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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of August, 1999.
SECURITY CAPITAL U.S. REALTY
- --------------------------------------------------------------------------------
(Translation of Registrant's Name Into English)
25b, boulevard Royal, L-2449, Luxembourg
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(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F X Form 40-F
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(Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.)
Yes___________________ No_______X_______
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-_____.)
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<PAGE>
Security Capital is filing the following material as an exhibit to
this Form 6-K. Each exhibit is incorporated by reference herein.
Exhibits.
99.1 Additional financial information for the period
ended 30 June 1999.
99.2 Press Release dated 9 August 1999 announcing second
quarter earnings.
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
SECURITY CAPITAL U.S. REALTY
Dated: August 12, 1999 By: /s/ Jeffrey A. Cozad
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Jeffrey A. Cozad
Managing Director
<PAGE>
EXHIBIT 99.1
ADDITIONAL FINANCIAL INFORMATION
The following interim financial information for the quarter ended
30 June 1999 is being provided because we have otherwise made public
information relating to revenues and income that is more current than the
information contained in our audited financial statements.
As you are aware, we account for our investments at fair value in
accordance with the U.S. specialised industry accounting rules prescribed by
the American Institute of Certified Public Accountants (AICPA) Audit and
Accounting Guide for Investment Companies. Under fair value accounting,
unrealised gains or losses are determined by comparing the fair value of the
securities held to the cost of those securities. Unrealised gains or losses
relating to changes in fair value of our investments are reported as a
component of net earnings. Deferred income taxes, if any, are recorded at the
applicable statutory rate as the estimate of taxes payable as if the gains were
realised. Under current tax laws, and in light of our operating methods and
plans, our investment gains generally are not subject to income taxes.
For more detail on fair value accounting, please read Note 2 of
our Consolidated Financial Statements at 31 December 1998.
<PAGE>
SECURITY CAPITAL U. S. REALTY
CONSOLIDATED STATEMENTS OF NET ASSETS
At 30 June 1999
(in thousands U. S. $ except per share amounts)
Unaudited
June 30,
1999
--------
ASSETS
Strategic investment positions at value:
CarrAmerica (Cost $699,902)................................ $ 715,085
City Center Retail (Cost $304,113)......................... 304,113
CWS Communities (Cost $224,488)............................ 224,488
Advance - CWS Communities.................................. 24,000
Regency (Cost $759,806).................................... 751,869
Storage USA (Cost $394,360)................................ 375,030
Urban Growth Property (Cost $181,082)...................... 181,082
Special opportunity positions at value:
Security Capital Group Incorporated (Cost $165,000)........ 120,307
Other special opportunity positions (Cost $233,235)........ 191,996
---------
Total investments................................................... $2,887,970
Cash and cash equivalents........................................... 4,050
Accounts receivable and other....................................... 18,322
TOTAL ASSETS........................................................ $2,910,342
LIABILITIES
Accounts payable and accrued expenses............................... $ 69,887
Taxes payable....................................................... 2,780
Line of credit...................................................... 294,000
Convertible notes................................................... 377,932
TOTAL LIABILITIES................................................... $ 744,599
TOTAL NET ASSETS (SHAREHOLDERS' EQUITY)............................. $2,165,743
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Authorised 250,000,000 shares of $4.00 par value, 86,561,872 shares
issued, 80,531,617 shares outstanding, at 30 June 1999..... $ 346,247
Share premium account(1)............................................ 1,631,203
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PAID-IN CAPITAL..................................................... $1,977,450
Legal reserve....................................................... $ 30,375
Reserve for own shares(1)........................................... 117,955
Undistributed net operating income.................................. $ 176,882
Accumulated net realised gain....................................... 79,051
Unrealised (depreciation)/appreciation on strategic
investment and special opportunity positions...................... (98,015
Acquisition of own shares (1)....................................... (117,955
SHAREHOLDERS' EQUITY................................................ $2,165,743
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Net Asset Value per share........................................... $ 26.89
(1) 6,030,255 shares have been repurchased under the share repurchase
programme.
The Net Asset Value per share has been calculated on 80,531,617 shares.
<PAGE>
SECURITY CAPITAL U.S. REALTY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the six months ended 30 June 1999 and 1998
(in thousands U.S. $ except per share amounts)
Unaudited
1999 1998
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REVENUES
Gross dividends from strategic investment positions:
CarrAmerica...................................... $ 26,458 $ 25,541
CWS Communities.................................. 3,148 1,622
Pacific Retail................................... 5,163 18,089
Regency.......................................... 21,157 9,930
Storage USA...................................... 15,766 14,874
Urban Growth Property............................ 213 --
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$ 71,905 $ 70,056
Gross dividends from special opportunity
positions:.......................................... 6,311 9,602
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$ 78,216 $ 79,658
Interest income from affiliate...................... 1,788 1,788
Interest income from non-affiliate and other income. 1,566 579
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TOTAL GROSS REVENUES................................ $ 81,570 $ 82,025
Withholding tax on dividends received............ (9,270) (8,700)
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TOTAL REVENUES...................................... 72,300 73,325
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EXPENSES
Operating advisor fees.............................. $ 16,713 $ 17,658
Custodian fees...................................... 236 237
Directors fees...................................... 60 62
Professional expenses............................... 629 164
Administrative expenses............................. 703 225
Amortisation of convertible notes deferred costs.... 789 171
Amortisation of formation expenses.................. -- --
Formation expenses.................................. -- --
Taxes............................................... 2,089 1,248
Line of credit arrangement and commitment fees...... 95 1,059
Interest on line of credit.......................... 8,639 8,758
Interest on convertible notes....................... 13,617 2,636
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TOTAL EXPENSES...................................... $ 43,570 $ 32,218
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NET OPERATING INCOME................................ $ 28,730 $ 41,107
NET REALISED AND UNREALISED (LOSS)/GAIN ON STRATEGIC
INVESTMENT AND SPECIAL OPPORTUNITY POSITIONS
Net realised gain on special opportunity positions.. $ 1,620 $ 30,562
Net increase/(decrease) in appreciation on strategic
investment and special opportunity positions........ 26,963 (212,905
NET GAIN/(LOSS) ON STRATEGIC INVESTMENT AND SPECIAL
OPPORTUNITY POSITIONS............................... $ 28,583 $(182,343
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INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS.......................................... $ 57,313 $(141,236
========= =========
<PAGE>
SECURITY CAPITAL U.S. REALTY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended 30 June 1999
and 1998 (in thousands U.S. $ except per
share amounts)
Unaudited
1999 1998
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Operating Activities:
Increase/(Decrease) in net assets resulting from
operations........................................ $ 57,313 $ (141,236)
Adjustments to reconcile (decrease)/increase in
net assets resulting from operations to net cash
provided by operating activities:
Movement in unrealised gain................... (26,963) 212,905
Movement in accretion on convertible notes.... 7,992 1,662
Movement in convertible notes deferred costs.. 789 171
Changes in operating assets and liabilities:
Accounts receivable and other............... 4,879 (7,587)
Interest receivable from affiliate.......... -- --
Accounts payable and accrued expenses....... 62,109 2,279
Operating advisor fees payable.............. (5,718) 1,750
Taxes payable............................... 1,475 425
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Net cash provided by operating activities... $ 101,876 $ 70,369
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Investing Activities:
Fundings in strategic investment positions:
CarrAmerica.................................... $ (51) $ (63,455)
City Center Retail............................. (78) (110,965)
CWS Communities................................ (70,926) (42,575)
Advance - CWS Communities...................... (24,000) --
Pacific Retail................................. 524,038 (11)
Regency........................................ (524,056) (9,757)
Storage USA.................................... (88) (41,434)
Urban Growth Property.......................... -- (88,009)
Fundings in Security Capital Group -- --
Fundings in other special opportunity
positions, net................................. 80,796 (120,143)
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Net cash used in investing activities $ (14,365) $ (476,349)
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Financing Activities:
Net proceeds from shares offering................ $ -- $ --
Net proceeds from convertible notes offering..... -- 352,666
Offering expenses charged against the share
premium account.................................. -- (1,081)
Acquisition of own shares........................ (117,955)
Drawdowns from line of credit.................... 31,500 260,500
Repayment of line of credit...................... -- (207,500)
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Net cash provided by financing activities $ (86,455) $ 404,585
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Net increase/(decrease) in cash and cash
equivalents....................................... $ 1,056 $ (1,395)
Cash and cash equivalents, beginning of the period 2,994 1,970
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Cash and cash equivalents, end of the period...... $ 4,050 $ 575
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Supplemental disclosure of cash flow information:
Tax paid......................................... $ 2,619 $ 823
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Interest paid on borrowings....................... $ 14,264 $ 8,083
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EXHIBIT 99.2
News Release For more information, contact:
- ------------ Mr. W. Scott Hartman
+352 46 37 56-1
U.S. callers dial 011 352 46 37 56-1
SC-U.S. REALTY REPORTS RESULTS FOR SECOND QUARTER 1999
Company Achieves Listing of ADRs on NYSE, Expands Share Repurchase Programme
(9 August 1999) - SC-U.S. Realty (NYSE: RTY) (Amsterdam AEX Stock Exchange
ISIN-Code: LU0060100673) reported EBDADT (earnings before depreciation,
amortisation and deferred taxes) of $0.46 per share for the quarter ended 30
June 1999, compared to $0.53 per share for the second quarter of 1998. The
primary reason for the lower per-share EBDADT was the decline in realised gains
from the company's special opportunity investments (SOI). Per-share EBDADT
excluding net realised gains or losses was $0.45 for the second quarter of 1999,
an increase of 21.6% compared to $0.37 for the same period last year.
SC-U.S. Realty's per-share EBDADT for the six months ended 30 June 1999 was
$0.89, compared to $1.07 per share for the same period in 1998. Per-share
EBDADT excluding net realised gains or losses for the first six months of
1999 was $0.87, an increase of 20.8% over per-share EBDADT excluding net
realised gains or losses of $0.72 for the same period in 1998.
Total EBDADT for the second quarter was $39.3 million, compared to total
EBDADT of $45.6 million in the second quarter of 1998. Total EBDADT
excluding net realised gains or losses was $38.3 million for the second
quarter, an increase of 18.9% compared to $32.2 million for the same period
in 1998. Net asset value (NAV) was $26.89 per share at 30 June 1999.
Jeffrey A. Cozad, managing director, said, "We accomplished several key
objectives during the second quarter, including listing the company's ADRs
on the New York Stock Exchange, which significantly broadens the company's
base of potential investors. Additionally, the Board approved a share
repurchase programme to invest up to $200 million in our own stock." As of
30 June 1999, SC-U.S. Realty had repurchased 6,030,255 shares for an
aggregate cost of $117,955,550, representing approximately 7.0% of the
company's shares outstanding. Mr. Cozad noted that SC-U.S. Realty's stock
is currently trading at a 25-30% discount to NAV, presenting an attractive
investment opportunity given its excellent asset base, double-digit
earnings growth rate, growing cash flow and investment-grade balance sheet.
According to Mr. Cozad, these initiatives are expected to contribute
significantly to the development of meaningful, long-term shareholder
value.
Strategic Investments Update
SC-U.S. Realty's six strategic investments remain the primary contributors
to the company's EBDADT excluding net realised gains or losses. The three
public strategic investees - CarrAmerica (NYSE: CRE), Regency (NYSE: REG)
and Storage USA (NYSE: SUS) - contributed 80.4% of the EBDADT from
strategic investments during the second quarter.
The company's three private strategic investees - City Center Retail, CWS
Communities and Urban Growth Property - contributed 19.6% of the EBDADT
from strategic investments during the second quarter of 1999, compared to
6.0% in the second quarter of 1998. During the first six months of 1999,
the private strategic investees raised approximately $90 million of debt
capital at an average interest cost of 7.15%. These companies are still
conservatively leveraged with an average total debt to total book
capitalisation ratio of 20.1% and an average fixed- charge coverage ratio
of 4.9x. "It is important for shareholders to recognise that these
companies are growing, raising attractively priced capital and are not
exclusively dependent on SC-U.S. Realty's capital to pursue their
respective long-term business strategies," added Mr. Cozad.
Special Opportunity Investments (SOI) Portfolio
SC-U.S. Realty had 6.6% of its assets, at fair value, invested in SOI at 30
June 1999, compared with 13.0% at 30 June 1998. At 31 March 1999, there
were $66.3 million in unrealised losses in the SOI portfolio. W. Scott
Hartman, newly appointed senior vice president and chief financial officer,
noted that unrealised losses in SOI declined during the second quarter to
$41.2 million, a 37.9% improvement. According to Mr. Hartman, SC-U.S.
Realty may realise losses during 1999 as some or all of these investments
are sold and capital is redeployed into higher yielding initiatives, such
as the company's share repurchase programme. "Ultimately, the company
expects to have 0-5% of its capital allocated to SOI," said Mr. Hartman.
SC-U.S. Realty is a research-driven, growth-orientated real estate company
focused on taking significant strategic investment positions in value-added
real estate operating companies based in the United States. SC-U.S.
Realty's strategic investments as of 30 June 1999 included ownership
positions and commitments to six U.S. real estate operating companies with
a combined market capitalisation of approximately $8.8 billion.
The full supplemental financial information for the second quarter is
available on the company's web site at http://www.sc-usrealty.com.
SC-U.S. Realty will conduct a conference call to discuss the second quarter
1999 results on Tuesday, 10 August 1999, at 3:00 p.m. GMT, 10:00 a.m. EDT.
The conference call number for non-U.S. callers is +1-612-332-1210 and for
U.S. callers is 1-800-288-8976.
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All monetary figures are expressed in United States currency.
In addition to historical information, this press release contains
forward-looking statements. These statements are based on current
expectations, estimates and projections about the industry and markets in
which Security Capital U.S. Realty operates, management's beliefs and
assumptions made by management. Forward-looking statements are not
guarantees of future performance and involve certain risks and
uncertainties that are difficult to predict. Actual operating results may
be affected by changes in international, national or local economic conditions,
competitive market conditions, and conditions in the securities markets and
therefore may differ materially from what is expressed or forecasted in this
press release.
