SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended 06/30/96
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________ to ___________
Commission file number: 1-13820
Sovran Self Storage, Inc.
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
Maryland 16-1194043
Sovran Self Storage, Inc.
5166 Main Street
Williamsville, NY 14221
(716) 633-1850
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 ____
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Title Outstanding
Common Shares, $.01 Par Value 7,544,171
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
<TABLE>
<CAPTION>
SOVRAN SELF STORAGE, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<S> <C> <C>
Sovran Self Sovran Self
Storage, Inc. at Storage, Inc. at
June 30, 1996 December 31, 1995
(Unaudited) (Audited)
Assets
Investment in storage facilities:
Land $ 43,503 $ 36,640
Building and equipment 147,913 122,821
----------- ----------
191,416 159,461
Less: accumulated depreciation (3,284) (1,497)
----------- ----------
Investment in storage facilities, net 188,132 157,964
Cash and cash equivalents 2,369 732
Accounts receivable 317 297
Prepaid expenses and other assets 1,595 1,444
----------- ----------
Total assets $ 192,413 $ 160,437
=========== ==========
Liabilities
Line of credit $ 36,809 $ 5,000
Accounts payable and accrued
liabilities 1,649 908
Deferred revenue 1,256 980
Accrued dividends 3,810 3,809
------------ ----------
Total liabilities 43,524 10,697
Shareholders' Equity
Common stock $.01 par value,
100,000 shares authorized, 7,544
shares issued and outstanding 75 75
Additional paid-in capital 150,733 150,727
Dividends in excess of net income (1,919) (1,062)
------------ -----------
Total shareholders' equity 148,889 149,740
------------ -----------
Liabilities and shareholders' equity $ 192,413 $ 160,437
============ ===========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
SOVRAN SELF STORAGE, INC. (THE COMPANY) AND
SOVRAN CAPITAL, INC. AND SOVRAN PARTNERSHIPS (THE
PREDECESSORS TO THE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS OF THE COMPANY AND
COMBINED STATEMENT OF OPERATIONS OF THE PREDECESSORS
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C>
Company Predecessors
--------------------------------------- ---------------
Sovran Capital,
Sovran Self Sovran Self Inc. and Sovran
Storage, Inc. Storage, Inc. Partnerships
April 1, 1996 June 26, 1995 April 1, 1995
to to to
June 30, 1996 June 30, 1995 June 25, 1995
(Unaudited) (Audited) (Audited)
Revenues:
Rental income $ 7,814 $ 347 $ 4,557
Interest and other income 146 5 159
---------- ----------- -----------
Total revenues 7,960 352 4,716
Expenses:
Property operations & maintenance 1,500 83 1,013
Real estate taxes 566 23 359
General and administrative 608 29 1,007
Interest 611 6 1,640
Depreciation and amortization 1,065 47 801
---------- ----------- ------------
Total expenses 4,350 188 4,820
---------- ----------- ------------
Net income $ 3,610 $ 164 $ (104)
========== =========== ============
Earnings per share $ 0.48 $ 0.02
========== ===========
Common shares used in earnings per
share calculation 7,544,171 6,840,921
Dividends declared per share $ 0.505 $ 0.00
=========== ============
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
SOVRAN SELF STORAGE, INC. (THE COMPANY) AND
SOVRAN CAPITAL, INC. AND SOVRAN PARTNERSHIPS (THE
PREDECESSORS TO THE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS OF THE COMPANY AND
COMBINED STATEMENT OF OPERATIONS OF THE PREDECESSORS
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C>
Company Predecessors
---------------------------------------- ---------------
Sovran Capital,
Sovran Self Sovran Self Inc. and Sovran
Storage, Inc. Storage, Inc. Partnerships
January 1, 1996 June 26, 1995 January 1, 1995
to to to
June 30, 1996 June 30, 1995 June 25, 1995
(Unaudited) (Audited) (Audited)
Revenues:
Rental income $ 14,671 $ 347 $ 9,260
Interest and other income 233 5 272
---------- ----------- -----------
Total revenues 14,904 352 9,532
Expenses:
Property operations & maintenance 3,014 83 2,061
Real estate taxes 1,079 23 708
General and administrative 1,115 29 1,574
Interest 889 6 3,268
Depreciation and amortization 2,045 47 1,610
---------- ----------- -----------
Total expenses 8,142 188 9,221
---------- ----------- -----------
Net income $ 6,762 $ 164 $ 311
=========== =========== ===========
Earnings per share $ 0.90 $ 0.02
=========== ===========
Common shares used in earnings per
share calculation 7,543,993 6,840,921
Dividends declared per share $ 1.01 $ 0.00
=========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
SOVRAN SELF STORAGE, INC. (THE COMPANY) AND
SOVRAN CAPITAL, INC. AND SOVRAN PARTNERSHIPS (THE
PREDECESSORS TO THE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS OF THE COMPANY AND
COMBINED STATEMENT OF CASH FLOWS OF THE PREDECESSORS
(In Thousands)
<S> <C> <C> <C>
Company Predecessors
Sovran Capital,
Sovran Self Sovran Self Inc. and Sovran
Storage, Inc. Storage, Inc. Partnerships
January 1, 1996 June 26, 1995 January 1, 1995
to to to
June 30, 1996 June 30, 1995 June 25, 1995
(Unaudited) (Audited) (Audited)
Operating Activities
Net income $ 6,762 $ 164 $ 311
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,045 47 1,610
Changes in assets and liabilities:
Accounts receivable (20) 6 (46)
Prepaid expenses and other assets (400) 289 (849)
Accounts payable and other liabilities 742 (51) 891
Deferred revenue 276 13 86
-------------- -------------- -------------
Net cash provided by operating activities 9,405 468 2,003
-------------- -------------- -------------
Investing Activities
Additions to storage facilities (31,955) (136,688) (3,478)
Additions to other assets (3) (797) 0
Restricted cash 0 0 138
-------------- -------------- -------------
Net cash used in investing activities (31,958) (137,485) (3,340)
-------------- -------------- -------------
Financing Activities
Net proceeds from sale of common stock 0 133,876 0
Proceeds from line of credit draw down 31,809 5,000 0
Dividends paid (7,619) 0 0
Proceeds from issuance of mortgages 0 0 2,821
Mortgage principal payments 0 0 (1,500)
Capital Contributions 0 0 965
Cash Contributions 0 0 (1,779)
-------------- -------------- -------------
Net cash provided by financing activities 24,190 138,876 507
-------------- -------------- -------------
Net increase (decrease) in cash 1,637 1,859 (830)
Cash at beginning of period 732 0 1,045
-------------- -------------- -------------
Cash at end of period $ 2,369 $ 1,859 $ 215
============== ============== =============
Supplemental cash flow information
Cash paid for interest $ 889 $ 6 $ 3,268
</TABLE>
See notes to financial statements.
<PAGE>
Notes to Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The accompanying unaudited financial statements of Sovran Self Storage,
Inc. (the Company) have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three- and six-month periods ended June 30, 1996 are not necessarily indicative
of the results that may be expected for the year ended December 31, 1996.
2. Organization
Sovran Self Storage, Inc. (the Company), a self-administered and
self-managed real estate investment trust (a REIT), was formed on April 19, 1995
to own and operate self-storage facilities throughout the United States. On June
26, 1995, the Company commenced operations effective with the completion of its
initial public offering of 5,890,000 shares (the Offering). The Offering price
per share was $23.00, resulting in net proceeds to the Company, after
underwriting discount and other expenses, of $124.3 million. On July 25, 1995,
the underwriters exercised their over-allotment option granted in connection
with the Company's initial public offering and purchased 750,000 shares of the
Company's common stock at $23.00 per share, resulting in net proceeds to the
Company of approximately $16 million. Additionally, the Company received $10.1
million in proceeds from a private placement of 422,171 shares of its common
stock.
Contemporaneously with the closing of the Offering, Sovran Self
Storage, Inc. acquired, in a transaction accounted for as a purchase, 62
self-storage facilities (the Original Properties) which had been owned and
managed by Sovran Capital, Inc. and the Sovran Partnerships (Predecessors to the
Company). Purchase accounting was applied to the acquisition of the Original
Properties to the extent cash was paid to purchase 100% of the limited
partnership interests in the Sovran Partnerships, prepay outstanding mortgages
at the time of acquisition and for related transaction costs. Additionally, the
Company acquired on that date 12 self-storage properties (the Acquisition
Properties) from unaffiliated third parties. The Company has since purchased a
total of 26 self-storage properties from unaffiliated third parties, increasing
the total number of self-storage properties owned at June 30, 1996 to 100
properties.
3. Commitments and Contingencies
The Company's current practice is to conduct environmental
investigations in connection with property acquisitions. At this time, the
Company is not aware of any environmental contamination of any of its facilities
which individually or in the aggregate would be material to the Company's
overall business, financial condition, or results of operations.
As of June 30, 1996, the Company had entered into contracts for the
purchase of 7 self-storage facilities. All of these facilities are scheduled to
be acquired in July and August, 1996 at a total cost of $19.5 million.
<PAGE>
4. Pro Forma Financial Information
The following unaudited pro forma Condensed Statement of Operations is
presented as if the consummation of the Offering, the purchase of the 12
Acquisition Properties, and the subsequent purchase of 26 additional storage
facilities had occurred at the beginning of the periods presented. Such
unaudited pro forma information is based upon the historical combined statements
of operations of the Company and the Predecessors, and the application of the
proceeds of the Offering. It should be read in conjunction with the financial
statements of the Company and the Predecessors and notes thereto included
elsewhere herein and in the Prospectus dated June 20, 1995, relating to its
initial public offering of shares. In management's opinion, all adjustments
necessary to reflect the effects of these transactions have been made. This
unaudited pro forma statement does not purport to represent what the actual
results of operations of the Company would have been assuming such transactions
had been completed as set forth above nor does it purport to represent the
results of operations for future periods.
(in thousands, except per share data)
<TABLE>
<S> <C> <C>
Six Months Ended June 30,
1996 1995
Revenues:
Rental income $ 16,120 $ 15,088
Other income 239 161
-------------- -------------
Total revenues 16,359 15,249
Expenses:
Property operations & maintenance 3,310 3,293
Real estate taxes 1,197 1,130
General and administrative 1,115 1,115
Interest 889 889
Depreciation and amortization 2,045 2,045
-------------- -------------
Total Expenses 8,556 8,472
-------------- -------------
Net income $ 7,803 $ 6,777
-------------- -------------
Earnings per share $ 1.03 $ 0.90
-------------- -------------
Common shares used in earnings
per share calculation 7,544,171 7,544,171
</TABLE>
5. Legal Proceedings
The Company is a party to proceedings arising in the ordinary course of
operation of self-storage facilities. However, the Company does not believe that
these matters, individually or in the aggregate, will have a material adverse
effect on the Company.
A former business associate of Messrs. Attea, Myszka, Rogers and Lannon
filed a lawsuit against the Company on June 13, 1995 in the United States
District Court for the Northern District of Ohio, alleging breach of fiduciary
duty, breach of contract, fraud and violation of trade name rights in connection
with the Formation Transactions and the Offering. The lawsuit seeks money
damages as well as declaratory and injunctive relief and an accounting. Messrs.
Attea, Myszka, Rogers and Lannon have agreed to indemnify the Company for any
loss arising from the lawsuit. The Company has answered denying the material
allegations of the complaint and interposing nine affirmative defenses, and the
parties are currently involved in discovery. The Company intends to vigorously
defend the lawsuit, and does not believe it will have a material adverse effect
upon the Company.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis of the consolidated financial
condition and results of operations should be read in conjunction with the
financial statements and notes thereto included elsewhere in this report.
The Company operates as a Real Estate Investment Trust ("REIT") and
owns and operates a portfolio of 100 self-storage facilities, providing storage
space for business and personal use to some 40,000 customers in 15 states. The
Company's investment objective is to increase cash flow and enhance shareholder
value by aggressively managing its portfolio, to expand and enhance the
facilities in that portfolio and to selectively acquire new properties in
geographic areas that will either complement or efficiently grow the portfolio.
Liquidity and Capital Resources
Revolving Credit Facility
In June, 1995, the Company entered into an agreement with a financial
institution to establish a revolving credit facility for up to $60 million,
secured by real estate. At June 30, 1996, the Company had identified and pledged
properties sufficient to provide $45 million of such borrowings; at the
Company's option, and upon pledging additional properties, the line can be
increased an additional $15 million. Interest on outstanding balances is payable
monthly at 260 basis points above LIBOR. The commitment fee was $281,250, and
the term of the agreement is for two years. The Company intends to use funds
available from this credit facility to finance future acquisition and
development plans described below. At June 30, 1996, the Company had remaining
borrowing capacity of $8 million on the line.
Umbrella Partnership REIT
The Company was formed as an Umbrella Partnership Real Estate Trust
("UPREIT") and, as such, has the ability to issue operating partnership ("OP")
units in exchange for properties sold by independent owners. By utilizing such
OP units as currency in facility acquisitions, the Company may partially defer
the seller's income-tax liability and obtain more favorable pricing or terms.
As of June 30, 1996, no OP units have been issued.
Acquisition of Properties
The Company's external growth strategy is to increase the number of
facilities it owns by acquiring suitable facilities in markets in which it
already has an operating presence or to expand in new markets by acquiring
several facilities at once in those new markets. In the three months ended June
30, 1996, the Company acquired a property in the Pittsburgh, PA market, and
entered into a contract to acquire a second facility in that city. The Company
also increased its existing presence in Syracuse, NY; Montgomery, Alabama;
Lakeland, West Palm Beach, and Ft. Myers, FL. Total acquisitions in the three
months ended June 30, 1996 added 359,000 square feet of space and 3,600 rental
units to the Company's portfolio.
Future Acquisition and Development Plans
The Company intends to continue its external growth strategy by
increasing the number of facilities it owns in Florida, North Carolina, and
Pennsylvania. It is also negotiating contracts to enter new markets in Virginia
and Ohio.
The Company also intends to improve certain of its existing facilities
by building additional storage buildings on presently vacant land and by
installing climate control and enhanced security systems at selected sites.
Liquidity
At June 30, 1996, the Company's debt to equity ratio was 25%, providing
considerable flexibility and room for growth. Continued acquisition of existing
properties represents the Company's principal liquidity requirement. As most of
the Company's operating cash flow is expected to be used to pay dividends, see
REIT Qualification and Distribution Requirements, the funds required to acquire
these additional properties will be provided by borrowings pursuant to the
revolving line of credit or other debt instruments and the issuance of OP units.
The Company intends to incur additional borrowings for such purposes in a manner
consistent with its policy of limiting the Company's indebtedness at the time of
incurrence to not more than 50% of market capitalization.
REIT Qualification and Distribution Requirements
As a REIT, the Company is not required to pay federal income tax on
income that it distributes to its shareholders, provided that the amount
distributed is equal to at least 95% of taxable income. These distributions must
be made in the year to which they relate or in the following year if declared
before the Company files its federal income-tax return and if it is paid before
the first regular dividend of the following year.
As a REIT, the Company must derive at least 95% of its total gross
income from income related to real property, interest and dividends. In the
three months ended June 30, 1996, the Company's percentage of revenue from such
sources exceeded 98%, thereby passing the 95% test, and no special measures are
expected to be required to enable the Company to maintain its REIT designation.
Results of Operations
The following discussion is based on the consolidated financial
statements of the Company as of June 30, 1996 and the five day period ended June
30,1995 and the combined statements of Sovran Capital, Inc. and the Sovran
Partnerships (the Predecessors to the Company) as of June 25, 1995.
The combined financial statements of Sovran Capital, Inc. and the
Sovran Partnerships combine the results of operations of the partnerships that
previously owned the properties and the management operations of Sovran Capital,
Inc., all of which was contributed to the Company in the formation transactions.
Sovran Capital, Inc. and the Sovran Partnerships are considered the predecessor
entity to the Company, and the combined financial statements are presented for
comparative purposes.
For the period April 1, 1996 through June 30, 1996
Income during the period was derived from 61 properties operated by
Sovran Capital, Inc. in 1994 and the first quarter of 1995, 1 facility purchased
by Sovran Capital, Inc. in April, 1995, 12 properties acquired concurrently with
the initial public offering ("IPO") and 26 properties purchased by the Company
since the IPO.
The Company reported revenues of $7,960,000 during the period and
incurred $2,066,000 in operating expenses, resulting in net operating income of
$5,894,000. The gross operating margin of 74% is one of the highest in the
industry and reflects a corporate-wide effort to operate the business
efficiently. General and administrative expenses of $608,000, interest expense
of $611,000 and depreciation and amortization expenses of $1,065,000 were
incurred during the period, resulting in a net income of $3,610,000.
Three months ended June 30, 1996, compared to Three months ended June 30, 1995
The following discussion compares the activities of the Company for the
three months ended June 30, 1996 with the activities of Sovran Capital, Inc. and
the Sovran Partnerships for the period ended June 25, 1995, and the Company for
the five day period ended June 30, 1995.
Total revenues increased from $5,068,000 for the three months ended
June 30, 1995 to $7,960,000 for the three months ended June 30, 1996, an
increase of $2,892,000, or 57%. Of this, $1,997,000 resulted from the
acquisition of 39 properties during the period from April, 1995 through June,
1996. An additional $287,000 was realized by imposing an average 4% rental-rate
increase at the 61 properties owned by the Company at March 31, 1995. Occupancy
increased from 87% to 90.3%, primarily in the Company's Northeastern and Ohio
markets; overall, same-store revenues grew 5.87% for the three month period
ended June 30, 1996 as compared to the same period in 1995.
Property operating and real estate tax expense increased $588,000, or
40%, during the period. $690,000 was a result of absorbing additional expenses
from operating the newly acquired properties. The Company realized a net
decrease of $102,000 in the operations of its sites operated more than one year,
primarily a result of payroll efficiencies and successful property tax protests.
General and administrative expenses decreased $428,000 principally as a
result of elimination of partnership management and administrative costs.
Interest expense decreased a net $1,035,000, because on June 25, 1995,
all outstanding debt of Sovran Capital, Inc. and the Sovran Partnerships was
paid from the proceeds of the public offering. A sum of $31,809,000 was borrowed
pursuant to the Company's line of credit during the first six months of 1996,
and the $5,000,000 owed at December 31, 1995 on that same line of credit is
still outstanding. These borrowings resulted in an interest expense of $611,000
during the quarter ended June 30, 1996.
Earnings before interest, depreciation, and amortization increased from
$2,554,000 to $5,286,000, an increase of $2,732,000, or 107%.
Six months ended June 30, 1996, compared to Six months ended June 30, 1995
The following discussion compares the activities of the Company for the
six months ended June 30, 1996 with the activities of Sovran Capital, Inc. and
the Sovran Partnerships for the period ended June 25, 1995, and the Company for
the five day period ended June 30, 1995.
Total revenues increased from $9,884,000 for the six months ended June
30, 1995 to $14,904,000 for the six months ended June 30, 1996, an increase of
$5,020,000, or 51%. Of this, $4,544,000 resulted from the acquisition of 40
properties during the period from January, 1995 through June, 1996. An
additional $476,000 was realized by imposing an average 2.3% rental-rate
increase at the 60 properties owned by the Company for the entire year 1995.
Occupancy increased from 86.6% to 90.3%, and same-store revenues grew 4.98% for
the six month period ended June 30, 1996 as compared to the same period in 1995.
Property operating and real estate tax expense increased $1,218,000, or
42%, during the period. $1,261,000 was a result of absorbing additional expenses
from operating the newly acquired properties; a credit of $43,000 is
attributable to decreased costs in the operation of the Company's sites operated
for more than one year, and the result of successful property tax protests.
General and administrative expenses decreased $488,000 principally as a
result of elimination of partnership syndication management and administration
costs.
Interest expense decreased a net of $2,385,000, because on June 25,
1995, all outstanding debt of Sovran Capital, Inc. and the Sovran Partnerships
was paid from the proceeds of the public offering. A sum of $31,809,000 was
borrowed pursuant to the Company's line of credit during the first six months of
1996, and the $5,000,000 owed at December 31, 1995 on that same line of credit
is still outstanding. These borrowings resulted in an interest expense of
$889,000 during the six months ended June 30, 1996.
Earnings before interest, depreciation, and amortization increased from
$5,406,000 to $9,696,000, an increase of $4,290,000, or 79%.
Pro Forma Six Months Ended June 30, 1996 Compared to Pro Forma Six Months Ended
June 30, 1995
The Company believes that pro forma results of operations are important
to provide an understanding of results of operations in its first year of
operation. The pro forma information includes the results of the 40 properties
acquired in 1995 and 1996 as if they had been acquired on January 1, 1995.
Revenues for the six months ended June 30, 1996 were $16,359,000
compared to revenues of $15,249,000 for the same period in 1995, an increase of
7.3%. This improvement is primarily due to an increase in overall occupancy from
87% to 90.3%, and rental rate increases ranging from 2% to 8% at the properties.
Property operating costs and property tax expense increased by less
than 1% over the prior year period. The Company believes the efficiencies it
obtains by "clustering" its properties in market areas, its attention to cost
saving measures and its persistence in protesting property tax increases has
enabled it to effectively contain its costs.
Operating income increased from $10,826,000 to $11,852,000, an
improvement of 9.5% as a result of the above.
<PAGE>
Inflation
The Company does not believe that inflation has had or will have a
direct adverse effect on its operations. Substantially all of the leases at the
facilities allow for monthly rent increases, which provide the Company with the
opportunity to achieve increases in rental income as each lease matures.
Seasonality
The Company's revenues typically have been higher in the third and
fourth quarters, primarily because the Company increases its rental rates on
most of its storage units at the beginning of May and, to a lesser extent,
because self-storage facilities tend to experience greater occupancy during the
late spring, summer and early fall months due to the greater incidence of
residential moves during these periods. However, the Company believes that its
tenant mix, diverse geographical locations, rental structure and expense
structure provide adequate protection against undue fluctuations in cash flows
and net revenues during off-peak seasons. Thus, the Company does not expect
seasonality to affect materially distributions to shareholders.
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
The Company is a party to proceedings arising in the ordinary
course of operation of self-storage facilities. However, the Company does not
believe that these matters, individually or in the aggregate, will have a
material adverse effect on the Company.
A former business associate of Messrs. Attea, Myszka, Rogers and Lannon
filed a lawsuit against the Company on June 13, 1995 in the United States
District Court for the Northern District of Ohio, alleging breach of fiduciary
duty, breach of contract, fraud and violation of trade name rights in connection
with the Formation transactions and the Offering. The lawsuit seeks money
damages as well as declaratory and injunctive relief and an accounting. Messrs.
Attea, Myszka, Rogers and Lannon have agreed to indemnify the Company for any
loss arising from the lawsuit. The Company has answered denying the material
allegations of the complaint and interposing nine affirmative defenses, and the
parties are currently involved in discovery. The Company intends to vigorously
defend the lawsuit, and does not believe it will have a material adverse effect
upon the Company.
Item 4. Submission of Matters to a Vote of Security Holders
a.) The date of the annual meeting was May 8, 1996.
b.) Directors Votes Votes Votes Abstentions Broker
For Against Withheld Nonvotes
Robert J. Attea 6,237,334 0 17,186 0 1,287,651
Kenneth F. Myszka 6,237,334 0 17,186 0 1,287,651
Charles E. Lannon 6,237,334 0 17,186 0 1,287,651
John Burns 6,237,334 0 17,186 0 1,287,651
Michael A. Elia 6,237,334 0 17,186 0 1,287,651
Anthony P. Gammie 6,237,334 0 17,186 0 1,287,651
c.) Ratification of the appointment by the Board of Directors of Ernst & Young
LLP as independent accountants to audit the accounts of the Company for the
fiscal year ending December 31, 1996.
Votes For: 6,230,975
Votes Against: 5,500
Votes Withheld: 0
Abstentions: 18,045
Broker Nonvotes: 1,287,651
Item 6. Exhibits and Reports on Form 8-K
1. None.
<PAGE>
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.
Sovran Self Storage, Inc.
By: David L. Rogers
David L. Rogers
Chief Financial Officer and Secretary
Date: August 14, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000944314
<NAME> SOVRAN SELF STORAGE, INC
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1.000
<CASH> 2,369
<SECURITIES> 0
<RECEIVABLES> 317
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,281
<PP&E> 191,416
<DEPRECIATION> 3,284
<TOTAL-ASSETS> 192,413
<CURRENT-LIABILITIES> 43,524
<BONDS> 0
0
0
<COMMON> 75
<OTHER-SE> 148,814
<TOTAL-LIABILITY-AND-EQUITY> 192,413
<SALES> 0
<TOTAL-REVENUES> 14,904
<CGS> 0
<TOTAL-COSTS> 4,093
<OTHER-EXPENSES> 2,966
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,083
<INCOME-PRETAX> 8,142
<INCOME-TAX> 0
<INCOME-CONTINUING> 8,142
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,142
<EPS-PRIMARY> 0.90
<EPS-DILUTED> 0.90
</TABLE>
