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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
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.)
5166 Main Street
Williamsville, NY 14221
________________________
(Address of principal executive offices)
(Zip code)
(716) 633-1850
______________
(Registrant's telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Securities Exchanges on which Registered
___________________ _____________________________
Common Stock, $.01 Par Value New York Stock Exchange
9.85% Series B Cumulative New York Stock Exchange
Redeemable Preferred Stock,
$.01 Par Value
Securities registered pursuant to section 12(g) of the Act:
None
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 [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
As of March 15, 2000, 12,131,168 shares of Common Stock,
$.01 par value per share were outstanding, and the aggregate
market value of the Common Stock held by non-affiliates was
approximately $216,762,816 (based on the closing price of the
Common Stock on the New York Stock Exchange on March 15, 2000).
Exhibit Index is on Pages 49-51
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for Annual Meeting of
Shareholders of the Company to be held on May 24, 2000 (Part
III).
PART I
ITEM 1. BUSINESS
Sovran Self Storage, Inc.(the "Company") is a self-
administered and self managed real estate investment trust
("REIT") which acquires, owns and manages self-storage
properties. (The Company's self-storage properties are
hereinafter referred to collectively as the "Properties" and
individually as a "Property"). The Company began operations on
June 26, 1995. As of March 15, 2000 the Company owned and
operated 225 self-storage properties consisting of approximately
12.7 million net rentable square feet, situated in 21 states. As
of December 31, 1999, the Properties have a weighted average
occupancy of 85% and a weighted average annual rent per occupied
square foot of $7.86. The Company believes that it is the 5th
largest operator of self-storage properties in the United States
based on facilities owned.
The Company seeks to increase cash flow and enhance
shareholder value through aggressive management of the Properties
and selective acquisitions of new self-storage properties.
Aggressive property management entails increasing rents,
increasing occupancy levels, strictly controlling costs,
maximizing collections, strategically expanding and improving the
Properties and, should economic conditions warrant, developing
new properties. The Company believes that there continues to be
significant opportunities for growth through acquisitions, and
constantly seeks to acquire self-storage properties located
primarily in the Eastern United States that are susceptible to
realization of increased economies of scale and enhanced
performance through application of the Company's management
expertise.
The Company was formed to continue the business of its
predecessor company, which had engaged in the self-storage
business since 1985. The Company owns an indirect interest in
each of the Properties through a limited partnership (the
"Partnership") of which the Company holds in total a 93.55%
economic interest and unaffiliated third parties own collectively
a 6.45% limited partnership interest. The Partnership owns a
100% fee simple interest in each of the Properties. The Company
believes that this structure, commonly known as an umbrella
partnership real estate investment trust ("UPREIT"), facilitates
the Company's ability to acquire properties by using units of the
Partnership as currency.
The Company was incorporated on April 19, 1995 under
Maryland law. The Company's principal executive offices are
located at 5166 Main Street, Williamsville, New York 14221, and
its telephone number is (716) 633-1850.
INDUSTRY OVERVIEW
The Company believes that self-storage facilities offer
inexpensive storage space to residential and commercial users.
In addition to fully enclosed and secure storage space, some
operators, including the Company, also offer outside storage for
automobiles, recreational vehicles and boats. The storage sites
are usually fenced and well lighted with gates that are either
manually operated or automated. All facilities have a full-time
manager/leasing. Customers have access to their storage area
during business hours and in certain circumstances are provided
with 24 hour access. Individual storage units are secured by the
customer's lock, which may be purchased from the Company, and the
customer has control of access to the unit.
The Company believes that the self-storage industry is
characterized by a trend toward consolidation, continuing
increase in demand, relatively slow growth in supply and a
targeted market of primarily residential customers.
According to published data, of the approximately 30,000
facilities in the United States, less than 13% are managed by the
ten largest operators. The remainder of the industry is
characterized by numerous small, local operators. The shortage
of skilled operators, the scarcity of financing available to
small operators for acquisitions and expansions and the potential
for savings through economies of scale are factors which are
leading to a consolidation in the industry. The Company believes
that as a result of this trend, significant growth opportunities
exist for operators with proven management systems and sufficient
capital resources.
Demand for self-storage service has increased as indicated
by an increase in industry-wide average rents and in industry
average occupancy. It is expected to remain strong because it is
slow to react to changing conditions and because of various other
factors, including population growth, increased mobility,
expansion of condominium, townhouse and apartment living, and
increasing consumer awareness, particularly by commercial users.
Commercial customers tend to rent larger areas for longer terms,
are more reliable payers and are less sensitive to price
increases. The Company estimates that commercial users account
for approximately 30% of its total occupancy, which is
substantially higher than the reported industry average of 18%.
PROPERTY MANAGEMENT
The Company believes that it has developed substantial
expertise in managing self-storage facilities. Key elements of
the Company's management system include:
- Recruiting, training and retaining capable, aggressive
on-site Property Managers;
- Motivating Property Managers by providing incentive-
based compensation;
- Developing and maintaining an integrated marketing plan
for each Property;
- Performing regular preventative maintenance to avoid
significant repair obligations;
- Linking all facilities to a central customized
management information system; and
- Utilization of a national marketing program that
attracts commercial tenants who have multi-market self-
storage needs.
Each Property is managed by a full-time Property Manager and
one or more assistant managers. Each Property Manager is
responsible for most operational decisions with respect to his or
her Property, including rent charges and maintenance, subject to
certain monetary limits. Assistant managers enable Property
Managers to have sufficient time to perform marketing functions.
Each Property Manager reports to an Area or Regional Manager who
in turn reports to an Executive Vice President. The Company
currently employs two Executive Vice Presidents who primarily
focus on marketing and overall supervision of the Area and
Regional Managers. The Area and Regional Managers are
responsible for overseeing site operations.
Property Managers attend a thorough orientation program and
undergo continuous training, which emphasizes telephone skills,
closing techniques, identification of selected marketing
opportunities, networking with possible referral sources, and
familiarization with the Company's customized management
information system. In addition to frequent contact with Area
and Regional Managers and other Company personnel, Property
Managers receive periodic newsletters regarding a variety of
operational issues, and from time to time attend "roundtable"
seminars with other Property Managers.
The Company annually develops a written marketing plan for
each of its Properties which is highly dependent upon local
conditions. The focus of each marketing plan is, in part,
determined by occupancy rates. If all storage units of the same
size at a Property are at or near 90% occupancy, then the plan
will generally include increases in rental rates. If a Property
has excess capacity, then the marketing plan will target selected
markets such as local military bases, colleges, apartment and
condominium complexes, industrial parks, medical centers, retail
shopping malls and office suites. The Company primarily uses
telephone directories to advertise its services, including a map
and when possible, listing Properties in the same marketplace in
a single advertisement. The Company also conducts quarterly
surveys of its competitors' practices, which include "shopping"
competing facilities.
The Company's customized computer system performs billing,
collections and reservation functions for each Property, and also
tracks information used in developing marketing plans based on
occupancy levels, and tenant demographics and histories. The
system generates daily, weekly and monthly financial reports for
each Property that are immediately transmitted to the Company's
principal office each night. The system also requires a Property
Manager to input a descriptive explanation for all debit and
credit transactions, paid-to-date changes, and all other
discretionary activities, which allows the accounting staff at
the Company's principal office to promptly review all such
transactions. Late charges are automatically imposed. More
sensitive activities such as rental rate changes and unit size or
number changes are completed only by Area and Regional Managers.
The Company's customized management information system permits it
to add new facilities to its portfolio with minimal additional
overhead expense.
The Company's Executive Vice Presidents, Regional Managers,
Area Managers and Property Managers are compensated with a base
salary and may, in addition, earn incentive compensation. The
Company annually establishes a target gross income and net
operating income for each Property. As incentive compensation,
Property Managers earn a specific bonus per move-in; and
Executive Vice Presidents, Regional Managers and Area Managers
earn a percentage of the combined net operating incomes in excess
of the targeted levels for all facilities reporting to them.
This incentive compensation program is not subject to any caps or
increment requirements. It is not unusual for any manager to
earn in excess of 10% of the base salary as incentive
compensation. The Company believes that the structure of these
programs causes its managers to exercise their operational
autonomy in a manner to maximize income through increased rental
rates.
ENVIRONMENTAL AND OTHER REGULATIONS
The Company is subject to federal, state, and local
environmental regulations that apply generally to the ownership
of real property and the operation of self-storage facilities.
The Company has not received notice from any governmental
authority or private party of any material environmental
noncompliance, claim, or liability in connection with any of the
Properties, and is not aware of any environmental condition with
respect to any of the Properties that could have a material
adverse effect on the Company's financial condition or results of
operations.
The Properties are also generally subject to the same types
of local regulations governing other real property, including
zoning ordinances. The Company believes that the Properties are
in substantial compliance with all such regulations.
INSURANCE
Each of the Properties is covered by fire, flood and
property insurance, including comprehensive liability, all-risk
property insurance, provided by reputable companies and with
commercially reasonable terms. In addition, the Company
maintains a policy insuring against environmental liabilities
resulting from tenant storage on terms customary for the
industry, and title insurance insuring fee title to the
Properties in an aggregate amount believed to be adequate.
FEDERAL INCOME TAX
The Company has operated, and intends to continue to
operate, in such a manner as to continue to qualify as a REIT
under the Internal Revenue Code of 1986 (the Code), but no
assurance can be given that it will at all times so qualify. To
the extent that the Company continues to qualify as a REIT, it
will not be taxed, with certain limited exceptions, on the
taxable income that is distributed to its shareholders. See
Item 7. "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital
Resources - REIT Qualification and Distribution Requirements".
COMPETITION
The primary factors upon which competition in the self-
storage industry is based are location, rental rates, suitability
of the property's design to prospective tenants' needs, and the
manner in which the property is operated and marketed. The
Company believes it competes successfully on these bases. The
extent of competition depends in significant part on local market
conditions. The Company seeks to locate its facilities so as not
to cause its own Properties to compete with one another for
customers, but the number of self-storage facilities in a
particular area could have a material adverse effect on the
performance of any of the Properties.
Several of the Company's competitors, including Public
Storage Management, Inc., Shurgard Incorporated, U-Haul
International, and Storage USA, Inc., are larger and have
substantially greater financial resources than the Company.
These larger operators may, among other possible advantages, be
capable of greater leverage and the payment of higher prices for
acquisitions.
INVESTMENT POLICY
While the Company emphasizes equity real estate investments,
it may, in its discretion, invest in mortgage and other real
estate interests related to self-storage properties consistent
with its qualification as a REIT. The Company may also retain a
purchase money mortgage for a portion of the sale price in
connection with the disposition of Properties from time to time.
Current market conditions preclude the Company from issuing
common or preferred equity. Should investment opportunities
become available, the Company may look to acquire self-storage
properties via a joint-venture partnership or similar entity.
The Company may or may not have a significant investment in such
a venture, but would use such an opportunity to expand its
portfolio of branded and managed properties.
Subject to the percentage of ownership limitations and gross
income tests necessary for REIT qualification, the Company also
may invest in securities of entities engaged in real estate
activities or securities of other issuers, including for the
purpose of exercising control over such entities.
DISPOSITION POLICY
Management periodically reviews the assets comprising the
Company's portfolio. Any disposition decision will be based on a
variety of factors, including, but not limited to, the
(i) potential to continue to increase cash flow and value,
(ii) sale price, (iii) strategic fit with the rest of the
Company's portfolio, (iv) potential for, or existence of,
environmental or regulatory issues, (v) alternative uses of
capital, and (vi) maintaining qualification as a REIT. In 1999,
the Company sold a facility located in Tennessee for $2.5 million
resulting in a gain of $.65 million.
DISTRIBUTION POLICY
The Company intends to pay regular quarterly distributions
to its shareholders. However, future distributions by the
Company will be at the discretion of the Board of Directors and
will depend on the actual cash available for distribution, the
Company's financial condition and capital requirements, the
annual distribution requirements under the REIT provisions of the
Code and other such factors as the Board of Directors deems
relevant. In order to maintain its qualification as a REIT, the
Company must make annual distributions to shareholders of at
least 95% of its REIT taxable income (which does not include
capital gains). Under certain circumstances, the Company may be
required to make distributions in excess of cash available for
distribution in order to meet this requirement.
The Board of Directors declared a dividend distribution of
one preferred share purchase right for each outstanding common
share to shareholders of record at the close of business on
December 16, 1996. These rights will become exercisable if a
person becomes an "acquiring person" by acquiring 10% or more of
the common shares of Sovran Self Storage, Inc. or if a person
commences a tender offer that would result in that person owning
10% or more of the common shares.
BORROWING POLICY
The Board of Directors of the Company currently limits the
amount of debt that may be incurred by the Company to less than
50% of the sum of market value of the issued and outstanding
Common and Preferred Stock plus the Company's debt (Market
Capitalization). The Company, however, may from time to time re-
evaluate and modify its borrowing policy in light of then current
economic conditions, relative costs of debt and equity capital,
market values of properties, growth and acquisition opportunities
and other factors.
The Company increased the balance outstanding on the $150
million credit facility from $112 million in 1998 to $123 million
at December 31, 1999. The proceeds were used to fund a portion
of the 1999 acquisitions. The credit facility matures
February 2001 and provides for funds at LIBOR plus 1.25%.
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 Company also has a $75 million unsecured term note that
bears interest at LIBOR plus 1.50%.
To the extent that the Company desires to obtain additional
capital to pay distributions, to provide working capital, to pay
existing indebtedness or to finance acquisitions, expansions or
development of new properties, the Company may utilize preferred
stock offerings, floating or fixed rate debt financing, retention
of cash flow (subject to satisfying the Company's distribution
requirements under the REIT rules) or a combination of these
methods. Additional debt financing may also be obtained through
mortgages on its Properties, which may be recourse, non-recourse,
or cross-collateralized and may contain cross-default provisions.
The Company has not established any limit on the number or amount
of mortgages that may be placed on any single Property or on its
portfolio as a whole. For additional information regarding
borrowings, see Item 7. "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and
Capital Resources" and Note 5 to the Consolidated Financial
Statements filed herewith.
EMPLOYEES
The Company currently employs a total of 608 employees,
including 242 Property Managers, 14 Area Managers, 6 Regional
Managers, 2 Executive Vice Presidents and 300 part-time
employees. At the Company's headquarters, in addition to the 3
senior executive officers, the Company employs 41 people engaged
in various support activities such as accounting and management
information systems. None of the Company's employees is covered
by a collective bargaining agreement. The Company considers its
employee relations to be excellent.
ITEM 2. PROPERTIES
OVERVIEW
At December 31, 1999, the Company, owned 100% fee simple
interests in, and operated, a total of 222 Properties, consisting
of approximately 12.5 million net rentable square feet, situated
in twenty-one states in the Eastern and Midwestern United States,
Arizona and Texas. As of December 31, 1999, the Properties had a
weighted average occupancy of 85% and a weighted average annual
rent per square foot of $7.86. The Company believes that it is
the 5th largest operator of self-storage properties in the United
States based on facilities owned.
The Company's self-storage facilities offer inexpensive,
easily accessible, enclosed storage space to residential and
commercial users on a month-to-month basis. Most of the
Company's Properties are fenced with computerized gates and are
well lighted. All but twenty-three of the Properties are single-
story, thereby providing customers with the convenience of direct
vehicle access to their storage units. All Properties have a
Property Manager on-site during business hours. Customers have
access to their storage areas during business hours, and some
commercial customers are provided 24-hour access. Individual
storage units are secured by a lock furnished by the customer to
provide the customer with control of access to the unit.
Currently, 212 of the Properties conduct business under the
user-friendly trade name "Uncle BoB's Self-Storage" and the
remainder are operated under various names acquired with the
Properties. The Company intends to convert all of the Properties
to the "Uncle BoB's" trade name.
The table below provides certain information regarding the properties:
Uncle
BoB's Occupancy
Year Trade at Mgr.
Location Built Sq. Ft. Name 12/31/99 Acres Units Bldgs. Floors Apt. Construction
__________________________________________________________________________________________________________________________________
ALABAMA
Birmingham I 1990 36,975 Y 79% 2.7 297 9 1 Y Masonry/Steel Roof
Birmingham II 1990 52,550 Y 87% 4.7 404 8 1 Y Masonry/Steel Roof
Montgomery I 1982 74,830 Y 81% 5.0 619 16 1 Y Masonry/Steel Roof
Birmingham III 1970 72,410 Y 77% 4.3 409 6 1 Y Masonry/Steel Roof
Montgomery II 1984 42,305 Y 95% 2.7 287 10 1 N Masonry/Steel Roof
Montgomery III 1988 41,550 Y 90% 2.4 391 9 1 Y Steel Bldg./Steel Roof
Birmingham-Walt 1984 63,380 Y 69% 3.3 390 6 1 Y Masonry Wall/Metal Roof
ARIZONA
Gilbert-Elliot Rd 1995 59,320 Y 79% 3.3 701 8 1 Y Masonry Wall/Metal Roof
Glendale-59th Ave 1997 67,076 Y 82% 4.6 634 7 1 Y Masonry Wall/Metal Roof
Mesa-Baseline 1986 39,125 Y 87% 1.8 393 11 1 Y Masonry Wall/Metal Roof
Mesa-E. Broadway 1986 38,825 Y 75% 1.8 371 5 1 Y Masonry Wall/Metal Roof
Mesa-W. Broadway 1976 36,405 Y 78% 1.9 403 5 1 Y Masonry Wall/Metal Roof
Mesa-Greenfield 1986 48,585 Y 79% 2.1 435 8 1 N Masonry Wall/Metal Roof
Phoenix-Camelback 1984 43,660 Y 76% 2.0 536 7 1 Y Masonry Wall/Metal Roof
Phoenix-Bell 1984 96,630 Y 71% 4.6 942 7 1 Y Metal Wall/Metal Roof
Phoenix-35th Ave 1996 72,140 Y 80% 4.3 728 8 1 Y Masonry Wall/Metal Roof
CONNECTICUT
New Haven 1985 48,290 Y 77% 3.9 392 5 1 N Masonry Wall/Steel Roof
Hartford-Metro I 1988 49,000 Y 91% 10.0 334 10 1 N Steel Bldg./Steel Roof
Hartford-Metro II 1992 39,025 Y 97% 6.0 315 7 1 N Steel Bldg./Steel Roof
FLORIDA
Lakeland I 1985 48,055 Y 79% 3.5 443 11 1 Y Masonry Wall/Steel Roof
Tallahassee I 1973 147,059 Y 80% 18.7 713 21 1 Y Masonry Wall/Tar & Gravel Roof
Tallahassee II 1975 43,740 Y 97% 4.0 241 7 1 Y Masonry Wall/Tar & Gravel Roof
Port St. Lucie 1985 54,250 Y 74% 4.0 597 12 1 N Steel Bldg./Steel Roof
Deltona 1984 63,992 Y 85% 5.0 453 5 1 Y Masonry Wall/Shingle Roof
Jacksonville I 1985 39,882 Y 92% 2.7 295 14 1 Y Masonry Wall/Tar & Gravel Roof
Orlando I 1988 50,445 Y 82% 2.8 594 3 2 Y Steel Bldg./Steel Roof
Ft. Lauderdale 1985 100,900 Y 93% 7.6 647 7 1 Y Steel Bldg./Steel Roof
West Palm I 1985 45,465 Y 74% 3.2 406 6 1 N Steel Bldg./Steel Roof
Melbourne I 1986 83,104 Y 89% 8.3 744 11 1 Y Masonry Wall/Shingled Roof
Pensacola I 1983 108,291 Y 87% 7.5 949 13 1 Y Steel Bldg./Steel Roof
Pensacola II 1986 57,720 Y 94% 3.4 508 9 1 Y Steel Bldg./Steel Roof
Melbourne II 1986 56,039 Y 85% 3.4 618 11 1 N Steel Bldg./Steel Roof
Jacksonville II 1987 53,975 Y 95% 4.4 480 11 1 Y Masonry/Steel Roof
Pensacola III 1986 64,641 Y 93% 6.1 515 12 1 N Steel Bldg./Steel Roof
Pensacola IV 1990 38,850 Y 94% 2.7 280 9 1 Y Masonry/Steel Roof
Pensacola V 1990 39,445 Y 81% 2.6 326 4 1 Y Masonry/Steel Roof
Tampa I 1989 60,516 Y 91% 3.3 877 6 1 N Masonry/Steel Roof
Tampa II 1985 56,081 Y 86% 2.9 782 10 1 N Masonry/Steel Roof
Tampa III 1988 47,321 Y 93% 2.2 665 14 1 N Masonry/Steel Roof
Orlando II 1986 134,834 Y 77% 8.5 1,360 20 1 Y Masonry Wall/Steel Roof
Ft. Myers I 1988 27,654 Y 77% 1.1 267 6 2 Y Steel Bldg./Steel Roof
Ft. Myers II 1991/94 23,053 Y 93% 1.9 300 2 1 Y Masonry/Steel Roof
Tampa IV 1985 58,605 Y 88% 4.0 558 10 1 Y Masonry/Steel Roof
West Palm II 1986 30,993 Y 89% 2.3 382 9 1 Y Masonry/Steel Roof
Ft. Myers III 1986 36,040 Y 91% 2.4 261 9 1 Y Masonry/Steel Roof
Lakeland II 1988 60,010 Y 83% 4.0 591 9 1 N Masonry Wall/Steel Roof
Ft. Myers IV 1987 59,706 Y 97% 4.5 277 4 1 Y Masonry/Steel Roof
Jacksonville III 1987 102,500 Y 84% 5.9 788 13 1 Y Masonry Wall/Shingle Roof
Jacksonville IV 1985 43,895 Y 87% 2.7 506 7 1 Y Steel Bldg./Steel Roof
Jacksonville V 1987/92 53,855 Y 98% 2.9 511 13 2 Y Steel Bldg./Masonry Wall/ Steel Roof
Orlando III 1975 52,704 Y 76% 3.2 504 8 2 N Masonry Wall/Steel Roof
Orlando IV-W 25th St 1984 38,636 Y 87% 2.8 408 6 1 Y Steel Bldg/Steel Roof
Delray I-Mini 1969 50,355 Y 96% 3.5 486 3 1 Y Masonry Wall/Concrete Roof
Delray II-Safeway 1980 70,078 Y 86% 4.3 711 17 1 Y Masonry Wall/Concrete Roof
Tampa-E. Hillborough 1985 84,690 N 80% 5.3 736 16 1 Y Masonry Wall/Metal Roof
Titusville 1986/90 54,850 Y 94% 6.0 417 9 1 Y Metal Wall/Shingle Roof
Ft.Myers-Mall 1991/94 20,881 Y 73% 1.3 230 4 1 Y Masonry/Steel Roof
Indian Harbor-Beach 1985 64,978 Y 91% 4.0 717 15 1 N Masonry Wall/Metal Roof
Hollywood-Sheridan 1988 129,613 N 93% 7.0 1,167 21 1 Y Masonry Wall/Concrete Roof
Pompano Beach-Atlantic 1985 75,154 N 86% 4.0 980 17 1 N Masonry Wall/Concrete Roof
Pompano Beach-Sample 1988 63,610 N 83% 3.6 839 14 1 N Masonry Wall/Metal Roof
Boca Raton-18th St 1991 89,527 N 85% 6.2 1,063 8 1 N Masonry Wall/Metal Roof
Vero Beach 1997 34,450 Y 94% 1.9 314 2 1 N Masonry Wall/Metal Roof
Hollywood-N.21st 1987 58,917 Y 96% 3.1 716 11 1 Y Masonry Wall/Metal Roof
Cocoa 1982 73,242 N 86% 2.5 720 12 1 Y Masonry Wall/Metal Roof
GEORGIA
Savannah 1981 59,530 Y 89% 5.4 499 11 1 Y Masonry Wall/Steel Roof
Atlanta-Metro I 1988 68,935 Y 91% 3.9 525 5 1 Y Steel Bldg./Steel Roof
Atlanta-Metro II 1988 45,300 Y 84% 3.9 375 6 1 Y Steel Bldg./Steel Roof
Atlanta-Metro III 1988 56,695 Y 72% 5.3 408 9 1 Y Steel Bldg./Steel Roof
Atlanta-Metro IV 1989 42,495 Y 84% 3.5 315 7 1 Y Steel Bldg./Steel Roof
Atlanta-Metro V 1988 44,545 Y 82% 4.2 308 3 1 Y Masonry Wall/Tar & Gravel Roof
Atlanta-Metro VI 1986 50,400 Y 81% 3.6 452 7 1 Y Steel Bldg./Steel Roof
Atlanta-Metro VII 1981 39,010 Y 79% 2.5 328 9 2 Y Masonry Wall/Tar & Gravel Roof
Atlanta-Metro VIII 1975 46,791 Y 85% 3.3 438 6 2 Y Masonry Wall/Tar & Gravel Roof
Augusta I 1988 52,360 Y 90% 4.0 408 13 1 Y Steel Bldg./Steel Roof
Macon I 1989 40,700 Y 90% 3.2 353 14 1 Y Steel Bldg./Steel Roof
Augusta II 1987 46,200 Y 87% 3.5 373 4 1 Y Masonry Wall/Steel Roof
Atlanta-Metro IX 1988 55,826 Y 88% 4.6 408 6 1 Y Steel Bldg./Steel Roof
Atlanta-Metro X 1988 47,895 Y 95% 6.8 412 9 1 N Steel Bldg./Steel Roof
Macon II 1989/94 58,915 Y 81% 14.0 540 11 1 Y Steel Bldg./Steel Roof
Savannah II 1988 49,365 Y 95% 2.6 462 8 1 Y Masonry Wall/Steel Roof
Atlanta-Alpharetta 1994 80,540 Y 66% 5.8 551 8 1&2 Y Steel Bldg./Steel Roof
Atlanta-Marietta-Roswell 1996 59,450 Y 83% 6.0 451 8 1&2 Y Steel Bldg./Steel Roof
Atlanta-Doraville 1995 68,465 Y 90% 4.9 636 8 1&2 Y St&Masonry Bldg/Steel Roof
Ft. Oglethorpe 1989 45,125 Y 83% 3.3 444 6 1 Y Masonry Wall/Metal Roof
LOUISIANA
Baton Rouge-Airline 1982 72,120 Y 84% 2.5 412 12 1 Y Masonry Wall/Metal Roof
Baton Rouge-Airline 2 1985 44,895 Y 90% 2.8 444 9 1 N Masonry Wall/Steel Roof
Lafayette-Pinhook 1 1980 57,030 Y 76% 3.2 492 7 1 Y Masonry Wall/Metal Roof
Lafayette-Pinhook 2 1992/94 47,025 Y 80% 2.4 439 2 1 Y Metal Wall/Metal Roof
Lafayette-Ambassador 1975 33,885 Y 79% 2.0 452 3 1 Y Masonry Wall/Shingle Roof
Lafayette-Evangeline 1977 35,230 Y 56% 3.1 353 3 1 Y Masonry Wall/Metal Roof
Lafayette-Guilbeau 1994 63,735 Y 79% 3.4 598 1 1 N Metal Wall/Metal Roof
MAINE
Westbrook 1988 41,000 N 84% 5.9 430 7 1 Y Metal Wall/Metal Roof
MARYLAND
Salisbury 1979 33,560 Y 82% 3.0 416 10 1 N Masonry Wall/Tar & Gravel Roof
Baltimore I-Frederick 1984 21,233 Y 85% 1.9 347 2 3 N Masonry Wall/Shingled Roof
Baltimore II-Gaithersburg 1988 61,834 Y 93% 2.2 539 2 4 Y Masonry Wall/Tar & Gravel Roof
Baltimore III-Landover 1990 51,838 Y 93% 3.1 674 8 1 Y Steel Bldg./Steel Roof
MASSACHUSETTS
New Bedford 1982 42,068 Y 97% 3.4 372 7 1 Y Steel Bldg./Steel Roof
Springfield 1986 42,100 Y 88% 4.7 318 5 1 N Masonry Wall/Shingle Roof
Northbridge 1988 50,410 Y 90% 3.5 356 10 1 N Metal Wall/Metal Roof
Salem 1979 53,205 Y 91% 2.0 498 2 2 Y Steel Wall/Metal Roof
Boston-Metro I 1980 37,875 Y 98% 2.0 401 3 2 Y Masonry Wall/Tar & Gravel Roof
Boston-Metro II 1986 38,315 Y 96% 3.6 439 8 2 N Masonry Wall/Tar & Gravel Roof
MICHIGAN
Grand Rapids 1976 57,900 Y 94% 5.4 526 9 1 Y Masonry Wall/Steel Roof
Grand Rapids II 1983 32,300 Y 95% 8.0 296 6 1 N Masonry & Steel Walls
Kalamazoo 1978 60,218 Y 87% 11.6 672 14 1 Y Steel Bldg/Steel & Shingle Roof
Lansing 1987 45,005 Y 92% 3.8 405 9 1 Y Steel Bldg/Steel Roof
Holland 1978 96,448 Y 94% 13.6 730 18 1 Y Masonry Wall/Steel Roof
MISSISSIPPI
Jackson I 1990 41,960 Y 94% 2.0 343 6 1 Y Masonry/Steel Roof
Jackson II 1990 38,815 Y 88% 2.1 310 9 1 Y Masonry/Steel Roof
Jackson III-155 1995 62,048 Y 97% 1.3 426 2 1 N Metal Wall/Metal Roof
Jackson-N.West 1984 57,175 N 90% 5.2 473 13 1 Y Masonry Wall/Metal Roof
NEW HAMPSHIRE
Salem-Policy 1980 62,775 Y 100% 8.7 546 9 1 Y Masonry Wall/Metal Roof
NEW YORK
Middletown 1988 26,000 Y 96% 2.8 283 4 1 N Steel Bldg./Steel Roof
Buffalo I 1981 76,290 Y 94% 5.1 535 10 1 Y Steel Bldg./Steel Roof
Rochester I 1981 41,834 Y 64% 2.9 407 5 1 Y Steel Bldg./Steel Roof
Rochester II 1980 29,610 Y 90% 3.5 242 9 1 N Masonry Wall/Shingle Roof
Buffalo II 1984 54,635 Y 90% 6.2 438 12 1 Y Steel Bldg./Steel Roof
Syracuse I 1987 73,320 Y 87% 7.5 767 16 1 N Steel Bldg./Steel Roof
Syracuse II 1983 54,650 Y 95% 3.6 424 10 1 Y Steel Bldg./Shingled Roof
Rochester III 1990 67,865 Y 95% 2.7 462 1 1 N Masonry Wall/Shingle Roof
Harriman 1989/95 66,240 Y 85% 6.1 642 10 1 Y Metal Wall/Metal Roof
NORTH CAROLINA
Charlotte 1986 37,815 Y 74% 2.9 333 6 1 Y Steel Bldg./Steel Roof
Fayetteville 1980 90,992 Y 64% 6.2 1,021 12 1 Y Steel Bldg./Steel Roof
Greensboro 1986 45,230 Y 70% 3.4 422 5 1 Y Steel Bldg./Mas. Wall/ Steel Roof
Raleigh I 1985 58,460 Y 79% 5.0 543 8 2 Y Steel Bldg./Steel Roof
Raleigh II 1985 33,125 Y 80% 2.5 325 8 1 Y Steel Bldg./Steel Roof
Charlotte II 1995 48,830 Y 54% 5.6 477 7 1 Y Masonry Wall/Steel Roof
Charlotte III 1995 31,320 Y 92% 2.9 336 6 1 Y Masonry Wall/Steel Roof
Greensboro-Hilltop 1995 32,328 Y 86% 1.0 311 7 1 N Metal Wall/Metal Roof
Greensboro-StageCoach 1997 9,625 Y 89% 2.5 91 2 1 N Metal Wall/Metal Roof
Greensboro-High Point 1993 58,420 Y 65% 2.5 518 9 1 N Steel wall/Metal Roof
Durham-Hillborough 1988/91 67,351 Y 78% 5.0 623 5 1 Y Metal Wall/Metal Roof
Durham-Cornwallis 1990/96 79,040 Y 73% 4.7 665 9 1 Y Masonry Wall/Metal Roof
Jacksonville-Center 1995 50,670 Y 68% 5.0 449 11 1 Y Metal Wall/Metal Roof
Jacksonville-Gum Branch 1989 62,930 Y 83% 5.0 479 14 1 Y Metal Wall/Metal Roof
Jacksonville-N. Marine 1985 43,540 Y 69% 8.4 413 6 1 Y Masonry Wall/Shingle Roof
OHIO
Youngstown 1980 54,830 Y 84% 5.8 364 5 1 Y Steel Bldg./Steel Roof
Cleveland-Metro I 1980 48,930 Y 89% 6.4 350 9 1 Y Steel Bldg./Steel Roof
Cleveland-Metro II 1987 60,890 Y 93% 4.8 453 4 1 Y Steel Bldg./Steel Roof
Cincinnati 1988 48,615 Y 96% 2.8 496 7 1 Y Masonry Wall/Steel Roof
Dayton 1988 62,602 Y 97% 3.6 615 8 1 Y Masonry Wall/Steel Roof
Youngstown II 1988 55,750 Y 90% 3.9 499 7 1 Y Masonry Wall/Steel Roof
Akron 1990 38,320 Y 89% 3.4 296 12 1 Y Masonry Wall/Steel Roof
Cleveland III 1986 68,100 Y 78% 3.4 598 12 1 Y Masonry Wall/Steel Roof
Cleveland IV 1978 65,810 Y 92% 3.5 597 5 1 Y Masonry Wall/Steel Roof
Cleveland V 1979 74,702 Y 92% 3.1 661 9 1&2 Y Masonry Wall/Rolled Roof
Cleveland VI 1979 47,165 Y 90% 2.6 377 8 1 Y Masonry Wall/Concrete Roof
Cleveland VII 1977 70,140 Y 95% 4.3 609 13 1 Y Masonry Wall/Steel Roof
Cleveland VIII 1970 47,975 Y 92% 5.7 477 6 1 N Masonry Wall/Steel Roof
Cleveland IX 1982 54,690 Y 85% 4.4 296 5 1 N Masonry Wall/Steel Roof
Cleveland 10-Avon 1989 46,700 Y 82% 5.8 369 6 1 N Metal Wall/Metal Roof
Warren-Elm 1986 60,230 Y 82% 7.3 498 8 1 Y Masonry Wall/Metal Roof
Warren-Youngstown 1986 59,107 Y 87% 5.0 548 11 1 N Masonry Wall/Metal Roof
Batavia 1988 61,810 N 72% 5.5 547 9 1 N Metal Wall/Steel Roof
PENNSYLVANIA
Allentown 1983 41,700 Y 87% 6.3 342 7 1 Y Masonry Wall/Shingle Roof
Sharon 1975 38,270 Y 92% 3.0 313 5 1 Y Steel Bldg./Steel Roof
Harrisburg I 1983 48,850 Y 96% 4.1 445 9 1 Y Masonry Wall/Steel Roof
Harrisburg II 1985 58,845 Y 90% 9.2 292 10 1 Y Masonry Wall/Steel Roof
Pittsburgh 1990 57,650 Y 90% 3.4 509 6 1 Y Steel Bldg./Steel Roof
Pittsburgh II 1983 102,750 Y 76% 4.8 750 4 2 Y Masonry Wall/Shingled Roof
Harrisburg-Peiffers 1984 63,770 Y 92% 4.1 612 9 1 Y Masonry Wall/Metal Roof
RHODE ISLAND
East Greenwich 1984/88 70,955 Y 91% 4.9 672 9 1 Y Metal Wall/Metal Roof
W. Warwick 1986/94 30,631 Y 89% 2.3 336 4 1 N Metal Wall/Steel Roof
Providence 1984 38,670 Y 98% 3.7 388 7 1 Y Masonry Wall/Tar & Gravel Roof
SOUTH CAROLINA
Charleston I 1985 49,714 Y 92% 3.3 412 11 1 Y Steel Bldg./Mas. Wall/Steel Roof
Columbia I 1985 47,800 Y 94% 3.3 398 7 1 Y Steel Bldg./Steel Roof
Columbia II 1987 58,830 Y 90% 6.0 464 8 1 N Steel Bldg./Steel Roof
Columbia III 1989 41,490 Y 76% 3.5 335 5 2 Y Steel Bldg./Steel Roof
Columbia IV 1986 57,770 Y 89% 5.6 453 7 1 Y Steel Bldg./Steel Roof
Spartanburg 1989 40,450 Y 76% 3.6 350 6 1 Y Steel Bldg./Steel Roof
Charleston II 1985 40,318 Y 98% 2.2 331 10 1 Y Masonry Wall/Steel Roof
TENNESSEE
Chattanooga-Lee Hwy 1987 37,180 Y 88% 3.3 390 6 1 Y Masonry Wall/Metal Roof
Chattanooga-Hwy 58 1985 35,630 Y 80% 2.4 329 4 1 Y Masonry Wall/Metal Roof
Hendersonville 1986/97 93,005 Y 70% 5.7 646 16 1 Y Masonry Wall/Metal Roof
TEXAS
Arlington I 1987 45,965 Y 92% 2.3 384 7 1 Y Masonry Wall/Steel Roof
Arlington II 1986 67,220 Y 73% 3.8 286 11 1 Y Masonry Wall/Steel Roof
Ft. Worth 1986 40,875 Y 92% 2.4 341 3 1 Y Masonry Wall/Asphalt Roof
San Antonio I 1986 49,920 Y 84% 3.9 486 12 1 Y Masonry Wall/Steel Roof
San Antonio II 1986 40,170 Y 80% 1.9 285 7 1 Y Masonry Wall/Steel Roof
San Antonio III 1981 48,782 Y 82% 2.6 495 5 1 Y Masonry Wall/Steel Roof
Universal 1985 35,120 Y 94% 2.4 397 8 1 Y Masonry Wall/Steel Roof
San Antonio IV 1995 44,560 Y 94% 5.4 415 11 1 Y Steel Bldg/Steel Roof
Houston-Eastex 1993/95 70,030 Y 95% 6.4 563 5 1 Y Metal Wall/Steel Roof
Houston-Nederland 1995 61,871 Y 95% 6.3 531 1 1 Y Metal Wall/Steel Roof
Houston-College 1995 35,650 Y 98% 1.8 316 1 1 Y Metal Wall/Steel Roof
Dallas-Skillman 1975 121,659 Y 81% 5.9 1,107 8 1&2 Y Masonry Wall/Steel Roof
Dallas-Centennial 1977 103,783 Y 81% 6.7 1,094 8 1&2 N Masonry Wall/Steel Roof
Dallas-Samuell 1975 79,046 Y 90% 3.8 793 6 1&2 Y Masonry Wall/Steel Roof
Dallas-Hargrove 1975 71,914 Y 86% 3.1 747 5 1&2 Y Masonry Wall/Steel Roof
Houston-Antoine 1984 75,720 Y 83% 4.1 671 9 1 Y Metal Wall/Metal Roof
Katy 1994 44,030 Y 87% 8.6 438 10 1 Y Metal Wall/Metal Roof
Humble 1986 63,589 Y 89% 2.3 601 6 1 Y Masonry Wall/Metal Roof
Houston-Old Katy 1996 52,800 Y 88% 3.0 490 19 1 Y Masonry Wall/Shingle Roof
Webster-Hwy 3 1997 54,850 Y 70% 3.3 536 6 1 Y Masonry Wall/Metal Roof
Carrollton 1997 51,760 Y 84% 3.2 499 5 1 Y Masonry Wall/Metal Roof
San Marcos 1994 61,690 Y 82% 5.0 432 18 1 N Metal Wall/Metal Roof
Austin-McNeil 1994 72,490 Y 78% 7.0 556 19 1 Y Metal Wall/Metal Roof
Austin-FM 1996 60,150 Y 95% 4.9 390 9 1 Y Metal Wall/Metal Roof
Euless 1996 93,120 Y 50% 7.5 499 9 1 Y Metal Wall/Metal Roof
N. Richland Hills 1996 76,545 Y 87% 7.4 549 11 1 Y Metal Wall/Metal Roof
Katy-Franz 1993 67,135 Y 82% 7.2 531 10 1 Y Metal Wall/Metal Roof
Cedar Hill 1985 53,735 N 93% 3.0 416 16 1 Y Metal Wall/Metal Roof
VIRGINIA
Newport News I 1988 50,065 Y 94% 3.2 449 7 1 Y Steel Bldg./Steel Roof
Alexandria 1984 76,334 Y 88% 3.2 1,129 4 2 Y Masonry Wall/Tar & Gravel Roof
Norfolk I 1984 40,350 Y 85% 2.7 328 7 1 Y Steel Bldg./Steel Roof
Norfolk II 1989 45,375 Y 92% 2.1 358 4 1 Y Masonry Wall/Steel Roof
Richmond 1987 52,070 Y 89% 2.7 526 5 1 Y Masonry Wall/Steel Roof
Newport News II 1988/93 63,475 Y 88% 4.7 407 8 1 Y Steel Bldg./Steel Roof
Lynchburg-Lakeside 1982 47,628 Y 88% 5.3 435 10 1 Y Masonry Wall/Steel Roof
Lynchburg-Timberlake 1985 44,150 Y 63% 2.3 384 4 1 Y Masonry Wall/Steel Roof
Lynchburg-Amherst 1987 23,388 Y 89% 1.5 202 3 1 N Masonry Wall/Metal Roof
Christiansburg 1985/90 38,622 Y 79% 3.2 346 6 1 Y Masonry Wall/Metal Roof
Chesapeake 1988/95 37,450 Y 85% 12.0 341 7 1 Y Metal Wall/Steel Roof
Danville 1988 49,672 Y 79% 3.2 408 8 1 N Steel Wall/Metal Roof
Chesapeake-Military 1996 58,435 Y 64% 3.0 592 3 1 N Masonry Wall/Metal Roof
Chesapeake-Volvo 1995 63,250 Y 94% 4.0 533 4 1 N Masonry Wall/Metal Roof
Virginia Beach-Shell 1991 52,566 Y 75% 2.5 588 5 1 N Masonry Wall/Metal Roof
Virginia Beach-Central 1993/95 96,693 Y 70% 5.0 934 6 1 N Masonry Wall/Metal Roof
NorfolK-Naval Base 1975 126,508 Y 84% 5.2 1,272 11 1 N Masonry Wall/Metal Roof
Lynchburg-Timberlake 1990/96 49,727 Y 84% 5.2 458 7 1 N Masonry Wall/Metal Roof
Total for all Properties 12,532,748 961 112,173 1,823
Weighted Average 85%
ITEM 3. 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. The Plaintiff
has since 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 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 and trial. The Company is vigorously defending the
lawsuit. Messrs. Attea, Myszka, Rogers and Lannon have agreed to
indemnify the Company for costs 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter of the
fiscal year covered by this report to a vote of security holders,
through the solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's Common Stock is traded on the New York Stock
Exchange under the symbol "SSS". Set forth below are the high
and low sales prices for the Company's Common Stock for each full
quarterly period within the two most recent fiscal years.
Quarter High Low
1998
1st 32.625 28.75
2nd 29.75 26.188
3rd 29.125 21.25
4th 26.625 23.563
1999
1st 25.5000 23.2500
2nd 27.0625 22.3750
3rd 26.4375 22.0000
4th 23.0625 17.5000
As of March 15, 2000, there were approximately 681 holders
of record of the Company's Common Stock.
The Company has paid quarterly dividends to its shareholders
since the Initial Offering. Reflected in the table below are the
dividends paid in the last three years.
For Federal Income Tax purposes distributions to
shareholders are treated as ordinary income, capital gain, return
of capital or a combination thereof. Distributions to
shareholders for 1999 represent 89.4% ordinary income, 8% return
of capital and a 2.6% capital gain.
History of Dividends Declared on Common Stock
1st Quarter, 1997 $0.520 per share
2nd Quarter, 1997 $0.520 per share
3rd Quarter, 1997 $0.540 per share
4th Quarter, 1997 $0.540 per share
_________________________________________
1st Quarter, 1998 $0.540 per share
2nd Quarter, 1998 $0.540 per share
3rd Quarter, 1998 $0.560 per share
4th Quarter, 1998 $0.560 per share
_________________________________________
1st Quarter, 1999 $0.560 per share
2nd Quarter, 1999 $0.560 per share
3rd Quarter, 1999 $0.570 per share
4th Quarter, 1999 $0.570 per share
ITEM 6. SELECTED FINANCIAL DATA
Predecessor
Company (a)
_________________________________________________________________ ___________
For For
Period Period
From From
6/26/95 1/1/95
(dollars in thousands, At or For Year Ended December 31, to to
except per share data) 1999 1998 1997 1996 12/31/95 6/25/95
____ ____ ____ _________ _______ ________
Operating Data
Total revenues $ 84,256 $ 69,360 $ 49,354 $ 33,597 $ 12,942 $ 9,532
Income before extraordinary item 25,585 23,897 23,119 15,659 6,744 311
Net income 25,585 23,540 23,119 15,659 6,744 311
Income per common share before
extraordinary item - basic 1.96 1.94 1.97 1.88 0.91 -
Net income per common
share - basic 1.96 1.91 1.97 1.88 0.91 -
Net income per common
share - diluted 1.96 1.91 1.96 1.87 0.91 -
Dividends declared per
common share 2.26 2.20 2.12 2.05 1.04 -
Balance Sheet Data
Investment in storage
facilities at cost $556,473 $502,502 $333,036 $220,711 $159,461 $114,008
Total assets 529,719 490,124 327,073 235,415 160,437 84,527
Total debt 203,253 190,059 39,559 - 5,000 69,102
Total liabilities 218,281 203,439 50,319 8,131 10,697 71,311
Series B preferred stock 28,585 - - - - -
Other Data
Net cash provided by
operating activities $ 40,502 $ 34,151 $31,159 $20,152 $ 7,188 $ 2,003
Net cash used in investing
activities (50,836) (153,367) (98,765) (58,760) (157,965) (3,340)
Net cash provided by financing
activities 8,382 119,633 53,486 54,563 151,509 507
Funds from operations available
to common shareholders (b) 35,299 33,932 29,487 19,793 8,036 -
(a) The Company began operations on June 26, 1995, and has no historical results of operations before that date. Results prior
to June 26, 1995 relate to Sovran Capital, Inc. and the Sovran Partnerships.
(b) Funds from operations ("FFO") means income (loss) before minority interest and extraordinary item (computed in accordance
with GAAP) adjusted as follows: (i) less gain on sale of property, (ii) plus depreciation of real estate assets and
amortization of intangible assets exclusive of deferred financing costs, (iii)plus significant non-recurring events
(unsuccessful debt offering costs in 1998), and (iv) less FFO attributable to minority interest. FFO is a supplemental
performance measure for REITs as defined by the National Association of Real Estate Investment Trusts, Inc. FFO is presented
because analysts consider FFO to be one measure of the performance of the Company. FFO does not take into consideration
scheduled principal payments on debt, capital improvements and other obligations of the Company. Accordingly, FFO is not a
substitute for the Company's cash flow or net income as a measure of the Company's liquidity or operating performance or
ability to pay dividends.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of the consolidated financial
condition and results of operations should be read in conjunction with
the financial statements and notes thereto included elsewhere in this report.
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 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 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 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 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.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998
In 1999, the Company recorded rental revenues of $82.4 million, an
increase of $14.2 million or 21% when compared to 1998 rental revenues of
$68.2 million. Of this, $11.9 million resulted from the acquisition of 18
stores during 1999 and from having the 1998 acquisitions included for a
full year of operations. The additional $2.3 million increase resulted
from increased revenues at the 156 core properties considered in same
store sales. For this core group, revenues increased 3.9%, primarily as the
result of rental rate increases which were slightly offset by an average
occupancy decrease of .4% to 86%. Interest and other income increased
to $1.9 million in 1999 from $1.1 million in 1998 due to a $.65 million gain
on the sale of a facility.
Property operating and real estate tax expense increased $4.8
million or 25% during the period. Of this, $3.9 million was incurred
by the facilities acquired in 1999 and from having the
1998 acquisitions included for a full year of operations, and $.9 million
additional cost was incurred in the operation of the 156 core properties.
General and administrative expenses increased $.7 million in 1999.
The increase was primarily a result of increased supervisory and
accounting costs associated with the operation of an increased number of
properties, and the start up and marketing costs related to Uncle Bob's
Flex-a-Space.
In 1999, interest expense increased to $13.9 million from $9.6 million
as a result of increased borrowings under the line of credit. The credit
facility was utilized throughout 1999 to fund the purchase of the 18
stores.
Depreciation and amortization expense increased to $13.1 million from
$10.3 million, primarily as a result of the additional depreciation taken
on the $46 million of real estate assets acquired in 1999 and a full year
of depreciation on 1998 acquisitions.
Earnings before interest, depreciation and amortization, minority
interest and extraordinary loss increased 20.8% from $45.1 million in 1998
to $54.4 million in 1999 as a result of the aforementioned items.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
In 1998, the Company recorded rental revenues of $68.2 million, an
increase of $19.6 million or 40% when compared to 1997 rental revenues of
$48.6 million. Of this, $18.4 million resulted from the acquisition of
fifty stores during 1998 and from having the 1997 acquisitions included for
a full year of operations. The additional $1.2 million increase resulted
from increased revenues at the 111 core properties considered in same store
sales. For this core group, revenues increased 3.8%, primarily as the
result of rental rate increases which were slightly offset by an average
occupancy decrease of 1% to 86.4%. Interest and other income increased to
$1.1 million in 1998 from $.8 million in 1997.
Property operating and real estate tax expense increased $5.8 million
or 42% during the period. Of this, $5.5 million was incurred by the
facilities acquired in 1998 and from having the 1997 acquisitions included
for a full year of operations, and $0.3 million additional cost was
incurred in the operation of the 111 core properties.
General and administrative expenses increased $2.1 million in 1998.
Of the increase, $.5 million related to the costs associated with the
unsuccessful public debt offering in 1998.
The additional increase was primarily a result of increased supervisory and
accounting costs associated with the operation of an increased number of
properties, and the change in the treatment of internal property
acquisition costs as discussed in Note 14 to the consolidated financial
statements.
In 1998, interest expense increased to $9.6 million from $2.2 million
as a result of increased borrowings under the line of credit and term note.
The credit facility and term note were utilized throughout 1998 to fund the
purchase of the fifty stores, as opposed to 1997 in which the Company
issued additional common stock to fund a portion of the acquired stores.
Depreciation and amortization expense increased to $10.3 million from
$7.0 million, primarily as a result of the additional depreciation taken on
the $170 million of real estate assets acquired in 1998 and a full year of
depreciation on 1997 acquisitions.
Earnings before interest, depreciation and amortization, minority
interest and extraordinary loss increased 36.8% from $32.9 million in 1997
to $45.1 million in 1998 as a result of the aforementioned items.
A $.36 million extraordinary loss was recorded in 1998 when the
Company's former unsecured credit facility was replaced with a new line of
credit with more favorable terms.
PRO FORMA YEAR ENDED DECEMBER 31, 1999 COMPARED TO PRO FORMA YEAR ENDED
DECEMBER 31, 1998
The following unaudited pro forma information shows the results of
operations as though the acquisitions of storage facilities in 1999 and
1998, and the preferred stock offering in 1999 had all occurred as of the
beginning of 1998.
Year Ended December 31,
(Dollars in thousands) 1999 1998
_________________________________________________________________
Revenues:
Rental income $84,623 $82,024
Interest and other income 1,897 1,340
_________________________________________________________________
Total revenues 86,520 83,364
_________________________________________________________________
Expenses:
Property operations and
maintenance 17,407 16,680
Real estate taxes 7,521 6,950
General and administrative 5,591 4,940
Interest 14,667 14,667
Depreciation and amortization 13,523 13,523
_________________________________________________________________
Total expenses 58,709 56,760
_________________________________________________________________
Income before minority interest and
extraordinary item 27,811 26,604
_________________________________________________________________
Minority interest (1,791) (1,690)
_________________________________________________________________
Income before extraordinary item $ 26,020 $ 24,914
Extraordinary loss on extinguishment
of debt - (357)
_________________________________________________________________
Net income $ 26,020 $ 24,557
_________________________________________________________________
Series B preferred stock dividend (2,955) (2,955)
_________________________________________________________________
Net income available to
common shareholders $ 23,065 $ 21,602
_________________________________________________________________
Rental revenue of $84.6 million in 1999 increased by 3.2% over 1998's
revenues of $82.0 million, primarily as a result of rate increases at the
stores.
Operating expenses and real estate taxes in 1999 were $24.9 million,
as compared to $23.6 million in 1998, an increase of 5.5%. While cost
efficiencies were enjoyed regarding insurance and yellow-page advertising,
these savings were offset by the Company's paying higher wages to attract
professional managers, and increased property taxes.
General and administrative costs were determined by the Company's
historical costs incurred in the management of 222 properties.
Interest expense in both years was determined by applying the 1999
year-end rate and the applicable non-usage fee associated with the
Company's $150 million credit facility and $75 million term note.
Such unaudited pro forma information is based upon the historical
consolidated statements of operations of the Company. It should be read in
conjunction with the financial statements of the Company and notes thereto.
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.
LIQUIDITY AND CAPITAL RESOURCES
CAPITAL RESOURCES, UNSECURED LINE OF CREDIT AND TERM NOTE
The Company's unsecured credit facility provides availability up to
$150 million, of which $123 million was drawn at December 31, 1999. The
facility matures February 2001 and bears interest at LIBOR plus 1.25%.
The 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-).
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+).
1998 and 1999, there has been a net outflow of capital from the REIT
sector, which has depressed prices of common shares of most REIT's,
including the Company's. Accordingly, management does not feel it
appropriate to issue equity in the form of common shares, because to do so
would be dilutive to existing shareholders. 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 (or combination of both) nature, issuance of preferred stock and
private placement solicitation of public pension funds and other sources of
capital.
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.
In 1999, the Company continued its common stock repurchase program
authorized by the Board of Directors by acquiring 300,500 shares for $6.5
million. At December 31, 1999, the total shares repurchased by the Company
was 376,200 at a total cost of $8.4 million.
ACQUISITION OF PROPERTIES
During 1999 the Company used borrowings pursuant to the line of credit
to acquire 18 properties comprising .9 million square feet from
unaffiliated storage operators. These properties are located in existing
markets in Florida, Lousianna, Rhode Island and Texas. The Company also
entered two new states, Arizona and Maine, during 1999. In 1998, 50
facilities totaling 3.2 million square feet were acquired. At December
31,1999, a total of 222 facilities and 12.5 million square feet of net
rentable storage space was owned and operated by the Company in 21 states.
FUTURE ACQUISITION AND DEVELOPMENT PLANS
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 operations, or to expand in new markets by acquiring several
facilities at once in those new markets.
At December 31, 1999, the Company had contracts totaling $11.2 million
to acquire additional properties in New York, Massachusetts and Texas.
The Company will continue to pursue the acquisition of quality self-
storage properties in markets where it already operates, and in strategic
new markets where a substantial property base can be quickly established.
The Company also intends to expand and enhance 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. The first
distribution of 2000 may be applied toward the Company's 1999 distribution
requirement.
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
1999, the Company's percentage of revenue from such sources exceeded 97%,
thereby passing the 95% test, and no special measures are expected to be
required to enable the Company to maintain its REIT designation.
INTEREST RATE RISK
As of December 31, 1999, the Company has one outstanding interest rate
collar transaction through June 30, 2000. Under the agreement, which is
based on a notional amount of $70 million, if the LIBOR rate exceeds 6.5%,
the bank pays the Company the rate in excess of 6.5% multiplied by $70
million for the outstanding period. If LIBOR drops below 5.265%, the
Company must pay the bank the difference between LIBOR and 5.265%
multiplied by $70 million for the outstanding period.
The net carrying amount of the Company's debt instruments approximates
fair value.
Based upon the Company's indebtedness at December 31, 1999, and taking
the interest rate collar agreements into account, a 1% increase in interest
rates would result in an increase to interest expense of approximately $1.9
million.
INFLATION
The Company does not believe that inflation has had or will have a
direct 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 quarter, 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 geographic 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.
IMPACT OF YEAR 2000
The Company employs several different computer systems for financial
reporting, property management, asset control and payroll. These systems
are purchased by the Company from third parties and therefore there is no
internally generated programming code. The Company's critical applications
relating to financial reporting, property management and asset control were
updated to Year 2000 compliant versions within the last year as part of the
normal maintenance agreements at a cost of less than $50,000.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required is incorporated by reference to the
information appearing under the caption "Interest Rate Risk" in Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" above.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
SOVRAN SELF STORAGE, INC. CONSOLIDATED BALANCE SHEETS
December 31,
_________________
(dollars in thousands, except share data) 1999 1998
Assets ____ ____
Investment in storage facilities:
Land $ 111,833 $ 102,864
Building and equipment 444,640 399,638
_________ _________
556,473 502,502
Less: accumulated depreciation (33,453) (21,339)
_________ _________
Investments in storage facilities, net 523,020 481,163
Cash and cash equivalents 1,032 2,984
Accounts receivable 1,796 1,699
Prepaid expenses and other assets 3,871 4,278
_________ _________
Total Assets $ 529,719 $ 490,124
Liabilities
Line of credit $ 123,000 $ 112,000
Term note 75,000 75,000
Accounts payable and accrued liabilities 4,696 3,542
Deferred revenue 3,322 2,943
Accrued dividends 7,010 6,895
Mortgage payable 5,253 3,059
_________ _________
Total Liabilities 218,281 203,439
Minority interest 23,582 24,020
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 -
Common stock $.01 par value,
100,000,000 shares authorized,
12,299,163 shares outstanding
(12,312,756 at December 31, 1998) 127 124
Additional paid-in capital 281,284 274,638
Unearned restricted stock (339) (418)
Dividends in excess of net income (13,357) (9,689)
Treasury stock at cost, 376,200 shares
(75,700 shares at December 31, 1998) (8,444) (1,990)
_______ _______
Total Shareholders' Equity 287,856 262,665
_______ _______
Total Liabilities and
Shareholders' Equity $ 529,719 $ 490,124
See notes to financial statements. _______ _______
SOVRAN SELF STORAGE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
_________________________
(dollars in thousands,
except per share data) 1999 1998 1997
____ ____ ____
Revenues
Rental income $82,387 $68,231 $48,584
Interest and other income 1,869 1,129 770
_______ _______ _______
Total revenues 84,256 69,360 49,354
Expenses
Property operations and maintenance 17,035 13,793 9,708
Real estate taxes 7,238 5,659 3,955
General and administrative 5,571 4,849 2,757
Interest 13,927 9,601 2,166
Depreciation and amortization 13,138 10,303 7,005
_______ ______ ______
Total expenses 56,909 44,205 25,591
_______ ______ ______
Income before minority interest
and extraordinary item 27,347 25,155 23,763
Minority interest (1,762) (1,258) (644)
_______ ______ _______
Income before extraordinary item 25,585 23,897 23,119
Extraordinary loss on
extinguishment of debt - (357) -
______ ______ ______
Net Income $25,585 $23,540 $23,119
Series B preferred stock dividend (1,239) - -
______ ______ ______
Net income available to common
shareholders $24,346 $23,540 $23,119
====== ====== ======
Per Common Share:
Earnings per common share before
extraordinary item - basic 1.96 1.94 1.97
Extraordinary loss - (0.03) -
______ _______ ______
Earnings per common share - basic $ 1.96 $1.91 $1.97
Earnings per common share - diluted $ 1.96 $1.91 $1.96
Dividends declared per common share $ 2.26 $2.20 $2.12
See notes to financial statements.
SOVRAN SELF STORAGE, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS'
EQUITY
9.85% Series B 9.85%
Preferred Series B Common
Additional Unearned Dividends in
Stock Preferred Stock Common
Paid-in Restricted Excess of Treasury Total
Shares Stock Shares Stock
Capital Stock Net Income Stock Equity
______________ _________ ______ _______
__________ __________ ____________ ________ ______
(dollars in thousands,
except share data)
Balance January 1, 1997 - $ - 10,706,671 $107
$227,719 $ (39) $ (4,158) $ - $ 223,629
Issuance of common stock - - 1,500,000 15
41,929 - - - 41,944
Exercise of stock options - - 14,250 -
328 - - - 328
Issuance of restricted stock - - 200 -
6 (6) - - -
Earned portion of
restricted stock - - - -
- 13 - - 13
Net income - - - -
- - 23,119 - 23,119
Dividends - - - -
- - (25,122) - (25,122)
_________ _______ __________ _____
________ ______ _________ _______ _________
Balance December 31, 1997 - - 12,221,121 122
269,982 (32) (6,161) - 263,911
Net proceeds from issuance
of stock through Dividend
Reinvestment and Stock
Purchase Plan - - 26,543 1
537 - - - 538
Issuance of common stock to
acquire storage facility - - 109,842 1
3,335 - - - 3,336
Exercise of stock options - - 15,750 -
362 - - - 362
Issuance of restricted stock - - 15,200 -
422 (422) - - -
Earned portion of
restricted stock - - - -
- 36 - - 36
Purchase of treasury shares - - (75,700) -
- - - (1,990) (1,990)
Net income - - - -
- - 23,540 - 23,540
Dividends - - - -
- - (27,068) - (27,068)
________ _________ __________ _____
________ ______ _________ _______ _________
Balance December 31, 1998 - - 12,312,756 $124
$274,638 $ (418) $(9,689) $(1,990) $262,665
Net proceeds from issuance of
stock through Dividend
Reinvestment and Stock
Purchase Plan - - 279,157 3
6,432 - - - 6,435
Issuance of 9.85% Series B
Cumulative
Preferred Stock 1,200,000 28,585 - -
- - - - 28,585
Exercise of stock options - - 6,750 -
169 - - - 169
Issuance of restricted stock - - 1,000 -
23 (23) - - -
Earned portion of
restricted stock - - - -
- 102 - - 102
Deferred compensation outside
directors - - - -
22 - - - 22
Purchase of treasury shares - - (300,500) -
- - - (6,454) (6,454)
Net income - - - -
- - 25,585 - 25,585
Dividends - - - -
- - (29,253) - (29,253)
___________________________________________________________________________
________________________
Balance December 31, 1999 1,200,000 $ 28,585 12,299,163 $127 $281,284 $ (339) $ (13,357) $ (8,444) $287,856
===================================================================================================
See notes to financial statements.
SOVRAN SELF STORAGE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
____________________________
(dollars in thousands) 1999 1998 1997
____ ____ ____
Operating Activities
Net income $ 25,585 $ 23,540 $ 23,119
Adjustments to reconcile net
income to net cash provided
by operating activities:
Extraordinary loss - 357 -
Depreciation and amortization 13,138 10,303 7,005
Gain on sale of real estate (652) - -
Minority interest 1,762 1,258 644
Restricted stock earned 102 36 13
Changes in assets and liabilities:
Accounts receivable (73) (812) (162)
Prepaid expenses and other assets (426) (1,051) (283)
Accounts payable and other liabilities 988 483 894
Deferred revenue 78 37 (71)
_______ _______ ______
Net cash provided by operating
activities 40,502 34,151 31,159
Investing Activities
Additions to storage facilities (53,090) (153,367) (98,970)
Proceeds from sale of real estate 2,302 - -
Other assets (48) - 205
_______ _______ ______
Net cash used in investing
activities (50,836) (153,367) (98,765)
Financing Activities
Net proceeds from sale of
common stock 6,604 900 42,273
Net proceeds from sale of
preferred stock 28,585 - -
Proceeds from line of credit 11,000 76,000 36,000
Proceeds from term note - 75,000 -
Financing costs - (1,824) -
Dividends paid - common stock (27,899) (26,772) (24,090)
Dividends paid - preferred stock (1,239) - -
Minority interest distributions (1,936) (1,181) (697)
Purchase of treasury stock (6,454) (1,990) -
Redemption of operating
partnership units (261) - -
Mortgage principal payments (18) (500) -
_______ _______ _______
Net cash provided by
financing activities 8,382 119,633 53,486
_______ _______ _______
Net(decrease) increase in cash (1,952) 417 (14,120)
Cash at beginning of period 2,984 2,567 16,687
_______ _______ _______
Cash at end of period $ 1,032 $ 2,984 $ 2,567
See notes to financial statements.
Year Ended December 31,
______________________________
(dollars in thousands) 1999 1998 1997
____ ____ ____
Supplemental cash flow information
Cash paid for interest $13,966 $ 9,024 $ 2,238
Storage facilities acquired
through issuance of Operating
Partnership Units and Common Stock - 14,703 9,240
Storage facilities acquired through
assumption of mortgage 2,212 - 3,559
Fair value of net liabilities assumed
on the acquisition of storage
facilities 463 1,458 4,144
Dividends declared but unpaid at December 31, 1999, 1998 and 1997 were
$7,010, $6,895, and $6,599, respectively.
See notes to financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Sovran Self Storage, Inc. - December 31, 1999
1. ORGANIZATION
Sovran Self Storage, Inc. (the "Company"), a self-administered and
self-managed real estate investment trust (a REIT), was formed on April 19,
1995 to own and operate self-storage facilities throughout the United
States. On June 26, 1995, the Company commenced operations effective with
the completion of its initial public offering of 5,890,000 shares. Since
its formation the Company has purchased a total of 149 (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 December 31, 1999 to 222
properties in 21 states.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: 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 Partnership, and
thereby controls the operations of the Operating Partnership holding a
93.55% ownership interest therein as of December 31, 1999. The remaining
ownership interests in the Operating Partnership (the "Units") 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.
Cash and Cash Equivalents: The Company considers all highly liquid debt
instruments purchased with maturity of three months or less to be cash
equivalents.
Revenue Recognition: Rental income is recorded when earned. Rental income
received prior to the start of the rental period is included in deferred
revenue.
Interest and Other Income: Other income consists primarily of interest
income, sales of storage-related merchandise (locks and packing supplies)
and commissions from truck rentals. In 1999, other income also includes a
$652 gain on the sale of a facility in Tennessee.
Investment in Storage Facilities: Storage facilities are recorded at cost.
Depreciation is computed using the straight line method over estimated
useful lives of forty years for buildings and improvements, and five to
twenty years for furniture, fixtures and equipment. Expenditures for
significant renovations or improvements which extend the useful life of
assets are capitalized. Repair and maintenance costs are expensed as
incurred.
Whenever events or changes in circumstances indicate that the basis of
the Company's property may not be recoverable, the Company's policy is to
assess any impairment of value. Impairment is evaluated based upon
comparing the sum of the expected undiscounted future cash flows to the
carrying value of the property; on a property by property basis. If the
sum of the cash flow is less than the carrying amount, an impairment loss
is recognized for the amount by which the carrying amount of the asset
exceeds the fair value of the asset. At December 31, 1999 and 1998, no
assets had been determined to be impaired under this policy, and,
accordingly, this policy had no impact on the Company's financial position
or results of operations.
Prepaid Expenses and Other Assets: Included in prepaid expenses and other
assets are prepaid expenses and intangible assets. The intangible assets at
December 31, 1999, consist primarily of loan acquisition costs of
approximately $1,845, net of accumulated amortization of approximately
$1,023; and covenants not to compete of $785, net of accumulated
amortization of $643. Loan acquisition costs are amortized over the terms
of the related debt; and the covenants are amortized over the contract
periods. Amortization expense was $879, $541 and $794 for the periods ended
December 31, 1999, 1998 and 1997, respectively.
Minority Interest: The minority interest reflects the outside ownership
interest of the limited partners of the Operating Partnership. Amounts
allocated to these interests are reflected as an expense in the income
statement and increase the minority interest in the balance sheet.
Distributions to these partners reduce this balance. At December 31, 1999,
minority interest ownership was 853,037 partnership units or 6.45%.
Income Taxes: The Company qualifies as a REIT under the Internal Revenue
Code of 1986, as amended, and will generally not be subject to corporate
income taxes to the extent it distributes at least 95% of its taxable
income to its shareholders and complies with certain other requirements.
Accordingly, no provision has been made for income taxes in the
accompanying financial statements.
Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
3. EARNINGS PER SHARE
The Company reports earnings per share data in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings Per Share."
In computing earnings per share, the Company excludes preferred 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.
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
(Amounts in thousands, 1999 1998 1997
except per share data)
_________________________________________________________________
Numerator:
Net income available to
common shareholders $ 24,346 $ 23,540 $23,119
_________________________________________________________________
Denominator
Denominator for basic
earnings per share -
weighted average
shares 12,409 12,294 11,759
_________________________________________________________________
Effect of Dilutive Securities:
Stock options 3 38 62
Denominator for diluted
earnings per share -
adjusted weighted - average
shares and assumed
conversion 12,412 12,332 11,821
_________________________________________________________________
Basic Earnings per
Common Share $ 1.96 $ 1.91 $1.97
_________________________________________________________________
Diluted Earnings per
Common Share $ 1.96 $ 1.91 $1.96
_________________________________________________________________
4. INVESTMENT IN STORAGE FACILITIES
The following summarizes activity in storage facilities during the years
ended December 31, 1999 and December 31, 1998
(Dollars in Thousands) 1999 1998
________________________________________________________________
Cost:
Beginning balance $502,502 $333,036
Property acquisitions 45,811 157,080
Improvements and equipment additions 9,959 12,940
Dispositions (1,799) (554)
________________________________________________________________
Ending balance $556,473 $502,502
________________________________________________________________
Accumulated Depreciation:
Beginning balance $ 21,339 $ 11,639
Additions during the year 12,259 9,762
Dispositions (145) (62)
________________________________________________________________
Ending balance $ 33,453 $ 21,339
________________________________________________________________
5. 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%. The average
interest rate at December 31, 1999 on the line of credit was approximately
7.10% (6.6% at December 31, 1998). At December 31, 1999, there was $27
million available on the line.
In 1998 the Company recorded an extraordinary loss on the
extinguishment of debt of $357,000 representing the unamortized financing
costs of a former revolving credit facility and related costs.
In December 1998, the Company entered into a $75 million unsecured
term note that matures on December 22, 2000 and bears interest at LIBOR
plus 1.50% (approximately 7.35% at December 31, 1999).
As of December 31, 1999, the Company has one outstanding interest rate
collar transaction through June 30, 2000. Under the agreement, which is
based on a notional amount of $70 million, if the LIBOR rate exceeds 6.5%,
the bank pays the Company the rate in excess of 6.5% multiplied by $70
million for the outstanding period. If LIBOR drops below 5.265%, the
Company must pay the bank the difference between LIBOR and 5.265%
multiplied by $70 million for the outstanding period.
The net carrying amount of the Company's debt instruments approximates
fair value.
6. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The following unaudited pro forma information shows the results of
operations as though the acquisitions of storage facilities in 1999 and
1998, and the preferred stock offering in 1999 had all occurred as of the
beginning of 1998.
Year ended December 31,
______________________________
(Dollars in thousands,
except share data) 1999 1998
_________________________________________________________________
Total revenues $ 86,520 $ 83,364
_________________________________________________________________
Total expenses (58,709) (56,760)
_________________________________________________________________
Minority interest (1,791) (1,690)
_________________________________________________________________
Income before extraordinary loss 26,020 24,914
________________________________________________________________
Net Income $ 26,020 $ 24,557
________________________________________________________________
Net income available to
common shareholders $ 23,065 $ 21,602
_________________________________________________________________
Earnings per common share before
extraordinary loss - basic $ 1.88 $ 1.79
_________________________________________________________________
Earnings per common share - basic $ 1.88 $ 1.76
_________________________________________________________________
Earnings per common share - diluted $ 1.88 $ 1.76
_________________________________________________________________
Common shares used in basic
earnings per share calculation 12,299,163 12,299,163
_________________________________________________________________
Such unaudited pro forma information is based upon the historical
consolidated statements of operations of the Company. It should be read in
conjunction with the financial statements of the Company and notes thereto.
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.
7. STOCK OPTIONS
The Company continues to account for stock-based compensation using
the measurement prescribed by APB Opinion No. 25 which does not recognize
compensation expense because the number of stock options granted is fixed
and the exercise price of the stock options equals the market price of the
underlying stock on the date of grant. Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation," requires
companies that choose not to adopt the new fair value accounting rules to
disclose pro forma net income and earnings per share under the new method.
The Company has established the 1995 Award and Option Plan (the Plan)
for the purpose of attracting and retaining the Company's executive
officers and other employees. The options vest ratably over four and five
years, and must be exercised within ten years from the date of grant. The
exercise price for qualified incentive stock options must be at least equal
to the fair market value at the date of grant. As of December 31, 1999,
options for 383,550 shares were outstanding under the Plan. The total
options available under the Plan (including restricted stock issuances) is
900,000.
The Company also established the 1995 Outside Directors' Stock Option
Plan (the Non-employee Plan) for the purpose of attracting and retaining
the services of experienced and knowledgeable outside directors. The Non-
employee Plan provides for the annual granting of options to purchase 3,000
shares of common stock to each eligible director. Such options vest over a
one year period for initial awards and immediately upon subsequent grants.
The total shares reserved under the Non-employee Plan is 100,000. The
exercise price for options granted under the Non-employee Plan is equal to
fair market value at date of grant. As of December 31, 1999, options for
49,500 shares were outstanding under the Non-employee Plan.
The fair value for the stock options was estimated at the date of
grant using a Black-Scholes option pricing model with the following
weighted-average assumptions: risk-free interest rate of 7.0% for 1999 and
5.5% for 1998; dividend yield of 10% for 1999 and 8% for 1998, volatility
factor of the expected market price of the Company's common stock of .21
for 1999 and .19 for 1998.
The Black-Scholes options valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option valuation
models require the input of highly subjective assumptions including the
expected stock price volatility. Because the Company's employee stock
options have characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of the
fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The
Company's pro forma information for the years ended December 31, 1999, 1998
and 1997 follows (in thousands, except for earnings per share information).
1999 1998 1997
_________________________________________________________________
Pro forma net income available to
common shareholders $ 24,239 $ 23,382 $ 22,976
Pro forma earnings per
common share Basic $ 1.95 $ 1.90 $ 1.96
Diluted $ 1.95 $ 1.90 $ 1.95
The Company has also issued 18,400 shares of restricted stock to
employees which vest over four and five year periods. The fair value of the
restricted stock on the date of grant ranged from $24.22 to $29.19. The
Company charges unearned compensation, a component of shareholders' equity,
for the market value of shares as they are issued. The unearned portion is
then amortized over the vesting period.
A summary of the Company's stock option activity and related information
for the years ended December 31 follows:
1999 1998 1997
___________________________________________________________________________
Weighted Weighted Weighted
average average average
exercise exercise exercise
Options price Options price Options price
___________________________________________________________________________
Outstanding at
beginning of year: 387,600 $25.99 295,250 $25.36 293,500 $ 23.97
Granted 58,200 27.18 110,350 27.91 34,000 29.93
Exercised (6,750) 23.00 (15,750) 23.00 (14,250) 23.00
Forfeited (6,000) 30.62 (2,250) 23.00 (18,000) 24.53
___________________________________________________________________________
Outstanding at end
of year 433,050 $25.32 387,600 $25.99 295,250 $ 25.36
___________________________________________________________________________
Exercisable at end
of year 305,910 $24.27 208,500 $24.19 146,750 $ 25.12
___________________________________________________________________________
Exercise prices for options outstanding as of December 31, 1999 ranged from
$23.00 to $29.66. The weighted average remaining contractual life of those
options is 6.8 years.
8. RETIREMENT PLAN
Employees of the Company qualifying under certain age and service
requirements are eligible to be a participant in a 401(K) Plan which was
effective September 1, 1997. The Company contributes to the Plan at the
rate of 50% of the first 4% of gross wages. Total expense to the Company
was approximately $56,000 and $53,000 for the years ended December 31, 1999
and 1998, respectively.
9. SHAREHOLDER RIGHTS PLAN
In November 1996, the Company adopted a Shareholder Rights Plan and
declared a dividend distribution of one Right for each outstanding share of
common stock. Under certain conditions, each Right may be exercised to
purchase one one-thousandth of a share of Series A Junior Participating
Preferred Stock at a purchase price of $75, subject to adjustment. The
Rights will be exercisable only if a person or group has acquired 10% or
more of the outstanding shares of common stock, or following the
commencement of a tender or exchange offer for 10% or more of such
outstanding shares of common stock. If a person or group acquires more than
10% of the then outstanding shares of common stock, each Right will entitle
its holder to receive, upon exercise, common stock having a value equal to
two times the exercise price of the Right. In addition, if the Company is
acquired in a merger or other business combination transaction, each Right
will entitle its holder to purchase that number of the acquiring Company's
common shares having a market value of twice the Right's exercise price.
The Company will be entitled to redeem the Rights at $.01 per Right at any
time prior to the earlier of the expiration of the Rights in November 2006
or the time that a person has acquired a 10% position. The Rights do not
have voting or dividend rights, and until they become exercisable, have no
dilutive effect on the Company's earnings.
10. PREFERRED STOCK
The Company has authorized 10,000,000 shares of preferred stock, of
which 250,000 shares have been designated as Series A Junior Participating
Cumulative Preferred Stock with a $.01 par value. Upon issuance pursuant to
the Shareholders Right Plan (see note 9), the Series A Junior Preferred
Stock will have certain voting, dividend and liquidation preferences over
common stock, as described in the Form 8-K filed December 3, 1996.
On July 30, 1999, the Company issued 1,200,000 shares of 9.85%
Series B Cumulative Redeemable Preferred Stock. The offering price was $25
per share resulting in net proceeds of $28.8 million after expenses. The
Series B Preferred Stock is not redeemable until on or after July 30, 2004,
after which time the Company may redeem the shares at $25.00 per share
($30,000,000 aggregate), plus any accrued and unpaid dividends. The shares
may be redeemed only with the proceeds of certain sales of equity
securities. Dividends on the Series B Preferred Stock are cumulative from
the date of original issue and are payable quarterly in arrears on the last
day of each March, June, September, and December at a rate of $2.4625 per
annum per share.
Holders of the Series B Preferred Stock generally have no voting
rights. However, if the Company does not pay dividends on the Series B
shares for six or more quarterly periods (whether or not consecutive), the
holders of the shares, voting as a class with the holders of any other
class or series of stock with similar voting rights, will be entitled to
vote for the election of two additional directors to serve on the Board of
Directors until all Series B dividends are paid.
11. SUPPLEMENTARY QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a summary of quarterly results of operations for the
years ended December 31, 1999 and 1998 (dollars in thousands, except per
share data)
1999 Quarter Ended
________________________________________________
March 31 June 30 Sept. 30 Dec. 31
________________________________________________
Revenue $19,451 $20,605 $22,570 $21,630
Net Income $ 5,855 $ 6,173 $ 7,654 $ 5,903
Net income available to
common shareholders $ 5,855 $ 6,173 $ 7,153 $ 5,165
Net Income Per Common
Share (Note 3):
Basic $ 0.47 $ 0.50 $ 0.57 $ 0.42
Diluted $ 0.47 $ 0.50 $ 0.57 $ 0.42
___________________________________________________________________________
1998 Quarter Ended
________________________________________________
March 31 June 30 Sept. 30 Dec. 31
________________________________________________
Revenue $14,375 $16,442 $19,107 $19,436
Income before
extraordinary loss $ 6,005 $ 6,052 $ 6,200 $ 5,640
Net Income $ 5,648 $ 6,052 $ 6,200 $ 5,640
Net Income Per
Common Share (Note 3):
Before extraordinary
loss - Basic $ 0.49 $ 0.49 $ 0.50 $ 0.46
Basic $ 0.46 $ 0.49 $ 0.50 $ 0.46
Diluted $ 0.46 $ 0.49 $ 0.50 $ 0.46
___________________________________________________________________________
12. 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 December 31, 1999 the Company had entered into
contracts for the purchase of four facilities. Three of these
facilities were acquired in February and March, 2000 for a total
cost of $7,917,000.
13. 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. The Plaintiff
has since 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 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 and trial. The Company is vigorously defending the
lawsuit. Messrs. Attea, Myszka, Rogers and Lannon have agreed to
indemnify the Company for costs 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.
14. INTERNAL PROPERTY ACQUISITION COSTS
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 Company had previously
capitalized such costs and has complied with the consensus
prospectively. The amount of such costs capitalized in 1998
(through the date of the pronouncement) and 1997 were $238,000
and $728,000, respectively.
Report of Independent Auditors
The Board of Directors and Shareholders
Sovran Self Storage, Inc.:
We have audited the accompanying consolidated balance sheets
of Sovran Self Storage, Inc. as of December 31, 1999 and 1998 and
the related statements of operations, shareholders' equity and
cash flows for each of the three years in the period ended
December 31,1999. Our audit also included the financial
statement schedule listed in the Index at Item 14(a). These
financial statements and schedule are the responsibility of the
management of Sovran Self Storage, Inc. Our responsibility is to
express an opinion on these financial statements and schedule
based on our audits.
We conducted our audits in accordance with auditing
standards generally accepted in the United States. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Sovran Self Storage, Inc. as of
December 31, 1999 and 1998, and the consolidated results of its
operations and its cash flows for each of the three years in the
period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States. Also in our
opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material
respects the information set forth therein.
Ernst & Young LLP
Buffalo, New York
January 26, 2000
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required is incorporated by reference to
"Election of Directors", including "Executive Officers of the
Company" and "Section 16(a) Beneficial Ownership Reporting
Compliance", in the Company's Proxy Statement for the Annual
Meeting of Shareholders of the Company to be held on May 24,
2000.
ITEM 11. EXECUTIVE COMPENSATION
The information required is incorporated by reference to
"Executive Compensation" and "Compensation of Directors" in the
Company's Proxy Statement for the Annual Meeting of Shareholders
of the Company to be held May 24,2000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required herein is incorporated by reference
to "Security Ownership of Certain Beneficial Owners and
Management" in the Proxy Statement for the Annual Meeting of
Shareholders of the Company to be held on May 24,2000.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required herein is incorporated by reference
to "Certain Transactions" in the Company's Proxy Statement for
the Annual Meeting of Shareholders to be held on May 24, 2000.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) Documents filed as part of this Annual Report on Form
10-K:
1. Financial Statements. Included in Part II, Item 8, of this
report:
(i) Consolidated Balance Sheets for Years Ended
December 31, 1999 and 1998.
(ii) Consolidated Statements of Operations for Years Ended
December 31, 1999, 1998, and 1997.
(iii) Consolidated Statements of Shareholders' Equity for
Years Ended December 31, 1999, 1998, and 1997.
(iv) Consolidated Statements of Cash Flows for Years Ended
December 31, 1999, 1998, and 1997.
(v) Selected Financial Data.
(vi) Notes to Consolidated Financial Statements.
(vii) Report of Independent Auditors.
2. The following financial statement Schedule as of the period
ended December 31, 1999 is included in this Annual Report on
Form 10-K.
Schedule III Real Estate and Accumulated Depreciation.
All other Consolidated financial schedules are omitted
because they are inapplicable, not required, or the information
is included elsewhere in the consolidated financial statements or
the notes thereto.
3. Exhibits
The exhibits required to be filed as part of this Annual
Report on Form 10-K have been included as follows:
3.1(a)* Amended and Restated Articles of Incorporation of the
Registrant.
3.1(b) Articles Supplementary to the Amended and Restated
Articles of Incorporation of the Registrant classifying
and designating the series A Junior Participating
Cumulative Preferred Stock. Incorporated by reference
to Exhibit 3.1 to the Registrant's Form 8-A filed
December 3, 1996.
3.1(c) Articles Supplementary to the Amended and Restated
Articles of Incorporation of the Registrant classifying
and designating the 9.85% Series B Cumulative
Redeemable Preferred Stock. Incorporated by reference
to Exhibit 1.6 to Registrant's Form 8-A filed July 29,
1999.
3.2* Bylaws of the registrant.
4.1 Shareholder Rights Plan. Incorporated by reference to
Exhibit 4.1 to the Registrant's Form 8-A filed
December 3, 1996.
10.1* Form of Agreement of Limited Partnership of Sovran
Acquisition Limited Partnership.
10.2* Form of Non-competition Agreement between the
Registrant and Charles E. Lannon.
10.3* Form of Non-competition Agreement between the
Registrant and Robert J. Attea.
10.4* Form of Non-competition Agreement between the
Registrant and Kenneth F. Myszka.
10.5* Form of Non-competition Agreement between the
Registrant and David L. Rogers
10.6* Sovran Self Storage, Inc. 1995 Award and Option Plan.
10.7* Sovran Self Storage, Inc. 1995 Outside Directors' Stock
Option Plan.
10.8* Sovran Self Storage Incentive Compensation Plan for
Executive Officer.
10.9* Restricted Stock Agreement between the Registrant and
David L. Rogers.
10.10* Form of Supplemental Representations, Warranties and
Indemnification Agreement among the Registrant and
Robert J. Attea, Charles E. Lannon, Kenneth F. Myszka
and David L. Rogers.
10.11* Form of Pledge Agreement among the Registrant and
Robert J. Attea, Charles E. Lannon, Kenneth F. Myszka
and David L. Rogers.
10.12* Form of Indemnification Agreement between the
Registrant and certain Officers and Directors of the
Registrant.
10.13* Form of Subscription Agreement (including Registration
Rights Statement) among the Registrant and subscribers
for 422,171 Common Shares.
10.14* Form of Registration Rights and Lock-Up Agreement among
the Registrant and Robert J. Attea, Charles E. Lannon,
Kenneth F. Myszka and David L. Rogers.
10.15* Form of Facilities Services Agreement between the
Registrant and Williamsville Properties, Inc.
10.16 Term Loan Agreement. Incorporated by reference to
Exhibit 10.16 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1998.
10.17 Revolving Credit Agreement among Registrant, the
Partnership, Fleet National Bank and other lenders
named therein. Incorporated by reference to
Exhibit 10.1 to Registrant's report on Form 10-Q for
the quarter ended March 31, 1998.
10.18 Sovran Self Storage, Inc. Deferred Compensation Plan
for Directors. Incorporated by reference to Appendix A
to Registrant's Proxy Statement for the 1999 Annual
Meeting of Shareholders.
12.1 Statement Re: Computation of Earnings to Fixed Charges
21 Subsidiary of the Company. The Company's only
subsidiary is Sovran Holdings, Inc.
23 Consent of Independent Auditors.
27 Financial Data Schedule.
(b) Report on Form 8-K:
None.
* Incorporated by reference to the same numbered exhibits as
filed in the Company's Registration Statement on Form S-11
(File No. 33-91422) filed June 19, 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
March 30, 2000 By: /s/ David L. Rogers
____________________________
David L. Rogers,
Chief Financial Officer,
Secretary
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
Signature Title Date
/s/Robert J. Attea Chairman of the March 30, 2000
______________________ Board of Directors
Robert J. Attea Chief Executive
Officer and Director
(Principal Executive
Officer)
/s/Kenneth F. Myszka President, Chief March 30, 2000
______________________ Operating Officer
Kenneth F. Myszka and Director
/s/David L. Rogers Chief Financial March 30, 2000
______________________ Officer (Principal
David L. Rogers Financial and
Accounting Officer)
/s/John Burns Director March 30, 2000
______________________
John Burns
/s/Michael A. Elia Director March 30, 2000
______________________
Michael A. Elia
/s/Anthony P. Gammie Director March 30, 2000
______________________
Anthony P. Gammie
/s/Charles E. Lannon Director March 30, 2000
______________________
Charles E. Lannon
Sovran Self Storage, Inc.
Schedule III
Combined Real Estate and Accumulated Depreciation
(in thousands)
December 31, 1999
Cost
Capitalized
Initial Subsequent to Gross
Amount at Which
Cost to Company Acquisition Carried at
Close of Period
___________________________ _____________
____________________________
Building, Building,
Building
Equipment Equipment
Equipment
and and Land
and Accumulated
Description ST Land Improvements Improvements Land
Improvements Total Depreciation Acquired
Boston-Metro I MA $ 363 $ 1,679 $ 123 $ 363
$1,802 $2,165 $ 209 6/26/95
Boston-Metro II MA 680 1,616 101 680
1,717 2,397 197 6/26/95
E. Providence RI 345 1,268 97 345
1,365 1,710 160 6/26/95
Charleston I SC 416 1,516 114 416
1,630 2,046 198 6/26/95
Lakeland I FL 397 1,424 51 397
1,475 1,872 177 6/26/95
Charlotte NC 308 1,102 128 308
1,230 1,538 134 6/26/95
Tallahassee I FL 770 2,734 1,205 770
3,939 4,709 354 6/26/95
Youngstown OH 239 1,110 164 239
1,274 1,513 155 6/26/95
Cleveland-Metro I OH 179 836 201 179
1,037 1,216 113 6/26/95
Cleveland-Metro II OH 701 1,659 93 701
1,752 2,453 208 6/26/95
Tallahassee II FL 204 734 167 204
901 1,105 102 6/26/95
Pt. St. Lucie FL 395 1,501 176 395
1,677 2,072 214 6/26/95
Deltona FL 483 1,752 290 483
2,042 2,525 228 6/26/95
Middletown NY 224 808 153 224
961 1,185 108 6/26/95
Buffalo I NY 423 1,531 740 497
2,197 2,694 231 6/26/95
Rochester I NY 395 1,404 47 395 1,451 1,846 163 6/26/95
Salisbury MD 164 760 204 164 964 1,128 99 6/26/95
New Bedford MA 367 1,325 197 367 1,522 1,889 167 6/26/95
Fayetteville NC 853 3,057 102 853 3,159 4,012 359 6/26/95
Allentown PA 199 921 766 203 1,683 1,886 129 6/26/95
Jacksonville I FL 152 728 181 152 909 1,061 116 6/26/95
Columbia I SC 268 1,248 37 268 1,285 1,553 150 6/26/95
Rochester II NY 230 847 109 234 952 1,186 112 6/26/95
Savannah I GA 463 1,684 148 463 1,832 2,295 213 6/26/95
Greensboro NC 444 1,613 137 444 1,750 2,194 200 6/26/95
Raleigh I NC 649 2,329 123 649 2,452 3,101 277 6/26/95
New Haven CT 387 1,402 316 387 1,718 2,105 173 6/26/95
Atlanta-Metro I GA 844 2,021 245 844 2,266 3,110 254 6/26/95
Atlanta-Metro II GA 302 1,103 98 303 1,200 1,503 149 6/26/95
Buffalo II NY 315 745 118 315 863 1,178 103 6/26/95
Raleigh II NC 321 1,150 167 321 1,317 1,638 149 6/26/95
Columbia II SC 361 1,331 93 374 1,411 1,785 172 6/26/95
Columbia III SC 189 719 124 189 843 1,032 107 6/26/95
Columbia IV SC 488 1,188 135 488 1,323 1,811 162 6/26/95
Atlanta-Metro III GA 430 1,579 111 430 1,690 2,120 208 6/26/95
Orlando I FL 513 1,930 152 513 2,082 2,595 256 6/26/95
Spartanburg SC 331 1,209 39 331 1,248 1,579 148 6/26/95
Sharon PA 194 912 213 194 1,125 1,319 128 6/26/95
Ft. Lauderdale FL 1,503 3,619 176 1,503 3,795 5,298 453 6/26/95
West Palm I FL 398 1,035 57 398 1,092 1,490 148 6/26/95
Atlanta-Metro IV GA 423 1,015 138 423 1,153 1,576 135 6/26/95
Atlanta-Metro V GA 483 1,166 105 483 1,271 1,754 152 6/26/95
Atlanta-Metro VI GA 308 1,116 185 308 1,301 1,609 163 6/26/95
Atlanta-Metro VII GA 170 786 111 174 893 1,067 113 6/26/95
Atlanta-Metro VIII GA 413 999 242 413 1,241 1,654 146 6/26/95
Baltimore I MD 154 555 109 154 664 818 79 6/26/95
Baltimore II MD 479 1,742 436 479 2,178 2,657 226 6/26/95
Augusta I GA 357 1,296 91 357 1,387 1,744 159 6/26/95
Macon I GA 231 1,081 73 231 1,154 1,385 139 6/26/95
Melbourne I FL 883 2,104 1,128 883 3,232 4,115 299 6/26/95
Newport News VA 316 1,471 171 316 1,642 1,958 194 6/26/95
Pensacola I FL 632 2,962 179 651 3,122 3,773 373 6/26/95
Augusta II GA 315 1,139 142 315 1,281 1,596 147 6/26/95
Hartford-Metro I CT 715 1,695 172 715 1,867 2,582 206 6/26/95
Atlanta-Metro IX GA 304 1,118 200 304 1,318 1,622 152 6/26/95
Alexandria VA 1,375 3,220 83 1,375 3,303 4,678 372 6/26/95
Pensacola II FL 244 901 115 244 1,016 1,260 140 6/26/95
Melbourne II FL 834 2,066 107 834 2,173 3,007 289 6/26/95
Hartford-Metro II CT 234 861 55 234 916 1,150 106 6/26/95
Atlanta-Metro X GA 256 1,244 72 256 1,316 1,572 164 6/26/95
Norfolk I VA 313 1,462 189 313 1,651 1,964 176 6/26/95
Norfolk II VA 278 1,004 143 278 1,147 1,425 145 6/26/95
Birmingham I AL 307 1,415 50 307 1,465 1,772 169 6/26/95
Birmingham II AL 730 1,725 81 730 1,806 2,536 208 6/26/95
Montgomery I AL 863 2,041 121 863 2,162 3,025 252 6/26/95
Jacksonville II FL 326 1,515 119 326 1,634 1,960 191 6/26/95
Pensacola III FL 369 1,358 220 369 1,578 1,947 196 6/26/95
Pensacola IV FL 244 1,128 103 244 1,231 1,475 156 6/26/95
Pensacola V FL 226 1,046 197 226 1,243 1,469 155 6/26/95
Tampa I FL 1,088 2,597 239 1,088 2,836 3,924 339 6/26/95
Tampa II FL 526 1,958 210 526 2,168 2,694 284 6/26/95
Tampa III FL 672 2,439 208 672 2,647 3,319 317 6/26/95
Jackson I MS 343 1,580 153 343 1,733 2,076 207 6/26/95
Jackson II MS 209 964 235 209 1,199 1,408 133 6/26/95
Richmond VA 443 1,602 145 443 1,747 2,190 209 8/25/95
Orlando II FL 1,161 2,755 195 1,162 2,949 4,111 335 9/29/95
Birmingham III AL 424 1,506 219 424 1,725 2,149 185 1/16/96
Macon II GA 431 1,567 58 431 1,625 2,056 172 12/1/95
Harrisburg I PA 360 1,641 159 360 1,800 2,160 197 12/29/95
Harrisburg II PA 627 2,224 183 636 2,398 3,034 255 12/29/95
Syracuse I NY 470 1,712 120 472 1,830 2,302 191 12/27/95
Ft. Myers FL 205 912 76 206 987 1,193 143 12/28/95
Ft. Myers II FL 412 1,703 195 413 1,897 2,310 258 12/28/95
Newport News II VA 442 1,592 65 442 1,657 2,099 170 1/5/96
Montgomery II AL 353 1,299 64 353 1,363 1,716 150 1/23/96
Charleston II SC 237 858 128 232 991 1,223 100 3/1/96
Tampa IV FL 766 1,800 150 766 1,950 2,716 182 3/28/96
Arlington I TX 442 1,767 84 442 1,851 2,293 174 3/29/96
Arlington II TX 408 1,662 171 408 1,833 2,241 201 3/29/96
Ft. Worth TX 328 1,324 76 328 1,400 1,728 134 3/29/96
San Antonio I TX 436 1,759 140 436 1,899 2,335 186 3/29/96
San Antonio II TX 289 1,161 126 289 1,287 1,576 127 3/29/96
Syracuse II NY 481 1,559 311 495 1,856 2,351 166 6/5/96
Montgomery III AL 279 1,014 120 279 1,134 1,413 110 5/21/96
West Palm II FL 345 1,262 78 345 1,340 1,685 131 5/29/96
Ft. Myers III FL 229 884 57 229 941 1,170 93 5/29/96
Pittsburgh PA 545 1,940 75 545 2,015 2,560 182 6/19/96
Lakeland II FL 359 1,287 735 359 2,022 2,381 143 6/26/96
Springfield MA 251 917 371 297 1,242 1,539 127 6/28/96
Ft. Myers IV FL 344 1,254 125 344 1,379 1,723 129 6/28/96
Cincinnati OH 557 1,988 51 557 2,039 2,596 178 7/23/96
Dayton OH 667 2,379 51 667 2,430 3,097 211 7/23/96
Baltimore III MD 777 2,770 50 777 2,820 3,597 246 7/26/96
Jacksonville III FL 568 2,028 553 568 2,581 3,149 206 8/23/96
Jacksonville IV FL 436 1,635 91 436 1,726 2,162 172 8/26/96
Pittsburgh II PA 627 2,257 562 631 2,815 3,446 220 8/28/96
Jacksonville V FL 535 2,033 75 538 2,105 2,643 210 8/30/96
Charlotte II NC 487 1,754 24 487 1,778 2,265 150 9/16/96
Charlotte III NC 315 1,131 30 315 1,161 1,476 98 9/16/96
Orlando III FL 314 1,113 291 314 1,404 1,718 115 10/30/96
Rochester III NY 704 2,496 70 708 2,562 3,270 191 12/20/96
Youngstown II OH 600 2,142 66 600 2,208 2,808 168 1/10/97
Akron OH 413 1,478 29 413 1,507 1,920 115 1/10/97
Cleveland III OH 751 2,676 289 751 2,965 3,716 222 1/10/97
Cleveland IV OH 725 2,586 305 725 2,891 3,616 228 1/10/97
Cleveland V OH 637 2,918 410 637 3,328 3,965 250 1/10/97
Cleveland VI OH 495 1,781 275 495 2,056 2,551 156 1/10/97
Cleveland VII OH 761 2,714 394 761 3,108 3,869 246 1/10/97
Cleveland VIII OH 418 1,921 528 418 2,449 2,867 194 1/10/97
Cleveland IX OH 606 2,164 101 606 2,265 2,871 173 1/10/97
Grand Rapids I MI 455 1,631 31 455 1,662 2,117 124 1/17/97
Grand Rapids II MI 219 790 103 219 893 1,112 79 1/17/97
Kalamazoo MI 516 1,845 102 516 1,947 2,463 143 1/17/97
Lansing MI 327 1,332 7 327 1,339 1,666 99 1/17/97
Holland MI 451 1,830 319 451 2,149 2,600 175 1/17/97
San Antonio III TX 474 1,686 113 474 1,799 2,273 134 1/30/97
Universal TX 346 1,236 56 346 1,292 1,638 98 1/30/97
San Antonio IV TX 432 1,560 61 432 1,621 2,053 127 1/30/97
Houston-Eastex TX 634 2,565 39 634 2,604 3,238 184 3/26/97
Houston-Nederland TX 566 2,279 63 566 2,342 2,908 165 3/26/97
Houston-College TX 293 1,357 66 293 1,423 1,716 101 3/26/97
Lynchburg-Lakeside VA 335 1,342 107 335 1,449 1,784 120 3/31/97
Lynchburg-Timberlake VA 328 1,315 175 328 1,490 1,818 114 3/31/97
Lynchburg-Amherst VA 155 710 111 152 824 976 67 3/31/97
Christiansburg VA 245 1,120 80 245 1,200 1,445 82 3/31/97
Chesapeake VA 260 1,043 154 260 1,197 1,457 81 3/31/97
Danville VA 326 1,488 25 326 1,513 1,839 106 3/31/97
Orlando-W 25th St FL 289 1,160 58 289 1,218 1,507 87 3/31/97
Delray I-Mini FL 491 1,756 297 491 2,053 2,544 141 4/11/97
Savannah II GA 296 1,196 96 296 1,292 1,588 92 5/8/97
Delray II-Safeway FL 921 3,282 114 921 3,396 4,317 223 5/21/97
Cleveland X-Avon OH 301 1,214 148 303 1,360 1,663 93 6/4/97
Dallas-Skillman TX 960 3,847 418 960 4,265 5,225 315 6/30/97
Dallas-Centennial TX 965 3,864 386 943 4,272 5,215 307 6/30/97
Dallas-Samuell TX 570 2,285 334 570 2,619 3,189 195 6/30/97
Dallas-Hargrove TX 370 1,486 221 370 1,707 2,077 140 6/30/97
Houston-Antoine TX 515 2,074 218 515 2,292 2,807 169 6/30/97
Atlanta-Alpharetta GA 1,033 3,753 132 1,033 3,885 4,918 262 7/24/97
Atlanta-Marietta GA 769 2,788 27 769 2,815 3,584 179 7/24/97
Atlanta-Doraville GA 735 3,429 46 735 3,475 4,210 214 8/21/97
Greensboro-Hilltop NC 268 1,097 55 268 1,152 1,420 71 9/25/97
GreensboroStgCch NC 89 376 34 89 410 499 27 9/25/97
Baton Rouge-Airline LA 396 1,831 160 396 1,991 2,387 132 10/9/97
Baton Rouge-Airline2 LA 282 1,303 87 282 1,390 1,672 93 11/21/97
Harrisburg-Peiffers PA 635 2,550 61 637 2,609 3,246 138 12/3/97
Chesapeake-Military VA 542 2,210 42 542 2,252 2,794 113 2/5/98
Chesapeake-Volvo VA 620 2,532 49 620 2,581 3,201 129 2/5/98
Virginia Beach Shell VA 540 2,211 45 540 2,256 2,796 114 2/5/98
Virginia Beach
Central VA 864 3,994 62 864 4,056 4,920 202 2/5/98
Norfolk-Naval Base VA 1,243 5,019 72 1,243 5,091 6,334 249 2/5/98
Tampa-E.Hillsborough FL 709 3,235 218 709 3,453 4,162 214 2/4/98
Northbridge MA 441 1,788 36 441 1,824 2,265 89 2/9/98
Harriman NY 843 3,394 59 843 3,453 4,296 168 2/4/98
Greensboro-High PointNC 397 1,834 136 397 1,970 2,367 97 2/10/98
Lynchburg-Timberlake VA 488 1,746 69 488 1,815 2,303 85 2/18/98
Titusville FL 492 1,990 16 492 2,006 2,498 95 2/25/98
Salem MA 733 2,941 322 733 3,263 3,996 150 3/3/98
Chattanooga-Lee Hwy TN 384 1,371 102 384 1,473 1,857 75 3/27/98
Chattanooga-Hwy 58 TN 296 1,198 89 296 1,287 1,583 60 3/27/98
Ft. Oglethorpe GA 349 1,250 39 349 1,289 1,638 60 3/27/98
Birmingham-Walt AL 544 1,942 176 544 2,118 2,662 108 3/27/98
East Greenwich RI 702 2,821 109 702 2,930 3,632 128 3/26/98
Durham-Hillborough NC 775 3,103 71 775 3,174 3,949 143 4/9/98
Durham-Cornwallis NC 940 3,763 62 940 3,825 4,765 169 4/9/98
Hendersonville TN 1,050 4,203 34 1,050 4,237 5,287 187 4/9/98
Salem-Policy NH 742 2,977 12 742 2,989 3,731 132 4/7/98
Warrem-Elm OH 522 1,864 89 522 1,953 2,475 84 4/22/98
Warren-Youngstown OH 512 1,829 16 512 1,845 2,357 78 4/22/98
Waterford-Highland MI 1,487 5,306 236 1,487 5,542 7,029 232 4/28/98
Indian Harbor FL 662 2,654 95 662 2,749 3,411 110 6/2/98
Jackson 3 - I55 MS 744 3,021 27 744 3,048 3,792 134 5/13/98
Katy-N.Fry TX 419 1,524 36 419 1,560 1,979 67 5/20/98
Hollywood-Sheridan FL 1,208 4,854 32 1,208 4,886 6,094 186 7/1/98
Pompano Beach -
Atlantic FL 944 3,803 29 944 3,832 4,766 148 7/1/98
Pompano Beach -
Sample FL 903 3,643 28 903 3,671 4,574 142 7/1/98
Boca Raton-18th St FL 1,503 6,059 87 1,503 6,146 7,649 234 7/1/98
Vero Beach FL 489 1,813 16 489 1,829 2,318 81 6/12/98
Humble TX 447 1,790 33 447 1,823 2,270 70 6/16/98
Houston-Old Katy TX 659 2,680 22 659 2,702 3,361 106 6/19/98
Webster TX 635 2,302 19 635 2,321 2,956 92 6/19/98
Carrollton TX 548 1,988 37 548 2,025 2,573 81 6/19/98
Hollywood-N.21st FL 840 3,373 35 840 3,408 4,248 123 8/3/98
San Marcos TX 324 1,493 37 324 1,530 1,854 60 6/30/98
Austin-McNeil TX 492 1,995 57 492 2,052 2,544 81 6/30/98
Austin-FM TX 484 1,951 69 481 2,023 2,504 80 6/30/98
Jacksonville-Center NC 327 1,329 20 327 1,349 1,676 50 8/6/98
Jacksonville-
Gum Branch NC 508 1,815 73 508 1,888 2,396 65 8/17/98
Jacksonville-
N. Marine NC 216 782 153 216 935 1,151 33 9/24/98
Euless TX 550 1,998 44 550 2,042 2,592 67 9/29/98
N. Richland Hills TX 670 2,407 11 670 2,418 3,088 78 10/9/98
Batavia OH 390 1,570 32 390 1,602 1,992 45 11/19/98
Jackson-N. West MS 460 1,642 150 460 1,792 2,252 62 12/1/98
Katy-Franz TX 507 2,058 11 507 2,069 2,576 58 12/15/98
W. Warwick RI 447 1,776 23 447 1,799 2,246 42 2/2/99
Lafayette-Pinhook 1 LA 556 1,951 157 556 2,108 2,664 58 2/17/99
Lafayette-Pinhook 2 LA 708 2,860 33 708 2,893 3,601 63 2/17/99
Lafayette-Ambassador LA 314 1,095 107 314 1,202 1,516 33 2/17/99
Lafayette-Evangeline LA 188 652 119 188 771 959 16 2/17/99
Lafayette-Guilbeau LA 963 3,896 23 963 3,919 4,882 85 2/17/99
Gilbert-Elliott Rd AZ 651 2,600 33 651 2,633 3,284 39 5/18/99
Glendale-59th Ave AZ 565 2,596 35 565 2,631 3,196 40 5/18/99
Mesa-Baseline AZ 330 1,309 43 330 1,352 1,682 20 5/18/99
Mesa-E. Broadway AZ 339 1,346 33 339 1,379 1,718 21 5/18/99
Mesa-W. Broadway AZ 291 1,026 35 292 1,060 1,352 16 5/18/99
Mesa-Greenfield AZ 354 1,405 35 355 1,439 1,794 21 5/18/99
Phoenix-Camelback AZ 453 1,610 37 454 1,646 2,100 25 5/18/99
Phoenix-Bell AZ 872 3,476 35 873 3,510 4,383 52 5/18/99
Phoenix-35th Ave AZ 849 3,401 40 850 3,440 4,290 51 5/21/99
Westbrook ME 410 1,626 102 411 1,727 2,138 18 8/2/99
Cocoa FL 667 2,373 33 668 2,405 3,073 16 9/29/99
Cedar Hill TX 335 1,521 20 336 1,540 1,876 7 11/9/99
Corporate Office NY 0 68 616 0 684 684 275 1/1/95
$111,650 $412,895 $31,928 $111,833 $444,640 $556,473 $33,453
December 31, 1999 December 31, 1998 December 31, 1997
Cost:
Balance at beginning of period $ 502,502 $333,036 $ 220,711
Additions during period:
Acquisitions through foreclosure $ - $ - $ -
Other acquisitions 45,811 157,080 106,926
Improvements, etc. 9,959 12,940 5,527
_________ _________ ________
55,770 170,020 112,453
Deductions during period:
Cost of real estate sold (1,799) (1,799) (554) (554) (128) (128)
_______ _______ _____ _____ _____ _____
Balance at close of period $ 556,473 $502,502 $ 333,036
========= ======== =========
Accumulated Depreciation:
Balance at beginning of period $ 21,339 $ 11,639 $ 5,457
Additions during period:
Depreciation expense $ 12,259 12,259 $ 9,762 $ 9,762 $ 6,211 6,211
________ _______ _______
Deductions during period:
Accumulated depreciation of
real estate sold (145) (145) (62) (62) (29) (29)
_________ _________ ________ ________ ________ ________
Balance at close of period $ 33,453 $ 21,339 $ 11,639
========= ========= =========
Sovran Self Storage, Inc.
Exhibit (12.1) - Statement Re: Computation of Earnings to
Combined Fixed Charges and Preferred Stock Dividends
Amounts in Thousands
June 26, 1995
Year ended December 31, to
1999 1998 1997 1996 December 31, 1995
Earnings:
Net income $25,585 $23,540 $23,119 $15,659 $6,744
Fixed charges 15,944 9,925 2,743 2,386 323
_____________________________________________________
Earnings (1) 41,529 33,465 25,862 18,045 7,067
Fixed charges:
Interest
expense 13,927 9,601 2,166 1,924 131
Preferred
stock
dividends 1,239 - - - -
Amortization
of financing
fees 778 324 577 462 192
_____________________________________________________
Fixed charges
(2) $15,944 $ 9,925 $ 2,743 $ 2,386 $ 323
_____________________________________________________
Ratio of earnings
to combined fixed
charges and
preferred stock
dividends
(1)/(2) 2.60 3.37 9.43 7.56 21.88
Exhibit 23
Consent of Independent Auditors
Board of Directors
Sovran Self Storage, Inc.
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 333-21679) pertaining to the 1995 Award
and Option Plan and the 1995 Outside Directors' Stock Option Plan
of Sovran Self Storage, Inc. and in the Registration Statement
(Form S-8 No. 333-64735) pertaining to the Dividend Reinvestment
and Stock Purchase Plan of Sovran Self Storage, Inc. of our
report dated January 26, 2000, with respect to the consolidated
financial statements and schedule included in this Annual Report
(Form 10-K) of Sovran Self Storage, Inc.
We also consent to the incorporation by reference in the
Registration Statement (Form S-8 No. 333-51169) of Sovran Self
Storage, Inc. and Sovran Acquisition Limited Partnership and in
the related Prospectus of our report dated January 26, 2000 with
respect to the consolidated financial statements and schedule
included in this Annual Report (Form 10-K) of Sovran Self
Storage, Inc.
ERNST & YOUNG LLP
Buffalo, New York
March 28, 2000