<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 28, 1996
REGISTRATION NO. 333-4961
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
SECURITY CAPITAL INDUSTRIAL TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
MARYLAND 74-2604728
(STATE OF ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION
NUMBER)
14100 EAST 35TH PLACE
AURORA, COLORADO 80011
(303) 375-9292
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
JEFFREY A. KLOPF, SECRETARY
SECURITY CAPITAL INDUSTRIAL TRUST
7777 MARKET CENTER AVENUE
EL PASO, TEXAS 79912
(915) 877-3900
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
EDWARD J. SCHNEIDMAN
MAYER, BROWN & PLATT
190 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60603
(312) 782-0600
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE>
PROSPECTUS
- ----------
[LOGO OF SECURITY CAPITAL INDUSTRIAL TRUST]
4,520,531 COMMON SHARES OF BENEFICIAL INTEREST
This Prospectus relates to the offer and sale from time to time of up to
4,520,531 common shares of beneficial interest, $0.01 par value per share
("Common Shares"), of Security Capital Industrial Trust, a Maryland real estate
investment trust ("SCI"), issuable to certain holders of units ("Units") of
limited partnership interest in SCI Limited Partnership-I (the "Partnership"),
of which SCI is the sole general partner. SCI is registering the Shares, as
required under the terms of the Transfer and Registration Rights Agreement,
dated as of December 22, 1993 (the "Registration Rights Agreement") by and
among SCI and certain holders of Units (the "Selling Shareholders"). See
"Registration Rights."
SCI will not receive any proceeds from the sale of any Common Shares by the
Selling Shareholders but has agreed to bear certain expenses of registration of
such Common Shares under federal and state securities laws. See "Registration
Rights."
The Common Shares are listed on the New York Stock Exchange (the "NYSE")
under the symbol "SCN." To ensure that SCI maintains its qualification as a
real estate investment trust ("REIT"), SCI has restricted ownership of more
than 9.8% of the issued and outstanding Common Shares by any single
shareholder, with certain exceptions. See "Description of Shares of Beneficial
Interest--Restrictions on Transfer."
The Selling Shareholders may from time to time offer and sell Common Shares
held by them directly or through agents or broker-dealers on terms to be
determined at the time of sale. To the extent required, the names of any agent
or broker-dealer and applicable commissions or discounts and any other required
information with respect to any particular offer will be set forth in an
accompanying Prospectus Supplement. See "Plan of Distribution." Each of the
Selling Shareholders reserves the sole right to accept or reject, in whole or
in part, any proposed purchase of the Common Shares to be made directly or
through agents or broker-dealers.
The Selling Shareholders and any agents or broker-dealers that participate in
the distribution of Common Shares may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933, as amended (the "Securities Act"), and
any commissions received by them and any profit on the resale of the Common
Shares may be deemed to be underwriting commissions or discounts under the
Securities Act. See "Registration Rights" for a description of indemnification
arrangements between SCI and the Selling Shareholders.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED
ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
----------------
The date of this Prospectus is June 28, 1996.
<PAGE>
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY SCI OR ANY SELLING SHAREHOLDER.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITY OTHER THAN THE COMMON SHARES OFFERED HEREBY, NOR
DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT
IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information................................................. 2
Incorporation by Reference............................................ 3
Security Capital Industrial Trust..................................... 3
Description of Shares of Beneficial Interest.......................... 4
Shares Available for Future Sale...................................... 7
Certain Provisions of Maryland Law and of
SCI's Declaration of Trust and Bylaws................................ 8
</TABLE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Registration Rights................................................... 10
Selling Shareholders.................................................. 11
Federal Income Tax Considerations..................................... 11
Plan of Distribution.................................................. 18
Experts............................................................... 18
Legal Matters......................................................... 19
</TABLE>
AVAILABLE INFORMATION
SCI is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith
files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy and information statements and
other information filed by SCI can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at its regional offices at Citicorp Center, 500
West Madison Street, Chicago, Illinois 60661 and Seven World Trade Center, New
York, New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. The Commission maintains a Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. Documents
filed electronically by SCI are publicly available through the Commission's
Web site (http://www.sec.gov). The Common Shares are listed on the NYSE and
such reports, proxy and information statements and other information
concerning SCI can also be inspected at the offices of the NYSE at 20 Broad
Street, New York, New York 10005.
SCI has filed with the Commission a registration statement on Form S-3
(together with all amendments and exhibits, the "Registration Statement")
under the Securities Act with respect to the Common Shares offered hereby.
This prospectus ("Prospectus"), which constitutes a part of the Registration
Statement, does not contain all the information set forth in the Registration
Statement, certain portions of which have been omitted as permitted by the
rules and regulations of the Commission. Statements made in this Prospectus as
to the content of any contract, agreement or other document referred to are
not necessarily complete. With respect to each such contract, agreement or
other document filed or incorporated by reference as an exhibit to the
Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference.
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<PAGE>
INCORPORATION BY REFERENCE
The following documents filed by SCI with the Commission are hereby
incorporated by reference into this Prospectus:
(1) SCI's Annual Report on Form 10-K for the fiscal year ended December
31, 1995, as amended by Form 10-K/A No. l;
(2) SCI's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1996;
(3) SCI's Current Reports on Form 8-K dated January 15, 1996, February
14, 1996 and May 14, 1996; and
(4) The description of the Common Shares and the related preferred share
purchase rights contained in SCI's Registration Statement on Form 8-A.
All documents subsequently filed by SCI pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act, prior to the termination of the offering, shall
be deemed to be incorporated by reference into this Prospectus. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein will be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which is or is deemed to be incorporated by
reference herein modifies or supersedes any such statement. Any such statement
so modified or superseded will not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
SCI will provide without charge to each person, including any beneficial
owner, to whom this Prospectus is delivered, upon written or oral request of
such person, a copy of any and all of the information incorporated by
reference in this Prospectus (not including exhibits to the information
incorporated by reference unless such exhibits are specifically incorporated
by reference into the information that this Prospectus incorporates). Requests
should be directed to Security Capital Industrial Trust, 14100 East 35th
Place, Aurora, Colorado 80011 Attention: Secretary, telephone number (303)
375-9292.
SECURITY CAPITAL INDUSTRIAL TRUST
SCI, through its REIT manager, Security Capital Industrial Incorporated (the
"REIT Manager" or "REIT Management"), is the largest publicly held, fully
integrated national operating company, based on equity market capitalization,
focused through the SCI National Operating System(TM) exclusively on meeting
the distribution space needs of national, regional and local industrial real
estate users throughout the United States. SCI distinguishes itself from its
competition by being the only entity that combines all of the following:
1. A national operating strategy targeting 1,000 key users of
distribution space;
2. A disciplined investment strategy based on proprietary research that
targets high growth markets with sustainable demand for SCI's targeted
product of low finish distribution space;
3. An organizational structure and service delivery system built around
the customer; SCI believes its service approach is unique to the real
estate industry as it combines national scope and expertise with strong
local presence; and
4. Over 250 professionals in 26 offices which REIT Management believes
comprise the deepest and most experienced management team in industrial
real estate.
The cornerstone of SCI's national operating strategy is the SCI National
Operating System(TM) comprised of the Market Officer Group, the National
Services Group and the National Development Group which is the organization
that was established to operate SCI's business. The SCI National Operating
System(TM) provides an exceptional level of customer service, marketing and
development on a national, regional and local basis.
3
<PAGE>
SCI engages in the acquisition, development, marketing, operation and long-
term ownership of distribution facilities, and the development of master-
planned distribution parks and build-to-suit facilities for its customers.
SCI, through its REIT Manager, is a fully integrated national operating
company with expertise in market research; building and land acquisition and
due diligence; master-planned distribution park design and building
construction; marketing; asset and leasing management; and capital markets and
financial operations. SCI deploys capital in markets with excellent long-term
growth prospects and in markets where SCI can achieve a strong market position
through the acquisition and development of generic, flexible facilities
designed for both warehousing and light manufacturing uses.
SCI's executive offices are located at 14100 East 35th Place, Aurora,
Colorado 80011, and its telephone number is (303) 375-9292. SCI's predecessor
was formed in June 1991 as a Delaware corporation, and SCI was re-formed as a
Maryland real estate investment trust in January 1993.
DESCRIPTION OF SHARES OF BENEFICIAL INTEREST
GENERAL
SCI's Amended and Restated Declaration of Trust, as amended (the
"Declaration of Trust"), authorizes SCI to issue up to 150,000,000 Shares of
Beneficial Interest, $0.01 par value, consisting of Common Shares, preferred
shares of beneficial interest ("Preferred Shares") and such other types or
classes of shares of beneficial interest as the Trustees may create and
authorize from time to time. At June 26, 1996, 81,447,929 Common Shares were
issued and outstanding and held of record by approximately 1,120 shareholders.
The Declaration of Trust also provides that, subject to the provisions of
any class or series of the capital shares of SCI then outstanding, the
shareholders of SCI shall be entitled to vote only on the following matters:
(i) election or removal of Trustees; (ii) subject to certain limited
exceptions, amendment of the Declaration of Trust; (iii) termination of SCI;
(iv) reorganization of SCI; and (v) merger or consolidation of SCI or the sale
or disposition of all or substantially all of SCI's assets. Except with
respect to the foregoing matters, no action taken by the shareholders at any
meeting shall in any way bind the Trustees. See "Certain Provisions of
Maryland Law and of SCI's Declaration of Trust and Bylaws" for a discussion of
provisions related to changes in control.
The transfer agent and registrar for the Common Shares is The First National
Bank of Boston, 150 Royall Street, Canton, Massachusetts 02021.
COMMON SHARES OF BENEFICIAL INTEREST
The outstanding Common Shares are fully paid and, except as set forth below
under "--Shareholder Liability," nonassessable. Each Common Share entitles the
holder to one vote on all matters requiring a vote of shareholders, including
the election of Trustees. Shareholders do not have the right to cumulate their
votes in the election of Trustees, which means that the holders of a majority
of the outstanding Common Shares can elect all of the Trustees then standing
for election. Shareholders are entitled to such distributions as may be
declared from time to time by the Trustees out of funds legally available
therefor. SCI's current distribution policy is to pay quarterly distributions
to shareholders based on a reasonable percentage of funds from operations.
Since January 1, 1992, SCI has paid consecutive distributions of $0.23375 per
Common Share for 1995 quarters, $0.2125 per Common Share for 1994 quarters,
$0.1875 per Common Share for 1993 quarters and an annual distribution of $0.45
per Common Share for 1992. SCI has paid a distribution of $0.2525 per Common
Share for the first and second quarters of 1996.
Holders of Common Shares have no conversion, redemption, preemptive or
exchange rights to subscribe to any securities of SCI. In the event of any
liquidation, dissolution or winding-up of the affairs of SCI, holders of
Common Shares will be entitled to share ratably in the assets of SCI remaining
after provision for payment of liabilities to creditors and subject to the
rights of holders of Preferred Shares, if any.
4
<PAGE>
All Common Shares shall have equal distribution, liquidation and other
rights and shall have no preference, preemptive, conversion or exchange
rights.
PREFERRED SHARES OF BENEFICIAL INTEREST; PURCHASE RIGHTS
The Preferred Shares authorized by the Declaration of Trust may be issued
from time to time in one or more series in such amounts and with such
preferences, conversion or other rights, voting powers, restrictions,
limitations as to distributions, qualifications and terms or conditions of
redemption as may be fixed by the Trustees. The issuance of Preferred Shares
could have the effect of delaying, deferring or preventing a change of control
of SCI and may adversely affect the voting and other rights of shareholders.
As of the date of this Prospectus, there were 5,400,000 of SCI's Series A
Cumulative Redeemable Preferred Shares of Beneficial Interest and 8,050,000 of
SCI's Series B Cumulative Convertible Redeemable Preferred Shares of
Beneficial Interest issued and outstanding.
On December 7, 1993, the Board of Trustees declared a dividend of one
preferred share purchase right (a "Purchase Right") for each Common Share
outstanding, payable to holders of Shares of record at the close of business
on December 31, 1993. The holders of any additional Common Shares issued after
such date and before the redemption or expiration of the Purchase Rights are
also entitled to receive one Purchase Right for each such additional Common
Share. Each Purchase Right entitles the holder under certain circumstances to
purchase from SCI one one-hundredth of a share of Series A Junior
Participating Preferred Shares, par value $.01 per share (the "Participating
Preferred Shares") at a price of $40.00 per one one-hundredth of a
Participating Preferred Share, subject to adjustment. Purchase Rights are
exercisable when a person or group of persons (other than Security Capital
Group Incorporated, herein referred to as "SCG") acquires 20% or more of the
outstanding Common Shares or announces a tender offer or exchange offer for
25% or more of the outstanding Common Shares. Each Participating Preferred
Share will be entitled to an aggregate distribution (including liquidating
distributions) of 100 times the distribution made per Common Share and will be
entitled to 100 votes, voting together with the Common Shares. Under certain
circumstances, each Purchase Right entitles the holder to purchase, at the
Purchase Right's then current exercise price, a number of Common Shares having
a market value of twice the Purchase Right's exercise price. The acquisition
of SCI pursuant to certain mergers or other business transactions would
entitle each holder to purchase, at the Purchase Right's then current exercise
price, a number of the acquiring company's common shares having a market value
at that time equal to twice the Purchase Right's exercise price. The Purchase
Rights held by certain 20% shareholders (other than SCG) would not be
exercisable. The Purchase Rights will expire on December 7, 2003 and are
subject to redemption in whole, but not in part, at a price of $0.01 per
Purchase Right payable in cash, shares of SCI or any other form of
consideration determined by SCI's Board of Trustees.
CLASSIFICATION OR RECLASSIFICATION OF SHARES OF BENEFICIAL INTEREST OR
PREFERRED SHARES OF BENEFICIAL INTEREST
The Declaration of Trust authorizes the Trustees to classify or reclassify
any unissued Common Shares or Preferred Shares by setting or changing the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to distributions, qualifications or terms or conditions of
redemption.
RESTRICTION ON SIZE OF HOLDINGS OF SHARES
The Declaration of Trust restricts ownership of SCI's outstanding shares of
beneficial interest by a single person, or persons acting as a group, to 9.8%
of such shares. The purposes of the provision are to assist in protecting and
preserving SCI's REIT status and to protect the interest of shareholders in
takeover transactions by preventing the acquisition of a substantial block of
shares of beneficial interest of SCI unless the acquiror makes a cash tender
offer for all outstanding shares of beneficial interest. For SCI to qualify as
a REIT under the Internal Revenue Code of 1986, as amended (the "Code"), not
more than 50% in value of its outstanding shares of beneficial interest may be
owned by five or fewer individuals at any time during the last half of any
taxable year. The provision permits five persons to acquire up to a maximum of
9.8% each, or an aggregate of 49% of the outstanding Common Shares, and, thus,
assists the Trustees in protecting and preserving SCI's REIT status
5
<PAGE>
for tax purposes. This limitation does not apply to SCG, which counts as
numerous holders for purposes of this tax rule, because its Common Shares are
attributed to its shareholders for purposes of this rule.
Shares of beneficial interest owned by a person or group of persons in
excess of 9.8% (other than SCG and 30% in the case of certain shareholders who
acquired Common Shares prior to SCI's initial public offering) of the
outstanding shares of beneficial interest ("Excess Shares") are subject to
redemption by SCI, at its option, upon 30 days' notice, at a price equal to
the average daily per Common Share closing sale price during the 30-day period
ending on the business day prior to the redemption date. SCI may make payment
of the redemption price at any time or times up to the earlier of five years
after the redemption date or liquidation of SCI. SCI may refuse to effect the
transfer of any shares of beneficial interest which would make the transferee
a holder of Excess Shares. Shareholders of SCI are required to disclose, upon
demand of the Board of Trustees, such information with respect to their direct
and indirect ownership of shares of SCI as the Trustees deem necessary to
comply with the provisions of the Code pertaining to qualification, for tax
purposes, of REITs, or to comply with the requirements of any other
appropriate taxing authority.
The 9.8% restriction does not apply to acquisitions by an underwriter in a
public offering and sale of shares of beneficial interest of SCI or to any
transaction involving the issuance of shares of beneficial interest in which a
majority of the Board of Trustees determines that the eligibility of SCI to
qualify as a REIT for federal income tax purposes will not be jeopardized or
the disqualification of SCI as a REIT is advantageous to the shareholders.
SCG's ownership of Common Shares is attributed to its shareholders for
purposes of the ownership test discussed above. The Board of Trustees has
exempted SCG from this restriction and has permitted certain other
shareholders who acquired Common Shares prior to the initial public offering
to acquire up to 30% of the outstanding Common Shares.
Options or warrants issuable to the REIT Manager, Trustees or sponsors of
the Trust, or any of their affiliates, shall not exceed 10% of the outstanding
shares of beneficial interest of SCI on the date of grant of any options or
warrants.
TRUSTEE LIABILITY
The Declaration of Trust provides that Trustees shall not be individually
liable for any obligation or liability incurred by or on behalf of SCI or by
Trustees for the benefit and on behalf of SCI. Under the Declaration of Trust
and Maryland law respecting REITs, Trustees are not liable to SCI or the
shareholders for any act or omission except for acts or omissions which
constitute bad faith, willful misfeasance or gross negligence in the conduct
of their duties.
SHAREHOLDER LIABILITY
Both Maryland statutory law governing REITs organized under the laws of that
state (the "Maryland REIT Law") and the Declaration of Trust provide that the
shareholders shall not be personally or individually liable for any debt, act,
omission or obligation of SCI or the Trustees. The Declaration of Trust
further provides that SCI shall indemnify and hold each shareholder harmless
from all claims and liabilities to which the shareholder may become subject by
reason of his being or having been a shareholder, and that SCI shall reimburse
each shareholder for all legal and other expenses reasonably incurred by the
shareholder in connection with any such claim or liability, except to the
extent that such claim or liability arises out of the shareholder's bad faith,
willful misconduct or gross negligence and provided that such shareholder
gives SCI prompt notice of any such claim or liability and permits SCI to
conduct the defense thereof. In addition, SCI is required to, and as a matter
of practice does, insert a clause in its management leases and other contracts
providing that shareholders assume no personal liability for obligations
entered into on behalf of SCI. Nevertheless, with respect to tort claims,
contractual claims where shareholder liability is not so negated, claims for
taxes and certain statutory liability, the shareholders may, in some
jurisdictions, be personally liable to the extent that such claims are not
satisfied by SCI. Inasmuch as SCI carries public liability insurance which it
considers adequate, any risk of personal liability to shareholders is limited
to situations in which SCI's assets plus its insurance coverage would be
insufficient to satisfy the claims against SCI and its shareholders.
6
<PAGE>
SHARES AVAILABLE FOR FUTURE SALE
At June 26, 1996, SCI had 86,671,950 Common Shares issued and outstanding or
reserved for issuance upon exchange of partnership units or exercise of
outstanding options and warrants. All of the 4,520,531 Common Shares that may
be issued pursuant to this Prospectus, as well as the Common Shares sold in
SCI's prior offerings, will be tradeable without restriction under the
Securities Act (other than Common Shares held by affiliates of SCI). In
addition, SCI has a "shelf" registration effective relating to the offer and
sale from time to time of (i) up to 645,864 Common Shares following an
exchange for units in SCI Limited Partnership-II and (ii) up to 310,000 Common
Shares issued in one of SCI's prior private offerings; as of June 26, 1996,
555,651 of such Common Shares had been issued upon exchange of units. The
remaining Common Shares currently issued and outstanding or reserved for
issuance upon exchange of partnership units or exercise of options or warrants
will be eligible for sale, subject to the volume resale, manner of sale and
notice limitations of Rule 144 of the Securities Act.
In general, under Rule 144, a person (or persons whose Common Shares are
aggregated in accordance with the Rule) who has beneficially owned his or her
Common Shares for at least two years, including any such persons who may be
deemed "affiliates" of SCI (as defined in the Securities Act), would be
entitled to sell within any three-month period a number of Common Shares that
does not exceed the greater of 1% of the then outstanding number of Common
Shares or the average weekly trading volume of the Common Shares during the
four calendar weeks preceding each such sale. After Common Shares are held for
three years, a person who is not deemed an "affiliate" of SCI is entitled to
sell such Common Shares under Rule 144 without regard to the volume
limitations described above. Sales of Common Shares by affiliates will
continue to be subject to the volume limitations. As defined in Rule 144, an
"affiliate" of an issuer is a person that directly or indirectly, through the
use of one or more intermediaries, controls, is controlled by, or is under
common control with, such issuer.
SCI has granted SCG, which owns approximately 48.32% of the issued and
outstanding Common Shares, the right to demand, at any time, registration of
all or any part of the Common Shares owned by it pursuant to Rule 415 of the
Securities Act. SCI has also agreed to file a registration statement relating
to all of the 583,512 Common Shares (which became issuable in October 1995)
issuable to limited partners in two of SCI's partnerships upon exchange of
partnership units. SCI has also granted certain demand registration rights to
a holder of warrants to purchase 11,764 Common Shares. The persons entitled to
register their securities are responsible for all costs and expenses (other
than SCI's legal and audit fees) incident to any registration of the type
discussed in this paragraph.
SCI has issued options to acquire 18,000 Common Shares under SCI's Share
Option Plan for Outside Trustees. SCI has reserved an additional 82,000 Common
Shares for future issuance upon exercise of options under the Share Option
Plan for Outside Trustees. SCI also has adopted a dividend reinvestment and
Common Share purchase plan covering 1,400,000 Common Shares which permits
shareholders to purchase additional Common Shares through the reinvestment of
distributions or through additional cash purchases.
SCI currently has a "shelf" registration statement in effect pursuant to
which it may offer to the public one or more of the following categories of
its securities in an aggregate amount not to exceed $600 million: (i) Common
Shares; (ii) preferred shares, in one or more series; and (iii) unsecured
senior debt securities, in one or more series, of which $311.25 million has
been issued. Such securities may be offered separately or together, in
separate series or amounts, at prices and on terms determined by the Trustees.
No prediction can be made as to the effect, if any, that future sales of
Common Shares or the availability of Common Shares for future sale will have
on the market price prevailing from time to time. Sales of substantial amounts
of Common Shares (including Common Shares issued upon the exercise of options
or warrants or upon exchange of partnership units), or the perception that
such sales could occur, could adversely affect the prevailing market price of
the Common Shares.
7
<PAGE>
CERTAIN PROVISIONS OF MARYLAND LAW AND OF
SCI'S DECLARATION OF TRUST AND BYLAWS
The following paragraphs summarize certain provisions of Maryland law, the
Declaration of Trust and SCI's Bylaws (the "Bylaws"). The summary does not
purport to be complete and is subject to and qualified in its entirety by
reference to Maryland law, the Declaration of Trust and Bylaws. A copy of each
of the Declaration of Trust and Bylaws is incorporated by reference as an
exhibit to the Registration Statement of which this Prospectus is a part.
BOARD OF TRUSTEES
The Declaration of Trust provides that the number of Trustees of SCI cannot
be less than three nor more than fifteen, as determined from time to time by
the Trustees. The Trustees are divided into three classes. One class will hold
office for a term expiring at the annual meeting of shareholders in 1996, a
second class will hold office for a term expiring at the annual meeting of
shareholders to be held in 1997 and a third class will hold office for a term
expiring at the annual meeting of shareholders to be held in 1998. Each
Trustee will hold office for the term to which he is elected and until his
successor is duly elected and qualified. At each annual meeting of
shareholders, the successors to the class of Trustees whose terms expire at
such meeting will be elected to hold office for a term of three years. The
incumbent Board of Trustees is authorized to fill vacancies on the Board,
including vacancies resulting from any increase in the number of members
constituting the Board of Trustees by up to two in any calendar year. Any
members so appointed by the incumbent Trustees (whether to fill a vacancy or a
newly created trusteeship) will serve until the next annual meeting of
shareholders. At such meeting, the newly appointed Trustee will stand for
election to serve the remainder of the term for which such Trustee was
appointed.
The classified Board of Trustees could have the effect of making the removal
of incumbent Trustees time-consuming and difficult, which could discourage a
third party from making a tender offer or otherwise attempting to obtain
control of SCI, even though a change in control may be beneficial to SCI and
its shareholders.
BUSINESS COMBINATIONS
Under Maryland law, certain "business combinations" (including a merger,
consolidation, share exchange, or, in certain circumstances, an asset transfer
or issuance or reclassification of equity securities) between a Maryland real
estate investment trust and any person who beneficially owns 10% or more of
the voting power of the trust's shares (an "Interested Shareholder") must be
(i) recommended by the trustees of such trust and (ii) approved by the
affirmative vote of at least (a) 80% of the votes entitled to be cast by
holders of outstanding voting shares of the trust and (b) two-thirds of the
votes entitled to be cast by holders of outstanding voting shares other than
shares held by the Interested Shareholder with whom the business combination
is to be effected, unless, among other things, the trust's common shareholders
receive a minimum price (as defined in the statute) for their shares and the
consideration is received in cash or in the same form as previously paid by
the Interested Shareholder for his shares. In addition, an Interested
Shareholder or any affiliate thereof may not engage in a "business
combination" with the trust for a period for five years following the date he
becomes an Interested Shareholder. These provisions of Maryland law do not
apply, however, to business combinations that are approved or exempted by the
board of trustees of the trust prior to the time that the Interested
Shareholder becomes an Interested Shareholder.
The Declaration of Trust and Bylaws contain provisions exempting SCG and its
affiliates and successors from the provisions of the Maryland business
combination statute.
CONTROL SHARE ACQUISITIONS
Maryland law provides that "Control Shares" of a Maryland REIT acquired in a
"Control Share acquisition" have no voting rights except to the extent
approved by a vote of two-thirds of the votes entitled to
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be cast on the matter, excluding shares of beneficial interest owned by the
acquiror or by officers or trustees who are employees of the trust. "Control
Shares" are voting shares of beneficial interest which, if aggregated with all
other such shares of beneficial interest previously acquired by the acquiror
or in respect of which the acquiror is able to exercise voting power in
electing trustees, fall within one of the following ranges of voting power:
(i) one-fifth or more but less than one-third, (ii) one-third or more but less
than a majority or (iii) a majority of all voting power. Control Shares do not
include shares of beneficial interest the acquiring person is then entitled to
vote as a result of having previously obtained shareholder approval. A
"Control Share acquisition" means the acquisition of Control Shares, subject
to certain exceptions.
A person who has made or proposes to make a Control Share acquisition, upon
satisfaction of certain conditions (including an undertaking to pay expenses),
may compel the board of trustees of the trust to call a special meeting of
shareholders to be held within 50 days of demand to consider voting rights for
the shares. If no request for a meeting is made, the trust may itself present
the question at any shareholders meeting.
If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement as required by the statute,
then, subject to certain conditions and limitations, the trust may redeem any
or all of the Control Shares (except those for which voting rights have
previously been approved) for fair value determined, without regard to the
absence of voting rights for the Control Shares, as of the date of the last
Control Share acquisition by the acquiror or of any meeting of shareholders at
which the voting rights of such shares are considered and not approved. If
voting rights for Control Shares are approved at a shareholders' meeting and
the acquiror becomes entitled to vote a majority of the shares of beneficial
interest entitled to vote, all other shareholders may exercise appraisal
rights. The fair value of the shares of beneficial interest as determined for
purposes of such appraisal rights may not be less than the highest price per
share paid by the acquiror in the Control Share acquisition.
The Control Share acquisition statute does not apply to shares acquired in a
merger, consolidation or share exchange if the trust is a party to the
transaction, or to acquisitions approved or exempted by the declaration of
trust or bylaws of the trust.
The Declaration of Trust and Bylaws contain provisions exempting SCG and its
affiliates and successors from the provisions of the Control Share acquisition
statute.
SHAREHOLDERS' MEETINGS
The Declaration of Trust provides for an annual meeting of shareholders to
be held upon reasonable notice and within a reasonable period (not less than
30 days) following delivery of SCI's annual report, but in any event such
meeting must be held within six months after the end of each full fiscal year.
Special meetings of shareholders may be called by a majority of the Trustees,
a majority of the independent Trustees or by any officer of SCI and shall be
called upon the written request of shareholders holding in the aggregate not
less than 10% of the outstanding Common Shares entitled to vote. Written
notice stating the place, date and hour of the shareholders' meeting and, in
the case of a special meeting, the purpose or purposes for which the meeting
is called, shall be delivered not less than 10 nor more than 60 days before
the day of the meeting to each holder of record.
ANNUAL REPORT
The Declaration of Trust requires SCI to deliver to shareholders an annual
report concerning its operations for the preceding fiscal year containing
financial statements prepared in accordance with generally accepted accounting
principles which are audited and reported on by independent certified public
accountants. The report must include (i) the ratio of the costs of raising
capital during the period to the capital raised and (ii) the aggregate amount
of REIT Management fees and the aggregate amount of other fees paid to the
REIT Manager and all affiliates of the REIT Manager by SCI and including fees
or charges paid to the REIT Manager and all affiliates of the REIT Manager by
third parties doing business with SCI. The report must also include separately
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stated, full disclosure of all material terms, factors, and circumstances
surrounding any and all transactions involving SCI, and the Trustees, the REIT
Manager, sponsors and/or affiliates thereof occurring in the year for which
the annual report is made. Independent Trustees are specifically charged with
a duty to examine and comment in the report on the fairness of such
transactions.
AMENDMENT TO THE DECLARATION OF TRUST
The Trustees, by a two-thirds vote, may amend the provisions of the
Declaration of Trust from time to time to qualify SCI as a REIT. Except as set
forth in the preceding sentence, the Declaration of Trust may be amended only
by the affirmative vote or written consent of the holders of not less than a
majority of the Common Shares then outstanding and entitled to vote thereon.
TERMINATION OF THE TRUST AND REIT STATUS
The Declaration of Trust permits the termination of SCI and the
discontinuation of the operations of SCI by the affirmative vote of the
holders of not less than a majority of the outstanding Common Shares at a
meeting of shareholders called for that purpose.
REGISTRATION RIGHTS
SCI has filed the Registration Statement of which this Prospectus is a part
pursuant to its obligations under the Registration Rights Agreement. The
following summary does not purport to be complete and is subject to and
qualified in its entirety by reference to the Registration Rights Agreement. A
copy of the Registration Rights Agreement is incorporated by reference as an
exhibit to the Registration Statement of which this Prospectus is a part.
Under the Registration Rights Agreement, SCI is obligated to use its
reasonable efforts to keep the Registration Statement continuously effective
for as long as necessary to complete the distribution of at least 90% of the
aggregate Common Shares issued to the Selling Shareholders. The Registration
Rights Agreement grants these rights to holders of Common Shares and Units
specified therein. Any Common Shares that have been sold pursuant to a public
offering registered under the Securities Act or in compliance with Rule 144 or
transferred to any holders not specified in the Registration Rights Agreement
will no longer be entitled to the benefits of the Registration Rights
Agreement.
SCI has no obligation under the Registration Rights Agreement to retain any
underwriter to effect the sale of the Common Shares covered thereby, and the
Registration Statement shall not be available for use for an underwritten
public offering of the Common Shares covered thereby.
Pursuant to the Registration Rights Agreement, SCI shall pay the expenses of
its counsel and accountants (including audits) to prepare the Registration
Statement and Prospectus in connection with the registration of the Common
Shares. The Selling Shareholders shall pay all other expenses incurred in such
registration on a pro rata basis based on the number of Common Shares included
in the Registration Statement, including, without limitation, expenses of
printing, counsel for such Selling Shareholders and federal and state
securities registration and filing fees. SCI also agreed to indemnify each
Selling Shareholder and the respective directors and officers and any person
who controls any such Selling Shareholder against certain losses, claims,
damages and expenses arising under the securities laws. In addition, each
Selling Shareholder agreed to indemnify SCI and each other holder, and each of
their respective Trustees, directors and officers (including each Trustee and
officer of SCI who signed the Registration Statement), and any person who
controls SCI or any other holder against certain losses, liabilities, claims,
damages and expenses arising under the securities laws with respect to written
information furnished to SCI by such holder.
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SELLING SHAREHOLDERS
The following table provides the name of each person who may receive Common
Shares upon exchange of Units and the total number of Common Shares that may
be offered by each such person pursuant to this Prospectus. Since the holders
of Units may exchange all, some or none of their Units for Common Shares and
may then sell all, some or none of such Common Shares, the number of Common
Shares that will be owned by each person identified below after completion of
this offering cannot be determined. Irving F. Lyons, III, a Managing Director
and Trustee of SCI and a Director and Managing Director of the REIT Manager,
is a partner in each of King & Lyons and Bayside Spinnaker Partners IV and, as
such, may be deemed to beneficially own 256,530 of the Common Shares that may
be offered hereby. Mr. Lyons may be deemed to own a total of 261,874 Common
Shares and Units. Additionally, Ned K. Anderson, a Senior Vice President of
SCI and the REIT Manager, is a partner in Bayside Spinnaker Partners II and,
as such, may be deemed to beneficially own 136,124 of the Common Shares that
may be offered hereby. The transaction in which the Selling Shareholders
acquired their Units was negotiated at arm's length prior to Mr. Lyons' and
Mr. Anderson's affiliation with SCI.
<TABLE>
<CAPTION>
NUMBER OF COMMON
SHARES THAT MAY
BE ISSUED
NAME HEREUNDER(1)
---- ----------------
<S> <C>
Charles King & Associates................................ 2,061,349
King & Lyons............................................. 578,042
Bayside Spinnaker Partners IV............................ 1,881,140
---------
Total................................................ 4,520,531
=========
</TABLE>
- --------
(1) The Selling Shareholders may be deemed to be under common control and, if
so, would together own approximately 5.26% of the outstanding Common
Shares if no Common Shares are sold.
FEDERAL INCOME TAX CONSIDERATIONS
SCI intends to operate in a manner that permits it to satisfy the
requirements for taxation as a REIT under the applicable provisions of the
Code. No assurance can be given, however, that such requirements will be met.
The following is a description of the federal income tax consequences to SCI
and its shareholders of the treatment of SCI as a REIT. Since these provisions
are highly technical and complex, each prospective purchaser of the Common
Shares is urged to consult his or her own tax advisor with respect to the
federal, state, local, foreign and other tax consequences of the purchase,
ownership and disposition of the Common Shares.
In brief, if certain detailed conditions imposed by the REIT provisions of
the Code are met, entities, such as SCI, that invest primarily in real estate
and that otherwise would be treated for federal income tax purposes as
corporations, are generally not taxed at the corporate level on their "REIT
taxable income" that is currently distributed to shareholders. This treatment
substantially eliminates the "double taxation" (at both the corporate and
shareholder levels) that generally results from the use of corporations.
If SCI fails to qualify as a REIT in any year, however, it will be subject
to federal income taxation as if it were a domestic corporation, and its
shareholders will be taxed in the same manner as shareholders of ordinary
corporations. In this event, SCI could be subject to potentially significant
tax liabilities, and therefore the amount of cash available for distribution
to its shareholders would be reduced or eliminated.
The Board of Trustees of SCI currently intends that SCI will operate in a
manner that permits it to elect, and that it has elected, REIT status
effective for the taxable year ended December 31, 1993 and in each taxable
year thereafter. There can be no assurance, however, that this expectation
will be fulfilled, since qualification as a REIT depends on SCI continuing to
satisfy numerous asset, income and distribution tests described below, which
in turn will be dependent in part on SCI's operating results.
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The following summary is based on existing law, is not exhaustive of all
possible tax considerations and does not give a detailed discussion of any
state, local, or foreign tax considerations, nor does it discuss all of the
aspects of federal income taxation that may be relevant to a prospective
shareholder in light of his or her particular circumstances or to certain
types of shareholders (including insurance companies, tax-exempt entities,
financial institutions or broker-dealers, foreign corporations and persons who
are not citizens or residents of the United States) subject to special
treatment under the federal income tax laws.
TAXATION OF SCI
General
In any year in which SCI qualifies as a REIT, in general it will not be
subject to federal income tax on that portion of its REIT taxable income or
capital gain which is distributed to shareholders. SCI may, however, be
subject to tax at normal corporate rates upon any taxable income or capital
gain not distributed.
Notwithstanding its qualification as a REIT, SCI may also be subject to
taxation in certain other circumstances. If SCI should fail to satisfy either
the 75% or the 95% gross income test (as discussed below), and nonetheless
maintains its qualification as a REIT because certain other requirements are
met, it will be subject to a 100% tax on the greater of the amount by which
SCI fails to satisfy either the 75% test or the 95% test, multiplied by a
fraction intended to reflect SCI's profitability. SCI will also be subject to
a tax of 100% on net income from any "prohibited transaction," as described
below, and if SCI has (i) net income from the sale or other disposition of
"foreclosure property" which is held primarily for sale to customers in the
ordinary course of business or (ii) other non-qualifying income from
foreclosure property, it will be subject to tax on such income from
foreclosure property at the highest corporate rate. In addition, if SCI should
fail to distribute during each calendar year at least the sum of (i) 85% of
its REIT ordinary income for such year, (ii) 95% of its REIT capital gain net
income for such year, and (iii) any undistributed taxable income from prior
years, SCI would be subject to a 4% excise tax on the excess of such required
distribution over the amounts actually distributed. SCI may also be subject to
the corporate "alternative minimum tax," as well as tax in certain situations
and on certain transactions not presently contemplated. SCI will use the
calendar year both for federal income tax purposes and for financial reporting
purposes.
In order to qualify as a REIT, SCI must meet, among others, the following
requirements:
Share Ownership Test
The Common Shares must be held by a minimum of 100 persons for at least 335
days in each taxable year (or a proportional number of days in any short
taxable year). In addition, at all times during the second half of each
taxable year, no more than 50% in value of the capital shares of SCI may be
owned, directly or indirectly and by applying certain constructive ownership
rules, by five or fewer individuals (the "50% test"), which for this purpose
includes certain tax-exempt entities, and for taxable years beginning before
January 1, 1994, any stock held by a qualified domestic pension trust. For
taxable years beginning on or after January 1, 1994, any stock held by a
qualified domestic pension or other retirement trust will be treated as held
directly by its beneficiaries in proportion to their actuarial interest in
such trust rather than by such trust. These stock ownership requirements need
not be met until the second taxable year of SCI for which a REIT election is
made. Pursuant to the constructive ownership rules, SCG's ownership of Common
Shares is attributed to its shareholders for purposes of the 50% test.
In order to ensure compliance with the 50% test, SCI has placed certain
restrictions on the transfer of the Common Shares to prevent additional
concentration of ownership. Moreover, to evidence compliance with these
requirements under United States Treasury Department ("Treasury") regulations,
SCI must maintain records which disclose the actual ownership of its
outstanding Common Shares. In fulfilling its obligations to maintain records,
SCI must and will demand written statements each year from the record holders
of designated percentages of its Common Shares disclosing the actual owners of
such Common Shares (as prescribed by
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Treasury regulations). A list of those persons failing or refusing to comply
with such demand must be maintained as a part of SCI's records. A shareholder
failing or refusing to comply with SCI's written demand must submit with his
or her tax returns a similar statement disclosing the actual ownership of
Common Shares and certain other information. In addition, the Declaration of
Trust provides restrictions regarding the transfer of its Common Shares that
are intended to assist SCI in continuing to satisfy the Common Share ownership
requirements. See "Description of Shares of Beneficial Interest--Restrictions
on Size of Holdings of Shares." SCI intends to enforce the 9.8% limitation on
ownership of Common Shares to assure that its qualification as a REIT will not
be compromised.
Asset Tests
At the close of each quarter of SCI's taxable year, SCI must satisfy certain
tests relating to the nature of its assets (what constitutes "assets" of SCI
is determined in accordance with generally accepted accounting principles).
First, at least 75% of the value of SCI's total assets must be represented by
interests in real property, interests in mortgages on real property, shares in
other REITs, cash, cash items, and government securities (including certain
government guaranteed securities) and qualified temporary investments. Second,
although the remaining 25% of SCI's assets generally may be invested without
restriction, securities in this class may not exceed either (i) in the case of
securities of any one non-government issuer, 5% of the value of SCI's total
assets or (ii) 10% of the outstanding voting securities of any one such
issuer. Where SCI invests in a partnership (including each of the partnerships
of which SCI is the general partner), it will be deemed to own a proportionate
share of the partnership's assets. See "Federal Income Tax Considerations--Tax
Aspects of SCI's Investments in Partnerships--General." Accordingly, SCI's
investment through its interest in the Partnerships is intended to constitute
an investment in qualified assets for purposes of the 75% asset test.
SCI owns 100% of the non-voting preferred stock of SCI Development Services
Incorporated. Because SCI does not own any of the voting securities of SCI
Development Services Incorporated and the preferred stock's approval right in
the case of SCI Development Services Incorporated is limited to certain
fundamental corporate actions that could adversely affect the preferred stock
as a class, the 10% limitation on holdings of voting securities of any one
issuer should not be exceeded.
Based upon its analysis of the total estimated value of SCI Development
Services Incorporated stock to be owned by SCI relative to the estimated value
of the total assets to be owned by SCI and the other assets of SCI, SCI
believes that the ownership of non-voting preferred stock by SCI will not
exceed, on the date of this Prospectus, 5% of the value of SCI's total assets.
The 5% limitation must be satisfied not only on the date that SCI acquired the
securities of SCI Development Services Incorporated, but also at the end of
any quarter in which SCI increases its interest in SCI Development Services
Incorporated or so acquires other property. Although SCI plans to take steps
to ensure that it satisfies the 5% value test for any quarter with respect to
which retesting is to occur, there can be no assurance that such steps will
always be successful or will not require a reduction in SCI's overall interest
in SCI Development Services Incorporated.
Gross Income Tests
There are three separate percentage tests relating to the sources of SCI's
gross income which must be satisfied for each taxable year. For purposes of
these tests, where SCI invests in a partnership, including the Partnerships,
SCI will be treated as receiving its share of the income and loss of the
partnership, and the gross income of the partnership will retain the same
character in the hands of SCI as it has in the hands of the partnership. The
three tests are as follows:
1. The 75% Test. At least 75% of SCI's gross income for the taxable year
must be "qualifying income." Qualifying income generally includes: (i)
rents from real property (except as modified below); (ii) interest on
obligations collateralized by mortgages on, or interests in, real property;
(iii) gains from the sale or other disposition of interests in real
property and real estate mortgages, other than gain from property held
primarily for sale to customers in the ordinary course of SCI's trade or
business ("dealer property");
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(iv) dividends or other distributions on shares in other REITs, as well as
gain from the sale of such shares; (v) abatements and refunds of real
property taxes; (vi) income from the operation, and gain from the sale, of
property acquired at or in lieu of a foreclosure of the mortgage
collateralized by such property ("foreclosure property"); and (vii)
commitment fees received for agreeing to make loans collateralized by
mortgages on real property or to purchase or lease real property.
Rents received from a tenant will not, however, qualify as rents from
real property in satisfying the 75% test (or the 95% gross income test
described below) if SCI, or an owner of 10% or more of SCI, directly or
constructively owns 10% or more of such tenant. In addition, if rent
attributable to personal property leased in connection with a lease of real
property is greater than 15% of the total rent received under the lease,
then the portion of rent attributable to such personal property will not
qualify as rents from real property. Moreover, an amount received or
accrued will not qualify as rents from real property (or as interest
income) for purposes of the 75% and 95% gross income tests if it is based
in whole or in part on the income or profits of any person, although an
amount received or accrued generally will not be excluded from "rents from
real property" solely by reason of being based on a fixed percentage or
percentages of receipts or sales. Finally, for rents received to qualify as
rents from real property, SCI generally must not operate or manage the
property or furnish or render services to tenants, other than through an
"independent contractor" from whom SCI derives no income, except that the
"independent contractor" requirement does not apply to the extent that the
services provided by SCI are "usually or customarily rendered" in
connection with the rental of space for occupancy only, or are not
otherwise considered "rendered to the occupant for his convenience."
2. The 95% Test. In addition to deriving 75% of its gross income from the
sources listed above, at least 95% of SCI's gross income for the taxable
year must be derived from the above-described qualifying income, or from
dividends, interest, or gains from the sale or disposition of stock or
other securities that are not dealer property. Dividends and interest on
any obligations not collateralized by an interest in real property are
included for purposes of the 95% test, but not for purposes of the 75%
test.
For purposes of determining whether SCI complies with the 75% and 95%
income tests, gross income does not include income from prohibited
transactions. A "prohibited transaction" is a sale of dealer property
(excluding foreclosure property) unless such property is held by SCI for at
least four years and certain other requirements (relating to the number of
properties sold in a year, their tax bases, and the cost of improvements
made thereto) are satisfied. See "--Taxation of SCI--General."
Even if SCI fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it may still qualify as a REIT for such year if
it is entitled to relief under certain provisions of the Code. These relief
provisions will generally be available if: (i) SCI's failure to comply was
due to reasonable cause and not to willful neglect; (ii) SCI reports the
nature and amount of each item of its income included in the tests on a
schedule attached to its tax return; and (iii) any incorrect information on
this schedule is not due to fraud with intent to evade tax. If these relief
provisions apply, however, SCI will nonetheless be subject to a special tax
upon the greater of the amount by which it fails either the 75% or 95%
gross income test for that year.
3. The 30% Test. SCI must derive less than 30% of its gross income for
each taxable year from the sale or other disposition of: (i) real property
held for less than four years (other than foreclosure property and
involuntary conversions); (ii) stock or securities held for less than one
year; and (iii) property in a prohibited transaction. SCI does not
anticipate that it will have any substantial difficulty in complying with
this test.
Special Distribution Requirement
Because the predecessor of SCI was not a REIT, SCI will only be able to
qualify for REIT status if, as of the end of 1993, it had no earnings and
profits accumulated by the predecessor. REIT Management believes that SCI had
no such earnings and profits.
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Annual Distribution Requirements
In order to qualify as a REIT, SCI is required to make distributions (other
than capital gain distributions) to its shareholders each year in an amount at
least equal to (i) the sum of (a) 95% of SCI's REIT taxable income (computed
without regard to the dividends paid deduction and the REIT's net capital
gain) and (b) 95% of the net income (after tax), if any, from foreclosure
property, minus (ii) the sum of certain items of non-cash income. Such
distributions must be paid in the taxable year to which they relate, or in the
following taxable year if declared before SCI timely files its tax return for
such year and if paid on or before the first regular distribution payment
after such declaration. To the extent that SCI does not distribute all of its
net capital gain or distributes at least 95%, but less than 100%, of its REIT
taxable income, as adjusted, it will be subject to tax on the undistributed
amount at regular capital gains or ordinary corporate tax rates, as the case
may be.
SCI intends to make timely distributions sufficient to satisfy the annual
distribution requirements. It is possible that SCI may not have sufficient
cash or other liquid assets to meet the 95% distribution requirement, due to
timing differences between the actual receipt of income and actual payment of
expenses on the one hand, and the inclusion of such income and deduction of
such expenses in computing SCI's REIT taxable income on the other hand. To
avoid any problem with the 95% distribution requirement, SCI will closely
monitor the relationship between its REIT taxable income and cash flow and, if
necessary, intends to borrow funds in order to satisfy the distribution
requirement. However, there can be no assurance that such borrowing would be
available at such time.
If SCI fails to meet the 95% distribution requirement as a result of an
adjustment to SCI's tax return by the Service, SCI may retroactively cure the
failure by paying a "deficiency dividend" (plus applicable penalties and
interest) within a specified period.
Failure to Qualify
If SCI fails to qualify for taxation as a REIT in any taxable year and the
relief provisions do not apply, SCI will be subject to applicable federal and
state tax (including any applicable alternative minimum tax) on its taxable
income at regular corporate rates. Distributions to shareholders in any year
in which SCI fails to qualify will not be deductible by SCI, nor generally
will they be required to be made under the Code. In such event, to the extent
of current and accumulated earnings and profits, all distributions to
shareholders will be taxable as ordinary income, and, subject to certain
limitations in the Code, corporate distributees may be eligible for the
dividends received deduction. Unless entitled to relief under specific
statutory provisions, SCI also will be disqualified from re-electing taxation
as a REIT for the four taxable years following the year during which
qualification was lost.
TAXATION OF SHAREHOLDERS
Taxation of Taxable Domestic Shareholders
As long as SCI qualifies as a REIT, distributions made to SCI's taxable
domestic shareholders out of current or accumulated earnings and profits (and
not designated as capital gain dividends) will be taken into account by them
as ordinary income and will not be eligible for the dividends received
deduction for corporations. Distributions that are designated as capital gain
distributions will be taxed as long term capital gains (to the extent they do
not exceed SCI's actual net capital gain for the taxable year) without regard
to the period for which the shareholder has held its Common Shares. However,
corporate shareholders may be required to treat up to 20% of certain capital
gain distributions as ordinary income. To the extent that SCI makes
distributions in excess of current and accumulated earnings and profits, these
distributions are treated first as a tax-free return of capital to the
shareholder, reducing the tax basis of a shareholder's Common Shares by the
amount of such distribution (but not below zero), with distributions in excess
of the shareholder's tax basis taxable as capital gains (if the Common Shares
are held as a capital asset). In addition, any distribution declared by SCI in
October, November or December of any year and payable to a shareholder of
record on a specific date in any such month
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shall be treated as both paid by SCI and received by the shareholder on
December 31 of such year, provided that the distribution is actually paid by
SCI during January of the following calendar year. Shareholders may not
include in their individual income tax returns any net operating losses or
capital losses of SCI. Federal income tax rules may also require that certain
minimum tax adjustments and preferences be apportioned to SCI shareholders.
In general, any loss upon a sale or exchange of Common Shares by a
shareholder who has held such Common Shares for six months or less (after
applying certain holding period rules) will be treated as a long term capital
loss, to the extent of distributions from SCI required to be treated by such
shareholder as long term capital gains.
Backup Withholding
SCI will report to its domestic shareholders and to the Service the amount
of distributions paid during each calendar year, and the amount of tax
withheld, if any, with respect thereto. Under the backup withholding rules, a
shareholder may be subject to backup withholding at applicable rates with
respect to distributions paid unless such shareholder (i) is a corporation or
comes within certain other exempt categories and, when required, demonstrates
this fact, or (ii) provides a taxpayer identification number, certifies as to
no loss of exemption from backup withholding, and otherwise complies with
applicable requirements of the backup withholding rules. A shareholder that
does not provide SCI with its correct taxpayer identification number may also
be subject to penalties imposed by the Service. Any amount paid as backup
withholding will be credited against the shareholder's income tax liability.
In addition, SCI may be required to withhold a portion of capital gain
distributions made to any shareholders who fail to certify their non-foreign
shareholder status to SCI.
Taxation of Tax-Exempt Shareholders
The Service has issued a revenue ruling in which it held that amounts
distributed by a REIT to a tax-exempt employees' pension trust do not
constitute unrelated business taxable income ("UBTI"). Subject to the
discussion below regarding a "pension-held REIT," based upon the ruling, the
analysis therein and the statutory framework of the Code, distributions by SCI
to a shareholder that is a tax-exempt entity should also not constitute UBTI,
provided that the tax-exempt entity has not financed the acquisition of its
Common Shares with "acquisition indebtedness" within the meaning of the Code,
and that the Common Shares are not otherwise used in an unrelated trade or
business of the tax-exempt entity, and that SCI, consistent with its present
intent, does not hold a residual interest in a real estate mortgage investment
company.
However, for taxable years beginning on or after January 1, 1994, if any
pension or other retirement trust that qualifies under Section 401(a) of the
Code ("qualified pension trust") holds more than 10% by value of the interests
in a "pension-held REIT" at any time during a taxable year, a portion of the
distributions paid to the qualified pension trust by such REIT may constitute
UBTI. For these purposes, a "pension-held REIT" is defined as a REIT if (i)
such REIT would not have qualified as a REIT but for the provisions of the
Code which look through such a qualified pension trust in determining
ownership of stock of the REIT and (ii) at least one qualified pension trust
holds more than 25% by value of the interests of such REIT or one or more
qualified pension trusts (each owning more than a 10% interest by value in the
REIT) hold in the aggregate more than 50% by value of the interests in such
REIT.
TAX ASPECTS OF SCI'S INVESTMENTS IN PARTNERSHIPS
General
SCI holds a partnership interest in four limited partnerships, including the
Partnership. In general, a partnership is a "pass-through" entity which is not
subject to federal income tax. Rather, partners are allocated their
proportionate shares of the items of income, gain, loss, deduction and credit
of a partnership, and are potentially subject to tax thereon, without regard
to whether the partners receive a distribution from the
16
<PAGE>
partnership. SCI will include its proportionate share of the foregoing
partnership items for purposes of the various REIT gross income tests and in
the computation of its REIT taxable income. See "--Taxation of SCI--General"
and "--Gross Income Tests."
Accordingly, any resultant increase in SCI's REIT taxable income from its
interest in the partnerships (whether or not a corresponding cash distribution
is also received) will increase its distribution requirements (see "--Taxation
of SCI--Annual Distribution Requirements"), but will not be subject to federal
income tax in the hands of SCI provided that an amount equal to such income is
distributed by SCI to its shareholders. Moreover, for purposes of the REIT
asset tests (see "--Taxation of SCI--Asset Tests"), SCI will include its
proportionate share of assets held by the partnerships.
Entity Classification
SCI's interest in the partnerships involves special tax considerations,
including the possibility of a challenge by the Service of the status of the
partnerships as partnerships (as opposed to associations taxable as
corporations for federal income tax purposes). If a partnership were to be
treated as an association, such partnership would be taxable as a corporation
and therefore be subject to an entity-level tax on its income. In such a
situation, the character of SCI's assets and items of gross income would
change, which may preclude SCI from satisfying the REIT asset tests and may
preclude SCI from satisfying the REIT gross income tests (see "--Taxation of
SCI--Failure to Qualify" above, for a discussion of the effect of SCI's
failure to meet such tests).
OTHER TAX CONSIDERATIONS
SCI Development Services Incorporated
SCI Development Services Incorporated will pay federal and state income
taxes at the full applicable corporate rates on its income prior to payment of
any dividends. SCI Development Services Incorporated will attempt to minimize
the amount of such taxes, but there can be no assurance whether or the extent
to which measures taken to minimize taxes will be successful. To the extent
that SCI Development Services Incorporated is required to pay federal, state
or local taxes, the cash available for distribution by SCI Development
Services Incorporated to its shareholders will be reduced accordingly.
Tax on Built-in Gain
Pursuant to Notice 88-19, 1988-1 C.B. 486, a C corporation that elects to be
taxed as a REIT has to recognize any gain that would have been realized if the
C corporation had sold all of its assets for their respective fair market
values at the end of its last taxable year before the taxable year in which it
qualifies to be taxed as a REIT and immediately liquidated unless the REIT
elects to be taxed under rules similar to the rules of Section 1374 of the
Code.
Since SCI has made this election, if during the 10-year period beginning on
the first day of the first taxable year for which SCI qualifies as a REIT (the
"Recognition Period"), SCI recognizes gain on the disposition of any asset
held by SCI as of the beginning of such Recognition Period, then, to the
extent of the excess of (a) the fair market value of such asset as of the
beginning of such Recognition Period over (b) SCI's adjusted basis in such
asset as of the beginning of such Recognition Period (the "Built-in Gain"),
such gain will be subject to tax at the highest regular corporate rate.
Because SCI acquired many of its properties in fully taxable transactions and
presently expects to hold each property beyond the Recognition Period, it is
not anticipated that SCI will pay a substantial corporate level tax on its
Built-in Gain.
Possible Legislative or Other Actions Affecting Tax Consequences
Prospective shareholders should recognize that the present federal income
tax treatment of an investment in SCI may be modified by legislative, judicial
or administrative action at any time and that any such action may affect
investments and commitments previously made. The rules dealing with federal
income taxation are constantly under review by persons involved in the
legislative process and by the Service and the Treasury,
17
<PAGE>
resulting in revisions of regulations and revised interpretations of
established concepts as well as statutory changes. Revisions in federal tax
laws and interpretations thereof could adversely affect the tax consequences
of investment in SCI.
State and Local Taxes
SCI and its shareholders may be subject to state or local taxation in
various jurisdictions, including those in which it or they transact business
or reside. The state and local tax treatment of SCI and its shareholders may
not conform to the federal income tax consequences discussed above.
Consequently, prospective shareholders should consult their own tax advisors
regarding the effect of state and local tax laws on an investment in the
Common Shares of SCI.
EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT WITH HIS OR HER OWN TAX
ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE PURCHASE,
OWNERSHIP AND SALE OF COMMON SHARES IN AN ENTITY ELECTING TO BE TAXED AS A
REAL ESTATE INVESTMENT TRUST, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN,
AND OTHER TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP, SALE AND ELECTION AND
OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
PLAN OF DISTRIBUTION
This Prospectus relates to the offer and sale from time to time of up to
4,520,531 Common Shares issuable to the Selling Shareholders.
SCI will not receive any proceeds from the Common Shares by the Selling
Shareholders. The Selling Shareholders and any agents or broker-dealers that
participate in the distribution of Common Shares may be deemed to be
"underwriters" within the meaning of the Securities Act, and any commissions
received by them and any profit on the resale of the Common Shares may be
deemed to be underwriting commissions or discounts under the Securities Act.
At the time a particular offer of Common Shares is made, a Prospectus
Supplement, if required, will be distributed that will set forth the names of
any agents or broker-dealers, any commissions or discounts and other terms
constituting compensation from the Selling Shareholders and any other required
information. The Common Shares may be sold from time to time at varying prices
determined at the time of sale or at negotiated prices.
In order to comply with the securities laws of certain states, if
applicable, the Common Shares may be sold only through registered or licensed
agents or broker-dealers. In addition, in certain states, the Common Shares
may not be sold unless they have been registered or qualified for sale in such
state or an exemption from such registration or qualification requirement is
available and is complied with.
SCI may from time to time issue up to 4,520,531 Common Shares upon the
exchange of Units. SCI will acquire one Unit in the Partnership in exchange
for each Common Share that SCI may issue to holders of Units. Consequently,
with each exchange, SCI's interest in the Partnership will increase.
EXPERTS
The financial statements and related schedules of SCI incorporated by
reference herein and in the Registration Statement have been audited or
reviewed by Arthur Andersen LLP, independent public accountants, to the extent
and for the periods indicated in their reports, and have been incorporated by
reference herein and in the Registration Statement in reliance upon the
authority of that firm as experts in accounting and auditing.
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<PAGE>
LEGAL MATTERS
The validity of the Common Shares offered pursuant to this Prospectus will
be passed upon for SCI by Mayer, Brown & Platt, Chicago, Illinois. Mayer,
Brown & Platt has in the past represented and is currently representing SCI
and certain of its affiliates, including SCG.
19
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection with the
issuance and distribution of the Common Shares registered hereby, indicating
which expenses will be borne by SCI and which expenses will be borne pro rata
by the Selling Shareholders:
<TABLE>
<CAPTION>
SELLING
SCI SHAREHOLDERS
------- ------------
<S> <C> <C>
SEC registration fee................................. $ 0 $26,695
Printing and duplicating expenses.................... 2,000 1,000
Legal fees........................................... 15,000 5,000
Accounting fees and expenses......................... 3,000 0
Miscellaneous expenses............................... 5,000 1,000
------- -------
Total............................................ $25,000 $33,695
======= =======
</TABLE>
ITEM 15. INDEMNIFICATION OF TRUSTEES AND OFFICERS.
Article 4, Section 11, of the Declaration of Trust provides as follows with
respect to indemnification of Trustees:
"The Trust shall indemnify and hold harmless each Trustee from and
against all claims and liabilities, whether they proceed to judgment or are
settled, to which such Trustee may become subject by reason of his being or
having been a Trustee, or by reason of any action alleged to have been
taken or omitted by him as Trustee, and shall reimburse him for all legal
and other expenses reasonably incurred by him in connection with any such
claim or liability, including any claim or liability arising under the
provisions of federal or state securities laws; provided, however, that no
Trustee shall be indemnified or reimbursed under the foregoing provisions
in relation to any matter unless it shall have been adjudicated that his
action or omission did not constitute willful misfeasance, bad faith or
gross negligence in the conduct of his duties, or, unless, in the absence
of such an adjudication, the Trust shall have received a written opinion
from independent counsel, approved by the Trustees, to the effect that if
the matter of willful misfeasance, bad faith or gross negligence in the
conduct of duties had been adjudicated, it would have been adjudicated in
favor of such Trustee. The Trust, without requiring a preliminary
determination of the ultimate entitlement to indemnification, shall pay or
reimburse reasonable expenses incurred by any Trustee in connection with
any threatened, pending or completed action, suit or proceeding to which
such Trustee is, was or at any time becomes a party or is threatened to be
made a party, as a result directly or indirectly, of serving at any time as
a Trustee. The rights accruing to a Trustee under these provisions shall
not exclude any other right to which he may be lawfully entitled, nor shall
anything herein contained restrict the right of the Trust to indemnify or
reimburse such Trustee in any proper cause even though not specifically
provided for herein."
Article 9, Section 1 of the Declaration of Trust provides as follows with
respect to the limitation of liability of Trustees and officers and
indemnification:
"A Trustee or officer of the Trust shall not be liable for monetary
damages to the Trust or its shareholders for any act or omission in the
performance of his duties unless:
(1) The Trustee or officer actually received an improper benefit in
money, property or services (in which case, such liability shall be for
the amount of the benefit in money, property or services actually
received);
(2) The Trustee's or officer's action or failure to act was the
result of active and deliberate dishonesty and was material to the
cause of action being adjudicated;
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<PAGE>
(3) The Trustee's or officer's action or failure to act constitutes
willful misconduct or deliberate recklessness; or
(4) Such liability to the Trust is specifically imposed upon Trustees
or officers by statute."
Article 9, Section 6 of the Declaration of Trust provides as follows with
respect to the indemnification of Trustees and officers:
"Notwithstanding any other provisions of this Declaration of Trust, the
Trust, for the purpose of providing indemnification for its Trustees and
officers, shall have the authority, without specific shareholder approval,
to enter into insurance or other arrangements, with persons or entities
which are not regularly engaged in the business of providing insurance
coverage, to indemnify all Trustees and officers of the Trust against any
and all liabilities and expenses incurred by them by reason of their being
Trustees or officers of the Trust, whether or not the Trust would otherwise
have the power under this Declaration of Trust or under Maryland law to
indemnify such persons against such liability. Without limiting the power
of the Trust to procure or maintain any kind of insurance or other
arrangement, the Trust may, for the benefit of persons indemnified by it,
(i) create a trust fund, (ii) establish any form of self-insurance, (iii)
secure its indemnity obligation by grant of any security interest or other
lien on the assets of the corporation, or (iv) establish a letter of
credit, guaranty or surety arrangement. Any such insurance or other
arrangement may be procured, maintained or established within the Trust or
with any insurer or other person deemed appropriate by the Board of
Trustees regardless of whether all or part of the stock or other securities
thereof are owned in whole or in part by the Trust. In the absence of
fraud, the judgment of the Board of Trustees as to the terms and conditions
of insurance or other arrangement and the identity of the insurer or other
person participating in any arrangement shall be conclusive, and such
insurance or other arrangement shall not be subject to voidability, nor
subject the Trustees approving such insurance or other arrangement to
liability, on any ground, regardless of whether Trustees participating and
approving such insurance or other arrangement shall be beneficiaries
thereof."
SCI has entered into indemnity agreements with each of its officers and
Trustees which provide for reimbursement of all expenses and liabilities of
such officer or Trustee, arising out of any lawsuit or claim against such
officer or Trustee due to the fact that he was or is serving as an officer or
Trustee, except for such liabilities and expenses (a) the payment of which is
judicially determined to be unlawful, (b) relating to claims under Section
16(b) of the Exchange Act, or (c) relating to judicially determined criminal
violations. In addition, SCI has entered into indemnity agreements with each
of its Trustees who is not also an officer of SCI which provide for
indemnification and advancement of expenses to the fullest lawful extent
permitted by Maryland law in connection with any pending or completed action,
suit or proceeding by reason of serving as a Trustee and SCI has established a
trust to fund payments under the indemnification agreements.
The Registration Rights Agreement provides for the reciprocal
indemnifications by the Selling Shareholders of SCI, and its Trustees,
officers and controlling persons, and by SCI of the Selling Shareholders, and
their respective directors, officers and controlling persons, against certain
liabilities under the Securities Act.
ITEM 16. EXHIBITS.
See the Exhibit Index which is hereby incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act;
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<PAGE>
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
Provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
registrant pursuant to section 13 or section 15(d) of the Exchange Act
that are incorporated by reference in the Registration Statement.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to Trustees, officers and controlling persons of the
registrant pursuant to the provisions set forth or described in Item 15 of
this Registration Statement, or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a Trustee, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such Trustee, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT TO THE
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF SANTA FE, STATE OF NEW MEXICO, ON
THE 27TH DAY OF JUNE, 1996.
Security Capital Industrial Trust
/s/ Jeffrey A. Klopf
By: _________________________________
Jeffrey A. Klopf
Senior Vice President and
Secretary
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Thomas G. Wattles* Co-Chairman, Chief
____________________________________ Investment Officer and
Thomas G. Wattles Trustee
/s/ K. Dane Brooksher* Co-Chairman, Chief Operating
____________________________________ Officer and Trustee
K. Dane Brooksher
/s/ M. Gordon Keiser* Senior Vice President
____________________________________ (Chief Financial Officer)
M. Gordon Keiser
/s/ Edward F. Long* Vice President and
____________________________________ Controller (Principal
Edward F. Long Accounting Officer)
/s/ Irving F. Lyons III* Managing Director and
____________________________________ Trustee
Irving F. Lyons III
/s/ Stephen L. Feinberg* Trustee
____________________________________
Stephen L. Feinberg
Trustee
____________________________________
Donald P. Jacobs
/s/ William G. Myers* Trustee
____________________________________
William G. Myers
/s/ John E. Robson* Trustee
____________________________________
John E. Robson
</TABLE>
/s/ Jeffrey A. Klopf June 27, 1996
*By: _____________________
Jeffrey A. Klopf
Attorney-in-fact
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<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DOCUMENT DESCRIPTION NUMBER
------- -------------------- ----------
<C> <S> <C>
4.1 Amended and Restated Declaration of Trust of SCI (In-
corporated by reference to exhibit 4.1 to SCI's Regis-
tration Statement No. 33-73382).
4.2 First Certificate of Amendment of Amended and Restated
Declaration of Trust of SCI (Incorporated by reference
to exhibit 3.1 to SCI's Form 8-K dated June 14, 1994).
4.3 Second Articles of Amendment of Restated Declaration of
Trust of SCI (Incorporated by reference to exhibit 4.3
to SCI's Registration Statement No. 33-87306).
4.4 Articles Supplementary relating to SCI's Series A Cumu-
lative Redeemable Preferred Shares of Beneficial Inter-
est (Incorporated by reference to exhibit 4.8 to SCI's
Form 8-A registration statement relating to such
shares).
4.5 First Articles of Amendment to Articles Supplementary
relating to SCI's Series A Cumulative Redeemable Pre-
ferred Shares of Beneficial Interest (Incorporated by
reference to exhibit 10.3 to SCI's Form 10-Q for the
quarter ended September 30, 1995).
4.6 Articles Supplementary relating to SCI's Series B Cumu-
lative Convertible Redeemable Preferred Shares of Bene-
ficial Interest (Incorporated by reference to exhibit
4.1 to SCI's Form 8-K dated February 14, 1996).
4.7 Bylaws of SCI (Incorporated by reference to exhibit 4.3
to SCI's Registration Statement No. 33-83208).
4.8 Rights Agreement, dated as of December 31, 1993, be-
tween SCI and State Street Bank and Trust Company, as
Rights Agent, including form of Rights Certificate (In-
corporated by reference to exhibit 4.4 to SCI's Regis-
tration Statement No. 33-78080).
4.9 First Amendment to Rights Agreement, dated as of Febru-
ary 15, 1995, between SCI and State Street Bank and
Trust Company, as Rights Agent (Incorporated by refer-
ence to exhibit 4.4 to SCI's Registration Statement No.
33-73382).
4.10 Form of share certificate for Common Shares of Benefi-
cial Interest of SCI (Incorporated by reference to ex-
hibit 4.4 to SCI's Registration Statement No. 33-
73382).
4.11 Form of share certificate for Series A Cumulative Re-
deemable Preferred Shares of Beneficial Interest (In-
corporated by reference to exhibit 4.7 to SCI's Form 8-
A registration statement relating to such shares).
4.12 Form of share certificate for Series B Cumulative Con-
vertible Redeemable Preferred Shares of Beneficial In-
terest (Incorporated by reference to exhibit 4.8 to
SCI's Form 8-A registration statement relating to such
shares).
4.13 8.72% Note due March 1, 2009 (Incorporated by reference
to exhibit 4.7 to SCI's Form
10-K for the year ended December 31, 1994).
4.14 9.34% Note due March 1, 2015 (Incorporated by reference
to exhibit 4.8 to SCI's Form
10-K for the year ended December 31, 1994).
4.15 7.875% Note due May 15, 2009 (Incorporated by reference
to exhibit 4.4 to SCI's Form
8-K dated May 9, 1995).
4.16 7.30% Note due May 15, 2001 (Incorporated by reference
to exhibit 4.3 to SCI's Form 8-K dated May 9, 1995).
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DOCUMENT DESCRIPTION NUMBER
------- -------------------- ----------
<C> <S> <C>
4.17 7.25% Note due May 13, 2000 (Incorporated by reference
to exhibit 4.2 to SCI's Form 8-K dated May 9, 1995).
4.18 7.125% Note due May 13, 1998 (Incorporated by reference
to exhibit 4.1 to SCI's Form
8-K dated May 9, 1995).
4.19 Indenture, dated as of March 1, 1995, between SCI and
State Street Bank and Trust Company, as Trustee (Incor-
porated by reference to exhibit 4.9 to SCI's Form 10-K
for the year ended December 31, 1994).
4.20 Collateral Trust Indenture, dated as of July 22, 1993,
between Krauss/Schwartz Properties, Ltd. and
NationsBank of Virginia, N.A., as Trustee (Incorporated
by reference to exhibit 4.10 to SCI's Form 10-K for the
year ended December 31, 1994).
4.21 First Supplemental Collateral Trust Indenture, dated as
of October 28, 1994, among SCI Limited Partnership-IV,
Krauss/Schwartz Properties, Ltd., and NationsBank of
Virginia, N.A., as Trustee (Incorporated by reference
to exhibit 10.6 to SCI's Form 10-Q for the quarter
ended September 30, 1994).
4.22 Agreement of Limited Partnership of SCI Limited Part-
nership-I, dated as of December 22, 1993, by and among
SCI, as general partner, and the limited partners set
forth therein (Incorporated by reference to exhibit
10.4 to SCI's Registration Statement No. 33-73382).
4.23 Transfer and Registration Rights Agreement, dated as of
December 22, 1993, among SCI and the persons set forth
therein (Incorporated by reference to exhibit 10.10 to
SCI's Registration Statement No. 33-73382).
*5 Opinion of Mayer, Brown & Platt as to the validity of
the shares being registered.
23.1 Consent of Mayer, Brown & Platt (included in the opin-
ion filed as Exhibit 5).
23.2 Consent of Arthur Andersen LLP.
*24.1 Power of Attorney.
</TABLE>
- --------
*Previously filed.
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<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of (i) our reports dated March 1,
1996 included in Security Capital Industrial Trust's Form 10-K for the year
ended December 31, 1995, (ii) our report dated April 19, 1996 included in
Security Capital Industrial Trust's Form 10-Q for the quarterly period ended
March 31, 1996, and (iii) our report dated July 31, 1995 on the combined
statement of revenue and certain expenses for Group E properties and to all
references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
Chicago, Illinois
June 27, 1996
