-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LiVDNAGJ8ySCRiO7w0Gi7Wb0S2Rtn2/yYD6A3QnGPwATS1k8S31QJUqpyQJCTUHN EqbuncqjAg9gyd9rXBfpjw== 0000950131-99-001085.txt : 19990225 0000950131-99-001085.hdr.sgml : 19990225 ACCESSION NUMBER: 0000950131-99-001085 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19990224 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROLOGIS TRUST CENTRAL INDEX KEY: 0000899881 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 742604728 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 001-12846 FILM NUMBER: 99548795 BUSINESS ADDRESS: STREET 1: 14100 EAST 35TH PLACE CITY: AURORA STATE: CO ZIP: 80011 BUSINESS PHONE: 3033759292 MAIL ADDRESS: STREET 1: 14100 EAST 35TH PLACE CITY: AURORA STATE: CO ZIP: 80011 FORMER COMPANY: FORMER CONFORMED NAME: SECURITY CAPITAL INDUSTRIAL TRUST DATE OF NAME CHANGE: 19931228 10-K/A 1 FORM 10-K/A - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 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) Maryland 74-2604728 (State or other jurisdiction (I.R.S. employer of incorporation or organization) identification no.)
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:
Name of each exchange Title of Each Class on which registered ------------------- ---------------------------- 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
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. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- TABLE OF CONTENTS
Item Description Page ---- ----------- ---- PART I 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
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. 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
Percentage Rentable Accumulated Long-term Year Acquired No. of Occupancy Square SCI Investment Depreciation Mortgage or Completed Bldgs. (1) Footage (2) (1) (1) Debt ------------- ------ ---------- ----------- -------------- ------------ ------------ 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 ----- ------ ---------- -------------- ------------ ------------
3 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE OF PROPERTIES (Continued)
Percentage Rentable SCI Accumulated Long-term Year Acquired No. of Occupancy Square Investment Depreciation Mortgage or Completed Bldgs. (1) Footage (2) (1) (1) Debt ------------- ------ ---------- ----------- ------------ ------------ ---------- 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 --- ------ --------- ------------ ----------- ----------
4 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE OF PROPERTIES (Continued)
Percentage Rentable Accumulated Year Acquired No. of Occupancy Square SCI Investment Depreciation or Completed Bldgs. (1) Footage (2) (1) (1) ------------- ------ ---------- ----------- -------------- ------------ 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 ----- ------ ---------- -------------- ---------- Long-term Mortgage Debt -------------- 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 --------------
5 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE OF PROPERTIES (Continued)
Percentage Rentable SCI Accumulated Long-term Year Acquired No. of Occupancy Square Investment Depreciation Mortgage or Completed Bldgs. (1) Footage (2) (1) (1) Debt ------------- ------ ---------- ----------- ------------ ------------ ------------ 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 ----- ------ ---------- ------------ --------- ------------
6 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE OF PROPERTIES (Continued)
Percentage Rentable SCI Accumulated Long-term Year Acquired No. of Occupancy Square Investment Depreciation Mortgage or Completed Bldgs. (1) Footage (2) (1) (1) Debt ------------- ------ ---------- ----------- -------------- ------------ ------------ 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 ----- ------ ---------- -------------- ------------ ------------
7 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE OF PROPERTIES (Continued)
Percentage Rentable SCI Accumulated Long-term Year Acquired No. of Occupancy Square Investment Depreciation Mortgage or Completed Bldgs. (1) Footage (2) (1) (1) Debt ------------- ------ ---------- ----------- -------------- ------------ ------------ 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 ===== ====== ========== ============== ============ ============
8
Long- Year of Rentable Budgeted Accumulated term Expected No. of Square Development Depreciation Mortgage Completion Bldgs. Footage (2) Cost (12) (1) Debt ---------- ------ ----------- ----------- ------------ -------- 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
9
Rentable Long- Year of Square Budgeted Accumulated term Expected No. of Footage Development Depreciation Mortgage Completion Bldgs. (2) Cost (12) (1) Debt ---------- ------ -------- ----------- ------------ -------- 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 === ========= ============ ========
10
Budgeted SCI Accumulated Long-term Year Acreage Development Investment Depreciation Mortgage Acquired (2) Cost (1) (1) Debt -------- ------- ----------- -------------- ------------ ------------ 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
11
Budgeted Accumulated Long-term Year Acreage Development SCI Investment Depreciation Mortgage Acquired (2) Cost (1) (1) Debt -------- ------- ----------- -------------- ------------ ------------ 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 ======= ============== ============
12
Budgeted SCI Accumulated Long-term Acreage Development Investment Depreciation Mortgage (2) Cost (1) (1) Debt ------- ------------ -------------- ------------ ------------ 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 ============ ============== ============ ============
13
Percentage Rentable SCI Long-term Year No. of Occupancy Square Footage Investment Mortgage Acquired Bldgs (1) (2) (1) Debt -------- ------ ---------- -------------- ---------- --------- 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 === ====== ======= ========== ====
Year of Rentable Budgeted Long-Term Expected No. of Square Footage Development Mortgage Completion Bldgs. (2) Cost (12) Debt ---------- ------ -------------- ----------- --------- 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 === ========= =========== ====
14 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 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.
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) ---------- ---------- ---------- ---------- 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
16
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) ---------- ---------- ---------- ---------- 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% ===== ====== === ======
- -------- (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 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 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 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 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 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:
Item Financial Date Reported Statements ----------------- -------- ---------- November 13, 1997 5, 7 Yes
(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 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE III
Page ---- 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
23 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 SECURITY CAPITAL INDUSTRIAL TRUST CONSOLIDATED BALANCE SHEETS
December 31, ---------------------- 1997 1996 ---------- ---------- (In thousands, except share data) ASSETS ------ 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 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ 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 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. 25 SECURITY CAPITAL INDUSTRIAL TRUST CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended December 31, 1997, 1996 and 1995
1997 1996 1995 -------- -------- -------- (In thousands, except per share data) 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 ======== ======== ========
The accompanying notes are an integral part of these consolidated financial statements. 26 SECURITY CAPITAL INDUSTRIAL TRUST CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Years Ended December 31, 1997, 1996 and 1995
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) 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 ======= ======== ======== ======== ======== ========== ==== ========= ======== ==========
The accompanying notes are an integral part of these consolidated financial statements. 27 SECURITY CAPITAL INDUSTRIAL TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 1997, 1996 and 1995
1997 1996 1995 --------- --------- --------- (In thousands) 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
The accompanying notes are an integral part of these consolidated financial statements. 28 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: Tenant improvements................. 10 years Acquired buildings.................. 30 years Developed buildings................. 40 years
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 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 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 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:
Percentage of Total Cost -------------- December 31, -------------- 1997 1996 ------ ------ 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
32 SECURITY CAPITAL INDUSTRIAL TRUST NOTES TO FINANCIAL STATEMENTS--(Continued)
Percentage of Total Cost -------------- December 31, -------------- 1997 1996 ------ ------ 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% ====== ======
The following summarizes real estate investments as of December 31 (in thousands):
1997 1996 ---------- ---------- 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 ========== ==========
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 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): 1998........................................................ $ 286,305 1999........................................................ 242,379 2000........................................................ 189,299 2001........................................................ 140,487 2002........................................................ 93,776 Thereafter.................................................. 200,875 ----------- $ 1,153,121 ===========
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): 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 =======
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 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):
Balloon Periodic Payment Interest Maturity Payment Principal Due At Description Market Rate Date Date Balance Maturity ----------- ----------- -------- -------- -------- --------- -------- 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 =======
- -------- (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 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):
1997 1996 -------- -------- 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
Long-Term Debt
December 31, ----------------- 1997 1996 -------- -------- (in thousands) 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
36 SECURITY CAPITAL INDUSTRIAL TRUST NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, ----------------- 1997 1996 -------- -------- (in thousands) 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 ======== ========
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 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): 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 ========
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 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 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 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 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: 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 ======
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: Risk-free interest rate..................................... 6.35% Forecasted dividend yield................................... 7.36% Volatility.................................................. 19.20% Weighted average option life................................ 6.75 years
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 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.
Number of Number Weighted Average Options Of Options Exercise Price Exercisable ---------- ---------------- ----------- 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 ========= ====== ======
Following is a summary of stock options outstanding, exercise prices, expiration dates, and weighted average remaining lives as of December 31, 1997:
Weighted Average Number Exercise Expiration Remaining of Options Price(1) Date Life ---------- ------------- ------------- ---------------- 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 =========
- -------- (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 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 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):
Years Ended December 31, ----------------------- 1997 1996 1995 ------- ------- ------- 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 ======= ======= =======
(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:
1997 1996 1995 ----- ------ ------ 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 ===== ====== ======
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 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:
Date of Issuance to 1997 1996 December 31, 1995 ----- ----- ------------------- Per Series A Preferred Share: Ordinary Income......................... $2.35 $2.35 $1.24 Capital Gains........................... -- -- -- ----- ----- ----- Total................................. $2.35 $2.35 $1.24 ===== ===== =====
Date of Issuance to 1997 December 31, 1996 ----- ------------------- 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 ===== =====
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 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:
Three Months Ended, Year ---------------------------------- Ended 3-31 6-30 9-30 12-31 12-31 ------- ------- -------- ------- -------- 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 ======= ======= ======== ======= ========
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 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:
Security Capital & REIT Property Affiliates Manager (a) Manager (a) Total ---------- ----------- ----------- ---------- 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
48 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):
1997 1996 -------------------- ------------------- Carrying Carrying Amount Fair Value Amount Fair Value -------- ---------- -------- ---------- 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 $ -- $ --
- -------- (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 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):
Interest Interest Rate Rate INTEREST RATE CONTRACTS ----------------- ---------- Futures Contracts Swaps ----------------- ---------- 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 =========== ========== Swedish German FOREIGN CURRENCY CONTRACTS ----------------- ---------- Krona Marks ----------------- ---------- 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 =========== ========== ===
- -------- (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 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 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 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1997 (In Thousands)
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 - ---------- 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) Date of Description Construction/Acquisition ----------- ------------------------ Operating Properties - ---------- 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
53 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued) December 31, 1997 (In Thousands)
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 - ---------- 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) Date of Description Construction/Acquisition ----------- ------------------------ Operating Properties - ---------- 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
54 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued) December 31, 1997 (In Thousands)
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 - ---------- Date of Description Construction/Acquisition ----------- ------------------------ Operating Properties - ---------- 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
55 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued) December 31, 1997 (In Thousands)
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 - ---------- 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) Date of Description Construction/Acquisition ----------- ------------------------ Operating Properties - ---------- 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
56 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued) December 31, 1997 (In Thousands)
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 - ---------- 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) Date of Description Construction/Acquisition ----------- ------------------------ Operating Properties - ---------- 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
57 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued) December 31, 1997 (In Thousands)
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 - ---------- 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) Date of Description Construction/Acquisition ----------- ------------------------ Operating Properties - ---------- 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
58 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued) December 31, 1997 (In Thousands)
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 - ---------- 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) Date of Description Construction/Acquisition ----------- ------------------------ Operating Properties - ---------- 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
59 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued) December 31, 1997 (In Thousands)
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 - ---------- 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) Date of Description Construction/Acquisition ----------- ------------------------ Operating Properties - ---------- 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
60 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued) December 31, 1997 (In Thousands)
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 - ---------- 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) Date of Description Construction/Acquisition ----------- ------------------------ Operating Properties - ---------- 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
61 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued) December 31, 1997 (In Thousands)
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 - ---------- 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) Date of Description Construction/Acquisition ----------- ------------------------ Operating Properties - ---------- 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
62 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued) December 31, 1997 (In Thousands)
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 - ---------- 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) Date of Description Construction/Acquisition ----------- ------------------------ Operating Properties - ---------- 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
63 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued) December 31, 1997 (In Thousands)
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 - ---------- 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) ----- -------- ---------- -------- -------- ---------- ---------- --------- Land Under Development - ----------- 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 -- Date of Description Construction/Acquisition - ----------- ------------------------ Operating Properties - ---------- 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...... Land Under Development - ----------- 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
64 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued) December 31, 1997 (In Thousands)
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 - ----------- 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
65 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued) December 31, 1997 (In Thousands)
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 - ----------- 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
66 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued) December 31, 1997 (In Thousands)
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 - ----------- 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 -- ------- --------- ------- ------- --------- --------- -------- Land Held for Development - ------------- 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
67 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued) December 31, 1997 (In Thousands)
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 - ------------- 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
68 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued) December 31, 1997 (In Thousands)
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 - ------------- 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
69 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued) December 31, 1997 (In Thousands)
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 - ------------- 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
70 SECURITY CAPITAL INDUSTRIAL TRUST SCHEDULE III--REAL ESTATE AND ACCUMULATED DEPRECIATION--(Continued) December 31, 1997 (In Thousands)
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 - ------------- 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) ======== ========== ======== ======== ========== ========== ========= Date of Description Construction/Acquisition ----------- ------------------------ Land Held for Development - ------------- 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.....
71 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): Total per Schedule III..................................... $2,879,022 Construction in process.................................... 114,495 Capitalized preacquisition costs........................... 12,719 ---------- Total real estate........................................ $3,006,236(g) ==========
(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:
December 31, 1997 (in thousands) ----------------- 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 ==========
72 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.
Signature Title Date --------- ----- ---- /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
/s/ Jeffrey A. Klopf February 24, 1999
*By: _____________________ Jeffrey A. Klopf Attorney-in-fact 73 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.
Sequential Numbered Number Description Page ------ ----------- ---------- 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)
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Sequential Numbered Number Description Page ------ ----------- ---------- 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)
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Sequential Numbered Number Description Page ------ ----------- ---------- 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)
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Sequential Numbered Number Description Page ------ ----------- ---------- 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)
77 EX-23.1 2 CONSENT OF ARTHUR ANDERSEN 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 -----END PRIVACY-ENHANCED MESSAGE-----