SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
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:
12,909,201 common shares of Beneficial Interest, $.01 par value
as of July 31, 1996.
<PAGE>
STORAGE TRUST REALTY
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1997 AND DECEMBER 31, 1996
(amounts in thousands, except for share information)
<TABLE>
<CAPTION>
June 30, Dec. 31,
1997 1996
(unaudited)
ASSETS
<S> <C> <C>
Investment in storage facilities, net $ 353,098 $ 304,114
Cash and cash equivalents 5,683 2,317
Accounts receivable and other assets 1,772 1,550
Deferred financing costs, net of
amortization of $765 and $463 1,220 547
Investments in joint ventures 236 197
Total assets $ 362,009 $ 308,725
LIABILITIES AND EQUITY
Liabilities:
Mortgages and notes payable:
Revolving line of credit $ 13,900 $ 60,673
Senior Notes 100,000 -
Other - 2,582
Accounts payable and accrued expenses 5,423 4,964
Accrued interest payable 2,944 171
Tenant prepayments 2,921 2,195
Dividends and distributions payable 5,985 5,974
Total liabilities 131,173 76,559
Minority interest 16,131 16,470
Shareholders' equity:
Common shares, $.01 par value,
150,000,000 shares authorized,
12,909,201 and 12,874,932 shares
issued and outstanding, respectively 129 129
Additional paid-in capital 220,531 219,868
Distributions in excess of net income (5,955) (4,301)
Total shareholders' equity 214,705 215,696
Total liabilities and shareholders'
equity $ 362,009 $ 308,725
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
STORAGE TRUST REALTY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(amounts in thousands, except for share information)
(unaudited)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Revenues:
Rental income $ 14,275 $ 9,965
Management income 48 40
Equity in earnings of joint ventures 24 33
Other income 323 129
Total revenues 14,670 10,167
Expenses:
Property operations 3,022 2,321
Real estate taxes 1,377 939
General and administrative 732 584
Interest 1,983 1,663
Depreciation 1,998 1,406
Amortization 153 72
Total expenses 9,265 6,985
Net income before minority interest 5,405 3,182
Minority interest (329) (237)
Net income $ 5,076 $ 2,945
Net income per share $ 0.39 $ 0.34
Weighted-average number of shares
outstanding during the period 12,908,032 8,734,332
Dividends declared per share
during the period $ 0.435 $ 0.410
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
STORAGE TRUST REALTY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(amounts in thousands, except for share information)
(unaudited)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Revenues:
Rental income $ 27,147 $ 17,727
Management income 112 101
Equity in earnings of joint ventures 39 68
Other income 550 265
Total revenues 27,848 18,161
Expenses:
Property operations 5,738 4,088
Real estate taxes 2,427 1,655
General and administrative 1,424 1,069
Interest 3,400 2,414
Depreciation 4,325 2,565
Amortization 305 144
Total expenses 17,619 11,935
Net income before minority interest 10,229 6,226
Minority interest (653) (399)
Net income $ 9,576 $ 5,827
Net income per share $ 0.74 $ 0.67
Weighted-average number of shares
outstanding during the period 12,897,195 8,734,332
Dividends declared per share
during the period $ 0.870 $ 0.820
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
STORAGE TRUST REALTY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
Cash flows from operating activities:
Net income $ 9,576 $ 5,827
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 4,630 2,709
Equity in earnings of joint ventures (39) (68)
Distributions from joint ventures - 6
Minority interest 653 399
Changes in assets and liabilities:
Accounts receivable and other assets (222) (81)
Accounts payable, tenant prepayments
and accrued expenses 3,958 1,665
Net cash provided by operating activities 18,556 10,457
Cash flows from investing activities:
Acquisition of storage facilities (49,783) (71,808)
Other additions to storage facilities (1,592) (2,596)
Net cash used in investing activities (51,375) (74,404)
Cash flows from financing activities:
Borrowings on revolving line of credit 39,150 81,528
Payments on revolving line of credit (85,923) (2,001)
Principal payments on other mortgages
and notes payable (4,226) (7,831)
Funding of Senior Notes 100,000 -
Financing costs paid (975) (51)
Offering costs paid - (125)
Distributions to minority interests paid (743) (388)
Dividends paid (11,216) (7,162)
Stock options exercised 118 -
Net cash provided by financing activities 36,185 63,970
Net change in cash and cash equivalents 3,366 23
Cash and cash equivalents at beginning
of period 2,317 2,356
Cash and cash equivalents at end of period $ 5,683 $ 2,379
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
STORAGE TRUST REALTY
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Supplemental cash flow information:
Cash paid for interest $ 671 $ 1,709
Schedule of non-cash investing and
financing activities:
Mortgages assumed on acquired facilities $ 1,644 $ 3,260
Issuance of Units in connection with the
acquisition of storage facilities $ - $ 4,500
Issuance of Units in connection with the
earnout provisions of contracts on
previously acquired storage facilities $ 293 $ -
Reclassification of investment in
joint ventures to investment in
storage facilities $ - $ 364
Conversion of Units of the Operating
Partnership held by minority interests
to Common Shares of the Company $ 545 $ -
</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, the "Predecessor Company") in owning,
operating and managing self-storage facilities. The Company
and its subsidiaries commenced operations effective with the
completion of the Company's initial public offering ("IPO")
on November 16, 1994. As of June 30, 1997, the Company
owned 183 self-storage facilities in 18 states, and was a
partner in two joint ventures that owned two operating
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 93.74% ownership
interest therein as of June 30, 1997. The remaining
ownership interests in the Operating Partnership (the
"Units") are held by certain owners of the Predecessor
Company, including BHC, 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 1996 have been reclassified to conform
to the presentation in 1997.
<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, 1996.
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 presentations.
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.
Revenue Recognition
Rental income is recorded when due form tenants under
operating lease agreements.
<PAGE>
STORAGE TRUST REALTY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies (continued)
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 and expects to
continue operating in a manner to qualify as a REIT. Under
the applicable provisions of the Internal Revenue Code for a
REIT, the Company is allowed to reduce taxable income by all
or a portion of its distributions to 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.
Deferred Financing Costs
Fees and related expenses incurred in connection with
financing transactions are capitalized at cost and are
amortized on a straight-line basis over the life of the
related financing, which approximates the interest method.
The unamortized balance is expensed upon termination or
prepayment of the financing.
Investments in Joint Ventures
Investments in joint ventures represent investments in self-storage
facilities in which the Company does not have a
controlling interest. The Company exercises significant
influence over the operating and financial policies of the
joint ventures.
The equity method of accounting has been applied in the
accompanying consolidated financial statements with respect
to the Company's interests in joint ventures.
Net Income Per Common Share
Primary earnings per Common Share are based upon the
weighted-average number of Common Shares and the equivalent
Common Shares outstanding during the period. The assumed
exercise price of outstanding options for Common Shares and
Units of the Operating Partnership 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)
Net Income Per Common Share (continued)
In February 1997, the Financial Accounting Standards Board
issued Statement No. 128, "Earnings per Share" ("FASB 128"),
which is required to be adopted on December 31, 1997. At
that time, the Company will be required to change the method
currently used to compute earnings per Common Share and to
restate all prior periods. Under the new requirements for
calculating primary earnings per Common Share, the dilutive
effect of stock options will be excluded. The impact of
FASB 128 on the calculation of primary and fully diluted
earnings per Common Share for the three months and six
months ended June 30, 1997 and 1996 is not expected to be
material.
Minority Interest
The minority interest reflects the ownership interest of the
limited partners of the Operating Partnership and the other
shareholder of the Management Company. Amounts allocated to
these interests are reflected as an expense in the statement
of operations and increase the Company's liability.
Distributions to these limited partners and the other
shareholder reduce this liability. Minority interest of
unitholders in the Operating Partnership is calculated on
the weighted-average Common Shares and Units outstanding for
the period.
Units in the Operating Partnership held by minority
interests can be exchanged for Common Shares of the Company
on a one-for-one basis or redeemed in cash at the Company's
option. During the six months ended June 30, 1997, limited
partners exchanged 27,829 Units in the Operating Partnership
for 27,829 Common Shares in the Company.
At June 30, 1997, minority interest ownership in the
Operating Partnership was 862,684 units or 6.19%.
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>
STORAGE TRUST REALTY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Investment in Storage Facilities
The following summarizes investment in storage facilities
(amounts in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
(unaudited)
<S> <C> <C>
Land $ 70,745 $ 60,578
Buildings 275,208 237,190
Furniture, fixtures and
equipment 21,147 16,551
367,100 314,319
Accumulated depreciation (14,002) (10,205)
Investment in storage
facilities, net $353,098 $304,114
</TABLE>
4. Mortgages and Notes Payable
Mortgages and notes payable consist of the following
(column amounts in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
(unaudited)
<S> <C> <C>
Revolving line of credit:
Unsecured revolving line of
credit with an aggregate
borrowing limit of $100 million,
bearing interest at LIBOR plus
1.375% per annum (7.1875%) at
June 30, 1997 and LIBOR plus
1.625% per annum (7.267%) at
December 31, 1996, respectively,
interest only payable monthly
and a fee on the unused
portion of .25% per annum.
Expiration on January 24, 1998,
with a one-year extension at
the Company's option upon
the satisfaction of
certain conditions. $13,900 $60,673
</TABLE>
<PAGE>
STORAGE TRUST REALTY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Mortgages and Notes Payable (continued)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
(unaudited)
<S> <C> <S>
Senior Notes:
Series A, bearing interest at a
fixed rate of 7.47% per annum,
interest payable semi-annually
on July 15 and January 15,
principal payments of $14,700,000
due on January 15, 2002 and 2003,
with the remaining principal
due January 15, 2004. $ 44,000 $ -
Series B, bearing interest at a
fixed rate of 7.66% per annum,
interest payable semi-annually
on July 15 and January 15,
principal payments of $11,200,000
due on January 15, 2003, 2004,
2005 and 2006, with the remaining
principal due January 15, 2007. 56,000 -
Total $100,000 $ -
</TABLE>
In anticipation of the Senior Notes offering, the Company
entered into a hedging transaction (the sale of Treasury
securities) with the objective of reducing its exposure to
changes in interest rates. The hedge was closed upon
receiving the commitments from the institutional investors
in December 1996. The Company realized net proceeds of
$645,000 from this transaction. This hedging gain is being
amortized against interest expense over the weighted-average
term of the Senior Notes. The balance of the hedging gain,
which is included in accrued liabilities, at June 30, 1997
and December 31, 1996 was $601,000 and $645,000,
respectively.
<PAGE>
STORAGE TRUST REALTY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Mortgages and Notes Payable (continued)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
(unaudited)
<S> <C> <C>
Other:
Mortgage loan secured by one
self-storage facility, bearing
interest at 7.5%, principal
and interest of $16,000
payable monthly.
Repaid on January 17, 1997. $ - $ 1,582
Mortgage loan secured by one
self-storage facility, bearing
interest at 5.0%, monthly interest
payments due. Repaid at maturity
on January 31, 1997. - 1,000
$ - $ 2,582
</TABLE>
Scheduled Maturities:
The scheduled maturities of mortgages and notes payable
subsequent to June 30, 1997 are as follows (amounts in
thousands):
<TABLE>
<CAPTION>
Revolving
Year Ending Line of Senior
December 31, Credit Notes Total
<C> <C> <C> <C>
1997 $ - $ - $ -
1998 13,900 - 13,900
1999 - - -
2000 - - -
2001 - - -
2002 - 14,700 14,700
2003 - 25,900 25,900
2004 - 25,800 25,800
2005 - 11,200 11,200
2006 - 11,200 11,200
2007 - 11,200 11,200
Totals $ 13,900 $100,000 $113,900
</TABLE>
<PAGE>
STORAGE TRUST REALTY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Subsequent Events
On August 13, 1997, the Company declared a $.435 dividend
on each Common Share for the third quarter of 1997. The
dividend is payable October 15, 1997 to shareholders of
record on September 15, 1997.
During July and August 1997, the Company initiated a series
of transactions, through an intermediary, for the tax-free
exchange of several of the Company's facilities. On July
22, 1997, the Company transferred ownership of eight
facilities (three in Gulfport, MS; two in Knoxville, TN;
and one each in Fayetteville, NC; Wilmington, NC; and
Odessa, TX) for $11,165,000. On July 23, 1997 and July 24,
1997, the Company received ownership of two facilities (one
each in Fort Worth, TX; and Houston, TX;) from separate
third-parties for $8,480,000. The Company anticipates
obtaining ownership of another facility with a purchase
price of at least $2,685,000 by September 30, 1997 in order
to meet the income tax regulations relating to like-kind
exchanges.
<PAGE>
STORAGE TRUST REALTY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Acquisitions and Pro Forma Information
During the first six months of 1997, the Company has
acquired 26 facilities for consideration, with an aggregate
value of $62,659,000. Consideration included cash of
$50,141,000 and the exchange of eight of the Company's
facilities valued at $12,518,000.
The following presents the consolidated results of
operations of the Company for the six months ended June 30,
1997 on a pro forma basis as if (a) these acquisitions
during the first six months of 1997 had been completed on
January 1, 1997 and (b) the funding of $100 million of
Senior Notes had been completed on January 1, 1997:
<TABLE>
<S> <C>
Total revenues $29,831,000
Total expenses 19,925,000
Net income before
minority interest 9,906,000
Minority interest (631,000) N
Net income $ 9,275,000
Net income per share $ 0.72
Weighted-average number
of shares outstanding 12,897,195
</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, 1997 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, 1996.
Storage Trust Realty (the "Company") commenced operations with
the completion of its initial public offering (the "IPO") of
common shares of beneficial interest, par value $.01 per share
("Common Shares"), 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 93.74% ownership interest therein as of June 30, 1997.
The remaining ownership interest in the Operating Partnership
(the "Units") are held by certain owners of the Predecessor
Company, including BHC, and certain former owners of assets
acquired by the Operating Partnership subsequent to the IPO.
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: Three months ended June 30, 1997
compared to three months ended June 30, 1996
Rental income increased $4,310,000 (43.3%) in the second quarter
of 1997 compared to the second quarter of 1996 as a result of the
net addition of 12 facilities during the six months ended
December 31, 1996 and 18 facilities during the six months ended
June 30, 1997 ($4,120,000) and increases in the average rent per
square foot and occupancy associated with those facilities owned
for all of the three months ended June 30, 1996 and 1997
($190,000). Average annualized revenue per square foot for the
portfolio increased 2.1% to $7.21 in 1997 from $7.06 in 1996,
while occupancy for the whole portfolio was at 87% at June 30,
1996 and June 30, 1997.
Other income increased $194,000 (150.4%) primarily from increased
product sales (locks and packaging supplies) and increased
commissions from rental trucks, which are at many of the
Company's facilities.
Revenues on a same store basis increased $229,000 or 2.6%.
Revenues on a same store basis include rental income,
administrative fees, late fees, product sales (locks and
packaging supplies), commissions from rental trucks and other
income. On a same store basis, average annualized revenue per
square foot increased 2.3% to $7.23 in 1997 from $7.07 in 1996,
while occupancy decreased from 87% at June 30, 1996 to 86% at
June 30, 1997.
Property operating expenses increased $701,000 (30.2%) as a
result of acquisitions in 1996 and 1997 ($696,000) and increases
at those facilities owned for all of the three months ended June
30, 1996 and 1997. Property operating expenses increased on a
same store basis by $5,000 or 0.3%, reflecting a) additional
payroll costs at the facilities, due to higher base pay and
incentive compensation, b) additional costs for regional
managers, due to more regions, and c) higher repairs and
maintenance. These increases were partially offset by lower
insurance costs and reduced advertising expenses.
Real estate taxes increased $438,000 (46.6%) as a result of
acquisitions in 1996 and 1997. Real estate taxes on a same store
basis did not increase.
General and administrative expenses increased $148,000 (25.3%).
The addition of personnel at the Company's headquarters in 1996
and 1997, increased travel costs and higher professional fees
accounted for the majority of this increase.
<PAGE>
Results of Operations: Three months ended June 30, 1997
compared to three months ended June 30, 1996 (continued)
Interest expense increased $320,000 (19.2%) due to the increase
in borrowings from the issuance of $100,000,000 of the Senior
Notes in January and April 1997.
Depreciation increased $592,000 (42.1%) due to the increased
investment in storage facilities.
Amortization increased $81,000 (112.5%) due to amortization of
the costs of the Senior Notes.
Net income increased $2,131,000 (72.4%) and net income per share
increased $.05 (14.7%) as a result of the factors noted above.
Results of Operations: Six months ended June 30, 1997
compared to six months ended June 30, 1996
Rental income increased $9,420,000 (53.1%) in the first six
months of 1997 compared to the first six months of 1996 as a
result of the net addition of 44 facilities during the year ended
December 31, 1996 and 18 facilities during the six months ended
June 30, 1997 ($8,610,000) and increases in the average rent per
square foot and occupancy associated with those facilities owned
for all of the six months ended June 30, 1996 and 1997
($810,000). Average annualized rent per square foot for the
portfolio increased 2.2% to $7.03 in 1997 from $6.88 in 1996,
while occupancy for the whole portfolio decreased from 87% at
June 30, 1996 to 86% at June 30, 1997.
Other income increased $285,000 (107.5%) primarily from increased
product sales (locks and packaging supplies) and increased
commissions from rental trucks at many of the Company's
facilities.
Revenues on a same store basis increased $882,000 or 5.6%.
Revenues on a same store basis include rental income,
administrative fees, late fees, product sales (locks and
packaging supplies), commissions from rental trucks and other
income. On a same store basis, average annualized rent per
square foot increased 3.5% to $7.15 in 1997 from $6.90 in 1996,
while occupancy decreased from 87% at June 30, 1996 to 86% at
June 30, 1997.
Property operating expenses increased $1,650,000 (40.4%) as a
result of acquisitions in 1996 and 1997 ($1,458,000) and
increases at those facilities owned for all of the six months
ended June 30, 1996 and 1997.
<PAGE>
Results of Operations: Six months ended June 30, 1997
compared to six months ended June 30, 1996 (continued)
Property operating expenses increased on a same store basis by
$192,000 or 5.7%, reflecting a) additional payroll costs at the
facilities, due to higher base pay and incentive compensation, b)
additional costs for regional managers, due to more regions, and
c) higher maintenance and snow removal costs. These increases
were partially offset by lower insurance costs and reduced
advertising expenses.
Real estate taxes increased $772,000 (46.6%) as a result of
acquisitions in 1996 and 1997 ($715,000) and increases at those
facilities owned for all of the six months ended June 30, 1996
and 1997. Real estate taxes on a same store basis increased by
$57,000 or 4.2%, reflecting higher tax assessments and higher tax
rates on those properties.
General and administrative expenses increased $355,000 (33.2%).
The addition of personnel at the Company's headquarters in 1996
and 1997, increased travel costs and higher professional fees
accounted for the majority of this increase.
Interest expense increased $986,000 (40.8%) due to the increase
in borrowings from the issuance of $100,000,000 of the Senior
Notes in January and April 1997.
Depreciation increased $1,760,000 (68.6%) due to the increased
investment in storage facilities.
Amortization increased $161,000 (111.8%) due to amortization of
the costs of the Senior Notes.
Net income increased $3,749,000 (64.3%) and net income per share
increased $.07 (10.4%) 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>
1997 1996
<S> <C> <C>
Three Months Ended June 30,:
Net income before minority interest $ 5,405 $ 3,182
Depreciation of revenue-producing
assets 1,978 1,406
Company's share of joint ventures'
depreciation 4 9
Funds from Operations $ 7,387 $ 4,592
Weighted-average number of
Common Shares and Units 13,759,469 9,410,104
Six Months Ended June 30,:
Net income before minority interest $10,229 $ 6,226
Depreciation of revenue-producing
assets 4,285 2,565
Company's share of joint ventures'
depreciation 8 13
Funds from Operations $14,522 $ 8,804
Weighted-average number of
Common Shares and Units 13,757,607 9,308,409
</TABLE>
The Company includes Units in these amounts as Units can be
exchanged for Common Shares of the Company on a one-for-one basis
or redeemed in cash at the Company's option.
<PAGE>
Funds from Operations (continued)
FFO increased $2,795,000 (60.9%) in the second quarter of 1997
over 1996 due to the acquisition of facilities in 1997 and 1996
and the increased results from those facilities owned for all of
the three months ended June 30, 1997 and 1996. Net operating
income, defined as revenues less property operating expenses and
real estate taxes, increased on a same store basis by $224,000 or
3.7%. These increases were partially offset by increases in
general and administrative expenses and interest expense, as
previously discussed.
FFO increased $5,718,000 (64.9%) in the first six months of 1997
over 1996 due to the acquisition of facilities in 1997 and 1996
and the increased results from those facilities owned for all of
the six months ended June 30, 1997 and 1996. Net operating
income increased on a same store basis by $633,000 or 5.8%.
These increases were partially offset by increases in general and
administrative expenses and interest expense, as previously
discussed.
<PAGE>
Liquidity and Capital Resources
Mortgages and Notes Payable
The Company had outstanding borrowings of $113,900,000 at March
31, 1997. This indebtedness consists of (a) $100,000,000 of
Senior Notes and (b) $13,900,000 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 1.375% (7.1875% at June 30, 1997).
In December 1996, the Company received commitments from various
institutional investors for the private placement of $100 million
of unsecured Senior Notes. The Company funded $75 million of the
Senior Notes on January 22, 1997 and the remaining $25 million
was funded on April 15, 1997. The fixed rate debt has two
separate series - Series A Senior Notes totaling $44 million with
a final maturity of seven years, an average maturity of six years
and a fixed interest rate of 7.47% per annum (125 basis points
over comparable Treasuries at the date of pricing) and Series B
Senior Notes totaling $56 million with a final maturity of ten
years, an average maturity of eight years and a fixed interest
rate of 7.66% per annum (135 basis points over corresponding
Treasuries at the date of pricing). The proceeds of the
financing are being utilized to repay indebtedness under the
Company's revolving line of credit, to finance additional self-storage
acquisitions and for general corporate purposes.
At June 30, 1997, the Company has joint and several liability but
does not guarantee the $3,939,000 indebtedness of a joint venture
in New Orleans, Louisiana in which it has a 15% interest. In
1996, the Company acquired a 25% interest in a joint venture that
is operating a self-storage facility in Kansas City, Missouri
that was constructed during 1997. The Company has guaranteed 25%
of the joint venture's construction loan, which is for a total of
$2,054,000. The balance outstanding under this construction loan
as of June 30, 1997 was $1,603,000.
<PAGE>
Liquidity and Capital Resources (continued)
Liquidity
The expansion of existing facilities, the acquisition, conversion
and development of additional self-storage facilities and the
repayment of indebtedness, including the Senior Notes and any
amounts outstanding on the revolving line of credit, 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 revolving line of credit.
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 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
During the three months ended March 31, 1997, the Company spent
$187,000 for expansions of existing facilities and climate-controlled
conversions and $446,000 on other capital
expenditures. During the three months ended June 30, 1997, the
Company spent $131,000 for expansions of existing facilities and
climate-controlled conversions and $832,000 on other capital
expenditures. For the twelve months ending June 30, 1998, the
Company expects to spend $7,800,000 for expansions and climate-controlled
conversions at existing facilities. For the remaining
six months of 1997, the Company expects to spend $1,350,000 on
other capital expenditures. The Company believes that it can
fund any necessary capital expenditures through its operations or
from the revolving line of credit.
<PAGE>
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 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 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.
New Accounting Pronouncement
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings per Share" ("FASB 128"), which is
required to be adopted on December 31, 1997. At that time, the
Company will be required to change the method currently used to
compute earnings per Common Share and to restate all prior
periods. Under the new requirements for calculating primary
earnings per Common Share, the dilutive effect of stock options
will be excluded. The impact of FASB 128 on the calculation of
primary and fully diluted earnings per Common Share for the three
months and six months ended June 30, 1997 and 1996 is not
expected to be material.
<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 7,
1997, the following business was conducted:
A. Shareholders elected the following Trustees to
office as Class III Trustees:
<TABLE>
<CAPTION>
<S> <C>
Gordon Burnam:
Votes for 10,562,989
Votes withheld 1,086,794
Randall K. Rowe:
Votes for 10,582,910
Votes withheld 1,066,873
Fredrick W. Petri:
Votes for 10,582,910
Votes withheld 1,086,873
</TABLE>
B. Shareholders ratified the appointment of Ernst &
Young LLP as the Company's independent auditors
for the year ended December 31, 1997 as follows:
<TABLE>
<CAPTION>
<S> <C>
Votes for 11,600,843
Votes against 21,830
Votes abstained 27,110
Shareholders approved an amendment and restatement of
the Storage Trust Realty 1994 Share Incentive Plan
as follows:
Votes for 7,388,453
Votes against 2,256,605
Votes abstained 68,680
Broker Non votes 1,936,045
</TABLE>
<PAGE>
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a.) Exhibits
10. Second Amendment to the Revolving Credit
Agreement, dated June 27, 1997.
27. Financial Data Schedule.
(b.) Reports on Form 8-K
A report on Form 8-K (Items 2 and 7), dated June 16,
1997, was filed to report that Storage Trust
Properties, L.P. completed the acquisition of eight
self-storage facilities and exchange of eight self-storage
facilities during the period from April 1, 1997
and May 20, 1997. Historical Summaries of Combined
Gross Revenue and Direct Operating Expenses for the
year ended December 31, 1996 were filed with the Form
8-K for the facilities acquired. In addition, an
unaudited Pro Forma Consolidated Balance Sheet as of
March 31, 1997 and unaudited Pro Forma Consolidated
Statements of Operations for the year ended December
31, 1996 and the three months ended March 31, 1997 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
August 13, 1997 /s/ Michael G. Burnam
(Date) Michael G. Burnam
Chief Executive Officer
August 13, 1997 /s/ Stephen M. Dulle
(Date) Stephen M. Dulle
Chief Financial Officer
<PAGE>
SECOND AMENDMENT TO
REVOLVING CREDIT AGREEMENT
THIS SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT (this
"Amendment") made this 27th day of June, 1997 by and among STORAGE TRUST
PROPERTIES, L. P., a Delaware limited partnership ("Borrower"), STORAGE TRUST
REALTY, a Maryland real estate investment trust ("Guarantor"), BANKBOSTON, N.A.
(formerly known as The First National Bank of Boston), individually
("BankBoston"), BANK OF AMERICA ILLINOIS ("BOA"), DRESDNER BANK AG NEW YORK
AND GRAND CAYMAN BRANCHES, as successor to Dresdner Bank AG Chicago and Grand
Cayman Branches ("Dresdner"), THE FIRST NATIONAL BANK OF CHICAGO, as
successor to NBD Bank ("First Chicago"), SIGNET BANK ("Signet") and KEYBANK
NATIONAL ASSOCIATION (formerly known as Key Bank), as successor to Society
National Bank ("Key"; BankBoston, BOA, Dresdner, First Chicago, Signet and
Key are hereinafter referred to collectively as the "Banks"), and BANKBOSTON,
N.A. (formerly known as The First National Bank of Boston), as Agent (the
"Agent").
W I T N E S E T H:
WHEREAS, Borrower, Agent and the Banks (or their predecessors-in-interest)
entered into that certain Revolving Credit Agreement dated January 25, 1996, as
amended by that certain First Amendment to Revolving Credit Agreement and
Guaranty dated December 13, 1996 (the"First Amendment"; such Revolving Credit
Agreement, as amended by the First Amendment, is hereinafter referred to
collectively as the "Credit Agreement"); and
WHEREAS, Guarantor has executed and delivered to the Agent and the Banks
that certain Unconditional Guaranty of Payment and Performance dated January
25, 1996, as amended by the First Amendment (collectively the "Guaranty"); and
WHEREAS, Borrower has requested that Agent and the Banks modify and
amend certain terms and provisions of the Credit Agreement and the Guaranty;
NOW, THEREFORE, for and in consideration of the sum of TEN and NO/100
DOLLARS ($10.00), and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto do hereby
covenant and agree as follows:
1. Definitions. All the terms used herein which are not otherwise
defined herein shall have the meanings set forth in the Credit Agreement.
2. Modification of the Credit Agreement. Borrower, Banks and Agent do
hereby modify and amend the Credit Agreement as follows:
(a) By deleting in its entirety the definition of the terms
"Applicable Margin", "Investment Grade" and "Rating Agencies" appearing in
1.1 of the Credit Agreement, and inserting in lieu thereof the following:
<PAGE>
"Applicable Margin. On any date that the lower of the Implied
Ratings issued from time to time by any of the Rating Agencies
for the Borrower or the Guarantor is an Investment Grade Rating,
the applicable margin set forth below for LIBOR Rate Loans based
on the lower of the Implied Ratings issued by any of the Rating
Agencies for the Borrower or the Guarantor and the Debt Service
Coverage Ratio of the Borrower:
<TABLE>
<CAPTION>
Applicable Margin No Investment
Debt Service Coverage Ratio Investment Grade Rating Grade Rating
<S> <C> <C>
Less than 4.0 to 1.0 1.50% 1.625%
Equal to or greater 1.375% 1.625%
than 4.0 to 1.0, but
less than 8.0 to 1.0
Equal to or greater 1.25% 1.50%
than 8.0 to 1.0
</TABLE>
The Applicable Margin for Base Rate Loans shall be 0.00%. On any date that the
lower of the Implied Ratings for the Borrower or the Guarantor is not an
Investment Grade Rating or neither the Borrower nor the Guarantor has obtained a
rating from any of the Rating Agencies, the Applicable Margin for LIBOR Rate
Loans shall be determined as if neither the Borrower nor the Guarantor has an
Investment Grade Rating. In the event of any change in an Implied Rating of
either the Borrower or the Guarantor by any of the Rating Agencies or if either
the Borrower's or the Guarantor's Implied Rating shall cease at any time to
be an Investment Grade Rating by any of the Rating Agencies (but subject to the
provisions within the definition of the term "Investment Grade Rating") and the
effect thereof would be an increase in the Applicable Margin, such change shall
effect an increase in the Applicable Margin on the first Business Day after the
Rating Notice Date; provided, further, that if any such event shall occur which
would result in a reduction of the Applicable Margin, such event shall effect a
reduction in the Applicable Margin as to each LIBOR Rate Loan only upon the
commencement of a new Interest Period applicable to such Loan. It is the
intention of the parties that if either the Borrower or the Guarantor shall only
obtain an Investment Grade Rating from one of the Rating Agencies without
seeking an Investment Grade Rating from the other Rating Agencies, the
Borrower shall be entitled to the benefit of the rate reductions described above
(it being the intent of the parties that the Borrower shall be entitled to the
benefit of the rate reductions described above if only one of the Borrower or
the Guarantor obtains an Investment Grade Rating); provided that if one of the
Borrower or the Guarantor shall have obtained an Investment Grade Rating from
two or more of the Rating Agencies, the lowest of the ratings (or the loss of
the Investment Grade Rating from any of the Rating Agencies thereafter), shall
control; and provided further that if only one of the Borrower or the Guarantor
shall have obtained an Investment Grade Rating from one of the Rating Agencies,
the loss of the Investment Grade Rating from such Rating Agency shall control.
It is further the intention of the parties that if both the Borrower and the
Guarantor shall have obtained an Investment Grade Rating from one or more of
the Rating Agencies, the lowest of any of such ratings (or the loss of the
Investment Grade Rating from any of the Rating Agencies thereafter as to either
the Borrower or the Guarantor), shall control.
<PAGE>
In the event that the Applicable Margin is at any time to be determined based
upon the Debt Service Coverage Ratio, the Applicable Margin shall be determined
based upon the Debt Service Coverage Ratio set forth in the Compliance
Certificate (subject to further verification if required by the Agent)
which has been most recently provided to the Agent in accordance with the terms
of this Agreement. In the event that the Borrower shall fail to deliver the
Compliance Certificate to Agent as and when required by 7.4(c), it shall be
assumed for the purposes of determining the Applicable Margin that the Debt
Service Coverage Ratio is less than 4.0 to 1. In the event of any change in
such ratio that would cause the Applicable Margin to increase, such event
shall effect an increase in the Applicable Margin on the first Business Day
after the delivery of such Compliance Certificate to Agent; provided, further
that if any such event shall occur which would result in a reduction of the
Applicable Margin, such event shall effect a reduction in the Applicable
Margin as to each LIBOR Rate Loan following the delivery of such Compliance
Certificate to Agent and only upon the commencement of a new Interest Period
applicable to such Loan.
Investment Grade Rating. With respect to any Person, an Implied Rating
equal to or more favorable than BBB- with respect to a rating issued by Standard
and Poors Corporation (or in the case of a rating issued by Moody's Investor
Service, a rating of Baa3 or in the case of a rating issued by Duff & Phelps
Credit Rating Co., a rating of BBB-). If, at any time after a Person obtains an
Investment Grade Rating, (a) no Implied Rating for such Person's senior
unsecured long-term debt shall have been issued or confirmed in writing by
any of the Rating Agencies within the previous 365 days, or (b) the rating
system of any of the Rating Agencies (as opposed to the rating of a Person)
shall change, or any of the Rating Agencies shall no longer perform the
functions of a securities rating agency, then the Borrower and the Agent
shall promptly negotiate in good faith to amend the reference to the specific
ratings in this definition for the determination of the Investment Grade Rating,
and pending such amendment, the applicable rating in effect as of the date the
event described in this paragraph occurred shall continue to apply.
Rating Agencies. Standard & Poor's Corporation, Moody's Investor
Service and Duff & Phelps Credit Rating Co.";
<PAGE>
(b) By inserting the following new definition in 1.1 of the Credit
Agreement:
"Debt Service Coverage Ratio. The ratio determined at the end of any
fiscal quarter of the Funds from Operations plus interest expense of
the Borrower and its Subsidiaries for the Test Period to the Debt Service
for the Test Period, as provided in 9.2."
(c) By deleting the words "Borrower or Guarantor has an Investment Grade
Rating from either of the Rating Agencies" appearing in the seventh (7th) and
eighth (8th) lines of 2.2 of the Credit Agreement and inserting in lieu
thereof the words "Borrower or Guarantor has an Investment Grade Rating from
any of the Rating Agencies";
(d) By deleting 2.8(b)(i) of the Credit Agreement in its entirety, and
inserting in lieu thereof the following:
"(i) Investment Grade Rating. The Borrower or the Guarantor shall
have obtained an Investment Grade Rating from either or both of Standard &
Poors Corporation or Moody's Investor Service, which continues in
full force and effect as to any such rating obtained prior to the
Maturity Date (it being understood that if either the Borrower or the
Guarantor shall have obtained an Investment Grade Rating from either or
both of Standard & Poors Corporation or Moody's Investor Service and
any such Implied Rating as to the Borrower or the Guarantor ceases to
be an Investment Grade Rating by either or both of Standard & Poors
Corporation or Moody's Investor Service at the time required by 2.8(b),
then Borrower shall not be entitled to an extension of the Maturity Date
pursuant to 2.8(b)(i)."; and
(e) By deleting Paragraph 2 of Exhibit D to the Credit Agreement in its
entirety, and inserting in lieu thereof the following:
"2. Investment Grade Rating. Borrower or Guarantor has obtained
an Investment Grade Rating from either or both of Standard & Poors
Corporation and Moody's Investor Service, which continues in full force
and effect as required by 2.8(b)(i) of the Credit Agreement."; and
3. References to Credit Agreement and Guaranty. All references in the
Loan Documents to the Credit Agreement or the Guaranty shall be deemed a
reference to the Credit Agreement or the Guaranty, as applicable, as modified
and amended herein.
4. Consent of Guarantor. By execution of this Amendment, Guarantor
hereby expressly consents to the modifications and amendments relating to the
Credit Agreement as set forth herein, and Guarantor hereby acknowledges,
represents and agrees that the Guaranty remains in full force and effect and
constitutes the valid and legally binding obligation of Guarantor, enforceable
against Guarantor in accordance with its terms, and that the execution and
delivery of this Amendment does not constitute, and shall not be deemed to
constitute, a release, waiver or satisfaction of Guarantor's obligations
under the Guaranty.
<PAGE>
5. No Default. By execution hereof, the Borrower and Guarantor certify
that the Borrower and Guarantor are and will be in compliance with all
covenants under the Loan Documents after the execution and delivery of this
Amendment, and that no Default or Event of Default has occurred and is
continuing except with respect to which a waiver has been obtained
in accordance with the terms of the Credit Agreement.
6. Waiver of Claims. Borrower and Guarantor acknowledge, represent and
agree that Borrower and Guarantor have no defenses, setoffs, claims,
counterclaims or causes of action of any kind or nature whatsoever with
respect to the Loan Documents, the administration or funding of the Loans or
with respect to any acts or omissions of Agent or any of the Banks, or any
past or present officers, agents or employees of Agent or any of the Banks,
and each of Borrower and Guarantor does hereby expressly waive, release and
relinquish any and all such defenses, setoffs, claims, counterclaims and causes
of action, if any.
7. Ratification. Except as hereinabove set forth, all terms, covenants
and provisions of the Credit Agreement and the Guaranty remain unaltered and
in full force and effect, and the parties hereto do hereby expressly ratify
and confirm the Credit Agreement and the Guaranty as modified and amended
herein. Nothing in this Amendment shall be deemed or construed to constitute,
and there has not otherwise occurred, a novation, cancellation, satisfaction,
release, extinguishment or substitution of the indebtedness evidenced by the
Notes or the other obligations of Borrower and Guarantor under the Loan
Documents.
8. Counterparts. This Amendment may be executed in any number of
counterparts which shall together constitute but one and the same agreement.
9. Effectiveness of Rate Modification. Notwithstanding the terms set
forth in this Amendment in the definition of the term "Applicable Margin"
concerning the effectiveness of any rate reduction at the end of the applicable
Interest Period, any rate reduction to which the Borrower would be entitled
based on the provisions of the definition of the term "Applicable Margin" as
of the date hereof shall become effective as of the date hereof and prior to the
expiration of the existing Interest Periods.
10. Miscellaneous. This Amendment shall be construed and enforced in
accordance with the laws of the Commonwealth of Massachusetts. This Amendment
shall be binding upon and shall inure to the benefit of the parties hereto
and their respective permitted successors, successors-in-title and assigns
as provided in the Credit Agreement and the Guaranty.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereto set their hands and
affixed their seals as of the day and year first above written.
BORROWER:
STORAGE TRUST PROPERTIES, L.P., a Delaware
limited partnership, by its sole general partner
By: Storage Trust Realty, a Maryland real estate
investment trust
By:__________________________________
Name:
Title:
[SEAL]
<PAGE>
GUARANTOR:
STORAGE TRUST REALTY, a Maryland real estate
investment trust
By: _____________________________________
Name:
Title:
[SEAL]
<PAGE>
BANKBOSTON, N.A. (formerly known as The First
National Bank of Boston), individually and as Agent
By:_______________________________________
Jeffrey L. Warwick, Director
[BANK SEAL]
<PAGE>
BANK OF AMERICA ILLINOIS
By:_______________________________________
Title:
[BANK SEAL]
<PAGE>
DRESDNER BANK, AG New York and Grand Cayman
Branches
By:_______________________________________
Title:
Attest:____________________________________
Title:
[BANK SEAL]
<PAGE>
KEYBANK NATIONAL ASSOCIATION
By:_______________________________________
Title:
[BANK SEAL]
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
By:_______________________________________
Title:
[BANK SEAL]
<PAGE>
SIGNET BANK
By:_______________________________________
Title:
[BANK SEAL]
<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-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,683
<SECURITIES> 0
<RECEIVABLES> 774
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,455
<PP&E> 367,100
<DEPRECIATION> (14,002)
<TOTAL-ASSETS> 362,009
<CURRENT-LIABILITIES> 17,273
<BONDS> 113,900
0
0
<COMMON> 129
<OTHER-SE> 220,531
<TOTAL-LIABILITY-AND-EQUITY> 362,009
<SALES> 27,147
<TOTAL-REVENUES> 27,848
<CGS> 0
<TOTAL-COSTS> 8,165
<OTHER-EXPENSES> 6,054
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,400
<INCOME-PRETAX> 9,576
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,576
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,576
<EPS-PRIMARY> 0.74
<EPS-DILUTED> 0.74
</TABLE>
