SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 1, 1999 (December 1, 1999)
STORAGE USA, INC.
(Exact name of registrant as specified in charter)
Tennessee 001-12910 62-1251239
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
165 Madison Avenue, Suite 1300
Memphis, Tennessee 38103
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (901) 252-2000
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Not Applicable
(Former name or former address, if changed since last report)
<PAGE>
INFORMATION TO BE INCLUDED IN REPORT
Item 5. Other Events.
On December 1, 1999, Storage USA, Inc. (the "Registrant") announced the
formation of two joint ventures with GE Capital Corporation ("GE Capital"),
providing a total investment capacity of $400 million for the acquisition and
development of self-storage properties. The Registrant and GE Capital formed a
$240 million acquisition joint venture and a $160 million development joint
venture. The Registrant plans to contribute up to 13 projects currently in the
early stages of development to the development joint venture. The Registrant
expects that the ventures will provide funding for substantially all of its new
acquisition and development over the next two years. All of the properties
acquired and developed through the joint ventures will be operated by the
Registrant under the Storage USA brand names under a five-year management
contract. In addition, the Registrant will provide other fee-based services for
the joint ventures and has the ability to increase its participation in the
joint venture if GE Capital reaches certain return thresholds.
In connection with the closing of the joint venture transactions, GE
Capital received warrants for the purchase of 1.25 million shares of the
Registrant's common stock at $42 per share. The warrants may be exercised at any
time within a five-year period. If fully exercised, the warrants would represent
approximately 3.79% of the Company's common shares and SUSA Partnership, L.P.
units, as of September 30, 1999.
In addition, the Registrant announced that its Board of Directors has
authorized the repurchase of up to 5% of the Registrant's outstanding shares of
common stock through open market and private purchases. The timing of the
purchases, the length of time that the repurchase program will continue and the
exact number of shares to be repurchased will depend on market conditions and
price levels. Based on the closing price of the Registrant's common stock on
November 30, 1999, the repurchase program represents a capital commitment of
approximately $38 million. Purchases will be paid for through borrowings against
the Registrant's lines of credit. As of September 30, 1999, the Registrant had
28,040,440 outstanding shares of common stock.
Additional information with respect to the transactions described above
is set forth in the exhibits, which are incorporated by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
a) Financial Statements.
None
b) Pro Forma Financial Information.
None
c) Exhibits.
Number Exhibit
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99.1 Storage USA Press Release dated December
1, 1999, announcing joint ventures with GE
Capital Corporation
99.2 Storage USA Press Release dated December
1, 1999, announcing approval of repurchase
program
99.3 Summary of Material Terms of the GE
Capital Transactions
2
<PAGE>
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.
STORAGE USA, INC.
Date: December 1, 1999 By: /s/ Christopher P. Marr
--------------------------------
Christopher P. Marr
Chief Financial Officer
3
<PAGE>
EXHIBIT INDEX
Number Exhibit
- ------ -------
99.1 Storage USA Press Release dated December 1, 1999,
announcing joint ventures with GE Capital
Corporation
99.2 Storage USA Press Release dated December 1,
1999, announcing approval of repurchase program
99.3 Summary of Material Terms of the GE Capital
Transactions
4
EXHIBIT 99.1
Contacts: Christopher P. Marr
901-252-2000
Teresa K. Corona
901-252-2000
STORAGE USA FORMS $400 MILLION IN JOINT VENTURES WITH GE CAPITAL
TO ACQUIRE AND DEVELOP SELF-STORAGE FACILITIES
MEMPHIS, Tennessee (December 1, 1999) - Storage USA (NYSE:SUS; www.sus.com)
today announced the formation of two joint ventures with GE Capital Corporation
("GE Capital"), providing for a total investment capacity of $400 million for
acquisition and development of self-storage properties. The two joint ventures
enable Storage USA to continue to expand its national presence and capitalize on
growth opportunities in the self-storage industry.
Storage USA expects the joint ventures to be accretive to its funds from
operations in 2000 and 2001 and expects to fund substantially all of its new
acquisition and development over the next two years through the ventures. All of
the properties acquired and developed by the ventures will be operated by
Storage USA under its brand names on a five-year management contract.
Storage USA and GE Capital formed a $240 million acquisition joint venture and a
$160 million development joint venture. Funding is expected to occur as projects
are closed. Storage USA plans to contribute as many as 13 projects currently in
early stages of development to the Development Venture, representing projected
aggregate total costs of $65 million, of which Storage USA has invested
approximately $23 million to date.
Both joint ventures will be conservatively leveraged, with targeted debt ratios
of approximately 50%. Storage USA will have a minority equity interest in both
joint ventures. Storage USA will provide certain fee-based services for the
joint ventures, including property management, identifying suitable development
and acquisition opportunities, general contractor services, and potentially,
disposition activities. In addition, Storage USA has the ability to earn
incremental cash flow participation upon GE Capital achieving certain return
thresholds. In connection with the closing of these transactions, GE Capital
received warrants for the purchase of 1.25 million shares of Storage USA common
stock at $42 per share. These warrants may be exercised at any time within a
five-year period. If fully exercised, the warrants would represent approximately
3.79% of the Company's fully-converted common shares and SUSA Partnership, L.P.
units, as of September 30, 1999.
"This transaction provides us with a world-class innovative partner that shares
our vision for the growth and profitability of the self-storage business," said
Dean Jernigan, Storage USA's chairman and chief executive officer. "This
transaction once again demonstrates our financial flexibility in efficiently
raising capital, allowing us to improve shareholder value through enhanced
growth in funds from operations."
GE Capital Real Estate President, Ron Pressman, said, "We believe we have
created a strategic relationship with one of the best operators and brand names
in the self-storage industry. Talented leadership, a great vision for success,
and demonstrated commitment to shareholders, are principles common to Storage
USA and GE Capital."
-more-
<PAGE>
GE Capital Real Estate, headquartered in Stamford, Connecticut, U.S.A., is a GE
Capital company and one of the industry's leading global sources for commercial
real estate capital with a portfolio of over US$17 billion. GE Capital with
assets of over US$300 billion, is a global, diversified financial services
company with 28 specialized businesses. A wholly-owned subsidiary of General
Electric Company, Stamford, Conn.-based GE Capital, provides equipment
management, mid-market and specialized financing, specialty insurance and a
variety of consumer services, such as car leasing, home mortgages and credit
cards, to businesses and individuals around the world.
Storage USA, Inc. is a fully integrated, self-administrated and self-managed
real estate investment trust, which is engaged in the management, acquisition,
development, construction and franchising of self-storage facilities. The
Company owns, manages and franchises 501 facilities containing 33.6 million
square feet in 31 states and District of Columbia, as of September 30, 1999.
Statements in this release concerning Storage USA's beliefs, expectations, and
intentions, future events, future performance and business prospects, including
the growth of funds from operations and the expansion of the Company's market
share, are forward-looking and are subject to certain risks and uncertainties.
These include, but are not limited to, the ability of the Acquisition and
Development Ventures to find and develop suitable facilities within the two year
investment term, meeting the performance thresholds necessary to earn fees, the
financial performance of such facilities following acquisition and development
and the market for acquisition and construction financing. These risks and other
risk factors are described in Storage, USA's form 10-K, particularly under the
caption "Forward Looking Statements and Risk Factors" and in the quarterly
reports on Form 10-Q and Storage USA's other filings with the Securities and
Exchange Commission.
More information on Storage USA, including a summary of key terms of this
transaction and quarterly and annual financial data, may be obtained through the
Company's Web Page at www.sus.com. and through Securities and Exchange
Commission filings to be made shortly.
-end-
EXHIBIT 99.2
Contacts: Christopher P. Marr
901-252-2000
Teresa K. Corona
901-252-2000
STORAGE USA BOARD OF DIRECTORS AUTHORIZES REPURCHASE
OF UP TO 5% OF COMPANY'S COMMON STOCK
MEMPHIS, Tennessee (December 1, 1999) - Storage USA, Inc. (NYSE: SUS;
www.sus.com) today announced that its Board of Directors authorized the Company
to repurchase up to 5% of the Company's common shares outstanding through open
market and private purchases.
The timing of the purchases, the length of time that the program will continue
and the exact number of shares to be purchased will be dependent upon prevailing
market conditions and price levels. Based on the closing price of Storage USA
common shares yesterday, the repurchase program represents a capital commitment
of approximately $38 million.
"We believe that our stock is significantly undervalued in the market and
represents an excellent investment at these levels," said Dean Jernigan,
chairman and CEO of Storage USA. "The authorization of this buyback program
reflects the confidence of the Board and management in the Company's strategy
and continued growth potential. We are committed to enhancing shareholder value,
and we believe this buyback program demonstrates that commitment."
Any purchases will be paid for through borrowings against the Company's lines of
credit. The borrowings will in turn be paid down with proceeds from the expected
sale of properties in non-core markets and the contribution of in-process
development to the Company's previously announced joint venture with GE Capital.
Storage USA had 28,040,440 common shares outstanding as of September 30, 1999.
Shares acquired through the buyback program will be retired and returned to the
status of authorized but unissued shares.
Storage USA, Inc. is a fully integrated, self-administrated and self-managed
real estate investment trust, which is engaged in the management, acquisition,
development, construction and franchising of self-storage facilities. The
Company owned, managed, and franchised 501 facilities containing 33.6 million
square feet in 31 states and the District of Columbia, as of September 30, 1999.
Statements in this release concerning Storage USA's beliefs, expectations, and
intentions, future events, future performance and business prospects are forward
looking within the meaning of the federal securities laws. The Company may
determine to modify or discontinue the repurchase program at any time. The
Company's actual results could differ materially from those anticipated as a
result of various factors, including those detailed from time to time in the
Company's Form 10-K and its other reports and filings with the Securities and
Exchange Commission. The Company undertakes no obligation to update or revise
such statements to reflect new circumstances or unanticipated events as they
occur.
-end-
EXHIBIT 99.3
Corporate Overview
STORAGE USA (R)
NOVEMBER 1999
<PAGE>
Table of Contents
I. Storage USA Overview
II. Summary of GE Capital Transaction
Statements in this presentation concerning Storage USA's beliefs, expectations,
and intentions, future events, future performance and business prospects,
including the growth of funds from operations and the expansion of the Company's
market share, are forward-looking and are subject to certain risks and
uncertainties. These include, but are not limited to, the ability of the
Acquisition and Development Ventures to find and develop suitable facilities
within the two year investment term, meeting the performance thresholds
necessary to earn fees, the financial performance of such facilities following
acquisition and development and the market for acquisition and construction
financing. These risks and other risk factors are described in Storage, USA's
Form 10-K, particularly under the caption "Forward Looking Statements and Risk
Factors" and in the quarterly reports on Form 10-Q and Storage USA's other
filings with the Securities and Exchange Commission.
<PAGE>
STORAGE USA OVERVIEW
Premier Self-Storage Operator
o 501 facilities containing 33.6 million square feet owned/managed/franchised
o Market presence spans 31 states and District of Columbia
o Average portfolio occupancy of 86.7%
o Industry leader in internal growth
o Fully-integrated owner/operator: acquiror, developer, franchisor, property
manager
o NYSE - listed (SUS) - $1.7 billion total market capitalization
[Map of United States with the states having Storage USA facilities highlighted
in blue]
<PAGE>
STORAGE USA OVERVIEW
Industry Highlights(1)
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o Size: 1.1 billion square feet / 29,955 facilities
o Occupancy: 86.9% (1999-nationwide)
o Typical customer base:
o Residential: 2/3
o Commercial: 1/3
o Average length of stay:
o Residential: 10 months
o Commercial: 21 months
Highly Fragmented Business(2)
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(as a % of total square feet)
[Pie chart]
Top 50 Operators - 26.1%
Small Entrepreneurs - 73.9%
(1) Source: Self-Storage Almanac - 2000.
(2) Top five operators control 16.6% of total market (as a % of total square
(feet), per Self-Storage Alamanac - 2000
<PAGE>
STORAGE USA OVERVIEW
Capital Structure(1)
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[Pie chart showing Consolidated Debt $800 MM and 46.1% and Equity $937 MM
showing 53.9%]
Investment Highlights(2)
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o NYSE Listing: SUS
o Stock Price: $27.125
o 52 Week High/Low: $35.375/
$26.00
o Dividend Yield: 9.9%
o 2000E FFO Multiple(3): 7.5x
o Corporate Senior
Credit Ratings: BBB/ Baa3
(1) Capital structure as of September 30, 1998.
(2) Investment highlights as of November 26, 1999.
(3) Based on First Call consensus estimates.
<PAGE>
STORAGE USA OVERVIEW
The Preferred Self-Storage Operator
Building a Brand
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[Round graph showing Total Storage Satisfaction(TM). The graph breaks into the
following segments: Convenience, Security, Protection, and Customer Service]
Industry Leader in Internal Growth(1)
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(year-over-year growth, three months ended September 30, 1999)
[Bar Graph]
Same-store Same-store
NOI Growth Revenue Growth
(year-over-year) (year-over-year)
---------------- ----------------
Storage USA 9.1% 5.5%
Public Storage 5.4% 4.3%
Shurgand 4.6% 4.3%
Sovran 4.6% 4.2%
(1) From PaineWebber real estate research, dated November 19, 1999, and company
September 30, 1999, Form 10Q reports.
<PAGE>
SUMMARY OF GE CAPITAL TRANSACTION
Summary of Key Terms
<TABLE>
<CAPTION>
Development Venture Acquisition Venture
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<S> <C> <C>
TARGETED VENTURE CAPITALIZATION $160 $240
LEVERAGE AMOUNT/RATIO $80 / 50% $120/ 50%
EQUITY AMOUNT/RATIO $80 / 50% (all equity pari passu) $120/ 50% (all equity pari passu)
GECC Equity Amount/Ratio $60 / 75% $100 / 83.3%
Storage USA Equity Amount/Ratio $20 / 25% $20 / 16.7%
PROPERTY MANAGEMENT/OPERATIONS Storage USA will manage the ventures' self-storage facilities pursuant
to a five-year management contract
MANAGEMENT FEE Storage USA receives property management fees equivalent to 6% of gross
revenues
OTHER STORAGE USA FEES
GC Fee (% improvements) 5% N/A
Development fee (% land and
improvements) 3% N/A
Acquisition fee N/A 1%
Disposition fee 1% 1%
INCREMENTAL CASH FLOW PARTICIPATION Storage USA may earn 50% of Storage USA may earn 40% of incremental
incremental cash flow upon cash flow upon achievement of certain
achievement of certain return thresholds to JV partner
return thresholds to JV partner
GOVERNANCE/ MAJOR DECISIONS Executive Committee with an equal number of representatives from
Storage USA and GECC must unanimously approve all major decisions
CAPITAL COMMITMENT PERIOD Two years (expected)
EXIT Asset-specific marketing right to both members after certain time
period (Right of First Refusal to non-initiating member)
</TABLE>
<PAGE>
OVERVIEW OF GE CAPITAL TRANSACTION
Strategic Implications to Storage USA
<TABLE>
<S> <C>
EXPANSION OF NATIONAL o Continue research-driven development program in targeted
PLATFORM/ BRAND markets
o Capitalize on attractive acquisition environment on a
national basis
INCREASED FINANCIAL FLEXIBILITY o $400 million of acquisition and development capacity without
need to issue additional common stock (i.e. identified
capital commitments)
o Limited capital commitment from Storage USA ($40 million)
ENHANCE FFO GROWTH RATE o Leverage Storage USA operating capabilities through
fee-based services
o Mitigate FFO dilution associated with development lease-up
periods
MAINTAIN CONSERVATIVE CAPITALIZATION o Leverage ratio of joint ventures in-line with corporate
POLICY leverage ratios
o No subordination of Storage USA Equity
REALIZATION OF VALUE CREATION o Incentive return structure allows Storage USA to capture
incremental economics upon achieving certain return
thresholds
</TABLE>
