FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
Commission file number: 1-13820
SOVRAN SELF STORAGE, INC.
(Exact name of Registrant as specified in its charter)
Maryland 16-1194043
_______________________________ ___________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6467 Main Street
Buffalo, NY 14221
(Address of principal executive offices) (Zip code)
(716) 633-1850
(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 ____
As of August 10, 2000 there were outstanding 11,985,432
shares of the registrants Common Stock, $.01 par value.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SOVRAN SELF STORAGE, INC.
CONSOLIDATED BALANCE SHEETS
June 30,
2000 December 31,
(dollars in thousands, except share data) (unaudited) 1999
___________________________________________________________________________
ASSETS
Investment in storage facilities:
Land $ 113,887 $ 111,833
Building and equipment 456,903 444,640
__________ __________
570,790 556,473
Less: accumulated depreciation (39,973) (33,453)
__________ __________
Investments in storage facilities, net 530,817 523,020
Cash and cash equivalents 1,903 1,032
Accounts receivable 2,937 1,796
Prepaid expenses and other assets 3,881 3,871
__________ __________
Total Assets $ 539,538 $ 529,719
========== ==========
LIABILITIES
Line of credit $ 142,500 $ 123,000
Term note 75,000 75,000
Accounts payable and accrued liabilities 4,968 4,696
Deferred revenue 3,639 3,322
Accrued dividends 6,835 7,010
Mortgage payable 5,227 5,253
__________ __________
Total Liabilities 238,169 218,281
Minority interest 23,439 23,582
SHAREHOLDERS' EQUITY
Series A Junior Participating Cumulative
Preferred Stock, $.01 par value, 250,000
shares authorized and no shares issued
and outstanding - -
9.85% Series B Cumulative Preferred Stock,
$.01 par value, 1,700,000 shares authorized,
1,200,000 shares issued and outstanding,
$30,000 liquidation value 28,585 28,585
Common stock $.01 par value, 100,000,000
shares authorized, 11,985,432 shares
outstanding (12,299,163 at December 31, 1999) 127 127
Additional paid-in capital 282,460 281,284
Unearned restricted stock (640) (339)
Dividends in excess of net income (16,787) (13,357)
Treasury stock at cost, 751,700 shares
(376,200 shares at December 31, 1999) (15,815) (8,444)
__________ __________
Total Shareholders' Equity 277,930 287,856
__________ __________
Total Liabilities and Shareholders' Equity $ 539,538 $ 529,719
See notes to financial statements. ========== ==========
SOVRAN SELF STORAGE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
April 1, 2000 April 1, 1999
(dollars in thousands to to
except share data) June 30, 2000 June 30, 1999
_______________ _______________
REVENUES:
Rental income $ 21,927 $ 20,331
Interest and other income 362 274
_________ _________
Total revenues 22,289 20,605
EXPENSES:
Property operations and maintenance 4,595 4,035
Real estate taxes 2,000 1,719
General and administrative 1,482 1,387
Interest 4,278 3,631
Depreciation and amortization 3,526 3,238
_________ _________
Total expenses 15,881 14,010
_________ _________
Income before minority interest 6,408 6,595
Minority interest (424) (422)
_________ _________
Net Income 5,984 6,173
Series B preferred stock dividend (739) -
_________ _________
Net income available to common
shareholders $ 5,245 $ 6,173
========= =========
PER COMMON SHARE:
Earnings per common share - basic $ 0.44 $ 0.50
========= =========
Earnings per common share - diluted $ 0.44 $ 0.50
========= =========
Common shares used in basic
earnings per share calculation 12,026,709 12,420,258
Common shares used in diluted
earnings per share calculation 12,028,281 12,435,123
Dividends declared per common share $ 0.57 $ 0.56
========== ==========
See notes to financial statements.
SOVRAN SELF STORAGE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
January 1, 2000 January 1, 1999
(dollars in thousands to to
except share data) June 30, 2000 June 30, 1999
_______________ _______________
REVENUES:
Rental income $ 43,461 $ 39,573
Interest and other income 626 484
_________ _________
Total revenues 44,087 40,057
EXPENSES:
Property operations and maintenance 9,332 8,076
Real estate taxes 4,015 3,295
General and administrative 2,939 2,515
Interest 8,192 6,972
Depreciation and amortization 6,982 6,341
_________ _________
Total expenses 31,460 27,199
_________ _________
Income before minority interest 12,627 12,858
Minority interest (829) (830)
_________ _________
Net Income 11,798 12,028
Series B preferred stock dividend (1,478) -
_________ _________
Net income available to common
shareholders $ 10,320 $ 12,028
========= =========
PER COMMON SHARE:
Earnings per common share - basic $ 0.85 $ 0.97
========= =========
Earnings per common share - diluted $ 0.85 $ 0.97
========= =========
Common shares used in basic
earnings per share calculation 12,130,881 12,389,724
Common shares used in diluted
earnings per share calculation 12,131,801 12,404,522
Dividends declared per common share $ 1.14 $ 1.12
========== ==========
See notes to financial statements.
SOVRAN SELF STORAGE, INC.
STATEMENTS OF CASH FLOW
(unaudited)
January 1, 2000 January 1, 1999
to to
(dollars in thousands) June 30, 2000 June 30, 1999
_______________ _______________
OPERATING ACTIVITIES
Net income $ 11,798 $ 12,028
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 6,982 6,341
Minority interest 829 830
Restricted stock earned 47 50
Changes in assets and liabilities:
Accounts receivable (1,141) (677)
Prepaid expenses and other assets (426) 525
Accounts payable and other liabilities 234 1,440
Deferred revenue 248 223
________ ________
Net cash provided by operating activities 18,571 20,760
________ ________
INVESTING ACTIVITIES
Additions to storage facilities (14,256) (40,955)
Additions to other assets - (22)
________ ________
Net cash used in investing activities (14,256) (40,977)
________ ________
FINANCING ACTIVITIES
Net proceeds from issuance of common
stock through Dividend Reinvestment
and Stock Purchase Plan 828 2,935
Proceeds from line of credit draw down 19,500 32,500
Dividends paid-common stock (13,925) (13,898)
Dividends paid-preferred stock (1,478) -
Purchase of treasury stock (7,371) -
Minority interest distributions (972) (966)
Redemption of operating partnership units - (261)
Mortgage principal payments (26) (2)
________ ________
Net cash (used in) provided by
financing activities (3,444) 20,308
________ ________
Net increase in cash 871 91
Cash at beginning of period 1,032 2,984
________ ________
Cash at end of period $ 1,903 $ 3,075
======== ========
Supplemental cash flow information
Cash paid for interest $ 8,249 $ 6,669
SOVRAN SELF STORAGE, INC.
STATEMENTS OF CASH FLOW
Supplemental cash-flow information for the six-months ended June 30, 2000
(dollars in thousands)
__________________________________________________________________________
Fair value of net liabilities assumed on
the acquisition of storage facilities $ 84
__________________________________________________________________________
Dividends declared but unpaid were $6,835 at June 30, 2000 and $7,010 at
December 31, 1999.
See notes to financial statements.
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 six-month period
ended June 30, 2000 are not necessarily indicative of the results
that may be expected for the year ended December 31, 2000.
2. ORGANIZATION
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). Since its formation the Company
has purchased a total of 153, (Four in 2000, eighteen in 1999,
fifty in 1998, forty four in 1997, twenty-nine in 1996 and eight
in 1995) self storage properties from unaffiliated third parties,
increasing the total number of self-storage properties owned at
June 30, 2000 to 226 properties in 21 states.
All of the Company's assets are owned by, and all its
operations are conducted through, Sovran Acquisition Limited
Partnership (the Operating Partnership). Sovran Holdings, Inc., a
wholly owned subsidiary of the Company (the Subsidiary), is the
sole general partner; and the Company is a limited partner of the
Operating Partnership, and thereby controls the operations of the
Operating Partnership holding a 93.36% ownership interest therein
as of June 30, 2000. The remaining ownership interests in the
Operating Partnership are held by certain former owners of assets
acquired by the Operating Partnership subsequent to its
formation. The consolidated financial statements of the Company
include the accounts of the Company, the Partnership, and the
wholly owned Subsidiary. All intercompany transactions and
balances have been eliminated.
3. INVESTMENT IN STORAGE FACILITIES
The following summarizes activity in storage facilities
during the period ended June 30, 2000.
(dollars in thousands)
________________________________________________________________
Cost:
Beginning balance $ 556,473
Property acquisitions 9,690
Improvements and equipment additions 4,682
Dispositions (55)
________________________________________________________________
Ending balance $ 570,790
________________________________________________________________
Accumulated Depreciation:
Beginning balance $ 33,453
Additions during the period 6,543
Dispositions (23)
________________________________________________________________
Ending balance $ 39,973
________________________________________________________________
4. UNSECURED LINE OF CREDIT AND TERM NOTE
The Company has a $150 million unsecured credit facility
that matures February 2001 and provides for funds at LIBOR plus
1.25%. At June 30, 2000, the outstanding balance on the credit
facility was $142.5 million.
The Company has a $75 million unsecured term note that
matures on December 22, 2000 and bears interest at LIBOR plus
1.50%.
The Company also has an interest rate cap transaction
through April 3, 2001. Under the agreement, which is based on a
notional amount of $40 million, if the LIBOR rate exceeds 9%, the
bank pays the Company the rate in excess of 9% multiplied by $40
million for the outstanding period.
The net carrying amount of the Company's debt instruments
approximates fair value.
5. 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, 2000, the Company had entered into a contract
for the purchase of one facility with an expected cost of $1.3
million.
6. PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma Condensed Statement of
Operations is presented as if the 4 storage facilities purchased
during the six months ended June 30, 2000, had occurred at
January 1, 2000. Such unaudited pro forma information is based
upon the historical combined statements of operations of the
Company. It should be read in conjunction with the financial
statements of the Company and notes thereto included elsewhere
herein. 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)
Six Months Ended
June 30,
2000
__________________
REVENUES:
Rental income $ 43,747
Other income 640
____________
Total revenues 44,387
EXPENSES:
Property operations & maintenance 9,418
Real estate taxes 4,038
General and administrative 2,941
Interest 8,294
Depreciation and amortization 7,106
____________
Total expenses 31,797
____________
Income before minority interest 12,590
Minority interest (827)
____________
Net income 11,763
Series B preferred stock dividend (1,478)
____________
Net income available to common shareholders $ 10,285
============
Earnings per common share - basic $ .86
============
Earnings per common share - diluted $ .86
============
Common shares used in basic earnings
per share calculation 11,985,432
________________________________________________________________
7. LEGAL PROCEEDINGS
A former business associate (Plaintiff) of certain officers
and directors of the Company, including Robert J. Attea,
Kenneth F. Myszka, David L. Rogers and Charles E. Lannon,
commenced a lawsuit against the Company on June 13, 1995 in the
United States District Court for the Northern District of Ohio.
The Plaintiff subsequently amended the complaint in the lawsuit
alleging breach of fiduciary duty, breach of contract, breach of
general partnership/joint venture arrangement, breach of duty of
good faith, fraud and deceit, and other causes of action
including declaratory judgment as to the Plaintiff's continuing
interest in the Company. The Plaintiff sought money damages in
excess of $15 million, as well as punitive damages and
declaratory and injunctive relief (including the imposition of a
constructive trust on assets of the Company in which the
Plaintiff claimed to have a continuing interest) and an
accounting. The amended complaint also added Messrs. Attea,
Myszka, Rogers and Lannon as additional defendants. In April
2000, following trial, the jury rendered a verdict adverse to the
Company with respect to Plaintiff's claims for breach of
fiduciary duty, breach of contract and breach of general
partnership/joint venture arrangement and found total
compensatory damages in the amount of $6,462,068. Messrs. Attea,
Myszka, Rogers and Lannon have agreed to indemnify the Company
for costs and any loss arising from the lawsuit and their
obligation to do so is secured by an escrow arrangement covering
shares of the Company's common stock owned by them having a
current value substantially in excess of the amount of damages
found by the jury. The Company has filed a post-trial motion
for judgment as a matter of law and a motion for a new trial. In
the event that the relief sought by these motions is not granted,
the Company intends to appeal. In view of the indemnification
agreement and escrow arrangement, the Company does not believe
that the lawsuit will have a material adverse effect upon the
Company regardless of the final disposition of the lawsuit.
8. EARNINGS PER SHARE
The Company reports earnings per share in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings
Per Share." In computing earnings per share, the Company
excludes preferred stock dividends from net income to arrive at
net income available to common shareholders. The following table
sets forth the computation of basic and diluted earnings per
common share:
Six Months Six Months
Ended Ended
June 30, June 30,
(in thousands except per share data) 2000 1999
____________ ____________
Numerator:
Net income available to
common shareholders $ 10,320 $ 12,028
Denominator:
Denominator for basic earnings
per share - weighted
average shares 12,131 12,390
Effect of Diluted Securities:
Stock options 1 15
Denominator for diluted earnings
per share - adjusted
weighted average shares and
assumed conversion 12,132 12,405
Basic earnings per common share $ .85 $ .97
Diluted earnings per common share $ .85 $ .97
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
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 226 self-storage
facilities, providing storage space for business and personal use
to customers in 21 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.
When used in this discussion and elsewhere in this document,
the words "intends," "believes," "anticipates," and similar
expressions are intended to identify "forward-looking statements"
within the meaning of that term in Section 27A of the Securities
Act of 1933, and in Section 21F of Securities Exchange Act of
1934. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors, which may cause the
actual results, performance or achievements of the Company to be
materially different from those expressed or implied by such
forward-looking statements. Such factors include, but are not
limited to, the effect of competition from new self-storage
facilities, which would cause rents and occupancy rates to
decline; the Company's ability to evaluate, finance and integrate
acquired businesses into the Company's existing business and
operations; the Company's existing indebtedness may mature in an
unfavorable credit environment, preventing refinancing or forcing
refinancing of the indebtedness on terms that are not as
favorable as the existing terms; the Company's ability to
effectively compete in the industries in which it does business;
the Company's ability to successfully implement its Uncle Bob's
Flex-a-Space strategy; the Company's cash flow may be
insufficient to meet required payments of principal and interest;
and tax law changes which may change the taxability of future
income.
LIQUIDITY AND CAPITAL RESOURCES
The Company's unsecured credit facility provides
availability up to $150 million, of which $142.5 million was
drawn at June 30, 2000. The facility matures February 2001 and
bears interest at LIBOR plus 1.25%.
In addition to the credit facility, the Company has an
unsecured term note due December 2000, that bears interest at
LIBOR plus 1.50%. The credit facility and term note currently
have investment grade ratings from Standard and Poors (BBB-),
Moodys (Baa3), and Duff and Phelps (BBB-).
The Company expects to fund its maturing obligations and its
future growth through a renewal of its line of credit, issuance
of 5-10 year notes of either a secured or unsecured nature,
issuance of preferred stock, and private placement solicitation
of public pension funds.
In July 1999, the Company issued 1,200,000 shares of 9.85%
Series B Cumulative Redeemable Preferred Stock. The net proceeds
of $28.6 million were used to repay a portion of the credit
facility. The Series B Preferred Stock is currently rated by
Standard and Poors (BB+), Moodys (Ba2) and Duff and Phelps (BB+).
The Company believes that its internally generated cash
flows and borrowing capacity under the credit facility will be
sufficient to fund ongoing operations, capital improvements,
dividends, and acquisitions for the year 2000.
COMMON STOCK REPURCHASE PROGRAM
The Company continued its common stock repurchase program
authorized by the Board of Directors by acquiring 169,900 shares
for $3.4 million during the second quarter of 2000. At June 30,
2000, the total shares repurchased by the Company were 751,700 at
a total cost of $15.8 million.
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, 2000, 853,037 units have been
issued in exchange for property at the request of the sellers.
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 into new markets by acquiring several facilities at once
in those new markets. In the three months ended June 30, 2000,
the Company acquired one property, increasing its existing
presence in Florida. The acquisition added 42,000 square feet of
space and 498 rental units to the Company's portfolio.
FUTURE ACQUISITION AND DEVELOPMENT PLANS
The Company has a contract on one property in Alabama with
an expected closing in September 2000. 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.
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 six months ended June 30, 2000, 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 financial
statements of the Company as of June 30, 2000 and June 30, 1999.
FOR THE PERIOD JANUARY 1, 2000 THROUGH JUNE 30, 2000 (DOLLARS IN
THOUSANDS)
The Company reported revenues of $44,087 during the period
and incurred $13,347 in operating expenses, resulting in net
operating income of $30,740, or 70%. General and administrative
expenses of $2,939, interest expense of $8,192 and depreciation
and amortization expenses of $6,982 resulted in income of $12,627
before minority interest. Net income amounted to $11,798.
THREE MONTHS ENDED JUNE 30, 2000, COMPARED TO THREE MONTHS ENDED
JUNE 30, 1999 (DOLLARS IN THOUSANDS)
The following discussion compares the activities of the
Company for the three months ended June 30, 2000 with the
activities of the Company for the three months ended June 30,
1999.
Total revenues increased from $20,605 for the three months
ended June 30, 1999 to $22,289 for the three months ended June
30, 2000, an increase of $1,684 or 8%. Of this, $853 resulted
from the acquisition of 16 properties during the period April 1,
1999 through June 30, 2000 and $831 was realized as a result of
increased rental rates at the 210 properties owned by the Company
at April 1, 1999. Overall, same-store revenues grew 4% for the
three-month period ended June 30, 2000 as compared to the same
period in 1999.
Property operating and real estate tax expense increased
$841 or 15% during the period. $416 was a result of absorbing
additional expenses from operating the newly acquired properties,
$250 was a result of marketing expenses relating to the Company's
Uncle Bob's Flex-a-Space initiative, and $175 related to the
operations of its sites operated more than one year.
General and administrative expenses, which include losses of
$17 realized as the result of replacement of equipment, increased
$95 principally as a result of increased administrative costs
associated with managing the additional properties.
Interest expense increased $647 due to an increase in
interest rates.
Income before minority interest decreased from $6,595 to
$6,408, a decrease of $187 or less than 3%.
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, when considered in conjunction 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 as income before minority
interest and extraordinary item, computed in accordance with
GAAP, plus depreciation of real estate assets and amortization of
intangible assets exclusive of deferred financing fees, and
excluding gains (losses) from debt restructuring and sales of
property. FFO should not be considered a substitute for net
income or cash flows, nor should it be considered an alternative
to operating performance or liquidity. The following table sets
forth the calculation of FFO:
Six months ended Six months ended
June 30, June 30,
2000 1999
__________________ __________________
(in thousands)
Net income $ 11,798 $ 12,028
Minority interest in income 829 830
Depreciation of real estate
and amortization of
intangible assets
exclusive of deferred
financing fees 6,623 5,982
Funds from operations
allocable to minority
interest (1,264) (1,216)
_________ _________
FFO 17,986 17,624
Preferred dividends (1,478) -
_________ _________
FFO available to
common shareholders $ 16,508 $ 17,624
========= =========
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.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company manages its exposure to interest rate changes by
entering into interest rate swap agreements. There have been no
material changes to the Company's exposure to interest rate risk
since December 31, 1999.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
A former business associate (Plaintiff) of certain officers
and directors of the Company, including Robert J. Attea,
Kenneth F. Myszka, David L. Rogers and Charles E. Lannon,
commenced a lawsuit against the Company on June 13, 1995 in the
United States District Court for the Northern District of Ohio.
The Plaintiff subsequently amended the complaint in the lawsuit
alleging breach of fiduciary duty, breach of contract, breach of
general partnership/joint venture arrangement, breach of duty of
good faith, fraud and deceit, and other causes of action
including declaratory judgment as to the Plaintiff's continuing
interest in the Company. The Plaintiff sought money damages in
excess of $15 million, as well as punitive damages and
declaratory and injunctive relief (including the imposition of a
constructive trust on assets of the Company in which the
Plaintiff claimed to have a continuing interest) and an
accounting. The amended complaint also added Messrs. Attea,
Myszka, Rogers and Lannon as additional defendants. In April
2000, following trial, the jury rendered a verdict adverse to the
Company with respect to Plaintiff's claims for breach of
fiduciary duty, breach of contract and breach of general
partnership/joint venture arrangement and found total
compensatory damages in the amount of $6,462,068. Messrs. Attea,
Myszka, Rogers and Lannon have agreed to indemnify the Company
for costs and any loss arising from the lawsuit and their
obligation to do so is secured by an escrow arrangement covering
shares of the Company's common stock owned by them having a
current value substantially in excess of the amount of damages
found by the jury. The Company has filed a post-trial motion
for judgment as a matter of law and a motion for a new trial. In
the event that the relief sought by these motions is not granted,
the Company intends to appeal. In view of the indemnification
agreement and escrow arrangement, the Company does not believe
that the lawsuit will have a material adverse effect upon the
Company regardless of the final disposition of the lawsuit.
ITEM 2. CHANGES IN SECURITIES
No disclosure required.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No disclosure required.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a.) The Annual Meeting of Shareholders was held on Wednesday,
May 24, 2000.
b.) Directors Votes For Votes Withheld
Robert J. Attea 10,471,275 108,945
Kenneth F. Myszka 10,471,275 108,945
John E. Burns 10,470,375 109,845
Michael A. Elia 10,471,275 108,945
Anthony P. Gammie 10,465,025 115,195
Charles E. Lannon 10,471,275 108,945
c.) The ratification of the appointment of Ernst & Young LLP as
independent auditors of the Company for the fiscal year ending
December 31,2000.
Votes For 10,406,845
Votes Against 141,483
Abstentions 31,891
Broker Nonvotes 1
ITEM 5. OTHER INFORMATION
No disclosure required.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27 - Financial data schedule.
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.
Sovran Self Storage, Inc.
August 11, 2000 By: / S / David L. Rogers
_____________________ _____________________________
Date David L. Rogers
Secretary, Chief Financial Officer