ProLogis' three business segments provide diverse revenue streams. Our property operations segment comprises wholly owned distribution and retail properties. While we do not expect to significantly grow this property base due to our contribution of properties into ProLogis funds, we do anticipate future growth in this segment driven by rental rate increases and stable occupancies supported by balanced supply and demand of leasable space.

We grew our investment management business during the year by more than 50%, to $19 billion of assets under management. Institutional investor demand for ProLogis property funds was strong in 2007, as our equity partners obtain access to our pipeline of newly built, well-leased assets and benefit from both professional management and our ability to leverage global customer relationships. ProLogis benefits by expanding with less overall capital invested - generally retaining 20% to 25% ownership in each fund - allowing us to earn management fees and our share of fund FFO while achieving higher returns on our invested capital. Our global network of experienced investment management professionals tapped new and existing private equity capital partners to form three new property funds and reposition a fourth fund during 2007, securing commitments that will allow us to grow assets under management to more than $33 billion.

Through Catellus Development Group and our retail joint ventures in Europe and China, we are expanding into development of retail centers. Our strong relationships with major customers, such as Best Buy, Home Depot and Wal-Mart, create opportunities to develop stores as well as warehouses.

In 2007, we realized some of the value created in our funds by purchasing the public shares of Macquarie ProLogis Trust, previously traded in Australia, and contributing those assets to the repositioned fund. Going forward, many of our recently formed funds have provisions for periodic performance measurement, thereby helping to create a potential stream of recurring property fund-related gains.

Our development, or CDFS, business also had a record year, starting roughly $4.1 billion of new construction. Our local expertise allows us to closely monitor market conditions in real time and shift capital to those regions with better fundamentals. In more mature global markets, such as the United States, new construction supply and demand remain well balanced, while in emerging markets, such as China, the lack of modern space supports strong growth.

A new area of focus is retail and mixed-use development for which our share of investment in new projects was about $170 million in 2007. Our Catellus Development Group has a specialized focus on redevelopment of former airports, military bases and factories. Also included in this amount is our share of the investment in retail centers being developed by SZITIC-CP, our joint venture partner in China, and new retail and mixed-use projects under development by Parkridge, our partner in Europe.