<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-K/A
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 1997.
OR
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to .
Commission File Number 1-12846
PROLOGIS TRUST
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Maryland 74-2604728
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
</TABLE>
14100 East 35th Place
Aurora, Colorado 80011
(Address of principal executive offices and zip code)
(303) 375-9292
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Name of each exchange
Title of Each Class on which registered
------------------- ----------------------------
<S> <C>
Common Shares of Beneficial Interest, par value New York Stock Exchange
$0.01 per share
Series A Cumulative Redeemable Preferred Shares New York Stock Exchange
of Beneficial Interest, par value $0.01 per
share
Series B Cumulative Convertible Redeemable New York Stock Exchange
Preferred Shares of Beneficial Interest, par
value $0.01 per share
Preferred Share Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
</TABLE>
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
Based on the closing price of the registrant's shares on March 12, 1998, the
aggregate market value of the voting shares held by non-affiliates of the
registrant was $1,657,026,451.
At March 12, 1998, there were outstanding approximately 117,388,358 common
shares of beneficial interest of the registrant.
----------------
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement for the 1998 annual
meeting of its shareholders are incorporated by reference in Part III of this
report.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item Description Page
---- ----------- ----
PART I
<C> <S> <C>
2. Properties.......................................................... 3
The Partnerships.................................................... 17
SCI Development Services............................................ 20
Unconsolidated Subsidiaries......................................... 20
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K..... 22
</TABLE>
Note: The purpose of this Amendment No. 2 is to amend and restate the
information required in Item 2 of Part I and Item 14 of Part IV of the
registrant's Annual Report on Form 10-K for the fiscal year ended December
31, 1997.
<PAGE>
Item 2. Properties
The following tables set forth certain information with respect to SCI's
distribution properties owned as of December 31, 1997. No individual property,
or group of properties operated as a single business unit, amounts to 10% or
more of SCI's consolidated total assets at December 31, 1997 nor does the
gross revenue from any such properties amount to 10% or more of SCI's
consolidated gross revenues for the fiscal year ended December 31, 1997.
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE OF PROPERTIES
<TABLE>
<CAPTION>
Percentage Rentable Accumulated Long-term
Year Acquired No. of Occupancy Square SCI Investment Depreciation Mortgage
or Completed Bldgs. (1) Footage (2) (1) (1) Debt
------------- ------ ---------- ----------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Properties
Owned
at December 31, 1997
Atlanta, Georgia
Central / Atlanta 1996 4 100.00% 347,560 $ 3,304,252 $ -- None
Chattahoochee 1996 1 100.00 120,000 1,619,425 -- None
I-20 / West / Fulton 1994, 1995, 1996, 1997 36 88.39 3,433,149 73,941,690 5,095,745 None
I-85 / Airport 1994, 1995, 1996, 1997 17 87.86 924,142 35,897,666 2,558,538 $ 1,837,905
I-85 / Northeast 1994, 1995, 1996, 1997 44 87.10 3,830,428 104,617,284 5,734,626 None
----- ------ ---------- -------------- ------------ ------------
102 88.39 8,655,279 219,380,317 13,388,909 1,837,905
----- ------ ---------- -------------- ------------ ------------
Austin, Texas
I-35 / Central 1994, 1995, 1996 12 98.03 648,939 23,848,680 1,217,258 None
I-35 / North / Mopac 1993, 1995, 1996 8 87.22 563,600 18,357,519 1,099,365 None
I-35 / South 1994, 1995, 1996 12 97.07 725,874 24,255,898 2,072,635 None
----- ------ ---------- -------------- ------------ ------------
32 94.53 1,938,413 66,462,097 4,389,258 None
----- ------ ---------- -------------- ------------ ------------
Birmingham, Alabama
I-459 / South /
Perimeter 1994 2 100.00 606,850 17,052,059 1,778,829 None
I-65 / Oxmoor 1994 4 100.00 528,428 16,514,229 1,701,685 6,994,831
----- ------ ---------- -------------- ------------ ------------
6 100.00 1,135,278 33,566,288 3,480,514 6,994,831
----- ------ ---------- -------------- ------------ ------------
Charlotte, North
Carolina
I-77 / Southwest (3) 1994 13 93.76 1,334,182 33,413,717 3,405,303 None
I-85 / North
Charlotte 1997 2 100.00 148,394 3,713,083 54,225 None
I-85 / Northeast 1994, 1995, 1996, 1997 8 79.27 784,720 22,748,354 983,971 None
I-85 / Northwest 1994 2 100.00 404,351 6,897,348 731,775 None
----- ------ ---------- -------------- ------------ ------------
25 90.80 2,671,647 66,772,502 5,175,274 None
----- ------ ---------- -------------- ------------ ------------
Chattanooga, Tennessee
Amnicola Highway 1994 4 99.61 1,075,872 13,914,843 1,286,255 None
I-24 / Tiftonia 1995 1 100.00 72,000 1,157,660 86,181 None
----- ------ ---------- -------------- ------------ ------------
5 99.63 1,147,872 15,072,503 1,372,436 None
----- ------ ---------- -------------- ------------ ------------
Chicago, Illinois
Army Trail Corridor / Chicago 1997 3 79.16 425,997 13,865,901 180,641 None
I-90 / O'Hare (9) 1995, 1996, 1997 24 86.09 2,558,428 86,452,962 2,990,646 None
South Cook County 1996 5 100.00 541,090 12,490,047 485,249 None
----- ------ ---------- -------------- ------------ ------------
32 87.39 3,525,515 112,808,910 3,656,536 None
----- ------ ---------- -------------- ------------ ------------
</TABLE>
3
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE OF PROPERTIES (Continued)
<TABLE>
<CAPTION>
Percentage Rentable SCI Accumulated Long-term
Year Acquired No. of Occupancy Square Investment Depreciation Mortgage
or Completed Bldgs. (1) Footage (2) (1) (1) Debt
------------- ------ ---------- ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Cincinnati, Ohio
I-71 / I-275 1995 1 100.00% 60,000 $ 1,436,802 $ 88,180 None
I-74 / West (4) 1994 1 100.00 232,880 3,297,449 294,888 $1,703,992(5)
I-75 / South /
N. Kentucky 1996 2 100.00 492,507 12,169,802 448,759 None
I-75 North /
Cincinnati 1994, 1995, 1996, 1997 32 92.67 2,501,705 58,244,877 3,472,306 None
--- ------ --------- ------------ ----------- ----------
36 94.42 3,287,092 75,148,930 4,304,133 1,703,992
--- ------ --------- ------------ ----------- ----------
Columbus, Ohio
I-270 / East 1994 5 88.38 566,345 12,077,726 1,025,218 None
I-270 /
Southeast 1994 1 100.00 121,200 1,795,929 176,838 None
I-270 / West 1995, 1996, 1997 7 91.10 923,241 20,793,246 1,264,043 None
I-270 /
Southwest 1996 3 99.36 880,116 21,756,573 681,765 None
--- ------ --------- ------------ ----------- ----------
16 93.84 2,490,902 56,423,474 3,147,864 None
--- ------ --------- ------------ ----------- ----------
Dallas/Fort
Worth, Texas
I-30 / Great
Southwest (3) 1994, 1995, 1996, 1997 17 89.34 1,482,908 37,235,794 1,400,010 None
I-35 / Stemmons
Corridor (3) 1994, 1995, 1996 12 85.10 704,150 13,337,229 1,034,392 None
I-35 South /
Fort Worth 1996 1 100.00 74,500 2,560,869 62,863 None
I-635 /
Northgate (3) 1994, 1996 5 100.00 531,149 10,868,846 1,014,277 None
I-635 / Valwood 1995, 1996, 1997 16 90.65 1,879,004 53,697,393 1,316,560 None
I-635 / DFW /
Airport (3) 1996, 1997 3 51.73 193,314 6,642,036 167,984 None
I-820 / North
Fort Worth 1994, 1995, 1996 4 84.87 372,883 7,294,848 605,287 None
Redbird / Loop
12 1994, 1996 4 100.00 604,776 11,634,432 449,041 None
--- ------ --------- ------------ ----------- ----------
62 89.93 5,842,684 143,271,447 6,050,414 None
--- ------ --------- ------------ ----------- ----------
Denver, Colorado
I-70 / Northeast
(3) 1992, 1993, 1994, 1995, 1996 21 97.46 2,504,255 57,346,601 6,696,835 None
--- ------ --------- ------------ ----------- ----------
21 97.46 2,504,255 57,346,601 6,696,835 None
--- ------ --------- ------------ ----------- ----------
East Bay (San
Francisco),
California
Hayward / San
Leandro (3)(6) 1993, 1994 38 92.44 2,877,727 103,333,869 11,613,390 15,975,205(7)
Tracy 1993, 1997 4 74.68 339,687 11,473,580 695,731 None
--- ------ --------- ------------ ----------- ----------
42 90.56 3,217,414 114,807,449 12,309,121 15,975,205
--- ------ --------- ------------ ----------- ----------
El Paso, Texas
I-10 / East /
Vista Del Sol
(3) 1991, 1993, 1994, 1995, 1996, 1997 19 94.15 2,311,784 59,569,876 4,741,746 6,646,362(8)
I-10 / Lower
Valley 1994 1 100.00 108,125 2,345,341 216,072 None
I-10 / Northwest 1992, 1993, 1994, 1997 5 94.40 571,091 14,080,068 1,092,298 None
--- ------ --------- ------------ ----------- ----------
25 94.41 2,991,000 75,995,285 6,050,116 6,646,362
--- ------ --------- ------------ ----------- ----------
</TABLE>
4
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE OF PROPERTIES (Continued)
<TABLE>
<CAPTION>
Percentage Rentable Accumulated
Year Acquired No. of Occupancy Square SCI Investment Depreciation
or Completed Bldgs. (1) Footage (2) (1) (1)
------------- ------ ---------- ----------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Fort
Lauderdale/Miami,
Florida
Airport West 1995 1 100.00% 124,000 $ 5,144,810 $ 257,704
I-95 / Hollywood
(9) 1995, 1997 3 56.28 406,427 14,846,001 602,343
I-95 / North (4) 1994, 1997 2 100.00 162,281 7,167,828 496,595
----- ------ ---------- -------------- ----------
6 74.35 692,708 27,158,639 1,356,642
----- ------ ---------- -------------- ----------
Houston, Texas
I-10 / Central
Business District 1995 1 100.00 168,869 3,319,742 266,369
I-10 / West / Post
Oak 1993, 1994, 1996 24 92.55 1,500,873 41,238,860 4,324,821
I-610 / East /
Hobby 1994 8 82.85 515,328 9,969,074 948,911
I-610 / North 1993, 1994, 1995 19 95.89 1,441,356 37,234,521 3,006,674
Northwest / U.S.
290 1993, 1994, 1995, 1996, 1997 18 92.57 1,876,935 46,609,491 2,978,332
----- ------ ---------- -------------- ----------
70 92.75 5,503,361 138,371,688 11,525,107
----- ------ ---------- -------------- ----------
Indianapolis,
Indiana
I-465 / Northwest 1994, 1995 24 93.29 2,312,175 68,190,488 4,486,317
I-69 / Northeast 1995 1 83.66 276,000 6,900,234 529,389
I-70 / East 1995 5 100.00 382,400 6,683,455 437,834
I-70 / West 1994, 1995, 1996 10 83.58 684,189 20,809,756 1,243,433
I-70 Southwest /
Indianapolis 1997 1 100.00 156,400 3,829,752 --
----- ------ ---------- -------------- ----------
41 91.80 3,811,164 106,413,685 6,696,973
----- ------ ---------- -------------- ----------
Kansas City, Kansas
/ Missouri
I-35 / Overland
Park 1994 3 100.00 90,163 3,684,367 361,919
I-35 / South
Corridor 1994 1 100.00 99,197 2,288,153 219,983
I-35 / Wyandotte 1994, 1996 2 93.36 154,992 3,897,102 326,566
I-70 / Riverside 1994, 1996, 1997 22 92.11 1,192,877 42,708,394 3,326,942
----- ------ ---------- -------------- ----------
28 93.21 1,537,229 52,578,016 4,235,410
----- ------ ---------- -------------- ----------
Las Vegas, Nevada
Airport /
Southwest 1994, 1996 5 100.00 399,157 20,311,810 1,008,213
I-15 / North 1994, 1995, 1996, 1997 7 82.05 844,261 24,374,547 1,092,125
I-515 / Henderson 1997 2 19.04 205,378 6,986,235 41,370
----- ------ ---------- -------------- ----------
14 78.06 1,448,796 51,672,592 2,141,708
----- ------ ---------- -------------- ----------
Los Angeles / Orange County, California
Central Los
Angeles 1997 3 100.00 568,371 22,101,838 105,247
I-5 / Mid-Counties 1995, 1997 6 100.00 623,390 22,848,782 1,392,849
I-
5 / North-Central Orange County 1996 2 100.00 1,182,051 38,652,232 869,720
I-5 / South Orange
County 1996, 1997 6 81.68 666,899 28,103,992 363,987
Irvine / Orange
County Airport 1994 1 100.00 100,000 4,349,855 369,770
----- ------ ---------- -------------- ----------
18 96.11 3,140,711 116,056,699 3,101,573
----- ------ ---------- -------------- ----------
Louisville,
Kentucky
I-264 / Riverport 1995, 1996 2 100.00 623,900 10,818,144 294,098
----- ------ ---------- -------------- ----------
2 100.00 623,900 10,818,144 294,098
----- ------ ---------- -------------- ----------
<CAPTION>
Long-term
Mortgage
Debt
--------------
<S> <C>
Fort
Lauderdale/Miami,
Florida
Airport West None
I-95 / Hollywood
(9) None
I-95 / North (4) $ 2,441,334(5)
--------------
2,441,334
--------------
Houston, Texas
I-10 / Central
Business District None
I-10 / West / Post
Oak None
I-610 / East /
Hobby None
I-610 / North None
Northwest / U.S.
290 None
--------------
None
--------------
Indianapolis,
Indiana
I-465 / Northwest None
I-69 / Northeast None
I-70 / East None
I-70 / West None
I-70 Southwest /
Indianapolis None
--------------
None
--------------
Kansas City, Kansas
/ Missouri
I-35 / Overland
Park None
I-35 / South
Corridor None
I-35 / Wyandotte None
I-70 / Riverside 14,671,773
--------------
14,671,773
--------------
Las Vegas, Nevada
Airport /
Southwest 8,968,101
I-15 / North 336,397
I-515 / Henderson None
--------------
9,304,498
--------------
Los Angeles / Orange County, California
Central Los
Angeles None
I-5 / Mid-Counties None
I-
5 / North-Central Orange County None
I-5 / South Orange
County None
Irvine / Orange
County Airport None
--------------
None
--------------
Louisville,
Kentucky
I-264 / Riverport None
--------------
None
--------------
</TABLE>
5
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE OF PROPERTIES (Continued)
<TABLE>
<CAPTION>
Percentage Rentable SCI Accumulated Long-term
Year Acquired No. of Occupancy Square Investment Depreciation Mortgage
or Completed Bldgs. (1) Footage (2) (1) (1) Debt
------------- ------ ---------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lyons, France
L'Isle d'Abeau 1997 1 100.00% 296,720 $ 8,307,938 $ -- None
----- ------ ---------- ------------ --------- ------------
1 100.00 296,720 8,307,938 -- None
----- ------ ---------- ------------ --------- ------------
Memphis, Tennessee
I-240 / Southeast 1994, 1995, 1996, 1997 28 92.83 2,994,776 55,928,321 3,784,666 $ 423,953
----- ------ ---------- ------------ --------- ------------
28 92.83 2,994,776 55,928,321 3,784,666 423,953
----- ------ ---------- ------------ --------- ------------
Monterrey, Mexico
Apodaca 1997 3 100.00 210,743 7,461,379 103,101 None
----- ------ ---------- ------------ --------- ------------
3 100.00 210,743 7,461,379 103,101 None
----- ------ ---------- ------------ --------- ------------
Nashville, Tennessee
I-24 / Southeast 1994, 1995, 1996, 1997 21 97.09 2,099,467 44,520,927 3,187,954 None
I-40 / Southeast 1995, 1996 3 100.00 154,500 4,606,309 336,890 None
----- ------ ---------- ------------ --------- ------------
24 97.29 2,253,967 49,127,236 3,524,844 None
----- ------ ---------- ------------ --------- ------------
New Jersey / I-95
Corridor
Meadowlands 1996 1 100.00 530,000 17,025,078 720,549 None
Route 287 / Exit 10
I-95(4) 1996, 1997 7 100.00 1,428,644 39,290,529 1,113,298 None
----- ------ ---------- ------------ --------- ------------
8 100.00 1,958,644 56,315,607 1,833,847 None
----- ------ ---------- ------------ --------- ------------
Oklahoma City,
Oklahoma
I-40 / Southwest 1993, 1994 6 98.75 639,942 10,074,377 1,131,026 None
----- ------ ---------- ------------ --------- ------------
6 98.75 639,942 10,074,377 1,131,026 None
----- ------ ---------- ------------ --------- ------------
Orlando, Florida
East Orlando /
Titusville (9) 1994 1 24.64 51,383 1 ,969,402 174,081 4,807,647(10)
I-4 / 33rd Street
(4)(9) 1994, 1995, 1996 9 100.00 489,891 13,989,070 938,976 888,459(5)(10)
Orlando Central Park 1994, 1997 3 100.00 463,414 10,732,673 556,513 None
----- ------ ---------- ------------ --------- ------------
13 96.15 1,004,688 26,691,145 1,669,570 5,696,106
----- ------ ---------- ------------ --------- ------------
Paris, France
CDG/North 1997 1 100.00 290,090 7,267,298 85,352 None
----- ------ ---------- ------------ --------- ------------
1 100.00 290,090 7,267,298 85,352 None
----- ------ ---------- ------------ --------- ------------
Phoenix, Arizona
I-10 / Central 1993, 1994, 1995 4 97.07 341,407 7,685,656 831,145 None
I-10 / West 1993, 1994 11 92.47 602,329 12,261,242 1,369,975 None
Tempe 1992, 1996 7 95.98 646,872 19,864,671 1,283,631 None
----- ------ ---------- ------------ --------- ------------
22 94.88 1,590,608 39,811,569 3,484,751 None
----- ------ ---------- ------------ --------- ------------
Portland, Oregon
I-5 / Columbia
Corridor 1993, 1994, 1995, 1996, 1997 14 91.02 950,823 30,935,340 1,918,331 349,281
I-5 / Wilsonville 1995, 1996 6 100.00 379,000 14,440,133 765,534 146,675
Sunset Corridor 1997 4 38.62 172,200 7,726,737 -- None
----- ------ ---------- ------------ --------- ------------
24 87.28 1,502,023 53,102,210 2,683,865 495,956
----- ------ ---------- ------------ --------- ------------
</TABLE>
6
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE OF PROPERTIES (Continued)
<TABLE>
<CAPTION>
Percentage Rentable SCI Accumulated Long-term
Year Acquired No. of Occupancy Square Investment Depreciation Mortgage
or Completed Bldgs. (1) Footage (2) (1) (1) Debt
------------- ------ ---------- ----------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Reno, Nevada
I-80 / Sparks 1993, 1994, 1995, 1996 15 97.74% 1,225,586 $ 35,538,277 $ 3,200,011 None
I-80 / East 1997 1 0.00 256,000 5,734,496 -- None
U.S. 395 / Reno
North 1996 2 94.91 473,816 14,152,926 84,030 None
----- ------ ---------- -------------- ------------ ------------
18 84.26 1,955,402 55,425,699 3,284,041 None
----- ------ ---------- -------------- ------------ ------------
Reynosa, Mexico
Reynosa Industrial
Park 1997 2 40.00 150,000 4,310,915 18,658 None
----- ------ ---------- -------------- ------------ ------------
2 40.00 150,000 4,310,915 18,658 None
----- ------ ---------- -------------- ------------ ------------
Rio Grande Valley
(Brownsville), Texas
I-77 / Lower Valley 1995, 1997 14 84.29 916,746 23,528,902 1,463,456 $ 3,218,530
----- ------ ---------- -------------- ------------ ------------
14 84.29 916,746 23,528,902 1,463,456 3,218,530
----- ------ ---------- -------------- ------------ ------------
Rotterdam,
Netherlands
South 1997 1 100.00 138,285 7,782,739 147,153 None
----- ------ ---------- -------------- ------------ ------------
1 100.00 138,285 7,782,739 147,153 None
----- ------ ---------- -------------- ------------ ------------
Salt Lake City, Utah
I-15 / Clearfield 1995, 1996 3 100.00 932,708 20,808,354 973,791 None
I-215 / Central 1995 2 74.85 299,000 9,030,124 664,489 None
I-80 / North 1994, 1996 2 90.72 361,960 11,767,351 466,747 None
----- ------ ---------- -------------- ------------ ------------
7 93.17 1,593,668 41,605,829 2,105,027 None
----- ------ ---------- -------------- ------------ ------------
San Antonio, Texas
I-10 / Central
Business District 1992, 1994 2 89.71 147,751 3,520,579 467,224 None
I-35 / Central (9) 1992, 1993, 1994, 1995, 1996 28 98.30 2,592,027 56,415,019 5,825,658 None
I-35 / North 1993, 1994, 1995, 1996, 1997 20 89.17 1,366,237 37,472,550 2,634,874 None
----- ------ ---------- -------------- ------------ ------------
50 94.96 4,106,015 97,408,148 8,927,756 None
----- ------ ---------- -------------- ------------ ------------
San Diego, California
Rancho Bernardo / I-
15 1996, 1997 3 100.00 329,427 13,292,242 -- None
----- ------ ---------- -------------- ------------ ------------
3 100.00 329,427 13,292,242 -- None
----- ------ ---------- -------------- ------------ ------------
Seattle, Washington
I-405 / Kent Valley 1994, 1995, 1997 6 86.95 695,923 27,558,791 1,479,921 187,330
I-5 / Tacoma 1996 3 51.83 339,623 13,487,594 178,550 None
----- ------ ---------- -------------- ------------ ------------
9 75.43 1,035,546 41,046,385 1,658,471 187,330
----- ------ ---------- -------------- ------------ ------------
South Bay (San
Francisco),
California
Fremont / Newark (6) 1993, 1994, 1995, 1996, 1997 63 99.76 2,886,818 185,964,534 16,693,495 21,770,809(7)
I-880 / North San
Jose 1994 5 100.00 507,310 19,631,468 2,202,619 None
----- ------ ---------- -------------- ------------ ------------
68 99.80 3,394,128 205,596,002 18,896,114 21,770,809
----- ------ ---------- -------------- ------------ ------------
</TABLE>
7
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE OF PROPERTIES (Continued)
<TABLE>
<CAPTION>
Percentage Rentable SCI Accumulated Long-term
Year Acquired No. of Occupancy Square Investment Depreciation Mortgage
or Completed Bldgs. (1) Footage (2) (1) (1) Debt
------------- ------ ---------- ----------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
St. Louis, Missouri
Earth City (3) 1997 5 95.86% 649,689 $ 17,330,331 $ 207,424 $ 2,421,179
Hazelwood 1997 1 100.00 61,200 1,591,160 11,212 947,244
I-270 Westport 1997 5 99.42 274,844 8,378,557 36,532 5,225,170
----- ------ ---------- -------------- ------------ ------------
11 97.11 985,733 27,300,048 255,168 8,593,593
----- ------ ---------- -------------- ------------ ------------
Tampa, Florida
Airport / Tampa West
(4)(9) 1994, 1995, 1996 23 94.26 883,505 36,723,759 2,903,412 11,328,985(5)(10)
I-4 / Lakeland 1994 1 100.00 247,018 6,795,731 690,744 None
I-75 / Tampa East
(4)(9) 1994, 1995, 1996, 1997 28 95.14 1,853,407 62,073,054 4,920,367 15,062,506(5)
Pinellas / St.
Petersburg (4)(9) 1994 5 93.61 83,632 2,112,297 191,703 738,717(5)
----- ------ ---------- -------------- ------------ ------------
57 95.23 3,067,562 107,704,841 8,706,226 27,130,208
----- ------ ---------- -------------- ------------ ------------
Tulsa, Oklahoma
I-44 / Broken Arrow
Expressway (4) 1993, 1994 10 90.22 573,333 12,897,836 1,301,761 654,800(5)
----- ------ ---------- -------------- ------------ ------------
10 90.22 573,333 12,897,836 1,301,761 654,800
----- ------ ---------- -------------- ------------ ------------
Washington, D.C. /
Baltimore
I-395 / Alexandria 1994, 1996 11 100.00 691,077 31,384,250 2,002,725 None
I-695 / Southwest 1995, 1996 6 83.98 620,075 17,357,369 776,851 None
I-95 / Capitol Heights 1996, 1997 2 44.30 273,135 10,647,208 198,824 None
I-95 / Corridor 1997 2 23.44 307,194 10,514,466 103,651 None
I-95 / Landover 1994 5 94.07 384,349 16,663,780 1,419,472 None
I-95 / Northeast /
Beltsville 1994 3 81.66 248,981 11,478,781 967,774 None
I-66 / Dulles 1995, 1996, 1997 6 95.83 775,215 27,689,241 830,799 None
----- ------ ---------- -------------- ------------ ------------
35 82.20 3,300,026 125,735,095 6,300,096 None
----- ------ ---------- -------------- ------------ ------------
Other Locations
(4)(9)(11)
Other 1991, 1994, 1996 7 95.89 389,192 10,205,154 787,123 535,152(5)
----- ------ ---------- -------------- ------------ ------------
7 95.89 389,192 10,205,154 787,123 535,152
----- ------ ---------- -------------- ------------ ------------
Total Operating
Properties Owned at
December 31, 1997 1,005 92.02% 90,842,484 $2,628,052,181 $171,524,993 $128,282,337
===== ====== ========== ============== ============ ============
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Long-
Year of Rentable Budgeted Accumulated term
Expected No. of Square Development Depreciation Mortgage
Completion Bldgs. Footage (2) Cost (12) (1) Debt
---------- ------ ----------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Properties Under Development
at December 31, 1997 (13)(14)
Amsterdam, Netherlands
Airport 1998 1 122,042 $ 9,849,729 N/A None
Atlanta, Georgia
I-85 / Airport 1998 2 210,800 9,308,457 N/A None
I-85 / Northeast 1998 3 367,600 12,306,977 N/A None
Charlotte, North Carolina
I-85 / Northeast 1998 2 192,923 6,442,290 N/A None
Chicago, Illinois
Army Trail Corridor / Chicago 1998 1 112,950 4,687,578 N/A None
I-55 Corridor 1998 1 183,100 6,912,004 N/A None
I-90 / O'Hare 1998 1 250,799 8,948,835 N/A None
South Cook County 1998 1 464,818 12,319,103 N/A None
Cincinnati, Ohio
I-75 South / N. Kentucky 1998 1 136,000 4,084,902 N/A None
I-75 North / Cincinnati 1998 1 123,760 5,180,508 N/A $377,615
Columbus, Ohio
I-270 / Southwest 1998 1 188,800 4,995,777 N/A None
Dallas/Fort Worth, Texas
I-30 / Great Southwest 1998 2 198,600 6,362,175 N/A None
I-635 / Valwood 1998 2 168,184 5,426,352 N/A None
I-635 / DFW Airport 1998 1 127,394 3,830,749 N/A None
Denver, Colorado
I-70 / Northeast 1998 2 199,311 7,685,621 N/A None
East Bay (San Francisco), California
Tracy 1998 2 176,400 6,192,648 N/A None
El Paso, Texas
I-10 / Northwest 1998 1 58,081 1,945,514 N/A None
Fort Lauderdale / Miami, Florida
Airport West 1998 1 64,960 2,996,790 N/A None
Indianapolis, Indiana
I-70 Southwest / Indianapolis 1998 1 190,400 5,456,273 N/A None
Juarez, Mexico
Southeast 1998 3 222,500 8,598,201 N/A None
Los Angeles / Orange County, California
I-5 / Mid-Counties 1998 2 718,628 31,954,665 N/A None
I-5 / South Orange County 1998 2 294,230 12,977,455 N/A None
Louisville, Kentucky
I-264 / Riverport 1998 1 216,000 5,612,226 N/A None
Monterrey, Mexico
Apodaca 1998 2 247,500 8,875,327 N/A None
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Rentable Long-
Year of Square Budgeted Accumulated term
Expected No. of Footage Development Depreciation Mortgage
Completion Bldgs. (2) Cost (12) (1) Debt
---------- ------ -------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
New Jersey / I-95 Corridor
Meadowlands 1998 1 460,557 $ 19,871,572 N/A None
Route 535 / Exit 8A I-95 1998 2 617,600 24,843,886 N/A None
Orlando, Florida
Orlando Central Park 1998 2 178,388 6,177,508 N/A None
Phoenix, Arizona
Tempe 1998 3 167,772 7,087,783 N/A None
Portland, Oregon
I-205 / Clackamas 1998 1 125,840 5,070,400 N/A None
I-5 / Columbia Corridor 1998 2 191,500 7,700,686 N/A None
Reno, Nevada
U.S. 395 / Reno North 1998 1 155,200 5,187,726 N/A None
Reynosa, Mexico
Reynosa Industrial Park 1998 2 175,000 6,383,402 N/A None
Rio Grande Valley (Brownsville),
Texas
I-77 / Lower Valley 1998 1 210,000 5,977,733 N/A None
Rotterdam, Netherlands
South 1998 1 181,911 8,413,499 N/A None
South Bay (San Francisco), California
Fremont / Newark 1998 2 139,645 8,916,068 N/A None
Tampa, Florida
I-75 / Tampa East 1998 2 149,861 6,211,172 N/A None
Washington, D.C. / Baltimore
I-66 / Dulles 1998 3 156,800 7,901,865 N/A None
I-95 / Corridor 1998 1 185,500 7,530,550 N/A None
I-95 / Landover 1998 1 110,842 6,457,772 N/A None
--- --------- ------------ --------
Total Properties Under
Development at December 31, 1997
(13)(14) 62 8,442,196 $326,681,778 $377,615
=== ========= ============ ========
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Budgeted SCI Accumulated Long-term
Year Acreage Development Investment Depreciation Mortgage
Acquired (2) Cost (1) (1) Debt
-------- ------- ----------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Land Held for Development
at December 31, 1997
Atlanta, Georgia
I-20 / West / Fulton 1994, 1996 43.4 N/A $ 1,952,059 N/A None
I-85 / Northeast 1997 56.7 N/A 4,231,022 N/A None
Austin, Texas
I-35 / Central 1994, 1996 21.5 N/A 1,084,456 N/A None
I-35 / North / Mopac 1994 20.4 N/A 1,368,315 N/A None
I-35 / South 1996 4.2 N/A 588,259 N/A None
Charlotte, North Carolina
I-85 / North Charlotte 1997 7.9 N/A 351,433 N/A None
I-85 / Northeast 1994, 1995, 1996, 1997 37.3 N/A 2,231,757 N/A None
Chicago, Illinois
Army Trail Corridor / Chicago 1996, 1997 68.1 N/A 8,098,263 N/A None
I-55 Corridor 1997 29.6 N/A 3,436,609 N/A None
I-90 / O'Hare 1996, 1997 41.1 N/A 10,533,869 N/A None
Cincinnati, Ohio
I-75 / South / N. Kentucky 1997 13.6 N/A 1,287,698 N/A None
I-75 North / Cincinnati 1996, 1997 71.8 N/A 3,811,877 N/A None
Columbus, Ohio
I-270 / West 1996 8.0 N/A 339,699 N/A None
I-270 / Southwest 1994, 1995, 1996, 1997 56.8 N/A 2,178,350 N/A None
Dallas/Fort Worth, Texas
I-30 / Great Southwest 1996, 1997 26.1 N/A 2,885,587 N/A None
I-635 / Valwood 1995 11.7 N/A 978,806 N/A None
I-820 / North Fort Worth 1997 25.3 N/A 3,252,918 N/A None
Denver, Colorado
I-70 / Northeast 1994, 1997 36.7 N/A 3,197,209 N/A None
East Bay (San Francisco), California
Tracy 1996 4.6 N/A 555,261 N/A None
El Paso, Texas
I-10 / East /Vista Del Sol 1993, 1994, 1995, 1996 47.9 N/A 2,793,799 N/A None
I-10 / Northwest 1991, 1992 164.1 N/A 6,847,299 N/A None
Fort Lauderdale/Miami, Florida
I-95 / Hollywood 1996 31.8 N/A 5,573,149 N/A None
Houston, Texas
North Houston / Airport 1997 5.9 N/A 455,523 N/A None
Northwest / U. S. 290 1993, 1997 105.3 N/A 7,553,613 N/A None
Indianapolis, Indiana
I-69 / Northeast 1994 6.1 N/A 491,036 N/A None
I-70 Southwest / Indianapolis 1996 25.3 N/A 1,519,471 N/A None
Juarez, Mexico
Southeast 1997 18.4 N/A 3,247,678 N/A None
Las Vegas, Nevada
I-15 / North 1993, 1995, 1997 63.1 N/A 6,100,400 N/A $ 466,100
I-515 / Henderson 1995, 1996 26.2 N/A 2,988,404 N/A None
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Budgeted Accumulated Long-term
Year Acreage Development SCI Investment Depreciation Mortgage
Acquired (2) Cost (1) (1) Debt
-------- ------- ----------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Los Angeles/Orange County, California
I-5 / Mid-Counties 1997 21.3 N/A $ 7,940,859 N/A None
I-5 / South Orange County 1995, 1996 36.6 N/A 7,725,744 N/A None
Louisville, Kentucky
I-264 / Riverport 1996, 1997 3.9 N/A 151,955 N/A None
Memphis, Tennessee
I-240 / Southeast 1997 68.3 N/A 3,493,840 N/A None
Nashville, Tennessee
I-24 / Southeast 1996 33.7 N/A 2,362,659 N/A None
New Jersey / I-95 Corridor
Meadowlands 1997 8.5 N/A 1,602,318 N/A None
Route 535 / Exit 8A I-95 1997 48.9 N/A 4,317,109 N/A None
Suburban New York East (18) 1997 6.7 N/A 3,999,930 N/A $ 3,900,000
Orlando, Florida
Orlando Central Park 1996 42.2 N/A 3,330,262 N/A None
Phoenix, Arizona
Tempe 1992, 1996 9.6 N/A 1,299,916 N/A None
Portland, Oregon
I-205 / Clackamas 1997 24.7 N/A 3,769,206 N/A None
I-5 / Columbia Corridor 1997 10.2 N/A 808,322 N/A None
Sunset Corridor 1996, 1997 28.3 N/A 3,972,160 N/A None
Reno, Nevada
U.S. 395 / Reno North 1995 10.1 N/A 1,026,913 N/A None
Reynosa, Mexico
Reynosa Industrial Park 1997 12.9 N/A 951,962 N/A None
Rio Grande Valley (Brownsville),
Texas
I-77 / Lower Valley 1995 14.8 N/A 439,288 N/A None
Salt Lake City, Utah
I-15 / Clearfield 1997 4.5 N/A 127,000 N/A None
I-215 / Central 1996 30.9 N/A 2,797,469 N/A None
I-80 / North 1994, 1995 27.3 N/A 1,827,520 N/A None
San Antonio, Texas
I-35 / Central 1994, 1996 25.9 N/A 2,249,064 N/A None
I-35 / North 1996, 1997 32.3 N/A 2,939,098 N/A None
Seattle, Washington
I-405 / Kent Valley 1994 6.2 N/A 1,248,137 N/A 1,959
Tampa, Florida
I-75 / Tampa East 1994, 1995, 1997 73.6 N/A 5,485,476 N/A None
Washington, D.C. / Baltimore
I-95 / Capitol Heights 1994 12.6 N/A 1,369,770 N/A None
I-95 / Corridor 1996 29.5 N/A 4,475,500 N/A None
------- -------------- ------------
Total Land Held for Development
at December 31, 1997 (16) 1,702.4 $ 159,645,296 $ 4,368,059
======= ============== ============
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Budgeted SCI Accumulated Long-term
Acreage Development Investment Depreciation Mortgage
(2) Cost (1) (1) Debt
------- ------------ -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Land Subject to Fixed
Price Options or
Rights of First
Refusal at
December 31, 1997
Options
- -------
Amsterdam, Netherlands
Airport 4.9 N/A N/A N/A None
Chicago, Illinois
I-55 Corridor 25.9 N/A N/A N/A None
South Cook County 4.0 N/A N/A N/A None
Cincinnati, Ohio
I-75 North /
Cincinnati 42.8 N/A N/A N/A None
Columbus, Ohio
I-270 / Southwest 38.8 N/A N/A N/A None
East Bay (San
Francisco), California
Tracy 309.0 N/A N/A N/A None
Louisville, Kentucky
I-264 / Riverport 20.6 N/A N/A N/A None
New Jersey / I-95
Corridor
Route 535 / Exit 8A I-
95 57.7 N/A N/A N/A None
South Bay (San
Francisco), California
Fremont/Newark 23.1 N/A N/A N/A None
Tampa, Florida
I-75 / Tampa East 0.9 N/A N/A N/A None
-----
Total Options at
December 31, 1997
(17) 527.7
=====
Rights of First Refusal
- -----------------------
Indianapolis, Indiana
I-70 Southwest /
Indianapolis 14.4 N/A N/A N/A None
South Bay (San
Francisco), California
Fremont/Newark 21.8 N/A N/A N/A None
----- ------------ -------------- ------------ ------------
Total Rights of First
Refusal at December
31, 1997 36.2
=====
Total Options and
Rights of First
Refusal at
December 31, 1997 563.9
=====
Grand Total at
December 31, 1997 $326,681,778 $2,787,697,477 $171,524,993 $133,028,011
============ ============== ============ ============
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Percentage Rentable SCI Long-term
Year No. of Occupancy Square Footage Investment Mortgage
Acquired Bldgs (1) (2) (1) Debt
-------- ------ ---------- -------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Operating Properties
Acquired
in January 1998
Columbus, Ohio
I-270 / West 1998 2 87.29% 136,206 $3,100,500 None
--- ------ ------- ---------- ----
Total for Operating
Properties
Acquired in
January 1998 2 87.29% 136,206 $3,100,500 None
=== ====== ======= ========== ====
</TABLE>
<TABLE>
<CAPTION>
Year of Rentable Budgeted Long-Term
Expected No. of Square Footage Development Mortgage
Completion Bldgs. (2) Cost (12) Debt
---------- ------ -------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
January 1998 Development Starts (15)
Amsterdam, Netherlands
Airport 1998 1 140,427 $ 9,470,277 None
Charlotte, North Carolina
I-77 / Southwest 1998 1 154,400 4,540,641 None
Chicago, Illinois
Army Trail Corridor / Chicago 1998 1 247,200 9,568,523 None
Fort Lauderdale / Miami, Florida
I-95 / Hollywood 1998 1 126,600 5,950,917 None
Houston, Texas
Northwest / U.S. 290 1998 2 280,000 8,731,018 None
Louisville, Kentucky
I-264 / Riverport 1998 1 192,000 4,409,060 None
Memphis, Tennessee
I-240 / Southeast 1998 1 504,000 12,804,583 None
Reynosa, Mexico
Del Norte Industrial Park 1998 2 197,544 7,907,120 None
San Antonio, TX
I-35 / Central 1998 2 213,800 6,682,108 None
Other Locations 1998 1 243,000 6,612,629 None
--- --------- ----------- ----
Total January 1998 Development
Starts 13 2,298,971 $76,676,876 None
=== ========= =========== ====
</TABLE>
14
<PAGE>
N/ANot Applicable
(1) Percentage Occupancy is as of December 31, 1997 for operating properties
owned at December 31, 1997. Operating properties at December 31, 1997
includes recently completed development properties in initial lease-up
(2.9 million square feet completed in the fourth quarter of 1997) which
impacts the overall occupancy percentage at December 31, 1997. SCI's
investment is as of December 31, 1997 for operating properties owned and
land held for development at December 31, 1997 and represents SCI's
historical cost excluding above-standard tenant improvements.
Depreciation is determined using the straight-line method over 30 years
for buildings acquired, over 40 years for building developed and over 10
years for tenant improvements.
(2) Square footage is shown for operating properties and properties under
development; acreage is shown for land held for future development and
land subject to fixed price options and rights of first refusal.
(3) In the Charlotte, Dallas, Denver, East-Bay (San Francisco), El Paso and
St. Louis markets, an aggregate of 1,928,194 square feet is owned through
SCI Limited Partnership-II, of which SCI is general partner and owns
97.6%. The square footage and investment included in the table represent
100.0% of the property owned by the partnership.
(4) In the Cincinnati, Fort Lauderdale/Miami, New Jersey, Orlando, Tampa,
Tulsa markets and one other location, 2,059,851 square feet are owned
through SCI Limited Partnership-IV, of which SCI IV, Inc., a wholly owned
subsidiary of SCI, is the general partner and owns 96.7%. The square
footage and investment included in the table represent 100% of the
property owned by the partnership.
(5) Includes 1,925,138 square feet owned by SCI Limited Partnership-IV
pledged to secure four long-term mortgage notes totalling $33,196,968 as
of December 31, 1997.
(6) In the East Bay (San Francisco) and South Bay (San Francisco) markets,
3,890,745 square feet are owned through SCI Limited Partnership-I, of
which SCI is the general partner and owns 68.7%. The square footage and
investment included in the table represent 100.0% of the property owned
by the partnership.
(7) Includes 1,205,420 square feet owned by SCI Limited Partnership-I pledged
to secure four long-term mortgage notes totalling $27,340,179 as of
December 31, 1997.
(8) Includes 144,000 square feet owned by SCI Limited Partnership-II pledged
to secure long-term mortgage notes totalling $2,647,053 as of December
31, 1997.
(9) In Chicago, Fort Lauderdale/Miami, Orlando, San Antonio, Tampa and one
other location, 1,231,455 square feet are owned through SCI Limited
Partnership-III, including 80,000 square feet owned in co-tenancy with an
unrelated third party. SCI is the general partner of SCI Limited
Partnership-III and owns 80.6%. The square footage and investment
included in the table represent 100.0% of the property owned by the
partnership.
(10) Includes 272,864 square feet (of which 80,000 square feet are owned in
co-tenancy) owned by SCI Limited Partnership-III pledged to secure four
long-term mortgage notes totalling $4,964,625 as of December 31, 1997.
(11) Includes 136,000 square feet in which SCI has a 70.0% joint venture
interest. The square footage and investment included in the table
represent 100.0% of the property owned by the joint venture.
(12) Represents the total budgeted development costs for properties under
development, which includes the cost of land, fees, permits, payments to
contractors, architectural and engineering fees and interest and property
taxes to be capitalized during construction, rather than costs incurred
to date.
(13) Includes 2,250,734 square feet in the design and permitting stage.
(14) Includes 1,176,174 square feet currently undergoing rehabilitation.
(15) During January 1998, SCI completed shell construction and transferred to
its operating property portfolio 12 buildings in 10 target markets
totalling 1,542,887 square feet.
(16) During January 1998, SCI acquired land totalling 16.3 net acres,
commenced development of 77.7 net acres and disposed of 6.7 acres
resulting in an inventory of land held for development at January 31,
1998 of 1,634.3 net acres.
(17) Fixed price options to acquire 22.5 acres expired January 31, 1998,
bringing total land subject to fixed price options at January 31, 1998 to
541.4 acres.
(18) On January 12, 1998, SCI sold a 6.7 acre parcel of land with a historical
cost of $4.0 million and a long-term mortgage debt of $3.9 million.
15
<PAGE>
Geographic Distribution
Substantially all of SCI's distribution properties are located in 44 target
market cities. The table below demonstrates the geographic distribution of
SCI's equity real estate investments as of December 31, 1997 and 1996. This
chart does not include land held for future development, which was less than
6% of assets, based on cost at December 31, 1997 and 1996.
<TABLE>
<CAPTION>
Percentage of Assets Based on Cost (1)(2)
-------------------------------------------
December 31, 1997 December 31, 1996
--------------------- ---------------------
Percentage Percentage
of Assets of Assets
Number of Based on Number of Based on
Properties Cost(1) Properties Cost(1)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Markets
Atlanta, Georgia................. 107 8.16% 100 8.08%
Austin, Texas.................... 32 2.25 35 3.05
Birmingham, Alabama.............. 6 1.14 6 1.34
Charlotte, North Carolina........ 27 2.48 23 2.53
Chattanooga, Tennessee........... 5 0.51 5 0.61
Chicago, Illinois................ 36 4.93 28 4.29
Cincinnati, Ohio................. 38 2.86 30 2.44
Columbus, Ohio................... 17 2.08 15 2.10
Dallas/Fort Worth, Texas......... 67 5.38 63 4.98
Denver, Colorado................. 23 2.20 22 2.31
East Bay (San Francisco), Cali-
fornia.......................... 44 4.09 42 4.60
El Paso, Texas................... 26 2.64 22 2.51
Fort Lauderdale/Miami, Florida... 7 1.02 3 0.72
Houston, Texas................... 70 4.68 70 5.54
Indianapolis, Indiana............ 42 3.79 48 4.74
Kansas City, Kansas/Missouri..... 28 1.78 28 2.11
Las Vegas, Nevada................ 14 1.75 14 2.12
Los Angeles/Orange County, Cali-
fornia.......................... 22 5.45 15 3.88
Louisville, Kentucky............. 3 0.55 2 0.43
Memphis, Tennessee............... 28 1.89 26 2.05
Nashville, Tennessee............. 24 1.66 24 1.93
New Jersey/I-95 Corridor......... 11 3.42 6 1.94
Oklahoma City, Oklahoma.......... 6 0.34 10 0.57
Orlando, Florida................. 15 1.11 13 1.05
Phoenix, Arizona................. 25 1.59 22 1.58
Portland, Oregon................. 27 2.23 25 2.44
Reno, Nevada..................... 19 2.05 17 1.93
Rio Grande Valley (Brownsville),
Texas........................... 15 1.00 14 0.97
Salt Lake City, Utah............. 7 1.41 8 2.26
San Antonio, Texas............... 50 3.30 61 4.46
San Diego, California............ 3 0.45 3 0.54
Seattle, Washington.............. 9 1.39 9 1.59
South Bay (San Francisco), Cali-
fornia.......................... 70 7.26 66 7.64
St. Louis, Missouri.............. 11 0.92 -- --
Tampa, Florida................... 59 3.85 60 4.39
Tulsa, Oklahoma.................. 10 0.44 10 0.50
Washington, D.C./Baltimore....... 40 5.00 35 4.98
Other............................ 7 0.34 9 0.80
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Percentage of Assets Based on Cost (1)(2)
--------------------------------------------
December 31, 1997 December 31, 1996
---------------------- ---------------------
Percentage Percentage
of Assets of Assets
Number of Based on Number of Based on
Properties Cost(1) Properties Cost(1)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
International Markets
Amsterdam, Netherlands............ 1 0.33 -- --
Juarez, Mexico.................... 3 0.29 -- --
Lyons, France..................... 1 0.28 -- --
Monterrey, Mexico................. 5 0.55 -- --
Paris, France..................... 1 0.25 -- --
Reynosa, Mexico................... 4 0.36 -- --
Rotterdam, Netherlands............ 2 0.55 -- --
----- ------ --- ------
Total............................. 1,067(3) 100.00% 989(4) 100.00%
===== ====== === ======
</TABLE>
- --------
(1) Includes properties under development at their budgeted total development
costs, rather than costs incurred to date.
(2) Does not include refrigerated warehousing facilities.
(3) Includes 62 buildings under development.
(4) Includes 47 buildings under development.
Consistent with SCI's strategy to build a critical mass in the three key
target markets of Chicago, Los Angeles and the New Jersey/I-95 corridor, the
combined percentage of real estate investments for these markets to SCI's
total real estate investments, increased from 10.11% at December 31, 1996 to
13.80% at December 31, 1997.
There are numerous other distribution properties located in close proximity
to each of SCI's properties. The amount of rentable space available in any
target market city could have a material effect on SCI's ability to rent space
and on the rents charged. In addition, in many of SCI's submarkets,
institutional investors and owners and developers of distribution facilities
compete for the acquisition, development and leasing of distribution space.
Many of these persons have substantial resources and experience.
The Partnerships
SCI's intention is to own substantially all properties directly; however, to
facilitate certain strategic acquisitions, SCI has completed four transactions
which involved the formation of four partnerships. At December 31, 1997, SCI
owned directly or indirectly 68.7%, 97.6%, 80.6% and 96.7% of SCI Limited
Partnership-I, SCI Limited Partnership-II, SCI Limited Partnership-III and SCI
Limited Partnership-IV, respectively (collectively, the "Partnerships"). The
properties owned through SCI Limited Partnership-I cannot be sold, prior to
the occurrence of certain events, without the consent of the limited partners
thereto, other than in tax-deferred exchanges, which restriction could
adversely affect SCI's ability to strategically reconfigure the portion of its
investment assets represented by this Partnership. There are no restrictions
on the sale of properties held by SCI Limited Partnership-II, SCI Limited
Partnership-III or SCI Limited Partnership-IV. SCI views all assets acquired
as long-term investments but will only agree to partnership resale
restrictions where the assets acquired are of such strategic quality that SCI
anticipates that there will be no change in investment strategy with respect
to such assets through the duration of the restriction. SCI may acquire
additional properties through partnerships in the future.
The Partnerships have been organized as Delaware limited partnerships.
Generally, pursuant to the Partnership agreements, SCI, as the sole general
partner in each of the Partnerships other than SCI Limited Partnership-IV, in
which a wholly owned subsidiary of SCI is the sole general partner, has full
responsibility for
17
<PAGE>
the management and control of the Partnerships, and the limited partners have
no authority to transact business for, or, except as described below,
participate in the management decisions of, the Partnerships. However, any
decision to amend certain provisions of the applicable Partnership agreement,
to dissolve a Partnership prior to the term set forth in the applicable
Partnership agreement or to enter into certain extraordinary transactions
where the limited partners would not receive the same consideration as
shareholders of SCI, would require the consent of all limited partners.
Pursuant to the Partnership agreements, SCI or its wholly owned subsidiary, as
the case may be, may not voluntarily withdraw from the applicable Partnership
or transfer or assign its interests in the Partnership without the consent of
all of the limited partners thereto. The limited partners may freely transfer
their Partnership units to affiliates, provided that such transfer does not
cause a termination of the Partnership for federal income tax purposes and
does not cause SCI to cease to comply with requirements under the Internal
Revenue Code of 1986, as amended (the "Code"), for qualification as a REIT.
Each of the Partnership agreements grants to limited partners the right to
exchange their Partnership units for Common Shares, subject to the conditions
described below.
Distinction from Other REIT Partnerships
The Partnerships differ from partnerships formed by certain other REITs
(which are commonly referred to as UPREITs) in that:
. A substantial majority of the limited partners were previously
unaffiliated with SCI, thus the Partnership transactions were negotiated
on an arms' length basis;
. None of the limited partners have a controlling influence over SCI, which
is the sole general and managing partner of each of the Partnerships
other than SCI Limited Partnership-IV, in which a wholly owned subsidiary
of SCI is the sole general partner;
. SCI or its wholly-owned subsidiary, as the case may be, has sole
discretion as to the disposition of assets held in the Partnerships,
subject to one Partnership's requirement that for the foreseeable future
all dispositions be through tax-deferred exchanges, as to which SCI has
sole discretion; and
. SCI is not restricted from acquiring properties outside the Partnerships
and intends to own a majority of its assets directly, so that no conflict
of interests exists with respect to future acquisitions.
12.6% of SCI's real estate (based on cost) is owned by the following
partnerships:
SCI Limited Partnership-I
In connection with the formation of SCI Limited Partnership-I, certain
previously unaffiliated parties agreed to contribute certain properties to
this Partnership in exchange for the issuance by such Partnership of
approximately 4,520,533 Partnership units. In exchange for the Partnership
units, the limited partners contributed the following properties: (i)
1,704,333 square feet of industrial property in SCI's San Francisco (South Bay
Area), California target market; and (ii) 2,186,572 square feet in SCI's San
Francisco (East Bay Area), California target market. The foregoing properties
had an aggregate purchase price to SCI of $190 million.
The Partnership agreement governing SCI Limited Partnership-I grants limited
partners the right to consent to (i) the sale or other disposition of any
property of the Partnership (other than through a tax-deferred exchange or a
pledge to secure a financing) or (ii) the incurrence of any indebtedness
(other than loans which SCI may make to the Partnership for capital
requirements). The requirement for the consent of the limited partners in
connection with a sale or other disposition of a property expires upon the
earlier to occur of the 30th anniversary of the date of the Partnership
agreement or the date on which 75% of the Partnership units outstanding have
been exchanged for Common Shares. Limited partners are entitled to exchange
each Partnership unit for up to one Common Share. A maximum of 4,520,531
Common Shares were so issuable effective as of January 1, 1995. On May 31,
1996, SCI filed a registration statement to register the resale of 4,520,531
Common Shares issuable
18
<PAGE>
upon exchange of SCI Limited Partnership-I units. The registration statement
was declared effective on June 29, 1996. Additionally, the limited partners
are entitled to receive fully cumulative quarterly distributions per
Partnership unit equal to the quarterly distributions payable in respect of
Common Shares. In the event that the Partnership sells any of its properties,
limited partners are entitled to a pro rata distribution of the net proceeds
of such sale, with a corresponding downward adjustment in the number of Common
Shares for which a unit may be exchanged. Each limited partner has agreed
that, from and after the time that such limited partner has exercised its
right to exchange a Partnership unit for a Common Share and for a period of
four years after the date of the Partnership agreement, the limited partner
will not, during any calendar year, sell Common Shares owned by the limited
partner if such sale would exceed 33% of the aggregate number of Partnership
units and Common Shares outstanding on the date of the Partnership agreement.
All cash flow available after payment of distributions to limited partners
will be distributed to SCI, as general partner.
SCI Limited Partnership-II
In exchange for approximately 645,867 Partnership units, the limited
partners of SCI Limited Partnership-II contributed the following properties:
(i) 437,542 square feet of industrial property in SCI's Dallas/Fort Worth,
Texas target market; (ii) 217,504 square feet in SCI's Austin, Texas target
market; (iii) 132,605 square feet in SCI's San Francisco (East Bay Area),
California target market; (iv) 51,750 square feet in SCI's Denver, Colorado
target market; (v) 493,894 square feet in SCI's Charlotte, North Carolina
target market; and (vi) 270,000 square feet in SCI's El Paso, Texas target
market. The foregoing properties had an aggregate purchase price to SCI of
$45.5 million. None of the limited partners of SCI Limited Partnership-II is
affiliated with SCI.
The Partnership agreement governing SCI Limited Partnership-II granted to
limited partners the right to exchange each Partnership unit for a Common
Share beginning on February 15, 1995. On May 19, 1995, SCI filed a
registration statement to register the resale of 955,864 Common Shares
relating to Common Shares issuable upon exchange of SCI Limited Partnership-II
Partnership units and up to 310,000 Common Shares issued in one of SCI's prior
private placement offerings; such registration statement was declared
effective on June 26, 1995. Through December 31, 1997, limited partners had
exchanged 555,654 of their Partnership units in SCI Limited Partnership-II for
555,651 Common Shares (and cash payments for partial units). As a result of
these conversions and additional capital contributions by SCI, SCI's general
partnership interest increased from 81.2% to 97.6% and 90,213 limited
partnership units remain outstanding in SCI Limited Partnership-II. Limited
partners are also entitled to fully cumulative quarterly distributions equal
to the quarterly distributions paid in respect of a Common Share and any
unpaid distributions will bear interest at prime plus 1%. Until the 10th
anniversary of the date of the Partnership agreement, upon any exchange of
Partnership units for Common Shares, limited partners are entitled to receive
all cumulated and unpaid distributions (together with interest thereon). After
the 10th anniversary of the date of the Partnership agreement, limited
partners are not entitled to receive cumulated and unpaid distributions (or
interest thereon) upon any exchange of Partnership units for Common Shares
unless the fair market value of a Common Share for which a unit is
exchangeable is less than 110% of the amount paid by a partner for a unit. All
cash flow available after payment of distributions to limited partners will be
distributed to SCI, as general partner. In the event that the Partnership
sells any of its properties, SCI as general partner is entitled to a
distribution of all net proceeds from such sale.
SCI Limited Partnership-III and SCI Limited Partnership-IV
On October 28, 1994, SCI acquired $91.7 million of additional properties and
related assets through two Partnerships, SCI Limited Partnership-III and SCI
Limited Partnership-IV. SCI Limited Partnership-IV contained approximately $81
million of properties and related assets at December 31, 1997, and is
structured as a distinct entity to maintain the credit rating of the secured
notes assumed by such Partnership. A total of 583,512 limited partnership
units were issued by these two Partnerships to certain previously unaffiliated
parties. SCI contributed $35.4 million of cash to these Partnerships in 1994
to retire debt, pay part of the aggregate property purchase price, make
capital improvements and pay closing costs. $47.1 million of mortgage debt was
assumed by these
19
<PAGE>
Partnerships. During 1995, SCI contributed an additional $11.9 million to SCI
Limited Partnership-III for property acquisitions which increased SCI's
general partnership interest from 50.4% to 71.8%. In 1996, SCI contributed
$4.2 million to SCI Limited Partnership III in connection with property
acquisition. In the aggregate, these contributions increased SCI's general
partnership interest from 71.8% to 75.6%. On October 23, 1997, SCI filed a
registration statement to register the resale of 583,508 Common Shares
issuable upon exchange of SCI Limited Partnership-III and SCI Limited
Partnership-IV units. The registration statement was declared effective on
November 6, 1997. In the fourth quarter of 1997, 105,000 partnership units
were converted to 105,000 SCI Common Shares, bringing SCI's general
partnership interest to 80.6% at December 31, 1997. During 1996 and 1997, SCI
contributed $2.5 million to SCI Limited Partnership IV in connection with tax
deferred exchanges of real estate which increased SCI's general partnership
interest from 96.36% to 96.65% at December 31, 1997. There were 409,900 and
68,612 partnership units outstanding in SCI Limited Partnership-III and SCI
Limited Partnership-IV, respectively, at December 31, 1997.
The Partnership agreements for these Partnerships are substantially similar
to the Partnership agreement governing SCI Limited Partnership-II and permit
holders of limited partnership units to exchange each unit for a Common Share
beginning on October 29, 1995. SCI or its wholly owned subsidiary, as the case
may be, as general partner, has complete discretion and control with respect
to all management matters, including disposition of assets, except for certain
restrictions on the retirement of assumed debt.
Limited partners are entitled to fully cumulative quarterly distributions
equal to the quarterly distributions paid in respect of a Common Share and any
unpaid distributions will bear interest at prime plus 1%. Until the 10th
anniversary of the date of the Partnership agreements, upon any exchange of
Partnership units for Common Shares, limited partners are entitled to receive
all cumulated and unpaid distributions (together with interest thereon). After
the 10th anniversary of the date of the Partnership agreements, limited
partners are not entitled to receive cumulated and unpaid distributions (or
interest thereon) upon any exchange of Partnership units for Common Shares
unless the fair market value of a Common Share for which a unit is
exchangeable is less than 110% of the amount paid by a limited partner for a
unit. All cash flow available after payment of distributions to limited
partners will be distributed to SCI or its wholly owned subsidiary, as the
case may be, as general partner. In the event that the Partnerships sell any
of their respective properties, SCI or its wholly owned subsidiary, as the
case may be, as general partner, is entitled to a distribution of all net
proceeds from such sale, except (during the first 10 years of the Partnerships
only) to the extent of unpaid distributions and interest thereon.
SCI Development Services
SCI Development Services Incorporated ("SCI Development Services") was
incorporated in Delaware in August 1994 for the purpose of acquiring,
developing, operating, and selling distribution space facilities either for
its own account or for third parties. SCI owns 100% of the nonvoting preferred
stock of SCI Development Services and an unaffiliated third party owns 100% of
the voting common stock and, as a result, SCI has no control over the
operations of SCI Development Services. SCI, through its preferred stock
ownership, is entitled to 66 2/3% of the first $300,000 of net operating cash
flow and is entitled to 95% of the remaining net operating cash flow of SCI
Development Services. The activities of SCI Development Services are
consolidated with SCI. As of December 31, 1997, SCI Development Services' real
estate portfolio had a book value of $188.7 million. SCI Development Services
is a taxable corporation and pays federal and state income taxes at the
applicable corporate rates.
Unconsolidated Subsidiaries
SCI Logistics
SCI Logistics was incorporated in Delaware in April 1997 for the purpose of
investing in CSI, a limited liability company that owns and operates
refrigerated warehousing. SCI Logistics owns a majority interest (77.1%) in
CSI and SCI owns 100% of the nonvoting preferred stock of SCI Logistics. An
unaffiliated third
20
<PAGE>
party owns 100% of the voting common stock of SCI Logistics and, as a result,
SCI has no control over the operations of SCI Logistics. As of December 31,
1997, SCI's investment in and advances to SCI Logistics totalled $85.6
million. CSI had total assets of $195 million at December 31, 1997. SCI,
through its preferred stock ownership, is entitled to 95% of the net operating
cash flow of SCI Logistics. SCI accounts for its investment in SCI Logistics
on the equity method of accounting. SCI Logistics is a taxable corporation and
will pay federal and state income taxes at the applicable corporate rates.
Frigoscandia SA
Frigoscandia SA was incorporated in Luxembourg in January 1998 for the
purpose of investing in Frigoscandia, which owns and operates refrigerated
warehousing in Europe. SCI owns 100% of the nonvoting preferred stock of
Frigoscandia SA. Security Capital owns 100% of the voting common stock of
Frigoscandia SA and, as a result, SCI has no control over the operations of
Frigoscandia SA. In January 1998, Frigoscandia SA purchased Frigoscandia for
$395.0 million. SCI, through its preferred stock ownership, is entitled to 95%
of the net operating cash flow of Frigoscandia SA. SCI accounts for its
investment in Frigoscandia SA on the equity method of accounting. Frigoscandia
SA is a taxable corporation and will pay taxes at the applicable corporate
rates.
21
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
The following documents are filed as a part of this report:
(a)Financial Statements and Schedules:
1.Financial Statements:
See Index to Consolidated Financial Statements and Schedule on page
F-1 of this report, which is incorporated herein by reference.
2.Financial Statement Schedules:
Schedule III.
All other schedules have been omitted since the required information is
presented in the financial statements and the related notes or is not
applicable.
3.Exhibits:
See Index to Exhibits on pages E-1 to E-4 of this report, which is
incorporated herein by reference.
(b)Reports on Form 8-K: The following report on Form 8-K was filed during
the last quarter of the period covered by this report:
<TABLE>
<CAPTION>
Item Financial
Date Reported Statements
----------------- -------- ----------
<S> <C> <C>
November 13, 1997 5, 7 Yes
</TABLE>
(c)Exhibits: The Exhibits required by Item 601 of Regulation S-K are listed
in the Index to Exhibits on pages E-1 to E-4 of this report, which is
incorporated herein by reference.
22
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE III
<TABLE>
<CAPTION>
Page
----
<S> <C>
Security Capital Industrial Trust:
Report of Independent Public Accountants................................. 24
Consolidated Balance Sheets.............................................. 25
Consolidated Statements of Operations.................................... 26
Consolidated Statements of Shareholders' Equity.......................... 27
Consolidated Statements of Cash Flows.................................... 28
Notes to Consolidated Financial Statements............................... 29
Report of Independent Public Accountants................................. 52
Schedule III--Real Estate and Accumulated Depreciation................... 53
</TABLE>
23
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Trustees and Shareholders of
Security Capital Industrial Trust:
We have audited the accompanying consolidated balance sheets of Security
Capital Industrial Trust and subsidiaries as of December 31, 1997 and 1996,
and the related consolidated statements of operations, shareholders' equity,
and cash flows for each of the three years in the period ended December 31,
1997. These financial statements are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits 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 statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. 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 audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Security Capital
Industrial Trust and subsidiaries as of December 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the three years
in the period ended December 31, 1997, in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
Chicago, Illinois
March 13, 1998
24
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
----------------------
1997 1996
---------- ----------
(In thousands, except
share data)
ASSETS
------
<S> <C> <C>
Real Estate............................................ $3,006,236 $2,508,747
Less accumulated depreciation........................ 171,525 109,147
---------- ----------
2,834,711 2,399,600
Investments in and Advances to Unconsolidated
Subsidiaries.......................................... 86,139 --
Cash and Cash Equivalents.............................. 25,009 4,770
Accounts Receivable.................................... 12,554 5,397
Other Assets........................................... 75,540 52,539
---------- ----------
Total assets....................................... $3,033,953 $2,462,306
========== ==========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Liabilities:
Line of credit....................................... $ -- $ 38,600
Long-term debt....................................... 724,052 524,191
Mortgage notes payable............................... 87,937 91,757
Securitized debt..................................... 33,197 36,025
Assessment bonds payable............................. 11,894 12,170
Accounts payable and accrued expenses................ 62,850 35,357
Construction payable................................. 27,221 24,645
Net amount due to a related party.................... 1,138 --
Distributions payable................................ 33,449 25,058
Other liabilities.................................... 22,174 18,130
---------- ----------
Total liabilities.................................. 1,003,912 805,933
---------- ----------
Commitments and Contingencies
Minority Interest...................................... 53,304 56,984
Shareholders' Equity:
Series A Preferred Shares; $0.01 par value; 5,400,000
shares issued and outstanding at December 31, 1997
and 1996; stated liquidation preference of $25 per
share............................................... 135,000 135,000
Series B Convertible Preferred Shares; $0.01 par
value; 8,000,300 shares issued and outstanding at
December 31, 1997 and 8,050,000 shares issued and
outstanding at December 31, 1996; stated liquidation
preference of $25 per share......................... 200,008 201,250
Series C Preferred Shares; $0.01 par value; 2,000,000
shares issued and outstanding at December 31, 1997
and 1996; stated liquidation preference of $50 per
share............................................... 100,000 100,000
Common shares of beneficial interest, $0.01 par
value; 117,364,148 shares issued and outstanding at
December 31, 1997 and 93,676,546 shares issued and
outstanding at December 31, 1996.................... 1,174 937
Additional paid-in capital............................. 1,773,465 1,257,347
Employee share purchase notes.......................... (27,186) --
Cumulative translation adjustments..................... (63) --
Distributions in excess of net earnings................ (205,661) (95,145)
---------- ----------
Total shareholders' equity......................... 1,976,737 1,599,389
---------- ----------
Total liabilities and shareholders' equity......... $3,033,953 $2,462,306
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
25
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
(In thousands, except per
share data)
<S> <C> <C> <C>
Income:
Rental income.................................... $284,533 $227,000 $153,879
Other real estate income......................... 12,291 5,342 2,899
Income from unconsolidated subsidiaries.......... 3,278 -- --
Interest income.................................. 2,392 1,121 1,725
-------- -------- --------
Total income................................... 302,494 233,463 158,503
-------- -------- --------
Expenses:
Rental expenses, net of recoveries of $42,288 in
1997, $30,469 in 1996 and $17,788 in 1995....... 23,187 21,734 17,028
Property management fees paid to a related party,
net of recoveries of $3,870 in 1997, $3,208 in
1996 and $2,351 in 1995......................... 3,821 4,940 1,432
Depreciation and amortization.................... 76,562 59,850 39,767
Interest expense................................. 52,704 38,819 32,005
REIT management fee paid to a related party...... 17,791 21,472 14,207
Administrative services fee paid to a related
party........................................... 1,113 -- --
General and administrative....................... 5,742 1,025 839
Costs incurred in acquiring management companies
from a related party............................ 75,376 -- --
Foreign exchange loss............................ 6,376 -- --
Other expense.................................... 3,891 2,913 2,234
-------- -------- --------
Total expenses................................. 266,563 150,753 107,512
-------- -------- --------
Net earnings before minority interest and
gain/(loss) on disposition of real estate......... 35,931 82,710 50,991
Minority interest share in net earnings............ 3,560 3,326 3,331
-------- -------- --------
Net earnings before gain/(loss) on disposition of
real estate....................................... 32,371 79,384 47,660
Gain/(loss) on disposition of real estate.......... 7,378 (29) 1,053
-------- -------- --------
Net earnings....................................... 39,749 79,355 48,713
Less preferred share dividends..................... 35,318 25,895 6,698
-------- -------- --------
Net Earnings Attributable to Common Shares......... $ 4,431 $ 53,460 $ 42,015
======== ======== ========
Weighted Average Common Shares Outstanding (Basic). 100,729 84,504 68,924
======== ======== ========
Weighted Average Common Shares Outstanding
(Diluted)......................................... 100,869 84,511 74,422
======== ======== ========
Per Share Net Earnings Attributable to Common
Shares:
Basic............................................ $ 0.04 $ 0.63 $ 0.61
======== ======== ========
Diluted.......................................... $ 0.04 $ 0.63 $ 0.61
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
26
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
Series A Series B Series C
Preferred Preferred Preferred
Shares at Shares at Shares at Cumu-
Common Aggregate Aggregate Aggregate lative Distri-
Shares Liqui- Liqui- Liqui- Addi- Trans- butions Employee Total
------------------ dation dation dation tional lation In Excess Share Share-
Number Par Prefer- Prefer- Prefer- Paid-in Adjust- of Net Purchase holders
of Shares Value ence ence ence Capital ments Earnings Notes Equity
--------- -------- --------- --------- --------- ---------- ------- --------- -------- ----------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at
December 31, 1994. 64,587 $ 645.8 $ -- $ -- $ -- $ 808,003 $-- $ (30,874) $ -- $ 777,775
Sale of common
shares........... 16,260 162.6 -- -- -- 249,837 -- -- -- 250,000
Sale of preferred
shares........... -- -- 135,000 -- -- -- -- -- 135,000
Dividend
reinvestment and
share purchase
plan............. 13 0.1 -- -- -- 217 -- -- -- 217
Less cost of
raising capital.. -- -- -- (5,022) -- -- -- (5,022)
Limited
partnership units
converted to
common shares.... 556 5.6 -- -- -- 6,107 -- -- -- 6,112
Net earnings
before gain on
disposition of
real estate...... -- -- -- -- -- -- -- 47,660 -- 47,660
Gain on
disposition of
real estate...... -- -- -- -- -- -- -- 1,053 -- 1,053
Common share
distributions.... -- -- -- -- -- -- -- (49,348) -- (49,348)
Series A
Preferred Share
dividends........ -- -- -- -- -- -- -- (6,698) -- (6,698)
Distributions
accrued.......... -- -- -- -- -- -- -- (20,558) -- (20,558)
------- -------- -------- -------- -------- ---------- ---- --------- -------- ----------
Balances at
December 31, 1995. 81,416 814.1 135,000 -- -- 1,059,142 -- (58,765) -- 1,136,191
Sale of common
shares........... 12,218 122.5 -- 210,639 -- -- -- 210,762
Sales of
preferred shares. -- -- -- 201,250 100,000 -- -- -- 301,250
Dividend
reinvestment and
share purchase
plan............. 21 .2 -- -- -- 356 -- -- -- 356
Common shares
issued upon
exercise of
warrants......... 22 .2 -- -- -- 218 -- -- -- 218
Less cost of
raising capital.. -- -- -- -- -- (13,008) -- -- -- (13,008)
Net earnings
before loss on
disposition of
real estate...... -- -- -- -- -- -- -- 79,384 -- 79,384
Loss on
disposition of
real estate...... -- -- -- -- -- -- -- (29) -- (29)
Common share
distributions.... -- -- -- -- -- -- -- (64,782) -- (64,782)
Preferred share
dividends........ -- -- -- -- -- -- -- (25,895) -- (25,895)
Distributions
accrued.......... -- -- -- -- -- -- -- (25,058) -- (25,058)
------- -------- -------- -------- -------- ---------- ---- --------- -------- ----------
Balances at
December 31, 1996. 93,677 937.0 135,000 201,250 100,000 1,257,347 -- (95,145) -- 1,599,389
Sale of common
shares........... 22,147 221.5 -- -- -- 488,432 -- -- -- 488,653
Dividend
reinvestment and
share purchase
plan............. 20 0.2 -- -- -- 429 -- -- -- 429
Limited
partnership units
converted to
common shares.... 105 1.0 -- -- -- 1,587 -- -- -- 1,588
Series B
Preferred Shares
converted to
common shares.... 63 0.6 -- (1,242) -- 1,241 -- -- -- 0
Common shares
issued under
employee share
purchase plan,
net.............. 1,352 13.5 -- -- -- 28,677 -- -- (27,186) 1,505
Less cost of
raising capital.. -- -- -- -- -- (4,248) -- -- -- (4,248)
Cumulative
translation
adjustments for
fluctuations in
foreign currency
rates............ -- -- -- -- -- -- (63) -- -- (63)
Net earnings
before gain on
disposition of
real estate...... -- -- -- -- -- -- -- 32,371 -- 32,371
Gain on
disposition of
real estate...... -- -- -- -- -- -- -- 7,378 -- 7,378
Common share
distributions.... -- -- -- -- -- -- -- (81,498) -- (81,498)
Preferred share
dividends........ -- -- -- -- -- -- -- (35,318) -- (35,318)
Distributions
accrued.......... -- -- -- -- -- -- -- (33,449) -- (33,449)
------- -------- -------- -------- -------- ---------- ---- --------- -------- ----------
Balances at
December 31, 1997. 117,364 $1,173.8 $135,000 $200,008 $100,000 $1,773,465 $(63) $(205,661) $(27,186) $1,976,737
======= ======== ======== ======== ======== ========== ==== ========= ======== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
27
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
(In thousands)
<S> <C> <C> <C>
Operating Activities:
Net earnings................................. $ 39,749 $ 79,355 $ 48,713
Minority interest............................ 3,560 3,326 3,331
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization.............. 76,275 59,850 39,767
(Gain)/loss on disposition of real estate.. (7,378) 29 (1,053)
Rent leveling.............................. (5,435) (4,777) (4,364)
Costs incurred in acquiring management
companies from a related party............ 75,376 -- --
Change in investment in and advances to
unconsolidated subsidiaries............... (770) -- --
Foreign exchange loss on remeasurement..... 348 -- --
Amortization of deferred financing costs... 1,977 2,339 2,092
Increase in accounts receivable and other
assets...................................... (24,103) (10,166) (14,392)
Increase in accounts payable and accrued
expenses.................................... 27,492 2,531 19,028
Increase in other liabilities................ 4,044 3,714 7,032
Increase in net amount due to a related
party....................................... 1,138 -- --
--------- --------- ---------
Net cash provided by operating
activities.............................. 192,273 136,201 100,154
--------- --------- ---------
Investing Activities:
Real estate investments...................... (601,577) (657,873) (633,251)
Investments in and advances to
unconsolidated subsidiaries................. (85,369) -- --
Tenant improvements and lease commissions.... (15,539) (14,806) (6,163)
Recurring capital expenditures............... (5,523) (2,851) (330)
Proceeds from disposition of real estate..... 137,147 9,652 10,949
--------- --------- ---------
Net cash used in investing activities.... (570,861) (665,878) (628,795)
--------- --------- ---------
Financing Activities:
Proceeds from sale of shares, net of
expenses.................................... 330,005 434,587 279,977
Net proceeds from sale of shares to a
related party............................... 75,000 64,416 100,001
Proceeds from exercised warrants and
dividend reinvestment and share purchase
plan........................................ 429 574 217
Proceeds from long-term debt offerings....... 199,772 199,632 324,455
Debt issuance costs.......................... (2,469) (4,698) (6,194)
Distributions paid to common shareholders.... (106,556) (85,340) (64,445)
Distributions paid to minority interest
holders..................................... (5,665) (5,237) (5,033)
Preferred share dividends.................... (35,318) (25,895) (6,698)
Reduction of employee share purchase notes... 64 -- --
Termination of interest rate contracts....... 1,894 -- --
Proceeds from line of credit................. 530,991 411,200 361,100
Payments on line of credit................... (569,591) (453,600) (440,100)
Regularly scheduled principal payments on
mortgage notes payable...................... (4,925) (3,738) (3,491)
Balloon principal payments made upon
maturity.................................... (14,804) (19,689) (10,183)
--------- --------- ---------
Net cash provided by financing
activities.............................. 398,827 512,212 529,606
--------- --------- ---------
Net Increase/(Decrease) in Cash and Cash
Equivalents.................................. 20,239 (17,465) 965
Cash and Cash Equivalents, beginning of year.. 4,770 22,235 21,270
--------- --------- ---------
Cash and Cash Equivalents, end of year........ $ 25,009 $ 4,770 $ 22,235
========= ========= =========
Supplemental Schedule of Noncash Investing and
Financing Activities:
In conjunction with real estate acquired:
Assumption of existing mortgage notes...... $ 12,805 $ 18,103 $ 14,688
Issuance of common shares.................. $ 1,000 $ -- $ --
In conjunction with the acquisition of
management companies
Issuance of common shares to a related
party..................................... $ 79,840 $ -- $ --
Purchase of computer and telephone
equipment................................. $ (4,464) $ -- $ --
Notes received from employees for common
shares issued............................... $ 27,250 $ -- $ --
Cumulative adjustment for translation of
foreign currency, net....................... $ 63 $ -- $ --
Conversion of partnership units into common
shares...................................... $ 1,588 $ -- $ 6,112
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
28
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS
1. Nature of Operations:
Security Capital Industrial Trust ("SCI"), a Maryland real estate investment
trust ("REIT"), is a publicly held global owner and operator of distribution
properties focused exclusively on meeting the distribution space needs of
international, national, regional and local industrial real estate users
through the SCI International Operating System(TM). SCI engages in the
acquisition, development, marketing, operation and long-term ownership of
distribution facilities, and the development of master-planned distribution
parks and corporate distribution facilities for its customers. SCI deploys
capital in markets with excellent long-term growth prospects 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. As of December 31, 1997, SCI's portfolio contained
90,843,000 square feet in 1,005 operating buildings and SCI had an additional
8,442,000 square feet under development in 62 buildings for a total of
99,285,000 square feet in 44 target market cities in the United States, Mexico
and Europe.
2. Summary of Significant Accounting Policies:
REIT Organization Status
In January 1993, SCI was formed as a Maryland real estate investment trust.
In February 1993, Security Capital Industrial Investors Incorporated, a
Delaware corporation, was merged with and into SCI. SCI has made an election
to be taxed as a REIT under the Internal Revenue Code of 1986, as amended.
REITs are not required to pay federal income taxes if minimum distribution
and income, asset and shareholder tests are met. During 1997, 1996 and 1995,
SCI was in compliance with the REIT requirements. Thus, no federal income tax
provision has been reflected in the accompanying consolidated financial
statements.
Basis of Presentation
The accompanying consolidated financial statements include the results of
SCI, its subsidiaries and its majority-owned and controlled partnerships. The
effects of intercompany transactions have been eliminated. Certain amounts
included in the consolidated financial statements for prior years have been
reclassified to conform with the 1997 financial statement presentation.
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 assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Real Estate and Depreciation
Real estate is carried at cost. Costs directly related to the acquisition,
renovation or development of real estate are capitalized and are depreciated
over the following useful lives:
<TABLE>
<S> <C>
Tenant improvements................. 10 years
Acquired buildings.................. 30 years
Developed buildings................. 40 years
</TABLE>
Depreciation is computed using a straight-line method. Certain real estate
was acquired through the formation of partnerships (Note 6) wherein SCI
contributed cash and the limited partners contributed real estate
29
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
in exchange for partnership units which are ultimately exchangeable for SCI's
Common Shares of Beneficial Interest, par value $0.01 per share (the "Common
Shares"). In consolidating the partnerships' assets, real estate cost includes
the estimated fair value attributable to the limited partners' interests at
the acquisition dates because (1) SCI's cash contributions constituted over
50% of the acquisition prices, (2) the acquisitions were from unrelated third-
parties and (3) the limited partners were not considered "promoters" under SEC
Staff Accounting Bulletin 48. The limited partners' interests will be
reflected as minority interest in the consolidated financial statements until
the units are exchanged for SCI Common Shares.
Long-Lived Assets
Long-lived assets to be disposed of are reported at the lower of their
carrying amount or fair value less cost to sell. SCI's management also
periodically reviews long-lived assets to be held and used for impairment
whenever events or changes in circumstances indicate that the carrying amount
of such assets may not be recoverable. In accordance with the provisions of
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of",
management's review involves comparing current and future operating
performance of the assets, the most significant of which is undiscounted
operating cash flows, to the carrying value of the assets. Based on this
analysis, a provision for possible loss (based upon a comparison of discounted
operating cash flows to ProLogis' carrying value) is recognized if necessary.
In management's opinion, long-lived assets, including real estate assets, are
not carried at amounts in excess of their estimated net realizable values.
Capitalized Compensation and Overhead Costs
Compensation and overhead costs incurred for development, renovation,
acquisition, and leasing activities that are incremental and identifiable to
specific and successful projects or leases are capitalized and depreciated
over their useful lives as discussed in Real Estate and Depreciation or, in
the case of leasing costs, amortized over SCI's average lease term of four
years.
Recent Accounting Pronouncements
Effective December 15, 1997, SCI adopted Statement of Financial Accounting
Standards No. 128, "Earnings Per Share" ("SFAS No. 128"). SFAS No. 128
supersedes APB Opinion No. 15 and requires restatement of prior years'
earnings per share. SFAS No. 128 replaces the presentation of primary and
fully diluted earnings per share with a presentation of basic and diluted
earnings per share. Diluted earnings per share reflects the potential dilution
that could occur if securities or other contracts to issue Common Shares were
exercised or converted into Common Shares or resulted in the issuance of
Common Shares that then shared in earnings. The adoption of SFAS No. 128 had
no effect on SCI's reported earnings per share for the years ended December
31, 1997, 1996, and 1995.
The FASB has also released Statement of Financial Accounting Standards No.
129, "Disclosure of Information about Capital Structure" ("SFAS No. 129"). SCI
already complied with the requirements of the statement which is effective for
periods ending after December 15, 1997.
Capitalized Interest
SCI capitalizes interest costs incurred during the land development or
construction period of qualifying projects.
Deferred Loan Fees
Included in other assets as of December 31, 1997 and 1996 are costs of $7.9
million and $9.2 million, respectively, associated with obtaining financing
(Note 5) which have been capitalized and are being amortized (to interest
expense or capitalized interest, as appropriate) over the life of the loan
using the effective interest rate method.
30
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
Cash and Cash Equivalents
Cash and cash equivalents consist of cash in bank accounts and funds
invested in money market funds.
Minority Interest
Minority interest is carried at cost and represents limited partners'
interests in various real estate partnerships controlled by SCI. As discussed
in Real Estate and Depreciation, certain minority interests are carried at the
pro rata share of the estimated fair value of property at the acquisition
dates. Common Shares of SCI issued upon exchange of limited partnership units
will be accounted for at the cost of the minority interest surrendered. As of
December 31, 1997, a total of 5,089,258 limited partnership units were held by
minority interest limited partners in the various real estate partnerships
(Note 6). Limited partners are entitled to exchange each partnership unit for
one Common Share of SCI.
Interest Rate Contracts
SCI utilizes various interest rate contracts to hedge interest rate risk on
anticipated debt offerings. These anticipatory hedges are designated, and
effective, as hedges of identified debt issuances which have a high
probability of occurring. Gains and losses resulting from changes in the
market value of these contracts are deferred and amortized into interest
expense over the life of the related debt issuance.
Foreign Currency Exchange Contracts
Foreign currency forward contracts used in conjunction with the purchase and
financing of a business are marked to market at the financial statement date
and the gain or loss, if any, is reflected in the consolidated results of
operations.
Foreign Currency Translation/Remeasurement
For foreign subsidiaries whose functional currency is not the U.S. dollar,
assets and liabilities are translated at the exchange rates in effect at the
end of the year and income statement accounts are translated at the average
exchange rates for the year. Translation gains and losses are included as a
separate component of stockholders' equity in a Cumulative Translation
Adjustments account. For foreign subsidiaries who have transactions
denominated in currencies other than their functional currency, nonmonetary
assets and liabilities are remeasured at historical rates, monetary assets and
liabilities are remeasured at the exchange rates in effect at the end of the
year, and income statement accounts are remeasured at average exchange rates
for the year. The remeasurement gains and losses of such foreign subsidiaries
are included in the consolidated results of operations as foreign exchange
gains or losses.
Employee Stock Based Compensation
SCI has adopted Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation" ("SFAS No. 123") and continues to
apply the accounting provisions of APB Opinion No. 25, "Accounting for Stock
Issued to Employees" ("APB No. 25") as allowed under SFAS No. 123 and makes
proforma fair value disclosures required by SFAS No. 123. In accordance with
APB No. 25, total compensation cost is measured by the difference between the
quoted market price of stock at the date of grant or award and the price, if
any, to be paid by an employee and is recognized as expense over the period
the employee performs related services.
31
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
Unconsolidated Subsidiaries
SCI's investment in 100% of the preferred stock of SCI Logistics Services
Incorporated ("SCI Logistics") is accounted for under the equity method
because SCI exercises significant influence over the operating and financial
activities of SCI Logistics (Note 4). Accordingly, the investment in SCI
Logistics is carried at cost as adjusted for SCI's proportionate share of SCI
Logistics' earnings or losses.
3. Real Estate
Real estate investments are comprised of income producing distribution
facilities, construction in progress and land held for distribution facility
development in the following markets:
<TABLE>
<CAPTION>
Percentage of
Total Cost
--------------
December 31,
--------------
1997 1996
------ ------
<S> <C> <C>
U.S. Markets
Atlanta, Georgia.............................................. 7.90% 7.99%
Austin, Texas................................................. 2.40 3.32
Birmingham, Alabama........................................... 1.16 1.33
Charlotte, North Carolina..................................... 2.45 2.39
Chattanooga, Tennessee........................................ 0.52 0.60
Chicago, Illinois............................................. 5.43 3.80
Cincinnati, Ohio.............................................. 2.86 2.57
Columbus, Ohio................................................ 2.16 2.16
Dallas/Fort Worth, Texas...................................... 5.40 4.79
Denver, Colorado.............................................. 2.11 2.37
East Bay (San Francisco), California.......................... 3.99 4.49
El Paso, Texas................................................ 2.96 2.99
Fort Lauderdale/Miami, Florida................................ 1.13 1.05
Houston, Texas................................................ 5.05 5.16
Indianapolis, Indiana......................................... 3.85 4.69
Kansas City, Kansas/Missouri.................................. 1.82 1.95
Las Vegas, Nevada............................................. 2.10 1.99
Los Angeles/Orange County, California......................... 4.75 3.65
Louisville, Kentucky.......................................... 0.45 0.46
Memphis, Tennessee............................................ 2.05 2.03
Nashville, Tennessee.......................................... 1.78 1.87
New Jersey/I-95 Corridor...................................... 2.90 1.92
Oklahoma City, Oklahoma....................................... 0.35 0.56
Orlando, Florida.............................................. 1.08 1.15
Phoenix, Arizona.............................................. 1.51 1.69
Portland, Oregon.............................................. 2.37 2.29
Reno, Nevada.................................................. 1.99 2.01
Rio Grande Valley (Brownsville), Texas........................ 0.93 0.89
Salt Lake City, Utah.......................................... 1.60 2.35
San Antonio, Texas............................................ 3.54 4.56
San Diego, California......................................... 0.46 0.61
</TABLE>
32
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Percentage of
Total Cost
--------------
December 31,
--------------
1997 1996
------ ------
<S> <C> <C>
U.S. Markets (continued)
Seattle, Washington........................................ 1.46 1.57
South Bay (San Francisco), California...................... 7.22 7.84
St. Louis, Missouri........................................ 0.94 --
Tampa, Florida............................................. 4.02 4.53
Tulsa, Oklahoma............................................ 0.45 0.49
Washington, D.C./Baltimore................................. 4.69 5.08
Other...................................................... 0.35 0.81
International Markets
Amsterdam, Netherlands..................................... 0.01 --
Juarez, Mexico............................................. 0.27 --
Lyons, France.............................................. 0.29 --
Monterrey, Mexico.......................................... 0.38 --
Paris, France.............................................. 0.25 --
Reynosa, Mexico............................................ 0.18 --
Rotterdam, Netherlands..................................... 0.44 --
------ ------
100.00% 100.00%
====== ======
</TABLE>
The following summarizes real estate investments as of December 31 (in
thousands):
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Land held for development................................ $ 159,645 $ 109,316
Land under development................................... 65,773 40,465
Improved land............................................ 420,019 356,428
Buildings and improvements............................... 2,233,585 1,918,256
Construction in progress................................. 114,495 77,506
Capitalized preacquisition costs......................... 12,719 6,776
---------- ----------
Total real estate...................................... 3,006,236 2,508,747
Less accumulated depreciation............................ 171,525 109,147
---------- ----------
Net real estate........................................ $2,834,711 $2,399,600
========== ==========
</TABLE>
Capitalized preacquisition costs include $3,644,000 and $1,634,000 of funds
on deposit with title companies as of December 31, 1997 and 1996,
respectively, for property acquisitions. In addition to the December 31, 1997
construction payable accrual of $27.2 million, SCI had unfunded commitments on
its contracts for developments under construction totaling $146.4 million.
Other real estate income consists primarily of gains on disposition of
undepreciated property and fees and other income from corporate distribution
facilities services generated to a large extent by SCI Development Services
Incorporated ("SCI Development Services"). SCI Development Services develops
corporate distribution facilities to meet customer requirements or works on a
fee basis for customers whose space needs do not meet SCI's strict investment
criteria for long-term ownership. Through its 100% preferred stock ownership,
SCI will realize substantially all economic benefits of SCI Development
Services' activities. Further, SCI advances mortgage loans to SCI Development
Services to fund acquisition, development and construction
33
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
("AD&C") activity. In accordance with accounting guidance for AD&C lending,
SCI accounts for these loans as real estate investments, effectively
consolidating the activities of SCI Development Services. As of December 31,
1997, the outstanding balances of development and mortgage loans made by SCI
to SCI Development Services for the purchase of distribution facilities and
land for distribution facility development aggregated $184.8 million. SCI
Development Services pays federal and state taxes at the applicable corporate
rate.
SCI leases its properties to customers under agreements which are classified
as operating leases. The leases generally provide for payment of all or a
portion of utilities, property taxes and insurance by the customer. SCI's
largest customer accounted for less than 1.0% of SCI's 1997 rental income (on
an annualized basis), and the annualized base rent for SCI's 20 largest
customers accounted for less than 12.4% of SCI's 1997 rental income (on an
annualized basis). Minimum lease payments receivable on non-cancelable leases
with lease periods greater than one year are as follows (in thousands):
<TABLE>
<S> <C>
1998........................................................ $ 286,305
1999........................................................ 242,379
2000........................................................ 189,299
2001........................................................ 140,487
2002........................................................ 93,776
Thereafter.................................................. 200,875
-----------
$ 1,153,121
===========
</TABLE>
4. Investments in and Advances to Unconsolidated Subsidiaries:
On September 1, 1997, SCI Development Services acquired 9.6% of the
outstanding common shares of Insight, Inc., a privately owned logistics
optimization consulting company, for $500,000, and committed to invest an
additional $2.0 million over the next two years to increase its ownership to
33%. SCI Development Services has accounted for this investment on the cost
method.
On April 24, 1997, SCI Logistics acquired a 60% interest in a refrigerated
warehousing company, renamed CS Integrated LLC ("CSI"). During the third and
fourth quarters of 1997 SCI Logistics contributed additional capital to CSI
which increased its ownership to 77.1%. As of December 31, 1997, CSI owned
refrigerated warehousing totaling 69.0 million cubic feet and also had 9.6
million cubic feet under construction. SCI owns 100% of the non-voting
preferred stock of SCI Logistics. An unrelated third party owns 100% of the
common stock of SCI Logistics. Through its 100% preferred stock ownership, SCI
will realize substantially all economic benefits of SCI Logistics' activities.
As of December 31, 1997, Investments in and Advances to Unconsolidated
Subsidiaries consists of the following items (in thousands):
<TABLE>
<S> <C>
Investment in Insight, Inc..................................... $ 500
Investment in preferred stock of SCI Logistics................. 7,404
Note receivable from SCI Logistics............................. 75,207
Accrued interest and other receivables......................... 3,028
-------
Total........................................................ $86,139
=======
</TABLE>
The note receivable from SCI Logistics is an unsecured loan, which bears
interest at 13% per annum payable on the 24th of April of each year,
commencing April 24, 1998, and matures on April 24, 2002.
34
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
5. Borrowings:
Mortgage notes payable, assessment bonds payable and securitized debt
consisted of the following at December 31, 1997 (in thousands):
<TABLE>
<CAPTION>
Balloon
Periodic Payment
Interest Maturity Payment Principal Due At
Description Market Rate Date Date Balance Maturity
----------- ----------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Mortgage Notes Payable:
Eigenbrodt Way
Distribution Center
#1.................... East Bay 8.590% 04/01/03 (1) $ 1,692 $ 1,479
Gateway Corporate
Center #10............ South Bay 8.590 04/01/03 (1) 2,002 1,361
Hayward Industrial
Center I & II......... East Bay 8.590 04/01/03 (1) 14,280 12,480
Kennedy International
Cargo Center Land #1.. New Jersey 6.000 01/12/98 (1) 3,900 3,900
MGI Portfolio.......... St. Louis 7.750 10/01/10 (2) 8,594 --
Oxmoor Distribution
Center #1............. Birmingham 8.390 04/01/99 (1) 4,032 3,895
Oxmoor Distribution
Center #2............. Birmingham 8.100 05/01/99 (1) 1,487 1,439
Oxmoor Distribution
Center #3............. Birmingham 8.100 05/01/99 (1) 1,476 1,426
Peter Cooper
Distribution Center
#1.................... El Paso 10.625 06/01/99 (1) 2,647 2,619
Platte Valley
Industrial Center #1.. Kansas City 9.750 03/01/00 (1) 448 256
Platte Valley
Industrial Center #3.. Kansas City 9.750 06/01/98 (1) 1,114 1,091
Platte Valley
Industrial Center #4.. Kansas City 10.100 11/01/21 (2) 2,080 --
Platte Valley
Industrial Center #8.. Kansas City 8.750 08/01/04 (1) 1,950 1,488
Platte Valley
Industrial Center #9.. Kansas City 8.100 04/01/17 (2) 3,407 --
Princeton Distribution
Center................ Cincinnati 9.250 02/19/99 (1) 378 378
Rio Grande Industrial
Center #1............. Brownsville 8.875 09/01/01 (1) 3,218 2,544
Riverside Industrial
Center #3............. Kansas City 8.750 08/01/04 (1) 1,532 1,170
Riverside Industrial
Center #4............. Kansas City 8.750 08/01/04 (1) 4,140 3,161
Southwide Lamar
Industrial Center #1.. Memphis 7.670 05/01/24 (1) 424 674
Sullivan 75
Distribution Center
#1.................... Atlanta 9.960 04/01/04 (1) 1,838 1,663
Tampa West Distribution
Center #20............ Tampa 9.125 11/30/00 (2) 157 --
Thornton Business
Center #1--#4......... South Bay 8.590 04/01/03 (1) 9,366 8,185
Titusville Industrial
Center #1............. Orlando 10.000 09/01/01 (1) 4,808 4,181
Vista Del Sol
Industrial Center #1.. El Paso 9.680 08/01/07 (2) 2,810 --
Vista Del Sol
Industrial Center #3.. El Paso 9.680 08/01/07 (2) 1,189 --
West One Business
Center #1............. Las Vegas 8.250 09/01/00 (1) 4,505 4,252
West One Business
Center #3............. Las Vegas 9.000 09/01/04 (1) 4,463 3,847
-------
8.65% Weighted average
rate $87,937
=======
Assessment Bonds
Payable:
City of Las Vegas...... Las Vegas 8.75% 10/01/13 (2) $ 303 --
City of Las Vegas...... Las Vegas 8.75 10/01/13 (2) 299 --
City of Las Vegas...... Las Vegas 8.75 10/01/13 (2) 200 --
City of Hayward........ South Bay 7.00 03/01/98 (2) 2 --
City of Fremont........ South Bay 7.00 03/01/11 (2) 10,404 --
City of Wilsonville.... Portland 6.82 08/19/04 (2) 147 --
City of Kent........... Seattle 7.85 06/20/05 (2) 119 --
City of Kent........... Seattle 7.98 05/20/09 (2) 70 --
City of Portland....... Portland 7.25 11/07/15 (2) 108 --
City of Portland....... Portland 7.25 11/17/07 (2) 5 --
City of Portland....... Portland 7.25 09/15/16 (2) 237 --
-------
7.14% Weighted average
rate $11,894
=======
Securitized Debt:
Tranche A.............. (3) 7.74% 02/01/04 (1) $24,973 $20,821
Tranche B.............. (3) 9.94 02/01/04 (1) 8,224 7,215
-------
8.29% Weighted average
rate $33,197
=======
</TABLE>
- --------
(1) Amortizing monthly with a balloon payment due at maturity.
(2) Fully amortizing.
(3) Secured by real estate located primarily in Fort Lauderdale/Miami, Orlando
and Tampa.
35
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
Mortgage notes payable are secured by real estate with an aggregate
undepreciated cost of $164.1 million at December 31, 1997. Assessment bonds
payable are secured by real estate with an aggregate undepreciated cost of
$224.3 million at December 31, 1997. Securitized debt is collateralized by
real estate with an aggregate undepreciated cost of $66.7 million at December
31, 1997.
Line of Credit
SCI has a $350.0 million unsecured revolving line of credit agreement with
NationsBank of Texas, N.A. ("NationsBank") (as agent for a bank group).
Borrowings bear interest at SCI's option, at either (a) the greater of the
federal funds rate plus 0.5% and the prime rate, or (b) LIBOR plus 0.95% based
upon SCI's current senior debt ratings. The prime rate was 8.5% and the 30-day
LIBOR rate was 5.71875% at December 31, 1997. Additionally, there is a
commitment fee ranging from .125% to .20% per annum of the unused line of
credit balance. The line is scheduled to mature in May 1998 and may be
extended annually for an additional year with the approval of NationsBank and
the other participating lenders; if not extended, at SCI's election, the
facility will either (a) convert to a three year term note, or (b) continue on
a revolving basis with the remaining one year maturity. All debt incurrences
are subject to a covenant that SCI maintain a debt to tangible net worth ratio
of not greater than 1 to 1. Additionally, SCI is required to maintain an
adjusted net worth (as defined) of at least $1.25 billion, to maintain
interest payment coverage of not less than 2 to 1 and to maintain a fixed
charge coverage ratio of not less than 1.75 to 1. SCI is in compliance with
all covenants contained in the line of credit, and as of December 31, 1997, no
borrowings were outstanding on the line of credit.
On October 1, 1997, SCI extended its $25.0 million short-term unsecured
discretionary line of credit with NationsBank through October 1, 1998. The
rate of interest and the maturity date of each advance will be determined by
agreement between SCI and NationsBank at the time of each advance. There were
no borrowings outstanding on the line of credit at December 31, 1997.
A summary of SCI's line of credit borrowings is as follows for the years
ended December 31, (in thousands):
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Weighted average daily interest rate..................... 6.75% 7.02%
Borrowings outstanding at December 31.................... $ -- $ 38,600
Weighted average daily borrowings........................ $ 56,938 $ 44,268
Maximum borrowings outstanding at any month end.......... $143,800 $124,200
Total line of credit at December 31...................... $375,000 $350,000
</TABLE>
Long-Term Debt
<TABLE>
<CAPTION>
December 31,
-----------------
1997 1996
-------- --------
(in thousands)
<S> <C> <C>
8.72% Senior Unsecured Notes, issued on March 2, 1995 in an
original principal amount of $150,000,000. Interest is
payable March 1 and September 1 of each year. The Notes are
payable in eight consecutive annual installments of
$18,750,000 commencing March 1, 2002 and maturing on March
1, 2009.................................................... $150,000 $150,000
9.34% Senior Unsecured Notes, issued on March 2, 1995 in an
original principal amount of $50,000,000. Interest is
payable March 1 and September 1 of each year. The Notes are
payable in six consecutive annual installments ranging from
$5,000,000 to $12,500,000 commencing on March 1, 2010 and
maturing on March 1, 2015.................................. 50,000 50,000
</TABLE>
36
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
December 31,
-----------------
1997 1996
-------- --------
(in thousands)
<S> <C> <C>
7.125% Senior Unsecured Notes due 1998, issued on May 16,
1995 in an original principal amount of $15,000,000, net of
original issue discount. Interest is payable May 15 and
November 15 of each year.................................... $ 14,998 $ 14,993
7.25% Senior Unsecured Notes due 2000, issued on May 16, 1995
in an original principal amount of $17,500,000, net of
original issue discount. Interest is payable May 15 and
November 15 of each year.................................... 17,463 17,448
7.30% Senior Unsecured Notes due 2001, issued on May 16, 1995
in an original principal amount of $17,500,000, net of
original issue discount. Interest is payable May 15 and
November 15 of each year.................................... 17,449 17,435
7.875% Senior Unsecured Notes, issued on May 16, 1995 in an
original principal amount of $75,000,000, net of original
issue discount. Interest is payable May 15 and November 15
of each year. The Notes are payable in eight annual
installments of $9,375,000 beginning May 15, 2002 and
maturing on May 15, 2009.................................... 74,694 74,668
7.25% Senior Unsecured Notes, issued on May 17, 1996 in an
original principal amount of $50,000,000, net of original
issue discount. Interest is payable May 15 and November 15
of each year. The Notes are payable in four annual
installments of $12,500,000 beginning May 15, 1999 and
maturing on May 15, 2002.................................... 49,962 49,951
7.95% Senior Unsecured Notes, issued on May 17, 1996 in an
original principal amount of $100,000,000, net of original
issue discount. Interest is payable May 15 and November 15
of each year. The Notes are payable in four annual
installments of $25,000,000 beginning May 15, 2005 and
maturing on May 15, 2008.................................... 99,851 99,840
8.65% Senior Unsecured Notes, issued on May 17, 1996 in an
original principal amount of $50,000,000, net of original
issue discount. Interest is payable May 15 and November 15
of each year. The Notes are payable in seven annual
installments ranging from $5,000,000 to $12,500,000
beginning May 15, 2010 and maturing on May 15, 2016......... 49,861 49,856
7.81% Medium-Term Notes, issued on February 4, 1997 in an
original principal amount of $100,000,000. Interest is
payable February 1 and August 1 of each year. The Notes are
payable in six annual installments ranging from $10,000,000
to $20,000,000 beginning February 1, 2010 and maturing on
February 1, 2015............................................ 100,000 --
7.625% Senior Unsecured Notes, due July 1, 2017, issued July
11, 1997 in an original principal amount of $100,000,000,
net of original issue discount. Interest is payable January
1 and July 1 of each year................................... 99,774 --
-------- --------
Total long-term debt, net of original issue discount........ $724,052 $524,191
======== ========
</TABLE>
All of the foregoing Notes are redeemable at any time at the option of SCI,
in whole or in part, at a redemption price equal to the sum of the principal
amount of the Notes being redeemed plus accrued interest thereon to the
redemption date plus an adjustment, if any, based on the yield to maturity
relative to market yields available at redemption. The Notes are governed by
the terms and provisions of an indenture agreement (the "Indenture") between
SCI and State Street Bank and Trust Company, as trustee.
37
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
Under the terms of the Indenture, SCI can incur additional debt only if,
after giving effect to the debt being incurred and application of proceeds
therefrom, (i) the ratio of debt to total assets, as defined in the Indenture,
does not exceed 60%, (ii) the ratio of secured debt to total assets, as
defined in the Indenture, does not exceed 40% and (iii) SCI's pro forma
interest coverage ratio, as defined in the Indenture, for the four preceding
fiscal quarters is not less than 1.5 to 1. In addition, SCI may not at any
time own total unencumbered assets, as defined in the Indenture, equal to less
than 150% of the aggregate outstanding principal amount of SCI's unsecured
debt. At December 31, 1997, SCI was in compliance with all debt covenants
contained in the Indenture.
Approximate principal payments due on long-term debt, mortgage notes
payable, assessment bonds payable and securitized debt during each of the
years in the five-year period ending December 31, 2002 and thereafter are as
follows (in thousands):
<TABLE>
<S> <C>
1998.......................................................... $ 24,062
1999.......................................................... 26,480
2000.......................................................... 38,887
2001.......................................................... 41,175
2002.......................................................... 45,148
2003 and thereafter........................................... 682,276
--------
Total principal due........................................... 858,028
Less: Original issue discount................................. (948)
--------
Total carrying value........................................ $857,080
========
</TABLE>
During 1997, 1996 and 1995, interest expense was $52,704,000, $38,819,000,
and $32,005,000, respectively, which was net of capitalized interest of
$18,365,000, $16,138,000 and $8,599,000, respectively. Total amortization of
deferred loan fees included in interest expense was $1,977,000, $2,339,000 and
$2,092,000 for the years ended December 31, 1997, 1996 and 1995, respectively.
The total interest paid in cash on all outstanding debt was $61,251,000,
$50,704,000 and $33,634,000 during 1997, 1996 and 1995, respectively.
6. Minority Interest:
Minority interest represents limited partners' interests in five real estate
partnerships controlled by SCI. With respect to each of the partnerships
either SCI or a subsidiary of SCI is the sole general partner with all
management powers over the business and affairs of the partnership. The
limited partners of each partnership generally do not have the right to
participate in or exercise management control over the business and affairs of
the partnership. With respect to each partnership the general partner may not,
without the written consent of all of the limited partners, take any action
that would prevent such partnership from conducting its business, possess the
property of the partnership, admit an additional partner or subject a limited
partner to the liability of a general partner.
SCI owns a 70.0% general partnership interest in Red Mountain Joint Venture,
which owns approximately $3.0 million of property in Albuquerque, New Mexico.
On December 22, 1993, SCI acquired a 68.7% controlling general partnership
interest in SCI Limited Partnership-I, which owns distribution facilities
primarily in the San Francisco Bay area. Limited partners are entitled to
exchange each partnership unit for one Common Share and are entitled to
receive preferential cumulative quarterly distributions per unit equal to the
quarterly distribution in respect of Common Shares. At December 31, 1997,
4,520,533 limited partnership units were outstanding and no units had been
exchanged.
38
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
During the first two quarters of 1994, SCI acquired an 81.2% controlling
general partnership interest in
SCI Limited Partnership-II, which owns distribution facilities primarily in
Austin, Charlotte, Dallas, Denver,
El Paso and the San Francisco Bay area. Limited partners are entitled to
exchange each partnership unit for one Common Share and are entitled to
receive preferential cumulative quarterly distributions per unit equal to the
quarterly distribution in respect of Common Shares. During the third quarter
of 1995 certain limited partners in SCI Limited Partnership-II exercised their
conversion rights to exchange partnership units for Common Shares on a one for
one basis. As a result of these conversions, SCI's general partnership
interest in SCI Limited Partnership-II increased to 97.6%, and SCI's
outstanding Common Shares increased by 555,651 shares. As of December 31,
1997, there were 90,213 limited partnership units outstanding in SCI Limited
Partnership-II.
In October 1994, SCI acquired a 50.4% controlling general partnership
interest in SCI Limited Partnership-III, which owns distribution facilities
primarily in Tampa, Florida. During 1995, SCI contributed an additional $11.9
million to this partnership for asset acquisitions which increased SCI's
general partnership interest to 71.8%. During 1996, SCI contributed $4.2
million for a property acquisition in San Antonio, Texas which increased SCI's
general partnership interest from 71.8% to 75.6%. Limited partners are
entitled to exchange each partnership unit for one Common Share and are
entitled to receive preferential cumulative quarterly distributions per unit
equal to the quarterly distribution in respect of Common Shares. During the
fourth quarter of 1997 certain limited partners in SCI Limited Partnership-III
exercised their conversion rights to exchange partnership units for Common
Shares on a one for one basis. As a result of these conversions, SCI's general
partnership interest in SCI Limited Partnership-III increased to 80.6%, and
SCI's outstanding Common Shares increased by 105,000 shares. As of December
31, 1997, there were 409,900 limited partnership units outstanding in SCI
Limited Partnership-III.
In October 1994, SCI IV, Inc., a wholly-owned subsidiary of SCI, made a
$27.5 million cash contribution to SCI Limited Partnership-IV, a Delaware
limited partnership ("Partnership-IV"), in exchange for a 96.4% controlling
general partner interest in Partnership-IV, and third party investors that
were not affiliated with SCI contributed an aggregate of $1.0 million in
assets to Partnership-IV in exchange for limited partner interests totaling
3.6% in Partnership-IV. SCI contributed an additional $2.5 million to the
partnership between January 1, 1996 and December 31, 1997, in conjunction with
tax deferred exchanges of real estate, which increased SCI's interest from
96.4% to 96.7%. SCI IV, Inc., as general partner, manages the activities of
Partnership-IV and has fiduciary responsibilities to Partnership-IV and its
other partners. At December 31, 1997, there were 68,612 limited partnership
units outstanding in Partnership-IV and no units had been exchanged.
Both Partnership-IV and SCI IV, Inc. are legal entities that are separate
and distinct from SCI, its affiliates and each other, and each has separate
assets, liabilities, business functions and operations. The assets owned by
Partnership-IV consist of income producing, improved real property located in
Florida, Ohio and Oklahoma. The sole assets owned by SCI IV, Inc. are its
general partner advances to and interest in Partnership-IV. SCI and its
affiliates had no borrowings from Partnership-IV at December 31, 1997 and
1996. Partnership-IV had $8.9 million and $1.4 million of borrowings from SCI
IV, Inc. at December 31, 1997 and 1996, respectively. SCI IV, Inc. had $8.9
million and $1.4 million of borrowings from SCI and its affiliates at December
31, 1997 and 1996, respectively. For financial reporting purposes, the assets,
liabilities, results of operations and cash flows of each of Partnership-IV
and SCI IV, Inc. are included in SCI's consolidated financial statements, and
the third party investors' interests in Partnership-IV are reflected as
minority interest. Limited partners are entitled to exchange each partnership
unit for one Common Share and are entitled to receive preferential cumulative
quarterly distributions per unit equal to the quarterly distribution in
respect of Common Shares.
7. Shareholders' Equity:
On December 22, 1997, SCI raised net proceeds of $200.0 million from a
private placement of 8,416,667 Common Shares at a price of $24 per share. SCI
paid Security Capital Markets Group Incorporated, a registered broker-dealer
subsidiary of Security Capital Group Incorporated ("Security Capital"), a $2.0
million fee for their
39
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
services in connection with the offering. Security Capital, SCI's largest
shareholder, purchased 3,125,067 Common Shares in the December offering at $24
per share. At December 31, 1997, Security Capital owned 42.5% of SCI's Common
Shares.
On August 6, 1997, in connection with the consummation of the Merger (see
Note 11), SCI commenced a rights offering to sell 4,970,352 Common Shares at
$21 per share. The rights offering was designed to allow SCI's shareholders,
other than Security Capital, the opportunity to maintain their relative
ownership in SCI by purchasing additional Common Shares at a price which was
below the price at which Security Capital received Common Shares in the
Merger. On September 9, 1997, SCI offered an additional 994,070 Common Shares
at $21 per share to third party subscribers in the rights offering that were
not accepted in whole or in part due to demand in excess of the Common Shares
offered. All of these Common Shares were issued in September 1997, and net
proceeds from these offerings totaled $124.9 million.
On June 24, 1997, SCI's shareholder's voted to increase SCI's authorized
capitalization from 150 million to 180 million shares of beneficial interest.
On March 24, 1997, SCI issued 48,809 Common Shares in conjunction with an
acquisition of property. On February 7, 1997, SCI completed a public offering
of 4,025,000 Common Shares; net proceeds to SCI after underwriting discounts
and offering costs were $80.4 million.
On November 13, 1996, SCI issued 2,000,000 Series C Cumulative Redeemable
Preferred Shares (the "Series C Preferred Shares"). The Series C Preferred
Shares have a liquidation preference of $50.00 per share for an aggregate
liquidation preference of $100.0 million plus accrued and unpaid dividends.
The net proceeds (after underwriting commission and other offering costs) of
the Series C Preferred Shares issued were $97.1 million. Holders of the Series
C Preferred Shares are entitled to receive, when, as and if declared by SCI's
Board of Trustees (the "Board"), out of funds legally available for payment of
distributions, cumulative preferential cash distributions at a rate of 8.54%
of the liquidation preference per annum (equivalent to $4.27 per share). On or
after November 13, 2026, the Series C Preferred Shares may be redeemed for
cash at the option of SCI. The redemption price (other than the portion
thereof consisting of accrued and unpaid distributions) is payable solely out
of the sale proceeds of other capital shares of SCI, which may include shares
of other series of preferred shares.
On August 21, 1996, SCI commenced a rights offering to sell 6,787,806 Common
Shares at $17.25 per Common Share and also authorized an additional 3,393,903
Common Shares for oversubscriptions or third party subscribers. In September
1996, SCI issued 7,865,645 Common Shares of the 10,181,709 Common Shares
subscribed for and recorded subscriptions receivable of $40.0 million. In
October 1996, 2,316,064 Common Shares were issued and all subscriptions
receivable were collected. Gross proceeds from the offering totaled $175.6
million. On September 24, 1996, SCI offered 2,036,342 Common Shares to third
party subscribers in the rights offering that were not accepted in whole or in
part due to demand in excess of the Common Shares offered. Security Capital
purchased 3,734,240 Common Shares in connection with the September rights
offering at the same price paid by the public.
In February 1996, SCI issued a total of 8,050,000 Series B Cumulative
Convertible Redeemable Preferred Shares (the "Series B Preferred Shares"). The
Series B Preferred Shares have a liquidation preference of $25.00 per share
for an aggregate liquidation preference at the time of issuance of $201.3
million plus any accrued and unpaid dividends. Holders of the Series B
Preferred Shares are only entitled to limited voting rights under certain
conditions. The Series B Preferred Shares are convertible at any time, unless
previously redeemed, at the option of the holders thereof into Common Shares
at a conversion price of $19.50 per share (equivalent to a conversion rate of
1.282 Common Shares for each Series B Preferred Share), subject to adjustment
in certain circumstances. Holders of the Series B Preferred Shares are
entitled to receive, when, as and if declared by the Board, out of funds
legally available for the payment of distributions, cumulative preferential
cash distributions in an amount
40
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
per share equal to the greater of 7% of the liquidation preference per annum
(equivalent to $1.75 per share) or the distribution on the Common Shares, or
portion thereof, into which a Series B Preferred Share is convertible.
Distributions on the Series B Preferred Shares are cumulative from the date of
original issue and payable quarterly in arrears on the last day of March,
June, September and December of each year. The Series B Preferred Shares are
redeemable at the option of SCI on or after February 21, 2001. There were
49,700 Series B Preferred Shares converted into 63,720 Common Shares in the
fourth quarter of 1997. There were 8,000,300 Series B Preferred Shares
outstanding as of December 31, 1997.
On September 29, 1995, SCI issued 9,421,505 Common Shares at $15.375 per
share and received subscriptions for 6,838,658 additional Common Shares at the
same price in conjunction with a rights offering (gross proceeds of $250.0
million). The additional Common Shares were issued on October 3, 1995.
Security Capital purchased 6,504,148 Common Shares in this offering (40% of
the shares sold).
On June 21, 1995, SCI issued 5,400,000 Series A Cumulative Redeemable
Preferred Shares of Beneficial Interest (the "Series A Preferred Shares"). The
Series A Preferred Shares have a liquidation preference of $25.00 per share
for an aggregate liquidation preference of $135.0 million plus any accrued and
unpaid dividends. The net proceeds (after underwriting commission and other
offering costs) of the Series A Preferred Shares issued were $130.4 million.
Holders of the Series A Preferred Shares are entitled only to limited voting
rights under certain conditions. Holders of the Series A Preferred Shares will
be entitled to receive, when, as and if declared by the Board, out of funds
legally available for the payment of distributions, cumulative preferential
cash distributions at the rate of 9.4% of the liquidation preference per annum
(equivalent to $2.35 per share). Such distributions are cumulative from the
date of original issue and are payable quarterly in arrears on the last day of
March, June, September, and December of each year. The Series A Preferred
Shares are redeemable at the option of SCI on or after June 21, 2000. The
redemption price (other than the portion thereof consisting of accrued and
unpaid distributions) is payable solely out of the sale proceeds of other
capital shares of SCI, which may include shares of other series of preferred
shares.
Long-Term Incentive Plan and Share Option Plan for Outside Trustees
On September 8, 1997, SCI's common shareholders approved a long-term
incentive plan (the "Incentive Plan"), which provides for awards consisting of
the following: 1) options to purchase Common Shares, 2) dividend equivalent
units ("DEUs") on options, 3) a share purchase program, and 4) share awards.
No more than 9,600,000 Common Shares in the aggregate may be awarded under the
Incentive Plan and no individual may be granted awards with respect to more
than 500,000 Common Shares in any one-year period. On July 16, 1997, SCI filed
a registration statement with the SEC to register the issuance of Common
Shares in connection with the Incentive Plan.
Under the Incentive Plan, certain employees of SCI purchased 1,356,834
Common Shares on September 8, 1997, at a price of $21.21875 per share (the
average of the high and low price per share on September 8, 1997). SCI
financed 95% of the total purchase price through ten-year, recourse loans to
the participants aggregating $27.3 million (including $22.5 million due from
officers of SCI). The loans, which have been recognized as a deduction from
Shareholders' Equity, bear interest at the lower of SCI's annual dividend
yield or 6% per annum. The loans are secured by the Common Shares purchased.
For each Common Share purchased, participants were granted options to purchase
two additional Common Shares at a price of $21.21875. As of December 31, 1997,
the outstanding balance on employee share purchase notes due to SCI totaled
$27.2 million.
Also, on September 8, 1997, SCI awarded options to purchase 354,484 Common
Shares for $21.21875 per share to officers and certain employees of SCI. On
December 10, 1997, additional options were awarded to officers for 20,860
Common Shares at a price of $23.97. These option awards are entitled to DEUs
each
41
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, depending on the relationship between SCI's Common Share dividend
yield and the S&P 500 average dividend yield for the year. On December 31,
1997, 2,636 DEUs were awarded to option holders under this plan. DEU's will
vest as the applicable options vest and entitle the holder to one Common Share
for each DEU. The 3,077,291 options outstanding under the Incentive Plan on
December 31, 1997 have five or nine year vesting schedules.
In accordance with the accounting provisions of APB No. 25, no compensation
cost has been recognized in the accompanying financial statements for
outstanding stock options. Had compensation cost for the Incentive Plan been
determined consistent with SFAS No. 123, SCI's net income and earnings per
share for the year ended December 31, 1997 would have been reduced to the
following pro forma amounts:
<TABLE>
<S> <C> <C>
Net earnings attributable to
Common Shares (in thousands): As reported $4,431
======
Pro forma $4,016
======
Basic net earnings per share
attributable to Common Shares: As reported $ 0.04
======
Pro forma $ 0.04
======
Diluted net earnings per share
attributable to Common Shares: As reported $ 0.04
======
Pro forma $ 0.04
======
</TABLE>
Since employee stock options vest over several years and additional grants
are likely to be made in future years, the resulting pro forma compensation
cost may not be representative of that to be expected in future years.
The weighted average fair value of options granted pursuant to SCI's
Incentive Plan during 1997 was $6.7 million. Under SFAS No. 123, compensation
cost is recognized for the fair value of the employees' purchase rights, which
was estimated using the Black-Scholes model with the following assumptions:
<TABLE>
<S> <C>
Risk-free interest rate..................................... 6.35%
Forecasted dividend yield................................... 7.36%
Volatility.................................................. 19.20%
Weighted average option life................................ 6.75 years
</TABLE>
In April 1994, SCI adopted its Share Option Plan for Outside Trustees (the
"Outside Trustees Plan"). Under the Outside Trustees Plan, there are 100,000
Common Shares approved which can be granted to non-employee Trustees. All
options granted are for a term of five years and are immediately exercisable
in whole or in part. The exercise price of the options granted may not be less
than the fair market value of Common Shares on the date of the grant. At
December 31, 1997 there were 26,000 options outstanding under the Outside
Trustees Plan.
42
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
A summary of the status of SCI's stock option plans as of December 31, 1997,
1996 and 1995, and changes during the years then ended is presented below. All
grants prior to 1997 relate to the Outside Trustees Plan.
<TABLE>
<CAPTION>
Number of
Number Weighted Average Options
Of Options Exercise Price Exercisable
---------- ---------------- -----------
<S> <C> <C> <C>
Balance at December 31, 1994........... 6,000 $15.50 6,000
Granted.............................. 6,000 16.00 6,000
Forfeited............................ (2,000) 15.50 (2,000)
--------- ------ ------
Balance at December 31, 1995........... 10,000 15.80 10,000
Granted.............................. 8,000 17.50 8,000
Exercised............................ -- -- --
--------- ------ ------
Balance at December 31, 1996........... 18,000 16.56 18,000
--------- ------ ------
Granted.............................. 3,097,012 21.24 8,000
Exercised............................ -- -- --
Forfeited............................ (11,721) 21.22 --
--------- ------ ------
Balance at December 31, 1997........... 3,103,291 $21.21 26,000
========= ====== ======
</TABLE>
Following is a summary of stock options outstanding, exercise prices,
expiration dates, and weighted average remaining lives as of December 31,
1997:
<TABLE>
<CAPTION>
Weighted Average
Number Exercise Expiration Remaining
of Options Price(1) Date Life
---------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
Outside Trustees Plan
(2).................... 26,000 $15.50-$20.50 1999--2002 3.33 years
Matching options on
share purchase program. 2,704,244 $21.21875 Sept. 8, 2007 9.7 years
Incentive Plan--1997
option awards (4)...... 373,047 $21.21875 Sept. 8, 2007 9.7 years
---------
Total................. 3,103,291
=========
</TABLE>
- --------
(1) Exercise price was equal to market price on the date of grant.
(2) Options are fully exercisable.
(3) Vesting at various rates over periods from five to nine years.
(4) The holders under this plan are awarded dividend equivalent units each
year of the plan. The DEUs awarded will vest beginning on September 8,
1999 at a rate of 25% per year through September 8, 2002.
Additionally, as of December 31, 1997, there were 11,764 warrants
outstanding with an exercise price of $10.00. The warrants were issued on
February 3, 1993 and expire June 21, 2003.
Establishment of 401(k) Plan and Nonqualified Savings Plan
In 1997, the Board established and approved the adoption of a 401(k) Plan
for the benefit of its employees, effective January 1, 1998. The 401(k) Plan
provides for matching employer contributions in Common Shares of 50 cents for
every dollar contributed by an employee, up to 6% of the employees' annual
compensation up to the statutory compensation limit. The vesting of
contributed Common Shares is based on years of service, with 20% vesting each
year of service, over a five-year period. On July 16, 1997, SCI filed a
registration statement with the SEC to register the issuance of 190,000 Common
Shares in connection with the 401(k) Plan.
In 1997, the Trustees also established and approved the adoption of the
Nonqualified Savings Plan (the "NSP") to provide benefits for a select group
of management or highly compensated employees, effective January 1, 1998. The
purpose of the NSP is to allow highly compensated employees the opportunity to
defer the receipt and income taxation of a portion of compensation in excess
of the amount permitted under the 401(k)
43
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
Plan. Under the NSP, these employees may defer up to 35% of their annual
salary and 100% of their annual target bonus and in coordination with the
401(k) Plan, SCI will match the lesser of (a) 50% of the sum of deferrals
under the 401(k) Plan plus deferrals under the NSP, and (b) 3% of total
compensation up to $160,000 minus the amount of match contributed by SCI under
the 401(k) Plan. The matching account will vest in the same manner as the
401(k) Plan.
Dividend Reinvestment and Share Purchase Plan
In March 1995, SCI adopted a Dividend Reinvestment and Share Purchase Plan
(the "1995 Plan"), which commenced in April 1995. The 1995 Plan allows holders
of Common Shares the opportunity to acquire additional Common Shares by
automatically reinvesting distributions. Common Shares are acquired pursuant
to the 1995 Plan at a price equal to 98% of the market price of such Common
Shares, without payment of any brokerage commission or service charge. The
1995 Plan also allows participating common shareholders to purchase a limited
number of additional Common Shares at 98% of the market price of such Common
Shares, by making optional cash payments, without payment of any brokerage
commission or service charge. Holders of Common Shares who do not participate
in the 1995 Plan continue to receive distributions as declared.
Shareholder Purchase Rights
On December 7, 1993, the Board declared a dividend of one preferred share
purchase right ("Right") for each outstanding Common Share to be distributed
to all holders of record of the Common Shares on December 31, 1993. Each Right
entitles the registered holder to purchase one-hundredth of a Participating
Preferred Share for an exercise price of $40.00 per one-hundredth of a
Participating Preferred Share, subject to adjustment as provided in the Rights
Agreement. The Rights will generally be exercisable only if a person or group
(other than certain affiliates of SCI) acquires 20% or more of the Common
Shares or announces a tender offer for 25% or more of the Common Shares. Under
certain circumstances, upon a shareholder acquisition of 20% or more of the
Common Shares (other than certain affiliates of SCI), each Right will entitle
the holder to purchase, at the Right's then-current exercise price, a number
of Common Shares having a market value of twice the Right's exercise price.
The acquisition of SCI pursuant to certain mergers or other business
transactions will entitle each holder of a Right to purchase, at the 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 Right's exercise price.
The Rights held by certain 20% shareholders will not be exercisable. The
Rights will expire on December 7, 2003, unless the expiration date of the
Rights is extended, and the Rights are subject to redemption at a price of
$0.01 per Right under certain circumstances.
44
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
8.Earnings Per Share:
Following is a reconciliation of the denominator used to calculate basic
earnings per share to the denominator used to calculate diluted earnings per
share under SFAS No. 128 for the periods indicated (in thousands, except per
share amounts):
<TABLE>
<CAPTION>
Years Ended December
31,
-----------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Net earnings attributable to Common Shares........ $ 4,431 $53,460 $42,015
Minority interest................................. -- -- 3,331
------- ------- -------
Adjusted net earnings attributable to Common
Shares........................................... $ 4,431 $53,460 $45,346
======= ======= =======
Weighted average Common Shares outstanding (Ba-
sic)............................................. 100,729 84,504 68,924
Incremental options and warrants.................. 140 7 13
Weighted average effect of conversion of partner-
ship units into common shares.................... -- -- 5,485
------- ------- -------
Adjusted weighted average Common Shares
Outstanding (Diluted)............................ 100,869 84,511 74,422
======= ======= =======
Per share net earnings attributable to Common
Shares:
Basic........................................... $ 0.04 $ 0.63 $ 0.61
======= ======= =======
Diluted (a)..................................... $ 0.04 $ 0.63 $ 0.61
======= ======= =======
</TABLE>
(a) For the years ended December 31, 1997 and 1996 there were 5,190 and
5,194 weighted average partnership units outstanding and 10,319 and
8,831 weighted average Series B Preferred Shares outstanding on an as-
converted basis, respectively, that were not assumed converted into
Common Shares since they were antidilutive to earnings per share. These
securities may become dilutive to earnings per share in subsequent
years.
9. Distributions:
The annual distribution per Common Share was $1.07 in 1997, $1.01 in 1996
and $0.935 in 1995. Distributions attributable to realized gains on the
disposition of real estate may be considered for payment to shareholders on a
special, as-incurred basis. At December 31, 1997 and 1996, SCI had no
accumulated undistributed net realized gain on disposition of real estate.
For Federal income tax purposes, the following summarizes the taxability of
distributions paid on Common Shares in 1996 and 1995 and the estimated
taxability for 1997:
<TABLE>
<CAPTION>
1997 1996 1995
----- ------ ------
<S> <C> <C> <C>
Per Common Share:
Ordinary income...................................... $1.07 $0.879 $0.692
Capital gains........................................ -- -- --
Return of capital.................................... -- 0.131 0.243
----- ------ ------
Total.............................................. $1.07 $1.010 $0.935
===== ====== ======
</TABLE>
On December 11, 1997, SCI declared a distribution of $0.285 per Common Share
payable on February 24, 1998 to shareholders of record as of February 10,
1998. At the same time, SCI announced that it set an annualized distribution
level of $1.14 per Common Share for 1998.
45
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
Pursuant to the terms of the preferred shares, SCI is restricted from
declaring or paying any distribution with respect to the Common Shares unless
all cumulative distributions with respect to the preferred shares have been
paid and sufficient funds have been set aside for distributions that have been
declared for the then-current distribution period with respect to the
preferred shares.
For Federal income tax purposes, the following summary reflects the
taxability of dividends paid on the Series A Preferred Shares, Series B
Preferred Shares, and Series C Preferred Shares for 1996, periods prior to
1996 and the estimated taxability for 1997:
<TABLE>
<CAPTION>
Date of Issuance to
1997 1996 December 31, 1995
----- ----- -------------------
<S> <C> <C> <C>
Per Series A Preferred Share:
Ordinary Income......................... $2.35 $2.35 $1.24
Capital Gains........................... -- -- --
----- ----- -----
Total................................. $2.35 $2.35 $1.24
===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
Date of Issuance to
1997 December 31, 1996
----- -------------------
<S> <C> <C>
Per Series B Preferred Share:
Ordinary Income................................ $1.75 $1.50
Capital Gains.................................. -- --
----- -----
Total........................................ $1.75 $1.50
===== =====
Per Series C Preferred Share:
Ordinary Income................................ $4.27 $0.57
Capital Gains.................................. -- --
----- -----
Total........................................ $4.27 $0.57
===== =====
</TABLE>
SCI's tax return for the year ended December 31, 1997 has not been filed,
and the taxability information for 1997 is based upon the best available data.
SCI's tax returns have not been examined by the Internal Revenue Service and,
therefore, the taxability of the distributions is subject to change.
46
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
10. Selected Quarterly Financial Data (Unaudited):
Selected quarterly financial data (in thousands, except for per share
amounts) for 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
Three Months Ended, Year
---------------------------------- Ended
3-31 6-30 9-30 12-31 12-31
------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
1997:
Rental income..................... $67,386 $69,157 $ 72,376 $75,614 $284,533
======= ======= ======== ======= ========
Earnings from operations.......... $26,456 $29,051 $(48,363) $28,787 $ 35,931
Minority interest share in net
earnings......................... 895 940 928 797 3,560
Gain on disposition of real es-
tate............................. -- 3,773 2,756 849 7,378
------- ------- -------- ------- --------
Net earnings...................... 25,561 31,884 (46,535) 28,839 39,749
Less preferred share dividends.... 8,829 8,830 8,829 8,830 35,318
------- ------- -------- ------- --------
Net earnings attributable to Com-
mon Shares....................... $16,732 $23,054 $(55,364) $20,009 $ 4,431
======= ======= ======== ======= ========
Basic and Diluted net earnings per
Common Share..................... $ 0.17 $ 0.24 $ (0.55) $ 0.18 $ 0.04
======= ======= ======== ======= ========
1996:
Rental income..................... $50,062 $54,361 $ 59,391 $63,186 $227,000
======= ======= ======== ======= ========
Earnings from operations.......... $17,262 $19,456 $ 20,427 $25,565 $ 82,710
Minority interest share in net
earnings......................... 756 884 859 827 3,326
Loss on disposition of real es-
tate............................. (29) -- -- -- (29)
------- ------- -------- ------- --------
Net earnings...................... 16,477 18,572 19,568 24,738 79,355
Less preferred share dividends.... 4,673 6,695 6,694 7,833 25,895
------- ------- -------- ------- --------
Net earnings attributable to Com-
mon Shares....................... $11,804 $11,877 $ 12,874 $16,905 $ 53,460
======= ======= ======== ======= ========
Basic and Diluted net earnings per
Common Share..................... $ 0.14 $ 0.15 $ 0.16 $ 0.18 $ 0.63
======= ======= ======== ======= ========
</TABLE>
11.Consummation of Merger:
On September 8, 1997, SCI's shareholders voted to approve an agreement with
Security Capital to exchange Security Capital's REIT management and property
management companies for 3,692,023 Common Shares (the "Merger"). As a result,
SCI became an internally managed REIT on September 9, 1997 with Security
Capital remaining as SCI's largest shareholder. The $81.9 million value of the
management companies was approved by the independent Trustees and a fairness
opinion was obtained from a third party investment bank. Pursuant to the terms
of the Merger Agreement, the number of shares issued to Security Capital was
based on the average market price of the Common Shares ($22.175) over the five-
day period prior to the August 6, 1997 record date for determining the SCI
shareholders entitled to vote on the Merger. The market value of the Common
Shares issued to Security Capital on September 9, 1997 was $79.8 million of
which $4.4 million was allocated to the net tangible assets acquired and the
$75.4 million difference was accounted for as costs incurred in acquiring the
management companies from a related party. Because the management companies did
not have significant operations other than the management of SCI and SCI's
assets the transaction does not qualify as the acquisition of a "business" for
purposes of applying APB Opinion No. 16, "Business Combinations". Consequently,
the market value of the Common Shares issued in excess of the fair value of the
net tangible assets acquired was charged to operating income rather than
capitalized as goodwill.
47
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
As a result of the Merger, SCI no longer pays REIT management and property
management fees to Security Capital through Security Capital's former
subsidiaries, Security Capital Industrial Incorporated (the "REIT Manager")
and SCI Client Services Incorporated (the "Property Manager"), respectively.
All employees of the REIT Manager and Property Manager became employees of SCI
and SCI directly incurs the personnel and other costs related to these
functions. The costs relating to property management are recorded as rental
expenses whereas the costs associated with managing the REIT are recorded as
general and administrative expenses. Direct and incremental costs related to
successful development, acquisition, and leasing activities are capitalized in
accordance with generally accepted accounting principles.
Upon consummation of the Merger, SCI and Security Capital entered into an
administrative services agreement (the "Administrative Services Agreement"),
pursuant to which Security Capital will provide SCI with certain
administrative and other services with respect to certain aspects of SCI's
business, as selected from time to time by SCI at its option. These services
are expected to include, but are not limited to, payroll and human resources,
cash management, accounts payable, MIS support and other computer services,
research, investor relations and insurance, legal and tax administration. Fees
payable to Security Capital will be equal to Security Capital's cost of
providing such services, plus an overhead factor of 20%, subject to a maximum
amount of approximately $7.1 million during the initial term of the agreement,
which expires on December 31, 1998. Cost savings under the Administrative
Services Agreement will accrue to SCI. The agreement will be automatically
renewed for consecutive one-year terms subject to approval by a majority of
the independent Trustees. Fees paid to Security Capital for services rendered
from the period September 9, 1997 to December 31, 1997 totaled $1.1 million.
In addition, after the closing of the Merger, Security Capital issued $101.0
million of warrants pro rata to holders of SCI's Common Shares (other than
Security Capital), Series B Preferred Shares and limited partnership units
("Unitholders"), to acquire 3,608,202 shares of Class B common stock of
Security Capital. SCI common shareholders and Unitholders received 0.046549
warrants for each Common Share or unit held and Series B preferred
shareholders received 0.059676 warrants for each preferred share held. Each
warrant can be exercised for one share of Security Capital Class B common
stock at an exercise price of $28 per share and has a term of one year from
the date of issuance. Security Capital issued these warrants as an incentive
to SCI shareholders to vote in favor of the Merger and to raise additional
equity capital at a relatively low cost in addition to other benefits.
12.Related Party Transactions:
SCI leases space to related parties on market terms that management believes
are no less favorable to SCI than those that could be obtained with
unaffiliated third parties. These transactions are summarized as follows:
<TABLE>
<CAPTION>
Security
Capital & REIT Property
Affiliates Manager (a) Manager (a) Total
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Rental revenue during the year
ended December 31, 1995......... $415,264 $210,856 $194,335 $ 820,455
Rental revenue during the year
ended December 31, 1996......... $593,657 $210,856 $571,970 $1,376,483
Rental revenue during the year
ended December 31, 1997......... $833,150 $145,244 $550,092 $1,528,486
Square feet leased as of December
31, 1997........................ 122,856 25,007 97,077 244,940
Annualized revenue for leases in
effect at December 31, 1997..... $870,324 n/a n/a $ 870,324
</TABLE>
48
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
(a) For the REIT Manager and the Property Manager, amounts included for
the year ended December 31, 1997 are for the period January 1, 1997
through September 8, 1997 (Note 11).
13. Financial Instruments:
Fair Value of Financial Instruments
The following disclosure of the estimated fair value of financial
instruments is presented in accordance with the requirements of SFAS No. 107,
"Disclosures about Fair Value of Financial Instruments". The estimated fair
value amounts have been determined by SCI using available market information
and valuation methodologies.
As of December 31, 1997 and 1996, the carrying amounts of certain financial
instruments employed by SCI, including cash and cash equivalents, accounts and
notes receivable, accounts payable and accrued expenses were representative of
their fair values because of the short-term maturity of these instruments. As
of December 31, 1997 and 1996, the fair values of the long-term debt and
mortgages have been estimated based on quoted market prices for the same or
similar issues or by discounting the future cash flows using rates currently
available for debt with similar terms and maturities. The increase in the fair
value of long-term debt and mortgages over the carrying value in the table
below is a result of a net reduction in the interest rates available to SCI at
December 31, 1997 and 1996, from the interest rates in effect at the dates of
issuance. The long-term debt and many of the mortgages contain pre-payment
penalties or yield maintenance provisions which would make the cost of
refinancing exceed the benefit of refinancing at the lower rates.
As of December 31, 1997 and 1996, the fair value of all derivative financial
instruments are amounts at which they could be settled, based on quoted market
prices or estimates obtained from brokers. The following table reflects the
carrying amount and estimated fair value of SCI's financial instruments at
December 31 (in thousands):
<TABLE>
<CAPTION>
1997 1996
-------------------- -------------------
Carrying Carrying
Amount Fair Value Amount Fair Value
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Balance sheet financial
instruments
Long-term debt............... $724,052 $755,799 $524,191 $549,613
Mortgages.................... $133,028 $137,628 $139,952 $142,643
Derivative financial instru-
ments
Interest rate contracts (1).. $ -- $ (8,621) $ -- $ 1,218
Foreign currency contract
(2)......................... $ (7,904) $ (7,904) $ -- $ --
Foreign currency contracts
(3)......................... $ 1,876 $ 1,876 $ -- $ --
</TABLE>
- --------
(1) These interest rate contracts are related to anticipated 1998 debt
offerings.
(2) This foreign currency exchange forward contract fixes the purchase price
of Frigoscandia AB which, per the purchase agreement, is denominated in
Swedish Krona (see Note 15).
(3) This foreign currency exchange forward contract fixes the exchange rate
related to an anticipated financing arrangement to be denominated in
German Marks associated with the Frigoscandia AB acquisition (see
Note 15).
Derivative Financial Instruments
SCI has only limited involvement with derivative financial instruments and
does not use them for trading purposes. SCI uses derivatives to manage well-
defined risk associated with interest and foreign currency rate fluctuations
on existing obligations or anticipated transactions.
The primary risks associated with derivative instruments are market risk
(price risk) and credit risk. Price risk is defined as the potential for loss
in the value of the derivative due to adverse changes in market prices
(interest rates or foreign currency rates). SCI utilizes derivative
instruments in anticipation of future transactions to manage well-defined
risk. Through hedging, SCI can effectively manage the risk of increases in
interest rates and fluctuations in foreign currency exchange rates.
49
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
Credit risk is the risk that one of the parties to a derivative contract
fails to perform or meet their financial obligation under the contract. SCI
does not obtain collateral to support financial instruments subject to credit
risk but monitors the credit standing of counterparties. As of December 31,
1997, the counterparties to all outstanding contracts were financial
institutions with AA+ or A+ credit ratings. SCI does not anticipate non-
performance by any of the counterparties to its derivative contracts. Should a
counterparty fail to perform, however, SCI would incur a financial loss to the
extent of the positive fair market value of the derivative instruments.
The following table summarizes the activity in interest rate and foreign
currency contracts for the years ended December 31, 1997 and 1996 (in
millions):
<TABLE>
<CAPTION>
Interest
Interest Rate Rate
INTEREST RATE CONTRACTS ----------------- ----------
Futures Contracts Swaps
----------------- ----------
<S> <C> <C> <C>
Notional amount at December 31, 1995.......... $ -- $ --
New contracts................................. 156.0 173.0
Matured or expired contracts (1).............. (50.0) --
Terminated contracts (1)...................... -- (140.0)
----------- ----------
Notional amount at December 31, 1996.......... $ 106.0 $ 33.0
----------- ----------
New contracts................................. 75.0 75.0
Matured or expired contracts (2).............. (106.0) (33.0)
Terminated contracts.......................... -- --
----------- ----------
Notional amount at December 31, 1997 (3)...... $ 75.0 $ 75.0
=========== ==========
<CAPTION>
Swedish German
FOREIGN CURRENCY CONTRACTS ----------------- ----------
Krona Marks
----------------- ----------
<S> <C> <C> <C>
Contracts outstanding at December 31, 1996.... -- --
New contracts................................. SEK 2,900.0 DEM (310.0)
Terminated contracts.......................... -- --
----------- ----------
Contracts outstanding at December 31, 1997.... SEK 2,900.0 DEM (310.0)
=========== ==========
Exchange rates................................ 7.7583 1.7715
=========== ==========
$ Equivalent of contracts..................... $ (373.8) $ 175.0
=========== ==========
$ Equivalent at December 31, 1997 (4)......... $ (365.9) $ 173.1
=========== ========== ===
</TABLE>
- --------
(1) Deferred losses totalling $1.9 million on matured, expired or terminated
contracts were recorded on the balance sheet as of December 31, 1996.
These losses relate to the unwind of hedges placed for the May 1996 debt
offering (Note 5) and are being amortized into interest expense over a
weighted average amortization period of 10.8 years.
(2) Deferred gains totaling $1.9 million on matured, expired or terminated
contracts were recorded on the balance sheet as of December 31, 1997.
These gains relate to the unwind of hedges placed for the February and
July 1997 debt offerings (Note 5) and are being amortized into income
over 18 years and 20 years, respectively.
(3) In anticipation of debt offerings in 1998, on October 28, 1997, SCI
entered into two interest rate protection agreements. A forward treasury
lock agreement was executed with a notional amount of $75.0 million on the
6 3/8% Treasury bond due August 2027 and a swap agreement was entered into
with a notional amount of $75.0 million on the 6 5/8% Treasury bond due
February 2027. The forward treasury lock has a termination date of March
31, 1998 and effectively locks in the 30-year treasury rate used to price
SCI's debt, at 6.316%. The swap agreement has a termination date of May
31, 1998, and carries a fixed rate of 6.721% which is a combination of the
treasury rate plus the swap spread and the forward premium.
50
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
(4) On December 22, 1997, SCI entered into a foreign exchange forward contract
to fix the purchase price of the Frigoscandia AB acquisition, denominated
in Swedish krona, and the anticipated cost of financing a portion of the
transaction denominated in German marks (Note 15). Statement of Financial
Accounting Standards No. 52 requires these foreign currency contracts to
be marked to market at the financial statement date and the gain or loss,
if any, reflected in the consolidated results of operations. A net foreign
exchange loss of $6.0 million was recognized for the year ended December
31, 1997 relating to foreign exchange contracts outstanding at December
31, 1997.
14. Commitments and Contingencies:
Environmental Matters
All of the properties acquired by SCI have been subjected to Phase I
environmental reviews. While some of these assessments have led to further
investigation and sampling, none of the environmental assessments has
revealed, nor is SCI aware of any environmental liability (including asbestos
related liability) that SCI believes would have a material adverse effect on
SCI's business, financial condition or results of operations.
15. Subsequent Events:
On January 16, 1998, Frigoscandia SA, a new preferred stock subsidiary of
SCI based in Luxembourg, acquired Frigoscandia AB, Europe's largest
refrigerated warehousing company for $395.0 million. The acquisition of
Frigoscandia AB was financed primarily with a $200.0 million bridge loan due
March 31, 1998 from NationsBank and $190.0 million of borrowings on SCI's
$350.0 million line of credit. The bridge loan bears interest at an annual
rate equal to the lesser of (a) the greater of the sum of the Federal Funds
Rate plus one-half percent, and (b) the prime rate or the Eurodollar Rate plus
0.95%.
On January 15, 1998, SCI settled its foreign currency forward contract to
purchase 2.9 billion Swedish krona at 7.7583 per U.S. dollar (Note 13). The
krona traded at 8.015 on January 15, 1998, resulting in a total loss of $12.0
million. Of this amount, $7.9 million was reflected in the consolidated
results of operations for the year ended December 31, 1997.
On March 5, 1998, SCI announced it increased its annual dividend per Common
Share to $1.24 per share from $1.14 per share, resulting in distributions of
$0.3183 per Common Share to be paid in the last three quarters of 1998.
On March 12, 1998, Merrill Lynch & Co. agreed to buy 3,750,000 SCI Common
Shares at $24.045 per share pursuant to an underwriting agreement. In
connection with the offering, SCI granted Merrill Lynch & Co. a 30-day option
to acquire an additional 562,500 Common Shares at $24.045 per share. The
offering is expected to close on March 18, 1998.
51
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Trustees and Shareholders of
Security Capital Industrial Trust:
We have audited, in accordance with generally accepted auditing standards,
the financial statements of Security Capital Industrial Trust included in this
Form 10-K, and have issued our report thereon dated March 13, 1998. Our audit
was made for the purpose of forming an opinion on those statements taken as a
whole. The supplemental Schedule III--Real Estate and Accumulated Depreciation
("Schedule III") is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. The Schedule III has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion,
fairly states in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
Chicago, Illinois
March 13, 1998
52
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Costs Gross Amounts At Which Carried
Initial Costs Capitalized At Close of Period
-------------------- Subsequent ------------------------------ Accumulated
No. of Encum- Building & To Building & Total Depreciation
Description Bldgs. brances Land Improvements Acquisition Land Improvements (a,b) (c)
----------- ------ ------- ------- ------------ ----------- ------- ------------ --------- ------------
Operating
Properties
- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Atlanta, Georgia
Atlanta Airport
Distribution
Center.......... 4 $2,037 -- $ 6,523 $2,325 $ 6,235 $ 8,560 $ (220)
Atlanta NE
Distribution
Center.......... 8 5,582 $ 3,047 22,995 6,273 25,351 31,624 (629)
Atlanta West
Distribution
Center.......... 20 6,771 34,785 8,591 6,774 43,373 50,147 (3,752)
Carter-Pacific
Business Center. 3 556 3,151 168 556 3,319 3,875 (226)
Chattahoochee
Business Center. 1 216 1,222 182 239 1,381 1,620 --
Fulton Park
Distribution
Center.......... 4 447 2,533 136 426 2,690 3,116 --
International
Airport
Industrial
Center.......... 9 2,939 14,146 4,659 2,971 18,773 21,744 (1,861)
LaGrange
Distribution
Center.......... 1 174 986 103 174 1,089 1,263 (128)
Northeast
Industrial
Center.......... 4 1,109 6,283 (7) 1,050 6,335 7,385 (380)
Northmont
Industrial
Center.......... 1 566 3,209 146 566 3,355 3,921 (362)
Oakcliff
Industrial
Center.......... 3 608 3,446 324 608 3,770 4,378 (327)
Olympic
Industrial
Center.......... 2 698 3,956 1,605 757 5,502 6,259 (306)
Peachtree
Commerce
Business Center. 4 707 4,004 532 707 4,536 5,243 (537)
Peachtree
Distribution
Center.......... 1 302 1,709 33 302 1,742 2,044 (173)
Piedmont Court
Distribution
Center.......... 2 885 5,013 78 885 5,091 5,976 (57)
Plaza Industrial
Center.......... 1 66 372 85 66 457 523 (33)
Pleasantdale
Industrial
Center.......... 2 541 3,184 138 541 3,322 3,863 (322)
Regency
Industrial
Center.......... 9 1,853 10,480 721 1,856 11,198 13,054 (1,188)
Riverside
Distribution
Center.......... 1 271 -- 2,144 297 2,118 2,415 --
Sullivan 75
Distribution
Center 3 (d) 728 4,123 431 728 4,554 5,282 (445)
Tradeport
Distribution
Center.......... 3 1,464 4,563 5,215 1,479 9,763 11,242 (684)
Weaver
Distribution
Center.......... 2 935 5,182 493 935 5,675 6,610 (543)
Westfork
Industrial
Center.......... 10 2,483 14,115 516 2,483 14,631 17,114 (1,216)
Zip Industrial
Center.......... 4 533 3,023 (252) 485 2,819 3,304 --
Austin, Texas
Corridor Park
Corporate
Center.......... 6 2,109 1,681 12,734 2,113 14,411 16,524 (726)
Montopolis
Distribution
Center.......... 1 580 3,384 607 580 3,991 4,571 (505)
<CAPTION>
Date of
Description Construction/Acquisition
----------- ------------------------
Operating
Properties
- ----------
<S> <C>
Atlanta, Georgia
Atlanta Airport
Distribution
Center.......... 1996,1997
Atlanta NE
Distribution
Center.......... 1996,1997
Atlanta West
Distribution
Center.......... 1994,1996
Carter-Pacific
Business Center. 1995
Chattahoochee
Business Center. 1996
Fulton Park
Distribution
Center.......... 1996
International
Airport
Industrial
Center.......... 1994,1995
LaGrange
Distribution
Center.......... 1994
Northeast
Industrial
Center.......... 1996
Northmont
Industrial
Center.......... 1994
Oakcliff
Industrial
Center.......... 1995
Olympic
Industrial
Center.......... 1996
Peachtree
Commerce
Business Center. 1994
Peachtree
Distribution
Center.......... 1994
Piedmont Court
Distribution
Center.......... 1997
Plaza Industrial
Center.......... 1995
Pleasantdale
Industrial
Center.......... 1995
Regency
Industrial
Center.......... 1994
Riverside
Distribution
Center.......... 1997
Sullivan 75
Distribution
Center 1994,1995
Tradeport
Distribution
Center.......... 1994,1996
Weaver
Distribution
Center.......... 1995
Westfork
Industrial
Center.......... 1995
Zip Industrial
Center.......... 1996
Austin, Texas
Corridor Park
Corporate
Center.......... 1995,1996
Montopolis
Distribution
Center.......... 1994
</TABLE>
53
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued)
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Costs Gross Amounts At Which Carried
Initial Costs Capitalized At Close of Period
-------------------- Subsequent ------------------------------ Accumulated
No. of Encum- Building & To Building & Total Depreciation
Description Bldgs. brances Land Improvements Acquisition Land Improvements (a,b) (c)
----------- ------ ------- ------- ------------ ----------- ------- ------------ --------- ------------
Operating
Properties
- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pecan Business
Center.......... 4 630 3,572 322 631 3,893 4,524 (310)
Rutland
Distribution
Center.......... 2 460 2,617 209 462 2,824 3,286 (374)
Southpark
Corporate
Center.......... 7 1,946 -- 15,195 1,946 15,195 17,141 (1,257)
Walnut Creek
Corporate
Center.......... 12 2,707 5,649 16,225 2,707 21,874 24,581 (1,217)
Birmingham,
Alabama
Oxmoor
Distribution
Center.......... 4 (d) 2,398 13,591 645 2,398 14,236 16,634 (1,702)
Perimeter
Distribution
Center.......... 2 2,489 14,109 470 2,490 14,578 17,068 (1,779)
Charlotte, North
Carolina
Barringer
Industrial
Center.......... 3 308 1,746 389 308 2,135 2,443 (256)
Bond
Distribution
Center.......... 2 905 5,126 867 905 5,993 6,898 (732)
Charlotte
Commerce Center. 10 4,341 24,954 1,670 4,342 26,623 30,965 (3,151)
Charlotte
Distribution
Center.......... 7 3,852 -- 17,111 4,609 16,354 20,963 (776)
Interstate North
Business Park... 2 535 3,030 148 535 3,178 3,713 (54)
Northpark
Distribution
Center.......... 1 307 1,742 48 307 1,790 2,097 (208)
Chattanooga,
Tennessee
Stone Fort
Distribution
Center.......... 4 2,063 11,688 164 2,063 11,852 13,915 (1,286)
Tiftonia
Distribution
Center.......... 1 146 829 182 146 1,011 1,157 (86)
Chicago, Illinois
Addison
Distribution
Center.......... 1 646 3,662 283 646 3,945 4,591 (102)
Bedford Park
Distribution
Center.......... 1 473 2,678 40 473 2,718 3,191 (111)
Bensenville
Distribution
Center.......... 1 728 4,123 -- 728 4,123 4,851 --
Bridgeview
Distribution
Center.......... 4 1,302 7,378 619 1,303 7,996 9,299 (374)
Des Plaines
Distribution
Center.......... 3 2,158 12,232 456 2,159 12,687 14,846 (742)
Elk Grove
Distribution
Center.......... 9 3,815 21,616 2,162 3,815 23,778 27,593 (1,338)
Elmhurst
Distribution
Center.......... 1 713 4,043 44 713 4,087 4,800 (68)
Glenview
Distribution
Center.......... 1 214 1,213 49 214 1,262 1,476 (49)
Itasca
Distribution
Center.......... 2 604 3,425 30 604 3,455 4,059 (102)
Mitchell
Distribution
Center.......... 1 1,236 7,004 386 1,236 7,390 8,626 (385)
North Avenue
Distribution
Center.......... 1 974 -- 4,069 1,183 3,860 5,043 (10)
Northlake
Distribution
Center.......... 1 372 2,106 51 372 2,157 2,529 (120)
<CAPTION>
Date of
Description Construction/Acquisition
----------- ------------------------
Operating
Properties
- ----------
<S> <C>
Pecan Business
Center.......... 1995
Rutland
Distribution
Center.......... 1993
Southpark
Corporate
Center.......... 1994,1995,1996
Walnut Creek
Corporate
Center.......... 1994,1995,1996
Birmingham,
Alabama
Oxmoor
Distribution
Center.......... 1994
Perimeter
Distribution
Center.......... 1994
Charlotte, North
Carolina
Barringer
Industrial
Center.......... 1994
Bond
Distribution
Center.......... 1994
Charlotte
Commerce Center. 1994
Charlotte
Distribution
Center.......... 1995,1996,1997
Interstate North
Business Park... 1997
Northpark
Distribution
Center.......... 1994
Chattanooga,
Tennessee
Stone Fort
Distribution
Center.......... 1994
Tiftonia
Distribution
Center.......... 1995
Chicago, Illinois
Addison
Distribution
Center.......... 1997
Bedford Park
Distribution
Center.......... 1996
Bensenville
Distribution
Center.......... 1997
Bridgeview
Distribution
Center.......... 1996
Des Plaines
Distribution
Center.......... 1995,1996
Elk Grove
Distribution
Center.......... 1995,1996,1997
Elmhurst
Distribution
Center.......... 1997
Glenview
Distribution
Center.......... 1996
Itasca
Distribution
Center.......... 1996,1997
Mitchell
Distribution
Center.......... 1996
North Avenue
Distribution
Center.......... 1997
Northlake
Distribution
Center.......... 1996
</TABLE>
54
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued)
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Costs Gross Amounts At Which Carried
Initial Costs Capitalized At Close of Period
-------------------- Subsequent ------------------------------ Accumulated
No. of Encum- Building & To Building & Total Depreciation
Description Bldgs. brances Land Improvements Acquisition Land Improvements (a,b) (c)
----------- ------ ------- ------- ------------ ----------- ------- ------------ --------- ------------
Operating
Properties
- ----------
<CAPTION><S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Date of
Description Construction/Acquisition
----------- ------------------------
Operating
Properties
- ----------
<S> <C>
O'Hare Cargo
Distribution
Center.......... 2 3,566 -- 10,991 5,924 8,633 14,557 (13)
Tri-Center
Distribution
Center.......... 3 889 5,038 187 889 5,225 6,114 (217)
Woodale
Distribution
Center.......... 1 263 1,490 48 263 1,538 1,801 (25)
Cincinnati, Ohio
Airpark
Distribution
Center.......... 2 1,692 -- 10,684 1,716 10,660 12,376 (449)
Blue
Ash/Interstate
Distribution
Center.......... 1 144 817 476 144 1,293 1,437 (88)
Capital
Distribution
Center I........ 4 1,750 9,922 689 1,751 10,610 12,361 (1,044)
Capital
Distribution
Center II....... 5 1,953 11,067 1,021 1,953 12,088 14,041 (1,269)
Capital
Industrial
Center I........ 10 1,039 5,885 1,227 1,039 7,112 8,151 (638)
Empire
Distribution
Center.......... 3 529 2,995 351 529 3,346 3,875 (256)
Kentucky Drive
Business Center. 4 553 3,134 291 553 3,425 3,978 (64)
Princeton
Distribution
Center.......... 1 (d) 816 -- 4,230 1,070 3,976 5,046 --
Production
Distribution
Center.......... 1 (f) 598 2,717 (18) 479 2,818 3,297 (295)
Sharonville
Distribution
Center.......... 2 1,206 -- 7,873 1,633 7,446 9,079 (14)
Springdale
Commerce Center. 3 421 2,384 678 421 3,062 3,483 (186)
Columbus, Ohio
Capital Park
South
Distribution
Center.......... 3 1,981 -- 19,859 1,981 19,859 21,840 (682)
Columbus West
Industrial
Center.......... 3 645 3,655 582 645 4,237 4,882 (340)
Corporate Park
West............ 2 679 3,849 178 679 4,027 4,706 (193)
Fisher
Distribution
Center.......... 1 1,197 6,785 645 1,197 7,430 8,627 (726)
International
Street Commerce
Center.......... 1 235 -- 2,343 249 2,329 2,578 (6)
McCormick
Distribution
Center.......... 5 1,664 9,429 985 1,664 10,414 12,078 (1,025)
New World
Distribution
Center.......... 1 207 1,173 416 207 1,589 1,796 (177)
Dallas/Fort
Worth, Texas
Carter
Industrial
Center.......... 1 334 -- 2,299 334 2,299 2,633 (63)
Dallas Corporate
Center.......... 7 4,102 -- 22,630 4,210 22,522 26,732 (523)
Franklin
Distribution
Center.......... 2 528 2,991 464 528 3,455 3,983 (431)
Freeport
Distribution
Center.......... 3 979 5,549 114 979 5,663 6,642 (168)
O'Hare Cargo
Distribution
Center.......... 1997
Tri-Center
Distribution
Center.......... 1996
Woodale
Distribution
Center.......... 1997
Cincinnati, Ohio
Airpark
Distribution
Center.......... 1996
Blue
Ash/Interstate
Distribution
Center.......... 1995
Capital
Distribution
Center I........ 1994
Capital
Distribution
Center II....... 1994
Capital
Industrial
Center I........ 1994,1995
Empire
Distribution
Center.......... 1995
Kentucky Drive
Business Center. 1997
Princeton
Distribution
Center.......... 1997
Production
Distribution
Center.......... 1994
Sharonville
Distribution
Center.......... 1997
Springdale
Commerce Center. 1996
Columbus, Ohio
Capital Park
South
Distribution
Center.......... 1996
Columbus West
Industrial
Center.......... 1995
Corporate Park
West............ 1996
Fisher
Distribution
Center.......... 1995
International
Street Commerce
Center.......... 1997
McCormick
Distribution
Center.......... 1994
New World
Distribution
Center.......... 1994
Dallas/Fort
Worth, Texas
Carter
Industrial
Center.......... 1996
Dallas Corporate
Center.......... 1996,1997
Franklin
Distribution
Center.......... 1994
Freeport
Distribution
Center.......... 1996,1997
</TABLE>
55
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued)
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Costs Gross Amounts At Which Carried
Initial Costs Capitalized At Close of Period
-------------------- Subsequent ------------------------------ Accumulated
No. of Encum- Building & To Building & Total Depreciation
Description Bldgs. brances Land Improvements Acquisition Land Improvements (a,b) (c)
----------- ------ ------- ------- ------------ ----------- ------- ------------ --------- ------------
Operating
Properties
- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Great Southwest
Distribution
Center.......... 14 3,801 19,430 5,198 3,831 24,598 28,429 (1,268)
Great Southwest
Industrial
Center I........ 2 308 1,744 172 308 1,916 2,224 (132)
Great Southwest
Industrial
Center II....... 1 836 -- 6,125 1,010 5,951 6,961 --
Lone Star
Distribution
Center.......... 2 967 5,477 155 967 5,632 6,599 (296)
Metropolitan
Distribution
Center.......... 1 201 1,097 722 297 1,723 2,020 (134)
Northgate
Distribution
Center.......... 5 1,570 8,897 424 1,570 9,321 10,891 (1,014)
Northpark
Business Center. 2 467 2,648 197 467 2,845 3,312 (174)
Redbird
Distribution
Center.......... 2 738 4,186 112 739 4,297 5,036 (153)
Royal Commerce
Center.......... 4 1,975 11,190 163 1,975 11,353 13,328 (94)
Stemmons
Distribution
Center.......... 1 272 1,544 485 272 2,029 2,301 (170)
Stemmons
Industrial
Center.......... 11 1,497 8,484 1,132 1,497 9,616 11,113 (864)
Trinity Mills
Distribution
Center.......... 4 1,709 9,684 1,043 1,709 10,727 12,436 (566)
Denver, Colorado
Denver Business
Center.......... 5 1,156 7,486 6,434 1,156 13,920 15,076 (1,458)
Havana
Distribution
Center.......... 1 401 2,281 82 401 2,363 2,764 (354)
Moline
Distribution
Center.......... 1 327 1,850 157 327 2,007 2,334 (249)
Moncrieff
Distribution
Center.......... 1 314 2,493 376 314 2,869 3,183 (446)
Pagosa
Distribution
Center.......... 1 406 2,322 358 406 2,680 3,086 (392)
Upland
Distribution
Center I........ 6 820 5,710 8,064 821 13,773 14,594 (1,727)
Upland
Distribution
Center II....... 6 2,456 13,946 705 2,489 14,618 17,107 (2,072)
East Bay (San
Francisco),
California
East Bay
Industrial
Center.......... 1 531 3,009 183 531 3,192 3,723 (356)
Eigenbrodt Way
Distribution
Center.......... 1 (d) 393 2,228 81 393 2,309 2,702 (304)
Hayward Commerce
Center.......... 4 1,933 10,955 495 1,933 11,450 13,383 (1,505)
Hayward Commerce
Park............ 9 2,764 15,661 1,430 2,764 17,091 19,855 (2,202)
Hayward
Distribution
Center.......... 7 (e) 3,417 19,255 578 3,417 19,833 23,250 (2,619)
Hayward
Industrial
Center.......... 13 (d) 4,481 25,393 2,453 4,481 27,846 32,327 (3,530)
Patterson Pass
Business Center. 4 1,829 4,885 4,870 1,856 9,728 11,584 (696)
San Leandro
Distribution
Center.......... 3 1,387 7,862 244 1,387 8,106 9,493 (1,098)
<CAPTION>
Date of
Description Construction/Acquisition
----------- ------------------------
Operating
Properties
- ----------
<S> <C>
Great Southwest
Distribution
Center.......... 1994,1995,1996,1997
Great Southwest
Industrial
Center I........ 1995
Great Southwest
Industrial
Center II....... 1997
Lone Star
Distribution
Center.......... 1996
Metropolitan
Distribution
Center.......... 1995
Northgate
Distribution
Center.......... 1994,1996
Northpark
Business Center. 1995,1996
Redbird
Distribution
Center.......... 1994,1996
Royal Commerce
Center.......... 1997
Stemmons
Distribution
Center.......... 1995
Stemmons
Industrial
Center.......... 1994,1995,1996
Trinity Mills
Distribution
Center.......... 1996
Denver, Colorado
Denver Business
Center.......... 1992,1994,1996
Havana
Distribution
Center.......... 1993
Moline
Distribution
Center.......... 1994
Moncrieff
Distribution
Center.......... 1992
Pagosa
Distribution
Center.......... 1993
Upland
Distribution
Center I........ 1992,1994,1995
Upland
Distribution
Center II....... 1993,1994
East Bay (San
Francisco),
California
East Bay
Industrial
Center.......... 1994
Eigenbrodt Way
Distribution
Center.......... 1993
Hayward Commerce
Center.......... 1993
Hayward Commerce
Park............ 1994
Hayward
Distribution
Center.......... 1993
Hayward
Industrial
Center.......... 1993
Patterson Pass
Business Center. 1993,1997
San Leandro
Distribution
Center.......... 1993
</TABLE>
56
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued)
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Costs Gross Amounts At Which Carried
Initial Costs Capitalized At Close of Period
-------------------- Subsequent ------------------------------ Accumulated
No. of Encum- Building & To Building & Total Depreciation
Description Bldgs. brances Land Improvements Acquisition Land Improvements (a,b) (c)
----------- ------ ------- ------- ------------ ----------- ------- ------------ --------- ------------
Operating
Properties
- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
El Paso, Texas
Billy the Kid
Distribution
Center.......... 1 273 1,547 525 273 2,072 2,345 (216)
Broadbent
Industrial
Center.......... 3 676 5,183 444 676 5,627 6,303 (862)
Goodyear
Distribution
Center.......... 1 511 2,899 60 511 2,959 3,470 (350)
Northwestern
Corporate
Center.......... 5 1,472 -- 14,982 1,986 14,468 16,454 (1,092)
Pan Am
Distribution
Center.......... 1 318 -- 2,327 318 2,327 2,645 (207)
Peter Cooper
Distribution
Center.......... 1 (d) 495 2,816 58 495 2,874 3,369 (340)
Vista Corporate
Center.......... 4 1,945 -- 10,678 1,946 10,677 12,623 (755)
Vista Del Sol
Industrial
Center.......... 9 (d) 3,088 12,782 15,803 4,497 27,176 31,673 (2,228)
Fort
Lauderdale/Miami,
Florida
Airport West
Distribution
Center.......... 1 675 3,825 645 1,276 3,869 5,145 (258)
Copans
Distribution
Center.......... 1 333 1,888 461 333 2,349 2,682 (70)
North Andrews
Distribution
Center.......... 1 (f) 698 3,956 92 698 4,048 4,746 (427)
Port 95
Distribution
Center I........ 3 2,065 6,654 6,427 3,364 11,782 15,146 (602)
Houston, Texas
Crosstimbers
Distribution
Center.......... 1 359 2,035 434 359 2,469 2,828 (298)
Hempstead
Distribution
Center.......... 3 1,013 5,740 569 1,013 6,309 7,322 (777)
I-10 Central
Distribution
Center.......... 2 181 1,023 255 181 1,278 1,459 (142)
I-10 Central
Service Center.. 1 58 330 90 58 420 478 (46)
Pine Forest
Business Center. 18 4,859 27,557 2,107 4,859 29,664 34,523 (2,709)
Post Oak
Business Center. 16 3,462 17,966 3,716 3,462 21,682 25,144 (2,358)
Post Oak
Distribution
Center.......... 7 2,115 12,017 1,394 2,115 13,411 15,526 (1,906)
South Loop
Distribution
Center.......... 5 1,051 5,964 1,071 1,052 7,034 8,086 (761)
Southwest
Freeway
Industrial
Center.......... 1 84 476 35 84 511 595 (61)
West by
Northwest
Industrial
Center.......... 15 3,855 8,382 27,484 4,050 35,671 39,721 (2,202)
White Street
Distribution
Center.......... 1 469 2,656 195 469 2,851 3,320 (266)
<CAPTION>
Date of
Description Construction/Acquisition
----------- ------------------------
Operating
Properties
- ----------
<S> <C>
El Paso, Texas
Billy the Kid
Distribution
Center.......... 1994
Broadbent
Industrial
Center.......... 1993
Goodyear
Distribution
Center.......... 1994
Northwestern
Corporate
Center.......... 1992,1993,1994,1997
Pan Am
Distribution
Center.......... 1995
Peter Cooper
Distribution
Center.......... 1994
Vista Corporate
Center.......... 1994,1995,1996
Vista Del Sol
Industrial
Center.......... 1994,1995,1997
Fort
Lauderdale/Miami,
Florida
Airport West
Distribution
Center.......... 1995
Copans
Distribution
Center.......... 1997
North Andrews
Distribution
Center.......... 1994
Port 95
Distribution
Center I........ 1995,1997
Houston, Texas
Crosstimbers
Distribution
Center.......... 1994
Hempstead
Distribution
Center.......... 1994
I-10 Central
Distribution
Center.......... 1994
I-10 Central
Service Center.. 1994
Pine Forest
Business Center. 1993,1994,1995
Post Oak
Business Center. 1993,1994,1996
Post Oak
Distribution
Center.......... 1993,1994
South Loop
Distribution
Center.......... 1994
Southwest
Freeway
Industrial
Center.......... 1994
West by
Northwest
Industrial
Center.......... 1993,1994,1995,1996,1997
White Street
Distribution
Center.......... 1995
</TABLE>
57
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued)
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Costs Gross Amounts At Which Carried
Initial Costs Capitalized At Close of Period
-------------------- Subsequent ------------------------------ Accumulated
No. of Encum- Building & To Building & Total Depreciation
Description Bldgs. brances Land Improvements Acquisition Land Improvements (a,b) (c)
----------- ------ ------- ------- ------------ ----------- ------- ------------ --------- ------------
Operating
Properties
- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Indianapolis,
Indiana
Eastside
Distribution
Center.......... 2 471 2,668 246 472 2,913 3,385 (204)
North by
Northeast
Distribution
Center.......... 1 1,058 -- 5,927 1,059 5,926 6,985 (529)
Park 100
Industrial
Center.......... 24 9,770 55,369 3,185 9,665 58,659 68,324 (4,486)
Park Fletcher
Distribution
Center.......... 10 2,860 16,204 1,743 2,911 17,896 20,807 (1,243)
Plainfield Park
Distribution
Center.......... 1 399 -- 3,430 625 3,204 3,829 --
Shadeland
Industrial
Center.......... 3 428 2,431 443 429 2,873 3,302 (234)
Kansas City,
Kansas/Missouri
44th Street
Business Center. 1 143 813 297 143 1,110 1,253 (66)
Congleton
Distribution
Center.......... 3 518 2,937 243 518 3,180 3,698 (362)
Lamar
Distribution
Center.......... 1 323 1,829 492 323 2,321 2,644 (260)
Macon Bedford
Distribution
Center.......... 1 304 1,725 357 304 2,082 2,386 (111)
Platte Valley
Industrial
Center.......... 11 (d) 3,867 20,017 5,507 4,002 25,389 29,391 (2,226)
Riverside
Distribution
Center.......... 5 (d) 533 3,024 470 534 3,493 4,027 (356)
Riverside
Industrial
Center.......... 5 (d) 1,012 5,736 316 1,012 6,052 7,064 (633)
Terrace &
Lackman
Distribution
Center.......... 1 285 1,615 431 285 2,046 2,331 (220)
Las Vegas, Nevada
Black Mountain
Distribution
Center.......... 2 1,108 -- 5,878 1,206 5,780 6,986 (41)
Hughes Airport
Center.......... 1 876 -- 3,328 910 3,294 4,204 (378)
Las Vegas
Corporate
Center.......... 7 (e) 4,157 -- 20,534 4,522 20,169 24,691 (1,092)
West One
Business Center. 4 (d) 2,468 13,985 231 2,468 14,216 16,684 (631)
Los
Angeles/Orange
County,
California
Foothills
Business Center. 1 1,877 -- 3,994 1,976 3,895 5,871 (10)
Freeway
Distribution
Center.......... 3 3,305 18,729 68 3,305 18,797 22,102 (105)
Mid-Counties
Distribution
Center.......... 6 3,355 15,895 3,753 3,356 19,647 23,003 (1,393)
<CAPTION>
Date of
Description Construction/Acquisition
----------- ------------------------
Operating
Properties
- ----------
<S> <C>
Indianapolis,
Indiana
Eastside
Distribution
Center.......... 1995
North by
Northeast
Distribution
Center.......... 1995
Park 100
Industrial
Center.......... 1994,1995
Park Fletcher
Distribution
Center.......... 1994,1995,1996
Plainfield Park
Distribution
Center.......... 1997
Shadeland
Industrial
Center.......... 1995
Kansas City,
Kansas/Missouri
44th Street
Business Center. 1996
Congleton
Distribution
Center.......... 1994
Lamar
Distribution
Center.......... 1994
Macon Bedford
Distribution
Center.......... 1996
Platte Valley
Industrial
Center.......... 1994,1997
Riverside
Distribution
Center.......... 1994
Riverside
Industrial
Center.......... 1994
Terrace &
Lackman
Distribution
Center.......... 1994
Las Vegas, Nevada
Black Mountain
Distribution
Center.......... 1997
Hughes Airport
Center.......... 1994
Las Vegas
Corporate
Center.......... 1994,1995,1996,1997
West One
Business Center. 1996
Los
Angeles/Orange
County,
California
Foothills
Business Center. 1997
Freeway
Distribution
Center.......... 1997
Mid-Counties
Distribution
Center.......... 1995,1997
</TABLE>
58
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued)
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Costs Gross Amounts At Which Carried
Initial Costs Capitalized At Close of Period
-------------------- Subsequent ------------------------------ Accumulated
No. of Encum- Building & To Building & Total Depreciation
Description Bldgs. brances Land Improvements Acquisition Land Improvements (a,b) (c)
----------- ------ ------- ------- ------------ ----------- ------- ------------ --------- ------------
Operating
Properties
- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
North County
Distribution
Center.......... 2 16,543 -- 22,342 16,374 22,511 38,885 (870)
Pacific Business
Center.......... 5 4,196 -- 20,537 4,379 20,354 24,733 (354)
Santa Ana
Distribution
Center.......... 1 647 3,668 35 647 3,703 4,350 (370)
Louisville,
Kentucky
Louisville
Distribution
Center.......... 2 1,219 3,402 6,281 1,240 9,662 10,902 (294)
Lyons, France
L'Isle d'Abeau
Distribution
Center.......... 1 1,246 7,062 -- 1,246 7,062 8,308 --
Memphis,
Tennessee
Airport
Distribution
Center.......... 15 4,543 25,748 3,400 4,544 29,147 33,691 (2,218)
Delp
Distribution
Center.......... 8 2,308 13,079 1,805 2,308 14,884 17,192 (1,120)
Fred Jones
Distribution
Center.......... 1 125 707 86 125 793 918 (76)
Southwide Lamar
Industrial
Center.......... 4 (d) 423 3,365 382 425 3,745 4,170 (370)
Monterrey, Mexico
Monterrey
Industrial Park. 3 1,382 3,785 2,279 1,418 6,028 7,446 (103)
Nashville,
Tennessee
Bakertown
Distribution
Center.......... 2 463 2,626 67 463 2,693 3,156 (193)
I-40 Industrial
Center.......... 3 665 3,774 167 666 3,940 4,606 (337)
Interchange City
Distribution
Center.......... 4 2,321 5,767 8,430 3,076 13,442 16,518 (748)
Space Park South
Distribution
Center.......... 15 3,499 19,830 1,582 3,499 21,412 24,911 (2,247)
New Jersey/I-95
Corridor
Brunswick
Distribution
Center.......... 2 870 4,928 1,117 870 6,045 6,915 (125)
Clearview
Distribution
Center.......... 1 2,232 12,648 238 2,232 12,886 15,118 (440)
Kilmer
Distribution
Center.......... 4 2,526 14,313 411 2,526 14,724 17,250 (548)
Meadowland
Industrial
Center.......... 1 2,409 13,653 963 2,409 14,616 17,025 (721)
Oklahoma City,
Oklahoma
Melcat
Distribution
Center.......... 1 240 1,363 273 240 1,636 1,876 (184)
Meridian
Business Center. 2 195 1,109 489 196 1,597 1,793 (149)
Oklahoma
Distribution
Center.......... 3 893 5,082 435 893 5,517 6,410 (797)
<CAPTION>
Date of
Description Construction/Acquisition
----------- ------------------------
Operating
Properties
- ----------
<S> <C>
North County
Distribution
Center.......... 1996
Pacific Business
Center.......... 1996,1997
Santa Ana
Distribution
Center.......... 1994
Louisville,
Kentucky
Louisville
Distribution
Center.......... 1995,1996
Lyons, France
L'Isle d'Abeau
Distribution
Center.......... 1997
Memphis,
Tennessee
Airport
Distribution
Center.......... 1995,1996
Delp
Distribution
Center.......... 1995,1997
Fred Jones
Distribution
Center.......... 1994
Southwide Lamar
Industrial
Center.......... 1994
Monterrey, Mexico
Monterrey
Industrial Park. 1997
Nashville,
Tennessee
Bakertown
Distribution
Center.......... 1995
I-40 Industrial
Center.......... 1995,1996
Interchange City
Distribution
Center.......... 1994,1995,1996,1997
Space Park South
Distribution
Center.......... 1994
New Jersey/I-95
Corridor
Brunswick
Distribution
Center.......... 1997
Clearview
Distribution
Center.......... 1996
Kilmer
Distribution
Center.......... 1996
Meadowland
Industrial
Center.......... 1996
Oklahoma City,
Oklahoma
Melcat
Distribution
Center.......... 1994
Meridian
Business Center. 1994
Oklahoma
Distribution
Center.......... 1993
</TABLE>
59
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued)
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Costs Gross Amounts At Which Carried
Initial Costs Capitalized At Close of Period
-------------------- Subsequent ------------------------------ Accumulated
No. of Encum- Building & To Building & Total Depreciation
Description Bldgs. brances Land Improvements Acquisition Land Improvements (a,b) (c)
----------- ------ ------- ------- ------------ ----------- ------- ------------ --------- ------------
Operating
Properties
- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Orlando, Florida
33rd Street
Industrial
Center.......... 9 (d)(f) 1,980 11,237 784 1,980 12,021 14,001 (939)
Chancellor
Distribution
Center.......... 1 380 2,156 1,055 380 3,211 3,591 (271)
La Quinta
Distribution
Center.......... 1 354 2,006 583 354 2,589 2,943 (255)
Orlando Central
Park............ 1 606 -- 3,738 775 3,569 4,344 (30)
Titusville
Industrial
Center.......... 1 (d) 283 1,603 84 283 1,687 1,970 (174)
Paris, France
Mitry Mory
Distribution
Center.......... 1 1,083 6,137 47 1,083 6,184 7,267 (85)
Phoenix, Arizona
24th Street
Industrial
Center.......... 2 503 2,852 297 503 3,149 3,652 (412)
Alameda
Distribution
Center.......... 1 369 2,423 190 369 2,613 2,982 (487)
Hohokam 10
Industrial
Center.......... 5 2,940 -- 11,376 2,941 11,375 14,316 (265)
I-10 West
Business Center. 3 263 1,525 139 263 1,664 1,927 (244)
Kyrene Commons
Distribution
Center.......... 1 430 2,656 143 430 2,799 3,229 (530)
Martin Van Buren
Distribution
Center.......... 6 572 3,285 396 572 3,681 4,253 (449)
Papago
Distribution
Center.......... 1 420 2,383 72 420 2,455 2,875 (308)
Pima
Distribution
Center.......... 1 306 1,742 218 306 1,960 2,266 (264)
Tiger
Distribution
Center.......... 1 402 2,279 595 402 2,874 3,276 (370)
Watkins
Distribution
Center.......... 1 242 1,375 192 243 1,566 1,809 (156)
Portland, Oregon
Argyle
Distribution
Center.......... 3 946 5,388 229 946 5,617 6,563 (784)
Columbia
Distribution
Center.......... 2 550 3,121 152 551 3,272 3,823 (341)
PDX Corporate
Center East..... 2 (e) 1,464 -- 6,777 2,258 5,983 8,241 (69)
PDX Corporate
Center North.... 7 (e) 2,405 -- 10,662 2,542 10,525 13,067 (724)
The Evergreen
Park............ 4 1,092 -- 6,947 1,462 6,577 8,039 --
Wilsonville
Corporate
Center.......... 6 (e) 2,963 -- 11,516 2,964 11,515 14,479 (766)
Reno, Nevada
Fernley
Distribution
Center.......... 1 974 -- 4,834 1,110 4,698 5,808 --
Golden Valley
Distribution
Center.......... 2 2,850 -- 11,306 2,812 11,344 14,156 (84)
<CAPTION>
Date of
Description Construction/Acquisition
----------- ------------------------
Operating
Properties
- ----------
<S> <C>
Orlando, Florida
33rd Street
Industrial
Center.......... 1994,1995,1996
Chancellor
Distribution
Center.......... 1994
La Quinta
Distribution
Center.......... 1994
Orlando Central
Park............ 1997
Titusville
Industrial
Center.......... 1994
Paris, France
Mitry Mory
Distribution
Center.......... 1997
Phoenix, Arizona
24th Street
Industrial
Center.......... 1994
Alameda
Distribution
Center.......... 1992
Hohokam 10
Industrial
Center.......... 1996
I-10 West
Business Center. 1993
Kyrene Commons
Distribution
Center.......... 1992
Martin Van Buren
Distribution
Center.......... 1993,1994
Papago
Distribution
Center.......... 1994
Pima
Distribution
Center.......... 1993
Tiger
Distribution
Center.......... 1994
Watkins
Distribution
Center.......... 1995
Portland, Oregon
Argyle
Distribution
Center.......... 1993
Columbia
Distribution
Center.......... 1994
PDX Corporate
Center East..... 1997
PDX Corporate
Center North.... 1995,1996
The Evergreen
Park............ 1997
Wilsonville
Corporate
Center.......... 1995,1996
Reno, Nevada
Fernley
Distribution
Center.......... 1997
Golden Valley
Distribution
Center.......... 1996
</TABLE>
60
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued)
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Costs Gross Amounts At Which Carried
Initial Costs Capitalized At Close of Period
-------------------- Subsequent ------------------------------ Accumulated
No. of Encum- Building & To Building & Total Depreciation
Description Bldgs. brances Land Improvements Acquisition Land Improvements (a,b) (c)
----------- ------ ------- ------- ------------ ----------- ------- ------------ --------- ------------
Operating
Properties
- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Meredith Kleppe
Business Center. 5 1,573 8,949 858 1,573 9,807 11,380 (1,326)
Pacific
Industrial
Center.......... 4 2,501 -- 10,529 2,501 10,529 13,030 (864)
Packer Way
Business Center. 3 458 2,604 466 458 3,070 3,528 (420)
Packer Way
Distribution
Center.......... 2 506 2,879 351 506 3,230 3,736 (437)
Spice Island
Distribution
Center.......... 1 435 2,466 1,024 435 3,490 3,925 (153)
Reynosa, Mexico
Reynosa
Industrial
Center.......... 2 668 -- 3,524 691 3,501 4,192 (19)
Rio Grande Valley
(Brownsville),
Texas
Rio Grande
Distribution
Center.......... 5 (d) 527 2,987 599 527 3,586 4,113 (282)
Rio Grande
Industrial
Center.......... 8 (d) 2,188 12,399 1,360 2,188 13,759 15,947 (1,149)
Valley
Industrial
Center.......... 1 230 -- 3,242 363 3,109 3,472 (33)
Rotterdam,
Netherlands
Eemhaven
Industrial Park. 1 -- 7,562 221 -- 7,783 7,783 (147)
Salt Lake City,
Utah
Centennial
Distribution
Center.......... 2 1,149 -- 7,925 1,149 7,925 9,074 (664)
Clearfield
Distribution
Center.......... 2 2,500 14,165 506 2,481 14,690 17,171 (974)
Ogden
Distribution
Center.......... 1 463 2,625 549 463 3,174 3,637 --
Salt Lake
International
Distribution
Center.......... 2 1,364 2,792 7,611 1,364 10,403 11,767 (467)
San Antonio,
Texas
10711
Distribution
Center.......... 2 582 3,301 483 582 3,784 4,366 (485)
Coliseum
Distribution
Center.......... 2 1,102 2,380 10,347 1,613 12,216 13,829 (1,196)
Distribution
Drive Center.... 1 473 2,680 482 473 3,162 3,635 (503)
Downtown
Distribution
Center.......... 1 241 1,364 245 241 1,609 1,850 (208)
I-10 Central
Distribution
Center.......... 1 223 1,275 195 240 1,453 1,693 (259)
I-35 Business
Center.......... 4 663 3,773 398 663 4,171 4,834 (637)
Landmark One
Distribution
Center.......... 1 341 1,933 291 341 2,224 2,565 (247)
Macro
Distribution
Center.......... 1 225 1,282 154 225 1,436 1,661 (241)
Perrin Creek
Corporate
Center.......... 6 1,547 -- 9,149 1,626 9,070 10,696 (417)
<CAPTION>
Date of
Description Construction/Acquisition
----------- ------------------------
Operating
Properties
- ----------
<S> <C>
Meredith Kleppe
Business Center. 1993
Pacific
Industrial
Center.......... 1994,1995
Packer Way
Business Center. 1993
Packer Way
Distribution
Center.......... 1993
Spice Island
Distribution
Center.......... 1996
Reynosa, Mexico
Reynosa
Industrial
Center.......... 1997
Rio Grande Valley
(Brownsville),
Texas
Rio Grande
Distribution
Center.......... 1995
Rio Grande
Industrial
Center.......... 1995
Valley
Industrial
Center.......... 1997
Rotterdam,
Netherlands
Eemhaven
Industrial Park. 1997
Salt Lake City,
Utah
Centennial
Distribution
Center.......... 1995
Clearfield
Distribution
Center.......... 1995
Ogden
Distribution
Center.......... 1996
Salt Lake
International
Distribution
Center.......... 1994,1996
San Antonio,
Texas
10711
Distribution
Center.......... 1994
Coliseum
Distribution
Center.......... 1994,1995
Distribution
Drive Center.... 1992
Downtown
Distribution
Center.......... 1994
I-10 Central
Distribution
Center.......... 1992
I-35 Business
Center.......... 1993
Landmark One
Distribution
Center.......... 1994
Macro
Distribution
Center.......... 1993
Perrin Creek
Corporate
Center.......... 1995,1996
</TABLE>
61
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued)
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Costs Gross Amounts At Which Carried
Initial Costs Capitalized At Close of Period
-------------------- Subsequent ------------------------------ Accumulated
No. of Encum- Building & To Building & Total Depreciation
Description Bldgs. brances Land Improvements Acquisition Land Improvements (a,b) (c)
----------- ------ ------- ------- ------------ ----------- ------- ------------ --------- ------------
Operating
Properties
- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
San Antonio
Distribution
Center I........ 13 2,154 12,247 2,663 2,154 14,910 17,064 (2,473)
San Antonio
Distribution
Center II....... 3 969 -- 5,680 885 5,764 6,649 (645)
San Antonio
Distribution
Center III...... 6 1,709 9,684 1,086 1,709 10,770 12,479 (584)
Sentinel
Business Center. 6 1,276 7,230 823 1,276 8,053 9,329 (849)
Tri-County
Distribution
Center.......... 1 496 -- 5,677 679 5,494 6,173 --
Woodlake
Distribution
Center.......... 2 248 1,405 76 248 1,481 1,729 (184)
San Diego,
California
Carmel Mountain
Ranch Industrial
Center.......... 3 3,732 -- 9,575 3,773 9,534 13,307 --
Seattle,
Washington
Andover East
Business Center. 2 535 3,033 203 535 3,236 3,771 (352)
Fife Corporate
Center.......... 3 4,059 -- 9,559 4,206 9,412 13,618 (179)
Kent Corporate
Center.......... 2 2,882 1,987 8,322 3,190 10,001 13,191 (882)
Van Doren's
Distribution
Center.......... 2 (e) 2,473 -- 8,145 2,860 7,758 10,618 (245)
South Bay (San
Francisco),
California
Bayside Business
Center.......... 2 (e) 2,088 -- 4,428 2,088 4,428 6,516 (87)
Bayside
Corporate
Center.......... 7 (e) 4,365 -- 15,864 4,365 15,864 20,229 (1,376)
Bayside Plaza I. 12 (e) 5,212 18,008 462 5,216 18,466 23,682 (2,480)
Bayside Plaza
II.............. 2 (e) 634 -- 2,812 634 2,812 3,446 (505)
Gateway
Corporate
Center.......... 11 (d)(e) 7,575 24,746 4,009 7,575 28,755 36,330 (3,968)
Mowry Business
Center.......... 2 3,957 -- 11,409 5,162 10,204 15,366 (51)
Shoreline
Business Center. 8 (e) 4,328 16,101 405 4,328 16,506 20,834 (2,202)
Shoreline
Business Center
II.............. 2 (e) 922 -- 4,570 922 4,570 5,492 (602)
Spinnaker
Business Center. 12 (e) 7,043 25,220 842 7,043 26,062 33,105 (3,520)
Thornton
Business Center. 5 (d) 3,988 11,706 6,092 3,989 17,797 21,786 (1,904)
Trimble
Distribution
Center.......... 5 2,836 16,067 729 2,836 16,796 19,632 (2,201)
<CAPTION>
Date of
Description Construction/Acquisition
----------- ------------------------
Operating
Properties
- ----------
<S> <C>
San Antonio
Distribution
Center I........ 1992,1993,1994
San Antonio
Distribution
Center II....... 1994
San Antonio
Distribution
Center III...... 1996
Sentinel
Business Center. 1994
Tri-County
Distribution
Center.......... 1997
Woodlake
Distribution
Center.......... 1994
San Diego,
California
Carmel Mountain
Ranch Industrial
Center.......... 1996,1997
Seattle,
Washington
Andover East
Business Center. 1994
Fife Corporate
Center.......... 1996
Kent Corporate
Center.......... 1995
Van Doren's
Distribution
Center.......... 1995,1997
South Bay (San
Francisco),
California
Bayside Business
Center.......... 1996
Bayside
Corporate
Center.......... 1995,1996
Bayside Plaza I. 1993
Bayside Plaza
II.............. 1994
Gateway
Corporate
Center.......... 1993,1996
Mowry Business
Center.......... 1997
Shoreline
Business Center. 1993
Shoreline
Business Center
II.............. 1995
Spinnaker
Business Center. 1993
Thornton
Business Center. 1993,1996
Trimble
Distribution
Center.......... 1994
</TABLE>
62
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued)
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Costs Gross Amounts At Which Carried
Initial Costs Capitalized At Close of Period
-------------------- Subsequent ------------------------------ Accumulated
No. of Encum- Building & To Building & Total Depreciation
Description Bldgs. brances Land Improvements Acquisition Land Improvements (a,b) (c)
----------- ------ ------- ------- ------------ ----------- ------- ------------ --------- ------------
Operating
Properties
- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
St. Louis,
Missouri
Earth City
Industrial
Center.......... 5 (d) 2,555 14,478 303 2,552 14,784 17,336 (207)
Hazelwood
Distribution
Center.......... 1 (d) 233 1,322 36 233 1,358 1,591 (11)
Westport
Distribution
Center.......... 3 (d) 761 4,310 62 761 4,372 5,133 (37)
Westport Service
Center.......... 2 (d) 486 2,754 6 486 2,760 3,246 --
Tampa, Florida
Adamo
Distribution
Center.......... 1 105 595 304 105 899 1,004 (50)
Clearwater
Distribution
Center.......... 2 (f) 92 524 49 92 573 665 (58)
Commerce Park
Distribution
Center.......... 4 811 4,597 246 811 4,843 5,654 (506)
Eastwood
Distribution
Center.......... 1 (f) 122 690 86 122 776 898 (75)
Joe's Creek
Distribution
Center.......... 2 (f) 161 909 124 160 1,034 1,194 (112)
Lakeland
Distribution
Center.......... 1 938 5,313 545 938 5,858 6,796 (691)
Orchid Lake
Industrial
Center.......... 1 41 235 12 41 247 288 (26)
Plant City
Distribution
Center.......... 1 (f) 206 1,169 50 206 1,219 1,425 (127)
Sabal Park
Distribution
Center.......... 2 1,080 -- 6,022 875 6,227 7,102 (160)
Silo Bend
Distribution
Center.......... 4 (f) 2,887 16,358 688 2,887 17,046 19,933 (1,698)
Silo Bend
Industrial
Center.......... 1 (f) 525 2,975 222 525 3,197 3,722 (335)
St. Petersburg
Service Center.. 1 35 197 21 35 218 253 (22)
Tampa East
Distribution
Center.......... 11 (f) 2,700 15,302 1,759 2,700 17,061 19,761 (1,730)
Tampa East
Industrial
Center.......... 2 (f) 332 1,880 242 332 2,122 2,454 (213)
Tampa West
Distribution
Center.......... 15 (d)(f) 3,273 18,659 1,897 3,383 20,446 23,829 (2,081)
Tampa West
Industrial
Center.......... 4 (f) 700 1,161 3,970 700 5,131 5,831 (210)
Tampa West
Service Center.. 4 (f) 970 5,501 412 971 5,912 6,883 (612)
Tulsa, Oklahoma
52nd Street
Distribution
Center.......... 1 340 1,924 182 340 2,106 2,446 (217)
70th East
Distribution
Center.......... 1 129 733 156 129 889 1,018 (86)
East 55th Street
Distribution
Center.......... 1 (f) 210 1,191 83 210 1,274 1,484 (130)
Expressway
Distribution
Center.......... 4 573 3,280 642 573 3,922 4,495 (552)
Henshaw
Distribution
Center.......... 3 500 2,829 131 499 2,961 3,460 (316)
<CAPTION>
Date of
Description Construction/Acquisition
----------- ------------------------
Operating
Properties
- ----------
<S> <C>
St. Louis,
Missouri
Earth City
Industrial
Center.......... 1997
Hazelwood
Distribution
Center.......... 1997
Westport
Distribution
Center.......... 1997
Westport Service
Center.......... 1997
Tampa, Florida
Adamo
Distribution
Center.......... 1995
Clearwater
Distribution
Center.......... 1994
Commerce Park
Distribution
Center.......... 1994
Eastwood
Distribution
Center.......... 1994
Joe's Creek
Distribution
Center.......... 1994
Lakeland
Distribution
Center.......... 1994
Orchid Lake
Industrial
Center.......... 1994
Plant City
Distribution
Center.......... 1994
Sabal Park
Distribution
Center.......... 1996,1997
Silo Bend
Distribution
Center.......... 1994
Silo Bend
Industrial
Center.......... 1994
St. Petersburg
Service Center.. 1994
Tampa East
Distribution
Center.......... 1994
Tampa East
Industrial
Center.......... 1994
Tampa West
Distribution
Center.......... 1994,1995
Tampa West
Industrial
Center.......... 1994,1996
Tampa West
Service Center.. 1994
Tulsa, Oklahoma
52nd Street
Distribution
Center.......... 1994
70th East
Distribution
Center.......... 1994
East 55th Street
Distribution
Center.......... 1994
Expressway
Distribution
Center.......... 1993
Henshaw
Distribution
Center.......... 1994
</TABLE>
63
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued)
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Costs Gross Amounts At Which Carried
Initial Costs Capitalized At Close of Period
--------------------- Subsequent -------------------------------- Accumulated
No. of Encum- Building & To Building & Total Depreciation
Description Bldgs. brances Land Improvements Acquisition Land Improvements (a,b) (c)
- ----------- ------ ------- -------- ------------ ----------- -------- ------------ ---------- ------------
Operating
Properties
- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Washington,
D.C./Baltimore
Airport Commons
Distribution
Center.......... 2 2,320 -- 8,194 2,360 8,154 10,514 (104)
Ardmore
Distribution
Center.......... 3 1,431 8,110 360 1,431 8,470 9,901 (839)
Ardmore
Industrial
Center.......... 2 984 5,581 253 985 5,833 6,818 (581)
Chantilly
Distribution
Center.......... 2 2,242 -- 15,155 3,377 14,020 17,397 (54)
Concorde
Industrial
Center.......... 4 1,538 8,717 443 1,538 9,160 10,698 (777)
De Soto Business
Park............ 5 1,774 10,055 2,909 1,774 12,964 14,738 (640)
Eisenhower
Industrial
Center.......... 3 1,240 7,025 1,026 1,240 8,051 9,291 (795)
Fleet
Distribution
Center.......... 8 3,198 18,121 948 3,198 19,069 22,267 (1,208)
Hampton Central
Distribution
Center.......... 2 1,769 -- 8,879 2,248 8,400 10,648 (199)
Patapsco
Distribution
Center.......... 1 270 1,528 847 270 2,375 2,645 (137)
Sunnyside
Industrial
Center.......... 3 1,541 8,733 1,205 1,541 9,938 11,479 (967)
Other Markets.... 7 (f) 1,300 8,635 372 1,364 8,943 10,307 (787)
----- -------- ---------- -------- -------- ---------- ---------- ---------
Total Operating
Properties...... 1,005 $402,714 $1,471,318 $779,572 $420,019 $2,233,585 $2,653,604 $(171,525)
----- -------- ---------- -------- -------- ---------- ---------- ---------
<CAPTION>
Land Under
Development
- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Amsterdam,
Netherlands
Schiphol
Distribution
Center.......... $ 3,153 -- $ 635 $ 3,788 -- $ 3,788 --
Atlanta, Georgia
Atlanta Airport
Distribution
Center.......... 1,400 -- 1,443 2,843 -- 2,843 --
Atlanta NE at
Sugarloaf....... 1,182 -- 406 1,588 -- 1,588 --
Breckenridge
Distribution
Center.......... 651 -- 181 832 -- 832 --
Charlotte, North
Carolina
Charlotte
Distribution
Center.......... 856 -- 621 1,477 -- 1,477 --
Chicago, Illinois
Alsip
Distribution
Center.......... 1,273 -- -- 1,273 -- 1,273 --
Bensenville
Distribution
Center.......... 940 -- -- 940 -- 940 --
North Avenue
Distribution
Center 695 -- 274 969 -- 969 --
Remington Lakes
Business Park... 1,026 -- 171 1,197 -- 1,197 --
<CAPTION>
Date of
Description Construction/Acquisition
- ----------- ------------------------
Operating
Properties
- ----------
<S> <C>
Washington,
D.C./Baltimore
Airport Commons
Distribution
Center.......... 1997
Ardmore
Distribution
Center.......... 1994
Ardmore
Industrial
Center.......... 1994
Chantilly
Distribution
Center.......... 1996,1997
Concorde
Industrial
Center.......... 1995
De Soto Business
Park............ 1996
Eisenhower
Industrial
Center.......... 1994
Fleet
Distribution
Center.......... 1996
Hampton Central
Distribution
Center.......... 1996,1997
Patapsco
Distribution
Center.......... 1995
Sunnyside
Industrial
Center.......... 1994
Other Markets.... 1991,1994,1996
Total Operating
Properties......
<CAPTION>
Land Under
Development
- -----------
<S> <C>
Amsterdam,
Netherlands
Schiphol
Distribution
Center.......... 1997
Atlanta, Georgia
Atlanta Airport
Distribution
Center.......... 1996
Atlanta NE at
Sugarloaf....... 1997
Breckenridge
Distribution
Center.......... 1997
Charlotte, North
Carolina
Charlotte
Distribution
Center.......... 1994,1995
Chicago, Illinois
Alsip
Distribution
Center.......... 1997
Bensenville
Distribution
Center.......... 1997
North Avenue
Distribution
Center 1996
Remington Lakes
Business Park... 1997
</TABLE>
64
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued)
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Costs Gross Amounts At Which Carried
Initial Costs Capitalized At Close of Period
-------------------- Subsequent ------------------------------ Accumulated
Encum- Building & To Building & Total Depreciation Date of
Description brances Land Improvements Acquisition Land Improvements (a,b) (c) Construction/Acquisition
- ----------- ------- ------- ------------ ----------- ------- ------------ --------- ------------ ------------------------
Land Under
Development
- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cincinnati, Ohio
Airpark
International
Distribution
Center.......... 434 -- 220 654 -- 654 -- 1997
Union Center
Commerce Park... 566 -- 16 582 -- 582 -- 1997
Columbus, Ohio
Capital Park
South
Distribution
Center.......... 285 -- 18 303 -- 303 -- 1997
Dallas/Fort
Worth, Texas
Dallas Corporate
Center.......... 608 -- 102 710 -- 710 -- 1995
Freeport
Distribution
Center.......... 414 -- 9 423 -- 423 -- 1996
Great Southwest
Distribution
Center.......... 1,046 -- 83 1,129 -- 1,129 -- 1996
Denver, Colorado
Denver Business
Center.......... 988 -- 34 1,022 -- 1,022 -- 1997
East Bay (San
Francisco),
California
Patterson Pass
Business Center. 959 -- 4 963 -- 963 -- 1996
El Paso, Texas
Northwestern
Corporate
Center.......... 129 -- 144 273 -- 273 -- 1991
Fort
Lauderdale/Miami,
Florida
Airport West
Distribution
Center.......... 578 -- 80 658 -- 658 -- 1997
Indianapolis,
Indiana
Plainfield Park
Distribution
Center.......... 486 -- 275 761 -- 761 -- 1996
Juarez, Mexico
Salvacar
Industrial
Center.......... 1,554 -- 406 1,960 -- 1,960 -- 1997
Los
Angeles/Orange
County,
California
Foothills
Distribution
Center.......... 3,650 -- 131 3,781 -- 3,781 -- 1995
Mid-Counties
Distribution
Center.......... 13,127 -- 1,344 14,471 -- 14,471 -- 1997
Louisville,
Kentucky
Riverport
Distribution
Center.......... 462 -- 44 506 -- 506 -- 1996
</TABLE>
65
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued)
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Costs Gross Amounts At Which Carried
Initial Costs Capitalized At Close of Period
-------------------- Subsequent ------------------------------ Accumulated
Encum- Building & To Building & Total Depreciation Date of
Description brances Land Improvements Acquisition Land Improvements (a,b) (c) Construction/Acquisition
- ----------- ------- ------- ------------ ----------- ------- ------------ --------- ------------ ------------------------
Land Under
Development
- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Monterrey, Mexico
Monterrey
Industrial
Center.......... 1,325 -- 512 1,837 -- 1,837 -- 1997
New Jersey/I-95
Corridor
Cranbury
Business Park... 2,017 -- 2,918 4,935 -- 4,935 -- 1997
Meadowland
Industrial
Center.......... 1,486 -- -- 1,486 -- 1,486 -- 1997
Orlando, Florida
Orlando Central
Park............ 772 -- 157 929 -- 929 -- 1996
Phoenix, Arizona
Kyrene Commons
Distribution
Center.......... 158 -- -- 158 -- 158 -- 1992
Kyrene Commons
Distribution
Center South.... 1,096 -- 58 1,154 -- 1,154 -- 1996
Portland, Oregon
PDX Corporate
Center East..... 734 -- 636 1,370 -- 1,370 -- 1997
Jennifer
Distribution
Center.......... 915 -- 184 1,099 -- 1,099 -- 1997
Reno, Nevada
Golden Valley
Distribution
Center.......... 284 -- 685 969 -- 969 -- 1995
Reynosa, Mexico
Reynosa
Industrial
Center.......... 959 -- 2 961 -- 961 -- 1997
Rio Grande Valley
(Brownsville),
Texas
McAllen
Distribution
Center.......... 452 -- 74 526 -- 526 -- 1997
South Bay (San
Francisco),
California
Mowry Business
Center.......... 1,974 -- 288 2,262 -- 2,262 -- 1996
Tampa, Florida
Sabal Park
Distribution
Center.......... 599 -- 50 649 -- 649 -- 1995
</TABLE>
66
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued)
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Costs Gross Amounts At Which Carried
Initial Costs Capitalized At Close of Period
-------------------- Subsequent ------------------------------ Accumulated
Encum- Building & To Building & Total Depreciation Date of
Description brances Land Improvements Acquisition Land Improvements (a,b) (c) Construction/Acquisition
- ----------- ------- ------- ------------ ----------- ------- ------------ --------- ------------ ------------------------
Land Under
Development
- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Washington
D.C./Baltimore
Gateway
Distribution
Center.......... 773 -- 170 943 -- 943 -- 1997
Meadowridge
Distribution
Center.......... 1,812 -- 81 1,893 -- 1,893 -- 1996
Priest Bridge
Distribution
Center.......... 1,440 -- 59 1,499 -- 1,499 -- 1997
------- --------- ------- ------- --------- --------- --------
Total Land Under
Development..... $53,258 -- $12,515 $65,773 -- $65,773 --
------- --------- ------- ------- --------- --------- --------
<CAPTION>
Land Held for
Development
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Atlanta, Georgia
Atlanta NE at
Sugarloaf....... $ 1,448 -- $ 33 $ 1,481 -- $ 1,481 -- 1997
Atlanta West
Distribution
Center.......... 714 -- 38 752 -- 752 -- 1994
Breckenridge
Distribution
Center.......... 2,595 -- 155 2,750 -- 2,750 -- 1997
Riverside
Distribution
Center.......... 1,107 -- 93 1,200 -- 1,200 -- 1996
Austin, Texas
Corridor Park
Corporate
Center.......... 1,305 -- 63 1,368 -- 1,368 -- 1994
Southpark
Corporate
Center.......... 525 -- 63 588 -- 588 -- 1996
Walnut Creek
Corporate
Center.......... 951 -- 133 1,084 -- 1,084 -- 1994,1996
Charlotte, North
Carolina
Charlotte
Distribution
Center.......... 898 -- 323 1,221 -- 1,221 -- 1994,1995,1996
Charlotte
Distribution
Center South.... 975 -- 36 1,011 -- 1,011 -- 1997
Interstate North
Business Park... 343 -- 8 351 -- 351 -- 1997
Chicago, Illinois
Bloomingdale 100
Business Center. 5,797 -- 440 6,237 -- 6,237 -- 1997
North Avenue
Distribution
Center.......... 1,532 -- 329 1,861 -- 1,861 -- 1996
O'Hare Cargo
Distribution
Center.......... 3,661 -- 6,873 10,534 -- 10,534 -- 1996,1997
Remington Lakes
Business Park... 3,233 -- 204 3,437 -- 3,437 -- 1997
</TABLE>
67
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued)
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Costs Gross Amounts At Which Carried
Initial Costs Capitalized At Close of Period
-------------------- Subsequent ------------------------------ Accumulated
Encum- Building & To Building & Total Depreciation Date of
Description brances Land Improvements Acquisition Land Improvements (a,b) (c) Construction/Acquisition
- ----------- ------- ------- ------------ ----------- ------- ------------ --------- ------------ ------------------------
Land Held for
Development
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cincinatti, Ohio
Airpark
International
Distribution
Center......... 860 -- 428 1,288 -- 1,288 -- 1997
Princeton
Distribution
Center (d) 436 -- 3 439 -- 439 -- 1996
Sharonville
Distribution
Center......... 574 -- 226 800 -- 800 -- 1996
Union Center
Commerce Park.. 592 -- 1,981 2,573 -- 2,573 -- 1997
Columbus, Ohio
Capital Park
South
Distribution
Center......... 1,447 -- 731 2,178 -- 2,178 -- 1994,1995,1996,1997
International
Street Commerce
Center......... 327 -- 13 340 -- 340 -- 1996
Dallas/Fort
Worth, Texas
Dallas
Corporate
Center......... 921 -- 58 979 -- 979 -- 1995
Great Southwest
Industrial
Center I....... 492 -- 26 518 -- 518 -- 1996
Great Southwest
Distribution
Center......... 2,330 -- 38 2,368 -- 2,368 -- 1997
Royal Lane
Distribution
Center......... 3,220 -- 33 3,253 -- 3,253 -- 1997
Denver, Colorado
Peoria
Distribution
Center......... 1,363 -- 170 1,533 -- 1,533 -- 1997
Upland
Distribution
Center I....... 1,647 -- 18 1,665 -- 1,665 -- 1994,1997
East Bay (San
Francisco),
California
Patterson Pass
Business
Center......... 552 -- 3 555 -- 555 -- 1996
El Paso, Texas
Northwestern
Corporate
Center......... 3,201 -- 3,646 6,847 -- 6,847 -- 1991,1992
Vista Corporate
Center......... 331 -- 151 482 -- 482 -- 1993
Vista Del Sol
Industrial
Center......... 2,008 -- 304 2,312 -- 2,312 -- 1994,1996
Fort
Lauderdale/Miami,
Florida
Port 95
Distribution
Center I....... 5,556 -- 17 5,573 -- 5,573 -- 1996
</TABLE>
68
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued)
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Costs Gross Amounts At Which Carried
Initial Costs Capitalized At Close of Period
-------------------- Subsequent ------------------------------ Accumulated
Encum- Building & To Building & Total Depreciation Date of
Description brances Land Improvements Acquisition Land Improvements (a,b) (c) Construction/Acquisition
- ----------- ------- ------- ------------ ----------- ------- ------------ --------- ------------ ------------------------
Land Held for
Development
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Houston, Texas
Jersey Village
Corporate
Center......... 4,753 -- 869 5,622 -- 5,622 -- 1997
West by
Northwest
Industrial
Center......... 1,859 -- 73 1,932 -- 1,932 -- 1993
World Houston
Distribution
Center......... 425 -- 31 456 -- 456 -- 1997
Indianapolis,
Indiana
North by
Northeast
Distribution
Center......... 435 -- 56 491 -- 491 -- 1994
Plainfield Park
Distribution
Center......... 1,082 -- 437 1,519 -- 1,519 -- 1996
Juarez, Mexico
Salvacar
Industrial
Center......... 2,731 -- 517 3,248 -- 3,248 -- 1997
Las Vegas,
Nevada
Black Mountain
Distribution
Center......... 2,845 -- 143 2,988 -- 2,988 -- 1995,1996
Hughes Airport
Center......... 263 -- 10 273 -- 273 -- 1997
Las Vegas
Corporate
Center......... (e) 4,916 -- 911 5,827 -- 5,827 -- 1993,1995,1997
Los Angeles /
Orange County,
California
Foothills
Business
Center......... 7,647 -- 79 7,726 -- 7,726 -- 1995,1996
Mid-Counties
Distribution
Center......... 8,443 -- (502) 7,941 -- 7,941 -- 1997
Louisville,
Kentucky
Riverport
Distribution
Center......... 138 -- 14 152 -- 152 -- 1996,1997
Memphis,
Tennessee
Memphis
Industrial
Park........... 2,563 -- 931 3,494 -- 3,494 -- 1997
Nashville,
Tennessee
Nashville/l-24
Distribution
Center......... 776 -- 1,587 2,363 -- 2,363 -- 1996
</TABLE>
69
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued)
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Costs Gross Amounts At Which Carried
Initial Costs Capitalized At Close of Period
-------------------- Subsequent ------------------------------ Accumulated
Encum- Building & To Building & Total Depreciation Date of
Description brances Land Improvements Acquisition Land Improvements (a,b) (c) Construction/Acquisition
- ----------- ------- ------- ------------ ----------- ------- ------------ --------- ------------ ------------------------
Land Held for
Development
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
New Jersey / I-
95 Corridor
Cranbury
Business Park.. 3,162 -- 1,155 4,317 -- 4,317 -- 1997
Kennedy
International
Cargo Center... (d) 3,915 -- 85 4,000 -- 4,000 -- 1997
Meadowland
Industrial
Center......... 1,600 -- 2 1,602 -- 1,602 -- 1997
Orlando, Florida
Orlando
Corporate
Center......... 3,234 -- 96 3,330 -- 3,330 -- 1996
Phoenix, Arizona
Kyrene Commons
Distribution
Center......... 1,278 -- 22 1,300 -- 1,300 -- 1992,1996
Portland, Oregon
Jennifer
Distribution
Center......... 2,935 -- 834 3,769 -- 3,769 -- 1997
PDX Corporate
Center East.... (e) 769 -- 39 808 -- 808 -- 1997
The Evergreen
Park........... 3,241 -- 731 3,972 -- 3,972 -- 1996,1997
Reno, Nevada
Golden Valley
Distribution
Center......... 347 -- 680 1,027 -- 1,027 -- 1995
Reynosa, Mexico
Reynosa
Industrial
Center......... 840 -- 112 952 -- 952 -- 1997
Rio Grande
Valley
(Brownsville),
Texas
Rio Grande
Distribution
Center......... 429 -- 10 439 -- 439 -- 1995
Salt Lake City,
Utah
Centennial
Distribution
Center......... 2,726 -- 71 2,797 -- 2,797 -- 1996
Clearfield
Distribution
Center......... 104 -- 23 127 -- 127 -- 1995
Salt Lake
Industrial
Center......... 1,734 -- 94 1,828 -- 1,828 -- 1994,1995
San Antonio,
Texas
Coliseum
Distribution
Center......... 608 -- 326 934 -- 934 -- 1994
Landmark One
Distribution
Center......... 127 -- 5 132 -- 132 -- 1997
Perrin Creek
Corporate
Center......... 2,637 -- 170 2,807 -- 2,807 -- 1996
San Antonio
Distribution
Center III..... 1,290 -- 25 1,315 -- 1,315 -- 1996
</TABLE>
70
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued)
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Costs Gross Amounts At Which Carried
Initial Costs Capitalized At Close of Period
--------------------- Subsequent -------------------------------- Accumulated
No. of Encum- Building & To Building & Total Depreciation
Description Bldgs. brances Land Improvements Acquisition Land Improvements (a,b) (c)
----------- ------ ------- -------- ------------ ----------- -------- ------------ ---------- ------------
Land Held for
Development
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Seattle,
Washington
Van Doren's
Distribution
Center......... (e) 1,075 -- 173 1,248 -- 1,248 --
Tampa, Florida
Sabal Park
Distribution
Center......... 1,906 -- 221 2,127 -- 2,127 --
Tampa East
Distribution
Center......... 2,769 -- 589 3,358 -- 3,358 --
Washington,
D.C./Baltimore
Hampton Central
Distribution
Center......... 1,156 -- 214 1,370 -- 1,370 --
Meadowridge
Distribution
Center......... 3,810 -- 666 4,476 -- 4,476 --
-------- ---------- -------- -------- ---------- ---------- ---------
Total Land Held
for
Development.... $131,509 -- $ 28,136 $159,645 -- $ 159,645 --
-------- ---------- -------- -------- ---------- ---------- ---------
GRAND TOTAL..... $587,481 $1,471,318 $820,223 $645,437 $2,233,585 $2,879,022 $(171,525)
======== ========== ======== ======== ========== ========== =========
<CAPTION>
Date of
Description Construction/Acquisition
----------- ------------------------
Land Held for
Development
- -------------
<S> <C>
Seattle,
Washington
Van Doren's
Distribution
Center......... 1994
Tampa, Florida
Sabal Park
Distribution
Center......... 1995,1997
Tampa East
Distribution
Center......... 1994
Washington,
D.C./Baltimore
Hampton Central
Distribution
Center......... 1994
Meadowridge
Distribution
Center......... 1996
Total Land Held
for
Development....
GRAND TOTAL.....
</TABLE>
71
<PAGE>
SECURITY CAPITAL INDUSTRIAL TRUST
SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued)
December 31, 1997
- --------
(a) Reconciliation of total cost to balance sheet caption at December 31, 1997
(in thousands):
<TABLE>
<S> <C>
Total per Schedule III..................................... $2,879,022
Construction in process.................................... 114,495
Capitalized preacquisition costs........................... 12,719
----------
Total real estate........................................ $3,006,236(g)
==========
</TABLE>
(b) The aggregate cost for federal income tax purposes was approximately
$2,923,619,000.
(c) Buildings are depreciated over their estimated useful lives (30 years for
acquisitions, 40 years for developments).
(d) $164,119,000 of these properties are pledged as collateral for $87,937,000
in mortgage notes payable.
(e) $224,279,000 of these properties are subject to lien under $11,894,000 of
net assessment bonds payable.
(f) $66,741,000 of these properties are pledged as collateral for $24,973,000
and $8,224,000 in first and second priority mortgage notes, respectively.
(g) A summary of activity for real estate and accumulated depreciation is as
follows:
<TABLE>
<CAPTION>
December 31, 1997
(in thousands)
-----------------
<S> <C>
Real Estate
Balance at beginning of year............................ $2,508,747
Additions:
Acquisitions/Completions.............................. 413,078
Improvements.......................................... 95,341
Cost of real estate disposed of......................... (53,862)
Change in construction in process....................... 36,989
Change in capitalized preacquisition costs.............. 5,943
----------
Balance at end of year.................................. $3,006,236
==========
Accumulated Depreciation
Balance at beginning of year............................ $ 109,147
Depreciation expense.................................... 65,620
Accumulation depreciation associated with real estate
disposed of............................................ (3,242)
----------
Balance at end of year.................................. $ 171,525
==========
</TABLE>
72
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
/s/ Jeffrey A. Klopf
By: _________________________________
Jeffrey A. Klopf
Secretary
Date: February 24, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Irving F. Lyons III* Co-Chairman, Chief
____________________________________ Investment Officer and
Irving F. Lyons III Trustee
/s/ K. Dane Brooksher* Co-Chairman, Chief Operating
____________________________________ Officer and Trustee
K. Dane Brooksher
/s/ M. Gordon Keiser Jr.* Senior Vice President
____________________________________ (Principal Financial
M. Gordon Keiser Jr. Officer)
/s/ Edward F. Long* Vice President and
____________________________________ Controller (Principal
Edward F. Long Accounting Officer)
/s/ Thomas G. Wattles* Trustee
____________________________________
Thomas G. Wattles
/s/ Stephen L. Feinberg* Trustee
____________________________________
Stephen L. Feinberg
/s/ Donald P. Jacobs* 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
<TABLE>
<S> <C> <C>
February 24, 1999
</TABLE>
*By: _____________________
Jeffrey A. Klopf
Attorney-in-fact
73
<PAGE>
INDEX TO EXHIBITS
Certain of the following documents are filed herewith. Certain other of the
following documents have been previously filed with the Securities and
Exchange Commission and, pursuant to Rule 12b-32, are incorporated herein by
reference.
<TABLE>
<CAPTION>
Sequential
Numbered
Number Description Page
------ ----------- ----------
<C> <S> <C>
3.1 Amended and Restated Declaration of Trust of SCI
(Incorporated by reference to exhibit 4.1 to SCI's
Registration Statement No. 33-73382)
3.2 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)
3.3 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)
3.4 Articles Supplementary relating to SCI's Series A
Cumulative Redeemable Preferred Shares of Beneficial
Interest (Incorporated by reference to exhibit 4.8 to
SCI's Form 8-A registration statement relating to such
shares)
3.5 First Articles of Amendment to Articles Supplementary
relating to SCI's Series A Cumulative Redeemable
Preferred Shares of Beneficial Interest (Incorporated
by reference to exhibit 10.3 to SCI's Form 10-Q for the
quarter ended September 30, 1995)
3.6 Articles Supplementary relating to SCI's Series B
Cumulative Convertible Redeemable Preferred Shares of
Beneficial Interest (Incorporated by reference to
exhibit 4.1 to SCI's Form 8-K dated February 14, 1996)
3.7 Articles Supplementary with respect to SCI's Series C
Cumulative Redeemable Preferred Shares of Beneficial
Interest (Incorporated by reference to exhibit 4.8 to
SCI's Form 8-A dated November 13, 1996).
3.8 Bylaws of SCI (Incorporated by reference to exhibit 4.3
to SCI's Registration Statement No. 33-83208)
4.1 Rights Agreement, dated as of December 31, 1993,
between SCI and State Street Bank and Trust Company, as
Rights Agent, including form of Rights Certificate
(Incorporated by reference to exhibit 4.4 to SCI's
Registration Statement No. 33-78080)
4.2 First Amendment to Rights Amendment, dated as of
February 15, 1995, between SCI, State Street Bank and
Trust Company and The First National Bank of Boston, as
successor Rights Agent (Incorporated by reference to
exhibit 3.1 to SCI's Form 10-Q for the quarter ended
September 30, 1995)
4.3 Second Amendment to Rights Agreement, dated as of June
22, 1995, between SCI, State Street Bank and Trust
Company and The First National Bank of Boston
(Incorporated by reference to Exhibit 3.1 to SCI's Form
10-Q for the quarter ended September 30, 1995)
4.4 Form of share certificate for Common Shares of
Beneficial Interest of SCI (Incorporated by reference
to exhibit 4.4 to SCI's Registration Statement No. 33-
73382)
4.5 Form of share certificate for Series A Cumulative
Redeemable Preferred Shares of Beneficial Interest of
SCI (Incorporated by reference to exhibit 4.7 to SCI's
Form 8-A registration statement relating to such
shares)
4.6 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)
</TABLE>
74
<PAGE>
<TABLE>
<CAPTION>
Sequential
Numbered
Number Description Page
------ ----------- ----------
<C> <S> <C>
4.7 Form of share certificate for Series B Cumulative
Convertible Redeemable Preferred Shares of Beneficial
Interest of SCI (Incorporated by reference to exhibit
4.8 to SCI's Form 8-A registration statement relating
to such shares)
4.8 Form of share certificate for Series C Cumulative
Redeemable Preferred Shares of Beneficial Interest of
SCI (Incorporated by reference to exhibit 4.8 to SCI's
Form 10-K for the year ended December 31, 1996)
4.9 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)
4.10 7.875% Note due May 15, 2009 (Incorporated by reference
to exhibit 4.4 to SCI's Form 8-K dated May 9, 1995)
4.11 7.30% Note due May 15, 2001 (Incorporated by reference
to exhibit 4.3 to SCI's Form 8-K dated May 9, 1995)
4.12 7.25% Note due May 15, 2000 (Incorporated by reference
to exhibit 4.2 to SCI's Form 8-K dated May 9, 1995)
4.13 7.125% Note due May 15, 1998 (Incorporated by reference
to exhibit 4.1 to SCI's Form 8-K dated May 9, 1995)
4.14 7.25% Note due May 15, 2002 (Incorporated by reference
to exhibit 4.1 to SCI's Form 10-Q for the quarter ended
June 30, 1996)
4.15 7.95% Note due May 15, 2008 (Incorporated by reference
to exhibit 4.2 to SCI's Form 10-Q for the quarter ended
June 30, 1996)
4.16 8.65% Note due May 15, 2016 (Incorporated by reference
to exhibit 4.3 to SCI's Form 10-Q for the quarter ended
June 30, 1996)
4.17 7.81% Medium-Term Notes, Series A, due February 1, 2015
(Incorporated by reference to exhibit 4.17 to SCI's
Form 10K for the year ended December 31, 1996)
4.18 Indenture, dated as of March 1, 1995, between SCI and
State Street Bank and Trust Company, as Trustee
(Incorporated by reference to exhibit 4.9 to SCI's Form
10-K for the year ended December 31, 1994)
4.19 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)
4.20 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)
10.1 Contribution Agreement for the Formation of SCI Limited
Partnership-I, dated as of December 17, 1993, among SCI
and the parties set forth therein (Incorporated by
reference to exhibit 10.3 to SCI's Registration
Statement No. 33-73382)
10.2 Agreement of Limited Partnership of SCI Limited
Partnership-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)
10.3 Agreement of Purchase and Sale, dated as of December
22, 1993, by and between King & Lyons, King & Lyons-
Tracy Industrial, Charles W. King Jr. and Irving F.
Lyons, III and SCI (Incorporated by reference to
exhibit 10.8 to SCI's Registration Statement No. 33-
73382)
</TABLE>
75
<PAGE>
<TABLE>
<CAPTION>
Sequential
Numbered
Number Description Page
------ ----------- ----------
<C> <S> <C>
10.4 Pledge Agreement, dated as of December 22, 1993, by
King & Lyons in favor of SCI (Incorporated by reference
to exhibit 10.9 to SCI's Registration Statement No. 33-
73382)
10.5 Transfer and Registration Rights Agreement, dated as of
December 22, 1993, among SCI and the investors listed
on the signature pages thereto (Incorporated by
reference to exhibit 10.10 to SCI's Registration
Statement No. 33-73382)
10.6 Contribution Agreement of SCI Limited Partnership-II,
dated as of January 28, 1994, among SCI and the parties
set forth therein (Incorporated by reference to exhibit
10.11 to SCI's Registration Statement No. 33-73382)
10.7 Amended and Restated Agreement of Limited Partnership
of SCI Limited Partnership-II, dated as of February 15,
1994, among SCI, as general partner, and the limited
partners set forth therein (Incorporated by reference
to exhibit 10.12 to SCI's Registration Statement No.
33-78080)
10.8 Administrative Services Agreement, dated as of
September 9, 1997, between SCI and Security Capital
Group Incorporated (Incorporated by reference to
exhibit 10.6 to Security Capital Group Incorporated's
Form 10-Q for the quarter ended September 30, 1997)
10.9 Third Amended and Restated Investor Agreement, dated as
of September 9, 1997, between SCI and Security Capital
Group Incorporated (Incorporated by reference to
exhibit 10.3 to Security Capital Group Incorporated's
Form 10-Q for the quarter ended September 30, 1997)
10.10 Amended and Restated Credit Agreement, entered into as
of May 2, 1996, between SCI and NationsBank Texas N.A.,
as agent bank, and the lenders party thereto
(Incorporated by reference to exhibit 10 to SCI's Form
10-Q for the quarter ended March 31, 1996)
10.11 Form of Indemnification Agreement entered into between
SCI and its Trustees and executive officers
(Incorporated by reference to exhibit 10.16 to SCI's
Registration Statement No. 33-73382)
10.12 Indemnification Agreements between SCI and each of its
independent Trustees (Incorporated by reference to
exhibit 10.16 to SCI's Form 10-K for the year ended
December 31, 1995)
10.13 Declaration of Trust for the benefit of SCI's
independent Trustees (Incorporated by reference to
exhibit 10.17 to SCI's Form 10-K for the year ended
December 31, 1995)
10.14 Transfer and Registration Rights Agreement dated as of
February 15, 1994, among SCI and the investors listed
on the signature pages thereto (Incorporated by
reference to exhibit 10.18 to SCI's Registration
Statement No. 33-78080)
10.15 Share Option Plan for Outside Trustees (Incorporated by
reference to exhibit 10.18 to SCI's Form 10-Q for the
quarter ended June 30, 1994)
10.16 Dividend Reinvestment and Share Purchase Plan
(Incorporated by reference to the prospectus contained
in Registration Statement No. 33-91366)
10.17 Contribution and Sale Agreement for SCI Limited
Partnership-III and SCI Limited Partnership-IV, dated
as of August 22, 1994, among SCI and the parties set
forth therein (Incorporated by reference to exhibit
10.19 to SCI's Registration Statement No. 33-83208)
</TABLE>
76
<PAGE>
<TABLE>
<CAPTION>
Sequential
Numbered
Number Description Page
------ ----------- ----------
<C> <S> <C>
10.18 First Amendment to Contribution and Sale Agreement,
dated as of October 14, 1994, among SCI and the parties
set forth therein (Incorporated by reference to exhibit
10.1 to SCI's Form 10-Q for the quarter ended September
30, 1994)
10.19 Second Amendment to Contribution and Sale Agreement,
dated as of October 21, 1994, among SCI and the parties
set forth therein (Incorporated by reference to exhibit
10.2 to SCI's Form 10-Q for the quarter ended September
30, 1994)
10.20 Amended and Restated Agreement of Limited Partnership
of SCI Limited Partnership-III, dated as of October 28,
1994, by and among SCI, as general partner, and the
limited partners set forth therein (Incorporated by
reference to exhibit 10.3 to SCI's Form 10-Q for the
quarter ended September 30, 1994)
10.21 Amended and Restated Agreement of Limited Partnership
of SCI Limited Partnership-IV, dated as of October 28,
1994, by and among SCI IV, Inc., as general partner,
and the limited partners set forth therein
(Incorporated by reference to exhibit 10.4 to SCI's
Form 10-Q for the quarter ended September 30, 1994)
10.22 Registration Rights Agreement, dated as of October 28,
1994, among SCI and the investors listed on the
signature pages thereto (Incorporated by reference to
exhibit 10.5 to SCI's Form 10-Q for the quarter ended
September 30, 1994)
10.23 Option Agreement and Consent, dated October 24, 1994,
by and between SCI and Farm Bureau Life Insurance
Company (Incorporated by reference to exhibit 10.7 to
SCI's Form 10-Q for the quarter ended September 30,
1994)
10.24 Security Capital Industrial Trust 1997 Long-Term
Incentive Plan (Incorporated by reference to Annex II
to Security Capital Group Incorporated's Registration
Statement No. 333-26259 on Form S-1)
10.25 Form of Secured Promissory Note and Pledge Agreement
relating to Share Purchase Program (previously filed)
11.1 Statement re: Computation of Per Share Earnings
(previously filed)
12.1 Statement re: Computation of Ratio of Earnings to Fixed
Charges (previously filed)
12.2 Statement re: Computation of Ratio of Earnings to
Combined Fixed Charges and Preferred Share Dividends
(previously filed)
21.1 Subsidiaries of SCI (previously filed)
23.1 Consent of Arthur Andersen LLP
24.1 Power of Attorney (previously filed)
27 Financial Data Schedule (previously filed)
</TABLE>
77
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports included in this Form 10-K, into the Trust's previously filed
Registration Statement File Nos. 33-91366, 33-92490, 333-4961, 333-31421,
333-39797 and 333-38515.
ARTHUR ANDERSEN LLP
Chicago, Illinois
February 24, 1999
