<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) January 26, 1998
--------------------
SECURITY CAPITAL PACIFIC TRUST
(Exact Name of Registrant as Specified in its Charter)
Maryland
(State or Other Jurisdiction of Incorporation)
1-10272
(Commission File Number)
74-6056896
(I.R.S. Employer Identification No.)
7670 South Chester Street, Englewood, Colorado 80112
(Address of Principal Executive Offices) (Zip Code)
(303) 708-5959
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events.
On January 26, 1998, Security Capital Pacific Trust ("PTR")
reported Funds from Operations ("FFO") attributable to common shares of
$39.4 million, or $0.43 per common share, for the quarter ended December
31, 1997. This represents a 13.2% increase in FFO per share, compared with
$28.7 million, or $0.38 per common share, for the same quarter of 1996. A
copy of the press release describing such increase in FFO is filed as an
exhibit to this report and is hereby incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit 99.1.
<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 hereunto duly authorized.
SECURITY CAPITAL PACIFIC TRUST
By: /s/ Jeffrey A. Klopf
-------------------------
Jeffrey A. Klopf
Title:
Date: March 3, 1998
<PAGE>
INDEX TO EXHIBITS
Exhibit Sequential
No. Document Description Page No.
------- -------------------- ----------
99.1 Press release dated January 26, 1998.
Exhibit 99.1
Security Capital Pacific Trust (NYSE: PTR) reported Funds from
Operations (FFO) attributable to common shares of $39.4 million, or $0.43
per common share, for the quarter ended December 31, 1997. This represents
a 13.2% increase in FFO per share, compared with $28.7 million, or $0.38
per common share, for the same quarter of 1996. PTR's development
communities generated approximately 55% of the increase in FFO, and 18% was
produced by the strong internal growth of the company's same-store
operating communities.
PTR also achieved very solid growth during the year ended December
31, 1997, reporting FFO attributable to common shares of $131.6 million, or
$1.61 per common share on revenues of $354.4 million for the year. This
represents an 11.8% increase in FFO per share, compared with FFO of $105.4
million, or $1.44 per common share in 1996. The FFO results reported above
are calculated consistent with the methodology used in prior periods.
"Our fourth quarter results were very strong and reflect the
outstanding performance of our development communities, together with
continually improving internal growth from our operating communities," said
R. Scot Sellers, president and chief executive officer. PTR achieved growth
of 4.27% in revenues and 4.18% in net operating income (NOI) for its
same-store communities during the quarter. "This is the fourth consecutive
quarter in which PTR's revenue growth has increased, which is a direct
result of our extensive redeployment of capital to markets with high
barriers to entry," he said.
Development Pipeline is a Powerful Component of Long-Term Growth
Mr. Sellers noted that PTR's West Coast development pipeline
positions the company for significant growth in 1998 and beyond. PTR owns
or controls land for the development of $943.0 million of new communities
in its West Coast markets that are either under construction or in
planning. "Our early entry into these markets allowed us to control very
well-located sites at prices that in many cases are less than 60% of
current land values," said Mr. Sellers. "This will allow us to compete and
stabilize more than $200 million in new development communities annually at
very attractive yields, during each of the next four years. These new
development communities will be a powerful component of our future growth
in FFO per share," he said.
During the quarter, PTR commenced construction on more than $131.9
million of new communities, including two communities in the San Francisco
Bay area which represent a total expected investment of $69.9 million. PTR
will also start an additional $114.5 million of new communities in the San
Francisco Bay area and San Diego during the first quarter of 1998. "These
communities are exceptionally well-located in dynamic growth markets with
high barriers to entry, and should have a very positive impact on our
future performance," said Mr.
Sellers.
Well Positioned for Growth in 1998
"We believe PTR is very well positioned for solid growth in 1998,"
said Mr. Sellers. The company expects to start a total of over $300 million
in new development communities in 1998, in markets and submarkets with high
barriers to entry. "These developments are expected to contribute
substantially to our growth in FFO going forward," he said. "In addition,
the strength of our markets should result in very consistent revenue growth
throughout 1998, due to the limited new competition and continuing strong
demand fundamentals."
PTR is the preeminent real estate operating company focusing on
the development, acquisition, operation and long-term ownership of
multifamily communities in the growing markets of the western United
States. PTR's primary objective is generating long-term, sustainable growth
in per share cash flow. As of December 31, 1997, PTR's portfolio of
garden-style multifamily communities included 43,465 operating units, 5,545
units under construction and an estimated 10,558 units in planning.
In addition to historical information, this press release contains
forward-looking statements under the federal securities law. These
statements are based on current expectations, estimates and projections
-1-
<PAGE>
about the industry and markets in which PTR operates, management's beliefs
and assumptions made by management. Forward-looking statements are not
guarantees of future performance and involve certain credit risks and
uncertainties which are difficult to predict. Actual operating results may
be affected by changes in national and local economic conditions,
competitive market conditions, weather, obtaining governmental approvals
and meeting development schedules, and therefore, may differ materially
from what is expressed or forecasted in this press release.
<TABLE>
<CAPTION>
SECURITY CAPITAL PACIFIC TRUST
Fourth Quarter 1997
Financial Highlights
In thousands, except per
share amounts and percentages
Three Months Ended Twelve Months Ended
December 31, December 31,
% %
1997 1996 Change 1997 1996 Change
---- ---- ------ ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Operating Performance (A)
Rental Revenues $87,938 $79,924 10.03% $335,060 $296,679 12.94%
Net Operating Income $56,950 $49,260 15.61% $212,009 $180,630 17.37%
Funds From Operations
Attributable to Common
Shares $39,371 $28,737 37.00% $131,621 $105,422 24.85%
Funds From Operations
per Common Share
(Primary and Basic) (B) $0.43 $0.38 13.16% $1.61 $1.44 11.81%
Cash Distributions per
Common Share (C) $0.325 $0.310 4.84% $1.30 $1.24 4.84%
<CAPTION>
As of December 31,
Financial Position 1997 1996 % Change
---- ---- ---------
<S> <C> <C> <C>
Assets
Real Estate Investments
Before Depreciation $2,604,919 $2,153,363 20.97%
Total Assets $2,805,686 $2,282,432 22.93%
Book Capitalization
Total Long-Term Debt $895,652 $797,188 12.35%
Total Debt $1,127,152 $907,388 24.22%
Total Long Term
Undepreciated Book Capitalization $2,565,806 $2,162,270 18.66%
Total Undepreciated Book Capitalization $2,797,306 $2,272,470 23.10%
Total Long-Term
Debt/Total Long Term
Undepreciated Book Capitalization 34.91% 36.87% (5.32%)
Total Debt/Total
Undepreciated Book Capitalization 40.29% 39.93% 0.90%
-2-
<PAGE>
<CAPTION>
1997 1996 % Change
---- ---- ---------
<S> <C> <C> <C>
Market Capitalization
Total Common Shares Outstanding 92,634 75,511 22.68%
Share Price $24.375 $22.875 6.56%
Market Capitalization of Common Equity $2,257,954 $1,727,314 30.72%
Total Series A
Convertible Preferred Shares Outstanding 5,408 6,495 (16.74%)
Share Price $32.750 $30.625 6.94%
Market Capitalization of Series A Convertible
Preferred Shares $177,112 $198,909 (10.95%)
Total Series B Cumulative Redeemable
Preferred Shares Outstanding 4,200 4,200 0.00%
Share Price $25.813 $25.625 0.73%
Market Capitalization of Series B Cumulative
Redeemable Preferred Shares $108,415 $107,625 0.73%
Total Equity Market Capitalization $2,543,481 $2,033,848 25.06%
NOTES
(A) Operating Performance: Except for distributions, 1996 information
reflects pro forma data assuming the spin-off of PTR's Homestead
Village extended-stay lodging assets ("Homestead Assets") to a
newly formed company, Homestead Village Incorporated ("Homestead")
as of January 1, 1996. Distributions and all 1997 information
reflect actual amounts.
(B) PTR's FFO per Common Share calculated under SFAS No. 128,
"Earnings Per Share" for the "basic" computation is as presented
above, which is equivalent to the "primary" computation under APB 15.
FFO per Common Share on a "diluted" basis is as follows:
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ --------------------
% %
1997 1996 Change 1997 1996 Change
---- ---- ------ ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
FFO Attributable to
Common Shares $39,371 $28,737 $131,621 $105,422
Series A Preferred
Share dividends 2,396 2,849 9,934 14,717
Adjusted FFO
attributable to
Common Shares $41,767 $31,586 $141,555 $120,139
Weighted Average
Common Shares
Outstanding 92,524 75,147 81,870 73,057
Conversion of Series A
Preferred Shares 7,326 9,110 8,322 11,197
Incremental options 107 86 38 86
Adjusted Weighted
Average Common Shares 99,957 84,343 90,230 84,340
Diluted FFO per
Common Share $0.42 $0.37 13.51% $1.57 $1.42 10.56%
NOTES
(C) In connection with PTR's acquisition of its REIT and property
managers, PTR shareholders received 0.052646 Security Capital
Group warrants for each PTR Common Share held. Based upon the
closing price of the warrants on December 31, 1997, the value of
the warrants was $0.28 per PTR common share.
-4-
<PAGE>
<CAPTION>
Fourth Quarter 1997
Statements of Funds from Operations (FFO) (A)
In thousands, except per share amounts
Three Months Ended Twelve Months Ended
December 31, December 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Rental Revenues $87,938 $79,924 $335,060 $296,679
Interest Income on
Homestead Notes 4,870 2,296 15,406 5,993
Other Income 1,891 576 3,915 2,160
$94,699 $82,796 $354,381 $304,832
Expenses:
Rental Expenses $24,509 $19,800 $87,220 $78,364
Real Estate Taxes 6,327 6,843 27,386 24,999
Property Management Fees:
Paid to Affiliate --- 3,747 7,642 11,610
Paid to Third Party 152 274 803 1,076
Interest 15,451 13,162 61,153 38,126
REIT Management Fee
Paid to Affiliate --- 4,689 13,040 19,434
General and Administrative 2,725 302 4,036 1,076
Administrative Services Fee
Paid to Affiliate 1,046 --- 1,274 ---
Other 359 31 822 558
$ 50,569 $ 48,848 $ 203,376 $ 175,243
FFO $ 44,130 $ 33,948 $ 151,005 $ 129,589
Less Preferred Share Dividends 4,759 5,211 19,384 24,167
FFO Attributable to
Common Shares $39,371 $28,737 $ 131,621 $105,422
Weighted Average Common
Shares Outstanding 92,524 75,147 81,870 73,057
FFO Attributable to Common
Shares per Common Share
(Primary and Basic) (B) $0.43 $0.38 $1.61 $1.44
</TABLE>
-4-
<PAGE>
Incremental Value per PTR Share Resulting From the Ownership of Homestead
Convertible Mortgages
During early 1998, PTR will complete the funding of $221.3 million of
convertible mortgages on Homestead development properties. These mortgages
are convertible into Homestead common shares at a price of $11.50 per
share. PTR's ownership of the Homestead mortgages results in the following
incremental value per PTR share:
Homestead Common Share Price (at 12/31/97) $15.063
Conversion Price $11.500
Incremental Value per Homestead Common Share $ 3.563
Homestead Common Shares Upon Conversion (at full funding) 19,246
Total Incremental Value from Conversion $68,573
PTR Common Shares Outstanding (at 12/31/97) 92,634
Incremental Value per PTR Common Share $0.74
NOTES
(A) The 1996 Statements of Funds From Operations were prepared on a
pro forma basis assuming the spin-off of Homestead Assets as of
January 1, 1996. The 1997 Statements of Funds From Operations
reflect actual results.
(B) See Previous Note B.
<TABLE>
<CAPTION>
SECURITY CAPITAL PACIFIC TRUST
Fourth Quarter 1997
Statement of Earnings (A)
In thousands, except per share amounts
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------- ------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Rental Revenues $87,938 $81,944 $335,060 $322,046
Interest Income on
Homestead Notes 5,283 2,035 16,687 2,035
Other Income 1,891 576 3,915 2,165
$95,112 $84,555 $355,662 $326,246
Rental Expenses $24,509 $21,473 $87,220 $88,474
Real Estate Taxes 6,327 7,009 27,386 26,962
Property Management Fees:
Paid to Affiliate --- 2,822 7,642 11,610
Paid to Third Party 152 273 803 1,076
Depreciation on Real
Estate Investments 14,841 12,657 52,893 44,887
Interest 15,451 12,887 61,153 35,288
-5-
<PAGE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------- --------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
REIT Management Fee
Paid to Affiliate --- 5,046 13,040 22,191
General and Administrative 2,725 307 4,036 1,077
Administrative Services Fee
Paid to Affiliate 1,046 --- 1,274 ---
Costs Incurred in Acquiring
Management Companies from
an Affiliate (B) --- --- 71,707 ---
Other 1,859 91 3,822 592
$66,910 $62,565 $330,976 $232,157
Earnings from Operations $28,202 $21,990 $24,686 $94,089
Gain on Disposition of
Investments, net 302 4,152 48,232 37,492
Net Earnings Before Extraordinary
Item $28,504 $26,142 $72,918 $131,581
Less Extraordinary Item -- Loss on
Early Extinguishment of Debt --- --- --- 870
Net Earnings $28,504 $26,142 $72,918 $130,711
Less Preferred Share Dividends 4,759 5,211 19,384 24,167
Net Earnings Attributable to
Common Shares $23,745 $20,931 $53,534 $106,544
Weighted Average Common Shares
Outstanding (Primary and Basic) 92,524 75,147 81,870 73,057
Weighted Average Common Shares
Outstanding (Diluted) 99,957 84,343 90,230 84,340
Net Earnings Attributable to
Common Shares per
Common Share
Primary and Basic $0.26 $0.28 $0.65 $1.46
Diluted $0.26 $0.28 $0.65 $1.44
Cash Distributions Paid
Per Common Share $0.325 $0.310 $1.30 $1.24
Reconciliation of Funds From Operations (A)
Net Earnings Attributable to
Common Shares $23,745 $20,931 $53,534 $106,544
Depreciation on Real
Estate Investments 14,841 12,657 52,893 44,887
Gain on Disposition of Investments (302) (4,152) (48,232) (37,492)
-6-
<PAGE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------- ------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Costs Incurred in Acquiring
Management Companies from an
Affiliate --- --- 71,707 ---
Other, net 1,087 (190) 1,719 598
Funds from Operations Attributable
to Common Shares $39,371 $29,246 $131,621 $114,537
Weighted Average Common
Shares Outstanding 92,524 75,147 81,870 73,057
Funds From Operations per
Common Share (Primary and
Basic) $0.43 $0.39 $1.61 $1.57
</TABLE>
NOTES
(A) Statements of Earnings represent PTR's historical earnings and are
reconciled to PTR's historical Funds From Operations. The 1996
statements do not give effect to pro forma calculations relating
to the spin-off of Homestead Assets.
(B) The difference between the merger purchase price and the estimated
fair value of the net tangible assets acquired was recorded as a
non-recurring charge. This one-time adjustment was recorded as an
operating expense but it was not deducted for purposes of
calculating Funds From Operations, due to the non-recurring and
non-cash nature of the expense.
-7-
<PAGE>
<TABLE>
<CAPTION>
SECURITY CAPITAL PACIFIC TRUST
Fourth Quarter 1997
Balance Sheets
In thousands
December 31, December 31,
1997 1996
<S> <C> <C>
Assets
Real Estate $2,604,919 $2,153,363
Less: Accumulated Depreciation 129,718 97,574
2,475,201 2,055,789
Investment in Homestead
Convertible Mortgages 272,556 176,304
Other Mortgage Notes Receivable 12,682 13,525
Net Investments 2,760,439 2,245,618
Cash and Cash Equivalents 4,927 5,643
Accounts Receivable
and Accrued Interest 11,544 4,157
Other Assets 28,776 27,014
Total Assets $2,805,686 $2,282,432
Liabilities and Shareholders' Equity
Liabilities:
Credit Facilities $231,500 $110,200
Long-term Debt 630,000 580,000
Mortgages Payable 265,652 217,188
Payables, Accrued Expenses and
Other Liabilities 138,098 107,536
Total Liabilities 1,265,250 1,014,924
Shareholders' Equity:
Series A Cumulative Convertible
Preferred Shares (A) 135,210 162,374
Series B Cumulative Redeemable
Perpetual Preferred Shares 105,000 105,000
Common Shares, $1 Par Value 92,634 75,511
Additional Paid-In Capital 1,251,503 918,434
Unrealized Holding Gain on
Homestead Mortgages 83,794 74,923
Distributions in Excess of
Net Earnings (127,705) (68,734)
Total Shareholders' Equity 1,540,436 1,267,508
Total Liabilities and Shareholders' Equity $2,805,686 $2,282,432
-8-
<PAGE>
<CAPTION>
December 31, December 31,
1997 1996
<S> <C> <C>
Share Data:
Total Common Shares Outstanding (A) 92,634 75,511
NOTES
(A) During 1997, 1,086,574 Series A Cumulative Convertible Preferred
Shares were converted into 1,463,448 Common Shares.
</TABLE>
-9-
