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 September 30, 1998
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.)
5166 Main Street
Williamsville, 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
September 30, December 31,
1998 1997
(dollars in thousands) (unaudited)
- -------------------------------------------------------------------------------
Assets
Investment in storage facilities:
Land $ 100,801 $ 71,391
Building and equipment 388,800 261,645
------------ ------------
489,601 333,036
Less: accumulated depreciation (18,559) (11,639)
------------ ------------
Investments in storage facilities, net 471,042 321,397
Cash and cash equivalents 6,112 2,567
Accounts receivable 1,302 834
Prepaid expenses and other assets 3,135 2,275
------------ -----------
Total Assets $ 481,591 $ 327,073
============ ===========
Liabilities
Line of credit and term note $ 176,500 $ 36,000
Accounts payable and accrued liabilities 4,640 1,950
Deferred revenue 2,882 1,994
Accrued distributions 7,356 6,816
Mortgage payable 3,059 3,559
----------- -----------
Total Liabilities 194,437 50,319
Limited partners' capital interest
(863,037 and 443,609 units, respectively),
at redemption value 22,655 14,454
Partners' Capital
General partner 5,144 5,257
Limited partner 259,355 257,043
----------- -----------
Total Partners' Capital 264,499 262,300
----------- -----------
Total Liabilities and Partners' Capital $ 481,591 $ 327,073
=========== ===========
See notes to financial statements.
SOVRAN ACQUISITION LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(unaudited)
July 1, 1998 July 1, 1997
(dollars in thousands, to to
except unit data) September 30, 1998 September 30, 1997
- -------------------------------------------------------------------------------
Revenues:
Rental income $ 18,876 $ 13,161
Interest and other income 231 159
------------ ------------
Total revenues 19,107 13,320
Expenses:
Property operations and maintenance 3,905 2,571
Real estate taxes 1,481 1,056
General and administrative 1,173 697
Interest 3,080 592
Depreciation and amortization 2,830 1,845
------------ -----------
Total expenses 12,469 6,761
------------ -----------
Net Income $ 6,638 $ 6,559
============ ===========
Earnings per unit - basic $ 0.51 $ 0.52
============ ===========
Earnings per unit - diluted $ 0.50 $ 0.52
============ ===========
Units used in basic earnings
per unit calculation 13,136,572 12,606,779
Distributions declared per unit $ 0.56 $ 0.54
============ ===========
See notes to financial statements.
SOVRAN ACQUISITION LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(unaudited)
January 1, 1998 January 1, 1997
(dollars in thousands, to to
except unit data) September 30, 1998 September 30, 1997
- -------------------------------------------------------------------------------
Revenues:
Rental income $ 49,223 $ 35,464
Interest and other income 701 527
----------- -----------
Total revenues 49,924 35,991
Expenses:
Property operations and maintenance 9,888 6,979
Real estate taxes 3,979 2,832
General and administrative 3,120 2,027
Interest 6,448 1,410
Depreciation and amortization 7,377 5,061
----------- -----------
Total expenses 30,812 18,309
----------- -----------
Income before extraordinary item 19,112 17,682
Extraordinary loss on extinguishment of debt (350) -
----------- -----------
Net Income $ 18,762 $ 17,682
=========== ===========
Earnings per unit before
extraordinary item - basic $ 1.48 $ 1.49
Extraordinary item (0.02) -
----------- -----------
Earnings per unit - basic $ 1.46 $ 1.49
=========== ===========
Earnings per unit - diluted $ 1.45 $ 1.48
=========== ===========
Units used in basic
earnings per unit calculation 12,881,773 11,904,659
Distributions declared per unit $ 1.64 $ 1.58
========== ==========
See notes to financial statements.
SOVRAN ACQUISITION LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(unaudited)
January 1, 1998 January 1, 1997
to to
(dollars in thousands) September 30, 1998 September 30, 1997
- -------------------------------------------------------------------------------
Operating Activities
Net income $ 18,762 $ 17,682
Adjustments to reconcile net income
to net cash provided by operating
activities:
Extraordinary loss 350 -
Depreciation and amortization 7,377 5,061
Restricted stock earned 5 10
Changes in assets and liabilities:
Accounts receivable (409) (289)
Prepaid expenses and other assets (659) 17
Accounts payable and other
liabilities 2,695 3,325
Deferred revenue 67 693
---------- -----------
Net cash provided by operating
activities 28,188 26,499
---------- -----------
Investing Activities
Additions to storage facilities (140,924) (92,386)
Additions to other assets (866) (10)
---------- -----------
Net cash used in investing activities (141,790) (92,396)
---------- -----------
Financing Activities
Net proceeds from sale of common stock - 42,340
Proceeds from line of credit draw down 140,500 28,000
Distributions paid (20,863) (18,999)
Purchase of treasury stock (1,990) -
Mortgage principal payments (500) -
---------- -----------
Net cash provided by financing activities 117,147 51,341
---------- -----------
Net increase (decrease) in cash 3,545 (14,556)
Cash at beginning of period 2,567 16,687
---------- -----------
Cash at end of period $ 6,112 $ 2,131
========== ===========
Supplemental cash flow information
Cash paid for interest $ 5,940 $ 1,410
See notes to financial statements.
SOVRAN ACQUISITION LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(unaudited)
Supplemental cash flow information for the nine months
ended September 30, 1998
(dollars in thousands)
- -------------------------------------------------------------------------------
Storage facilities acquired through the issuance of minority
interest in the Operating Partnership $ 14,703
Fair value of net liabilities assumed on the acquisition
of storage facilities $ 1,208
- -------------------------------------------------------------------------------
Distributions declared but unpaid were $7,356 at September 30, 1998 and $6,816
at December 31, 1997
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 nine month periods ended September 30, 1998 and
September 30, 1997 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1998.
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).
Contemporaneously with the closing of the Offering, the Operating Partnership
acquired, in a transaction accounted for as a purchase, sixty-two 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 Operating
Partnership acquired on that date twelve self-storage properties from
unaffiliated third parties. The Operating Partnership has since purchased a
total of 127 (forty-five in 1998, forty-four in 1997, twenty-nine in 1996 and
nine in 1995) self storage properties from unaffiliated third parties,
increasing the total number of self-storage properties owned at September 30,
1998 to 201 properties, most of which are in the eastern United States and
Texas.
As of September 30, 1998, the Company was a 93.4% 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
options 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
September 30, 1998.
(dollars in thousands)
Cost:
Beginning balance $ 333,036
Property acquisitions 145,841
Improvements and equipment additions 10,890
Dispositions (166)
--------------
Ending balance $ 489,601
==============
Accumulated Depreciation:
Beginning balance $ 11,639
Additions during the period 6,962
Dispositions (42)
--------------
Ending balance $ 18,559
==============
4. Line of Credit
On February 20, 1998, the Operating Partnership entered into a new $150
million unsecured credit facility which replaced in its entirety the Operating
Partnership's $75 million revolving credit facility. The new facility matures
February 2001 and provides for funds at LIBOR plus 1.25%, a savings of 65 basis
points over the Operating Partnership's old facility. As a result of the new
credit facility, in 1998 the Operating Partnership recorded an extraordinary
loss on the extinguishment of debt of $350,000 representing the unamortized
financing costs of the former revolving credit facility.
In June 1998, the Operating Partnership entered into a $30 million
unsecured term note which matured on September 24, 1998 and provided for funds
at LIBOR plus 1.25%. The term note has been increased to $40 million and
extended through January 1999, and bears interest at LIBOR plus 1.50%.
To manage its exposure to interest rate fluctuations, the Operating
Partnership has entered into LIBOR-based interest rate swap agreements in
amounts of $75 million through October 1998 and $40 million through June 1999.
Net payments or receipts under swap agreements are recorded as adjustments to
interest expense. The net carrying amount of the Operating Partnership's debt
instruments approximates the fair values.
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 September 30, 1998, the Operating Partnership had entered into
contracts for the purchase of 10 self-storage facilities with expected costs of
$24 million.
6. Pro Forma Financial Information
The following unaudited pro forma Condensed Statement of Operations is
presented as if the 45 storage facilities purchased during the nine months ended
September 30, 1998, had occurred at January 1, 1998. Such unaudited pro forma
information is based upon the historical combined 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)
Nine Months Ended
September 30,
1998
Revenues:
Rental income $ 55,534
Other income 828
----------------
Total revenues 56,362
Expenses:
Property operations & maintenance 11,398
Real estate taxes 4,547
General and administrative 3,170
Interest 9,329
Depreciation and amortization 8,031
----------------
Total Expenses 36,475
----------------
Income before extraordinary item 19,887
Extraordinary loss on extinguishment of debt (350)
-----------------
Net income $ 19,537
================
Earnings per unit before extraordinary item - basic $ 1.51
Extraordinary item (.02)
-----------------
Earnings per unit - basic $ 1.49
================
Earnings per unit - diluted $ 1.48
================
Units used in basic earnings
per unit calculation 13,136,000
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, filed a lawsuit against the Company on June 13,
1995 in the United States District Court for the Northern District of Ohio in
connection with the formation of the Company as a REIT and related transactions,
as well as the Offering. On April 29, 1996, the Plaintiff filed a first amended
complaint and on September 24, 1997, a second amended complaint was filed. The
complaint alleges, among other things, breach of fiduciary duty, breach of
contract, breach of general partnership/joint venture arrangement, fraud and
deceit, breach of duty of good faith and other causes of action including
declaratory judgement as to the Plaintiff's continuing interest in the Company.
The Plaintiff is seeking 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 claims
to have a continuing interest) and an accounting. The amended complaint also
added Messrs. Attea, Myszka, Rogers and Lannon as additional defendants. The
parties are currently involved in discovery. The Company intends to vigorously
defend the lawsuit. Messrs. Attea, Myszka, Rogers and Lannon have agreed to
indemnify the Company for cost and any loss arising from the lawsuit. The
Company believes that the actual amount of the Plaintiff's recovery in this
matter if any, would be within the ability of these individuals to provide
indemnification. The Company does not believe that the lawsuit will have a
material adverse effect upon the Company.
8. Earnings Per Unit
In 1997, the Operating Partnership adopted Statement of Financial
Accounting Standards No. 128, "Earnings Per Share." The following table sets
forth the computation of basic and diluted earnings per unit:
Nine Months Nine Months
Ended Ended
September 30, September 30,
1998 1997
------------- -------------
Numerator:
Net Income $ 18,762 $ 17,682
Denominator:
Denominator for basic earnings
per unit - weighted average units 12,882 11,905
Effect of Diluted Securities:
Stock options 30 61
Denominator for diluted earnings
per unit - adjusted weighted
average units and assumed conversion 12,912 11,966
Basic earnings per unit $ 1.46 $ 1.49
Diluted earnings per unit $ 1.45 $ 1.48
9. Recent Accounting Pronouncements
On March 19, 1998 the Financial Accounting Standards Board Emerging
Issues Task Force reached a consensus as to the accounting for internal
acquisition costs incurred in connection with real property. The Task Force
consensus indicates that internal costs related to the acquisition of operating
properties should be expensed as incurred. The Operating Partnership has
previously capitalized such costs and will comply with the consensus
prospectively. The amount of internal acquisition costs capitalized in the
nine-months ended September 30, 1998 and 1997, was $222,000 and $600,000,
respectively.
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, through the Operating Partnership, a portfolio of 201
self-storage facilities, providing storage space for business and personal use
to customers in 19 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 Exchange Act of 1933, as amended, and in Section 21F of
Securities Exchange Act of 1934, as amended. 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 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 ability to effectively compete in the
industries in which it does business; and tax law changes which may change the
taxability of future income.
Liquidity and Capital Resources
Revolving Credit Facility
On February 20, 1998, the Operating Partnership entered into a new $150
million unsecured credit facility which replaces in its entirety the Operating
Partnership's $75 million revolving credit facility. The new facility matures
February 2001 and provides for funds at LIBOR plus 1.25%, a savings of 65 basis
points over the Operating Partnership's old facility. The Operating Partnership
intends to use funds available from this credit facility to finance future
acquisition and development plans described below. At September 30, 1998, the
outstanding balance of the unsecured credit facility was $150 million.
In June 1998, the Operating Partnership entered into a $30 million term
note that matured on September 24, 1998 and provided for funds at LIBOR plus
1.25%. The term note has been increased to $40 million and extended through
January 1999, and bears interest at LIBOR plus 1.50%. At September 30, 1998,
there was $26.5 million outstanding on the term note. To manage its exposure to
interest rate fluctuations, the Operating Partnership has entered into
LIBOR-based interest rate swap agreements in amounts of $75 million through
October 1998 and $40 million through June 1999.
Umbrella Partnership
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 September 30, 1998, 863,037 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 September 30, 1998, the Operating Partnership acquired nine properties,
increasing its existing presence in Florida, North Carolina and Texas. The nine
acquisitions in the three months ended September 30, 1998 added 640,000 square
feet of space and 7,000 rental units to the Operating Partnership's portfolio.
Future Acquisition and Development Plans
In October, the Operating Partnership continued its external growth
strategy by increasing the number of facilities it owns in Texas, and has
contracts on properties in Louisiana, Mississippi, Ohio, Rhode Island, and Texas
with planned closings in the fourth quarter of 1998 and the first quarter of
1999.
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.
Liquidity
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 additional properties will be provided by borrowings
pursuant to the revolving line of credit and the issuance of UPREIT units.
At September 30, 1998, the Company had $13.5 million available under the
term note. The Company has received a committment from a syndicate of banks for
a $75 million term note that will be used to repay the current $40 million term
note and provide financing for future acquisitions.
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
three months ended September 30, 1998, 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 September 30, 1998 and September 30, 1997.
For the period January 1, 1998 through September 30, 1998 (dollars in thousands)
The Operating Partnership reported revenues of $49,924 during the
period and incurred $13,867 in operating expenses, resulting in net operating
income of $36,057, or 72%. General and administrative expenses of $3,120,
interest expense of $6,448 and depreciation and amortization expenses of 7,377
resulted in income of $19,112 before extraordinary item. An extraordinary loss
of $350 resulted from the write-off of the unamortized financing costs of the
revolving credit facility that was replaced in February 1998. Net income
amounted to $18,762.
Three months ended September 30, 1998, compared to Three months ended September
30, 1997 (dollars in thousands)
The following discussion compares the activities of the Operating
Partnership for the three months ended September 30, 1998 with the activities of
the Operating Partnership for the three months ended September 30, 1997.
Total revenues increased from $13,320 for the three months ended
September 30, 1997 to $19,107 for the three months ended September 30, 1998, an
increase of $5,787 or 43%. Of this, $5,290 resulted from the acquisition of 53
properties during the period July 1, 1997 through September 30, 1998 and $497
was realized as a result of increased rental rates at the 148 properties owned
by the Operating Partnership at June 30, 1997. Overall, same-store revenues grew
3.8% for the three month period ended September 30, 1998 as compared to the same
period in 1997.
Property operating and real estate tax expense increased $1,759 or 48%
during the period. $1,466 was a result of absorbing additional expenses from
operating the newly acquired properties, and $293 related to the operations of
its sites operated more than one year.
General and administrative expenses, which includes losses of $96
realized as the result of replacement of equipment, increased $476 principally
as a result of the need for additional personnel and increased administrative
costs associated with managing the additional properties.
Interest expense increased $2,488 due to the $140.5 million drawn on the
Operating Partnership's line of credit during 1998. Net income increased from
$6,559 to $6,638, an increase of $79 or 1.2%.
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.
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, filed a lawsuit against the Company on June 13, 1995 in
the United States District Court for the Northern District of Ohio in connection
with the formation of the Company as a REIT and related transactions, as well as
the Offering. On April 29, 1996, the Plaintiff filed a first amended complaint
and on September 24, 1997, a second amended complaint was filed. The complaint
alleges, among other things, breach of fiduciary duty, breach of contract,
breach of general partnership/joint venture arrangement, fraud and deceit,
breach of duty of good faith and other causes of action including declaratory
judgement as to the Plaintiff's continuing interest in the Company. The
Plaintiff is seeking 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 claims to
have a continuing interest) and an accounting. The amended complaint also added
Messrs. Attea, Myszka, Rogers and Lannon as additional defendants. The parties
are currently involved in discovery. The Company intends to vigorously defend
the lawsuit. Messrs. Attea, Myszka, Rogers and Lannon have agreed to indemnify
the Company for cost and any loss arising from the lawsuit. The Company believes
that the actual amount of the Plaintiff's recovery in this matter if any, would
be within the ability of these individuals to provide indemnification. The
Company does not believe that the lawsuit will have a material adverse effect
upon the Company.
Item 5. Other Information
No disclosure required.
Item 6. Exhibits and Reports on Form 8-K
(a.) Exhibit 27 - Financial data schedule.
(b.) Reports on Form 8-K
On July 6, 1998, the Company filed a Current Report on Form 8-K, reporting
the acquisition of ten self-storage facilities. In addition, an unaudited
Pro Forma Combined Balance Sheet and Statement of Operations at and for the
three months ended March 31, 1998 and the year ended December 31, 1997 were
presented.
On September 25, 1998, the Company filed a Current Report on Form 8-K
reporting the acquisition of four self-storage facilities. In addition, an
unaudited Pro Forma Combined Balance Sheet and Statement of Operations at
and for the six months ended June 30, 1998 and the year ended December 31,
1997 were presented.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Sovran Acquisition Limited Partnership
By: SOVRAN HOLDINGS, INC.
Its: General Partner
November 13, 1998 By: / S / David L. Rogers
- ------------------ -----------------------
Date DAVID L. ROGERS,
Chief Financial Officer