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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(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, 1999
( )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 001-12403
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
165 Madison Avenue, Suite 1300 38103
Memphis, TN (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (901) 252-2000
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 by non-affiliates of the registrant was
approximately $108,967,461 as of January 31, 2000, based on 3,655,093 units held
by non-affiliates of the registrant and based upon the closing price of $29.8125
for Storage USA, Inc.'s common stock on the New York Stock Exchange. (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 unitholders; such an exclusion shall not be deemed to constitute
an admission that any such person is an "affiliate" of the registrant.)
3,655,093
(Number of units of limited partnership interest outstanding,
as of January 31, 2000)
DOCUMENTS INCORPORATED BY REFERENCE
Part II and Part III incorporate certain information by reference from the
registrant's 2000 Annual Report and from Storage USA, Inc.'s definitive proxy
statement to be filed with respect to the 2000 Annual Meeting of Shareholders.
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ITEM 1. BUSINESS
GENERAL
SUSA Partnership, L.P. (the "Company" and the "Partnership") was formed by
Storage USA, Inc. (the "GP"), general partner and holder of approximately 88% of
the interest therein, to acquire, develop, construct, franchise, and own and
operate self-storage facilities throughout the United States. We are the second
largest owner and operator of self-storage space in the United States. At
December 31, 1999, we owned 405 facilities containing 27.3 million net rentable
square feet and managed 102 facilities for others (including 47 franchises)
containing an additional 6.8 million net rentable square feet. Our owned and
managed facilities are located in 31 states and the District of Columbia. The GP
is structured as an umbrella partnership real estate investment trust ("UPREIT")
in which substantially all of its business is conducted through the Partnership.
Under this structure, we are able to acquire self-storage facilities in exchange
for units of limited partnership interest, which permits the sellers to
partially defer taxation of capital gains.
In 1996, we formed Storage USA Franchise Corp ("Franchise"), a Tennessee
corporation. The Partnership owns 100% of the non-voting common stock of
Franchise. The Partnership has a 97.5% economic interest in Franchise and
accounts for Franchise under the equity method and includes our share of the
profit or loss of Franchise in Other Income.
BUSINESS STRATEGY
INTERNAL GROWTH/OPERATIONS
Our internal growth strategy is to pursue an active leasing policy. This
includes marketing available space and renewing existing leases at higher rents
per square foot while controlling expense growth. Our implementation of our
internal growth strategy can be evaluated by examining the "year-over-year"
results of our same-store facilities during 1999 and 1998. Newly
developed facilities and expansions are removed from this group to avoid skewing
the results. During 1999, we achieved same-store revenue growth of 5.3% and net
operating income ("NOI") growth of 8.0% over 1998. In 1998, as compared to 1997,
we grew total revenue 5.9% and NOI 6.9%. We have reevaluated the amounts that we
charge our customers and have implemented a new late fee policy reducing our
late fees. We cannot currently determine the amount by which this new policy
will reduce our revenue in future periods for a number of reasons, including the
fact that our late fee charges vary across the country, they varied at
facilities we acquired and facility managers have the discretion to waive late
fees. However, the fee change could reduce revenues in 2000 by as much as $5
million. We expect that any revenue reduction may be offset, in part by
increased rents, increased late fee collection efforts, and continued
efficiencies in our operating margins, but we are not yet able to estimate the
net effect of these items. You should refer to the discussions under
"Forward-Looking Statements and Risk Factors" in this Item and "Legal
Proceedings" in Item 3.
o LEASING - We seek to increase our revenues by increasing the occupancy in
our facilities through the use of sales and marketing programs. Facility
and district managers have authority and incentives to customize these
programs for each location. We develop a written marketing plan for each
facility and utilize yellow page advertising, site signage and location as
the primary means to advertise our services. The facility managers are
trained to market to both phone-in and walk-in prospective tenants. The
primary emphasis of the training is to teach managers to act as salespeople
and to convert prospective tenants into actual tenants. Emphasis is placed
on conversion from the initial telephone call to an on-site visit, and from
the on-site visit to a rental. During 1999, we created a national
reservation center to ensure that a knowledgeable employee answer calls
centrally from prospective customers when the property manager is
unavailable. The reservation center can also be reached through our
national toll-free number, 1-800-STOR-USA.
o RENT INCREASES - We have historically increased rents in all of our
facilities at least once a year regardless of the occupancy level. As a
facility nears 100% occupancy, we typically increase rents more frequently.
We believe the average rental rate per net rentable square foot in our
facilities is usually higher than our competitors' facilities.
o FACILITY MANAGERS - We carefully select and train managers of our
self-storage facilities. Personality profiles and personal interviews are
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used to screen applicants during the recruiting process. Training programs
feature facility operations and marketing manuals, sales and marketing
programs, telephone communication, computer systems, and daily facility
operations (unit rental, retail sales, facility maintenance, security
systems and financial duties). Our formal training programs are followed by
on-the-job training (supervised by a regional manager) and a three-step,
self-administered certification program. We conduct monthly telephone
surveys in which "mystery shoppers" call each facility posing as
prospective customers. These telephone calls are recorded and graded by
management for policy compliance and sales skills.
o INTEGRATED MANAGEMENT INFORMATION SYSTEMS - We have installed management
software at each facility to maintain appropriate controls and enhance
operational efficiencies. In 1999, we completed installation of satellite
dishes at all of our storage facilities, for timely transmission of
monthly, weekly and daily data to our headquarters. These systems are used
to monitor manager performance and market response to our rental structure.
EXTERNAL GROWTH
Our external growth strategy is designed to increase the number of facilities we
own, manage or franchise through the following methods:
o acquiring directly or through joint ventures, suitably located facilities
that offer potential due to low occupancy rates or non-premium pricing or
where our operating strategy would enhance performance,
o developing and constructing new self-storage facilities directly or
through joint ventures in favorable markets, or
o license to owners and developers of self-storage facilities, the
nonexclusive right to use and operate under the Storage USA name.
In pursuing opportunities to expand the number of facilities in our system, we
primarily seek to add facilities in those metropolitan areas in which we
operate. We also selectively enter new markets that have desirable
characteristics such as a growing population and a concentration of multifamily
dwellings. Our intentions are to acquire or develop facilities that have strong
retail characteristics and are attractively designed.
ACQUISITIONS
Since the GP's initial public offering ("IPO") in March, we have purchased 394
self-storage facilities containing 25.9 million net rentable square feet for
approximately $1.501 billion.
o FRAGMENTED INDUSTRY OWNERSHIP - We believe that there are approximately
29,955 self-storage facilities in the United States with approximately 1.1
billion net rentable square feet. According to the SELF-STORAGE ALMANAC -
2000, 73.9% of the 1.1 billion square feet available is currently
controlled by small entrepreneurs. The remaining 26.1% is controlled by the
top 50 operators in the industry. Only 16.6%, or approximately 183 million
square feet, is currently controlled by the top 5 operators. We believe
that this fragmented ownership offers opportunities for acquisitions,
including opportunities resulting from the following circumstances:
o the necessity of sale by some smaller operators who cannot obtain
refinancing of existing debt,
o the desire of some smaller operators to sell their facilities to obtain
retirement funds or to seek alternative investments, and
o the inability of smaller operators to obtain funds to compete for
acquisitions as timely and inexpensively as we can.
o OPERATING EFFICIENCIES - After a facility is acquired, we implement our
operating methods, which are designed to increase rental rates and trim
operating expenses.
o OPPORTUNITY FOR TAX DEFERRAL - In several of our acquisitions, we have
financed a portion of the purchase price through the issuance of units of
limited partnership interest in the Partnership ("Units"), permitting the
sellers to partially defer taxation of capital gains. We believe that our
ability to offer Units as a form of consideration is a key element in our
ability to successfully negotiate with sellers of self-storage facilities.
Since the IPO, we have issued 4.3 million Units valued at $146 million in
consideration for the acquisition of self-storage facilities.
o ACCESS TO ACQUISITION CAPITAL - Historically, we had been able to access
various forms of capital. Debt and equity markets, however, became
difficult to access in 1998, and this trend continued through 1999. As
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discussed in the "JOINT VENTURES" section, we formed two joint ventures
with General Electric Capital Corporation ("GE Capital") in 1999, to
acquire and develop self-storage facilities. Substantially all of our new
acquisitions and developments over the next two years will be funded by
these ventures.
DEVELOPMENT
Development of new facilitates provides long-term returns that could exceed
returns achieved by acquired facilities. By developing properties, we are able
to capitalize on unsaturated markets where suitable acquisition opportunities
may be minimal or nonexistent. These locations may, in some instances, provide
long-term returns greater than those available in typical suburban markets.
During the year, we placed in service eight newly developed facilities at a cost
of $35.4 million, adding 619 thousand square feet. We also expanded the
available square feet at fourteen existing facilities, adding 274 thousand
square feet for a cost of $15.7 million.
As of December 31, 1999, we have 20 development projects in process. In
connection with our joint ventures with GE Capital, we expect to transfer as
many as 13 of these projects into the GE Capital development venture. We plan to
continue the development of the remaining seven projects within the REIT.
o ACCESS TO DEVELOPMENT CAPITAL - As stated in the section entitled
"ACQUISITIONS", debt and equity markets became difficult to access
in 1998, and this trend continued through 1999. We believe, however,
that borrowings under our current credit facilities combined with cash from
operations will provide us with necessary liquidity and capital resources
to complete the seven development projects within the REIT. Most new
development activity over the next several years will be funded through and
owned by our joint venture with GE Capital, as discussed in the "JOINT
VENTURES" section.
o SELF-STORAGE ZONING - Local regulations may present barriers to new
development. As with all real property, self-storage facilities must
conform to local zoning ordinances. Typically, self-storage facilities are
not a permitted use within the commercial and retail zones desired by us
for development of a new facility. Therefore, we must generally obtain a
special use permit or zoning variance to undertake the development of a new
facility.
o DEVELOPMENT RETURNS - Newly developed properties provide the potential for
long-term returns greater than what can typically be achieved by acquired
facilities. However, losses during the lease-up period on these properties
reduce earnings. In addition to the risks associated with owning and
operating established facilities, development involves additional risks
relating to delays in construction and less-favorable-than-anticipated
rental rates, which could reduce our return.
JOINT VENTURES
In the second quarter of 1999, we formed a joint venture with Fidelity
Management Trust Company (the "Fidelity Venture"), to raise capital. We
contributed 32 self-storage facilities with a total value of $144 million to the
Fidelity Venture in return for $131 million in cash and a 25% interest in the
joint venture. We utilized approximately $90 million of these proceeds to
acquire in tax-free exchanges new self-storage facilities that have greater
growth potential than the facilities that were contributed.
During the fourth quarter, we formed two joint ventures with GE Capital ("GE
Ventures"), providing a total investment capacity of $400 million for
acquisitions and development of self-storage properties. We plan to fund
substantially all of our new acquisition and development over the next two years
through the GE Ventures.
For more details regarding these joint ventures, see Note 4 "Advancements and
Investments in Real Estate" in the Notes to Consolidated Financial Statements
contained in Exhibit 13-Annual Report.
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FRANCHISING
Storage USA Franchise Corp. ("Franchise") was established in 1996. We own a
97.5% economic interest in Franchise and 100% of its Class B non-voting common
stock. Franchise was created to enhance our short-term and long-term income
streams and to provide a pipeline of acquisitions designed and constructed to
our standards. Franchise offers a turnkey package including access to capital,
analysis of potential markets and sites, facility design, general contractor
work and facility management. As of December 31, 1999, Franchise had 47
facilities open and operating, 16 under development and 13 in due diligence. Of
these 76 facilities, approximately 47 are joint venture properties that include
earnings participation by Franchise (this figure is subject to change, as
Franchisees in the due diligence stage have not definitively chosen which
arrangement they will use).
On August 20, 1999, Budget Storage USA Joint Venture LLC was formed between
affiliates of Budget Group, Inc., an international car and truck rental company,
and Franchise. Both Budget's affiliate and Franchise own a 50% interest in the
Venture. The Venture was formed for the primary purpose of selling to owners and
developers of self-storage facilities, the nonexclusive right to use and operate
under the Budget Storage USA trade name. As of December 31, 1999, the Venture
was principally engaged in preparation of its Uniform Offering Circular in order
to be registered to conduct business in its target markets.
CAPITAL STRATEGY
We maintain a conservative capital structure in order to improve our access to
capital and earnings growth. We expect to finance our long-term capital needs
through the issuance of equity (common and preferred) and debt securities. Since
the IPO, the GP has issued $371 million of its common stock in three public
offerings. The GP issued $284 million of its common stock in a series of direct
placements with Security Capital U.S. Realty ("USRealty"), an affiliate of
Security Capital Group, Inc. Since October 1996, we have issued $600 million of
unsecured Senior Notes to the public. These notes were issued at interest rates
ranging from 6.95% to 8.2% and with maturities ranging from 2003-2027. In
addition, since the IPO, we have issued 4.3 million Units valued at $146 million
in consideration for the acquisition of self-storage facilities.
Short-term capital needs are met through our revolving lines of credit. We have
$240.0 million borrowing capacity in two unsecured revolving lines of credit
with a group of commercial banks. As of December 31, 1999 we had borrowed $105.5
million under these revolving lines of credit. We also had mortgage loans
outstanding of $63.6 million that were collateralized by 24 properties. Our
policy, which is subject to change at the discretion of our Board of Directors,
is to limit total indebtedness to the lesser of 50% of total assets at cost or
an amount that will sustain a minimum debt service coverage ratio of 2.5:1. As
of December 31, 1999, our total indebtedness is 43.9% of total assets at cost
and our debt service coverage ratio for the year ended December 31, 1999, is
3.4:1. As discussed in "JOINT VENTURES", the majority of all acquisitions and
developments over the next two years will be funded through and owned by the GE
Capital joint ventures. We believe that borrowings under our current credit
facilities combined with cash from operations will provide us with necessary
liquidity and capital resources to complete any additional acquisitions and
development projects outside of these joint ventures. We are limited in the
amount of debt we can issue by the Amended and Restated Unsecured Revolving
Credit Agreement, dated December 23, 1997 and Indenture dated November 1, 1996.
(See "Liquidity and Capital Resources" in Management's Discussion and Analysis
of Financial Condition and Results of Operations contained in Exhibit 13-Annual
Report for more details.) We are also subject to certain limitations on the
amount of debt we can incur under the existing line of credit facility and the
Strategic Alliance Agreement, as described in the section entitled "Strategic
Alliance with Security Capital U.S. Realty."
We may from time to time re-evaluate our borrowing policies according to the
following factors:
o current economic conditions,
o relative costs of debt and equity capital,
o market values of facilities,
o growth and acquisition opportunities, and
o other factors.
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Borrowings may be incurred through the Partnership or the GP. Indebtedness
incurred by us may be in the form of bank borrowings, secured and unsecured, and
publicly and privately placed debt instruments. Indebtedness incurred by the
Partnership may be in several forms:
o purchase money obligations to the sellers of properties,
o publicly or privately placed debt instruments, and
o financing from banks, institutional investors or other lenders.
Any of the above indebtedness may be unsecured or may be secured by mortgages or
other interests in the property owned by the Partnership. Such indebtedness may
provide the lender recourse to all or any part of our assets or those of the
Partnership, or may be limited to the particular property to which the
indebtedness relates. The proceeds from any borrowings by the Partnership or the
GP may be used for the following:
o payment of distributions,
o working capital,
o refinancing existing indebtedness, or
o financing acquisitions or expansions of facilities.
Our capital is used to further our investment objective of acquiring or
developing self-storage facilities with cash flow growth potential. While we
emphasize equity real estate investments, we may invest in mortgage and other
real estate interests, including securities of other REITs. As of December 31,
1999, we had no investments in securities of other REITs. We may also invest in
participating or convertible mortgages. Such mortgages are similar to equity
participation. Specifically, we may make participating and non-participating
loans collateralized by self-storage facilities owned by third parties (see
"Strategic Alliance with Security Capital U.S. Reality").
Despite the decline in the real estate debt and equity markets in 1998 and 1999,
we believe that our joint ventures with Fidelity Trust Management Corporation
and GE Capital Corporation will allow us to continue to expand our system. We
also believe that borrowings under our current credit facilities combined with
cash from operations will provide us with necessary liquidity and capital
resources to complete any additional acquisitions and development projects
outside of those joint ventures.
In December 1999, the GP announced a plan authorized its Board of Directors
to repurchase up to 5% of its outstanding shares of common stock through open
market and private purchases. The timing of the purchases, the length of time
that the repurchase program will continue and the exact number of shares to be
repurchased will depend on market conditions and price levels. Purchases will be
paid for through existing credit facilities. As of December 31, 1999, the GP had
repurchased 250,000 shares at an average price of $28.91.
STRATEGIC ALLIANCE WITH SECURITY CAPITAL U.S. REALTY
On March 19, 1996, the GP and the Partnership entered into a Strategic Alliance
Agreement with US Realty. The Strategic Alliance Agreement, among other things,
permits US Realty to purchase up to 42.5% of the GP's common stock and to
participate in certain offerings of the GP's equity securities. At December 31,
1998, US Realty owned 42.2% of the GP's common stock. We believe that the
alliance with US Realty has provided us with access to significant additional
financial and strategic resources not otherwise readily available to us, thereby
enhancing our short-term and long-term growth prospects and better positioning
us to capitalize on opportunities as the REIT industry matures. We also expect
that we will continue to benefit significantly from our affiliation with US
Realty and our access to US Realty's market knowledge, operating experience and
research capabilities.
The Strategic Alliance Agreement places several restrictions on the GP. Pursuant
to the Strategic Alliance Agreement, and until the first to occur of:
(A) June 5, 2003, which can be extended; and
(B) the first date following the date on which US Realty's ownership of the
GP's common stock has been below 20% of the outstanding shares of common
stock for a continuous period of 180 days, we may not:
o incur total indebtedness in an amount exceeding 60% of the value of our
total assets (which is deemed to be equal to the market value of our
outstanding equity (on a fully-diluted basis at a price of $31.30 per
share) and debt as of March 1, 1996, plus the acquisition cost of
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properties acquired after March 1, 1996 (less any proceeds of property
dispositions that are distributed to shareholders)),
o cause or permit the sum of the following to, at any time, exceed 10%,
at cost, of the consolidated assets owned by both GP and the
Partnership:
o securities of any other person,
o assets not held other than directly by the GP,
o loans made by the GP to the Partnership or any other
subsidiary, or the reverse,
o assets managed by persons other than the GP's employees,
o own real property other than self-storage facilities or land suitable
for the development of self-storage facilities whose value exceeds 10%
of the aggregate value of our real estate assets at cost,
o terminate the GP's eligibility for treatment as a REIT for federal
income tax purposes, or
o except as permitted or required by agreements existing as of
March 1, 1996:
o own any interest in any partnership unless the GP is the sole
managing general partner of such partnership, or
o issue Units, or securities convertible or exercisable for
Units, if such issuance would cause the GP to own less
than 90% of the Units on a fully diluted basis
(collectively, the "Corporate Action Covenants"). We have
amended this provision to allow us to own as little as
86.11%. We have certain specified rights to cure certain
failures to comply with the Corporate Action Covenants.
In addition, the GP is subject to certain limitations pursuant to the Strategic
Alliance that continue until US Realty's ownership of the GP's common stock
shall have been below 20% by value of the actually outstanding shares of the
GP's common stock for a continuous period of 180 days (subject to certain
conditions). Generally, these limitations restrict the amount of assets that we
may own indirectly through other entities and the manner in which the GP
conducts its business.
US Realty requested these conditions because of its belief that REITs with
direct and extensive control over the operation of all of their assets operate
more effectively and in order to permit US Realty to comply with certain
requirements of the Code and other countries' tax laws applicable to foreign
investors. We, during the same period, have agreed not to take actions in the
future that would result in more than 10% of our gross income, or more than 10%
of our assets by value (subject to certain adjustments), being attributable to
properties that are indirectly owned and are not managed by our employees or the
Partnership. US Realty has agreed to waive these requirements in certain
specific instances where indirect ownership facilitates our acquisition of
certain facilities.
US Realty is restricted from acquiring more than 42.5% of the GP's common stock
without its consent. US Realty is also restricted from certain other activities
with respect to the GP including, among others, a restriction on selling the
GP's common stock during a five year period ending on June 5, 2003 (so long as
it owns at least 20% of the GP's common stock,) except pursuant to transfers in
compliance with Rule 144 of the 1933 Securities Act, transfers pursuant to a
negotiated transaction with a third party, to its affiliates, or to banks or
similar institutions for purposes of securing a loan. These restrictions lapse
if we, or the GP, among other things, default under the Strategic Alliance
Agreement, another investor acquires more than 9.8% of the GP's outstanding
common stock or other similar events occur.
We believe that these limitations are generally consistent with our, or the
GP's, operating strategies and do not believe that they will materially restrict
the GP's operations or have a material adverse effect on our financial condition
or results of operations, though there can be no assurance that they will not do
so in the future.
ANTI-TAKEOVER MEASURES
Our Charter and By-laws and Tennessee law include a number of provisions that
could discourage a takeover or other transaction where our shareholders might
receive a premium for their shares over the then prevailing market price. The
provisions also cover situations that shareholders might believe to be otherwise
in their best interest, including:
o a prohibition on direct or constructive ownership of more than 9.8% of
the outstanding shares of common stock in the GP by any person (except
USRealty, which may acquire up to 42.5% of our common stock),
o the capacity to issue "blank check" preferred stock with terms and
preferences established by the Board of Directors, and
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o the Tennessee Investor Protection Act, Business Combination Act and
Greenmail Act, which impose certain restrictions and require certain
procedures with respect to certain takeover offers and business
combinations.
COMPETITION
Competition from other self-storage facilities exists in every market in which
our facilities are located. We principally face competitors who seek to attract
tenants primarily on the basis of lower prices. However, we usually do not seek
to be the lowest price competitor. Rather, based on the quality of our
facilities and our customer service-oriented managers and amenities, our
strategy is to lead particular markets in terms of prices.
We monitor the development of self-storage facilities in our markets. We have
facilities in several markets where we believe overbuilding has occurred,
including the following:
o Atlanta, GA (1.5% of portfolio square footage "sq. ft.")
o Las Vegas, NV (2.2% sq. ft.),
o Albuquerque, NM (1.8% sq. ft.),
o Nashville, TN (2.4% sq. ft.),
o Portland, OR (0.8% sq. ft.), and
o Dallas, TX (5.0% sq. ft.).
In these markets we may experience a minimal reduction in Physical Occupancy and
less growth in rental rates than other markets. As a result of the geographic
diversity of our portfolio, we do not expect the potential for excess supply in
these markets to have a significant impact on our financial condition or results
of operations.
We are the second largest self-storage operator, with 34.7 million square feet
in 405 owned and 112 managed (including 53 franchises) facilities as of March
20, 2000. There are four other publicly traded REITs and numerous private and
regional operators. These other companies may be able to accept more risk than
we can prudently manage. This competition may reduce the number of suitable
acquisition opportunities offered to us and increase the price required to
acquire particular facilities. Further, we believe that competition could
increase from companies organized with similar objectives. Nevertheless, we
believe that the operations, development, and financial experience of our
executive officers and directors along with our customer-oriented approach to
management of self-storage facilities should enable us to compete effectively.
SEASONALITY
Our revenues typically have been higher in the third and forth quarter primarily
because we increase our rental rates on most of our storage units at the
beginning of May. This also occurs to a lesser extent because self-storage
facilities tend to experience greater occupancy during the late spring, summer,
and early fall months due to greater incidence of persons moving during those
periods. Accordingly, a greater percentage of our customers come to us as a
result of the moving. We believe that our tenant mix, rental structure, and
expense structure provide adequate protection against undue fluctuations in cash
flows and net revenues during off-peak seasons. Thus, we do not expect
seasonality to materially affect our results of operations.
EMPLOYEES
All persons referred to as our employees are employees of the Partnership or its
subsidiaries (e.g. Franchise). As of December 31, 1999, we employed
approximately 1,939 employees, of whom approximately 334 were employed part-time
(fewer than 30 hours per week) on a regular basis. None of our employees are
covered by a collective bargaining agreement.
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GOVERNMENTAL REGULATION
The conduct of the self-storage business is regulated by various federal and
state laws, both statutory and common law, including those relating to the form
and content of rental agreements for individual storage spaces and requirements
relating to collection practices and imposition of late fees. Franchise is
subject to certain Federal and state laws, regulating the sale of franchises and
other practices with respect to the franchisor/franchisee relationship. Taxation
of Real Estate Investment Trusts ("REIT") is subject to governmental regulation
and interpretation of the Internal Revenue Code.
On December 17, 1999, the Ticket to Work and Work Incentives Improvement Act of
1999 (the "Act") was signed into law. The Act includes several REIT provisions
(the "REIT Provisions"). The REIT Provisions generally will be effective January
1, 2001 and will overhaul the existing tax rules applicable to taxable
subsidiaries of REITs. Under the REIT Provisions, the GP will be allowed to own
all of the stock in taxable REIT subsidiaries ("TRSs"). In addition, a TRS will
be allowed to perform "non-customary" services to the GP's tenants (i.e. those
types of services that would taint the rents from our tenants if provided by the
GP). The use of TRSs, however, would be subject to restrictions, including the
following:
o no more than 20% of the REIT's assets may consist of securities of TRSs,
o the tax deductibility of interest paid or accrued by a TRS to its
affiliated REIT would be limited, and
o a 100% excise tax would be imposed on non-arm's length transactions
between a TRS and its affiliated REIT or the REIT's tenants.
The GP expects to restructure its ownership interests in its current taxable
subsidiaries and establish additional taxable subsidiaries once the Act is
effective.
QUALIFICATION AS A REAL ESTATE INVESTMENT TRUST
The GP operates in a manner to qualify as a Real Estate Investment Trust
("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"). A
REIT, which complies with the Code and distributes at least 95% of its taxable
income to its shareholders, does not pay federal tax on its distributed income.
("95% REIT distribution test") 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. Certain facts and
circumstances not entirely within the GP'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 on the GP's
qualifications as a REIT or the federal income tax consequences. If the GP were
to fail to qualify as a REIT, it would not be allowed a deduction for
distributions to its shareholders in computing its taxable income. In this case,
the GP 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 GP would also 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 GP 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.
ENVIRONMENTAL MATTERS
We have obtained Phase 1 environmental audits on all of our facilities from
various outside environmental engineering firms. The purpose of the Phase 1
audits is to identify potential sources of contamination at these facilities and
to assess the status of environmental regulatory compliance. The Phase 1 audits
include the following:
o historical reviews of the facilities,
o reviews of certain public records,
o preliminary investigations of the sites and surrounding properties,
o visual inspection for the presence of asbestos,
o PCBs and underground storage tanks, and
o the preparation and issuance of a written report.
9
<PAGE>
A Phase 1 audit does not include invasive procedures, such as soil sampling or
ground water analysis. In certain instances we have obtained Phase 2
environmental audits or procedures in order to determine (using invasive
testing) whether potential sources of contamination indicated in Phase 1 audits
actually exist. While some of the facilities have in the past been the subject
of environmental remediation or underground storage tank removal, we are not
aware of any contamination of facilities requiring remediation under current
law. We will not take ownership of any acquisition facility prior to completing
a satisfactory environmental review and inspection procedure. No assurance can
be given that the Phase 1 and 2 audits have identified or will identify all
significant environmental problems or that no additional environmental
liabilities exist.
Under various federal, state and local laws and regulations, an owner or
operator of real estate may be liable for the costs of removal or remediation of
certain hazardous or toxic substances on properties. Such laws often impose such
liability without regard to whether the owner caused or knew of the presence of
hazardous or toxic substances and whether or not the storage of such substances
was in violation of a tenant's lease. Furthermore, the cost of remediation or
removal of such substances may be substantial, and the presence of such
substances, or the failure to promptly remediate such substances, may adversely
affect the owner's ability to sell such real estate or to borrow using such real
estate as collateral. In connection with the ownership and operation of our
facilities, we may become liable for such costs.
The environmental audit reports have not revealed any environmental liability
that we believe would have a material adverse effect on our business, assets or
results of operations. We are not aware of any existing conditions that
currently would be considered an environmental liability. Nevertheless, it is
possible that these reports do not or will not reveal all environmental
liabilities or that there are material environmental liabilities of which we are
unaware. Moreover, no assurances can be given concerning the following:
o that future laws, ordinances or regulations will not impose any material
environmental liability,
o that the current environmental condition of the facilities will not be
affected by the condition of the properties in the vicinity of the
facilities (such as the presence of leaking underground storage
tanks), or
o that tenants will not violate their leases by introducing hazardous or
toxic substances into our facilities. We may be potentially liable as
owner of the facility for hazardous materials stored in units in
violation of a tenant's lease, although to date we believe we have not
incurred any such liability.
We believe that the facilities are in compliance in all material respects with
all applicable federal, state and local ordinances and regulations regarding
hazardous or toxic substances and other environmental matters. We have not been
notified by any governmental authority of any material noncompliance, liability
or claim relating to hazardous or toxic substances or other environmental
substances in connection with any of our present or former properties.
FORWARD-LOOKING STATEMENTS AND RISK FACTORS
All statements contained in this Annual Report on Form 10-K that are not
historical facts are based on our current expectations. This includes statements
regarding anticipated future development and acquisition activity, the impact of
anticipated rental rate increases on our revenue growth, our 2000 anticipated
revenues, expenses and returns, and future capital requirements. Words such as
"believes", "expects", "anticipate", "intends", "plans" and "estimates" and
variations of such words and similar words also identify forward looking
statements. Such statements are forward looking in nature and involve a number
of risks and uncertainties. Actual results may differ materially. The following
factors, among others, could cause actual results to differ materially from the
forward-looking statements:
o Changes in the economic conditions in the markets in which we operate
could negatively impact the financial resources of our customers,
impairing our ability to raise rents.
o Certain of our competitors with substantially greater financial
resources than us could reduce the number of suitable acquisition
opportunities offered to us and increase the price necessary to
consummate the acquisition of particular facilities.
o Competition for development sites could drive up costs, making it
unfeasible for us to develop properties in certain markets.
o Increased development of new facilities in our markets could result in
over-supply and lower rental rates.
o Amounts we charge for late fees are periodically under review, have been
and are the subject of litigation against us and are, in some states,
the subject of government regulation. Consequently, such amounts could
change, materially affecting the results of operations.
10
<PAGE>
o The conditions affecting the bank, debt and equity markets could change.
o The availability of sufficient capital to finance our business plan on
satisfactory terms could decrease.
o Competition could increase, adversely affecting occupancy and rental
rates, thereby reducing our revenues.
o Costs related to compliance with laws, including environmental laws could
increase.
o General business and economic conditions could change, adversely
affecting occupancy and rental rates, thereby reducing our revenues.
We caution you not to place undue reliance on any such forward-looking
statements. We assume no obligation to update any forward-looking statements as
a result of new information, subsequent events or any other circumstances.
In addition, our business is subject to the following particular risks and may
be subject to other unidentified risks:
ACQUISITION AND DEVELOPMENT RISKS
Acquisitions risk is the possibility that investments will not perform in
accordance with expectations. Acquisitions risks exist because of the following
factors:
o the price paid for acquired facilities is based upon a series of
market judgements,
o costs of any improvements required to bring an acquired facility up to
standards to establish the market position intended for that facility may
prove inaccurate, and
o general investment risks associated with any new real estate investment.
We can give no assurance that acquisition targets meeting our guidelines for
quality and yield will continue to be available in the quantity that were
available in prior periods. We also may not be able to purchase such facilities
in volumes adequate to meet our goals in the future.
The self-storage development business involves significant risks. Other risks in
addition to those involved in the ownership and operation of established
self-storage facilities include the following:
o unfavorable financing terms,
o amounts charged for late fees are periodically under review, have been
and are subject of litigation and government regulation and could change,
reducing revenues,
o timing delays in construction and lease-up,
o costs overruns in completing construction,
o less-favorable than anticipated lease terms,
o less demand than anticipated, and
o an economic downturn reducing our rent collection rate.
Consequently, we give no assurance that we will realize our development goals or
that newly developed facilities will perform as well as other facilities
developed by us or realize their budgeted returns.
DEBT FINANCING
GENERAL RISKS. We finance certain of our acquisitions and development with
unsecured debt and, in some cases mortgage debt. Because we use debt, we are
subject to the risks normally associated with debt financing. The required
payments on indebtedness are not reduced if the economic performance of any
property or Storage USA as a whole declines. If such decline occurs, our ability
to make debt service payments would be adversely affected. If we mortgage a
property to secure debt and we are then unable to meet the mortgage payments,
the mortgagee could then take possession of that property by foreclosure. This
would cause a loss of revenue and asset value to us. Likewise our debt payment
requirements could use funds that would have been distributed to meet the 95%
REIT distribution test and the GP would lose its REIT status.
In connection with the 95% REIT distribution test, the GP may be required to
make distributions in excess of cash available for distribution to shareholders
in order to meet such distribution requirements. If this happened, we would try
to borrow the funds or sell assets to obtain the cash necessary to make
distributions to retain our qualification as a REIT for federal income tax
purposes.
11
<PAGE>
EFFECT OF MARKET INTEREST RATES ON PRICE OF COMMON STOCK. One of the factors
that influences the price of the common stock in public trading markets is the
annual yield from distributions on the price paid for common stock as compared
to yields on other financial instruments. Thus, an increase in market interest
rates will result in higher yields on other financial instruments, which could
adversely affect the market price of the GP's common stock.
CHANGES IN POLICIES. Our major policies, including our policies dealing with
acquisitions, development, financing, growth, operations, debt limitation and
distributions, are determined by the Board of Directors of the GP. The Board of
Directors may amend or revise these and other policies from time to time without
a vote of its shareholders.
MARKET RISK. In the past, we have depended upon an inflow of external capital to
carry out our acquisition and development strategies. Although there has been a
decline in the real estate debt and equity markets in 1998 and 1999, we believe
the flexibility we gained through our joint ventures with Fidelity Trust
Management Corporation and GE Capital Corporation will allow us to continue to
expand our system.
TAX RISKS
TAX LIABILITIES AS A CONSEQUENCE OF THE FAILURE TO QUALIFY AS A REIT. The GP
intends to operate in a manner to qualify as a REIT for federal income tax
purposes. However, no assurance can be given that the GP will qualify or remain
qualified as a REIT. Qualification as a REIT involves the application of highly
technical and complex provisions of the Code for which there are only limited
judicial or administrative interpretations. The complexity of these provisions
is greater in the case of a REIT that holds 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. Certain
facts and circumstances not entirely within our control may affect the GP's
ability to qualify as a REIT. In addition, no assurance can be given that
legislation, new regulations, administrative interpretations or court decisions
will not adversely effect the GP's qualification as a REIT or the federal income
tax consequences.
If the GP were to fail to qualify as a REIT, it would not be allowed a deduction
for distributions to shareholders in computing its taxable income. In this case,
the GP would be subject to federal income tax (including any applicable
alternative minimum tax) on our taxable income at regular corporate rates.
Unless entitled to relief under certain Code provisions, the GP would also 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 its shareholders would be reduced for each of the years
involved. Although the GP 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.
ADVERSE EFFECTS OF REIT MINIMUM DISTRIBUTION REQUIREMENTS. In order to qualify
as a REIT, the GP generally will be required each year to distribute to its
shareholders at least 95% of its net taxable income (excluding any net capital
gain). The GP would be subject to a 4% nondeductible excise tax on the amount,
if distributions paid are less than the sum of one of the following scenarios
during a calendar year:
o 85% of the GP's ordinary income,
o 95% of the GP's capital gain net income for that year, or
o 100% of the GP's undistributed taxable income from prior years.
The GP intends to make distributions to its shareholders to comply with the 95%
distribution requirement and to avoid the nondeductible excise tax. The GP's
income and cash flow consists primarily of its share of those items from the
Partnership. Differences in timing between taxable income and cash available for
distribution could require the GP to borrow funds on a short-term basis to meet
the 95% distribution requirement and to avoid the nondeductible excise tax. For
federal income tax purposes, distributions paid to shareholders may consist of
ordinary income, capital gains, nontaxable return of capital, or a combination
of these. The GP will provide its shareholders with an annual statement as to
the taxability of distributions.
Distributions by the Partnership are determined by the GP's Board of Directors
and will be dependent on a number of factors. Some of those factors could
include the following:
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o the amount of the Partnership's cash available for distribution,
o the Partnership's financial condition,
o any decision by the Board of Directors to reinvest funds rather than to
distribute such funds,
o the Partnership's capital expenditures,
o the annual distribution requirements under the REIT provisions of the
Code, and
o other factors as the Board of Directors deems relevant.
SELF-STORAGE INDUSTRY RISKS
OPERATING RISKS. Our facilities are subject to all operating risks common to the
self-storage facility industry. These include the following risks:
o a lack of demand for rental spaces in a given locale,
o changes in supply of or demand for similar or competing facilities in an
area,
o changes in market rental rates,
o an economic downturn reducing our customers ability to pay their rents or
our ability to collect them, and
o amounts charged for late fees are subject to review and could change,
materially affecting results of operations.
COMPETITION. Our facilities compete with other self-storage properties in their
geographic markets. Most of our competitors seek to compete by offering storage
space at lower prices. We compete for customers and for investment opportunities
with companies that have substantially greater financial resources. These
companies may generally be able to accept more risk than we can prudently
manage. Competition may generally reduce the number of suitable investment
opportunities offered to us and increase the bargaining power of property owners
seeking to sell. See "Item 1, Business-Competition" above.
REAL ESTATE INVESTMENT RISKS
GENERAL RISKS. Our investments are subject to varying degrees of risk associated
with the ownership of real property. The underlying value of our real estate
investments and our ability to make distributions depends on our ability to
operate the facilities in a manner to maintain or increase cash provided by
operations. Our income from our self-storage facilities may be adversely
affected by the following:
o adverse changes in national economic conditions,
o adverse changes in local market conditions due to changes in general or
local economic conditions and neighborhood characteristics,
o competition from other self-storage properties,
o changes in interest rates or loan fees,
o changes in amounts we charge for late fees,
o the availability, cost and terms of mortgage funds,
o the impact of present or future legislation and regulatory compliance,
including the costs of compliance with environmental, zoning and land
use and fire and safety regulations as well as building codes and other
laws,
o the ongoing need for capital improvements,
o changes in real estate tax rates and other operating expenses,
o adverse changes in governmental rules and fiscal policies,
o civil unrest,
o acts of God, including earthquakes and other natural disasters (which may
result in uninsured losses),
o acts of war, and
o other factors which are beyond our control.
ILLIQUIDITY OF REAL ESTATE MAY LIMIT ITS VALUE. Real estate investments are
relatively illiquid. Our ability to vary our portfolio in response to changes in
economic and other conditions is limited. There can be no assurance that we will
be able to dispose of an investment when we find disposition advantageous or
necessary or that the sale price will recoup or exceed the amount of our
investment.
UNINSURED AND UNDERINSURED LOSSES COULD RESULT IN LOSS OF VALUE OF FACILITIES.
We maintain comprehensive insurance on each of our facilities, including
liability, fire and extended coverage. We believe this coverage is of the type
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<PAGE>
and amount customarily obtained for real property. However, there are certain
types of losses, generally of a catastrophic nature, such as earthquakes,
hurricanes and floods that may be uninsurable or not economically insurable. As
such, our facilities are at risk in their particular locales. We use our
discretion in determining amounts, coverage limits and deductibles for
insurance. These terms are determined based on retaining an acceptable level of
risk at a reasonable cost. This may result in insurance coverage that in the
event of a substantial loss would not be sufficient to pay the full current
market value or current replacement cost of our lost investment. Inflation,
changes in building codes and ordinances, environmental considerations, and
other factors also might make it unfeasible to use insurance proceeds to replace
a facility after it has been damaged or destroyed. Under such circumstances, the
insurance proceeds we receive might not be adequate to restore our economic
position in a property.
POSSIBLE LIABILITY RELATING TO ENVIRONMENTAL MATTERS. We may be subject to
liability under various environmental laws as an owner or operator of real
estate. See "Item 1, Business Strategy Practices - Environmental Matters."
ITEM 2. PROPERTIES
The following are definitions of terms used throughout this discussion in
analyzing our business:
o "Physical occupancy" is the total net rentable square feet rented as of
the date divided by the total net rentable square feet available.
o "Economic occupancy" is determined by dividing the expected income by the
gross potential income.
o "Gross potential income" is 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.
o "Expected income" is the sum of the monthly rent being charged for the
rented units at a facility as of the date computed.
o "Rent Per Square Foot" is the annualized result of dividing gross
potential income on the date by total net rentable square feet.
o "Direct Property Operating Cost" means the costs incurred in the
operation of a facility, such as utilities, real estate taxes, and
on-site personnel. Costs incurred in the management of all facilities,
such as accounting personnel and management level operations personnel
are excluded.
SELF-STORAGE FACILITIES
Our self-storage facilities offer customers fully enclosed units. The customer
furnishes their own lock, therefore each unit is controlled only by that
customer. The average size of a Company-owned facility is 67,400 square feet and
contains an average of 663 units. At December 31, 1999, the average rent per
square foot for our-owned facilities was $12.01. The average direct expense per
square foot for a Company owned facility is $2.00. According to Self-Storage
Almanac - 2000, the typical customer base for a self-storage facility is 67%
residential and 33% commercial. At December 31, 1999, the average occupancy of
the 405 facilities owned by us was 81% physical and 72% economic.
Our self-storage facilities are located near major business and residential
areas, and generally are clearly visible and easily accessible from major
traffic arteries. Computer-controlled access gates, door alarm systems and video
cameras, generally protect them. These facilities are typically constructed of
one-story masonry or tilt-up concrete walls, with an individual roll-up door for
each storage space and with removable steel interior walls to permit
reconfiguration and to protect items from damage. Sites have wide drive aisles
to accommodate most vehicles. At most of the facilities, a property manager
lives in an apartment located on site. Climate-controlled space is offered in
many facilities for storing items that are sensitive to extreme humidity or
temperature. Some of the facilities provide paved secure storage areas for
recreational vehicles, boat and commercial vehicles. The facilities generally
contain 400 to 1,000 units varying in size from 25 to 400 square feet. The
majority of our tenants are individuals, ranging from high-income homeowners to
college students to lower income renters, who typically store furniture,
appliances and other household and personal items. Commercial users range from
sales representatives and distributors storing inventory to small businesses
that typically store equipment, records and seasonal items. The facilities
generally have a diverse tenant base of 500 to 600 tenants, with no single
tenant occupying more than one to two percent of the net rentable square feet of
a facility.
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CAPITAL EXPENDITURES AND MAINTENANCE
Due to the type of simple structures and durable materials used for the
facilities, property maintenance is minimal compared to other types of real
estate investments. The majority of our facilities are one story, with either
tilt-up concrete or masonry load-bearing walls, easily moved steel interior
walls, and metal roofs. Typical capital expenditures include replacing asphalt
roofs, gates, air conditioning equipment and elevators (as contrasted with
expense items such as repairing asphalt, repairing a door, pointing up masonry
walls, painting trim and facades, repairing a fence, maintaining landscaping,
and repairing damage caused by tenant vehicles). Maintenance within a storage
unit between leasing typically consists of sweeping out the unit and changing a
light bulb. Maintenance is the responsibility of the facility manager who
resides in the apartment located at most of the facilities.
The following table provides summarized information regarding our owned
facilities, including stabilized and non-stabilized properties, as of December
31, 1999.
MARKETS
<TABLE>
<CAPTION>
NUMBER OF AVAILABLE AVAILABLE PHYSICAL RENT PER ECONOMIC
UNITS SQUARE FEET OCCUPANCY SQUARE FOOT OCCUPANCY
PROPERTIES
- -----------------------------------------------------------------------------------------------------
<S> <C>
Alabama 2 830 104,900 82.4% $9.77 74.0%
Arizona 18 11,172 1,079,523 80.6% $10.47 70.6%
California 74 55,291 5,545,022 87.2% $12.28 75.6%
Colorado 2 1,373 155,954 77.3% $10.60 67.7%
Connecticut 7 4,830 543,734 90.5% $12.86 81.6%
Florida 30 24,770 2,273,428 76.6% $13.26 69.5%
Georgia 6 3,818 439,243 73.2% $9.12 64.8%
Indiana 22 8,874 1,031,939 76.3% $8.03 64.8%
Kansas 1 397 47,550 81.9% $9.13 67.8%
Kentucky 6 2,749 325,223 72.0% $8.30 62.4%
Massachusetts 12 6,633 776,885 82.5% $11.86 72.8%
Maryland 17 13,338 1,243,156 72.8% $16.29 65.4%
Michigan 14 7,919 910,273 87.7% $10.54 78.2%
Missouri 1 540 61,855 86.1% $8.18 78.9%
North Carolina 7 4,150 460,999 70.6% $8.03 64.0%
New Jersey 18 12,651 1,223,856 82.4% $16.19 74.1%
New Mexico 10 5,339 562,670 74.2% $9.30 64.2%
Nevada 11 6,996 764,689 77.6% $10.16 66.4%
New York 22 25,733 1,566,424 83.1% $20.92 75.8%
Ohio 25 11,311 1,523,541 78.6% $8.26 67.9%
Oklahoma 14 7,430 891,291 84.2% $6.87 74.4%
Oregon 3 2,160 203,105 81.1% $12.04 73.0%
Pennsylvania 9 6,457 586,615 90.1% $12.89 83.7%
Tennessee 36 19,992 2,389,418 73.0% $9.81 61.4%
Texas 21 13,018 1,480,072 81.9% $10.49 72.0%
Utah 2 997 137,135 82.5% $8.29 73.0%
Virginia 13 8,472 830,365 80.5% $16.55 70.5%
Washington 2 1,379 130,260 62.5% $12.58 52.4%
===============================================================================
405 268,619 27,289,125 80.7% $12.01 71.5%
===============================================================================
</TABLE>
ITEM 3. LEGAL PROCEEDINGS.
Actions for negligence or other tort claims occur routinely in the ordinary
course of our business, but none of these proceedings involves a claim for
damages (in excess of applicable excess umbrella insurance coverages) involving
more than 10% of our current assets. We do not anticipate any amounts which we
may be required to pay as a result of an adverse determination of such legal
proceedings, individually or in the aggregate, or any other relief granted by
reason thereof, will have a material adverse effect on our financial position or
results of operation.
15
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On July 22, 1999, a purported class action was filed against the GP and
Partnership in the Circuit Court of Montgomery County, Maryland, under the
style: Ralph Grunewald v. Storage USA, Inc. and SUSA Partnership, L.P., Case No.
201546V, seeking recovery of certain late fees paid by the our tenants and an
injunction against further assessment of similar fees. We filed a responsive
pleading on September 17, 1999, setting out our answer and affirmative defenses,
and believe that we have defenses to the claims in the suit and intend to
vigorously defend it. The case is currently in discovery and no trial date has
been set.
On November 15, 1999 a purported class action was filed against the GP and
Partnership in the Supreme Court of the State of New York, Ulster County, case
no 99-3278 , also seeking the recovery of certain late and administrative fees
paid by our tenants and an injunction against similar fees. We filed a
responsive pleading on January 28, 2000. We believe that we have defenses to the
suit and intend to vigorously defend it. The case is currently in discovery and
no trial date has been set.
While the ultimate resolution of these cases will not have a material adverse
effect on our financial position, if during any period the potential contingency
should become probable, the results of operations in such period could be
materially affected.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of the GP's shareholders during the last
quarter of our fiscal year ended December 31, 1999.
EXECUTIVE OFFICERS OF THE REGISTRANT AT MARCH 20, 2000.
The following information relates to our executive officers:
<TABLE>
<CAPTION>
NAME AND AGE POSITIONS AND OFFICES HELD AND PRINCIPAL OCCUPATIONS OR
EMPLOYMENT DURING PAST 5 YEARS
-------------------
<S> <C>
Dean Jernigan (54) Director, Chairman, President and Chief Executive Officer since 1984.
Christopher Marr (35) Chief Financial Officer since August, 1998. Senior Vice President, Finance
and Accounting July, 1997 to August 1998. Vice President, Financial
Reporting and Controller, Storage USA, Inc., August, 1994 to July, 1997.
Senior Manager, Coopers and Lybrand, January, 1994 to August, 1994.
Karl Haas (48) Executive Vice President, Management since March 1994.
John W. McConomy (50) Executive Vice President, General Counsel and secretary since August,
1998. Vice President and Associate General Counsel, Harrah's
Entertainment, Inc., February, 1996 to August, 1998. Associate General
Counsel, Harrah's Entertainment, Inc. 1991-1996.
Francis C. Brown, III (36) Senior Vice President, E-Commerce since February 2000. Vice President,
Human Resources February 1998 to January 2000. Vice President, Human
Resources, AutoZone, Inc. December, 1993 to February, 1998.
Director, Communications, AutoZone, Inc. July, 1991 to December,
1993.
Carol Shipley (43) Senior Vice President since November 1999. Senior Vice President of
Development, Storage USA Franchise Corp. January 1998 to October, 1999.
Senior Vice President of Storage USA, Inc. January 1992 through December
1997.
16
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Richard B. Stern (48) Senior Vice President, Development since June, 1996. Vice President/Senior
Portfolio Manager, Kemper Corporation , October, 1992 to January, 1996.
Bruce Taub (42) Senior Vice President, Capital Markets as of January 2000. Senior Vice
President and General Counsel, Storage USA Franchise Corp., September 1998
to December 1999. Partner, Shapiro and Olander, January 1991 to August
1998.
Mark E. Yale (34) Senior Vice President, Financial Reporting since July 1999. Vice President,
Financial Reporting August 1998 through June 1999. Senior Audit Manager,
PricewaterhouseCoopers, January, 1994 to July, 1998.
</TABLE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
No established public trading market exists for the Units. At January 31, 1999,
there were 78 limited partners and 3,655,093 Units outstanding held by such
limited partners. During 1999, the Partnership made the following quarterly cash
distributions per Unit: $0.67 in the First Quarter; $ 0.67 in the Second
Quarter; $ 0.67 in the Third Quarter; and $ 0.67 in the Fourth Quarter.
The table below sets forth all issuances of Units made by the
Partnership to persons other than the GP during the year ended December 31,
1999. All Units were issued in exchange for interests in self-storage facilities
acquired by the Partnership. The price per Unit is determined by the closing
price of a share of the GP's common stock on the date of issuance as quoted on
the New York Stock Exchange. The offerings were exempt from registration
pursuant to Section 4(2) and Regulation D under the Securities Act of 1933, as
amended (investors are required to establish their status as accredited
investors pursuant to an investor questionnaire):
Price
Date Units Issued Per Unit
- -------------------------------------------------
6/11/99 22,797 $ 33.46
6/15/99 43,908 $ 33.59
6/15/99 59,544 $ 33.59
9/25/99 37,071 $ 26.98
11/23/99 25,562 $ 27.79
The Units may be redeemed for cash, or at the GP's option, common stock
of the GP commencing one year after the issuance of the Units, as described in
the Company's partnership agreement.
ITEM 6. SELECTED FINANCIAL DATA.
Incorporated herein by reference from the caption "Selected Financial Data"
appearing in our 1999 Annual Report, the relevant portion of which is attached
hereto as Exhibit 13.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
Incorporated herein by reference from the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" appearing in our 1999
Annual Report, the relevant portion of which is attached hereto as Exhibit 13.
ITEM 7.A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK.
Incorporated herein by reference from the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Qualitative and
Quantitative Disclosure About Market Risk" appearing in our 1999 Annual Report,
the relevant portion of which is attached hereto as Exhibit 13.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Our Financial Statements and Supplementary Data for the year ended December 31,
1999, are incorporated herein by reference from our 1999 Annual Report, the
relevant portion of which is attached hereto as Exhibit 13.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT AT MARCH 20, 2000
For non-employee Directors, the information required hereunder is incorporated
herein by reference from the captions "Election of Directors" in the GP's
definitive proxy statement to be filed with respect to the GP's Annual Meeting
of Shareholders.
For executive officers, the information required hereunder is included in Part
1, following Item 4 in this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION.
Incorporated herein by reference from the caption " Executive Compensation" and
"Indebtedness by Executives to Storage USA" in the GP's definitive proxy
statement to be filed with respect to the GP's Annual Meeting of Shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Incorporated herein by reference from the caption "Beneficial Ownership of
Company Common Stock" in the GP's definitive proxy statement to be filed with
respect to the GP's Annual Meeting of Shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Incorporated herein by reference from the caption "Transactions with Management
and Others; Certain Business Relationships" and "Indebtedness of Executives" in
the GP's definitive proxy statement to be filed with respect to the GP's Annual
Meeting of Shareholders.
18
<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 included or hereby incorporated by reference from our
1999 Annual Report, excerpts from which are attached hereto
as exhibit 13:
1. FINANCIAL STATEMENTS:
Report of Independent Accountants
Consolidated balance sheets as of December 31, 1999 and 1998
Consolidated statements of operations for the years ended December
31, 1999, 1998 and 1997
Consolidated statements of cash flows for the years ended December
31, 1999, 1998 and 1997
Consolidated statements of shareholders' equity for the years ended
December 31, 1999, 1998 and 1997
Notes to consolidated financial statements
Supplementary information on quarterly financial data (unaudited)
Selected Financial Data
Schedule III, Real Estate and Accumulated Depreciation as of December
31, 1999
Report of Independent Accountants
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 December 1, 1999, the GP filed its current report on Form 8-K. The
filing included information relating to the formation of our two joint ventures
with General Electric Capital Corporation, as well as the GP's plan to
repurchase up to 5% of its outstanding shares of common stock. More details
regarding these events are contained in Notes to Consolidated Financial
Statements contained in Exhibit 13-Annual Report.
On December 9, 1999, the GP filed an amendment to its Current Report on
Form 8-K, filed on December 1, 1999. The amendment included additional
information regarding the two joint ventures with General Electric Capital
Corporation.
19
<PAGE>
(C) EXHIBITS
The following exhibits are filed as part of this report:
EXHIBIT NO. DESCRIPTION
3.1 Amended and Restated Charter of Storage USA, Inc. (the "GP"),
(filed as Exhibit 3.1 to our Registration Statement on Form S-3
(File No. 333-44641), and incorporated by reference herein).
3.2* Restated and Amended Bylaws of the GP.
4* Specimen Common Stock Certificate.
10.1* Agreement between the GP and certain executive officers
prohibiting conflicting self-storage interests.
10.2* GP's 1993 Omnibus Stock Plan.
10.3* SUSA Partnership, L.P. (the "Partnership") 401(k) Savings Plan.
10.4** Form of Registration Rights Agreement relating to
Partnership unit issuances in 1994.
10.5++ Form of Agreement of General Partners relating to certain
Partnership unit issuances in 1995 and schedule of
beneficiaries.
10.6++ Form of Registration Rights Agreement relating to certain
issuances of Partnership units after 1994 and schedule of
beneficiaries.
10.7++ Form of Stock Purchase Agreement in connection with the 1995
Employee Stock Purchase and Loan Plan, and schedule of
participants.
10.8++ Form of Promissory Note in connection with the 1995
Employee Stock Purchase and Loan Plan, and schedule of
issuers.
10.9++++ Second Amended and Restated Agreement of Limited
Partnership of the Partnership, dated as September 21, 1994
(the "Partnership Agreement").
10.10 First Amendment to the Partnership Agreement, dated March
19, 1996 (filed as Exhibit 10.3 to our Current Report on
Form 8-K/A, filed April 1, 1996, and incorporated by
reference herein).
10.11 Second Amendment to the Partnership Agreement, dated as of
June 14, 1996 (filed as Exhibit 10.0 to our Current Report
on Form 8-K/A filed July 17, 1996, and incorporated by
reference herein).
10.12 Third Amendment to Partnership Agreement, dated as of
August 14, 1996 (filed as Exhibit 10.1 to our Amendment No.
1 to a Registration Statement on Form S-3 (File No.
333-04556), and incorporated by reference herein).
20
<PAGE>
10.13 Strategic Alliance Agreement, dated as of March 1, 1996,
between the GP and Security Capital Holdings S.A. and
Security Capital U.S. Realty (filed as Exhibit 10.1 to our
Current Report on Form 8-K, filed on April 1, 1996, and
incorporated by reference herein).
10.14 Amendment No. 1 to Strategic Alliance Agreement, dated June 14,
1996, between the GP, the Partnership, Storage USA Trust,
Security Capital U.S. Realty and Security Capital Holdings, S.A.
(filed as Exhibit 10.2 to our Amendment No. 1 to
Registration Statement on Form S-3 (File No. 333-04556), and
incorporated by reference herein).
10.15 Registration Rights Agreement, dated as of March 19, 1996,
between the GP, 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).
10.16 Indenture, dated November 1, 1996, between the Partnership
and First National Bank of Chicago, as Trustee (filed as
Exhibit 10.1 to our Current Report on Form 8-K, filed on
November 8, 1996, and incorporated by reference herein).
10.17+ First Amendment to the Adoption Agreement for our 401(k)
Plan.
10.18 Amended and Restated Revolving Credit Agreement dated
December 23, 1997 (filed as an exhibit to our current
Report on Form 8-K, filed on January 20, 1998,) and
incorporated by reference herein.
10.19## Second Amendment to Strategic Alliance Agreement dated as of
November 20, 1997, between the GP and Security Capital U.S. Realty
10.20# Fourth Amendment to the Second Amended and Restated Agreement
of Limited Partnership of SUSA Partnership, L.P. dated as of
November 12, 1998
10.21## Amendment No. 3 to GP's 1993 Omnibus Stock Plan, dated as of
December 16, 1996
10.22## Amendment No. 4 to GP's 1993 Omnibus Stock Plan, dated as of
November 4, 1998
10.23## The GP's 1996 Officers' Stock Option Loan Program,
effective as of December 16, 1996
10.24## Form of Restricted Stock Award pursuant to the GP's 1993
Omnibus Stock Plan
10.25## The GP's 1998 Non-Executive Employee Stock Option Plan,
effective as of November 4, 1998
10.26## Shareholder Value Plan, effective as of January 1, 1999
21
<PAGE>
10.27## Employment Agreements for:
Larry Hohl, Executive VP and Senior Operating Officer,
dated as of September 1, 1998,
John McConomy, Executive VP and General Counsel,
dated as of July 24, 1998,
Richard Stern, Senior VP, Development, dated as of May 15,
1998, Morris J Kriger, Executive VP, Acquisitions, dated as
of December 6, 1995.
10.28### Second Amended and Restated Unsecured Revolving Credit Agreement,
dated as of May 26, 1999
10.29### Limited Liability Company Agreement of Storage Portfolio
I LLC, by and between SUSA Partnership, L.P. and FREAM
No. 18, LLC, dated May 13, 1999.
10.30### First Amendment to Limited Liability Company Agreement of
Storage Portfolio I LLC, dated as of June 7, 1999
10.31### Amendment No. 2 to the GP's 1995 Employee Stock Purchase and Loan
Plan, dated as of May 5, 1999
10.32####Form of Severance Agreement between the GP and Dean Jernigan,
Chairman, President and Chief Executive Officer, effective
August 16, 1999
10.33####Form of Severance Agreement between the GP and
Christopher P. Marr, Chief Financial Officer, effective
August 16, 1999.
10.34####Form of Change of Control Severance Agreement between the GP and
each of:
(I) John W. McConomy, Executive Vice President, General Counsel
and Secretary;
(II) Karl T. Haas, Executive Vice President Operations;
(III) Morris J. Kriger, Executive Vice President Acquisitions;
(IV) Francis C. ("Buck") Brown, III, Senior Vice President Human
Resources;
(V) Richard B. Stern, Senior Vice President Development;
(VI) Russell W. Williams, Senior Vice President Sales and
Marketing; and
(VII) Mark E. Yale, Senior Vice President Financial Reporting,
effective August 16, 1999.
10.35####Form of Change of Control Severance Agreement between the GP and
each of:
(I) Teresa K. Corona, Vice President, Investor Relations,
(II) Michael P. Kenney, Vice President Operations - Western
Division,
(III) Stephen R. Nichols, Vice President Operations - Eastern
Division,
(IV) Richard J. Yonis, Vice President Operations - Central
Division, effective August 16, 1999.
10.36####Amendment No. 3 to the GP's 1995 Employee Stock Purchase and
Loan Plan dated as of August 5, 1999
10.37####Amended and Restated Amendment No. 4 to the GP's 1993 Omnibus
Stock Plan dated as of November 4, 1998.
10.38####Employment Agreement between the GP and Christopher P.
Marr, Chief Financial Officer, dated as of August 4, 1999
10.39####Employment Agreement between the GP and Bruce F. Taub, Senior
Vice President, Capital Markets, dated as of June 12,1998
22
<PAGE>
10.40x Storage USA Press Release dated December 1, 1999,
announcing joint ventures With GE Capital Corporation
10.41x Storage USA Press Release dated December 1, 1999,
announcing approval of repurchase program
10.42x Summary of Material Terms of the GE Capital Transactions
10.43xx Limited Liability Company Agreement of Storage
Development Portfolio, L.L.C., dated November 30, 1999
between SUSA Partnership, L.P. and Storage Ventures, L.P.
10.44xx Limited Liability Company Agreement of Storage
Acquisition Portfolio, L.L.C., dated November 30, 1999
between SUSA Partnership, L.P. and Storage Ventures, L.P.
10.45xx Warrant Purchase Agreement dated November 30, 1999
between the GP and Storage Ventures, L.P.
10.46xx Common Stock Warrant, dated November 30, 1999 issued by
the GP to Storage Ventures, L.P.
10.47xx Participation Rights Letter dated November 12, 1999 from the GP
to Security Capital U.S. Realty Management.
10.48 Amendment No. 5 to the GP's 1993 Omnibus Stock Plan, dated
February 2, 2000
10.49 Form of Change of Control Severance Agreement between the GP
and each of (I) Bruce F. Taub
(II) Carol E. Shipley
13 Relevant portions of our 1999 Annual Report are filed herewith.
21 Subsidiaries of Registrant.
23 Consent of Independent Accountants
27.1 Financial Data Schedule
* Filed as an Exhibit to the GP's Registration Statement on Form
S-11, File No. 33-74072, as amended, and incorporated by reference
herein.
** Filed as an Exhibit to the GP's Registration Statement on Form
S-11, File No. 33-82764, as amended, and incorporated by reference
herein.
*** Filed as an Exhibit to our Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, and incorporated by reference herein.
+ Filed as an Exhibit to our Annual Report on Form 10-K for the fiscal
year ended December 31, 1995, and incorporated by reference.
++ Filed as an Exhibit to our Current Report on Form 8-K, as amended to
Form 8-K/A Filed November 17, 1995, and incorporated by reference
herein.
23
<PAGE>
+++ Filed as an Exhibit to our Current Report on Form 8-K, filed May 30,
1995, and incorporated by reference herein.
++++ Filed as an Exhibit to our Registration Statement on Form
S-3, File No. 33-91302, and incorporated by reference herein.
# Filed as an Exhibit to our Current Report on Form 8-K, filed November
20, 1998, and incorporated by reference here in.
## Filed as an Exhibit to our Annual Report on Form 10-K for the fiscal
year ended December 31, 1998, and incorporated by reference.
### Filed as an Exhibit to our Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999, and incorporated by reference here in.
#### Filed as an Exhibit to our Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999, and incorporated by reference here
in.
x Filed as an Exhibit to the GP's Current Report on Form 8-K, filed
December 1, 1999, and incorporated by reference here in.
xx Filed as an Exhibit to the GP's Current Report on Form 8-K/A, filed
December 9, 1999, and incorporated by reference here in.
24
<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 report to be signed on our
behalf by the undersigned, thereunto duly authorized.
SUSA PARTNERSHIP, L.P.
BY STORAGE USA, INC.,
GENERAL PARTNER
By: /s/ Christopher P. Marr
---------------------------
Christopher P. Marr
Chief Financial Officer
(Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C>
/s/ Dean Jernigan Chairman of the Board of Directors March 24, 2000
- ------------------------ Chief Executive Officer (Principal
Dean Jernigan Executive Officer)
/s/ Howard P. Colhoun Director March 24, 2000
- ------------------------
Howard P. Colhoun
/s/ Ronald Blankenship Director March 24, 2000
- ------------------------
Ronald Blankenship
/s/ Harry Thie Director March 24, 2000
- ------------------------
Harry Thie
/s/ Mark Jorgensen Director March 24, 2000
- ------------------------
Mark Jorgensen
/s/ John McCann Director March 24, 2000
- ------------------------
John McCann
/s/ William D. Sanders Director March 24, 2000
- ------------------------
William D. Sanders
/s/ Caroline McBride Director March 24, 2000
- ------------------------
Caroline McBride
/s/ Alan Graf Director March 24, 2000
- ------------------------
Alan Graf
</TABLE>
25
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
3.1 Amended and Restated Charter of Storage USA, Inc. (the "GP"),
(filed as Exhibit 3.1 to our Registration Statement on Form S-3
(File No. 333-44641), and incorporated by reference herein).
3.2* Restated and Amended Bylaws of the GP.
4* Specimen Common Stock Certificate.
10.1* Agreement between the GP and certain executive officers
prohibiting conflicting self-storage interests.
10.2* GP's 1993 Omnibus Stock Plan.
10.3* SUSA Partnership, L.P. (the "Partnership") 401(k) Savings Plan.
10.4** Form of Registration Rights Agreement relating to
Partnership unit issuances in 1994.
10.5++ Form of Agreement of General Partners relating to certain
Partnership unit issuances in 1995 and schedule of
beneficiaries.
10.6++ Form of Registration Rights Agreement relating to certain
issuances of Partnership units after 1994 and schedule of
beneficiaries.
10.7++ Form of Stock Purchase Agreement in connection with the 1995
Employee Stock Purchase and Loan Plan, and schedule of
participants.
10.8++ Form of Promissory Note in connection with the 1995
Employee Stock Purchase and Loan Plan, and schedule of
issuers.
10.9++++ Second Amended and Restated Agreement of Limited
Partnership of the Partnership, dated as September 21, 1994
(the "Partnership Agreement").
10.10 First Amendment to the Partnership Agreement, dated March
19, 1996 (filed as Exhibit 10.3 to our Current Report on
Form 8-K/A, filed April 1, 1996, and incorporated by
reference herein).
10.11 Second Amendment to the Partnership Agreement, dated as of
June 14, 1996 (filed as Exhibit 10.0 to our Current Report
on Form 8-K/A filed July 17, 1996, and incorporated by
reference herein).
10.12 Third Amendment to Partnership Agreement, dated as of
August 14, 1996 (filed as Exhibit 10.1 to our Amendment No.
1 to a Registration Statement on Form S-3 (File No.
333-04556), and incorporated by reference herein).
<PAGE>
26
10.13 Strategic Alliance Agreement, dated as of March 1, 1996,
between the GP and Security Capital Holdings S.A. and
Security Capital U.S. Realty (filed as Exhibit 10.1 to our
Current Report on Form 8-K, filed on April 1, 1996, and
incorporated by reference herein).
10.14 Amendment No. 1 to Strategic Alliance Agreement, dated June 14,
1996, between the GP, the Partnership, Storage USA Trust,
Security Capital U.S. Realty and Security Capital Holdings, S.A.
(filed as Exhibit 10.2 to our Amendment No. 1 to
Registration Statement on Form S-3 (File No. 333-04556), and
incorporated by reference herein).
10.15 Registration Rights Agreement, dated as of March 19, 1996,
between the GP, 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).
10.16 Indenture, dated November 1, 1996, between the Partnership
and First National Bank of Chicago, as Trustee (filed as
Exhibit 10.1 to our Current Report on Form 8-K, filed on
November 8, 1996, and incorporated by reference herein).
10.17+ First Amendment to the Adoption Agreement for our 401(k)
Plan.
10.18 Amended and Restated Revolving Credit Agreement dated
December 23, 1997 (filed as an exhibit to our current
Report on Form 8-K, filed on January 20, 1998,) and
incorporated by reference herein.
10.19## Second Amendment to Strategic Alliance Agreement dated as of
November 20, 1997, between the GP and Security Capital U.S. Realty
10.20# Fourth Amendment to the Second Amended and Restated Agreement
of Limited Partnership of SUSA Partnership, L.P. dated as of
November 12, 1998
10.21## Amendment No. 3 to GP's 1993 Omnibus Stock Plan, dated as of
December 16, 1996
10.22## Amendment No. 4 to GP's 1993 Omnibus Stock Plan, dated as of
November 4, 1998
10.23## The GP's 1996 Officers' Stock Option Loan Program,
effective as of December 16, 1996
10.24## Form of Restricted Stock Award pursuant to the GP's 1993
Omnibus Stock Plan
10.25## The GP's 1998 Non-Executive Employee Stock Option Plan,
effective as of November 4, 1998
10.26## Shareholder Value Plan, effective as of January 1, 1999
27
<PAGE>
10.27## Employment Agreements for:
Larry Hohl, Executive VP and Senior Operating Officer,
dated as of September 1, 1998,
John McConomy, Executive VP and General Counsel,
dated as of July 24, 1998,
Richard Stern, Senior VP, Development, dated as of May 15,
1998, Morris J Kriger, Executive VP, Acquisitions, dated as
of December 6, 1995.
10.28### Second Amended and Restated Unsecured Revolving Credit Agreement,
dated as of May 26, 1999
10.29### Limited Liability Company Agreement of Storage Portfolio
I LLC, by and between SUSA Partnership, L.P. and FREAM
No. 18, LLC, dated May 13, 1999.
10.30### First Amendment to Limited Liability Company Agreement of
Storage Portfolio I LLC, dated as of June 7, 1999
10.31### Amendment No. 2 to the GP's 1995 Employee Stock Purchase and Loan
Plan, dated as of May 5, 1999
10.32#### Form of Severance Agreement between the GP and Dean Jernigan,
Chairman, President and Chief Executive Officer, effective August
16, 1999
10.33#### Form of Severance Agreement between the GP and
Christopher P. Marr, Chief Financial Officer, effective August
16, 1999.
10.34#### Form of Change of Control Severance Agreement between the GP and
each of:
(I) John W. McConomy, Executive Vice President, General
Counsel and Secretary;
(II) Karl T. Haas, Executive Vice President Operations;
(III) Morris J. Kriger, Executive Vice President Acquisitions;
Francis C. ("Buck") Brown, III, Senior Vice President
Human Resources;
(IV) Richard B. Stern, Senior Vice President Development;
(V) Russell W. Williams, Senior Vice President Sales and
Marketing; and
(VI) Mark E. Yale, Senior Vice President Financial Reporting,
effective August 16, 1999.
10.35#### Form of Change of Control Severance Agreement between the GP
and each of:
(I) Teresa K. Corona, Vice President, Investor Relations,
(II) Michael P. Kenney, Vice President Operations - Western
Division,
(III) Stephen R. Nichols, Vice President Operations - Eastern
Division,
(IV) Richard J. Yonis, Vice President Operations - Central
Division, effective August 16, 1999.
10.36#### Amendment No. 3 to the GP's 1995 Employee Stock Purchase and
Loan Plan dated as of August 5, 1999
10.37#### Amended and Restated Amendment No. 4 to the GP's 1993 Omnibus
Stock Plan dated as of November 4, 1998.
10.38#### Employment Agreement between the GP and Christopher P.
Marr, Chief Financial Officer, dated as of August 4, 1999
10.39#### Employment Agreement between the GP and Bruce F. Taub, Senior
Vice President, Capital Markets, dated as of June 12,1998
28
<PAGE>
10.40x Storage USA Press Release dated December 1, 1999,
announcing joint ventures With GE Capital Corporation
10.41x Storage USA Press Release dated December 1, 1999,
announcing approval of repurchase program
10.42x Summary of Material Terms of the GE Capital Transactions
10.43xx Limited Liability Company Agreement of Storage
Development Portfolio, L.L.C., dated November 30, 1999
between SUSA Partnership, L.P. and Storage Ventures, L.P.
10.44xx Limited Liability Company Agreement of Storage
Acquisition Portfolio, L.L.C., dated November 30, 1999
between SUSA Partnership, L.P. and Storage Ventures, L.P.
10.45xx Warrant Purchase Agreement dated November 30, 1999
between the GP and Storage Ventures, L.P.
10.46xx Common Stock Warrant, dated November 30, 1999 issued by
the GP to Storage Ventures, L.P.
10.47xx Participation Rights Letter dated November 12, 1999 from the GP
to Security Capital U.S. Realty Management.
10.48 Amendment No. 5 to the GP's 1993 Omnibus Stock Plan, dated
February 2, 2000
10.49 Form of Change of Control Severance Agreement between the GP
and each of (I) Bruce F. Taub
(II) Carol E. Shipley
13 Relevant portions of our 1999 Annual Report are filed herewith.
21 Subsidiaries of Registrant.
23 Consent of Independent Accountants
27.1 Financial Data Schedule
* Filed as an Exhibit to the GP's Registration Statement on Form
S-11, File No. 33-74072, as amended, and incorporated by reference
herein.
** Filed as an Exhibit to the GP's Registration Statement on Form
S-11, File No. 33-82764, as amended, and incorporated by reference
herein.
*** Filed as an Exhibit to our Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, and incorporated by reference herein.
+ Filed as an Exhibit to our Annual Report on Form 10-K for the fiscal
year ended December 31, 1995, and incorporated by reference.
++ Filed as an Exhibit to our Current Report on Form 8-K, as amended to
Form 8-K/A Filed November 17, 1995, and incorporated by reference
herein.
29
<PAGE>
+++ Filed as an Exhibit to our Current Report on Form 8-K, filed May 30,
1995, and incorporated by reference herein.
++++ Filed as an Exhibit to our Registration Statement on Form
S-3, File No. 33-91302, and incorporated by reference herein.
# Filed as an Exhibit to our Current Report on Form 8-K, filed November
20, 1998, and incorporated by reference here in.
## Filed as an Exhibit to our Annual Report on Form 10-K for the fiscal
year ended December 31, 1998, and incorporated by reference.
### Filed as an Exhibit to our Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999, and incorporated by reference here in.
#### Filed as an Exhibit to our Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999, and incorporated by reference here
in.
x Filed as an Exhibit to the GP's Current Report on Form 8-K, filed
December 1, 1999, and incorporated by reference here in.
xx Filed as an Exhibit to the GP's Current Report on Form 8-K/A, filed
December 9, 1999, and incorporated by reference here in.
30
<PAGE>
Storage USA, Inc.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareholders of Storage USA, Inc.
Our report on the consolidated financial statements of SUSA Partnership, L.P.
has been incorporated by reference in this Form 10-K. In connection with our
audits of such financial statements, we have also audited the related financial
statement schedule incorporated by reference 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.
PricewaterhouseCoopers LLP
Memphis, Tennessee
January 26, 2000
<PAGE>
SUSA Partnership, L.P.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31, 1999 1998
- --------------------------------------------------------------------------------------
(in thousands, except unit data)
<S> <C> <C>
Assets
Investments in storage facilities, at cost:
Land $ 441,080 $ 429,723
Buildings and equipment 1,229,812 1,186,492
- --------------------------------------------------------------------------------------
1,670,892 1,616,215
Accumulated depreciation (94,538) (73,496)
- --------------------------------------------------------------------------------------
1,576,354 1,542,719
Cash & cash equivalents 1,699 2,358
Advances and investments in real estate 120,246 112,265
Other assets 56,620 48,311
- --------------------------------------------------------------------------------------
Total assets $1,754,919 $1,705,653
- --------------------------------------------------------------------------------------
Liabilities & partner's capital
Notes payable $ 600,000 $ 600,000
Line of credit borrowings 105,500 70,762
Mortgage notes payable 70,163 78,737
Other borrowings 42,453 47,625
Accounts payable & accrued expenses 21,982 21,849
Dividends payable 18,831 17,758
Rents received in advance 10,869 10,332
Deferred gain from contribution of self-storage facilities 37,125 --
Minority interest 959 822
- --------------------------------------------------------------------------------------
Total liabilities 907,882 847,885
- --------------------------------------------------------------------------------------
Limited Common Partnership units
3,655,093 and 3,742,359 outstanding at redemption value 110,567 120,925
Commitments and contingencies
Partners' capital:
Preferred Partnership units
650,000 outstanding 65,000 65,000
Deferred compensation (517) --
General Common Partnership units
27,865,932 and 27,727,560 outstanding 683,355 683,232
Notes receivable officers (11,368) (11,389)
- --------------------------------------------------------------------------------------
Total partners' capital 736,470 736,843
- --------------------------------------------------------------------------------------
Total liabilities & partners' capital $1,754,919 $1,705,653
- --------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
SUSA Partnership, L.P.
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For the year ended December 31, 1999 1998 1997
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
(in thousands, except per unit data)
Property Revenues
Rental income $243,767 $217,312 $157,798
Other income 8,951 4,692 2,772
- --------------------------------------------------------------------------------------
Total property revenues 252,718 222,004 160,570
- --------------------------------------------------------------------------------------
Property Expenses
Cost of property operations & maintenance 61,547 55,954 39,743
Taxes 21,168 18,583 12,620
General & administrative 14,275 11,677 6,766
Depreciation & amortization 35,164 29,880 19,667
- --------------------------------------------------------------------------------------
Total property expenses 132,154 116,094 78,796
- --------------------------------------------------------------------------------------
Income from property operations 120,564 105,910 81,774
- --------------------------------------------------------------------------------------
Other Income (expense)
Interest expense, net (42,222) (36,873) (16,028)
- --------------------------------------------------------------------------------------
Income before, gain (loss) on exchange, minority
interest and distributions to Preferred Unitholders 78,342 69,037 65,746
Gain/(loss) on exchange of self-storage facilities 181 (284) 2,569
- --------------------------------------------------------------------------------------
Income before minority interest and
Distributions to Preferred Unitholders 78,523 68,753 68,315
Minority interest (463) (52) (381)
- --------------------------------------------------------------------------------------
Income before distributions to Preferred Unitholders 78,060 68,701 67,934
- --------------------------------------------------------------------------------------
Distributions to Preferred Unitholders (5,769) (769) --
- --------------------------------------------------------------------------------------
Net Income allocated to common unitholders $ 72,291 $ 67,932 $ 67,934
=======================================================================================
Per common unit:
Basic net income per unit $2.29 $2.18 $2.33
- --------------------------------------------------------------------------------------
Diluted net income per unit $2.28 $2.17 $2.31
- --------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
SUSA Partnership, L.P.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the year ended December 31, 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(in thousands)
Operating Activities
Net income $ 72,291 $ 67,932 $ 67,934
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 35,164 29,880 19,667
Minority interest 463 52 381
(Gain)/loss on exchange of self-storage facilities (181) 284 (2,569)
Changes in assets and liabilities:
Other assets (3,892) (17,316) (18,799)
Other liabilities 1,075 13,965 5,543
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 104,920 94,797 72,157
- ------------------------------------------------------------------------------------------------------------------
Investing Activities
Acquisition and improvements of self-storage facilities (109,494) (201,875) (307,704)
Proceeds from exchange of self-storage facilities 144,952 1,694 10,213
Development of self-storage facilities (71,523) (58,911) (40,856)
Advances and investments in real estate (40,359) (81,574) (24,541)
Proceeds from liquidation of advances and investments in real estate 41,904 7,747 --
- ------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (34,520) (332,919) (362,888)
- ------------------------------------------------------------------------------------------------------------------
Financing Activities
Net borrowings (repayments) under lines of credit 34,738 38,919 (20,887)
Mortgage principal payments (4,031) (3,366) (12,726)
Mortgage principal borrowings -- 145 2,670
Other borrowings principal payments/payoffs (6,131) -- --
Payment of debt issuance costs (1,185) (1,083) (227)
Distributions to general partner (73,962) (53,188) (65,666)
Distributions to limited partners (9,712) (6,337) (5,660)
Preferred unit distributions (5,336) -- --
Proceeds from issuance of notes payable -- 198,311 296,131
General partner contributions 1,952 1,236 94,482
Repurchase of units from general partner (7,228) -- --
Proceeds from issuance of preferred units (18) 63,375 --
Payments on notes receivable 166 3,150 1,842
Net contributions (distributions) to minority interests (312) (1,591) 332
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities (71,059) 239,571 290,291
- ------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and equivalents (659) 1,449 (440)
Cash and equivalents, beginning of period 2,358 909 1,349
- ------------------------------------------------------------------------------------------------------------------
Cash and equivalents, end of period $ 1,699 $ 2,358 $ 909
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Supplemental schedule of non-cash activities:
Equity share of joint venture received for disposition of assets ($175) $ -- $ --
Common stock issued in exchange for notes receivable and
contributed to Partnership in exchange for Partnership Units -- 2,333 4,360
Common stock issued to Directors and contributed to
Partnership in exchange for Partnership Units 160 132 107
Mortgages assumed on storage facilities acquired -- 28,135 7,098
Storage facilities and land acquired in exchange for Partnership Units 4,948 34,597 35,661
Storage facilities acquired in exchange for unsecured notes, deferred
Partnership Unit agreements and capital leases 1,000 46,966 349
Restricted stock issued in exchange for Partnership Units 246 -- 1,395
Storage facilities contributed by GP in exchange for Partnership Units -- -- 3,547
Exchange of Partnership Units for shares of GP common stock 9,164 250 966
Payoff of officer note -- 565 --
Issuance of warrants to GP 666 -- --
Exchange of storage facilities, net (181) 284 2,569
Minority interest in acquired facility -- 45 --
Note received in consideration for facility sold 875 -- --
Equity share of joint venture received for disposition of assets (596) -- --
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
SUSA Partnership, L.P.
<TABLE>
<CAPTION>
Consolidated Statements of Partners' Capital
General
Preferred Common Notes Total
Partnership Deferred Partnership Receivable- Partners'
Capital Compensation Capital Officers Capital
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(amounts in thousands)
Balance at December 31, 1996 $ - $ - $570,603 $(10,253) $560,350
- -------------------------------------------------------------------------------------------------------------------
Capital contributions - - 103,178 - 103,178
Contribution of self-storage facilities in
exchange for Units - - 35,661 - 35,661
Contribution of self-storage facilities in
exchange for Units - deferred - - - - -
Redemption of units by conversion to GP stock - - (617) - (617)
Issuance of Units to employees in
exchange for notes receivable - - - (2,518) (2,518)
Net income - - 67,934 - 67,934
Distributions - - (71,326) - (71,326)
Adjustment to reflect limited partners' equity
Interest at redemption value - - (41,339) - (41,339)
- -------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997 - - 664,094 (12,771) 651,323
- -------------------------------------------------------------------------------------------------------------------
Capital contributions 65,000 - 3,705 - 68,705
Contribution of self-storage facilities in
exchange for Units - - 34,597 - 34,597
Contribution of self-storage facilities in
exchange for Units - deferred - - - - -
Redemption of units by conversion to GP stock - - (1,875) - (1,875)
Issuance of Units to employees in
exchange for notes receivable - - - 1,382 1,382
Net income - - 67,932 - 67,932
Distributions - - (77,265) - (77,265)
Adjustment to reflect limited partners' equity
interest at redemption value - - (7,956) - (7,956)
- -------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998 65,000 - 683,232 (11,389) 736,843
- -------------------------------------------------------------------------------------------------------------------
Capital contributions - - 12,000 - 12,000
Contribution of self-storage facilities in
exchange for Units - - 4,948 - 4,948
Contribution of self-storage facilities in
exchange for Units - deferred - - 1,000 - 1,000
Redemption of units by conversion to GP stock - - (9,164) - (9,164)
Issuance of Units to employees in
exchange for notes receivable - - - 21 21
Net income - - 72,291 - 72,291
Distributions - - (84,748) - (84,748)
Deferred compensation - (517) - - (517)
Repurchase of Units - - (7,228) - (7,228)
Warrants issued to GP - - 666 - 666
Adjustment to reflect limited partners' equity
interest at redemption value - - 10,358 - 10,358
- -------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999 $65,000 $(517) $683,355 $(11,368) $736,470
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SUSA Partnership, L.P.
Notes to Consolidated Financial Statements
(dollar amounts in thousands, except share, unit and per unit data)
NOTE 1 ORGANIZATION
SUSA Partnership, L.P. (the "Company" and the "Partnership") was formed by
Storage USA, Inc. (the "GP"), general partner and holder of approximately 88% of
the interest therein, to acquire, develop, construct, franchise and own and
operate self-storage facilities throughout the United States. On March 23, 1994,
the GP completed an initial public offering (the "IPO") of 6,325,000 shares of
common stock at $21.75 per share. The GP is structured as an umbrella
partnership real estate investment trust ("UPREIT") in which substantially all
of the GP's business is conducted through the Partnership. Under this structure,
the Company is able to acquire self-storage facilities in exchange for units of
limited partnership interest in the Partnership ("Units"), permitting the
sellers to partially defer taxation of capital gains. Under the terms of the
partnership agreement, all proceeds from the issuance of common stock are
contributed to the Partnership in exchange for Units. At December 31, 1999 and
1998, respectively, the GP had an approximately 88.4% and 88.1% partnership
interest in the Partnership.
In 1996, the Company formed Storage USA Franchise Corp ("Franchise"), a
Tennessee corporation. The Partnership owns 100% of the non-voting common stock
of Franchise. The Company accounts for Franchise under the equity method and
includes its share of the profit or loss of Franchise in Other Income.
At December 31, 1999, the Company owned and managed 507 self-storage
facilities containing approximately 34,069,000 square feet located in 31 states
and the District of Columbia.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of the Company and
SUSA Management. All intercompany balances and transactions have been
eliminated. The Company accounts for Franchise under the equity method and
includes its share of the profit or loss of Franchise in Other Income.
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.
Segment Reporting
The "Property Operations" division is responsible for the operation of the
Company's owned and managed facilities. Property Operations represents the only
reportable segment of the Company. Performance for the division is measured
through evaluating total property revenues and property expenses exclusive of
general and administrative expenses and depreciation and amortization. All of
the Company's facilities are located in the United States.
Federal Income Taxes
No provision for income taxes is provided since all taxable income or loss
or tax credits are passed through to the partners.
The GP operates so as to qualify to be taxed as a Real Estate Investment Trust
("REIT") under the Internal Revenue Code of 1986, as amended (the "Code").
Generally, a REIT that complies with the Code and distributes at least 95% of
its taxable income to its shareholders does not pay federal tax on its
distributed income. Therefore, the statement of operations contains no provision
for federal income taxes.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments purchased with maturity
of three months or less to be cash equivalents.
Revenue Recognition
Rental income is recorded when due from tenants. Rental income received prior to
the start of the rental period is deferred and included in rents received in
advance.
<PAGE>
Other Income
Other income consists primarily of revenue from property specific activities
(rental of floor and storage space for locks and packaging material, truck
rentals and ground rents for cellular telephone antenna towers and billboards),
revenue for the management of facilities owned by third parties, and the
proportionate share of net income of equity investments including joint ventures
and Franchise. A summary of these amounts is as follows:
1999 1998 1997
- --------------------------------------------------------------------------
Property specific: $4,117 $3,371 $1,518
Management fees: 2,055 1,079 809
Income from equity: 2,779 242 445
- --------------------------------------------------------------------------
Total other income $8,951 $4,692 $2,772
Interest Expense, net
Interest income and expense are netted together and the breakout of income and
expense is as follows:
1999 1998 1997
- ----------------------------------------------------------------------------
Interest income $ 13,101 $ 8,667 $ 2,083
Interest expense (55,323) (45,540) (18,111)
- ----------------------------------------------------------------------------
Interest expense, net $(42,222) $(36,873) $(16,028)
Interest is capitalized on accumulated expenditures relating to the development
of certain qualifying properties. During 1999, 1998, and 1997, total cash paid
by the Company for interest was $55,511, $41,560, and $18,316, respectively,
which includes $4,388, $3,461, and $1,866, which was capitalized in 1999, 1998,
and 1997, respectively.
Interest Rate Management Agreements
The Company periodically enters into interest rate risk management agreements
including interest rate swaps and caps to manage interest rate risk associated
with anticipated debt transactions and with its variable rate line of credit.
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. Any up-
front premium is amortized over the effective period of the corresponding
agreement 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 any corresponding anticipatory transaction is no
longer likely to occur, the Company would mark the derivative to market and
would recognize any adjustment in the consolidated statement of operations. The
Company 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
development, are capitalized. Upon disposition, both the asset and accumulated
depreciation accounts are relieved, and the related gain or loss is credited or
charged to the income statement.
If there is an event or a change in circumstances that indicates that the
basis of the Company's property may not be recoverable, the Company'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
asset exceeds the fair value of the asset.
Minority Interest
Minority interest reflects the ownership interest of the limited partners in
several facilities in which the Partnership is the general partner. The limited
partners' share of the net income of the Partnership is charged to minority
interest expense and increases the Company's liability. Distributions to the
limited partners reduce the Company's liability.
Reclassifications
Certain previously reported amounts have been reclassified to conform to the
current financial statement presentation with no impact on previously reported
net income or partner's capital.
<PAGE>
NOTE 3 INVESTMENTS IN STORAGE FACILITIES
The following summarizes activity during the periods:
- ----------------------------------------------------------------------------
Cost
- ----
Balance at December 31, 1997 $1,242,864
Property acquisitions 293,578
Land acquisitions and joint
venture development 57,046
Facility expansions 1,867
Improvements and other 29,581
Properties exchanged (8,721)
- ----------------------------------------------------------------------------
Balance at December 31, 1998 $1,616,215
- ----------------------------------------------------------------------------
Property acquisitions 86,879
Land acquisitions and joint
venture development 71,004
Facility expansions 529
Improvements and other 16,723
Properties exchanged (120,458)
- ----------------------------------------------------------------------------
Balance at December 31, 1999 $1,670,892
============================================================================
Accumulated Depreciation
Balance at December 31, 1997 $ 44,955
Additions during the year 28,954
Properties exchanged (413)
- ----------------------------------------------------------------------------
Balance at December 31, 1998 $ 73,496
Additions during the year 33,625
Properties exchanged (12,583)
- ----------------------------------------------------------------------------
Balance at December 31, 1999 $ 94,538
============================================================================
The above cost balances include facilities acquired through capital leases of
$31,334 at December 31, 1999 and $31,160 at December 31, 1998 and construction
in progress of $89,870 at December 31, 1999 and $65,716 at December 31, 1998.
Also included above is $11,800 at December 31, 1999 and $10,300 at December 31,
1998 of corporate office furniture and fixtures. Accumulated depreciation
associated with the facilities acquired through capital leases was $771 at
December 31, 1999 and $145 at December 31, 1998.
NOTE 4 ADVANCES AND INVESTMENT IN REAL ESTATE
Advances
During 1997, the Company began offering construction advances to franchisees of
Franchise to fund the development of franchised self-storage facilities. The
loans are collateralized by the property. The Company will advance the funds for
construction and start-up costs at a market interest rate based on a spread over
the 30-day LIBOR rate or the prime rate and adjusted monthly. Typically
advances represent 70%-96% of the anticipated cost of the project at the prime
rate plus one half to one percentage point. In consideration for coordinating
the financing as well as other value derived by the franchisee, Franchise
typically receives an equity interest in the facility. The equity interest
typically allows Franchise to share in 40% to 45% of the positive cash flows of
the facility, and if sold, the sale of the facility. Franchise recognizes its
proportionate share of the facilities' net income. Due to the Company's equity
participation in the underlying projects (through its 97.5% economic interest in
Franchise) all related activity is being accounted for as direct investments in
and advances to real estate joint ventures. As of December 31, 1999, the Company
is committed to advance an additional $36,186 for similar construction loans.
The table below summarizes certain information related to these advances:
1999 1998
- ----------------------------------------------------------------------------
Advances (collateralized by first mortgages) $ 117,022 $ 112,163
Interest rates at end of period 8.25%-10.00% 7.75%-8.41%
W/A interest rate during period (1) 8.50% 8.72%
- ----------------------------------------------------------------------------
(1) W/A = Weighted average
<PAGE>
Joint Ventures
Fidelity Venture:
On June 7, 1999, the Company formed a joint venture with Fidelity Management
Trust Company (the "Fidelity Venture"). The Company contributed 32 self-storage
facilities with a fair value of $144,000 to the Fidelity Venture in return for a
25% interest and cash proceeds of approximately $131,000, representing Fidelity
Management Trust Company's 75% interest in the joint venture and the Company's
proportionate share of proceeds from a $93,600 non-recourse note obtained by the
joint venture. The note is secured and has a fixed interest rate of 7.76%. The
Company accounts for its investment in the Fidelity Venture under the equity
method. The Company's original basis in the Fidelity venture was equal to 25%
of the Company's historical cost basis in the self-storage facilities of
approximately $91,200, less the approximate $23,400 in debt proceeds distributed
from the joint venture. A $37,100 gain on the transaction, net of disposition
costs, was deferred until such time the Company disposes of its interest in the
Fidelity Venture or the underlying properties are sold. As of December 31,
1999, the Company had a recorded negative investment in the Fidelity Venture of
$175. Under the terms of the venture agreement, cash flow from operations and
liquidation of the venture will be distributed to each member based on its
proportionate equity interest. The Company will manage the Fidelity Venture and
continue to operate all of the venture's assets for a fee. During 1999, the
Company recognized $845 in equity earnings from the venture and $780 in
management fees for managing the venture's properties. The table below
summarizes certain financial information related to the Fidelity Venture:
For the Period June 7, 1999
Through December 31, 1999
- --------------------------------------------------------------
(in thousands)
Property revenues $ 12,847
Property expenses $ 1,919
Net Operating Income $ 10,928
Net income $ 3,381
Total assets $136,259
Total debt $ 92,976
- --------------------------------------------------------------
GECC Ventures:
On December 1, 1999, the Company formed two joint ventures with GE Capital
Corporate ("GE Capital"), providing for a total investment capacity of $400,000
for acquisitions and development of self-storage facilities. The Company will
have a 25% interest in the $160,000 Development Venture and a 16.7% interest in
the $240,000 Acquisition Venture. All of the properties acquired and developed
by the ventures will be operated by Storage USA under a five-year management
contract. In addition to the property management, Storage USA will provide
certain fee-based services for the ventures, including identifying suitable
development and acquisition opportunities and general contractor services. It is
expected that both ventures will be leveraged with targeted debt ratios of
approximately 50%. The Company accounts for these joint ventures under the
equity method of accounting. In connection with the closing of these joint
ventures, GE Capital received warrants for the purchase of 1.25 million shares
of Storage USA common stock at $42 per share. These warrants may be exercised
at any time within a five-year period. The Company's recorded investment in the
joint ventures of $2,749 as of December 31, 1999 is comprised of the estimated
value of the warrants of $666 and investment advisory fees of $1,900 incurred
directly by the Company. Through December 31, 1999, no development had
commenced or acquisitions had occurred within the ventures.
During the first quarter of 2000, Storage USA does expect to transfer as many
as 13 projects currently in early stages of development into the Development
Venture. These projects have a projected total cost of $64,700, of which
Storage USA has invested approximately $29,400 as of December 31, 1999.
Other Ventures:
The Company has equity interests in several single facility joint ventures. The
Company accounts for these joint ventures under the equity method of accounting.
As of December 31, 1999 and 1998, the recorded investments in these joint
ventures was $650 and $103, respectively.
<PAGE>
NOTE 5 OTHER ASSETS
Other assets consist of the following at December 31:
1998 1997
- --------------------------------------------------------------------------------
Deposits $ 4,147 $ 5,048
Deferred cost of issuances
of unsecured notes 10,006 10,695
Accounts receivable 4,855 4,769
Mortgages receivable 4,449 3,624
Notes receivable 7,445 8,642
Other receivables 4,988 5,137
Advances and investments in Franchise 13,906 4,464
Other 6,824 5,932
- --------------------------------------------------------------------------------
$56,620 $48,311
- --------------------------------------------------------------------------------
Deferred financing costs are amortized using the interest method over the terms
of the related debt.
NOTE 6 BORROWINGS
The following is a debt maturity schedule as of December 31,1999:
<TABLE>
<CAPTION>
2000 2001 2002 2003 2004 Thereafter
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Notes payable $ -- $ -- $ -- $100,000 $ -- $500,000
Mortgage note payables 2,310 1,461 1,607 1,769 23,463 33,040
Non-interest bearing notes 4,000 5,150 -- -- -- --
- ---------------------------------------------------------------------------------------------------------
Cash payments $6,310 $ 6,611 $ 1,607 $101,769 $23,463 $533,040
</TABLE>
Notes Payable
The Partnership has issued various senior unsecured notes (the "Notes") due on
various dates. The Notes are redeemable at any time at the option of the
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 Partnership. The Notes contain various covenants restricting the amount of
secured and unsecured indebtedness the Partnership may incur. The amounts,
maturities and interest rates of the notes are as follows:
- ------------------------
Amount
- ------------------------
1999 1998 Maturity Interest
- -------------------------------------------------------------------------------
$ 100,000 $100,000 November, 2003 7.125%
100,000 100,000 July, 2006 6.950%
100,000 100,000 December, 2007 7.000%
100,000 100,000 June, 2017 8.200%
100,000 100,000 July, 2018 7.450%
100,000 100,000 December, 2027 7.500%
- -------------------------------------------------------------------------------
$ 600,000 $600,000
The proceeds from the issuances of the Notes were used to fund the purchase of
acquisitions and repay debt incurred under the revolving lines of credit, which
are used to finance the acquisition of self-storage facilities and for working
capital.
<PAGE>
Mortgage Notes Payable
Mortgage notes payable consist of the following at December 31:
1999
- -------------------------------------------------------------------------------
Face Assets Maturity Interest Rate
Amount Encumbered Range Range
- -------------------------------------------------------------------------------
Conventional fixed rate $58,318 $145,287 2000-2021 6.5%-11.5%
Conventional variable rate 5,332 11,244 2006-2016 7.9%-9.0%
- -------------------------------------------------------------------------------
Total $63,650 $156,531
Premiums 6,513
---------
Mortgage notes payable $70,163
1998
- -------------------------------------------------------------------------------
Face Encumbered Maturity Interest Rate
Amount Amount Range Range
- -------------------------------------------------------------------------------
Conventional fixed rate $59,638 $142,174 2000-2021 6.5%-11.5%
Conventional variable rate 8,043 18,180 2006-2016 7.9%-9.0%
- -------------------------------------------------------------------------------
Total $67,681 $160,354
Premiums 11,056
---------
Mortgage notes payable $78,737
Certain mortgages were assumed at above market interest rates. Premiums were
recorded upon assumption and amortized using the interest method over the terms
of the related debt.
Line of Credit Borrowings
1999 1998
- --------------------------------------------------------------------------------
Total lines of credit at
December 31 $240,000 $190,000
Borrowings outstanding at
December 31 $105,500 $ 70,762
Weighted average daily borrowing
during the year $ 93,122 $ 78,900
Maximum daily borrowing during
the year $123,093 $179,288
Weighted average daily interest
rate during the year 6.39% 6.73%
During 1999, the Company renegotiated its existing line of credit with a group
of commercial banks, expanding the borrowing capacity under the line to $200,000
and extending the maturity to May 25, 2002. This line bears interest at various
spreads over LIBOR based on the Company's long-term debt ratings. At December
31, 1999, the Company also had a $40,000 line of credit with a commercial bank.
The line bears interest at spreads over LIBOR, matures on July 1, 2000 and is
renewable at that time. Neither of these agreements have compensating balance
requirements. The agreement imposes several limitations on the Company. The
most restrictive of these requires the Company to maintain minimum levels of
debt service coverage and limits the level of the Company's total borrowings as
a percentage of the its assets.
OTHER BORROWINGS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
1999 | 1998
1999 Face Amount Carrying Value Imputed Rate | Face Amount Carrying Value Imputed Rate
- --------------------------------------------------------------------------------|-------------------------------------------
<S> <C> <C> <C> | <C> <C> <C>
Non-interest bearing notes $ 9,150 $ 8,365 7.50% | $15,154 $13,513 7.50%
Deferred Units $12,000 $10,256 7.50% | $13,000 $10,452 7.50%
Leases -- $23,832 7.50% | -- $23,660 7.50%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
During 1998, the Company issued $15,154 of unsecured, non-interest bearing notes
in exchange for interest in self-storage facilities. The notes were issued at
various maturities through 2001. The Company also consummated deferred unit
agreements totaling $13,000 in exchange for interest in self-storage facilities.
The agreements have various maturities through 2002, at which time units of
limited partnership interest in SUSA Partnership, L.P. will be issued to satisfy
the agreements. During 1998, the Company signed a lease agreement on several
self-storage facilities. The lease is being accounted for as a capital lease.
An initial deposit of $7,600 was made at the time of closing and minimum lease
payments totaling $9,249 will be paid to the lessor through 2003 at which time
the Company has the option to purchase the facilities for $29,000. If the
Company does not exercise this option the Lessor has the option to sell the
facilities to the Company for $29,250. Minimum lease payments broken out between
principle and interest by maturity are shown below.
2000 2001 2002 2003
- -------------------------------------------------------------------------------
Principal ($56) $ 123 $ 296 $23,480
Interest 1,790 1,788 1,772 1,168
- -------------------------------------------------------------------------------
Minimum lease payment $1,734 $1,911 $2,068 $24,648
NOTE 7 INCOME PER UNIT
As of December 31, 1997, the Company adopted Statement of Financial Accounting
Standards No. 128 "Earnings per Share," to report basic and diluted earnings per
unit. As required by this statement, all prior periods have been restated. Basic
and diluted income per common unit is calculated by dividing net income
attributed to common unitholders by the appropriate weighted average common
units as presented in the following table:
<TABLE>
<CAPTION>
1999 1998 1997
---------------------------------------------------------------------
<S> <C> <C> <C>
Basic net income per Unit:
Net income attributable to common unitholders $ 72,291 $ 67,932 $ 67,934
Basic weighted average units outstanding 31,602 31,137 29,155
---------------------------------------------------------------------------------------------------------------------
Basic net income per Unit $ 2.29 $ 2.18 $ 2.33
Diluted net income per Unit:
Net income attributable to common unitholders $ 72,291 $ 67,932 $ 67,934
Basic weighted average units outstanding 31,602,000 31,137,000 29,155,000
Dilutive effect of GP stock options 70,000 126,000 212,000
---------------------------------------------------------------------
Diluted weighted average Units outstanding 31,672,000 31,263,000 29,367,000
---------------------------------------------------------------------
Diluted net income per Unit $ 2.28 $ 2.17 $ 2.31
</TABLE>
NOTE 8 PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The following summary of unaudited pro forma combined financial information of
the Company is presented as if all acquisitions, exchanges of self-storage
facilities, GP common stock issuances and notes payable issuances that
transpired during 1999 and 1998 had occurred at the beginning of each period
presented. The unaudited combined financial information is not necessarily
indicative of what actual results of operations of the Company would have been
assuming such transactions had been completed at the beginning of each period,
nor does it purport to represent the results of operations for future periods.
Year ended December 31, 1999 1998
- -----------------------------------------------------------------------------
Pro forma total revenues $249,218 $213,267
Pro forma net income $ 71,237 $ 65,387
Pro forma basic net income per common unit $ 2.25 $ 2.10
Pro forma diluted net income per common unit $ 2.25 $ 2.09
<PAGE>
NOTE 9 FINANCIAL INSTRUMENTS
The off-balance sheet instruments that the Company primarily uses are interest
rate swaps and caps. The only instrument in effect during 1999 was an interest
rate cap with a notional value of $100,000 and a cap strike price of 6.0%. The
contract was effective November 5, 1999 and terminated on February 7, 2000. The
Company paid an up-front premium of $45 and received a $40 upon termination of
the contract.
The Company's carrying amounts and fair value of its financial instruments were
as follows:
<TABLE>
<CAPTION>
As of December 31, 1999 1998
Carrying value Fair value Carrying value Fair value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 1,699 $ 1,699 $ 2,358 $ 2,358
Advances(collateralized by first mortgage) 117,022 117,022 112,163 112,163
Line of credit borrowings 105,500 105,500 70,762 70,762
Mortgage notes payable 70,163 70,163 78,737 78,213
Notes payable 600,000 584,457 600,000 565,173
</TABLE>
The Company, in determining the fair values set forth above, used the
following methods and assumptions:
Advances
A market rate of interest is used based on a spread over the 30-day LIBOR rate
or the prime rate and adjusted monthly; and therefore fair value approximates
carrying value.
Mortgage and Notes Payable, and Line of Credit Borrowings
The Company's line of credit borrowings bear interest at variable rates and
therefore cost approximates fair value. The fair value of the mortgage and notes
payable were estimated using discounted cash flow analysis, based on the
Company's current incremental borrowing rate at December 31, 1999 and 1998, for
similar types of borrowing arrangements.
NOTE 10 COMMITMENTS AND CONTINGENCIES
Lease Agreements
The Company has various lease agreements for office space. Total future minimum
rental payments on the office leases are $2,361 in year one, $2,585 in year two,
$2,003 in year three, $1,872 in years four and five and $20,262 thereafter.
Rental expense under these operating leases approximated $1,218 in 1999, $1,009
in 1998 and $667 in 1997. These minimum payments are net of amounts due to the
Company under corresponding subleases of $573 in year one, $688 in two through
five and $8,055 thereafter.
Construction Financing
The Company is committed to advance an additional $36,186 in construction
financing to franchisees of Franchise as described in Note 4. The Company is
also a limited guarantor on the financing of three open and operating projects
in which Franchise has either a partnership interest or an option to purchase
the facility at various times after completion. Under the terms of the
guarantee, the Company has the option, upon notice by the financial institution
of an event which would require payment by the Company under the guarantee, of
(a) purchasing the note and all related loan documents without recourse or (b)
payment of the guarantee. At December 31, 1999, the Company was guarantor on
$7,768 of these financing arrangements, of which $0 was outstanding.
Redemption of Units
At December 31, 1999, there were 3,655,093 Units outstanding. Certain Units are
redeemable for an amount equal to their fair market value ($2,481 based upon a
price per Unit of $30.250 at December 31, 1999) payable by the Company 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
($108,086 redeemable at December 31, 1999, based upon a price per Unit of
$30.250 at December 31, 1999) payable by the Company in cash or, at the option
of the GP, in shares of the GP's common stock at the exchange ratio of one share
for each Unit.
NOTE 11 DISTRIBUTIONS(unaudited)
The Company distributed the following amounts per unit to holders of common
Units during 1999, 1998 and 1997.
- ----------------------------------------------------------------------------
<PAGE>
1999 1998 1997
- ----------------------------------------------------------------------------
Distributions $2.68 $2.56 $2.40
NOTE 12 PARTNER'S CAPITAL
Stock-Based Compensation Plan
The GP has a Stock Option Plan, Employee Stock Purchase and Loan Plan, Dividend
Reinvestment Plan and Stock Purchase Plan, in which employees of the Company
participate. Under the terms of the partnership agreement, all proceeds from
the issuance of GP common stock, or exercise of GP stock options, under the
plans are contributed to the Partnership in exchange for Units.
The GP applies Accounting Principles Board (APB)25 and related
interpretations in accounting for its stock-based compensation plan. In
accordance with SFAS123 "Accounting for Stock-Based Compensation", the GP
elected to continue to apply the provisions of APB25. However, pro forma
disclosures as if the GP adopted the cost recognition provisions of SFAS123
are required and are presented below along with a summary of the plan and
awards.
The shareholders of the GP have approved and the GP has adopted the Storage
USA, Inc. 1993 Omnibus Stock Plan (the "Plan"). The GP has granted options to
certain GP directors, and officers and key employees of the Company to purchase
shares of the GP's common stock at a price not less than the fair market value
at the date of grant. Options granted to employees generally vest over a three
to five year period. There are 4,000,000 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>
Weighted
Number of Exercise average
options price range exercise price
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Options outstanding December 31, 1996 953,790 $ 21.75-$37.625 $28.65
Exercisable at end of year 693,963 $ 21.75-$37.625 $25.99
Granted 863,300 $35.625-$40.375 $38.55
Exercised (170,581) $ 21.75-$ 31.00 $24.76
Cancelled (143,020) $ 31.00-$39.125 $36.25
- ---------------------------------------------------------------------------------------------------------
Options outstanding December 31, 1997 1,503,489 $ 21.75-$40.375 $34.16
Exercisable at end of year 546,543 $ 21.75-$ 38.25 $26.78
Granted 710,058 $ 29.50-$40.313 $31.33
Exercised (56,100) $ 24.75-$ 31.25 $26.51
Cancelled (189,102) $ 24.75-$40.375 $39.23
- ---------------------------------------------------------------------------------------------------------
Options outstanding December 31, 1998 1,968,345 $21.75-$40.3125 $32.87
Exercisable at end of year 771,982 $21.75-$40.3125 $30.59
Granted 800,129 $27.5625-31.875 $33.09
Exercised (79,000) $ 31.75-$31.00 $24.30
Cancelled (93,026) $38.875-$38.875 $38.75
- ---------------------------------------------------------------------------------------------------------
Options outstanding December 31, 1999 2,596,448 $21.75-$40.3125 $31.66
Exercisable at end of year 1,039,079 $21.75-$40.3125 $32.63
- ---------------------------------------------------------------------------------------------------------
</TABLE>
The following table provides additional information about the options
outstanding and exercisable at December 31, 1999:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Options outstanding Options exercisable
- --------------------------------------------------------------------------------------------------------------------
Outstanding Weighted average Weighted | As of Weighted
Range of as of remaining average | Dec. 31, average
exercise prices Dec. 31, 1999 contractual life exercise price | 1999 exercise price
- ------------------------------------------------------------------------------------|--------------------------------
<S> <C> <C> <C> | <C> <C>
$20.1566 - $24.1878 126,000 4.91 $21.7500 | 126,000 $21.7500
$24.1879 - $28.2191 881,239 9.33 $27.3084 | 101,110 $25.3482
$28.2192 - $32.2504 569,977 8.05 $30.0124 | 251,297 $30.5481
$32.2505 - $36.2817 132,057 8.06 $34.3347 | 54,857 $34.0893
$36.2818 - $40.3125 887,175 7.68 $38.0505 | 505,815 $37.6819
</TABLE>
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> | <C> <C>
2,596,448 8.17 $31.6601 | 1,039,079 $32.6348
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The GP has utilized a Black-Scholes option-pricing model with the
following assumptions in order to estimate the fair value of the GP's stock
options:
- --------------------------------------------------------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------
Risk-free interest rates 6.35% 4.57% 5.74%
Estimated dividend yields 8.86% 7.50% 6.20%
Volatility factors of the expected
market price of the Company's
common shares 22.80% 20.30% 16.80%
Expected life of the options (years) 7 7 10
Weighted average fair value $ 3.35 $ 2.56 $ 3.98
- --------------------------------------------------------------------------------
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:
- --------------------------------------------------------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------
Pro forma compensation
Expense $ 1,063 $ 1,202 $ 939
Pro forma net income $71,228 $66,730 $66,995
Pro forma basic net income
per unit $ 2.25 $ 2.14 $ 2.30
Pro forma diluted net
income per unit $ 2.25 $ 2.13 $ 2.28
- --------------------------------------------------------------------------------
Employee Stock Purchase and Loan Plan
As of December 31, 1999, the GP has issued 523,000 shares of its common stock
under the 1995 Employee Stock Purchase and Loan Plan. Pursuant to the terms of
the plan, the GP and certain officers entered into stock purchase agreements
whereby the officers purchased common stock at the then current market price.
The GP provides 100% financing for the purchase of the shares with interest
rates ranging from 6.1% to 9.2% per annum payable quarterly. The underlying
notes have personal guarantees and are collateralized by the shares and mature
between 2002 and 2006.
Dividend Reinvestment and Stock Purchase Plan
In 1995, the GP adopted the Dividend Reinvestment and Stock Purchase Plan. Under
the plan, the GP 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 GP 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 1999 and
1998, 3,813 and 1,545 shares, respectively, were issued under the plan.
<PAGE>
Stock Purchase Agreement
On March 1, 1996, the GP entered into a Stock Purchase Agreement with Security
Capital U.S. Reality (USRealty), an affiliate of Security Capital Group to
purchase shares of the GP's common stock. As of December 31, 1999, USRealty owns
11,765,654 shares of the GP's common stock, which represents 42.2% of the
outstanding shares of the GP. On March 19, 1996, USRealty also executed a
Strategic Alliance Agreement and a Registration Rights Agreement with the
Company. The Strategic Alliance Agreement generally provides that USRealty may
nominate a number of directors to the Company's Board of Directors proportionate
to its ownership of the GP's common stock. As of December 31, 1999, three
nominees of the USRealty serve on the Company's Board of Directors. During
1999, the Company paid Security Capital Group or its affiliates $3,857 for
various services received by the Company during the year. The payments included
$3,717 for investment advisory services and $140 for real estate research,
insurance related services.
General Partner Contributions
In 1997, the GP issued 2,461,000 shares of common stock for an aggregate
purchase price of $90,368. The proceeds from the issuances are contributed to
the Partnership in exchange for additional Units. The Partnership used 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.
In December of 1999, the GP announced a Board authorized plan to repurchase up
to 5% of its common shares outstanding through open market and private
purchases. As of December 31, 1999, the GP had repurchased 250,000 shares at an
average price of $28.91.
NOTE 13 PREFERRED UNITS
On November 12, 1998, the Partnership issued 650,000 units of $100 par value
8.875% Cumulative Redeemable Preferred Partnership Units (the "Preferred Units")
valued at $65,000 in a private placement. The Partnership has the right to
redeem the Preferred Units after November 1, 2003 at the original capital
contribution plus the cumulative priority return to the redemption date to the
extent not previously distributed. The Preferred Units are exchangeable for
8.875% Series A Preferred Stock of Storage USA, Inc., on or after November 1,
2008 (or earlier upon the occurrence of certain events) at the option of 51% of
the holders of the Preferred Units.
NOTE 14 POST EMPLOYMENT BENEFIT PLAN
The Company 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 Company 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. Company profit sharing contributions to the plan are determined
annually by the Company. Company contributions totaled $865, $661, and $479
during 1999, 1998 and 1997, respectively.
NOTE 15 RECENT ACCOUNTING DEVELOPMENTS
On February 27, 1998, the AICPA Accounting Standards Executive Committee (AcSEC)
issued Statement of Position 98-1 (SOP 98-1), "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use", which is effective
for fiscal years beginning after December 15, 1998. SOP 98-1 sets forth
guidelines for the capitalization of costs relating to internal-use software.
In connection with the new SOP, the Company capitalized approximately $600 of
qualifying costs in 1999.
On June 16, 1998, FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133), which is effective for fiscal
years beginning after June 15, 2000. SFAS 133 establishes accounting and
reporting standards for derivative instruments and hedging activities. Under
this statement derivatives are recognized at fair market value and changes in
fair market value are recognized as gains or losses. The adoption of SAS 133 is
not expected to have a material impact on the financial position or results of
operation of the Company.
NOTE 16 QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a summary of quarterly results of operations for 1999 and 1998:
<TABLE>
<CAPTION>
1999
First Second Third Fourth
quarter quarter quarter quarter
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $60,928 $64,095 $64,484 $63,211
Net income $15,551 $18,591 $19,716 $10,089
Basic net income per common unit $ 0.49 $ 0.59 $ 0.62 $ 0.59
Diluted net income per common unit $ 0.49 $ 0.59 $ 0.62 $ 0.58
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1998
First Second Third Fourth
quarter quarter quarter quarter
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $48,318 $53,730 $58,605 $62,060
Net income $15,924 $17,283 $18,105 $16,640
Basic net income per common unit $ 0.52 $ 0.55 $ 0.58 $ 0.53
Diluted net income per common unit $ 0.52 $ 0.55 $ 0.58 $ 0.52
</TABLE>
SUSA Partnership, L.P.
Report of Independent Accountants
To the Partners of
SUSA Partnership, L.P.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, partner's capital and cash flows
present fairly, in all material respects, the financial position of SUSA
Partnership, L.P. (the "Company") at December 31, 1999 and 1998, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States, which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Memphis, Tennessee
January 26, 2000
<PAGE>
Storage USA, Inc., Facilities
Schedule III
Real Estate and Accumulated Depreciation
as of December 31, 1999
<TABLE>
<CAPTION>
Initial Cost to REIT
----------------------------- Cost of
Building & Improvements
State Property Name Encumbrances Land Fixtures Sub to Acquisition
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AL Birmingham/Hwy 280 348,919 953,148 87,171
AL Birmingham/Palisades Blvd 571,924 1,546,313 9,374
AZ Oracle 587,844 1,595,864 84,762
AZ East Phoenix 370,586 1,021,566 218,030
AZ Tempe 878,690 2,389,598 99,656
AZ Cave Creek 824,369 2,244,177 65,958
AZ Alma School 785,504 2,162,032 57,254
AZ Metro-21st/Peoria-Phoenix 599,712 1,638,042 1,569,499
AZ 7th St/Indian Sch-Phoenix 518,977 1,418,677 94,865
AZ Phoenix/32nd Street 1,346,245 3,670,885 30,746
AZ Mesa/Country Club 554,688 1,503,241 67,109
AZ Mesa/East Main St 1,427,613 913,783 2,479,293 234,234
AZ Phoenix/Bell Road 1,312,139 3,547,636 97,358
AZ Tucson/S Santa Clara Ave 542,275 1,486,171 96,626
AZ Phoenix/N 43rd Avenue 1,307,809 3,541,123 256,000
AZ Phoenix/N 25th Avenue 537,482 1,457,678 93,335
AZ Phoenix/2331 W Ind Sch 537,759 1,458,428 161,100
AZ Mesa/N Power Rd 454,601 1,231,582 63,313
AZ Chandler/3026 S Ctry Club 525,840 1,429,081 162,144
AZ Tempe/E Southshore Dr 1,200,074 798,272 2,158,290 228,466
CA Marina Del Rey 1,954,097 5,293,255 139,239
CA Campbell 989,715 2,684,079 314,324
CA Monterey I & II 1,556,242 4,223,039 309,230
CA Santa Cruz 1,036,838 2,812,668 286,485
CA Scotts Valley 601,093 1,634,485 269,823
CA Santa Clara 1,362,331 3,738,431 143,969
CA Watsonville 430,931 1,173,809 240,028
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
CA Point Loma 2,135,347 5,777,511 359,709
CA Rialto 695,327 1,921,602 138,804
CA Yucaipa 411,580 1,145,267 22,808
CA Fallbrook 418,763 1,154,513 72,713
CA Hemet 455,585 1,252,504 59,157
CA San Bernardino/Baseline 1,220,837 3,325,258 93,880
CA Colton 514,276 1,425,550 126,839
CA San Marcos 318,260 879,411 87,858
CA Capitola 827,352 2,283,337 57,754
CA Oceanside 1,236,627 3,383,435 78,955
CA San Bernardino/Waterman 708,661 1,941,602 196,070
CA Santee 879,599 2,382,970 269,134
CA Santa Ana 1,273,489 3,456,542 68,603
CA Garden Grove 1,137,544 3,087,956 82,427
CA City of Industry 899,709 2,453,012 117,389
CA Chatsworth 1,740,975 4,744,309 140,126
CA Palm Springs/Tamarisk 816,416 2,229,985 130,863
CA Moreno Valley 413,759 1,142,629 139,765
CA San Bern/23rd St 655,883 1,803,082 102,099
CA San Bern/Mill Ave 368,526 1,023,905 98,778
CA Highlands 626,794 1,718,949 46,542
CA Redlands 673,439 1,834,612 263,025
CA Palm Springs/Gene Autry 784,589 2,129,022 57,333
CA Thousand Palms 652,410 1,831,765 167,596
CA Salinas 622,542 1,731,104 73,935
CA Whittier 919,755 2,516,477 82,248
CA Florin/Freeport-Sacramento 824,241 2,262,310 150,727
CA Sunrise/Sacramento 819,025 2,231,500 98,755
CA Santa Rosa 1,351,168 3,669,084 115,226
CA Huntington Beach 838,648 2,309,309 252,250
CA La Puente/Valley Blvd 992,211 2,710,041 70,747
CA Huntington Bch II/McFadden 1,050,495 2,846,043 133,994
CA Hawaiian Gardens/Norwalk 1,956,411 5,353,015 120,181
CA Sacramento/Auburn Blvd 666,995 1,808,847 231,371
CA Vacaville/Bella Vista 680,221 1,873,594 36,620
CA Sacramento/Perry 452,480 1,225,139 72,286
CA Cypress/Lincoln Avenue 795,173 2,178,391 39,160
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
CA Hollywood/N Vine St 1,736,825 4,735,794 57,073
CA Los Angeles/Fountain Ave 1,773,080 835,269 2,318,852 293,980
CA Long Beach/W Wardlow Rd 988,344 2,714,905 62,899
CA Riverside/Arlington Ave 596,109 1,676,348 177,031
CA Orange/S Flower St 1,563,079 4,245,104 2,075,041
CA Huntington Bch/Warner Ave 3,308,574 8,976,395 136,659
CA Anaheim/W Penhall Way 977,584 2,664,764 69,839
CA Santa Ana/W Fifth St 760,131 2,109,283 73,124
CA Long Beach/E Carson St 1,485,186 4,033,235 148,981
CA Long Beach/W Artesia Blvd 2,025,400 5,552,032 141,708
CA El Segundo/El Segundo Blv 2,065,840 5,598,384 79,536
CA Gardena/E Alondra Blvd 1,080,093 2,944,755 53,441
CA Pico Rivera/E Slauson Ave 1,823,075 4,954,864 113,327
CA Whittier/Comstock 1,230,548 3,346,862 190,801
CA Baldwin Park/Garvey Ave 568,380 1,552,405 64,178
CA Glendora/E Arrow Hwy 873,562 2,378,316 68,453
CA Pomona/Ridgeway 810,109 2,242,407 219,559
CA Riverside/Fairgrounds St 675,019 1,867,609 65,167
CA Cathedral City/E Ramon Rd 1,485,254 4,047,848 118,765
CA Palm Springs/Radio Road 1,011,684 2,765,751 208,961
CA Campbell/187 E Sunnyoaks 781,574 1,658,248 17,401
CA Roseville/6th Street 793,202 2,153,320 87,965
CA Roseville/Junction Blvd 918,175 2,484,109 63,750
CA Spring Valley/Jamacha Rd 823,892 2,232,496 177,026
CA N Highlands/Elkhorn Blvd 490,354 1,325,770 220,891
CA Los Angeles/Centinela Ave - 2,975,910 70,896
CA Los Alamitos/Cerritos Ave 2,027,330 5,481,290 365,036
CA Los Angeles/W Pico Blvd 1,122,500 3,034,910 243,573
CA Redwood City/Willow St 3,107,679 3,285,844 10,343
CA Oceanside/Oceanside Blvd 2,283,822 6,174,777 6,070
CO Broomfield/W 120th Ave 690,949 1,899,169 21,264
CO Lakewood/W Mississippi 1,348,480 3,658,455 127,237
CT Wethersfield 472,831 1,294,408 943,481
CT East Hartford 992,547 2,700,212 141,464
CT Waterbury 746,487 2,036,915 103,036
CT Rocky Hill 1,327,857 3,608,978 95,231
CT Farmington 1,272,203 3,454,995 91,774
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
CT Stamford/Commerce Rd 3,159,903 8,547,884 96,600
CT Brookfield/Brookfield-Fed 1,042,980 2,819,920 69,333
FL Longwood 862,849 2,387,142 60,771
FL Sarasota 1,281,966 2,007,843 1,646,916
FL WPB Southern 810,270 226,524 922,193 3,044,277
FL WPB II 572,284 2,365,372 97,407
FL Ft. Myers 489,609 1,347,207 796,975
FL North Lauderdale 1,050,449 2,867,443 823,083
FL Naples 636,051 1,735,211 114,733
FL Hallandale 1,696,519 4,625,578 148,572
FL Davie 2,005,938 5,452,384 165,416
FL Tampa/Adamo 837,180 2,291,714 119,944
FL SR 84 (Southwest) 1,903,782 5,187,373 135,110
FL Quail Roost 1,677,365 1,663,641 4,533,384 127,213
FL Tamiami 1,962,917 5,371,139 84,572
FL Highway 441 (2nd Avenue) 1,734,958 4,760,420 73,428
FL Miami Sunset 2,205,018 6,028,210 80,286
FL Doral (Archway) 1,633,500 4,464,103 128,271
FL Boca Raton 1,505,564 4,123,885 126,965
FL Ft Lauderdale 1,063,136 2,949,236 91,126
FL Coral Way 2,907,763 1,574,578 4,314,468 365,246
FL Miller Rd. 1,409,474 3,898,643 102,523
FL Harborview/Port Charlotte 883,344 2,400,333 1,372,187
FL Miami Gardens/441 540,649 1,469,557 205,342
FL Miramar/State Rd 7 1,797,370 4,892,278 487,631
FL Delray Bch/W Atlantic Blvd 388,538 1,059,895 140,460
FL Sarasota/N Washington Bl 1,038,538 2,822,939 173,667
FL West Palm Bch/N Military 791,677 2,140,460 39,742
FL Miami/SW 127th Ave - 5,491,430 36,945
FL WPB/Congress Avenue 474,880 3,136,069 6,495
FL WPB/Okeechobee Blvd 1,273,005 3,063,825 30,069
FL Bradenton/Manatee Ave 840,035 2,271,607 8,126
GA South Cobb 161,509 1,349,816 185,599
GA Lilburn 634,879 1,724,697 107,374
GA Eastpoint 807,085 2,194,489 811,548
GA Acworth 333,504 917,825 1,131,077
GA Western Hills 682,094 1,855,712 1,042,165
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
GA Stone Mountain 1,053,620 2,908,080 96,343
IN Marion/W 2nd St 230,497 660,932 101,516
IN Indianapolis/N Illinois 365,621 993,582 88,102
IN Indianapolis/W 10th St 598,465 1,627,324 141,195
IN Indianapolis/Hawthorn Pk 1,257,359 3,409,578 224,764
IN Indianapolis/E 56th St 1,053,343 2,856,687 125,734
IN Indianapolis/E 42nd St 665,547 1,809,692 148,092
IN Indianapolis/E 86th St 397,221 1,087,020 102,810
IN Indianapolis/Beachway Dr 526,117 1,432,517 98,959
IN Indianapolis/Crawfordsvil 267,217 732,526 90,654
IN Indianapolis/Fulton Dr 323,210 881,916 150,041
IN Indianapolis/N Meridian - 11,011 457,776
IN Indianapolis/Fry Rd 617,315 1,694,127 186,888
IN Greenwood/E Stop 11 Rd 794,443 2,158,189 115,333
IN Columbus/W 15th St 59,597 170,384 64,631
IN Columbus/Eastwood Dr 83,159 239,273 42,303
IN Clarksville/N Hallmark 53,776 157,730 140,709
IN Jeffersonville/E 10th St 301,589 826,943 762,408
IN New Albany/Grant Line Rd 188,493 519,965 70,752
IN Jeffersonville/W 7th St 329,308 902,889 143,962
IN Clarksville/Woodstock Dr 286,620 785,272 98,580
IN New Albany/Progress Blvd 387,797 1,061,123 81,558
KS Olathe 429,808 1,176,442 98,234
KY Louisville/Bardstown 664,899 1,812,323 47,783
KY Louisville/Dixie Highway 649,638 1,790,623 55,164
KY Louisville/Preston Hwy 863,390 2,346,688 1,456,788
KY Valley Station/Val Sta Rd 623,828 1,697,482 62,833
KY Louisville/Adams St 752,032 2,049,063 139,923
MA Whitman 544,178 1,487,628 1,906,872
MA Brockton 1,134,761 3,104,615 77,700
MA Northborough 822,364 2,279,586 127,500
MA Nashua/Tyngsboro 1,211,930 3,293,838 102,909
MA South Easton 909,912 2,465,382 100,992
MA North Attleboro 908,949 2,460,427 1,738,336
MA Fall River 773,781 2,097,333 149,770
MA Salisbury 771,078 2,096,159 88,770
MA Raynham/Broadway 128,851 352,739 1,563,971
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
MA Plainville/Washington St 802,165 2,805,865 90,557
MA Abington/Bedford Street 850,574 2,299,700 18,096
MA Stoughton/Washington St 873,582 2,361,908 13,485
MD Annapolis/Route 50 3,192,672 1,565,664 4,324,670 871,857
MD Silver Spring 2,776,490 4,455,110 104,171
MD Columbia 1,057,034 3,289,952 119,831
MD Rockville 1,376,588 3,765,848 98,825
MD Annapolis/Trout 1,635,928 4,430,887 132,397
MD Millersville 1,501,123 4,101,854 125,247
MD Waldorf 1,168,869 3,175,314 48,689
MD Rt 3/Millersville 546,011 1,493,533 80,156
MD Balto City/E Pleasant St 1,547,767 4,185,072 462,160
MD Wheaton/Georgia Avenue 2,524,985 6,826,813 158,858
MD Owings Mills/Owings Mills 1,232,000 2,695,300 471,400
MD Columbia/Berger Rd 2,575,892 1,301,350 3,518,450 579,654
MD Germantown/Wisteria Dr 2,194,299 1,507,010 4,074,500 439,679
MD Towson/E Joppa Rd - 5,019,296 2,293,725
MD Bethesda/River Road 2,688,520 7,268,950 (75,306)
MD Towson/203 E Joppa Rd 1,307,339 3,618,848 11,452
MD Germantown/Fredrick Rd 2,058,984 1,819,481 9,378
MI Lincoln Park 761,209 2,097,502 1,456,264
MI Tel-Dixie 595,495 1,646,723 80,727
MI Troy/Coolidge Highway 1,264,541 3,425,505 68,563
MI Grand Rapids/28th St SE 598,182 1,621,080 99,973
MI Grandville/Spartan Ind Dr 579,599 1,840,838 91,698
MI Linden/S Linden Rd 608,318 1,725,631 120,505
MI Farmington Hills/Gr Riv - 21,690 121,852
MI Belleville/Old Rawsonvill 1,604,420 4,337,870 112,104
MI Canton/Canton Center Rd 1,058,080 2,860,740 69,168
MI Chesterfield/23 Mild Rd 1,069,360 2,891,220 70,276
MI Mt Clemens/N River Rd 804,822 2,176,000 77,003
MI Shelby Twnshp/Van Dyke 1,646,340 4,451,210 44,280
MI Southgate/Allen Road 903,934 2,443,966 38,150
MI Ypsilanti/Carpenter Rd 1,294,443 3,499,784 88,450
MO Grandview 511,576 1,396,230 177,012
NC Charlotte/Tryon St 1,003,418 2,731,345 61,273
NC Raleigh/Hillsborough St 753,296 2,051,496 65,305
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
NC Charlotte/Amity Rd 947,871 2,583,190 119,003
NC Fayetteville/MacArthur 597,765 1,689,315 108,911
NC Fayetteville/Rim Rd 514,208 1,417,324 26,396
NC Wilmington/Market St 622,720 1,704,743 48,020
NC Pineville/Crump Road 763,330 2,063,820 56,238
NJ Lawnside 1,095,126 2,972,032 392,940
NJ Cherry Hill/Cuthbert 720,183 1,894,545 102,649
NJ Cherry Hill/Route 70 693,314 1,903,413 109,307
NJ Pomona 529,657 1,438,132 72,030
NJ Mays Landing 386,592 1,051,300 54,195
NJ Hackensack/S River St 7,357,899 3,646,649 9,863,617 1,519,879
NJ Secaucus/Paterson Plank 5,428,566 2,851,097 7,712,681 1,172,313
NJ Harrison/Harrison Ave 1,228,918 822,192 2,227,121 348,334
NJ Orange/Oakwood Ave 3,903,735 2,408,877 6,517,030 918,577
NJ Flanders/Bartley Flanders 645,486 1,749,362 66,872
NJ Mt Laurel/Ark Road 678,397 1,866,032 57,899
NJ Ho Ho Kus/Hollywood Ave 4,474,785 12,117,431 102,567
NJ Millville/S Wade Blvd 302,675 829,306 157,265
NJ Williamstown/Glassboro Rd 483,584 1,316,646 156,457
NJ West New York/55th St 852,042 2,303,670 141,753
NJ Englewood/Grand Avenue 1,039,298 3,674,024 10,504
NJ Edgewater/River Road 2,819,510 7,623,119 -
NJ Tom's River/Route 37 East 1,019,345 2,756,007 -
NM Lomas 251,018 691,453 73,306
NM Montgomery 606,860 1,651,611 105,044
NM Legion - 1,873,666 147,389
NM Ellison 642,304 1,741,230 43,826
NM Hotel Circle 277,101 766,547 903,718
NM Eubank 577,099 1,568,266 260,247
NM Coors 494,400 1,347,792 111,506
NM Osuna 696,685 1,891,849 289,025
NM Santa Fe/875 W San Mateo 2,437,476 1,055,760 2,854,470 376,575
NM Albuquerque/Central Ave,E 549,778 1,492,587 314,901
NV Rainbow 879,928 2,385,104 165,372
NV Oakey 663,607 1,825,505 84,011
NV Tropicana 803,070 2,179,440 238,908
NV Sunset 934,169 2,533,803 244,232
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
NV Sahara 1,217,565 3,373,622 117,799
NV Charleston 557,678 1,520,140 90,878
NV Las Vegas-Sahara/Pioneer 1,040,367 2,842,388 93,342
NV Las Vegas/S Nellis Blvd 619,239 1,749,528 116,505
NV Las Vegas/W Cheyenne Rd 815,468 2,204,780 68,100
NV Henderson/Stephanie Pl 2,593,986 1,623,290 4,388,890 248,036
NV Las Vegas/5801 W Charlest 929,185 2,512,240 113,617
NY Coram/Bald Hill 1,976,332 5,352,301 121,383
NY Mahopac/Rt 6 and Lupi Ct 1,299,571 3,530,956 63,098
NY Kingston/Sawkill Rd 677,909 1,845,654 123,482
NY New Paltz/So Putt Corners 547,793 1,498,124 159,311
NY Saugerties/Route 32 677,909 1,839,254 202,830
NY Amsterdam/Route 5 So 394,628 1,070,360 85,016
NY Ridge/Middle Country Rd 1,357,430 3,670,090 78,021
NY Bronx/Third Avenue 763,367 2,063,920 149,252
NY New Rochelle/Huguenot St 1,360,120 3,677,360 263,026
NY Mt Vernon/Northwest St - 5,139,250 213,096
NY Bronx/Zerega Avenue 1,586,900 4,290,520 135,048
NY Bronx/Bruckner Blvd 4,641,070 12,548,400 462,690
NY Bronx/112 Bruckner Blvd 2,813,340 7,606,440 119,389
NY Brooklyn/Albemarle Rd 3,887,603 3,321,900 8,981,430 623,922
NY Long Island City/Starr 6,811,550 4,228,040 11,431,400 868,983
NY New York/W 143rd St 1,826,321 4,937,833 44,930
NY Brooklyn/John St 4,251,290 3,319,740 8,975,590 775,040
NY New York/W 21st St. 3,920,699 10,600,417 133,045
NY Hicksville/S Broadway 1,223,817 3,308,839 20,069
NY Yonkers/Saw Mill River 1,547,491 4,183,958 61,702
NY White Plains/S Kensico 1,297,085 3,506,934 37,152
NY New York/531 W 21st St 3,933,027 10,633,741 41,089
OH Akron/Chenoweth Rd 540,716 1,519,499 108,195
OH Streetsboro/Frost Rd 622,041 1,836,890 174,860
OH Kent/Cherry St 513,752 1,454,983 57,691
OH Amherst/Leavitt 392,212 1,131,603 72,746
OH East Lake/Lakeland Blvd 432,656 1,237,086 160,338
OH Mentor/Mentor Ave 1,051,222 2,910,600 96,460
OH Mentor/Heisley Road 337,560 986,802 158,925
OH Columbus/W Broad St 891,738 2,423,670 204,947
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
OH Columbus/S High St 785,018 2,127,507 113,992
OH Columbus/Innis Rd 1,694,130 4,585,478 142,202
OH Columbus/E Main St 665,547 1,808,554 149,731
OH Columbus/E Cooke Rd 891,461 2,415,298 1,262,190
OH Worthington/Reliance St 519,187 1,408,980 95,670
OH Delaware/State Rt 23 76,506 213,346 59,604
OH Trotwood/Salem Bend Dr 1,041,424 2,834,894 150,885
OH Worthington/Alta View Blv 437,308 1,185,419 24,047
OH Columbus/W Dublin-Grand 1,554,421 801,749 2,170,758 208,143
OH Dublin/Old Avery Road 712,038 1,928,205 86,933
OH Hilliard/Parkway Lane 739,230 2,001,725 88,562
OH Columbus/Urlin Avenue 1,592,200 803,372 2,172,080 194,754
OH Columbus/Schofield Dr 578,248 1,563,410 129,820
OH Columbus/Wilson Road 729,548 1,972,480 125,580
OH Columbus/2929 Dublin Rd 707,428 1,912,680 118,599
OH Columbus/Kenny Road 715,395 1,934,220 140,979
OH Columbus/South Hamilton 357,786 967,348 101,178
OK Sooner Road 453,185 1,252,031 114,045
OK 10th Street 261,208 743,356 1,238,143
OK Midwest City 443,545 1,216,512 106,771
OK Meridian 252,963 722,040 394,210
OK Air Depot 347,690 965,923 141,896
OK Peoria 540,318 1,488,307 93,576
OK 11th & Mingo 757,054 2,071,799 212,926
OK Skelly 173,331 489,960 107,290
OK Lewis 642,511 1,760,304 40,881
OK Sheridan 531,978 1,509,718 107,384
OK OKC/33rd Street 267,059 741,710 120,195
OK OKC/South Western 721,181 1,958,872 22,143
OK Tulsa/So Garnett Road 966,052 497,746 29,096
OK NW Expressway/Roxbury 598,527 1,631,870 286,349
OR Hillsboro/229th Ave 1,198,358 3,249,301 100,782
OR Beaverton/Murray Ave 1,086,999 2,948,220 84,849
OR Aloha/185th Ave 1,337,157 3,624,573 54,367
PA King of Prussia 1,354,359 3,678,011 115,848
PA Warminster 891,048 2,446,648 194,223
PA Allentown 578,632 1,583,744 101,200
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
PA Bethlehem 843,324 2,317,298 89,464
PA Norristown 868,586 2,405,332 63,638
PA Malvern/E Lancaster 433,482 2,833,980 854,356
PA West Chester/Downington 567,546 1,613,461 34,140
PA Huntingdon Valley/Welsh 583,650 1,578,020 36,000
PA Philadelphia/Wayne Ave 1,781,940 4,817,840 207,347
#N/A SUSA Partnership L.P. 522,077 35,393,885 62,185,043 4,222,672
TN Summer 172,093 2,663,644 153,209
TN Union 286,925 1,889,030 2,252,069
TN Memphis/Mt Moriah 692,669 1,598,722 1,438,406
TN Antioch/Nashville 822,125 2,239,684 196,375
TN Keyport (Gateway) 396,229 1,080,547 109,400
TN Chattanooga 484,457 1,360,998 1,146,240
TN Memphis/Ridgeway 638,757 1,141,414 1,252,615
TN Winchester 774,069 2,260,361 1,199,060
TN Nashville/Lebanon Pike 1,366,208 3,748,062 51,758
TN Nashville/Haywood 1,085,697 423,170 1,166,891 173,208
TN Nashville/Murfreesboro 811,371 344,720 950,811 1,459,789
TN Memphis/2939 Poplar 1,750,286 1,986,417 2,790,578
TN Nashville/Trousdale 1,440,860 3,901,994 74,556
TN Nashville/Murfreesboro 1,222,229 3,309,033 143,389
TN Nashville/Old Hickory Rd 1,271,786 3,444,402 169,430
TN Antioch/Bell Road 841,235 2,280,513 134,608
TN Franklin/Liberty Pike 844,335 2,287,937 130,995
TN Memphis/5675 Summer Ave 399,486 1,103,101 64,021
TN Memphis/4705 Winchester 425,797 1,171,967 149,217
TN Memphis/Madison Avenue 189,329 523,890 113,458
TN Memphis/Raleigh-LaGrange 282,744 788,041 92,121
TN Memphis/4175 Winchester 233,054 661,583 63,678
TN Memphis/American Way 326,495 911,122 191,423
TN Memphis/6390 Winchester 348,906 976,683 81,392
TN Collierville/W Poplar 1,122,353 2,372,249 26,996
TN Antioch/2757 Murfreesboro 2,424,140 1,299,380 3,531,925 293,977
TN Memphis/Shelby Oaks 446,424 1,219,883 156,168
TN Cordova/Autumn Creek 760,818 2,057,030 75,200
TN Cordova/N Germantown 991,310 2,680,210 100,587
TN Cordova/Moriarty Rd 679,285 1,836,580 83,229
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
TN Cordova/389 N Germantown Pkwy 1,434,990 2,371,420 160,695
TN Memphis/Hickory Hill 720,000 3,560,989 16,951
TN Bartlett/Germantown Rd N 720,188 1,944,173 41,536
TN Memphis/7301 Winchester 1,016,188 2,747,471 44,647
TN Bartlett/6937 Stage Road 624,662 2,125,412 7,690
TN Memphis/Kirby Parkway 554,334 1,498,754 97,086
TX White Settlement 920,149 2,496,150 1,369,546
TX Airport Freeway 616,535 1,678,683 241,407
TX Midway 851,959 2,310,475 1,220,227
TX Dallas/Preston 1,194,744 3,245,423 36,099
TX Bedford 923,948 2,525,303 90,487
TX Spring/I-45 North 1,110,728 3,005,855 63,901
TX Sugarland/Old Mill Rd 675,660 1,830,545 145,385
TX Dallas/N Dallas Pkwy 894,127 2,446,468 33,528
TX Alvin/Mustang Road 371,866 1,082,427 11,680
TX Clute/Brazos Park Drive 614,354 1,665,736 144,255
TX Houston/South Main 1,105,840 2,992,930 21,164
TX Austin/McNeil Drive 916,980 2,479,240 24,184
TX Plano/Wagner Way 1,046,620 2,829,760 10,415
TX Carrollton/W Frankford Rd 797,598 2,156,470 20,986
TX Pasadena/Red Bluff Rd 605,356 1,636,700 79,863
TX Dallas/N Central Express 1,215,080 3,285,210 75,559
TX Spring/Spring Stuebner 621,986 1,681,670 55,969
TX Addison/16280 Addison Rd 1,386,743 3,749,346 54,768
TX Grapevine/State Highway 1,254,651 3,392,203 18,216
TX Dallas/Lemmon Ave 1,211,599 3,275,805 12,516
TX Dallas/19211 Preston Road 1,371,378 3,707,800 11,196
UT Sandy 949,065 2,573,696 86,767
UT West Valley 576,248 1,579,605 35,070
VA Fairfax Station 1,019,015 2,115,385 335,875
VA Chantilly 882,257 2,395,841 826,394
VA Reston 551,285 2,260,947 136,338
VA Falls Church 1,226,409 3,348,761 215,954
VA Willow Lawn 1,516,115 4,105,846 116,455
VA Stafford/Jefferson Davis 751,398 2,035,961 90,404
VA Fredericksburg/Jefferson 668,526 1,812,040 81,401
VA Fredericksburg/Plank Rd 846,358 2,287,063 81,620
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
VA Alexandria/N Henry St 2,424,650 6,555,535 171,108
VA Falls Church/Hollywood Rd 2,209,059 5,972,642 137,699
VA Alexandria/Kings Centre 1,612,519 2,207,382 840,254
VA Fairfax/Prosperity Ave 1,132,852 3,171,245 10,875
VA Sterling/Woodland Rd 653,670 3,143,418 8,236
WA Vancouver/78th St 753,071 2,045,377 72,969
WA Seattle/N 130th Street 1,763,737 4,768,623 -
---------------------------------------------------------------
63,649,957 428,127,014 1,141,344,030 101,420,924
===============================================================
<CAPTION>
Gross Amount at Close of Period Depreciable
------------------------------------------------ Life of
Building & Land & Building Accumulated Year Placed Building
State Property Name Land Fixtures Total Depreciation in Service Component
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
AL Birmingham/Hwy 280 353,429 1,035,808 1,389,238 (94,501) 1996 40
AL Birmingham/Palisades Blvd 571,924 1,555,688 2,127,612 (11,152) 1999 40
AZ Oracle 587,844 1,680,626 2,268,470 (243,832) 1994 40
AZ East Phoenix 370,586 1,239,597 1,610,182 (138,536) 1995 40
AZ Tempe 879,017 2,488,927 3,367,944 (286,124) 1995 40
AZ Cave Creek 824,369 2,310,134 3,134,504 (258,049) 1995 40
AZ Alma School 789,076 2,215,715 3,004,790 (232,211) 1996 40
AZ Metro-21st/Peoria-Phoenix 1,013,070 2,794,183 3,807,253 (181,364) 1996 40
AZ 7th St/Indian Sch-Phoenix 522,549 1,509,971 2,032,519 (137,795) 1996 40
AZ Phoenix/32nd Street 1,347,052 3,700,823 5,047,876 (315,080) 1996 40
AZ Mesa/Country Club 558,822 1,566,217 2,125,038 (129,895) 1996 40
AZ Mesa/East Main St 965,186 2,662,123 3,627,310 (206,019) 1996 40
AZ Phoenix/Bell Road 1,319,860 3,637,273 4,957,133 (286,346) 1996 40
AZ Tucson/S Santa Clara Ave 543,219 1,581,853 2,125,072 (111,928) 1997 40
AZ Phoenix/N 43rd Avenue 1,314,457 3,790,474 5,104,932 (224,865) 1997 40
AZ Phoenix/N 25th Avenue 541,455 1,547,040 2,088,495 (91,195) 1997 40
AZ Phoenix/2331 W Ind Sch 541,733 1,615,553 2,157,287 (95,241) 1997 40
AZ Mesa/N Power Rd 458,286 1,291,210 1,749,496 (81,798) 1997 40
AZ Chandler/3026 S Ctry Club 529,773 1,587,292 2,117,065 (101,168) 1997 40
AZ Tempe/E Southshore Dr 813,320 2,371,707 3,185,028 (108,385) 1998 40
CA Marina Del Rey 1,954,097 5,432,494 7,386,591 (785,639) 1994 40
CA Campbell 1,041,860 2,946,257 3,988,118 (390,985) 1994 40
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
CA Monterey I & II 1,613,922 4,474,589 6,088,511 (596,663) 1994 40
CA Santa Cruz 1,092,718 3,043,273 4,135,991 (403,459) 1994 40
CA Scotts Valley 651,281 1,854,120 2,505,401 (257,251) 1994 40
CA Santa Clara 1,362,331 3,882,400 5,244,731 (472,528) 1995 40
CA Watsonville 480,039 1,364,729 1,844,768 (182,575) 1994 40
CA Point Loma 2,139,342 6,133,225 8,272,567 (781,797) 1994 40
CA Rialto 695,327 2,060,405 2,755,733 (240,526) 1995 40
CA Yucaipa 411,580 1,168,075 1,579,655 (147,676) 1995 40
CA Fallbrook 418,763 1,227,226 1,645,989 (149,611) 1995 40
CA Hemet 455,585 1,311,661 1,767,246 (157,744) 1995 40
CA San Bernardino/Baseline 1,220,837 3,419,138 4,639,975 (409,812) 1995 40
CA Colton 514,276 1,552,389 2,066,665 (187,681) 1995 40
CA San Marcos 318,260 967,269 1,285,529 (126,624) 1995 40
CA Capitola 827,352 2,341,090 3,168,443 (271,277) 1995 40
CA Oceanside 1,236,627 3,462,390 4,699,017 (424,659) 1995 40
CA San Bernardino/Waterman 708,988 2,137,344 2,846,333 (232,772) 1995 40
CA Santee 879,599 2,652,104 3,531,703 (296,016) 1995 40
CA Santa Ana 1,273,816 3,524,818 4,798,634 (392,002) 1995 40
CA Garden Grove 1,137,871 3,170,056 4,307,927 (349,909) 1995 40
CA City of Industry 900,036 2,570,074 3,470,110 (284,176) 1995 40
CA Chatsworth 1,736,893 4,888,518 6,625,410 (546,516) 1995 40
CA Palm Springs/Tamarisk 816,743 2,360,520 3,177,264 (281,699) 1995 40
CA Moreno Valley 414,614 1,281,539 1,696,153 (157,369) 1995 40
CA San Bern/23rd St 655,883 1,905,181 2,561,064 (209,408) 1995 40
CA San Bern/Mill Ave 370,043 1,121,166 1,491,209 (125,995) 1995 40
CA Highlands 627,594 1,764,692 2,392,285 (190,116) 1995 40
CA Redlands 731,365 2,039,711 2,771,076 (219,841) 1995 40
CA Palm Springs/Gene Autry 784,589 2,186,355 2,970,944 (230,937) 1995 40
CA Thousand Palms 655,982 1,995,789 2,651,771 (220,148) 1996 40
CA Salinas 626,114 1,801,467 2,427,581 (182,980) 1996 40
CA Whittier 923,327 2,595,154 3,518,480 (257,624) 1996 40
CA Florin/Freeport-Sacramento 828,504 2,408,774 3,237,278 (234,395) 1996 40
CA Sunrise/Sacramento 822,597 2,326,683 3,149,280 (224,661) 1996 40
CA Santa Rosa 1,354,740 3,780,738 5,135,478 (349,512) 1996 40
CA Huntington Beach 842,664 2,557,543 3,400,207 (253,298) 1996 40
CA La Puente/Valley Blvd 995,455 2,777,544 3,772,999 (245,994) 1996 40
CA Huntington Bch II/McFadden 1,054,708 2,975,824 4,030,532 (260,553) 1996 40
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
CA Hawaiian Gardens/Norwalk 1,960,437 5,469,170 7,429,607 (476,111) 1996 40
CA Sacramento/Auburn Blvd 665,659 2,041,554 2,707,213 (178,290) 1996 40
CA Vacaville/Bella Vista 681,166 1,909,270 2,590,435 (153,564) 1997 40
CA Sacramento/Perry 458,533 1,291,373 1,749,905 (108,382) 1996 40
CA Cypress/Lincoln Avenue 796,117 2,216,606 3,012,724 (167,968) 1997 40
CA Hollywood/N Vine St 1,737,769 4,791,922 6,529,692 (343,829) 1997 40
CA Los Angeles/Fountain Ave 905,889 2,542,211 3,448,101 (190,422) 1997 40
CA Long Beach/W Wardlow Rd 989,288 2,776,860 3,766,148 (211,978) 1997 40
CA Riverside/Arlington Ave 597,054 1,852,435 2,449,488 (164,429) 1997 40
CA Orange/S Flower St 2,083,008 5,800,215 7,883,224 (337,967) 1997 40
CA Huntington Bch/Warner Ave 3,310,670 9,110,958 12,421,628 (607,616) 1997 40
CA Anaheim/W Penhall Way 979,681 2,732,507 3,712,187 (190,482) 1997 40
CA Santa Ana/W Fifth St 762,227 2,180,312 2,942,538 (162,508) 1997 40
CA Long Beach/E Carson St 1,487,282 4,180,120 5,667,402 (279,956) 1997 40
CA Long Beach/W Artesia Blvd 2,027,497 5,691,643 7,719,140 (399,766) 1997 40
CA El Segundo/El Segundo Blv 2,067,936 5,675,824 7,743,760 (376,996) 1997 40
CA Gardena/E Alondra Blvd 1,082,189 2,996,100 4,078,289 (204,858) 1997 40
CA Pico Rivera/E Slauson Ave - 6,891,266 6,891,266 (413,784) 1997 40
CA Whittier/Comstock 1,232,645 3,535,567 4,768,211 (231,421) 1997 40
CA Baldwin Park/Garvey Ave 570,476 1,614,487 2,184,963 (113,535) 1997 40
CA Glendora/E Arrow Hwy 875,659 2,444,672 3,320,331 (169,721) 1997 40
CA Pomona/Ridgeway 812,206 2,459,869 3,272,075 (172,541) 1997 40
CA Riverside/Fairgrounds St 677,115 1,930,681 2,607,795 (143,893) 1997 40
CA Cathedral City/E Ramon Rd 1,487,350 4,164,517 5,651,867 (288,439) 1997 40
CA Palm Springs/Radio Road 1,013,781 2,972,615 3,986,396 (199,508) 1997 40
CA Campbell/187 E Sunnyoaks 781,574 1,675,649 2,457,223 (101,221) 1997 40
CA Roseville/6th Street 794,891 2,239,596 3,034,487 (127,997) 1997 40
CA Roseville/Junction Blvd 919,546 2,546,488 3,466,034 (140,645) 1997 40
CA Spring Valley/Jamacha Rd 825,263 2,408,151 3,233,414 (134,992) 1997 40
CA N Highlands/Elkhorn Blvd 490,557 1,546,458 2,037,015 (92,628) 1998 40
CA Los Angeles/Centinela Ave 2,490 3,044,316 3,046,806 (104,786) 1998 40
CA Los Alamitos/Cerritos Ave 2,029,290 5,844,367 7,873,656 (201,670) 1998 40
CA Los Angeles/W Pico Blvd 1,126,798 3,274,185 4,400,983 (117,597) 1998 40
CA Redwood City/Willow St 3,107,679 3,296,187 6,403,866 (47,328) 1999 40
CA Oceanside/Oceanside Blvd 2,283,822 6,180,848 8,464,669 (59,405) 1999 40
CO Broomfield/W 120th Ave 691,893 1,919,489 2,611,382 (145,478) 1997 40
CO Lakewood/W Mississippi 1,350,196 3,783,976 5,134,172 (227,785) 1997 40
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
CT Wethersfield 472,831 2,237,889 2,710,720 (261,032) 1994 40
CT East Hartford 992,547 2,841,676 3,834,223 (347,959) 1995 40
CT Waterbury 751,111 2,135,327 2,886,438 (206,588) 1996 40
CT Rocky Hill 1,332,481 3,699,586 5,032,066 (329,061) 1996 40
CT Farmington 1,276,827 3,542,145 4,818,972 (329,587) 1996 40
CT Stamford/Commerce Rd 3,175,004 8,629,384 11,804,387 (471,261) 1997 40
CT Brookfield/Brookfield-Fed 1,045,858 2,886,375 3,932,233 (82,425) 1998 40
FL Longwood 862,849 2,447,913 3,310,762 (665,810) 1988 40
FL Sarasota 2,007,894 2,928,830 4,936,725 (672,687) 1988 40
FL WPB Southern 1,021,536 3,171,458 4,192,994 (439,886) 1991 40
FL WPB II 572,284 2,462,779 3,035,063 (399,350) 1991 40
FL Ft. Myers 645,219 1,988,572 2,633,791 (242,377) 1994 40
FL North Lauderdale 1,282,769 3,458,206 4,740,975 (470,088) 1994 40
FL Naples 636,051 1,849,944 2,485,995 (252,976) 1994 40
FL Hallandale 1,696,519 4,774,151 6,470,669 (580,522) 1995 40
FL Davie 2,011,841 5,611,896 7,623,738 (682,107) 1995 40
FL Tampa/Adamo 837,180 2,411,659 3,248,838 (289,230) 1995 40
FL SR 84 (Southwest) 1,903,782 5,322,484 7,226,265 (606,283) 1995 40
FL Quail Roost 1,682,210 4,642,028 6,324,238 (505,966) 1995 40
FL Tamiami 1,962,917 5,455,711 7,418,628 (647,403) 1995 40
FL Highway 441 (2nd Avenue) 1,734,958 4,833,848 6,568,806 (571,916) 1995 40
FL Miami Sunset 2,205,018 6,108,496 8,313,514 (707,308) 1995 40
FL Doral (Archway) 1,639,215 4,586,659 6,225,874 (545,558) 1995 40
FL Boca Raton 1,509,136 4,247,278 5,756,414 (410,469) 1996 40
FL Ft Lauderdale 1,066,708 3,036,790 4,103,498 (307,995) 1996 40
FL Coral Way 1,657,605 4,596,687 6,254,292 (427,026) 1996 40
FL Miller Rd. 1,412,540 3,998,100 5,410,640 (403,595) 1996 40
FL Harborview/Port Charlotte 1,523,476 3,132,389 4,655,864 (248,048) 1996 40
FL Miami Gardens/441 544,221 1,671,327 2,215,548 (166,721) 1996 40
FL Miramar/State Rd 7 1,800,942 5,376,337 7,177,279 (561,685) 1996 40
FL Delray Bch/W Atlantic Blvd 392,563 1,196,331 1,588,893 (112,306) 1996 40
FL Sarasota/N Washington Bl 1,039,483 2,995,661 4,035,144 (208,815) 1997 40
FL West Palm Bch/N Military 787,989 2,183,890 2,971,879 (97,887) 1998 40
FL Miami/SW 127th Ave 2,942 5,525,433 5,528,375 (222,297) 1998 40
FL WPB/Congress Avenue 474,880 3,142,564 3,617,444 (13,843) 1999 40
FL WPB/Okeechobee Blvd 1,273,005 3,093,894 4,366,899 (134,355) 1999 40
FL Bradenton/Manatee Ave 840,035 2,279,733 3,119,768 (15,672) 1999 40
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
GA South Cobb 161,509 1,535,415 1,696,924 (284,466) 1992 40
GA Lilburn 634,879 1,832,070 2,466,950 (279,882) 1994 40
GA Eastpoint 937,618 2,875,504 3,813,122 (377,259) 1994 40
GA Acworth 520,032 1,862,374 2,382,406 (196,047) 1994 40
GA Western Hills 846,462 2,733,509 3,579,971 (287,904) 1994 40
GA Stone Mountain 1,057,192 3,000,851 4,058,043 (297,281) 1996 40
IN Marion/W 2nd St 231,441 761,504 992,945 (74,190) 1997 40
IN Indianapolis/N Illinois 368,997 1,078,308 1,447,305 (67,400) 1997 40
IN Indianapolis/W 10th St 602,650 1,764,334 2,366,984 (103,413) 1997 40
IN Indianapolis/Hawthorn Pk 1,263,833 3,627,868 4,891,701 (208,656) 1997 40
IN Indianapolis/E 56th St 1,059,108 2,976,656 4,035,764 (174,580) 1997 40
IN Indianapolis/E 42nd St 669,964 1,953,366 2,623,331 (113,597) 1997 40
IN Indianapolis/E 86th St 400,707 1,186,344 1,587,051 (75,524) 1997 40
IN Indianapolis/Beachway Dr 530,051 1,527,542 2,057,593 (91,863) 1997 40
IN Indianapolis/Crawfordsvil 270,251 820,146 1,090,397 (54,042) 1997 40
IN Indianapolis/Fulton Dr 326,439 1,028,728 1,355,167 (64,888) 1997 40
IN Indianapolis/N Meridian - 468,787 468,787 (44,856) 1997 40
IN Indianapolis/Fry Rd 621,565 1,876,765 2,498,330 (121,527) 1997 40
IN Greenwood/E Stop 11 Rd 799,308 2,268,656 3,067,965 (131,080) 1997 40
IN Columbus/W 15th St 61,910 232,702 294,612 (18,409) 1997 40
IN Columbus/Eastwood Dr 85,554 279,181 364,735 (21,767) 1997 40
IN Clarksville/N Hallmark 56,069 296,146 352,215 (30,164) 1997 40
IN Jeffersonville/E 10th St 453,161 1,437,779 1,890,940 (100,442) 1997 40
IN New Albany/Grant Line Rd 191,254 587,956 779,210 (41,264) 1997 40
IN Jeffersonville/W 7th St 332,558 1,043,600 1,376,159 (74,719) 1997 40
IN Clarksville/Woodstock Dr 289,722 880,750 1,170,472 (57,912) 1997 40
IN New Albany/Progress Blvd 391,250 1,139,228 1,530,478 (73,127) 1997 40
KS Olathe 429,808 1,274,676 1,704,484 (203,739) 1994 40
KY Louisville/Bardstown 666,131 1,858,875 2,525,005 (147,607) 1997 40
KY Louisville/Dixie Highway 650,582 1,844,843 2,495,425 (137,407) 1997 40
KY Louisville/Preston Hwy 1,080,333 3,586,533 4,666,866 (195,600) 1997 40
KY Valley Station/Val Sta Rd 628,101 1,756,042 2,384,143 (98,911) 1997 40
KY Louisville/Adams St 756,748 2,184,270 2,941,018 (132,592) 1997 40
MA Whitman 1,133,600 2,805,078 3,938,678 (230,227) 1994 40
MA Brockton 1,138,334 3,178,742 4,317,076 (305,126) 1996 40
MA Northborough 825,937 2,403,514 3,229,450 (245,549) 1996 40
MA Nashua/Tyngsboro 1,216,554 3,392,123 4,608,677 (316,987) 1996 40
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
MA South Easton 914,536 2,561,749 3,476,286 (235,813) 1996 40
MA North Attleboro 1,316,103 3,791,608 5,107,712 (243,560) 1996 40
MA Fall River 778,405 2,242,479 3,020,884 (202,760) 1996 40
MA Salisbury 775,702 2,180,305 2,956,007 (197,258) 1996 40
MA Raynham/Broadway 130,220 1,915,340 2,045,561 (57,629) 1997 40
MA Plainville/Washington St 802,165 2,896,422 3,698,587 (104,174) 1998 40
MA Abington/Bedford Street 845,731 2,322,639 3,168,370 (87,437) 1998 40
MA Stoughton/Washington St 873,582 2,375,393 3,248,975 (15,424) 1999 40
MD Annapolis/Route 50 1,774,896 4,987,295 6,762,191 (1,490,868) 1989 40
MD Silver Spring 2,776,490 4,559,280 7,335,771 (1,184,181) 1989 40
MD Columbia 1,057,034 3,409,782 4,466,817 (741,679) 1991 40
MD Rockville 1,376,588 3,864,673 5,241,261 (536,461) 1994 40
MD Annapolis/Trout 1,635,928 4,563,284 6,199,212 (613,079) 1994 40
MD Millersville 1,501,123 4,227,101 5,728,224 (455,121) 1995 40
MD Waldorf 1,169,197 3,223,676 4,392,872 (352,577) 1995 40
MD Rt 3/Millersville 549,583 1,570,117 2,119,700 (149,138) 1996 40
MD Balto City/E Pleasant St 1,551,339 4,643,659 6,194,999 (342,380) 1996 40
MD Wheaton/Georgia Avenue 2,541,788 6,968,868 9,510,656 (375,920) 1997 40
MD Owings Mills/Owings Mills 1,232,006 3,166,694 4,398,700 (135,382) 1998 40
MD Columbia/Berger Rd 1,415,235 3,984,219 5,399,454 (184,812) 1998 40
MD Germantown/Wisteria Dr 1,604,410 4,416,779 6,021,189 (198,932) 1998 40
MD Towson/E Joppa Rd - 7,313,021 7,313,021 (229,861) 1998 40
MD Bethesda/River Road 2,638,157 7,244,008 9,882,164 (231,631) 1998 40
MD Towson/203 E Joppa Rd 1,307,339 3,630,300 4,937,639 (59,370) 1999 40
MD Germantown/Fredrick Rd 2,058,984 1,828,859 3,887,843 (11,782) 1999 40
MI Lincoln Park 1,028,677 3,286,299 4,314,975 (341,747) 1995 40
MI Tel-Dixie 608,495 1,714,449 2,322,945 (211,686) 1995 40
MI Troy/Coolidge Highway 1,268,321 3,490,288 4,758,609 (287,493) 1996 40
MI Grand Rapids/28th St SE 601,962 1,717,273 2,319,235 (145,604) 1996 40
MI Grandville/Spartan Ind Dr 583,379 1,928,756 2,512,135 (158,463) 1996 40
MI Linden/S Linden Rd 609,262 1,845,191 2,454,454 (159,681) 1997 40
MI Farmington Hills/Gr Riv 944 142,597 143,542 (25,622) 1997 40
MI Belleville/Old Rawsonvill 1,606,891 4,447,503 6,054,394 (149,256) 1998 40
MI Canton/Canton Center Rd 1,060,046 2,927,943 3,987,988 (97,124) 1998 40
MI Chesterfield/23 Mild Rd 1,071,860 2,958,996 4,030,856 (99,721) 1998 40
MI Mt Clemens/N River Rd 807,325 2,250,500 3,057,825 (82,199) 1998 40
MI Shelby Twnshp/Van Dyke 1,648,302 4,493,528 6,141,830 (144,379) 1998 40
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
MI Southgate/Allen Road 905,898 2,480,153 3,386,050 (81,969) 1998 40
MI Ypsilanti/Carpenter Rd 1,296,808 3,585,869 4,882,677 (116,740) 1998 40
MO Grandview 511,576 1,573,242 2,084,818 (244,755) 1994 40
NC Charlotte/Tryon St 1,006,990 2,789,046 3,796,036 (264,412) 1996 40
NC Raleigh/Hillsborough St 756,868 2,113,229 2,870,097 (200,995) 1996 40
NC Charlotte/Amity Rd 951,444 2,698,621 3,650,064 (250,594) 1996 40
NC Fayetteville/MacArthur 598,709 1,797,281 2,395,991 (153,737) 1997 40
NC Fayetteville/Rim Rd 515,153 1,442,775 1,957,928 (104,504) 1997 40
NC Wilmington/Market St 623,664 1,751,819 2,375,483 (125,347) 1997 40
NC Pineville/Crump Road 765,753 2,117,635 2,883,388 (85,817) 1998 40
NJ Lawnside 1,095,126 3,364,972 4,460,098 (374,750) 1995 40
NJ Cherry Hill/Cuthbert 720,183 1,997,194 2,717,377 (233,832) 1995 40
NJ Cherry Hill/Route 70 693,641 2,012,393 2,706,034 (224,637) 1995 40
NJ Pomona 534,281 1,505,538 2,039,819 (139,747) 1996 40
NJ Mays Landing 391,216 1,100,871 1,492,087 (100,752) 1996 40
NJ Hackensack/S River St 3,993,539 11,036,606 15,030,145 (832,421) 1996 40
NJ Secaucus/Paterson Plank 3,108,351 8,627,740 11,736,091 (654,160) 1996 40
NJ Harrison/Harrison Ave 886,738 2,510,908 3,397,647 (201,851) 1996 40
NJ Orange/Oakwood Ave 2,633,661 7,210,823 9,844,484 (549,502) 1996 40
NJ Flanders/Bartley Flanders 652,270 1,809,450 2,461,720 (153,060) 1996 40
NJ Mt Laurel/Ark Road 679,341 1,922,986 2,602,328 (136,100) 1997 40
NJ Ho Ho Kus/Hollywood Ave 4,477,747 12,217,036 16,694,783 (738,724) 1997 40
NJ Millville/S Wade Blvd 304,497 984,749 1,289,246 (69,737) 1997 40
NJ Williamstown/Glassboro Rd 484,529 1,472,159 1,956,687 (93,211) 1997 40
NJ West New York/55th St 854,303 2,443,162 3,297,465 (103,401) 1998 40
NJ Englewood/Grand Avenue 1,039,298 3,684,528 4,723,825 (13,199) 1999 40
NJ Edgewater/River Road 2,819,510 7,623,119 10,442,629 (31,819) 1999 40
NJ Tom's River/Route 37 East 1,019,345 2,756,007 3,775,351 - 1999 40
NM Lomas 251,018 764,759 1,015,777 (113,792) 1994 40
NM Montgomery 606,860 1,756,655 2,363,515 (267,840) 1994 40
NM Legion - 2,021,055 2,021,055 (279,172) 1994 40
NM Ellison 620,366 1,806,995 2,427,360 (268,136) 1994 40
NM Hotel Circle 255,163 1,692,204 1,947,366 (181,901) 1994 40
NM Eubank 577,099 1,828,513 2,405,612 (273,125) 1994 40
NM Coors 494,400 1,459,299 1,953,698 (202,179) 1994 40
NM Osuna 696,685 2,180,874 2,877,559 (279,947) 1994 40
NM Santa Fe/875 W San Mateo 1,128,533 3,158,272 4,286,805 (147,347) 1998 40
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
NM Albuquerque/Central Ave,E 552,498 1,804,768 2,357,266 (172,055) 1998 40
NV Rainbow 892,753 2,537,651 3,430,405 (332,665) 1994 40
NV Oakey 663,607 1,909,516 2,573,123 (248,654) 1995 40
NV Tropicana 815,085 2,406,333 3,221,418 (320,396) 1994 40
NV Sunset 947,534 2,764,670 3,712,204 (374,541) 1994 40
NV Sahara 1,217,565 3,491,421 4,708,986 (436,028) 1995 40
NV Charleston 558,006 1,610,690 2,168,696 (181,029) 1995 40
NV Las Vegas-Sahara/Pioneer 1,043,939 2,932,158 3,976,097 (291,233) 1996 40
NV Las Vegas/S Nellis Blvd 621,015 1,864,256 2,485,272 (123,060) 1997 40
NV Las Vegas/W Cheyenne Rd 817,432 2,270,916 3,088,348 (108,789) 1998 40
NV Henderson/Stephanie Pl 1,654,456 4,605,760 6,260,216 (183,940) 1998 40
NV Las Vegas/5801 W Charlest 931,763 2,623,279 3,555,042 (108,077) 1998 40
NY Coram/Bald Hill 1,980,956 5,469,060 7,450,016 (489,280) 1996 40
NY Mahopac/Rt 6 and Lupi Ct 1,302,537 3,591,087 4,893,625 (212,342) 1997 40
NY Kingston/Sawkill Rd 680,141 1,966,904 2,647,045 (131,179) 1997 40
NY New Paltz/So Putt Corners 550,013 1,655,215 2,205,228 (106,037) 1997 40
NY Saugerties/Route 32 680,020 2,039,973 2,719,993 (160,584) 1997 40
NY Amsterdam/Route 5 So 397,286 1,152,718 1,550,004 (73,237) 1997 40
NY Ridge/Middle Country Rd 1,360,419 3,745,122 5,105,541 (179,946) 1998 40
NY Bronx/Third Avenue 768,920 2,207,620 2,976,539 (107,711) 1998 40
NY New Rochelle/Huguenot St 1,365,672 3,934,834 5,300,506 (183,884) 1998 40
NY Mt Vernon/Northwest St 5,552 5,346,793 5,352,346 (246,382) 1998 40
NY Bronx/Zerega Avenue 1,592,457 4,420,011 6,012,468 (205,099) 1998 40
NY Bronx/Bruckner Blvd 4,646,626 13,005,534 17,652,160 (587,289) 1998 40
NY Bronx/112 Bruckner Blvd 2,823,516 7,715,652 10,539,169 (246,582) 1998 40
NY Brooklyn/Albemarle Rd 3,443,462 9,483,790 12,927,252 (301,275) 1998 40
NY Long Island City/Starr 4,417,524 12,110,899 16,528,423 (378,464) 1998 40
NY New York/W 143rd St 1,822,780 4,986,305 6,809,084 (176,391) 1998 40
NY Brooklyn/John St 3,487,270 9,583,100 13,070,370 (304,438) 1998 40
NY New York/W 21st St. 3,920,704 10,733,457 14,654,161 (323,207) 1998 40
NY Hicksville/S Broadway 1,223,817 3,328,908 4,552,725 (22,963) 1999 40
NY Yonkers/Saw Mill River 1,547,491 4,245,660 5,793,151 (30,676) 1999 40
NY White Plains/S Kensico 1,297,085 3,544,086 4,841,171 (25,117) 1999 40
NY New York/531 W 21st St 3,933,027 10,674,830 14,607,857 (68,663) 1999 40
OH Akron/Chenoweth Rd 541,661 1,626,750 2,168,410 (137,958) 1997 40
OH Streetsboro/Frost Rd 622,985 2,010,806 2,633,791 (165,078) 1997 40
OH Kent/Cherry St 514,697 1,511,729 2,026,426 (125,542) 1997 40
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
OH Amherst/Leavitt 393,156 1,203,405 1,596,561 (108,522) 1997 40
OH East Lake/Lakeland Blvd 433,600 1,396,480 1,830,080 (115,642) 1997 40
OH Mentor/Mentor Ave 1,052,166 3,006,116 4,058,282 (238,532) 1997 40
OH Mentor/Heisley Road 338,504 1,144,783 1,483,287 (82,478) 1997 40
OH Columbus/W Broad St 896,942 2,623,413 3,520,355 (163,768) 1997 40
OH Columbus/S High St 789,851 2,236,666 3,026,517 (131,976) 1997 40
OH Columbus/Innis Rd 1,702,121 4,719,689 6,421,810 (261,287) 1997 40
OH Columbus/E Main St 669,964 1,953,867 2,623,832 (124,994) 1997 40
OH Columbus/E Cooke Rd 1,185,678 3,383,271 4,568,949 (187,592) 1997 40
OH Worthington/Reliance St 523,097 1,500,740 2,023,837 (90,392) 1997 40
OH Delaware/State Rt 23 78,878 270,578 349,456 (23,028) 1997 40
OH Trotwood/Salem Bend Dr 1,047,147 2,980,056 4,027,203 (179,722) 1997 40
OH Worthington/Alta View Blv 438,635 1,208,139 1,646,774 (64,914) 1997 40
OH Columbus/W Dublin-Grand 829,997 2,350,653 3,180,650 (128,393) 1997 40
OH Dublin/Old Avery Road 713,365 2,013,812 2,727,176 (110,330) 1997 40
OH Hilliard/Parkway Lane 740,557 2,088,960 2,829,517 (115,878) 1997 40
OH Columbus/Urlin Avenue 830,830 2,339,376 3,170,206 (101,264) 1998 40
OH Columbus/Schofield Dr 580,734 1,690,744 2,271,478 (75,779) 1998 40
OH Columbus/Wilson Road 732,102 2,095,506 2,827,608 (92,515) 1998 40
OH Columbus/2929 Dublin Rd 709,914 2,028,793 2,738,707 (82,160) 1998 40
OH Columbus/Kenny Road 717,989 2,072,605 2,790,594 (88,611) 1998 40
OH Columbus/South Hamilton 360,448 1,065,864 1,426,312 (50,012) 1998 40
OK Sooner Road 453,185 1,366,076 1,819,261 (203,539) 1994 40
OK 10th Street 621,413 1,621,293 2,242,707 (171,833) 1994 40
OK Midwest City 443,545 1,323,283 1,766,828 (196,449) 1994 40
OK Meridian 244,143 1,125,070 1,369,213 (160,001) 1994 40
OK Air Depot 347,690 1,107,819 1,455,509 (182,119) 1994 40
OK Peoria 540,318 1,581,883 2,122,201 (198,520) 1995 40
OK 11th & Mingo 757,054 2,284,725 3,041,779 (291,524) 1995 40
OK Skelly 173,331 597,250 770,581 (82,929) 1995 40
OK Lewis 626,512 1,817,185 2,443,696 (215,943) 1995 40
OK Sheridan 531,978 1,617,102 2,149,080 (207,384) 1995 40
OK OKC/33rd Street 270,631 858,333 1,128,964 (99,900) 1996 40
OK OKC/South Western 722,126 1,980,070 2,702,196 (149,375) 1997 40
OK Tulsa/So Garnett Road 358,960 1,133,934 1,492,894 (59,966) 1997 40
OK NW Expressway/Roxbury 599,660 1,917,086 2,516,746 (242,719) 1998 40
OR Hillsboro/229th Ave 1,201,930 3,346,511 4,548,441 (305,540) 1996 40
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
OR Beaverton/Murray Ave 1,090,571 3,029,497 4,120,068 (275,122) 1996 40
OR Aloha/185th Ave 1,340,729 3,675,368 5,016,097 (327,014) 1996 40
PA King of Prussia 1,354,359 3,793,859 5,148,218 (450,382) 1995 40
PA Warminster 891,048 2,640,871 3,531,919 (307,109) 1995 40
PA Allentown 578,632 1,684,944 2,263,576 (218,336) 1995 40
PA Bethlehem 843,324 2,406,763 3,250,086 (303,884) 1995 40
PA Norristown 872,159 2,465,397 3,337,556 (248,052) 1996 40
PA Malvern/E Lancaster 590,523 3,531,296 4,121,818 (185,517) 1997 40
PA West Chester/Downington 568,490 1,646,657 2,215,147 (138,542) 1997 40
PA Huntingdon Valley/Welsh 586,181 1,611,489 2,197,670 (85,165) 1998 40
PA Philadelphia/Wayne Ave 1,784,728 5,022,399 6,807,127 (164,911) 1998 40
TN SUSA Partnership L.P. 39,046,815 62,754,286 101,801,600 (3,573,147) 1994 5
TN Summer 172,093 2,816,853 2,988,946 (852,069) 1986 40
TN Union 485,570 3,942,455 4,428,024 (603,029) 1987 40
TN Memphis/Mt Moriah 1,034,883 2,694,914 3,729,797 (534,643) 1989 40
TN Antioch/Nashville 822,125 2,436,059 3,258,184 (360,592) 1994 40
TN Keyport (Gateway) 403,492 1,182,684 1,586,176 (170,036) 1994 40
TN Chattanooga 684,433 2,307,261 2,991,695 (177,888) 1995 40
TN Memphis/Ridgeway 638,849 2,393,937 3,032,786 (228,002) 1995 40
TN Winchester 774,069 3,459,422 4,233,490 (145,727) 1997 40
TN Nashville/Lebanon Pike 1,369,780 3,796,248 5,166,028 (346,594) 1996 40
TN Nashville/Haywood 450,922 1,312,347 1,763,269 (120,578) 1996 40
TN Nashville/Murfreesboro 723,197 2,032,123 2,755,320 (110,771) 1996 40
TN Memphis/2939 Poplar 1,857,209 4,670,072 6,527,281 (173,000) 1997 40
TN Nashville/Trousdale 1,441,554 3,975,856 5,417,410 (320,729) 1996 40
TN Nashville/Murfreesboro 1,226,323 3,448,328 4,674,651 (283,913) 1996 40
TN Nashville/Old Hickory Rd 1,275,879 3,609,738 4,885,618 (304,502) 1996 40
TN Antioch/Bell Road 845,328 2,411,028 3,256,356 (209,011) 1996 40
TN Franklin/Liberty Pike 848,428 2,414,839 3,263,267 (211,275) 1996 40
TN Memphis/5675 Summer Ave 400,430 1,166,178 1,566,608 (90,177) 1997 40
TN Memphis/4705 Winchester 426,742 1,320,239 1,746,981 (105,822) 1997 40
TN Memphis/Madison Avenue 190,273 636,404 826,677 (70,612) 1997 40
TN Memphis/Raleigh-LaGrange 283,689 879,217 1,162,906 (70,150) 1997 40
TN Memphis/4175 Winchester 233,998 724,317 958,315 (62,706) 1997 40
TN Memphis/American Way 327,439 1,101,600 1,429,040 (82,720) 1997 40
TN Memphis/6390 Winchester 349,851 1,057,130 1,406,981 (78,093) 1997 40
TN Collierville/W Poplar 1,122,353 2,399,245 3,521,598 (140,605) 1997 40
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
TN Antioch/2757 Murfreesboro 1,341,846 3,783,437 5,125,282 (235,803) 1997 40
TN Memphis/Shelby Oaks 450,081 1,372,395 1,822,475 (81,268) 1997 40
TN Cordova/Autumn Creek 766,179 2,126,869 2,893,048 (118,455) 1998 40
TN Cordova/N Germantown 996,671 2,775,436 3,772,107 (139,907) 1998 40
TN Cordova/Moriarty Rd 684,646 1,914,448 2,599,094 (96,797) 1998 40
TN Cordova/389 N Germantown Pkwy 1,434,992 2,532,112 3,967,105 (89,707) 1998 40
TN Memphis/Hickory Hill 720,000 3,577,940 4,297,940 (68,456) 1998 40
TN Bartlett/Germantown Rd N 720,188 1,985,709 2,705,897 (52,498) 1999 40
TN Memphis/7301 Winchester 1,020,208 2,788,098 3,808,306 (72,427) 1998 40
TN Bartlett/6937 Stage Road 624,662 2,133,102 2,757,763 (35,290) 1999 40
TN Memphis/Kirby Parkway 554,334 1,595,841 2,150,174 (12,295) 1999 40
TX White Settlement 1,370,309 3,415,536 4,785,845 (453,868) 1994 40
TX Airport Freeway 616,535 1,920,090 2,536,625 (267,317) 1994 40
TX Midway 1,169,859 3,212,803 4,382,661 (366,761) 1994 40
TX Dallas/Preston 1,194,744 3,281,522 4,476,266 (347,627) 1995 40
TX Bedford 927,520 2,612,218 3,539,738 (246,690) 1996 40
TX Spring/I-45 North 1,114,300 3,066,185 4,180,484 (254,289) 1996 40
TX Sugarland/Old Mill Rd 681,063 1,970,527 2,651,590 (167,987) 1996 40
TX Dallas/N Dallas Pkwy 895,071 2,479,052 3,374,123 (186,608) 1997 40
TX Alvin/Mustang Road 372,810 1,093,163 1,465,973 (115,004) 1997 40
TX Clute/Brazos Park Drive 617,041 1,807,304 2,424,345 (99,974) 1997 40
TX Houston/South Main 1,107,133 3,012,801 4,119,934 (159,677) 1997 40
TX Austin/McNeil Drive 916,403 2,504,001 3,420,404 (128,419) 1998 40
TX Plano/Wagner Way 1,043,240 2,843,556 3,886,795 (157,885) 1998 40
TX Carrollton/W Frankford Rd 795,891 2,179,163 2,975,054 (112,541) 1998 40
TX Pasadena/Red Bluff Rd 608,467 1,713,452 2,321,919 (95,314) 1998 40
TX Dallas/N Central Express 1,217,617 3,358,232 4,575,849 (186,252) 1998 40
TX Spring/Spring Stuebner 623,950 1,735,676 2,359,625 (81,369) 1998 40
TX Addison/16280 Addison Rd 1,392,860 3,797,998 5,190,858 (109,093) 1998 40
TX Grapevine/State Highway 1,254,651 3,410,420 4,665,070 (44,108) 1999 40
TX Dallas/Lemmon Ave 1,211,599 3,288,321 4,499,920 (41,373) 1999 40
TX Dallas/19211 Preston Road 1,371,378 3,718,996 5,090,374 (48,383) 1999 40
UT Sandy 949,065 2,660,463 3,609,528 (362,844) 1994 40
UT West Valley 576,248 1,614,675 2,190,923 (169,134) 1995 40
VA Fairfax Station 1,131,884 2,338,391 3,470,275 (370,679) 1993 40
VA Chantilly 882,257 3,222,235 4,104,492 (388,381) 1994 40
VA Reston 551,285 2,397,286 2,948,570 (220,209) 1996 40
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
VA Falls Church 1,226,736 3,564,388 4,791,124 (393,825) 1995 40
VA Willow Lawn 1,519,687 4,218,729 5,738,416 (351,786) 1996 40
VA Stafford/Jefferson Davis 756,323 2,121,440 2,877,763 (178,686) 1996 40
VA Fredericksburg/Jefferson 672,985 1,888,982 2,561,967 (155,044) 1996 40
VA Fredericksburg/Plank Rd 850,195 2,364,845 3,215,041 (193,769) 1996 40
VA Alexandria/N Henry St 2,441,309 6,709,984 9,151,293 (362,348) 1997 40
VA Falls Church/Hollywood Rd 2,225,719 6,093,682 8,319,400 (322,930) 1997 40
VA Alexandria/Kings Centre 1,612,518 3,047,638 4,660,156 (99,040) 1998 40
VA Fairfax/Prosperity Ave 1,132,852 3,182,121 4,314,973 (61,860) 1999 40
VA Sterling/Woodland Rd 653,670 3,151,654 3,805,323 (44,975) 1999 40
WA Vancouver/78th St 756,643 2,114,774 2,871,417 (194,038) 1996 40
WA Seattle/N 130th Street 1,763,737 4,768,623 6,532,361 - 1999 40
-------------------------------------------------------------
441,079,836 1,229,811,632 1,670,891,968 (94,537,653)
=============================================================
(in thousands)
Balance at December 31, 1998 1,616,215
Additions during period:
Acquisitions-other 86,879
Development 71,004
Facility expansions 529
Improvements and other 16,723
-----------------------------
175,135
Deductions during period:
Properties exchanged (120,458)
-----------
-----------
Balance at December 31, 1999 1,670,892
===========
</TABLE>
<PAGE>
EX 10.48 Stock Option Plan Amendment
No. 5 to 1993 Omnibus.doc
STORAGE USA, INC.
AMENDMENT NO. 5 TO
1993 OMNIBUS STOCK PLAN
This Amendment No. 5, dated as of February 2, 2000 to the Storage USA, Inc.
1993 Omnibus Stock Plan, as amended, recites and provides as follows:
At a meeting held on February 2, 2000, the Board of Directors of Storage
USA, Inc. (the "Company") resolved to amend the Company's 1993 Omnibus Stock
Plan (the "Plan"), pursuant to paragraph 19 of the Plan, to allow an optionee to
exercise vested, unexercised options for 30 days following termination of such
optionee's employment with the Company, except for a termination for cause
arising out of fraud, embezzlement or illegal conduct.
NOW, THEREFORE, the following amendment to the Plan is hereby adopted:
The first sentence of Paragraph 6 (e) is deleted in its entirety and the
following substituted therefor:
In the event of Termination (as defined below) of an optionee's status as
an employee or director of the Company for any cause other than death,
Disability (as defined below), fraud, embezzlement or illegal conduct, all
unexercised, vested options shall terminate thirty (30) days following such
Termination, or such longer period as the Committee may grant, and all
unexercised, unvested options shall terminate at such Termination. In the
event of a termination of an optionee's status as an employee or director
of the Company for cause arising out of fraud, embezzlement or illegal
conduct, all unexercised options, whether vested or unvested, shall
terminate at such Termination.
IN WITNESS WHEREOF, the Company has caused this Amendment No. 5 to be
executed as of the date first above written.
STORAGE USA, INC.
By: \s\ John W. McConomy
------------------------------
Executive Vice President,
General Counsel and Secretary
<PAGE>
EX 10.49 Severance Agreement 2x.doc
SEVERANCE AGREEMENT
AGREEMENT effective as of ___________, 1999, by and between Storage USA,
Inc., a Tennessee corporation (the "Company"), and _________________ (the
"Executive").
WITNESSETH:
WHEREAS, the Company considers it essential to the best interest of its
stockholders to foster the continuous employment of key management personnel;
WHEREAS, the Board recognizes that, as is the case with many publicly held
corporations, the possibility of a Change of Control may exist and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of the Company's and its
affiliates' management personnel to the detriment of the Company and its
stockholders; and
WHEREAS, the Board has determined that it is in the best interest of the
Company and its stockholders to enter into this Agreement in order to reinforce
and encourage the continued attention and dedication of Executive to his
assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change of Control.
NOW, THEREFORE, in consideration of the premises and mutual obligations
hereinafter set forth the parties agree as follows:
1) Definitions. For purposes of this Agreement, the following terms shall have
------------
the following definitions:
a) "1993 Omnibus Stock Plan" means the Company's 1993 Omnibus Stock Plan,
as amended.
b) "1995 Employee Stock Purchase and Loan Plan" means the Company's 1995
Employee Stock Purchase and Loan Plan, as amended.
c) "1996 Officers' Stock Option Loan Program" means the Company's 1996
Officers' Stock Option Loan Program, as amended.
d) "Additional Amount" means the amount the Company shall pay to the
Executive in order to indemnify the Executive against all claims,
losses, damages, penalties, expenses, interest, and Excise Taxes
(including additional taxes on such Additional Amount) incurred by
Executive as a result of Executive receiving Change of Control
Benefits as further described in Section 6 of this Agreement.
---------
e) "Arbitrators" means the arbitrators selected to conduct any
arbitration proceeding in connection with any disputes arising out of
or relating to this Agreement.
<PAGE>
f) "Award Period" means any period in which the Company's performance is
measured in connection with its Shareholder Value Plan.
g) "Award Plans" mean each and every plan or program in which Executive
receives compensation in the form of a cash bonus, shares of stock in
the Company, Partnership Units, or Options, including, without
limitation, compensation received pursuant to the Company's 1993
Omnibus Stock Plan, 1995 Employee Stock Purchase and Loan Plan, 1996
Officers' Stock Option Loan Program, Shareholder Value Plan, and any
other stock option, incentive compensation, profit participation,
bonus or extra compensation plan that is adopted by the Company and in
which the Company's executive officers generally participate.
h) "Base Salary" means the annual salary paid to Executive by the
Company.
i) "Benefit Plans" mean each and every health, life, medical, dental,
disability, insurance and welfare plan maintained by the Company that
are maintained from time to time by the Company for the benefit of
Executive, the executives of the Company generally or for the
Company's employees generally, provided that Executive is eligible to
participate in such plan under the eligibility provisions thereof that
are generally applicable to the participants thereof.
j) "Board" means the Board of Directors of the Company.
k) "Change of Control" means any of the following events which occur
during the Term of this Agreement:
i) any "person", as that term is used in Section 13(d) and Section
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), becomes, is discovered to be, or files a report on
Schedule 13D or 14D-1 (or any successor schedule, form or report)
disclosing that such person is a beneficial owner (as defined in Rule
13d-3 under the Exchange Act or any successor rule or regulation),
directly or indirectly, of securities of the Company representing 25%
or more of the combined voting power of the Company's then outstanding
securities entitled to vote generally in the election of directors,
without the approval of the Board of the acquisition of such
securities by the acquiring person;
ii) any "person", as that term is used in Section 13(d) and Section
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), becomes, is discovered to be, or files a report on
Schedule 13D or 14D-1 (or any successor schedule, form or report)
disclosing that such person is a beneficial owner (as defined in Rule
13d-3 under the Exchange Act or any successor rule or regulation),
directly or indirectly, of securities of the Company representing 25%
or more of the combined voting power of the Company's then outstanding
securities entitled to vote generally in the election of directors,
regardless of whether or not the Board shall have approved the
acquisition of
2
<PAGE>
such securities by the acquiring person; if, at any time within three
(3) years after the acquisition of such securities, those individuals
who constituted the Board at the time of the acquisition of such
securities cease for any reason to constitute at least a majority of
the Board of Directors of the Company;
iii) any "person", as that term is used in Section 13(d) and Section
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), becomes, is discovered to be, or files a report on
Schedule 13D or 14D-1 (or any successor schedule, form or report)
disclosing that such person is a beneficial owner (as defined in Rule
13d-3 under the Exchange Act or any successor rule or regulation),
directly or indirectly, of securities of the Company representing
49.9% or more of the combined voting power of the Company's then
outstanding securities entitled to vote generally in the election of
directors, regardless of whether or not the Board shall have approved
the acquisition of such securities by the acquiring person;
iv) individuals who, as of the effective date of this Agreement,
constitute the Board of Directors of the Company cease for any reason
to constitute at least a majority of the Board of Directors of the
Company, unless any such change is approved by the vote of at least
80% of the members of the Board of Directors of the Company in office
immediately prior to such cessation;
v) the Company is merged, consolidated or reorganized into or with
another corporation or other legal person, or securities of the
Company are exchanged for securities of another corporation or other
legal person, and immediately after such merger, consolidation,
reorganization or exchange less than 75% of the combined voting power
of the then-outstanding securities of such corporation or person
immediately after such transaction are held, directly or indirectly,
in the aggregate by the holders of securities entitled to vote
generally in the election of directors of the Company immediately
prior to such transaction;
vi) the Company in any transaction or series of related transactions,
sells all or substantially all of its assets to any other corporation
or other legal person and less than 75% of the combined voting power
of the then-outstanding securities of such corporation or person
immediately after such sale or sales are held, directly or indirectly,
in the aggregate by the holders of securities entitled to vote
generally in the election of directors of the Company immediately
prior to such sale;
vii) the Company and its affiliates shall sell or transfer (in a
single transaction or series of related transactions) to a
non-affiliate business operations or assets that generated at least
two-thirds of the consolidated revenues (determined on the basis of
the Company's four most recently completed fiscal quarters for which
reports have been filed under the Exchange Act) of the Company and its
subsidiaries immediately prior thereto;
3
<PAGE>
viii) the Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act
disclosing in response to Form 8-K (or any successor, form or report
or item therein) that a change in control of the Company has occurred;
ix) the shareholders of the Company approve any plan or proposal for
the liquidation or dissolution of the Company;
x) the Company ceases to be the general partner of the Partnership or
in any transaction or a series of transactions sells or transfers
Partnership Units owned by the Company to a third party constituting
at least 49.9% of the limited partnership interests in the
Partnership; or
xi) any other transaction or series of related transactions occur that
have substantially the effect of the transactions specified in any of
the preceding clauses in this sentence.
l) "Change of Control Benefits" means the Executive's receipt of the
Termination Payment or any other payment, benefit or compensation
(except for the Additional Amount) which the Executive receives or has
the right to receive from the Company or any of its affiliates as a
result of a Change of Control Termination.
m) "Change of Control Termination" means (i) a Termination Without Cause
of the Executive's employment by the Company, (a) within three (3)
months prior to a Change of Control and in anticipation of such Change
of Control; (b) on the date of the Change of Control; or (c) within
two (2) years after a Change of Control or (ii) the Executive's
resignation for Good Reason on or within two (2) years after a Change
of Control.
n) "Code" means the Internal Revenue Code of 1986, as amended.
o) "Company" means Storage USA, Inc., a Tennessee corporation, and any
successor to its business and/or assets which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
p) "Company Shares" means the shares of common stock of the Company or
any securities of a successor company which shall have replaced such
common stock.
q) "Excess Parachute Payments" has the meaning set forth in section 280G
of the Code.
r) "Excise Tax" means a tax on Excess Parachute Payments imposed pursuant
to Code section 4999.
s) "Executive" means the person identified in the preamble paragraph of
this Agreement.
4
<PAGE>
t) "Fair Market Value" means, on any give date, the closing sale price of
the common stock of the Company on the New York Stock Exchange on such
date, or, if the New York Stock Exchange shall be closed on such date,
the next preceding date on which the New York Stock Exchange shall
have been open.
u) "Good Reason" means any of the following:
i) a change in the Executive's status, position or responsibilities
(including reporting relationships and responsibilities) which, in the
Executive's reasonable judgment and without Executive's consent,
represents a reduction in or demotion of the Executive's status,
position or responsibilities as in effect immediately prior to a
Change of Control; the assignment to the Executive of any duties or
responsibilities which, in the Executive's reasonable judgment, are
inconsistent with such status, position or responsibilities; or any
removal of the Executive from or failure to reappoint or reelect the
Executive to any of such positions;
ii) the relocation of the Company's principal executive offices to a
location outside a thirty-mile radius of Memphis, Tennessee or the
Company's requiring the Executive to be based at any place other than
a location within a thirty-mile radius of Memphis, Tennessee, except
for reasonably required travel on the Company's business;
iii) the failure by the Company to continue to provide the Executive
with compensation and benefits provided to Executive prior to the
Change of Control or benefits substantially similar to those provided
to the Executive under any of the employee benefit plans in which the
Executive is or becomes a participant, or the taking of any action by
the Company which would directly or indirectly materially reduce any
of such benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change of Control;
iv) any material breach by the Company of any provision of this
Agreement; or
v) the failure of the Company to obtain an agreement reasonably
satisfactory to Executive from any successor or assign of the Company
to assume and agree to perform this Agreement.
v) "Option(s)" means any options issued pursuant to the Company's 1993
Omnibus Stock Plan, or any other stock option plan adopted by the
Company, any option granted with respect to Partnership Units, or any
option granted under the plan of any successor company that replaces
or assumes the Company's or the Partnership's options.
w) "Partnership" means SUSA Partnership, L.P.
x) "Partnership Unit(s)" means limited partnership interests of the
Partnership. The holder has the option of requiring the Company to
redeem such interests. The Company may
5
<PAGE>
elect to effectuate such redemption by either paying cash or
exchanging Company Shares for such interests.
y) "Permanent Disability" means a complete physical or mental inability,
confirmed by a licensed physician, to perform the Executive's duties
that continues for a period of six (6) consecutive months.
z) "Plan Loan(s)" means any loan extended by the Company to Executive
pursuant to the 1995 Employee Stock Purchase and Loan Plan, the 1996
Officers' Stock Option Loan Program, or any other similar plan or
program adopted by the Company during the Term of this Agreement.
aa) "Restricted Stock" means any restricted stock issued pursuant to the
Company's 1993 Omnibus Stock Plan, or any other Award Plan adopted by
the Company, or any restricted stock issued under the plan of any
successor company that replaces or assumes the Company's grants of
restricted stock.
bb) "Self Storage Business" means the business of acquiring, developing,
constructing, franchising, owning or operating self-storage
facilities.
cc) "Self Storage Property" means any real estate upon which the
Self-Storage Business is being conducted.
dd) "Shareholder Value Plan" means the Company's Shareholder Value Plan,
as amended.
ee) "SVU Grant" means the total number of shareholder value units granted
to the Executive pursuant to the Company's Shareholder Value Plan.
ff) "SVU Value" means the value of each shareholder value unit based upon
certain performance measures as set forth in the Company's Shareholder
Value Plan.
gg) "Term" has the meaning assigned to it in Section 2 of this Agreement.
---------
hh) "Termination Date" means the date employment of Executive is
terminated, which date shall be the date specified as the Termination
Date in the Termination Notice, which date shall not be less than
thirty nor more than sixty days from the date the Termination Notice
is given.
ii) "Termination Notice" means a written notice of termination of
employment by Executive or the Company.
jj) "Termination Payment" has the meaning set forth in Section 3(b) of
------------
this Agreement.
6
<PAGE>
kk) "Termination With Cause" means the termination of the Executive's
employment by the Company for any of the following reasons:
i) the Executive's conviction for a felony;
ii) the Executive's theft, embezzlement, misappropriation of or
intentional infliction of material damage to the Company's
property or business opportunity; or
iii) the Executive's ongoing willful neglect of or failure to perform
his duties hereunder or his ongoing willful failure or refusal to
follow any reasonable, unambiguous duly adopted written direction
of the Company that is not inconsistent with the Executive's
duties, if such willful neglect, failure or refusal is materially
damaging or materially detrimental to the business and operations
of the Company; provided that Executive shall have received
written notice of such failure and shall have continued to engage
in such failure after 30 days following receipt of such notice
from the Company, which notice specifically identifies the manner
in which the Company believes that Executive has engaged in such
failure.
For purposes of this subsection, no act, or failure to act, shall be deemed
"willful" unless done, or omitted to be done, by Executive not in good faith,
and without reasonable belief that such action or omission was in the best
interest of the Company.
ll) "Termination Without Cause" means the termination of the Executive's
employment by the Company for any reason other than Termination With
Cause, or termination by the Company due to Executive's death or
Permanent Disability.
mm) "Uniform Arbitration Act" means the Uniform Arbitration Act, Tennessee
Code Annotated (S) 29-5-391 et seq., as amended.
-- ---
2) Term; Termination.
------------------
a) The term of this Agreement hereunder shall commence on ________1, 1999
and shall be extended automatically, for so long as the Executive
remains employed by the Company hereunder, on January 1 of each year
beginning January 1, 2000 for an additional one year period (such
period, as it may be extended from time to time, being herein referred
to as the "Term"), unless, not later than September 30 of the
preceding year, the Company shall have given notice that it does not
wish to extend this Agreement; provided, further, if a Change of
Control of the Company shall have occurred during the original or
extended term of this Agreement, this Agreement shall automatically
continue in effect for a period of twenty-four months beyond the month
in which such Change of Control occurred. This Agreement shall
automatically terminate upon the termination of Executive's employment
other than by reason of a Change in Control Termination.
7
<PAGE>
b) Any purported termination of employment by Executive or the Company
(i) within three (3) months prior to a Change of Control; , (ii) on
the date of the Change of Control; or (iii) within two (2) years after
a Change of Control shall be communicated by a Termination Notice. The
Termination Notice shall indicate the specific termination provision
in this Agreement relied upon and set forth the facts and
circumstances claimed to provide a basis for termination. If the party
receiving the Termination Notice notifies the other party prior to the
Termination Date that a dispute exists concerning the termination, the
Termination Date shall be extended until the dispute is finally
determined, either by mutual written agreement of the parties, by a
binding arbitration award, or by a final judgment, order or decree of
a court of competent jurisdiction. The Termination Date shall be
extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such
dispute with reasonable diligence. Notwithstanding the pendency of any
such dispute, the Company will continue to pay Executive his full
compensation in effect when the notice giving rise to the dispute was
given and Executive shall continue as a participant in all Award Plans
and Benefit Plans in which Executive participated when the Termination
Notice giving rise to the dispute was given, until the dispute is
finally resolved in accordance with this subsection. Amounts paid
under this subsection are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other
amounts due under this Agreement.
3) Severance Benefit in Connection with a Change of Control Termination.
---------------------------------------------------------------------
a) In the event of a Change of Control Termination, the Company shall, on
the Termination Date, pay the Executive in addition to any Base Salary
earned but not paid through the Termination Date and any amounts due
pursuant to Award Plans and Benefit Plans including, without
limitation, the pro rata amount of Executive's anticipated bonus for
the fiscal year in which Executive is terminated, the compensation and
benefits set forth in this Section 3.
---------
b) The Company shall pay Executive a Termination Payment which is equal
to the sum of two (2) times the Executive's annual Base Salary in
effect on the Termination Date plus two (2) times the amount of the
highest annual cash bonus paid to the Executive for the previous five
fiscal years (but not including compensation under the Company's
Shareholder Value Plan) ("Termination Payment"). The Termination
Payment shall be calculated and paid immediately prior to the closing
of the transactions constituting a Change of Control if the Executive
receives notice prior to the Change of Control that his employment
will be terminated on or after the Change of Control.
c) Executive shall be permitted to participate in, and have all rights
and benefits provided by, all Benefit Plans which Executive was
eligible to participate in immediately prior to the Termination Date
(to the extent such participation is possible under the laws then
pertaining to such Benefit Plans), for two years following the
Termination Date. If Executive is no longer eligible to participate in
one or more of the Benefit Plans because
8
<PAGE>
of such termination, Executive shall be entitled to, and the Company
shall provide to Executive at the Company's sole expense, benefits
substantially equivalent to those Benefit Plans to which Executive was
entitled immediately prior to such termination for two (2) years after
the Termination Date.
d) All restrictions upon any Restricted Stock which may have been awarded
to Executive shall expire and be removed and such Restricted Stock
shall be fully vested at the Termination Date (unless otherwise
previously expired and removed and vested pursuant to the terms of any
Restricted Stock award pursuant to the 1993 Omnibus Stock Plan or any
other Award Plan), and such Stock shall be delivered to Executive. All
Options granted to Executive shall become fully vested at the
Termination Date (unless otherwise previously vested pursuant to the
1993 Omnibus Stock Plan or any other Award Plan). In lieu of Company
Shares issuable upon exercise of any outstanding and unexercised
Options granted to Executive, Executive may, at Executive's option,
receive an amount in cash equal to the product of (i) the excess of
the higher of the Fair Market Value of Company Shares on the
Termination Date, or the highest per share price for Company Shares
actually paid in connection with any Change of Control of the Company,
over the per share exercise price of each Option held by Executive,
times (ii) the number of Company Shares covered by each such Option.
In the event Executive does not elect to receive a cash payment for
any outstanding and unexercised Options granted to Executive,
Executive shall have the right to otherwise exercise such Options in
accordance with the terms and conditions of the 1993 Omnibus Stock
Plan or any other applicable Award Plan. This Agreement shall not
prevent Restricted Stock or Options from vesting pursuant to the terms
of the 1993.
e) Omnibus Stock Plan or any other Award Plan or otherwise, at a time
prior to that provided for herein.
f) If Executive has any Plan Loans outstanding to the Company immediately
prior to the effective date of a Change of Control Termination, the
Company shall, prior to the effective date of such Change of Control
Termination discharge and cancel the amount of principal and interest
due with respect to such Plan Loans which exceeds the Fair Market
Value of Company Shares securing the Plan Loans. The Executive shall
pay the Plan Loans in full (less the amount discharged) within ninety
(90) days following the Termination Date, and shall have the option of
repaying all amounts due with respect to the Plan Loans by the
transfer of the Company Shares securing the Plan Loans, or by the
payment, in cash, of the amounts due with respect to the Plan Loans.
Except as otherwise set forth herein, Executive shall remain subject
to all terms and conditions set forth in the Loan Agreements and
Promissory Notes until the Plan Loans are paid in full.
g) With respect to Executive's participation in the Company's Shareholder
Value Plan, the Award Periods in connection with all of Executive's
outstanding SVU Grants shall be accelerated such that each Award
Period is deemed to have ended upon the effective date of a Change of
Control Termination. At such time, the Company shall pay Executive an
9
<PAGE>
amount equal to the SVU Value multiplied by the number of Executive's
outstanding SVU Grants. The SVU Value shall be reduced by 66% for all
SVU Grants which were granted less than twelve months prior to the
effective date of a Change of Control Termination and the SVU Value
shall be reduced by 33% for all SVU Grants which were granted less
than twenty-four months but more than twelve months prior to the
effective date of a Change of Control Termination. No adjustments
shall be made to the SVU Value for SVU Grants which were granted more
than twenty-four months prior to the effective date of the Change of
Control Termination. All payments made to Executive after a Change in
Control Termination in connection with outstanding SVU Grants shall be
made solely in cash.
h) The Company shall also pay to Executive all legal fees and expenses
incurred by Executive as a result of a Change of Control Termination
(including all such fees and expenses, if any, incurred in contesting
or disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement or in connection with
any tax audit or proceeding to the extent attributable to the
application of Section 4999 of the Code to any payment or benefit
provided hereunder).
4) Certain Transactions. Notwithstanding the provisions of Sections 1(k)(i),
--------------------- -----------------
(ii), (iii) or (viii), unless otherwise determined in a specific case by
---------------------
majority vote of the Board, a Change of Control shall not be deemed to have
occurred for purposes of this Agreement solely because (i) an entity in
which the Company directly or indirectly beneficially owns 50% or more of
the voting securities or (ii) any Company-sponsored employee stock
ownership plan, or any other employee benefit plan of the Company, either
files or becomes obligated to file a report or a proxy statement under or
in response to Schedule 13D, Schedule 14D-l, Form 8-K or Schedule 14A (or
any successor schedule, form or report or item thereon) under the Exchange
Act, disclosing beneficial ownership by it of shares of stock of the
Company, or because the Company reports that a Change of Control of the
Company has or may have occurred or will or may occur in the future by
reason of such beneficial ownership.
5) Escrow Arrangement. If within thirty (30) days after the effective date of
-------------------
a Change of Control, Executive's employment has not been terminated, the
Company shall, at the request of Executive, deposit with an escrow agent,
pursuant to an escrow agreement between the Company and such escrow agent,
a sum of money, or other property permitted by such escrow agreement, which
is substantially sufficient in the opinion of the Company's management to
fund the amounts due to Executive set forth in Section 3 of this Agreement.
---------
The escrow agreement shall provide that such agreement may not be
terminated until the earlier of (i) Executive's employment has terminated
and all amounts due to Executive as set forth in this Agreement have been
paid to Executive or (ii) two (2) years after the effective date of the
Change of Control.
6) Tax Matters. If the Excise Tax on Excess Parachute Payments will be imposed
------------
on the Executive under Code section 4999 as a result of the Executive's
receipt of the Change of Control Benefits, the Company shall indemnify the
Executive and hold him harmless against
10
<PAGE>
all claims, losses, damages, penalties, expenses, interest, and Excise
Taxes. To effect this indemnification, the Company shall pay to the
Executive the Additional Amount which is sufficient to indemnify and hold
the Executive harmless from the application of Code sections 280G and 4999,
including the amount of (i) the Excise Tax that will be imposed on the
Executive under section 4999 of the Code with respect to the Change of
Control Benefits; (ii) the additional (A) Excise Tax under section 4999 of
the Code, (B) hospital insurance tax under section 3111(b) of the Code and
(C) federal, state and local income taxes for which the Executive is or
will be liable on account of the payment of the amount described in subitem
(i); and (iii) the further excise, hospital insurance and income taxes for
which the Executive is or will be liable on account of the payment of the
amount described in subitem (ii) and this subitem (iii) and any other
indemnification payment under this Section 6. The Additional Amount shall
---------
be calculated and paid to the Executive at the time that the Termination
Payment is paid to the Executive. In calculating the Additional Amount, the
highest marginal rates of federal and applicable state and local income
taxes applicable to individuals and in effect for the year in which the
Change of Control occurs shall be used. Nothing in this paragraph shall
give the Executive the right to receive indemnification from the Company
for federal, state or local income taxes or hospital insurance taxes
payable solely as a result of the Executive's receipt of (a) the Change in
Control Benefits, or (b) any additional payment, benefit or compensation
other than the Additional Amount. As specified in items (ii) and (iii),
above, all income, hospital insurance and additional Excise Taxes resulting
from additional compensation in the form of the Excise Tax payment
specified in item (i), above, shall be paid to the Executive.
The provisions of this Section 6 are illustrated by the following example:
---------
Assume that the Termination Payment and all other Change of Control
Benefits result in a total federal, state and local income tax and hospital
insurance tax liability of $180,000; and an Excise Tax liability under Code
section 4999 of $70,000. Under such circumstances, the Executive is solely
responsible for the $180,000 income and hospital insurance tax liability; and
the Company must pay to the Executive $70,000, plus an amount necessary to
indemnify the Executive for all federal, state and local income taxes, hospital
insurance taxes, and Excise Taxes that will result from the $70,000 payment to
the Executive and from all further indemnification to the Executive of taxes
attributable to the initial $70,000 payment.
7) Employment Status. The parties acknowledge and agree that Executive is an
------------------
employee of the Company or of one of its affiliates, not an independent
contractor. Any payments made to Executive by the Company pursuant to this
Agreement shall be treated for federal and state payroll tax purposes as
payments made to a Company employee, irrespective whether such payments are
made subsequent to the Termination Date.
8) Noncompetition; Nonsolicitation. For a period of two (2) years after
--------------------------------
Executive receives Change of Control Benefits pursuant to the terms of this
Agreement, Executive shall not solicit any employee of the Company to leave
the service of the Company or own any interest in any Self-Storage Property
(other than any permissible interest acquired while Executive was employed
by the Company) as partner, shareholder or otherwise; or directly or
11
<PAGE>
indirectly, for his own account or for the account of others, either as an
officer, director, promoter, employee, consultant, advisor, agent, manager,
or in any other capacity, engage in the Self-Storage Business.
The nonsolicitation provision shall apply to any Company employee during
the period of such Company employee's employment with the Company and for a
period of 30 days after such employee's termination of employment with the
Company. The Executive agrees that damages at law for violation of the
restrictive covenant contained herein would not be an adequate or proper remedy
to the Company, and that should the Executive violate or threaten to violate any
of the provisions of such covenant, the Company, its successors or assigns,
shall be entitled to obtain a temporary or permanent injunction, as appropriate,
against the Executive in any court having jurisdiction over the person and the
subject matter, prohibiting any further violation of any such covenants. The
injunctive relief provided herein shall be in addition to any award of damages,
compensatory, exemplary or otherwise, payable by reason of such violation.
Furthermore, the Executive acknowledges that this Agreement has been
negotiated at arms' length by the parties, neither being under any compulsion to
enter into this Agreement, and that the foregoing restrictive covenant does not
in any respect inhibit his ability to earn a livelihood in his chosen profession
without violating the restrictive covenant contained herein. The Company by this
Agreement has attempted to limit the Executive's right to compete only to the
extent necessary to protect the Company from unfair competition. The Company
recognizes, however, that reasonable people may differ in making such a
determination. Consequently, the Company agrees that if the scope or
enforceability of the restricted covenant contained herein is in any way
disputed at any time, a court or other trier of fact may modify and enforce the
covenant to the extent that it believes to be reasonable under the circumstances
existing at the time.
9) Notices. All notices or deliveries authorized or required pursuant to this
--------
Agreement shall be deemed to have been given when in writing and personally
delivered or when deposited in the U.S. mail, certified, return receipt
requested, postage prepaid, addressed to the parties at the following
addresses or to such other addresses as either may designate in writing to
the other party:
To the Company: 165 Madison
Suite 1300
Memphis, TN 38103
Attn: General Counsel
To the Executive:
-------------------------
-------------------------
-------------------------
10) Entire Agreement. This Agreement contains the entire understanding between
-----------------
the parties hereto with respect to the subject matter hereof and shall not
be modified in any manner except by instrument in writing signed, by or on
behalf of, the parties hereto. This Agreement
12
<PAGE>
shall be binding upon and inure to the benefit of the heirs, successors and
assigns of the parties hereto.
11) Arbitration. Any controversy concerning or claim arising out of or relating
------------
to this Agreement shall be settled by final and binding arbitration in
Memphis, Shelby County, Tennessee at a location specified by the party
seeking such arbitration.
a) The Arbitrators. Any arbitration proceeding shall be conducted by
three (3) Arbitrators and the decision of the Arbitrators shall be
binding on all parties. Each Arbitrator shall have substantial
experience and expert competence in the matters being arbitrated. The
party desiring to submit any matter relating to this
Agreement to arbitration shall do so by written notice to the other
party, which notice shall set forth the items to be arbitrated, such
party's choice of Arbitrator, and such party's substantive position in
the arbitration. The party receiving such notice shall, within fifteen
(15) days after receipt of such notice, appoint an Arbitrator and
notify the other party of its appointment and of its substantive
position. The Arbitrators appointed by the parties to the Arbitration
shall select an additional Arbitrator meeting the aforedescribed
criteria. The Arbitrators shall be required to render a decision in
accordance with the procedures set forth in Subparagraph (b) below
within thirty (30) days after being notified of their selection. The
fees of the Arbitrators shall be equally divided amongst the parties
to the arbitration.
b) Arbitration Procedures. Arbitration shall be conducted in accordance
with the Uniform Arbitration Act, except to the extent the provisions
of such Act are modified by this Agreement or the subsequent mutual
agreement of the parties. Judgment upon the award rendered by the
Arbitrator(s) may be entered in any court having jurisdiction thereof.
Any party hereto may bring an action, including a summary or expedited
proceeding, to compel arbitration of any controversy or claim to which
this provision applies in any court having jurisdiction over such
action in Shelby County, Tennessee, and the parties agree that
jurisdiction and venue in Shelby County, Tennessee are appropriate and
approved by such parties.
12) Applicable Law. This Agreement shall be governed and construed in
---------------
accordance with the laws of the State of Tennessee.
13) Assignment. The Executive acknowledges that his services are unique and
-----------
personal. Accordingly, the Executive may not assign his rights or delegate
his duties or obligations under this Agreement.
14) Headings. Headings in this Agreement are for convenience only and shall not
---------
be used to interpret or construe its provisions.
15) Successors; Binding Agreement. The Company will require any successor to
------------------------------
all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the Company
13
<PAGE>
would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a beach of this Agreement and
shall entitle Executive to compensation from the Company in the same amount
and on the same terms as Executive would be entitled to hereunder if
Executive terminates his employment for Good Reason on or within three (3)
years after a Change of Control. The Company's rights and obligations under
this Agreement shall inure to the benefit of and shall be binding upon the
Company's successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first above written.
STORAGE USA, INC.
By:
-------------------------
Name: Dean Jernigan
Title: Chairman of the Board
And Chief Executive Officer
EXECUTIVE:
----------------------------
Name:
-----------------------
14
<PAGE>
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Amounts in thousands, except share and per share data
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Year ended 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
Property revenues $ 252,718 $ 222,004 $ 160,570 $ 107,309 $ 68,007
Property expenses 132,154 116,094 78,796 53,672 34,525
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Income from property operations $ 120,564 $ 105,910 $ 81,774 $ 53,637 $ 33,482
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Interest expense, net $ (42,222) $ (36,873) $ (16,028) $ (7,557) $ (2,838)
- ---------------------------------------------------------------------------------------------------------------------------
Income before minority interest and gain
on exchange 78,342 69,037 65,746 46,080 30,644
Gain/(loss) on exchange of self-storage
facilities 181 (284) 2,569 288 -
Minority interest (463) (52) (381) (157) (224)
Distribution to preferred unitholder (5,769) (769) - - -
- ---------------------------------------------------------------------------------------------------------------------------
Net income $ 72,291 $ 67,932 $ 67,934 $ 46,211 $ 30,420
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Basic net income per common unit $ 2.29 $ 2.18 $ 2.33 $ 2.09 $ 1.87
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Diluted net income per common unit $ 2.28 $ 2.17 $ 2.31 $ 2.07 $ 1.86
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Distributions per common unit $ 2.68 $ 2.56 $ 2.40 $ 2.25 $ 2.04
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Funds from operations (FFO) $ 96,484 $ 96,325 $ 84,148 $ 57,941 $ 38,053
- ---------------------------------------------------------------------------------------------------------------------------
Cash flows from:
Operating activities $ 104,920 $ 94,797 $ 72,157 $ 59,758 $ 37,775
Investing activities (34,520) (332,919) (362,888) (276,880) (217,168)
Financing activities (71,059) 239,571 290,291 215,669 178,917
- ---------------------------------------------------------------------------------------------------------------------------
As of December 31:
Total assets $1,754,919 $ 1,705,653 $ 1,259,682 $ 845,307 $ 509,525
Total debt 818,116 797,124 474,609 198,454 114,275
Partners' capital 736,470 736,843 651,323 560,350 351,682
- ---------------------------------------------------------------------------------------------------------------------------
Units outstanding 31,521,025 31,469,919 30,463,425 26,626,824 18,587,786
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following discussion and analysis of the consolidated financial condition
and results of operations should be read together with the Consolidated
Financial Statements and Notes thereto. References to "we," "our" or "the
Company" refer to SUSA Partnership, L.P., (the "Partnership"). References to
the GP refer to Storage USA, Inc., general partner and holder of approximately
88% of the interest in the Partnership.
The following are definitions of terms used throughout this discussion that
will be helpful in understanding our business.
. Physical Occupancy means the total net rentable square feet rented as of the
date (or period if indicated) divided by the total net rentable square feet
available.
. Scheduled Rent Per Square Foot means the average market rate per square foot
of rentable space.
. Net Rental Income means income from self-storage rentals less discounts.
. Realized Rent Per Square Foot means the annualized result of dividing Net
Rental Income by total square feet rented.
. Direct Property Operating Cost means the costs incurred in the operation of a
facility, such as utilities, real estate taxes, and on-site personnel. Costs
incurred in the management of all facilities, such as accounting personnel
and management level operations personnel are excluded.
. Net Operating Income ("NOI") means total property revenues less Direct
Property Operating Costs.
. Annual Capitalization Rate ("Cap Rate")/ Yield means NOI of a facility
divided by the total capitalized costs of the facility.
. Funds from operations ("FFO") means 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 of revenue-producing property, and after adjustments for
unconsolidated partnerships and joint ventures.
. Same-Store Facilities includes all facilities that we owned for the entire
period of both comparison periods. Development properties and expansions are
removed from these groups to avoid skewing the results.
Overview
SUSA Partnership, L.P. is one of the largest owners and operators of self-
storage space in the United States. We are a fully integrated, self-
administered and self-managed real estate investment trust, which is engaged in
the management, acquisition, development, construction and franchising of self-
storage facilities. As of December 31, 1999, we owned, managed and franchised
507 facilities containing 34.1 million square feet in 31 states and the District
of Columbia.
Internal Growth
During 1999, we continued to pursue our internal growth strategy of
aggressively marketing available space and renewing existing leases at higher
rents per square foot, while controlling expense growth. Our internal growth
can best be evaluated by examining the "year over year" results of our same-
store facilities which showed revenue growth of 5.3%, expense reduction of
(1.1%) and overall NOI growth of 8.0% for the year.
<PAGE>
The following table details selected same-store statistics comparing 1999
results to 1998 results at the end of each quarter:
<TABLE>
<CAPTION> Scheduled Scheduled
Quarter/Year Number of Same-store Same-store Same-store Rent Per Rent Per % Increase Physical Physical
Ended: Same-store Revenue Expense NOI % Square Foot Square Foot in Rent Per Occupancy Occupancy
Facilities Growth Growth Growth 1999 1998 Square Foot 1999 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
March 31 318 6.3% 0.7% 8.9% $10.83 $10.18 6.4% 86% 86%
June 30 298 5.3% (1.9%) 8.2% $10.87 $10.20 6.6% 87% 87%
September 30 312 5.5% (3.4%) 9.1% $11.06 $10.41 6.2% 88% 89%
December 31 321 4.6% (1.7%) 7.2% $11.32 $10.69 5.9% 86% 87%
Year, 1999 271 5.3% (1.1%) 8.0% $10.93 $10.28 6.3% 87% 87%
</TABLE>
The following table details selected same-store statistics comparing 1998
results to 1997 results at the end of each quarter:
<TABLE>
<CAPTION> Scheduled Scheduled
Quarter/Year Number of Same-store Same-store Same-store Rent Per Rent Per % Increase Physical Physical
Ended: Same-store Revenue Expense NOI % Square Foot Square Foot in Rent Per Occupancy Occupancy
Facilities Growth Growth Growth 1998 1997 Square Foot 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
March 31 216 5.2% 4.9% 5.3% $10.46 $9.86 6.1% 86% 86%
June 30 223 6.5% 2.5% 8.1% $10.53 $9.92 6.2% 89% 88%
September 30 259 6.5% 3.8% 7.6% $10.32 $9.72 6.3% 89% 89%
December 31 266 6.2% 1.5% 8.2% $10.63 $9.81 8.4% 87% 87%
Year, 1998 205 5.9% 3.1% 6.9% $10.69 $9.97 7.2% 87% 87%
</TABLE>
The following table displays the same-store results for fiscal year 1999 for
our 10 largest same-store markets as measured by NOI. Same-store properties for
fiscal year 1999 include all properties that we have owned since January 1,
1998.
<TABLE>
<CAPTION>
Number of % of Total Same-store Same-store Same-store % Change in
Same-store Same-store Revenue Expense NOI % Net Rental
Market Facilities NOI Growth Growth Growth Income
<S> <C> <C> <C> <C> <C> <C>
S. California/Los Angeles 44 20.6% 11.5% -0.1% 16.1% 11.4%
Baltimore/Washington 16 10.0% 3.7% -1.8% 5.1% 5.0%
S. Florida 14 7.7% 3.3% -2.9% 5.8% 4.1%
N. California 8 4.0% 1.5% -2.2% 2.5% 2.0%
Arizona/Phoenix 13 3.8% 4.9% 2.4% 6.0% 5.1%
New York/North New Jersey 13 8.5% 4.1% -0.2% 5.7% 3.1%
Pennsylvania/Philadelphia 11 3.8% 8.6% 3.7% 10.6% 8.1%
Tennessee/Nashville 8 2.9% -0.7% -4.6% 0.8% -1.0%
Texas/Dallas 6 2.6% 4.0% -5.9% 8.5% 3.3%
S. California/San Diego 6 3.2% 11.2% -4.2% 16.4% 11.2%
All same-store facilities 271 100.0% 5.3% -1.1% 8.0% 5.4%
<CAPTION>
% Change in % Change in Physical
Actual Rent Per Occupied Occupancy
Market Square Foot Square Feet 1999
<S> <C> <C> <C>
S. California/Los Angeles 8.9% 2.2% 90%
Baltimore/Washington 6.2% -1.1% 92%
S. Florida 5.8% -1.6% 80%
N. California 8.0% -5.5% 91%
Arizona/Phoenix 5.3% -0.2% 83%
New York/North New Jersey 3.6% -0.5% 91%
Pennsylvania/Philadelphia 5.6% 2.4% 93%
Tennessee/Nashville 2.4% -3.4% 81%
Texas/Dallas 6.2% -2.7% 87%
S. California/San Diego 11.0% 0.1% 91%
All same-store facilities 6.0% -0.1% 87%
</TABLE>
Note: These 10 markets cover 67.1 % of the same-store NOI.
External Growth
We also continued to focus on our external growth strategy during the year.
In 1999, we invested $91 million to acquire 16 facilities. These acquisitions
were located predominately in the metro New York area or were purchased from the
internal pipeline of Storage USA franchised facilities. The following table
summarizes the number of facilities acquired in 1999, 1998 and 1997, the cost,
net rentable square feet and the weighted average cost of acquisitions.
<PAGE>
<TABLE>
<CAPTION>
Number Net Rentable Weighted
Year of Total Square Average
Acquired Facilities Cost Feet Cost
- --------------------------------------------------------------------------------
(in thousands, except number of facilities)
<S> <C> <C> <C> <C>
1999 16 $ 91,000 1,168 $ 36,000
1998 59 $283,000 3,825 $144,000
1997 119 $353,000 7,183 $146,000
</TABLE>
We calculate weighted average cost based on the duration of time for which the
acquired facilities were owned during the year. The weighted average cost
reflects the dollar amount of acquisitions that will impact our net income
during the year of acquisition.
From a development and expansion prospective, we opened 8 new facilities and
expanded an additional 14 during the year. Investments in development and
expansion projects totaled $51.2 million during the year. The following table
lists the newly developed properties opened in 1999, 1998 and 1997 and provides
data relevant to their operating performance.
<TABLE>
<CAPTION>
Available Physical Development
Number of Square Feet Occupancy Rent Per Cost
Year Placed in Service Properties (in thousands) at 12/31/99 Square Foot (in thousands)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1999 8 619 28% $15.73 $35,467
1998 7 536 58% $12.57 $32,418
1997 5 332 79% $13.81 $20,905
</TABLE>
In connection with our joint ventures with General Electric Capital
Corporation ("GE Capital) discussed in the Financing section below, we expect to
transfer as many as 13 projects currently in early stages of development into
the GE Capital development venture during the first quarter of 2000,
representing projected total costs of $64.7 million, of which we have invested
approximately $29.4 million to date. We plan to continue the development of
seven projects within the REIT. The following tables summarize the details of
these seven projects.
<TABLE>
<CAPTION>
Expected Investment
Number of ---------------------- Invested Remaining
Facilities Square Feet Total Per Foot to Date Investment
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(in thousands except facility and per square foot figures)
Developments under construction 4 273 $24,481 $89.67 $18,367 $ 6,114
Developments in planning/design 3 269 $23,125 $85.97 $12,481 $10,644
- -----------------------------------------------------------------------------------------------------------------------------------
Total development in process 7 542 $47,606 $87.83 $30,848 $16,758
</TABLE>
<TABLE>
<CAPTION>
Expected to be placed in service
---------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Q1 2000 Q2 2000 Q3 2000 Q4 2000 2001-2002 Total
- -------------------------------------------------------------------------------------------------------
(in thousands)
Development properties $- $14,008 $10,473 $18,228 $ 4,897 $47,606
</TABLE>
Development projects underway are concentrated in the Baltimore-Washington and
New York areas.
<PAGE>
To take advantage of areas where we operate and demand continues to exceed the
current supply, we actively review our portfolio for expansion opportunities.
The following table supplies information about the expansions completed in
1999,1998 and 1997.
<TABLE>
<CAPTION>
Available
Average Square Feet Physical Expansion
Year Placed Number of % Increase in After Expansion Occupancy Rent Per Cost
In Service Facilities Square Feet (in thousands) at 12/31/99 Square Foot (in thousands)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1999 14 40% 964 68% $11.48 $15,696
1998 6 45% 429 73% $11.56 $ 5,443
1997 8 35% 579 80% $11.11 $ 6,610
</TABLE>
The expansions in process and the anticipated timing of opening those
expansions are shown in the below two tables.
<TABLE>
<CAPTION>
Number of Expected Invested Remaining
Investment
------------------------
Facilities Square Feet Total Per Foot to Date Investment
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(in thousands except facility and per square foot figures)
Expansions under construction 7 155 $ 9,678 $62.43 $ 5,129 $ 4,549
Expansions in planning/process 16 352 $21,425 $60.87 $ 4,934 $16,491
- -----------------------------------------------------------------------------------------------------------------------------------
Total expansions in process 23 507 $31,103 $61.34 $10,063 $21,040
</TABLE>
<TABLE>
<CAPTION>
Expected to be placed in service
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Q1 2000 Q2 2000 Q3 2000 Q4 2000 2001-2002 Total
- ----------------------------------------------------------------------------------------------------------------------------
(in thousands)
Expansion facilities $6,207 $1,845 $6,606 $4,807 $ 11,638 $31,103
</TABLE>
Financing
During the year, we were also able to create greater financial flexibility.
In the second quarter of 1999, we formed a joint venture with Fidelity
Management Trust Company (the "Fidelity Venture"), to raise capital. We
contributed 32 self-storage facilities with a total value of $144 million to the
Fidelity Venture in return for $131 million in cash and a 25% interest in the
joint venture. We utilized approximately $90 million of these proceeds to
acquire in tax-free exchanges new self-storage facilities that have greater
growth potential than the facilities that were contributed. Also, during the
second quarter, we closed on a $200 million unsecured revolving credit line with
a group of commercial banks, representing a $50 million increase from our
previous line of credit. Finally, during the fourth quarter, we formed two
joint ventures with GE Capital ("GE Ventures"), providing a total investment
capacity of $400 million for acquisitions and development of self-storage
properties. We plan to fund substantially all of our new acquisition and
development over the next two years through the GE Ventures.
In December of 1999, the GP announced a Board authorized plan to repurchase up
to 5% of its common shares outstanding through open market and private
purchases. The timing of the purchases, the length of time that the program
will continue and the exact number of shares to be purchased will be dependent
upon prevailing market conditions. As of December 31, 1999, the GP repurchased
250 thousand shares at an average price of $28.91.
<PAGE>
Results of Operations
The following table reflects selected income and expense categories, for the
years ended 1999, 1998 and 1997, based on a percentage of total revenues, and is
referred to in the discussion that follows:
<TABLE>
<CAPTION>
For the year
ended December 31, 1999 1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Rental income 96.5% 97.9% 98.3%
Other income 3.5% 2.1% 1.7%
- -------------------------------------------------------------------------------
Total income 100.0% 100.0% 100.0%
EXPENSES
Property operations 24.4% 25.2% 24.8%
Taxes 8.4% 8.4% 7.9%
General and administrative 5.6% 5.3% 4.2%
- -------------------------------------------------------------------------------
</TABLE>
Rental income increased $26.5 million, or 12.2% in fiscal year 1999 and $59.5
million, or 37.7% in fiscal year 1998. These increases are primarily a result
of recognizing a full year of rental income on the 1998 acquisitions and our
internal growth, offset by the sale of facilities to the Fidelity Venture
discussed in the section entitled "Overview". The primary contributors to
rental income growth for 1999 and 1998 are summarized in the table below:
<TABLE>
<CAPTION>
Rental Income Growth 1999 1998
- ------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Preceding year acquisitions $ 20,441 $30,490
Same-store facilities 8,032 6,675
Current year acquisitions 5,822 20,727
Current year dispositions (12,568) (247)
Other 4,728 1,869
--------------------------------
$ 26,455 $59,514
</TABLE>
The majority of the other rental income growth is attributed to newly
developed and expanded facilities. The majority of the same-store Facilities
revenue growth for 1999 was provided by an approximate 6.0% increase in realized
rent per square foot, from $9.27 per square foot in 1998 to $9.83 for 1999.
Physical occupancy during this period remained constant at 87%. For 1998, a
Realized Rent per Square Foot increase of 5.5%, from $9.15 to $9.65, contributed
to the bulk of same-store rental income growth, with occupancy remaining
constant at 87%.
We have reevaluated the amounts that we charge our customers and have
implemented a new late fee policy reducing our late fees. We cannot currently
determine the amount by which this new policy will reduce our revenue in future
periods for a number of reasons, including the fact that our late fee charges
vary across the country, they varied at facilities we acquired and facility
managers have the discretion to waive late fees. However, the fee change could
reduce revenues in 2000 by as much as $5 million. We expect that any revenue
reduction may be offset, in part by increased rents, increased late fee
collection efforts, and continued efficiencies in our operating margins, but we
are not yet able to estimate the net effect of these items. You should refer to
the discussions under "Legal Proceedings" and "Forward-Looking Statements and
Risk Factors" for additional information relevant to our late fee charges.
Other income grew $4.3 million in fiscal year 1999, and $1.9 million in fiscal
year 1998. Other income consisted primarily of revenue from facility-specific
activities (rental of floor and storage space for locks and packaging materials,
truck rentals and ground rents for cellular telephone antenna towers and
billboards), revenue for the management of facilities owned by third parties,
and the proportionate share of net income of equity investments including joint
ventures and Storage USA Franchise Corp. (Franchise). A summary of these
amounts is as follows:
<PAGE>
<TABLE>
<CAPTION>
For the year ended
December 31, 1999 1998 1997
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Facility specific revenue $4,117 $3,371 $1,518
Management fees 2,055 1,079 809
Share of net income of equity investments 2,779 242 445
---------------------------------------------
Total other income $8,951 $4,692 $2,772
=============================================
</TABLE>
As a percentage of revenues, cost of property operations and maintenance
increased from 24.8% in 1997 to 25.2% in 1998 and then decreased to 24.4% in
1999. The trend as a percentage of revenues is for cost of property operations
to decrease over time due to same-store revenue growth outpacing expense growth.
In 1998, this trend was offset from having a larger number of newly developed
properties open and facilities being acquired while in lease-up stage. As these
facilities had not yet reached their full revenue potential and expenses were
relatively fixed, the cost of property operations as a percentage of revenues
tended to be higher. The trend normalized in 1999.
Tax expense as a percentage of revenues was 8.4% in 1999, 8.4% in 1998 and
7.9% in 1997. Tax expense as a percentage of revenues trends down as a result of
revenue growth outpacing tax expense growth. In 1998 this trend was offset by
the impact discussed above of the larger number of facilities in lease-up. In
1999, a number of our larger properties were reassessed by their respective tax
jurisdictions, causing an increase in expense, and offsetting any decrease
caused by revenue growth.
General and administrative expense ("G&A") as a percentage of revenues
increased during 1999 to 5.6% from 5.3% in 1998 and from 4.2% in 1997. G&A
increased $2.6 million in 1999 as compared to 1998 and $6.0 million in 1998 as
compared to 1997. The continued growth in G&A is a result of the expansion of
our administration, acquisition and development, management information systems,
human resources, and legal departments in connection with the implementation of
our internal and external growth strategies. The growth in 1999 was also
impacted by $600 thousand of expense recognized in connection with a 1999
enacted Tennessee law that subjects limited partnerships and limited liability
corporations to the Tennessee Excise and Franchise tax.
The increase in depreciation and amortization expense by $5.3 million in
1999 and $10.2 million in 1998 primarily reflects our acquisition of
approximately $63 million of depreciable assets in 1999, $213 million in 1998
and $258 million in 1997.
Interest expense was $55.3 million in 1999, $45.5 million in 1998 and $18.1
million in 1997. The interest expense was primarily from the sources listed in
the table at the bottom of this page and was offset by capitalized interest.
<TABLE>
<CAPTION>
1999 1998 1997
----------------------- ------------------------- ------------------------
Weighted Weighted Weighted Weighted Weighted Weighted
Average Average Average Average Average Average
- -----------------------------------------------------------------------------------------------------
Debt Borrowing Interest Rate Borrowing Interest Rate Borrowing Interest Rate
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(in thousands)
Notes payable $600,000 7.41% $ 494,200 7.41% $172,877 7.22%
Lines of credit $ 93,122 6.39% $ 78,900 6.73% $ 45,610 6.96%
Mortgages payable $ 72,968 9.92% $ 55,281 9.76% $ 39,304 9.95%
Other borrowings $ 45,898 7.50% $ 14,400 7.50% $ - -
</TABLE>
For a more detailed review of 1999 financing see the section entitled
"Liquidity and Capital Resources."
Interest income grew to $13.1 million from $8.7 million in 1998 and $2.1
million in 1997. Approximately $4.2 million of the increase in 1999 and $6.0
million of the increase in 1998 is from interest earned on advances from us to
franchisees of Franchise. The remainder of the increase is from interest earned
on amounts outstanding under the GP's 1995 Employee Stock Purchase and Loan Plan
and earnings on overnight deposits.
<PAGE>
Gain/(loss) on exchange of storage facilities of $181 thousand in 1999, ($284)
thousand in 1998 and $2.6 million in 1997 represents gains/(losses) on the
disposition of our investments in storage facilities that were exchanged for
cash and other self-storage facilities. In 1999 we sold 8 properties and
contributed an additional 32 to the Fidelity joint venture. The $37.1 million
gain on the Fidelity transaction was deferred until such time we dispose of
interests in the Fidelity Venture. This diverse group of properties encompassed
20 states and the District of Columbia. In 1998 we sold one property in
California, and in 1997 we exchanged six properties in Illinois, South Carolina
and Louisiana for eight properties in Tennessee and Oklahoma.
Liquidity and Capital Resources
Cash provided by operating activities was $104.9 million in 1999 as compared
to $94.8 million in 1998 and $72.2 million in 1997. These increases are
primarily a result of the significant expansion of our property portfolio. The
items affecting the operating cash flows are discussed more fully in the
"Results of Operations" section.
During fiscal year 1999, we received $144.9 million in proceeds from the
disposition of self-storage facilities, including those 32 facilities involved
in the Fidelity Venture described in the section entitled "External Growth -
Acquisitions." In order to redeploy these proceeds in a tax efficient manner,
$95.3 million of the total proceeds were used to acquire additional properties
and development land parcels in tax-free exchanges.
We invested cash totaling $109.5 million in 1999 in the acquisition and
improvement of self-storage facilities compared to $201.9 million during 1998
and $307.7 million during 1997. Of the $109.5 million invested in 1999
acquisitions and improvements, $82.5 million was funded with proceeds from the
disposition transactions described above. We also issued units of limited
partnership interest ("Units") worth $4.9 million relating to various
acquisitions during the year. We invested cash of $71.5 million in 1999, $58.9
million in 1998 and $40.8 million in 1997 for land held for development and
construction of self-storage facilities. Of the $71.5 million invested in 1999,
$13.1 million reflected purchases of development land parcels through proceeds
from the dispositon transactions described above. We also provided $40.3
million in 1999, $81.6 million in 1998 and $24.5 million in 1997 of financing to
franchisees of Storage USA Franchise Corp. During, 1999, proceeds were also
received from certain franchisees, as thirteen repaid their loans during the
period, generating $41.9 million in cash.
Of the 20 newly developed facilities in process as of December 31, 1999, we
expect to transfer as many as 13 of these projects to the GE Capital development
venture described in the section above entitled "Overview - Financing". The
remaining seven projects have an expected remaining investment of $16.8
million. In addition to the development projects, we have 23 expansions of
existing facilities in process at December 31, 1999. These projects have an
expected remaining investment of $21.0 million. We have $36.2 million of loan
commitments to franchisees to fund as of December 31, 1999. In 2000, we also
expect to invest approximately $19.0 million as part of our required equity
contributions in the GE Capital joint ventures.
As noted above, we sometimes acquire facilities in exchange for Units. The
Units are redeemable after one year for cash or, at our option, shares of the
GP's common stock. Sellers taking Units instead of cash are able to defer
recognizing a taxable gain on the sale of their facilities until they sell or
redeem their Units. At December 31, 1999 we had 3.7 million Units outstanding,
of which the following Units were redeemable:
82 thousand Units for an amount equal to the fair market value ($2.5 million,
based upon a price per Unit of $30.250 at December 31, 1999) payable in cash or,
at our option, by a promissory note payable in quarterly installments over two
years with interest at the prime rate.
3.6 million Units for amounts equal to the fair market value ($108.1 million,
based upon a price per Unit of $30.250 at December 31, 1999) payable by us in
cash or, at our option, in shares of the GP's common stock at the initial
exchange ratio of one share for each Unit.
<PAGE>
We anticipate that the source of funds for any cash redemption of Units will
be retained cash flow or proceeds from the future sale of our securities or
other indebtedness. We have agreed to register any shares of the GP's common
stock issued upon redemption of Units under the Securities Act of 1933.
Between November 1996 and July 1998, the Partnership issued $600 million of
notes payable. The notes are unsecured obligations of the Partnership, and may
be redeemed at any time at the option of the Partnership, subject to a premium
payment and other terms and conditions. The combined notes carry a weighted
average interest rate of 7.37% and were issued at a price to yield a weighted
average of 7.42%. The terms of the notes are staggered between seven and thirty
years, maturing between 2003 and 2027.
During 1999, we repurchased, under the GP's stock buy-back plan, 250,000
shares of common stock at a total cost of $7,228,000. Subject to prevailing
market conditions and price levels, the GP expects to commit an additional $30
million in 2000 to this plan to purchase up to a total of 5% of the GP's
outstanding shares, including shares repurchased in 1999.
We initially fund our capital requirements primarily through the available
lines of credit with the intention of refinancing these with long-term capital
in the form of equity and debt securities when we determine that market
conditions are favorable. At December 31, 1999, the GP can issue under
currently effective shelf registration statements up to $650 million of common
stock, preferred stock, depository shares and warrants and can also issue $250
million of unsecured, non-convertible senior debt securities of the Partnership.
Our lines of credit bear interest at various spreads over LIBOR. We had net
borrowings of $34.7 million in 1999 and $38.9 million in 1998, and net
repayments of $20.9 million in 1997. Borrowings would have been greater in 1999
if we had not used $39.4 million of the proceeds received from the Fidelity
Venture described in the section entitled "Overview - Financing" to reduce those
lines of credit in the second quarter. Also, on May 26, 1999, we closed on a
$200 million unsecured revolving credit line with a group of commercial banks,
representing a $50 million increase from the previous line of credit. The line
bears interest at a spread of 120 basis points over LIBOR, based on our current
debt rating. The maturity was extended to March 31, 2002, and existing
covenants were modified.
Our overall debt policy, which is subject to change at the discretion of our
Board of Directors, is to limit total indebtedness to the lessor of 50% of total
assets at cost or that amount that will sustain a minimum debt service ratio of
2.5:1.
In November 1998, we issued $65 million of 8.875% Cumulative Redeemable
Preferred Partnership Units in a private placement. The proceeds from the
issuance were used to pay down the line of credit.
We expect to incur approximately $4.5 million for scheduled maintenance and
repairs during the next twelve months and approximately $5.9 million to conform
facilities acquired from 1994 to 1999 to our standards. Commencing in 2000, the
Company will be committed under several new leases relating to corporate office
space in Memphis. The leases have a term of fifteen years with estimated annual
payments of $2.7 million. We have rented a portion of this space to others
under several subleases at the same rent and substantially similar terms to our
primary leases and expect to receive approximately $0.8 million annually from
such subleases.
We believe that borrowings under our current credit facilities combined with
available cash from operations after dividend requirements will provide us with
necessary liquidity and capital resources to meet the funding requirements of
our remaining development and expansion pipeline, commitments to provide
financing to franchisees, equity commitments of the GE Capital joint ventures
and expected investments under the GP's stock-buy back plan. Additionally, no
significant maturities are scheduled under any of our borrowings until 2003.
<PAGE>
Qualitative and Quantitative Disclosure About Market Risk
We are exposed to certain financial market risks, the most predominant being
fluctuations in interest rates on existing variable rate debt and the repricing
of fixed rate debt at maturity. We monitor interest rate fluctuations as an
integral part of our overall risk management program, which recognizes the
unpredictability of financial markets and seeks to reduce the potentially
adverse effect on our results. The effect of interest rate fluctuations
historically has been small relative to other factors affecting operating
results, such as rental rates and occupancy.
Our operating results are affected by changes in interest rates primarily as a
result of borrowing under our lines of credit. If interest rates increased by
25 basis points, our annual interest expense would have increased by
approximately $203 thousand, based on balances outstanding during the year
ending December 31, 1999.
In July of 1999, we purchased an interest rate cap from a bank to protect us
from interest rate volatility, particularly as it pertains to Y2K issues. In
return for a $45 thousand upfront premium, we received protection if the 3-month
LIBOR rate moved above 6.0% . We received approximately $40 thousand when the
cap expired in February of 2000.
Funds from Operations
We believe funds from operations ("FFO") should be considered in conjunction
with net income and cash flows to facilitate a clear understanding of our
operating results. FFO should not be considered as an alternative to net income,
as a measure of our 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. We follow the
National Association of Real Estate Investment Trust's (NAREIT) definition of
FFO. Our FFO may not be comparable to similarly titled measures of other REITs
that calculate FFO differently. In calculating FFO per share, we add back only
depreciation and amortization of revenue-producing property. As such, Our FFO
and FFO per share may not be comparable to other REITs that may add back total
depreciation and amortization.
The following table illustrates the components of our FFO for the years ended
December 31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
Year ended Year ended Year ended
December 31, December 31, December 31,
1999 1998 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(in thousands except per share data)
Net income allocated to common unitholders $72,291 $67,932 $67,934
(Gain)/loss on sale of assets (181) 284 (2,569)
Total depreciation & amortization 35,164 29,880 19,667
Depreciation from unconsolidated entities 370 -- --
Less: depreciation of non-revenue
producing assets (2,816) (1,771) (884)
- --------------------------------------------------------------------------------------------------------
Consolidated FFO available to common 104,828 96,325 84,148
unitholders
- --------------------------------------------------------------------------------------------------------
Weighted average diluted units 31,672 31,271 29,366
- --------------------------------------------------------------------------------------------------------
Distributions per unit $ 2.68 $ 2.56 $ 2.40
- --------------------------------------------------------------------------------------------------------
Payout ratio 81.0% 82.8% 83.0%
- --------------------------------------------------------------------------------------------------------
</TABLE>
At its meeting on October 27, 1999, NAREIT clarified that FFO should include
non-recurring results of operations, except those defined as "extraordinary
items" under generally accepted accounting principles (GAAP). The
clarification of FFO is not effective until January 1, 2000. Since we have
historically not added back non-recurring items to our calculation, the
modification of the FFO definition will not have a material impact on previously
reported FFO information.
As a qualified REIT, the GP is required to distribute a substantial portion of
its net income as dividends to its shareholders. While our goal is to generate
and retain sufficient cash flow to meet our operating, capital and debt service
needs, the GP's dividend requirements may require us to utilize our bank lines
of credit and other sources of liquidity to finance property acquisitions and
development, and major capital improvements. See "Liquidity and Capital
Resources" section.
<PAGE>
Competition
We monitor the development of self-storage facilities in our markets. We have
facilities in several markets where we believe overbuilding has occurred,
including the following:
. Atlanta, GA (1.5% of portfolio square footage "sq. ft.")
. Las Vegas, NV (2.2% sq. ft.),
. Albuquerque, NM (1.8% sq. ft.),
. Nashville, TN (2.4% sq. ft.),
. Portland, OR (0.8% sq. ft.), and
. Dallas, TX (5.0% sq. ft.).
In these markets we may experience a minimal reduction in Physical Occupancy
and less growth in rental rates than other markets. Thus, our net rental income
will not grow at the same rates as other areas of the country. As a result of
the geographic diversity of our portfolio, we do not expect the potential for
excess supply in these markets to have a significant impact on our financial
condition or results of operations.
Inflation
We do not believe that inflation has had or will have a direct effect on our
operations. Substantially all of the leases at our facilities allow for monthly
rent increases, which provide us with the opportunity to achieve increases in
rental income.
Seasonality
Our revenues typically have been higher in the third and fourth quarter
primarily because we increase our rental rates on most of our storage units at
the beginning of May. This also occurs 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 persons moving during
those periods. Accordingly, a greater percentage of our customers come to us as
a result of the moving. We believe that our tenant mix, rental structure, and
expense structure provide adequate protection against undue fluctuations in cash
flows and net revenues during off-peak seasons. Thus, we do not expect
seasonality to materially affect our results of operations.
Year 2000 Compliance
Many computer programs process transactions using two digits for the year of
the transaction rather than four digits (i.e. "98" for the year 1998). Systems
that process Year 2000 transactions with the year "00" may encounter significant
processing inaccuracies or inoperability.
We carried out a plan to ensure that all of our computer systems were Year
2000 ("Y2K") compliant. As of March 1, 2000, no material adverse effects on our
operations were experienced.
Recent Accounting Developments
See Note 16, "Recent Accounting Developments" in the Notes to Consolidated
Financial Statements.
Qualification as a REIT
The GP has operated and intends to continue to operate so as to qualify as a
REIT under the federal income tax laws. Qualification as a REIT involves the
application of highly technical and complex rules for which there are only
limited judicial or administrative interpretations. 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 our control may affect our ability to
qualify as a REIT.
<PAGE>
New regulations, administrative interpretations or court decisions could
adversely affect the GP's qualification as a REIT or the federal income tax
consequences of such qualification. If the GP were to fail to qualify as a REIT
in any taxable year, they would not be allowed a deduction for distributions to
shareholders in computing their taxable income. The GP also would be subject to
federal income tax (including any applicable alternative minimum tax) on their
taxable income at regular corporate rates. Unless entitled to relief under
certain Code provisions, the GP also would be disqualified from taxation 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 GP 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.
On December 17, 1999, the Ticket to Work and Work Incentives Improvement Act
of 1999 (the "Act") was signed into law. The Act includes several REIT
provisions (the "REIT Provisions"). The REIT Provisions generally will be
effective January 1, 2001 and will overhaul the existing tax rules applicable to
taxable subsidiaries of REITs. Under the REIT Provisions, the GP will be
allowed to own all of the stock in taxable REIT subsidiaries ("TRSs"). In
addition, a TRS will be allowed to perform "non-customary" services to our
tenants (i.e. those types of services that would taint the rents from our
tenants if provided by us). The use of TRSs, however, would be subject to
restrictions, including the following:
. no more than 20% of the REIT's assets may consist of securities of TRSs,
. the tax deductibility of interest paid or accrued by a TRS to its affiliated
REIT would be limited, and
. a 100% excise tax would be imposed on non-arm's length transactions between a
TRS and its affiliated REIT or the REIT's tenants.
The GP expects to restructure its ownership interests in its current taxable
subsidiaries and establish additional taxable subsidiaries once the Act is
effective.
Legal Proceedings
On July 22, 1999, a purported class action was filed against the GP and
Partnership in the Circuit Court of Montgomery County, Maryland, under the
style: Ralph Grunewald v. Storage USA, Inc. and SUSA Partnership, L.P., Case No.
201546V, seeking recovery of certain late fees paid by our tenants and an
injunction against further assessment of similar fees. We filed a responsive
pleading on September 17, 1999, setting out our answer and affirmative defenses,
and believe that we have defenses to the claims in the suit and intend to
vigorously defend it. The case is currently in discovery and no trial date has
been set.
On November 15, 1999 a purported class action was filed against the GP and
Partnership in the Supreme Court of the State of New York, Ulster County, case
no 99-3278 , also seeking the recovery of certain late and administrative fees
paid by our tenants and an injunction against similar fees. We filed a
responsive pleading on January 28, 2000. We believe that we have defenses to
the suit and intend to vigorously defend it. The case is currently in discovery
and no trial date has been set.
While the ultimate resolution of this case will not have a material adverse
effect on our financial position, if during any period the potential contingency
should become probable, the results of operations in such period could be
materially affected.
Forward Looking Statements and Risk Factors
All statements contained in this section that are not historical facts are
based on our current expectations. This includes statements regarding
anticipated future development and acquisition activity, the impact of
anticipated rental rate increases on our revenue growth, our 2000 anticipated
revenues, expenses and returns, and future capital requirements. Words such as
"believes", "expects", "anticipate", "intends", "plans" and "estimates" and
variations of such words and similar words also identify forward looking
statements. Such statements are forward looking in nature and involve a number
of risks and uncertainties. Actual results may differ materially. The following
factors, among others, could cause actual results to differ materially from the
forward-looking statements:
. Changes in the economic conditions in the markets in which we operate could
negatively impact the financial resources of our customers, impairing our
ability to raise rents.
<PAGE>
. Certain of our competitors with substantially greater financial resources
than us could reduce the number of suitable acquisition opportunities
offered to us and increase the price necessary to consummate the
acquisition of particular facilities.
. Competition for development sites could drive up costs, making it
unfeasible for us to develop properties in certain markets.
. Increased development of new facilities in our markets could result in
over-supply and lower rental rates.
. Amounts we charge for late fees are periodically under review, have been
and are the subject of litigation against us and are, in some states, the
subject of government regulation. Consequently, such amounts could change,
materially affecting the results of operations.
. The conditions affecting the bank, debt and equity markets could change.
. The availability of sufficient capital to finance our business plan on
satisfactory terms could decrease.
. Competition could increase, adversely effecting occupancy and rental
rates, thereby reducing our revenue.
. Costs related to compliance with laws, including environmental laws could
increase.
. General business and economic conditions could change, adversely effecting
occupancy and rental rates, thereby reducing our revenue.
. Other risk factors exist as described in our Annual Report on Form 10-K
for the year ended December 31, 1999 and other reports filed from time to
time with the Securities and Exchange Commission.
We caution you not to place undue reliance on any such forward looking
statements. We assume no obligation to update any forward-looking statements as
a result of new information, subsequent events or any other circumstances. Such
statements speak only as of the date that they are made.
<PAGE>
EXHIBIT 21
Storage USA, Inc.
Subsidiaries
All subsidiaries are organized under Tennessee law unless otherwise indicated.
Direct
Storage USA Trust (Maryland)
SUSA Partnership, L.P.
Huron Acquisition, Inc.
Indirect
SUSA Management, Inc.
441 Mini-Storage Partners, Ltd. (Florida)
Buzzman Partners I Ltd. Partnership (Pennsylvania)
Buzzman Partners II, Ltd. Partnership (Pennsylvania)
Clarendon Storage Associates Ltd Partnership (Virginia)
Cole/Morgan, Ltd
Dade County Mini-Storage Associates, Ltd. (Florida)
Parklawn Storage Partners, LP
Preston Self Storage, Ltd. (Texas)
Prospect Heights Self Storage, LLC (Illinois)
Southeast Mini-Storage Limited Partners (Florida)
Storage Partners of Okeechobee, Ltd (Florida)
Storage Partners of Paoli, LP
Storage USA Franchise Corp.
Storage USA of Palm Beach County Ltd. Partnership (Maryland)
Sunset Mini-Storage Partners, Ltd. (Florida)
SUSA Hackensack LP
SUSA Harrison LP
SUSA Hollywood, LP
SUSA Investments II, LLC (Virginia)
SUSA Investments I, LLC (Virginia)
SUSA Mesa L.P.
SUSA Nashville L.P.
SUSA Orange LP
SUSA Secaucus LP
SUSA/38th Avenue, Capitola LP (California)
SUSA/Poplar Partners, LP
Tamiami Mini-Storage Partners, Ltd. (Florida)
ABC Self Storage Limited Co.(New Mexico)
SUSA Mt. Vernon, LLC (New York)
SUSA Germantown, LP
SUSA Columbia, LP
SUSA Whitney Mesa, LP (Nevada)
Frankford Road Self Storage, Ltd. (Texas)
Spring Creek Self Storage, Ltd. (Texas)
McNeil Drive Self Storage, Ltd. (Texas)
SUSA Peachtree, LLC (Virginia)
Storage Partners of West Colonial, LLC (Florida)
<PAGE>
DMMJ Limited Parnership (Maryland)
River Road Limited Partnership (Maryland)
SUSA Brooklyn John, LP (New York)
SUSA Brooklyn Snyder, LP (New York)
SUSA Long Island, LP (New York)
Storage Partners of Egg Harbor, LLC (New Jersey)
Storage Partners of Eatontown, LLC (New Jersey)
SUSA Construction, LLC (Delaware)
SUSA Finance Corp. (Delaware)
SUSA Holdings, LP Savi Ranch - SPC, LLC (Delaware)
Rockline - SPC, LLC (Delaware)
Calvine - SPC, LLC (Delaware)
Oxnard - SPC, LLC (Delaware)
Elk Grove - SPC, LLC (Delaware)
Storage Portfolio I, LLC (Delaware)
Storage Development Holding Portfolio, LLC (Delaware)
Storage Development Portfolio, LLC (Delaware)
Storage Acquisition Portfolio, LLC (Delaware)
<PAGE>
EXHIBIT 23
Consent of Independent Accountants
SUSA Partnership, L.P.
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference into the Registration Statements of
SUSA Partnership, L.P. (the "Partnership") on Forms S-3 (File Nos. 333-3344,
333-21991 and 333-44641), of (1) our report dated January 26, 2000, on our
audits of the consolidated financial statements of the Partnership as of
December 31, 1999 and 1998 and for each of the three years in the period ended
December 31, 1999, which report is incorporated by reference in the
Partnership's 1999 Form 10-K and (2) our report dated January 26, 2000, on the
financial statement schedule of the Partnership as of December 31, 1999, which
report is incorporated by reference in the Partnership's 1999 Form 10-K. We
also consent to the reference to us under the heading "Experts" in such
Registration Statements.
PricewaterhouseCoopers LLP
Memphis, Tennessee
March 23, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001011991
<NAME> SUSA PARTNERSHIP, L.P.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,699
<SECURITIES> 0
<RECEIVABLES> 176,866
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 178,565
<PP&E> 1,670,892
<DEPRECIATION> 94,538
<TOTAL-ASSETS> 1,754,919
<CURRENT-LIABILITIES> 89,766
<BONDS> 818,116
0
0
<COMMON> 0
<OTHER-SE> 847,037
<TOTAL-LIABILITY-AND-EQUITY> 1,754,919
<SALES> 243,767
<TOTAL-REVENUES> 252,718
<CGS> 0
<TOTAL-COSTS> 132,154
<OTHER-EXPENSES> 6,051<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42,222
<INCOME-PRETAX> 72,291
<INCOME-TAX> 0
<INCOME-CONTINUING> 72,291
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 72,291
<EPS-BASIC> 2.29
<EPS-DILUTED> 2.28
<FN>
<F1>Included in other expenses are minority interest expense and gain (loss) on
exchange of self-storage facilities
</FN>
</TABLE>
