<PAGE>
===============================================================================
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
JUNE 25, 1998
SECURITY CAPITAL ATLANTIC INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 1-2303 85-0415503
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
SIX PIEDMONT CENTER, SUITE 600 30305
ATLANTA, GEORGIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (404) 237-9292
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
===============================================================================
<PAGE>
ITEM 5. OTHER EVENTS
This Current Report on Form 8-K is being filed by Security Capital Atlantic
Incorporated ("ATLANTIC") to provide audited financial information for certain
multifamily communities acquired by Atlantic Multifamily Limited Partnership-I
of which ATLANTIC has a controlling general partnership interest. These
acquisitions were previously disclosed in ATLANTIC's 8K/A No. 1 dated April 24,
1998 and filed on May 20, 1998.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
a. Financial Statements:
Combined Historical Summary of Gross Income and Direct
Operating Expenses for the year ended December 31, 1997--Group
H Community with Report of Independent Auditors
b. Pro Forma Financial Information:
See the Pro Forma Financial Information provided in ATLANTIC's
Form 8-K/A No. 1 dated April 24, 1998 and filed on May 20, 1998.
c. Exhibits:
Exhibit 23.1--Consent of Independent Auditors
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Security Capital Atlantic Incorporated
By: /S/ CONSTANCE B. MOORE
==========================
Constance B. Moore
CO-CHAIRMAN AND CHIEF OPERATING OFFICER
/S/ WILLIAM KELL
===========================
William Kell
SENIOR VICE PRESIDENT AND CONTROLLER
(PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER)
Date: June 25, 1998
3
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
Security Capital Atlantic Incorporated
We have audited the accompanying combined Historical Summary of Gross Income and
Direct Operating Expenses (Historical Summary) of the Group H Communities
described in Note 1 for the year ended December 31, 1997. This combined
Historical Summary is the responsibility of the Group H Communities' management.
Our responsibility is to express an opinion on this combined Historical Summary
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the combined Historical Summary is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the combined Historical Summary. An audit also
includes assessing the accounting principles used and the significant estimates
made by management, as well as evaluating the overall presentation of the
combined Historical Summary. We believe that our audit provides a reasonable
basis for our opinion.
The accompanying combined Historical Summary has been prepared for the purpose
of complying with the rules and regulations of the Securities and Exchange
Commission for inclusion in the Current Report on Form 8-K of Security Capital
Atlantic Incorporated as described in Note 1 and is not intended to be a
complete presentation of the income and expenses of the combined Group H
Communities.
In our opinion, the combined Historical Summary of Gross Income and Direct
Operating Expenses referred to above presents fairly, in all material respects,
the combined gross income and direct operating expenses of the combined Group H
Communities, as described in Note 1, for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Dallas, Texas
May 29, 1998
4
<PAGE>
<TABLE>
<CAPTION>
SECURITY CAPITAL ATLANTIC
INCORPORATED
GROUP H COMMUNITIES
COMBINED HISTORICAL SUMMARY OF GROSS
INCOME AND DIRECT OPERATING EXPENSES
YEAR ENDED DECEMBER 31, 1997 AND THE PERIOD FROM
JANUARY 1, 1998 THROUGH MARCH 31, 1998 (UNAUDITED)
1997 1998
------------------ ----------------
(Unaudited)
<S> <C> <C>
Gross income:
Rental..............................................................$ 12,785,941 $ 3,926,471
Other............................................................... 689,220 202,360
------------------ ----------------
Total gross income.............................................. 13,475,161 4,128,831
------------------ ----------------
Direct operating expenses:
Utilities and other operating expenses.............................. 1,979,052 581,626
Real estate taxes................................................... 751,343 302,272
Repairs and maintenance............................................. 1,087,369 311,369
Management fees..................................................... 723,212 205,750
Advertising......................................................... 294,902 69,338
Insurance........................................................... 116,313 71,596
------------------ ----------------
Total direct operating expenses................................. 4,952,191 1,541,951
------------------ ----------------
Excess of gross income over direct operating expenses..................$ 8,522,970 $ 2,586,880
================== ================
</TABLE>
See accompanying notes.
5
<PAGE>
SECURITY CAPITAL ATLANTIC
INCORPORATED
GROUP H COMMUNITIES
NOTES TO COMBINED HISTORICAL SUMMARY OF GROSS
INCOME AND DIRECT OPERATING EXPENSES
YEAR ENDED DECEMBER 31, 1997 AND THE PERIOD FROM
JANUARY 1, 1998 THROUGH MARCH 31, 1998 (UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION
The combined Historical Summary of Gross Income and Direct Operating
Expenses (the "Historical Summary") for the year ended December 31, 1997 and the
period from January 1, 1998 through March 31, 1998 relates to the operations of
the following Group H Communities which have been or are likely to be acquired
from unaffiliated parties by Security Capital Atlantic Incorporated
("ATLANTIC").
<TABLE>
<CAPTION>
Date of Acquisition Community Name Location Acquisition Cost
- --------------------------- ------------------------------- --------------------------- ------------------
(in 000s)
<S> <C> <C> <C>
May 1, 1998 Eastover Glen Charlotte, NC $ 9,303
May 1, 1998 Reafield Ridge I & II Charlotte, NC 19,274
May 1, 1998 Springs at Steele Creek Charlotte, NC 16,878
May 1, 1998 Cornerstone Raleigh, NC 24,728
May 1, 1998 Poplar Place Raleigh, NC 14,165
May 1, 1998 Halton Place Greenville, SC 12,028
(1) Pinnacle at Northcross Charlotte, NC 23,841
(1) Conifer Glen Raleigh, NC 14,705
(1) Forest at Biltmore I & II Asheville, NC 26,956
</TABLE>
(1) Community is under contract.
The accompanying combined Historical Summary has been prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Current Report on Form 8-K of ATLANTIC.
The combined Historical Summary is not intended to be a complete presentation of
combined income and expenses of the Group H Communities for the year ended
December 31, 1997 and the period from January 1, 1998 through March 31, 1998, as
certain costs such as depreciation, amortization, mortgage interest,
professional fees and other income or costs not considered comparable to the
future operations of the Group H Communities have been excluded.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Rental income from leasing activities consists of lease payments earned
from tenants under lease agreements with terms of one year or less.
CAPITALIZATION POLICY
Ordinary repairs and maintenance are expensed as incurred; major
replacements and betterments are capitalized.
ADVERTISING EXPENSE
The cost of advertising is expensed as incurred.
6
<PAGE>
SECURITY CAPITAL ATLANTIC
INCORPORATED
GROUP H COMMUNITIES
NOTES TO COMBINED HISTORICAL SUMMARY OF GROSS
INCOME AND DIRECT OPERATING EXPENSES (CONTINUED)
USE OF ESTIMATES
The preparation of the combined Historical Summary in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the Historical Summary and
accompanying notes. Actual results could differ from those estimates.
UNAUDITED INTERIM HISTORICAL SUMMARY
The combined Historical Summary for the period from January 1, 1998 through
March 31, 1998 is unaudited. In the opinion of management, all adjustments
necessary for a fair presentation of such combined Historical Summary have been
included. The results of operations for the period are not necessarily
indicative of the Group H Communities' future results of operations.
3. RELATED PARTY TRANSACTIONS
Management fees of $723,212 and $205,750 were paid to an affiliate of the
prior owners under property management agreements in 1997 and 1998,
respectively. Management fees are based on the greater of 4-5% of total revenue
or an agreed upon minimum until a certain occupancy rate is achieved, as stated
in the management agreement.
7
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in 1) the Registration
Statement (Form S-3 No. 333-38477) of Security Capital Atlantic
Incorporated (ATLANTIC) and in the related Prospectus; 2) the Registration
Statement (Form S-4 No. 333-51139) of Security Capital Pacific Trust and
related Prospectus and Joint Proxy Statement of Security Capital Pacific
Trust and ATLANTIC; and 3) the Registration Statements (Form S-8 No.
333-43761, 333-31419, and 333-25993) pertaining to the Security Capital
Atlantic Incorporated 401 (K) Savings Plan, the Security Capital Atlantic
Incorporated Long-Term Incentive Plan and the Security Capital Atlantic
Incorporated Share Option Plan for Outside Directors of our report dated
May 29, 1998, with respect to the combined Historical Summary of Gross
Income and Direct Operating Expenses of the Group H Communities which is
included in the Report on Form 8-K to be filed by ATLANTIC on or about June 22,
1998.
ERNST & YOUNG LLP
Dallas, Texas
June 22, 1998
