<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) September 8, 1997
----------------------
SECURITY CAPITAL INDUSTRIAL TRUST
(Exact Name of Registrant as Specified in its Charter)
Maryland
------------------------------------------------
(State or Other Jurisdiction of Incorporation)
01-12846 74- 2604728
---------------------------- ----------------------------
14100 East 35th Place, Aurora, Colorado 80011
- -------------------------------------------------------------------------------
(303) 375-9292
- -------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
- -------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(a) Pro Forma Financial Information:
Security Capital Industrial Trust Pro Forma Condensed Consolidated
Financial Statements:
Pro Forma Condensed Consolidated Balance Sheet as of June 30,
1997 (unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the
six months ended June 30, 1997 (unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the
year ended December 31, 1996 (unaudited)
(b) Exhibit:
Exhibit 23 -Consent of Independent Public Accountants
Exhibit 15 -Letter of Arthur Andersen LLP regarding unaudited
interim financial information
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The accompanying pro forma condensed consolidated financial statements
for Security Capital Industrial Trust, ("SCI"), reflect the Merger pursuant to
which SCI will acquire its REIT Manager and Property Manager currently owned by
Security Capital Group Incorporated, ("Security Capital"), SCI's largest
shareholder, in exchange for SCI Common Shares. The Merger will result in SCI
becoming an internally managed REIT. The Merger does not meet the significance
tests of the Securities and Exchange Commission that require pro forma financial
statements and financial statements of the acquired companies. However, pro
forma financial statements have been presented because management believes that
presenting the pro forma effects of the Merger will help a reader evaluate and
understand the Merger.
The pro forma condensed consolidated financial statements also reflect
the acquisition by SCI of certain properties acquired between January 1, 1996
and August 15, 1996. This is the group of properties previously included in
SCI's 8-K filed August 20, 1996.
The pro forma condensed consolidated financial statements have been
prepared based upon certain pro forma adjustments to the historical financial
statements of SCI.
The accompanying pro forma condensed consolidated balance sheet as of
June 30, 1997 has been prepared as if the Merger had been completed as of that
date. The accompanying pro forma condensed consolidated statements of
operations for the six months ended June 30, 1997 and for the year ended
December 31, 1996 have been prepared as if the Merger and acquisition of
properties between January 1, 1996 and August 15, 1996 had occurred on January
1, 1996. However, it does not give effect to the fully stabilized results of
operations related to SCI properties under development at June 30, 1997 with a
total budgeted completion cost of $270.0 million or to 1996 development
completions with a total budgeted cost of $379.2 million. Management believes
there will be sufficient depth of management and personnel such that additional
assets can be acquired, developed and managed without a significant increase in
personnel or other costs. As a result, management of SCI believes that the pro
forma results reflected in the pro forma condensed consolidated statements of
operations are not indicative of the accretion that is expected to occur under
an internally managed structure.
The pro forma condensed consolidated financial statements do not
purport to be indicative of the financial position or results of operations
which would actually have been obtained had the transactions described above
been completed on the dates indicated or which may be obtained in the future.
The pro forma condensed consolidated financial statements should be read in
conjunction with the historical financial statements of SCI as set forth in
SCI's 1996 Form 10-K and June 30, 1997 Form 10-Q which are incorporated herein
by reference. In management's opinion, all material adjustments necessary to
reflect the effects of these transactions have been made.
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 1997
(In thousands, except share amounts)
(Unaudited)
<TABLE>
<CAPTION>
SCI
ASSETS Historical (a) The Merger Pro Forma
------ -------------- ---------- ---------
<S> <C> <C> <C>
Real estate: $2,702,070 $ - $2,702,070
Less accumulated depreciation 139,236 - 139,236
---------- ---------- ----------
Net real estate investments 2,562,834 - 2,562,834
---------- ---------- ----------
Other fixed assets - 6,074 (b) 6,074
Cash and cash equivalents 9,532 164 (c) 9,696
(700) (d) (700)
Accounts receivable and other assets 66,731 583 (c) 67,314
Investment in and advances to unconsolidated subsidiaries 75,166 - 75,166
Due from Security Capital - 1,724 (e) 1,724
---------- --------- ----------
Total assets $2,714,263 $ 7,845 $2,722,108
========== ========= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
Line of credit $ 130,100 $ - $ 130,100
Mortgage notes and assessment bonds payable 131,158 - 131,158
Long-term debt 624,234 - 624,234
Accounts payable and other liabilities 78,214 2,471 (c) 80,685
---------- --------- ----------
Total liabilities 963,706 2,471 966,177
Minority interest 55,973 - 55,973
---------- --------- ----------
Shareholders' equity:
Series A Preferred Shares 135,000 - 135,000
Series B Preferred Shares 201,250 - 201,250
Series C Preferred Shares 100,000 - 100,000
Common Shares (97,760,595 shares historical,
101,452,618 shares pro forma) 978 37 (d) 1,015
Additional paid-in capital 1,338,965 81,134 (d) 1,420,099
Distributions in excess of net earnings (81,609) (75,797) (f) (157,406)
---------- --------- ---------
Total shareholders' equity 1,694,584 5,374 1,699,958
---------- ---------- ----------
Total liabilities and shareholders' equity $2,714,263 $ 7,845 $2,722,108
========== ========== ==========
</TABLE>
See accompanying notes to pro forma condensed consolidated financial statements.
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Six Months Ended June 30, 1997
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Historical SCI(g) The Merger Pro Forma
----------------- ----------- ---------
<S> <C> <C> <C>
Income:
Rental income $ 136,543 $ (533) (m) $ 136,010
Other real estate income 5,690 - 5,690
Interest income 1,117 - 1,117
Income from unconsolidated subsidiaries 1,546 - 1,546
--------- -------- ---------
Total income 144,896 (533) 144,363
--------- -------- ---------
Expenses:
Rental expenses, net of recoveries 7,398 5,120 (o) 12,518
Property management fees paid to affiliate 5,427 (5,427)(p) -
Depreciation and amortization of real estate assets 37,024 9 (q) 37,033
Depreciation of fixed assets - 730 (n) 730
Interest expense 24,558 - 24,558
General and administrative 687 8,712 (r) 9,399
REIT management fee paid to affiliate 12,834 (12,834)(p) -
Other 1,461 - 1,461
--------- -------- ---------
Total expenses 89,389 (3,690) 85,699
--------- -------- ---------
Net earnings from operations before minority interest 55,507 3,157 58,664
Minority interest share in net earnings 1,835 104 (s) 1,939
--------- -------- ---------
Net earnings excluding gain on disposition of real
estate 53,672 3,053 56,725
Less preferred share dividends 17,659 - 17,659
--------- -------- ---------
Net earnings attributable to Common Shares excluding
gain on disposition of real estate $ 36,013 $ 3,053 (t) $ 39,066
========= ======== =========
Weighted average Common Shares outstanding 96,888 3,692 (u) 100,580
========= ======== =========
Net earnings per share attributable to Common Shares
excluding gain on disposition of real estate $ 0.37 $ 0.02 $ 0.39
========= ======== =========
Reconciliation of net earnings attributable to Common
Shares excluding gain on disposition of real estate
to funds from operations:
Net earnings attributable to Common Shares excluding
gain on disposition of real estate $ 36,013 $ 3,053 $ 39,066
Add (deduct):
Depreciation and amortization of real estate assets 37,024 9 37,033
Minority interest 1,835 104 1,939
Other - - -
--------- -------- ---------
Funds from operations attributable to Common Shares (v) $ 74,872 $ 3,166 $ 78,038
========= ======== =========
Weighted average Common Shares outstanding assuming
conversion of limited partnership units 102,082 3,692 105,774
========= ======== =========
Cash Flow Summary:
Net cash provided by operating activities $ 84,265 $ 3,330 $ 87,595
Net cash used in investing activities (267,420) (4,812) (272,232)
Net cash provided by financing activities $ 187,917 $ (3,866) $ 184,051
</TABLE>
See accompanying notes to pro forma condensed consolidated financial statements.
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1996
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Historical
----------------------------- Pro Forma The
SCI (g) Acquisitions(h) Adjustments Subtotal Merger Pro Forma
------------ --------------- ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Income:
Rental income $ 227,000 $ 6,788 $ - $ 233,788 $ (978) (m) $ 232,810
Other real estate income 5,342 - - 5,342 - 5,342
Interest income 1,121 - - 1,121 - 1,121
--------- ------- -------- ----------- -------- ---------
Total income 233,463 6,788 - 240,251 (978) 239,273
--------- ------- -------- ----------- -------- ---------
Expenses:
Rental expenses, net of
recoveries 18,526 548 - 19,074 8,399 (o) 27,473
Property management fees
paid to affiliate 8,148 290 (43) (i) 8,395 (8,395) (p) -
Depreciation and amortization
of real estate assets 59,850 - 1,698 (j) 61,548 47 (q) 61,595
Depreciation of fixed assets - - - - 1,075 (n) 1,075
Interest expense 38,819 - 4,272 (k) 43,091 43,091
General and administrative 1,025 - - 1,025 14,219 (r) 15,244
REIT management fee paid
to affiliate 21,472 - 275 (l) 21,747 (21,747) (p) -
Other 2,913 - - 2,913 - 2,913
--------- ------- -------- ----------- -------- ---------
Total expenses 150,753 838 6,202 157,793 (6,402) 151,391
--------- ------- -------- ----------- -------- ---------
Net earnings from
operations before minority
interest 82,710 5,950 (6,202) 82,458 5,424 87,882
Minority interest share in
net earnings 3,326 - - 3,326 228 (s) 3,554
--------- ------- -------- ----------- -------- ---------
Net earnings excluding
loss on disposition of
real estate 79,384 5,950 (6,202) 79,132 5,196 84,328
Less preferred share
dividends 25,895 - - 25,895 - 25,895
--------- ------- -------- ----------- -------- ---------
Net earnings attributable
to Common Shares
excluding loss on
disposition of real
estate $ 53,489 $ 5,950 $ (6,202) $ 53,237 $ 5,196 (t) $ 58,433
========= ======= ======== =========== ======== =========
Weighted average Common
Shares outstanding 84,504 - - 84,504 3,692 (u) 88,196
========= ======= ======== =========== ======== =========
Net earnings per share
attributable to Common
Shares excluding loss on
disposition of real
estate $ 0.63 $ - $ - $ 0.63 $ 0.03 $ 0.66
========= ======= ======== =========== ======== =========
Reconciliation of net
earnings attributable to
Common Shares excluding
loss on disposition
of real estate to funds
from operations:
Net earnings attributable
to Common Shares
excluding loss on
disposition of real
estate $ 53,489 $ 5,950 $ (6,202) $ 53,237 $ 5,196 $ 58,433
Add (deduct):
Depreciation and
amortization of real
estate assets 59,850 - 1,698 61,548 47 61,595
Minority interest 3,326 - - 3,326 228 3,554
Other 225 - - 225 - 225
-------- ------- -------- ----------- -------- ---------
Funds from operations
attributable to Common
Shares (v) $ 116,890 $ 5,950 $ (4,504) $ 118,336 $ 5,471 $ 123,807
========= ======= ======== =========== ======== =========
Weighted average Common
Shares outstanding
assuming conversion of
limited partnership
units 89,699 - - 89,699 3,692 93,391
========= ======= ======== =========== ======== =========
Cash Flow Summary:
Net cash provided by
operating activities $ 136,201 $ 5,950 $ (6,202) $ 135,949 $ 12,463 $ 148,412
Net cash used in
investing activities (665,878) - - (665,878) (7,640) (673,518)
Net cash provided by
financing activities $ 512,212 $ - $ - $ 512,212 $ (9,341) $ 502,871
</TABLE>
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except per share amounts)
(a) Reflects the historical balance sheet of SCI as of June 30, 1997, as set
forth on Form 10-Q , which is incorporated herein by reference.
(b) Reflects the historical cost of fixed assets (primarily computer
equipment and software) being acquired from the REIT Manager and the Property
Manager as of June 30, 1997. Assets and liabilities, consisting primarily of
intercompany and related accounts, which are not being acquired in the Merger
have not been reflected as they will have no impact on the financial position of
SCI.
(c) Reflects the historical operating assets and liabilities of the REIT
Manager and the Property Manager for which Security Capital will reimburse SCI,
as more fully discussed in note (e).
(d) Reflects (i) the adjustments to Common Shares and additional paid-in
capital to record the issuance of Common Shares in exchange for the common stock
of the REIT Manager and the Property Manager, and (ii) the deduction from
additional paid-in capital of the estimated costs of the Merger, as follows:
<TABLE>
<CAPTION>
<S> <C>
Assumed market value of Common Shares issued...... $ 81,871
Assumed market value per Common Share......$22.175
Assumed Common Shares issued to Security
Capital....................................3,692
Par value of Common Shares issued................. (37)
Estimated costs of the Merger..................... (700)
----------
Net increase to additional paid-in capital........ $ 81,134
==========
</TABLE>
(e) In accordance with the terms of the Merger Agreement, reflects the
amount due from Security Capital to SCI as reimbursement for the net historical
operating liabilities (as discussed in note (c)) acquired from the REIT Manager
and the Property Manager as of June 30, 1997.
(f) Represents the difference between the assumed market value of Common
Shares issued on the date of the Merger and the fair value of the net tangible
assets acquired which has been accounted for as costs incurred in acquiring the
management companies from a related party because the management companies do
not qualify as "businesses" for purposes of applying APB Opinion No. 16,
"Business Combinations." Such difference is as calculated below.
Assumed market value of Common Shares issued...... $ 81,871
Net tangible assets acquired...................... (6,074)
----------
Costs incurred in acquiring management companies
from a related party.......................... $ 75,797
==========
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except per share amounts)
Since the intent of the accompanying pro forma condensed consolidated
statement of earnings for the year ended December 31, 1996 is to reflect the
expected continuing impact of the Merger on SCI, the one-time adjustment
discussed above has been excluded. Upon consummation of the Merger, this expense
will be recorded as an operating expense on SCI's consolidated statement of
operations but SCI will not deduct this expense for purposes of calculating
funds from operations, due to the non-recurring and non-cash nature of the
expense.
(g) Reflects SCI's historical statement of operations for the period
indicated.
(h) Reflects historical revenues and certain expenses on properties acquired
by SCI after January 1, 1996 and prior to August 15, 1996. This is the group of
properties previously included in SCI's 8-K filed August 20, 1996. (Acquisitions
subsequent to this date have not exceeded the significance level that would
necessitate the filing of an updated 8-K.) The total historical acquisition
adjustment reflects the period from January 1, 1996 to the date of acquisition.
Results of operations after the date of acquisition are reflected in SCI's
historical operating results. Historical acquisition revenues and certain
expenses exclude amounts which would not be comparable to the proposed future
operations of the properties such as certain interest expense, interest income,
income taxes and depreciation.
(i) Reflects the difference between historical property management fee
expense on the pro forma acquisitions and SCI's property management fee expense.
(j) Reflects pro forma depreciation expense adjustment for the acquired
operating properties for the period from January 1, 1996 to the respective dates
of acquisition based on SCI's purchase cost assuming a 30 year asset life.
(k) Reflects additional interest expense on SCI's line of credit assumed to
have been utilized to finance acquisitions of the pro forma operating
properties. Interest was calculated using SCI's 1996 line of credit average
borrowing rate of 7.02%. Also reflects estimated interest expense on a $6.2
million mortgage note payable bearing interest at 9.75%, which SCI assumed from
the seller in conjunction with a property acquisition. Both components of the
interest expense adjustment apply to the period from January 1, 1996 to the
acquired operating properties' respective dates of acquisition.
(l) Reflects the adjustment to REIT management fee expense related to the
change in cash flow (as defined in the REIT management agreement) resulting from
the acquisitions of the pro forma properties.
(m) Reflects the elimination of rent paid by the REIT Manager and the
Property Manager to SCI during the six months ended June 30, 1997 and the year
ended December 31, 1996, as applicable.
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except per share amounts)
(n) Reflects historical depreciation expense related to fixed assets
(primarily computer equipment and software) of the REIT Manager and the Property
Manager for the six months ended June 30, 1997, and the year ended December 31,
1996, as applicable.
(o) Reflects the following adjustments:
<TABLE>
<CAPTION>
For the six
For the year ended months ended
December 31, 1996 June 30, 1997
------------------ -------------
<S> <C> <C>
Historical operating expenses of the Property
Manager which were directly related to
providing services to SCI $ 8,925 $ 5,904
Estimated increase in operating expenses due to
the increase in operating properties resulting
from the pro forma acquisitions 315 -
Elimination of occupancy expense paid to SCI
on the historical books of the Property Manager (723) (405)
Estimated capitalization of expenses directly
related to implementation of software (118) (379)
--------- --------
Total $ 8,399 $ 5,120
========= ========
</TABLE>
(p) Reflects the elimination of SCI's expenses related to REIT management
fees and property management fees. The corresponding fee revenue recognized by
the REIT Manager and the Property Manager have not been reflected as they would
be eliminated in consolidation.
(q) Reflects the adjustment to give effect to the additional depreciation
that would result from the capitalization of acquisition and development-related
costs discussed in note (r). These capitalized costs will be depreciated
utilizing the same lives and methods currently utilized by SCI.
(r) Reflects the following adjustments:
<TABLE>
<CAPTION>
For the six
For the year ended months ended
December 31, 1996 June 30, 1997
------------------ -------------
<S> <C> <C>
(i) Historical general and administrative expenses of the
REIT Manager and leasing employee expense of the
Property Manager which were directly related to
providing services to SCI, including charges for
administrative services provided by Security Capital
-- see below $ 27,842 $ 17,125
</TABLE>
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except per share amounts)
In connection with the Merger, it is expected that SCI will enter into a
proposed Administrative Services Agreement (ASA) with Security Capital. Under
the ASA, Security Capital will provide SCI with administrative services such as
payroll, accounts payable, cash management, risk management, internal audit, tax
and legal administration, systems development and systems support. Such services
are currently provided by Security Capital to SCI through the REIT Manager and
Property Manager. The fees payable to Security Capital will be equal to Security
Capital's costs of providing such services, plus 20%. Based upon a review of the
terms of the agreement, it was determined that the costs that would have been
incurred under the ASA for the six months ended June 30, 1997 ($2,255), and the
year ended December 31, 1996 ($3,466), would not differ materially from the
actual costs charged to the REIT Manager and Property Manager by Security
Capital during these periods (which are included in (i) above) and therefore no
pro forma adjustments are required.
(s) Represents the estimated incremental increase to minority interest share
in net earnings resulting from the Merger.
(t) No tax benefit is reflected for the historical results of operations of
the REIT Manager and the Property Manager as these companies will be merged into
a qualified REIT Subsidiary which, under federal income tax laws, would not be
subject to income taxes.
(u) Reflects the increase in weighted average Common Shares outstanding that
would result from the issuance of Common Shares in exchange for the common stock
of the REIT Manager and the Property Manager as if the Merger had occurred on
January 1, 1996. The number of shares shown is based on the market value of
Common Shares issued on the date of the Merger which is assumed to be $81.9
million at an assumed market value per Common Share of $22.175.
(v) Funds from operations represents SCI's net earnings computed in
accordance with GAAP, excluding gains (or losses) from disposition of
depreciated real estate, minority interest, significant non-recurring items, and
depreciation and amortization. SCI believes that funds from operations is
helpful to a reader as a measure of the performance of an equity REIT because,
along with cash flow from operating activities, financing activities and
investing activities, it provides a reader with an indication of the ability of
SCI to incur and service debt, to make capital expenditures and to fund other
cash needs. Furthermore, management believes that an understanding of funds from
operations will enhance the reader's comprehension of the impact of the Merger
on SCI which was a specific consideration of SCI's Special Committee in
recommending approval of the Merger transaction to the Board of Trustees. Funds
from operations should not be considered as an alternative to net income or any
other GAAP measurement of performance as an indicator of SCI's operating
performance or as an alternative to cash flows from operating, investing or
financing activities as a measure of liquidity. Furthermore, the funds from
operations measure presented by SCI will not be comparable to similarly titled
measures of other REITs who do not compute funds from operations in a manner
consistent with SCI.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SECURITY CAPITAL INDUSTRIAL TRUST
By: /s/ M. Gordon Keiser
------------------------------
M. Gordon Keiser,
Senior Vice President
(Principal Financial Officer)
Date: September 8, 1997
By: /s/ Edward F. Long
------------------------------
Edward F. Long,
Vice President and Controller
(Principal Accounting Officer)
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
For the six
For the year ended months ended
December 31, 1996 June 30, 1997
------------------ -------------
<S> <C> <C>
(ii) Estimated net increase in general and administrative
expenses due to the increase in operating properties
resulting from the pro forma acquisitions 62 -
(iii) Elimination of occupancy expense paid to SCI on
the historical books of the REIT Manager (255) (128)
(iv) Pro forma adjustment to capitalize qualifying costs
relating to the acquisition,development and leasing
of real estate investments and software application
development costs that would have been capitalized
by SCI under GAAP, had the Merger occurred on
January 1, 1996. Under the current management
structure, SCI pays leasing commissions (which it
capitalizes and amortizes over the terms of the
leases), a property management fee, and a REIT
management fee which is based upon 16% of cash
flow, as defined. The management fees are expensed
in accordance with GAAP since the underlying costs
of services are not directly incurred by SCI and
the fees do not represent a reimbursement of such
costs. Upon consummation of the Merger, all such
costs will be incurred directly by SCI (as shown
in (i) and (ii) above), and to the extent that they
are qualifying costs, they will be capitalized in
accordance with GAAP. Capitalized acquisition and
development related costs will be depreciated over
the useful lives of the buildings (30 years for
acquired buildings and 40 years for developed
buildings), capitalized leasing costs will be
amortized over four years (the average length
of SCI's leases), and software application
development costs will be amortized over five
years (the average life of SCI's software) (13,430) (8,285)
------- ------
$14,219 $8,712
======= ======
</TABLE>
<PAGE>
EXHIBIT 15
September 8, 1997
Board of Trustees and Shareholders
Security Capital Industrial Trust:
We are aware that Security Capital Industrial Trust has included in its Form 8-K
its consolidated financial statements for the quarter ended June 30, 1997, which
includes our report dated August 11, 1997 covering the unaudited interim
financial information contained therein. Pursuant to Regulation C of the
Securities Act of 1933 (the "Act"), that report is not considered a part of such
Form 8-K prepared or certified by our firm or a report prepared or certified by
our firm within the meaning of Sections 7 and 11 of the Act.
ARTHUR ANDERSEN LLP
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form 8-K of our report dated February 10, 1997, included in
Security Capital Industrial Trust's Form 10-K for the year ended December 31,
1996. It should be noted that we have not audited any financial statements of
the Trust subsequent to December 31, 1996 or performed any audit procedures
subsequent to the date of our report.
ARTHUR ANDERSEN LLP
Chicago, Illinois
September 8, 1997
