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 November 1999.
SECURITY CAPITAL U.S. REALTY
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(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 ___________
(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-_____.)
<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 September 1999.
99.2 Press Release dated 8 November 1999 announcing third
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: December 15, 1999 By: /s/ Jeffrey A. Cozad
-----------------------
Jeffrey A. Cozad
Managing Director
EXHIBIT 99.1
ADDITIONAL FINANCIAL INFORMATION
The following interim financial information for the quarter ended
30 September 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.
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<TABLE>
<CAPTION>
SECURITY CAPITAL U. S. REALTY
CONSOLIDATED STATEMENTS OF NET ASSETS
At 30 September 1999
(in thousands U. S.$ except per share amounts)
Unaudited
September 30,
1999
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<S> <C>
ASSETS
Strategic investment positions at value:
CarrAmerica (Cost $699,905)...................................................................$ 627,487
City Center Retail (Cost $304,113)............................................................ 304,113
CWS Communities (Cost $236,488)............................................................... 236,488
Regency (Cost $759,807)....................................................................... 719,738
Storage USA (Cost $394,362)................................................................... 323,555
Urban Growth Property (Cost $188,582)......................................................... 188,582
Special opportunity positions at value:
Security Capital Group Incorporated (Cost $165,000)........................................... 121,862
Other special opportunity positions (Cost $203,839)........................................... 142,031
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Total investments......................................................................................$ 2,663,856
Cash and cash equivalents......................................................................... 1,394
Accounts receivable and other......................................................................... 18,258
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TOTAL ASSETS...........................................................................................$ 2,683,508
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LIABILITIES
Accounts payable and accrued expenses..................................................................$ 8,896
Taxes payable........................................................................................ 3,670
Line of credit........................................................................................ 337,500
Convertible notes..................................................................................... 382,089
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TOTAL LIABILITIES..................................................................................... $ 732,155
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TOTAL NET ASSETS (SHAREHOLDERS' EQUITY)................................................................$ 1,951,353
============
Authorised 250,000,000 shares of $4.00 par value, 86,561,872 shares
issued, 78,116,061 shares outstanding, at 30 September 1999...................................$ 346,247
Share premium account(1)............................................................................... 1,586,801
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PAID-IN CAPITAL........................................................................................$ 1,933,048
Legal reserve..........................................................................................$ 30,375
Reserve for own shares(1).............................................................................. 162,357
Undistributed net operating income.....................................................................$ 197,321
Accumulated net realised gain......................................................................... 78,852
Unrealised (depreciation)/appreciation on strategic investment and special opportunity positions...... (288,243)
Acquisition of own shares (1).......................................................................... (162,357)
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SHAREHOLDERS' EQUITY ..................................................................................$ 1,951,353
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Net Asset Value per share..............................................................................$ 24.98
(1) 8,445,811 shares have been repurchased under the share repurchase
programme. The Net Asset Value per share has been calculated on
78,116,061 shares outstanding.
<PAGE>
<CAPTION>
SECURITY CAPITAL U.S. REALTY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the nine months ended 30 September 1999 and 1998
(in thousands U.S.$ except per share amounts)
Unaudited
1999 1998
---- ----
<S> <C> <C>
REVENUES
Gross dividends from strategic investment positions:
CarrAmerica............................................................... $ 39,687 $ 38,770
CWS Communities........................................................... 5,579 3,568
Regency................................................................... 42,086 42,221
Storage USA............................................................... 23,649 22,405
Urban Growth Property..................................................... 7,262 --
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$ 118,263 $ 106,964
Gross dividends from special opportunity positions:.......................... 8,176 14,515
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$ 126,439 $ 121,479
Interest income from affiliate............................................... 2,681 2,681
Interest income from non-affiliate and other income.......................... 3,160 847
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TOTAL GROSS REVENUES......................................................... $ 132,280 $ 125,007
Withholding tax on dividends received..................................... (16,503) (8,431)
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TOTAL REVENUES............................................................... 115,777 116,576
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EXPENSES
Operating advisor fees ...................................................... $ 24,996 $ 26,606
Custodian fees............................................................... 361 350
Directors fees............................................................... 92 77
Director Share Option Equivalents............................................ (235) 426
Professional expenses........................................................ 731 1,992
Administrative expenses...................................................... 1,261 743
Amortisation of convertible notes deferred costs............................. 1,192 574
Taxes........................................................................ 3,122 1,845
Line of credit arrangement and commitment fees............................... 153 2,088
Interest on line of credit................................................... 14,555 13,367
Interest on convertible notes................................................ 20,380 8,856
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TOTAL EXPENSES............................................................... $ 66,608 $ 56,924
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NET OPERATING INCOME......................................................... $ 49,169 $ 59,652
NET REALISED AND UNREALISED GAIN/(LOSS) ON STRATEGIC
INVESTMENT AND SPECIAL OPPORTUNITY POSITIONS
Net realised gain on special opportunity positions........................... $ 1,421 $ 32,763
Net increase/(decrease) in appreciation on strategic investment and special
opportunity positions........................................................ (163,265) (601,047)
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NET GAIN/(LOSS) ON STRATEGIC INVESTMENT AND SPECIAL
OPPORTUNITY POSITIONS..................................................... $ (161,844) $ (568,284)
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INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM $ (112,675) $ (508,632)
OPERATIONS................................................................ ============== ===========
<PAGE>
<CAPTION>
SECURITY CAPITAL U.S. REALTY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended 30 September 1999 and 1998
(in thousands U.S.$ except per share amounts)
Unaudited
1999 1998
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<S> <C> <C>
Operating Activities:
Increase(Decrease) in net assets resulting from operations............... $ (112,675) $(508,632)
Adjustments to reconcile (decrease)/increase in net assets resulting
from operations to net cash provided by operating activities:
Movement in unrealised gain.......................................... 163,265 601,047
Movement in accretion on convertible notes........................... 12,149 5,581
Movement in convertible notes deferred costs......................... 1,192 574
Changes in operating assets and liabilities:
Accounts receivable and other...................................... 5,433 (11,405)
Interest receivable from affiliate................................. (894) (894)
Accounts payable and accrued expenses.............................. 1,318 10,181
Operating advisor fees payable..................................... (5,919) 1,704
Taxes payable...................................................... 2,364 42
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Net cash provided by operating activities........................ $ 66,233 $ 98,198
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Investing Activities:
Fundings in strategic investment positions:
CarrAmerica............................................................ $ (54) $ (63,455)
City Center Retail..................................................... (78) (207,651)
CWS Communities........................................................ (89,925) (47,456)
Pacific Retail......................................................... -- (167)
Regency................................................................ (21) (9,791)
Storage USA............................................................ (90) (45,811)
Urban Growth Property.................................................. (7,500) (125,499)
Fundings in Security Capital Group....................................... -- --
Fundings in other special opportunity positions, net..................... 110,192 (130,660)
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Net cash provided by/(used in) investing activities................ $ 19,524 $(630,491)
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Financing Activities:
Net proceeds from shares offering........................................ $ -- $ --
Net proceeds from convertible notes offering............................. -- 352,667
Transfer of net profit to the Legal Reserve.............................. -- 3,071
Offering expenses charged against the share premium account.............. -- (4,116)
Acquisition of own shares................................................ (162,357) 386,500
Net drawdowns/(repayments) from line of credit........................... 75,000 (207,500)
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Net cash (used in)/provided by financing activities $ (86,455) $530,622
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Net increase/(decrease) in cash and cash equivalents........................ $ (1,600) $ (1,671)
Cash and cash equivalents, beginning of the period.......................... 2,994 1,970
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Cash and cash equivalents, end of the period................................ $ 1,394 $ 299
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Supplemental disclosure of cash flow information:
Tax paid................................................................. $ 619 $ 823
=========== ============
Interest paid on borrowings.............................................. $ 14,264 $ 8,083
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</TABLE>
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 THIRD QUARTER 1999
$200 Million Share Repurchase Programme 81.2% Complete
(8 November 1999) - SC-U.S. Realty (NYSE: RTY) (Amsterdam AEX Stock
Exchange ISIN-Code: LU0060100673) reported EBDADT (earnings before
depreciation, amortisation and deferred taxes) of $0.47 per share for the
quarter ended 30 September 1999, compared to $0.44 per share for the third
quarter of 1998. Per-share EBDADT excluding net realised gains or losses
from special opportunity investments (SOI) was $0.47 for the third quarter
of 1999, an increase of 14.6% compared to $0.41 for the same period last
year.
SC-U.S. Realty's per-share EBDADT for the nine months ended 30
September 1999 was $1.36, compared to $1.51 per share for the same period
in 1998. The primary reason for the lower per-share EBDADT was the decline
in realised gains from the company's SOI portfolio. Per-share EBDADT
excluding net realised gains or losses for the first nine months of 1999
was $1.34, an increase of 18.6% over per-share EBDADT excluding net
realised gains or losses of $1.13 for the same period in 1998. Net asset
value (NAV) was $24.98 per share at 30 September 1999.
"On 29 June we announced Board approval to expand SC-U.S. Realty's
share repurchase programme to invest up to $200 million in our own stock,"
said Jeffrey A. Cozad, managing director. "We made significant progress in
executing this programme during the third quarter and are committed to
prudently and successfully completing it," he said. As of 30 September
1999, SC-U.S. Realty had repurchased 8,445,811 shares for an aggregate cost
of $162.4 million, representing approximately 9.8% of the company's shares
outstanding when the programme was initiated. "The highest total rate of
return investment opportunity we have today is share repurchase, and upon
completion of the current $200 million programme we will have created
significant shareholder value," said Mr. Cozad. He noted that SC-U.S.
Realty has a strong asset base, an attractive long-term per-share EBDADT
growth rate, an investment-grade balance sheet and growing free cash flow.
"Given that the stock is currently trading at a 40+% discount to NAV, this
presents an extremely compelling investment opportunity," he said.
The third quarter was the first full quarter in which the company's
ADRs traded on the New York Stock Exchange (NYSE). Since 24 June, when the
listing took place, the percentage of trading volume in ADRs compared to
shares increased steadily - from 6.5% in July to 43% during the month of
September. In addition, the average daily trading volume for ADRs on the
NYSE increased from 3,586 ADRs in July to 105,808 ADRs in September. As of
30 September 1999, approximately 43% of the company's free float had been
converted to ADRs.
Strategic Investments Update
SC-U.S. Realty's six strategic investments remain the primary
contributors to the company's EBDADT. 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 third quarter.
<PAGE>
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 third quarter of 1999,
compared to 11.3% in the third quarter of 1998. The contribution to EBDADT
from the private companies was lower than anticipated due to a slower rate
of capital deployment into these entities by SC-U.S. Realty, Mr. Cozad
commented. "Our current capital allocation priority is share repurchase,
however, it is important to note that our private strategic investees have
successfully tapped the private debt markets for capital to execute their
long-term strategies," he said. During the first nine months of 1999, the
private strategic investees raised approximately $185.8 million of debt
capital at an average annual interest cost of 7.5%. These companies have an
average total debt to total book capitalisation ratio of 24.8% and an
average fixed-charge coverage ratio of 4.8x. "The three private investees
remain conservatively leveraged, are growing and raising attractively
priced capital and are not exclusively dependent on SC-U.S. Realty's equity
investment to pursue their respective long-term business strategies," Mr.
Cozad said.
Special Opportunity Investments (SOI) Portfolio
SC-U.S. Realty had 5.3% of its assets, at fair value, invested in
SOI at 30 September 1999, compared with 12.5% at 30 September 1998. "We
continue to be proactive in decreasing the percentage of publicly traded
positions in our SOI portfolio," said W. Scott Hartman, senior vice
president and chief financial officer. During the quarter, a net loss of
$199,000 was realised in SOI; total unrealised losses in SOI increased to
$61.8 million at 30 September from $41.2 million at 30 June. These losses
are largely attributable to the poor performance of the entire U.S. public
real estate sector. According to Mr. Hartman, SC-U.S. Realty expects to
realise additional losses in the near term as some or all of these
investments are sold and capital is redeployed into higher yielding
initiatives, primarily the company's share repurchase programme. "The total
return potential of an investment in our own stock is significantly higher
than that afforded us by remaining invested in the publicly traded SOI
positions today," he said.
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 September 1999 included
ownership positions and commitments to six U.S. real estate operating
companies with a combined market capitalisation of approximately $8.4
billion.
The full supplemental financial information for the third quarter
is available on the company's web site at http://www.sc-usrealty.com.
###
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.
