FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number:
1-13462
STORAGE TRUST REALTY
(Exact name of Registrant as specified in its Charter)
MARYLAND 43-1689825
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
2407 RANGE LINE, COLUMBIA, MO 65202
(Address of principal executive offices) (Zip Code)
(573)499-4799
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
12,874,332 common shares of Beneficial Interest, $.01 par value
as of July 30, 1996.
<PAGE>
<TABLE>
STORAGE TRUST REALTY
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1996 AND DECEMBER 31, 1995
(amounts in thousands, except for share information)
<CAPTION>
1996
(Unaudited) 1995
<S> <C> <C>
ASSETS
Investment in storage facilities, net $ 269,981 $ 190,019
Cash and cash equivalents 2,379 2,356
Accounts receivable, deferred costs and
other assets 1,908 1,920
Investments in joint ventures 58 360
Total assets $ 274,326 $ 194,655
LIABILITIES AND EQUITY
Liabilities:
Mortgages and notes payable $ 114,242 $ 39,285
Accounts payable and accrued expenses 6,661 4,913
Dividends payable 3,581 3,581
Total liabilities 124,484 47,779
Minority interest 12,268 7,837
Shareholders' equity:
Common shares, $.01 par value,
150,000,000 shares authorized,
8,734,332 shares issued and
outstanding 87 87
Additional paid-in capital 140,879 141,004
Distributions in excess of net income (3,392) (2,052)
Total shareholders' equity 137,574 139,039
Total liabilities and shareholders'
equity $ 274,326 $ 194,655
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<TABLE>
STORAGE TRUST REALTY
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(amounts in thousands, except for share information)
(unaudited)
<CAPTION>
1996 1995
<S> <C> <C>
Revenues:
Rental income $ 17,726 $ 9,585
Management income 101 74
Equity in earnings of joint ventures 68 49
Other income 265 99
Total revenues 18,160 9,807
Expenses:
Property operations 4,059 2,080
Real estate taxes 1,655 722
General and administrative 1,097 609
Interest 2,414 723
Depreciation and amortization 2,710 1,417
Total expenses 11,935 5,551
Net income before minority interest 6,225 4,256
Minority interest (401) (207)
Net income $ 5,824 $ 4,049
Net income per share $ 0.67 $ 0.69
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<TABLE>
STORAGE TRUST REALTY AND PREDECESSOR COMPANY
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995
(amounts in thousands)
(unaudited)
<CAPTION>
1996 1995
<S> <C> <C>
Revenues:
Rental income $ 9,964 $ 5,157
Management income 40 38
Equity in earnings of joint ventures 33 27
Other income 130 57
Total revenues 10,167 5,279
Expenses:
Property operations 2,290 1,149
Real estate taxes 939 380
General and administrative 615 331
Interest 1,663 508
Depreciation and amortization 1,479 782
Total expenses 6,986 3,150
Net income before minority interest 3,181 2,129
Minority interest (238) (103)
Net income $ 2,943 $ 2,026
Net income per share $ 0.34 $ 0.34
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<TABLE>
STORAGE TRUST REALTY
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(amounts in thousands)
(unaudited)
1996 1995 1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,824 $ 4,049
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 2,710 1,417
Equity in earnings of joint ventures (68) (49)
Minority interest 401 207
Changes in assets and liabilities:
Accounts receivable, deferred
costs and other assets (59) (103)
Accounts payable and accrued expenses 1,726 (480)
Net cash provided by operating
activities 10,534 5,041
Cash flows from investing activities:
Additions to storage facilities (77,663) (38,217)
Net cash used in investing
activities (77,663) (38,217)
Cash flows from financing activities:
Proceeds from the issuance of mortgages
and notes payable 84,822 31,182
Principal payments on mortgages and
notes payable (9,865) (37,259)
Loan acquisition fees (52) (512)
Distributions from joint ventures 6 15
Minority interest distributions (470) (223)
Offering costs (125) 650
Dividends paid (7,164) (3,407)
Net proceeds from public offering - 46,600
Net cash provided by financing
activities 67,152 37,046
Net change in cash and cash equivalents 23 3,870
Cash and cash equivalents at beginning
of period 2,356 3,720
Cash and cash equivalents at end of period $ 2,379 $ 7,590
Supplemental cash flow information:
Cash paid for interest $ 1,809 $ 724
Storage facilities acquired in exchange
for operating partnership units 4,500 -
Reclassification of investment in joint
ventures to investment in storage
facilities $ 364 $ -
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Storage Trust Realty
Notes to Consolidated and Combined Financial Statements
(amounts in thousands, except share information)
1. Organization and Basis of Presentation
Organization
Storage Trust Realty (the "Company") was formed as a Maryland real estate
investment trust ("REIT") on July 12, 1994, and commenced operations
effective with the completion of its initial public offering (the "IPO") on
November 16, 1994. The Company was formed to continue the self-storage
business of Burnam Holding Companies Co. ("BHC") and certain of its affiliates
(collectively, "BHC" or the "Predecessor Company") in owning, operating and
managing self-storage facilities. As of June 30, 1996, the Company owned 153
self-storage facilities in 18 states, and was a partner in two joint ventures
which owned two self-storage facilities.
Substantially all of the Company's assets and interests in self-storage
facilities are held by, and all of its operations are conducted through,
Storage Trust Properties, L.P. (the "Operating Partnership"). The Company is
the sole general partner of and thereby controls the operations of the
Operating Partnership holding a 92.82% ownership interest therein as of
June 30, 1996. The remaining ownership interests in the Operating
Partnership (the "Units") are held by certain owners of the Predecessor
Company, including BHC (collectively "Original Investors") and certain
former owners of assets acquired by the Operating Partnership subsequent to
the IPO.
On November 16, 1994, the Company completed the IPO of 5,760,000 common shares
of beneficial interest (the "Common Shares") at $17.50 per Common Share.
Concurrent with the closing of the IPO, the Original Investors transferred their
interests in the Predecessor Company, the management business of BHC and
other assets to the Operating Partnership. Additionally, BHC purchased
50,000 Common Shares pursuant to a concurrent private placement.
Net of underwriting discounts and offering costs, the Company received
approximately $92 million in proceeds from the Offering and the concurrent
private placement. The net proceeds were primarily used to repay
indebtedness encumbering the facilities of BHC, to pay certain investors
of the Predecessor Company for their equity interests in the properties, to
acquire 48 facilities from third parties and to establish working capital and
capital expenditure reserve accounts.
<PAGE>
On June 28, 1995, the Company completed a public offering of 2,500,000 Common
Shares at $20.00 per Common Share. On July 6, 1995, the over allotment of
the public offering of 375,000 Common Shares was exercised at $20.00 per
Common Share. Net of underwriting discounts and offering costs, the Company
received approximately $53.5 million in proceeds from this offering. The net
proceeds were used to repay indebtedness under the line of credit, which was
incurred in property acquisitions, and to acquire additional self storage
facilities.
Basis of Presentation
The financial statements included herein have been prepared without audit
pursuant to the rules and regulations of the Securities and Exchange
Commission. These financial statements reflect all adjustments which, in
the opinion of management, are necessary to fairly present results for the
interim periods and all such adjustments are of a normal recurring nature.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the accompanying disclosures
are adequate to make the information presented not misleading. The results
for the interim period are not necessarily indicative of the results for a
full fiscal year. These financial statements should be read in conjunction
with the financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995.
The accompanying consolidated financial statements include the accounts of
the Company, the Operating Partnership, and Storage Realty Management Co.
("Management Company"). All significant intercompany transactions have been
eliminated in the consolidated and combined presentations.
The equity method of accounting has been applied in the accompanying
consolidated and combined financial statements with respect to the Company's
interests in two joint ventures.
<PAGE>
2. Summary of Significant Accounting Policies
Investment in Storage Facilities
Investment in storage facilities is recorded at cost. Depreciation is
computed using the straight line and accelerated methods over estimated
useful lives ranging from 15 to 40 years for buildings and improvements and 3
to 10 years for furniture, fixtures and equipment. Expenditures for
significant renovations and improvements which improve and/or extend the
useful lives of fixed assets are capitalized. Maintenance and repairs are
expensed as incurred.
Long-Lived Assets
On January 1, 1996, the Company adopted FASB Statement No. 121, "Accounting
for the Impairment of Long-Lived Assets and Assets to Be Disposed Of", which
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the assets'
carrying amount. Statement 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. Based on current circumstances,
there is no effect of adoption on the Company's financial position or
results of operations.
Cash and Cash Equivalents
The Company considers all demand and money market accounts and repurchase
agreements with a maturity of three months or less when purchased to be cash
and cash equivalents.
Deferred Costs
Loan fees and expenses are capitalized at cost and are amortized on a
straight line basis over the life of the loan, which approximates the
interest method. These costs are expensed upon termination or prepayment of
a loan.
Revenue Recognition
Rental income is recorded when due from tenants under operating leases.
Income Taxes
No provision has been made for Federal income taxes for the Company in the
accompanying consolidated and combined financial statements because the
Company has operated in a manner which it expects to enable it to qualify
as a REIT. Under the applicable provisions of the Internal Revenue code, a
REIT generally will not be subject to Federal income tax on the portion of
its REIT taxable income it currently distributes to its shareholders so long as
it distributes at least 95% of its taxable income to its shareholders and
complies with certain other requirements.
<PAGE>
Share Based Compensation
The Company grants share options for a fixed number of shares to employees
with an exercise price equal to the fair value of the shares at the date of
grant. The Company accounts for share option grants in accordance with APB
Opinion No. 25, Accounting for Stock Issued to Employees, and, accordingly,
recognizes no compensation expense for the share option grants.
Net Income Per Common Share
Net income per Common Share is computed based on net income and the weighted
average number of Common Shares outstanding during the period (8,734,332
and 5,941,750 for the three months and 8,734,332 and 5,900,768 for the six
months ended June 30, 1996 and 1995, respectively).
Primary earnings per Common Share is based upon the weighted
average number of Common Shares and the equivalent Common Shares outstanding
during the period. The assumed exercise price of outstanding Common Share
options using the treasury stock method is not materially dilutive and such
amounts are not presented.
Minority Interest
The minority interest reflects the ownership interest of the limited partners
of the Operating Partnership. Amounts allocated to these interests are
reflected as an expense in the income statement and increases the Company's
liability. Distributions to these partners reduce this liability. At
June 30, 1996, minority interest ownership was 675,772 units or 7.18%.
Investments in Joint Ventures
Investments in joint ventures represent investments in two self-storage
facilities in which the Company does not have a controlling interest.
As of April 1, 1996, the Company acquired its partner's interest in five
facilities, previously reflected as joint venture investments, which resulted
in the Company owning 100% of the facilities. Consideration for the purchase
price of $7,748 included 203,390 units in the Operating Partnership at a value
of $22.125 per unit, a net assumption of liabilities of $3,119 and cash paid
of $129. The Company has accounted for the transaction as a purchase under
APB 16 and has consolidated the properties as of April 1, 1996.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
<PAGE>
<TABLE>
3. Investment in Storage Facilities
The following summarizes investment in storage facilities:
<CAPTION>
June 30 December 31
1996 1995
<S> <C> <C>
Land $ 53,389 $ 34,275
Buildings 210,227 151,966
Furniture, fixtures and
equipment 13,127 7,975
276,743 194,216
Accumulated depreciation (6,762) (4,197)
Investment in storage
facilities, net $ 269,981 $ 190,019
</TABLE>
4. Investments in Joint Ventures
Investments in joint ventures represent the Operating Partnership's minority
interests in two self-storage facilities as follows:
<TABLE>
<CAPTION>
Year Acquired
by the Operating
Predecessor Partnership's
Location Company Ownership
<S> <C> <C>
Mundelein, IL 1993 15%
New Orleans, LA 1993 15%
</TABLE>
<PAGE>
5. Mortgages and Notes Payable
Mortgages and notes payable consist of the following:
<TABLE>
June 30, December 31,
1996 1995
<CAPTION>
<S> <C> <C>
Revolving, unsecured line of
credit with an aggregate
borrowing limit of $100 million
bearing interest at LIBOR plus
175 basis points per annum
(7.25% and 7.575%), interest only
payable monthly until expiration
on January 24, 1998, with a one-year
extension at the Company's option
upon the satisfaction of certain
conditions, annual fee on unused
portion of 25 basis points. $ 99,000 $ 33,095
Acquisition loan, unsecured, bearing
interest at LIBOR plus 175 basis
points per annum (7.25%), interest
only payable monthly until
expiration on August 24, 1996. 13,623 -
Mortgage loan secured by 1
self-storage facility, bearing
interest at 7.5%, principal and
interest of $16 payable monthly,
and maturing on April 3, 1999. 1,619 1,656
Mortgage loan secured by 1
self-storage facility, bearing
interest at 7.5%, maturing
January 10, 1996. - 850
Mortgage loan secured by 1
self-storage facility, bearing
interest at 8%, maturing on
January 16, 1996. - 1,000
Mortgage loan secured by 1
self-storage facility, bearing
interest at 7.75%, maturing on
April 1, 1996. - 2,684
$ 114,242 $ 39,285
</TABLE>
<PAGE>
The scheduled maturities of mortgages and notes payable subsequent to
June 30, 1996 are as follows:
<TABLE>
<C> <C>
1996 $ 13,668
1997 89
1998 99,100
1999 1,385
$ 114,242
</TABLE>
6. Share Option Plan
A share option plan, adopted by the Company in November 1994 and amended in
May 1996, provides that an aggregate of 730,000 of the Company's authorized
Common Shares are reserved for issuance. The options vest over 5 years for
officers and employees and are exercisable at a price not less than the fair
market value on the date of grant. The options expire 10 years from the date
of grant. The Company has granted options for 420,600 Common Shares or Units to
key officers, employees and trustees of the Company or the Operating
Partnership. The Company's independent trustees were each granted options for
3,000 Common Shares upon becoming Trustees, which options become exercisable
1 year from the date of grant, and have been and are granted options for 3,000
Common Shares subsequent to the close of each of the Company's annual
shareholders meetings, which options are exercisable upon grant. Such
options granted to the independent trustees are exercisable at the fair
market value on the date of grant.
7. Retirement Savings Plan
The Company adopted a retirement savings plan (the "Plan") for its full-time
employees. The Plan is a qualified plan pursuant to Sections 401(a) and
401(k) of the Internal Revenue Code. Participants in the Plan may elect to
contribute a portion of their earnings to the Plan and the Company is
obligated to make a matching contribution for the employee equal to 50% of
the participant's contribution to the Plan, up to 2% of the participant's
compensation.
8. Subsequent Events
On July 1, 1996, the Company completed a public offering of 3,600,000 Common
Shares at $20.25 per Common Share. On July 9, 1996, the over-allotment of the
public offering of 540,000 Common Shares was exercised at $20.25 per Common
Share. Net of underwriting discounts and offering costs, the Company
received approximately $79 million from this offering.
The net proceeds have been used to repay indebtedness under the line of
credit and a short-term acquisition loan which were incurred in property
acquisitions. Following the offering, the ownership interest of the Company
in the Operating Partnership increased to 95.01%.
On August 8, 1996, the Company declared a $.41 dividend on each Common Share
for the third quarter ended September 30, 1996. The dividend is payable
October 15, 1996 to shareholders of record September 16, 1996.
9. Pro Forma Information
The following presents the results of operations of the Company on a pro
forma basis as if the 32 acquisitions from January 1, 1996 through
June 30, 1996 had been purchased as of January 1, 1996.
<TABLE>
<S> <C>
Revenues $22,347
Net income $ 6,200
Net income per share $ .71
</TABLE>
The unaudited pro forma information is not necessarily indicative of what
actual results of operations of the Company would have been assuming such
transactions had been completed as of January 1, 1996 nor does it purport
to represent the results of operations for future periods.
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussions should be read in conjunction with the
financial statements and notes thereto appearing elsewhere herein
and in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995.
Storage Trust Realty (the "Company") commenced operations with
the completion of its initial public offering (the "IPO") on
November 16, 1994. The Company was formed to continue the self-
storage business of Burnam Holding Companies Co. and certain of
its affiliates (collectively, "BHC" or the "Predecessor
Company"). On November 16, 1994 the Company completed the IPO of
5,760,000 common shares of beneficial interest (the "Common
Shares") at $17.50 per Common Share. Concurrent with the closing
of the IPO, the original investors in the Predecessor Company
transferred their interests therein, the management business of
BHC and other assets, to Storage Trust Properties, L.P. (the
"Operating Partnership") as set forth in the Registration
Statement relating to the IPO. Additionally, the Predecessor
Company purchased 50,000 Common Shares pursuant to a concurrent
private placement.
Net of underwriting discounts and offering costs, the Company
received approximately $92 million in proceeds from the IPO and
the concurrent private placement. The net proceeds were used
primarily to repay indebtedness encumbering the facilities of
BHC, to pay investors for their equity interests
in the properties, to acquire 48 facilities from third parties
and to establish working capital and capital expenditure reserve
accounts.
On June 28, 1995, the Company completed a public offering of
2,500,000 Common Shares at $20.00 per Common Share. Net of
underwriting discounts and offering costs, the Company received
approximately $46.4 million in proceeds from this offering. On
July 6, 1995 the underwriters exercised their over allotment
option to acquire 375,000 Common Shares. Net of underwriting
discounts, the Company received approximately $7.1 million from
the sale of such shares. The net proceeds were used to repay
indebtedness under the Company's line of credit, which was
incurred in property acquisitions, and to acquire additional
self storage facilities.
Substantially all of the Company's assets and interests in self-
storage facilities are held by, and all of its operations are
conducted through, the Operating Partnership. The Company is the
sole general partner of, and thereby controls the operations of
the Operating Partnership, holding a 92.82% ownership interest
<PAGE>
therein as of June 30, 1996. Accordingly, the Operating
Partnership has been consolidated with the Company for reporting
purposes. Additionally, subsequent to the IPO the consolidated
financial statements include the accounts of Storage Realty
Management Co. (the "Management Company").
The Company derives its revenue principally from the Operating
Partnership, which is generated primarily by (i) the Operating
Partnership's rental of self-storage units at the Company's
facilities, (ii) revenues (for financial reporting purposes) of
the Management Company, and (iii) earnings from joint ventures.
The following discussion is based on the consolidated and
combined financial statements of Storage Trust Realty.
Six months ended June 30, 1996
compared to six months ended June 30, 1995
Rental income increased $8,141,000 (85%)in the first six months
of 1996 compared to the first six months of 1995 as a result of
the addition of 58 facilities between July 1, 1995 and June 30,
1996 ($5,108,000) and an increase in average rent per square foot
and occupancy associated with the other facilities ($3,033,000).
Average annualized rent per square foot increased 7% to $6.84 in
1996 from $6.40 in 1995 while average occupancy increased to 87%
as of June 30, 1996 from 84% as of June 30, 1995.
Property operating expenses increased $1,979,000 (95%) primarily
reflecting the operating expenses relating to the facilities
acquired in 1995 and 1996 ($1,669,225) and unusually high utility
and snow removal expenses incurred during the first quarter of
1996.
Real estate taxes increased $933,000 (129%) primarily due to the
taxes on these additional facilities and reassessments on other
facilities.
General and administrative expenses increased $488,000 (80%) due
to the acquisition of new facilities. The addition of personnel
at the Company's headquarters to handle this growth, as well as
increased state and local taxes and licenses accounted for the
majority of this increase.
Interest expense increased $1,691,000 (234%) due to the increase
in mortgages and borrowings under the Company's line of credit.
Depreciation and amortization increased $1,293,000 (91%) due to
the increased investment in storage facilities.
Net income increased $1,775,000 (44%) as a result of the factors
noted above.
<PAGE>
Results of Operations
Three months ended June 30, 1996
compared to three months ended June 30, 1995
Rental income increased $4,807,000 (93%)in the second quarter of
1996 compared to the second quarter of 1995 as a result of the
addition of 58 facilities between July 1, 1995 and June 30, 1996
($3,370,000) and an increase in average rent per square foot and
occupancy associated with the other facilities ($1,437,000).
Average annualized rent per square foot increased 7% to $6.90 in
1996 from $6.44 in 1995.
Property operating expenses increased $1,141,000 (99%) primarily
reflecting the operating expenses relating to the facilities
acquired in 1995 and 1996.
Real estate taxes increased $559,000 (147%) primarily due to the
taxes on these additional facilities and reassessments on other
facilities.
General and administrative expenses increased $284,000 (86%) due
to the acquisition of new facilities. The addition of personnel
at the Company's headquarters to handle this growth, as well as
increased state and local taxes and licenses accounted for the
majority of this increase.
Interest expense increased $1,155,000 (227%) due to the increase
in mortgages and borrowings under the Company's line of credit.
Depreciation and amortization increased $697,000 (89%) due to the
increased investment in storage facilities.
Net income increased $917,000 (45%) as a result of the factors
noted above.
Liquidity and Capital Resources
The Company believes that Funds from Operations ("FFO") is
helpful to investors as a measure of the performance of an equity
REIT because, along with cash flows from operating activities,
financing activities and investing activities, it provides
investors with an understanding of the ability of the Company to
incur and service debt and to make capital expenditures. FFO is
defined by NAREIT as income (loss) before minority interest of
the holders of Units (computed in accordance with GAAP),
excluding gains or losses from debt restructuring and sales of
property, provision for losses, and real estate related
depreciation and amortization (excluding amortization of
financing costs). FFO is not to be considered as an alternative
to net income or any other GAAP measurement as a measure of
operating performance and is not necessarily indicative of cash
available to fund all cash needs. FFO for the six months ended
<PAGE>
June 30, 1996 was approximately $8.8 million ($.95 per share) as
compared to $5.5 million ($.89 per share) for the six months
ended June 30, 1995. FFO for the three months ended June 30, 1996
was approximately $4.6 million ($.49 per share) as compared to
$2.8 million ($.45 per share) for the second quarter of 1995.
These increases in FFO are primarily due to the acquisition of
facilities.
The Company had outstanding borrowings equal to approximately
$114.2 million on June 30, 1996. This indebtedness consists of
(I) $1.6 million of mortgage indebtedness relating to the
Facility located at Hilton Head, South Carolina which bears
interest at the fixed rate of 7.5% and matures on April 3, 1999,
(ii) 99.0 million under the Company's credit line and (iii) $13.6
million under a short-term acquisition loan. The credit line may
be used to fund the acquisition, development or conversion of
additional facilities. The credit line expires in January 1998,
with a one-year extension at the Company's option upon
satisfaction of certain conditions, and bears interest at a
floating rate of LIBOR plus 175 basis points. The acquisition
loan matures on August 24, 1996, and bears interest at a floating
rate of LIBOR plus 175 basis points. The Company used the
approximately $79 million of net proceeds of the offering of
4,140,000 Common Shares (including 540,000 in connection with the
over-allotment option) to repay the acquisition loan and a
portion of the amount outstanding under the credit line.
The Company is also obligated with respect to $5.1 million on
indebtedness, which is guaranteed by the Company, incurred in
connection with the two facilities in which the Company has a
joint venture interest. The joint venture indebtedness, which is
secured by first mortgage liens on the two joint venture
facilities, is a joint and several liability of each of the joint
venture participants, bearing interest at variable (prime rate
plus 1.0%) and fixed rates (8.5% and 9.5% per annum) and maturing
at various dates from June 2001 to August 2003, of which
approximately $800,000 is due on demand or matures before
December 31, 1996.
Expansion of existing facilities, acquisition and development of
additional self-storage facilities and the repayment of principal
on mortgage indebtedness, including Company debt or any amounts
that may be outstanding under the credit line, represent the
Company's principal liquidity requirements.
The Company expects to meet its short-term liquidity requirements
by net cash provided by operating activities, any portion of net
cash flow not distributed currently and borrowings under the
credit line. The Company believes that its future net cash flow
will be adequate to meet operating requirements and provide for
payment of distributions by the Company in accordance with tax
requirements relating to a real estate investment trust (REIT) in
the short-term and in the long-term. In order to maintain its
<PAGE>
status as a REIT, the Company will be required to make
distributions to its shareholders of at least 95% of its taxable
income, which is expected to consist primarily of its share of
the income of the Operating Partnership. Differences in timing
between the recognition of taxable income and receipt of cash
which would be available for distribution could require the
Company to borrow to meet the 95% distribution requirement,
although the Company does not currently anticipate the need to
borrow as a result of any such differences in timing.
Capital Expenditures
The Company expects to spend approximately $1.3 million during
the remainder of 1996 on primarily nonrecurring repairs and
refurbishment of the facilities and approximately $600,000 on
expansion of existing facilities. The Company believes that it
can fund any necessary capital expenditures through its
operations or from the credit line.
Inflation
Substantially all of the leases at the facilities have one-month
terms which thereby provide the Company with the opportunity to
achieve increases in rental income as each lease matures. Such
types of leases generally minimize the risk of inflation to the
Company.
Seasonality
The Company's and its predecessor's revenues have historically
not been seasonal. The Company does not expect seasonality to
materially affect distributions to shareholders. The Company
believes that its geographic diversity, tenant mix, and rental
and expense structures provide adequate protection against
significant fluctuations in cash flow and net income due to
seasonality.
<PAGE>
Part II
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
At the annual meeting of shareholders held on May 8, 1996, shareholders
elected the following Trustees to office: 7,010,252 shares were voted for
the election of Michael G. Burnam as Class II Trustee, 0 shares were
voted against, and 12,871 shares were withheld: 7,010,252 shares were voted
for the election of Daniel C. Staton as a Class II Trustee, 0 shares were
voted against, and 12,871 shares were withheld.
At the annual meeting, shareholders voted 7,005,683 shares to ratify the
appointment of Ernst & Young LLP as the Company's independent auditors for
1996, 5,805 shares were voted against, and 11,635 shares abstained from voting.
At the annual meeting, shareholders voted 6,595,919 shares approving the
amendment of the option plan to increase the number of Common Shares
available for issuance from 530,000 to 730,000 shares, 397,542 shares were
voted against, and 29,662 shares abstained from voting.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a.) Exhibits
27. Financial Data Schedule
<PAGE>
(b.) Reports on Form 8-K
A report on Form 8-K, dated May 24, 1996, was filed in the second quarter of
1996 to report that Storage Trust Properties, L.P. consummated the purchase
of (a) 25 self-storage facilities from Balcor/Colonial Storage Income Fund -
86 and (b) two other self-storage facilities. Historical Summaries of
Combined Gross Revenue and Direct Operating Expenses for the three months
ended March 31, 1996 (Unaudited) and for the year ended December 31, 1995
(Audited) were filed with the 8-K for both groups of properties. In
addition, an unaudited Pro Forma Combined Balance Sheet as of March 31, 1996
and unaudited Pro Forma Combined Statements of Operations for the three
months ended March 31, 1996 and for the year ended December 31, 1995 were
presented.
<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 TRUST REALTY
August 8, 1996 /S/ Michael G. Burnam
(Date) Michael G. Burnam
Chief Executive Officer
August 8, 1996 /S/ Stephen M. Dulle
(Date) Stephen M. Dulle
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SECOND QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2379
<SECURITIES> 0
<RECEIVABLES> 417
<ALLOWANCES> 0
<INVENTORY> 0
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<PP&E> 276743
<DEPRECIATION> (6762)
<TOTAL-ASSETS> 274326
<CURRENT-LIABILITIES> 10242
<BONDS> 114242
0
0
<COMMON> 87
<OTHER-SE> 137487
<TOTAL-LIABILITY-AND-EQUITY> 274326
<SALES> 17726
<TOTAL-REVENUES> 18160
<CGS> 0
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<EPS-PRIMARY> .67
<EPS-DILUTED> .67
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