<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): APRIL 22, 1998
SECURITY CAPITAL PACIFIC TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 1-10272 74-6056896
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
7670 SOUTH CHESTER STREET 80112
ENGLEWOOD, COLORADO (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (303) 708-5959
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE>
Item 5. Other Events.
This Current Report on Form 8-K ("Form 8-K") provides current pro forma
financial information on the following Security Capital Pacific Trust ("PTR")
transactions which were previously reported on the Form 8-K dated September 8,
1997:
(i) The acquisition of PTR's REIT Manager and Property Manager,
previously owned by Security Capital Group Incorporated
("Security Capital"), in exchange for PTR common shares
("Common Shares"), which resulted in PTR becoming an
internally managed REIT, and
(ii) The acquisitions and dispositions of the multifamily
communities reflected on PTR's Form 8-K dated September 8,
1997.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro Forma Financial Information (Unaudited):
Pro Forma Condensed Statement of Earnings from Operations for
the year ended December 31, 1997
Notes to Pro Forma Condensed Statement of Earnings from
Operations
1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant had duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SECURITY CAPITAL PACIFIC TRUST
Dated: April 22, 1998 By: /S/ ASH K. ATWOOD
------------------
Ash K. Atwood
Vice President and Co-Controller
(Principal Accounting Officer)
2
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
PRO FORMA CONDENSED FINANCIAL STATEMENT
(UNAUDITED)
The accompanying pro forma condensed statement of earnings from
operations of Security Capital Pacific Trust ("PTR") reflects the transaction,
which was consummated on September 9, 1997, pursuant to which PTR acquired the
operations and business of Security Capital Pacific Incorporated (the "REIT
Manager") and SCG Realty Services Incorporated (the "Property Manager")
previously owned by Security Capital Group Incorporated ("Security Capital"), in
exchange for PTR common shares (the "Transaction"). The Transaction resulted in
PTR becoming an internally managed REIT. Management believes this information is
helpful in understanding PTR's 1997 financial results.
In addition to the Transaction, the pro forma condensed statement of
earnings from operations reflects the 1997 acquisitions and dispositions of the
following multifamily communities previously reported in the Form 8-K dated
September 8, 1997 which were as follows (the "Community Acquisitions and
Dispositions"):
<TABLE>
<CAPTION>
Acquisitions Dispositions
---------------------------- ----------------------------
<S> <C>
Newport Crossing Anderson Mill
Reflections Post Oak Ridge
Marina Lakes Club at the Green
River Meadows Knight's Castle
Folsom Ranch Windsail
Sierra Hills Weslayan
Los Padres Craycroft
La Jolla Point Seahawk
Cambrian Pineloch
Pelican Point North Mountain Village
Le Club Park Place
Carrington Place Apple Ridge
The Hamptons
</TABLE>
The pro forma condensed statement of earnings from operations has been
prepared based on certain pro forma adjustments to PTR's historical statement of
earnings. The accompanying pro forma condensed statement of earnings from
operations for the year ended December 31, 1997 has been prepared as if the
Transaction and the Community Acquisitions and Dispositions had occurred on
January 1, 1997.
A pro forma condensed balance sheet as of December 31, 1997 has not
been presented as all of the aforementioned transactions had been completed, and
therefore included, in the historical balance sheet as of December 31, 1997.
The pro forma condensed statement of earnings from operations does not
purport to be indicative of the results of operations which would actually have
been obtained had the transactions described above been completed on January 1,
1997 or which may be obtained in the future. The pro forma condensed statement
of earnings from operations should be read in conjunction with the historical
statement of earnings of PTR as set forth in PTR's 1997 Form 10-K. In
management's opinion, all material adjustments have been made.
3
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
PRO FORMA CONDENSED STATEMENT OF EARNINGS FROM OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
COMMUNITY
PTR ACQUISITIONS AND THE PTR
HISTORICAL (a) DISPOSITIONS (b) TRANSACTION PRO FORMA
--------------------- ------------------- ------------------ --------------
<S> <C> <C> <C> <C>
Revenues:
Rental revenues........................ $ 335,060 $ 1,873 $ - $ 336,933
Interest income on Homestead Notes..... 16,687 - - 16,687
Other interest income.................. 3,915 - - 3,915
--------------------- ------------------- ------------------ --------------
355,662 1,873 - 357,535
--------------------- ------------------- ------------------ --------------
Expenses:
Rental expenses ....................... 87,220 (579) 7,920 (c) 94,561
Real estate taxes...................... 27,386 1 - 27,387
Property management fees:
Paid to affiliate.................... 7,642 (16) (7,626) (d) -
Paid to third parties................ 803 - - 803
Depreciation on real estate investments 52,893 907 220 (e) 54,020
Interest .............................. 61,153 1,551 - 62,704
REIT management fee paid to affiliate.. 13,040 146 (13,186) (d) -
General and administrative............. 4,036 - 6,359 (f) 10,395
Administrative services provided by
an affiliate......................... 1,274 - 3,103 (g) 4,377
Costs incurred in acquiring Management
Companies from an affiliate.......... 71,707 - - 71,707
Other.................................. 3,822 - 593 (e) 4,415
--------------------- ------------------- ------------------ --------------
Total expenses....................... 330,976 2,010 (2,617) 330,369
--------------------- ------------------- ------------------ --------------
Earnings from operations................... 24,686 (137) 2,617 27,166
Less preferred share dividends............. 19,384 - - 19,384
--------------------- ------------------- ------------------ --------------
Earnings from operations attributable to
Common Shares............................ $ 5,302 $ (137) $ 2,617 $ 7,782
===================== =================== ================== ==============
Common Shares
outstanding (Basic)...................... 81,870 - 2,266 (h) 84,136
===================== =================== ================== ==============
Weighted-average Common Shares
outstanding (Diluted).................... 81,908 - 2,266 (h) 84,174
===================== =================== ================== ==============
Earnings from operations attributable to
Common Shares per Common Share
(Basic).................................. $ 0.06 $ - $ 0.03 $ 0.09
===================== =================== ================== ==============
Earnings from operations attributable to
Common Shares per Common Share
(Diluted)................................ $ 0.06 $ - $ 0.03 $ 0.09
===================== =================== ================== ==============
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PTR ACQUISITIONS AND THE PTR
HISTORICAL (a) DISPOSITIONS (b) TRANSACTION PRO FORMA
------------------- ----------------- ----------------- --------------
<S> <C> <C> <C> <C>
Other Data:
Reconciliation of earnings from operations
attributable to Common Shares to
funds from operations attributable to
Common Shares:
Earnings from operations attributable to
Common Shares............................. $ 5,302 $ (137) $ 2,617 $ 7,782
Add (Deduct):
Depreciation of real estate............. 52,893 907 220 54,020
Provision for possible loss on
investments........................... 3,000 - - 3,000
Amortization related to Homestead
Notes................................. (1,281) - - (1,281)
Costs incurred in acquiring
Management Companies
from an affiliate...................... 71,707 - - 71,707
------------------- ----------------- ----------------- --------------
Common Shares (i)......................... $ 131,621 $ 770 $ 2,837 $ 135,228
=================== ================= ================= ==============
Weighted-average Common Shares
outstanding (Basic)....................... 81,870 - 2,266 84,136
------------------- ----------------- ----------------- --------------
Weighted-average Common Shares
outstanding (Diluted)..................... 81,908 - 2,266 84,174
------------------- ----------------- ----------------- --------------
Cash Flow Summary:
Net cash flow provided by operating
activities............................. $ 159,724 $ 770 $ 3,430 $ 163,924
Net cash used in investing activities.... (403,112) - (5,444) (408,556)
Net cash provided by financing activities $ 242,672 $ - $ - $ 242,672
</TABLE>
5
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
NOTES TO PRO FORMA CONDENSED
STATEMENT OF EARNINGS FROM OPERATIONS
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(a) Reflects historical information derived from PTR's statement of earn-
ings for the year ended December 31, 1997.
(b) For those PTR multifamily community acquisitions acquired after
January 1, 1997 that were reported on PTR's previously filed Form 8-K
dated September 8, 1997, reflects the predecessor's historical revenues
and certain expenses and certain pro forma adjustments from January 1,
1997 to the respective dates of acquisition. The historical revenues
and certain expenses exclude amounts which would not be comparable to
the proposed future operations of the communities such as certain
interest expense (unless mortgage debt was assumed), interest income,
income taxes and depreciation. This column also reflects the
elimination of the historical revenues and expenses for the period from
January 1, 1997 to the respective dates of disposition, related to the
multifamily community dispositions reported on the Form 8-K, dated
September 8, 1997 the proceeds of which were used to fund these
acquisitions (the transactions were structured as tax-free exchanges).
The following table reconciles the historical amounts and pro forma
adjustments to the accompanying pro forma condensed statement of
earnings from operations, followed by footnotes explaining the pro
forma adjustments:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
-----------------------------------------------------------------------------
HISTORICAL
---------------------------------------
PRO FORMA
ACQUISITIONS (i) DISPOSITIONS (ii) ADJUSTMENTS TOTAL
----------------- ------------------ --------------- -----------
<S> <C> <C> <C> <C>
Rental revenues.....................$ 11,105 $ (9,232) $ - $ 1,873
Rental expenses..................... (2,666) 3,245 - 579
Real estate taxes................... (824) 823 (1)
Property management fees ........... (387) 363 40 (iii) 16
Depreciation ....................... - 999 (1,906) (iv) (907)
Interest expense ................... (1,892) 283 58 (v) (1,551)
REIT management fees ............... - - (146) (vi) (146)
---------------- ---------------- -------------- ----------
Earnings (loss) from operations.... $ 5,336 $ (3,519) $ (1,954) $ (137)
Reconciliation to funds
from operations:
Add:
Depreciation ..................... - (999) 1,906 907
--------------- ---------------- -------------- ----------
Funds from operations............... $ 5,336 $ (4,518) $ (48) $ 770
=============== ================ ============== ==========
<FN>
(i) Represents predecessor historical revenues and certain expenses,
including mortgage interest if applicable, recorded from January
1, 1997 to the respective dates of acquisition.
(ii) Reflects the elimination of the historical revenues and expenses
PTR recorded for the year ended December 31, 1997, related to the
community dispositions whose proceeds were used to fund the
community acquisitions.
(iii)Reflects the difference between predecessor's historical property
management fee expenses and the fee which would have been charged
by the Property Manager.
(iv) Reflects pro forma depreciation expense adjustment from January 1,
1997 to the respective dates of acquisition based on the
depreciable basis of PTR's acquisition cost, assuming asset lives
ranging from 10 to 40 years. The pro forma depreciation expense
adjustment amounts by community are as follows:
</FN>
</TABLE>
6
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
NOTES TO PRO FORMA CONDENSED
STATEMENT OF EARNINGS FROM OPERATIONS
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DEPRECIATION EXPENSE
ACQUISITION ACQUISITION YEAR ENDED
COMMUNITY DATE COST DECEMBER 31, 1997
-------------------------------------- -------------------------- ------------------- ------------------------
<S> <C> <C> <C>
Newport Crossing...................... 1/10/97 $ 11,290 $ 6
Reflections........................... 1/27/97 52,100 77
Marina Lakes.......................... 2/19/97 39,500 108
River Meadows......................... 3/20/97 13,925 60
Folsom Ranch.......................... 3/31/97 23,150 114
Sierra Hills.......................... 4/17/97 18,700 110
Los Padres............................ 4/23/97 30,500 189
La Jolla Point........................ 4/24/97 30,600 191
Cambrian.............................. 6/03/97 41,125 347
Pelican Point......................... 6/26/97 29,200 282
Le Club............................... 6/30/97 33,000 327
Carrington Place...................... 8/29/97 7,200 95
-----------------------
Total................................. $ 1,906
=======================
<FN>
(v) Represents the pro forma interest expense adjustment related to
utilization of line of credit borrowings that would have been
required if the community acquisitions had occurred at January 1,
1997, net of the pro forma reduction in line of credit borrowings
associated with excess proceeds from dispositions.
(vi)Reflects adjustment to PTR's REIT management fee expense related
to the net pro forma increase in cash flow resulting from the
acquisitions and dispositions.
(c) Reflects the historical operating expenses of the Property Manager
which were directly related to providing services to PTR for the period
from January 1, 1997 to September 9, 1997.
(d) Reflects the elimination of PTR's pro forma expenses related to REIT
management fees and property management fees.
(e) Reflects the historical depreciation expense of the REIT Manager and
the Property Manager directly related to the fixed assets (primarily
computer equipment and software) acquired as part of the Transaction of
$593 and the estimated increase in depreciation that would result from
the capitalization of development-related costs of $220 for the period
from January 1, 1997 to September 9, 1997 discussed in note (f). These
capitalized costs will be depreciated utilizing the same lives and
methods currently utilized by PTR.
(f) Reflects the historical general and administrative costs of the REIT
Manager of $11,594 which were associated with providing services to
PTR for the period from January 1, 1997 to September 9, 1997, reduced
for the pro forma adjustment to capitalize qualifying direct and
incremental costs relating primarily to the development of real estate
investments of $5,759 that would have been capitalized by PTR under
generally accepted accounting principles ("GAAP"), had the
transaction occurred on January 1, 1997. This amount is net of a $524
adjustment related to the pro forma reduction of internal costs
capitalized in connection with PTR's operating community acquisitions
for the period from September 9, 1997 to December 31, 1997. The pro
forma reduction results from a March 1998 accounting rule requiring
that internal acquisition costs be expensed as incurred. PTR was not
able under GAAP to capitalize internal development-related costs
prior to September 9, 1997 because the REIT management fee paid was
not a direct reimbursement of these costs.
</FN>
</TABLE>
7
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
NOTES TO PRO FORMA CONDENSED
STATEMENT OF EARNINGS FROM OPERATIONS
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(g) Reflects charges for administrative services provided by Security
Capital to PTR of $3,312 for the period from January 1, 1997 to
September 9, 1997, reduced for the pro forma adjustment to capitalize
qualifying direct and incremental costs relating primarily to the
development of real estate investments of $263 that would have been
capitalized by PTR under GAAP, had the transaction occurred on
January 1, 1997. This amount is net of an adjustment for $54 related
to the pro forma reduction of internal costs capitalized in connection
with PTR's operating community acquisitions for the period from
September 9, 1997 to December 31, 1997. The pro forma reduction
results from a March 1998 accounting rule requiring that internal
acquisition costs be expensed as incurred.
Security Capital has been providing these services to PTR since
September 9, 1997 under an administrative services agreement.
(h) Reflects the increase in weighted-average Common Shares outstanding
that would have resulted from the issuance of Common Shares in exchange
for the common stock of the REIT Manager and the Property Manager as if
the Merger had occurred on January 1, 1997. The number of shares shown
is based on the 3,296 Common Shares actually issued to Security Capital
on September 9, 1997, calculated as: 3,296 x 251 days / 365 days =
2,266 weighted-average incremental shares.
Following is a reconciliation of the denominator used to compute basic
EPS to the denominator used to compute diluted EPS, on a historical and
pro forma basis:
<TABLE>
<CAPTION>
1997
--------------------------------
Historical Pro Forma
--------------- -------------
<S> <C> <C>
Basic EPS - weighted-average number of Common Shares outstanding 81,870 81,870
Additional pro forma Common Shares outstanding - 2,266
Incremental options outstanding 38 38
--------------- -------------
Diluted EPS - weighted-average number of Common Shares outstanding 81,908 84,174
=============== =============
</TABLE>
(i) Funds from operations represents PTR's net earnings computed in
accordance with GAAP, excluding real estate depreciation, gains (or
losses) from depreciated real estate, provisions for possible losses,
non-cash interest income from Homestead Notes, extraordinary items
and significant non-recurring items. PTR believes that funds from
operations is helpful to a reader as a measure of the performance of
an equity REIT because, along with cash flow from operating activities,
investing activities and financing activities, it provides a reader
with an indication of the ability of PTR to incur and service debt,
to make capital expenditures and to fund other cash needs. Funds from
operations should not be considered as a alternative to net earnings
or any other GAAP measurement of performance as an indicator of PTR's
operating performance or as an alternative to cash flows from
operating, investing or financing activities as a measure of liquidity.
The funds from operations measure presented by PTR, while consistent
with the NAREIT definition, will not be comparable to similarly
titled measures of other REITs who do not compute funds from operations
in a manner consistent with PTR. Funds from operations is not intended
to represent cash made available to shareholders. Furthermore,
management believes that an understanding of funds from operations
will enhance the reader's comprehension of the impact of the
Transaction to PTR which was a specific consideration of PTR's Special
Committee in recommending approval to the Board of Trustees.
8
