SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report(Date of earliest event reported):August 30, 1996(January 3, 1996)
SOVRAN SELF STORAGE, INC.
(Exact Name of Registrant as Specified in Charter)
Maryland 1-13820 16-1194043
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation or
organization)
5166 Main Street
Williamsville, NY 14221
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (716) 633-1850
NOT APPLICABLE
(Former name or former address, if changed since last report)
Page 1 of 14
Item 2. Acquisition or Disposition of Assets
Sovran Self Storage, Inc. (the "Company") has consummated the
acquisition of 25 self-storage facilities through Sovran Acquisition Limited
Partnership, L.P. ("OP"), a limited partnership controlled by the Company. The
25 facilities totaling approximately 1,321,000 square feet are located in 10
states and were purchased for approximately $51 million.
All of the facilities were acquired with cash and from unaffiliated
third parties. The acquisitions were funded by cash generated from operations
and borrowings under the Company's line of credit, and one facility was
partially acquired through the issuance of Operating Partnership Units (OP
Units). Each of the facilities acquired was used by the seller as a self-storage
facility prior to its acquisition by the Company, and the Company intends to
continue the use of all facilities for that purpose. The Company's management
determined the contract price through arms-length negotiations, after taking
into consideration such factors as: the age and condition of the facility; the
projected amounts of maintenance costs; anticipated capital improvements; the
facility's current revenues; comparable facilities competing in the applicable
market; market rental rates for comparable facilities; the occupancy rate of the
facility; and the estimated amount of taxes, utility costs, personnel costs and
other anticipated expenses.
The following provides certain additional information concerning the 5
facilities acquired not detailed on the 8-K Report dated July 25, 1996. These
properties are included in the accompanying financial statements in addition to
the 20 facilities listed on the July 25, 1996 8-K Report.
Location Seller Date of Acquisition Price Square Feet
Landover, MD Landover Development Group 7/26/96 $ 3,460,191 53,170
Jacksonville, FL Cedar Creek Mini Warehouses 8/23/96 2,558,822 102,500
Jacksonville, FL Sunbeam Self Storage, Inc. 8/26/96 2,034,395 43,865
Pittsburgh, PA Rent-A-Spot South 8/28/96 3,225,000 75,875
Jacksonville, FL Blanding Storage Joint Venture 8/30/96 2,500,000 53,170
----------- --------
$13,778,408 328,580
2
Item 7. Financial Statements and Exhibits PAGE
(a) Financial Statements Applicable to Real Estate Properties Acquired
* Report of Independent Auditors 4
* Acquisition Facilities Historical Summaries of Combined
Gross Revenue and Direct Operating Expenses for the
year ended December 31, 1995 and the six months ended
June 30, 1996. 5
* Acquisition Facilities Notes to Historical Summaries of
Combined Gross Revenue and Direct Operating Expenses
for the year ended December 31, 1995 and the six months
ended June 30, 1996. 6-7
(b) Pro Forma Financial Information
* Sovran Self Storage, Inc., Pro Forma Combined Financial
Information 8
* Sovran Self Storage, Inc., Pro Forma Combined Balance
Sheet as of June 30, 1996 9
* Sovran Self Storage, Inc., Pro Forma Combined Statement
of Operations For the Six months ended June 30, 1996 10
* Sovran Self Storage, Inc., Pro Forma Combined Statement
of Operations For the Year ended December 31, 1995 11
* Sovran Self Storage, Inc., Notes to Pro Forma Combined
Financial Statements 12
(c)Exhibits
Exhibit Description
No.
23 Consent of Independent Auditors, Ernst & Young. 14
3
[Ernst & Young L.L.P. Letterhead]
Report of Independent Auditors
Board of Directors
Sovran Self Storage, Inc.
We have audited the accompanying Historical Summaries of Combined Gross Revenue
and Direct Operating Expenses (the "Historical Summaries") for sixteen self
storage facilities (the "Acquisition Facilities") as described in Note 1, for
the year ended December 31, 1995. These Historical Summaries are the
responsibility of the management of Sovran Self Storage, Inc. Our responsibility
is to express an opinion on the Historical Summaries based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summaries are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the Historical Summaries. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the Historical
Summaries. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying Historical Summaries were prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission for
inclusion in the Form 8-K/A of Sovran Self Storage, Inc. as described in Note 1,
and are not intended to be a complete presentation of the Acquisition
Facilities' revenue and expenses.
In our opinion, the Historical Summaries referred to above present fairly, in
all material respects, the combined gross income and direct operating expenses
of the Acquisition Facilities for the year ended December 31, 1995, in
conformity with generally accepted accounting principles.
Ernst & Young LLP
Buffalo, New York
August 30, 1996
4
Acquisition Facilities
Historical Summaries of Combined Gross
Revenue and Direct Operating Expenses
(in thousands)
Six months
ended
June 30,
1996
December 31, 1995 -----------
---------------------------------------------- Total
16 9 Total 25
Acquisition Acquisition 25 Acquisition
(audited) (unaudited) Facilities (unaudited)
----------------------------------------------------------------
Revenues:
Rental income $ 5,438 $ 2,194 $ 7,632 $ 2,871
Other income 38 7 45 15
----------------------------------------------------------------
Total revenue 5,476 2,201 7,677 2,886
Direct Operating Expenses:
Property operations and maintenance 1,074 477 1,551 612
Real estate taxes 416 165 581 226
-----------------------------------------------------------------
Total direct operating expenses 1,490 642 2,132 838
-----------------------------------------------------------------
Revenue in excess of direct operating
expenses $ 3,986 $ 1,559 $ 5,545 $ 2,048
=================================================================
See accompanying notes.
5
Acquisition Facilities
Note to Historical Summaries of Combined Gross
Revenue and Direct Operating Expenses
(in thousands)
1. Basis of Presentation
The historical summaries of combined gross revenue and direct operating expenses
(the "Historical Summaries") relate to the operations of the following 16
facilities acquired since January 1, 1996, which have been audited, and the 9
facilities acquired since January 1, 1996, which are unaudited. These 25
facilities, which have been acquired from unaffiliated third parties by Sovran
Acquisition Limited Partnership (the "Partnership") for an aggregate purchase
price of $51,000, are collectively referred to as the "25 Acquisition
Facilities". The general partner of the Partnership is Sovran Self Storage, Inc.
(the "Company").
16 Acquisition Facilities - Audited
Location Date of Acquisition Location Date of Acquisition
Tampa, Florida 3/28/96 Plant City, Florida 6/26/96
Arlington, Texas 3/29/96 Dayton, Ohio 7/22/96
Arlington, Texas 3/29/96 Cincinnati, Ohio 7/22/96
Fort Worth, Texas 3/29/96 Landover, Maryland 7/26/96
San Antonio, Texas 3/29/96 Jacksonville, Florida 8/23/96
San Antonio, Texas 3/29/96 Jacksonville, Florida 8/26/96
Montgomery, Alabama 5/21/96 Pittsburgh, Pennsylvania 8/28/96
Pittsburgh, Pennsylvania 6/19/96 Jacksonville, Florida 8/30/96
9 Acquisition Facilities - Unaudited
Location Date of Acquisition Location Date of Acquisition
Newport News, Virginia 1/05/96 Fort Myers, Florida 5/29/96
Birmingham, Alabama 1/16/96 Syracuse, New York 6/06/96
Montgomery, Alabama 1/23/96 Springfield, Massachusetts 6/28/96
Charleston, South Carolina 3/04/96 Fort Myers, Florida 6/28/96
West Palm Beach, Florida 5/29/96
6
Acquisition Facilities
Note to Historical Summaries of Combined Gross
Revenue and Direct Operating Expenses
(in thousands)
1. Basis of Presentation (continued)
The Historical Summaries have been prepared to comply with the rules and
regulations of the Securities and Exchange Commission for real estate operations
to be acquired. The Historical Summaries are not representative of the actual
operations for the periods presented, as certain expenses which may not be
comparable to the expenses expected to be incurred by the Company in the
proposed future operations of the 25 Acquisition Facilities have been excluded.
Expenses excluded consist of management fees, interest, depreciation and
amortization, and other indirect costs not directly related to the future
operations of the 25 Acquisition Facilities. Rental income is recognized when
due from occupants. Expenses are recognized on the accrual basis.
2. Unaudited Interim Periods
The unaudited interim Historical Summaries for the six months ended June 30,
1996, have been prepared in accordance with generally accepted accounting
principles for interim financial information. The operations of the 25
Acquisition Facilities through the date of acquisition are included in the
unaudited Historical Summaries. Operations subsequent to acquisition are
included in the financial statements of the Company. In the opinion of
management, all adjustments of a normal recurring nature considered necessary
for a fair presentation have been included. Operating results for the six months
ended June 30, 1996, are not necessarily indicative of future operating results.
7
Sovran Self Storage, Inc.
Pro Forma Combined Financial Information
The following unaudited Pro Forma Combined Balance Sheet as of June 30, 1996 and
unaudited Pro Forma Combined Statements of Operations for the six months ended
June 30, 1996 and for the year ended December 31, 1995 have been prepared to
reflect the acquisition of 25 self storage facilities (the "25 Acquisition
Facilities") and the adjustments described in the accompanying notes. The pro
forma combined financial information is based on the historical financial
statements of Sovran Self Storage, Inc. in the Company's 10-Q for the period
ended June 30, 1996, and the other financial information in the Company's 1995
Annual Report to Shareholders and should be read in conjunction with those
financial statements and notes thereto. The Pro Forma Combined Balance Sheet was
prepared as if the 7 Acquisition Facilities that were purchased after June 30,
1996, were acquired at that date. The Pro Forma Combined Statements of
Operations were prepared as if the 25 Acquisition Facilities were purchased at
the beginning of the period reflected thereon. The combined pro forma financial
information is not necessarily indicative of the financial position or results
of operations which actually would have occurred if such transactions had been
consummated on the dates described, nor does it purport to represent the
Company's future financial position or results of operations.
8
Sovran Self Storage, Inc.
Pro Forma Combined Balance Sheet
June 30, 1996
(in thousands)
(unaudited)
Sovran
Self Storage Pro Forma Sovran
Historical Adjustments Self Storage, Inc.
(Note 1) (Note 2) Pro Forma
----------------------------------------------------
Assets
Investment in storage facilities, net $ 188,132 $ 19,328 $ 207,460
Cash and cash equivalents 2,369 - 2,369
Accounts receivable 317 18 335
Prepaid expenses and other assets 1,595 25 1,620
----------------------------------------------------
Total assets $ 192,413 $ 19,371 $ 211,784
====================================================
Liabilities
Line of credit $ 36,809 $ 18,723 $ 55,532
Accounts payable and accrued liabilities 1,649 80 1,729
Deferred revenue 1,256 88 1,344
Accrued dividends 3,810 - 3,810
Minority interest - 480 480
----------------------------------------------------
Total liabilities 43,524 19,371 62,895
Shareholders' Equity
Common stock, $.01 par value 75 - 75
Additional paid-in capital 150,733 - 150,733
Dividends in excess of net income (1,919) - (1,919)
----------------------------------------------------
Total shareholders' equity 148,889 - 148,889
----------------------------------------------------
Total liabilities and shareholders' equity $ 192,413 $ 19,371 $ 211,784
====================================================
See notes to pro forma combined financial information
9
Sovran Self Storage, Inc.
Pro Forma Combined Statement of Operations
For the Six months ended June 30, 1996
(in thousands, except per share data)
(unaudited)
Sovran 25
Self Storage Acquisition Pro Forma Sovran Self
Historical Facilities Adjustments Storage, Inc.
(Note 1) (Note 3) (Note 4) Pro Forma
-------------------------------------------------------------
Revenues:
Rental income $ 14,671 $ 2,871 $ - $ 17,542
Interest and other income 233 15 - 248
-------------------------------------------------------------
Total revenues 14,904 2,886 - 17,790
Expenses:
Property operations and maintenance 3,014 612 - 3,626
Real estate taxes 1,079 226 - 1,305
General and administrative 1,115 - 42 1,157
Interest 889 - 1,489 2,378
Depreciation and amortization 2,045 - 389 2,434
-------------------------------------------------------------
Total expenses 8,142 838 1,920 10,900
-------------------------------------------------------------
Net income before minority interest 6,762 2,048 (1,920) 6,890
Minority interest - - (17) (17)
-------------------------------------------------------------
Net income $ 6,762 $ 2,048 $ (1,937) $ 6,873
=============================================================
Earnings per share $ 0.90 $ 0.91
============== ============
Common shares used in earnings per
share calculation 7,543,993 7,543,993
Dividends declared per share $ 1.01 $ 1.01
============== ============
See notes to pro forma combined financial information
10
Sovran Self Storage, Inc.
Pro Forma Combined Statement of Operations
For the Year ended December 31, 1995
(in thousands, except per share data)
(unaudited)
Sovran 25
Self Storage Acquisition Pro Forma Sovran
Historical Facilities Adjustments Self Storage, Inc.
(Note 1) (Note 3) (Note 4) Pro Forma
------------------------------------------------------------------
Revenues:
Rental income $ 21,817 $ 7,632 $ - $ 29,449
Interest and other income 657 45 - 702
------------------------------------------------------------------
Total revenues 22,474 7,677 - 30,151
Expenses:
Property operations and maintenance 4,594 1,551 - 6,145
Real estate taxes 1,569 581 - 2,150
General and administrative 2,548 - 152 2,700
Interest 3,399 - 1,321 4,720
Depreciation and amortization 3,309 - 1,052 4,361
------------------------------------------------------------------
Total expenses 15,419 2,132 2,525 20,076
------------------------------------------------------------------
Net income before minority interest 7,055 5,545 (2,525) 10,075
Minority interest - - (25) (25)
------------------------------------------------------------------
Net income $ 7,055 $ 5,545 $ (2,550) $ 10,050
==================================================================
Earnings per share $ 0.94 $ 1.33
============= ===============
Common shares used in earnings per
share calculation 7,429,872 7,429,872
Dividends declared per share $ 1.04 $ 1.04
============= ===============
See notes to pro forma combined financial information
11
Sovran Self Storage, Inc.
Notes to Pro Forma Combined Financial Statements
(in thousands, except per share data)
(unaudited)
1. Sovran Self Storage Historical
The consolidated balance sheet and statement of operations as of and for the six
months ended June 30, 1996, include the accounts of Sovran Self Storage, Inc.
(the "Company"), Sovran Acquisition Limited Partnership (the "Partnership"), and
Sovran Holdings, Inc., a wholly-owned subsidiary of the Company. The
consolidated statement of operations for the year ended December 31, 1995,
include the accounts of Sovran Self Storage, Inc., Sovran Acquisition Limited
Partnership, and Sovran Holdings, Inc. from June 26, 1995 to December 31, 1995
and the accounts of Sovran Capital, Inc. and the Sovran Partnerships (the
"Predecessors") from January 1, 1995 to June 25, 1995.
2. Pro Forma Adjustments - Balance Sheet
These adjustments reflect the seven acquisitions which occurred subsequent to
June 30, 1996 and were not included in the Sovran Self Storage Historical June
30, 1996 balance sheet. The facilities were purchased from unaffiliated parties
for an aggregate purchase price of approximately $19,400. The acquisition price
was funded with borrowings under the Company's line of credit, and the issuance
of units of limited partnership interest in the Partnership (the "OP Units").
The 18,787 OP Units were issued at $25.50 per unit as part of the purchase of
the Landover, Maryland facility.
3. 25 Acquisition Facilities - Statements of Operations
The statements of operations for the 25 Acquisition Facilities reflects the
results of operations for the 25 Acquisition Facilities for the year ended
December 31, 1995, and the results of operations of the 25 Acquisition
Facilities up to the date acquired or for the six months ended June 30, 1996,
which are reported in the Historical Summaries of Combined Gross Revenue and
Direct Operating Expenses included elsewhere herein.
4. Pro Forma Adjustments - Statements of Operations
These adjustments reflect the additional general and administrative expenses,
depreciation expense, and interest on the additional borrowings relating to the
25 Acquisition Facilities, and the minority interest for the OP Units issued in
connection with the purchase of one facility.
12
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: /s/ David L. Rogers
David L. Rogers
Chief Financial Officer
Date: August 30, 1996
13