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 September 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 RANGELINE STREET, COLUMBIA, MISSOURI 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 October 31, 1996.
<PAGE>
STORAGE TRUST REALTY
CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(amounts in thousands, except for share information)
<TABLE>
<CAPTION>
Sept. 30, Dec. 31,
1996 1995
(unaudited)
<S> <C> <C>
ASSETS
Investment in storage facilities, net $ 301,134 $ 190,019
Cash and cash equivalents 2,276 2,356
Accounts receivable, deferred costs and
other assets 1,658 1,920
Investments in joint ventures 55 360
Total assets $ 305,123 $ 194,655
LIABILITIES AND EQUITY
Liabilities:
Mortgages and notes payable $ 59,774 $ 39,285
Accounts payable and accrued expenses 5,452 3,351
Tenant prepayments 2,272 1,562
Dividends payable 5,278 3,581
Total liabilities 72,776 47,779
Minority interest 15,978 7,837
Shareholders equity:
Common shares, $.01 par value,
150,000,000 shares authorized,
12,874,332 and 8,734,332 shares
issued and outstanding, respectively 129 87
Additional paid-in capital 219,856 141,004
Distributions in excess of net income (3,616) (2,052)
Total shareholders' equity 216,369 139,039
Total liabilities and shareholders
equity $ 305,123 $ 194,655
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
STORAGE TRUST REALTY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(amounts in thousands, except for share information)
(unaudited)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Revenues:
Rental income $ 29,781 $ 15,642
Management income 134 113
Equity in earnings of joint ventures 86 77
Other income 462 313
Total revenues 30,463 16,145
Expenses:
Property operations 6,758 3,397
Real estate taxes 2,641 1,211
General and administrative 1,783 1,032
Interest 3,241 780
Depreciation 4,225 2,022
Amortization 216 326
Total expenses 18,864 8,768
Net income before minority interest 11,599 7,377
Minority interest (726) (333)
Net income $ 10,873 $ 7,044
Net income per share $ 1.08 $ 1.03
Weighted average number of shares
outstanding during the period 10,108,639 6,848,801
Dividends declared per share
during the period $ 1.2300 $ 1.1625
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
STORAGE TRUST REALTY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(amounts in thousands, except for share information)
(unaudited)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Revenues:
Rental income $ 12,055 $ 6,072
Management income 32 39
Equity in earnings of joint ventures 17 28
Other income 199 199
Total revenues 12,303 6,338
Expenses:
Property operations 2,670 1,318
Real estate taxes 986 489
General and administrative 715 422
Interest 827 56
Depreciation 1,660 797
Amortization 72 135
Total expenses 6,930 3,217
Net income before minority interest 5,373 3,121
Minority interest (325) (125)
Net income $ 5,048 $ 2,996
Net income per share $ 0.39 $ 0.34
Weighted average number of shares
outstanding during the period 12,827,375 8,713,952
Dividends declared per share
during the period $ 0.4100 $ 0.3875
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
STORAGE TRUST REALTY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(amounts in thousands)(unaudited)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 10,873 $ 7,044
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 4,441 2,348
Equity in earnings of joint ventures (86) (77)
Distributions from joint ventures 20 24
Minority interest 726 333
Changes in assets and liabilities:
Accounts receivable, deferred
costs and other assets 97 (98)
Accounts payable, tenant prepayments
and accrued expenses 2,811 538
Net cash provided by operating activities 18,882 10,112
Cash flows from investing activities:
Acquisition of storage facilities (98,844) (50,911)
Other additions to storage facilities (3,622) (2,638)
Net cash used in investing activities (102,466) (53,549)
Cash flows from financing activities:
Net borrowings (payments) on revolving
line of credit 24,078 (6,343)
Principal payments on mortgages and
notes payable (7,849) (51)
Loan acquisition fees (51) (646)
Minority interest distributions (824) (223)
Dividends paid (10,744) (5,677)
Offering costs paid (4,941) (3,840)
Proceeds from sale of Common Stock 83,835 57,500
Net cash provided by financing activities 83,504 40,720
Net change in cash and cash equivalents (80) (2,717)
Cash and cash equivalents at beginning
of period 2,356 3,720
Cash and cash equivalents at end of period $ 2,276 $ 1,003
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
STORAGE TRUST REALTY
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Supplemental cash flow information:
Cash paid for interest $ 3,013 $ 754
Schedule of non-cash investing and
financing activities:
Storage facilities acquired in exchange
for operating partnership units 8,243 3,652
Storage facility acquired in exchange for
two storage facilities 2,360 -
Mortgages assumed on acquired facilities 4,260 1,000
Reclassification of investment in joint
ventures to investment in storage
facilities 371 -
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Storage Trust Realty
Notes to Consolidated Financial Statements
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 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 September 30, 1996, the Company owned 163 self-storage
facilities in 18 states, and was a partner in one joint
venture which owned one self-storage facility.
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 93.75% ownership
interest therein as of September 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.
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 amounts from 1995 have been reclassified to conform
to the presentation in 1996.
<PAGE>
Storage Trust Realty
Notes to Consolidated Financial Statements
1. Organization and Basis of Presentation (continued)
Basis of Presentation (continued):
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 periods 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 joint ventures.
2. Summary of Significant Accounting Policies
Investment in Storage Facilities
Investment in storage facilities is recorded at cost.
Depreciation is computed using 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.
<PAGE>
Storage Trust Realty
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (continued)
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.
Revenue Recognition
Rental income is recorded when due form tenants under
operating lease agreements.
Federal Income Taxes
No provision has been made for Federal income taxes for the
Company in the accompanying consolidated financial
statements because the Company has operated in a manner
which it expects to enable it to qualify as a real estate
investment trust ("REIT"). Under the applicable provisions
of the Internal Revenue code, a REIT generally will not be
subject to Federal income taxes 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.
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.
<PAGE>
Storage Trust Realty
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (continued)
Deferred Loan Costs
Loan fees and related expenses are capitalized at cost and
are amortized on a straight-line basis over the life of the
loan, which approximates the interest method. The
unamortized balance is expensed upon termination or
prepayment of the loan.
Investments in Joint Ventures
Investments in joint ventures represents investments in
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 these facilities. Consideration for the purchase
price of $7,748,000 included 203,390 units in the Operating
Partnership (at a value of $22.125 per unit), a net
assumption of liabilities of $3,119,000, and cash paid of
$129,000. The Company has accounted for this transaction as
a purchase under APB 16 and has consolidated the properties
as of April 1, 1996.
In August 1996, the Company exchanged its interest in one
joint venture for an interest in a facility that was
subsequently acquired by the Company.
Net Income Per Common Share
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.
<PAGE>
Storage Trust Realty
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (continued)
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
September 30, 1996, minority interest ownership was 858,275
units or 6.25%.
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.
3. Investment in Storage Facilities
The following summarizes investment in storage facilities
(amounts in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
(unaudited)
<S> <C> <C>
Land $ 59,700 $ 34,275
Buildings 233,740 151,966
Furniture, fixtures and
equipment 16,022 7,975
309,462 194,216
Accumulated depreciation (8,328) (4,197)
Investment in storage
facilities, net $301,134 $190,019
</TABLE>
<PAGE>
Storage Trust Realty
Notes to Consolidated Financial Statements
4. Mortgages and Notes Payable
Mortgages and notes payable consist of the following
(amounts in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
(unaudited)
<S> <C> <C>
Unsecured revolving line of
credit with an aggregate
borrowing limit of $100 million,
bearing interest at LIBOR plus
1.75% per annum (7.140% 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 and a fees on the
unused portion of .25% per annum. $57,173 $33,095
Mortgage loan secured by one
self-storage facility, bearing
interest at 7.5%, principal and
interest of $16 payable monthly,
and maturing on April 3, 1999. 1,601 1,656
Mortgage loan secured by one
self-storage facility, bearing
interest at 5.0%, monthly interest
payments due until maturity on
January 31, 1997. 1,000 -
Mortgage loan secured by 1
self-storage facility, bearing
interest at 7.5%, matured on
January 10, 1996. - 850
</TABLE>
<PAGE>
Storage Trust Realty
Notes to Consolidated Financial Statements
4. Mortgages and Notes Payable (continued)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
(unaudited)
<C> <C> <C>
Mortgage loan secured by 1
self-storage facility, bearing
interest at 8%, matured on
January 16, 1996. $ - $ 1,000
Mortgage loan secured by 1
self-storage facility, bearing
interest at 7.75%, matured on
April 1, 1996. - 2,684
$59,774 $39,285
</TABLE>
Scheduled Maturities
The scheduled maturities of mortgages and notes payable
subsequent to September 30, 1996 are as follows (amounts in
thousands):
<TABLE>
<CAPTION>
<C> <C>
1996 $ 19
1997 1,079
1998 57,259
1999 1,417
$59,774
</TABLE>
<PAGE>
Storage Trust Realty
Notes to Consolidated Financial Statements
5. Stock Offering
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 $78,894,000 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.
6. Subsequent Event
On November 14, 1996, the Company declared a $.435 dividend
on each Common Share for the fourth quarter of 1996. The
dividend is payable January 15, 1997 to shareholders of
record on December 16, 1996.
<PAGE>
Storage Trust Realty
Notes to Consolidated Financial Statements
7. Acquisitions and Pro Forma Information
During the first nine months of 1996, the Company has
acquired 44 facilities for consideration, with an aggregate
value of $112,737,000.
The following presents the results of operations of the
Company for the nine months ended September 30, 1996 on a
pro forma basis as if (a) these acquisitions from January 1,
1996 through September 30, 1996 had been completed as of
January 1, 1996 and (b) the public offering of Common Shares
discussed above occurred as of January 1, 1996.
<TABLE>
<CAPTION>
<S> <C>
Revenues $37,498,000
Net income $14,141,000
Net income per share $ 1.10
</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").
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 93.75% ownership interest therein as of September 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 financial
statements of Storage Trust Realty.
<PAGE>
Results of Operations: Nine months ended September 30, 1996
compared to nine months ended September 30, 1995
Rental income increased $14,139,000 (90.4%)in the first nine
months of 1996 compared to the first nine months of 1995 as a
result of the addition of 91 facilities between January 1, 1995
and September 30, 1996 ($13,063,000) and an increase in average
rent per square foot and occupancy associated with those
facilities owned for all of the nine months ended September 30,
1995 and 1996 ($1,076,000). Average annualized rent per square
foot increased 6.4% to $6.97 in 1996 from $6.55 in 1995 while
average occupancy increased to 87% as of September 30, 1996 from
83% as of September 30, 1995.
Property operating expenses increased $3,361,000 (98.9%) as a
result of acquisitions in 1995 and 1996 ($2,940,000) and
increases at those facilities owned for all of the nine months
ended September 30, 1995 and 1996 ($421,000), reflecting
additional payroll costs necessary to retain facility managers
and increased advertising and marketing efforts.
Real estate taxes increased $1,430,000 (118.1%) as a result of
acquisitions in 1995 and 1996 ($1,310,000) and increases at those
facilities owned for all of the nine months ended September 30,
1995 and 1996 ($120,000), reflecting higher tax assessments on
those properties.
General and administrative expenses increased $751,000 (72.8%)
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 $2,461,000 (315.5%) due to the
increase in borrowings under the Company's line of credit.
Depreciation increased $2,203,000 (109.0%) due to the increased
investment in storage facilities.
Net income increased $3,829,000 (54.4%) and net income per share
increased $.05 (4.9%) as a result of the factors noted above.
<PAGE>
Results of Operations: Three months ended September 30, 1996
compared to three months ended September 30, 1995
Rental income increased $5,983,000 (98.5%)in the third quarter of
1996 compared to the third quarter of 1995 as a result of the
addition of 70 facilities between July 1, 1995 and September 30,
1996 ($5,246,000) and an increase in average rent per square foot
and occupancy associated with those facilities owned for all of
the three months ended September 30, 1995 and 1996 ($737,000).
Average annualized rent per square foot increased 7.3% to $7.10
in 1996 from $6.62 in 1995.
Property operating expenses increased $1,352,000 (102.6%) as a
result of acquisitions in late 1995 and 1996 ($1,158,000) and
increases at those facilities owned for all of the three months
ended September 30, 1995 and 1996 ($194,000), reflecting
additional payroll costs necessary to retain facility managers
and increased advertising and marketing efforts.
Real estate taxes increased $497,000 (101.6%) as a result of
acquisitions in late 1995 and 1996 ($433,000) and increases at
those facilities owned for all of the three months ended
September 30, 1995 and 1996 ($64,000), reflecting higher tax
assessments on those properties.
General and administrative expenses increased $293,000 (69.4%)
due to the acquisition of new facilities. The addition of
personnel at the Company's headquarters to handle this growth
accounted for the majority of this increase.
Interest expense increased $771,000 (1376.8%) due to the increase
in mortgages and borrowings under the Company's line of credit.
Depreciation increased $863,000 (108.3%) due to the increased
investment in storage facilities.
Net income increased $2,052,000 (68.5%) and net income per share
increased $.05 (14.7%) as a result of the factors noted above.
<PAGE>
Funds from Operations
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.
Funds from Operations is determined as follows (amounts in
thousands):
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Nine Months Ended:
Net income before minority interest $11,599 $ 7,377
Depreciation 4,225 2,022
Company s share of joint ventures
depreciation 17 28
Funds from Operations $15,841 $ 9,427
Three Months Ended:
Net income before minority interest $ 5,373 $ 3,121
Depreciation 1,660 797
Company s share of joint ventures
depreciation 4 4
Funds from Operations $ 7,037 $ 3,922
</TABLE>
<PAGE>
Liquidity and Capital Resources
The Company had outstanding borrowings of $59,774,000 at
September 30, 1996. This indebtedness consists of (a) $1,601,000
of mortgage indebtedness relating to the facility located in
Hilton Head, South Carolina, (b) $1,000,000 of mortgage
indebtedness relating to the facility located in Denver, Colorado
and (c) $57,173,000 on the Company s revolving line of credit.
The revolving line of credit may be used to fund the acquisition,
development or conversion of additional facilities. The
revolving line of credit 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
1.75% (7.14% at September 30, 1996).
The Company used the $78,894,000 of net proceeds of the offering
of 4,140,000 Common Shares (including 540,000 Common Shares in
connection with the over-allotment option) in July 1996 to repay
an acquisition loan and a portion of the amount outstanding under
the revolving line of credit.
At September 30, 1996, the Company is also obligated with respect
to $3,992,000 of indebtedness, which is guaranteed by the
Company, incurred in connection with the one facility in which
the Company has a joint venture interest. The joint venture
indebtedness, which is secured by a first mortgage lien on the
joint venture facility, is a joint and several liability of each
of the joint venture participants, requires monthly principal and
interest payments, bearing interest at a fixed rate of 9.5% per
annum (through June 2001) and maturing in June 2006.
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 (a) net cash provided by operating activities, (b) any portion
of net cash flow not distributed currently and (c) borrowings
under the credit line.
<PAGE>
Liquidity and Capital Resources (continued)
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 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 $635,000 during the
remainder of 1996 on primarily nonrecurring repairs and
refurbishment of the facilities and approximately $40,000 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.
<PAGE>
Seasonality
The Company s revenues are expected to be higher during the
latter part of the year because its facilities experience greater
occupancy from May through September (due to higher levels of
residential moves during that period) and increases in rental
rates, which occur throughout during the year. 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
None
Item 5. Other Information
None
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a.) Exhibits
10. First Amendment to Storage Trust Properties, L.P.
Amended and Restated Agreement of Limited
Partnership, dated November 12, 1996.
27. Financial Data Schedule
(b.) Reports on Form 8-K
A report on Form 8-K, dated September 16, 1996, was
filed to report that Storage Trust Properties, L.P.
consummated the purchase of 12 self-storage facilities.
Historical Summaries of Combined Gross Revenue and
Direct Operating Expenses for the six months ended June
30, 1996 (Unaudited) and for the year ended December
31, 1995 (Audited) were filed with the Form 8-K for
nine of the 12 facilities acquired. In addition, an
unaudited Pro Forma Balance Sheet as of June 30, 1996
and unaudited Pro Forma Statements of Operations for
the six months ended June 30, 1996 and for the year
ended December 31, 1995 were presented.
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.
STORAGE TRUST REALTY
November 14, 1996 /S/ Michael G. Burnam
(Date) Michael G. Burnam
Chief Executive Officer
November 14, 1996 /S/ Stephen M. Dulle
(Date) Stephen M. Dulle
Chief Financial Officer
FIRST AMENDMENT TO
STORAGE TRUST PROPERTIES, L.P.
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
This Amendment, dated as of November 12, 1996, amends the Amended and
Restated Agreement of Limited Partnership, dated as of November 16, 1994 (the
"Partnership Agreement"), of Storage Trust Properties, L.P., a Delaware
limited partnership (the "Partnership"), by and among Storage Trust Realty, a
Maryland real estate investment trust, as the General Partner (the "General
Partner"), and the Persons whose names are set forth on Exhibit A to the
Partnership Agreement, as the Limited Partners (the "Limited Partners"),
together with any other Persons who become Partners in the Partnership as
provided in the Partnership Agreement.
W I T N E S E T H:
WHEREAS, the Partnership is a Delaware limited partnership existing
under the Delaware Revised Uniform Limited Partnership Act (the "Act")
pursuant to the Partnership Agreement;
WHEREAS, pursuant Section 14.1(b)(4), the General Partner has the power,
without the consent of the Limited Partners, to amend the Partnership
Agreement in order to cure any ambiguity;
WHEREAS, the General Partner has determined that Section 11.7(a) of the
Partnership Agreement contains an ambiguity regarding which Limited Partners
are bound by the Registration Rights and Lock-up Agreement and with respect to
which Units such Limited Partners are so bound; and
WHEREAS, the General Partner desires to amend the Partnership Agreement
to cure such ambiguity.
NOW, THEREFORE, pursuant the authority granted in Section 14.1(b)(4) of
the Partnership Agreement, the General Partner hereby amends the Partnership
Agreement as follows:
1. Amendment. Effective as of the date hereof, Section 11.7(a) of the
Partnership Agreement is hereby amended (i) by adding the phrase "who is a
Limited Partner as of November 16, 1994" immediately following the words "Each
Limited Partner" in the last sentence of such Section 11.7(a) and (ii) by
adding the phrase ", with respect to Units owned by such Limited Partner as of
November 16, 1994," immediately following the words "to be bound" in the last
sentence of such Section 11.7(a).
2. Continuing Effectiveness. As herein amended, the Partnership
Agreement shall remain in full force and effect and is hereby ratified and
confirmed in all respects.
<PAGE>
3. Governing Law. This Amendment shall be governed by the internal
laws of the State of Delaware.
4. Defined Terms. Capitalized terms used and not defined herein
shall have the respective meanings assigned such terms in the Partnership
Agreement.
IN WITNESS WHEREOF, the undersigned, the General Partner of the
Partnership, has executed this Amendment to the Partnership Agreement as of
the date first above written.
STORAGE TRUST REALTY
By: /s/ MICHAEL G. BURNAM
Name: Michael G. Burnam
Title: Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE THIRD
QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,276
<SECURITIES> 0
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<ALLOWANCES> 0
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<PP&E> 309,462
<DEPRECIATION> (8,328)
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<CURRENT-LIABILITIES> 13,002
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0
0
<COMMON> 129
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<TOTAL-LIABILITY-AND-EQUITY> 305,123
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