12.

Noncontrolling Interests

Prologis, L.P.

We report noncontrolling interests related to several entities we consolidate but of which we do not own 100% of the common equity. These entities include two real estate partnerships that have issued limited partnership units to third parties. Depending on the specific partnership agreements, these limited partnership units are exchangeable into shares of the Parent’s common stock (or cash), generally at a rate of one share of common stock to one unit. We evaluated the noncontrolling interests with redemption provisions that permit the issuer to settle in either cash or common stock at the option of the issuer to determine whether temporary or permanent equity classification on the balance sheet is appropriate, including the requirement to settle in unregistered shares, and determined that these units meet the requirements to qualify for presentation as permanent equity. We also consolidate several entities in which we do not own 100% of the equity and the units of the entity are not exchangeable into our common stock.

As discussed in Note 3, we began consolidating the co-investment venture NAIF in October 2014.

In the first quarter of 2014, we formed a new U.S. co-investment venture, Prologis U.S. Logistics Venture, in which we hold a 55% equity ownership interest and have one partner. The venture is consolidated due to the structure and voting rights of the venture. At closing, the venture acquired from us a portfolio of 66 operating properties aggregating 12.8 million square feet for an aggregate purchase price of $1.0 billion.

In the second quarter of 2013, we acquired our partners’ interest in Prologis Institutional Alliance Fund II (“Fund II”), a consolidated co-investment venture. In connection with this transaction, we paid $245.8 million and issued approximately 805,000 limited partnership units worth $31.3 million in one of our limited partnerships based primarily on appraised values of the properties. These units are exchangeable into cash or an equal number of shares of our common stock, at our option.

In the second quarter of 2013, we earned a promote from Fund II, of $18.8 million from the fund, which was based on the venture’s cumulative returns of the investors over the life of the venture. Of that amount, $13.5 million represented the third-party investors’ portion and is reflected as a component of Noncontrolling Interest in the Consolidated Statements of Operations.

Prologis, Inc.

The noncontrolling interest of the Parent includes the noncontrolling interests presented in the Operating Partnership, as well as the common limited partnership units in the Operating Partnership that are not owned by the Parent.

During 2013, net earnings attributable to noncontrolling interests was $10.1 million, of which $0.5 million was a loss from continuing operations and $10.6 million was income from discontinued operations. Amounts allocated to discontinued operations for 2012 were not considered significant.

The following is a summary of the noncontrolling interest and the consolidated entity’s total investment in real estate and debt at December 31 (dollars and units in thousands):


	Our Ownership Percentage				Noncontrolling Interest				Total Investment In Real Estate				Debt
	2014		2013		2014		2013		2014		2013		2014		2013
Partnerships with exchangeable units (1)		various		various	$	70,716	$	75,532	$	711,310	$	783,052	$	-	$	-
Prologis North American Industrial Fund		66.1%		N/A		544,718		-		2,771,299		-		1,188,836		-
Prologis U.S. Logistics Venture		55.0%		N/A		427,307		-		1,006,183		-		-		-
Brazil Fund (2)		50.0%		50.0%		68,533		65,006		-		-		-		-
Mexico Fondo Logistico (AFORES) (3)		20.0%		20.0%		17,122		220,292		-		457,006		-		191,866
Other consolidated entities		various		various		31,505		56,256		307,686		370,933		18,269		48,126

Prologis, L.P. noncontrolling interests						1,159,901		417,086		4,796,478		1,610,991		1,207,105		239,992
Limited partners in Prologis, L.P. (4)						48,189		48,209		-		-		-		-

Prologis, Inc. noncontrolling interests					$	1,208,090	$	465,295	$	4,796,478	$	1,610,991	$	1,207,105	$	239,992

(1)

At December 31, 2014 and 2013, there were limited partnership units that were exchangeable into cash or, at our option, 1,887 and 1,949 shares, respectively, of the Parent’s common stock. In 2014, 62 limited partnership units were redeemed for cash of $2.5 million. All of these outstanding limited partnership units receive quarterly cash distributions equal to the quarterly dividends paid on our common stock pursuant to the terms of the applicable partnership agreements.

(2)	We have a 50% ownership interest in and consolidate the Brazil Fund. The Brazil Fund’s assets are primarily investments in unconsolidated entities of $152.0 million at December 31, 2014. For additional information on our unconsolidated investments, see Note 5.

(3)

In 2014, AFORES contributed its remaining operating properties and the balance of its secured debt to FIBRA Prologis in two separate transactions. The difference between the amount received and the noncontrolling interest balance related to the properties contributed was $34.6 million, and was adjusted through equity with no gain or loss recognized. See Notes 4 and 5 for more information on these transactions.

(4)

At December 31, 2014 and 2013, there were limited partnership units in the Operating Partnership that were exchangeable into cash or, at our option, 1,767 shares of the Parent’s common stock. In 2014, no limited partnership units were redeemed for cash or the Parent’s common stock. All of these outstanding limited partnership units receive quarterly cash distributions equal to the quarterly distributions paid on our common stock pursuant to the terms of the partnership agreement.