UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(b) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 28, 1997 (January 3,1997)
001-12910
(Commission File Number)
STORAGE USA, INC.
(Exact name of registrant as specified in its charter)
Tennessee 62-1251239
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
10440 Little Patuxent Parkway, Columbia, Maryland 21044
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (410) 730-9500
<PAGE>
ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS
Storage USA, Inc., (the "Company") had, for the period January 1, 1997 through
May 27,1997, consummated the acquisition of 31 self-storage facilities (the
"Acquired Facilities") through SUSA Partnership, L.P. ("Partnership"), a limited
partnership in which the Company is the general partner and owns approximately a
93% interest. The 31 facilities totaling approximately 1,675,000 square feet are
located in 13 states and were purchased for approximately $70,293,000.
The Company managed, for a fee, the one facility acquired on May 15, 1996
(indicated with a *). This facility was acquired with cash and units of limited
partnership interest in the Partnership ("Units"). The acquisition of the
Acquired Facilities was funded by cash generated from operations, the issuance
of Units, the issuance of approximately 2.5 million shares of common stock for
approximately $90 million, the assumption of certain mortgages payable, and
borrowings under the Company's lines of credit with The First National Bank of
Chicago and First Tennessee Bank. Each of the facilities acquired was used by
the seller as a self-storage facility prior to its acquisition by the Company,
and the Company intends to continue the use of all the Acquired Facilities for
that purpose. The Company's management determined the contract price of each
facility through arms-length negotiations, after taking into consideration such
factors as: the age and condition of the facility; the projected amounts of
maintenance costs; anticipated capital improvements; the facility's current
revenues; comparable facilities competing in the applicable market; market
rental rates for comparable facilities; the occupancy rate of the facility; and
the estimated amount of taxes, utility costs, personnel costs, and other
anticipated expenses.
After reasonable inquiry, the Company is not aware of any material factors
relating to the properties that would cause the historical financial information
provided in item 7 not to be necessarily indicative of future operating results
for the applicable facilities.
The following provides certain additional information concerning the 31
facilities acquired:
LOCATION SELLER DATE OF ACQUISITION
Acquired as of March 31:
- ------------------------
Oklahoma City, OK D.D.S. January 3, 1997
Vacaville, California Potter-Taylor & Co. January 28, 1997
Louisville, Kentucky H. Wayne Smith January 31, 1997
Broomfield, Colorado Kohlbarg & Co. February 12, 1997
Dallas, Texas Leon Backes February 19, 1997
Prospect Heights, IL The Nagel Group Inc. March 12, 1997
Cypress, CA Winton G. Kammis Trust March 13, 1997
Hollywood, CA RPM Investments Inc. March 18, 1997
Hollywood, CA William V. Bromiley & John McDonald March 18, 1997
Tucson, AZ Southwest Mine Warehouse Self Storage March 24, 1997
Long Beach, CA Roger Deyoung Construction Co. March 25, 1997
Acquired subsequent to March 31:
- --------------------------------
Marion, Indiana Liberty Self Storage April 17, 1997
Akron, OH Liberty Self Storage April 17, 1997
Streetsboro, OH Liberty Self Storage April 17, 1997
Franklin, OH Liberty Self Storage April 17, 1997
Kent, OH Liberty Self Storage April 17, 1997
East Lake, OH Liberty Self Storage April 17, 1997
West Chester, PA Liberty Self Storage April 17, 1997
Mentor, OH Liberty Self Storage April 17, 1997
Riverside, CA Bancap Self Storge Group Inc. April 25, 1997
Laurel, NJ* Pete Shannon May 15, 1997
2
<PAGE>
LOCATION SELLER DATE OF ACQUISITION
Memphis, TN Storage Trust Property L.P. May 20, 1997
Memphis, TN Storage Trust Property L.P. May 20, 1997
Memphis, TN Storage Trust Property L.P. May 20, 1997
Memphis, TN Storage Trust Property L.P. May 20, 1997
Memphis, TN Storage Trust Property L.P. May 20, 1997
Memphis, TN Storage Trust Property L.P. May 20, 1997
Memphis, TN Storage Trust Property L.P. May 20, 1997
Tulsa, OK Storage Trust Property L.P. May 20, 1997
Alvin, TX Don Johnson Co. May 27, 1997
Sarasota, FL Rodney Dessberg May 27, 1997
In addition, the Company has 21 facilities under contract (the "Acquisition
Facilities") with anticipated closing dates ranging from May 30, 1997, to June
10, 1997. These facilities, containing approximately 1,574,000 square feet are
located in three states and have an estimated cost of $82,625,000. The following
provides certain additional information concerning the 21 pending acquisitions:
LOCATION SELLER ANTICIPATED DATE
OF ACQUISITION
Pending Acquisitions:
- ---------------------
Orange, CA Bancap Self Storge Group Inc. May 30, 1997
Anaheim, CA Bancap Self Storge Group Inc. May 30, 1997
Santa Ana, CA Bancap Self Storge Group Inc. May 30, 1997
Huntington Beach, CA Bancap Self Storge Group Inc. May 30, 1997
Huntington Beach, CA Bancap Self Storge Group Inc. May 30, 1997
Long Beach, CA Bancap Self Storge Group Inc. May 30, 1997
Long Beach, CA Bancap Self Storge Group Inc. May 30, 1997
El Segundo, CA Bancap Self Storge Group Inc. May 30, 1997
Pico Rivera, CA Bancap Self Storge Group Inc. May 30, 1997
Pico Rivera, CA Bancap Self Storge Group Inc. May 30, 1997
Whittier, CA Bancap Self Storge Group Inc. May 30, 1997
Whittier, CA Bancap Self Storge Group Inc. May 30, 1997
Baldwin Park, CA Bancap Self Storge Group Inc. May 30, 1997
Glendora, CA Bancap Self Storge Group Inc. May 30, 1997
Pomona, CA Bancap Self Storge Group Inc. May 30, 1997
Gardena, CA Bancap Self Storge Group Inc. May 30, 1997
Torrance, CA Bancap Self Storge Group Inc. May 30, 1997
Cathedral City, CA Bancap Self Storge Group Inc. May 30, 1997
Riverside, CA Bancap Self Storge Group Inc. May 30, 1997
Louisville, KY Security Storage Center, LLC June 9, 1997
Mahopac, NY Mahopac Self Storage June 10, 1997
3
<PAGE>
In addition the Company has acquired or has pending acquisitions for 7 other
facilities that are not included in the Historical Summaries and are not deemed
to be significant either individually or in the aggregate.
LOCATION SELLER DATE OF ACQUISITION
Linden, Michigan Liberty Self Storage April 17, 1997
Fayetteville, NC Liberty Self Storage April 17, 1997
Fayetteville, NC Liberty Self Storage April 17, 1997
Wilmington, NC Liberty Self Storage April 17, 1997
Amherst, OH Liberty Self Storage April 17, 1997
Palm Springs, CA Bancap Self Storge Group Inc. May 30, 1997
Palm Springs, CA Bancap Self Storge Group Inc. May 30, 1997
Pico Rivera, CA Bancap Self Storge Group Inc. May 30, 1997
The following unaudited data related to the Acquired and Acquisition Facilities
is derived from the Company's internal records as of the last day of the month
following closing, or the most current information available:
<TABLE>
<CAPTION>
SQUARE RENT PER ECONOMIC PHYSICAL
LOCATION FEET SQUARE FOOT OCCUPANCY OCCUPANCY TOTAL UNITS CONTRACT PRICE
- -------- ---- ----------- --------- --------- ----------- --------------
<S> <C>
Acquired as of March 31:
Oklahoma City, OK(1) 74,000 $ 4.80 86 % 96 % 561 $ 2,660,000
Vacaville, CA(1) 69,150 $ 6.12 92 % 89 % 548 $ 2,400,000
Louisville, KY(1)(3) 60,950 $ 6.54 92 % 80 % 511 $ 2,450,000
Broomfield, CO(1) 54,885 $ 8.26 81 % 82 % 414 $ 2,550,000
Dallas, TX(1) 53,617 $ 10.82 86 % 90 % 529 $ 3,300,000
Prospect Heights, IL(1)(3) 76,336 $ 9.06 90 % 66 % 632 $ 3,000,000
Cypress, CA(1) 63,354 $ 8.21 86 % 83 % 429 $ 2,940,000
Hollywood, CA(1) 48,768 $ 17.51 96 % 93 % 804 $ 6,375,000
Hollywood, CA(1) 33,336 $ 15.39 94 % 94 % 554 $ 3,050,000
Tucson, AZ(1) 54,100 $ 8.08 97 % 90 % 663 $ 2,300,000
Long Beach, CA(1) 65,600 $ 8.87 95 % 96 % 603 $ 3,600,000
----------------------------------------------------------------------------------------------------
654,096 $ 8.88 91 % 82 % 6,248 $ 34,625,000
Acquired subsequent to March 31:
Marion, IN(2) 52,050 $ 4.23 75 % 88 % 455 $ 850,000
Akron, OH(2) 65,950 $ 5.76 63 % 64 % 563 $ 2,000,000
Streetsboro, OH(2) 63,885 $ 6.32 68 % 72 % 513 $ 2,300,000
Franklin, OH(2) 29,300 $ 5.34 96 % 98 % 248 $ 853,500
Kent, OH(2) 58,195 $ 6.28 69 % 74 % 445 $ 1,900,000
East Lake, OH(2) 47,000 $ 6.50 65 % 67 % 295 $ 1,600,000
Mentor, OH(2) 75,800 $ 6.31 68 % 81 % 491 $ 3,887,500
West Chester, PA(2) 40,900 $ 8.76 84 % 93 % 483 $ 2,100,000
Riverside, CA(1) 68,000 $ 5.51 96 % 94 % 813 $ 2,202,000
Laurel, NJ(1) 46,340 $ 11.22 83 % 87 % 374 $ 2,500,000
Memphis, TN(2) 43,010 $ 7.05 94 % 96 % 369 $ 1,381,946
Memphis, TN(1) 60,570 $ 6.32 77 % 88 % 484 $ 1,613,023
Memphis, TN(1) 27,725 $ 8.62 86 % 96 % 284 $ 949,103
Memphis, TN(1) 37,240 $ 7.55 95 % 99 % 356 $ 1,230,612
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
SQUARE RENT PER ECONOMIC PHYSICAL
LOCATION FEET SQUARE FOOT OCCUPANCY OCCUPANCY TOTAL UNITS CONTRACT PRICE
- -------- ---- ----------- --------- --------- ----------- --------------
<S> <C>
Memphis, TN(1) 36,820 $ 6.57 77 % 83 % 361 $ 972,397
Memphis, TN(1) 39,790 $ 8.28 88 % 93 % 366 $ 1,441,245
Memphis, TN(2) 39,454 $ 6.83 82 % 84 % 344 $ 1,177,882
Tulsa, OK(2) 57,540 $ 5.82 75 % 84 % 471 $ 1,433,791
Alvin, TX(1) 45,109 $ 6.41 95 % 91 % 483 $ 1,400,000
Sarasota, FL(1)(3) 85,870 $ 8.00 65 % 0 % 585 $ 3,875,000
----------------------------------------------------------------------------------------------------
1,020,548 $ 6.78 79 % 94 % 8,783 $ 35,667,999
----------------------------------------------------------------------------------------------------
Total Acquired Facilities 1,674,644 $ 7.60 84 % 94 % 15,031 70,292,999
</TABLE>
<TABLE>
<CAPTION>
SQUARE RENT PER ECONOMIC PHYSICAL
LOCATION FEET SQUARE FOOT OCCUPANCY OCCUPANCY TOTAL UNITS CONTRACT PRICE
- -------- ---- ----------- --------- --------- ----------- --------------
<S> <C>
Acquisition Facilities:
Orange, CA(1) 117,714 $ 9.46 90 % 90 % 1,230 $ 3,825,000
Anaheim, CA(1) 69,220 $ 8.66 83 % 85 % 662 $ 3,650,000
Santa Ana, CA(1) 64,584 $ 7.57 84 % 85 % 791 $ 3,000,000
Huntington Beach, CA(1) 88,714 $ 10.80 88 % 90 % 835 $ 6,500,000
Huntington Beach, CA(1) 86,557 $ 11.24 85 % 98 % 56 $ 5,750,000
Long Beach, CA(1) 80,223 $ 10.41 90 % 92 % 1,048 $ 5,500,000
Long Beach, CA(1) 125,146 $ 9.87 91 % 91 % 1,463 $ 7,500,000
El Segundo, CA(1) 93,299 $ 13.72 84 % 85 % 1,094 $ 7,650,000
Pico Rivera, CA(1) 76,531 $ 8.37 88 % 90 % 897 $ 3,500,000
Pico Rivera, CA(2) 60,605 N/A 90 % 85 % 27 $ 2,000,000
Whittier, CA(1) 58,992 $ 8.91 83 % 85 % 744 $ 3,750,000
Whittier, CA(1) 12,180 N/A 83 % 85 % N/A $ 850,000
Baldwin Park, CA(1) 37,521 $ 8.85 83 % 86 % 395 $ 2,150,000
Glendora, CA(1) 56,130 $ 9.02 88 % 89 % 514 $ 3,250,000
Pomona, CA(1) 76,899 $ 6.63 81 % 82 % 837 $ 3,000,000
Gardena, CA(2) 74,912 $ 8.24 85 % 87 % 879 $ 4,000,000
Torrance, CA(1)(3) 65,000 N/A N/A N/A 700 $ 1,750,000
Cathedral City, CA(1) 131,794 $ 6.63 90 % 91 % 1,099 $ 5,500,000
Riverside, CA(1) 86,828 $ 5.25 69 % 74 % 947 $ 2,500,000
Louisville, KY(1)(3) 57,246 $ 6.99 85 % 85 % 459 $ 2,300,000
Mahopac, NY(1) 54,035 $ 14.62 94 % 96 % 631 $ 4,700,000
---------------------------------------------------------------------------------------------------
Total Acquisition Facilities 1,574,130 $ 8.34 87 % 84 % 15,308 $ 82,625,000
</TABLE>
(1) These facilities are included in the Group 1 Facilities Historical Summaries
of Combined Gross Revenue and Direct Operating Expenses, which facilities
financial information is audited for the year ended December 31, 1996.
(2) These facilities are included in the Group 2 Facilities Historical Summaries
of Combined Gross Revenue and Direct Operating Expenses, which facilities
financial information is unaudited for the year ended December 31, 1996.
(3) These facilities were developed properties that opened in 1996 or 1997.
5
<PAGE>
In addition the Company has acquired or has pending acquisitions for 8 other
facilities. Financial data other than that presented below is not available for
these facilities, and accordingly no financial information for these facilities
has been included in the Historical Summaries or Pro Forma Financial Statements.
The Company believes that these facilities and the Group 2 Facilities are not
material either individually or in the aggregate.
<TABLE>
<CAPTION>
SQUARE RENT PER ECONOMIC PHYSICAL
LOCATION FEET SQUARE FOOT OCCUPANCY OCCUPANCY TOTAL UNITS CONTRACT PRICE
- -------- ---- ----------- --------- --------- ----------- --------------
<S> <C>
Linden, MI 56,100 $ 5.52 87 % 97 % 1,180 $ 2,250,000
Fayetteville, NC 108,708 $ 5.21 57 % 63 % 859 $ 2,210,000
Fayetteville, NC 50,550 $ 6.64 63 % 70 % 416 $ 1,900,000
Wilmington, NC 53,775 $ 6.54 81 % 85 % 451 $ 2,300,000
Amherst, OH 69,910 $ 5.69 63 % 70 % 438 $ 1,450,000
Palm Springs, CA 62,052 $ 6.26 54 % 57 % 658 $ 2,000,000
Palm Springs, CA 60,000 $ 4.94 72 % 72 % 64 $ 1,750,000
Pico Rivera, CA 9,266 N/A 90 % 85 % N/A $ 1,250,000
------- ----- ------------
470,361 4,072 $ 15,110,000
</TABLE>
ITEM 5: OTHER INFORMATION
On May 21, 1997, the Company announced the hiring of Dennis A. Reeve as Chief
Financial Officer. Mr. Reeve is a member of the Company's Board of Directors and
most recently President of Sparks Capital Corporation. In addition, the Company
announced the resignation of Thomas E. Robinson as President and Chief Financial
Officer. A copy of the press release dated May 21, 1997, is attached hereto as
exhibit 99.1.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS APPLICABLE TO REAL ESTATE PROPERTIES ACQUIRED
* Report of Independent Accountants.
* Group 1 Facilities Historical Summaries of Combined Gross
Revenue and Direct Operating Expenses for the year ended
December 31, 1996 (Audited), and for the three months ended
March 31, 1997 (Unaudited).
* Notes to Group 1 Historical Summaries of Combined Gross Revenue
and Direct Operating Expenses.
* Group 2 Facilities Historical Summaries of Combined Gross
Revenue and Direct Operating Expenses for the year ended
December 31, 1996 (Unaudited), and for the three months ended
March 31, 1997 (Unaudited).
* Notes to Group 2 Historical Summaries of Combined Gross Revenue
and Direct Operating Expenses.
(B) PRO FORMA FINANCIAL INFORMATION
* Unaudited Pro Forma Combined Condensed Balance Sheet as of
March 31, 1997.
* Unaudited Pro Forma Combined Condensed Statement of Operations
for the three months ended March 31, 1997.
6
<PAGE>
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS, CONTINUED
(B) PRO FORMA FINANCIAL INFORMATION, continued
* Unaudited Pro Forma Combined Condensed Statement of Operations
for the year ended December 31, 1996.
* Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
(C) EXHIBITS
Exhibit Description
------- -----------
23.0 Consent of Independent Accountants.
99.1 Press Release, dated May 21, 1997
7
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of
Storage USA, Inc.
We have audited the accompanying Historical Summaries of
Combined Gross Revenue and Direct Operating Expenses (the "Historical
Summaries") for certain self-storage facilities (the "Group 1 Facilities")
described in Note 1 to the Historical Summaries for the year ended December 31,
1996. These Historical Summaries are the responsibility of the management of the
Group 1 Facilities. Our responsibility is to express an opinion on these
Historical Summaries based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the Historical Summaries
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the Historical Summaries. An
audit also includes assessing the accounting principles used and the significant
estimates made by management, as well as evaluating the overall presentation of
the Historical Summaries. We believe that our audits provide a reasonable basis
for our opinion.
The accompanying Historical Summaries were prepared for
the purposes of complying with the Rules and Regulations of the Securities and
Exchange Commission (for inclusion in the Form 8-K of Storage USA, Inc.) as
described in Note 1 to the Historical Summaries, and are not intended to be a
complete presentation of the Group 1 Facilities' revenues and expenses.
In our opinion, based on our audits, the Historical
Summaries referred to above present fairly, in all material respects, the
combined gross revenue and direct operating expenses described in Note 1 of the
Group 1 Facilities for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
May 28, 1997
8
<PAGE>
GROUP 1 FACILITIES
HISTORICAL SUMMARIES OF COMBINED GROSS
REVENUE AND DIRECT OPERATING EXPENSES
(amounts in thousands)
For the For the
year ended three months ended
December 31, March 31,
1996 1997
------------ -----------------
(unaudited)
(note 2)
Gross Revenue:
Rental revenue $16,664 $4,599
Other revenue 313 76
----------- ----------
Total gross revenue 16,977 4,675
----------- ----------
Direct Operating Expenses:
Property operations and maintenance 3,863 984
Real estate taxes 1,081 362
----------- ----------
Total direct operating expenses 4,944 1,346
----------- ----------
Revenue in excess of direct operating expenses $12,033 $3,329
=========== ==========
See accompanying notes.
9
<PAGE>
NOTES TO GROUP 1 HISTORICAL
SUMMARIES OF COMBINED
GROSS REVENUE AND DIRECT
OPERATING EXPENSES
(amounts in thousands)
1. BASIS OF PRESENTATION
The Historical Summaries of Combined Gross Revenue and Direct Operating Expenses
(the "Historical Summaries") relate to the operation of the following
self-storage facilities ("Group 1 Facilities") which have been acquired or are
under contract to be acquired by the Partnership.
Group 1 Facilities- Locations
Oklahoma City, OK Riverside, CA Santa Ana, CA
Vacaville, California Laurel, NJ* Huntington Beach, CA
Louisville, Kentucky Memphis, TN Huntington Beach, CA
Broomfield, Colorado Memphis, TN Long Beach, CA
Dallas, Texas Memphis, TN Long Beach, CA
Prospect Heights, IL Memphis, TN El Segundo, CA
Cypress, CA Memphis, TN Whittier, CA
Hollywood, CA Alvin, TX Whittier, CA
Hollywood, CA Sarasota, FL Baldwin Park, CA
Tucson, AZ Orange, CA Glendora, CA
Long Beach, CA Anaheim, CA Pomona, CA
Torrance, CA Riverside, CA Mahopac, NY
Cathedral City, CA Louisville, KY Pico Rivera, CA
* - The Company managed this facility prior to the purchase.
The Historical Summaries for the Group 1 Facilities with a total
acquisition cost of $128,833 have been prepared pursuant to the Rules and
Regulations of the Securities and Exchange Commission for real estate operations
to be acquired. The Historical Summaries are not representative of the actual
operations for the periods presented, as certain expenses which may not be
comparable to the expenses expected to be incurred by the Company in the future
operations of the Group 1 Facilities have been excluded. Expenses excluded
consist of management fees, interest, depreciation and amortization,
professional fees and other indirect costs not directly related to the future
operations of the Group 1 Facilities. Rental Income is recognized when due from
occupants. Expenses are recognized on the accrual basis.
2. INTERIM PERIODS
The unaudited interim Historical Summaries have been prepared on a
basis consistent with the audited Historical Summaries. In the opinion of
management, all adjustments considered necessary for a fair presentation are of
a normal recurring nature and have been included. Operating results for the
three months ended March 31, 1997 are not necessarily indicative of future
operating results.
10
<PAGE>
GROUP 2 FACILITIES
UNAUDITED HISTORICAL SUMMARIES OF COMBINED GROSS
REVENUE AND DIRECT OPERATING EXPENSES
(amounts in thousands)
For the For the
year ended three months ended
December 31, March 31,
1996 1997
------------ ------------------
(See Note 2)
Gross Revenue:
Rental revenue $3,306 $839
Other revenue 95 31
------------ ---------
Total gross revenue 3,401 870
------------ ---------
Direct Operating Expenses:
Property operations and maintenance 1,061 205
Real estate taxes 291 90
------------ ---------
Total direct operating expenses 1,352 295
------------ ---------
Revenue in excess of direct operating expenses $2,049 $575
============ =========
See accompanying notes.
11
<PAGE>
NOTES TO GROUP 2 HISTORICAL
SUMMARIES OF COMBINED
GROSS REVENUE AND DIRECT
OPERATING EXPENSES
(amounts in thousands)
1. BASIS OF PRESENTATION
The Unaudited Historical Summaries of Combined Gross Revenue and Direct
Operating Expenses (the "Historical Summaries") relate to the operation of the
following self-storage facilities ("Group 2 Facilities") which have been
acquired or are pending acquisitions by the Partnership.
Group 2 Facilities - Locations
Marion, IN East Lake, OH Memphis, TN
Akron, OH Mentor, OH Tulsa, OK
Streetsboro, OH West Chester, PA Pico Rivera, CA
Franklin, OH Mentor, OH Gardena, CA
Kent, Ohio Memphis, TN
The Group 2 Facilities, with a total acquisition cost of $25,875 are unaudited
as a result of the Partnership's inability to access underlying accounting data.
The Historical Summaries have been prepared pursuant to the Rules and
Regulations of the Securities and Exchange Commission for real estate operations
to be acquired. The Historical Summaries are not representative of the actual
operations for the periods presented, as certain expenses which may not be
comparable to the expenses expected to be incurred by the Company in the future
operations of the Group 2 Facilities have been excluded. Expenses excluded
consist of management fees, interest, depreciation and amortization,
professional fees and other indirect costs not directly related to the future
operations of the Group 2 Facilities. Rental Income is recognized when due from
occupants. Expenses are recognized on the accrual basis.
2. INTERIM PERIODS
The unaudited interim Historical Summaries have been prepared on a basis
consistent with the unaudited annual Historical Summaries. In the opinion of
management, all adjustments considered necessary for a fair presentation are of
a normal recurring nature and have been included. Operating results for the
three months ended March 31, 1997 are not necessarily indicative of future
operating results.
12
<PAGE>
STORAGE USA, INC.
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
The following unaudited Pro Forma Combined Condensed Balance Sheet as of March
31, 1997, and the unaudited Pro Forma Combined Condensed Statements of
Operations for the three months ended March 31, 1997, and for the year ended
December 31, 1996 have been prepared to reflect the acquisition of the Group 1
and the Group 2 Facilities as if the Group 1 and the Group 2 Facilities and
other previously reported transactions had been consummated at the beginning of
the respective periods shown. The Pro Forma Combined Condensed Financial
Information is based on the historical financial statements included in the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 and
the pro forma financial information set forth in the footnotes to the financial
statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996, and should be read in conjunction with those financial
statements and the notes thereto. The Pro Forma Combined Condensed Balance Sheet
was prepared as if the Group 1 and the Group 2 Facilities were purchased on
March 31, 1997. The Pro Forma Combined Condensed Statements of Operations were
prepared as if the Group 1 and the Group 2 Facilities were purchased at the
beginning of the respective periods reflected thereon. The Combined Condensed
Pro Forma Financial Information is not necessarily indicative of the financial
position or results of operations which actually would have occurred if such
transactions had been consummated on the dates described, nor does it purport to
represent the Company's future financial position or results of operations.
13
<PAGE>
STORAGE USA, INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
as of March 31, 1997
(Unaudited)
(amounts in thousands)
<TABLE>
<CAPTION>
Historical Group 1 and Pro Forma
Storage Group 2 Pro Forma Storage
USA, Inc. Facilities Adjustments USA, Inc.
----------- ------------ ----------- ----------
<S> <C>
Assets:
Investment in storage facilities, net $868,173 $154,708 ($34,855) (a) $988,026
Cash and equivalents 9,569 9,569
Other assets 15,264 15,264
----------- ---------- ----------- ----------
Total assets $893,006 $154,708 ($34,855) $1,012,859
=========== ========== =========== ==========
Liabilities and Shareholders' Equity
Line of credit borrowings 0 137,063 (34,855) (a) 102,208
Mortgage notes payable 40,179 40,179
Notes payable 100,000 100,000
Accounts payable and accrued expenses 8,734 8,734
Rents received in advance 5,939 5,939
Dividend payable 16,322 16,322
Minority interest 59,457 17,645 77,102
----------- ---------- ----------- ----------
Total liabilities $230,631 $154,708 ($34,855) $350,484
----------- ---------- ----------- ----------
Shareholders' Equity
Common stock 272 272
Paid-in capital 701,315 701,315
Notes receivable - officers (10,216) (10,216)
Accumulated deficit (15,831) (15,831)
Distributions in excess of net income (13,165) (13,165)
----------- ---------- ----------- ----------
Total shareholders' equity 662,375 662,375
- -
----------- ---------- ----------- ----------
Total liabilities and shareholders'
equity $893,006 $154,708 ($34,855) $1,012,859
=========== ========== =========== ==========
</TABLE>
See accompanying notes.
14
<PAGE>
STORAGE USA, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
For the three months ended March 31, 1997
(Unaudited)
(thousands, except per share data)
<TABLE>
<CAPTION>
Historical Pro Forma
Storage Group 1 Group 2 Pro Forma Storage
USA, Inc. Facilities Facilities Adjustments USA, Inc.
------------ ----------- ----------- ----------- ----------
<S> <C>
Property Revenues:
Rental income $33,476 $4,599 $839 ($586) (b) $38,328
Management income - 0
Other income 441 76 31 (10) (c) 538
------------ --------- --------- --------- ----------
Total revenues 33,917 4,675 870 (596) 38,866
------------ --------- --------- --------- ----------
Property Expenses:
Cost of property operations
and maintenance 8,422 984 205 (92) (d) 9,519
Taxes 2,972 362 90 (34) (e) 3,390
General & administrative 1,267 185 (f) 1,452
Depreciation & amortization 4,174 694 (g) 4,868
------------ --------- --------- --------- ----------
Total expenses 16,835 1,346 295 753 19,229
------------ --------- --------- --------- ----------
Income from property operations 17,082 3,329 575 (1,349) 19,637
Other Income (expenses):
Interest expense (3,269) (711) (h) (3,980)
Interest income 237 237
------------ --------- --------- --------- ----------
Income before minority interest 14,050 3,329 575 (2,060) 15,894
Minority interest (1,065) (214) (i) (1,279)
------------ --------- --------- --------- ----------
Net income $12,985 $3,329 $575 ($2,274) $14,615
============ ========= ========= ========= ==========
Net income per share $0.52 $0.54
============ ==========
Weighted average shares
outstanding 25,040 27,205
============ ==========
</TABLE>
See accompanying notes.
15
<PAGE>
STORAGE USA, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
For the year ended December 31, 1996
(Unaudited)
(thousands, except per share data)
<TABLE>
<CAPTION>
Initial
Pro Forma Pro Forma
Storage Group 1 Group 2 Pro Forma Storage
USA, Inc. Facilities Facilities Adjustments USA, Inc.
--------- ---------- ---------- ----------- ---------
<S> <C>
Property Revenues:
Rental income $130,839 $16,664 $3,306 $150,809
Management income 485 (27) (j) 458
Other income 1,715 313 95 2,123
--------- ---------- ----------- ----------- ---------
Total revenues 133,039 16,977 3,401 (27) 153,390
--------- ---------- ----------- ----------- ---------
Property Expenses:
Cost of property operations
and maintenance 33,530 3,863 1,061 38,454
Taxes 10,827 1,081 291 12,199
General & administrative 4,722 722 (k) 5,444
Depreciation & amortization 16,097 2,823 (l) 18,920
--------- ---------- ----------- ----------- ---------
Total expenses 65,176 4,944 1,352 3,545 75,017
--------- ---------- ----------- ----------- ---------
Income from property operations 67,863 12,033 2,049 (3,572) 78,373
Other Income (expenses):
Interest expense (12,885) (3,305) (m) (16,190)
Interest income 687 687
--------- ---------- ----------- ----------- ---------
Income before gain and minority interest 55,665 12,033 2,049 (6,877) 62,870
Gain on investment 288 288
--------- ---------- ----------- ----------- ---------
Income before minority interest 55,953 12,033 2,049 (6,877) 63,158
Minority interest (3,870) (1,212) (n) (5,082)
--------- ---------- ----------- ----------- ---------
Net income $52,083 $12,033 $2,049 ($8,089) $58,076
========= ========== =========== =========== =========
Net income per share $2.11 $2.13
========= =========
Weighted average shares outstanding 24,723 27,205
========= =========
</TABLE>
See accompanying notes.
<PAGE>
NOTES TO PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS (DOLLAR
AMOUNTS IN THOUSANDS, EXCEPT
SHARE/UNIT AND PER SHARE/UNIT DATA)
(UNAUDITED)
1. STORAGE USA, INC.
The historical financial information of Storage USA, Inc. (the
"Company") includes SUSA Partnership, LP (the "Operating Partnership"), Storage
USA, Trust (the "Trust") and SUSA Management, Inc. ("SUSA Management").
2. GROUP 1 AND GROUP 2 FACILITIES- BALANCE SHEET
Amounts reflect the acquisition of 31 facilities acquired from January 1, 1997
to May 27, 1997 and 21 facilities with closing dates ranging from May 30, 1997
to June 10, 1997 for a price of $154,708. The total acquisition price includes
the purchase price of the facilities ($152,918) plus the Company's estimated
average cost of $30 per property for capital improvements ($1,560) and other
closing costs ($230). The total acquisition price was or will be funded with
borrowings under the Company's lines of credit, the issuance of approximately
2.5 million shares of common stock for approximately $90 million, ("1997 Common
Stock Offering"), the issuance of approximately 41,000 units of limited
partnership interest in the Operating Partnership ("Units") issued at $36.75 and
the issuance of approximately 436,000 Units at the then current market price on
the date of closing.
3. STORAGE USA, INC. - INITIAL PRO FORMA STATEMENT OF OPERATIONS
The Initial Pro Forma Statement of Operations for the year ended December 31,
1996 is presented as if (a) the acquisition during 1996 of 82 facilities
totaling 5.4 million square feet for a cost of approximately $304,000 and (b)
the issuance of 7,029,000 shares of common stock for net proceeds of
approximately $220,528 had occurred on January 1, 1996.
18
<PAGE>
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
4. PRO FORMA ADJUSTMENTS - COMBINED CONDENSED BALANCE SHEET
Pro Forma Adjustments are as follows:
<TABLE>
<CAPTION>
AS OF
MARCH 31, 1997
--------------
<S> <C>
(a) To reflect the facilities acquired from January 1 to March 31, 1997,
which facilities are included in the Historical Storage USA, Inc.
balances as of March 31, 1997. $ (34,855)
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS - STATEMENT OF OPERATIONS
THREE MONTHS ENDED
MARCH 31, 1997
-------------------
<S> <C>
(b) To reduce rental income for the 11 properties acquired during the
first three months of 1997 from the date acquired to March 31,
1997. $ (586)
(c) To reduce management income for the one managed property
acquired on May 15, 1997, based on actual management fees
earned by the company during the first quarter of 1997. $ (7)
To reduce other income for the 11 properties acquired during the
first three months of 1997 from the date acquired to March 31,
1997. $ (3)
---
Pro forma adjustment $ (10)
(d) To reduce cost of property operations and maintenance for the 11
properties acquired during the first three months of 1997 from the
date acquired to March 31, 1997. $ (92)
(e) To reduce taxes for the 11 properties acquired during the first
three months of 1997 from the date acquired to March 31,
1997. $ (34)
(f) To reflect an estimated increase in general and administrative expense
based on results subsequent to acquisition. $ 185
</TABLE>
19
<PAGE>
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
5. PRO FORMA ADJUSTMENTS - STATEMENT OF OPERATIONS-CONTINUED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1997
------------------
<S> <C>
(g) To record depreciation for the Group 1 and Group 2 Facilities
from January 1, 1997 (or date acquired) to March 31, 1997, based on
approximately $112,935 of the purchase price being allocated to
depreciable assets, based on a 40 year life. $ 706
Less: Depreciation recorded from acquisition date to March 31, 1997 $ (12)
----
Pro forma adjustment $ 694
(h) To reflect interest expense on bank debt utilized to fund the purchase
of the Acquisitions, based on $50,214 of net additional bank borrowings
at 6.96%. $ 923
Less: Interest savings as a result of the pro forma effect of assuming
the 1997 Common Stock Offering occurred on January 1, 1997. $ 212
---
Pro forma adjustment $ (711)
(i) To reflect minority interest expense on the Group 1 Facilities, Group 2
Facilities, and the pro forma adjustments. $ (214)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------
<S> <C>
(j) To reduce management income for the one managed property
acquired on May 15, 1997, based on actual management fees
earned by the company during fiscal year 1996. $ (27)
(k) To reflect an estimated increase in general and administrative expense
based on results subsequent to acquisition. $ 722
(l) To record depreciation for the Group 1 and the Group 2
Facilities from January 1, 1996 to December 31, 1996,
based on approximately $110,869 of the purchase price being
allocated to depreciable assets, based on a 40 year life. $ 2,823
(m) To reflect interest expense on bank debt utilized to fund the purchase
of the Acquired Facilities, based on $50,214 of net additional bank
borrowings at 6.99%. $ (3,305)
</TABLE>
20
<PAGE>
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
5. PRO FORMA ADJUSTMENTS - STATEMENT OF OPERATIONS-CONTINUED
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------
<S> <C>
(n) To reflect minority interest expense on the Group 1 Facilities, the
Group 2 Facilities, and the pro forma adjustments. $ (1,212)
</TABLE>
21
<PAGE>
SIGNATURES
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.
DATED: May 28, 1997
STORAGE USA, INC.
By: /s/ Thomas E. Robinson
---------------------------------
Thomas E. Robinson
President and
Chief Financial Officer
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference into (A) the Registration
Statements on Forms S-8 (Commission File Nos. 33-80967, 33-93884, 33-93882 and
33-86362) of Storage USA, Inc.; (B) the Registration Statements on Forms S-3
(Commission File Nos. 333-10903, 333-4556, 33-80965, 33-98142, 33-93886,
33-91302, 333-25821 and 333-21991) of Storage USA, Inc.; and (C) the
Registration Statements on Forms S-3, (Commission File Nos. 333-3344 and
333-21991) of SUSA Partnership, L.P. of our report dated May 28, 1997, on our
audit of the Historical Summaries of Combined Gross Revenues and Direct
Operating Expenses for certain self-storage facilities for the year ended
December 31, 1996, which report is included in this Form 8-K.
/s/ COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
MAy 28, 1997
Contact: Dean Jernigan
Chairman and Chief Executive Officer
(901) 762-0000
STORAGE USA ANNOUNCES NEW CHIEF FINANCIAL OFFICER AND
RESIGNATION OF THOMAS E. ROBINSON
MEMPHIS, Tennessee (May 21, 1997) - Storage USA, Inc. (NYSE:SUS)
announced today that Dennis A. Reeve has been named to the position of
Chief Financial Officer. Mr. Reeve has been a Director of the Company since
April 13, 1994 and has served as Chairman of the Audit Committee and a member
of the Compensation Committee. Most recently he has been employed as President
of Sparks Capital Corporation, an NASD general securities broker/dealer and
an independent commodity introducing broker located in Memphis, Tennessee. For
the previous 13 years Mr. Reeve was Chief Financial Officer and a member of the
Board of Directors for one of the largest restaurant franchises in the United
States. In addition, Christopher Marr has been named Senior Vice President,
Finance and Accounting after having previously served since August 1, 1994 as
Vice President, Financial Reporting and Controller.
Dean Jernigan, Storage USA Chairman and CEO said "The entire Board of
Directors of Storage USA joins me in stating how pleased we are that Dennie
has agreed to devote his efforts to the Company as a full time employee. In
his Board capacity, he has been playing a major role in Storage USA's growth
and will now be adding significant talent and experience to our top management.
We are implementing our strategy of hiring specific senior executives to
position the Company for continued growth in our funds from operations per
share."
The Company also announced today the resignation of Thomas E. Robinson,
President and Chief Financial Officer, who is leaving to join the Corporate
Finance Department of Legg Mason Wood Walker, Inc., in Baltimore, Maryland.
Mr. Jernigan went on to say, "The Board of Directors and employees also join
me in wishing Tom Robinson great success in his exciting new endeavor at
Legg Mason. I am especially pleased to see him joining forces with Bob Frank, as
Tom and Bob were the two people who most influenced me in the formative years
before Storage USA went public in 1994."
Storage USA, Inc. is a fully integrated, self-administered and self-
managed real estate investment trust with principal offices in Columbia,
Maryland and Memphis, Tennessee, which is engaged in the management,
acquisition, development, construction and franchising of self-storage
facilities. Of its total of 314 self-storage facilities containing approximately
20,624,000 square feet located in 31 states and the District of Columbia, the
Company has 13 in development or construction to contain 953,000 square feet,
owns 272 storage facilities containing 17,941,000 square feet and manages 29
facilities containing 1,730,000 square feet.
More information, including quarterly and annual financial data and
a property database, may be obtained through the Company's Web Page at
http://www.sus.com.
