<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) November 12, 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 5. OTHER EVENTS
Acquisitions:
- -------------
The following acquisitions of light industrial and bulk distribution
facility properties in Security Capital Industrial Trust's ("SCI") target
markets were completed by SCI from unrelated parties since the filing of SCI's
Form 8-K dated August 19, 1996. SCI acquired these properties because SCI's
management believes that these properties represent excellent opportunities for
long-term above average growth in rental income and cash flow and SCI could
acquire them at significant discounts to replacement cost.
SCI acquired the West One Business Center in Las Vegas, Nevada from a
partnership on August 29, 1996. West One Business Center consists of four
buildings totalling 297,967 square feet on 18.4 acres of land and is a
combination of light industrial and bulk distribution facilities. The buildings
were constructed from 1977 to 1983. SCI purchased the property for approximately
$16.5 million. At the date of purchase the facilities were 100% leased to five
tenants.
On August 30, 1996, SCI acquired the Great Southwest Distribution Center
#10 located in the Great Southwest submarket of Dallas. The facility was built
in 1981, consists of 44,800 square feet and is classified as bulk distribution.
SCI purchased the property from a corporation for approximately $1.0 million.
The property was 100% leased to two tenants at the date of purchase.
In three separate transactions dated September 25, 1996, October 3, 1996
and October 25, 1996, SCI purchased the Heitman Industrial Portfolio from a
limited partnership for an aggregate price of approximately $27.0 million. The
properties are located in Chicago, Illinois and are a combination of light
industrial and bulk distribution facilities totalling 1,114,090 square feet of
rentable space in 12 buildings. The portfolio was approximately 97% leased at
the date of purchase.
SCI acquired the Northpark Business Center in Fort Worth, Texas on October
11, 1996 from an individual. The property is a 91,000 square foot bulk
distribution facility and was constructed in 1980. SCI purchased the property
for approximately $1.8 million and at the date of purchase the property was 100%
leased to one tenant.
SCI acquired the 33rd Street Industrial Center in Orlando, Florida on
October 30, 1996 from a limited partnership. The facility is classified as light
industrial and consists of a single building totalling 80,640 square feet. The
building was constructed in 1986. SCI purchased the property for approximately
$1.9 million and at the date of purchase the facility was 100% leased to three
tenants.
SCI acquired the Freeport Distribution Center #1 located in Irving, Texas
on October 23, 1996 from a corporation. The property is a 100,000 square foot
bulk distribution facility and was constructed in 1986. SCI purchased the
property for approximately $4.1 million and at the date of purchase the property
was 100% leased to one tenant.
On November 1, 1996, SCI acquired the Post Oak Business Center in Houston,
Texas from a private investment group. The property was built in 1978, consists
of 110,000 square feet, and is classified as bulk distribution. The purchase
price was approximately $3.0 million and the property was 100% leased to one
tenant at the date of purchase.
SCI acquired the Great Southwest Distribution Center #11 located in the
Great Southwest submarket of Dallas on December 4, 1996 from a corporation. The
property is a 60,812 square foot bulk distribution facility and was constructed
in two phases in 1963 and in 1968. SCI purchased the property for approximately
$1.0 million and at the date of purchase the property was 100% leased to one
tenant.
On December 13, 1996, SCI acquired the Fulton Park Distribution Center in
Atlanta, Georgia from a corporation. The property was built in 1971, consists of
59,878 square feet and is classified as bulk distribution. The purchase price
was approximately $900,000 and the property was 100% leased to one tenant at the
date of purchase.
1
<PAGE>
SCI acquired the Clearview Distribution Center in Edison, New Jersey from a
real estate company on December 23, 1996. The property is classified as bulk
distribution, consists of a single building with 470,062 square feet on 24.15
acres of land and was constructed in 1970. SCI purchased the property for
approximately $14.9 million. At the date of purchase the facility was 100%
leased to one tenant.
On December 13, 1996, SCI acquired the Kilmer Distribution Center in
Edison, New Jersey from a state government retirement system. The facilities,
classified as bulk distribution, were constructed from 1973 through 1980 and
consist of four buildings totalling 740,410 square feet on 46.59 acres of land.
The purchase price was approximately $16.8 million and the property was 100%
leased to four tenants at the date of purchase.
SCI acquired the Alsip Distribution Center on January 14, 1997 from a
family trust. The property is a 464,818 square foot bulk distribution facility
constructed in 1968 and located in Alsip, Illinois in the South Cook County
submarket of Chicago. SCI purchased the property for approximately $8.5 million
and at the date of purchase there were no signed leases. The building is
currently under renovation.
On February 4, 1997, SCI acquired the Copans Distribution Center in Pompano
Beach, Florida, located in the Ft. Lauderdale/Miami market. The property was
built in 1986, consists of 68,806 square feet, and is classified as bulk
distribution. The facility was purchased from an insurance company for
approximately $2.2 million and was 100% leased to two tenants at the date of
purchase.
SCI acquired the Great Southwest Distribution Center #12 located in the
Great Southwest submarket of Dallas on February 14, 1997. The facility is
classified as bulk distribution, and consists of 44,868 square feet of rentable
space. SCI purchased the property from a general partnership for approximately
$1.0 million. There were no signed leases at the time of purchase.
SCI acquired the Brunswick Distribution Center in Edison Township, New
Jersey on February 26, 1997 from a real estate company. The facility, classified
as bulk distribution, is comprised of a single building with 152,368 square
feet. The purchase price was approximately $3.8 million and the property was 88%
leased to two tenants on the date of purchase.
SCI acquired the Atlanta NE Distribution Center in Atlanta, Georgia on
February 28, 1997. The property consists of a single building with 151,544
square feet, was constructed in 1986, and is classified as bulk distribution.
SCI purchased the property from a limited partnership for approximately $3.6
million. At the date of purchase the building was 23% leased.
On March 6, 1997, SCI acquired the Great Southwest Distribution Center #13
located in the Great Southwest submarket of Dallas. The facility is classified
as bulk distribution and consists of a single building with 50,076 square feet
of rentable space. SCI purchased the property from a corporation for
approximately $1.3 million. There were no signed leases on the date of purchase.
At September 30, 1997 the property was 100% leased.
SCI acquired the Addision Distribution Center in the Army Trail Corridor
submarket of Chicago on March 21, 1997. The facility, built in 1981, is
classified as bulk distribution and consists of 135,579 square feet of rentable
space. SCI purchased the property from a corporation for approximately $4.3
million. At the date of purchase the facility was 100% leased to one tenant.
On March 25, 1997, SCI acquired the Monterrey Industrial Center in
Monterrey, Mexico from a development and construction company. The facilities,
built in 1989 and 1990, are classified as light industrial and consist of two
buildings totalling 149,243 square feet. SCI purchased the property for
approximately $4.5 million. At the time of purchase the facilities were 100%
leased to three tenants.
On May 22, 1997, SCI acquired the Kentucky Drive Business Center in
Florence, Kentucky in the Northern Kentucky submarket of Cincinnati. The
property is classified as light industrial and consists of four buildings
totalling 172,081 square feet of rentable space. SCI purchased the property for
approximately $3.7 million from an insurance company. The facilities were 92.7%
leased to fifteen tenants at the date of purchase.
2
<PAGE>
SCI acquired the Eamhaven Industrial Park on June 2, 1997 from an
individual in Rotterdam, Netherlands. The facility is classified as bulk
distribution and consists of 138,285 square feet. The purchase price was
approximately $7.6 million and the property was 100% leased to one tenant at the
date of purchase.
On June 3, 1997, SCI acquired the Meadowland Industrial Center in
Carlstadt, New Jersey. The property was built in 1962, consists of approximately
460,557 square feet of rentable space, and is classified as bulk distribution.
SCI purchased the facility from a corporation for approximately $9.9 million.
There were no signed leases at the time of purchase and the building is
currrently under renovation.
On June 12, 1997, SCI acquired the Great Southwest Distribution Centers
#14, #15 and #16 from a joint venture. The property is located in Grand Prairie,
Texas in the Great Southwest submarket of Dallas. The facilities were
constructed in 1982, consist of three buildings totalling 266,000 square feet
and are classified as bulk distribution. SCI purchased the property for
approximately $6.9 million. At the date of acquisition the facilities were 100%
leased to five tenants.
SCI acquired the Elmhurst Distribution Center and the Woodale Distribution
Center in the O'Hare and Army Trail Corridor submarkets, respectively, of
Chicago from a real estate company on June 27, 1997. The facilities are
classified as bulk distribution, consist of two buildings totalling 180,955
square feet and were constructed in 1975. SCI purchased the property for
approximately $6.5 million. At the date of purchase the facilities were 100%
leased to five tenants.
SCI acquired the Earth City Industrial Center in Earth City, Missouri, a
submarket of St. Louis, from a real estate company on June 27, 1997. The
property is classified as bulk distribution, consists of four buildings
totalling 449,089 square feet on 22.89 acres of land and was constructed between
1977 and 1982. SCI purchased the property for approximately $11.9 million. At
the date of purchase the facilities were 88% leased to 13 tenants.
On July 10, 1997, SCI acquired the Freeport Distribution Centers #3 and #4
in Irving, Texas in the DFW/Freeport North submarket of Dallas. The facilities,
classified as bulk distribution, were constructed in 1982 and consist of two
buildings totaling 93,314 square feet. The purchase price was approximately $2.4
million and there were no signed leases at the time of purchase.
SCI acquired the Interstate North Business Park in Charlotte, North
Carolina on July 15, 1997 from a pension fund. The property consists of two
buildings totalling 148,394 square feet, is classified as light industrial, and
was constructed in 1982 and 1983. SCI purchased the property for approximately
$3.6 million. At the date of purchase the facilities were 91% leased to eight
tenants.
On July 31, 1997, SCI acquired the Mitry Mory building in Paris, France.
The building was purchased for approximately $7.2 million from a European
corporation and has 290,090 square feet of rentable space. At the time of
purchase the facility was 100% leased.
On August 8, 1997, SCI acquired the Delp Distribution Center in Memphis,
Tennessee from a corporation. The property was built in 1976, consists of
189,000 square feet in two buildings, and is classified as bulk distribution.
SCI purchased the property for approximately $2.7 million and at the date of
purchase there were no signed leases. At September 30, 1997 the property was 50%
leased.
SCI acquired the Piedmont Court Distribution Center located in Atlanta,
Georgia on August 26, 1997. The facilities are classified as bulk distribution,
and consist of two buildings totaling 256,066 square feet on 14.05 acres of
land. SCI purchased the property from a limited partnership for approximately
$5.9 million. The facilities were 88% leased to 15 tenants at the time of
purchase.
SCI acquired the MGI Portfolio on September 17, 1997 in St. Louis, Missouri
from a real estate company. The portfolio consists of five buildings totalling
536,399 square feet and is a combination of light industrial and bulk
distribution facilities constructed between 1969 and 1986. The purchase price
was approximately $15.0 million and the property was 100% leased to two tenants
on the date of purchase.
3
<PAGE>
SCI acquired the Royal Commerce Center in Dallas, Texas from an insurance
company on September 22, 1997. The property consists of four buildings totalling
498,713 square feet on approximately 24 acres of land. The buildings are a
combination of bulk distribution and light industrial facilities and were
constructed in 1981. SCI purchased the property for approximately $13.2 million
and at the time of purchase the facilities were 98.2% leased.
4
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(a) Financial Statements:
Combined Statement of Revenue and Certain Expenses for Group G
Properties and Notes thereto with Independent Public Accountants'
Report thereon dated November 7, 1997.
(b) 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)
(c) Exhibits:
Exhibit 23-1 - Consent of Independent Public Accountants
5
<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
Date: November 12, 1997 By: /s/ Edward F. Long
------------------------------------
Edward F. Long, Vice President
and Controller
6
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Board of Trustees and Shareholders of
Security Capital Industrial Trust:
We have audited the accompanying combined statement of revenue and certain
expenses of SECURITY CAPITAL INDUSTRIAL TRUST GROUP G PROPERTIES (described in
Note 1) for the year ended December 31, 1996. This financial statement is the
responsibility of Group G Properties' management. Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying combined statement of revenue and certain expenses was
prepared for the purpose of complying with Rule 3-14 of Regulation S-X of the
Securities and Exchange Commission for inclusion in the Form 8-K of Security
Capital Industrial Trust and is not intended to be a complete presentation of
the Group G Properties' combined revenue and certain expenses.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the combined revenue and certain expenses of Security
Capital Industrial Trust Group G Properties for the year ended December 31,
1996, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
November 7, 1997
7
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
GROUP G PROPERTIES
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
(In thousands)
<TABLE>
<CAPTION>
REVENUE:
<S> <C>
Minimum rents $6,620
Expense reimbursements 596
------
Total revenue 7,216
CERTAIN EXPENSES:
Real estate taxes 1,209
Property operating expenses 525
Insurance 158
Management fees 265
------
Total certain expenses 2,157
------
REVENUE IN EXCESS OF CERTAIN EXPENSES $5,059
======
</TABLE>
See accompanying notes to combined statement of revenue and certain expenses.
8
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
GROUP G PROPERTIES
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
1. BASIS OF PRESENTATION:
---------------------
The combined statement of revenue and certain expenses for the year ended
December 31, 1996, relates to the operations of the following properties ("Group
G Properties") which were acquired from unaffiliated parties by Security Capital
Industrial Trust ("SCI") between January 1, 1997 and November 7, 1997.
<TABLE>
<CAPTION>
Acquisition Acquisition
Date Property Name Location Cost
---------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
06/12/97 Great Distribution Centers #14,
#15 and #16 Dallas, TX $ 6,909
06/27/97 Elmhurst Dist. Center and
Woodale Dist. Center Chicago, IL 6,509
06/27/97 Earth City Industrial Center St. Louis, MO 11,875
08/26/97 Piedmont Court Atlanta, GA 5,898
09/17/97 MGI Portfolio St. Louis, MO 15,023
09/22/97 Royal Commerce Center Dallas, TX 13,165
-------
$59,379
=======
</TABLE>
The Group G Properties have an aggregate net leasable area of 2.2 million
square feet and were 92.3% leased as of December 31, 1996.
The accompanying financial statement excludes certain expenses, such as
interest, depreciation and amortization, professional fees and other costs not
directly related to the future operations of the Group G Properties that may not
be comparable to the expenses expected to be incurred by SCI in the proposed
future operations of the Group G Properties. Management is not aware of any
material factors relating to these properties which would cause the reported
financial information not to be necessarily indicative of future operating
results.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. MORTGAGE NOTES:
--------------
In connection with the acquisition of a certain Group G property, SCI
assumed existing indebtedness of approximately $8.7 million. This mortgage note
bears interest at 7.75% and is due in installments through October 2010.
Approximate principal payments due on the mortgage note on the Group G property
acquired are as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
1997 (from date of acquisition) $ 97
1998 407
1999 440
2000 475
2001 513
Thereafter 6,759
------
$8,691
======
</TABLE>
9
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
GROUP G PROPERTIES
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
3. RELATED-PARTY TRANSACTIONS:
--------------------------
Included in management fees is approximately $114,000 paid to affiliates of
the prior owners under property management agreements.
4. FUTURE MINIMUM RENTS RECEIVABLE:
-------------------------------
All of the Group G Properties are leased to tenants under agreements which
are classified as operating leases. The leases generally provide for payment of
utilities, property taxes and insurance by the tenant. As of December 31, 1996,
minimum lease payments receivable on noncancelable leases with lease periods
greater than one year were as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
1997 $ 6,367
1998 5,544
1999 3,550
2000 2,588
2001 1,730
Thereafter 392
-------
$20,171
=======
</TABLE>
10
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following proforma condensed consolidated financial statements for
Security Capital Industrial Trust ("SCI") reflect the acquisition by SCI of
certain properties between January 1, 1996 and November 11, 1997. 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 properties acquired subsequent to June 30,
1997 had been acquired as of that date.
The accompanying pro forma condensed consolidated statements of operations
for the year ended December 31, 1996 and for the six months ended June 30, 1997,
have been prepared as if the acquisition of the properties acquired between
January 1, 1996 and November 11, 1997, had occurred on January 1, 1996.
The pro forma condensed consolidated financial statements do not purport to
be indicative of the results which would actually have been attained had the
transactions described above been completed on the dates indicated or which may
be obtained in the future.
11
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
June 30, 1997
(Unaudited)
(In thousands, except share data)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
------------
ASSETS Historical Acquisitions Pro Forma
------ ---------- ------------ ----------
<S> <C> <C> <C>
Real estate: $2,702,070 $49,963(a) $2,752,033
Less accumulated depreciation 139,236 - 139,236
---------- ------- ----------
Net real estate investments 2,562,834 49,963 2,612,797
Investment in and advances to unconsolidated subsidiaries 75,166 - 75,166
Cash and cash equivalents 9,532 (9,532)(b) -
Accounts receivable and other assets 66,731 - 66,731
---------- ------- ----------
Total assets $2,714,263 $40,431 $2,754,694
========== ======= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
Line of credit $ 130,100 $31,740(c) $ 161,840
Mortgage notes and assessment bonds payable 131,158 8,691(d) 139,849
Long-term debt 624,234 - 624,234
Accounts payable and other liabilities 78,214 - 78,214
---------- ------- ----------
Total liabilities 963,706 40,431 1,004,137
Minority interest 55,973 - 55,973
Shareholders' equity:
Series A Preferred Shares; 5,400,000 shares issued
and outstanding; stated liquidation preference of
$25 per share 135,000 - 135,000
Series B Convertible Preferred Shares; 8,050,000 shares
issued and outstanding; stated liquidation preference
of $25 per share 201,250 - 201,250
Series C Preferred Shares; 2,000,000 shares issued and
outstanding; stated liquidation preference of $50
per share 100,000 - 100,000
Common shares of beneficial interest, $.01 par value;
97,760,595 shares issued and outstanding 978 - 978
Additional paid-in capital 1,338,965 - 1,338,965
Distributions in excess of net earnings (81,609) - (81,609)
---------- ------- ----------
Total shareholders' equity 1,694,584 - 1,694,584
---------- ------- ----------
Total liabilities and shareholders' equity $2,714,263 $40,431 $2,754,694
========== ======= ==========
</TABLE>
12
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the Six Months Ended June 30, 1997
--------------------------------------------------------
Historical
--------------------------- Pro Forma
SCI Acquisitions(e) Adjustments Pro Forma
-------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
Income:
Rental income $136,543 $7,440 $ - $143,983
Other real estate income 5,690 - - 5,690
Interest and other income 2,663 - - 2,663
-------- ------ ------- --------
Total income 144,896 7,440 - 152,336
-------- ------ ------- --------
Expenses:
Rental expenses, net of recoveries 12,825 2,624 (76)(f) 15,373
Depreciation and amortization 37,024 - 1,406(g) 38,430
Mortgage interest 5,377 - 336(h) 5,713
General and administrative 687 - - 687
REIT management fee 12,834 - 253(i) 13,087
Interest on general debt 19,181 - 3,434(j) 22,615
Other 1,461 - - 1,461
-------- ------ ------- --------
Total expenses 89,389 2,624 5,353 97,366
-------- ------ ------- --------
Net Earnings From Operations Before
Minority Interest 55,507 4,816 (5,353) 54,970
Minority interest share in net earnings 1,835 - - 1,835
-------- ------ ------- --------
Net Earnings Excluding Gain on Disposition
of Real Estate 53,672 4,816 (5,353) 53,135
Less preferred share dividends 17,659 - - 17,659
-------- ------ ------- --------
Net Earnings Attributable to Common Shares
Excluding Gain on Disposition of Real Estate $ 36,013 $4,816 $(5,353) $ 35,476
======== ====== ======= ========
Weighted average common shares outstanding 96,888 96,888
======== ========
Per Share Earnings Attributable to Common Shares
Excluding Gain on Disposition of Real Estate $ 0.37 $ 0.37
======== ========
</TABLE>
13
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the Year Ended December 31, 1996
-------------------------------------------------------------
Historical
---------------------------- Pro Forma
SCI Acquisitions(k) Adjustments Pro Forma
-------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
Income:
Rental income $227,000 $30,319 $ - $257,319
Other real estate income 5,342 - - 5,342
Interest and other income 1,121 - - 1,121
-------- ------- -------- --------
Total income 233,463 30,319 - 263,782
-------- ------- -------- --------
Expenses:
Rental expenses, net of recoveries 26,674 7,327 (29)(f) 33,972
Depreciation and amortization 59,850 - 7,672(g) 67,522
Mortgage interest 11,668 - 1,497(h) 13,165
General and administrative 1,025 - - 1,025
REIT management fee 21,472 - (952)(i) 20,520
Interest on general debt 27,151 - 20,213(j) 47,364
Other 2,913 - - 2,913
-------- ------- -------- --------
Total expenses 150,753 7,327 28,401 186,481
-------- ------- -------- --------
Net Earnings From Operations Before
Minority Interest 82,710 22,992 (28,401) 77,301
Minority interest share in net earnings 3,326 - - 3,326
-------- ------- -------- --------
Net Earnings Excluding Loss on Disposition
of Real Estate 79,384 22,992 (28,401) 73,975
Less preferred share dividends 25,895 - - 25,895
-------- ------- -------- --------
Net Earnings Attributable to Common Shares
Excluding Loss on Disposition of Real Estate $ 53,489 $22,992 $(28,401) $ 48,080
======== ======= ======== ========
Weighted average common shares outstanding 84,504 84,504
======== ========
Per Share Net Earnings Attributable to Common
Shares Excluding Loss on Disposition of
Real Estate $ 0.63 $ 0.57
======== ========
</TABLE>
14
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
Notes to Pro Forma Condensed Consolidated Financial Statements
(Unaudited)
(a) Represents acquisitions of distribution properties subsequent to June 30,
1997, as follows:
<TABLE>
<CAPTION>
Acquisition Amount
Name Date (in thousands)
---- ----------- --------------
<S> <C> <C>
Freeport Distribution Centers
#3 and #4 July 10, 1997 $ 2,442
Interstate North Business Park July 15, 1997 3,564
Mitry Mory July 31, 1997 7,220
Delp Distribution Center August 8, 1997 2,651
Piedmont Court Distribution
Center August 26, 1997 5,898
MGI Portfolio September 17, 1997 15,023
Royal Commerce Center September 22, 1997 13,165
-------
$49,963
=======
</TABLE>
(b) Reflects the application of cash on hand to fund pro forma acquisitions of
properties.
(c) Reflects draw on line of credit to finance acquisitions of operating
properties subsequent to June 30, 1997.
(d) Reflects debt assumed on an acquired property.
(e) Reflects historical revenues and certain expenses of the properties
acquired by SCI after January 1, 1997 and prior to June 30, 1997 and of the
properties listed in footnote (a) above. The total historical acquisition
adjustment reflects the period from January 1, 1997 to the earlier of the
respective dates of acquisition or June 30, 1997 as applicable (results of
operation after the date of acquisition are included 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.
(f) Reflects the difference between historical property management fee expense
and SCI's property management fee expense.
(g) Reflects depreciation expense for the acquired properties which is based on
SCI's purchase cost assuming asset lives of 30 years. Depreciation is
computed using the straight-line method.
(h) Reflects estimated interest on mortgage notes payable as if assumed by SCI
on January 1, 1996. Mortgages assumed from sellers in conjunction with the
acquisition of specific properties bear interest at fixed rates ranging
from 7.75% to 9.75%.
(i) Reflects the adjustment to REIT management fee expense related to the
change in cash flow (as defined in the REIT Management Agreement) resulting
from acquisition of distribution properties.
(j) Represents additional interest expense on long-term debt securities and
borrowings under SCI's line of credit assumed to have been used to finance
the acquisitions of the pro forma operating properties as described in
footnotes (e) and (k). The adjustments assume the issuance of the long-term
debt securities and the borrowings on the line of credit occurred on
January 1 of the periods presented using actual effective interest rates of
9.04% for $200.0 million of debt securities issued in May 1996, 7.73% for
$100.0 million issued February 4, 1997 and 6.74% for borrowings on the line
of credit.
15
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
Notes to Pro Forma Condensed Consolidated Financial Statements
(Unaudited)
(k) Reflects historical revenues and certain expenses of the properties
acquired by SCI after January 1, 1996 and prior to June 30, 1997 and of the
properties listed in footnote (a) above. The total historical acquisition
adjustment reflects the period from January 1, 1996 to the earlier of the
respective dates of acquisition or December 31, 1996, as applicable
(results of operation after the date of acquisition are included 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.
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EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report included in this Form 8-K, into the Company's previously filed
Registration Statement File Nos. 33-91366, 33-92490, 333-4961, 333-13909,
333-26597, 333-31421, 333-38875 and 333-39797.
ARTHUR ANDERSEN LLP
Chicago, Illinois
November 11, 1997
