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: 0-24071
Sovran Acquisition Limited Partnership
(Exact name of Registrant as specified in its charter)
Delaware 16-1481551
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6467 Main Street
Buffalo, New York 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 _
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SOVRAN ACQUISITION LIMITED PARTNERSHIP
BALANCE SHEETS
June 30,
2000 December 31,
(dollars in thousands, except unit 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 4,482 4,210
Deferred revenue 3,639 3,322
Accrued distributions 7,321 7,496
Mortgage payable 5,227 5,253
__________ __________
Total Liabilities 238,169 218,281
Limited partners' capital interest
(853,037 units in 2000 and 1999)
at redemption value 17,787 15,888
PARTNERS' CAPITAL
General partner (219,567 units issued and
outstanding in 2000 and 1999) 5,177 5,283
Limited partner (11,765,865 and 12,079,596
units issued and outstanding in 2000 and
1999, respectively 248,405 260,267
Preferred Partners (1,200,000 Series B
Preferred Units, at $25 liquidation preference) 30,000 30,000
__________ __________
Total Partners' Capital 283,582 295,550
__________ __________
Total Liabilities and Partners' Capital $ 539,538 $ 529,719
========== ==========
See notes to financial statements.
SOVRAN ACQUISITION LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(unaudited)
April 1, 2000 April 1, 1999
(dollars in thousands to to
except unit 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
_________ _________
Net Income 6,408 6,595
Distributions to preferred unitholders (739) -
_________ _________
Net income available to common unitholders $ 5,669 $ 6,595
========= =========
Earnings per common unit - basic $ 0.44 $ 0.50
========= =========
Earnings per common unit - diluted $ 0.44 $ 0.50
========= =========
Units used in basic earnings
per unit calculation 12,879,746 13,282,928
Units used in diluted earnings
per unit calculation 12,881,318 13,297,793
Distributions declared per units $ 0.57 $ 0.56
========== ==========
See notes to financial statements.
SOVRAN ACQUISITION LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(unaudited)
January 1, 2000 January 1, 1999
(dollars in thousands to to
except unit 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
_________ _________
Net Income 12,627 12,858
Distributions to preferred unitholders (1,478) -
_________ _________
Net income available to common unitholders $ 11,149 $ 12,858
========= =========
Earnings per common unit - basic $ 0.86 $ 0.97
========= =========
Earnings per common unit - diluted $ 0.86 $ 0.97
========= =========
Units used in basic earnings
per unit calculation 12,983,918 13,252,577
Units used in diluted earnings
per unit calculation 12,984,838 13,267,375
Distributions declared per units $ 1.14 $ 1.12
========== ==========
See notes to financial statements.
SOVRAN ACQUISITION LIMITED PARTNERSHIP
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 $ 12,627 $ 12,858
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 6,982 6,341
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
Distributions paid (16,375) (14,864)
Purchase of treasury stock (7,371) -
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 ACQUISITION LIMITED PARTNERSHIP
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
__________________________________________________________________________
Distributions declared but unpaid were $7,321 at June 30, 2000 and $7,496
at December 31, 1999.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements of Sovran
Acquisition Limited Partnership (the Operating Partnership) 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
Sovran Acquisition Limited Partnership is the entity through
which Sovran Self Storage, Inc. (the Company) a self-administered
and self-managed real estate investment trust (a REIT), conducts
substantially all of its business and owns substantially all of
its assets. On June 26, 1995, the Company commenced operations,
through the Operating Partnership, effective with the completion
of its initial public offering of 5,890,000 shares (the
Offering). The Operating Partnership has since 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.
As of June 30, 2000, the Company was a 93.36% economic owner
of the Operating Partnership and controls it through Sovran
Holdings, Inc. (Holdings) a wholly-owned subsidiary of the
Company and the sole general partner of the Operating
Partnership. The board of directors of Holdings, the members of
which are also members of the board of directors of the Company,
manages the affairs of the Operating Partnership by directing the
affairs of Holdings. The Company's limited partner and indirect
general partner interest in the Operating Partnership entitle it
to share in the cash distributions from, and in the profits and
losses of, the Operating Partnership in proportion to its
ownership interest therein and entitle the Company to vote on all
matters requiring a vote of the limited partners.
The other limited partners of the Operating Partnership are
persons who contributed their direct or indirect interest in
certain self-storage properties to the Operating Partnership.
The Operating Partnership is obligated to redeem each unit of the
limited partnership (Unit) at the request of the holder thereof
for cash equal to the fair value of a share of the Company's
common stock (Common Shares) at the time of such redemption,
provided that the Company at its option may elect to acquire any
Unit presented for redemption for one Common Share or cash. With
each such redemption the Company's percentage ownership interest
in the Operating Partnership will increase. In addition,
whenever the Company issues Common Shares, the Company is
obligated to contribute any net proceeds therefrom to the
Operating Partnership and the Operating Partnership is obligated
to issue an equivalent number of units to the Company. Such
limited partners' redemption rights are reflected in "limited
partners' capital interest" in the accompanying balance sheets at
the cash redemption amount at the balance sheet date.
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 Operating Partnership 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 Operating Partnership has a $75 million unsecured term
note that matures on December 22, 2000 and bears interest at
LIBOR plus 1.50%.
The Operating Partnership 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 Operating Partnership the rate in
excess of 9% multiplied by $40 million for the outstanding
period.
The net carrying amount of the Operating Partnership's debt
instruments approximates fair value.
5. COMMITMENTS AND CONTINGENCIES
The Operating Partnership's current practice is to conduct
environmental investigations in connection with property
acquisitions. At this time, the Operating Partnership is not
aware of any environmental contamination of any of its facilities
which individually or in the aggregate would be material to the
Operating Partnership's overall business, financial condition, or
results of operations.
As of June 30, 2000, the Operating Partnership 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 statements of operations of the Operating
Partnership. It should be read in conjunction with the financial
statements of the Operating Partnership 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 Operating Partnership 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 unit 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
__________
Net income 12,590
Series B preferred stock dividend (1,478)
__________
Net income available to common unitholders $ 11,112
==========
Earnings per common unit - basic $ .87
==========
Earnings per common unit - diluted $ .87
==========
Units used in basic earnings
per unit calculation 12,838,469
_________________________________________________________________
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 Operating Partnership does
not believe that the lawsuit will have a material adverse effect
upon the Operating Partnership regardless of the final
disposition of the lawsuit.
8. EARNINGS PER UNIT
The Operating Partnership reports earnings per unit in
accordance with Statement of Financial Accounting Standards
No. 128, "Earnings Per Share." In computing earnings per common
unit, the Operating Partnership excludes preferred stock
dividends from net income to arrive at net income available to
common unitholders. The following table sets forth the
computation of basic and diluted earnings per unit:
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 $ 11,149 $ 12,858
Denominator:
Denominator for basic earnings
per unit - weighted
average units 12,984 13,253
Effect of Diluted Securities:
Stock options - 14
Denominator for diluted earnings
per unit - adjusted weighted
average units and assumed
conversion 12,985 13,267
Basic earnings per common unit $ .86 $ .97
Diluted earnings per common unit $ .86 $ .97
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
The following discussion and analysis of the 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, through the Operating
Partnership, 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 21E 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 Operating
Partnership 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 Operating Partnership's ability
to evaluate, finance and integrate acquired businesses into the
Operating Partnership's existing business and operations; the
Operating Partnership's 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 Operating Partnership's ability to
effectively compete in the industries in which it does business;
the Operating Partnership's ability to successfully implement its
Uncle Bob's Flex-a-Space strategy; the Operating Partnership'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 Operating Partnership'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 Operating
Partnership 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 Operating Partnership 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 Operating Partnership believes that its internally
generated cash flows and borrowing capacity under the credit
facility will be sufficient to fund ongoing operations, capital
improvements, distributions, and acquisitions for the year 2000.
UMBRELLA PARTNERSHIP REIT
The Operating Partnership 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 Operating Partnership 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 Operating Partnership'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 Operating Partnership acquired one
property, increasing its existing presence in Florida. The
acquisition added 42,000 square feet of space and 498 rental
units to the Operating Partnership's portfolio.
FUTURE ACQUISITION AND DEVELOPMENT PLANS
The Operating Partnership has a contract on one property in
Alabama with an expected closing in September 2000. The Operating
Partnership 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
The Operating Partnership is treated as a partnership for
Federal income tax purposes and the Company is treated as a
partner in the Operating Partnership. As a partner, the Company
is deemed to own its proportionate share of the assets of the
partnership and is deemed to be entitled to the income of the
partnership attributable to such share.
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 Operating Partnership as of June 30, 2000 and
June 30, 1999.
FOR THE PERIOD JANUARY 1, 2000 THROUGH JUNE 30, 2000 (DOLLARS IN
THOUSANDS)
The Operating Partnership 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
net income of $12,627.
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
Operating Partnership for the three months ended June 30, 2000
with the activities of the Operating Partnership 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
Operating Partnership 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 related to the Operating
Partnership'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 includes 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.
Net income decreased from $6,595 to $6,408, a decrease of
$187 or less than 3%.
INFLATION
The Operating Partnership 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 Operating Partnership
with the opportunity to achieve increases in rental income as
each lease matures.
SEASONALITY
The Operating Partnership's revenues typically have been
higher in the third and fourth quarters, primarily because the
Operating Partnership 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 Operating Partnership 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 Operating Partnership does not expect
seasonality to affect materially distributions to unitholders.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Operating Partnership manages its exposure to interest
rate changes by entering into interest rate swap agreements.
There have been no material changes to the Operating
Partnership'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 Operating Partnership does
not believe that the lawsuit will have a material adverse effect
upon the Operating Partnership 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
No disclosure required.
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 Acquisition Limited Partnership
By: Sovran Holdings, Inc.
Its: General Partner
August 11, 2000 By: / S / David L. Rogers
_____________________ ______________________________
Date David L. Rogers
Chief Financial Officer