DENVER - April 28, 1998 - Security Capital Industrial Trust (SCI) (NYSE:SCN), a leading global provider of distribution facilities and services, reported a 22.9% increase in funds from operations (FFO) per diluted share for the first quarter of 1998 versus the same period in 1997. First quarter 1998 FFO rose to $54.3 million, or $0.43 per diluted share, compared with $35.7 million, or $0.35 per diluted share, for the same period in 1997.
SCI's record first quarter performance reflects the company's continued emphasis on providing integrated service solutions to meet its customers' increasing global logistics and distribution space requirements. "SCI's distinct competitive advantage is our demonstrated ability to provide tailored solutions to meet our customers' individual global supply chain needs through the SCI International Operating System," said K. Dane Brooksher, co-chairman and chief operating officer. "The expansion of our value-added service offerings-including corporate distribution facilities services, multi-market customer agreements, and distribution logistics services-allowed us to achieve our exceptional results."
Mr. Brooksher noted the strong operating performance of the company's properties during the first quarter, highlighted by rental rate growth of 14.0% for previously leased space. In addition, SCI achieved customer retention of 79.8%, a near-record high, and an increase in stabilized leased percentage to 96.6% across the company's global portfolio. "Because our business is relationship-driven, we stay focused on helping our customers streamline and maximize the efficiency of their local and global distribution operations," said Mr. Brooksher. "At the same time, our customers continuously tell us how we can expand our services to better meet their needs."
Corporate Distribution Facilities Services Accelerate Growth Globally
To date in 1998, SCI has executed 15 customer agreements in 13 global markets, representing 2.5 million square feet of facilities through its corporate distribution facilities services business, in which SCI develops facilities to meet specific customer requirements. This represents an increase of 2.2 million square feet over the 310,000 square feet of agreements executed for such facilities during the first quarter of 1997. More than 64% of the square footage represented by these agreements are with existing customers expanding their operations throughout SCI's global target markets, including a new 170,400 square foot facility in Northern Mexico for the Solar Turbines division of Caterpillar, an existing SCI customer in the United States.
The company currently has 3.2 million square feet of corporate distribution facilities services agreements in active negotiation in 12 of its global target markets. "The rapid expansion of this important business segment in North America and Europe has allowed SCI to grow with our global customers, including agreements executed for Converse and Konica during the first quarter," said Irving F. Lyons III, co-chairman and chief investment officer. "We are confident that this business will continue to be an integral part of SCI's future growth."
International Expansion Drives Overall Company Growth
Through the extension of the SCI International Operating System, the company is establishing a strategic presence in key distribution markets to meet the expansion and reconfiguration needs of its multi-market global customers. SCI currently has a total of 20.0 million square feet of dry and temperature controlled distribution facilities, including completed acquisitions and facilities currently under development, letter of intent or in serious negotiation, in 12 countries outside of the United States. "The comprehensive international operating platform we have established provides an outstanding opportunity to expand customer relationships around the world," said Mr. Brooksher. "Because of this, we expect our international efforts to be a significant and sustainable contributor to SCI's growth."
Including SCI's recently announced agreement to purchase the 405,000 square foot Warsaw Industrial Center in Poland, SCI has more than $300 million of acquisitions in active negotiation in its international target markets. "The expansion of our European operations into Warsaw illustrates SCI's ability to identify and respond to customer-driven capital deployment opportunities," said Mr. Lyons. In addition, the company controls 188 acres of land in its international target markets, representing 3.9 million square feet of potential distribution space.
SCI also reported that its Board of Trustees has declared a regular dividend of $0.3183 per common share, payable on May 26, 1998, to shareholders of record on May 11, 1998, consistent with SCI's previously announced increase in its annual common dividend amount to $1.24 per common share for 1998. On March 31, 1998, SCI paid a quarterly dividend of $0.5875 per cumulative redeemable Series A preferred share, $0.4375 per cumulative convertible Series B preferred share and $1.0675 per cumulative redeemable Series C preferred share, to preferred shareholders of record on March 16, 1998.
Security Capital Industrial is the largest publicly held, U.S.-based global owner and operator of distribution facilities and services, with operations in North America and Europe. SCI's primary objective is to build shareholder value through long-term, sustainable growth in per-share cash flow. SCI expects to achieve this objective by targeting the 1,000 largest users of distribution space through the SCI International Operating System, which provides exceptional corporate distribution facilities and services to meet customer expansion and reconfiguration needs globally. As of March 31, 1998, SCI had 116.7 million square feet of distribution space operating or under development in 37 U.S. markets and 29 targeted international markets.
In addition to historical information, this press release contains forward-looking statements under the federal securities laws. These statements are based on current expectations, estimates and projections about the industry and markets in which Security Capital Industrial Trust operates, management's beliefs and assumptions made by management. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties which are difficult to predict. Actual operating results may be affected by changes in national and local economic conditions, competitive market conditions, weather, obtaining governmental approvals and meeting development schedules, and therefore, may differ materially from what is expressed or forecasted in this press release.
A copy of SCI's first quarter supplemental information is available upon request by calling 800/820-0181.