Significant progress has been made through three major transactions: the reengineering and privatization of Homestead, a company with a $910 million private market capitalization; the $1.6 billion combination of Security Capital and SC-U.S. Realty; and the four-tranche sale of Security Capital's $1.2 billion holdings in Archstone. These transactions have reduced the number of publicly traded companies in Security Capital from seven to four and additional steps will be taken to further simplify the structure. Security Capital has increased financial and operational flexibility to make additional transactions that will monetize or consolidate existing businesses. The plan is to continue to concentrate capital in a few real estate businesses that possess five key characteristics.

OVERVIEW OF THREE PRIVATE OPERATING DIVISIONS

Access Storage Solutions Access Storage Solutions S.A., a wholly owned division of Security Capital European Realty, is the largest developer, owner and operator of self-storage facilities in Europe, as well as the largest self-storage company in Australia. The company is capitalizing on opportunities in countries where self-storage is still in its infancy. Currently, the total number of self-storage facilities in Europe is less than 375, compared to nearly 30,000 in the United States. Access Storage Solutions has a significant presence with over 60 operating properties in the United Kingdom and France. The company's strategy is to concentrate on new development in difficult-to- duplicate, infill locations in major urban centers in these countries. By emulating the most profitable models of self-storage companies in the United States and creating the leading pan-European brand in this industry, Access Storage Solutions is exceptionally positioned to achieve a high return on equity and profit from the growing global demand for self-storage capabilities.

Access Storage Solutions was created by combining five separate companies. A new identity program designed to create a coherent operating company, increase awareness and enhance service revenues is being implemented in 2001 in all facilities.

BelmontCorp  Started in 1997, Belmont's strategy is to become an industry leader as a developer, owner and operator of purpose-built senior assisted living communities in selected underserved markets with high barriers to entry. The company is well positioned to take advantage of strong fundamentals resulting from a surge in the senior population. Demand for assisted living in Belmont's target markets exceeds supply by a factor of ten to one, versus the national average of four to one. Belmont facilities are built from the ground up to meet the needs of the market. Belmont facilities are larger than traditional assisted living facilities, with the number of units per property ranging from 120 to 170. This approach affords greater economies of scale and enables gross margins in excess of 40%, while allowing Belmont to provide its residents with superior services. Belmont has built an exceptional management team that is setting the standard for operating excellence and value, creating the leading brand in the senior assisted living industry. Belmont currently has five operating properties, four properties under construction and six properties in planning. Lease-up is ahead of plan, at rental rates surpassing budget, resulting in a high return on equity.

The Belmont Village facility in Houston, the prototype for all Belmont facilities, is located within one mile of the world-renowned Texas Medical Center. The facility is 98% leased, at rents above plan. Belmont facilities are built in highly visible infill sites, adjacent to commercial corridors in  residential neighborhoods.

InterPark InterPark's strategy is to create America's leading branded parking company in markets that operate 24 hours a day, seven days a week. The company focuses on large facilities in areas of significant urban development where multiple uses such as business, residential, entertainment, hotel and tourism drive around-the-clock demand. The leading national owner of major off-street parking facilities in a highly fragmented industry where demand exceeds supply, InterPark recently expanded into the largest parking market in the world through an ownership position in the third largest parking operator in New York City. Through utilization of the proprietary RevPlus™ system, InterPark is using technology to enhance customer service and increase operating income to create unparalleled operating performance at each of its facilities. The RevPlus™ system combines yield management, cash control, customer service, redevelopment and alternative revenue source generation. This system, along with its highly recognizable brand, will result in a high return on equity and positions InterPark as the premier parking owner and operating company in the United States. InterPark is established in 12 of its 13 target markets with 102,840 parking spaces and over $240 million in system-wide parking revenue.

Traders/Tower Self Park in Chicago's Loop district is strategically located between the Sears Tower and the Board of Trade. This major facility was created by developing an 800-car facility and designing it to align floors with a 1,200-car facility across the alley. Upon acquisition of the second facility, the two garages were connected with vehicular ramps and now operate as one modern, highly automated facility.

Security Capital continued to improve operating performance and increase earnings growth during 2000. Per-share EBDADT (earnings before depreciation, amortization and deferred taxes) rose 35.9% to $2.69 at year-end 2000. For the year 2000, total EBDADT was $305.9 million compared to $237.6 million in 1999. These results do not include the positive impact of special items totaling $131.2 million or $1.04 per share for the year. The Global Capital Management Group (U.S.) increased total assets under management to over $2 billion. 

In 2000, Security Capital repurchased and retired 12.9 million equivalent SCZ shares, or an aggregate of $208.9 million. Since the company initiated share repurchases, through March 1, 2001, $310.3 million of SCZ stock and $80.5 million of convertible debentures have been repurchased. Security Capital's Board has authorized a current share repurchase program of $250 million.

Security Capital continues to maintain a strong balance sheet, with significant financial flexibility. Cash flow from operations (after taxes, interest expense and preferred share dividends) for the four quarters ended December 31, 2000, was $116.5 million, compared to $60.3 million a year ago. Cash flow during 2001 will be strengthened as a result of the SC-U.S. Realty transaction; Security Capital now has direct ownership in these businesses and is the direct beneficiary of their dividend streams. The coverage ratio for the trailing four quarters ended December 31, 2000, was 2.98, compared to 2.16 at December 31, 1999. As of March 1, 2001, total long-term indebtedness was $925.6 million with an average maturity of 12.0 years at an average fixed rate of 7.2%; the company had no balance on its $470 million line of credit.

Security Capital's management team is dedicated to completing the reengineering of the company as expeditiously as possible, in a manner that will maximize value. The company is near the midpoint of transforming into a simplified operating company structure. In the process, the company will continue to build upon its deep management team and the exceptional operating platforms of its businesses to create superior long-term earnings growth. 

The international public real estate industry is still in its infancy, and this creates outstanding opportunities to generate significantly higher returns on equity for shareholders. Security Capital's strategy is squarely aimed at taking advantage of the changes that will take place in the real estate industry in order to create meaningful shareholder value.

On March 19, 2001, Security Capital announced a $200 million "Dutch auction" tender offer to repurchase more of its significantly undervalued stock. As the future unfolds, however, the majority of new capital that is generated for investment will be utilized to fund the business plans of the firm's wholly owned operating divisions.

The Annual Meeting of Shareholders will take place in Santa Fe on Thursday, May 17, 2001 at the Eldorado Hotel, 309 W. San Francisco Street, Santa Fe, New Mexico, at 9:30 a.m. (Mountain Time). Once again, there will be a brief business presentation with the balance of time allowed for a question and answer session.

The hard work and dedication of many, many Security Capital colleagues at all levels throughout the organization helped make 2000 successful. These colleagues and the Board of Directors of Security Capital thank you for your support as Security Capital continues to work to successfully implement its strategy.


William D. Sanders 
Chairman 

C. Ronald Blankenship
Vice Chairman

April 12, 2001