the level of  development  activity in
each year.

    Other Expenses

     Other  expenses  were $0.8  million  for the three  months in 2002 and $1.2
million  for the same period in 2001 and  includes  land  holding  costs and the
write-off of previously  capitalized  pursuit costs Land holding costs were $0.6
million in 2002 and $0.5  million in 2001.  Pursuit  cost  write-offs  were $0.2
million in 2002 and $0.7 million in 2001.

    Loss on Disposition of Real Estate

     Loss on  disposition  of real  estate  represents  the net losses  from the
disposition  of  distribution  facilities  that were  acquired or developed  for
long-term use in the property operations segment.  Generally,  ProLogis disposes
of facilities in the property  operations  segment  because such  facilities are
considered to be non-strategic  facilities.  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

                                       25

or configuration.  Also, ProLogis will contribute  facilities from its operating
portfolio to complement the portfolio of developed distribution  facilities that
are acquired by the  unconsolidated  real estate funds.  During the three months
ended March 31, 2002, ProLogis disposed of one operating facility with net sales
proceeds of $1.5  million.  This facility was not  classified as a  discontinued
operation under SFAS No. 144 as the effect on ProLogis'  Consolidated  Condensed
Statements of Earnings and Comprehensive  Income is not material.  See Note 1 to
ProLogis' Consolidated Condensed Financial Statements in Item 1.

     During the three  months  ended March 31,  2001,  ProLogis  disposed of six
operating  facilities with net sales proceeds of $62.9 million (four  facilities
with net sales proceeds of $58.8 million were contributed to unconsolidated real
estate funds in which ProLogis maintains an ownership interest).  Also, ProLogis
recognized  a net  gain of $0.5  million  upon  the  contribution  of its  49.9%
ownership  of  ProLogis  European   Properties  S.a.r.l.  to  ProLogis  European
Properties Fund in January 2001.

    Income (Loss) from Unconsolidated Entities

     The combined income (loss) from unconsolidated  entities,  recognized under
the equity method,  that is not directly  attributable to one of ProLogis' three
business  segments  was a loss of  $2,069,000  for the three  months in 2002 and
income of  $2,178,000  for the three  months  in 2001.  See Note 7 to  ProLogis'
Consolidated  Condensed  Financial  Statements in Item 1. For 2002,  this amount
consists of: (i) a $2,073,000  loss from ProLogis'  investment in GoProLogis and
(ii) income of $4,000  from  ProLogis'  investment  in  Insight,  Inc.  The loss
recognized by GoProLogis  represents  ProLogis' share of GoProLogis'  impairment
adjustment   that  reduced   GoProLogis'   remaining   investment   in  Vizional
Technologies  to zero.  For  2001,  this  amount  consists  of:  (i)  income  of
$2,188,000  from ProLogis'  investment in GoProLogis and ProLogis  Broadband (1)
Incorporated  ("ProLogis  PhatPipe")  and (ii) a loss of $10,000 from  ProLogis'
investment in Insight,  Inc. The income  recognized  by GoProLogis  and ProLogis
PhatPipe  consisted  entirely of license fee income for the non-exclusive use of
the ProLogis Operating System(R) earned from Vizional  Technologies and PhatPipe
Inc.,  respectively.  ProLogis PhatPipe and GoProLogis ceased recognizing income
under the  license  fee  agreements  in the second and third  quarters  of 2001,
respectively.   See  Note  3  to  ProLogis'   Consolidated  Condensed  Financial
Statements in Item 1.

    Foreign Currency Exchange Gains (Losses), Net

     ProLogis  recognized net foreign  currency  exchange losses of $0.3 million
and net foreign currency  exchange gains of $2.7 million during the three months
2002 and 2001,  respectively.  Foreign  currency  exchange  gains and losses are
primarily the result of the  remeasurement  and settlement of  intercompany  and
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, the
pound  sterling and the yen and the level of  intercompany  and third party debt
outstanding that is denominated in a currency other than the functional currency
of the borrower.  Changes in these currency  exchange rates against the entity's
functional  currency  are  the  primary  source  of  the  remeasurement   losses
recognized in these periods.

    Income Taxes

     ProLogis  is taxed as a REIT for  federal  income tax  purposes  and is not
generally  required  to pay federal  income  taxes if minimum  distribution  and
income,  asset and shareholder tests are met. Not all of ProLogis'  consolidated
subsidiaries  in the  United  States are  qualified  REIT  subsidiaries  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 certain of its taxable subsidiaries.

     Current income tax expense  recognized  during the three months in 2002 and
2001 was $1.1 million and $1.6 million, respectively. Current income tax expense
is generally a function of the level of income  recognized by ProLogis'  taxable
subsidiary operating in the CDFS business segment.  ProLogis recognized deferred
income tax expense of $7.7 million for the three months in 2002 and $0.9 million
for the three months in 2001.  ProLogis'  deferred income tax component of total
income taxes is a function of each period's  temporary  differences  (items that
are  treated  differently  for tax  purposes  than  for book  purposes)  and the
utilization  of previously  generated  tax net  operating  losses that have been
recognized as deferred tax assets

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
                                       26

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

     ProLogis' future  investing  activities are expected to consist of: (i) the
acquisition of land for future  development  and the development of distribution
facilities  in the  CDFS  business  segment  for  future  disposition  and  (ii)
acquisitions of existing distribution  facilities in key distribution markets in
the property  operations  segment.  ProLogis'  future  investing  activities are
expected to be 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  contribution  of  facilities to  unconsolidated
          real estate funds in which ProLogis maintains an ownership interest;

     o    the  proceeds  from the  disposition  of ProLogis'  investment  in the
          temperature-controlled distribution operations segment;

     o    the proceeds  from the sale of Common  Shares under  ProLogis'  Common
          Share plans; and

     o    utilization of ProLogis' U.S. dollar  denominated  and  multi-currency
          denominated lines of credit.

     In the short-term,  borrowings on and subsequent  repayments of,  ProLogis'
line of credit are expected to provide  ProLogis  with  adequate  liquidity  and
financial flexibility to efficiently respond to market opportunities.  As of May
13, 2002, on a combined  basis,  ProLogis had  approximately  $479.0  million of
short-term  borrowings  outstanding resulting in additional short-term borrowing
capacity  available  of $542.6  million  (see "--  Borrowing  Capacity  and Debt
Maturities").  ProLogis has $608.0 million of shelf-registered  securities which
can be issued in the form of debt securities,  preferred shares,  Common Shares,
rights to purchase  Common  Shares and  preferred  share  purchase  rights on an
as-needed  basis,  subject  to  ProLogis'  ability  to  effect  an  offering  on
satisfactory  terms.  ProLogis will continue to evaluate the public debt markets
with the objective of reducing its  short-term  borrowings  and  extending  debt
maturities should favorable terms be available.

     Within  ProLogis  European  Properties  Fund,  ProLogis has access to 350.9
million euros (the currency  equivalent of  approximately  $305.8  million as of
March 31, 2002) of additional third party equity capital in Europe that has been
committed  primarily by  institutional  investors  through  September  2002. The
capital is committed to fund  acquisitions  of  ProLogis'  completed  stabilized
European developments and acquisitions of facilities from third parties.

   Cash Operating Activities

     Net cash provided by operating  activities  was $88.2 million for the three
months in 2002 and $104.8  million for the three months in 2001. See "-- Results
of Operations  -- Property  Operations".  Cash provided by operating  activities
exceeded the cash distributions paid on Common Shares and cash dividends paid on
preferred  shares for both  three-month  periods in 2002 and 2001. See ProLogis'
Consolidated Condensed Statements of Cash Flows in Item 1.

   Cash Investing and Cash Financing Activities

     For the three months in 2002,  ProLogis' investing  activities provided net
cash of $53.5  million  and its  financing  activities  used net cash of  $110.0
million  (financing  activities  used net cash of $39.3 million  excluding  cash
distributions on Common Shares and cash dividends on preferred shares). Proceeds
received  from  dispositions  of real  estate were used to fund  ProLogis'  real
estate  investments  and,  along with the proceeds from sales of Common  Shares,
were used to fund  ProLogis' net repayment of borrowings on its lines of credit.
For the three months in 2001,  ProLogis' investing  activities provided net cash
of $253.3 million and its financing  activities  used net cash of $382.5 million
(financing   activities   used  net  cash  of  $313.9  million   excluding  cash
distributions on Common Shares and cash dividends on preferred shares). Proceeds
received  from  dispositions  of real estate and the  repayments of loans by and
distributions received from ProLogis'  unconsolidated entities were used to fund
ProLogis' real estate  investments and were the primary sources of funds used to
repay  borrowings  on  ProLogis'  lines of credit.  See  ProLogis'  Consolidated
Condensed Statements of Cash Flows in Item 1.

Borrowing Capacity and Debt Maturities

     ProLogis has over $1.0 billion of short-term  borrowing capacity under four
revolving lines of credit. These borrowings are available in four currencies and
are summarized below (dollar amounts in millions of U.S. dollars):

                                       27


                        Outstanding as of
                 -------------------------------
  Total                                           Weighted Average
Commitment       March 31, 2002    May 13, 2002    Interest Rate(1)  Expiration
----------       --------------   --------------  ----------------   -----------
                                                         
$   500.0          $  107.0         $  109.0             2.66%       06/06/03(2)
     60.0(3)             --             44.6               --        06/06/02
    283.4(4)(5)       226.8(4)(5)      276.7(4)(5)       4.28%       12/17/03
    184.9(6)           46.8(6)          48.7(6)          1.15%       09/13/04(2)
---------          --------         --------            -----
  1,028.3(7)       $  380.6         $  479.0             3.44%
=========          ========         ========            =====
----------

(1)  Represents the weighted average interest rate on borrowings  outstanding as
     of March 31, 2002.

(2)  Credit  agreement  may be extended from this date for one year at ProLogis'
     option.

(3)  Borrowings can be denominated in U.S.  dollars,  euros,  pounds sterling or
     yen.

(4)  Includes the currency  equivalent of approximately  $57.7 million of direct
     borrowings by Kingspark  S.A.  under  ProLogis' line of credit as of March,
     31, 2002. ProLogis has guaranteed these borrowings. As of May 13, 2002, the
     currency  equivalent of approximately  $84.1 was borrowed by Kingspark S.A.
     under ProLogis' line of credit, all of which were guaranteed by ProLogis.

(5)  Borrowings  can be denominated  in either euros or pounds  sterling  (total
     commitment is 325.0  million  euros).  As of March 31, 2002,  257.3 million
     euros  were  outstanding.  As of May 13,  2002,  302.2  million  euros were
     outstanding.

(6)  Borrowings are  denominated in yen (total  commitment is 24.5 billion yen).
     As of March 31, 2002, 6.2 billion yen were outstanding. As of May 13, 2002,
     6.2 billion yen were outstanding, respectively.

(7)  Available  borrowings  as of March 31, 2002 and May 13, 2002 are reduced by
     $4.5   million  and  $6.7   million  of  letters  of  credit   outstanding,
     respectively.



     ProLogis  has senior  unsecured  notes and secured  debt  (mortgage  notes,
assessment  bonds and  securitized  debt)  outstanding as of March 31, 2002 with
annual  principal  payments  during  each of the years in the  five-year  period
ending December 31, 2006 and thereafter as follows (in thousands):

                                                   
                Remainder of 2002..................   $    28,678
                2003...............................       185,214
                2004...............................       316,554
                2005...............................       111,579
                2006...............................       319,995
                2007 and thereafter................     1,222,011
                                                      -----------
                          Total principal due......     2,184,031
                Less: Original issue discount......        (2,051)
                                                      -----------
                          Total carrying value.....   $ 2,181,980
                                                      ===========

Liquidity and Capital Resources of ProLogis' Unconsolidated Entities

     ProLogis has  investments and advances to  unconsolidated  entities of $1.3
billion as of March 31, 2002.  Summarized  financial  information for certain of
these unconsolidated  entities is presented below (in millions of U.S. dollars).
The information presented is for the entire entity.


                                                      ProLogis   ProLogis   ProLogis   ProLogis   ProLogis
                                                        North      North      North      North      North     ProLogis
                                                      American   American   American   American   American    European
                   ProLogis  Frigoscandia ProLogis   Properties Properties Properties Properties Properties  Properties  Kingspark
                  Logistics(1)  S.A.(1)  California(2)Fund I(3) Fund II(4) Fund III(4)Fund IV(4)  Fund V(5)    Fund(6)    S.A.(1)
                  ---------  ----------- ----------  ---------- ---------- ---------- ---------  ---------   ----------  ---------
                                                                                            
Total assets....... $327.9     $ 246.8     $602.6    $363.9     $233.5     $ 208.2     $145.3     $180.1     $1,601.2     $637.5
Total liabilities.. $129.5(7)  $ 364.9(8)  $302.1(9) $238.7(10) $168.0(11) $ 152.7(12) $104.8(13) $123.1(14) $  715.7(15) $552.4(16)
Minority interest.. $  --      $   0.2     $   --    $   --     $   --     $    --     $   --     $   --     $    --          --
Equity............. $198.4     $(118.3)    $300.5    $125.2     $ 65.5     $  55.5     $ 40.5     $ 57.0     $  885.5(17) $ 85.1

----------
                                       28



(1)  ProLogis  had an  ownership  interest in excess of 99% in each entity as of
     March 31, 2002.

(2)  ProLogis had a 50% ownership interest in this entity as of March 31, 2002.

(3)  ProLogis  had a 41.3%  ownership  interest  in this  entity as of March 31,
     2002.

(4)  ProLogis had a 20% ownership interest in each entity as of March 31, 2002.

(5)  ProLogis had a 15% ownership interest in this entity as of March 31, 2002.

(6)  ProLogis  had a 33.1%  ownership  interest  in this  entity as of March 31,
     2002.

(7)  Liabilities include amounts due to ProLogis and loans from third parties in
     the following amounts:

     o    $11.4 million due to ProLogis;

     o    $90.0 million due to a third party;  due on June 6, 2002; all of which
          has been guaranteed by ProLogis; and

     o    $1.5  million  of other  third  party  debt;  none of  which  has been
          guaranteed by ProLogis.

(8)  Liabilities include amounts due to ProLogis and loans from third parties in
     the following amounts:

     o    $283.7  million  due to  ProLogis;  and

     o    $1.0  million  of other  third  party  debt;  none of  which  has been
          guaranteed by ProLogis.

(9)  Liabilities include amounts due to ProLogis and loans from third parties in
     the following amounts:

     o    $0.2  million due to ProLogis;

     o    $17.2  million due to a third party;  due May 31, 2005;  none of which
          has been guaranteed by ProLogis;

     o    $182.0 million due to a third party;  due March 1, 2009; none of which
          has been guaranteed by ProLogis; and

     o    $93.8 million due to a third party;  due August 1, 2009; none of which
          has been guaranteed by ProLogis.


(10) Liabilities include amounts due to ProLogis and loans from third parties in
     the following amounts:

     o    $1.7 million due to ProLogis;

     o    $102.0  million due to a third party;  due on March 10, 2011;  none of
          which has been guaranteed by ProLogis; and

     o    $130.6 million due to a third party; due on December 10, 2010; none of
          which has been guaranteed by ProLogis.

(11) Liabilities include amounts due to ProLogis and loans from third parties in
     the following amounts:

     o    $0.5 million due to ProLogis and

     o    $165.0  million  due to a third  party;  due on June 1, 2007;  none of
          which has been guaranteed by ProLogis.

(12) Liabilities include amounts due to ProLogis and loans from third parties in
     the following amounts:

     o    $0.1 million due to ProLogis and

     o    $150.0 million due to a third party; due on September 1, 2007; none of
          which has been guaranteed by ProLogis.

(13) Liabilities include amounts due to ProLogis and loans from third parties in
     the following amounts:

     o    $0.1 million due to ProLogis and

     o    $103.0 million due to a third party;  due on January 2, 2008;  none of
          which has been guaranteed by ProLogis.


                                       29


(14) Liabilities include amounts due to ProLogis and loans from third parties in
     the following amounts:

     o    $3.0  million  due to  ProLogis  and

     o    $120.0  million due to a third  party;  due on June 28,  2002;  all of
          which has been guaranteed by ProLogis.

(15) Liabilities include amounts due to ProLogis and loans from third parties in
     the following amounts:

     o    $2.8 million due to ProLogis;

     o    $114.1  million  (five  mortgage  issues) due to third  parties due on
          various dates ranging from July 2006 through March 2015; none of which
          has been guaranteed by ProLogis;

     o    $189.0 million due to a third party; due on May 1, 2011; none of which
          has been guaranteed by ProLogis;

     o    $87.1  million due to a third party;  due on August 14, 2002;  none of
          which has been guaranteed by ProLogis; and

     o    $242.0 million due to a third party;  due on September 15, 2002;  none
          of which has been guaranteed by ProLogis.

(16) Liabilities  include  $423.1 million due to ProLogis and $57.7 million that
     has  been  borrowed  under  ProLogis'  line of  credit  and  guaranteed  by
     ProLogis.  Additionally,  ProLogis  has  guaranteed  a 25.0  million  pound
     sterling (the  currency  equivalent  of  approximately  $35.6 million as of
     March 31,  2002) line of credit of a  subsidiary  of  Kingspark  S.A. As of
     March  31,  2002,  there  were no  borrowings  outstanding  on this line of
     credit.

(17) ProLogis  has entered  into a  subscription  agreement  to make  additional
     capital  contributions  of 46.0 million euros (the  currency  equivalent of
     approximately $40.0 million as of March 31, 2002) through September 2002.



   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 28, 2002, ProLogis paid a quarterly  distribution of $0.355 per
Common Share to shareholders of record on February 14, 2002,  respectively.  The
distribution  level for 2002 was set by ProLogis'  Board of Trustees in December
2001 at $1.42 per Common Share.  The payment of  distributions is subject to the
discretion  of the Board  and is  dependent  upon the  financial  condition  and
operating results of ProLogis and may be adjusted at the discretion of the Board
of Trustees during the year.

     As of March 31, 2002,  ProLogis had three series of  cumulative  redeemable
preferred shares of beneficial interest  outstanding.  The annual dividend rates
on ProLogis' cumulative  redeemable preferred shares are $4.27 per share (Series
C), $1.98 per share (Series D) and $2.19 per share (Series E).

     On January 31,  2002,  ProLogis  paid  quarterly  dividends  of $0.5469 per
cumulative redeemable Series E preferred share. On March 29, 2002, ProLogis paid
quarterly  dividends  of $1.0675 per  cumulative  redeemable  Series C preferred
share and $0.495 per cumulative redeemable Series D 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.

Other Commitments

     As of March  31,  2002,  ProLogis  had  letters  of  intent  or  contingent
contracts,  subject to ProLogis' final due diligence, for the acquisition of 1.5
million square feet of distribution  facilities at an estimated acquisition cost
of $39.3  million.  The  foregoing  transactions  are  subject  to a  number  of
conditions,  and  ProLogis  cannot  predict  with  certainty  that  they will be
consummated. As of March 31, 2002, ProLogis had $1.0 million of funds on deposit
with title companies that can be used to acquire these assets.  In addition,  as
of March 31, 2002,  ProLogis had facilities  under  development with an expected
cost at completion of $222.2 million of which $104.0 million was unfunded.

                                       30

     ProLogis  has  a  Common  Share  repurchase  program  under  which  it  may
repurchase  up to $100.0  million of its Common  Shares.  The Common Shares have
been and, to the extent  these  repurchases  continue,  will be purchased in the
open market and in privately negotiated transactions, depending on market prices
and  other  conditions.  As of  March  31,  2002,  778,400  Common  Shares  were
repurchased under this program at a total cost of $16.0 million.  No repurchases
occurred during the three months ended March 31, 2002.  ProLogis intends to fund
the Common Share repurchase program through borrowings on its lines of credit.

Funds from Operations

     Funds from  operations  attributable  to Common  Shares  increased  by $5.5
million to $106.2  million for the three months in 2002 from $100.7  million for
the three months in 2001.

     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
Statement of Cash Flows in ProLogis' Consolidated Condensed Financial Statements
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):


                                                             Three Months Ended
                                                                   March 31,
                                                            --------------------
                                                               2002       2001
                                                            --------  ----------
                                                                
Net earnings attributable to Common Shares................. $ 54,996  $  44,007
  Add (Deduct):
     Real estate related depreciation and amortization.....   34,502     36,377
     Loss on disposition of non-CDFS business
        segment assets.....................................      153      1,198
     Foreign currency exchange (gains) losses, net.........      339     (2,884)
     Deferred income tax expense...........................    7,701        909
     ProLogis' share of reconciling items of unconsolidated
      entities:
        Real estate related depreciation and amortization..    9,490     18,147
        Gain on disposition of non-CDFS business segment
          assets...........................................     (814)        (5)
        Foreign currency exchange (gains) losses, net......   (3,930)     8,874
        Deferred income tax expense (benefit) expense......    3,732     (5,918)
                                                            --------   --------
Funds from operations attributable to Common Shares........ $106,169   $100,705
                                                            ========   ========

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

     As of March 31,  2002,  no  significant  change had  occurred in  ProLogis'
interest  rate risk or foreign  currency  risk as discussed  in  ProLogis'  2001
Annual Report on Form 10-K, as amended.


                                       31



PART II

Item 4.  Submission of Matters to Vote of Securities Holders

    None.

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 KPMG LLP regarding unaudited financial information dated
          May 14, 2002


    (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: May 14, 2002














































                                       33






                                                                   EXHIBIT 12.1

                                 PROLOGIS TRUST
                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
                          (Dollar amounts in thousands)



                                    Three Months Ended
                                         March 31,                                    Year Ended December 31,
                                 -------------------------      ----------------------------------------------------------------
                                     2002         2001              2001         2000         1999         1998         1997
                                 -----------   -----------      -----------  -----------  -----------   -----------  -----------
                                                                                                
Net Earnings from Operations     $    72,428   $    56,469      $   126,582  $   236,221  $   161,570   $   102,936  $    38,832
Add:
     Interest Expense                 40,830        41,522          163,269      172,191      170,746        77,650       52,704
                                 -----------   -----------      -----------  -----------  -----------   -----------  -----------

Earnings as Adjusted             $   113,258   $    97,991      $   289,851  $   408,412  $   332,316   $   180,586  $    91,536
                                 ===========   ===========      ===========  ===========  ===========   ===========  ===========

Fixed Charges:
     Interest Expense            $    40,830   $    41,522      $   163,269  $   172,191  $   170,746   $    77,650  $    52,704
     Capitalized Interest              5,489         5,904           24,276       18,549       15,980        19,173       18,365
                                 -----------   -----------      -----------  -----------  -----------   -----------  -----------

         Total Fixed Charges     $    46,319   $    47,426      $   187,545  $   190,740  $   186,726   $    96,823  $    71,069
                                 ===========   ===========      ===========  ===========  ===========   ===========  ===========

Ratio of Earnings, as Adjusted
     to Fixed Charges                    2.4           2.1              1.5          2.1          1.8           1.9          1.3
                                 ===========   ===========      ===========  ===========  ===========   ===========  ===========














































                                       34











                                                                   EXHIBIT 12.2

                                 PROLOGIS TRUST
           COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
                          AND PREFERRED SHARE DIVIDENDS
                          (Dollar amounts in thousands)




                                    Three Months Ended
                                         March 31,                                    Year Ended December 31,
                                 -------------------------      ----------------------------------------------------------------
                                     2002         2001              2001         2000         1999         1998         1997
                                 -----------   -----------      -----------  -----------  -----------   -----------  -----------
                                                                                                
Net Earnings from Operations     $    72,428   $    56,469      $   126,582  $   236,221  $   161,570   $   102,936  $    38,832
Add:
     Interest Expense                 40,830        41,522          163,269      172,191      170,746        77,650       52,704
                                 -----------   -----------      -----------  -----------  -----------   -----------  -----------

Earnings as Adjusted             $   113,258   $    97,991      $   289,851  $   408,412  $   332,316   $   180,586  $    91,536
                                 ===========   ===========      ===========  ===========  ===========   ===========  ===========

Combined Fixed Charges and
   Preferred Share Dividends:
     Interest Expense            $    40,830   $    41,522      $   163,269  $   172,191  $   170,746   $    77,650  $    52,704
     Capitalized Interest              5,489         5,904           24,276       18,549       15,980        19,173       18,365
                                 -----------   -----------      -----------  -----------  -----------   -----------  -----------

         Total Fixed Charges          46,319        47,426          187,545      190,740      186,726        96,823       71,069
     Preferred Share Dividends         8,179        11,432           37,309       56,763       56,835        49,098       35,318
                                 -----------   -----------      -----------  -----------  -----------   -----------  -----------

Combined Fixed Charges and
  Preferred Share Dividends      $    54,498   $    58,858      $   224,854  $   247,503  $   243,561   $   145,921  $   106,387
                                 ===========   ===========      ===========  ===========  ===========   ===========  ===========

Ratio of Earnings, as Adjusted
  to Combined Fixed Charges
  and Preferred Share Dividends          2.1           1.7              1.3          1.7          1.4           1.2          (a)
                                 ===========   ===========      ===========  ===========  ===========   ===========  ===========




(a)  Due to a one-time, non-recurring, non-cash charge of $75.4 million relating
     to the costs incurred in acquiring the management  companies from a related
     party,  earnings  were  insufficient  to cover  combined  fixed charges and
     preferred  share  dividends  for the year ended  December 31, 1997 by $14.9
     million.
































                                       35





                                                                   EXHIBIT 15.1




May 14, 2002






Board of Trustees and Shareholders of ProLogis Trust
Denver, Colorado

Re:  Registration  Statement  Nos.  33-91366,  33-92490,  333-31421,  333-38515,
     333-26597,   333-74917,   333-75893,   333-79813,   333-69001,   333-86081,
     333-46700,   333-46698,   333-43546,   333-43544,   333-36578,   333-04961,
     333-60374, 333-63992, 333-70274, 333-95737, 333-75722 and 333-88150.

With  respect  to  the  subject  registration  statements,  we  acknowledge  our
awareness  of the use therein of our report dated May 1, 2002 (except as to Note
11,  which is as of May 14,  2002)  related to our  review of interim  financial
information.

Pursuant to Rule 436 under the Securities Act of 1933 (the Act),  such report is
not  considered  part of a  registration  statement  prepared or certified by an
accountant,  or a report  prepared  or  certified  by an  accountant  within the
meaning of Sections 7 and 11 of the Act.


                                                KPMG LLP





San Diego, California









































                                       36