Financial Performance

We reported funds from operations, excluding significant non-cash items (FFO), of $1.15 per share, which after adjusting for non-recurring charges of $0.26, was in line with our expectations. Included in 2009 was $495 million of non-cash impairments, reflecting value declines in real estate and joint venture interests, offset by gains of approximately $172 million related to the successful repurchase of debt at a discount.

Despite challenging capital markets, we had an extremely active year, generating $6.0 billion of liquidity and reducing debt by more than $2.7 billion. We generated $2.9 billion from asset sales, including certain investments in Asia, and contributions to our property funds. We placed $1.4 billion of equity and closed on $1.5 billion of direct debt financings. In large part, these proceeds were used to reduce or refinance debt, while approximately $950 million was spent to complete development and invest in our property funds.

For 2010, we expect our results to reflect continued weakness in industrial market fundamentals, as well as dilution from selling properties. Leasing in our development portfolio, which we expect will reach 80 to 85 percent by year end, will drive modest improvement in the leased percentage of our total operating portfolio. This increase will be offset, however, by further decreases in net effective rents as leases turn over, resulting in modestly negative same-store net operating income.

The development leasing during 2009 will generate additional income in 2010 as customers take occupancy; however, this will be offset by reduced income related to dispositions. We plan to use proceeds from dispositions to start $700 to $800 million of primarily non-U.S. development this year. We also are focused on generating returns from our land through development and third-party sales. And, as we did throughout 2009, we will continue to maintain discipline with respect to spending.

2010 is off to a good start with less than $235 million of direct debt maturing this year. We are focused on smoothing maturities and, in March, refinanced a portion of 2011 to 2013 debt with the issuance of $1.5 billion of five-, seven- and 10-year senior notes. We are confident that with our access to the capital markets, this refinancing effort will be well in hand no later than mid-2011.

Lastly, while we believe the ability to generate FFO is important, it should not be the primary measure of our success in 2010. In this environment, generating liquidity, actively addressing debt maturities and enhancing net asset value are our highest priorities. We believe the steps we are taking today will position us to take advantage of opportunities to grow our business over the long term.

William E. Sullivan
Chief Financial Officer