SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
May 21, 1999
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Date of Report
(Date of earliest
event reported)
SHURGARD STORAGE CENTERS, INC.
(Exact name of registrant as specified in its charter)
Washington 0-23466 91-1603837
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(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation)
1155 Valley Street, Suite 400
Seattle, Washington 98109
(Address of principal executive offices, including zip code)
(206) 624-8100
(Registrant's telephone number, including area code)
Item 5. Other Events
On May 21, 1999, Shurgard Storage Centers, Inc.("Shurgard")
completed the initial contribution of six properties to a
partnership it had formed on March 17, 1999 with Fremont
Realty Capital L.L.C. ("Fremont"). A total of up to 16
properties Shurgard recently developed or expects to
complete development of during 1999 will be contributed to
the Partnership. A wholly owned subsidiary of Shurgard,
Shurgard Development II, Inc., ("Shurgard Development II"),
and an affiliate of Fremont are the general partners of the
Partnership, with Shurgard Development II having a 10%
equity interest and the Fremont affiliate having a 90%
equity interest in the Partnership. All major decisions by
the Partnership require approval of both Shurgard and the
Fremont affiliate. The Partnership has obtained a
nonrecourse credit facility from a commercial bank of up to
$64.7 million, secured by the properties owned by the
Partnership.
Under the terms of the agreements executed in
connection with the formation of the Partnership, properties
are contributed by Shurgard Development II to the
Partnership shortly after completion of development of the
properties by Shurgard. Shurgard is reimbursed at cost for
all expenses it incurred in developing the properties
contributed to the Partnership (including a reimbursement of
$2.80 per net rentable square foot for internal costs). Six
properties were contributed to the partnership on May 21,
1999, and the remaining properties are expected to be
contributed by the end of the year. The Partnership will be
capitalized with approximately $92.4 million, including the
$64.7 million credit facility, to fund the acquisition of
the properties and Partnership operations.
The Partnership has granted Shurgard an option to
acquire all of the properties owned by the Partnership. The
purchase option is exercisable at certain times between
December 15, 2001 and November 30, 2003, depending upon the
performance of the properties. The purchase price for the
properties upon exercise of the option is based on a 9 1/4
capitalization rate applied to the net operating income of
the properties for the three or four-month period preceding
the exercise of the option, subject to a collar. However,
Shurgard expects the effective capitalization rate for its
purchase of the properties to be approximately 9.5 to 10% on
the same trailing net operating income basis. This expected
effective capitalization rate is based on the terms in the
Partnership Agreement which increase Shurgard's equity
return to 20% after the partners receive a specified
priority return.
Under a Management Services Agreement between Shurgard
and the Partnership, Shurgard will act as property manager
for the properties owned by the Partnership, and Shurgard
will receive a monthly management fee equal to the greater
of $2,000 per property or 5% of gross revenues, as well as
certain other fees relating to accounting and administrative
services that Shurgard will perform on behalf of the
Partnership.
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 hereunto duly
authorized.
SHURGARD STORAGE CENTERS, INC.
Dated: May 26, 1999
By /s/Harrell Beck
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Harrell Beck, Chief Financial Officer
