SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) April 28, 1998
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SECURITY CAPITAL INDUSTRIAL TRUST
(Exact Name of Registrant as Specified in its Charter)
Maryland
(State or Other Jurisdiction of Incorporation)
1-12846
(Commission File Number)
74-2604728
(I.R.S. Employer Identification No.)
14100 East 35th Place, Aurora, Colorado 80011
(Address of Principal Executive Offices) (Zip Code)
(303) 375-9292
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
On April 28, 1998, Security Capital Industrial Trust, a Maryland
real estate investment trust, announced its operating results for the three
months ended March 31, 1998 and 1997. These operating results are not
necessarily indicative of the results to be expected for the entire year.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Sequential
Exhibit No. Document Description Page No.
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99.1 Press Release dated April 28, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
SECURITY CAPITAL INDUSTRIAL TRUST
Dated: April 29, 1998 By: /s/ Jeffrey A. Klopf
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Jeffrey A. Klopf
Secretary
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N E W S R E L E A S E
Contact: K. Dane Brooksher (800) 820-0181
(303) 375-9292
Irving F. Lyons III (510) 656-1900
SECURITY CAPITAL INDUSTRIAL REPORTS
22.9% INCREASE IN FUNDS FROM OPERATIONS PER SHARE
Customer-Driven Service Strategy Drives Growth
DENVER--April 28, 1998--Security Capital Industrial Trust (SCI) (NYSE:SCN), a
leading global provider of distribution facilities and services, reported a
22.9% increase in funds from operations (FFO) per diluted share for the
first quarter of 1998 versus the same period in 1997. First quarter 1998
FFO rose to $54.3 million, or $0.43 per diluted share, compared with $35.7
million, or $0.35 per diluted share, for the same period in 1997.
SCI's record first quarter performance reflects the company's continued
emphasis on providing integrated service solutions to meet its customers'
increasing global logistics and distribution space requirements. "SCI's
distinct competitive advantage is our demonstrated ability to provide
tailored solutions to meet our customers' individual global supply chain
needs through the SCI International Operating System ," said K. Dane
Brooksher, co-chairman and chief operating officer. "The expansion of our
value-added service offerings including corporate distribution facilities
services, multi-market customer agreements, and distribution logistics
services allowed us to achieve our exceptional results."
Mr. Brooksher noted the strong operating performance of the company's
properties during the first quarter, highlighted by rental rate growth of
14.0% for previously leased space. In addition, SCI achieved customer
retention of 79.8%, a near-record high, and an increase in stabilized
leased percentage to 96.6% across the company's global portfolio. "Because
our business is relationship- driven, we stay focused on helping our
customers streamline and maximize the efficiency of their local and global
distribution operations," said Mr. Brooksher. "At the same time, our
customers continuously tell us how we can expand our services to better
meet their needs."
Corporate Distribution Facilities Services Accelerate Growth Globally
To date in 1998, SCI has executed 15 customer agreements in 13 global
markets, representing 2.5 million square feet of facilities through its
corporate distribution facilities services business, in which SCI develops
facilities to meet specific customer requirements. This represents an
increase of 2.2 million square feet over the 310,000 square feet of
agreements executed for such facilities during the first quarter of 1997.
More than 64% of the square footage represented by these agreements are
with existing customers expanding their operations throughout SCI's global
target markets, including a new 170,400 square foot facility in Northern
Mexico for the Solar Turbines division of Caterpillar, an existing SCI
customer in the United States.
The company currently has 3.2 million square feet of corporate distribution
facilities services agreements in active negotiation in 12 of its global
target markets. "The rapid expansion of this important business segment in
North America and Europe has allowed SCI to grow with our global customers,
including agreements executed for Converse and Konica during the first
quarter," said Irving F. Lyons III, co-chairman and chief investment
officer. "We are confident that this business will continue to be an
integral part of SCI's future growth."
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Security Capital Industrial
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International Expansion Drives Overall Company Growth
Through the extension of the SCI International Operating System, the
company is establishing a strategic presence in key distribution markets to
meet the expansion and reconfiguration needs of its multi-market global
customers. SCI currently has a total of 20.0 million square feet of dry and
cold storage distribution facilities, including completed acquisitions and
facilities currently under development, letter of intent or in serious
negotiation, in 12 countries outside of the United States. "The
comprehensive international operating platform we have established provides
an outstanding opportunity to expand customer relationships around the
world," said Mr. Brooksher. "Because of this, we expect our international
efforts to be a significant and sustainable contributor to SCI's growth."
Including SCI's recently announced agreement to purchase the 405,000 square
foot Warsaw Industrial Center in Poland, SCI has more than $300 million of
acquisitions in active negotiation in its international target markets.
"The expansion of our European operations into Warsaw illustrates SCI's
ability to identify and respond to customer-driven capital deployment
opportunities," said Mr. Lyons. In addition, the company controls 188 acres
of land in its international target markets, representing 3.9 million
square feet of potential distribution space.
SCI also reported that its Board of Trustees has declared a regular
dividend of $0.3183 per common share, payable on May 26, 1998, to
shareholders of record on May 11, 1998, consistent with SCI's previously
announced increase in its annual common dividend amount to $1.24 per common
share for 1998. On March 31, 1998, SCI paid a quarterly dividend of $0.5875
per cumulative redeemable Series A preferred share, $0.4375 per cumulative
convertible Series B preferred share and $1.0675 per cumulative redeemable
Series C preferred share, to preferred shareholders of record on March 16,
1998.
* * *
Security Capital Industrial is the largest publicly held, U.S.-based global
owner and operator of distribution facilities and services, with operations
in North America and Europe. SCI's primary objective is to build
shareholder value through long-term, sustainable growth in per-share cash
flow. SCI expects to achieve this objective by targeting the 1,000 largest
users of distribution space through the SCI International Operating
System (TM), which provides exceptional corporate distribution facilities and
services to meet customer expansion and reconfiguration needs globally.
As of March 31, 1998, SCI had 116.7 million square feet of distribution space
operating or under development in 37 U.S. markets and 29 targeted international
markets.
# # #
In addition to historical information, this press release contains
forward-looking statements under the federal securities laws. These
statements are based on current expectations, estimates and projections
about the industry and markets in which Security Capital Industrial Trust
operates, management's beliefs and assumptions made by management.
Forward-looking statements are not guarantees of future performance and
involve certain risks and uncertainties which are difficult to predict.
Actual operating results may be affected by changes in national and local
economic conditions, competitive market conditions, weather, obtaining
governmental approvals and meeting development schedules, and therefore,
may differ materially from what is expressed or forecasted in this press
release.
A copy of SCI's first quarter supplemental information is available upon
request by calling 800/820-0181.
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<CAPTION>
SECURITY CAPITAL INDUSTRIAL TRUST
At March 31, 1998
Unaudited Financial Results
Selected Financial Data
(in thousands, except per share amounts)
Three Months Ended
March 31,
1998 1997 % Change
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income Items:
Revenues $95,012 $ 69,231 37.2%
Net earnings attributable to Common Shares $27,746 $ 16,732 65.8%
Funds from Operations attributable to
Common Shares $54,310 $ 35,675 52.2%
Per share Funds from Operations attributable to
Common Shares:
Basic (1) $ 0.44 $ 0.35 25.7%
Diluted (2) $ 0.43 $ 0.35 22.9%
Distributions per Common Share $ 0.285 $ 0.2675 6.5%
Annual dividend rate (3) $ 1.24 $ 1.07 15.9%
<CAPTION>
March 31, December 31,
1998 1997 % Change
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<S> <C> <C> <C>
Assets:
Investments in Real Estate Before Depreciation $3,109,808 $3,006,236 3.4%
Total Assets (net of accumulated depreciation) $3,347,957 $3,033,953 10.3%
Market Capitalization:
Total Common Shares Outstanding 121,377 (4) 117,364 (4) 3.4%
Common Share Price $ 25.625 $ 24.875 3.0%
Equity Value $3,742,447 (5) $3,541,885 (6) 5.7%
Total Market Capitalization (including long
term debt) $4,847,999 $4,398,965 10.2%
(1) SCI's Funds from Operations per Common Share calculated using the
methodology prescribed by Statement of Financial Accounting Standards
No. 128, "Earnings per Share," for the "basic" computation as
presented above has been adjusted to assume conversion of all limited
partnership units to SCI shares, which is consistent with the
methodology used by SCI in prior periods.
(2) See Funds from Operations page, footnote 4, for diluted FFO per Common
Share calculation.
(3) On April 28, 1998, SCI's Board of Trustees declared a common dividend
of $0.3183 per common share, payable on May 26, 1998, to shareholders
of record on May 11, 1998, consistent with SCI's previously announced
increase in the annual common dividend amount to $1.24 per common
share for 1998.
(4) Excludes limited partnership units.
(5) Includes $140.1 million of Series A Preferred Shares, $262.2 million
of Series B Convertible Preferred Shares, $100.0 million of Series C
Preferred Shares, and $129.9 million of limited partnership units.
(6) Includes $140.7 million of Series A Preferred Shares, $255.1 million
of Series B Convertible Preferred Shares, $100.0 million of Series C
Preferred Shares, and $126.6 million of limited partnership units.
<PAGE>
<CAPTION>
SECURITY CAPITAL INDUSTRIAL TRUST
At March 31, 1998
Unaudited Financial Results
Operating Highlights
(in thousands, except number of properties and acres)
As of March 31, 1998 As of December 31, 1997
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<S> <C> <C> <C> <C> <C> <C>
INVESTMENT IN REAL ESTATE: Total Total
Expected Balance Expected Balance
In Dollars: Investment Sheet Investment Sheet
---------- ----- ---------- -----
Operating Properties $2,854,131 $2,741,710 $2,763,915 $2,653,604
Properties Under Development 365,852 171,886 326,682 180,268
Land Held for Future Development n/a 142,023 n/a 159,645
No. of Square No. of Square
In Square Feet: Properties Feet Properties Feet
---------- ---- ---------- ----
Operating Properties 1,024 93,085 1,005 90,843
Properties Under Development 64 9,784 62 8,442
-- ----- -- -----
Total 1,088 102,869 1,067 99,285
===== ======= ===== ======
% Leased:
Total Portfolio 94.26% 94.15%
Stabilized Portfolio (1) 96.58% 96.38%
<CAPTION>
Three Months Ended
March 31, 1998
- ------------------------------------------------------------------------------
<S> <C> <C>
Total Expected
Square Investment/Sales
Development Feet Proceeds
---- --------
Development Starts 4,034 $137,192
Development Completions 2,746 100,175
Building Acquisitions 256 7,720
Land Acquisitions (Acres) 70 n/a
Building Dispositions (2) 679 34,707
<CAPTION>
Three Months Ended
March 31, 1998
- ------------------------------------------------------------------------------
<S> <C>
Rental Rate Growth 14.0%
Turnover Costs $0.63
(1) 87.8 million stabilized sq ft as of 3/31/98 and 85.1 million stabilized
sq ft as of 12/31/97.
(2) Building dispositions indicates net sales proceeds.
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<CAPTION>
SECURITY CAPITAL INDUSTRIAL TRUST
At March 31, 1998
Unaudited Financial Results
Funds from Operations
(in thousands, except per share amounts)
Three Months Ended
March 31,
-----------------------------
1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues:
Rental income (1) $ 78,565 $ 67,386
Other real estate income 5,257 1,121
Income from refrigerated distribution services 10,565 -
Interest income 625 724
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Total Revenues 95,012 69,231
Expenses:
Net rental expenses 5,938 5,828
General and administrative 5,171 307
REIT management fee - 6,606
Depreciation of non-real estate assets 246 -
Interest (2) 19,645 11,375
Other 903 611
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Total Expenses 31,903 24,727
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Funds from Operations 63,109 44,504
Less preferred share dividends 8,799 8,829
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Funds from Operations Attributable to Common Shares $ 54,310 $ 35,675
=========== ==========
Weighted average common shares outstanding (3) 123,074 101,203
Per Share Funds from Operations Attributable to
Common Shares (3)(4):
Basic $ 0.44 $ 0.35
============= ===========
Diluted $ 0.43 $ 0.35
============= ===========
(1) Includes $680,000 and $1,233,000 of straight-lined rent for the three
month periods in 1998 and 1997, respectively.
(2) Includes $441,000 and $669,000 of amortization of loan fees for the
three month periods in 1998 and 1997, respectively.
(3) SCI's Fund from Operations per Common Share calculated using the
methodology prescribed by Statement of Financial Account Standards No.
128, "Earnings per Share," for the "basic" computation as presented
above has been adjusted to assume conversion of all limited
partnership units to SCI shares, which is consistent with the
methodology used by SCI in prior periods.
(4) SCI's Funds from Operations per Common Share calculated under
Statement of Financial Accounting Standards No. 128, "Earnings per
Share," on a "diluted" basis is as follows:
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<CAPTION>
Three Months Ended
March 31,
----------------------------
1998 1997
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<S> <C> <C>
FFO Attributable to Common Shares $ 54,310 $ 35,675
Series B preferred share dividends 3,492 3,522
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Adjusted FFO attributable to common shares $ 57,802 $ 39,197
Weighted average common shares outstanding 123,074 101,203
Weighted average conversion of Series B preferred shares 10,243 10,320
Incremental options and warrants (a) 490 10
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Adjusted weighted average common shares 133,807 111,533
Diluted FFO per Common Share $ 0.43 $ 0.35
============= =============
(a) The number of weighted average options and warrants outstanding were
3,076,000 and 30,000 for the three month periods in 1998 and 1997,
respectively.
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<CAPTION>
SECURITY CAPITAL INDUSTRIAL TRUST
At March 31, 1998
Unaudited Financial Results
Consolidated Statements of Income and Comprehensive Income
(in thousands, except per share amounts)
Three Months Ended
March 31,
-------------------------
1998 1997
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues:
Rental income (1) $ 78,565 $ 67,386
Other real estate income 5,257 1,121
Income from refrigerated distribution services (2) 4,238 -
Change in value of foreign currency contracts (3) 1,610 -
Interest income 625 724
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Total Revenues 90,295 69,231
Expenses:
Rental expenses, net of recoveries 5,938 5,828
General and administrative 5,171 307
REIT management fee - 6,606
Depreciation and amortization 23,180 18,048
Interest (4) 19,645 11,375
Other 903 611
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Total Expenses 54,837 42,775
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Net earnings before minority interest 35,458 26,456
Less minority interest 979 895
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Net earnings before gain on sale of depreciated real estate 34,479 25,561
Gain on sale of depreciated real estate 2,066 -
------------ -----------
Net Earnings 36,545 25,561
Less preferred share dividends 8,799 8,829
------------ -----------
Net Earnings Attributable to Common Shares 27,746 16,732
Other Comprehensive Income:
Foreign currency translation adjustments 56 -
------------ ----------
Comprehensive Income $ 27,802 $ 16,732
=========== ==========
Weighted average common shares outstanding - basic 118,003 96,009
Weighted average common shares outstanding - diluted 123,564 101,213
Per Share Net Earnings Attributable to Common Shares:
Basic $ 0.24 $ 0.17
=========== ==========
Diluted $ 0.23 $ 0.17
=========== ==========
(1) Includes $680,000 and $1,233,000 of straight-lined rent for the
three month periods in 1998 and 1997, respectively.
(2) The refrigerated distribution services businesses are accounted for
on the equity method and are after the deduction for depreciation
expense relating to refrigeration facilities.
(3) The contract to acquire Frigoscandia, executed on December 13, 1997,
required payment in Swedish krona. On December 22, 1997, SCI entered
into foreign exchange forward contracts to fix the purchase price of
the Frigoscandia acquisition (U.S. dollar versus Swedish krona) and
planned European currency denominated financing (U.S. dollar versus
German mark). These foreign exchange hedges were terminated during
the first quarter and were one-time, non-recurring contracts
executed exclusively for the acquisition of Frigoscandia and were
not entered into to hedge on-going income in foreign currencies.
Accordingly, the change in their value is not included as revenue
for FFO purposes.
(4) Includes $441,000 and $669,000 of amortization of loan fees for the
three month periods in 1998 and 1997, respectively.
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<CAPTION>
SECURITY CAPITAL INDUSTRIAL TRUST
At March 31, 1998
Unaudited Financial Results
Consolidated Balance Sheets
(in thousands)
March 31, December 31,
1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investments in Real Estate
Buildings, improvements, improved land and CIP $ 2,967,785 $ 2,846,591
Land held for development 142,023 159,645
Less accumulated depreciation 190,358 171,525
--------------- ---------------
Net real estate investments 2,919,450 2,834,711
Investment in refrigerated distribution services 294,867 86,139
Cash and cash equivalents 48,117 25,009
Accounts receivable 6,709 12,554
Other assets 78,814 75,540
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Total Assets $ 3,347,957 $ 3,033,953
============== ==============
Liabilities and Shareholders' Equity:
Liabilities
Line of credit $ 253,200 $ -
Long term debt 724,076 724,052
Mortgage notes payable 83,446 87,937
Securitized debt 32,959 33,197
Assessment bonds payable 11,871 11,894
Accounts payable and accrued expenses 44,888 63,988
Construction payable 22,045 27,221
Distributions payable - 33,449
Other liabilities 22,476 22,174
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Total Liabilities 1,194,961 1,003,912
Minority Interest 52,500 53,304
Shareholders' Equity
Series A preferred shares 135,000 135,000
Series B convertible preferred shares 199,543 200,008
Series C preferred shares 100,000 100,000
Common shares at $.01 par value 1,214 1,174
Additional paid-in capital 1,842,667 1,746,279
Accumulated other comprehensive income (7) (63)
Distributions in excess of net earnings (177,921) (205,661)
--------------- ---------------
Total Shareholders' Equity 2,100,496 1,976,737
--------------- ---------------
Total Liabilities and Shareholders' Equity $ 3,347,957 $ 3,033,953
============== ==============
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