SCHEDULE 14A
(RULE 14A-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, for
Use of the Commission
Only (as permitted by
Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|X| Soliciting Material Pursuant to Rule 14a-12
Security Capital U.S. Realty
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(Name of Registrant as Specified In Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials:
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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On September 28, 2000, Security Capital U.S. Realty, an entity formed under
the laws of Luxembourg as a Societe d'Investissement a Capital Fixe, made
available the following information on its website, www.sc-usrealty.com.:
NEWS RELEASE
------------
Contact:
Security Capital Group:
William R. (Todd) Fowler
(800) 988-4304
SC-U.S. Realty:
Laura Hamilton
+352 46 37 56 2008
U.S. callers dial 011 352 46 37 56 2008
SECURITY CAPITAL GROUP AND SC-U.S. REALTY REACH AGREEMENT
TO COMBINE COMPANIES
(September 26, 2000) - Security Capital Group Incorporated (NYSE: SCZ) and
SC-U.S. Realty (NYSE: RTY) (Amsterdam AEX Stock Exchange ISIN-Code:
LU0060100673) announced today that they have entered into a definitive agreement
to combine the two businesses. Under the terms of the agreement, shareholders of
SC-U.S. Realty will receive 1.15 shares of SCZ Class B common stock for each
share of outstanding RTY stock, and Security Capital will acquire the assets and
assume or provide the necessary funds to satisfy the liabilities of SC-U.S.
Realty. The number of shares of SCZ stock to be received in respect of each of
RTY stock represents an 8.5% premium over the relative average trading prices of
the two stocks for the past 30 days. The agreement was unanimously approved by
the Board of Directors of SC-U.S. Realty, based upon review, approval and
unanimous recommendation by a special committee of the SC-U.S. Realty Board
consisting of three of its independent directors, and unanimously approved by
the Board of Directors of Security Capital. The total value of the transaction
is approximately $1.4 billion, excluding the value of the SC-U.S. Realty shares
owned by Security Capital.
Additionally, Security Capital's Board increased its previously announced $100
million stock buyback program to a total of $450 million, with the increase to
be implemented after closing of the transaction. The authorized increase
includes up to $200 million that will be available to dissenting SC-U.S. Realty
shareholders that elect to receive cash in lieu of SCZ stock in the transaction.
Security Capital will not be obligated to proceed with the transaction should
shareholder elections require cash payments in excess of $200 million. In light
of Luxembourg legal requirements, the transaction will be structured in two
steps. Security Capital will exchange its stock and cash for assets of SC-U.S.
Realty, followed by the repayment of SC-U.S. Realty's line of credit and
satisfaction and discharge of its convertible debentures. Shortly after the
exchange, SC-U.S. Realty shareholders will receive a distribution of SCZ stock
or cash.
The two companies believe that the transaction should provide important benefits
for both groups of shareholders. The transaction would eliminate the complex
structural relationship that exists between the two companies and remove a tier
of discount and unrealized value currently reflected in the stock prices of
each. Further, the combined company is expected to have
<PAGE>
increased financial and operational flexibility and provide shareholders with
enhanced liquidity. The transaction is also expected to enhance opportunities to
improve shareholder value through substantial additional stock repurchases or
future transactions that monetize or consolidate existing businesses.
As a consequence of the transaction, Security Capital is expected to receive
increased annual dividends and interest of $154.5 million after the cancellation
of the management agreement with SC-U.S. Realty. In addition, approximately $8
million of operating expenses will be permanently eliminated. On a pro forma
basis as of June 30, 2000, Security Capital's reported net asset value increases
by 12.7% and cash flow from operations for the trailing four quarters increases
by 22.4% to $1.04 per share. Total pro forma cash flow from operations for the
same period increases 67.2% to $155.5 million. After the transaction, the pro
forma fixed charge coverage ratio per Security Capital's line of credit is
2.68x, with a leverage ratio of 29.1%. This pro forma financial information is
based on only the $200 million cash election amount provided for in the
transaction agreement, and does not take into account the additional $250
million of SCZ share repurchases authorized by Security Capital's Board or the
anticipated expense savings. Please refer to page 3 of the supplemental
information for details on the pro forma effect of this transaction on EBDADT
(earnings before depreciation, amortization and deferred taxes).
William D. Sanders, Chairman of both Security Capital Group and SC-U.S. Realty,
said, "This is a unique and equitable opportunity to create substantial value
for both groups of shareholders. This move will allow Security Capital to
accelerate simplification of its structure and reduce the significant public
market discount that exists in the stock prices of both companies today." Mr.
Sanders said that this is a major step in the transition of the combined entity
to an operating company model. "In addition to receiving a premium to the
current RTY share price, SC-U.S. Realty shareholders will be owners, along with
current Security Capital shareholders, of a company with strong free cash flow
and solid earnings growth prospects from a diversified group of assets," he
said.
"The strength of the combined balance sheet should provide the resulting company
with significant financial flexibility and a self-funding capability that will
enable future value-creating transactions, including significant stock
repurchases," said C. Ronald Blankenship, Vice Chairman and Chief Operating
Officer of Security Capital. He noted that the transaction enables SC-U.S.
Realty shareholders to benefit from the elimination of investment limitations
imposed on its investees by various tax rules applicable to SC-U.S. Realty.
"Finally, shareholders will benefit from the removal of a tier of operating
expenses currently incurred at SC-U.S. Realty and at Security Capital in its
advisory capacity."
The transaction is subject to approval by the holders of two-thirds of SC-U.S.
Realty shares, and the holders of a majority of the voting power of Security
Capital shares, who cast votes at special shareholder meetings of each company,
expected to take place early in the first quarter of 2001. Security Capital owns
30,401,683, or 40.6%, of outstanding SC-U.S. Realty shares and will vote its
shares in favor of the transaction. The transaction is subject to review under
United States anti-trust rules, as well as by the Commission de Surveillance du
Secteur Financier, the
<PAGE>
Luxembourg regulatory agency that has authority over SC-U.S. Realty, and is
subject to other customary conditions to closing, including receipt of the
necessary financing. Subject to these matters, the transaction is expected to
close promptly after shareholder approvals.
SC-U.S. Realty shareholders, if any, who vote against the transaction will have
the option to receive SCZ common stock or up to $200 million in cash, in a
per-share amount equal to the average high and low trading price of the SCZ
common stock for a 15 trading-day period that ends on the sixth trading day
prior to the SC-U.S. Realty shareholder meeting, multiplied by 1.15. If cash
elections amount to less than $200 million, the balance will be used by Security
Capital to repurchase its own stock. U.S. shareholders of SC-U.S. Realty who
receive SCZ stock or cash in the transaction will recognize gain or loss for
U.S. tax purposes; tax treatment of non-U.S. shareholders will depend on the
laws in their country of residence.
As part of the transaction, SC-U.S. Realty will use cash received from Security
Capital to satisfy and discharge its obligations in respect of its outstanding
2% senior unsecured convertible debentures due 2003. Debenture holders are
expected to receive cash equal to the full accreted value of the debentures in
May 2001. Also in connection with the transaction, SC-U.S. Realty's outstanding
bank debt will be refinanced by Security Capital. Security Capital has arranged
a $625 million acquisition facility to finance the transaction.
Goldman, Sachs & Co. advised Security Capital and Merrill Lynch & Co. Inc.
advised the SC-U.S. Realty Special Committee in the transaction. The acquisition
facility was arranged by Chase Securities, Inc. and Wells Fargo Bank N.A.
Security Capital Group Incorporated is an international real estate research,
investment and operating management company. Security Capital operates its
business through two divisions. The Capital Division provides operational and
capital deployment oversight to direct and indirect investments in real estate
operating companies, generating earnings principally from its ownership of these
affiliates. Currently, the Capital Division has investments in 16 real estate
operating companies. The Financial Services Division generates fees principally
from capital management and capital markets activities. The principal offices of
Security Capital and its directly owned affiliates are in Amsterdam, Atlanta,
Brussels, Chicago, Denver, El Paso, Houston, London, Luxembourg, New York and
Santa Fe.
SC-U.S. Realty is a research-driven 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
included ownership positions and commitments to six U.S. real estate investment
trusts (REITs).
SUPPLEMENTAL FINANCIAL INFORMATION ON THE PROPOSED TRANSACTION MAY BE FOUND ON
THE COMPANIES' RESPECTIVE WEB SITES AT WWW.SECURITYCAPITAL.COM OR
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WWW.SC-USREALTY.COM.
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The senior management of Security Capital and SC-U.S. Realty will host a
conference call to discuss the transaction on Tuesday, September 26, 2000, at 10
a.m. EDT. A live webcast of the
<PAGE>
call and the accompanying presentation will be available simultaneously through
a link at Security Capital's web site at www.securitycapital.com.
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The phone number for the conference call is 1-800-230-1059 for domestic U.S.
callers, and 1-612-288-0318 for international participants. A taped replay of
the conference call and a copy of the presentation will be available by logging
on to www.securitycapital.com or by calling 1-800-475-6701 in the United States
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or 1-320-365-3844 outside the United States and entering the access code 540387.
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THIS PRESS RELEASE AND THE ATTACHED SUPPLEMENTAL INFORMATION CONTAIN CERTAIN
STATEMENTS THAT ARE NEITHER REPORTED FINANCIAL RESULTS NOR OTHER HISTORICAL
INFORMATION. THESE STATEMENTS ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING
OF THE SAFE-HARBOR PROVISIONS OF THE U.S. FEDERAL SECURITIES LAWS. THESE
STATEMENTS REFLECT THE CURRENT VIEWS OF SECURITY CAPITAL AND/OR SC-U.S. REALTY
WITH RESPECT TO FUTURE EVENTS AND ARE NOT GUARANTEES OF FUTURE PERFORMANCE.
BECAUSE THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES,
ACTUAL FUTURE RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED IN OR IMPLIED
BY THE STATEMENTS. MANY OF THESE RISKS AND UNCERTAINTIES RELATE TO FACTORS THAT
ARE BEYOND THE COMPANIES' ABILITY TO CONTROL OR ESTIMATE PRECISELY, SUCH AS
FUTURE MARKET CONDITIONS, THE BEHAVIOR OF OTHER MARKET PARTICIPANTS, THE ACTIONS
OF GOVERNMENTAL REGULATORS AND OTHER RISK FACTORS DETAILED IN SECURITY CAPITAL'S
AND SC-U.S. REALTY'S REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
YOU ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING
STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE OF THESE MATERIALS. THE COMPANIES DO
NOT UNDERTAKE ANY OBLIGATION TO PUBLICLY RELEASE ANY REVISIONS TO THESE
FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE OF
THESE MATERIALS.
WE URGE YOU TO READ THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED
TRANSACTION BETWEEN SECURITY CAPITAL GROUP INCORPORATED AND SC-U.S. REALTY, WHEN
IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. THE JOINT
PROXY STATEMENT/PROSPECTUS WILL BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION BY SECURITY CAPITAL GROUP AND SC-U.S. REALTY. YOU MAY OBTAIN A FREE
COPY OF THE JOINT PROXY STATEMENT/PROSPECTUS (WHEN IT IS AVAILABLE) AND OTHER
DOCUMENTS FILED BY SECURITY CAPITAL GROUP AND SC-U.S. REALTY WITH THE COMMISSION
(INCLUDING THE DOCUMENTS INCORPORATED BY REFERENCE INTO THE JOINT PROXY
STATEMENT/PROSPECTUS) AT THE COMMISSION'S WEB SITE AT WWW.SEC.GOV. SHAREHOLDERS
OF SECURITY CAPITAL GROUP MAY ALSO OBTAIN A FREE COPY OF THE JOINT PROXY
STATEMENT / PROSPECTUS (WHEN IT IS AVAILABLE) AND THESE OTHER DOCUMENTS BY
DIRECTING A REQUEST TO SECURITY CAPITAL GROUP INCORPORATED, ATTENTION: WILLIAM
R. FOWLER, TELEPHONE: 800 988-4304. SHAREHOLDERS OF SC-U.S. REALTY MAY ALSO
OBTAIN A FREE COPY OF THE JOINT PROXY STATEMENT/PROSPECTUS (WHEN IT IS
AVAILABLE) AND THESE OTHER DOCUMENTS BY DIRECTING A REQUEST TO SECURITY CAPITAL
U.S. REALTY, ATTENTION: LAURA HAMILTON, TELEPHONE: +352 46 37 56 2008 (U.S.
CALLERS DIAL 011 352 46 37 56 2008).
SC-U.S. REALTY AND CERTAIN OTHER PERSONS MAY BE DEEMED TO BE PARTICIPANTS IN THE
SOLICITATON OF PROXIES FROM SC-U.S. REALTY'S STOCKHOLDERS TO APPROVE THE
PROPOSED TRANSACTION. THE PARTICIPANTS IN THIS SOLICITATION MAY INCLUDE THE
DIRECTORS AND EXECUTIVE OFFICERS OF SC-U.S. REALTY. INFORMATION REGARDING
SC-U.S. REALTY'S DIRECTORS AND EXECUTIVE OFFICERS AND THEIR SECURITY HOLDINGS IN
SC-U.S. REALTY IS CONTAINED IN SC-U.S. REALTY'S MOST RECENT FORM 20-F AND FORM
F-1, FILED WITH THE COMMISSION ON JUNE 9, 2000 AND APRIL 5, 2000, RESPECTIVELY.
SECURITY CAPITAL GROUP AND CERTAIN OTHER PERSONS MAY BE DEEMED TO BE
PARTICIPANTS IN THE SOLICITATION OF PROXIES FROM SECURITY CAPITAL GROUP'S
STOCKHOLDERS TO APPROVE THE ISSUANCE OF SECURITY CAPITAL GROUP STOCK IN
CONNECTION WITH THE PROPOSED TRANSACTION. THE PARTICIPANTS IN THIS SOLICITATION
MAY INCLUDE THE DIRECTORS AND EXECUTIVE OFFICERS OF SECURITY CAPITAL GROUP.
INFORMATION REGARDING SECURITY CAPITAL GROUP'S DIRECTORS AND EXECUTIVE OFFICERS
AND THEIR SECURITY HOLDINGS IN SECURITY CAPITAL GROUP IS CONTAINED IN SECURITY
CAPITAL GROUP'S PROXY STATEMENT FOR ITS ANNUAL MEETING OF SHAREHOLDERS DATED
APRIL 10, 2000.
<PAGE>
[SECURITY CAPITAL GROUP INCORPORATED LOGO]
SUPPLEMENTAL INFORMATION
Page
GENERAL INFORMATION
Operating Structure...................................................... 1
Description of Transaction .............................................. 2
Impact of Transaction on 2001............................................ 3
Pro Forma Statements..................................................... 4
FINANCIAL INFORMATION
Pro Forma Financial Highlights........................................... 5
Pro Forma Statements of Earnings Before Depreciation, Amortization.......
and Deferred Taxes (EBDADT) for the Six Months Ended June 30, 2000..... 6
Pro Forma Statements of Earnings Before Depreciation, Amortization
and Deferred Taxes (EBDADT) for Year Ended December 31, 1999........... 7
Pro Forma Balance Sheet as of June 30, 2000.............................. 8
Pro Forma Balance Sheet as of December 31, 1999.......................... 9
Pro Forma Cash Flow From Operations...................................... 10
INVESTMENT INFORMATION
Pro Forma Capital Division Investment Summary.......................... 11
Pro Forma Investment Summary........................................... 12
OTHER INFORMATION
Pro Forma Global Capital Management Group.............................. 13
Pro Forma Debt Outstanding............................................. 14
Pro Forma Share Information............................................ 15
Notes to Pro Forma Statements.......................................... 16-17
THIS INFORMATION IS UNAUDITED.
<PAGE>
SECURITY CAPITAL GROUP INCORPORATED
OPERATING STRUCTURE
____________________________________________
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| [SECURITY CAPITAL GROUP INCORPORATED LOGO] |
| |
|____________________________________________|
|
|
____________________|___________________
| |
| |
| |
____________|________________ ________________|______________
| | | |
| CAPITAL DIVISION | | FINANCIAL SERVICES DIVISION |
| -------------------------- | | --------------------------- |
| Proactive Ownership in | | Market-Responsive |
| High-Growth Real Estate | | Global Real Estate |
| Operating Companies | | Services Organization |
|_____________________________| |_______________________________|
PUBLIC COMPANIES Real Estate Research Group
Archstone Communities Trust Capital Markets Group
CarrAmerica Realty Corporation Corporate Services Group
ProLogis Trust Global Capital Management Group
Regency Realty Corporation Mutual Funds/Separate Accounts
Storage USA, Inc. Managed Entities
PRIVATE COMPANIES
BelmontCorp
City Center Retail Trust
CWS Communities Trust
Homestead Village Incorporated
Security Capital European Realty
Urban Growth Property Trust
SUPPLEMENTAL INFORMATION PAGE 1
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SECURITY CAPITAL GROUP INCORPORATED
DESCRIPTION OF TRANSACTION
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Security Capital Group (Security Capital) and Security Capital U.S. Realty
(SC-U.S. Realty) have agreed to combine their businesses. The transaction
details were negotiated between Security Capital and a special committee of
SC-U.S. Realty's independent directors and are described below:
- Consistent with Luxembourg rules and regulations, Security Capital will
acquire the assets of SC-U.S. Realty in exchange for shares of Security
Capital Class B Common stock (and cash, to be used for the limited cash
substitution described below), and SC-U.S. Realty will distribute the shares
(and cash, if any) to its shareholders.
- Shareholders of SC-U.S. Realty (except those shareholders who dissent and
choose cash) would receive 1.15 shares of Security Capital Class B Common
stock for each share of SC-U.S. Realty common stock.
- If the transaction proceeds, SC-U.S. Realty shareholders who voted against
the transaction will have the option of receiving their consideration in
cash. This election will be made simultaneously with the submission of their
vote. Security Capital has agreed to make up to $200 million of cash
available for such dissenting shareholders. If shareholders representing more
than $200 million of shares vote against the transaction and request cash
instead of Security Capital shares, Security Capital will not be obligated to
proceed with the transaction.
- The accompanying pro forma statements assume that 40.7 million shares of
Security Capital stock and $200 million of cash are issued to SC-U.S. Realty
shareholders in the transaction.
- Security Capital has arranged a new loan facility to finance the cash
payments and the refinancing of SC-U.S. Realty's debt. Under the terms of
this facility, Security Capital can borrow up to $625 million. The loan will
have an initial term of one year, and Security Capital will have an option to
extend the term for an additional year. The loan is expected be repaid with
contemplated asset sales and free cash flow, with the remainder being
refinanced with long-term debt.
- The transaction is subject to approval by the affirmative vote of at least
two-thirds of the SC-U.S. Realty shares present or represented at an
extraordinary meeting of stockholders, provided that at least a majority of
the outstanding shares are present or represented. The transaction must also
be approved by an affirmative vote of at least a majority of the stockholders
present at a special meeting of Security Capital stockholders, provided that
the total vote cast represents at least a majority of the voting power of
Security Capital shares who are entitled to vote on the transaction. Both of
these special meetings are expected to take place early in the first quarter
of 2001.
- The transaction is subject to review under United States anti-trust rules, as
well as by the Commission de Surveillance de Secteur Financier, the
Luxembourg regulatory agency that has authority over SC-U.S. Realty, and is
subject to other customary conditions to closing.
SUPPLEMENTAL INFORMATION PAGE 2
<PAGE>
SECURITY CAPITAL GROUP INCORPORATED
IMPACT OF TRANSACTION ON 2001
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EBDADT estimates for Security Capital for 2001 will be positively impacted by
the following items (which are partially offset by the items mentioned below):
- The positive impact of a total of up to $450 million to be made available
for purchases of Security Capital shares. Up to $200 million of this
amount will be used to provide cash in lieu of Security Capital shares to
dissenting SC-U.S. Realty shareholders, which will have the effect of
reducing the Security Capital shares to be issued in the transaction. It
is expected that the balance of funds will be used to make share purchases
in open market transactions from time to time depending on market
conditions.
- The elimination of approximately $8 million of annual expense related to
SC-U.S. Realty.
- The impact of dividends and interest, that increase by $185.5 million for
the four quarters ended June 30, 2000, from the following new investees:
Investee % Owned
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CarrAmerica Realty Corporation 42.7%
City Center Retail Trust 99.9%
CWS Communities Trust 94.1%
Regency Realty Corporation 60.2%
Storage USA, Inc. 43.1%
Urban Growth Property Trust 98.8%
The higher dividends and interest are partially offset by increased income
taxes and interest expense. The incremental cash flow will be available to
either reduce indebtedness, repurchase stock or for other transactions
which create shareholder value.
Going forward, Security Capital's EBDADT will reflect the inclusion of equity in
EBDADT from S.C.-U.S. Realty's investees, and the elimination of equity in
EBDADT from S.C.-U.S. Realty itself. Additionally, shares outstanding will
increase by 40.7 million (assuming $200 million is paid out in cash in the
transaction).
Other adjustments that should be taken into account when considering future
performance include the following:
- Elimination of Security Capital's management fee relating to SC-U.S.
Realty ($31.0 million for the four quarters ended June 30, 2000).
- Additional interest expense on $220 million borrowed to fund the maximum
cash payment to dissenters and merger related costs. Such debt is expected
to be reduced by future cash flow and asset sales.
- A normalized income tax rate in the range of 10-12% of pre-tax EBDADT.
SUPPLEMENTAL INFORMATION PAGE 3
<PAGE>
SECURITY CAPITAL GROUP INCORPORATED
PRO FORMA STATEMENTS
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The attached financial information includes pro forma results for the year ended
December 31, 1999 and for the six months ended June 30, 2000. The methodology
used in the preparation of the pro forma information is consistent with the
guidelines of the Securities and Exchange Commission. As a result, the following
items are not reflected in the pro forma statements:
- The agreement between Security Capital and SC-U.S. Realty calls for up to
$200 million in cash to be made available to SC-U.S. Realty stockholders who
vote against the deal and elect to receive cash instead of Security Capital
stock, which is reflected in the pro forma information using the closing
price of Security Capital stock on September 22, 2000 of $19.0625. The pro
forma statements do not consider the additional $250 million of open market
purchases which have been authorized by Security Capital's board.
- Anticipated annual expense savings related to SC-U.S. Realty of $8 million.
In the event these two items were included in the pro forma information (and
assuming the additional open market purchases occurred at the September 22, 2000
closing price), the adjusted pro forma results would be as follows:
For the Six Months Ended June 30, 2000:
Adjusted Increase from Actual to
Actual Pro Forma* Pro Forma Adjusted Pro Forma
------ ---------- --------- ------------------
Per Share:
Diluted EBDADT $1.17 $1.12 $1.21 $0.04
Net Asset Value** $22.66 $25.54 $26.10 $3.44
For the Twelve Months Ended December 31, 1999:
Adjusted Increase from Actual to
Actual Pro Forma* Pro Forma Adjusted Pro Forma
------ ---------- --------- ------------------
Per Share:
Diluted EBDADT $1.96 $1.98 $2.14 $0.18
Net Asset Value** $17.99 $20.60 $20.74 $2.75
* As presented in the accompanying pro forma statements
** NAVs presented herein are based on the current market value of the
investments held by Security Capital and SC-U.S. Realty, and are not intended to
represent the fair value of such investments nor the amount that might be
realized were such investments to be sold in a single transaction or series of
transactions.
SUPPLEMENTAL INFORMATION PAGE 4
<PAGE>
SECURITY CAPITAL GROUP INCORPORATED
PRO FORMA FINANCIAL HIGHLIGHTS
(In thousands, except per share amounts)
OPERATING INFORMATION:
EARNINGS BEFORE DEPRECIATION, SECURITY CAPITAL
AMORTIZATION AND DEFERRED TAXES (EBDADT) GROUP ACTUAL (1) PRO FORMA (2)
---------------- -------------
Six Months Ended June 30, 2000
(before special items):
Basic EBDADT $ 133,584 $ 173,020
Diluted EBDADT per share $ 1.17 $ 1.12
Weighted average SCZ Shares
Outstanding - Diluted 121,101 161,755
Year Ended December 31, 1999
(before special items):
Basic EBDADT $ 236,012 $ 318,183
Diluted EBDADT per share $ 1.96 $ 1.98
Weighted average SCZ Shares
Outstanding - Diluted 120,268 160,922
NET CASH FLOW FROM OPERATIONS (3)
Four Quarters Ended June 30, 2000 $ 93,002 $ 155,521
Four Quarters Ended December 31, 1999 $ 60,337 $ 119,567
COVERAGE RATIO (4)
Four Quarters Ended June 30, 2000 2.65 2.68
Four Quarters Ended December 31, 1999 2.16 2.41
BALANCE SHEET INFORMATION (AS OF JUNE 30, 2000): (5)
Total Assets $ 4,012,434 $ 6,069,608
Total Liabilities $ 1,172,003 $ 1,839,267
Leverage Ratio (6) 27.6% 29.1%
Net Asset Value per share (7) $ 22.66 $ 25.54
The accompanying Notes to Pro Forma Statements
should be read in conjunction with this statement
SUPPLEMENTAL INFORMATION PAGE 5
<PAGE>
SECURITY CAPITAL GROUP INCORPORATED
PRO FORMA STATEMENTS OF EARNINGS BEFORE DEPRECIATION, AMORTIZATION
AND DEFERRED TAXES (EBDADT)
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(In thousands, except per share amounts)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY CAPITAL SECURITY CAPITAL PRO FORMA
GROUP (1) U.S. REALTY (1) ADJUSTMENTS (2) PRO FORMA
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<S> <C> <C> <C> <C>
INCOME:
Equity in Capital Division Investees' EBDADT $ 192,194 $ 126,285 $ (31,752) (a) $ 286,727
Financial Services Division revenues 42,184 - (15,200) (b) 26,984
Interest and other income 956 3,297 (745) (c) 3,508
--------------------------------------------------------------------------------
Total Income 235,334 129,582 (47,697) 317,219
--------------------------------------------------------------------------------
EXPENSES:
Operating expenses 44,164 16,585 (15,200) (b) 45,549
Interest expense 41,331 19,973 7,202 (d) 68,506
Current income tax expense (benefit) 7,238 14,256 (367) (e) 21,127
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Total Expenses 92,733 50,814 (8,365) 135,182
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CONVERTIBLE PREFERRED SHARE DIVIDENDS 9,017 - - 9,017
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BASIC EBDADT BEFORE SPECIAL ITEMS 133,584 78,768 (39,332) 173,020
Realized gains (losses) (568) 2,546 (1,249) (f) 729
Extraordinary gain on retirement of
debt, net of tax 6,152 - - 6,152
Gain on sale of Archstone stock,
net of tax 8,747 - - 8,747
Homestead special (charge) credit 1,182 - - 1,182
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BASIC EBDADT AFTER SPECIAL ITEMS $ 149,097 $ 81,314 $ (40,581) $ 189,830
--------------------------------------------------------------------------------
WEIGHTED AVERAGE SCZ SHARES
OUTSTANDING - DILUTED 121,101 40,654 (h) 161,755
---------------- ----------- -----------
DILUTED EBDADT PER SHARE BEFORE SPECIAL ITEMS $ 1.17 $ 1.12 (8)
Realized gains (losses) - -
Extraordinary gain on retirement of
debt, net of tax 0.05 0.04
Gain on sale of Archstone stock,
net of tax 0.07 0.05
Homestead special (charge) credit 0.01 0.01
---------------- -----------
DILUTED EBDADT PER SHARE AFTER SPECIAL ITEMS $ 1.30 $ 1.22 (8)
---------------- -----------
</TABLE>
The accompanying Notes to Pro Forma Statements
should be read in conjunction with this statement
SUPPLEMENTAL INFORMATION PAGE 6
<PAGE>
SECURITY CAPITAL GROUP INCORPORATED
PRO FORMA STATEMENTS OF EARNINGS BEFORE DEPRECIATION, AMORTIZATION
AND DEFERRED TAXES (EBDADT)
FOR THE YEAR ENDED DECEMBER 31, 1999
(In thousands, except per share amounts)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY CAPITAL SECURITY CAPITAL PRO FORMA
GROUP (1) U.S. REALTY (1) ADJUSTMENTS (2) PRO FORMA
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCOME:
Equity in Capital Division Investees' EBDADT $ 344,725 $ 244,385 $ (52,937) (a) $ 536,173
Financial Services Division revenues 99,258 - (32,506) (b) 66,752
Interest and other income 3,596 16,688 (3,575) (c) 16,709
--------------------------------------------------------------------------------
Total Income 447,579 261,073 (89,018) 619,634
--------------------------------------------------------------------------------
EXPENSES:
Operating expenses 112,014 36,079 (32,506) (b) 115,587
Interest expense 82,303 49,418 4,095 (d) 135,816
Current income tax expense (benefit) (785) 28,707 4,091 (e) 32,013
--------------------------------------------------------------------------------
Total Expenses 193,532 114,204 (23,320) 283,416
--------------------------------------------------------------------------------
CONVERTIBLE PREFERRED SHARE DIVIDENDS 18,035 - - 18,035
--------------------------------------------------------------------------------
BASIC EBDADT BEFORE SPECIAL ITEMS 236,012 146,869 (64,698) 318,183
Realized gains (losses) (25,826) (65,587) 24,201 (f) (67,212)
Extraordinary gain on retirement of
debt, net of tax 10,942 - - 10,942
Homestead special (charge) credit (45,581) - - (45,581)
City Center Retail special charge - (3,408) - (3,408)
Strategic Hotel provision (55,288) - - (55,288)
Security Capital Group provision for loss - (69,220) 69,220 (g) -
--------------------------------------------------------------------------------
BASIC EBDADT AFTER SPECIAL ITEMS $ 120,259 $ 8,654 $ 28,723 $ 157,636
--------------------------------------------------------------------------------
WEIGHTED AVERAGE SCZ SHARES
OUTSTANDING - DILUTED 120,268 40,654 (h) 160,922
---------------- ----------- -----------
DILUTED EBDADT PER SHARE BEFORE SPECIAL ITEMS $ 1.96 $ 1.98 (8)
Realized gains (losses) (0.21) (0.43)
Extraordinary gain on retirement of
debt, net of tax 0.09 0.07
Homestead special (charge) credit (0.38) (0.28)
City Center Retail special charge - (0.02)
Strategic Hotel provision (0.46) (0.34)
Security Capital Group provision for loss - -
---------------- -----------
DILUTED EBDADT PER SHARE AFTER SPECIAL ITEMS $ 1.00 $ 0.98 (8)
---------------- -----------
</TABLE>
The accompanying Notes to Pro Forma Statements
should be read in conjunction with this statement.
SUPPLEMENTAL INFORMATION PAGE 7
<PAGE>
SECURITY CAPITAL GROUP INCORPORATED
PRO FORMA BALANCE SHEET (5)
AS OF JUNE 30, 2000
(In thousands, except per share amounts)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY CAPITAL SECURITY CAPITAL PRO FORMA
GROUP (1) U.S. REALTY (1) ADJUSTMENTS (2) PRO FORMA
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Capital Division
Operating Company Investments:
Archstone Communities Trust $ 1,115,270 $ - $ - $ 1,115,270
Belmont Corp 92,909 - - 92,909
CarrAmerica Realty Corporation - 758,437 - 758,437
City Center Retail Trust - 175,758 - 175,758
CWS Communities Trust - 253,739 - 253,739
Homestead Village Incorporated 492,006 - - 492,006
ProLogis Trust 1,066,694 - - 1,066,694
Regency Realty Corporation - 813,454 - 813,454
Storage USA, Inc. - 347,271 - 347,271
Urban Growth Property Trust - 201,082 - 201,082
Managed Entities:
Security Capital European Realty 440,553 - - 440,553
Security Capital Preferred Growth
Incorporated 83,020 - - 83,020
Security Capital U.S. Realty 547,230 - (547,230) (i) -
Intermediate-term Investments:
Security Capital European Real Estate
Shares 10,407 - - 10,407
Security Capital U.S. Real Estate Shares 22,709 - - 22,709
Other private investments - 40,544 - 40,544
Financial Services Division - - - -
Cash & Cash Equivalents 5,688 272 - 5,960
Other Assets 135,948 18,413 (4,566) (j) 149,795
--------------------------------------------------------------------------------
Total Assets $ 4,012,434 $ 2,608,970 $ (551,796) $ 6,069,608
--------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities
Accounts Payable and Other Liabilites $ 65,904 $ 10,500 $ - $ 75,954
Line of Credit 175,800 42,500 (10,286) (k) 208,014
Transaction Loan - - 625,000 (k) 625,000
Long-term Debt 699,641 - - 699,641
Convertible Subordinated Debentures 230,658 394,714 (394,714) (k) 230,658
--------------------------------------------------------------------------------
TOTAL LIABILITIES 1,172,003 447,264 220,000 1,839,267
--------------------------------------------------------------------------------
Shareholders' Equity
Series B Preferred Shares 257,642 - - 257,642
Common Shareholders' Equity 2,582,789 2,161,706 (771,796) 3,972,699
--------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 2,840,431 2,161,706 (771,796) 4,230,341
--------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 4,012,434 $ 2,608,970 $ (551,796) $ 6,069,608
--------------------------------------------------------------------------------
DILUTED SHARES OUTSTANDING 113,955 74,877 164,603
---------------- ----------------- --------------
NET ASSET VALUE PER DILUTED SHARE $ 22.66 $ 28.87 $ 25.54 (7)
---------------- ----------------- --------------
</TABLE>
The accompanying Notes to Pro Forma Statements
should be read in conjunction with this statement.
SUPPLEMENTAL INFORMATION PAGE 8
<PAGE>
SECURITY CAPITAL GROUP INCORPORATED
PRO FORMA BALANCE SHEET (5)
AS OF DECEMBER 31, 1999
(In thousands, except per share amounts)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY CAPITAL SECURITY CAPITAL PRO FORMA
GROUP (1) U.S. REALTY (1) ADJUSTMENTS (2) PRO FORMA
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Capital Division
Operating Company Investments:
Archstone Communities Trust $ 1,118,076 $ - $ - $ 1,118,076
Belmont Corp 78,052 - - 78,052
CarrAmerica Realty Corporation - 604,247 - 604,247
City Center Retail Trust - 304,132 - 304,132
CWS Communities Trust - 236,488 - 236,488
Homestead Village Incorporated 221,949 - - 221,949
ProLogis Trust 960,648 - - 960,648
Regency Realty Corporation - 685,465 - 685,465
Storage USA, Inc. - 355,911 - 355,911
Urban Growth Property Trust - 188,582 - 188,582
Managed Entities:
Security Capital European Realty 440,542 - - 440,542
Security Capital Preferred Growth
Incorporated 82,455 - - 82,455
Security Capital U.S. Realty 431,704 - (431,704) (i) -
Intermediate-term Investments:
Security Capital European Real Estate
Shares 10,520 - - 10,520
Security Capital U.S. Real Estate Shares 26,285 - - 26,285
Other private investments - 42,019 - 42,019
Security Capital Group securities - 95,780 (95,780) (n) -
Financial Services Division - - - -
Cash & Cash Equivalents 9,599 2,732 - 12,331
Other Assets 101,183 15,530 (5,354) (j) 111,359
--------------------------------------------------------------------------------
Total Assets $ 3,481,013 $ 2,530,886 $ (532,838) $ 5,479,061
--------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities
Accounts Payable and Other Liabilites $ 53,518 $ 10,851 $ - $ 64,369
Line of Credit 90,900 239,000 (18,843) (k) 311,057
Transaction Loan - - 625,000 (k) 625,000
Long-term Debt 699,606 - - 699,606
Convertible Subordinated Debentures 278,951 386,157 (386,157) (k) 278,951
--------------------------------------------------------------------------------
TOTAL LIABILITIES 1,122,975 636,008 220,000 1,978,983
--------------------------------------------------------------------------------
Shareholders' Equity
Series B Preferred Shares 257,642 - - 257,642
Common Shareholders' Equity 2,100,396 1,894,878 (752,838) 3,242,436
--------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 2,358,038 1,894,878 (752,838) 3,500,078
--------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 3,481,013 $ 2,530,886 $ (532,838) $ 5,479,061
--------------------------------------------------------------------------------
DILUTED SHARES OUTSTANDING 116,738 76,700 157,392
---------------- ----------------- --------------
NET ASSET VALUE PER DILUTED SHARE $ 17.99 $ 24.70 $ 20.60 (7)
---------------- ----------------- --------------
</TABLE>
The accompanying Notes to Pro Forma Statements
should be read in conjunction with this statement.
SUPPLEMENTAL INFORMATION PAGE 9
<PAGE>
SECURITY CAPITAL GROUP INCORPORATED
PRO FORMA CASH FLOW FROM OPERATIONS (3)
(In thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY CAPITAL SECURITY CAPITAL PRO FORMA
FOR THE FOUR QUARTERS ENDED JUNE 30, 2000 GROUP (1) U.S. REALTY (1) ADJUSTMENTS (2) PRO FORMA
----------------------------------------- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SOURCES:
Dividend Income $ 179,947 $ 179,331 $ - $ 359,278
Interest and other income 3,288 8,700 (2,532) (c) 9,456
Financial Services Division revenues 98,410 - (30,989) (b) 67,421
--------------------------------------------------------------------------------
281,645 188,031 (33,521) 436,155
--------------------------------------------------------------------------------
USES:
Operating expenses 84,779 34,325 (30,989) (b) 88,115
Income Taxes 3,143 31,604 1,690 (e) 36,437
Interest and related expenses 82,686 29,371 (l) 25,990 (d) 138,047
Preferred share dividends 18,035 - - 18,035
--------------------------------------------------------------------------------
188,643 95,300 (3,309) 280,634
--------------------------------------------------------------------------------
NET CASH FLOW FROM OPERATIONS $ 93,002 $ 92,731 $ (30,212) $ 155,521
FOR THE FOUR QUARTERS ENDED DECEMBER 31, 1999
---------------------------------------------
SOURCES:
Dividend Income $ 153,368 $ 168,507 $ - $ 321,875
Interest and other income 7,441 16,688 (3,575) (c) 20,554
Financial Services Division revenues 99,258 - (32,506) (b) 66,752
--------------------------------------------------------------------------------
260,067 185,195 (36,081) 409,181
--------------------------------------------------------------------------------
USES:
Operating expenses 100,177 36,079 (32,506) (b) 103,750
Income Taxes (785) 28,707 4,091 (e) 32,013
Interest and related expenses 82,303 33,202 (l) 20,311 (d) 135,816
Preferred share dividends 18,035 - - 18,035
--------------------------------------------------------------------------------
199,730 97,988 (8,104) 289,614
--------------------------------------------------------------------------------
NET CASH FLOW FROM OPERATIONS $ 60,337 $ 87,207 $ (27,977) $ 119,567
</TABLE>
The accompanying Notes to Pro Forma Statements
should be read in conjunction with this statement.
SUPPLEMENTAL INFORMATION PAGE 10
<PAGE>
SECURITY CAPITAL GROUP INCORPORATED
PRO FORMA CAPITAL DIVISION INVESTMENT SUMMARY
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(In thousands, except per share amounts)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
PRO FORMA OWNERSHIP INVESTEE DILUTED
AS OF JUNE 30, 2000 EBDADT PER SHARE SIX MONTHS
--------------------------------- BEFORE SPECIAL ITEMS DIVIDENDS PER SHARE
Invested ---------------------- ---------------------
% Owned Shares Capital (9) 2000 1999 2000 1999
--------------------------------- ---------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTEES
STABILIZED COMPANIES:
Archstone Communities Trust 38.0% 52,951 $775,860 $1.06 $0.95 $0.7700 $0.7400
CarrAmerica Realty Corporation 42.7% 28,603 699,905 1.47 1.22 0.9250 0.9250
City Center Retail Trust 99.9% 30,390 175,758 0.22 0.31 - -
Homestead Village Incorporated 99.9% 120,001 596,719 0.35 0.23 0.2083 -
ProLogis Trust 30.5% 49,904 657,800 1.07 0.95 0.6700 0.6455
Regency Realty Corporation 60.2% 34,273 759,807 1.25 1.17 0.9600 0.9200
Security Capital Preferred Growth
Incorporated 9.3% 3,950 80,116 0.57 0.38 0.6700 0.6500
Storage USA, Inc. 43.1% 11,766 394,362 1.62 1.60 1.3800 1.3400
START-UP COMPANIES:
BelmontCorp 99.9% 9,291 92,909 (0.34) (0.68) - -
CWS Communities Trust 94.1% 25,341 253,739 0.31 0.29 0.3000 0.2400
Security Capital European Realty 34.6% 22,028 440,553 0.37 0.32 - -
Urban Growth Property Trust 98.8% 18,824 201,082 0.33 0.40 - 0.2400
INTERMEDIATE-TERM INVESTMENTS:
Security Capital European
Real Estate Shares 99.8% 1,025 11,000 (0.02) 0.35 0.0501 0.1335
Security Capital U.S.
Real Estate Shares 24.4% 2,110 24,750 0.27 0.49 0.2487 0.2417
SECURITY CAPITAL'S REMAINING INVESTMENT COMMITMENT AT JUNE 30, 2000 IS:
Belmont $17,046
CWS Communities Trust 107,835 *
Security Capital
European Realty 77,716
* Includes $61,297 relating to a contingent liability that expires in March
2001.
</TABLE>
The accompanying Notes to Pro Forma Statements
should be read in conjunction with this statement.
SUPPLEMENTAL INFORMATION PAGE 11
<PAGE>
SECURITY CAPITAL GROUP INCORPORATED
PRO FORMA INVESTMENT SUMMARY
AS OF JUNE 30, 2000
(In thousands)
--------------------------------------------------------------------------------
[PIE CHART ENTITLED "PROPERTY TYPE BY SECTOR"
DEPICTING THE FOLLOWING DATA:
Offices 17%
Multifamily 16%
Shopping Centers 15%
Distribution 13%
Extended Stay Lodging 12%
Self-Storage 9%
Parking 6%
Manufactured Homes 5%
Senior Assisted Living 2%
Other 5% ]
--------------------------------------------------------------------------------
Security Capital
Group's Pro Forma
Property Sector Investee Investment *
--------------------------------------------------------------------------------
Offices CarrAmerica, Akeler, Bernheim-
Comofi, City & West End $ 853,015
Multifamily Archstone Communities, London
and Henley 830,470
Shopping Centers Regency Realty 759,807
Distribution ProLogis 657,800
Extended Stay Lodging Homestead Village 596,719
Self-Storage Storage USA, Access 475,577
Parking Urban Growth Property,
Interparking S.A. 322,184
Manufactured Homes CWS Communities 253,739
Senior Assisted Living BelmontCorp 92,909
Other Other 291,624
-----------------
$ 5,133,844
* Amounts presented for Security Capital European Realty investees
represent Security Capital's relative percentage ownership.
--------------------------------------------------------------------------------
[PIE CHART ENTITLED "PUBLIC VS. PRIVATE COMPANY OWNERSHIP"
DEPICTING THE FOLLOWING DATA:
Public Companies 64%
Private Copanies 36% ]
--------------------------------------------------------------------------------
The accompanying Notes to Pro Forma Statements
should be read in conjunction with this statement.
SUPPLEMENTAL INFORMATION PAGE 12
<PAGE>
SECURITY CAPITAL GROUP INCORPORATED
PRO FORMA GLOBAL CAPITAL MANAGEMENT GROUP
TOTAL ASSETS UNDER MANAGEMENT AS OF JUNE 30, 2000
(in thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA REVENUES
JUNE 30, PRO FORMA JUNE 30, SIX MONTHS
2000 ADJUSTMENTS (2) 2000 ENDED 6/30/00
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MANAGED ENTITES:
Security Capital European Realty $ 1,264,657 $ - $ 1,264,657 $ 7,827
Security Capital Preferred Growth 1,012,461 - 1,012,461 4,723
Security Capital U.S. Realty 2,590,285 (2,590,285) (m) - -
----------------------------------------------------------------------------------
4,867,403 (2,590,285) 2,277,118 12,550
----------------------------------------------------------------------------------
OPEN-END ENTITIES:
Security Capital European
Real Estate Shares 10,418 - 10,418 56
Security Capital U.S.
Real Estate Shares 93,099 - 93,099 301
Separate Accounts 764,498 - 761,498 923
----------------------------------------------------------------------------------
868,015 - 868,015 1,280
----------------------------------------------------------------------------------
TOTAL ASSETS UNDER MANAGEMENT $ 5,735,418 $ (2,590,285) $ 3,145,133 13,830
</TABLE>
The accompanying Notes to Pro Forma Statements
should be read in conjunction with this statement
SUPPLEMENTAL INFORMATION PAGE 13
<PAGE>
SECURITY CAPITAL GROUP INCORPORATED
PRO FORMA DEBT OUTSTANDING (1)(2)
(In thousands)
--------------------------------------------------------------------------------
June 30, December 31,
2000 1999
----------------------------------
Line of Credit (Unsecured) (k) $ 208,014 $ 311,057
Transaction Loan (Unsecured) (k) 625,000 625,000
Senior Unsecured Debt:
7.75% Notes due 2003 100,000 100,000
7.66% Notes due 2004 14,700 14,700
6.95% Notes due 2005 200,000 200,000
7.75% Notes due 2005 5,000 5,000
7.80% Notes due 2005 80,300 80,300
7.15% Notes due 2007 100,000 100,000
7.70% Notes due 2008 200,000 200,000
Less Unamortized Discount (359) (394)
----------------------------------
Total Senior Unsecured Debt 699,641 699,606
6.5% Convertible Subordinated Debentures
due 2016 230,658 278,951
----------------------------------
Total Pro Forma Debt $1,763,313 $1,914,614
The accompanying Notes to Pro Forma Statements
should be read in conjunction with this statement.
SUPPLEMENTAL INFORMATION PAGE 14
<PAGE>
SECURITY CAPITAL GROUP INCORPORATED
PRO FORMA SHARE INFORMATION (1)(2)
(In thousands, except per share data)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AS OF AS OF
JUNE 30, 2000 DECEMBER 31, 1999
PRO FORMA SHARES OUTSTANDING --------------------------- -----------------------------
FOR NET ASSET VALUE PURPOSES: CLASS A SCZ CLASS A SCZ
----------------------------- --------------------------- -----------------------------
<S> <C> <C> <C> <C>
SCZ Shares Outstanding - 52,014 - 52,696
SCZ Shares issued in connection
with merger - 40,654 - 40,654
Class A Shares Outstanding 1,117 55,850 1,218 60,921
Class A Options and warrants 42 2,100 46 2,276
SCZ Options - 3,991 - 845
Assumed conversion of Security
Capital convertible debentures - 9,994 - -
--------------------------- -----------------------------
1,159 164,603 1,264 157,392
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA EBDADT PER SHARE DATA:
SIX MONTHS ENDED JUNE 30, 2000
--------------------------------------------------------------------------------
SECURITY CAPITAL SECURITY CAPITAL PRO FORMA
GROUP U.S. REALTY ADJUSTMENTS PRO FORMA
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic EBDADT after special items $ 149,097 $ 81,314 $ (40,581) $ 189,830
Debenture interest expense 8,293 - - 8,293
--------------------------------------------------------------------------------
Diluted EBDADT after special items $ 157,390 $ 81,314 $ (40,581) $ 198,123
--------------------------------------------------------------------------------
Weighted average SCZ Shares Outstanding - Basic 109,003 - 40,654 (h) 149,657
Increase in shares which would result from:
Exercise of options and warrants 1,175 - - 1,175
Conversion of debentures 10,923 - - 10,923
--------------------------------------------------------------------------------
Weighted average SCZ Shares Outstanding
- Diluted 121,101 - 40,654 161,755
--------------------------------------------------------------------------------
Per share EBDADT after special items:
Basic $ 1.37 $ 1.27
------------------ -----------
Diluted $ 1.30 $ 1.22
------------------ -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
--------------------------------------------------------------------------------
SECURITY CAPITAL SECURITY CAPITAL PRO FORMA
GROUP U.S. REALTY ADJUSTMENTS PRO FORMA
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic and Diluted EBDADT after special items $ 120,259 $ 8,654 $ 28,723 $ 157,636
--------------------------------------------------------------------------------
Weighted average SCZ Shares Outstanding - Basic 119,255 - 40,654 (h) 159,909
Increase in shares which would result from:
Exercise of options and warrants 1,013 - - 1,013
--------------------------------------------------------------------------------
Weighted average SCZ Shares Outstanding
- Diluted 120,268 - 40,654 160,922
--------------------------------------------------------------------------------
Per share EBDADT after special items:
Basic $ 1.01 $ 0.99
------------------ -----------
Diluted $ 1.00 $ 0.98
------------------ -----------
</TABLE>
The accompanying Notes to Pro Forma Statements
should be read in conjunction with this statement.
SUPPLEMENTAL INFORMATION PAGE 15
<PAGE>
NOTES TO PRO FORMA STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND THE YEAR ENDED DECEMBER 31, 1999
(In thousands, except per share amounts)
--------------------------------------------------------------------------------
(1) See Security Capital's and SC-U.S. Realty's press release supplements as of
June 30, 2000 for a discussion of historical results.
(2) Pro forma adjustments assume the acquisition of SC-U.S. Realty for 40.7
million shares, $200 million of cash to dissenting shareholders, the
assumption / payment of liabilities and $20 million of transaction costs. If
shareholders representing more than $200 million of shares dissent and
request cash instead of Security Capital shares, Security Capital has the
option to increase the cash it makes available for such purposes. The pro
forma financial information does not reflect utilization of the remaining
$250 million that the Security Capital board has authorized for share
repurchases. The acquisition will be financed through a new $625 million
transaction loan. Pro forma adjustments are comprised of the following:
(a) Elimination of Security Capital's equity in EBDADT of SC-U.S. Realty.
(b) Elimination of Security Capital management fee for advising SC-U.S.
Realty. Further cost reductions should be achievable, but have not been
reflected in the pro forma statements.
(c) Elimination of the interest paid to SC-U.S. Realty on its holdings of
Security Capital's convertible debentures.
Six Months Twelve Months
Ended 6/30/00 Ended 12/31/99
--------------- ----------------
(d) Increase in interest expense due to:
Elimination of SC-U.S. Realty's
interest expense $ (19,973) $ (49,418)
Increase related to borrowing on
credit facilities to fund the
cash payment to dissenters,
merger-related costs and
repayment of SC-U.S. Realty's
convertible debentures and line
of credit. 27,920 57,088
Elimination of interest paid to
SC-U.S. Realty on its holdings
of Security Capital convertible
debentures (745) (3,575)
--------------- ----------------
$ 7,202 $ 4,095
=============== ================
(e) Change in income taxes due to:
Additional income taxes from SC-U.S.
Realty's taxable earnings $ 13,889 $ 32,798
Elimination of SC-U.S. Realty
withholding and other taxes (14,256) (28,707)
--------------- ----------------
$ (367) $ 4,091
=============== ================
(f) Elimination of Security Capital's share of SC-U.S. Realty's realized
gains.
(g) Elimination of SC-U.S. Realty's provision for loss on disposition of its
investment in Security Capital's stock and convertible debentures.
(h) Additional shares issued in the transaction as follows:
SC-U.S. Realty shares outstanding
as of June 30, 2000 74,877
Less: SC-U.S. Realty shares owned by
Security Capital (30,402)
---------------
Net SC-U.S. Realty shares 44,475
Less: SC-U.S. Realty shares purchased
for cash at $21.922 per share (9,123)
---------------
SC-U.S. Realty shares 35,352
Exchange ratio 1.15
---------------
Net Security Capital shares exchanged
for SC-U.S. Realty shares 40,654
===============
(i) Elimination of Security Capital's investment in SC-U.S. Realty.
(j) Elimination of SC-U.S. Realty's deferred financing costs.
SUPPLEMENTAL INFORMATION PAGE 16
<PAGE>
NOTES TO PRO FORMA STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND THE YEAR ENDED DECEMBER 31, 1999
(In thousands, except per share amounts)
--------------------------------------------------------------------------------
Six Months Twelve Months
Ended 6/30/00 Ended 12/31/99
--------------- ----------------
(k) The components of the acquisition
to be financed are:
SC-U.S. Realty convertible
debentures $ 394,714 $ 386,157
Purchase price plus transaction
costs 220,000 220,000
--------------- ----------------
Total financed 614,714 606,157
Less transaction loan financing 625,000 625,000
--------------- ----------------
Net decrease in lines of credit
outstanding $ (10,286) $ (18,843)
=============== ================
(l) Represents cash interest paid by SC-U.S. Realty.
(m) Elimination of SC-U.S. Realty assets under management.
(n) Elimination of SC-U.S. Realty's investment in Security Capital.
(3) Net cash flow from operations represents EBDADT, adjusted to substitute
dividends and interest income for equity in EBDADT from investees and to
subtract non-cash charges and non-real estate depreciation and amortization
from operating expenses.
(4) Calculated pursuant to the provisions of Security Capital's line of credit.
(5) Assets and liabilities are presented on an unconsolidated fair value basis
assuming the following:
- Publicly traded investments - all based on NYSE closing prices, which may
differ from underlying net asset value.
- Private company investments - at cost, or in the case of Security Capital
Preferred Growth Incorporated and the Intermediate-term investments,
their current net asset value. The net asset value of these entities may
fluctuate from time to time based on asset value changes. Security
Capital will revalue an investment downward if the investee experiences
sustained degradation of operating performance or if changed
circumstances indicate cost does not reflect fair value.
- Deferred taxes on unrealized securities positions are not provided.
(6) Leverage ratio is calculated as total debt to fair value of assets.
(7) The net asset value (which does not include a value for the Financial
Services Division, deferred taxes on unrealized gains or convertible
securities when anti-dilutive), is computed as follows:
As of As of
6/30/00 12/31/99
--------------- ----------------
Common Shareholders' Equity
(see note 5) $ 3,972,699 $ 3,242,436
Debentures assumed converted if
net asset value is greater than
$23.08 230,658 -
--------------- ----------------
4,203,357 3,242,436
Diluted Shares Outstanding 164,603 157,392
--------------- ----------------
Net Asset Value $ 25.54 $ 20.60
=============== ================
(8) If all of SC-U.S. Realty's stock were to be exchanged for Security Capital
stock, diluted EBDADT per share would be:
Six Months Twelve Months
Ended 6/30/00 Ended 12/31/99
--------------- ----------------
Before Special Items $ 1.08 $ 1.90
After Special Items $ 1.18 $ 0.97
(9) Invested capital represents historical cost of Security Capital or SC-U.S.
Realty.
SUPPLEMENTAL INFORMATION PAGE 17
<PAGE>
SECURITY CAPITAL GROUP INCORPORATED
This supplemental information contains certain statements that are neither
reported financial results nor other historical information. These statements
are forward-looking statements within the meaning of the safe-harbor provisions
of the U.S. federal securities laws. These statements reflect the current views
of Security Capital and/or SC-U.S. Realty with respect to future events and are
not guarantees of future performance. Because these forward-looking statements
are subject to risks and uncertainties, actual future results may differ
materially from thos expressed in or implied by the statements. Many of these
risks and uncertainties relate to factors that are beyond the companies' ability
to control or estimate precisely, such as future market conditions, the behavior
of other market participants, the actions of governmental regulators and other
risk factors detailed in Security Capital's and SC-U.S. Realty's reports filed
with the Securites and Exchange Commission. You are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date of these materials. The companies do not undertake any obligation to
publicly release any revisions to these foward-looking statemetns to reflect
events or circumstances after the date of these materials.
We urge you to read the joint proxy statement/prospectus regarding the proposed
transaction between Security Capital Group Incorporated and SC-U.S. Realty, when
it becomes available, because it will contain important information. The joint
proxy statement/prospectus will be filed with the Securities and Exchange
Commission by Security Capital Group and SC-U.S. Realty. You may obtain a free
copy of the joint proxy statement/prospectus (when it is available) and other
documents filed by Security Capital Group and SC-U.S. Realty with the Commission
(including the documents incorporated by reference into the joint proxy
statement/prospectus) at the Commission's web site at www.sec.gov. Shareholders
of Security Capital Group may also obtain a free copy of the joint proxy
statement/prospectus (when it is available) and these other documents by
directing a request to Security Capital Group Incorporated, Attention: William
R. Fowler, telephone: 800-988-4304. Shareholders of SC-U.S. Realty may also
obtain a free copy of the joint proxy statement/prospectus (when it is
available) and these other documents by directing a request to Security Capital
U.S. Realty, Attention: Laura Hamilton, telephone: +352-46-37-56-2008 (U.S.
callers dial 011-352-46-37-56-2008).
SC-U.S. Realty and certain other persons may be deemed to be participants in the
solicitation of proxies from SC-U.S. Realty's stockholders to approve the
proposed transaction. The participants in this solicitation may include the
directors and executive officers of SC-U.S. Realty. Information regarding
SC-U.S. Realty's directors and executive officers and their security holdings in
SC-U.S. Realty is contained in SC-U.S. Realty's most recent Form 20-F and Form
F-1, filed with the Commission on June 9, 2000 and April 5, 2000, respectively.
Security Capital Group and certain other persons may be deemed to be
participants in the solicitation of proxies from Security Capital Group's
stockholders to approve the issuance of Security Capital Group stock in
connection with the proposed transaction. The participants in this solicitation
may include the directors and executive officers of Security Capital Group.
Information regarding Security Capital Group's directors and executive officers
and their security holdings in Security Capital Group is contained in Security
Capital Group's proxy statement for its annual meeting of shareholders dated
April 10, 2000.
SUPPLEMENTAL INFORMATION PAGE 18
###
<PAGE>
[INVESTOR/ANALYST PRESENTATION MATERIALS]
[Security Capital Group Incorporated Logo]
<PAGE>
IMPORTANT INFORMATION
We urge you to read the joint proxy statement / prospectus regarding the
proposed transaction between Security Capital Group Incorporated and SC-U.S.
Realty, when it becomes available, because it will contain important
information. The joint proxy statement / prospectus will be filed with the
Securities and Exchange Commission by Security Capital Group and SC-U.S. Realty.
You may obtain a free copy of the joint proxy statement / prospectus (when it is
available) and other documents filed by Security Capital Group and SC-U.S.
Realty with the Commission (including the documents incorporated by reference
into the joint proxy statement / prospectus) at the Commission's web site at
www.sec.gov. Shareholders of Security Capital Group may also obtain a free copy
of the joint proxy statement / prospectus (when it is available) and these other
documents by directing a request to Security Capital Group Incorporated,
Attention: William R. Fowler, telephone: 800-988-4304. Shareholders of SC-U.S.
Realty may also obtain a free copy of the joint proxy statement / prospectus
(when it is available) and these other documents by directing a request to
Security Capital U.S. Realty, Attention: Laura Hamilton, telephone:
011-352-46-37-56-2008.
SC-U.S. Realty and certain other persons may be deemed to be participants in the
solicitation of proxies from SC-U.S. Realty's stockholders to approve the
proposed transaction. The participants in this solicitation may include the
directors and executive officers of SC-U.S. Realty. Information regarding
SC-U.S. Realty's directors and executive officers and their security holdings in
SC-U.S. Realty is contained in SC-U.S. Realty's most recent Form 20-F and Form
F-1, filed with the Commission on June 9, 2000 and April 5, 2000, respectively.
Security Capital Group and certain other persons may be deemed to be
participants in the solicitation of proxies from Security Capital Group's
stockholders to approve the issuance of Security Capital Group stock in
connection with the proposed transaction. The participants in this solicitation
may include the directors and executive officers of Security Capital Group.
Information regarding Security Capital Group's directors and executive officers
and their security holdings in Security Capital Group is contained in Security
Capital Group's proxy statement for its annual meeting of shareholders dated
April 10, 2000.
<PAGE>
FORWARD LOOKING STATEMENTS
These materials contain certain statements that are neither reported financial
results nor other historical information. These statements are forward-looking
statements within the meaning of the safe-harbor provisions of the U.S. Federal
securities law. These statements reflect the current views of Security Capital
and/or SC-U.S. Realty with respect to future events and are not guarantees of
future performance. Because these forward-looking statements are subject to
risks and uncertainties, actual future results may differ materially from those
expressed in or implied by the statements. Many of these risks and uncertainties
relate to factors that are beyond the companies' ability to control or estimate
precisely, such as future market conditions, currency fluctuations, the behavior
of other market participants, the actions of governmental regulators and other
risk factors detailed in Security Capital's and SC-U.S. Realty's reports filed
with the Securities and Exchange Commission. You are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date of these materials. The companies do not undertake any obligation to
publicly release any revisions to these forward-looking statements to reflect
events or circumstances after the date of these materials.
<PAGE>
COMBINATION OF SCZ AND SC-U.S. REALTY
--------------------------------------------------------------------------------
- SCZ and SC-U.S. Realty Have Agreed (subject to shareholder approvals) to
Combine. The Expected Benefits for Both Companies Include:
- A Simplified Combined Company with a Stronger Market Profile
- Eliminate a Tier of Discount and Unrealized Value
- Eliminate a Complex Structural Relationship
- Increased Liquidity and Financial Flexibility
- Significant Step Towards an Operating Company Structure
- Enhanced Opportunities Including Monetization or Consolidation of Existing
Businesses and Significant Stock Repurchases
1
<PAGE>
SCZ WILL COMBINE WITH SC-U.S. REALTY
CONSISTENT WITH LUXEMBOURG RULES
--------------------------------------------------------------------------------
Two-Stage Program to Enhance Shareholder Value
- SCZ will Acquire SC-U.S. Realty Assets and Assume its Liabilities in Exchange
for
- Up to 51.1 Million Shares of SCZ Stock Issued (1.15x exchange ratio)(1)(3)
- $555.1 Million of SC-U.S. Realty's Liabilities and Commitments Assumed /
Retired
- SCZ has Authorized $450 Million to Repurchase SCZ Stock (inclusive of SCZ's
current $100 million stock buyback)
- Open Market Purchases
- Includes Up to $200 Million for Payments to SC-U.S. Realty Shareholders who
Desire Cash(2)(3)
(1) Excluding shares returned to SCZ, shares issued will be reduced by up to
10.5 million to the extent SC-U.S. Realty Shareholders request cash.
(2) For dissenting shareholders amount of cash per share will be determined
based on daily average high and low sales prices of SCZ stock over a 15-day
trading period ending shortly before SC-U.S. Realty Shareholders meeting,
multiplied by 1.15.
(3) The receipt of SCZ stock or cash by SC-U.S. Realty shareholders who are U.S.
residents may be taxable.
2
<PAGE>
PRO FORMA STRUCTURE POST-TRANSACTION
--------------------------------------------------------------------------------
-------------------------------------------------------------------------
| SECURITY CAPITAL GROUP |
| (Combined Company) |
| Total Assets: $6,070 MM (1) |
|-----------------------------------------------------------------------|
| | |
| CAPITAL DIVISION | FINANCIAL SERVICES |
| | DIVISION |
| (98.7% of Assets) | |
| | |
-------------------------------------------------------------------------
- Public Companies Ownership - Real Estate Research Group
---------
- Archstone 29% (2) - Capital Markets Group
- CarrAmerica 43%
- ProLogis 31% - Corporate Services Group
- Regency 60%
- Storage USA 43% - Global Capital Management Group
- Private Companies - Mutual Funds/Separate Accounts
- Belmont 100% - Managed Entities
- CWS Communities 94%
- Homestead Village 100%
- SC-European Realty 35% (1) As of June 30, 2000.
- Urban Growth 99% (2) Percentage after SCZ's sale
of ASN shares completed on
July 25, 2000.
3
<PAGE>
FINANCIAL IMPACT OF TRANSACTION
--------------------------------------------------------------------------------
SCZ Believes the Combination Provides Strong Advantages
- 2001 and Beyond
- Positive Impact of $450 Million of Stock Repurchases
- Annual Expense Savings of Approximately $8 Million
- Pro Forma Impact of Transaction (Based on Only $200 Million of Share
----
Purchases) (1)
- Accretive to SCZ's Reported NAV by 12.7%
- Cash Flow from Operations for the Four Quarters Ended June 30, 2000
Increases 22.4% to $1.04 Per Share Reflecting the Net Increase in Dividends
Received from SC-U.S. Realty Investees
- Cash Flow Coverage Ratio is 2.68x, Leverage Ratio of 29.1%
- Equity Market Capitalization of $3+ Billion
- Direct Strategic Ownership of Companies with Current Total Market
Capitalization of $26.2 Billion
(1) All financial information is pro forma as of 6/30/00.
4
<PAGE>
PRO FORMA FINANCIAL IMPACT
OF TRANSACTION
--------------------------------------------------------------------------------
(Consistent with SEC Requirements, Pro Forma Results Based on Only $200
----
Million of Share Purchases and Excludes Anticipated Expense Savings)
If the Additional $250 Million of Stock Repurchases Authorized by SCZ's Board
and Expense Savings were Included, the Results Would be as Follows:
For the Six Months Ended June 30, 2000
Adjusted Increase from Actual to
Actual Pro Forma Pro Forma (1) Adjusted Pro Forma
------ --------- --------- ------------------
Per Share
Diluted EBDADT $1.17 $1.12 $1.21 $0.04
Net Asset Value $22.66 $25.54 $26.10 $3.44
(1) Assumes completion of an additional $250 million of stock repurchases using
SCZ's closing stock price on September 22, 2000 of $19.0625 and
approximately $8 million of annual expense savings.
5
<PAGE>
BENEFITS TO SC-U.S. REALTY
SHAREHOLDERS
--------------------------------------------------------------------------------
- Direct Strategic Ownership of Companies with Current Total Market
Capitalization of $26.2 Billion
- Ownership of a Company with Greater Liquidity in a Unified Trading Market
on the NYSE and $3+ Billion Equity Market Capitalization
- Dissenting Shareholders will Have the Option to Receive Cash (Up
to $200 Million in Total)
- Shareholders Receive a Premium to the Market Price on September 25, 2000
- Simplified Structure with No External Advisor
- Eliminate Investment of Restructuring Limitations Imposed on Investees
Operating Through an Indirect Structure
6
<PAGE>
COMBINATION OF SCZ AND SC-U.S. REALTY
--------------------------------------------------------------------------------
- SCZ Believes the Combination is the Best Way to Reduce the Multi-Tier Discount
That Exists in the Current Stock Prices of Both Companies
- Alternatives for Monetization, Consolidation or Additional Stock
Repurchases Remain (with Increased Flexibility)
- Transaction Expected to Be Completed Within Four Months
- Thoroughly Analyzed a Number of Alternatives Prior to Selecting the
Combination
- Distribution of SC-U.S. Realty's Public Securities
- Liquidation of SC-U.S. Realty (Public / Private Companies)
- Purchase of SC-U.S. Realty Shares by SCZ in the Open Market
7
<PAGE>
SCZ POST-COMBINATION
--------------------------------------------------------------------------------
This Transaction is Consistent with the Key Objectives Outlined by SCZ's Board
in February 1999
- Another Important Step in Eliminating Discount to NAV
- Enhance Ability to Monetize Investments and Repurchase Significant Amount of
SCZ Stock
- Achieve High Percentage Ownership of a Few Select Real Estate Operating /
Service Businesses
- Own Businesses that Produce High ROI
- Sustainable Leadership Businesses which Produce Substantial Service Income
- Businesses Able to Create Measurable Brand Value
- Leading Operating / Service Platform in Respective Niche
- Dispose of Businesses That Do Not Meet Criteria
8
<PAGE>
IMPLEMENTATION OF SCZ STRATEGY
--------------------------------------------------------------------------------
$1.1 Billion of Capital Transactions Since September 1999
- $329 Million Sale of Strategic Hotel Capital Enables SCZ to Begin Attractive
Stock Repurchase Program
- Completed $200 Million of Stock Repurchases
- Repurchased $80.5 Million of Convertible Debentures at an Average Discount of
25.1%
- Restructuring and Privatization of Homestead
- Provides $62+ Million of Cash Flow to SCZ
- Ability to Maximize Value
- Overhead Sized to Meeting Long-Term Strategic Needs
- $416 Million Sale of Archstone Stock
- Creates Flexibility in Repositioning Homestead
- Provides Cash for Additional SCZ Stock Repurchases
9
<PAGE>
THE FUTURE
--------------------------------------------------------------------------------
Priorities
- Simplification
- Stock Repurchases Which Increase Shareholder Value
- Concentrate Only on High ROI Businesses / Transactions
10
<PAGE>
COMBINATION OF SCZ AND SC-U.S. REALTY
--------------------------------------------------------------------------------
Process / Timetable
- Transaction Requires the Approval of:
- 66.7% of Voting SC-U.S. Realty Shareholders (including SCZ shares)
- Majority of the Voting Power of SCZ Shares Who Cast Votes
Subject to Review by Luxembourg CSSF and Review Under United States Anti-Trust
Regulations
- Current Timetable
- File Joint Proxy Statement / Prospectus with SEC and CSSF in Early October
- Shareholder Votes / Approval
- Closing
- Distribution of SCZ Shares or Cash to SC-U.S. Realty Shareholders
11
<PAGE>
ESTIMATED TRANSACTION TIMELINE
--------------------------------------------------------------------------------
The following reflects Security Capital's best estimate of the timeline.
Because of the international nature of the transaction, unanticipated delays
could occur.
[Graphic depiciting the following Transaction Timeline:
Announcement - Sept. 26
10-14 Days
File Prospectus - Oct. 10
45-60 Days
Mail Final Prospectus - Dec. 5
30-40 Days
Vote - Jan. 19
7 Days
Distribution to Shareholders - Jan. 26 ]
12
<PAGE>
[Security Capital Group Incorporated Logo]
Transaction Details
13
<PAGE>
TRANSACTION DETAILS OUTLINE
--------------------------------------------------------------------------------
- Transaction Process
- Summary Pro Forma Financial Information
- NAV
- Debt Maturity Schedule
- Equity Market Capitalization Comparison
- Pro Forma Asset Distribution of Combined Entity
- Transaction Financing
- Estimated Transaction Timetable
14
<PAGE>
TRANSACTION PROCESS
--------------------------------------------------------------------------------
- Pursuant to Luxembourg Law, SC-U.S. Realty's Assets will be Transferred to SCZ
and SC-U.S. Realty's Line of Credit and Convertible Debentures will be
Retired (1)
- Shareholders of SC-U.S. Realty who Vote in Favor of the Transaction Receive
1.15 Shares of SCZ Stock (2)(3) for Each Share of SC-U.S. Realty
- Dissenting SC-U.S. Realty Shareholders will have the Option to Receive Cash or
SCZ Stock (2)
- Distribution of Cash and Stock will be Immediately After Shareholder
Votes
- SCZ has Agreed to Make up to $200 Million in Cash Available. The Cash Price
is Based on the 15-day Average Trading Price of SCZ Stock Ending Six
Trading Days Prior to SC-U.S. Realty's Shareholder Vote
- In this process, SC-U.S. Realty will be Liquidated
(1) SCZ has obtained a commitment for a bank loan to finance the transaction.
(2) The receipt of SCZ stock or cash by SC-U.S. Realty shareholders who are
U.S. residents may be taxable.
(3) 1.15:1 ratio was negotiated in arms-length transaction between SCZ and
SC-U.S. Realty special committee. 15
<PAGE>
SC-U.S. REALTY SHAREHOLDER VOTE
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
-----------------------------------------------------------------------------
| |
| [SECURITY CAPITAL U.S. REALTY Logo] |
| |
----------| |-----------
| | Shareholders Vote | |
| | | |
| ----------------------------------------------------------------------------- |
| |
| |
| |
--------------------- ---------------------
| | | |
| Vote in Favor of | | Vote Against |
| Transaction | | Transaction |
| | | |
--------------------- ---------------------
| |
| |
| |
| ---------------------------------
| | |
| | Choose |
| | |
--------------------- --------------------- ---------------------
| | | | | |
| Receive 1.15 | | Receive 1.15 SCZ | | Receive Cash* |
|SCZ Shares for Each| | Shares for Each | |(Up to $200 Million|
| RTY Share Held | | RTY Share Held | | Available) |
| | | | | |
--------------------- --------------------- ---------------------
Shareholders Only Receive Consideration if Transaction
is Approved by 66.7% of Voting SC-U.S. Realty Shareholders
* Based on average high and low SCZ for 15-day period that ends on
the sixth trading day prior to shareholder vote
16
</TABLE>
<PAGE>
PRO FORMA FINANCIAL IMPACT
OF TRANSACTION
--------------------------------------------------------------------------------
(Consistent with SEC Requirements, Based on Only $200 Million of
----
Share Purchases and Excludes Anticipated Expense Savings)
<TABLE>
<CAPTION>
12-MONTHS ENDED SIX-MONTHS ENDED
DEC. 31, 1999 JUNE 30, 2000
SCZ ACTUAL PRO FORMA SCZ ACTUAL PRO FORMA
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
EBDADT / Share $ 1.96 $1.98 $1.17 $1.12
Cash Flow From Operations $60,337 $119,567 $93,002 $155,521
Cash Flow / Share $ 0.51 $0.75 $0.85 $1.04
Reported NAV $ 17.99 $20.60 $22.66 $25.54
Cash Flow Coverage Ratio 2.16x 2.41x 2.65x 2.68x
Leverage Ratio (1) 30.7% 34.9% 27.6% 29.1% (2)
(1) Calculated as total debt to fair value of assets.
(2) 25.4% as of August 31, 2000.
17
</TABLE>
<PAGE>
PER SHARE NAV
--------------------------------------------------------------------------------
Reported NAV as of June 30, 2000 and
[Bar graph depicting the following information:
Security Capital - $22.66
Combined Company - $25.54 ]
Pro Forma NAV Assuming Transaction Completion
[Bar graph depicting the following information:
SC-U.S. Realty - $28.87
SCZ Share Equivalent (1) - $29.37 ]
(1) Based on SC-U.S. Realty shareholders receiving 1.15 shares of SCZ stock for
each SC-U.S. Realty share.
18
<PAGE>
FINANCIAL FLEXIBILITY MAINTAINED
--------------------------------------------------------------------------------
Pro Forma Debt Maturity Schedule
[Bar graph depicting the following information (In Millions):
SCZ Credit Rating: Baa2 / BBB
LOC - 2002 - $0
2003 - $100 (7.8%)
2004 - $100 (7.8%)
2005 - $200 (7.0%)
2006 - $251 (1) (8.0%)
2007 - $100 (7.2%)
Convertible - 2016 - $231 (6.5%)
2028 - $200 (7.7%) ]
Fixed Charge Coverage Ratio
-----------------------------------
(Four quarters ended June 30, 2000)
Current 2.65x
Pro Forma 2.68x
(1) Issued in 2001 to replace transaction
financing. Assumes $200 million of
cash is paid out in lieu of stock in
the transaction.
19
<PAGE>
EQUITY MARKET CAPITALIZATION
--------------------------------------------------------------------------------
[Bar graph depicting the following information (In Billions:
RTY - $1.3
SCZ - $2.2
VNO - $3.2
Combined Entity - $3.2
SPK - $3.3
BXP - $3.5
SPG - $6.1
EQR - $6.4
EOP - $7.8 ]
Reflects equity market capitalization based on June 30, 2000 valuation.
Combined Entity market capitalization is based on pro forma SCZ shares and
SCZ closing stock price on September 22, 2000 of $19.0625.
20
<PAGE>
PRO FORMA ASSET DISTRIBUTION OF COMBINED ENTITY
--------------------------------------------------------------------------------
[Pie chart entitled "Public / Private Mix" depicting the following information:
Private 36%
Public 64% ]
[Pie chart entitled "By Property Sector" depicting the following information:
Offices 17%
Multi-family 16%
Shopping Centers 15%
Distribution 13%
Extended Stay Lodging 12%
Self Storage 9%
Parking 6%
Manufactured Homes 5%
Senior Assisted Living 2%
Other 5% ]
As of June 30, 2000 21
<PAGE>
TRANSACTION FINANCING
--------------------------------------------------------------------------------
SCZ has Obtained an Underwritten Commitment for
a Transaction Loan
- One-year Initial Term
- One-year Extension Option Available at SCZ's Choice
- Interest Rate is LIBOR Plus 130 Bps
- SCZ will Draw up to $625 Million at Closing to Fund any SC-U.S. Realty
Shareholders Selecting Cash Election and Retire SC-U.S. Realty Liabilities
- Transaction Loan will Be Repaid with Contemplated Asset Sales and Free Cash
Flow, with the Remainder being Refinanced with Long-Term Debt
22
<PAGE>
ESTIMATED TRANSACTION TIMETABLE
--------------------------------------------------------------------------------
The following reflects Security Capital's best estimate of the timeline.
Because of the international nature of the transaction, unanticipated delays
could occur.
DAYS
----
- SC-U.S. Realty and SCZ Announce Business Combination 1
- Joint Proxy Statement / Prospectus Filed with SEC 14
- Joint Proxy Statement / Prospectus Cleared by SEC and 70
Mailed to Shareholders
- SCZ and SC-U.S. Realty Shareholder Meetings 115
- Issue Press Release Regarding Results of Shareholder 116
Votes
- Closing (Approximately January 23-26, 2001) 119-122
- Transfer of Assets
- Payment of SC-U.S. Realty Bank Debt / Other Liabilities
- Distribution of SCZ Shares and / or Cash Equivalent
- Satisfaction and discharge of Indentures for SC-U.S. Realty
Convertible Debentures
- Payment of SC-U.S. Realty Convertible Debentures (May 2001)
23
<PAGE>
[Security Capital Group Incorporated Logo]
