SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(X)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1996
( )TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from_______to_______
Commission file number 001-12910
SUSA Partnership, L.P.
(Exact name of registrant as specified in its charter)
Tennessee 62-1554135
State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
10440 Little Patuxent Parkway, Suite 1100, 21044
Columbia, MD (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (410) 730-9500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
SUSA Partnership, L.P. New York Stock Exchange
7.12% Notes
Due November 15, 2003
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 (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of this registrant's knowledge,
in a definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. ( )
The aggregate market value of the units held by non-affiliates of the
registrant was approximately $72,106,000 as of March 26, 1997, based on
1,903,797 units held by non-affiliates of the registrant. (For this computation,
the registrant has excluded the market value of all units reported as
beneficially owned by executive officers and directors of the registrant and
certain other stockholders; such an exclusion shall not be deemed to constitute
an admission that any such person is an "affiliate" of the registrant.)
1,903,797
(Number of units of limited partnership interest outstanding as of March 26,
1997)
DOCUMENTS INCORPORATED BY REFERENCE
Part II and Part III incorporate certain information by reference from
the Storage USA, Inc.'s 1996 Annual Report to Shareholders and from the Storage
USA, Inc.'s definitive proxy statement to be filed with respect to the 1997
Annual Meeting of Shareholders.
<PAGE>
This 10-K/A is being filed to amend Exhibit 99 to include a page inadvertently
ommitted from the original filing and to correct certain immaterial errors.
<PAGE>
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) The following documents are filed as a part of this report and are
hereby incorporated by reference:
<TABLE>
<CAPTION>
<S> <C>
1996 Annual Report to Form 10-K
Shareholders (Exhibit 13)
---------------
Page Numbers
(Manually signed original)
------------------------------------------
1. Financial Statements:
Report of Coopers & Lybrand L.L.P. __ ___
Balance sheets as of December 31, 1996 and 1995 __ ___
Statements of operations for the years ended December 31, 1996 and
1995, for the period March 24, 1994 (inception) through December 31,
1994. __ ___
Statements of cash flows for the years ended December 31, 1996 and
1995, for the period March 24, 1994 (inception) through December 31,
1994. __ ___
Statements of Partnership Capital for the years ended December 31,
1996 and 1995, for the period March 24, 1994 (inception) through
December 31, 1994. ___ ___
Notes to financial statements ____ ____
Supplementary information on Quarterly financial data (unaudited) __ ___
Selected Financial Data ____ ____
Schedule III, Real Estate and Accumulated Depreciation as of December ____ ____
31, 1996
Report of Independent Accountants ____ ____
</TABLE>
All other schedules are omitted since the required information is not
present or is not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the financial
statements and notes thereto.
(b) Reports on Form 8-K
On October 24, 1996, the Partnership filed its Current Report on Form
8-K. The filing included the following historical and pro forma financial
statements with respect to the 9 self-storage facilities referred to in the
filing.
Financial Statements Applicable to Real Estate Properties Acquired:
o Report of Independent Accountants
o Acquisition Facilities Historical Summaries of Combined Gross
Revenue and Direct Operating Expenses for the year ended
December 31, 1995 (Audited), and for the six months ended June
30, 1996 (Unaudited).
o Notes to Historical Summaries of Combined Gross Revenue and
Direct Operating Expenses
Pro Forma Financial Information:
o Unaudited Pro-Forma Combined Condensed Balance Sheet as of
June 30, 1996.
o Unaudited Pro-Forma Combined Condensed Statement of Operation
for the six months ended June 30, 1996.
o Unaudited Pro-Forma Combined Condensed Statement of Operations
for the year ended December 31, 1995.
o Notes to Unaudited Pro-Forma Combined Condensed Financial
Statements.
On October 31, 1996, the Company filed an amendment to its Current
Report on Form 8-K, filed October 24, 1996. The amendment corrected certain
immaterial financial information in the initial filing.
On December 19, 1996, the Company filed its Current Report on Form 8-K.
The filing included the following historical and pro forma financial statements
with respect to the 26 self-storage facilities referred to in the filing.
Financial Statements Applicable to Real Estate Properties Acquired:
o Report of Independent Accountants
o Acquisition Facilities Historical Summaries of Combined Gross
Revenue and Direct Operating Expenses for the year ended
December 31, 1995 (Audited), and for the nine months ended
September 30, 1996 (Unaudited).
o Notes to Historical Summaries of Combined Gross Revenue and
Direct Operating Expenses
Pro Forma Financial Information:
o Unaudited Pro-Forma Combined Condensed Balance Sheet as of
September 30, 1996.
o Unaudited Pro-Forma Combined Condensed Statement of Operation
for the nine months ended September 30, 1996.
o Unaudited Pro-Forma Combined Condensed Statement of Operations
for the year ended December 31, 1995.
o Notes to Unaudited Pro-Forma Combined Condensed Financial
Statements.
(c) Exhibits
The following exhibits are filed as part of this report:
Exhibit No. Description
----------- -----------
3.1++++ Second Amended and Restated Agreement of Limited Partnership of
SUSA Partnership, L.P. (the "Partnership"), dated as September
21, 1994 (the "Partnership Agreement").
3.2 First Amendment to the Partnership Agreement, dated March 19,
1996 (filed as Exhibit 10.3 to the Current Report on Form 8-K of
Storage USA, Inc., (the "Comapany"), filed April 1, 1996, and
incorporated by reference herein).
3.3 Second Amendment to the Partnership Agreement, dated as of June
14, 1996 (filed as Exhibit 10.0 to the Company's Current Report
on Form 8-K/A filed July 17, 1996, and incorporated by reference
herein).
3.4 Third Amendment to Partnership Agreement, dated as of August 14,
1996 (filed as Exhibit 10.1 to the Company's Amendment No. 1 to
a Registration Statement on Form S-3 (File No. 333-04556), and
incorporated by reference herein).
10.1 Amended Charter of Storage USA, Inc. (the "Company"), (filed as
Exhibit 4.2 to the Company's Amendment No. 1 to the Registration
Statement on Form S-3 (File No. 333-04556), and incorporated by
reference herein).
10.2* Restated and Amended Bylaws of the Company.
10.3* Agreement between the Company and certain executive officers
prohibiting conflicting self-storage interest.
10.4* Company's Omnibus Stock Option Plan.
10.5* Deed of Trust Promissory Note made by Severn River Associates
Limited Partnership ("Severn River") in favor of Aid Association
of Lutherans ("AAL").
10.6 First Deed of Trust made by Severn River in favor of AAL.
10.7 SUSA Partnership, L.P. 401(k) Savings Plan.
10.8* Form of Registration Rights Agreement relating to Partnership
unit issuances in 1994.
10.9** Promissory Note dated February 8, 1995, in the amount of
$15,000,000 executed by the Partnership payable to Crestar Bank.
10.10** Promissory Note dated February 8, 1995, in the amount of
$15,000,000 executed by the Partnership payable to Signet
Bank/Virginia.
10.11+ Credit Agreement, dated as of December 21, 1995, by and among
the Partnership, the Company, and The First National Bank of
Chicago.
10.12 Promissory Note, dated December 21, 1995, in the amount of
$25,000,000 executed by the Partnership, payable to The First
National Bank of Chicago.
10.13+ Form of Agreement of General Partners relating to certain
Partnership issuances in 1995 and schedule of beneficiaries.
10.14++ Promissory Note, dated March 23, 1995, in the original principal
amount of $2,400,000 executed by the Partnership.
10.15++ Form of Registration Rights Agreement relating to certain
issuances of Partnership units after 1994 and schedule of
beneficiaries.
10.16++ Form of Stock Purchase Agreement in connection with the 1995
Employee Stock Purchase and Loan Plan, and schedule of
participants.
10.17++ Form of Promissory Note in connection with the 1995 Employee
Stock Purchase and Loan Plan, and schedule of issuers.
10.18 Stock Purchase Agreement, dated as of March 1, 1996, between the
Company and Security Capital Holdings S.A. and Security Capital
U.S. Realty (filed as Exhibit 10.1 to the Company's Current
Report on Form 8-K, filed March 7, 1996, and incorporated by
reference herein).
10.19 Amendment No. 1 to Stock Purchase Agreement, dated July 1, 1996,
between the Company, Security Capital Holdings S.A. and Security
Capital U.S. Realty (filed as Exhibit 10.3 to the Company's
Amendment No. 1 to Registration Statement on Form S-3 (File No.
333-04556), and incorporated by reference herein).
10.20 Strategic Alliance Agreement, dated as of March 1, 1996, between
the Company and Security Capital Holdings S.A. and Security
Capital U.S. Realty (filed as Exhibit 10.1 to the Company's
Current Report on Form 8-K, filed on April 1, 1996, and
incorporated by reference herein).
10.21 Amendment No. 1 to Strategic Alliance Agreement, dated June 14,
1996, between the Company, the Partnership, Storage USA Trust,
Security Capital U.S. Realty and Security Capital Holdings, S.A.
(filed as Exhibit 10.2 to the Company's Amendment No. 1 to the
Registration Statement on Form S-3 (File No. 333-04556), and
incorporated by reference herein).
10.22 Registration Rights Agreement, dated as of March 19, 1996,
between the Company, Security Capital Holdings, S.A. and
Security Capital U.S. Realty (filed as Exhibit 10.2 to the
Company's Current Report on Form 8-K, filed on April 1, 1996,
and incorporated by reference herein).
10.23 Indenture, dated November 1, 1996, between the Partnership and
First National Bank of Chicago, as Trustee (filed as Exhibit
10.1 to the Company's Current Report on Form 8-K, filed on
November 8, 1996, and incorporated by reference herein).
10.24+ First Amendment to the Adoption Agreement for the Company's
401(k) Plan.
21 Subsidiaries of Registrant. (Filed with Annual Report on 10-K
on March 31, 1997, and incorporated by reference herein.)
23.1 Consent of Coopers & Lybrand L.L.P.
27 Financial Data Schedule. (Filed with Annual Report on 10-K
on March 31, 1997, and incorporated by reference herein.)
99 Managements Discussion and Analysis of Financial Condition and
Results of Operations; Selected Financial Data; and Financial
Statements of the Partnership, including footnotes, for the
fiscal year ended December 31, 1996.
- --------------------
* Filed as an Exhibit to the Company's Registration Statement on Form
S-11, File No. 33-74072, as amended, and incorporated by reference
herein.
** Filed as an Exhibit to the Company's Registration Statement on Form
S-11, File No. 33-82764, as amended, and incorporated by reference
herein.
*** Filed as an Exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, and incorporated by reference
herein.
+ Filed as an Exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, and incorporated by reference
herein.
++ Filed as an Exhibit to the Company's Current Report on Form 8-K, as
amended to Form 8-K/A Filed November 17, 1995, and incorporated by
reference herein.
++ Filed as an Exhibit to the Company's Current Report on form 8-K, filed
May 30, 1995, and incorporated by reference herein.
++++ Filed as an Exhibit to the Company's Registration Statement on Form
S-3, File No. 33-91302, and incorporated by reference herein.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amendment to be signed
on its behalf by the undersigned, thereunto duly authorized.
SUSA PARTNERSHIP, L.P.
by STORAGE USA, Inc.,
General Partner
By: /s/ Thomas E. Robinson
----------------------------------
Thomas E. Robinson
President
and Chief Financial Officer
<PAGE>
SUSA PARTNERSHIP, L.P.
Exhibit Index
Exhibit No. Description
----------- -----------
3.1++++ Second Amended and Restated Agreement of Limited Partnership of
SUSA Partnership, L.P. (the "Partnership"), dated as September
21, 1994 (the "Partnership Agreement").
3.2 First Amendment to the Partnership Agreement, dated March 19,
1996 (filed as Exhibit 10.3 to the Current Report on Form 8-K of
Storage USA, Inc., (the "Comapany"), filed April 1, 1996, and
incorporated by reference herein).
3.3 Second Amendment to the Partnership Agreement, dated as of June
14, 1996 (filed as Exhibit 10.0 to the Company's Current Report
on Form 8-K/A filed July 17, 1996, and incorporated by reference
herein).
3.4 Third Amendment to Partnership Agreement, dated as of August 14,
1996 (filed as Exhibit 10.1 to the Company's Amendment No. 1 to
a Registration Statement on Form S-3 (File No. 333-04556), and
incorporated by reference herein).
10.1 Amended Charter of Storage USA, Inc. (the "Company"), (filed as
Exhibit 4.2 to the Company's Amendment No. 1 to the Registration
Statement on Form S-3 (File No. 333-04556), and incorporated by
reference herein).
10.2* Restated and Amended Bylaws of the Company.
10.3* Agreement between the Company and certain executive officers
prohibiting conflicting self-storage interest.
10.4* Company's Omnibus Stock Option Plan.
10.5* Deed of Trust Promissory Note made by Severn River Associates
Limited Partnership ("Severn River") in favor of Aid Association
of Lutherans ("AAL").
10.6 First Deed of Trust made by Severn River in favor of AAL.
10.7 SUSA Partnership, L.P. 401(k) Savings Plan.
10.8* Form of Registration Rights Agreement relating to Partnership
unit issuances in 1994.
10.9** Promissory Note dated February 8, 1995, in the amount of
$15,000,000 executed by the Partnership payable to Crestar Bank.
10.10** Promissory Note dated February 8, 1995, in the amount of
$15,000,000 executed by the Partnership payable to Signet
Bank/Virginia.
10.11+ Credit Agreement, dated as of December 21, 1995, by and among
the Partnership, the Company, and The First National Bank of
Chicago.
10.12 Promissory Note, dated December 21, 1995, in the amount of
$25,000,000 executed by the Partnership, payable to The First
National Bank of Chicago.
10.13+ Form of Agreement of General Partners relating to certain
Partnership issuances in 1995 and schedule of beneficiaries.
10.14++ Promissory Note, dated March 23, 1995, in the original principal
amount of $2,400,000 executed by the Partnership.
10.15++ Form of Registration Rights Agreement relating to certain
issuances of Partnership units after 1994 and schedule of
beneficiaries.
10.16++ Form of Stock Purchase Agreement in connection with the 1995
Employee Stock Purchase and Loan Plan, and schedule of
participants.
10.17++ Form of Promissory Note in connection with the 1995 Employee
Stock Purchase and Loan Plan, and schedule of issuers.
10.18 Stock Purchase Agreement, dated as of March 1, 1996, between the
Company and Security Capital Holdings S.A. and Security Capital
U.S. Realty (filed as Exhibit 10.1 to the Company's Current
Report on Form 8-K, filed March 7, 1996, and incorporated by
reference herein).
10.19 Amendment No. 1 to Stock Purchase Agreement, dated July 1, 1996,
between the Company, Security Capital Holdings S.A. and Security
Capital U.S. Realty (filed as Exhibit 10.3 to the Company's
Amendment No. 1 to Registration Statement on Form S-3 (File No.
333-04556), and incorporated by reference herein).
10.20 Strategic Alliance Agreement, dated as of March 1, 1996, between
the Company and Security Capital Holdings S.A. and Security
Capital U.S. Realty (filed as Exhibit 10.1 to the Company's
Current Report on Form 8-K, filed on April 1, 1996, and
incorporated by reference herein).
10.21 Amendment No. 1 to Strategic Alliance Agreement, dated June 14,
1996, between the Company, the Partnership, Storage USA Trust,
Security Capital U.S. Realty and Security Capital Holdings, S.A.
(filed as Exhibit 10.2 to the Company's Amendment No. 1 to the
Registration Statement on Form S-3 (File No. 333-04556), and
incorporated by reference herein).
10.22 Registration Rights Agreement, dated as of March 19, 1996,
between the Company, Security Capital Holdings, S.A. and
Security Capital U.S. Realty (filed as Exhibit 10.2 to the
Company's Current Report on Form 8-K, filed on April 1, 1996,
and incorporated by reference herein).
10.23 Indenture, dated November 1, 1996, between the Partnership and
First National Bank of Chicago, as Trustee (filed as Exhibit
10.1 to the Company's Current Report on Form 8-K, filed on
November 8, 1996, and incorporated by reference herein).
10.24+ First Amendment to the Adoption Agreement for the Company's
401(k) Plan.
21 Subsidiaries of Registrant. (Filed with Annual Report on 10-K
on March 31, 1997, and incorporated by reference herein.)
23.1 Consent of Coopers & Lybrand L.L.P.
27 Financial Data Schedule. (Filed with Annual Report on 10-K
on March 31, 1997, and incorporated by reference herein.)
99 Managements Discussion and Analysis of Financial Condition and
Results of Operations; Selected Financial Data; and Financial
Statements of the Partnership, including footnotes, for the
fiscal year ended December 31, 1996.
- --------------------
* Filed as an Exhibit to the Company's Registration Statement on Form
S-11, File No. 33-74072, as amended, and incorporated by reference
herein.
** Filed as an Exhibit to the Company's Registration Statement on Form
S-11, File No. 33-82764, as amended, and incorporated by reference
herein.
*** Filed as an Exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, and incorporated by reference
herein.
+ Filed as an Exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, and incorporated by reference
herein.
++ Filed as an Exhibit to the Company's Current Report on Form 8-K, as
amended to Form 8-K/A Filed November 17, 1995, and incorporated by
reference herein.
++ Filed as an Exhibit to the Company's Current Report on form 8-K, filed
May 30, 1995, and incorporated by reference herein.
++++ Filed as an Exhibit to the Company's Registration Statement on Form
S-3, File No. 33-91302, and incorporated by reference herein.
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference into the Registration Statements on
Forms S-3, (Commission File Nos. 333-21991 and 333-3344) of SUSA Partnership,
L.P. (the "Operating Partnership"), of: (1) our report dated January 29, 1997,
except for Note 13, as to which the date is March 17, 1997, on our audits of the
consolidated financial statements of the Operating Partnership as of December
31, 1996 and 1995 and for the each of the two years in the period ended December
31, 1996 and for the period from March 24, 1994 (inception) through December 31,
1994, and the combined results of Storage USA, Inc, (the Predecessor") for the
period from January 1, 1994 through March 23, 1994, which report is included in
the Operating Partnership's 1996 Form 10-K/A; and (2) our report dated January
29, 1997, on the financial statement schedule of the Operating Partnership as of
December 31, 1996, which report is included in the Operating Partnership's 1996
Form 10-K/A.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
March 31, 1997
Exhibit 99
SUSA Partnership, L.P.
SELECTED FINANCIAL DATA
FINANCIAL HIGHLIGHTS
Amounts in thousands, except share and per share data
<TABLE>
<CAPTION>
<S> <C>
Predecessor March 1994
and Partnership (inception)
Combined through PREDECESSOR
------------- December 31, -------------------------
Year ended 1996 1995 1994(2) 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
Property revenues $ 107,309 $ 68,007 $ 28,432 $ 25,834 $ 11,189 $ 8,900
Property expenses 53,672 34,525 14,307 12,793 5,957 5,712
--------------------------------------------------------------------------------------------
Income from property operations $ 53,637 $ 33,482 $ 14,125 $ 13,041 $ 5,232 $ 3,188
--------------------------------------------------------------------------------------------
Other income and expense, net (7,557) (2,838) (1,941) (746) (4,432) (6,341)
Income (loss) before minority interest
and extraordinary item 46,080 30,644 12,184 12,295 800 (3,153)
Gain on Investment 288 - - - - -
Minority Interest (157) (224) (212) (158) (351) 109
Extraordinary item: Gain from early
extinguishment of debt - - - - - 12,279
--------------------------------------------------------------------------------------------
Net income $ 46,211 $ 30,420 $ 11,972 $ 12,137 $ 449 $ 9,235
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Net income per unit $ 2.09 $ 1.87 $ - $ 1.28 $ - $ -
--------------------------------------------------------------------------------------------
Distributions per unit $ 2.25 $ 2.04 $ - $ 1.41 $ - $ -
Funds from operations (FFO) (1) 58,229 38,053 - 14,757 - -
Cash flows from:
Operating activities 59,758 37,775 17,491 17,828 1,389 (3,236)
Investing activities (276,880) (217,168) (264,898) (264,888) (3,750) (2,270)
Financing activities 215,669 178,917 250,525 250,338 2,448 5,529
Year ended December 31:
Total Assets 845,307 509,525 - 279,432 55,253 51,620
Total Debt 198,454 114,275 - 8,373 65,753 53,237
Partners' capital 631,980 385,136 - 263,890 (12,662) (3,561)
Units outstanding 26,626,824 18,587,786 - 13,705,707 - -
</TABLE>
(1) The Partnership presented its 1996 FFO under the amended method as defined
by the National Association of Real Estate Investment Trusts, and restated prior
years' FFO. As such, the Partnership's FFO may not be comparable to similarly
titled measures of other REITs who may not have restated prior years FFO under
the amended method. The amended definition of FFO is defined as net income,
computed in accordance with generally accepted accounting principles, excluding
gains (losses) from debt restructuring and sales of property, plus depreciation
and amortization, and after adjustments for unconsolidated partnerships and
joint ventures.
(2) The combined results for 1994 are presented unaudited as they represent the
sum of the amounts derived by combining the audited results of the Predecessor
for the period January 1, 1994 to March 24, 1994, and the audited results of the
Partnership for the period March 24, 1994 through December 31, 1994.
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations SUSA Partnership, L.P.
All statements contained herein that are not historical facts, including but not
limited to, statements regarding anticipated future development and acquisition
activity, the impact of anticipated rental rate increases on the Operating
Partnership's revenue growth, the Operating Partnership's 1997 budgeted revenues
and expenses, and future capital requirements are based on current expectations.
These statements are forward looking in nature and involve a number of risks and
uncertainties. Actual results may differ materially. Among the factors that
could cause actual results to differ materially are the following: changes in
the economic conditions in the markets in which the Operating Partnership
operates negatively impacting the financial resources of the Operating
Partnership's clients; certain of the Operating Partnership's competitors with
substantially greater financial resources than the Operating Partnership
reducing the number of suitable acquisition opportunities offered to the
Operating Partnership and increasing the price necessary to consummate the
acquisition of particular facilities; increased development of new facilities
and competition in the Operating Partnership's markets resulting in over-supply
thereby lowing rental and occupancy rates; the availability of sufficient
capital to finance the Operating Partnership's business plan on terms
satisfactory to the Operating Partnership; increased costs related to compliance
with laws, including environmental laws; general business and economic
conditions; and the other risk factors described in the Operating Partnership's
reports filed from time to time with the Securities and Exchange Commission. The
Operating Partnership cautions readers not to place undue reliance on any such
forward looking statements, which statements are made pursuant to the Private
Securities Litigation Reform Act of 1995 and, as such, speak only as of the date
made.
The following discussion and analysis of the consolidated financial condition
and results of operations should be read in conjunction with the Consolidated
Financial Statements and Notes thereto. Storage USA, Inc. (the "Company") is the
sole general partner in the Operating Partnership and is a self-administered,
self-managed real estate investment trust ("REIT"). As discussed in Note 1 to
the Consolidated Financial Statements, SUSA Partnership, L.P.'s (the "Operating
Partnership") 1994 results of operations are presented from March 24, 1994, the
date the Operating Partnership commenced operation. As discussed in Note 11 to
the Consolidated Financial Statements, the accompanying combined financial
statements for the periods prior to March 24, 1994, present only the "carved
out" accounts of Storage USA, Inc. (the "Predecessor") comprised of the combined
assets, liabilities, and operations of the Predecessor preceding the IPO,
including 11 owned facilities and 6 controlled facilities and Storage USA
Management Corp. The Predecessor completed its initial public offering (the
"IPO") on March 23, 1994, forming the Company and the Operating Partnership.
References to the "Operating Partnership" include SUSA Management, Inc., a
wholly owned subsidiary.
Due to the substantial number of facilities acquired from the IPO to December
31, 1996, management believes that it is meaningful and relevant in
understanding the present and ongoing operations of the Operating Partnership to
compare information using occupancy and per square foot and pro forma
information.
The following are definitions of terms used throughout this discussion analyzing
the Operating Partnership's business. Physical Occupancy is defined as the total
net rentable square feet rented as of the date computed divided by the total net
rentable square feet available. Gross Potential Income is defined as the sum of
all units available to rent at a facility multiplied by the market rental rate
applicable to those units as of the date computed. Expected Income is defined as
the sum of the monthly rent being charged for the rented units at a facility as
of the date computed. Economic Occupancy is defined as the Expected Income
divided by the Gross Potential Income. Rent Per Square Foot is defined as the
annualized result of dividing Gross Potential Income on the date computed by
total net rentable square feet available. Direct Property Operating Cost is
defined as the costs incurred in the operation of a facility, such as utilities,
real estate taxes, and on-site personnel. Indirect Property Operations Cost is
defined as costs incurred in the management of all facilities, such as
accounting personnel and management level operations personnel. Net Operating
Income ("NOI") is defined as total property revenues less Direct Property
Operating Costs.
Outlook:
Internal Growth Strategy:
The Operating Partnership's internal growth strategy is to pursue an active
leasing policy, which includes aggressively marketing available space and
renewing existing leases at higher rents per square foot. The following table
details the same-store Physical Occupancy and Rent Per Square Foot at the end of
each quarter of 1996 and 1995:
<TABLE>
<CAPTION>
<S> <C>
- ------------------- ----------------- --------------------- ------------------- ------------------ -------------- ---------------
Quarter ended: Number of Physical Occupancy Physical Rent Per Square Rent Per % increase in
same-store 1996 Occupancy 1995 Foot 1996 Square Foot Rent Per
facilities 1995 Square Foot
- ------------------- ----------------- --------------------- ------------------- ------------------ -------------- ---------------
March 31 98 88% 87% $9.61 $8.93 7.6%
- ------------------- ----------------- --------------------- ------------------- ------------------ -------------- ---------------
June 30 132 90% 90% $9.59 $8.91 7.6%
- ------------------- ----------------- --------------------- ------------------- ------------------ -------------- ---------------
September 30 146 89% 90% $9.60 $8.98 6.9%
- ------------------- ----------------- --------------------- ------------------- ------------------ -------------- ---------------
December 31 153 87% 88% $9.61 $8.94 7.5%
- ------------------- ----------------- --------------------- ------------------- ------------------ -------------- ---------------
</TABLE>
The Operating Partnership was able to aggressively increase its Rent Per Square
Foot on facilities it has owned for at least one year, while maintaining its
Physical Occupancy. This can be attributed, in part, to Partnership-wide sales
and marketing programs that are customized for each location by facility
managers who have substantial authority and effective incentives. The Operating
Partnership's policy is to raise rents, both rates to existing customers and its
"street" rates for new customers, at all of its facilities at least once a year
regardless of the occupancy level. This increase typically takes place in the
Spring, the beginning of the Operating Partnership's highest rental season. The
Operating Partnership increases its street rates throughout the year, based on
facts and circumstances at individual facilities. The 1% decline in Physical
Occupancy at the end of both the third and fourth quarters represents less than
one thousand self-storage units and can be attributed, in part, to the Operating
Partnership increasing rates during 1996 at facilities acquired during the last
six months of 1995. Historically, as the Operating Partnership implements its
rate policies at acquisition facilities, existing tenants paying lower rental
rates may vacate, to be replaced by tenants leasing under the Operating
Partnership's higher rate structure.
The greater than 7% increases in same-store Rent Per Square Foot translated into
1996 total same-store revenue growth of 7.7%, or $3.8 million over 1995
same-store total revenues of $49.2 million. Revenues include late fees,
administration fees, lock and packaging income, and other miscellaneous income
that account for the fact that total same-store revenue growth was greater than
same-store Rent Per Square Foot growth.
The Operating Partnership anticipates same-store revenue growth will slow in
1997, as facilities the Operating Partnership has owned for two or more years
will comprise a larger percentage of the same-store pool of facilities during
1997. Revenue growth for a facility generally is greatest in the first year
following acquisition as the Operating Partnership implements its higher base
rate structure.The Operating Partnership anticipates generating same-store
revenue growth of approximately 5.5% in 1997 subject to the risks discussed
above.
External Growth Strategy:
The Operating Partnership continued executing its strategy of acquiring suitably
located, under performing facilities that offer upside potential due to low
occupancy rates or non premium pricing, and by developing and constructing new
self-storage facilities in favorable markets. During the year the Operating
Partnership invested $304 million in acquiring 82 facilities containing 5.4
million square feet. The Operating Partnership remains committed to its policy
of acquiring facilities at projected annual capitalization rates ("Cap Rates")
of not less than 10% and generally is acquiring properties at Cap Rates of
between 10.0-10.5%. The acquisition facilities continued to realize their upside
potential. The 96 facilities the Operating Partnership owned at December 31,
1994 generated returns of 12.3% in 1995, 13.1% in 1996(calculated by dividing
NOI by the total acquisition costs of the facilities), and the Operating
Partnership is budgeting a return of approximately 14.1% on the facilities in
1997. In 1997, the Operating Partnership has budgeted to invest its acquisition
capital at the same levels as in the prior three years, seeking to acquire
between 65 and 75 facilities. The Operating Partnership's acquisitions entail
risks that investments will fail to perform as expected and that judgements with
respect to acquisition prices and costs of improvements will be inaccurate, as
well as general real estate investment risks.
In addition to its acquisitions during the year, the Operating Partnership
opened two newly developed facilities in northern Virginia totaling 123 thousand
square feet for a cost of $9 million. The Operating Partnership also completed
expansions to five existing facilities, adding 129 thousand square feet. The
Operating Partnership's minimum internal rate of return on investment on
development opportunities is 12.5%. The 1997 budgeted un-leveraged return on the
two facilities opened during 1996 is 8.8%. In addition to risks associated with
owning and operating established facilities, development involves additional
risks relating to delays in construction and lease-up and less favorable than
anticipated lease terms, all of which could reduce the Company's return.
The Operating Partnership believes that its external growth strategy is enhanced
by favorable supply and demand conditions. According to industry data, there
were less than four hundred construction starts in 1996. Barriers to entry,
including availability of development capital and the absence in many markets of
appropriate zoning for self-storage, contribute to the favorable supply and
demand balance in the business. Based on Operating Partnership surveys, 52% of
its customers are first time users. The Operating Partnership believes that this
low market penetration, along with improving product quality and development of
a more educated consumer, will continue to validate its external growth
strategy. At December 31, 1996, the Operating Partnership had $17.9 million of
development in progress and the Operating Partnership had plans to develop 21
new facilities containing 1.7 million square feet. Expansions are planned for 23
existing facilities. Of these, 12 new construction projects and 18 expansions
are underway with total estimated costs of $66.8 million. These 30 projects have
expected completion dates ranging from the second quarter of 1997 through the
first quarter of 1998.
Capital Strategy:
The Operating Partnership expects to finance its external growth strategy
primarily through the issuance of debt securities and contributions from the
Company's issuance of equity securities. On February 19, 1997, the Operating
Partnership and the Company filed a joint shelf registration statement with the
Securities and Exchange Commission relating to $450 million of securities,
including up to $250 million of common stock, preferred stock, depository
shares, and warrants of the Company and up to $200 million of unsecured,
nonconvertable senior debt securities of the Operating Partnership. An
additional $150 million of unsecured, nonconvertable senior debt securities are
issuable under the Operating Partnership's existing shelf registration
statement, permitting the Operating Partnership and the Company to issue up to
$600 million of securities.
The Operating Partnership anticipates using its lines of credit as an interim
source of acquisition funds, repaying the credit lines with longer term debt or
contributions from the Company's equity offerings, when management determines
market conditions are favorable.
Results of Operations:
Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
In 1996, the Operating Partnership reported growth in revenue, income from
property operations, and net income, respectively, of $39.3 million, $20.2
million, and $15.8 million over the prior period. These significant increases
are primarily attributable to the Operating Partnership's implementation of its
internal and external growth strategies.
Facility acquisitions during 1996, by quarter, were as follows (in thousands
except number of facilities):
<TABLE>
<CAPTION>
<S> <C>
Number of Facilities Cost Net Rentable Square Feet
- ------------------------------------- --------------------- --------------------------- ----------------------------
419
Quarter ended March 31, 1996 6 $21,960
- ------------------------------------- --------------------- --------------------------- ----------------------------
91,754 1,666
Quarter ended June 30, 1996 26
- ------------------------------------- --------------------- --------------------------- ----------------------------
85,588 1,599
Quarter ended September 30, 1996 23
- ------------------------------------- --------------------- --------------------------- ----------------------------
104,610 1,717
Quarter ended December 31, 1996 27
- ------------------------------------- --------------------- --------------------------- ----------------------------
303,912 5,401
Total 82
- ------------------------------------- --------------------- --------------------------- ----------------------------
</TABLE>
These acquisitions added 55 thousand units, bringing the total square feet and
units of the 242 facilities owned by the Operating Partnership at December 31,
1996 to 16.37 million and 160 thousand, respectively. At December 31, 1996, the
average occupancy of the 242 facilities was 86% Physical and 79% Economic with
an average Rent Per Square Foot of $9.73. For the 153 comparable facilities
owned by the Operating Partnership since December 31, 1995, average occupancy
was 87% Physical and 80% Economic, compared to 88% Physical and 81% Economic a
year ago. Rent Per Square Foot increased 7.5%, rising to $9.61 from $8.94 a year
ago. Same store revenues were $52.96 million in 1996, a 7.7% increase over the
$49.19 million in 1995. The majority of this increase is attributable to
increases in rental rates as occupancy remains fairly consistent.
Management income in 1996 was $701 thousand, a decline of $371 thousand from the
$1.07 million reported in 1995, as the Operating Partnership purchased 16
self-storage facilities during 1996 that had been managed by the Operating
Partnership during 1995.
Other income grew to $1.52 million in 1996, or $1.04 million, from the $480
thousand reported in 1995. The increase is primarily caused by $365 thousand
increase in the sale of locks and boxes and a $222 thousand increase in truck
rental and billboard/cell tower income.
As a percentage of total revenue, rental and management income declined to 98.6%
of total revenue from 99.3% in 1995. Other income grew to 1.4% of total revenue
from 0.7% in 1995.
Cost of property operations and maintenance was $28.03 million or 26.1% of total
revenue in 1996. In 1995, the expense was $18.74 million, or 27.2% of total
revenues. The decline as a percentage of total revenues is explained by same
store revenue growth out-pacing the expense growth, combined with the revenue
impact of over $100 million of late fourth quarter acquisitions. The Operating
Partnership historically benefits in the first month or two following
acquisitions as the revenues precede the costs of implementing the Operating
Partnership's management and operational strategy. During the first three
quarters of 1996, expenses averaged 26.5% of revenues, a more typical
percentage. Same-store expenses were $11.82 million, representing 6.4% growth
over the $11.12 million of expense in 1995. The expense growth on a same-store
basis was caused by increased repair and maintenance charges and miscellaneous
expenses, including postage, printing, and trash removal.
Tax expense was $8.9 million, or 8.3% of revenues in 1996, compared to $4.9
million, or 7.2% of revenues in 1995. The growth in taxes is caused by increased
assessments on properties acquired during late 1994 and 1995. The Operating
Partnership expects the expense to remain at a consistent level in 1997.
Direct Property Operating Cost was 30.4% of revenues in 1996, a slight increase
from the 29.9% in 1995. This increase is primarily attributable to the increased
property tax expense in 1996.
General and administrative expense ("G&A") was $4.12 million, or 3.8% of
revenues in 1996, as compared to $2.57 million or 3.8% of revenues in 1995. The
growth in the Acquisitions, Administration, and the Development departments
contributed to the majority of the dollar growth in the G&A expense.
The increase in depreciation and amortization expense to $12.6 million from $8.6
million reflects the Operating Partnership's acquisition of $304 and $220
million of facilities in 1996 and 1995, respectively.
Interest expense was $8.2 million in 1996, an increase of $5.2 million over the
$3.0 million reported in 1995. Interest expense in 1996 represents weighted
average borrowings of $92.2 million under the Operating Partnership's lines of
credit at a weighted average interest rate of 6.99% as compared to 1995 weighted
average borrowings and interest rate of $47.2 million and 6.4%, respectively. In
addition, on November 4, 1996, the Operating Partnership issued $100 million of
7.125% notes due November 1, 2003 and during the year assumed $37.3 million of
mortgages on facilities acquired.
Interest income grew to $687 thousand, or 0.6% of total revenue in 1996, an
increase of $521 thousand, or 0.2% of total revenue in 1995. 1996 interest
income represents primarily earnings on overnight deposits and amounts
outstanding under the 1995 Employee Stock Purchase and Loan Plan.
Gain on investment of $288 thousand represents a gain on the disposition of the
Operating Partnership's investment in a Jacksonville, Florida storage facility
that was exchanged for cash and two facilities located in Oklahoma.
Year Ended December 31, 1995 Compared to Period March 24, 1994 (inception)
through December 31, 1994
In 1995, the Operating Partnership reported growth in revenue, income from
property operations, and net income, respectively, of $42.2 million, $27.3
million, and $18.2 million over the prior period. Compared to pro forma results
for 1994, the Operating Partnership's revenues grew $21.0 million, income from
property operations increased $12.2 million and net income rose $5.9 million.
These significant increases are primarily attributable to both the Operating
Partnership's aggressive acquisition strategy and aggressive rental rate
increases.
Facility acquisitions during 1995, by quarter, were as follows (in thousands,
except number of facilities):
<TABLE>
<CAPTION>
<S> <C>
Number of Facilities Cost Net Rentable Square Feet
- ------------------------------------- --------------------- --------------------------- ----------------------------
Quarter ended March 31, 1995 2 $7,080 180
- ------------------------------------- --------------------- --------------------------- ----------------------------
Quarter ended June 30, 1995 34 119,788 2,248
- ------------------------------------- --------------------- --------------------------- ----------------------------
Quarter ended September 30, 1995 14 56,682 1,110
- ------------------------------------- --------------------- --------------------------- ----------------------------
Quarter ended December 31, 1995 13 36,450 890
- ------------------------------------- --------------------- --------------------------- ----------------------------
Total 63 $220,000 4,428
- ------------------------------------- --------------------- --------------------------- ----------------------------
</TABLE>
These acquisitions added 44 thousand units, bringing the total square feet and
units of the 159 facilities owned by the Operating Partnership at December 31,
1995 to 10.72 million and 105 thousand, respectively. For the year, the 96
facilities owned on December 31, 1994, provided 74% of the Operating
Partnership's rental income. These facilities' rental income grew 9.1% over pro
forma 1994 results. Approximately 8% of this growth was provided by rate
increases. At December 31, 1995, the physical and economic occupancy and rent
per square foot on these facilities was 88%, 81%, and $9.24, respectively. The
Operating Partnership's portfolio as a whole had average occupancy at December
31, 1995 of 88% physical and 81% economic, with an average rent per square foot
of $8.93.
Management income increased $365 thousand over the prior Period, and $216
thousand over the 1994 pro forma results. The pro forma variance reflects the
addition of three managed facilities and management during the year of
facilities that were subsequently purchased by the Operating Partnership.
Other Income, which consists primarily of sales of lock and packaging products
and truck rentals, increased 4% over the prior Period. This increase reflects
primarily the growth in the number of facilities owned.
Cost of property operations and maintenance was 27.2% of revenue for 1995 as
compared to 26.5% for the prior Period. This increase reflects the addition of
Indirect Property Operations Cost to support the level of growth experienced in
1995 and planned in 1996.
Taxes were 7.2% of revenue for 1995 as compared to 6.5% for the prior Period and
6.8% for the pro forma results. This growth as a percentage of revenue reflects
the impact of reassessments on the properties purchased during 1994 and 1995.
The majority of the increase is attributable to reassessments on acquisitions
with the remainder attributable to increased tax rates or reassessments on
properties owned for a full year.
Direct Property Operating Cost was 29.9% of rental income, both on the 96
properties owned at December 31, 1994 and the portfolio as a whole. The property
level margins remained consistent from 1994 to 1995.
G&A expense declined as a percentage of total revenue as compared to the prior
Period and was consistent as compared to the 1994 pro forma results. 1995 G&A
expense was $2.6 million, or 3.8% of total revenue as compared to $1.4 million
or 5.3% in the prior Period. G&A was $762 thousand for the quarter ended
December 31, 1995 and the Operating Partnership expects that the gross expense
will grow in 1996 as the Operating Partnership expands its accounting,
management information systems, and human resource departments, in connection
with its ongoing growth strategy.
<PAGE>
The increase in depreciation and amortization to $8.6 million from $2.9 million
in the prior Period and $5.7 million on a pro forma basis reflects the Operating
Partnership's acquisition of $220 million of facilities in 1995. In addition,
the Operating Partnership amortized $903 thousand of the loan fees related to
the Operating Partnership's short- term borrowings in 1995. As of December 31,
1995, the Operating Partnership has unamortized loan fees of approximately $230
thousand.
Interest expense was $3.0 million in 1995, a $1.6 million increase over the
prior Period. 1995 interest expense represents weighted average borrowings of
$47.2 million under the Operating Partnership's lines of credit at a weighted
average interest rate of 6.4%.
Interest income in 1995 was $166 thousand, as compared to $658 thousand in 1994.
1995 interest income represents earnings on overnight deposits and amounts
outstanding under the 1995 Employee Stock Purchase and Loan Plan, while the
prior Period reflected the temporary investment of a portion of the proceeds
from the Company's two common stock offerings during the Period.
Year Ended December 31, 1995 results of the Operating Partnership, as compared
to the combined (historical) year ended December 31, 1994 results of the
Predecessor and the Operating Partnership:
Rental Income increased $39.4 million (146%) primarily as a result of rental
rate increases, and an increase in the number of facilities owned as a result of
the Operating Partnership acquiring 63 facilities during fiscal year 1995.
Management income increased $.18 million (20%) reflecting the addition of three
managed facilities and management during the year of facilities that were
subsequently purchased by the Operating Partnership.
Cost of property operations and maintenance increased $10.8 million (142%) as a
result of an increase in the number of facilities owned during fiscal year 1995.
Cost of property operations and maintenance was 27.2% of revenue for 1995 as
compared to 26.9% for the combined 1994 period.
Real estate taxes increased $3.1 million (166%) as a result of additional
expenses due to acquisitions of 63 facilities during fiscal year 1995 and the
impact of property reassessments. Real estate taxes were 7.2% of revenue for
1995 as compared to 6.5% for the combined 1994 period.
G&A expense increased $.9 million (51%) as a result of additional expenses
incurred to support the Operating Partnership's aggressive growth strategy. G&A
expense was 3.8% of revenue for 1995 as compared to 6.0% for the combined 1994
period. This decline as a percentage of revenue reflects the overall increase in
revenue.
Depreciation and amortization expense increased $5.5 million (175%) due to the
acquisition of $220 million in facilities in 1995, as well as the impact of
recognizing a full year of depreciation on the facilities acquired in the prior
period.
Interest expense increased $.4 million reflecting the changes in the Operating
Partnership's debt structure between the periods.
Liquidity and Capital Resources
Capital Resources
The Operating Partnership funds its capital requirements primarily through the
issuance of debt securities and the contributions from the Company of the
proceeds from the issuance of equity securities. On March 1, 1996, the Company
entered into a series of agreements providing for a strategic alliance with
Security Capital U.S. Realty ("US Realty"). Pursuant to the agreement, subject
to the terms and conditions thereof, US Realty purchased 7,028,754 shares of
common stock at $31.30 per share in three fundings, and contributed the proceeds
to the Operating Partnership. The initial purchase of 1,948,882 shares for $61
million occurred on March 19, 1996. The second funding of 1,916,933 shares for
$60 million took place on July 8, 1996. The final funding of 3,162,939 shares
for $99 million took place on September 30, 1996. As of December 31, 1996, US
Realty owned approximately 34.6% of the outstanding shares of common stock of
the Company. On November 4, 1996, the Operating Partnership issued $100 million
of 7.125% Notes due November 1, 2003. The Notes are unsecured obligations of the
Operating Partnership, and may be redeemed at any time at the option of the
Operating Partnership, subject to certain terms and conditions. To fund short
term capital needs, the Operating Partnership had in place at December 31, 1996,
two lines of credit with total borrowing capacity of $105 million. The lines
bear interest at various spreads over a base rate, depending upon the Operating
Partnership's debt service coverage. Amounts outstanding under the lines of
credit bore interest at a weighted average rate of 6.78% in February 1997.
During 1996 the Operating Partnership had net repayments under its lines of
credit of $54.9 million. At December 31, 1996, the Operating Partnership had
$52.7 million of borrowings outstanding on its lines of credit.
The Operating Partnership also assumed $37.3 million of mortgages on facilities
acquired during 1996. At December 31, 1996, the Operating Partnership had $36.7
million of fixed rate mortgages with a weighted average interest rate of 10.14%
and $9.1 million of variable rate mortgages with a weighted average interest
rate of 9.2%. These mortgages mature at various dates through 2021.
During 1996 the Operating Partnership issued 901,374 units of limited
partnership interest in the Operating Partnership ("Units") valued at $30.7
million in connection with the acquisition of facilities. At December 31, 1996,
the Operating Partnership had 1,903,797 Operating Partnership Units outstanding.
Certain Operating Partnership Units are redeemable for an amount equal to their
fair market value ($3.1 million, based upon a price per Unit of $37.625 at
December 31, 1996) payable by the Operating Partnership either in cash or (at
the Operating Partnership's option, based upon a determination by the Company's
Board of Directors that the Operating Partnership's anticipated cash
requirements and anticipated cash flow make a lump sum payment imprudent) by a
promissory note payable in quarterly installments over two years with interest
at the prime rate. Units held by other Limited Partners are redeemable, at the
option of such Limited Partners, beginning on the first anniversary of their
issuance, for amounts equal to the then fair market value of their Units ($35.5
million, based upon a price per Unit of $37.625 at December 31, 1996) payable by
the Operating Partnership in cash or, at the option of the Operating
Partnership, in shares of the Company's Common Stock at the initial exchange
ratio of one share for each Unit. It is anticipated that a source of funds for
any such cash redemption will be retained cash flow or proceeds from the future
sale of securities of the Operating Partnership or the Company or other
Operating Partnership or Company indebtedness. The Company has agreed to
register under the Securities Act of 1933 any shares of the Company's common
stock issued upon redemption of Units.
The Operating Partnership's investing activities consisted primarily of the
acquisition of 82 self-storage facilities for approximately $304 million, along
with new development and expansion of existing facilities. During 1996, the
Operating Partnership opened two newly constructed facilities in northern
Virginia totaling 123 thousand square feet for a cost of $9.3 million. The
Operating Partnership also completed five expansions to existing facilities
totaling 129 thousand square feet. The Operating Partnership generated cash flow
from operating activities of $ 60.04 million in 1996, an increase of $22.3
million over 1995, primarily as a result of the significant expansion of the
Operating Partnership's portfolio as discussed under "Results of Operations".
On February 19, 1997, the Company and the Operating Partnership filed a shelf
registration statement relating to $450 million of securities, as more fully
discussed under "Outlook- Capital Strategy". In March , 1997, the Company issued
2.5 million shares of its common stock for an aggregate purchase price of $90
million. The Company contributed the proceeds from the offering to the Operating
Partnership in exchange for additional units of partnership interest, which the
Operating Partnership used to repay debt incurred under its revolving lines of
credit to finance the acquisition of self-storage facilities, and for working
capital.
The Company anticipates, subject to prevailing market conditions and other
business economic factors, issuing preferred stock or debt securities through
the Operating Partnership to finance its liquidity requirements for the
remainder of 1997. In anticipation of a debt offering, the Operating Partnership
entered into a forward starting interest rate swap with a notional amount of $75
million, which had the effect of fixing the seven-year U.S. Treasury rate
starting May 1, 1997 at 6.87%. At December 31, 1996, the Operating Partnership
had an unrealized loss on this derivative instrument of $1.1 million.
The proceeds from any debt or equity offering by the Operating Partnership or
the Company would be used to repay borrowings under the Company's lines of
credit and for general purposes. As a general matter, the Operating Partnership
anticipates utilizing its lines of credit as an interim source of funds to
acquire and develop self- storage facilities and repaying the credit lines with
longer- term debt or equity when management determines that market conditions
are favorable. The Operating Partnership believes that the combination of the
Company's common stock issuance, and debt or equity issuances pursuant to the
shelf registration statements, in addition to borrowings under its credit
facilities and issuances of Units, as described above, will provide the
Operating Partnership with necessary liquidity and capital resources to meet the
requirements of its operating strategies in 1997.
The Operating Partnership expects to incur approximately $1.2 million for
scheduled maintenance and repairs during the next twelve months and
approximately $7.2 million to conform facilities acquired during 1996, 1995,
and 1994 to Operating Partnership standards.
The Operating Partnership at December 31, 1996, had Partners Capital of
approximately $632 million, a debt- to- partners' capital ratio of 31.4%, a
debt- to -total assets ratio of 23.5%, and a debt service coverage ration of
7:1. The debt policy of the Company and the Partnership, which is subject to
change at the discretion of the Company's Board of Directors, is to limit total
indebtedness to the lesser of 50% of total assets at cost or that amount that
will sustain a minimum debt service coverage ratio of 3:1.
Funds from Operations ("FFO")
The Operating Partnership believes FFO should be considered in conjunction with
net income and cash flows to facilitate a clear understanding of its operating
results. FFO is defined as net income, computed in accordance with generally
accepted accounting principles ("GAAP"), excluding gains (losses) from debt
restructuring and sales of property, plus depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint ventures. FFO should
not be considered as an alternative to net income as a measure of the Operating
Partnership's financial performance or as an alternative to cash flows from
operating activities as a measure of liquidity. FFO does not represent cash
generated from operating activities in accordance with GAAP and is not
necessarily indicative of cash available to fund cash needs. Effective January
1, 1996, the National Association of Real Estate Investment Trusts amended its
definition of FFO. The Operating Partnership, presented its 1996 FFO under the
amended method and restated prior years FFO. As such, the Operating
Partnership's FFO may not be comparable to similarly titled measures of other
REITs who may have not restated prior years FFO under the amended method. The
pro forma FFO was prepared as if the IPO and the related formation transactions,
including the acquisition of 26 facilities, had occurred on January 1, 1994.
The following table illustrates the components of the Operating Partnership's
FFO for the years ended December 31, 1996 and 1995, and pro forma for the year
ended December 31, 1994:
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------- --------------------- ---------------------- ----------------------
(Amounts in thousands) 1996 Historical 1995 Historical 1994 Pro Forma
- ------------------------------------------------- --------------------- ---------------------- ----------------------
Net Income $46,211 $30,420 $14,531
Depreciation of real property 11,865 6,996 2,984
Amortization of non compete 83 252 167
Amortization of lease guarantees 70 385 186
Consolidated FFO $58,229 $38,053 $17,868
- ------------------------------------------------- --------------------- ---------------------- ----------------------
</TABLE>
The Operating Partnership had weighted average units outstanding of 22,108
and16,294, for the years ended December 31, 1996, and 1995, respectively. The
Operating Partnership distributed $2.25 and $2.04 per unit in 1996 and 1995,
respectively.
The Company, as a qualified REIT, is required to distribute a substantial
portion of its net income as dividends to its shareholders. The Company's payout
ratio was 85.9% and 87.6% for 1996 and 1995, respectively. It is the intent of
the Operating Partnership that cash distributions will be made each fiscal year
to enable the Company to meet it's distribution requirements for qualification
as a REIT. While the Operating Partnership's goal is to generate and retain
sufficient cash flow to meet its operating, capital and debt service needs, its
distribution requirements may require the Operating Partnership to utilize its
bank lines of credit and other sources of liquidity to finance property
acquisitions and development, and major capital improvements.
The Operating Partnership believes that its liquidity and capital resources are
adequate to meet its cash requirements for the next twelve months. Portfolio
expansion and repayment of principal on Operating Partnership indebtedness
represent the Operating Partnership's primary long-term liquidity requirements.
The Operating Partnership does not expect to generate sufficient funds from
operating cash flow to meet such long- term liquidity needs and intends to
finance them primarily through borrowings under its lines of credit, debt or
proceeds contributed from Company equity offerings, or additional borrowings for
such purpose.
Competition
The Operating Partnership monitors the development of self- storage facilities
in its markets. The Operating Partnership has identified four markets in which
potential overbuilding may be occurring. In two of these markets (Dallas and
Albuquerque) the Operating Partnership may be required to reduce by 50% its
normal yearly rental rate increase, and in two markets (Atlanta and Las Vegas),
the Operating Partnership may experience a minimal reduction in Physical
Occupancy during 1997. As a result of the geographic diversity of the Operating
Partnership's portfolio, the Operating Partnership does not expect the potential
for excess supply in these markets to have a significant impact on its financial
condition or results of operations.
Inflation
The Operating Partnership does not believe that inflation has had or will have a
direct effect on its operations. Substantially all of the leases at the
facilities allow for monthly rent increases which provide the Operating
Partnership with the opportunity to achieve increases in rental income as each
lease matures.
Seasonality
The Operating Partnership's revenues typically have been higher in the third and
fourth quarter primarily because the Operating Partnership increases its rental
rates on most of its storage units at the beginning of May, and to a lesser
extent because self-storage facilities tend to experience greater occupancy
during the late spring, summer, and early fall months due to the greater
incidence of moves during those periods. The Operating Partnership believes that
its tenant mix, rental structure, and expense structure provide adequate
protection against undue fluctuations in cash flows and net revenues during
off-peak seasons. Thus, the Operating Partnership does not expect seasonality to
materially affect distributions to shareholders.
Recent Accounting Developments
In February of 1997, Statement of Financial Accounting Standards No. 128,
"Earnings per Share" was issued. The statement establishes standards for
computing and presenting earnings per share and is effective for financial
statements issued for periods ending after December 15, 1997. The Operating
Partnership has yet to assess the impact of this standard on the financial
statements.
Qualification as a REIT
The Company intends to operate so as to qualify as a REIT under the Internal
Revenue Code (the "Code"). Qualification as a REIT involves the application of
highly technical and complex rules for which there are only limited judicial or
administrative interpretations. The complexity of these rules is greater in the
case of a REIT that holds its assets in partnership form. Furthermore, there are
no controlling authorities that deal specifically with many tax issues affecting
a REIT that operates self-storage facilities. The determination of various
factual matters and circumstances not entirely within the Company's control may
affect its ability to qualify as a REIT. In addition, new regulations,
administrative interpretations or court decisions could have a substantial
adverse effect with respect to the qualifications as a REIT or the federal
income tax consequences of such qualification. If the Company were to fail to
qualify as a REIT in any taxable year, the Company would not be allowed a
deduction for distributions to shareholders in computing its taxable income and
would be subject to federal income tax (including any applicable alternative
minimum tax) on its taxable income at regular corporate rates. Unless entitled
to relief under certain Code provisions, the Company also would be disqualified
from treatment as a REIT for the four taxable years following the year during
which qualification was lost. As a result, the cash available for distribution
to shareholders would be reduced for each of the years involved. Although the
Company currently intends to operate in a manner designed to qualify as a REIT
it is possible that future economic, market, legal, tax or other considerations
may cause the Board of Directors, with the consent of a majority of the
shareholders, to revoke the REIT election.
<PAGE>
SUSA Partnership, L.P.
Consolidated Balance Sheets
(Amounts in thousands, except share data)
<TABLE>
<CAPTION>
<S> <C>
as of as of
December 31, 1996 December 31, 1995
-------------------------- ------------------------
Assets
Investments in storage facilities, at cost:
Land $235,139 $139,603
Buildings and equipment 620,503 369,694
-------------------------- ------------------------
855,642 509,297
Accumulated depreciation (26,573) (14,561)
-------------------------- ------------------------
829,069 494,736
Cash & cash equivalents 1,349 2,802
Other assets 14,889 11,987
-------------------------- ------------------------
Total assets $845,307 $509,525
========================== ========================
Liabilities & shareholders' equity
Line of credit borrowings $52,730 $107,605
Mortgage notes payable 45,724 6,670
Notes payable 100,000 -
Accounts payable & accrued expenses 7,641 5,910
Rents received in advance 5,640 3,680
Minority interest 1,592 524
-------------------------- ------------------------
Total liabilities 213,327 124,389
-------------------------- ------------------------
Commitments and contingencies
Partners' Capital:
General partnership units 364,947
24,723,027 and 17,562,363
outstanding 585,419
Limited partnership units, 1,903,797
and 1,025,423 outstanding 56,814 26,916
Notes receivable - employees (10,253) (6,727)
-------------------------- ------------------------
Total partners' capital 631,980 385,136
-------------------------- ------------------------
Total liabilities & partners' equity $845,307 $509,525
========================== ========================
</TABLE>
See notes to consolidated financial statements
<PAGE>
SUSA Partnership, L.P. (the "Operating Partnership")
and
Storage USA, Inc.(the "Predecessor")
Consolidated Statements of Operations
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
<S> <C>
PREDECESSOR
For the period March 24, For the period January
Year ended Year ended 1994(inception) through 1,1994 through
December 31, 1996 December 31, 1995 December 31, 1994 March 23, 1994
--------------- ----------------- ----------------------- ----------------------
Property Revenues:
Rental income $105,091 $66,455 $24,667 $2,358
Management income 701 1,072 707 188
Other income 1,517 480 460 52
--------------- ----------------- ----------------------- ----------------------
Total property revenues 107,309 68,007 25,834 2,598
--------------- ----------------- ----------------------- ----------------------
Property Expenses:
Cost of property operations & maintenance 28,029 18,471 6,851 792
Taxes 8,903 4,900 1,686 153
General & administrative 4,122 2,568 1,374 325
Depreciation & amortization 12,618 8,586 2,882 244
--------------- ----------------- ----------------------- ----------------------
Total property expenses 53,672 34,525 12,793 1,514
--------------- ----------------- ----------------------- ----------------------
Income from property operations 53,637 33,482 13,041 1,084
--------------- ----------------- ----------------------- ----------------------
Other income (expense):
Interest expense (8,244) (3,004) (1,404) (1,195)
Interest income 687 166 658 -------
--------------- ----------------- ----------------------- ----------------------
Income (loss) before minority interest
and gain on investment 46,080 30,644 12,295 (111)
Gain on Investment 288 0
--------------- ----------------- ----------------------- ----------------------
Income (loss) before minority interest 46,368 30,644 12,295 (111)
Minority interest (157) (224) (158) (54)
--------------- ----------------- ----------------------- ----------------------
Net income (loss) $46,211 $30,420 $12,137 ($165)
=============== ================= ======================= ======================
Net income per unit $2.09 $1.87 $1.28
=============== ================= =======================
Weighted average units outstanding 22,108 16,294 9,467
=============== ================= =======================
</TABLE>
See notes to consolidated financial statements
<PAGE>
SUSA Partnership, L.P. (the "Operating Partnership")
and
Storage USA, Inc.(the "Predecessor")
Consolidated Statements of Cash Flows
(Amounts in thousands)
<TABLE>
<CAPTION>
<S> <C>
Year ended Year ended
December 31, 1996 December 31, 1995
------------------ ------------------
Operating Activities:
Net Income $46,211 $30,420
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 12,618 8,586
Minority interest 157 224
Gain on investment (288)
Changes in assets and liabilities:
Other assets (2,631) (4,009)
Other liabilities 3,691 2,554
------------------ ------------------
Net cash provided by operating activities: 59,758 37,775
================== ==================
Investing Activities:
Acquisition and improvements of storage facilities (273,043) (212,326)
Development of storage facilities (3,837) (4,842)
------------------ ------------------
Net cash used in investing activities (276,880) (217,168)
================== ==================
Financing Activities:
Net borrowings (repayments) under line of credit (54,875) 103,605
Mortgage principal payments (298) (79)
Mortgage principal borrowings 2,063 2,376
Increase in payable to affiliates - -
Distributions to general partner (47,934) (33,414)
General partner contributions 220,721 108,169
Proceeds from issuance of notes payable 99,140 -
Distribution to limited partners (2,900) (1,483)
Distribution to minority interests (248) (257)
------------------ ------------------
Net cash provided by financing activities 215,669 178,917
================== ==================
Net increase (decrease) in cash and equivalents (1,453) (476)
Cash and equivalents, beginning of period 2,802 3,278
------------------ ------------------
Cash and equivalents, end of period $1,349 $2,802
================== ==================
Supplemental schedule of non-cash activities:
General partnership units issued in exchange for notes receivable $3,541 $6,727
Mortgages assumed on storage facilities acquired $37,289 -
Land contributed for minority interest $1,162
Exchange of Operating Partnership units for common shares $613
Storage facilities acquired in exchange for Limited
Partnership Units $30,726 $17,978
================== ==================
<CAPTION>
PREDECESSOR
For the period March 24, For the period January
1994(inception) through 1,1994 through
December 31, 1994 March 23, 1994
------------------------ ----------------------
Operating Activities:
Net Income (loss) $12,137 ($165)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,882 244
Minority interest 158 -
Gain on investment
Changes in assets and liabilities:
Other assets (4,385) (809)
Other liabilities 7,036 393
------------------------ ----------------------
Net cash provided by (used in) operating activities: 17,828 (337)
======================== ======================
Investing Activities:
Acquisition and improvements of storage facilities (264,561) -----
Development of storage facilities (327) -----
------------------------ ----------------------
Net cash used in investing activities (264,888) 0
======================== ======================
Financing Activities:
Net borrowings (repayments) under line of credit 4,000 450
Mortgage principal payments (40) (44)
Mortgage principal borrowings 4,413 -
Increase in payable to affiliates - 178
Distributions to general partner (13,070) (397)
General partner contributions 255,483 -
Proceeds from issuance of notes payable - -
Distribution to limited partners (271)
Distribution to minority interests (177) -
------------------------ ----------------------
Net cash provided by financing activities 250,338 187
======================== ======================
Net increase (decrease) in cash and equivalents 3,278 (150)
Cash and equivalents, beginning of period ---- 150
------------------------ ----------------------
Cash and equivalents, end of period $3,278 $0
======================== ======================
Supplemental schedule of non-cash activities:
General partnership units issued in exchange for notes receivable -
Mortgages assumed on storage facilities acquired
Land contributed for minority interest
Exchange of Operating Partnership units for common shares
Storage facilities acquired in exchange for Limited -
Partnership Units $9,611
========================
</TABLE>
See notes to consolidated financial statements
<PAGE>
SUSA PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS
OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>
<S> <C>
General Limited Notes Total
Partnership Partnership Receivable- Partners'
Capital Capital Employees Capital
---------------------------------------------------
(amounts in thousands)
Initial capital contribution at March 24, 1994 $109,969 $109,969
Contribution of self-storage facilities in
exchange for units 9,611 9,611
Capital contribution 145,514 145,514
Net income 11,927 210 12,137
Distributions (13,070) (271) (13,341)
---------------------------------------------------
Balance at December 31, 1994 254,340 9,550 263,890
===================================================
Capital contribution 114,896 114,896
Contribution of self-storage facilities in
exchange for units 17,554 17,554
Issuance of units to employees in
exchange for notes receivable (6,727) (6,727)
Net income 29,125 1,295 30,420
Distributions (33,414) (1,483) (34,897)
---------------------------------------------------
Balance at December 31, 1995 364,947 26,916 (6,727) 385,136
===================================================
Capital contribution 224,880 224,880
Contribution of self-storage facilities in
exchange for units 30,113 30,113
Issuance of units to employees in
exchange for notes receivable (3,526) (3,526)
Net income 43,526 2,685 46,211
Distributions (47,934) (2,900) (50,834)
---------------------------------------------------
Balance at December 31, 1996 585,419 56,814 (10,253) 631,980
===================================================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
SUSA Partnership, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except per unit data)
NOTE 1
ORGANIZATION
SUSA Partnership, L.P. (the "Operating Partnership") which commenced operation
on March 23, 1994, is engaged in owning, developing, constructing and operating
self-storage facilities throughout the United States. Storage USA, Inc. (the
"Predecessor" See Note 13), a Tennessee corporation, was formed in 1985 to own,
develop, construct, and operate self-storage facilities throughout the United
States. On March 23, 1994, the Predecessor completed an initial public offering
(the "IPO") of 6,325,000 shares of common stock at $21.75 per share forming
Storage USA, Inc. (the "Company"), the sole general partner in the Operating
Partnership. The Company is a self-administered and self-managed real estate
investment trust ("REIT).
The results for the period from January 1, 1994 through March 23, 1994 are
presented for the Predecessor and are labeled as such on the financial
statements related to predecessor activity.
On March 23, 1994, the Company contributed substantially all of its net assets
of $109,969 to the Operating Partnership in exchange for an approximately 98.9%
general partnership interest in the Operating Partnership. The Operating
Partnership used the contribution from the Company to acquires 26 self-storage
facilities from unrelated third parties, to acquire the outstanding partnership
interest in five controlled facilities, and for working capital.
In addition, the Operating Partnership formed SUSA Management, Inc. ("SUSA
Management"), to provide self-storage management to third parties and certain
ancillary services. The Operating Partnership owns 99% of the economic interest
of SUSA Management.
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of the Operating
Partnership and SUSA Management. All intercompany balances and transactions have
been eliminated. The financial statements reflect the segregation of the
operating activities for the periods presented related to the Operating
Partnership and the Predecessor, which has been accounted for on a basis
consistent with the Operating Partnership except for the items noted in Note 13.
Use of Estimates in Preparation of Financial Statements
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, liabilities, revenues and expenses and
disclosure of contingent assets and liabilities. Actual results could differ
from those estimates.
Federal Income Taxes
No provision has been made for income taxes in the accompanying consolidated
financial statements since such taxes, if any, are the responsibility of the
individual partners.
<PAGE>
SUSA Partnership, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except per unit data)
Cash and Cash Equivalents
The Operating Partnership considers all highly liquid debt instruments purchased
with maturity of three months or less to be cash equivalents.
Revenue Recognition
Rental income and management income is recorded when due from tenants and
customers. Rental income received prior to the start of the rental period is
included in rents received in advance.
Other Income
Other income consists primarily of sales of storage-related merchandise (locks
and packing supplies) and commissions from truck rentals.
Interest
Interest is capitalized on accumulated expenditures relating to the development
of certain qualifying properties. During 1996, 1995, and 1994, total cash paid
by the Operating Partnership for the interest was $7,636, $3,345, and $1,404
respectively, which includes $965, and $532, which was capitalized in 1996, and
1995, respectively. No interest was capitalized in 1994.
Deferred Financing Costs
Deferred financing costs are amortized over a period not to exceed the term of
the related debt. Amortization of deferred financing costs is classified as
amortization expense and included in the consolidated statement of operations in
the amount of $361, $705, and $115 in 1996, 1995, and 1994, respectively.
Interest Rate Management Agreements
The Operating Partnership enters into interest rate risk management agreements
to manage interest rate risk associated with anticipated debt transactions. The
Operating Partnership follows SFAS No. 80 "Accounting for Futures Contracts"
which permits hedge accounting for anticipatory transactions meeting certain
criteria. Gains and losses, if any, on these transactions are deferred and
amortized over the terms of the related debt as an adjustment to interest
expense. Changes in the fair value of the interest rate risk management
agreements are not recognized in the financial statements. In the event that the
anticipatory transaction is no longer likely to occur, the Operating Partnership
would mark the derivative to market and would recognize any adjustment in the
consolidated statement of operations. The Operating Partnership does not enter
into interest rate risk management agreements for trading or speculative
purposes.
Investment in Storage Facilities
Storage facilities are recorded at cost. Depreciation is computed using the
straight line method over estimated useful lives of 40 years for buildings and
improvements, and three to ten years for furniture, fixtures and equipment.
Expenditures for significant renovations or improvements that extend the useful
life of assets are capitalized. Repairs and maintenance costs are expensed as
incurred. Certain costs, principally payroll, directly related to real estate
acquisitions and development, are capitalized.
<PAGE>
SUSA Partnership, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except per unit data)
If there is an event or a change in circumstances that indicates that the basis
of the Operating Partnership's property may not be recoverable the Operating
Partnership's policy is to assess any impairment of value. Impairment is
evaluated based upon comparing the sum of the expected future cash flows
(undiscounted and without interest charges) to the carrying value of the asset.
If the cash flow is less, an impairment loss is recognized for the amount by
which the carrying amount of the assets exceeds the fair value of the asset.
Minority Interest
The minority interest reflects the ownership interest of the limited partners in
three facilities in which the Operating Partnership is a general partner. The
limited partner's share of the net income of the Operating Partnership is
charged to minority interest expense and increases the Operating Partnership's
liability. Distributions to the limited partners reduces the Operating
Partnership's liability.
Income Per Unit
Net income per unit is calculated using the weighted average number of units
outstanding during the period.
Reclassifications
Certain previously reported amounts have been reclassified to conform with the
current financial statement presentation.
<PAGE>
SUSA Partnership, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except per unit data)
NOTE 3
INVESTMENT IN STORAGE FACILITIES
The following summarizes activity in storage facilities during the period:
Cost
Balance at December 31, 1994 278,993
Property acquisitions 220,541
Land acquisitions 5,733
Improvements 4,030
---------
Balance at December 31, 1995 509,297
Property acquisitions 305,760
Land acquisitions and joint venture development 21,329
Facility expansions 8,986
Developments placed in service 8,679
Improvements 4,711
Property Exchange (3,120)
---------
Balance at December 31, 1996 855,642
Accumulated Depreciation
Balance at December 31, 1994 7,224
Additions during the year 7,337
---------
Balance at December 31, 1995 14,561
Additions during the year 12,012
---------
Balance at December 31, 1996 26,573
The aggregate cost of real estate facilities for federal income tax purposes was
approximately $797,103 and $479,037 at December 31, 1996 and 1995, respectively.
NOTE 4
MORTGAGE NOTES PAYABLE
Mortgage notes payable consist of the following at December 31:
1996 1995
---- ----
Conventional fixed rate $36,666 $6,670
Conventional variable rate 9,058 ---
------ -----
Total 45,724 6,670
------ -----
Conventional fixed-rate mortgage notes included 13 mortgages encumbering 13
properties with a cost basis of $68,572 at December 31, 1996 and three loans
encumbering three properties with a cost basis of $16,032
<PAGE>
SUSA Partnership, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except per unit data)
at December 31, 1995. Mortgage notes are generally due in monthly installments
of principal and interest and mature at various dates through 2021. At December
31, 1996 and 1995, this debt carried fixed rates of interest ranging from 6.8%
to 11.5% (10.14% weighted average) and 8.375% to 10.6% (9.67% weighted average),
respectively.
Conventional variable-rate mortgage notes consist of 4 loans encumbering four
properties with a cost basis of $13,500 at December 31, 1996. Two of the notes
require monthly principal and interest payments and mature in 2019. Two of the
notes require monthly payments of interest only and mature in 2001. At December
31, 1996 conventional variable rate debt had interest rates ranging from 7.81%
to 9.67% with a weighted average interest rate of 9. 2%.
The aggregate principal payments of mortgage notes (fixed and variable rate) for
the five years subsequent to December 31, 1996 are as follows:
1997 $10,802
1998 614
1999 677
2000 746
2001 824
Thereafter $32,061
NOTE 5
NOTES PAYABLE
On November 4, 1996, the Operating Partnership issued $100,000 of 7.125% senior
unsecured notes (the "Notes") due November 1, 2003. Interest on the Notes is
payable on May 1 and November 1 of each year, commencing May 1, 1997. The Notes
are redeemable at any time at the option of the Operating Partnership in whole
or in part, at a redemption price equal to the sum of: (a) the principal amount
of the Notes being redeemed plus accrued interest or (b) a make-whole amount as
more fully defined in the Notes prospectus. The Notes are not subject to any
mandatory sinking fund and are an unsecured obligation of the Operating
Partnership. The Notes contain various covenants restricting the amount of
secured and unsecured indebtedness the Operating Partnership may incur. The $979
offering discount and the approximately $353 of offering costs, net of
accumulated amortization, are included in other assets at December 31, 1996, and
are being amortized into interest expense over the term of the Notes.
NOTE 6
LINE OF CREDIT BORROWINGS
1996 1995
---- ----
Total lines of credit at December 31 $105,000 $123,000
Borrowings outstanding at December 31 $52,730 $107,605
Weighted average daily borrowing during the year $92,225 $47,135
Maximum daily borrowing during the year $150,153 $121,700
Weighted average daily interest rate during the year 6.99% 6.42%
<PAGE>
SUSA Partnership, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except per unit data)
At December 31, 1996, and 1995, the Operating Partnership had a $75,000 line of
credit with a group of commercial banks. This line bears interest at various
spreads over a base rate based on the Operating Partnership's debt service
coverage. The credit agreements mature annually in February, and are renewable
at the option of the Operating Partnership. On January 28, 1997, the Operating
Partnership exercised its option and extended the maturity to February 8, 1998.
At December 31, 1996, the Operating Partnership had a $30,000 line of credit
with a commercial bank. The line bears interest at spreads over LIBOR and is
payable on demand. None of these agreements have compensating balance
requirements.
During 1996 the Operating Partnership entered into a $50,000 bridge loan with
the same group of commercial banks as the $75,000 line of credit. The bridge
loan had a one-year term and bore interest at various LIBOR spreads, which
spreads increased with the passing of each four-month period. The Operating
Partnership borrowed the entire amount available under the bridge loan in June
of 1996, and repaid the amount in full in September 1996, and the facility was
terminated at that time.
At December 31, 1995, the Operating Partnership had a $25,000 term note with an
initial termination date of April 21, 1996. The note was issued by the same
group of commercial banks participating in the $75,000 line of credit, and bore
interest at 1.35% over 30 day LIBOR. The note was paid in full in March 1996,
and the facility was terminated at that time.
At December 31, 1995, the Operating Partnership had $23,000 line with a
commercial bank. The $23,000 line consisted of an $8,000 tranche that matured on
February 15, 1996, and a $15,000 tranche that matured on July 1, 1996. Both
tranches, at the option of the Operating Partnership, bore interest at prime or
LIBOR plus 2.25%, and were collateralized by mortgages on 13 facilities.
Subsequent to December 31, 1995, the commercial bank agreed to release the
mortgages and increase the line to $30,000.
NOTE 7
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The following summary of unaudited pro forma combined financial information of
the Operating Partnership is presented as if: (a) the acquisition during 1996 of
82 properties totaling 5,401 square feet for a cost of approximately $304,000
and (b) the issuance of 7,029 shares of common stock for net proceeds of
approximately $220,528 had occurred on January 1, 1996. The unaudited combined
financial information is not necessarily indicative of what actual results of
operation of the company would have been assuming such transactions had been
completed as of January 1, 1996, nor does it purport to represent the results of
operations for future periods.
Year ended December 31, 1996
----
Pro Forma total revenues $133,039
Pro forma net income $ 54,767
Pro forma earnings per unit $ 2.11
<PAGE>
SUSA Partnership, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except per unit data)
NOTE 8
FINANCIAL INSTRUMENTS
The Operating Partnership's carrying amounts and fair value of its financial
instruments were as follows:
<TABLE>
<CAPTION>
<S> <C>
as of December 31, 1996 1995
Carrying value Fair value Carrying value Fair value
-------------- ---------- -------------- ----------
Cash and cash equivalents $ 1,349 $ 1,349 $ 2,802 $ 2,802
Line of credit borrowings 52,730 52,730 107,605 107,605
Mortgage notes payable 45,724 49,963 6,670 7,003
Notes payable 100,000 99,587 --- ---
Interest rate risk management agreements ---- (1,118) --- (3,547)
</TABLE>
The Operating Partnership, in determining the fair values set forth above, used
the following methods and assumptions:
Mortgage and Notes Payable and Line of Credit Borrowings
The Operating Partnership's line of credit borrowings bear interest at variable
rates and therefore cost approximates fair value. The fair value of the Mortgage
notes payable, and the Notes payable were estimated using discounted cash flow
analysis, based on the Operating Partnership's current incremental borrowing
rate at December 31, 1996 and 1995, for similar types of borrowing arrangements.
Interest Rate Risk Management Agreement
In 1996, the Operating Partnership entered into a $75 million (notional amount)
fixed pay forward starting swap agreement with a major Wall Street investment
banking firm in order to reduce the interest rate risk associated with the
anticipated issuance of fixed rate debt by the Operating Partnership in 1997.
The transaction allowed the Operating Partnership to lock- in a seven year
Treasury rate of 6.87% on or before May 1, 1997. The Operating Partnership
anticipates terminating the swap transaction upon the issuance of the fixed rate
debt. At December 31, 1996, the Operating Partnership had a $(1,118) unrealized
loss on this transaction. Any gain or loss from this transaction will be
deferred and amortized as an adjustment to interest expense over the term of the
fixed rate debt. This transaction exposes the Operating Partnership to credit
loss in the event of non-performance by the counterparty, however such
non-performance is not anticipated as the counterparty is a highly rated, credit
quality entity.
During 1996, the Operating Partnership entered into an interest rate swap
agreement in order to reduce the interest rate risk associated with the issuance
of the $100,000 Notes (see Note 5). The Operating Partnership terminated the
agreement on the date the Notes were issued and recognized a $(2,481) loss. This
loss, net of accumulated amortization, is included in other assets at December
31, 1996 and is being amortized into interest expense over the term of the
Notes.
During 1995, the Operating Partnership had entered into an interest rate swap
agreement with the objective of reducing its exposure to future interest rate
fluctuations. The agreement involved the exchange of a variable rate for a fixed
rate interest payment obligation. The agreement had a notional principal amount
of $100,000, an effective date of March 1, 1996, and a maturity date of March 1,
2003. At December 31, 1995, the fair value of the agreement was ($3,547). On
March 8, 1996, the Operating Partnership closed the interest rate swap agreement
and received proceeds of approximately $50.
<PAGE>
SUSA Partnership, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except per unit data)
The gain from this contract was deferred and is being amortized over the life
of the Notes (see Note 5). The fair value of the interest rate management
agreements as of December 31, 1996 and 1995, represents the estimated amount the
Operating Partnership would have paid to terminate the agreements on those
dates.
NOTE 9
COMMITMENTS AND CONTINGENCIES
Lease Agreements
The Operating Partnership has various lease agreements for office space. Total
future minimum rental payments on the office leases are $451 in year one: $471
in year two through three, and $478 in year four, and $433 in year five.
Guarantees
The Operating Partnership is a limited guarantor on the financing of five
development projects in which the Operating Partnership has either a partnership
interest or an option to purchase the facility at various times after
completion. Under the terms of the guarantee, the Operating Partnership has the
option, upon notice by the financial institution of an event which would require
payment by the Operating Partnership under the guarantee, of (a) purchasing the
note and all related loan documents without recourse or (b) payment of the
guarantee. At December 31, 1996 the Operating Partnership had maximum exposure
under the guarantee arrangements of $18,250.
Redemption of Limited Partnership Units
At December 31, 1996, there were 1,903,797 Limited Partnership Units
outstanding. Certain Limited Partnership Units are redeemable for an amount
equal to their fair market value ($3.1 million, based upon a price per Unit of
$37.625 at December 31, 1996) payable by the Operating Partnership in cash or by
a promissory note payable in quarterly installments over two years with interest
at the prime rate. Units held by other Limited Partners are redeemable, at the
option of such Limited Partners, beginning on the first anniversary of their
issue, for amounts equal to the then fair market value of their Units ($35.5
million, based upon a price per Unit of $37.625 at December 31, 1996) payable by
the Company in cash or, at the option of the Company, in shares of the Company's
common stock at the exchange ration of one share for each Unit.
NOTE 10
PARTNERSHIP CAPITAL
The Company, as a corporate general partner, has Stock Option, Employee Stock
Purchase and Loan, and Dividend Reinvestment and Stock Purchase Plans. Under the
terms of the partnership agreement, all proceeds from the issuance of common
stock under the plans are contributed to the Operating Partnership in exchange
for Operating Partnership Units.
The Company applies APB25 and related interpretations in accounting for its
stock-based compensation plan. In accordance with SFAS123 "Accounting for
Stock-Based Compensation", the Company elected to continue to apply the
provisions of APB25. However, pro forma disclosures as if the Company adopted
the cost recognition provisions of SFAS123 in 1995 are required and are
presented below along with a summary of the Plan and awards.
The shareholders of the Company have approved and the Company has adopted the
Storage USA, Inc. 1993 Omnibus Stock Incentive Plan. The Company has granted
options to certain directors, officers and key employees to purchase shares of
the Company's common stock at a price not less than the fair market
<PAGE>
SUSA Partnership, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except per unit data)
value at the date of grant. There are 1,000,000 shares available to be issued
under the plan. Generally, the optionee has up to ten years from the date of the
grant to exercise the options. Plan activity is as follows:
<TABLE>
<CAPTION>
<S> <C>
Weighted Average
Weighted Average Remaining Life
Number of Options Price per Share Price per Share at December 31, 1996
----------------- --------------- --------------- --------------------
Options outstanding :
March 24, 1994 -- --
Granted 493,402 $21.75-$25.625 $23.69
Exercised -- --
Cancelled -- --
---------
Options outstanding December 31,
1994 493,402 $21.75-$25.625 $23.69 7.46 yrs.
=========
Exercisable at end of year 382,402 $21.75-$25.625 $23.38
=========
Granted 175,834 $21.75-$31.00 $30.91
Exercised (4,500) $21.75-$24.75 $22.75
Cancelled (3,000) $24.75 $24.75
---------
Options outstanding December 31,
1995 661,736 $21.75-$31.00 $25.61 7.73 yrs.
=========
Exercisable at end of year 466,861 $21.75-$31.00 $24.08
=========
Granted 385,614 $31.25-$36.75 $34.45
Exercised (2,600) $24.75 $24.75
Cancelled (44,750) $31.00 $31.00
---------
Options outstanding December 31,
1996 1,000,000 $21.75-$36.75 $28.10 8.21 yrs.
=========
Exercisable at end of year 690,762 $21.75-$33.625 $25.93
=========
</TABLE>
The Company has utilized a Black-Scholes option-pricing model with the following
assumptions in order to estimate the fair value of its stock options:
1996 1995
---- ----
Risk free interest rates 6.8% 7.8%
Estimated dividend yields 6.5% 7.5%
Volatility factors of the expected market
price of the Company's Common Shares 25.8% 15.9%
Expected life of the options 9.2-10 yrs. 8.75-10 yrs.
Weighted average fair value $5.72 $3.13
The following pro-forma disclosures were computed assuming the fair value of the
options is amortized to compensation expense over the vesting period of the
options:
1996 1995
---- ----
Historic net income $43,526 $29,153
Historic net income per share $ 2.09 $ 1.87
Pro forma compensation expense (1) $ 858 $ 112
Pro forma net income (1) $42,668 $29,041
Pro forma net income per share (1) $ 2.05 $ 1.86
(1) Due to the inclusion on only 1996 and 1995 option grants, the effect of
applying SFAS123 in 1996 and 1995 may not be representative of the Pro Forma
impact in future years.
<PAGE>
SUSA Partnership, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except per unit data)
Employee Stock Purchase and Loan Plan
As of December 31, 1996, the Company has issued 333,000 shares of its common
stock under the 1995 Employee Stock Purchase and Loan Plan. Pursuant to the
terms of the plan, the Company and certain officers entered into stock purchase
agreements whereby the officers purchased common stock at the then current
market price. The Company provides 100% financing for the purchase of the shares
with interest at 7% per anum payable quarterly. The underlying notes are secured
by the shares and mature in November 2002. Under the terms of the partnership
agreement, all proceeds from the issuance of common stock under the plan are
contributed to the Operating Partnership in exchange for operating partnership
units.
Dividend Reinvestment and Stock Purchase Plan
In 1995, the Company adopted the Dividend Reinvestment and Stock Purchase Plan
(the "Plan"). Under the Plan, the Company offers holders of its common stock the
opportunity to purchase, through reinvestment of dividends or by additional cash
payments, additional shares of its common stock. The shares of common stock for
participants may be purchased from the Company at the greater of the average
high and low sales price or the average closing sales price on the investment
date or in the open market at 100% of the average price of all shares purchased
for the Plan. During 1996 and 1995, 2,022 and 653 shares, respectively, were
issued under the Plan. Under the terms of the partnership agreement, all
proceeds from the issuance of common stock under the plan are contributed to the
Operating Partnership in exchange for operating partnership units.
General Partner Contributions
On March 1, 1996, the Company entered into a Stock Purchase Agreement with
Security Capital U.S. Realty (US Realty), an affiliate of Security Capital
Group. Under the Stock Purchase Agreement, subject to certain terms and
conditions, US Realty invested a total of $220,000 in purchasing 7,028,754
shares of the Company's common stock, placed two of its nominees on the
Company's Board of Directors, and executed a Strategic Alliance Agreement and a
Registration Rights Agreement with the Company. At December 31, 1996, US Realty
owned approximately 34.6% of the outstanding common shares of the Company. The
proceeds received from US Realty were contributed by the Company to the
Operating Partnership in exchange for operating partnership units and were used
by the Operating Partnership to repay borrowings under the Operating
Partnership's lines of credit, to acquire self-storage facilities, and for
working capital.
NOTE 11
POST EMPLOYMENT BENEFIT PLAN
The Operating Partnership contributes to a 401(k) savings plan (a voluntary
defined contribution plan) for the benefit of employees meeting certain
eligibility requirements and electing participation in the plan. Each year the
Operating Partnership is obligated to make a matching contribution on the
employee's behalf equal to 50% of the participant's contribution to the plan, up
to 2% of the participant's compensation. Operating Partnership profit sharing
contributions to the plan are determined annually by the Operating Partnership.
Operating Partnership contributions totaled $382, $223, and $137 during 1996,
1995 and 1994, respectively.
<PAGE>
SUSA Partnership, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except per unit data)
NOTE 12
Summary of Predecessor Significant Accounting Policies
Basis of Presentation:
The accompanying combined financial statements for the periods prior to March
24, 1994 present only the "carved-out" accounts of the Predecessor comprised of
the continuing assets, liabilities and operations of the Predecessor following
the IPO, including 11 owned facilities and six controlled Facilities (Original
Facilities) and Storage USA Management Corporation (Management Corp.). All other
accounts of the Predecessor were excluded since the business segments to which
they relate were discontinued by the Company before the IPO. Due to common
ownership and management of the Original Facilities and Management Corp., the
historical combined financial statements have been accounted for as a group of
entities under common control, which is similar to the accounting method used
for a pooling of interest. All significant intercompany transactions and
balances have been eliminated in the combined presentation. The financial
information included herein may not necessarily reflect the financial position
and results of operations of the Predecessor had it been a separate stand-alone
entity during the periods prior to March 24, 1994.
Minority Interest:
The Predecessor financial statements include the accounts of six facilities
(Selling Partnerships) which were owned by investment partnerships in which the
Predecessor or its affiliates had a controlled interest. The ownership interest
of the other partners in these partnerships is treated as a minority interest
and reported as a liability of the Predecessor. Increases in minority interest
are charged to operations.
Federal Income Taxes:
The Predecessor was an S Corporation and thus was not subject to taxation at the
corporate level. The self-storage facilities owned through the investment
partnerships required the partners to include their respective share of profits
and losses in their individual tax returns. Therefore, the statements of
operations contain no provision for federal income taxes for any periods prior
to March 24, 1994.
Shareholders' Deficit:
The Predecessor's President and Chief Executive Officer contributed a portion of
his interest in two of the Selling Partnerships in exchange for the satisfaction
of his indebtedness tot he Predecessor. The value attributed to his interest in
the Selling Partnerships was determined on the same basis as the determination
of payments made by the Predecessor to the unrelated limited partners in the
Selling Partnerships.
Corporate reorganization adjustments consist primarily of dividends deemed cash
distributions, reclassification of certain minority interests, and other
non-cash adjustments relating to the IPO.
Related Party Transactions:
The Predecessor had demand notes payable to the Predecessor's founder, bearing
interest at prime plus 2% (8% at December 31, 1993). These notes were
collateralized by second mortgages on certain of the Original Facilities. Total
interest expense to affiliates amounted to approximately $178 for period from
January 1, 1994 to March 23, 1994.
<PAGE>
SUSA Partnership, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except per unit data)
Other:
Total cash paid for interest related to the mortgages payable and notes payable
balances for the period from January 1, 1994 to March 23, 1994 was $1,017.
NOTE 13
SUBSEQUENT EVENTS
Property Acquisitions
Subsequent to December 31, 1996, the Operating Partnership has completed the
acquisition of 11 self-storage facilities for approximately $34,625 . These
acquisitions were financed through operating cash flows and borrowings under the
$30,000 line of credit.
On March 11, 1997, the Company issued 1,400 shares of common stock for an
aggregate purchase price of $50,739. On March 17, 1997, the underwriters
exercised their option to purchase 210 additional shares of common stock for an
aggregate purchase price of $7,610. U.S. Realty currently owns 34.6% of the
outstanding common stock of the Company and has indicated it intends to purchase
approximately 851 thousand shares of common stock directly from the Company
prior to March 31, 1997. Net proceeds from U.S. Realty will be approximately
$32,019.
The proceeds from the issuances are contributed to the Operating Partnership in
exchange for additional Operating Partnership units. The Operating Partnership
will use the net proceeds to repay debt incurred under its revolving lines of
credit to finance the acquisitions of self-storage facilities and for working
capital.
NOTE 14
QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a summary of quarterly results of operations for 1996 and 1995:
<TABLE>
<CAPTION>
<S> <C>
1996
First Quarter Second Quarter Third Quarter Fourth Quarter
------------- -------------- ------------- --------------
Revenue $21,333 $24,356 $29,435 $32,185
Net Income $8,886 $10,749 $12,327 $14,249
Per Unit Net Income $0.47 $0.52 $0.55 $0.54
<CAPTION>
1995
First Quarter Second Quarter Third Quarter Fourth Quarter
------------- -------------- ------------- --------------
Revenue $12,312 $16,233 $18,667 $20,795
Net Income $5,938 $6,992 $8,937 $8,553
Per Unit Net Income $0.43 $0.47 $0.49 $0.47
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of Storage USA, Inc.
We have audited the accompanying consolidated balance sheets
of SUSA Partnership, L.P. (the "Operating Partnership") as of December 31, 1996
and 1995, and the related consolidated statements of operations, partners'
capital, and cash flows for each of the two years in the period ended December
31, 1996 and for the period from March 24, 1994 (inception) through December 31,
1994. We have also audited the accompanying combined statements of operations,
shareholders' equity, and cash flows of Storage USA, Inc. (the "Predecessor")
for the period from January 1, 1994 through March 23, 1994. These financial
statements are the responsibility of the management of the Operating
Partnership. 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 the 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 consolidated financial position of
the Operating Partnership as of December 31, 1996 and 1995, and the consolidated
results of its operations and its cash flows for each of the two years in the
period ended December 31, 1996 and for the period from March 24, 1994
(inception) through December 31, 1994, and the combined results of the
Predecessor's operations and cash flows for the period from January 1, 1994
through March 23, 1994, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
January 29, 1997, except for Note 13,
as to which the date is
March 17, 1997
<PAGE>
SUSA Partnership, L.P.
SELECTED FINANCIAL DATA
(amounts in thousands)
The following table summarizes certain selected financial data for the
Partnership and its Predecessor. This financial data should be read in
conjunction with the Partnership's financial statements and notes thereto, and
with Management's Discussion and Analysis of Financial Condition and Results of
Operations.
<PAGE>
SUSA Partnership, L.P., Facilities
Schedule III
Real Estate and Accumulated Depreciation
as of December 31, 1996
<TABLE>
<CAPTION>
Initial Cost to REIT Cost of
-------------------------- Improvements
Buiding & Subsequent
State Property Name Encumbrances Land Fixtures to Acquisition
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
AL Vestavia 652,309 1,771,282 48,781
AL Birmingham/Hwy 280 348,919 953,148 0
AZ 24th Street 500,232 1,362,657 31,565
AZ Oracle 587,844 1,595,864 42,192
AZ 22nd Street 529,702 1,439,965 33,363
AZ East Phoenix 370,586 1,021,566 42,203
AZ Tempe 878,690 2,389,598 49,705
AZ Cave Creek 824,369 2,244,177 69,566
AZ Alma School 785,504 2,162,032 0
AZ Metro-21st/Peoria-Phoenix 599,712 1,638,042 0
AZ 7th St/Indian Sch-Phoenix 518,977 1,418,677 0
AZ Phoenix/32nd Street 4,440,000 1,352,332 3,670,885 0
AZ Mesa/Country Club 554,688 1,503,241 0
AZ Mesa/East Main St 1,482,225 913,783 2,479,293 0
AZ Phoenix/Bell Road 1,312,139 3,547,636 0
CA Miramar Self 387,430 1,059,395 43,165
CA Miramar Business 1,225,124 3,344,676 155,871
CA Marina Del Rey 1,954,097 5,293,255 89,201
CA Covina 1,234,592 3,356,433 179,300
CA Norwalk 1,529,221 4,152,897 124,870
CA Campbell 1,045,526 2,834,735 57,993
CA Monterey I & II 1,612,187 4,374,059 73,734
CA Palo Alto 654,944 1,780,329 37,677
CA San Jose 1,270,652 3,443,410 46,436
CA Santa Cruz 1,092,783 2,963,688 40,264
CA Scotts Valley 654,945 1,779,847 28,220
CA Santa Clara 1,362,331 3,738,431 75,299
CA Watsonville 483,703 1,316,251 29,433
CA Panorama City 961,128 2,608,919 45,806
CA Westminster 975,304 2,641,287 68,585
CA Point Loma 2,135,347 5,777,511 153,438
CA Rialto 695,327 1,921,602 103,328
CA Yucaipa 411,580 1,130,757 9,567
CA Fallbrook 418,763 1,154,513 15,982
CA Hemet 455,585 1,252,504 3,655
CA Victorville 491,597 1,347,613 17,994
CA San Bernardino/Baseline 1,220,837 3,325,258 18,479
CA Colton 514,276 1,425,550 22,070
CA San Marcos 318,260 879,411 19,487
CA Capitola 827,352 2,283,337 18,353
CA Oceanside 1,236,627 3,383,435 9,782
CA San Bernardino/Waterman 708,661 1,941,602 49,045
CA Santee 879,599 2,382,970 84,050
CA Santa Ana 1,273,489 3,456,542 18,862
CA Garden Grove 1,137,544 3,087,956 21,067
CA City of Industry 899,709 2,453,012 65,130
CA Chatsworth 1,740,975 4,744,309 41,104
CA Palm Springs/Tamarisk 816,416 2,229,985 96,439
CA Moreno Valley 413,759 1,142,629 55,335
CA San Bern/23rd St 655,883 1,803,082 78,881
CA San Bern/Mill Ave 368,526 1,023,905 60,662
CA Highlands 626,794 1,718,949 34,049
CA Redlands 673,439 1,834,612 248,932
CA Palm Springs/Gene Autry 784,589 2,129,022 21,881
CA Thousand Palms 652,410 1,831,765 0
CA Salinas 622,542 1,731,104 0
CA Whittier 919,755 2,516,477 0
CA Florin/Freeport-Sacrament 824,241 2,262,310 0
CA Sunrise/Sacramento 819,025 2,231,500 0
CA Santa Rosa 1,351,168 3,669,084 0
CA Huntington Beach 838,648 2,309,309 0
CA La Puente/Valley Blvd 992,211 2,710,041 0
CA Pacheco/First Ave North 1,198,654 3,257,766 0
CA Huntington Bch II/McFadden 1,050,495 2,846,043 0
CA Hawaiian Gardens/Norwalk 1,956,411 5,353,015 0
CA Sacramento/Auburn Blvd 666,995 1,808,847 0
CA Sacramento/Perry 452,480 1,225,139 0
CT Wethersfield 472,831 1,294,408 880,667
CT Enfield 506,875 1,395,631 55,945
CT East Hartford 992,547 2,700,212 3,256
CT Waterbury 746,487 2,036,915 0
CT Rocky Hill 1,327,857 3,608,978 0
CT Farmington 1,272,203 3,454,995 0
DC U Street 1,388,564 3,769,506 44,584
DE Wilmington 610,689 2,512,985 32,263
FL Kendall 1,838,903 3,870,318 19,020
FL Ives Dairy 1,061,776 4,306,278 50,006
FL Longwood 862,849 2,387,142 22,238
FL Sarasota 1,281,966 2,007,843 1,772,379
FL WPB Southern 875,804 226,524 922,193 2,877,838
FL WPB II 572,284 2,365,372 21,371
FL Port Richey 605,850 1,668,041 60,725
FL Ft. Myers 489,609 1,347,207 273,981
FL North Lauderdale 1,050,449 2,867,443 695,949
FL Naples 636,051 1,735,211 43,837
FL Hallandale 1,696,519 4,625,578 17,257
FL Davie 2,005,938 5,452,384 67,675
FL Tampa/Adamo 837,180 2,291,714 14,334
FL SR 84 (Southwest) 1,903,782 5,187,373 47,755
FL Quail Roost 2,193,219 1,663,641 4,533,384 11,171
FL Tamiami 1,962,917 5,371,139 5,562
FL Highway 441 (2nd Avenue) 1,734,958 4,760,420 10,342
FL Miami Sunset 2,205,018 6,028,210 9,105
FL Doral (Archway) 1,633,500 4,464,103 47,801
FL Boca Raton 1,505,564 4,123,885 0
FL Ft Lauderdale 1,063,136 2,949,236 0
FL Coral Way 3,501,163 1,574,578 4,314,468 0
FL Miller Rd. 3,501,163 1,409,474 3,898,643 0
FL Harborview/Port Charlotte 883,344 2,400,333 0
FL Miami Gardens/441 540,649 1,469,557 0
FL Miramar/State Rd 7 1,797,370 4,892,278 0
FL Delray Bch/W Atlantic Blvd 388,538 1,059,895 0
FL Okeechobee Partners, LP 1,134,363 0 0
GA South Cobb 161,509 1,349,816 77,109
GA Lilburn 634,879 1,724,697 27,775
GA Eastpoint 937,618 2,194,489 103,745
GA Acworth 493,504 917,825 685,678
GA Western Hills 842,094 1,855,712 92,569
GA Stone Mountain 1,053,620 2,908,080 0
IL Brickyard 713,079 1,935,999 42,991
IL Cermak 948,679 2,582,566 139,489
IL Schaumburg 1,159,033 3,158,017 57,901
KS Shawnee 546,118 1,490,460 23,250
KS Olathe 429,808 1,176,442 44,729
KS Overland Park 561,549 1,530,969 26,053
KS State Avenue 448,025 1,224,381 41,991
LA Tchoup (New Orleans) 920,987 2,501,147 122,851
MA Worcester 661,235 1,541,427 82,380
MA Haverhill 573,068 1,568,047 5,743
MA New Bedford 768,959 2,099,751 9,609
MA Whitman 544,178 1,487,628 36,918
MA Brockton 1,134,761 3,104,615 0
MA Northborough 822,364 2,279,586 0
MA Nashua/Tyngsboro 1,211,930 3,293,838 0
MA South Easton 909,912 2,465,382 0
MA North Attleboro 908,949 2,460,427 0
MA Fall River 773,781 2,097,333 0
MA Salisbury 771,078 2,096,159 0
MD Annapolis/Route 50 3,377,572 1,565,664 4,324,670 26,895
MD Silver Spring 2,776,490 4,455,110 36,572
MD Essex 1,015,773 2,396,462 12,907
MD Columbia 1,057,034 3,289,952 29,901
MD Rockville 1,376,588 3,765,848 21,495
MD Annapolis/Trout 1,635,928 4,430,887 44,756
MD Montgomery Village 1,287,176 3,537,609 31,460
MD Millersville 1,501,123 4,101,854 30,274
MD Waldorf 1,168,869 3,175,314 12,727
MD Rt 3/Millersville 546,011 1,493,533 0
MD Balto City/E Pleasant St 1,547,767 4,185,072 0
MD SUSA Partnership/Management 3,531,744 650,997 15,150,726
MI Lincoln Park 761,209 2,097,502 338,822
MI Tel-Dixie 595,495 1,646,723 26,643
MI Troy/Coolidge Highway 1,264,541 3,425,505 0
MI Grand Rapids/28th St SE 598,182 1,621,080 0
MI Grandville/Spartan Ind Dr 579,599 1,840,838 0
MO Grandview 511,576 1,396,230 48,466
MO Raytown 427,056 1,171,397 59,940
NC Charlotte/Tryon St 1,003,418 2,731,345 0
NC Raleigh/Hillsborough St 753,296 2,051,496 0
NC Charlotte/Amity Rd 947,871 2,583,190 0
NJ Pennsauken 914,938 2,484,553 43,261
NJ Lawnside 1,095,126 2,972,032 17,123
NJ Cherry Hill/Cuthbert 720,183 1,894,545 6,407
NJ Cherry Hill/Route 70 693,314 1,903,413 13,564
NJ Pomona 529,657 1,438,132 0
NJ Mays Landing 386,592 1,051,300 0
NJ Hackensack/S River St 7,630,393 3,646,649 9,863,617 0
NJ Secaucus/Paterson Plank 5,629,669 2,851,097 7,712,681 0
NJ Harrison/Harrison Ave 1,273,522 822,192 2,227,121 0
NJ Orange/Oakwood Ave 4,033,027 2,408,877 6,517,030 0
NJ Flanders/Bartley Flanders 645,486 1,749,362 0
NM Lomas 251,018 691,453 40,482
NM San Mateo 524,982 1,436,128 62,004
NM Montgomery 606,860 1,651,611 35,985
NM Legion 0 1,873,666 40,527
NM Ellison 620,366 1,715,897 33,808
NM Hotel Circle 277,101 766,547 749,538
NM Eubank 577,099 1,568,266 106,954
NM Coors 494,400 1,347,792 32,358
NM Osuna 696,685 1,891,849 83,264
NM East Central 292,031 801,475 46,511
NV Rainbow 892,753 2,419,779 55,293
NV Oakey 663,607 1,825,505 20,380
NV Tropicana 815,085 2,211,925 75,947
NV Sunset 947,534 2,569,938 60,172
NV Sahara 1,217,565 3,373,622 18,761
NV Charleston 557,678 1,520,140 10,145
NV Las Vegas-Sahara/Pioneer 1,040,367 2,842,388 0
NY Coram/Bald Hill 1,976,332 5,352,301 0
OK Sooner Road 453,185 1,252,031 46,494
OK 10th Street 621,413 743,356 126,516
OK Moore 281,912 776,815 60,142
OK NW Expressway 353,735 977,978 70,659
OK Midwest City 443,545 1,216,512 15,455
OK Meridian 252,963 722,040 293,353
OK Air Depot 347,690 965,923 59,545
OK Peoria 540,318 1,488,307 35,994
OK 11th & Mingo 757,054 2,071,799 53,964
OK Skelly 173,331 489,960 16,334
OK Lewis 642,511 1,760,304 20,599
OK Sheridan 531,978 1,509,718 34,615
OK OKC/Roxbury Blvd 241,220 671,753 0
OK OKC/33rd Street 267,059 741,710 0
OR Hillsboro/229th Ave 1,198,358 3,249,301 0
OR Beaverton/Murray Ave 1,086,999 2,948,220 0
OR Aloha/185th Ave 1,337,157 3,624,573 0
PA Philadelphia 1,574,064 2,838,049 20,927
PA King of Prussia 1,354,359 3,678,011 20,207
PA Warminster 891,048 2,446,648 72,092
PA Allentown 578,632 1,583,744 34,281
PA Bethlehem 843,324 2,317,298 23,507
PA Norristown 868,586 2,405,332 0
PA Storage Partners of Paoli 433,482 849,584 0
SC Charleston/Ashley River Rd 475,367 1,298,593 0
SC Columbia/Broad River Rd 461,455 1,267,675 0
TN Summer 172,093 2,663,644 21,959
TN Union 286,925 1,889,030 44,303
TN Memphis/Mt Moriah 1,024,669 1,598,722 816,229
TN Antioch/Nashville 822,125 2,239,684 97,707
TN Keyport (Gateway) 403,492 1,100,184 49,041
TN Chattanooga 484,457 1,360,998 39,828
TN Memphis/Ridgeway 638,757 1,141,414 149,116
TN Winchester 774,069 974,471 0
TN Nashville/Lebanon Pike 1,366,208 3,748,062 0
TN Nashville/Haywood 1,131,359 423,170 1,166,891 0
TN Nashville/Murfreesboro 845,495 344,720 950,811 0
TN SUSA/Poplar Partners, LP 1,750,000 10,635 0
TN Nashville/Trousdale 1,440,860 3,901,994 0
TN Nashville/Murfreesboro 1,222,229 3,309,033 0
TN Nashville/Old Hickory Rd 1,271,786 3,444,402 0
TN Antioch/Bell Road 841,235 2,280,513 0
TN Franklin/Liberty Pike 844,335 2,287,937 0
TX Ft. Worth Avenue 393,893 1,076,836 142,867
TX Euless 359,330 979,859 125,238
TX North Freeway 687,758 1,867,833 63,901
TX South Freeway 441,599 1,202,291 94,184
TX White Settlement 1,347,379 2,531,920 605,479
TX Airport Freeway 616,535 1,678,683 172,303
TX Midway 1,125,514 2,344,420 601,450
TX Dallas/Preston 1,194,744 3,245,423 17,346
TX Bedford 923,948 2,525,303 0
TX Spring/I-45 North 1,110,728 3,005,855 0
TX Sugarland/Old Mill Rd 675,660 1,830,545 0
UT Orem 629,867 1,722,550 27,132
UT Sandy 949,065 2,573,696 36,645
UT West Valley 576,248 1,579,605 12,697
VA Fairfax Station 1,019,015 2,115,385 111,899
VA Chantilly 882,257 2,395,841 119,234
VA Clarendon 37,575 0 6,351,724
VA Reston 551,285 0 2,326,986
VA Falls Church 1,226,409 3,348,761 49,935
VA Willow Lawn 1,516,115 4,105,846 0
VA Stafford/Jefferson Davis 751,398 2,035,961 0
VA Fredericksburg/Jefferson 983,000 668,526 1,812,040 0
VA Charlottesville/Seminole 2,763,000 748,988 2,029,716 0
VA Fredericksburg/Plank Rd 846,358 2,287,063 0
WA Vancouver/78th St 753,071 2,045,377 0
======================================================================
$43,660,611 $224,812,344 $588,937,361 $41,892,598
======================================================================
<CAPTION>
Gross Amount at Close of Period Depreciable
---------------------------------------------- Life of
Buiding & Accumulated Year Placed Building
State Property Name Land Fixtures Total Depreciation in Service Component
- -------------------------------------- -------------------------------------------------------------------------------------------
<S> <C>
AL Vestavia 652,309 1,820,064 2,472,372 (128,858) 1994 40
AL Birmingham/Hwy 280 348,919 953,148 1,302,067 (2,259) 1996 40
AZ 24th Street 500,232 1,394,222 1,894,454 (97,662) 1994 40
AZ Oracle 587,844 1,638,056 2,225,900 (112,352) 1994 40
AZ 22nd Street 529,702 1,473,328 2,003,030 (103,352) 1994 40
AZ East Phoenix 370,586 1,063,770 1,434,355 (48,131) 1995 40
AZ Tempe 879,017 2,438,975 3,317,993 (81,714) 1995 40
AZ Cave Creek 824,369 2,313,742 3,138,112 (63,841) 1995 40
AZ Alma School 785,504 2,162,032 2,947,535 (54,707) 1996 40
AZ Metro-21st/Peoria-Phoenix 599,712 1,638,042 2,237,754 (24,283) 1996 40
AZ 7th St/Indian Sch-Phoenix 518,977 1,418,677 1,937,654 (21,007) 1996 40
AZ Phoenix/32nd Street 1,352,332 3,670,885 5,023,217 (30,725) 1996 40
AZ Mesa/Country Club 554,688 1,503,241 2,057,929 (6,404) 1996 40
AZ Mesa/East Main St 913,783 2,479,293 3,393,075 (5,223) 1996 40
AZ Phoenix/Bell Road 1,312,139 3,547,636 4,859,776 0 1996 40
CA Miramar Self 387,430 1,102,560 1,489,990 (75,500) 1994 40
CA Miramar Business 1,225,124 3,500,547 4,725,671 (247,934) 1994 40
CA Marina Del Rey 1,954,097 5,382,456 7,336,553 (368,168) 1994 40
CA Covina 1,234,592 3,535,733 4,770,325 (194,323) 1994 40
CA Norwalk 1,529,221 4,277,767 5,806,988 (238,040) 1994 40
CA Campbell 1,041,860 2,896,392 3,938,253 (151,443) 1994 40
CA Monterey I & II 1,613,922 4,446,057 6,059,979 (246,313) 1994 40
CA Palo Alto 651,280 1,821,670 2,472,950 (101,932) 1994 40
CA San Jose 1,266,988 3,493,510 4,760,498 (181,548) 1994 40
CA Santa Cruz 1,092,718 3,004,016 4,096,734 (168,191) 1994 40
CA Scotts Valley 651,281 1,811,732 2,463,012 (101,440) 1994 40
CA Santa Clara 1,362,331 3,813,730 5,176,061 (145,696) 1995 40
CA Watsonville 480,039 1,349,348 1,829,387 (70,021) 1994 40
CA Panorama City 961,128 2,654,725 3,615,853 (151,370) 1994 40
CA Westminster 975,304 2,709,871 3,685,176 (135,644) 1994 40
CA Point Loma 2,139,342 5,926,953 8,066,296 (295,551) 1994 40
CA Rialto 695,327 2,024,930 2,720,257 (84,644) 1995 40
CA Yucaipa 411,580 1,140,324 1,551,904 (51,750) 1995 40
CA Fallbrook 418,763 1,170,495 1,589,258 (52,107) 1995 40
CA Hemet 455,585 1,256,159 1,711,744 (56,049) 1995 40
CA Victorville 491,597 1,365,607 1,857,204 (59,287) 1995 40
CA San Bernardino/Baseline 1,220,837 3,343,738 4,564,574 (148,114) 1995 40
CA Colton 514,276 1,447,620 1,961,896 (63,699) 1995 40
CA San Marcos 318,260 898,898 1,217,158 (40,048) 1995 40
CA Capitola 827,352 2,301,690 3,129,042 (88,529) 1995 40
CA Oceanside 1,236,627 3,393,217 4,629,844 (150,885) 1995 40
CA San Bernardino/Waterman 708,988 1,990,320 2,699,308 (67,139) 1995 40
CA Santee 879,599 2,467,019 3,346,619 (65,212) 1995 40
CA Santa Ana 1,273,816 3,475,077 4,748,893 (116,112) 1995 40
CA Garden Grove 1,137,871 3,108,696 4,246,567 (104,180) 1995 40
CA City of Industry 900,036 2,517,815 3,417,851 (84,011) 1995 40
CA Chatsworth 1,738,243 4,788,145 6,526,388 (158,904) 1995 40
CA Palm Springs/Tamarisk 816,743 2,326,096 3,142,840 (79,125) 1995 40
CA Moreno Valley 414,614 1,197,109 1,611,723 (37,450) 1995 40
CA San Bern/23rd St 655,883 1,881,963 2,537,846 (55,401) 1995 40
CA San Bern/Mill Ave 370,043 1,083,050 1,453,093 (32,564) 1995 40
CA Highlands 627,594 1,752,198 2,379,792 (51,411) 1995 40
CA Redlands 731,365 2,025,619 2,756,983 (58,366) 1995 40
CA Palm Springs/Gene Autry 784,589 2,150,904 2,935,492 (54,706) 1995 40
CA Thousand Palms 652,410 1,831,765 2,484,175 (46,563) 1996 40
CA Salinas 622,542 1,731,104 2,353,646 (32,309) 1996 40
CA Whittier 919,755 2,516,477 3,436,232 (47,328) 1996 40
CA Florin/Freeport-Sacrament 824,241 2,262,310 3,086,551 (33,232) 1996 40
CA Sunrise/Sacramento 819,025 2,231,500 3,050,525 (28,379) 1996 40
CA Santa Rosa 1,351,168 3,669,084 5,020,251 (46,240) 1996 40
CA Huntington Beach 838,648 2,309,309 3,147,957 (25,398) 1996 40
CA La Puente/Valley Blvd 992,211 2,710,041 3,702,252 (28,883) 1996 40
CA Pacheco/First Ave North 1,198,654 3,257,766 4,456,420 (27,593) 1996 40
CA Huntington Bch II/McFadden 1,050,495 2,846,043 3,896,538 (17,858) 1996 40
CA Hawaiian Gardens/Norwalk 1,956,411 5,353,015 7,309,426 (34,128) 1996 40
CA Sacramento/Auburn Blvd 666,995 1,808,847 2,475,841 (3,860) 1996 40
CA Sacramento/Perry 452,480 1,225,139 1,677,619 0 1996 40
CT Wethersfield 472,831 2,175,076 2,647,906 (88,274) 1994 40
CT Enfield 506,875 1,451,577 1,958,451 (89,857) 1994 40
CT East Hartford 992,547 2,703,468 3,696,015 (118,612) 1995 40
CT Waterbury 746,487 2,036,915 2,783,402 (26,436) 1996 40
CT Rocky Hill 1,327,857 3,608,978 4,936,834 (45,453) 1996 40
CT Farmington 1,272,203 3,454,995 4,727,198 (44,188) 1996 40
DC U Street 1,388,564 3,814,090 5,202,654 (261,647) 1994 40
DE Wilmington 610,689 2,545,248 3,155,937 (489,344) 1989 40
FL Kendall 1,838,903 3,889,338 5,728,241 (791,879) 1988 40
FL Ives Dairy 1,061,776 4,356,283 5,418,060 (859,355) 1988 40
FL Longwood 862,849 2,409,380 3,272,229 (471,711) 1988 40
FL Sarasota 2,007,894 3,054,294 5,062,188 (433,573) 1988 40
FL WPB Southern 996,405 3,030,150 4,026,555 (173,421) 1991 40
FL WPB II 572,284 2,386,742 2,959,027 (201,144) 1991 40
FL Port Richey 605,850 1,728,767 2,334,616 (119,947) 1994 40
FL Ft. Myers 645,219 1,465,579 2,110,797 (97,264) 1994 40
FL North Lauderdale 1,282,769 3,331,072 4,613,841 (201,113) 1994 40
FL Naples 636,051 1,779,048 2,415,099 (99,882) 1994 40
FL Hallandale 1,696,519 4,642,835 6,339,354 (196,603) 1995 40
FL Davie 2,005,938 5,520,059 7,525,997 (222,970) 1995 40
FL Tampa/Adamo 837,180 2,306,048 3,143,228 (92,383) 1995 40
FL SR 84 (Southwest) 1,903,782 5,235,128 7,138,910 (164,351) 1995 40
FL Quail Roost 1,663,641 4,544,555 6,208,196 (142,233) 1995 40
FL Tamiami 1,962,917 5,376,701 7,339,618 (213,171) 1995 40
FL Highway 441 (2nd Avenue) 1,734,958 4,770,762 6,505,720 (188,956) 1995 40
FL Miami Sunset 2,205,018 6,037,315 8,242,333 (239,647) 1995 40
FL Doral (Archway) 1,633,500 4,511,904 6,145,404 (180,162) 1995 40
FL Boca Raton 1,505,564 4,123,885 5,629,449 (77,657) 1996 40
FL Ft Lauderdale 1,063,136 2,949,236 4,012,371 (55,535) 1996 40
FL Coral Way 1,574,578 4,314,468 5,889,045 (73,458) 1996 40
FL Miller Rd. 1,409,474 3,898,643 5,308,117 (67,744) 1996 40
FL Harborview/Port Charlotte 883,344 2,400,333 3,283,677 (35,513) 1996 40
FL Miami Gardens/441 540,649 1,469,557 2,010,206 (18,293) 1996 40
FL Miramar/State Rd 7 1,797,370 4,892,278 6,689,647 (61,244) 1996 40
FL Delray Bch/W Atlantic Blvd 388,538 1,059,895 1,448,433 (9,003) 1996 40
FL Okeechobee Partners, LP 1,134,363 0 1,134,363 0 1996 40
GA South Cobb 161,509 1,426,924 1,588,434 (141,428) 1992 40
GA Lilburn 634,879 1,752,471 2,387,351 (123,132) 1994 40
GA Eastpoint 937,618 2,298,234 3,235,852 (154,466) 1994 40
GA Acworth 520,032 1,576,975 2,097,007 (62,376) 1994 40
GA Western Hills 846,462 1,943,913 2,790,375 (108,755) 1994 40
GA Stone Mountain 1,053,620 2,908,080 3,961,700 (55,241) 1996 40
IL Brickyard 716,443 1,975,626 2,692,069 (122,000) 1994 40
IL Cermak 949,042 2,721,692 3,670,734 (155,573) 1994 40
IL Schaumburg 1,159,033 3,215,918 4,374,951 (134,255) 1995 40
KS Shawnee 546,118 1,513,710 2,059,828 (105,054) 1994 40
KS Olathe 429,808 1,221,171 1,650,979 (86,147) 1994 40
KS Overland Park 561,549 1,557,022 2,118,571 (108,698) 1994 40
KS State Avenue 448,025 1,266,372 1,714,397 (69,415) 1994 40
LA Tchoup (New Orleans) 920,987 2,623,998 3,544,985 (178,744) 1994 40
MA Worcester 661,235 1,623,807 2,285,042 (94,723) 1994 40
MA Haverhill 573,068 1,573,790 2,146,858 (89,595) 1994 40
MA New Bedford 768,959 2,109,361 2,878,319 (120,038) 1994 40
MA Whitman 544,178 1,524,546 2,068,724 (85,554) 1994 40
MA Brockton 1,134,761 3,104,615 4,239,376 (59,023) 1996 40
MA Northborough 822,364 2,279,586 3,101,950 (43,203) 1996 40
MA Nashua/Tyngsboro 1,211,930 3,293,838 4,505,768 (42,580) 1996 40
MA South Easton 909,912 2,465,382 3,375,294 (31,173) 1996 40
MA North Attleboro 908,949 2,460,427 3,369,376 (30,882) 1996 40
MA Fall River 773,781 2,097,333 2,871,114 (26,379) 1996 40
MA Salisbury 771,078 2,096,159 2,867,236 (27,170) 1996 40
MD Annapolis/Route 50 1,565,664 4,351,566 5,917,229 (712,851) 1989 40
MD Silver Spring 2,776,490 4,491,681 7,268,172 (832,466) 1989 40
MD Essex 1,015,773 2,409,368 3,425,142 (383,806) 1990 40
MD Columbia 1,057,034 3,319,853 4,376,887 (477,431) 1991 40
MD Rockville 1,376,588 3,787,342 5,163,931 (238,545) 1994 40
MD Annapolis/Trout 1,635,928 4,475,643 6,111,571 (260,670) 1994 40
MD Montgomery Village 1,287,176 3,569,068 4,856,245 (201,500) 1994 40
MD Millersville 1,501,123 4,132,128 5,633,251 (126,679) 1995 40
MD Waldorf 1,169,197 3,187,713 4,356,910 (107,308) 1995 40
MD Rt 3/Millersville 546,011 1,493,533 2,039,544 (18,984) 1996 40
MD Balto City/E Pleasant St 1,547,767 4,185,072 5,732,839 (8,718) 1996 40
MD SUSA Partnership/Management 10,427,038 8,906,429 19,333,467 (335,988) 1989 5
MI Lincoln Park 1,028,677 2,168,856 3,197,533 (92,200) 1995 40
MI Tel-Dixie 595,495 1,673,366 2,268,861 (71,627) 1995 40
MI Troy/Coolidge Highway 1,264,541 3,425,505 4,690,046 (14,324) 1996 40
MI Grand Rapids/28th St SE 598,182 1,621,080 2,219,261 (6,770) 1996 40
MI Grandville/Spartan Ind Dr 579,599 1,840,838 2,420,437 (7,686) 1996 40
MO Grandview 511,576 1,444,696 1,956,272 (100,201) 1994 40
MO Raytown 427,056 1,231,337 1,658,393 (68,659) 1994 40
NC Charlotte/Tryon St 1,003,418 2,731,345 3,734,763 (34,209) 1996 40
NC Raleigh/Hillsborough St 753,296 2,051,496 2,804,791 (25,935) 1996 40
NC Charlotte/Amity Rd 947,871 2,583,190 3,531,061 (32,365) 1996 40
NJ Pennsauken 914,938 2,527,814 3,442,752 (169,533) 1994 40
NJ Lawnside 1,095,126 2,989,156 4,084,281 (131,160) 1995 40
NJ Cherry Hill/Cuthbert 720,183 1,900,951 2,621,135 (84,236) 1995 40
NJ Cherry Hill/Route 70 693,641 1,916,650 2,610,291 (64,479) 1995 40
NJ Pomona 529,657 1,438,132 1,967,790 (18,233) 1996 40
NJ Mays Landing 386,592 1,051,300 1,437,892 (13,410) 1996 40
NJ Hackensack/S River St 3,646,649 9,863,617 13,510,266 (20,529) 1996 40
NJ Secaucus/Paterson Plank 2,851,097 7,712,681 10,563,778 (16,065) 1996 40
NJ Harrison/Harrison Ave 822,192 2,227,121 3,049,313 (4,637) 1996 40
NJ Orange/Oakwood Ave 2,408,877 6,517,030 8,925,907 (13,574) 1996 40
NJ Flanders/Bartley Flanders 645,486 1,749,362 2,394,848 (3,641) 1996 40
NM Lomas 251,018 731,936 982,953 (47,970) 1994 40
NM San Mateo 524,982 1,498,132 2,023,114 (97,359) 1994 40
NM Montgomery 606,860 1,687,596 2,294,456 (111,549) 1994 40
NM Legion 0 1,914,193 1,914,193 (121,526) 1994 40
NM Ellison 620,366 1,749,705 2,370,071 (115,271) 1994 40
NM Hotel Circle 255,163 1,538,023 1,793,186 (49,355) 1994 40
NM Eubank 577,099 1,675,220 2,252,319 (88,654) 1994 40
NM Coors 494,400 1,380,150 1,874,550 (74,264) 1994 40
NM Osuna 696,685 1,975,113 2,671,798 (102,833) 1994 40
NM East Central 292,031 847,986 1,140,017 (46,882) 1994 40
NV Rainbow 892,753 2,475,071 3,367,825 (131,642) 1994 40
NV Oakey 663,607 1,845,885 2,509,492 (94,641) 1995 40
NV Tropicana 815,085 2,287,872 3,102,957 (120,012) 1994 40
NV Sunset 947,534 2,630,111 3,577,644 (139,850) 1994 40
NV Sahara 1,217,565 3,392,383 4,609,948 (162,599) 1995 40
NV Charleston 558,006 1,529,957 2,087,963 (51,586) 1995 40
NV Las Vegas-Sahara/Pioneer 1,040,367 2,842,388 3,882,755 (53,821) 1996 40
NY Coram/Bald Hill 1,976,332 5,352,301 7,328,633 (67,340) 1996 40
OK Sooner Road 453,185 1,298,525 1,751,710 (90,560) 1994 40
OK 10th Street 621,413 869,872 1,491,285 (53,202) 1994 40
OK Moore 281,912 836,956 1,118,869 (58,369) 1994 40
OK NW Expressway 353,735 1,048,637 1,402,372 (72,390) 1994 40
OK Midwest City 443,545 1,231,967 1,675,512 (85,931) 1994 40
OK Meridian 244,143 1,024,213 1,268,356 (55,885) 1994 40
OK Air Depot 347,690 1,025,468 1,373,158 (70,357) 1994 40
OK Peoria 540,318 1,524,301 2,064,619 (58,023) 1995 40
OK 11th & Mingo 757,054 2,125,763 2,882,817 (80,906) 1995 40
OK Skelly 173,331 506,294 679,625 (20,454) 1995 40
OK Lewis 642,511 1,780,903 2,423,414 (67,987) 1995 40
OK Sheridan 531,978 1,544,333 2,076,311 (56,703) 1995 40
OK OKC/Roxbury Blvd 241,220 671,753 912,972 (6,175) 1996 40
OK OKC/33rd Street 267,059 741,710 1,008,769 (6,678) 1996 40
OR Hillsboro/229th Ave 1,198,358 3,249,301 4,447,659 (40,650) 1996 40
OR Beaverton/Murray Ave 1,086,999 2,948,220 4,035,219 (36,886) 1996 40
OR Aloha/185th Ave 1,337,157 3,624,573 4,961,730 (45,342) 1996 40
PA Philadelphia 1,574,064 2,858,975 4,433,040 (522,705) 1990 40
PA King of Prussia 1,354,359 3,698,219 5,052,577 (159,123) 1995 40
PA Warminster 891,048 2,518,740 3,409,788 (106,125) 1995 40
PA Allentown 578,632 1,618,025 2,196,657 (72,028) 1995 40
PA Bethlehem 843,324 2,340,805 3,184,129 (104,295) 1995 40
PA Norristown 868,586 2,405,332 3,273,918 (50,835) 1996 40
PA Storage Partners of Paoli 433,482 849,584 1,283,065 0 1996 40
SC Charleston/Ashley River Rd 475,367 1,298,593 1,773,960 (16,293) 1996 40
SC Columbia/Broad River Rd 461,455 1,267,675 1,729,130 (15,995) 1996 40
TN Summer 172,093 2,685,603 2,857,696 (615,157) 1986 40
TN Union 286,925 1,933,333 2,220,258 (412,368) 1987 40
TN Memphis/Mt Moriah 1,034,883 2,404,737 3,439,620 (317,408) 1989 40
TN Antioch/Nashville 822,125 2,337,391 3,159,516 (163,330) 1994 40
TN Keyport (Gateway) 403,492 1,149,225 1,552,717 (67,663) 1994 40
TN Chattanooga 484,457 1,400,826 1,885,283 (40,530) 1995 40
TN Memphis/Ridgeway 638,849 1,290,438 1,929,287 (49,378) 1995 40
TN Winchester 774,069 974,471 1,748,539 0 1996 40
TN Nashville/Lebanon Pike 1,366,208 3,748,062 5,114,270 (47,170) 1996 40
TN Nashville/Haywood 423,170 1,166,891 1,590,061 (5,164) 1996 40
TN Nashville/Murfreesboro 344,720 950,811 1,295,530 (4,263) 1996 40
TN SUSA/Poplar Partners, LP 1,750,000 10,635 1,760,635 0 1996 40
TN Nashville/Trousdale 1,440,860 3,901,994 5,342,853 (8,223) 1996 40
TN Nashville/Murfreesboro 1,222,229 3,309,033 4,531,263 (6,932) 1996 40
TN Nashville/Old Hickory Rd 1,271,786 3,444,402 4,716,188 (7,271) 1996 40
TN Antioch/Bell Road 841,235 2,280,513 3,121,747 (4,854) 1996 40
TN Franklin/Liberty Pike 844,335 2,287,937 3,132,272 (9,607) 1996 40
TX Ft. Worth Avenue 393,893 1,219,703 1,613,596 (71,018) 1994 40
TX Euless 359,330 1,105,097 1,464,427 (58,295) 1994 40
TX North Freeway 687,758 1,931,734 2,619,492 (105,869) 1994 40
TX South Freeway 441,599 1,296,475 1,738,074 (68,112) 1994 40
TX White Settlement 1,370,309 3,114,469 4,484,778 (169,012) 1994 40
TX Airport Freeway 616,535 1,850,985 2,467,521 (98,519) 1994 40
TX Midway 1,169,859 2,901,525 4,071,384 (129,345) 1994 40
TX Dallas/Preston 1,194,744 3,262,768 4,457,513 (95,509) 1995 40
TX Bedford 923,948 2,525,303 3,449,251 (32,439) 1996 40
TX Spring/I-45 North 1,110,728 3,005,855 4,116,583 (18,795) 1996 40
TX Sugarland/Old Mill Rd 675,660 1,830,545 2,506,205 (7,636) 1996 40
UT Orem 629,867 1,749,682 2,379,549 (100,127) 1994 40
UT Sandy 949,065 2,610,341 3,559,406 (147,269) 1994 40
UT West Valley 576,248 1,592,302 2,168,550 (44,482) 1995 40
VA Fairfax Station 1,019,015 2,227,285 3,246,299 (164,583) 1993 40
VA Chantilly 882,257 2,515,075 3,397,332 (160,743) 1994 40
VA Clarendon 1,187,575 5,201,724 6,389,299 (70,764) 1996 40
VA Reston 551,285 2,326,986 2,878,271 (40,304) 1996 40
VA Falls Church 1,226,736 3,398,369 4,625,105 (114,597) 1995 40
VA Willow Lawn 1,516,115 4,105,846 5,621,961 (34,258) 1996 40
VA Stafford/Jefferson Davis 751,398 2,035,961 2,787,359 (8,523) 1996 40
VA Fredericksburg/Jefferson 668,526 1,812,040 2,480,566 (7,592) 1996 40
VA Charlottesville/Seminole 748,988 2,029,716 2,778,704 (8,502) 1996 40
VA Fredericksburg/Plank Rd 846,358 2,287,063 3,133,422 (9,566) 1996 40
WA Vancouver/78th St 753,071 2,045,377 2,798,447 (25,602) 1996 40
=============================================================
$235,139,274 $620,503,025 $855,642,289 ($26,572,972)
=============================================================
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of Storage USA, Inc.
Our report on the consolidated financial statements of SUSA
Partnership, L.P. is included in this Form 10-K of SUSA Partnership, L.P. In
connection with our audits of such financial statements, we have also audited
the related financial statement schedule included in this Form 10-K.
In our opinion, the financial statement schedule referred to
above, when considered in relation to the basic financial statements taken as a
whole, presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
January 29, 1997
