FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
For Quarter Ended September 30, 1995 Commission file number 0-23466
SHURGARD STORAGE CENTERS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 91-1603837
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1201-3RD AVENUE, SUITE 2200, SEATTLE, WASHINGTON 98101
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 206-624-8100
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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Shares outstanding at October 16, 1995:
Class A Common Stock, $.001 par value, 23,039,317 shares
outstanding
Class B Common Stock, $.001 par value, 154,604 shares outstanding
<PAGE>
Shurgard Storage Centers, Inc.
Part I, Item 1: Consolidated Balance Sheets
(unaudited)
(Amounts in thousands except share data)
Sept. 30, Dec. 31,
1995 1994
---------- ----------
Assets:
Storage centers:
Land $ 99,882 $ 88,532
Buildings and equipment, net 398,604 362,332
Construction in progress 13,535 532
---------- ----------
512,021 451,396
Other real estate investments 22,040 15,104
Cash and cash equivalents 14,667 13,162
Restricted cash 2,043 2,766
Other assets 46,200 12,162
---------- ----------
Total assets $ 596,971 $ 494,590
========== ==========
Liabilities and Shareholders' Equity:
Accounts payable and other liabilities $ 12,624 $ 10,138
Lines of credit 42,000
Notes payable 131,887 125,137
---------- ----------
Total liabilities 144,511 177,275
---------- ----------
Minority interest in other real estate
investments 2,597 470
Shareholders' equity:
Class A common stock, $0.001 par value;
120,000,000 authorized; 23,039,317 and
16,983,887 shares issued and outstanding 452,920 317,434
Class B common stock, $0.001 par value;
500,000 shares authorized, 154,604
issued and outstanding; net of loans to
shareholders of $4,002 (1,086) (1,086)
Cumulative dividends (41,005) (17,324)
Cumulative earnings 39,034 17,821
---------- ----------
Total shareholders' equity 449,863 316,845
---------- ----------
Total liabilities and shareholders'
equity $ 596,971 $ 494,590
========== ==========
<PAGE>
Shurgard Storage Centers, Inc.
Part I, Item 1: Consolidated Statements of Net Income
(unaudited)
(Amounts in thousands except per share data)
Company
-------------------------
Three months Three months
ended ended
Sept. 30, Sept. 30,
1995 1994
---------- ----------
Rental revenue $ 24,768 $ 20,465
Revenue from other
real estate investments 315 50
Property management revenue 1,005
---------- ----------
Total revenue 26,088 20,515
---------- ----------
Operating expense 6,630 4,875
Management fees 1,233
Depreciation and amortization 4,578 3,303
Real estate taxes 1,985 1,757
General and administrative 1,412 763
---------- ----------
Total expenses 14,605 11,931
---------- ----------
Income from operations 11,483 8,584
---------- ----------
Interest and other income 101 242
Interest expense (2,363) (2,822)
---------- ----------
Total other income (expense) (2,262) (2,580)
---------- ----------
Net income $ 9,221 $ 6,004
========== ==========
Net income per Common and
Common Equivalent Share $ 0.40 $ 0.35
========== ==========
<PAGE>
Shurgard Storage Centers, Inc.
Part I, Item 1: Consolidated Statements of Earnings
(unaudited)
(Amounts in thousands except per share data)
Company Predecessor
--------------------- ------------
Nine Nine Period from
months months Jan. 1, 1994
ended ended to
Sept. 30, Sept. 30, March 1,
1995 1994 1994
--------- --------- ----------
Rental revenue $ 68,511 $ 45,701 $ 12,348
Revenue from other
real estate investments 1,016 109 20
Property management revenue 2,036
--------- --------- ---------
Total revenue 71,563 45,810 12,368
--------- --------- ---------
Operating expense 17,945 10,567 2,961
Management fees 1,320 2,739 733
Depreciation and amortization 12,609 7,594 2,390
Real estate taxes 5,678 4,083 1,170
General and administrative 3,648 1,689 1,232
--------- --------- ---------
Total expenses 41,200 26,672 8,486
--------- --------- ---------
Income from operations 30,363 19,138 3,882
--------- --------- ---------
Interest and other income 496 473 188
Interest expense (9,646) (5,814) (487)
Incentive management fees (5,340)
Litigation, hostile takeover defense
and consolidation expense (12,180)
Gain on consolidation 48,223
--------- --------- ---------
Total other income (expense) (9,150) (5,341) 30,404
--------- --------- ---------
Income before extraordinary item 21,213 13,797 34,286
Extraordinary item - loss
on retirement of debt (1,180)
--------- --------- ---------
Net income $ 21,213 $ 12,617 $ 34,286
========= ========= =========
Net income per Common and
Common Equivalent Share:
Income before extraordinary item $ 1.07 $ 0.81
Extraordinary item - loss
on retirement of debt (0.07)
--------- ---------
Net income per share $ 1.07 $ 0.74
========= =========
<PAGE>
Shurgard Storage Centers, Inc.
Part I, Item 1: Consolidated Statements of Cash Flows
(unaudited)
(Amounts in thousands)
Company Predecessor
------------------- ------------
Nine Nine Period from
months months Jan. 1, 1994
ended ended to
Sept. 30, Sept. 30, March 1,
1995 1994 1994
-------- -------- ----------
Operating activities:
Net income $21,213 $12,617 $34,286
Adjustments to reconcile earnings
to net cash provided by operating
activities:
Depreciation and amortization 12,609 7,594 2,390
Minority interest in earnings from
investments in joint partnerships 168
Gain on consolidation (48,223)
Loss on retirement of debt 1,180
Earnings in excess of distributions
from joint venture (29) (20)
Changes in other accounts:
Restricted cash 723 (2,717)
Other assets 1,864 (474) 2,675
Accounts payable and
other liabilities (349) 874 (2,391)
Accrued consolidation expense 16,399
------- -------- -------
Net cash provided by operating
activities 36,228 19,045 5,116
------- -------- -------
Investing activities:
Construction, acquisition and
improvement of storage centers (25,531) (100,875) (1,158)
Purchase of real estate investments (7,180) (600)
Purchase of amortizable assets (200)
Investment in property management
company (480)
Investment in limited partnership (35,308)
Proceeds from sale of real estate
and equipment 64,120
Distributions in excess of earnings
from investment in joint partnerships 244
------- ------- -------
Net cash (used in) provided by
investing activities (68,455) (101,475) 62,962
------- ------- -------
Financing activities:
Proceeds from stock offering 106,080
Proceeds from notes payable 227,180 350
Proceeds from line of credit 54,093 30,000 680
Payment of financing costs (1,600) (8,088)
Payment of assumed consolidation
liabilities (11,662)
Repayment of lines of credit (100,430)
Principal payments on notes payable (525) (129,168) (855)
Dividends paid (23,681) (9,851)
Distributions to partners (205) (764)
------- ------- -------
Net cash provided by (used in)
financing activities 33,732 98,411 (589)
------- ------- -------
Increase in cash and cash equivalents 1,505 15,981 67,489
Cash and cash equivalents at
beginning of year 13,162 1 9,057
------- ------- -------
Cash and cash equivalents at
end of period $14,667 $15,982 $76,546
======= ======= =======
Supplemental schedule of cash flow information:
Cash paid during the period for
interest $ 9,657 $ 5,631 $ 487
======= ======= =======
<PAGE>
Shurgard Storage Centers, Inc.
Part I, Item 1: Notes to Consolidated Financial Statements
Nine Months Ended September 30, 1995
(unaudited)
Note A -- Basis of Presentation
The consolidated financial statements include the accounts of the
Company, and its subsidiaries. All intercompany balances and
transactions have been eliminated upon consolidation. Prior to
March 1, 1994, the Company was inactive.
The consolidated financial statements included in this report are
unaudited. In the opinion on the Company, all adjustments
necessary for a fair presentation of such financial statements have
been included and such adjustments consisted only of normal
recurring items. The interim financial statements should be read
in conjunction with the 1994 Annual Report. Interim results are
not necessarily indicative of results for a full year.
On March 1, 1994, the Company completed the acquisition of 17
publicly-held limited partnerships (the Predecessor) as a means for
assembling an initial portfolio of real estate investments. The
combined financial statements presented herein for the period from
January 1, 1994 to March 1, 1994 represent the Predecessor's
combined results of operations and cash flows prior to the March 1,
1994. Since the purchase method of accounting was used to record
assets acquired and certain limited partners elected to receive
cash rather than Company stock, the Predecessor financial
statements are not comparable in all material respects with
financial statements subsequent to the Acquisition Date. The most
significant differences relate to the Partnerships' higher
historical cost of storage centers and the related depreciation and
the Company's higher debt and related interest expense in periods
after the Acquisition Date.
Weighted average shares outstanding for the three months and nine
months ended September 30, 1995 were 23,133,515 and 19,807,707,
respectively and for both the three months and nine months ended
September 30, 1994 were 16,983,887.
Note B -- Merger
On March 24, 1995, the Company merged with Shurgard Incorporated
(the Management Company) in order to become self-administered and
self-advised. On that date, the Company issued 1,266,705 new
shares of Class A common stock to the shareholders of the
Management Company. In addition, 282,572 shares previously owned
by the Management Company were reissued to Management Company
shareholders. On August 28, 1995 pursuant to the Merger Agreement,
an additional 23,030 shares were issued as a result of adjustments
identified in the audit of the Management Company's final statement
of assets, liabilities and stockholder's equity. The Management
Company shareholders may receive additional shares over the next
five years as consideration for certain partnership interests held
by the Management Company which were not valued at the time of the
Merger. A summary of the assets and liabilities assumed in this
transaction are as follows (amounts in thousands):
Storage centers $ 8,058
Cash 780
Other assets 34,663
Line of credit (4,337)
Notes payable (7,275)
Other liabilities (2,480)
--------
$29,409
========
During the second quarter of 1995, SSC Evergreen, Inc., a wholly
owned subsidiary of the Company, purchased the limited partnership
interest in a partnership (the Evergreen Partnership) which owns
seven storage centers and a 59.5% interest in a joint venture
owning three additional storage centers. The Company paid $35.5
million in exchange for the 99% limited partnership interest. The
Company previously owned the 1% general partnership interest which
was acquired in the Merger.
The following unaudited pro forma statements of income represent
the results of operations of the Company for the nine months ended
September 30, 1994 and as if all properties owned by the Company at
September 30, 1995 had been acquired on January 1, 1994 and the
merger of the Management Company, the acquisition of Evergreen
Partnership and the stock offering had been consummated on January
1, 1994. The pro forma results do not necessarily indicate the
actual results that would have been obtained, nor are they
necessarily indicative of the future operations of the combined
companies.
Nine months ended
Sept. 30,
---------------------
1995 1994
--------- ---------
(in thousands)
Revenues $75,500 $ 71,593
Operations expenses (29,819) (28,720)
Depreciation and amortization (13,423) (13,094)
Interest expense (7,778) (8,238)
--------- ---------
Net income before extraordinary item 24,480 21,541
Extraordinary item - loss of retirement
of debt (1,180)
--------- ---------
Net income $24,480 $ 20,361
========= =========
Per share data:
Net income before extraordinary item 1.05 0.93
Extraordinary item - loss of retirement
of debt (0.05)
--------- ---------
Net income $ 1.05 $ 0.88
========= =========
Note C -- Lines of Credit
During 1995, the Company borrowed an additional $54.1 million on
its lines of credit. Proceeds were used to repay the $4.3 million
line of credit assumed in the Merger as well as fund the
acquisition of the Evergreen Partnership and four storage centers.
Proceeds were also used to fund the purchase of several parcels of
undeveloped land and the initial construction costs at these
development sites. All outstanding balances on the lines of credit
were repaid in June with the proceeds from an offering of Company
shares described in Note D. During the third quarter, the interest
rate on one of the $50 million lines of credit was reduced from
LIBOR plus 200 basis points to LIBOR plus 175 basis points.
Note D -- Shareholder's Equity
On June 13, 1995, the Company issued an additional 4.5 million
Class A Common shares at $23.00 per share, providing net proceeds
after offering costs of $96.9 million. On July 11, 1995, the
Company's underwriters exercised their over allotment option and
the Company issued an additional 420,000 shares, providing
approximately $9 million in net proceeds. Net proceeds were used
to repay lines of credit and the remaining funds will be used to
fund storage center development and acquisitions and general
corporate purposes. Stock options exercised during the quarter
total 300 shares at an exercise price of $23.00 and market value of
$24.125 at the time of exercise.
Part I, Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations
The Company has entered into a number of important transactions during
1995 that further establish the structural and financial means of
executing its 1995 growth plan. The following discussion summarizes
the recent developments pertaining to the Company.
Merger of the Management Company - In order to create a fully
integrated company and more closely align the interests of management
with the shareholders, the Management Company merged with the Company
on March 24, 1995. Pursuant to the Agreement and Plan of Merger, the
outstanding shares of the Management Company common stock were
converted into an aggregate of 1,289,734 newly issued shares of the
Company's Class A Common Stock (Common Stock) and an additional
282,572 shares that replaced the Common Stock previously owned by the
Management Company, subject to certain adjustments. Pursuant to the
Merger Agreement, Management Company shareholders are also entitled to
receive additional shares of Common Stock in the future based on (i)
the extent to which, during the five years following the Merger, the
Company realizes value as a result of certain transactions relating to
interests in or assets of six limited partnerships acquired by the
Company in the Merger and (ii) the value, at the end of five years
after the Merger, or in the event of a change of control of the
Company, of any remaining interests in such partnerships as determined
by independent appraisal.
Listing of Common Stock on the NYSE - The Common Stock was
authorized for listing on the NYSE under the symbol "SHU" on April 27,
1995, and commenced trading on the NYSE on May 5, 1995. From March
28, 1994 through May 4, 1995, the Common Stock traded on the Nasdaq
National Market under the symbol "SHUR."
Acquisition of Evergreen Properties - In May 1995, SSC Evergreen,
Inc., a wholly owned subsidiary of the Company, purchased the limited
partner interest in Shurgard Evergreen Limited Partnership (the
Evergreen Partnership), an entity formed in May 1990 to develop and
own self storage centers, of which the Company is the general partner.
The limited partner interest was owned by a wholly owned subsidiary of
the State Investment Board of the State of Washington. The Evergreen
Partnership developed and owns seven self storage centers directly
and, through a joint venture, owns an interest in an additional three
centers. Three of the centers are located in the Atlanta, Georgia
area, three are located in the Portland, Oregon area, and one each is
located near Philadelphia, Pennsylvania, Phoenix, Arizona, San
Antonio, Texas and Seattle, Washington. At the time of acquisition,
the centers, having an aggregate of 631,000 net rentable square feet,
had a weighted average occupancy rate of 81%, based on net rentable
square footage; weighted average occupancy for the quarter ended
September 30, 1995 was 85%. The purchase price for the limited
partner interest in Evergreen Partnership was $35.5 million which was
financed through the Company's line of credit.
Additional Developments and Acquisitions - In 1995, the Company has
continued to selectively acquire development parcels and self storage
centers in its target markets. Nine developments are currently under
construction in the United States which will contain an aggregate of
approximately 518,000 net rentable square feet of storage space.
Additionally, three storage centers were opened or partially opened by
the Company's Tennessee joint ventures. The Company has also acquired
existing self storage properties in Taylor, Michigan (March 1995),
Orland Park, Illinois (May 1995), Puyallup, Washington (May 1995) and
Madison Heights, Michigan (June 1995) with a total of approximately
173,000 net rentable square feet of storage space. In the first nine
months of 1995, the Company invested $4.7 million in its Benelux
subsidiary which owns three operating storage centers having aggregate
net rentable square footage of 169,000. The following table
summarizes the 1995 acquisition and development activity for the
Company and its joint ventures:
Net
1st 2nd 3rd Year to Rentable
Quarter Quarter Quarter Date Sq. Ft.
------- ------- ------- ------- --------
Stores Acquired 2 13 0 15* 965,000
Stores Partially Opened
or Completed 2 1 3 6 347,000
* Includes a majority interest acquired in three properties
Public Stock Offering - On June 13, 1995, the Company issued an
additional 4.5 million Class A Common shares at $23.00 per share,
providing net proceeds after offering costs of $96.9 million. On July
11, 1995, the Company's underwriters exercised their over allotment
option and the Company issued an additional 420,000 shares, providing
approximately $9 million in net proceeds. Net proceeds were used to
repay lines of credit and the remaining funds have been used to fund
storage center development and acquisitions and general corporate
purposes.
Liquidity and Capital Resources
During 1995, the Company has invested $34 million in storage centers.
In addition to the $8 million storage center acquired in the Merger,
the Company invested approximately $10 million in acquisitions of four
operating storage centers, $13 million in development projects and $3
million in capital improvements to its existing portfolio. The $7.2
million increase in other real estate investments reflects primarily
the $4.7 million invested in the Company's Benelux subsidiary and the
$2.3 million invested in the Tennessee joint ventures. As described
above, the Company also invested $35.3 million in cash (net of
partnership cash received) in the purchase of the Evergreen
partnership interest.
Cash balances increased from December 31, 1994 to September 30, 1995
as a result of excess stock offering proceeds. Prior to the stock
offering, $54 million was borrowed on the lines of credit to meet
interim acquisition and development requirements and repay the $4.3
million line of credit assumed in the Merger. All outstanding
balances on the Company's lines of credit, including the $42 million
borrowed in 1994, were repaid on June 13, 1995, leaving current
capital available from lines of credit at September 30, 1995 of $100
million. At September 30, 1995, the Company's debt to total asset
ratio was 22% and its debt to total capitalization ratio was 19%.
The Company anticipates that cash flow from operating activities,
available lines of credit and the proceeds from its equity offering
will continue to provide adequate capital for planned expansion,
principal payments and dividend payments in accordance with REIT
requirements. Cash provided by operating activities for the nine
months of operations was $36 million. The Company has declared the
following dividends during 1995:
Quarter ended Record Date Pay Date Per Share Amount
------------- ------------- ------------- ----------------
Dec. 31, 1994 Feb. 10, 1995 Mar. 29, 1995 0.44
Mar. 31, 1995 Mar. 22, 1995 May 19, 1995 0.46
June 30, 1995 June 2, 1995 July 31, 1995 0.46
Sept. 30, 1995 Nov. 9, 1995 Nov. 22, 1995 0.46
In order to distribute accumulated earnings and profits related to the
merger with the Management Company, the Company expects to accelerate
its usual fourth quarter dividend and to declare a special dividend of
$2 to $3 million. The Company expects to declare both dividends prior
to year end, with payable dates in January 1996.
Results of Operations
The Company operates a professionally-managed real estate portfolio
consisting primarily of self service storage properties that provide
month-to-month leases for business and personal use. Net income for
the third quarter of 1995 was $9.2 million, or $0.40 per share,
reflecting three months of consolidated operations for 168 storage
centers, a commercial building and two business parks. The table
below provides measures of geographic diversity and property earnings
as a percentage of historical cost. Performance measures are
annualized to allow comparisons between periods.
Year-to-date 1995
Percentage of Portfolio Annualized Property
Based on Original Cost Performance
------------------------- ------------------------
California 14.9% 12.9%
Florida 5.6% 12.3%
New York 5.3% 16.3%
Texas 14.3% 12.1%
Virginia 8.8% 12.8%
Washington 20.1% 12.6%
Other 30.9% 14.6%
------
Total 100%
======
The annualized property performance percentages are determined by
dividing the annualized property level net operating income (rental
revenue less direct property operating expenses and real estate taxes)
for the nine months ended September 30, 1995 by the original
acquisition cost. This new definition of NOI excludes management fees
which were incurred prior to the merger in order to be comparable with
the current presentation. This performance is not necessarily
indicative of what the actual property performance percentages for the
full year will be. Net operating income is not reduced by
depreciation, general and administrative expenses or certain
management level operating expenses and, had it been, the percentages
would be lower. This performance measure should not be construed as a
yield or return of investment.
FFO is used by many financial analysts in evaluating REIT's. The
Company has historically defined FFO as net income before
extraordinary items, plus depreciation and amortization, plus or minus
certain non-recurring revenue and expenses. The Company has modified
our definition of FFO in accordance with the recommendations of NAREIT
(the REIT industry association) to exclude amortization of financing
costs. Accordingly, management now calculates FFO as net income
before extraordinary items, plus depreciation and amortization
relating to real estate activities, plus or minus certain non-
recurring non-real estate revenue and expenses.
The following table reconciles our previous definition to the new
NAREIT definition (in thousands):
Quarter ended Nine months ended
September 30, September 30,
------------------ ------------------
Pro Forma
1995 1994 1995 1994
------- ------- ------- -------
Net income before extraordinary
item 9,221 6,004 21,213 16,713
Depreciation/Amortization 4,560 3,331 12,702 9,824
Non-recurring revenue/expenses 0 0 0 (58)
------- ------- ------- -------
FFO as Previously Defined 13,781 9,335 33,915 26,479
======= ======= ======= =======
Less deferred financing costs (280) (220) (840) (600)
------- ------- ------- -------
FFO as Currently Defined 13,501 9,115 33,075 25,879
======= ======= ======= =======
Weighted Average Shares
Outstanding 23,134 16,984 19,808 16,984
======= ======= ======= =======
FFO for the third quarter of 1995 rose $4.4 million over the pro forma
FFO for the third quarter of 1994. This growth reflects the improved
performance of current properties as well as the addition of
properties acquired during the past year. Future growth rates will
reflect the performance of developments, as well as current properties
and acquisitions. Given the anticipated rent-up time frame on
development properties, it normally takes six to nine months after
opening a store to generate positive operating cash flow and at least
twelve months to cover its debt service costs. Additionally, it could
take a year or longer to reach a return consistent with the current
portfolio. During this `rent-up' period, management expects earnings
and FFO per share will be effected. Management estimates that, at the
current share level, the effect on FFO, for the first year of
operations for an average development, will be approximately $0.01 per
share, assuming that it is financed with debt. Despite this interim
drag, management continues to believe that development of storage
centers will provide superior long-term returns.
Quarter Ended September 30, 1995 compared to Quarter Ended September 30, 1994
Net income for the third quarter of 1995 has increased 54% or $3.2
million over net income for the third quarter of 1994. This
significant improvement reflects the Company's merger with its
advisor/property management company, the acquisition of 35 storage
centers (20 of them on September 1, 1994), the opening or partial
opening of three development sites, as well as strong growth in
earnings for the original portfolio.
Third quarter 1995 revenues rose 27% or $5.6 million compared to the
third quarter of 1994, including the addition of $1 million in
revenues from property management operations and a $4.3 million
increase in rental revenues. Rising rental revenues reflect
approximately $1.6 million of revenues related to the 20 storage
centers acquired September 1, 1994, $2 million of revenues related to
properties added during the second quarter, and a 6% increase in
average rental rates for the original portfolio of assets. The
average rental rate on the Company's original portfolio of storage
centers rose from $8.42 for the third quarter of 1994 to $8.96 for the
third quarter of 1995. Average occupancy levels remained relatively
stable at 89% for the quarter ended September 30, 1995 compared to 90%
for the quarter ended September 30, 1994.
Total expenses for the third quarter of 1995 rose 22% or $2.7 million
over the third quarter of 1994, of which $1.3 million represents
increases in noncash depreciation and amortization reflecting the
Company's acquisitions and loan costs related to the lines of credit.
An additional $1.1 million of the increase reflects the addition of
the storage centers discussed above. Due to its merger with the
management company, the Company no longer pays management fees but
instead recognizes the actual expenses of management administration
and real estate operations. These additional expenses are also offset
by the revenues received for services performed for outside parties.
General and administrative expenses includes an additional $400,000
and operating expenses includes $1.3 million related to the addition
of the management company expenses. These are offset by the $1
million in revenue generated from its external operations and the $1.2
million elimination of management fees.
Interest expense decreased $459,000 for the third quarter of 1995
compared to the same quarter in 1994 primarily due to the
capitalization of $435,000 in construction period interest.
Additionally, the Company had no outstanding balances on its lines of
credit during the third quarter of 1995.
Nine Months Ended Sept. 30, 1995 compared to Nine Months Ended Sept. 30, 1994
The following discussion of operating results compares the Company's
actual results for the first nine months of 1995 to the combined
operating results of the Predecessor from January 1, 1994 to March 1,
1994 and the operating results of the Company from March 1, 1994 (the
beginning of operations) to September 30, 1994.
Revenues for the first nine months rose 23% or $13.4 million compared
to the first nine months of 1994, including the addition of $2 million
in revenues from property management operations and a $10.5 million
increase in rental revenues. This reflects approximately $4.4 million
of revenues related to the 20 storage centers acquired September 1,
1994, $2.8 million of revenues related to properties added during the
second quarter, as well as a 6% increase in revenues for the original
portfolio of assets.
Total expenses for the first nine months of 1995 rose 17% over the
first nine months of 1994, while income from operations rose 32% for
the same period. This increase reflects the addition of acquisitions
made during the last year as well as the merger with the property
management company discussed above.
Item 4 - Matters submitted for shareholder vote:
The Company's Annual Meeting of Shareholders was held on July 26,
1995. At the meeting there were 195 shares represented in person and
15,233,380 shares represented by proxy, making a total of 15,223,575
shares, which was 83 percent of the 18,250,592 shares of the Company
entitled to vote at the Meeting. The following are the results of the
vote:
Proposal 1 - Election of Directors
A. Election of the following two nominees to serve as directors for
three-year terms or until their respective successors are elected
and qualified:
AGAINST OR
FOR AUTHORITY WITHHELD
----------------------------- --------------------------
In In
Person By Proxy Total Person By Proxy Total
------ --------- --------- ------ --------- ---------
-
Charles
K. Barbo 195 14,796,749 14,796,947 0 426,631 426,631
Donald W.
Lusk 195 14,837,381 14,837,576 0 386,242 386,242
B. Election of the following two nominees to serve as directors for
two-year terms or until their respective successors are elected
and qualified:
AGAINST OR
FOR AUTHORITY WITHHELD
----------------------------- ---------------------------
In In
Person By Proxy Total Person By Proxy Total
------ --------- --------- ------ --------- ---------
Wendell
J. Smith 0 14,804,114 14,804,114 195 407,379 407,574
Harrell
L. Beck 0 14,855,475 14,855,475 195 365,818 366,013
C. Election of the nominee to serve as director for a one-year term
or until his respective success or is elected and qualified:
AGAINST OR
FOR AUTHORITY WITHHELD
----------------------------- ---------------------------
In In
Person By Proxy Total Person By Proxy Total
------ --------- --------- ------ --------- ---------
Dan Kour-
koumelis 0 14,767,692 14,767,692 195 422,486 422,681
Proposal 2 - Amendment to Certificate of Incorporation
Approve an amendment to the Company's Certificate of Incorporation to
provide for a classified Board of Directors.
FOR AGAINST ABSTAIN
------------- ------------ ------------
10,940,695 1,561,923 603,092
Proposal 3 - Amendment to Certificate of Incorporation
Approve an amendment to the Company's Certificate of Incorporation to
incorporate a New York Stock Exchange requirement.
FOR AGAINST ABSTAIN
------------- ------------ ------------
14,514,389 141,314 526,494
Proposal 4 - Amendment to by-laws
Approve an amendment to Section 16 of the Company's by-laws.
FOR AGAINST ABSTAIN
------------- ------------ ------------
11,468,848 650,867 1,012,277
Proposal 5 - Stock Option Plan
Approve the Shurgard Storage Centers, Inc. 1995 Long-Term Incentive
Compensation Plan.
FOR AGAINST ABSTAIN
------------- ------------ ------------
10,352,413 1,929,254 923,760
Proposal 6 - Stock Option Plan
Approve an amendment to the Shurgard Storage Centers, Inc. Stock
Option Plan for Nonemployee Directors to increase the number of shares
issuable under the plan.
FOR AGAINST ABSTAIN
------------- ------------ ------------
10,199,873 1,833,901 1,021,735
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
SHURGARD STORAGE CENTERS, INC.
Date: October 27, 1995 By: /s/ Harrell Beck
-----------------------------------------
Harrell Beck
Chief Financial Officer and Authorized
Signatory
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