UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 OR 15(b) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 1, 1998
(April 30,1998)
Storage USA, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Tennessee 001-12910 62-1251239
- ------------------------------ ------------ ----------------------
State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization File Number) Identification Number)
165 Madison Avenue, Suite 1300, Memphis, TN 38103
- -------------------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (901) 252-2000
<PAGE>
Note: This Form 8-K/A is being filed to amend the Form 8-K filed on October 13,
1998 and to include audited and pro forma financial statements for the
acquisitions reported on that Form 8-K.
Item 2: Acquisition or Disposition of Assets
Storage USA, Inc., (the "Company") consummated during the period April 30, 1998
through September 25, 1998, the acquisition of 35 self-storage facilities (the
"Acquired Facilities") through SUSA Partnership, L.P. (the "Partnership"), a
limited partnership in which the Company is the sole general partner and owns
approximately a 88% interest as of the date of this report. The Acquired
Facilities contain approximately 2,347,000 square feet, are located in 14 states
and were purchased at a contract price of approximately $180,123,000.
The acquisition of the Acquired Facilities was funded by cash generated from
operations, borrowings under the Company's lines of credit with The First
National Bank of Chicago and First Tennessee, the issuance of $200 million
senior unsecured notes, units of limited partnership interest in the Partnership
("Units"), the assumption of mortgages, the use of capital leases, the issuance
of unsecured non-interest bearing notes and the use of deferred unit agreements.
Each of the Acquired Facilities was used by the seller as a self-storage
facility prior to its acquisition by the Company, and the Company intends to
continue such use of all the Acquired Facilities. 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 amount 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 associated with the
facility. Other than changes in these factors, the Company, after reasonable
inquiry, 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 Acquired
Facilities:
<TABLE>
<CAPTION>
Location Seller Date of Acquisition
- -------- ------ -------------------
<S> <C> <C> <C>
West Palm Beach, FL CMV Partners 4/30/98
Columbus, OH Grandview Storage Associates 5/4/98
Spring, TX CB Commercial 5/6/98
Tempe, AZ Mini Pockets, L.L.C. 5/28/98
West New York, NJ Hudson Mini Storage, Inc. 6/3/98
Las Vegas, NV Charleston/Jones Mini Storage 6/4/98
Pineville, NC Superior Storage, L.L.C. 6/26/98
Abington, MA Extraspace of Abington, L.C. 6/29/98
Henderson, NV Whitney Mesa Minis L.L.C. 6/29/98
Kendall, FL Budget Mini Storage, Inc. 6/30/98
Albuquerque, NM Tony O. Scarton and Judith K. Scarton 6/30/98
Columbus, OH J.A.S. Group 7/16/98
Whitehall, OH J.A.S. Group 7/16/98
Columbus, OH J.A.S. Group 7/16/98
Columbus, OH J.A.S. Group 7/16/98
Columbus, OH J.A.S. Group 7/16/98
Columbus, OH J.A.S. Group 7/16/98
Los Alamitos, CA Los Al U-Store & Lock 7/31/98
Los Angeles, CA West Pico Associates 8/27/98
Shelby, MI Pogoda Companies & Maurice Pogoda 9/4/98
Canton, MI Pogoda Companies & Maurice Pogoda 9/4/98
Belleville, MI Pogoda Companies & Maurice Pogoda 9/4/98
Ypsilanti, MI Pogoda Companies & Maurice Pogoda 9/4/98
Chesterfield Township, MI Pogoda Companies & Maurice Pogoda 9/4/98
Southgate, MI Pogoda Companies & Maurice Pogoda 9/4/98
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Location Seller Date of Acquisition
- -------- ------ -------------------
<S> <C> <C> <C>
Mount Clemens, MI Pogoda Companies & Maurice Pogoda 9/4/98
Bethesda, MD River Road Limited Patnership & DMMJ Limited Partnership 9/14/98
Los Angeles, CA Bondie O. Gabrell & Carrie D. Gambrell 9/25/98
Brooklyn, NY Vestpro Corporation 9/25/98
Long Island City, NY Vestpro Corporation 9/25/98
Brooklyn, NY Vestpro Corporation 9/25/98
Bronx, NY Vestpro Corporation 9/25/98
New York, NY Vestpro Corporation 9/25/98
New York, NY Vestpro Corporation 9/25/98
Philadelphia, PA Vestpro Corporation 9/25/98
</TABLE>
The following unaudited data related to the 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 Total Contract
Location Feet Square Foot Occupancy Occupancy Units Price
-------- --------- ------------- --------- --------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Acquired Facilities:
West Palm Beach, FL (1) 52,345 $11.34 50% 57% 604 $2,900,000
Columbus, OH 62,300 $8.64 70% 78% 511 $2,899,374
Spring, TX (1) 73,121 $6.72 35% 54% 540 $2,300,000
Tempe, AZ 44,250 $10.67 84% 90% 533 $3,000,000
West New York, NJ 45,437 $15.22 81% 96% 1,297 $3,150,000
Las Vegas, NV (1) 59,706 $9.45 84% 37% 740 $3,400,000
Pineville, NC (1) 47,565 $11.55 38% 43% 499 $2,826,000
Abington, MA (1)(2) 45,775 $12.71 90% 96% 425 $3,150,000
Henderson, NV (1) 114,650 $10.79 49% 69% 1,179 $5,885,000
Kendall, FL 76,711 $15.14 69% 77% 1,082 $5,462,500
Albuquerque, NM 49,615 $8.14 66% 78% 505 $950,000
Columbus, OH 22,750 $7.30 58% 95% 174 $1,050,000
Whitehall, OH 50,025 $7.15 74% 79% 401 $2,100,000
Columbus, OH 64,250 $6.86 69% 72% 454 $2,650,000
Columbus, OH 54,475 $7.71 90% 95% 427 $2,570,000
Columbus, OH (1) 58,795 $7.90 76% 85% 367 $2,600,000
Columbus, OH (1) 30,350 $7.28 62% 76% 214 $1,300,000
Los Alamitos, CA 81,803 $13.08 94% 96% 1,051 $7,500,000
Los Angeles, CA 61,518 $12.64 90% 94% 693 $4,150,000
Shelby, MI 94,000 $8.54 85% 89% 631 $6,097,549
Canton, MI 62,800 $8.76 84% 92% 365 $3,918,823
Belleville, MI 85,561 $10.06 80% 91% 811 $5,942,286
Ypsilanti, MI 68,400 $10.85 76% 83% 636 $4,992,654
Chesterfield Township, MI 65,020 $9.08 78% 92% 480 $3,960,581
Southgate, MI (1) 46,650 $10.41 70% 77% 390 $3,492,718
Mount Clemens, MI (1) 44,600 $9.78 77% 84% 475 $2,980,822
Bethesda, MD (2) 41,282 $22.58 88% 98% 592 $7,450,000
Los Angeles, CA 53,964 $14.28 88% 85% 716 $2,975,000
Brooklyn, NY 97,048 $21.94 95% 95% 2,045 $12,284,000
Long Island City, NY 140,323 $20.34 81% 78% 2,552 $15,648,000
Brooklyn, NY 101,662 $19.50 101% 94% 2,012 $12,292,000
Bronx, NY 101,652 $21.17 81% 82% 1,845 $10,408,000
New York, NY (1) 77,268 $29.60 53% 50% 1,311 $11,750,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Square Rent per Economic Physical Total Contract
Location Feet Square Foot Occupancy Occupancy Units Price
-------- ------ ------------- --------- --------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
New York, NY (1) 51,875 $27.82 17% 16% 936 $9,500,000
Philadelphia, PA 119,847 $11.93 85% 71% 1,958 $6,588,000
=========================================================================================
Total Acquired Facilities 2,347,393 $13.48 78% 75% 29,451 $ 180,123,307
=========================================================================================
</TABLE>
(1) These properties were developed in 1997 or 1998 and were in various stages
of lease-up during those periods.
(2) These properties were managed by the Company prior to being acquired by
the Company.
<PAGE>
Item 7: Financial Statements and Exhibits
(a) Financial Statements Applicable to Real Estate Properties Acquired
* Report of Independent Accountants.
* Acquired Facilities Historical Summaries of Combined Gross
Revenue and Direct Operating Expenses for the year ended
December 31, 1997 (Audited), and for the nine months ended
September 30, 1998 (Unaudited).
* Notes to Acquired Facilities Historical Summaries of Combined
Gross Revenue and Direct Operating Expenses.
(b) Pro Forma Financial Information
* Unaudited Pro Forma Combined Condensed Balance Sheet as of
September 30, 1998.
* Unaudited Pro Forma Combined Condensed Statement of Operations
for the nine months ended September 30, 1998.
* Unaudited Pro Forma Combined Condensed Statement of Operations
for the year ended December 31, 1997.
* Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
(c) Exhibits
Exhibit Description
23.1 Consent of Independent Accountants.
<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 "Acquired Facilities")
described in Note 1 to the Historical Summaries for the year ended December 31,
1997. These Historical Summaries are the responsibility of the management of the
Acquired 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/A of Storage USA, Inc.) as
described in Note 1 to the Historical Summaries, and are not intended to be a
complete presentation of the Acquired 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 Acquired
Facilities for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
PRICEWATERHOUSECOOPERS LLP
Baltimore, Maryland
December 1, 1998
<PAGE>
ACQUIRED FACILITIES
HISTORICAL SUMMARIES OF COMBINED GROSS
REVENUE AND DIRECT OPERATING EXPENSES
(amounts in thousands)
<TABLE>
<CAPTION>
For the For the
year ended nine months ended
December 31, September 30,
1997 1998
--------------------- -----------------------
<S> <C> <C>
(unaudited)
(note 2)
Gross Revenue:
Rental revenue $20,665 $18,011
Other revenue 492 543
--------------------- -----------------------
Total gross revenue 21,157 18,554
--------------------- -----------------------
Direct Operating Expenses:
Property operations and maintenance 4,838 3,952
Real estate taxes 1,308 1,098
--------------------- -----------------------
Total direct operating expenses 6,146 5,050
--------------------- -----------------------
Gross revenue in excess of direct operating expenses $15,011 $13,504
===================== =======================
</TABLE>
See accompanying notes.
<PAGE>
NOTES TO ACQUIRED FACILITIES
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 ("Acquired Facilities") which have been acquired
by Storage USA, Inc. (the "Company").
<TABLE>
<CAPTION>
Acquired Facilities
-------------------
Number of Number of
Location Facilities Location Properties
- ----------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C>
West Palm Beach, FL 1 Shelby, MI 1
Columbus, OH 6 Canton, MI 1
Spring, TX 1 Belleville, MI 1
Tempe, AZ 1 Ypsilanti, MI 1
West New York, NJ 1 Chesterfield Township, MI 1
Las Vegas, NV 1 Southgate, MI 1
Pineville, NC 1 Mount Clemens, MI 1
Abington, MA 1 Bethesda, MD 1
Henderson, NV 1 Brooklyn, NY 2
Kendall, FL 1 Long Island City, NY 1
Albuquerque, NM 1 Bronx, NY 1
Whitehall, OH 1 New York, NY 2
Los Alamitos, CA 1 Philadelphia, PA 1
Los Angeles, CA 2
</TABLE>
The Historical Summaries for the Acquired Facilities with a total
acquisition cost of $180,123 have been prepared pursuant to the Rules and
Regulations of the Securities and Exchange Commission for real estate operations
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 Acquired 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 Acquired Facilities. Rental income is recognized when due from
occupants. Expenses are recognized on the accrual basis.
2. Interim Periods
The unaudited interim Historical Summaries for the Acquired Facilities
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 nine months ended September 30, 1998 are not necessarily
indicative of future operating results.
<PAGE>
STORAGE USA, INC.
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
(UNAUDITED)
The following unaudited Pro Forma Combined Condensed Balance Sheet was
prepared as if the Acquired Facilities were purchased on September 30, 1998. The
unaudited Pro Forma Combined Condensed Statements of Operations for the nine
months ended September 30, 1998, and for the year ended December 31, 1997, have
been prepared to reflect the acquisition of the Acquired Facilities as if the
Acquired 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 September 30, 1998, 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, 1997, and should be
read in conjunction with those financial statements and the notes thereto. 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.
<PAGE>
STORAGE USA, INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
as of September 30, 1998
(Unaudited)
(amounts in thousands)
<TABLE>
<CAPTION>
Historical Pro Forma
Storage Pro Forma Storage
USA, Inc. Adjustments USA, Inc.
----------------- ---------------- ------------------
<S> <C> <C> <C>
Assets:
Investment in storage facilities, net $ 1,503,803 $ 1,050 (a) $ 1,504,853
Cash and equivalents 2,869 2,869
Mortgages receivable 97,489 97,489
Other assets 51,279 51,279
----------------- ---------------- ------------------
Total assets $ 1,655,440 $ 1,050 $ 1,656,490
================= ================ ==================
Liabilities and shareholders' equity
Notes payable $ 600,000 $ 600,000
Line of credit borrowings 87,012 $ 1,050 (b) 88,062
Mortgage notes payable 67,926 67,926
Other borrowings 47,443 47,443
Accounts payable and accrued expenses 25,954 25,954
Rents received in advance 10,274 10,274
Dividend payable 17,751 17,751
Minority interest 94,174 94,174
----------------- ---------------- ------------------
Total liabilities 950,534 1,050 951,584
----------------- ---------------- ------------------
Shareholders' equity
Common stock 277 277
Paid-in capital 752,675 752,675
Notes receivable - officers (11,706) (11,706)
Accumulated deficit (15,831) (15,831)
Distributions in excess of net income (20,509) (20,509)
----------------- ---------------- ------------------
Total shareholders' equity 704,906 - 704,906
----------------- ---------------- ------------------
Total liabilities and shareholders' $ 1,655,440 $ 1,050 $ 1,656,490
equity ================= ================ ==================
</TABLE>
See accompanying notes.
<PAGE>
STORAGE USA, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
For the nine months ended September 30, 1998
(Unaudited)
(thousands, except per share data)
<TABLE>
<CAPTION>
Historical Pro Forma
Storage Acquired Pro Forma Storage
USA, Inc. Facilities Adjustments USA, Inc.
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Property Revenues:
Rental income $ 156,922 $14,501 $ 1,722 (c) $ 173,145
Other income 3,731 501 87 (d) 4,319
---------------- -------------- ---------------- --------------
Total revenues 160,653 15,002 1,809 177,464
---------------- -------------- ---------------- --------------
Property Expenses:
Cost of property operations
and maintenance 40,699 3,038 310 (e) 44,047
Taxes 13,330 865 133 (f) 14,328
General & administrative 7,513 786 (g) 8,299
Depreciation & amortization 21,037 2,280 (h) 23,317
---------------- -------------- ---------------- --------------
Total expenses 82,579 3,903 3,509 89,991
---------------- -------------- ---------------- --------------
Income from property operations 78,074 11,099 (1,700) 87,473
Other Income (expenses):
Interest expense (32,105) (8,745) (i) (40,850)
Interest income 5,635 5,635
---------------- -------------- ---------------- --------------
Income before gain and minority interest 51,604 11,099 (10,445) 52,258
Gain on exchange of self-storage facilities (284) 284 (j) -
---------------- -------------- ---------------- --------------
Income before minority interest 51,320 11,099 (10,161) 52,258
Minority interest (5,586) (602)(k) (6,188)
---------------- -------------- ---------------- --------------
Net income $ 45,734 $11,099 $ (10,763) $ 46,070
================ ============== ================ ==============
Basic net income per share $ 1.65 $ 1.66
================ ==============
Diluted net income per share $ 1.64 $ 1.66
================ ==============
Basic weighted average shares outstanding 27,695 27,695
================ ==============
Diluted weighted average shares outstanding 27,820 27,820
================ ==============
</TABLE>
See accompanying notes.
<PAGE>
STORAGE USA, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
For the year ended December 31, 1997
(Unaudited)
(thousands, except per share data)
<TABLE>
<CAPTION>
Initial
Pro Forma Pro Forma
Storage Acquired Pro Forma Storage
USA, Inc. Facilities Adjustments USA, Inc.
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Property Revenues:
Rental income $ 181,721 $ 20,665 $ 10,251 (l) $ 212,637
Other income 3,130 492 455 (m) 4,077
---------------- -------------- ---------------- --------------
Total revenues 184,851 21,157 10,706 216,714
---------------- -------------- ---------------- --------------
Property Expenses:
Cost of property operations
and maintenance 44,722 4,838 2,237 (n) 51,797
Taxes 14,515 1,308 732 (o) 16,555
General & administrative 7,789 1,343 (p) 9,132
Depreciation & amortization 22,890 4,962 (q) 27,852
---------------- -------------- ---------------- --------------
Total expenses 89,916 6,146 9,274 105,336
---------------- -------------- ---------------- --------------
Income from property operations 94,935 15,011 1,432 111,378
Other Income (expenses):
Interest expense (28,362) (17,437)(r) (45,799)
Interest income 2,083 2,083
---------------- -------------- ---------------- --------------
Income before gain and minority interest 68,656 15,011 (16,005) 67,662
Gain on exchange of self-storage facilities - - -
---------------- -------------- ---------------- --------------
Income before minority interest 68,656 15,011 (16,005) 67,662
Minority interest (6,376) (1,652)(s) (8,028)
---------------- -------------- ---------------- --------------
Net income $ 62,280 $ 15,011 $ (17,657) $ 59,634
================ ============== ================ ==============
Basic net income per share $ 2.25 $ 2.16
================ ==============
Diluted net income per share $ 2.24 $ 2.14
================ ==============
Basic weighted average shares outstanding 27,635 27,635
================ ==============
Diluted weighted average shares outstanding 27,847 27,847
================ ==============
</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, L.P. (the "Partnership"), Storage USA,
Trust (the "Trust") and SUSA Management, Inc. ("SUSA Management").
2. Storage USA, Inc. - Initial Pro Forma Statement of Operations
The Initial Pro Forma Statement of Operations for the year ended
December 31, 1997 is presented as if (a) the acquisition during 1997 of 119
facilities totaling 7,200 square feet for a cost of approximately $353,000, (b)
the issuance of 2,461,000 shares of common stock for net proceeds of
approximately $90,368, (c) the issuance of $300,000 of notes payable, (d)
issuance of 949,000 of Units valued at approximately $35,700 and (e) the
assumption of approximately $7,100 of mortgages had occurred on January 1, 1997.
3. Acquired Facilities - Statement of Operations
The statements of operations for the Acquired Facilities reflects the
results of operations of the Acquired Facilities for the year ended December 31,
1997, and the results of operations of the Acquired Facilities from January 1,
1998 to the date acquired, which are included in the Acquired Facilities
Historical Summaries of Combined Gross Revenue and Direct Operating Expenses
included in this Form 8-K/A.
<PAGE>
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(dollar amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
4. Pro Forma Adjustments - Balance Sheet
As of September 30, 1998
---------------------------
(a) To record the anticipated capital improvements of the Acquired Facilities. $ 1,050
(b) To record the line of credit draw relating to the anticipated capital
improvements of the Acquired Facilities. $ 1,050
5. Pro Forma Adjustments - Statement of Operations
Nine Months Ended
September 30, 1998
------------------
(c) To record rental income for the 21 facilities acquired from January 1,
1998 to March 31, 1998 (the "Reported Acquisitions") from January 1,
1998 to the date acquired. $ 1,722
(d) To record other income for the Reported Acquisitions from January 1, 1998 to
the date acquired. $ 104
To reduce other income for the managed facilities acquired
based on actual management fees earned by the Company from January 1, 1998 to the
acquisition date. $ (17)
-------------------------------
Pro forma adjustment $ 87
(e) To record cost of property operations and maintenance for the Reported
Acquisitions from January 1, 1998 to the date acquired. $ 310
(f) To record taxes for the Reported Acquisitions from January 1, 1998 to the
date acquired. $ 133
(g) To reflect an estimated increase in general and administrative expense based on
results subsequent to acquisition. $ 786
(h) To record depreciation for the Reported Acquisitions based on
approximately $66,241 of the purchase price being allocated to
depreciable assets, based on a 40 year life. $ 1,242
To record depreciation for the Acquired Facilities based on $132,257 of the
purchase price being allocated to depreciable assets, based on a 40 year life. $ 2,480
Less: Depreciation included in the Historical balance relating to the facilities
acquired during the first nine months of 1998. $ (1,442)
-------------------------------
Pro forma adjustment $ 2,280
</TABLE>
<PAGE>
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(dollar amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
5. Pro Forma Adjustments - Statement of Operations - continued
Nine Months Ended
September 30, 1998
-------------------
(i) To reflect the pro forma interest expense from a pro forma decrease
in the line of credit balance at a weighted average interest rate of 6.81%
after assuming all financing transactions occurred on January 1, 1998. $ 2,411
To reflect the pro forma effect of additional interest expense and
amortization of discount due to the issuance of $100,000 of 6.95% notes
payable assumed to occur on January 1, 1998. $ (3,700)
To reflect the pro forma effect of additional interest expense and
amortization of discount due to the issuance of $100,000 of 7.45% notes
payable assumed to occur on January 1, 1998. $ (3,966)
To reflect interest expense on mortgage notes payable from January 1, 1998 to
the date of acquisition for the $28,105 mortgages assumed with the Reported
Acquisitions and the Acquired Facilities. $ (1,101)
To reflect the pro forma effect on interest of assuming the payoff of
all mortgages that were paid off during the first nine months of 1998
occurred on January 1, 1998. $ 122
To reflect interest expense from January 1, 1998 to the date of acquisition for
the capital leases, unsecured non-interest bearing notes and deferred Units
totaling $47,443 that were entered into in exchange for self-storage facilities. $ (2,511)
-------------------------------
Pro forma adjustment $ (8,745)
(j) To remove loss on exchange of self-storage facilities $ 284
(k) To reflect the pro forma effect on minority interest expense from the
income contributed from facilities acquired from the Reported
Acquisitions and the Acquired Facilities assuming those acquisitions
and all financing transactions occurred on January 1, 1998. $ (602)
Year ended
December 31, 1997
-----------------
(l) To record rental income for the Reported Acquisitions. $ 10,251
(m) To record other income for the Reported Acquisitions. $ 502
To reduce other income for the managed facilities acquired
based on actual management fees earned by the Company. $ (47)
-------------------------------
Pro forma adjustment $ 455
(n) To record cost of property operations and maintenance for the Reported
Acquisitions. $ 2,237
(o) To record taxes for the Reported Acquisitions. $ 732
(p) To reflect an estimated increase in general and administrative expense based on
results subsequent to acquisition. $ 1,343
</TABLE>
<PAGE>
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(dollar amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
5. Pro Forma Adjustments - Statement of Operations - continued
Year ended
December 31, 1997
-----------------
(q) To record depreciation for the Reported Acquisitions based on
approximately $66,241 of the purchase price being allocated to
depreciable assets, based on a 40 year life. $ 1,656
To record depreciation for the Acquired Facilities based on $132,257 of the
purchase price being allocated to depreciable assets, based on a 40 year life. $ 3,306
-------------------------------
Pro forma adjustment $ 4,962
(r) To reflect the interest expense on the pro forma line of credit
balance decrease of $35,350 at a weighted average interest rate of 6.99%
after effect of assuming all financing transactions to occur on January 1, 1997. $ 2,471
To reflect the pro forma effect of additional interest expense and
amortization of discount due to the issuance of $100,000 of 6.95%
notes payable assumed to occur on January 1, 1997. $ (6,961)
To reflect the pro forma effect of additional interest expense and
amortization of discount due to the issuance of $100,000 of 7.45%
notes payable assumed to occur on January 1, 1997. $ (7,461)
To reflect interest expense on mortgage notes payable for the $28,105
mortgages assumed with the Reported Acquisitions and the Acquired Facilities. $ (2,108)
To reflect the pro forma effect on interest of assuming the payoff of all
mortgages that were paid off during the first nine months of 1998 occurred on
January 1, 1997. $ 181
To reflect interest expense for the capital leases, unsecured
non-interest bearing notes and deferred Units totaling $47,443 that
were entered into in exchange for self-storage facilities. $ (3,559)
-------------------------------
Pro forma adjustment $ (17,437)
(s) To reflect the pro forma effect on minority interest expense from the
income contributed from facilities acquired from the Reported
Acquisitions and the Acquired Facilities assuming those acquisitions
and financing transactions
occurred on January 1, 1997. $ (1,636)
</TABLE>
<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: December 1, 1998
STORAGE USA, INC.
By: /s/ Christopher P. Marr
---------------------------------
Christopher P. Marr
Chief Financial Officer
(Principal Financial and Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit Description
23.1 Consent of Independent Accountants.
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,
33-86362, 333-29753 and 333-29773) of Storage USA, Inc.; (B) the Registration
Statements on Forms S-3 (Commission File Nos. 333-67695, 333-67009, 333-60631,
333-53997, 333-41057, 333-37857, 333-13385, 333-15341, 333-17159, 333-10903,
333-4556, 33-80965, 33-98142, 33-93886, 33-91302, 333-25821, 333-21991,
333-31145 and 333-44641) of Storage USA, Inc.; and (C) the Registration
Statements on Forms S-3 (Commission File Nos. 333-3344, 333-21991 and 333-44641)
of SUSA Partnership, L. P. of our report dated December 1, 1998, on our audit of
the Historical Summaries of Combined Gross Revenue and Direct Operating Expenses
of the Acquired and Acquisition Facilities for the year ended December 31, 1997,
which report is included in this Form 8-K/A.
PRICEWATERHOUSECOOPERS LLP
Baltimore, Maryland
December 1, 1998
