LIFE STORAGE, INC. - Annual Report: 2009 (Form 10-K)
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UNITED STATES 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
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2009
Commission File Number: 1-13820
Commission File Number: 1-13820
SOVRAN SELF STORAGE, INC.
(Exact name of Registrant as specified in its charter)
Maryland | 16-1194043 | |
(State of incorporation or organization) | (I.R.S. Employer Identification No.) |
6467 Main Street
Williamsville, NY 14221
(Address of principal executive offices) (Zip code)
Williamsville, NY 14221
(Address of principal executive offices) (Zip code)
(716) 633-1850
(Registrants telephone number including area code)
(Registrants 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 |
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or Section 15(d) of the Exchange Act.
Yes o No þ
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 þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes
o No o
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 registrants 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. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes o No þ
As of June 30, 2009, 23,391,184 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 $558,480,713 (based on the closing price of the Common Stock on the New York Stock
Exchange on June 30, 2009).
As of February 15, 2010, 27,547,027 shares of Common Stock, $.01 par value per share, were
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Definitive Proxy Statement for the Annual Meeting of Shareholders of the
Registrant to be held on May 26, 2010 (Part III).
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EX-32.1 |
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Part I
When used in this discussion and elsewhere in this document, the words intends, believes,
expects, 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 the 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
Companys ability to evaluate, finance and integrate acquired businesses into the Companys
existing business and operations; the Companys ability to effectively compete in the industry in
which it does business; the Companys 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; interest rates may fluctuate, impacting costs associated
with the Companys outstanding floating rate debt; the Companys ability to comply with debt
covenants; any future ratings on the Companys debt instruments; the Companys reliance on its call
center; the Companys cash flow may be insufficient to meet required payments of principal,
interest and dividends; and tax law changes that may change the taxability of future income.
Item 1. Business
Sovran Self Storage, Inc. together with its direct and indirect subsidiaries and the
consolidated joint ventures, to the extent appropriate in the applicable context, (the Company,
We, Our, or Sovran) is a self-administered and self-managed real estate investment trust
(REIT) that acquires, owns and manages self-storage properties. We refer to the self-storage
properties in which we have an ownership interest and are managed by us as Properties. We began
operations on June 26, 1995. We were formed to continue the business of our predecessor company,
which had engaged in the self-storage business since 1985. At February 15, 2010, we held ownership
interests in and managed 381 Properties consisting of approximately 24.7 million net rentable
square feet, situated in 24 states. Among our 381 Properties are 27 Properties that we manage for
a consolidated joint venture of which we are a majority owner and 25 Properties that we manage for
a joint venture of which we are a 20% owner. We believe we are the fourth largest operator of
self-storage properties in the United States based on facilities owned and managed. Our Properties
conduct business under the user-friendly name Uncle Bobs Self-Storage ®.
We own an indirect interest in each of the Properties through a limited partnership (the
Partnership). In total, we own a 98.5% economic interest in the Partnership and unaffiliated
third parties own collectively a 1.5% limited partnership interest at December 31, 2009. We
believe that this structure, commonly known as an umbrella partnership real estate investment trust
(UPREIT), facilitates our ability to acquire properties by using units of the Partnership as
currency. By utilizing interests in the Partnership as currency in facility acquisitions, we may
partially defer the sellers income tax liability which in turn may allow us to obtain more
favorable pricing.
We were incorporated on April 19, 1995 under Maryland law. Our principal executive offices
are located at 6467 Main Street, Williamsville, New York 14221, our telephone number is (716)
633-1850 and our web site is www.sovranss.com .
We seek to enhance shareholder value through internal growth and acquisition of additional
storage properties. Internal growth is achieved through aggressive property management: increasing
rents, increasing occupancy levels, controlling costs, maximizing collections and strategically
expanding and improving the Properties. Should economic conditions warrant, we may develop new
properties. We believe that there continue to be opportunities for growth through acquisitions,
and constantly seek to acquire self-storage properties that are susceptible to realization of
increased economies of scale and enhanced performance through application of our expertise.
Industry Overview
We believe that self-storage facilities offer inexpensive storage space to residential and
commercial users. In addition to fully enclosed and secure storage space, many facilities also
offer outside storage for automobiles, recreational vehicles and boats. Better facilities, such as
those managed by the Company, are usually fenced and
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well lighted with gates that are either manually operated or automated and have a full-time manager. Our customers rent space on a
month-to-month basis and 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
customers lock, and the customer has sole control of access to the unit.
According to the 2010 Self-Storage Almanac, of the approximately 48,700 facilities in the
United States, less than 11% 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 capital available to small operators for acquisitions and expansions, and the
potential for savings through economies of scale are factors that are leading to consolidation in
the industry. We believe that, as a result of this trend, significant growth opportunities exist
for operators with proven management systems and sufficient capital resources.
Property Management
We believe that we have developed substantial expertise in managing self-storage facilities.
Key elements of our management system include the following:
Personnel:
Property managers undergo continuous training that emphasizes closing techniques,
identification of selected marketing opportunities, networking with possible referral sources, and
familiarization with our customized management information system. In addition to frequent contact
with Area Managers and other Company personnel, property managers receive periodic newsletters via
our intranet regarding a variety of operational issues, and from time to time attend roundtable
seminars with other property managers.
Marketing and Sales:
Responding to the increased customer demand for services, we have implemented several programs
expected to increase profitability. These programs include:
- | A Customer Care Center (call center) that services new and existing
customers inquiries and facilitates the capture of sales leads that
were previously lost; |
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- | Internet marketing, which provides customers information about all of
our stores via numerous portals and e-mail; |
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- | A rate management system, that matches product availability with
market demand for each type of storage unit at each store, and
determines appropriate pricing. The Company credits this program in
achieving higher yields and controlling discounting; |
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- | Dri-guard, that provides humidity-controlled spaces. We became the
first self-storage operator to utilize this humidity protection
technology. These environmental control systems are a premium storage
feature intended to protect metal, electronics, furniture, fabrics and
paper from moisture; and |
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- | Uncle Bobs trucks, that provide customers with convenient, affordable
access to vehicles to help move their goods into storage, and which
also serve as moving billboards to help advertise our storage
facilities. |
Ancillary Income:
Our stores are essentially retail operations and we have in excess of 160,000 customers. As a
convenience to those customers, we sell items such as locks, boxes, tarps, etc. to make their
storage experience easier. We also make available renters insurance through a third party carrier,
on which we earn a commission. Income from incidental truck rentals, billboards and cell towers is
also earned by our Company.
Information Systems:
Our customized computer system performs billing, collections and reservation functions
for each Property. It also tracks information used in developing marketing plans based on
occupancy levels and customer demographics and histories. The system generates daily, weekly and
monthly financial reports for each Property that are transmitted to our 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 our 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
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changes, are completed only by Area Managers. Our customized management information system
permits us to add new facilities to our portfolio with minimal additional overhead expense.
Property Maintenance:
All of our Properties are subject to regular and routine maintenance procedures, which are
designed to maintain the structure and appearance of our buildings and grounds. A staff
headquartered in our principal office is responsible for the upkeep of the Properties, and all
maintenance service is contracted through local providers, such as lawn service, snowplowing, pest
control, gate maintenance, HVAC repairs, paving, painting, roofing, etc. A codified set of
specifications has been designed and is applied to all work performed on our Uncle Bobs stores.
As with many other aspects of our Company, our size has allowed us to enjoy relatively low
maintenance costs because we have the benefit of economies of scale in purchasing, travel and
overhead absorption.
Environmental and Other Regulations
We are subject to federal, state, and local environmental regulations that apply generally to
the ownership of real property. We have 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 are not aware of any environmental condition with respect to any of the
Properties that could have a material adverse effect on our 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. We believe that the Properties are in
substantial compliance with all such regulations.
Insurance
Each of the Properties is covered by fire and property insurance (including comprehensive
liability), and all-risk property insurance policies, which are provided by reputable companies and
on commercially reasonable terms. In addition, we maintain a policy insuring against environmental
liabilities resulting from tenant storage on terms customary for the industry, and title insurance
insuring fee title to the Company-owned Properties in an amount that we believe to be adequate.
Federal Income Tax
We operate, and intend 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 we
will at all times so qualify. To the extent that we continue to qualify as a REIT, we will not be
taxed, with certain limited exceptions, on the taxable income that is distributed to our
shareholders. See Item 7, Managements 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 propertys design to prospective customers needs, and the manner
in which the property is operated and marketed. We believe we compete successfully on these bases.
The extent of competition depends significantly on local market conditions. We seek to locate
facilities so as not to cause our 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 our competitors, including Public Storage, U-Haul, and Extra Space Storage, are
larger and have substantially greater financial resources than we do. These larger operators may,
among other possible advantages, be capable of greater leverage and the payment of higher prices
for acquisitions.
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Investment Policy
While we emphasize equity real estate investments, we may, at our discretion, invest in
mortgage and other real estate interests related to self-storage properties in a manner consistent
with our qualification as a REIT. We 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. Should
investment opportunities become available, we may look to acquire self-storage properties via a
joint-venture partnership or similar entity. We may or may not elect to have a significant
investment in such a venture, but would use such an opportunity to expand our portfolio of branded
and managed properties.
Subject to the percentage of ownership limitations and gross income tests necessary for REIT
qualification, we 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
Any disposition decision of our Properties is 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 our portfolio, (iv) potential for, or existence of,
environmental or regulatory issues, (v) alternative uses of capital, and (vi) maintaining
qualification as a REIT.
During 2009 we sold five non-strategic storage facilities located in Massachusetts, North
Carolina and Pennsylvania for net cash proceeds of $16.3 million resulting in a loss of $1.6
million. During 2008 we sold one non-strategic storage facility located in Michigan for net cash
proceeds of $7.0 million resulting in a gain of $0.7 million. No storage facilities were sold in
2007.
Distribution Policy
We intend to pay regular quarterly distributions to our shareholders. However, future
distributions by us will be at the discretion of the Board of Directors and will depend on the
actual cash available for distribution, our financial condition and capital requirements, the
annual distribution requirements under the REIT provisions of the Code and such other factors as
the Board of Directors deems relevant. In order to maintain our qualification as a REIT, we must
make annual distributions to shareholders of at least 90% of our REIT taxable income (which does
not include capital gains). Under certain circumstances, we may be required to make distributions
in excess of cash available for distribution in order to meet this requirement.
On May 6, 2009, recognizing the need to maintain maximum financial flexibility in light of the
current state of the capital markets, our Board of Directors reduced the quarterly common stock
dividend from $0.64 per share to $0.45 per share, for an annual rate of $1.80 per share.
Borrowing Policy
Our Board of Directors currently limits the amount of debt that may be incurred by us to less
than 50% of the sum of the market value of our issued and outstanding Common and Preferred Stock
plus our debt. We, however, may from time to time re-evaluate and modify our 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.
On June 25, 2008, we entered into agreements relating to new unsecured credit arrangements,
and received funds under those arrangements. As part of the agreements, we entered into a $250
million unsecured term note maturing in June 2012 bearing interest at LIBOR plus 1.625%. The
proceeds from this term note were used to repay the Companys previous line of credit that was to
mature in September 2008, the Companys term note that was to mature in September 2009, the term
note maturing in July 2008, and to provide for working capital. In October 2009, the Company
repaid $100 million of the term note entered into in June 2008. The 2008 agreements also
provide for a $125 million (expandable to $175 million) revolving line of credit maturing June
2011 bearing interest at a variable rate equal to LIBOR plus 1.375%, and requires a 0.25% facility
fee. At December 31, 2009, there was
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$125 million available on the unsecured line of credit.
We also maintain an $80 million term note maturing September 2013 bearing interest at a fixed
rate of 6.26%, a $20 million term note maturing September 2013 bearing interest at a variable rate
equal to LIBOR plus 1.50%, and a $150 million unsecured term note maturing in April 2016 bearing
interest at 6.38%.
To the extent that we desire 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, we may utilize amounts available under the expanded line of credit, common or
preferred stock offerings, floating or fixed rate debt financing, retention of cash flow (subject
to satisfying our distribution requirements under the REIT rules) or a combination of these
methods. Additional debt financing may also be obtained through mortgages on our Properties, which
may be recourse, non-recourse, or cross-collateralized and may contain cross-default provisions.
We have not established any limit on the number or amount of mortgages that may be placed on any
single Property or on our portfolio as a whole, although certain of our existing term loans contain
limits on overall mortgage indebtedness. For additional information regarding borrowings, see
Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources and Note 7 to the Consolidated Financial Statements filed
herewith.
Employees
We currently employ a total of 1,051 employees, including 381 property managers, 24 area
managers, and 511 assistant managers and part-time employees. At our headquarters, in addition to
our three senior executive officers, we employ 132 people engaged in various support activities,
including accounting, human resources, customer care, and management information systems. None of
our employees are covered by a collective bargaining agreement. We consider our employee relations
to be excellent.
Available Information
We file with the U.S. Securities and Exchange Commission quarterly and annual reports on
Forms 10-Q and 10-K, respectively, current reports on Form 8-K, and proxy statements pursuant to
the Securities Exchange Act of 1934, in addition to other information as required. The public may
read and copy any materials that we file with the SEC at the SECs Public Reference Room at 100 F
Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the
Public Reference Room by calling the SEC at 1 (800) SEC-0330. We file this information with the
SEC electronically, and the SEC maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file electronically with the
SEC at http://www.sec.gov. Our annual reports on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and all amendments to those reports are available free of charge on
our web site at http://www.sovranss.com as soon as reasonably practicable after such
material is electronically filed with or furnished to the SEC. In addition, our codes of ethics
and Charters of our Governance, Audit Committee, and Compensation Committee are available free of
charge on our website at http://www.sovranss.com.
Also, copies of our annual report and Charters of our Governance, Audit Committee, and
Compensation Committee will be made available, free of charge, upon written request to Sovran Self
Storage, Inc., Attn: Investor Relations, 6467 Main Street, Williamsville, NY 14221.
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Item 1A. Risk Factors
You should carefully consider the risks described below, together with all of the other
information included in or incorporated by reference into our Form 10-K, as part of your evaluation
of the Company. If any of the following risks actually occur, our business could be harmed. In such
case, the trading price of our securities could decline, and you may lose all or part of your
investment.
Our Acquisitions May Not Perform as Anticipated
We have completed many acquisitions of self-storage facilities since our initial public
offering of common stock in June 1995. Our strategy is to continue to grow by acquiring additional
self-storage facilities. Acquisitions entail risks that investments will fail to perform in
accordance with our expectations and that our judgments with respect to the prices paid for
acquired self-storage facilities and the costs of any improvements required to bring an acquired
property up to standards established for the market position intended for that property will prove
inaccurate. Acquisitions also involve general investment risks associated with any new real estate
investment.
We May Incur Problems with Our Real Estate Financing
Unsecured Credit Facility and Term Notes. We have a line of credit and term note agreements with a
syndicate of financial institutions and other lenders. This unsecured credit facility and the term
notes are recourse to us and the required payments are not reduced if the economic performance of
any of the properties declines. The unsecured credit facility limits our ability to make
distributions to our shareholders, except in limited circumstances.
Rising Interest Rates. Indebtedness that we incur under the unsecured credit facility and bank
term notes bear interest at a variable rate. Accordingly, increases in interest rates could
increase our interest expense, which would reduce our cash available for distribution and our
ability to pay expected distributions to our shareholders. We manage our exposure to rising
interest rates using interest rate swaps and other available mechanisms. If the amount of our
indebtedness bearing interest at a variable rate increases, our unsecured credit facility may
require us to enter into additional interest rate swaps.
Refinancing May Not Be Available. It may be necessary for us to refinance our unsecured credit
facility through additional debt financing or equity offerings. If we were unable to refinance
this indebtedness on acceptable terms, we might be forced to dispose of some of our self-storage
facilities upon disadvantageous terms, which might result in losses to us and might adversely
affect the cash available for distribution. If prevailing interest rates or other factors at the
time of refinancing result in higher interest rates on refinancings, our interest expense would
increase, which would adversely affect our cash available for distribution and our ability to pay
expected distributions to shareholders.
Recent turmoil in the credit markets could affect our ability to obtain debt financing on
reasonable terms and have other adverse effects on us. The United States credit markets have
recently experienced significant dislocations and liquidity disruptions which have caused the
spreads on available debt financings to widen considerably. These circumstances have materially
impacted liquidity in the debt markets, making financing terms for borrowers less attractive. A
prolonged downturn in the credit markets could cause us to seek alternative sources of potentially
less attractive financing, and may require us to adjust our business plan accordingly. Continued
uncertainty in the credit markets may negatively impact our ability to make acquisitions.
Covenants and Risk of Default. Our unsecured credit facility and term notes require us to operate
within certain covenants, including financial covenants with respect to leverage, fixed charge
coverage, minimum net worth, limitations on additional indebtedness and dividend limitations. If
we violate any of these covenants or otherwise default under our unsecured credit facility or term
notes, then our lenders could declare all indebtedness under these facilities to be immediately due
and payable which would have a material adverse effect on our business and could require us to sell
self-storage facilities under distress conditions and seek replacement financing on substantially
more expensive terms.
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Our Debt Levels May Increase
Our Board of Directors currently has a policy of limiting the amount of our debt at the time
of incurrence to less than 50% of the sum of the market value of our issued and outstanding common
stock and preferred stock plus the amount of our debt at the time that debt is incurred. However,
our organizational documents do not contain any limitation on the amount of indebtedness we might
incur. Accordingly, our Board of Directors could alter or eliminate the current policy limitation
on borrowing without a vote of our shareholders. We could become highly leveraged if this policy
were changed. However, our ability to incur debt is limited by covenants in our bank credit
arrangements.
We Are Subject to the Risks Posed by Fluctuating Demand and Significant Competition in the
Self-Storage Industry
Our self-storage facilities are subject to all operating risks common to the self-storage
industry. These risks include but are not limited to the following:
| Decreases in demand for rental spaces in a particular locale; | ||
| Changes in supply of similar or competing self-storage facilities in an area; | ||
| Changes in market rental rates; and | ||
| Inability to collect rents from customers. |
Our current strategy is to acquire interests only in self-storage facilities. Consequently, we
are subject to risks inherent in investments in a single industry. Our self-storage facilities
compete with other self-storage facilities in their geographic markets. As a result of competition,
the self-storage facilities could experience a decrease in occupancy levels and rental rates, which
would decrease our cash available for distribution. We compete in operations and for acquisition
opportunities with companies that have substantial financial resources. Competition may reduce the
number of suitable acquisition opportunities offered to us and increase the bargaining power of
property owners seeking to sell. The self-storage industry has at times experienced overbuilding in
response to perceived increases in demand. A recurrence of overbuilding might cause us to
experience a decrease in occupancy levels, limit our ability to increase rents and compel us to
offer discounted rents.
Our Real Estate Investments Are Illiquid and Are Subject to Uninsurable Risks and Government
Regulation
General Risks. Our investments are subject to varying degrees of risk generally related to
the ownership of real property. The underlying value of our real estate investments and our income
and ability to make distributions to our shareholders are dependent upon our ability to operate the
self-storage facilities in a manner sufficient to maintain or increase cash available for
distribution. Income from our self-storage facilities may be adversely affected by the following
factors:
| Changes in national economic conditions; | ||
| Changes in general or local economic conditions and neighborhood characteristics; | ||
| Competition from other self-storage facilities; | ||
| Changes in interest rates and in the availability, cost and terms of financing; | ||
| The impact of present or future environmental legislation and compliance with environmental laws; | ||
| The ongoing need for capital improvements, particularly in older facilities; | ||
| Changes in real estate tax rates and other operating expenses; |
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| Adverse changes in governmental rules and fiscal policies; | ||
| Uninsured losses resulting from casualties associated with civil unrest, acts of God, including natural disasters, and acts of war; | ||
| Adverse changes in zoning laws; and | ||
| Other factors that are beyond our control. |
Illiquidity of Real Estate May Limit its Value. Real estate investments are relatively
illiquid. Our ability to vary our portfolio of self-storage facilities in response to changes in
economic and other conditions is limited. In addition, provisions of the Code may limit our ability
to profit on the sale of self-storage facilities held for fewer than two years. We may be unable to
dispose of a facility when we find disposition advantageous or necessary and the sale price of any
disposition may not equal or exceed the amount of our investment.
Uninsured and Underinsured Losses Could Reduce the Value of our Self Storage Facilities. Some
losses, generally of a catastrophic nature, that we potentially face with respect to our
self-storage facilities may be uninsurable or not insurable at an acceptable cost. Our management
uses its discretion in determining amounts, coverage limits and deductibility provisions of
insurance, with a view to acquiring appropriate insurance on our investments at a reasonable cost
and on suitable terms. These decisions may result in insurance coverage that, in the event of a
substantial loss, would not be sufficient to pay the full current market value or current
replacement cost of our lost investment. Inflation, changes in building codes and ordinances,
environmental considerations, and other factors also might make it infeasible to use insurance
proceeds to replace a property after it has been damaged or destroyed. Under those circumstances,
the insurance proceeds received by us might not be adequate to restore our economic position with
respect to a particular property.
Possible Liability Relating to Environmental Matters. Under various federal, state and local
environmental laws, ordinances and regulations, a current or previous owner or operator of real
property may be liable for the costs of removal or remediation of hazardous or toxic substances on,
under or in that property. Those laws often impose liability even if the owner or operator did not
cause or know of the presence of hazardous or toxic substances and even if the storage of those
substances was in violation of a customers lease. In addition, the presence of hazardous or toxic
substances, or the failure of the owner to address their presence on the property, may adversely
affect the owners ability to borrow using that real property as collateral. In connection with the
ownership of the self-storage facilities, we may be potentially liable for any of those costs.
Americans with Disabilities Act. The Americans with Disabilities Act of 1990, or ADA,
generally requires that buildings be made accessible to persons with disabilities. A determination
that we are not in compliance with the ADA could result in imposition of fines or an award of
damages to private litigants. If we were required to make modifications to comply with the ADA, our
results of operations and ability to make expected distributions to our shareholders could be
adversely affected.
There Are Limitations on the Ability to Change Control of Sovran
Limitation on Ownership and Transfer of Shares. To maintain our qualification as a REIT, not
more than 50% in value of our outstanding shares of stock may be owned, directly or indirectly, by
five or fewer individuals, as defined in the Code. To limit the possibility that we will fail to
qualify as a REIT under this test, our Amended and Restated Articles of Incorporation include
ownership limits and transfer restrictions on shares of our stock. Our Articles of Incorporation
limit ownership of our issued and outstanding stock by any single shareholder to 9.8% of the
aggregate value of our outstanding stock, except that the ownership by some of our shareholders is
limited to 15%.
These ownership limits may:
| Have the effect of precluding an acquisition of control of Sovran by a third party without consent of our Board of Directors even if the change in control would be in the interest of shareholders; and |
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| Limit the opportunity for shareholders to receive a premium for shares of our common stock they hold that might otherwise exist if an investor were attempting to assemble a block of common stock in excess of 9.8% or 15%, as the case may be, of the outstanding shares of our stock or to otherwise effect a change in control of Sovran. |
Our Board of Directors may waive the ownership limits if it is satisfied that ownership by
those shareholders in excess of those limits will not jeopardize our status as a REIT under the
Code or in the event it determines that it is no longer in our best interests to be a REIT. Waivers
have been granted to the former holders of our Series C preferred stock, FMR Corporation and
Cohen & Steers, Inc. A transfer of our common stock and/or preferred stock to a person who, as a
result of the transfer, violates the ownership limits may not be effective under some
circumstances.
Other Limitations. Other limitations could have the effect of discouraging a takeover or
other transaction in which holders of some, or a majority, of our outstanding common stock might
receive a premium for their shares of our common stock that exceeds the then prevailing market
price or that those holders might believe to be otherwise in their best interest. The issuance of
additional shares of preferred stock could have the effect of delaying or preventing a change in
control of Sovran even if a change in control were in the shareholders interest. In addition, the
Maryland General Corporation Law, or MGCL, imposes restrictions and requires that specified
procedures with respect to the acquisition of stated levels of share ownership and business
combinations, including combinations with interested shareholders. These provisions of the MGCL
could have the effect of delaying or preventing a change in control of Sovran even if a change in
control were in the shareholders interest. Waivers and exemptions have been granted to the
initial purchasers of our former Series C preferred stock in connection with these provisions of
the MGCL. In addition, under the Partnerships agreement of limited partnership, in general, we
may not merge, consolidate or engage in any combination with another person or sell all or
substantially all of our assets unless that transaction includes the merger or sale of all or
substantially all of the assets of the Partnership, which requires the approval of the holders of
75% of the limited partnership interests thereof. If we were to own less than 75% of the limited
partnership interests in the Partnership, this provision of the limited partnership agreement could
have the effect of delaying or preventing us from engaging in some change of control transactions.
Our Failure to Qualify as a REIT Would Have Adverse Consequences
We intend to operate in a manner that will permit us to qualify as a REIT under the Code.
Qualification as a REIT involves the application of highly technical and complex Code provisions
for which there are only limited judicial and administrative interpretations. Continued
qualification as a REIT depends upon our continuing ability to meet various requirements
concerning, among other things, the ownership of our outstanding stock, the nature of our assets,
the sources of our income and the amount of our distributions to our shareholders.
In addition, a REIT is limited with respect to the services it can provide for its tenants. In
the past, we have provided certain conveniences for our tenants, including property insurance
underwritten by a third party insurance company that pays us commissions. We believe the insurance
provided by the insurance company would not constitute a prohibited service to our tenants. No
assurances can be given, however, that the IRS will not challenge our position. If the IRS
successfully challenged our position, our qualification as a REIT could be adversely affected.
If we were to fail to qualify as a REIT in any taxable year, we would not be allowed a
deduction for distributions to shareholders in computing our taxable income and would be subject to
federal income tax (including any applicable alternative minimum tax) on our taxable income at
regular corporate rates. Unless entitled to relief under certain Code provisions, we also would be
ineligible for qualification as a REIT for the four taxable years following the year during which
our qualification was lost. As a result, distributions to the shareholders would be reduced for
each of the years involved. Although we currently intend to operate in a manner designed to qualify
as a REIT, it is possible that future economic, market, legal, tax or other considerations may
cause our Board of Directors to revoke our REIT election.
We May Pay Some Taxes, Reducing Cash Available for Shareholders
Even if we qualify as a REIT for federal income tax purposes, we are required to pay some
federal, foreign,
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state and local taxes on our income and property. Certain of our corporate
subsidiaries have elected to be treated as taxable REIT subsidiaries of the Company for federal
income tax purposes. A taxable REIT subsidiary is taxable as a regular corporation and is limited
in its ability to deduct interest payments made to us in excess of a certain amount. In addition,
if we receive or accrue certain amounts and the underlying economic arrangements among our taxable
REIT subsidiaries and us are not comparable to similar arrangements among unrelated parties, we
will be subject to a 100% penalty tax on those payments in excess of amounts deemed reasonable
between unrelated parties. Finally, some state and local jurisdictions may tax some of our income
even though as a REIT we are not subject to federal income tax on that income because not all
states and localities follow the federal income tax treatment of REITs. To the extent that the
Company or any taxable REIT subsidiary is required to pay federal, foreign, state or local taxes,
we will have less cash available for distribution to shareholders.
We May Change the Dividend Policy for Our Common Stock in the Future
In 2009, our board of directors authorized and we declared quarterly common stock dividends of
$0.64 per share for the first fiscal quarter; the equivalent of an annual rate of $2.56 per share.
With respect to the second quarter of 2009, recognizing the need to maintain maximum financial
flexibility in light of the current state of the capital markets, our board of directors reduced
the quarterly common stock dividend to $0.45 per share, for an annual rate of $1.80 per share. A
$0.45 per share quarterly common stock dividend was also declared with respect to the third and
fourth quarters of 2009. We can provide no assurance that the board will not reduce or eliminate
entirely dividend distributions on our common stock in the future.
A recent Internal Revenue Service revenue procedure allows us to satisfy the REIT income
distribution requirements with respect to our 2010 and 2011 taxable years by distributing up to 90%
of our dividends for such years on our common stock in shares of our common stock in lieu of paying
dividends entirely in cash, so long as we follow a process allowing our shareholders to elect cash
or stock subject to a cap that we impose on the maximum amount of cash that will be paid. Although
we may utilize this procedure in the future, we currently have no intent to do so. In the event
that we pay a portion of a dividend in shares of our common stock, taxable U.S. shareholders would
be required to pay tax on the entire amount of the dividend, including the portion paid in shares
of common stock, in which case such shareholders might have to pay the tax using cash from other
sources. If a U.S. shareholder sells the stock it receives as a dividend in order to pay this tax,
the sales proceeds may be less than the amount included in income with respect to the dividend,
depending on the market price of our stock at the time of the sale. Furthermore, with respect to
non-U.S. shareholders, we may be required to withhold U.S. tax with respect to such dividend,
including in respect to all of or a portion of such dividend that is payable in stock. In
addition, if a significant number of our shareholders sell shares of our common stock in order to
pay taxes owed on dividends, such sales could put downward pressure on the market price of our
common stock.
Our board of directors will continue to evaluate our distribution policy on a quarterly basis
as they monitor the capital markets and the impact of the economy on our operations. The decision
to authorize and pay dividends on our common stock in the future, as well as the timing, amount and
composition of any such future dividends, will be at the sole discretion of our board of directors
in light of conditions then existing, including our earnings, financial condition, capital
requirements, debt maturities, the availability of capital, applicable REIT and legal restrictions
and the general overall economic conditions and other factors. Any change in our dividend policy
could have a material adverse effect on the market price of our common stock.
We May Have Rescission Liability in Connection with Sales of Unregistered Shares to Certain
Investors
As previously disclosed in our Form 10-Q for the three months ended March 31, 2009, from
December 2008 through April 2009, we sold an aggregate of 653,757 shares of common stock under our
dividend reinvestment and stock purchase plan (the DRSPP) which were not registered under the Securities Act as a
result of the expiration in November 2008 of our registration statement covering the DRSPP. Some
or all of those sales, which resulted in proceeds to us of approximately $14.0 million, may have
violated Section 5 of the Securities Act. Purchasers of shares issued in violation of Section 5
have a right to rescind their purchases for a period of twelve months following the date of
original purchase under Section 13 of the Securities Act. As a result, we could be required to
repurchase some or all of the shares issued under the DRSPP during this period at the original sale
price plus statutory interest.
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Market Interest Rates May Influence the Price of Our Common Stock
One of the factors that may influence the price of our common stock in public trading markets
or in private transactions is the annual yield on our common stock as compared to yields on other
financial instruments. An increase in market interest rates will result in higher yields on other
financial instruments, which could adversely affect the price of our common stock.
Regional Concentration of Our Business May Subject Us to Economic Downturns in the States of Texas
and Florida
As of December 31, 2009, 147 of our 381 self-storage facilities are located in the states of
Texas and Florida. For the year ended December 31, 2009, these facilities accounted for
approximately 42.0% of store revenues. This concentration of business in Texas and Florida exposes
us to potential losses resulting from a downturn in the economies of those states. If economic
conditions in those states continue to deteriorate, we will experience a reduction in existing and
new business, which may have an adverse effect on our business, financial condition and results of
operations.
Changes in Taxation of Corporate Dividends May Adversely Affect the Value of Our Common Stock
The maximum marginal rate of tax payable by domestic noncorporate taxpayers on dividends
received from a regular C corporation under current law is 15% through 2010, as opposed to higher
ordinary income rates. The reduced tax rate, however, does not apply to distributions paid to
domestic noncorporate taxpayers by a REIT on its stock, except for certain limited amounts.
Although the earnings of a REIT that are distributed to its stockholders generally remain subject
to less federal income taxation than earnings of a non-REIT C corporation that are distributed to
its stockholders net of corporate-level income tax, legislation that extends the application of a
lower rate of taxation to dividends paid after 2010 by C corporations could cause domestic
noncorporate investors to view the stock of regular C corporations as more attractive relative to
the stock of a REIT, because the dividends from regular C corporations would continue to be taxed
at a lower rate while distributions from REITs (other than distributions designated as capital gain
dividends) are generally taxed at the same rate as other ordinary income of domestic noncorporate
taxpayers and the maximum rate for domestic noncorporate taxpayers will increase in 2011 unless
current tax laws are changed.
Item 1B. Unresolved Staff Comments
None.
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Item 2. | Properties |
At December 31, 2009, we held ownership interests in and managed a total of 381 Properties
situated in twenty-four states. Among the 381 self-storage facilities are 27 Properties that we
manage for a consolidated joint venture of which we are a majority owner and 25 Properties that we
manage for a joint venture of which we are a 20% owner.
Our self-storage facilities offer inexpensive, easily accessible, enclosed storage space to
residential and commercial users on a month-to-month basis. Most of our Properties are fenced with
computerized gates and are well lighted. A majority of the Properties are single-story, thereby
providing customers with the convenience of direct vehicle access to their storage spaces. Our
stores range in size from 21,000 to 181,000 net rentable square feet, with an average of
approximately 65,000 net rentable square feet. The Properties generally are constructed of masonry
or steel walls resting on concrete slabs and have standing seam metal, shingle, or tar and gravel
roofs. 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 spaces are secured by a lock furnished by the customer to
provide the customer with control of access to the space.
All of the Properties conduct business under the user-friendly name Uncle Bobs Self-Storage
®.
The following table provides certain information regarding the Properties in which we have an
ownership interest and manage as of December 31, 2009:
Number of | ||||||||||||||||
Stores at | Percentage | |||||||||||||||
December 31, | Square | Number of | of Store | |||||||||||||
2009 | Feet | Spaces | Revenue | |||||||||||||
Alabama |
22 | 1,587,552 | 11,895 | 4.9 | % | |||||||||||
Arizona |
9 | 532,834 | 4,723 | 2.3 | % | |||||||||||
Connecticut |
5 | 300,860 | 2,866 | 1.9 | % | |||||||||||
Colorado |
4 | 276,927 | 2,374 | 1.3 | % | |||||||||||
Florida |
57 | 3,641,512 | 33,394 | 15.1 | % | |||||||||||
Georgia |
27 | 1,710,528 | 13,935 | 6.1 | % | |||||||||||
Kentucky |
2 | 144,872 | 1,323 | 0.6 | % | |||||||||||
Louisiana |
14 | 836,350 | 7,309 | 3.7 | % | |||||||||||
Maine |
2 | 114,265 | 1,010 | 0.5 | % | |||||||||||
Maryland |
4 | 172,083 | 2,037 | 0.9 | % | |||||||||||
Massachusetts |
12 | 664,614 | 6,067 | 3.2 | % | |||||||||||
Michigan |
6 | 354,608 | 3,035 | 1.1 | % | |||||||||||
Mississippi |
12 | 922,933 | 7,116 | 3.4 | % | |||||||||||
Missouri |
7 | 432,039 | 3,791 | 2.0 | % | |||||||||||
New Hampshire |
4 | 259,555 | 2,331 | 1.0 | % | |||||||||||
New York |
28 | 1,590,577 | 14,566 | 8.4 | % | |||||||||||
North Carolina |
14 | 723,262 | 6,223 | 2.7 | % | |||||||||||
Ohio |
23 | 1,558,905 | 12,900 | 5.5 | % | |||||||||||
Pennsylvania |
4 | 208,400 | 1,630 | 0.8 | % | |||||||||||
Rhode Island |
4 | 168,346 | 1,565 | 0.8 | % | |||||||||||
South Carolina |
8 | 443,158 | 3,782 | 1.7 | % | |||||||||||
Tennessee |
4 | 291,204 | 2,457 | 0.9 | % | |||||||||||
Texas |
90 | 6,624,499 | 54,563 | 26.9 | % | |||||||||||
Virginia |
19 | 1,130,226 | 10,528 | 4.3 | % | |||||||||||
Total |
381 | 24,690,109 | 211,420 | 100.0 | % | |||||||||||
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At December 31, 2009, the Properties had an average occupancy of 80.0% and an annualized rent
per occupied square foot of $10.29.
Item 3. | Legal Proceedings |
In the normal course of business, we are subject to various claims and litigation. While the
outcome of any litigation is inherently unpredictable, we do not believe that any matters currently
pending against the Company will have a material adverse impact on our financial condition, results
of operations or cash flows.
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 Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
Our 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 our Common Stock for each full quarterly period within
the two most recent fiscal years.
Quarter 2008 | High | Low | ||||||
1st |
$ | 44.62 | $ | 33.56 | ||||
2nd |
46.50 | 41.37 | ||||||
3rd |
46.15 | 35.77 | ||||||
4th |
44.16 | 19.18 |
Quarter 2009 | High | Low | ||||||
1st |
$ | 36.12 | $ | 16.40 | ||||
2nd |
26.95 | 19.28 | ||||||
3rd |
33.33 | 22.69 | ||||||
4th |
38.06 | 28.88 |
As of February 15, 2010, there were approximately 1,335 holders of record of our Common Stock.
We have paid quarterly dividends to our shareholders since our inception. Reflected in the
table below are the dividends paid in the last two 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 2009
represent 45% ordinary income, and 55% return of capital.
History of Dividends Declared on Common Stock
March 2008 |
$0.630 per share | |||
June 2008 |
$0.630 per share | |||
September 2008 |
$0.640 per share | |||
December 2008 |
$0.640 per share | |||
March 2009 |
$0.640 per share | |||
July 2009 |
$0.450 per share | |||
October 2009 |
$0.450 per share | |||
January 2010 |
$0.450 per share |
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EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth certain information as of December 31, 2009, with respect to
equity compensation plans under which shares of the Companys Common Stock may be issued.
Number of | ||||||||||||
securities to be | ||||||||||||
issued upon | Weighted average | Number of | ||||||||||
exercise of | exercise price of | securities | ||||||||||
outstanding | outstanding | remaining available | ||||||||||
options, warrants | options, warrants | for future issuance | ||||||||||
Plan Category | and rights (#) | and rights ($) | (#) | |||||||||
Equity compensation plans approved by
shareholders: |
||||||||||||
2005 Award and Option Plan |
316,163 | $ | 42.86 | 998,330 | ||||||||
1995 Award and Option Plan |
46,300 | $ | 27.23 | 0 | ||||||||
2009 Outside Directors Stock Option and
Award Plan |
9,500 | $ | 23.15 | 137,044 | ||||||||
1995 Outside Directors Stock Option Plan |
25,505 | $ | 46.23 | 0 | ||||||||
Deferred Compensation Plan for Directors (1) |
29,390 | N/A | 27,671 | |||||||||
Equity compensation plans not approved by
shareholders: |
N/A | N/A | N/A |
(1) | Under the Deferred Compensation Plan for Directors, non-employee Directors may defer all or part of their Directors fees that are otherwise payable in cash. Directors fees that are deferred under the Plan will be credited to each Directors account under the Plan in the form of Units. The number of Units credited is determined by dividing the amount of Directors fees deferred by the closing price of the Companys Common Stock on the New York Stock Exchange on the day immediately preceding the day upon which Directors fees otherwise would be paid by the Company. A Director is credited with additional Units for dividends on the shares of Common Stock represented by Units in such Directors Account. A Director may elect to receive the shares in a lump sum on a date specified by the Director or in quarterly or annual installments over a specified period and commencing on a specified date. |
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CORPORATE PERFORMANCE GRAPH
The following chart and line-graph presentation compares (i) the Companys shareholder return
on an indexed basis since December 31, 2004 with (ii) the S&P Stock Index and (iii) the National
Association of Real Estate Investment Trusts Equity Index.
![(CHART)](https://www.sec.gov/Archives/edgar/data/0000944314/000095012310018131/l38886l3888600.gif)
CUMULATIVE TOTAL SHAREHOLDER RETURN
SOVRAN SELF STORAGE, INC.
DECEMBER 31, 2004 DECEMBER 31, 2009
SOVRAN SELF STORAGE, INC.
DECEMBER 31, 2004 DECEMBER 31, 2009
Dec. 31, 2004 | Dec. 31, 2005 | Dec. 31, 2006 | Dec. 31, 2007 | Dec. 31, 2008 | Dec. 31, 2009 | |||||||||||||||||||
S&P |
100.00 | 104.91 | 121.48 | 128.15 | 80.74 | 102.11 | ||||||||||||||||||
NAREIT |
100.00 | 112.17 | 151.49 | 127.72 | 79.54 | 101.80 | ||||||||||||||||||
SSS |
100.00 | 117.89 | 150.77 | 110.72 | 105.80 | 114.07 |
The foregoing item assumes $100.00 invested on December 31, 2004, with dividends reinvested.
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Item 6. Selected Financial Data
The following selected financial and operating information should be read in conjunction with
Managements Discussion and Analysis of Financial Condition and Results of Operations, and the
financial statements and related notes included elsewhere in this Annual Report on Form 10-K:
At or For Year Ended December 31, | ||||||||||||||||||||
(dollars in thousands, except per share data) | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
Operating Data |
||||||||||||||||||||
Operating revenues |
$ | 195,011 | $ | 200,193 | $ | 190,013 | $ | 162,541 | $ | 134,524 | ||||||||||
Income from continuing operations |
22,438 | 37,803 | 40,184 | 37,306 | 34,379 | |||||||||||||||
(Loss) income from discontinued
operations (1) |
(784 | ) | 1,880 | 1,661 | 1,738 | 1,940 | ||||||||||||||
Net income |
21,654 | 39,683 | 41,845 | 39,044 | 36,319 | |||||||||||||||
Net income attributable to common
shareholders |
19,916 | 37,399 | 37,958 | 34,098 | 30,667 | |||||||||||||||
Income from continuing operations per
common share attributable to common
shareholders diluted |
0.87 | 1.63 | 1.73 | 1.80 | 1.72 | |||||||||||||||
Net income per common share
attributable to common shareholders
basic |
0.84 | 1.72 | 1.81 | 1.90 | 1.86 | |||||||||||||||
Net income per common share
attributable to common shareholders
diluted |
0.84 | 1.72 | 1.81 | 1.89 | 1.84 | |||||||||||||||
Dividends declared per common share (2) |
1.54 | 2.54 | 2.50 | 2.47 | 2.44 | |||||||||||||||
Balance Sheet Data |
||||||||||||||||||||
Investment in storage facilities at cost |
$ | 1,387,583 | $ | 1,366,615 | $ | 1,300,847 | $ | 1,115,255 | $ | 865,692 | ||||||||||
Total assets |
1,185,201 | 1,212,528 | 1,164,475 | 1,053,033 | 784,195 | |||||||||||||||
Total debt |
481,219 | 623,261 | 566,517 | 462,027 | 339,144 | |||||||||||||||
Total liabilities |
520,142 | 692,381 | 610,644 | 495,175 | 364,856 | |||||||||||||||
Series C preferred stock |
| | | 26,613 | 26,613 | |||||||||||||||
Other Data |
||||||||||||||||||||
Net cash provided by operating
activities |
$ | 59,123 | $ | 77,132 | $ | 85,175 | $ | 64,656 | $ | 60,724 | ||||||||||
Net cash used in investing activities |
(4,448 | ) | (82,711 | ) | (190,267 | ) | (176,567 | ) | (79,156 | ) | ||||||||||
Net cash (used in) provided by
financing activities |
(48,451 | ) | 6,055 | 61,372 | 154,730 | 20,238 |
(1) | In 2009 we sold five stores and in 2008 we sold one store whose results of operations and (loss) gain on disposal are classified as discontinued operations for all previous years presented. | |
(2) | In 2009 we declared dividends in March, July, and October (see Item 5). On January 4, 2010 we declared a dividend of $0.45 per common share, and therefore it is not included in the 2009 column. |
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Item 7. | Managements 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.
Disclosure Regarding Forward-Looking Statements
When used in this discussion and elsewhere in this document, the words intends, believes,
expects, 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 the Securities Exchange Act of 1934. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors, which may cause our actual results, performance
or achievements 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 Companys
ability to evaluate, finance and integrate acquired businesses into the Companys existing business
and operations; the Companys ability to effectively compete in the industry in which it does
business; the Companys 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; interest rates may fluctuate, impacting costs associated with the
Companys outstanding floating rate debt; the Companys ability to comply with debt covenants; any
future ratings on the Companys debt instruments; the regional concentration of the Companys
business may subject it to economic downturns in the states of Florida and Texas; the Companys
reliance on its call center; the Companys cash flow may be insufficient to meet required payments
of principal, interest and dividends; and tax law changes that may change the taxability of future
income.
Business and Overview
We believe we are the fourth largest operator of self-storage properties in the United States
based on facilities owned and managed. All of our stores are operated under the user-friendly name
Uncle Bobs Self-Storage®.
Operating Strategy
Our operating strategy is designed to generate growth and enhance value by:
A. | Increasing operating performance and cash flow through aggressive management of our stores: |
- | We seek to differentiate our self-storage facilities from our competition through innovative marketing and value-added product offerings including: |
- | Our Customer Care Center, which answers sales inquiries and makes reservations for all of our Properties on a centralized basis, | ||
- | The Uncle Bobs truck move-in program, under which, at present, 258 of our stores offer a free Uncle Bobs truck to assist our customers in moving into their spaces, | ||
- | Our dehumidification system, known as Dri-guard, which provides our customers with a better environment to store their goods and improves yields on our Properties, and | ||
- | Internet marketing and sales. |
- | Our Name your Price concession differentiates us from the free month offer now prevalent in our industry, and allows us to engage the customer in a unique manner. We are able to customize this offer based on occupancies and demand. | ||
- | Our customized property management systems enable us to improve our ability to track trends, set optimal pricing levels, enjoy considerable economies of scale in vendor and supply pricing, and control collections and accounts receivable. |
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- | In addition, our managers are better qualified and receive a significantly higher level of training than they did in the past, customer access and security are greatly enhanced as a result of advances in technology, and property appearance and functionality have been improved. |
B. | Acquiring additional stores: |
- | Our objective is to acquire new stores one or two at a time in markets we currently operate in. By so doing, we can add to our existing base, which should improve market penetration in those areas, and contribute to the benefits achieved from economies of scale. | ||
- | We may also enter new markets if we can do so by acquiring a group of stores in those markets. We feel that our marketing efforts and control systems would enhance even those portfolios that have been managed efficiently by independent operators, and that attractive returns can be generated by such acquisitions. |
C. | Expanding our management business: |
- | We see our management business as a source of future acquisitions. We may develop additional joint ventures in which we are minority owners and managers of the self-storage facilities acquired by these joint ventures. The joint venture agreements will give us first right of refusal to purchase the managed properties in the event they are offered for sale. |
D. | Expanding and enhancing our existing stores: |
- | Over the past five years, we have undertaken a program of expanding and enhancing our Properties. In 2007, we expended approximately $25 million to add some 444,000 square feet of premium space (i.e., air-conditioned and/or humidity controlled) to our Properties; in 2008, we spent approximately $26 million to add 403,000 square feet and to convert 95,000 square feet to premium storage; and in 2009, we completed construction of a new 78,000 square foot facility in Richmond Virginia, added 175,000 square feet to other existing Properties, and converted 64,000 square feet to premium storage for a total cost of approximately $18 million. |
Supply and Demand
We believe the supply and demand model in the self-storage industry is micro market specific
in that a majority of our business comes from within a five mile radius of our stores. The current
economic conditions and the credit market environment have resulted in a decrease in new supply on
a national basis in 2008 and 2009. With the decrease of debt and equity capital brought about by
the credit market tightening in the past year, we have seen capitalization rates on acquisitions
(expected annual return on investment) increase to approximately 8.0% and expect continued
increases in 2010. From 2003 to 2007, the historically low interest rates available to developers
resulted in increased supply on a national basis. We experienced some of this excess supply in
certain markets in Texas and Florida from 2003 to 2007, but because of the demand model, we did not
see a widespread effect on our stores in those years. In 2008, the Florida market was negatively
affected by the current economic downturn and in 2009 many markets were affected as consumers
pulled back spending.
Operating Trends
Since 2007, our industry has experienced some softness in demand. This was due to the
economic slowdown that began in late 2007, and in part to regional issues, such as the reduction of
hurricane driven demand in Florida and the Gulf Coast states, and to an overall slowdown in the
housing sector. We believe the housing slowdown has impacted our industry in two ways: 1.) a
reduction in lease-up activity resulting from fewer residential real estate transactions (both
buyers and sellers of residences use our product in times of transition) and 2.) a contraction of
housing construction activity which has reduced the number of people working in the construction trades (trades people are a measurable part of our usual customer base.)
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While we enjoyed same store revenue growth from 2003 through 2008, in 2009 our same store
revenue decreased 3.1%, primarily because of the aforementioned issues. We expect conditions in
most of our markets to remain challenging and are forecasting -2% to 0% revenue growth on a same
store basis in 2010.
We were able to reduce many expenses at the store operating level in 2009 to mitigate the
effect of the revenue decline. Expenses related to operating a self-storage facility had increased
substantially over the previous five years as a result of expanded hours, increased health care
costs, property insurance costs, and the costs of amenities (such as Uncle Bobs trucks). While we
do not expect further expense decreases in 2010, we do believe expense increases will be at a
manageable level of between 2% and 4%.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based
upon our consolidated financial statements, which have been prepared in accordance with U.S.
generally accepted accounting principles. The preparation of these financial statements requires us
to make estimates and judgments that affect the amounts reported in our financial statements and
the accompanying notes. On an on-going basis, we evaluate our estimates and judgments, including
those related to carrying values of storage facilities, bad debts, and contingencies and
litigation. We base these estimates on experience and on various other assumptions that we believe
to be reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under different assumptions or conditions.
Carrying value of storage facilities: We believe our judgment regarding the impairment of the
carrying value of our storage facilities is a critical accounting policy. Our policy is to assess
any impairment of value whenever events or circumstances indicate that the carrying value of a
storage facility may not be recoverable. Such events or circumstances would include negative
operating cash flow, significant declining revenue per storage facility, or an exception that, more
likely than not, a property will be sold or otherwise disposed of significantly before the end of
its previously estimated useful life. Impairment is evaluated based upon comparing the sum of the
expected undiscounted future cash flows to the carrying value of the storage facility, on a
property by property basis. If the sum of the undiscounted cash flow is less than the carrying
amount, an impairment loss is recognized for the amount by which the carrying amount exceeds the
fair value of the asset. If cash flow projections are inaccurate and in the future it is
determined that storage facility carrying values are not recoverable, impairment charges may be
required at that time and could materially affect our operating results and financial position.
Estimates of undiscounted cash flows could change based upon changes in market conditions, expected
occupancy rates, etc. At December 31, 2009 and 2008, no assets had been determined to be impaired
under this policy.
Estimated useful lives of long-lived assets: We believe that the estimated lives used for our
depreciable, long-lived assets is a critical accounting policy. We periodically evaluate the
estimated useful lives of our long-lived assets to determine if any changes are warranted based
upon various factors, including changes in the planned usage of the assets, customer demand, etc.
Changes in estimated useful lives of these assets could have a material adverse impact on our
financial condition or results of operations. We have not made significant changes to the
estimated useful lives of our long-lived assets in the past and we dont have any current
expectation of making significant changes in 2010.
Consolidation and investment in joint ventures: We consolidate all wholly owned subsidiaries.
Partially owned subsidiaries and joint ventures are consolidated when we control the entity.
Investments in joint ventures that we do not control but for which we have significant influence
over are reported using the equity method. Under the equity method, our investment in joint
ventures are stated at cost and adjusted for our share of net earnings or losses and reduced by
distributions. Equity in earnings of real estate ventures is generally recognized based on our
ownership interest in the earnings of each of the unconsolidated real estate ventures.
Revenue and Expense Recognition: Rental income is recognized when earned pursuant to
month-to-month leases for storage space. Promotional discounts are recognized as a reduction to rental
income over the promotional period, which is generally during the first month of occupancy. Rental
income received prior to the start of the rental period is included in deferred revenue.
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Qualification as a REIT: We operate, and intend to continue to operate, as a REIT under the
Code, but no assurance can be given that we will at all times so qualify. To the extent that we
continue to qualify as a REIT, we will not be taxed, with certain limited exceptions, on the
taxable income that is distributed to our shareholders. If we fail to qualify as a REIT, any
requirement to pay federal income taxes could have a material adverse impact on our financial
conditions and results of operations.
Recent Accounting Pronouncements
In June 2009, the FASB issued revised accounting guidance under ASC Topic 810, Consolidation
by issuing SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (SFAS 167). The revised
guidance amends previous guidance (as previously required under FASB Interpretation No. 46(R),
Variable Interest Entities) for determining whether an entity is a variable interest entity
(VIE) and requires an enterprise to perform an analysis to determine whether the enterprises
variable interest or interests give it a controlling financial interest in a VIE. Under the
revised guidance, an enterprise has a controlling financial interest when it has a) the power to
direct the activities of a VIE that most significantly impact the entitys economic performance and
b) the obligation to absorb losses of the entity or the right to receive benefits from the entity
that could potentially be significant to the VIE. The revised guidance also requires an enterprise
to assess whether it has an implicit financial responsibility to ensure that a VIE operates as
designed when determining whether it has power to direct the activities of the VIE that most
significantly impact the entitys economic performance. The revised guidance also requires ongoing
assessments of whether an enterprise is the primary beneficiary of a VIE, requires enhanced
disclosures and eliminates the scope exclusion for qualifying special-purpose entities. The
revised guidance is effective for the first annual reporting period that begins after November 15,
2009, with early adoption prohibited. The Company is currently evaluating the impact that the
adoption of the revised guidance will have on its consolidated financial statements.
YEAR ENDED DECEMBER 31, 2009 COMPARED TO
YEAR ENDED DECEMBER 31, 2008
YEAR ENDED DECEMBER 31, 2008
We recorded rental revenues of $186.9 million for the year ended December 31, 2009, a decrease
of $5.6 million or 2.9% when compared to 2008 rental revenues of $192.5 million. Of the decrease
in rental revenue, $6.2 million resulted from a 3.2% decrease in rental revenues at the 352 core
properties considered in same store sales (those properties included in the consolidated results of
operations since January 1, 2008). The decrease in same store rental revenues was a result of a
2.1% decrease in average rental income per square foot as a result of increased move-in incentives
used in 2009 to attract customers. We also experienced a decrease in square foot occupancy of 115
basis points, which we believe resulted from general economic conditions, in particular the housing
sector. These decreases were partially offset by a $0.6 million increase in rental revenues
resulting from having the three stores acquired in 2008 included for a full year of operations.
Other income, which includes merchandise sales, insurance commissions, truck rentals, management
fees and acquisition fees, increased in 2009 primarily as a result of $0.3 million increase in
commissions earned from our customer insurance program.
Property operating and real estate tax expense decreased $2.0 million, or 2.7%, in 2009
compared to 2008. Much of the decrease resulted from numerous expense control initiatives and from
a reduction in yellow page advertising at the 352 core properties considered same stores. These
expense decreases were partially offset by a 4.1% increase in same store property tax expense and
$0.3 million of additional expenses incurred from having the 2008 acquisitions included for a full
year of operations. We expect same-store operating costs to increase only moderately in 2010 with
increases primarily attributable to utilities and property taxes.
General and administrative expenses increased $1.4 million or 7.9% from 2008 to 2009. The
increase primarily resulted from the write-off of construction in progress projects that were
terminated and an increase in internet advertising.
Depreciation and amortization expense decreased to $33.4 million in 2009 from $33.9 million in
2008, primarily as a result of a $1.0 million decrease in amortization of in-place customers leases
relating to previous year acquisitions, offset partially by a full year of depreciation on those
acquisitions.
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Interest expense increased from $38.1 million in 2008 to $50.1 million in 2009 as a result of
the following factors:
| A credit ratings downgrade by Fitch Ratings in May 2009 on our unsecured floating rate notes triggered a 1.75% increase in the interest rate on our $150 million term notes and a 0.375% increase in the interest rate on our $250 million term notes. The increase was effective from May to October of 2009, at which time our credit rating was upgraded back to investment grade rating after our common stock offering in October 2009; | ||
| At March 31, 2009, the Company had violated the leverage ratio covenant contained in the line of credit and term note agreements. In May 2009, the Company obtained a waiver of the violation as of March 31, 2009. The fees paid to obtain the waiver were approximately $0.9 million and are included in 2009 interest expense and; | ||
| On October 5, 2009, the Company used proceeds from the issuance of common stock to terminate the interest rate swap agreements with notional amounts of $75 million and $25 million (see Note 9 of our financial statements). The total cost to terminate the swaps was $8.4 million and is included as additional interest expense in 2009 and; | ||
| In October 2009, we wrote-off to interest expense $0.6 million of unamortized financing fees related to the $100 million term note that was repaid with the proceeds of the common stock offering. |
The casualty loss recorded in 2009 relates to insurance proceeds received that were less than
the carrying value of a building damaged by a fire at one of our facilities.
During 2009, we sold a parcel of land to the State of Georgia Department of Transportation for
their use as part of a road widening project for net cash proceeds of $1.1 million resulting in a
gain on sale of $1.1 million.
As described in Note 5 to the financial statements, during 2009 the Company sold five
non-strategic storage facilities for net cash proceeds of $16.3 million resulting in a loss of $1.6
million. During 2008 the Company sold one non-strategic storage facility for net cash proceeds of
$7.0 million resulting in a gain of $0.7 million. The 2009, 2008, and 2007 operations of these
facilities and the loss/gain associated with the disposal are reported in income from discontinued
operations for all periods presented.
YEAR ENDED DECEMBER 31, 2008 COMPARED TO
YEAR ENDED DECEMBER 31, 2007
YEAR ENDED DECEMBER 31, 2007
We recorded rental revenues of $192.5 million for the year ended December 31, 2008, an
increase of $8.7 million or 4.7% when compared to 2007 rental revenues of $183.8 million. Of the
increase in rental revenue, $1.3 million resulted from a 0.7% increase in rental revenues at the
321 core properties considered in same store sales (those properties included in the consolidated
results of operations since January 1, 2007). The increase in same store rental revenues was
achieved primarily through rate increases on select units averaging 1.9%, offset by a decrease in
square foot occupancy of 150 basis points, which we believe resulted from general economic
conditions, in particular the housing sector. The remaining $7.4 million increase in rental
revenues resulted from the acquisition of three stores during 2008 and from having the 31 stores
acquired in 2007 included for a full year of operations. Other income, which includes merchandise
sales, insurance commissions, truck rentals, management fees and acquisition fees, increased in
2008 primarily as a result of $1.1 million of management and acquisition fees generated from our
unconsolidated joint venture, Sovran HHF Storage Holdings LLC.
Property operating and real estate tax expense increased $5.0 million, or 7.3%, in 2008
compared to 2007. Of this increase, $2.7 million were expenses incurred by the facilities acquired in 2008 and
from having expenses from the 2007 acquisitions included for a full year of operations. $2.3
million of the increase was due to increased payroll, property taxes, utilities, and maintenance
expenses at the 321 core properties considered same stores.
General and administrative expenses increased $2.0 million or 13.4% from 2007 to 2008. The
increase primarily resulted from the costs associated with operating the properties acquired in
2008 and 2007, and from managing the 25 properties acquired by our joint venture in 2008.
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Depreciation and amortization expense increased to $33.9 million in 2008 from $33.4 million in
2007, primarily as a result of additional depreciation taken on real estate assets acquired in
2008, and a full year of depreciation on 2007 acquisitions, offset by a decrease in amortization of
in-place customers leases relating to these acquisitions.
Interest expense increased from $33.9 million in 2007 to $38.1 million in 2008 as a result of
additional borrowings under our line of credit and term notes to purchase three stores in 2008, as
well as an increase in interest rates as a result of our debt refinancing in June 2008.
As described in Note 5 to the financial statements, during 2009, the Company sold five
non-strategic storage facilities in Massachusetts, North Carolina, and Pennsylvania for net cash
proceeds of $16.3 million resulting in a loss of $1.6 million. In 2008, the Company sold one
non-strategic storage facility located in Michigan for net cash proceeds of $7.0 million resulting
in a gain of $0.7 million. The 2008 and 2007 operations of these facilities are reported as
discontinued operations.
The decrease in preferred stock dividends from 2007 to 2008 was a result of the conversion of
all remaining 1,200,000 shares of our Series C Preferred Stock into 920,244 shares of common stock
in July 2007.
FUNDS FROM OPERATIONS
We believe that Funds from Operations (FFO) provides relevant and meaningful information
about our operating performance that is necessary, along with net earnings and cash flows, for an
understanding of our operating results. FFO adds back historical cost depreciation, which assumes
the value of real estate assets diminishes predictably in the future. In fact, real estate asset
values increase or decrease with market conditions. Consequently, we believe FFO is a useful
supplemental measure in evaluating our operating performance by disregarding (or adding back)
historical cost depreciation.
FFO is defined by the National Association of Real Estate Investment Trusts, Inc. (NAREIT)
as net income computed in accordance with generally accepted accounting principles (GAAP),
excluding gains or losses on sales of properties, plus depreciation and amortization and after
adjustments to record unconsolidated partnerships and joint ventures on the same basis. We believe
that to further understand our performance, FFO should be compared with our reported net income and
cash flows in accordance with GAAP, as presented in our consolidated financial statements.
Our computation of FFO may not be comparable to FFO reported by other REITs or real estate
companies that do not define the term in accordance with the current NAREIT definition or that
interpret the current NAREIT definition differently. FFO does not represent cash generated from
operating activities determined in accordance with GAAP, and should not be considered as an
alternative to net income (determined in accordance with GAAP) as an indication of our performance,
as an alternative to net cash flows from operating activities (determined in accordance with GAAP)
as a measure of our liquidity, or as an indicator of our ability to make cash distributions.
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Reconciliation of Net Income to Funds From Operations
For Year Ended December 31, | ||||||||||||||||||||
(dollars in thousands) | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
Net income attributable to common
shareholders |
$ | 19,916 | $ | 37,399 | $ | 37,958 | $ | 34,098 | $ | 30,667 | ||||||||||
Net income attributable to
noncontrolling interests |
1,738 | 2,284 | 2,631 | 2,434 | 1,529 | |||||||||||||||
Depreciation of real estate and
amortization of intangible assets
exclusive of deferred financing fees |
33,385 | 33,876 | 33,360 | 24,653 | 20,604 | |||||||||||||||
Depreciation of real estate
included in discontinued operations |
434 | 591 | 676 | 652 | 618 | |||||||||||||||
Depreciation and amortization from
unconsolidated joint ventures |
820 | 333 | 59 | 168 | 484 | |||||||||||||||
Casualty gain |
| | (114 | ) | | | ||||||||||||||
Loss (gain) on sale of real estate |
509 | (716 | ) | | | | ||||||||||||||
Funds from operations allocable to
noncontrolling interest in
Operating
Partnership |
(984 | ) | (1,366 | ) | (1,425 | ) | (1,450 | ) | (1,519 | ) | ||||||||||
Funds from operations allocable to
noncontrolling interest in
consolidated joint ventures |
(1,360 | ) | (1,564 | ) | (1,848 | ) | (1,785 | ) | (1,499 | ) | ||||||||||
Funds from operations available to
common shareholders |
$ | 54,458 | $ | 70,837 | $ | 71,297 | $ | 58,770 | $ | 50,884 | ||||||||||
LIQUIDITY AND CAPITAL RESOURCES
Our line of credit and term notes require us to meet certain financial covenants measured on a
quarterly basis, including prescribed leverage, fixed charge coverage, minimum net worth,
limitations on additional indebtedness and limitations on dividend payouts. At December 31, 2009,
the Company was in compliance with all debt covenants. The most sensitive covenant is the leverage
ratio covenant contained in our line of credit and term note agreements. This covenant limits our
total consolidated liabilities to 55% of our gross asset value. At December 31, 2009, our leverage
ratio as defined in the agreements was approximately 42.8%. The agreements define total
consolidated liabilities to include the liabilities of the Company plus our share of liabilities of
unconsolidated joint ventures. The agreements also define a prescribed formula for determining
gross asset value which incorporates the use of a 9.25% capitalization rate applied to annualized
earnings before interest, taxes, depreciation and amortization (EBITDA) as defined in the
agreements. At March 31, 2009, the Company had violated the leverage ratio covenant contained in
the line of credit and term note agreements. In May 2009, the Company obtained a waiver of the
violation as of March 31, 2009. The fees paid to obtain the waiver were approximately $0.9 million
and are included in interest expense in 2009. In the event that the Company violates debt
covenants in the future, the amounts due under the agreements could be callable by the lenders.
On May 6, 2009, we announced a reduction in our quarterly dividend for the remainder of 2009
from $0.64 per share to $0.45 per share. In addition to the reduction in the dividend, in the
second quarter of 2009 we changed our policy of declaring the dividend from the last week in the
quarter to the first week following the quarter end. As a result of this date change, no dividend
was declared in the three months ended June 30, 2009. A dividend of $0.45 per common share was
declared on January 4, 2010 and paid on January 26, 2010. The dividend paid amounted to $12.4
million. In 2010, we expect to declare and pay four dividends in the calendar year.
On October 5, 2009, the Company completed the public offering of 4,025,000 shares of its
common stock at $29.75 per share. Net proceeds to the Company after deducting underwriting
discounts and commissions and estimated offering expenses were approximately $114.0 million. The Company used the net
proceeds from the offering to repay $100 million of the Companys unsecured term note due June 2012
and to terminate two interest rate swaps relating to the debt repaid at a cost of $8.4 million.
The Company used the remaining proceeds along with operating cash flows to payoff a maturing
mortgage in December 2009 of $26.1 million.
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We believe that the steps the Company has taken, including but not limited to the equity
raised from our common stock offering of approximately $114.0 million, the pay down of $100 million
of our term notes, and the reduction in the quarterly dividend, will be adequate to avoid future
covenant violations under the current terms of our line of credit and term note agreements.
Our ability to retain cash flow is limited because we operate as a REIT. In order to maintain
our REIT status, a substantial portion of our operating cash flow must be used to pay dividends to
our shareholders. We believe that our internally generated net cash provided by operating
activities and our availability on our line of credit will be sufficient to fund ongoing
operations, capital improvements, dividends and debt service requirements through June 2011, at
which time our revolving line of credit matures. Future draws on our line of credit may be limited
due to covenant restrictions.
Cash flows from operating activities were $59.1 million, $77.1 million and $85.2 million for
the years ended December 31, 2009, 2008, and 2007, respectively. The decrease in operating cash
flows from 2008 to 2009 was primarily due to a decrease in net income. The decrease in net income
was primarily a result of lower rental income and increased interest expense. The decrease in
operating cash from 2007 to 2008 was primarily attributable to a decrease in net income and
accounts payable remaining consistent with the prior year.
Cash used in investing activities was $4.4 million, $82.7 million, and $190.3 million for the
years ended December 31, 2009, 2008, and 2007 respectively. The decrease in cash used from 2008 to
2009 was due to (i) reduced acquisition and capital improvement activity in 2009, (ii) an increase
in proceeds from the sale of storage facilities, and (iii) a reduction in the funding of our share
of the joint venture entered into in 2008. The decrease in cash used from 2007 to 2008 was
attributable to reduced acquisition activity in 2008 as many of the properties acquired were
acquired through a joint venture of which we are a 20% owner.
Cash used in financing activities was $48.5 million in 2009, compared to cash provided by
financing activities of $6.0 million in 2008 and $61.4 million in 2007. In 2009, we used our
operating cash flow and the proceeds from our common stock offering to paydown $14.0 million of our
line of credit, $100 million of term notes, and a $26.1 million mortgage. Our reduced acquisition
activity in 2008 was the driver behind the decrease in cash provided from financing activities from
2007 to 2008.
On June 25, 2008, we entered into agreements relating to new unsecured credit arrangements,
and received funds under those arrangements. As part of the agreements, the Company entered into a
$250 million unsecured term note maturing in June 2012 bearing interest at LIBOR plus 1.625% (based
on the Companys December 31, 2009 credit rating). The proceeds from this term note were used to
repay the Companys previous line of credit that was to mature in September 2008, the Companys
term note that was to mature in September 2009, the term note maturing in July 2008, and to provide
for working capital. We repaid $100 million of this term note with the proceeds of our common
stock offering. The agreements also provide for a $125 million (expandable to $175 million)
revolving line of credit maturing June 2011 bearing interest at a variable rate equal to LIBOR plus
1.375% (based on the Companys credit rating at December 31, 2009), and requires a 0.25% facility
fee. The interest rate at December 31, 2009 on the Companys available line of credit was
approximately 1.61% (1.8% at December 31, 2008). At December 31, 2009, there was $125 million
available on the unsecured line of credit. We believe that if operating results remain consistent
with historical levels and levels of other debt and liabilities remain consistent with amounts
outstanding at December 31, 2009, the entire $125 million line of credit could be drawn without
violating our debt covenants.
We also maintain a $80 million term note maturing September 2013 bearing interest at a fixed
rate of 6.26%, a $20 million term note maturing September 2013 bearing interest at a variable rate
equal to LIBOR plus 1.50%, and a $150 million unsecured term note maturing in April 2016 bearing
interest at 6.38% (based on our December 31, 2009 credit ratings).
Prior to our October 2009 common stock offering, the line of credit facility and term notes
had an investment grade rating from Standard and Poors (BBB-). Due to our debt covenant violation
and operating trends, Fitch Ratings downgraded the Companys rating on its revolving credit
facility and term notes to non-investment
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grade (BB+) in May 2009. As a result of our common stock offering in October 2009 and the use of proceeds to repay $100 million of term notes, Fitch Ratings
upgraded our rating on our line of credit and term notes again to investment grade (BBB-).
Combined, this credit rating upgrade, the repayment of $100 million of term notes and the
termination of the interest rate swaps related to these term notes are expected to reduce our
annualized interest by approximately $9.8 million.
In addition to the unsecured financing mentioned above, our consolidated financial statements
also include $81.2 million of mortgages payable as detailed below:
*
|
7.80% mortgage note due December 2011, secured by 11 self-storage facilities
(Locke Sovran I) with an aggregate net book value of $42.7 million, principal
and interest paid monthly. The outstanding balance at December 31, 2009 on
this mortgage was $28.4 million. |
|
*
|
7.19% mortgage note due March 2012, secured by 27 self-storage facilities
(Locke Sovran II) with an aggregate net book value of $80.3 million, principal
and interest paid monthly. The outstanding balance at December 31, 2009 on
this mortgage was $41.5 million. |
|
*
|
7.25% mortgage note due December 2011, secured by 1 self-storage facility
with an aggregate net book value of $5.7 million, principal and interest paid
monthly. Estimated market rate at time of acquisition 5.40%. The outstanding
balance at December 31, 2008 on this mortgage was $3.4 million. |
|
*
|
6.76% mortgage note due September 2013, secured by 1 self-storage facility
with an aggregate net book value of $2.0 million, principal and interest paid
monthly. The outstanding balance at December 31, 2009 on this mortgage was
$1.0 million. |
|
*
|
6.35% mortgage note due March 2014, secured by 1 self-storage facility with
an aggregate net book value of $3.7 million, principal and interest paid
monthly. The outstanding balance at December 31, 2009 on this mortgage was
$1.1 million. |
|
*
|
7.50% mortgage notes due August 2011, secured by 3 self-storage facilities
with an aggregate net book value of $14.0 million, principal and interest paid
monthly. Estimated market rate at time of acquisition 6.42%. The outstanding
balance at December 31, 2009 on this mortgage was $5.9 million. |
The 7.80% and 7.19% mortgages were incurred in 2001 and 2002 respectively as part of the
financing of the consolidated joint ventures. The Company assumed the 7.25%, 6.76%, 6.35%, and
7.50% mortgage notes in connection with the acquisitions of storage facilities in 2005 and 2006.
During 2009, we issued approximately 1.4 million shares via our Dividend Reinvestment and
Stock Purchase Plan and Employee Stock Option Plan. We received $32.6 million from the sale of
such shares. Our Dividend Reinvestment and Stock Purchase Plan was suspended in November 2009. We
plan to reinstate our Dividend Reinvestment and Stock Purchase Plan in 2010 and expect to issue
shares when our share price and capital needs warrant such issuance.
During 2009 and 2008, we did not acquire any shares of our common stock via the Share
Repurchase Program authorized by the Board of Directors. From the inception of the Share
Repurchase Program through December 31, 2009, we have reacquired a total of 1,171,886 shares
pursuant to this program. From time to time, subject to market price and certain loan covenants,
we may reacquire additional shares.
Future acquisitions, our expansion and enhancement program, and share repurchases are expected
to be funded with draws on our line of credit, sale of properties and private placement
solicitation of joint venture equity. Current capital market conditions may prevent us from
accessing other traditional sources of capital including the issuance of common and preferred stock
and the issuance of unsecured term notes. Should these capital market conditions persist, we may
have to curtail acquisitions, our expansion and enhancement program, and share repurchases as we
approach June 2011, when our line of credit matures.
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CONTRACTUAL OBLIGATIONS
The following table summarizes our future contractual obligations:
Payments due by period | |||||||||||||||
Contractual | |||||||||||||||
obligations | Total | 2010 | 2011-2012 | 2013-2014 | 2015 and thereafter | ||||||||||
Line of credit
|
| | | | | ||||||||||
Term notes
|
$ | 400.0 million | | $ | 150.0 million | $ | 100.0 million | $ | 150.0 million | ||||||
Mortgages payable
|
$ | 81.2 million | $ | 2.2 million | $ | 77.1 million | $ | 1.9 million | | ||||||
Interest payments
|
$ | 99.2 million | $ | 23.8 million | $ | 40.6 million | $ | 22.9 million | $ | 11.9 million | |||||
Interest rate swap
payments
|
$ | 11.5 million | $ | 7.0 million | $ | 4.2 million | $ | 0.3 million | | ||||||
Land lease
|
$ | 1.1 million | $ | 0.1 million | $ | 0.1 million | $ | 0.1 million | $ | 0.8 million | |||||
Building leases
|
$ | 0.1 million | $ | 0.1 million | | | | ||||||||
Total
|
$ | 593.1 million | $ | 33.2 million | $ | 272.0 million | $ | 125.2 million | $ | 162.7 million |
Interest payments include actual interest on fixed rate debt and estimated interest for
floating-rate debt based on December 31, 2009 rates. Interest rate swap payments include net
settlements of swap liabilities based on forecasted variable rates.
ACQUISITION OF PROPERTIES
We acquired no properties in 2009. During 2008, we used operating cash flow, borrowings
pursuant to the line of credit, borrowings under the bank term note, and proceeds from our Dividend
Reinvestment and Stock Purchase Plan to acquire three Properties in Mississippi and Ohio comprising
0.2 million square feet from unaffiliated storage operators. During 2007, we used operating cash
flow, borrowings pursuant to the line of credit, borrowings under the bank term note, proceeds from
our Dividend Reinvestment and Stock Purchase Plan, and proceeds from the December 2006 common stock
offering to acquire 31 Properties in Alabama, Florida, Mississippi, New York, and Texas comprising
2.3 million square feet from unaffiliated storage operators.
FUTURE ACQUISITION AND DEVELOPMENT PLANS
Our external growth strategy is to increase the number of facilities we own by acquiring
suitable facilities in markets in which we already have operations, or to expand in new markets by
acquiring several facilities at once in those new markets. No properties were acquired in 2009 and
acquisitions in 2010 may be limited due to the fact that, at present, sellers asking prices remain
considerably higher than the Company believes market conditions warrant.
In 2009 we scaled back a planned $550 million program to expand and enhance our existing
properties. Instead we spent approximately $18 million to add 175,000 square feet to existing
Properties, and to convert 64,000 square feet to premium storage. We also completed construction
of a new 78,000 square foot facility in Richmond, Virginia. Although we do not expect to construct
any new facilities in 2010, we do plan to expend up to $20 million to expand and enhance existing
facilities.
DISPOSITION OF PROPERTIES
During 2009, we sold five non-strategic storage facilities in Massachusetts, North Carolina,
and Pennsylvania for net cash proceeds of $16.3 million resulting in a loss of $1.6 million.
During 2008, we sold one non-strategic storage facility located in Michigan for net cash proceeds
of $7.0 million resulting in a gain of $0.7 million. No sales took place in 2007.
We may seek to sell additional Properties to third parties or joint venture programs in 2010.
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OFF-BALANCE SHEET ARRANGEMENTS
We have a 20% ownership interest in Sovran HHF Storage Holdings LLC (Sovran HHF), a joint
venture that was formed in May 2008 to acquire self-storage properties that are managed by us. The
carrying value of our investment at December 31, 2009 was $19.9 million. Twenty five properties
were acquired by Sovran HHF as of December 31, 2008 for approximately $171.5 million. We
contributed $18.6 million to the joint venture as our share of capital required to fund the
acquisitions.
As manager of Sovran HHF, we earn a management and call center fee of 7% of gross revenues
which totaled $1.2 million and $0.5 million for 2009 and 2008, respectively. We also received an
acquisition fee of 0.5% or $0.7 million of purchase price for securing purchases for the joint
venture in 2008. Our share of Sovran HHFs income for 2009 and 2008 was $0.2 million and $0.1
million, respectively. At December 31, 2009, Sovran HHF owed us $0.2 million for payments made by
us on behalf of the joint venture.
We also have a 49% ownership interest in Iskalo Office Holdings, LLC, which owns the building
that houses the Companys headquarters and other tenants. Our investment includes a capital
contribution of $49. The carrying value of our investment is a liability of $0.5 million at
December 31, 2009 and 2008, and is included in accounts payable and accrued liabilities in the
accompanying consolidated balance sheets. For the years ended December 31, 2009, 2008 and 2007,
our share of Iskalo Office Holdings, LLCs income (loss) was $7,000, ($6,000), and $80,000,
respectively. We paid rent to Iskalo Office Holdings, LLC of $608,000, $600,000 and $561,000 in
2009, 2008, and 2007, respectively. Future minimum lease payments under the lease are $0.6 million
per year through 2010.
A summary of the unconsolidated joint ventures financial statements as of and for
the year ended December 31, 2009 is as follows:
Sovran HHF | ||||||||
Storage | Iskalo Office | |||||||
(dollars in thousands) | Holdings LLC | Holdings, LLC | ||||||
Balance Sheet Data: |
||||||||
Investment in storage facilities, net |
$ | 168,237 | $ | | ||||
Investment in office building |
| 5,322 | ||||||
Other assets |
3,575 | 688 | ||||||
Total Assets |
$ | 171,812 | $ | 6,010 | ||||
Due to the Company |
$ | 173 | $ | | ||||
Mortgages payable |
78,512 | 7,037 | ||||||
Other liabilities |
2,087 | 224 | ||||||
Total Liabilities |
80,772 | 7,261 | ||||||
Unaffiliated partners equity (deficiency) |
72,832 | (714 | ) | |||||
Company equity (deficiency) |
18,208 | (537 | ) | |||||
Total Liabilities and Partners Equity (deficiency) |
$ | 171,812 | $ | 6,010 | ||||
Income Statement Data: |
||||||||
Total revenues |
$ | 17,702 | $ | 1,129 | ||||
Total expenses |
16,761 | 1,115 | ||||||
Net income |
$ | 941 | $ | 14 | ||||
We do not expect to have material future cash outlays relating to these joint ventures outside
our share of capital for future acquisitions of properties by Sovran HHF. We do not guarantee the debt of
Sovran HHF or Iskalo Office Holdings, LLC. A summary of our cash flows arising from the
off-balance sheet arrangements with Sovran
29
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HHF and Iskalo Office Holdings, LLC for the three years
ended December 31, 2009 are as follows:
Year ended December 31, | ||||||||||||
(dollars in thousands) | 2009 | 2008 | 2007 | |||||||||
Statement of Operations |
||||||||||||
Other operating income (management fees and acquisition
fee income) |
$ | 1,243 | $ | 1,135 | $ | | ||||||
General and administrative expenses (corporate office rent) |
608 | 600 | 561 | |||||||||
Equity in income of joint ventures |
235 | 104 | 119 | |||||||||
Distributions from unconsolidated joint ventures |
686 | 345 | 98 | |||||||||
Investing activities |
||||||||||||
Investment in joint ventures |
(331 | ) | (20,287 | ) | | |||||||
Reimbursement of advances to (advances to) joint ventures |
163 | (336 | ) | |
REIT QUALIFICATION AND DISTRIBUTION REQUIREMENTS
As a REIT, we are not required to pay federal income tax on income that we distribute to our
shareholders, provided that the amount distributed is equal to at least 90% of our taxable income.
These distributions must be made in the year to which they relate, or in the following year if
declared before we file our federal income tax return, and if it is paid before the first regular
dividend of the following year. The first distribution of 2010 may be applied toward our 2009
distribution requirement.
As a REIT, we must derive at least 95% of our total gross income from income related to real
property, interest and dividends. In 2009, our percentage of revenue from such sources was
approximately 98%, thereby passing the 95% test, and no special measures are expected to be
required to enable us to maintain our REIT designation. Although we currently intend to operate in
a manner designed to qualify as a REIT, it is possible that future economic, market, legal, tax or
other considerations may cause our Board of Directors to revoke our REIT election.
INTEREST RATE RISK
We have entered into interest rate swap agreements in order to mitigate the effects of
fluctuations in interest rates on our variable rate debt. At December 31, 2009, we have three
outstanding interest rate swap agreements as summarized below:
Fixed | Floating Rate | |||||||||||||
Notional Amount | Effective Date | Expiration Date | Rate Paid | Received | ||||||||||
$20 Million |
9/4/05 | 9/4/13 | 4.4350 | % | 6 month LIBOR | |||||||||
$50 Million |
7/1/08 | 6/25/12 | 4.2825 | % | 1 month LIBOR | |||||||||
$100 Million |
7/1/08 | 6/22/12 | 4.2965 | % | 1 month LIBOR |
Upon renewal or replacement of the credit facility, our total interest may change dependent on
the terms we negotiate with the lenders; however, the LIBOR base rates have been contractually
fixed on $170 million of our debt through the interest rate swap termination dates.
Through June 2012, all of our $400 million of unsecured debt is on a fixed rate basis after
taking into account the interest rate swaps noted above. Based on our outstanding unsecured debt
of $400 million at December 31, 2009, a 100 basis point increase in interest rates would have no effect on our interest
expense.
The table below summarizes our debt obligations and interest rate derivatives at December
31, 2009. The estimated fair value of financial instruments is subjective in nature and is
dependent on a number of important assumptions, including discount rates and relevant comparable
market information associated with each financial
30
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instrument. The use of different market assumptions and estimation methodologies may have a
material effect on the reported estimated fair value amounts. Accordingly, the estimates presented
below are not necessarily indicative of the amounts the Company would realize in a current market
exchange.
Expected Maturity Date Including Discount | ||||||||||||||||||||||||||||||||
Fair | ||||||||||||||||||||||||||||||||
(dollars in thousands) | 2010 | 2011 | 2012 | 2013 | 2014 | Thereafter | Total | Value | ||||||||||||||||||||||||
Line of credit variable rate LIBOR + 1.375
(1.61% at December 31, 2009) |
| | | | | | | | ||||||||||||||||||||||||
Notes Payable: |
||||||||||||||||||||||||||||||||
Term note variable rate LIBOR+1.625%
(1.86% at December 31, 2009) |
| | $ | 150,000 | | | | $ | 150,000 | $ | 150,000 | |||||||||||||||||||||
Term note variable rate LIBOR+1.50%
(2.23% at December 31, 2009) |
| | | $ | 20,000 | | | $ | 20,000 | $ | 20,000 | |||||||||||||||||||||
Term note fixed rate 6.26% |
| | | $ | 80,000 | | | $ | 80,000 | $ | 76,958 | |||||||||||||||||||||
Term note fixed rate 6.38% |
| | | | | $ | 150,000 | $ | 150,000 | $ | 136,630 | |||||||||||||||||||||
Mortgage note fixed rate 7.80% |
$ | 630 | $ | 27,817 | | | | | $ | 28,447 | $ | 29,454 | ||||||||||||||||||||
Mortgage note fixed rate 7.19% |
$ | 1,211 | $ | 1,301 | $ | 38,963 | | | | $ | 41,475 | $ | 43,133 | |||||||||||||||||||
Mortgage note fixed rate 7.25% |
$ | 149 | $ | 3,220 | | | | | $ | 3,369 | $ | 3,385 | ||||||||||||||||||||
Mortgage note fixed rate 6.76% |
$ | 25 | $ | 27 | $ | 29 | $ | 896 | | | $ | 977 | $ | 1,011 | ||||||||||||||||||
Mortgage note fixed rate 6.35% |
$ | 28 | $ | 30 | $ | 31 | $ | 34 | $ | 949 | | $ | 1,072 | $ | 1,059 | |||||||||||||||||
Mortgage notes fixed rate 7.50% |
$ | 222 | $ | 5,657 | | | | | $ | 5,879 | $ | 6,003 | ||||||||||||||||||||
Interest rate derivatives liability |
| | | | | | | $ | 11,524 |
INFLATION
We do not believe that inflation has had or will have a direct effect on our operations.
Substantially all of the leases at the facilities are on a month-to-month basis which provides us
with the opportunity to increase rental rates as each lease matures.
SEASONALITY
Our revenues typically have been higher in the third and fourth quarters, primarily because we
increase rental rates on most of our storage units at the beginning of May and 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, we believe
that our customer 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, we do not expect seasonality to affect materially distributions to shareholders.
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. Managements Discussion and Analysis of Financial
Condition and Results of Operations above.
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Item 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of Sovran Self Storage, Inc.
We have audited the accompanying consolidated balance sheets of Sovran Self Storage, Inc. as
of December 31, 2009 and 2008, and the related consolidated statements of operations, shareholders
equity and comprehensive income, and cash flows for each of the three years in the period ended
December 31, 2009. Our audits also included the financial statement schedule listed in the Index at
Item 15(a). These financial statements and schedule are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial statements and schedule
based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (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. at December 31, 2009 and
2008, and the consolidated results of its operations and its cash flows for each of the three years
in the period ended December 31, 2009, in conformity with U.S. generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
As discussed in Note 2 to the consolidated financial statements, the Company retrospectively
adjusted the consolidated financial statements as a result of the Companys adoption of Statement
of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial
Statements an Amendment of ARB No. 51 (codified in FASB ASC Topic 810 Consolidation) on
January 1, 2009.
We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), Sovran Self Storage, Inc.s internal control over financial
reporting as of December 31, 2009, based on criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated February 26, 2010 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Buffalo, New York
February 26, 2010
February 26, 2010
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SOVRAN SELF STORAGE, INC.
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS
December 31, | ||||||||
(dollars in thousands, except share data) | 2009 | 2008 | ||||||
Assets |
||||||||
Investment in storage facilities: |
||||||||
Land |
$ | 237,684 | $ | 236,655 | ||||
Building, equipment, and construction in progress |
1,149,899 | 1,129,960 | ||||||
1,387,583 | 1,366,615 | |||||||
Less: accumulated depreciation |
(245,178 | ) | (212,301 | ) | ||||
Investment in storage facilities, net |
1,142,405 | 1,154,314 | ||||||
Cash and cash equivalents |
10,710 | 4,486 | ||||||
Accounts receivable |
2,405 | 2,934 | ||||||
Receivable from related parties |
| 14 | ||||||
Receivable from unconsolidated joint venture |
173 | 336 | ||||||
Investment in unconsolidated joint venture |
19,944 | 20,111 | ||||||
Prepaid expenses |
4,250 | 4,647 | ||||||
Other assets |
5,314 | 7,460 | ||||||
Net assets of discontinued operations |
| 18,226 | ||||||
Total Assets |
$ | 1,185,201 | $ | 1,212,528 | ||||
Liabilities |
||||||||
Line of credit |
$ | | $ | 14,000 | ||||
Term notes |
400,000 | 500,000 | ||||||
Accounts payable and accrued liabilities |
22,339 | 23,970 | ||||||
Deferred revenue |
5,060 | 5,570 | ||||||
Fair value of interest rate swap agreements |
11,524 | 25,490 | ||||||
Accrued dividends |
| 14,090 | ||||||
Mortgages payable |
81,219 | 109,261 | ||||||
Total Liabilities |
520,142 | 692,381 | ||||||
Noncontrolling redeemable Operating Partnership
Units at redemption value |
15,005 | 15,118 | ||||||
Shareholders Equity |
||||||||
Common stock $.01 par value, 100,000,000 shares
authorized, 27,547,027 shares outstanding
(22,016,348 at December 31, 2008) |
287 | 232 | ||||||
Additional paid-in capital |
814,988 | 666,633 | ||||||
Dividends in excess of net income |
(139,863 | ) | (122,581 | ) | ||||
Accumulated other comprehensive income |
(11,265 | ) | (25,162 | ) | ||||
Treasury stock at cost, 1,171,886 shares |
(27,175 | ) | (27,175 | ) | ||||
Total Shareholders Equity |
636,972 | 491,947 | ||||||
Noncontrolling interest- consolidated joint venture |
13,082 | 13,082 | ||||||
Total Equity |
650,054 | 505,029 | ||||||
Total Liabilities and Shareholders Equity |
$ | 1,185,201 | $ | 1,212,528 | ||||
See notes
to consolidated financial statements.
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SOVRAN SELF STORAGE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31, | ||||||||||||
(dollars in thousands, except per share data) | 2009 | 2008 | 2007 | |||||||||
Revenues |
||||||||||||
Rental income |
$ | 186,892 | $ | 192,474 | $ | 183,802 | ||||||
Other operating income |
8,119 | 7,719 | 6,211 | |||||||||
Total operating revenues |
195,011 | 200,193 | 190,013 | |||||||||
Expenses |
||||||||||||
Property operations and maintenance |
51,955 | 54,858 | 51,466 | |||||||||
Real estate taxes |
19,591 | 18,706 | 17,095 | |||||||||
General and administrative |
18,650 | 17,279 | 15,234 | |||||||||
Depreciation and amortization |
33,384 | 33,876 | 33,360 | |||||||||
Total operating expenses |
123,580 | 124,719 | 117,155 | |||||||||
Income from operations |
71,431 | 75,474 | 72,858 | |||||||||
Other income (expenses) |
||||||||||||
Interest expense |
(50,050 | ) | (38,097 | ) | (33,861 | ) | ||||||
Interest income |
85 | 322 | 954 | |||||||||
Casualty (loss) gain |
(390 | ) | | 114 | ||||||||
Gain on sale of land |
1,127 | | | |||||||||
Equity in income of joint ventures |
235 | 104 | 119 | |||||||||
Income from continuing operations |
22,438 | 37,803 | 40,184 | |||||||||
(Loss) income from discontinued operations
(including loss
on disposal of $1,636 in 2009 and gain on
disposal of $716
in 2008) |
(784 | ) | 1,880 | 1,661 | ||||||||
Net income |
21,654 | 39,683 | 41,845 | |||||||||
Preferred stock dividends |
| | (1,256 | ) | ||||||||
Net income attributable to noncontrolling interest |
(1,738 | ) | (2,284 | ) | (2,631 | ) | ||||||
Net income attributable to common shareholders |
$ | 19,916 | $ | 37,399 | $ | 37,958 | ||||||
Earnings per common share attributable to common
shareholders basic |
||||||||||||
Continuing operations |
$ | 0.87 | $ | 1.63 | $ | 1.73 | ||||||
Discontinued operations |
(0.03 | ) | 0.09 | 0.08 | ||||||||
Earning per share basic |
$ | 0.84 | $ | 1.72 | $ | 1.81 | ||||||
Earnings per common share attributable to common
shareholders diluted |
||||||||||||
Continuing operations |
$ | 0.87 | $ | 1.63 | $ | 1.73 | ||||||
Discontinued operations |
(0.03 | ) | 0.09 | 0.08 | ||||||||
Earning per share diluted |
$ | 0.84 | $ | 1.72 | $ | 1.81 | ||||||
Dividends declared per common share |
$ | 1.54 | $ | 2.54 | $ | 2.50 |
See notes to consolidated financial statements.
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SOVRAN SELF STORAGE, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME
8.375% Series | ||||||||||||||||
C Preferred | 8.375% Series C | Common | ||||||||||||||
Stock | Preferred | Stock | Common | |||||||||||||
(dollars in thousands, except share data) | Shares | Stock | Shares | Stock | ||||||||||||
Balance January 1, 2007 |
1,200,000 | 26,613 | 20,443,529 | 216 | ||||||||||||
Net proceeds from issuance of stock through Dividend
Reinvestment and Stock Purchase Plan |
| | 252,816 | 3 | ||||||||||||
Exercise of stock options |
| | 13,100 | | ||||||||||||
Issuance of non-vested stock |
| | 43,989 | | ||||||||||||
Earned portion of non-vested stock |
| | | | ||||||||||||
Stock option expense |
| | | | ||||||||||||
Deferred compensation outside directors |
| | | | ||||||||||||
Conversion of Series C Preferred Stock to common stock and exercise of related stock warrants |
(1,200,000 | ) | (26,613 | ) | 920,244 | 9 | ||||||||||
Conversion of operating partnership units to common
stock |
| | 2,908 | | ||||||||||||
Carrying value less than redemption value on redeemed
partnership units |
| | | | ||||||||||||
Adjustment to redemption value of noncontrolling
redeemable Operating Partnership Units |
| | | | ||||||||||||
Net income |
| | | | ||||||||||||
Change in fair value of derivatives |
| | | | ||||||||||||
Total comprehensive income |
| | | | ||||||||||||
Dividends |
| | | | ||||||||||||
Balance December 31, 2007 |
| | 21,676,586 | 228 | ||||||||||||
Net proceeds from issuance of stock through Dividend
Reinvestment and Stock Purchase Plan |
| | 285,308 | 3 | ||||||||||||
Exercise of stock options |
| | 2,600 | | ||||||||||||
Issuance of non-vested stock |
| | 45,713 | 1 | ||||||||||||
Earned portion of non-vested stock |
| | | | ||||||||||||
Stock option expense |
| | | | ||||||||||||
Deferred compensation outside directors |
| | 6,141 | | ||||||||||||
Carrying value less than redemption value on redeemed
partnership units |
| | | | ||||||||||||
Adjustment to redemption value of noncontrolling
redeemable Operating Partnership Units |
| | | | ||||||||||||
Net income |
| | | | ||||||||||||
Change in fair value of derivatives |
| | | | ||||||||||||
Total comprehensive income |
| | | | ||||||||||||
Dividends |
| | | | ||||||||||||
Balance December 31, 2008 |
| | 22,016,348 | 232 | ||||||||||||
Net proceeds from the issuance of common stock |
| | 4,025,000 | 40 | ||||||||||||
Net proceeds from issuance of stock through Dividend
Reinvestment and Stock Purchase Plan |
| | 1,430,521 | 14 | ||||||||||||
Exercise of stock options |
| | 3,770 | | ||||||||||||
Issuance of non-vested stock |
| | 59,590 | 1 | ||||||||||||
Earned portion of non-vested stock |
| | | | ||||||||||||
Stock option expense |
| | | | ||||||||||||
Deferred compensation outside directors |
| | 11,798 | | ||||||||||||
Adjustment to redemption value of noncontrolling
redeemable Operating Partnership Units |
| | | | ||||||||||||
Net income |
| | | | ||||||||||||
Change in fair value of derivatives |
| | | | ||||||||||||
Total comprehensive income |
| | | | ||||||||||||
Dividends |
| | | | ||||||||||||
Balance December 31, 2009 |
| $ | | 27,547,027 | $ | 287 | ||||||||||
See notes to consolidated financial statements
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SOVRAN SELF STORAGE, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME
Additional | Dividends in | Accumulated | ||||||||||||||||||
Paid-in | Excess of | Other Comprehensive | Treasury | Total | ||||||||||||||||
(dollars in thousands, except share data) | Capital | Net Income | Income (loss) | Stock | Equity | |||||||||||||||
Balance January 1, 2007 |
612,738 | (98,020 | ) | 2,128 | (27,175 | ) | 516,500 | |||||||||||||
Net proceeds from issuance of stock through Dividend
Reinvestment and Stock Purchase Plan |
12,756 | | | | 12,759 | |||||||||||||||
Exercise of stock options |
425 | | | | 425 | |||||||||||||||
Issuance of non-vested stock |
| | | | | |||||||||||||||
Earned portion of non-vested stock |
1,224 | | | | 1,224 | |||||||||||||||
Stock option expense |
183 | | | | 183 | |||||||||||||||
Deferred compensation outside directors |
161 | | | | 161 | |||||||||||||||
Conversion of Series C Preferred Stock to common stock and exercise of related stock warrants. |
26,604 | | | | | |||||||||||||||
Conversion of operating partnership units to common
stock |
167 | | | | 167 | |||||||||||||||
Carrying value less than redemption value on redeemed
partnership units |
(117 | ) | | | | (117 | ) | |||||||||||||
Adjustment to redemption value of noncontrolling
redeemable Operating Partnership Units |
| 7,119 | | | 7,119 | |||||||||||||||
Net income |
| 39,214 | | | 39,214 | |||||||||||||||
Change in fair value of derivatives |
| | (3,496 | ) | | (3,496 | ) | |||||||||||||
Total comprehensive income |
| | | | 35,718 | |||||||||||||||
Dividends |
| (54,042 | ) | | | (54,042 | ) | |||||||||||||
Balance December 31, 2007 |
654,141 | (105,729 | ) | (1,368 | ) | (27,175 | ) | 520,097 | ||||||||||||
Net proceeds from issuance of stock through Dividend
Reinvestment and Stock Purchase Plan |
10,654 | | | | 10,657 | |||||||||||||||
Exercise of stock options |
72 | | | | 72 | |||||||||||||||
Issuance of non-vested stock |
| | | | 1 | |||||||||||||||
Earned portion of non-vested stock |
1,444 | | | | 1,444 | |||||||||||||||
Stock option expense |
279 | | | | 279 | |||||||||||||||
Deferred compensation outside directors |
112 | | | | 112 | |||||||||||||||
Carrying value less than redemption value on redeemed
partnership units |
(69 | ) | | | | (69 | ) | |||||||||||||
Adjustment to redemption value of noncontrolling
redeemable Operating Partnership Units |
| 1,439 | | | 1,439 | |||||||||||||||
Net income |
| 37,399 | | | 37,399 | |||||||||||||||
Change in fair value of derivatives |
| | (23,794 | ) | | (23,794 | ) | |||||||||||||
Total comprehensive income |
| | | | 13,605 | |||||||||||||||
Dividends |
| (55,690 | ) | | | (55,690 | ) | |||||||||||||
Balance December 31, 2008 |
666,633 | (122,581 | ) | $ | (25,162 | ) | (27,175 | ) | 491,947 | |||||||||||
Net proceeds from the issuance of common stock |
113,931 | | | | 113,971 | |||||||||||||||
Net proceeds from issuance of stock through Dividend
Reinvestment and Stock Purchase Plan |
32,548 | | | | 32,562 | |||||||||||||||
Exercise of stock options |
62 | | | | 62 | |||||||||||||||
Issuance of non-vested stock |
| | | | 1 | |||||||||||||||
Earned portion of non-vested stock |
1,379 | | | | 1,379 | |||||||||||||||
Stock option expense |
321 | | | | 321 | |||||||||||||||
Deferred compensation outside directors |
114 | | | | 114 | |||||||||||||||
Adjustment to redemption value of noncontrolling
redeemable Operating Partnership Units |
| (156 | ) | | | (156 | ) | |||||||||||||
Net income |
| 19,916 | | | 19,916 | |||||||||||||||
Change in fair value of derivatives |
| | 13,897 | | 13,897 | |||||||||||||||
Total comprehensive income |
| | | | 33,813 | |||||||||||||||
Dividends |
| (37,042 | ) | | | (37,042 | ) | |||||||||||||
Balance December 31, 2009 |
$ | 814,988 | $ | (139,863 | ) | $ | (11,265 | ) | $ | (27,175 | ) | $ | 636,972 | |||||||
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SOVRAN SELF STORAGE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31, | ||||||||||||
(dollars in thousands) | 2009 | 2008 | 2007 | |||||||||
Operating Activities |
||||||||||||
Net income |
$ | 21,654 | $ | 39,683 | $ | 41,845 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||
Depreciation and amortization |
35,656 | 35,659 | 34,999 | |||||||||
Loss (gain) on sale of storage facilities |
1,636 | (716 | ) | | ||||||||
Gain on sale of land |
(1,127 | ) | | | ||||||||
Casualty loss (gain) |
390 | | (114 | ) | ||||||||
Equity in income of joint ventures |
(235 | ) | (104 | ) | (119 | ) | ||||||
Distributions from unconsolidated joint venture |
686 | 345 | 98 | |||||||||
Non-vested stock earned |
1,379 | 1,444 | 1,224 | |||||||||
Stock option expense |
321 | 279 | 183 | |||||||||
Changes in assets and liabilities: |
||||||||||||
Accounts receivable |
509 | (171 | ) | (599 | ) | |||||||
Prepaid expenses |
413 | 118 | 822 | |||||||||
Accounts payable and other liabilities |
(1,677 | ) | 619 | 7,082 | ||||||||
Deferred revenue |
(462 | ) | (24 | ) | (246 | ) | ||||||
Net cash provided by operating activities |
59,143 | 77,132 | 85,175 | |||||||||
Investing Activities |
||||||||||||
Acquisition of storage facilities |
| (18,547 | ) | (138,059 | ) | |||||||
Improvements, equipment additions, and construction in progress |
(22,261 | ) | (45,709 | ) | (52,441 | ) | ||||||
Net proceeds from the sale of storage facility |
16,309 | 7,002 | | |||||||||
Net proceeds from the sale of land |
1,140 | | | |||||||||
Casualty insurance proceeds received |
518 | | 1,692 | |||||||||
Investment in unconsolidated joint venture |
(331 | ) | (20,287 | ) | | |||||||
Additional investment in consolidated joint ventures net of cash acquired |
| (6,106 | ) | | ||||||||
Reimbursement of advances (advances) to joint ventures |
163 | (336 | ) | | ||||||||
Reimbursement of (payment of) property deposits |
| 1,259 | (1,469 | ) | ||||||||
Receipts from related parties |
14 | 13 | 10 | |||||||||
Net cash used in investing activities |
(4,448 | ) | (82,711 | ) | (190,267 | ) | ||||||
Financing Activities |
||||||||||||
Net proceeds from sale of common stock |
146,710 | 10,842 | 13,345 | |||||||||
Proceeds from line of credit |
30,000 | 14,000 | 112,000 | |||||||||
Repayment of line of credit and term note |
(144,000 | ) | (206,000 | ) | (12,000 | ) | ||||||
Proceeds from term notes |
| 250,000 | 6,000 | |||||||||
Financing costs |
| (3,085 | ) | (316 | ) | |||||||
Dividends paid common stock |
(51,133 | ) | (55,256 | ) | (51,805 | ) | ||||||
Dividends paid preferred stock |
| | (1,256 | ) | ||||||||
Distributions to noncontrolling interest holders |
(2,006 | ) | (2,633 | ) | (2,912 | ) | ||||||
Redemption of operating partnership units |
| (114 | ) | (174 | ) | |||||||
Mortgage principal and capital lease payments |
(28,042 | ) | (1,699 | ) | (1,510 | ) | ||||||
Net cash (used in) provided by financing activities |
(48,471 | ) | 6,055 | 61,372 | ||||||||
Net increase (decrease) in cash |
6,224 | 476 | (43,720 | ) | ||||||||
Cash at beginning of period |
4,486 | 4,010 | 47,730 | |||||||||
Cash at end of period |
$ | 10,710 | $ | 4,486 | $ | 4,010 | ||||||
Supplemental cash flow information |
||||||||||||
Cash paid for interest, net of interest capitalized |
$ | 49,154 | $ | 37,970 | $ | 32,313 | ||||||
Fair value of net liabilities assumed on the acquisition of storage facilities |
| 107 | 1,580 |
Dividends declared but unpaid at December 31, 2009, 2008 and 2007 were $0, $14,090, and $13,656,
respectively.
See notes to consolidated financial statements.
37
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SOVRAN SELF STORAGE, INC. DECEMBER 31, 2009
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
Sovran Self Storage, Inc. (the Company, We, Our, or Sovran), 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. At December 31,
2009, we had an ownership interest in and managed 381 self-storage properties in 24 states under
the name Uncle Bobs Self Storage ®. Among our 381 self-storage properties are 27 properties that
we manage for a consolidated joint venture of which we are a majority owner and 25 properties that
we manage for an unconsolidated joint venture of which we are a 20% owner. Approximately 42% of
the Companys revenue is derived from stores in the states of Texas and Florida.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: All of the Companys 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 of the Operating Partnership; the Company is a limited partner of the Operating
Partnership, and through its ownership of the Subsidiary and its limited partnership interest
controls the operations of the Operating Partnership, holding a 98.5% ownership interest therein as
of December 31, 2009. 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.
We consolidate all wholly owned subsidiaries. Partially owned subsidiaries and joint ventures
are consolidated when we control the entity. Our consolidated financial statements include the
accounts of the Company, the Operating Partnership, Locke Sovran I, LLC, and Locke Sovran II, LLC,
which is a majority owned joint venture. All intercompany transactions and balances have been
eliminated. Investments in joint ventures that we do not control but for which we have significant
influence over are reported using the equity method.
In June 2008, the Company made an additional investment of $6.1 million in Locke Sovran I, LLC
that increased the Companys ownership from approximately 70% to 100%.
In December 2007, the FASB issued additional accounting guidance now codified in ASC Topic
810, Consolidation through the issuance of FASB Statement No. 160, Noncontrolling Interests in
Consolidated Financial Statements (SFAS No. 160) which was adopted by the Company on January 1,
2009. The additional guidance requires that the portion of equity in a subsidiary attributable to
the owners of the subsidiary other than the parent or the parents affiliates be labeled
noncontrolling interests and presented in the consolidated balance sheet as a component of
equity. The additional guidance does not significantly change the Companys past accounting
practices with respect to the attribution of net income between controlling and noncontrolling
interests, however, the provisions of the additional guidance require that earnings attributable to
noncontrolling interests be reported as part of consolidated earnings and not as a separate
component of income or expense. In addition, the additional guidance requires the disclosure of
the attribution of consolidated earnings to the controlling and noncontrolling interests on the
face of the statement of operations. The presentation and disclosure requirements of the
additional guidance are applied retrospectively and all prior period information has been presented
and disclosed in accordance with these new requirements. The adoption of this additional guidance
did not result in any differences between net income available to common shareholders as previously
reported and net income attributable to common shareholders as currently reported.
As a result of the adoption of these additional guidelines we now present noncontrolling
interests in Locke Sovran II, LLC as a separate component of equity, called Noncontrolling
interests consolidated joint venture in the consolidated balance sheets. Prior to the adoption
of these additional guidelines, the noncontrolling interests in Locke Sovran I, LLC and Locke
Sovran II, LLC were called Minority interest consolidated joint venture and were presented in
the mezzanine section of the consolidated balance sheet, above equity. The following table sets
forth the activity in the noncontrolling interest consolidated joint venture:
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Table of Contents
(Dollars in thousands) | 2009 | 2008 | ||||||
Beginning balance noncontrolling interests consolidated joint venture |
$ | 13,082 | $ | 16,783 | ||||
Carrying value of Locke Sovran I, LLC purchased in 2008 for $6.1 million |
| (3,701 | ) | |||||
Net income attributable to noncontrolling interests consolidated joint venture |
1,360 | 1,563 | ||||||
Distributions |
(1,360 | ) | (1,563 | ) | ||||
Ending balance noncontrolling interests consolidated joint venture |
$ | 13,082 | $ | 13,082 | ||||
Included in the consolidated balance sheets are noncontrolling redeemable operating
partnership units. Prior to the adoption of these additional guidelines, we referred to these
noncontrolling interests as Minority interest Operating Partnership. These interests are
presented in the mezzanine section of the consolidated balance sheet because they dont meet the
functional definition of a liability or equity under current authorative accounting literature.
These represent the outside ownership interests of the limited partners in the Operating
Partnership. At December 31, 2009 and 2008, there was 419,952 noncontrolling redeemable operating
partnership Units outstanding. The Operating Partnership is obligated to redeem each of these
limited partnership Units in the Operating Partnership at the request of the holder thereof for
cash equal to the fair market value of a share of the Companys common stock, at the time of such
redemption, provided that the Company at its option may elect to acquire any such Unit presented
for redemption for one common share or cash. Effective January 1, 2009, the Company accounts for
these noncontrolling redeemable Operating Partnership Units under the provisions of FASB ASC Topic
480-10-S99. The application of the FASB ASC Topic 480-10-S99 accounting model requires the
noncontrolling interest to follow normal noncontrolling interest accounting and then be marked to
redemption value at the end of each reporting period if higher (but never adjusted below that
normal noncontrolling interest accounting amount). The offset to the adjustment to the carrying
amount of the noncontrolling redeemable Operating Partnership Units is reflected in accumulated
deficit. Accordingly, in the accompanying consolidated balance sheet, noncontrolling redeemable
Operating Partnership Units are reflected at redemption value at December 31, 2009 and December 31,
2008, equal to the number of Units outstanding multiplied by the fair market value of the Companys
common stock at that date. Redemption value exceeded the value determined under the Companys
historical basis of accounting at those dates.
(Dollars in thousands) | 2009 | 2008 | ||||||
Beginning balance noncontrolling redeemable Operating Partnership Units |
$ | 15,118 | $ | 16,951 | ||||
Redemption of Operating Partnership Units |
| (115 | ) | |||||
Redemption value in excess of carrying value |
| 70 | ||||||
Net income attributable to noncontrolling interests consolidated joint venture |
378 | 721 | ||||||
Distributions |
(647 | ) | (1,070 | ) | ||||
Adjustment to redemption value |
156 | (1,439 | ) | |||||
Ending balance noncontrolling redeemable Operating Partnership Units |
$ | 15,005 | $ | 15,118 | ||||
Retrospective Impact of New Accounting Pronouncement Adopted January 1, 2009 (in thousands):
Statement of Operations:
For the Year Ended December 31, 2008: | ||||||||||||
As Previously Reported | ||||||||||||
adjusted for discontinued | ||||||||||||
operations | Adjustments | As Adjusted | ||||||||||
Income from continuing operations |
$ | 35,519 | $ | 2,284 | $ | 37,803 | ||||||
Net income |
37,399 | 2,284 | 39,683 | |||||||||
Net income attributable to noncontrolling interest |
| 2,284 | 2,284 | |||||||||
Net income attributable to common shareholders |
| 37,399 | 37,399 |
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For the Year Ended December 31, 2007: | ||||||||||||
As Previously Reported | ||||||||||||
adjusted for discontinued | ||||||||||||
operations | Adjustments | As Adjusted | ||||||||||
Income from continuing operations |
$ | 37,553 | $ | 2,631 | $ | 40,184 | ||||||
Net income |
39,214 | 2,631 | 41,845 | |||||||||
Net income attributable to noncontrolling interest |
| 2,631 | 2,631 | |||||||||
Net income attributable to common shareholders |
| 37,958 | 37,958 |
Balance Sheet:
December 31, 2008: | ||||||||||||
As Previously Reported | Adjustments | As Adjusted | ||||||||||
Minority interest operating partnership |
$ | 9,265 | $ | (9,265 | ) | $ | | |||||
Noncontrolling redeemable operating partnership units |
| 15,118 | 15,118 | |||||||||
Minority interest consolidated joint venture |
13,082 | (13,082 | ) | | ||||||||
Accumulated deficit |
(116,728 | ) | (5,853 | ) | (122,581 | ) | ||||||
Total shareholders equity |
497,800 | (5,853 | ) | 491,947 | ||||||||
Noncontrolling interest consolidated joint venture |
| 13,082 | 13,082 | |||||||||
Total equity |
497,800 | 7,229 | 505,029 |
Statement of Cash Flows:
For the Year Ended December 31, 2008: | ||||||||||||
As Previously Reported | Adjustments | As Adjusted | ||||||||||
Net income |
37,399 | 2,284 | 39,683 | |||||||||
Minority interest |
2,284 | (2,284 | ) | |
For the Year Ended December 31, 2007: | ||||||||||||
As Previously Reported | Adjustments | As Adjusted | ||||||||||
Net income |
39,214 | 2,631 | 41,845 | |||||||||
Minority interest |
2,631 | (2,631 | ) | |
Cash and Cash Equivalents: The Company considers all highly liquid investments purchased
with maturities of three months or less to be cash equivalents. The cash balance includes $2.3
million and $3.8 million, respectively, held in escrow for encumbered properties at December 31,
2009 and 2008.
Revenue and Expense Recognition: Rental income is recognized when earned pursuant to
month-to-month leases for storage space. Promotional discounts are recognized as a reduction to
rental income over the promotional period, which is generally during the first month of occupancy.
Rental income received prior to the start of the rental period is included in deferred revenue.
Equity in earnings of real estate joint ventures that we have significant influence over is
recognized based on our ownership interest in the earnings of these entities.
Cost of operations, general and administrative expense, interest expense and advertising costs
are expensed as incurred. For the years ended December 31, 2009, 2008, and 2007, advertising costs
were $1.9 million, $1.4 million, and $1.4 million, respectively. The Company accrues property
taxes based on estimates and historical trends. If these estimates are incorrect, the timing and
amount of expense recognition would be affected.
Other Operating Income: Consists primarily of sales of storage-related merchandise (locks and
packing supplies), insurance commissions, incidental truck rentals, and management fees from
unconsolidated joint ventures.
Investment in Storage Facilities: Storage facilities are recorded at cost. The purchase price
of acquired facilities is allocated to land, building, equipment, and in-place customer leases
based on the fair value of each component. 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
that extend the useful life of assets are capitalized. Interest and other costs incurred during the
construction period of major expansions are capitalized. Capitalized interest during the years
ended December 31, 2009, 2008, and 2007 was $0.2, $0.4 million and $0.4 million, respectively.
Repair and
40
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maintenance costs are expensed as incurred.
Whenever events or changes in circumstances indicate that the basis of the Companys property
may not be recoverable, the Companys 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 undiscounted
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, 2009
and 2008, no assets had been determined to be impaired under this policy and, accordingly, this
policy had no impact on the Companys financial position or results of operations.
Other Assets: Included in other assets are net loan acquisition costs, a note receivable,
property deposits, and the value placed on in-place customer leases at the time of acquisition. The
loan acquisition costs were $5.9 million and $6.8 million at December 31, 2009, and 2008,
respectively. Accumulated amortization on the loan acquisition costs was approximately $3.4
million and $2.5 million at December 31, 2009, and 2008, respectively. Loan acquisition costs are
amortized over the terms of the related debt. The note receivable of $2.8 million represents a note
from certain investors of Locke Sovran II, LLC. The note bears interest at LIBOR plus 2.4% and
matures upon the dissolution of Locke Sovran II, LLC. There were no property deposits at December
31, 2009 and $0.1 million at December 31, 2008.
The Company allocates a portion of the purchase price of acquisitions to in-place customer
leases. The value of in-place customer leases is based on the Companys experience with customer
turnover. The Company amortizes in-place customer leases on a straight-line basis over 12 months
(the estimated future benefit period). At December 31, 2009, the gross carrying amount of in-place
customer leases was $5.4 million and the accumulated amortization was $5.4 million
Amortization expense, including amortization of in-place customer leases, was $2.1 million,
$2.5 million and $4.8 million for the periods ended December 31, 2009, 2008 and 2007, respectively.
Accounts Payable and Accrued Liabilities: Accounts payable and accrued liabilities consists
primarily of trade payables, accrued interest, and property tax accruals. The Company accrues
property tax expense based on estimates and historical trends. Actual expense could differ from
these estimates.
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 90% of its taxable income to its shareholders and complies with certain other
requirements. Accordingly, no provision has been made for federal income taxes in the accompanying
financial statements. On an aggregate basis, the Companys reported amounts of net assets exceeds
the tax basis by approximately $73 million and $74 million at December 31, 2009 and 2008,
respectively.
Comprehensive Income: Comprehensive income consists of net income and the change in value of
derivatives used for hedging purposes and is reported in the consolidated statements of
shareholders equity. Comprehensive income was $33.8 million, $13.6 million and $35.7 million for
the years ended December 31, 2009, 2008, and 2007, respectively.
Derivative Financial Instruments: The Company accounts for derivatives in accordance with ASC
Topic 815 Derivatives and Hedging", which requires companies to carry all derivatives on the
balance sheet at fair value. The Company determines the fair value of derivatives by reference to
quoted market prices. The accounting for changes in the fair value of a derivative instrument
depends on whether it has been designated and qualifies as part of a hedging relationship and, if
so, the reason for holding it. The Companys use of derivative instruments is limited to cash flow
hedges of certain interest rate risks.
Recent Accounting Pronouncements: In June 2009, the FASB issued revised accounting guidance
under ASC Topic 810, Consolidation by issuing SFAS No. 167, Amendments to FASB Interpretation
No. 46(R) (SFAS 167). The revised guidance amends previous guidance (as previously required
under FASB Interpretation No. 46(R), Variable Interest Entities) for determining whether an
entity is a variable interest entity (VIE) and requires an enterprise to perform an analysis to
determine whether the enterprises variable interest or interests give
41
Table of Contents
it a controlling financial interest in a VIE. Under the revised guidance, an enterprise has a
controlling financial interest when it has a) the power to direct the activities of a VIE that most
significantly impact the entitys economic performance and b) the obligation to absorb losses of
the entity or the right to receive benefits from the entity that could potentially be significant
to the VIE. The revised guidance also requires an enterprise to assess whether it has an implicit
financial responsibility to ensure that a VIE operates as designed when determining whether it has
power to direct the activities of the VIE that most significantly impact the entitys economic
performance. The revised guidance also requires ongoing assessments of whether an enterprise is
the primary beneficiary of a VIE, requires enhanced disclosures and eliminates the scope exclusion
for qualifying special-purpose entities. The revised guidance is effective for the first annual
reporting period that begins after November 15, 2009, with early adoption prohibited. The Company
is currently evaluating the impact that the adoption of the revised guidance will have on its
consolidated financial statements.
In May 2009, the FASB issued accounting guidance now codified as FASB ASC Topic 855,
"Subsequent Events. FASB ASC Topic 855 establishes general standards for accounting for and
disclosure of events that occur after the balance sheet date but before financial statements are
available to be issued (subsequent events). More specifically, FASB ASC Topic 855 sets forth the
period after the balance sheet date during which management of a reporting entity should evaluate
events or transactions that may occur for potential recognition in the financial statements,
identifies the circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements and the disclosures that should
be made about events or transactions that occur after the balance sheet date. FASB ASC Topic 855
provides largely the same guidance on subsequent events which previously existed only in auditing
literature. We adopted FASB ASC Topic 855 on April 1, 2009. We have evaluated subsequent events
through February 26, 2010, the date this quarterly report on Form 10-K was filed with the U.S.
Securities and Exchange Commission. See Note 17 for further information regarding our evaluation
of subsequent events.
Stock-Based Compensation: Effective January 1, 2006, the Company adopted ASC Topic 718,
"Compensation Stock Compensation (formerly, FASB Statement 123R) and uses the
modified-prospective method. Under the modified-prospective method, the Company recognizes
compensation cost in the financial statements issued subsequent to January 1, 2006 for all share
based payments granted, modified, or settled after the date of adoption as well as for any awards
that were granted prior to the adoption date for which the requisite service period has not been
completed as of the adoption date.
The Company recorded compensation expense (included in general and administrative expense) of
$321,000, $279,000 and $183,000 related to stock options and $1.4 million, $1.4 million and $1.2
million related to amortization of non-vested stock grants for the years ended December 31, 2009,
2008 and 2007, respectively. The Company uses the Black-Scholes Merton option pricing model to
estimate the fair value of stock options granted subsequent to the adoption of ASC Topic 718. The
application of this pricing model involves assumptions that are judgmental and sensitive in the
determination of compensation expense. The weighted average for key assumptions used in
determining the fair value of options granted during 2009 follows:
Weighted Average | Range | |||||||
Expected life (years) |
4.50 | 4.50 | ||||||
Risk free interest rate |
2.04 | % | 1.65 2.63 | % | ||||
Expected volatility |
38.65 | % | 36.40% 41.10 | % | ||||
Expected dividend yield |
9.43 | % | 5.40% 12.60 | % | ||||
Fair value |
$ | 2.73 | $ | 1.59 $7.35 |
The weighted-average fair value of options granted during the years ended December 31, 2008
and 2007, were $4.79 and $6.86, respectively.
To determine expected volatility, the Company uses historical volatility based on daily
closing prices of its Common Stock over periods that correlate with the expected terms of the
options granted. The risk-free rate is based on the United States Treasury yield curve at the time
of grant for the expected life of the options granted. Expected dividends are based on the
Companys history and expectation of dividend payouts. The expected life of stock options is based
on the midpoint between the vesting date and the end of the contractual term.
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Use of Estimates: The preparation of financial statements in conformity with U.S. 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 ASC Topic 260, Earnings Per Share.
Effective January 1, 2009, FASB ASC Topic 260 was updated for the issuance of FASB Staff Position
(FSP) EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions
Are Participating Securities", or FSP EITF 03-6-1, with transition guidance included in FASB ASC
Topic 260-10-65-2. Under FSP EITF 03-6-1, unvested share-based payment awards that contain
nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are
participating securities and shall be included in the computation of earnings-per-share pursuant to
the two-class method. The codification update requires retrospective restatement of all prior
period earnings per share data to conform with its provisions. The Company has calculated its 2009 basic and diluted earnings per share using the two-class method. The Company has also calculated its basic and diluted earnings per share amounts for 2008 and 2007 under the two-class method and it resulted in no change in basic and diluted earnings per share as previously reported. The following table sets forth the
computation of basic and diluted earnings per common share utilizing the two-class method.
Year Ended December 31, | ||||||||||||
(Amounts in thousands, except per share data) | 2009 | 2008 | 2007 | |||||||||
Numerator: |
||||||||||||
Net income from continuing operations
attributable to common shareholders |
$ | 20,700 | $ | 35,519 | $ | 36,297 | ||||||
Denominator: |
||||||||||||
Denominator for basic earnings per share -
weighted average shares |
23,787 | 21,762 | 20,955 | |||||||||
Effect of Dilutive Securities: |
||||||||||||
Stock options and warrants and non-vested stock |
10 | 21 | 49 | |||||||||
Denominator for diluted earnings per share -
adjusted weighted average shares and assumed
conversion |
23,797 | 21,783 | 21,004 | |||||||||
Basic Earnings per Common Share from
continuing operations attributable to common
shareholders |
$ | 0.87 | $ | 1.63 | $ | 1.73 | ||||||
Basic Earnings per Common Share attributable
to common shareholders |
$ | 0.84 | $ | 1.72 | $ | 1.81 | ||||||
Diluted Earnings per Common Share from
continuing operations attributable to common
shareholders |
$ | 0.87 | $ | 1.63 | $ | 1.73 | ||||||
Diluted Earnings per Common Share attributable
to common shareholders |
$ | 0.84 | $ | 1.72 | $ | 1.81 |
Not included in the effect of dilutive securities above are 333,072 stock options and 125,871
unvested restricted shares for the year ended December 31, 2009; 262,247 stock options and 124,161
unvested restricted shares for the year ended December 31, 2008; and 67,500 stock options and
105,266 unvested restricted shares for the year ended December 31, 2007, because their effect would
be antidilutive.
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4. INVESTMENT IN STORAGE FACILITIES
The following summarizes activity in storage facilities during the years ended December 31,
2009 and December 31, 2008.
(Dollars in thousands) | 2009 | 2008 | ||||||
Cost: |
||||||||
Beginning balance |
$ | 1,366,615 | $ | 1,300,847 | ||||
Acquisition of storage facilities |
| 18,454 | ||||||
Additional investment in consolidated joint ventures |
| 2,473 | ||||||
Improvements and equipment additions |
26,256 | 44,273 | ||||||
(Decrease) increase in construction in progress |
(4,121 | ) | 761 | |||||
Dispositions |
(1,167 | ) | (193 | ) | ||||
Ending balance |
$ | 1,387,583 | $ | 1,366,615 | ||||
Accumulated Depreciation: |
||||||||
Beginning balance |
$ | 212,301 | $ | 179,880 | ||||
Additions during the year |
33,096 | 32,556 | ||||||
Dispositions |
(219 | ) | (135 | ) | ||||
Ending balance |
$ | 245,178 | $ | 212,301 | ||||
The Company allocates purchase price to the tangible and intangible assets and liabilities
acquired based on their estimated fair values. The value of land and buildings are determined at
replacement cost. Intangible assets, which represent the value of existing customer leases, are
recorded at their estimated fair values. The Company did not acquire any storage facilities in
2009. During 2008, the Company acquired three storage facilities for $18.9 million. Substantially
all of the purchase price for these facilities was allocated to land ($3.7 million), building
($14.7 million), equipment ($0.1 million) and in-place customer leases ($0.4 million) and the
operating results of the acquired facilities have been included in the Companys operations since
the respective acquisition dates.
5. DISCONTINUED OPERATIONS
During 2009, the Company sold five non-strategic storage facilities in Massachusetts, North
Carolina, and Pennsylvania for net cash proceeds of $16.3 million resulting in a loss of $1.6
million. In April 2008, the Company sold one non-strategic storage facility located in Michigan
for net cash proceeds of $7.0 million resulting in a gain of $0.7 million. The operations of these
facilities and the loss or gain on sale are reported as discontinued operations. The amounts in
the 2008 and 2007 financial statements related to the operations and the net assets of this
property have been reclassified and are presented as discontinued operations and net assets from
discontinued operations, respectively. Cash flows of discontinued operations have not been
segregated from the cash flows of continuing operations on the accompanying consolidated statement
of cash flows for the years ended December 31, 2009, 2008 and 2007. The following is a summary of
the amounts reported as discontinued operations:
Year Ended December 31, | ||||||||||||
(dollars in thousands) | 2009 | 2008 | 2007 | |||||||||
Total revenue |
$ | 2,187 | $ | 3,043 | $ | 3,757 | ||||||
Property operations and maintenance expense |
(643 | ) | (956 | ) | (1,048 | ) | ||||||
Real estate tax expense |
(258 | ) | (332 | ) | (372 | ) | ||||||
Depreciation and amortization expense |
(434 | ) | (591 | ) | (676 | ) | ||||||
Net realized (loss) gain on sale of property |
(1,636 | ) | 716 | | ||||||||
Total (loss) income from discontinued operations |
$ | (784 | ) | $ | 1,880 | $ | 1,661 | |||||
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6. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The following unaudited pro forma Condensed Statement of Operations is presented as if the 31
storage facilities purchased during 2007 and the related indebtedness incurred and assumed on these
transactions had all occurred at January 1, 2007. Such unaudited pro forma information is based
upon the historical statements of operations of the Company. It should be read in conjunction with
the financial statements of the Company. In managements opinion, all adjustments necessary to
reflect the effects of these transactions have been made. This unaudited pro forma information
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.
Year Ended | ||||
(dollars in thousands, except share data) | December 31, 2007 | |||
Pro forma total operating revenues |
$ | 199,569 | ||
Pro forma net income |
$ | 41,749 | ||
Pro forma earnings per common share diluted |
$ | 1.92 |
7. UNSECURED LINE OF CREDIT AND TERM NOTES
On June 25, 2008, the Company entered into agreements relating to new unsecured credit
arrangements, and received funds under those arrangements. As part of the agreements, the Company
entered into a $250 million unsecured term note maturing in June 2012 bearing interest at LIBOR
plus 1.625% (based on the Companys December 31, 2009 credit rating). In October 2009, the Company
repaid $100 million of this term note. The new agreements also provide for a $125 million
(expandable to $175 million) revolving line of credit maturing June 2011 bearing interest at a
variable rate equal to LIBOR plus 1.375% (based on the Companys credit rating at December 31,
2009), and requires a 0.25% facility fee. The interest rate at December 31, 2009 on the Companys
available line of credit was approximately 1.61% (1.8% at December 31, 2008). At December 31,
2009, there was $125 million available on the unsecured line of credit.
The Company also maintains an $80 million term note maturing September 2013 bearing interest
at a fixed rate of 6.26%, a $20 million term note maturing September 2013 bearing interest at a
variable rate equal to LIBOR plus 1.50%, and a $150 million unsecured term note maturing in April
2016 bearing interest at 6.38% (based on the Companys credit rating at December 31, 2009).
The line of credit and term notes require the Company to meet certain financial covenants,
measured on a quarterly basis, including prescribed leverage, fixed charge coverage, minimum net
worth, limitations on additional indebtedness and limitations on dividend payouts. At December 31,
2009, the Company was in compliance with its debt covenants. At March 31, 2009, the Company had
violated the leverage ratio covenant contained in the line of credit and term note agreements. In
May 2009, the Company obtained a waiver of the violation as of March 31, 2009. The fees paid to
obtain the waiver were approximately $0.9 million and are included in interest expense for the year
ended December 31, 2009.
As a result of the debt covenant violation and operating trends, Fitch Ratings downgraded the
Companys rating on its revolving credit facility and term notes to non-investment grade in May
2009. In October 2009, Fitch Ratings adjusted the Companys rating on its revolving credit
facility and term notes back to investment grade.
We believe that if operating results remain consistent with historical levels and levels of
other debt and liabilities remain consistent with amounts outstanding at December 31, 2009 the
entire $125 million line of credit could be drawn without violating our debt covenants.
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8. MORTGAGES PAYABLE AND OTHER DEBT DISCLOSURES
Mortgages payable at December 31, 2009 and December 31, 2008 consist of the following:
December 31, | December 31, | |||||||
(dollars in thousands) | 2009 | 2008 | ||||||
7.80% mortgage note due December 2011,
secured by 11 self-storage facilities
(Locke Sovran I) with an aggregate net book
value of $42.7 million, principal and
interest paid monthly |
$ | 28,447 | $ | 29,033 | ||||
7.19% mortgage note due March 2012, secured
by 27 self-storage facilities (Locke Sovran
II) with an aggregate net book value of
$80.3 million, principal and interest paid
monthly |
41,475 | 42,603 | ||||||
7.25% mortgage note due December 2011,
secured by 1 self-storage facility with an
aggregate net book value of $5.7 million,
principal and interest paid monthly.
Estimated market rate at time of
acquisition 5.40% |
3,369 | 3,510 | ||||||
6.76% mortgage note due September 2013,
secured by 1 self-storage facility with an
aggregate net book value of $2.0 million,
principal and interest paid monthly |
977 | 1,000 | ||||||
6.35% mortgage note due March 2014, secured
by 1 self-storage facility with an
aggregate net book value of $3.7 million,
principal and interest paid monthly |
1,072 | 1,098 | ||||||
5.55% mortgage notes secured by 8 self
storage facilities paid December 1, 2009 |
| 25,930 | ||||||
7.50% mortgage notes due August 2011,
secured by 3 self-storage facilities with
an aggregate net book value of $14.0
million, principal and interest paid
monthly. Estimated market rate at time of
acquisition 6.42% |
5,879 | 6,087 | ||||||
Total mortgages payable |
$ | 81,219 | $ | 109,261 | ||||
The Company assumed the 7.25%, 6.76%, 6.35%, and 7.50% mortgage notes in connection with the
acquisitions of storage facilities in 2005 and 2006. The 7.25% and 7.50% mortgages were recorded
at their estimated fair value based upon the estimated market rates at the time of the acquisitions
ranging from 5.40% to 6.42%. The carrying value of these two mortgages approximates the actual
principal balance of the mortgages payable. An immaterial premium exists at December 31, 2009,
which will be amortized over the remaining term of the mortgages based on the effective interest
method.
The table below summarizes the Companys debt obligations and interest rate derivatives at
December 31, 2009. The estimated fair value of financial instruments is subjective in nature and
is dependent on a number of important assumptions, including discount rates and relevant comparable
market information associated with each financial instrument. The fair value of the fixed rate
term note and mortgage note were estimated by discounting the future cash flows using the current
rates at which similar loans would be made to borrowers with similar credit ratings and for the
same remaining maturities. The use of different market assumptions and estimation methodologies
may have a material effect on the reported estimated fair value amounts. Accordingly, the
estimates presented below are not necessarily indicative of the amounts the Company would realize
in a current market exchange.
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Expected Maturity Date Including Discount | ||||||||||||||||||||||||||||||||
Fair | ||||||||||||||||||||||||||||||||
(dollars in thousands) | 2010 | 2011 | 2012 | 2013 | 2014 | Thereafter | Total | Value | ||||||||||||||||||||||||
Line of credit variable rate LIBOR + 1.375 (1.61% at December 31, 2009) |
| | | | | | | | ||||||||||||||||||||||||
Notes Payable: |
||||||||||||||||||||||||||||||||
Term note variable rate LIBOR+1.625%
(1.86% at December 31, 2009) |
| | $ | 150,000 | | | | $ | 150,000 | $ | 150,000 | |||||||||||||||||||||
Term note variable rate LIBOR+1.50%
(2.23% at December 31, 2009) |
| | | $ | 20,000 | | | $ | 20,000 | $ | 20,000 | |||||||||||||||||||||
Term note fixed rate 6.26% |
| | | $ | 80,000 | | | $ | 80,000 | $ | 76,958 | |||||||||||||||||||||
Term note fixed rate 6.38% |
| | | | | $ | 150,000 | $ | 150,000 | $ | 136,630 | |||||||||||||||||||||
Mortgage note fixed rate 7.80% |
$ | 630 | $ | 27,817 | | | | | $ | 28,447 | $ | 29,454 | ||||||||||||||||||||
Mortgage note fixed rate 7.19% |
$ | 1,211 | $ | 1,301 | $ | 38,963 | | | | $ | 41,475 | $ | 43,133 | |||||||||||||||||||
Mortgage note fixed rate 7.25% |
$ | 149 | $ | 3,220 | | | | | $ | 3,369 | $ | 3,385 | ||||||||||||||||||||
Mortgage note fixed rate 6.76% |
$ | 25 | $ | 27 | $ | 29 | $ | 896 | | | $ | 977 | $ | 1,011 | ||||||||||||||||||
Mortgage note fixed rate 6.35% |
$ | 28 | $ | 30 | $ | 31 | $ | 34 | $ | 949 | | $ | 1,072 | $ | 1,059 | |||||||||||||||||
Mortgage notes fixed rate 7.50% |
$ | 222 | $ | 5,657 | | | | | $ | 5,879 | $ | 6,003 | ||||||||||||||||||||
Interest rate derivatives liability |
| | | | | | | $ | 11,524 |
9. DERIVATIVE FINANCIAL INSTRUMENTS
Interest rate swaps are used to adjust the proportion of total debt that is subject to
variable interest rates. The interest rate swaps require the Company to pay an amount equal to a
specific fixed rate of interest times a notional principal amount and to receive in return an
amount equal to a variable rate of interest times the same notional amount. The notional amounts
are not exchanged. No other cash payments are made unless the contract is terminated prior to its
maturity, in which case the contract would likely be settled for an amount equal to its fair value.
The Company enters interest rate swaps with a number of major financial institutions to minimize
counterparty credit risk.
The interest rate swaps qualify and are designated as hedges of the amount of future cash
flows related to interest payments on variable rate debt. Therefore, the interest rate swaps are
recorded in the consolidated balance sheet at fair value and the related gains or losses are
deferred in shareholders equity as Accumulated Other Comprehensive Income (AOCI). These
deferred gains and losses are amortized into interest expense during the period or periods in which
the related interest payments affect earnings. However, to the extent that the interest rate swaps
are not perfectly effective in offsetting the change in value of the interest payments being
hedged, the ineffective portion of these contracts is recognized in earnings immediately.
Ineffectiveness was immaterial in 2009, 2008, and 2007.
The Company has three interest rate swap agreements in effect at December 31, 2009 as detailed
below to effectively convert a total of $170 million of variable-rate debt to fixed-rate debt.
Fixed | Floating Rate | |||||||||
Notional Amount | Effective Date | Expiration Date | Rate Paid | Received | ||||||
$20 Million
|
9/4/05 | 9/4/13 | 4.4350 | % | 6 month LIBOR | |||||
$50 Million
|
7/1/08 | 6/25/12 | 4.2825 | % | 1 month LIBOR | |||||
$100 Million
|
7/1/08 | 6/22/12 | 4.2965 | % | 1 month LIBOR |
The interest rate swap agreements are the only derivative instruments, as defined by FASB ASC
Topic 815,
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held by the Company. During 2009, 2008, and 2007, the net reclassification from AOCI to
interest expense was $9.7 million, $2.6 million and ($1.1) million, respectively, based on payments
(receipts) made or received under the swap agreements. Based on current interest rates, the
Company estimates that payments under the interest rate swaps will be approximately $7.0 million in
2010. Payments made under the interest rate swap agreements will be reclassified to interest
expense as settlements occur. The fair value of the swap agreements, including accrued interest,
was a liability of $11.5 million and $25.5 million at December 31, 2009, and 2008 respectively.
Jan. 1, 2009 | Jan. 1, 2008 | |||||||
to | to | |||||||
(dollars in thousands) | Dec. 31, 2009 | Dec. 31, 2008 | ||||||
Adjustments to interest expense: |
||||||||
Realized loss reclassified from accumulated other comprehensive
loss to interest expense |
$ | (9,687 | ) | $ | (2,601 | ) | ||
Adjustments to other comprehensive income (loss): |
||||||||
Realized loss reclassified to interest expense for 2009 and 2008,
respectively |
9,687 | 2,601 | ||||||
Unrealized gain (loss) from changes in the fair value of the effective
portion of the interest rate swaps for 2009 and 2008, respectively |
4,210 | (26,395 | ) | |||||
Gain (loss) included in other comprehensive income (loss) |
$ | 13,897 | $ | (23,794 | ) | |||
In October 2009, the Company prepaid $100 million in variable rate term notes. In October
2009, the Company also terminated two interest rate swap agreements that were designated as hedges
of forecasted interest payments on variable rate debt. Realized losses recognized in interest
expense in 2009 include $8.4 million in costs to terminate the interest rate swaps. The cost
approximated the fair market values of the swaps at the date of termination.
10. FAIR VALUE MEASUREMENTS
In September 2006, the FASB issued additional accounting guidance under ASC Topic 820, Fair
Value Measurements through the issuance of SFAS No. 157, Fair Value Measurements, (SFAS 157).
The additional guidance defines fair value, establishes a framework for measuring fair value and
expands the related disclosure requirements. This additional guidance applies under other
codification standards that require or permit fair value measurements. The additional guidance
indicates, among other things, that a fair value measurement assumes that the transaction to sell
an asset or transfer a liability occurs in the principal market for the asset or liability or, in
the absence of a principal market, the most advantageous market for the asset or liability. FASB
ASC Topic 820 defines fair value based upon an exit price model.
In 2008 and 2009, the FASB issued additional guidance under ASC Topic 820 through the issuance
of FASB Staff Positions (FSP) 157-1, 157-2, and 157-3. FSP 157-1 provides additional guidance under
ASC Topic 820 to exclude FASB ASC Topic 840, Leases and its related interpretive accounting
guidance that addresses leasing transactions, while FSP 157-2 delays the effective date of the
application of the fair value guidelines added to FASB ASC Topic 820 through the issuance of SFAS
157 to fiscal years beginning after November 15, 2008 for all nonfinancial assets and nonfinancial
liabilities that are recognized or disclosed at fair value in the financial statements on a
nonrecurring basis. FSP 157-3 addresses considerations in determining the fair value of a
financial asset when the market for that asset is not active.
We adopted, as of January 1, 2008, the additional guidance in FASB ASC Topic 820 through the
issuance of SFAS 157, with the exception of the application of the statement to non-recurring
nonfinancial assets and nonfinancial liabilities. We applied the provisions of the additional
guidance issued in SFAS 157 in determining the fair value of our nonfinancial assets and
nonfinancial liabilities on a nonrecurring basis effective January 1, 2009. Assets that are
measured on a nonrecurring basis include those measured at fair value in a business combination
accounted for under the provisions of the updated codification standard, as well as investments in
storage facilities in circumstances when we determine that those assets are impaired under the
provisions of FASB ASC Topic 360-10-35, Property, Plant and Equipment Subsequent Measurement.
No non-recurring fair value measurements were made during the year ended December 31, 2009.
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FASB ASC Topic 820, through the additional guidance provided by SFAS 157, establishes a
valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This
hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted
prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are
quoted prices for similar assets and liabilities in active markets or inputs that are observable
for the asset or liability, either directly or indirectly through market corroboration, for
substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs
based on our own assumptions used to measure assets and liabilities at fair value. A financial
asset or liabilitys classification within the hierarchy is determined based on the lowest level
input that is significant to the fair value measurement.
The following table provides the assets and liabilities carried at fair value measured on a
recurring basis as of December 31, 2009 (in thousands):
Asset | ||||||||||||||||
(Liability) | Level 1 | Level 2 | Level 3 | |||||||||||||
Interest rate swaps |
(11,524 | ) | | (11,524 | ) | |
Interest rate swaps are over the counter securities with no quoted readily available Level 1
inputs, and therefore are measured at fair value using inputs that are directly observable in
active markets and are classified within Level 2 of the valuation hierarchy, using the income
approach.
11. STOCK OPTIONS AND NON-VESTED STOCK
The Company established the 2005 Award and Option Plan (the Plan) which replaced the expired
1995 Award and Option Plan for the purpose of attracting and retaining the Companys executive
officers and other key employees. 1,500,000 shares were authorized for issuance under the Plan.
The options vest ratably over four and eight 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 of the common shares at the date of grant. As of December 31, 2009, options
for 362,463 shares were outstanding under the Plans and options for 998,330 shares of common stock
were available for future issuance.
The Company also established the 2009 Outside Directors Stock Option and Award Plan (the
Non-employee Plan) which replaced the 1995 Outside Directors Stock Option Plan for the purpose of
attracting and retaining the services of experienced and knowledgeable outside directors. The
Non-employee Plan provides for the initial granting of options to purchase 3,500 shares of common
stock and for the annual granting of options to purchase 2,000 shares of common stock to each
eligible director. Such options vest over a one-year period for initial awards and immediately upon
subsequent grants. In addition, each outside director receives non-vested shares annually equal to
80% of the annual fees paid to them. During the restriction period, the non-vested shares may not
be sold, transferred, or otherwise encumbered. The holder of the non-vested shares has all rights
of a holder of common shares, including the right to vote and receive dividends. During 2009,
3,456 non-vested shares were issued to outside directors. Such non-vested shares vest over a
one-year period. The total shares reserved under the Non-employee Plan is 150,000. The exercise
price for options granted under the Non-employee Plan is equal to the fair market value at the date
of grant. As of December 31, 2009, options for 35,005 common shares and non-vested shares of 12,161
were outstanding under the Non-employee Plans and options for 137,044 shares of common stock were
available for future issuance.
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A summary of the Companys stock option activity and related information for the years ended
December 31 follows:
2009 | 2008 | 2007 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
average | average | average | ||||||||||||||||||||||
exercise | exercise | exercise | ||||||||||||||||||||||
Options | price | Options | price | Options | price | |||||||||||||||||||
Outstanding at beginning
of year: |
360,688 | $ | 43.06 | 168,125 | $ | 42.54 | 113,225 | $ | 35.77 | |||||||||||||||
Granted |
51,500 | 23.99 | 201,163 | 43.12 | 74,000 | 52.49 | ||||||||||||||||||
Exercised |
(4,225 | ) | 21.46 | (2,600 | ) | 27.78 | (13,100 | ) | 32.44 | |||||||||||||||
Forfeited |
(10,495 | ) | 44.53 | (6,000 | ) | 36.86 | (6,000 | ) | 59.62 | |||||||||||||||
Outstanding at end of year |
397,468 | $ | 40.78 | 360,688 | $ | 43.06 | 168,125 | $ | 42.54 | |||||||||||||||
Exercisable at end of year |
159,701 | $ | 40.71 | 118,025 | $ | 38.84 | 82,625 | $ | 34.45 |
A summary of the Companys stock options outstanding at December 31, 2009 follows:
Outstanding | Exercisable | |||||||||||||||
Weighted | Weighted | |||||||||||||||
average | average | |||||||||||||||
exercise | exercise | |||||||||||||||
Exercise Price Range | Options | price | Options | price | ||||||||||||
$20.375 29.99 |
72,750 | $ | 22.35 | 33,250 | $ | 21.88 | ||||||||||
$30.00 39.99 |
37,050 | $ | 35.05 | 22,050 | $ | 34.87 | ||||||||||
$40.00 57.79 |
287,668 | $ | 46.18 | 104,401 | $ | 47.94 | ||||||||||
Total |
397,468 | $ | 40.78 | 159,701 | $ | 40.71 |
Intrinsic value of outstanding stock options at December 31, 2009 |
$ | 1,034,302 | ||
Intrinsic value of exercisable stock options at December 31, 2009 |
$ | 505,412 |
The intrinsic value of stock options exercised during the years ended December 31, 2009, 2008,
and 2007, were $50,188, $37,691, and $346,306 respectively.
The aggregate intrinsic value is calculated as the difference between the exercise price of
the underlying awards and the quoted price of the Companys common stock at December 31, 2009, or
the price on the date of exercise for those exercised during the year. As of December 31, 2009,
there was approximately $1.0 million of total unrecognized compensation cost related to non-vested
share-based compensation arrangements granted under our stock award plans. That cost is expected
to be recognized over a weighted-average period of approximately 4.6 years. The weighted average
remaining contractual life of all options is 7.4 years, and for exercisable options is 5.8 years.
Non-vested Stock
The Company has also issued 348,732 shares of non-vested stock to employees which vest over
two to nine year periods. During the restriction period, the non-vested shares may not be sold,
transferred, or otherwise encumbered. The holder of the non-vested shares has all rights of a
holder of common shares, including the right to vote and receive dividends. For issuances of
non-vested stock during the year ended December 31, 2009, the fair market value of the non-vested
stock on the date of grant ranged from $21.82 to $35.15. During 2009, 59,590 shares of non-vested
stock were issued to employees and directors with an aggregate fair value of $1.8 million. The
Company charges additional paid-in capital for the market value of shares as they are issued.
The unearned portion is then amortized and charged to expense over the vesting period. The
Company uses the average of the high and
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low price of its common stock on the date the award is
granted as the fair value for non-vested stock awards.
A summary of the status of unvested shares of stock issued to employees and directors as of
and during the years ended December 31 follows:
2009 | 2008 | 2007 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Non- | average | Non- | average | Non- | average | |||||||||||||||||||
vested | grant date fair | vested | grant date fair | vested | grant date fair | |||||||||||||||||||
Shares | value | Shares | value | Shares | value | |||||||||||||||||||
Unvested at beginning
of year: |
130,807 | $ | 44.79 | 115,896 | $ | 45.54 | 96,453 | $ | 40.21 | |||||||||||||||
Granted |
59,590 | 29.70 | 45,713 | 41.50 | 43,989 | 53.79 | ||||||||||||||||||
Vested |
(35,349 | ) | 41.25 | (30,802 | ) | 42.71 | (24,546 | ) | 39.39 | |||||||||||||||
Forfeited |
(455 | ) | 43.95 | | | | | |||||||||||||||||
Unvested at end of year |
154,593 | $ | 39.79 | 130,807 | $ | 44.79 | 115,896 | $ | 45.54 |
Compensation expense of $1.4 million, $1.4 million and $1.2 million was recognized for the
vested portion of non-vested stock grants in 2009, 2008 and 2007, respectively. The fair value of
non-vested stock that vested during 2009, 2008 and 2007 was $1.5 million, $1.3 million and $1.0
million, respectively. The total unrecognized compensation cost related to non-vested stock was
$5.2 million at December 31, 2009, and the remaining weighted-average period over which this
expense will be recognized was 5.6 years.
12. RETIREMENT PLAN
Employees of the Company qualifying under certain age and service requirements are eligible to
be a participant in a 401(k) Plan. The Company contributes to the Plan at the rate of 10% of the
first 4% of gross wages that the employee contributes. Total expense to the Company was
approximately $114,000, $284,000, and $256,000 for the years ended December 31, 2009, 2008 and
2007, respectively.
13. INVESTMENT IN JOINT VENTURES
The Company has a 20% ownership interest in Sovran HHF Storage Holdings LLC (Sovran HHF), a
joint venture that was formed in May 2008 to acquire self-storage properties that will be managed
by the Company. The carrying value of the Companys investment at December 31, 2009 was $19.9
million. Twenty five properties were acquired by Sovran HHF as of December 31, 2008 for
approximately $171.5 million. In 2008, the Company contributed $18.6 million to the joint venture
as its share of capital required to fund the acquisitions. As of December 31, 2009, the carrying
value of the Companys investment in Sovran HHF exceeds its share of the underlying equity in net
assets of Sovran HHF by approximately $1.7 million as a result of the capitalization of certain
acquisition related costs. This difference is not amortized, it is included in the carrying value
of the investment, which is assessed for impairment on a periodic basis.
As manager of Sovran HHF, the Company earns a management and call center fee of 7% of gross
revenues which totaled $1.2 million and $0.5 million for 2009 and 2008, respectively. The Company
also received an acquisition fee of 0.5% or $0.7 million of purchase price for securing purchases
for the joint venture in 2008. The Companys share of Sovran HHFs income for 2009 and 2008 was
$0.2 million and $0.1 million, respectively. At December 31, 2009, Sovran HHF owed the Company
$0.2 million for payments made by the Company on behalf of the joint venture.
The Company also has a 49% ownership interest in Iskalo Office Holdings, LLC, which owns the
building that houses the Companys headquarters and other tenants. The Companys investment
includes a capital contribution of $49. The carrying value of the Companys investment is a
liability of $0.5 million at December 31, 2009 and 2008, and is included in accounts payable and
accrued liabilities in the accompanying consolidated
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balance sheets. For the years ended December
31, 2009, 2008 and 2007, the Companys share of Iskalo Office Holdings, LLCs income (loss) was
$7,000, ($6,000), and $80,000, respectively. The Company paid rent to Iskalo Office Holdings, LLC
of $608,000, $600,000 and $561,000 in 2009, 2008, and 2007, respectively. Future minimum lease
payments under the lease are $0.6 million per year through 2010.
A summary of the unconsolidated joint ventures financial statements as of and for the year
ended December 31, 2009 is as follows:
Sovran HHF | ||||||||
Storage | Iskalo Office | |||||||
(dollars in thousands) | Holdings LLC | Holdings, LLC | ||||||
Balance Sheet Data: |
||||||||
Investment in storage facilities, net |
$ | 168,237 | $ | | ||||
Investment in office building |
| 5,322 | ||||||
Other assets |
3,575 | 688 | ||||||
Total Assets |
$ | 171,812 | $ | 6,010 | ||||
Due to the Company |
$ | 173 | $ | | ||||
Mortgages payable |
78,512 | 7,037 | ||||||
Other liabilities |
2,087 | 224 | ||||||
Total Liabilities |
80,772 | 7,261 | ||||||
Unaffiliated partners equity (deficiency) |
72,832 | (714 | ) | |||||
Company equity (deficiency) |
18,208 | (537 | ) | |||||
Total Liabilities and Partners Equity (deficiency) |
$ | 171,812 | $ | 6,010 | ||||
Income Statement Data: |
||||||||
Total revenues |
$ | 17,702 | $ | 1,129 | ||||
Total expenses |
16,761 | 1,115 | ||||||
Net income |
$ | 941 | $ | 14 | ||||
The Company does not guarantee the debt of Sovran HHF or Iskalo Office Holdings, LLC.
14. SHAREHOLDERS EQUITY
On October 5, 2009, the Company completed the public offering of 4,025,000 shares of its common stock at $29.75 per share. Net proceeds to the Company after deducting underwriting discounts and commissions and offering expenses were approximately $114.0 million.
During 2009, the Company issued 1,430,521 shares via its Dividend Reinvestment and Stock
Purchase Plan. The Company received $32.6 million from the sale of such shares. During 2008 and 2007,
the Company issued 285,308 and 252,816 shares, respectively, via this plan and received net proceeds of
approximately $10.7 million and $12.8 million, respectively. Our Dividend Reinvestment and Stock
Purchase Plan was suspended in November 2009.
On July 3, 2002, the Company entered into an agreement providing for the issuance of 2,800,000
shares of 8.375% Series C Convertible Cumulative Preferred Stock (Series C Preferred) in a privately
negotiated transaction. The Company immediately issued 1,600,000 shares of the Series C Preferred and
issued the remaining 1,200,000 shares on November 27, 2002. The offering price was $25.00 per share
resulting in net proceeds for the Series C Preferred and related common stock warrants of $67.9 million
after expenses. In 2004, the Company issued 306,748 shares of its common stock in connection with the
conversion of 400,000 shares of Series C Preferred Stock into common stock. During 2005, the Company
issued 920,244 shares of its common stock in connection with a written notice from one of the holders of
the Series C Preferred Stock requesting the conversion of 1,200,000 shares of Series C Preferred Stock into
common stock. On July 7, 2007, we issued 920,244 shares of our common stock to the holder of our Series
C Preferred Stock upon the holders election to convert the remaining 1,200,000 shares of Series C
Preferred Stock into common stock.
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15. SUPPLEMENTARY QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a summary of quarterly results of operations for the years ended December 31,
2009 and 2008 (dollars in thousands, except per share data).
2009 Quarter Ended | ||||||||||||||||
March 31 | June 30 | Sept. 30 | Dec. 31 (b) | |||||||||||||
Operating revenue |
$ | 48,846 | $ | 48,097 | $ | 49,551 | $ | 48,517 | ||||||||
Income (loss) from continuing
operations (a) |
$ | 7,873 | $ | 6,436 | $ | 8,722 | $ | (593 | ) | |||||||
(Loss) income from discontinued
operations (a) |
$ | 247 | $ | 306 | $ | (752 | ) | $ | (585 | ) | ||||||
Net Income(Loss) |
$ | 8,120 | $ | 6,742 | $ | 7,970 | $ | (1,178 | ) | |||||||
Net income (loss) attributable to
common
shareholders |
$ | 7,635 | $ | 6,286 | $ | 7,496 | $ | (1,501 | ) | |||||||
Net Income (Loss) Per Share
Attributable to Common Shareholders |
||||||||||||||||
Basic |
$ | 0.35 | $ | 0.28 | $ | 0.32 | $ | (0.06 | ) | |||||||
Diluted |
$ | 0.35 | $ | 0.28 | $ | 0.32 | $ | (0.06 | ) |
2008 Quarter Ended | ||||||||||||||||
March 31 | June 30 | Sept. 30 | Dec. 31 | |||||||||||||
Operating revenue (a) |
$ | 48,925 | $ | 49,421 | $ | 51,769 | $ | 50,078 | ||||||||
Income from continuing operations (a) |
$ | 9,271 | $ | 10,166 | $ | 9,743 | $ | 8,623 | ||||||||
Income from discontinued operations (a) |
$ | 318 | $ | 1,000 | $ | 308 | $ | 254 | ||||||||
Net Income |
$ | 9,589 | $ | 11,166 | $ | 10,051 | $ | 8,877 | ||||||||
Net income attributable to common
shareholders |
$ | 8,953 | $ | 10,541 | $ | 9,528 | $ | 8,377 | ||||||||
Net Income Per Share Attributable to
Common Shareholders |
||||||||||||||||
Basic |
$ | 0.41 | $ | 0.49 | $ | 0.44 | $ | 0.38 | ||||||||
Diluted |
$ | 0.41 | $ | 0.48 | $ | 0.44 | $ | 0.38 |
(a) | Data as presented in this table differ from the amounts as presented in the Companys quarterly reports due to the impact of discontinued operations accounting with respect to the five properties sold in 2009 and the one property sold in 2008 as described in Note 5. | |
(b) | As discussed in Note 9, in the fourth quarter of 2009 the Company recorded $8.4 million in interest expense related to the termination of two interest rate swap agreements. |
16. COMMITMENTS AND CONTINGENCIES
The Companys 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 that individually or in the aggregate would be material to the Companys
overall business, financial condition, or results of operations.
At December 31, 2009, we have a contract in place with a potential buyer for the possible sale
of two properties for approximately $2.4 million. The sale of these properties is subject to
significant contingencies as of December 31, 2009, including the potential buyers satisfactory
completion of an inspection of the properties and the buyer securing funds from its lender to
finance the transaction. While there can be no assurances that we will successfully complete the
sale of these properties, based upon the status of our dealings with the potential buyer, the
sale of these properties is expected to close in March 2010. Should these sales occur, the Company would recognize a loss of approximately $0.1 million on the disposal of
these properties in the first quarter of 2010.
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17. SUBSEQUENT EVENTS
On January 4, 2010, the Company declared a quarterly dividend of $0.45 per common share. The
dividend was paid on January 26, 2010 to shareholders of record on January 14, 2010. The total
dividend paid amounted to $12.4 million.
In January and February 2010, the Company entered into contracts for the sale of ten
non-strategic properties in North Carolina, Georgia, Michigan, and Virginia for approximately $25.0
million. The sales of these properties are subject to significant contingencies and there is no
assurance that the properties will be sold. Should the sales occur, the Company would recognize an
aggregate gain of approximately $7.7 million.
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Table of Contents
Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure |
None.
Item 9A. | Controls and Procedures |
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Our management conducted an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under
the Securities Exchange Act of 1934, as amended (Exchange Act), under the supervision of and with
the participation of our management, including the Chief Executive Officer and Chief Financial
Officer. Based on that evaluation, our management, including the Chief Executive Officer and Chief
Financial Officer, concluded that our disclosure controls and procedures were effective at December
31, 2009. There have not been changes in the Companys internal controls or in other factors that
could significantly affect these controls during the quarter ended December 31, 2009.
Managements Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over
financial reporting, and for performing an assessment of the effectiveness of internal control over
financial reporting as of December 31, 2009. Internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. Our system of internal control over financial reporting includes those
policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts
and expenditures of the company are being made only in accordance with authorizations of management
and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the Companys assets that could have
a material effect on the financial statements.
Our management performed an assessment of the effectiveness of our internal control over
financial reporting as of December 31, 2009 based upon criteria in Internal Control Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). Based on our assessment, management determined that our internal control over financial
reporting was effective as of December 31, 2009 based on the criteria in Internal
Control-Integrated Framework issued by COSO.
The effectiveness of the Companys internal control over financial reporting as of December
31, 2009 has been audited by Ernst & Young LLP, an independent registered public accounting firm,
as stated in their report which is included in Item 9A herein.
/s/ Robert J. Attea
|
/s/ David L. Rogers | |
Robert J. Attea
|
David L. Rogers | |
Chief Executive Officer
|
Chief Financial Officer |
55
Table of Contents
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of Sovran Self Storage, Inc.
We have audited Sovran Self Storage, Inc.s internal control over financial reporting as of
December 31, 2009, based on criteria established in Internal ControlIntegrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Sovran
Self Storage, Inc.s management is responsible for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting included in the accompanying Managements Report on Internal Control Over Financial
Reporting. Our responsibility is to express an opinion on the companys internal control over
financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk,
and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
A companys internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting
principles. A companys internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the companys assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Sovran Self Storage, Inc. maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2009, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of Sovran Self Storage, Inc. as of
December 31, 2009 and 2008, and the related consolidated statements of operations, shareholders
equity and comprehensive income, and cash flows for each of the three years in the period ended
December 31, 2009 of Sovran Self Storage, Inc. and our report dated February 26, 2010 expressed an
unqualified opinion thereon.
/s/ Ernst & Young LLP
Buffalo, New York
February 26, 2010
February 26, 2010
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Table of Contents
Part III
Item 10. | Directors, Executive Officers and Corporate Governance |
The information contained in the Proxy Statement for the Annual Meeting of Shareholders of the
Company to be held on May 26, 2010, with respect to directors, executive officers, audit committee,
and audit committee financial experts of the Company and Section 16(a) beneficial ownership
reporting compliance, is incorporated herein by reference in response to this item.
The Company has adopted a code of ethics that applies to all of its directors, officers, and
employees. The Company has made the Code of Ethics available on its website at
http://www.sovranss.com.
Item 11. | Executive Compensation |
The information required is incorporated by reference to Executive Compensation and
Director Compensation in the Companys Proxy Statement for the Annual Meeting of Shareholders of
the Company to be held on May 26, 2010.
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
The information required herein is incorporated by reference to Stock Ownership By Directors
and Executive Officers and Security Ownership of Certain Beneficial Owners in the Proxy
Statement for the Annual Meeting of Shareholders of the Company to be held on May 26, 2010.
Item 13. | Certain Relationships and Related Transactions, and Director Independence |
The information required herein is incorporated by reference to Certain Transactions and
Election of DirectorsDirector Independence in the Companys Proxy Statement for the Annual
Meeting of Shareholders to be held on May 26, 2010.
Item 14. | Principal Accountant Fees and Services |
The information required herein is incorporated by reference to Appointment of Independent
Auditor in the Companys Proxy Statement for the Annual Meeting of Shareholders to be held on May
26, 2010.
Part IV
Item 15. | Exhibits, Financial Statement Schedules |
(a) | Documents filed as part of this Annual Report on Form 10-K: |
1. | The following consolidated financial statements of Sovran Self Storage, Inc. are included in Item 8. |
(i) | Consolidated Balance Sheets as of December 31, 2009 and 2008. | ||
(ii) | Consolidated Statements of Operations for Years Ended December 31, 2009, 2008, and 2007. | ||
(iii) | Consolidated Statements of Shareholders Equity and Comprehensive Income for Years Ended December 31, 2009, 2008, and 2007. | ||
(iv) | Consolidated Statements of Cash Flows for Years Ended December 31, 2009, 2008, and 2007. | ||
(v) | Notes to Consolidated Financial Statements. |
2. | The following financial statement Schedule as of the period ended December 31, 2009 is included in this Annual Report on Form 10-K. | |
Schedule III Real Estate and Accumulated Depreciation. |
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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 | Amended and Restated Articles of Incorporation of the Registrant.
(incorporated by reference to Exhibit 3.1 (a) to the Registrants
Registration Statement on Form S-11 (File No. 33-91422) filed June
19, 1995). |
|
3.2 | 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 Registrants Form
8-A filed December 3, 1996.) |
|
3.3 | Articles Supplementary to the Amended and Restated Articles of
Incorporation of the Registrant classifying and designating the
8.375% Series C Convertible Cumulative Preferred Stock.
(incorporated by reference to Exhibit 4.1 to Registrants Current
Report on Form 8-K filed July 12, 2002). |
|
3.4* | Bylaws, as amended, of the Registrant. |
|
4.1 | Form of Common Stock Certificate (incorporated by reference to
Exhibit 4.1 to Registrants Registration Statement on Form S-11
(File No. 33-91422) filed June 19, 1995). |
|
10.1+* | Sovran Self Storage, Inc. 2005 Award and Option Plan, as amended.
|
|
10.2+* | Sovran Self Storage, Inc. 1995 Outside Directors Stock Option
Plan, as amended. |
|
10.3+ | Employment Agreement between the Registrant and Robert J. Attea
(incorporated by reference to Exhibit 10.3 to Registrants Form
10-K filed February 27, 2009). |
|
10.4+ | Employment Agreement between the Registrant and Kenneth F. Myszka
(incorporated by reference to Exhibit 10.4 to Registrants Form
10-K filed February 27, 2009). |
|
10.5+ | Employment Agreement between the Registrant and David L. Rogers
(incorporated by reference to Exhibit 10.5 to Registrants Form
10-K filed February 27, 2009). |
|
10.6+ | Form of restricted stock grant pursuant to Sovran Self Storage,
Inc. 2005 Award and Option Plan (incorporated by reference to
Exhibit 10.1 to Registrants Quarterly Report on Form 10-Q/A filed
November 24, 2006). |
|
10.7+ | Form of stock option grant pursuant to Sovran Self Storage, Inc.
2005 Award and Option Plan (incorporated by reference to
Exhibit 10.2 to Registrants Quarterly Report on Form 10-Q/A filed
November 24, 2006). |
|
10.8+ | Form of restricted stock grant pursuant to Sovran Self Storage,
Inc. 1995 Award and Option Plan (incorporated by reference to
Exhibit 10.3 to Registrants Quarterly Report on Form 10-Q/A filed
November 24, 2006). |
|
10.9+ | Form of stock option grant pursuant to Sovran Self Storage, Inc.
1995 Award and Option Plan (incorporated by reference to
Exhibit 10.4 to Registrants Quarterly Report on Form 10-Q/A filed
November 24, 2006). |
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10.10+ | Deferred Compensation Plan for Directors (incorporated by reference
to Schedule 14A Proxy Statement filed April 10, 2008). |
|
10.11 | Amended Indemnification Agreements with members of the Board of
Directors and Executive Officers (incorporated by reference to
Exhibit 10.35 and 10.36 to Registrants Current Report on Form 8-K
filed July 20, 2006). |
|
10.12 | Agreement of Limited Partnership of Sovran Acquisition Limited
Partnership (incorporated by reference to Exhibit 3.1 on Form 10
filed April 22, 1998). |
|
10.13 | Amendments to the Agreement of Limited Partnership of Sovran
Acquisition Limited Partnership dated July 30, 1999 and July 3,
2002 (incorporated by reference to Exhibit 10.13 to registrants
Form 10-K filed February 27, 2009). |
|
10.14* | Promissory Note between Locke Sovran II, LLC and PNC Bank, National
Association. |
|
10.15 | Third Amended and Restated Revolving Credit and Term Loan Agreement
among Registrant, the Partnership, Manufacturers and Traders Trust
Company and other lenders named therein (incorporated by reference
to Exhibit 10.1 filed in the Companys Current Report on Form 8-K,
filed June 27, 2008). |
|
10.16 | Cornerstone Acquisition Agreement and Amendments to Certain Loan
Agreements (incorporated by reference to Exhibits 10.30, 10.31,
10.32, 10.33 and 10.34 of Registrants Current Report on Form 8-K
filed June 26, 2006). |
|
10.17 | $150 million, 6.38% Senior Guaranteed Notes, Series C due April 26,
2016, and Amendments to Second Amendment Restated Revolving Credit
and Term Loan Agreement dated December 16, 2004 and Amendment to
Note Purchase Agreement dated September 4, 2003 (incorporated by
reference to Exhibits 10.27, 10.28, and 10.29 of the Registrants
Current Report on Form 8-K filed May 1, 2006). |
|
10.18 | Promissory Note between Locke Sovran I, LLC and GMAC Commercial
Mortgage Corporation (incorporated by reference to Exhibit 10.21 as
filed in the Companys Annual Report on Form 10-K, filed March 1,
2007). |
|
10.19 | Indemnification Agreement dated September 25, 2009 between
Registrant, Sovran Acquisition Limited Partnership and James R.
Boldt, a director of the Company (incorporated by reference to
Exhibit 10.1 to Registrants Current Report on Form 8-K filed
September 25, 2009). |
|
10.20+ | Sovran Self Storage, Inc. 2009 Outside Directors Stock Option and
Award Plan (incorporated by reference to Registrants Proxy
Statement filed April 9, 2009). |
|
12.1* | Statement Re: Computation of Earnings to Fixed Charges. |
|
21.1* | Subsidiaries of the Company. |
|
23.1* | Consent of Independent Registered Public Accounting Firm. |
|
24.1* | Powers of Attorney (included on signature pages). |
|
31.1* | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
and Rule 15d-14(a) of the Securities Exchange Act, as amended. |
|
31.2* | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
and Rule 15d-14(a) of the Securities Exchange Act, as amended. |
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32.1* | Certification of Chief Executive Officer and Chief Financial
Officer Pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
* | Filed herewith. |
|
+ | Management contract or compensatory plan or arrangement. |
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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. |
||||
February 26, 2010 | 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 Board of Directors Chief Executive Officer and Director (Principal Executive Officer) |
February 26, 2010 | ||
/s/ Kenneth F. Myszka
|
President, Chief Operating Officer and Director |
February 26, 2010 | ||
/s/ David L. Rogers
|
Chief Financial Officer (Principal Financial and Accounting Officer) |
February 26, 2010 | ||
/s/ John Burns
|
Director | February 26, 2010 | ||
John Burns |
||||
/s/ James R. Boldt
|
Director | February 26, 2010 | ||
James R. Boldt |
||||
/s/ Anthony P. Gammie
|
Director | February 26, 2010 | ||
Anthony P. Gammie |
||||
/s/ Charles E. Lannon
|
Director | February 26, 2010 | ||
Charles E. Lannon |
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Table of Contents
Sovran Self Storage, Inc.
Schedule III
Combined Real Estate and Accumulated Depreciation
(in thousands)
December 31, 2009
Schedule III
Combined Real Estate and Accumulated Depreciation
(in thousands)
December 31, 2009
Cost Capitalized | Life on | |||||||||||||||||||||||||||||||||||||||||||||||
Subsequent to | Gross Amount at Which | which | ||||||||||||||||||||||||||||||||||||||||||||||
Initial Cost to Company | Acquisition | Carried at Close of Period | depreciation | |||||||||||||||||||||||||||||||||||||||||||||
Building, | Building, | Building, | in latest | |||||||||||||||||||||||||||||||||||||||||||||
Equipment | Equipment | Equipment | income | |||||||||||||||||||||||||||||||||||||||||||||
Encum | and | and | and | Accum. | Date of | Date | statement | |||||||||||||||||||||||||||||||||||||||||
Description | ST | brance | Land | Improvements | Improvements | Land | Improvements | Total | Deprec. | Construction | Acquired | is computed | ||||||||||||||||||||||||||||||||||||
Boston-Metro I |
MA | $ | 363 | $ | 1,679 | $ | 545 | $ | 363 | 2,224 | $ | 2,587 | $ | 778 | 1980 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||
Boston-Metro II |
MA | 680 | 1,616 | 383 | 680 | 1,999 | 2,679 | 764 | 1986 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
E. Providence |
RI | 345 | 1,268 | 688 | 345 | 1,956 | 2,301 | 631 | 1984 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Charleston l |
SC | 416 | 1,516 | 2,080 | 416 | 3,596 | 4,012 | 878 | 1985 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Lakeland I |
FL | 397 | 1,424 | 1,465 | 397 | 2,889 | 3,286 | 703 | 1985 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Charlotte |
NC | 308 | 1,102 | 1,124 | 747 | 1,787 | 2,534 | 617 | 1986 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Tallahassee I |
FL | 770 | 2,734 | 1,889 | 770 | 4,623 | 5,393 | 1,599 | 1973 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Youngstown |
OH | 239 | 1,110 | 1,317 | 239 | 2,427 | 2,666 | 705 | 1980 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Cleveland-Metro II |
OH | 701 | 1,659 | 822 | 701 | 2,481 | 3,182 | 840 | 1987 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Tallahassee II |
FL | 204 | 734 | 923 | 198 | 1,663 | 1,861 | 565 | 1975 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Pt. St. Lucie |
FL | 395 | 1,501 | 885 | 779 | 2,002 | 2,781 | 817 | 1985 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Deltona |
FL | 483 | 1,752 | 2,077 | 483 | 3,829 | 4,312 | 1,032 | 1984 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Middletown |
NY | 224 | 808 | 817 | 224 | 1,625 | 1,849 | 570 | 1988 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Buffalo I |
NY | 423 | 1,531 | 1,660 | 497 | 3,117 | 3,614 | 1,115 | 1981 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Rochester I |
NY | 395 | 1,404 | 491 | 395 | 1,895 | 2,290 | 678 | 1981 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Salisbury |
MD | 164 | 760 | 463 | 164 | 1,223 | 1,387 | 460 | 1979 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Jacksonville I |
FL | 152 | 728 | 1,028 | 688 | 1,220 | 1,908 | 454 | 1985 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Columbia I |
SC | 268 | 1,248 | 447 | 268 | 1,695 | 1,963 | 664 | 1985 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Rochester II |
NY | 230 | 847 | 452 | 234 | 1,295 | 1,529 | 466 | 1980 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Savannah l |
GA | 463 | 1,684 | 3,832 | 805 | 5,174 | 5,979 | 1,213 | 1981 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Greensboro |
NC | 444 | 1,613 | 2,846 | 444 | 4,459 | 4,903 | 831 | 1986 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Raleigh I |
NC | 649 | 2,329 | 855 | 649 | 3,184 | 3,833 | 1,126 | 1985 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
New Haven |
CT | 387 | 1,402 | 962 | 387 | 2,364 | 2,751 | 732 | 1985 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Atlanta-Metro I |
GA | 844 | 2,021 | 670 | 844 | 2,691 | 3,535 | 987 | 1988 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Atlanta-Metro II |
GA | 302 | 1,103 | 369 | 303 | 1,471 | 1,774 | 588 | 1988 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Buffalo II |
NY | 315 | 745 | 1,662 | 517 | 2,205 | 2,722 | 601 | 1984 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Raleigh II |
NC | 321 | 1,150 | 655 | 321 | 1,805 | 2,126 | 611 | 1985 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Columbia II |
SC | 361 | 1,331 | 599 | 374 | 1,917 | 2,291 | 722 | 1987 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Columbia III |
SC | 189 | 719 | 1,079 | 189 | 1,798 | 1,987 | 563 | 1989 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Columbia IV |
SC | 488 | 1,188 | 508 | 488 | 1,696 | 2,184 | 648 | 1986 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Atlanta-Metro III |
GA | 430 | 1,579 | 1,941 | 602 | 3,348 | 3,950 | 854 | 1988 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Orlando I |
FL | 513 | 1,930 | 474 | 513 | 2,404 | 2,917 | 934 | 1988 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Sharon |
PA | 194 | 912 | 441 | 194 | 1,353 | 1,547 | 492 | 1975 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Ft. Lauderdale |
FL | 1,503 | 3,619 | 839 | 1,503 | 4,458 | 5,961 | 1,362 | 1985 | 6/26/1995 | 5 to 40 years |
62
Table of Contents
Cost Capitalized | Life on | |||||||||||||||||||||||||||||||||||||||||||||||
Subsequent to | Gross Amount at Which | which | ||||||||||||||||||||||||||||||||||||||||||||||
Initial Cost to Company | Acquisition | Carried at Close of Period | depreciation | |||||||||||||||||||||||||||||||||||||||||||||
Building, | Building, | Building, | in latest | |||||||||||||||||||||||||||||||||||||||||||||
Equipment | Equipment | Equipment | income | |||||||||||||||||||||||||||||||||||||||||||||
Encum | and | and | and | Accum. | Date of | Date | statement | |||||||||||||||||||||||||||||||||||||||||
Description | ST | brance | Land | Improvements | Improvements | Land | Improvements | Total | Deprec. | Construction | Acquired | is computed | ||||||||||||||||||||||||||||||||||||
West Palm l |
FL | 398 | 1,035 | 292 | 398 | 1,327 | 1,725 | 560 | 1985 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Atlanta-Metro IV |
GA | 423 | 1,015 | 375 | 424 | 1,389 | 1,813 | 562 | 1989 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Atlanta-Metro V |
GA | 483 | 1,166 | 939 | 483 | 2,105 | 2,588 | 619 | 1988 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Atlanta-Metro VI |
GA | 308 | 1,116 | 521 | 308 | 1,637 | 1,945 | 676 | 1986 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Atlanta-Metro VII |
GA | 170 | 786 | 562 | 174 | 1,344 | 1,518 | 511 | 1981 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Atlanta-Metro VIII |
GA | 413 | 999 | 645 | 413 | 1,644 | 2,057 | 672 | 1975 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Baltimore I |
MD | 154 | 555 | 1,369 | 306 | 1,772 | 2,078 | 464 | 1984 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Baltimore II |
MD | 479 | 1,742 | 2,810 | 479 | 4,552 | 5,031 | 994 | 1988 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Augusta I |
GA | 357 | 1,296 | 832 | 357 | 2,128 | 2,485 | 732 | 1988 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Macon I |
GA | 231 | 1,081 | 469 | 231 | 1,550 | 1,781 | 579 | 1989 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Melbourne I |
FL | 883 | 2,104 | 1,577 | 883 | 3,681 | 4,564 | 1,254 | 1986 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Newport News |
VA | 316 | 1,471 | 780 | 316 | 2,251 | 2,567 | 824 | 1988 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Pensacola I |
FL | 632 | 2,962 | 1,105 | 651 | 4,048 | 4,699 | 1,559 | 1983 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Augusta II |
GA | 315 | 1,139 | 769 | 315 | 1,908 | 2,223 | 657 | 1987 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Hartford-Metro I |
CT | 715 | 1,695 | 1,061 | 715 | 2,756 | 3,471 | 883 | 1988 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Atlanta-Metro IX |
GA | 304 | 1,118 | 2,521 | 619 | 3,324 | 3,943 | 829 | 1988 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Alexandria |
VA | 1,375 | 3,220 | 2,166 | 1,376 | 5,385 | 6,761 | 1,612 | 1984 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Pensacola II |
FL | 244 | 901 | 420 | 244 | 1,321 | 1,565 | 586 | 1986 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Melbourne II |
FL | 834 | 2,066 | 1,136 | 1,591 | 2,445 | 4,036 | 998 | 1986 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Hartford-Metro II |
CT | 234 | 861 | 1,881 | 612 | 2,364 | 2,976 | 638 | 1992 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Atlanta-Metro X |
GA | 256 | 1,244 | 1,803 | 256 | 3,047 | 3,303 | 847 | 1988 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Norfolk I |
VA | 313 | 1,462 | 938 | 313 | 2,400 | 2,713 | 827 | 1984 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Norfolk II |
VA | 278 | 1,004 | 375 | 278 | 1,379 | 1,657 | 540 | 1989 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Birmingham I |
AL | 307 | 1,415 | 1,559 | 384 | 2,897 | 3,281 | 786 | 1990 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Birmingham II |
AL | 730 | 1,725 | 619 | 730 | 2,344 | 3,074 | 898 | 1990 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Montgomery l |
AL | 863 | 2,041 | 626 | 863 | 2,667 | 3,530 | 1,018 | 1982 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Jacksonville II |
FL | 326 | 1,515 | 423 | 326 | 1,938 | 2,264 | 746 | 1987 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Pensacola III |
FL | 369 | 1,358 | 2,741 | 369 | 4,099 | 4,468 | 1,027 | 1986 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Pensacola IV |
FL | 244 | 1,128 | 714 | 719 | 1,367 | 2,086 | 550 | 1990 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Pensacola V |
FL | 226 | 1,046 | 543 | 226 | 1,589 | 1,815 | 614 | 1990 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Tampa I |
FL | 1,088 | 2,597 | 988 | 1,088 | 3,585 | 4,673 | 1,360 | 1989 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Tampa II |
FL | 526 | 1,958 | 798 | 526 | 2,756 | 3,282 | 1,032 | 1985 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Tampa III |
FL | 672 | 2,439 | 583 | 672 | 3,022 | 3,694 | 1,115 | 1988 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Jackson I |
MS | 343 | 1,580 | 2,213 | 796 | 3,340 | 4,136 | 817 | 1990 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Jackson II |
MS | 209 | 964 | 597 | 209 | 1,561 | 1,770 | 635 | 1990 | 6/26/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Richmond |
VA | 443 | 1,602 | 826 | 443 | 2,428 | 2,871 | 851 | 1987 | 8/25/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Orlando II |
FL | 1,161 | 2,755 | 976 | 1,162 | 3,730 | 4,892 | 1,378 | 1986 | 9/29/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Birmingham III |
AL | 424 | 1,506 | 691 | 424 | 2,197 | 2,621 | 903 | 1970 | 1/16/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Macon II |
GA | 431 | 1,567 | 734 | 431 | 2,301 | 2,732 | 785 | 1989/94 | 12/1/1995 | 5 to 40 years |
63
Table of Contents
Cost Capitalized | Life on | |||||||||||||||||||||||||||||||||||||||||||||||
Subsequent to | Gross Amount at Which | which | ||||||||||||||||||||||||||||||||||||||||||||||
Initial Cost to Company | Acquisition | Carried at Close of Period | depreciation | |||||||||||||||||||||||||||||||||||||||||||||
Building, | Building, | Building, | in latest | |||||||||||||||||||||||||||||||||||||||||||||
Equipment | Equipment | Equipment | income | |||||||||||||||||||||||||||||||||||||||||||||
Encum | and | and | and | Accum. | Date of | Date | statement | |||||||||||||||||||||||||||||||||||||||||
Description | ST | brance | Land | Improvements | Improvements | Land | Improvements | Total | Deprec. | Construction | Acquired | is computed | ||||||||||||||||||||||||||||||||||||
Harrisburg I |
PA | 360 | 1,641 | 599 | 360 | 2,240 | 2,600 | 819 | 1983 | 12/29/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Harrisburg II |
PA | (1 | ) | 627 | 2,224 | 958 | 692 | 3,117 | 3,809 | 1,018 | 1985 | 12/29/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Syracuse I |
NY | 470 | 1,712 | 1,313 | 472 | 3,023 | 3,495 | 923 | 1987 | 12/27/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Ft. Myers |
FL | 205 | 912 | 310 | 206 | 1,221 | 1,427 | 573 | 1988 | 12/28/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Ft. Myers II |
FL | 412 | 1,703 | 458 | 413 | 2,160 | 2,573 | 947 | 1991/94 | 12/28/1995 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Newport News II |
VA | 442 | 1,592 | 1,180 | 442 | 2,772 | 3,214 | 731 | 1988/93 | 1/5/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Montgomery II |
AL | 353 | 1,299 | 653 | 353 | 1,952 | 2,305 | 633 | 1984 | 1/23/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Charleston II |
SC | 237 | 858 | 623 | 232 | 1,486 | 1,718 | 529 | 1985 | 3/1/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Tampa IV |
FL | 766 | 1,800 | 649 | 766 | 2,449 | 3,215 | 844 | 1985 | 3/28/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Arlington I |
TX | 442 | 1,767 | 319 | 442 | 2,086 | 2,528 | 730 | 1987 | 3/29/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Arlington II |
TX | 408 | 1,662 | 1,070 | 408 | 2,732 | 3,140 | 881 | 1986 | 3/29/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Ft. Worth |
TX | 328 | 1,324 | 331 | 328 | 1,655 | 1,983 | 598 | 1986 | 3/29/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
San Antonio I |
TX | 436 | 1,759 | 1,121 | 436 | 2,880 | 3,316 | 937 | 1986 | 3/29/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
San Antonio II |
TX | 289 | 1,161 | 543 | 289 | 1,704 | 1,993 | 582 | 1986 | 3/29/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Syracuse II |
NY | 481 | 1,559 | 2,391 | 671 | 3,760 | 4,431 | 1,015 | 1983 | 6/5/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Montgomery III |
AL | 279 | 1,014 | 998 | 433 | 1,858 | 2,291 | 575 | 1988 | 5/21/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
West Palm II |
FL | 345 | 1,262 | 354 | 345 | 1,616 | 1,961 | 577 | 1986 | 5/29/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Ft. Myers III |
FL | 229 | 884 | 298 | 229 | 1,182 | 1,411 | 413 | 1986 | 5/29/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Lakeland II |
FL | 359 | 1,287 | 1,065 | 359 | 2,352 | 2,711 | 814 | 1988 | 6/26/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Springfield |
MA | 251 | 917 | 2,267 | 297 | 3,138 | 3,435 | 885 | 1986 | 6/28/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Ft. Myers IV |
FL | 344 | 1,254 | 292 | 310 | 1,580 | 1,890 | 567 | 1987 | 6/28/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Cincinnati |
OH | (2 | ) | 557 | 1,988 | 775 | 688 | 2,632 | 3,320 | 299 | 1988 | 7/23/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Dayton |
OH | (2 | ) | 667 | 2,379 | 433 | 683 | 2,796 | 3,479 | 340 | 1988 | 7/23/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Baltimore III |
MD | 777 | 2,770 | 434 | 777 | 3,204 | 3,981 | 1,087 | 1990 | 7/26/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Jacksonville III |
FL | 568 | 2,028 | 931 | 568 | 2,959 | 3,527 | 1,052 | 1987 | 8/23/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Jacksonville IV |
FL | 436 | 1,635 | 520 | 436 | 2,155 | 2,591 | 789 | 1985 | 8/26/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Jacksonville V |
FL | 535 | 2,033 | 321 | 538 | 2,351 | 2,889 | 908 | 1987/92 | 8/30/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Charlotte II |
NC | 487 | 1,754 | 425 | 487 | 2,179 | 2,666 | 674 | 1995 | 9/16/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Charlotte III |
NC | 315 | 1,131 | 338 | 315 | 1,469 | 1,784 | 485 | 1995 | 9/16/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Orlando III |
FL | 314 | 1,113 | 953 | 314 | 2,066 | 2,380 | 702 | 1975 | 10/30/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Rochester III |
NY | 704 | 2,496 | 2,335 | 707 | 4,828 | 5,535 | 1,029 | 1990 | 12/20/1996 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Youngstown ll |
OH | 600 | 2,142 | 2,073 | 693 | 4,122 | 4,815 | 939 | 1988 | 1/10/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Cleveland lll |
OH | 751 | 2,676 | 1,798 | 751 | 4,474 | 5,225 | 1,300 | 1986 | 1/10/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Cleveland lV |
OH | 725 | 2,586 | 1,354 | 725 | 3,940 | 4,665 | 1,206 | 1978 | 1/10/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Cleveland V |
OH | (1 | ) | 637 | 2,918 | 1,629 | 701 | 4,483 | 5,184 | 1,563 | 1979 | 1/10/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Cleveland Vl |
OH | 495 | 1,781 | 899 | 495 | 2,680 | 3,175 | 865 | 1979 | 1/10/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Cleveland Vll |
OH | 761 | 2,714 | 1,337 | 761 | 4,051 | 4,812 | 1,273 | 1977 | 1/10/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Cleveland Vlll |
OH | 418 | 1,921 | 1,655 | 418 | 3,576 | 3,994 | 1,110 | 1970 | 1/10/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Cleveland lX |
OH | 606 | 2,164 | 1,363 | 606 | 3,527 | 4,133 | 917 | 1982 | 1/10/1997 | 5 to 40 years |
64
Table of Contents
Cost Capitalized | Life on | |||||||||||||||||||||||||||||||||||||||||||||||
Subsequent to | Gross Amount at Which | which | ||||||||||||||||||||||||||||||||||||||||||||||
Initial Cost to Company | Acquisition | Carried at Close of Period | depreciation | |||||||||||||||||||||||||||||||||||||||||||||
Building, | Building, | Building, | in latest | |||||||||||||||||||||||||||||||||||||||||||||
Equipment | Equipment | Equipment | income | |||||||||||||||||||||||||||||||||||||||||||||
Encum | and | and | and | Accum. | Date of | Date | statement | |||||||||||||||||||||||||||||||||||||||||
Description | ST | brance | Land | Improvements | Improvements | Land | Improvements | Total | Deprec. | Construction | Acquired | is computed | ||||||||||||||||||||||||||||||||||||
Grand Rapids l |
MI | (2 | ) | 455 | 1,631 | 981 | 624 | 2,443 | 3,067 | 292 | 1976 | 1/17/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Grand Rapids ll |
MI | 219 | 790 | 879 | 219 | 1,669 | 1,888 | 535 | 1983 | 1/17/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Kalamazoo |
MI | (2 | ) | 516 | 1,845 | 1,729 | 694 | 3,396 | 4,090 | 367 | 1978 | 1/17/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Lansing |
MI | (2 | ) | 327 | 1,332 | 1,627 | 542 | 2,744 | 3,286 | 293 | 1987 | 1/17/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Holland |
MI | 451 | 1,830 | 1,899 | 451 | 3,729 | 4,180 | 1,143 | 1978 | 1/17/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
San Antonio lll |
TX | (1 | ) | 474 | 1,686 | 442 | 504 | 2,098 | 2,602 | 644 | 1981 | 1/30/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Universal |
TX | 346 | 1,236 | 467 | 346 | 1,703 | 2,049 | 522 | 1985 | 1/30/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
San Antonio lV |
TX | 432 | 1,560 | 1,695 | 432 | 3,255 | 3,687 | 927 | 1995 | 1/30/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Houston-Eastex |
TX | 634 | 2,565 | 1,172 | 634 | 3,737 | 4,371 | 1,139 | 1993/95 | 3/26/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Houston-Nederland |
TX | 566 | 2,279 | 356 | 566 | 2,635 | 3,201 | 837 | 1995 | 3/26/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Houston-College |
TX | 293 | 1,357 | 568 | 293 | 1,925 | 2,218 | 572 | 1995 | 3/26/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Lynchburg-Lakeside |
VA | 335 | 1,342 | 1,274 | 335 | 2,616 | 2,951 | 743 | 1982 | 3/31/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Lynchburg-Timberlake |
VA | 328 | 1,315 | 976 | 328 | 2,291 | 2,619 | 725 | 1985 | 3/31/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Lynchburg-Amherst |
VA | 155 | 710 | 337 | 152 | 1,050 | 1,202 | 372 | 1987 | 3/31/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Christiansburg |
VA | 245 | 1,120 | 583 | 245 | 1,703 | 1,948 | 478 | 1985/90 | 3/31/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Chesapeake |
VA | 260 | 1,043 | 1,188 | 260 | 2,231 | 2,491 | 627 | 1988/95 | 3/31/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Danville |
VA | 326 | 1,488 | 246 | 326 | 1,734 | 2,060 | 561 | 1988 | 3/31/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Orlando-W 25th St |
FL | 289 | 1,160 | 744 | 616 | 1,577 | 2,193 | 507 | 1984 | 3/31/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Delray l-Mini |
FL | 491 | 1,756 | 672 | 491 | 2,428 | 2,919 | 833 | 1969 | 4/11/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Savannah ll |
GA | 296 | 1,196 | 347 | 296 | 1,543 | 1,839 | 526 | 1988 | 5/8/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Delray ll-Safeway |
FL | 921 | 3,282 | 488 | 921 | 3,770 | 4,691 | 1,266 | 1980 | 5/21/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Cleveland X-Avon |
OH | 301 | 1,214 | 2,106 | 304 | 3,317 | 3,621 | 742 | 1989 | 6/4/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Dallas-Skillman |
TX | 960 | 3,847 | 1,500 | 960 | 5,347 | 6,307 | 1,651 | 1975 | 6/30/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Dallas-Centennial |
TX | 965 | 3,864 | 1,276 | 943 | 5,162 | 6,105 | 1,635 | 1977 | 6/30/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Dallas-Samuell |
TX | (1 | ) | 570 | 2,285 | 795 | 611 | 3,039 | 3,650 | 990 | 1975 | 6/30/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Dallas-Hargrove |
TX | 370 | 1,486 | 530 | 370 | 2,016 | 2,386 | 712 | 1975 | 6/30/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Houston-Antoine |
TX | 515 | 2,074 | 561 | 515 | 2,635 | 3,150 | 872 | 1984 | 6/30/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Atlanta-Alpharetta |
GA | 1,033 | 3,753 | 458 | 1,033 | 4,211 | 5,244 | 1,428 | 1994 | 7/24/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Atlanta-Marietta |
GA | (1 | ) | 769 | 2,788 | 465 | 825 | 3,197 | 4,022 | 1,031 | 1996 | 7/24/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Atlanta-Doraville |
GA | 735 | 3,429 | 318 | 735 | 3,747 | 4,482 | 1,230 | 1995 | 8/21/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
GreensboroHilltop |
NC | 268 | 1,097 | 391 | 268 | 1,488 | 1,756 | 458 | 1995 | 9/25/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
GreensboroStgCch |
NC | 89 | 376 | 1,539 | 89 | 1,915 | 2,004 | 463 | 1997 | 9/25/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Baton Rouge-Airline |
LA | (1 | ) | 396 | 1,831 | 966 | 421 | 2,772 | 3,193 | 796 | 1982 | 10/9/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Baton Rouge-Airline2 |
LA | 282 | 1,303 | 312 | 282 | 1,615 | 1,897 | 551 | 1985 | 11/21/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Harrisburg-Peiffers |
PA | 635 | 2,550 | 532 | 637 | 3,080 | 3,717 | 940 | 1984 | 12/3/1997 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Chesapeake-Military |
VA | 542 | 2,210 | 343 | 542 | 2,553 | 3,095 | 789 | 1996 | 2/5/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Chesapeake-Volvo |
VA | 620 | 2,532 | 908 | 620 | 3,440 | 4,060 | 1,015 | 1995 | 2/5/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Virginia Beach-Shell |
VA | 540 | 2,211 | 276 | 540 | 2,487 | 3,027 | 797 | 1991 | 2/5/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Virginia Beach-Central |
VA | 864 | 3,994 | 752 | 864 | 4,746 | 5,610 | 1,464 | 1993/95 | 2/5/1998 | 5 to 40 years |
65
Table of Contents
Cost Capitalized | Life on | |||||||||||||||||||||||||||||||||||||||||||||||
Subsequent to | Gross Amount at Which | which | ||||||||||||||||||||||||||||||||||||||||||||||
Initial Cost to Company | Acquisition | Carried at Close of Period | depreciation | |||||||||||||||||||||||||||||||||||||||||||||
Building, | Building, | Building, | in latest | |||||||||||||||||||||||||||||||||||||||||||||
Equipment | Equipment | Equipment | income | |||||||||||||||||||||||||||||||||||||||||||||
Encum | and | and | and | Accum. | Date of | Date | statement | |||||||||||||||||||||||||||||||||||||||||
Description | ST | brance | Land | Improvements | Improvements | Land | Improvements | Total | Deprec. | Construction | Acquired | is computed | ||||||||||||||||||||||||||||||||||||
Norfolk-Naval Base |
VA | 1,243 | 5,019 | 744 | 1,243 | 5,763 | 7,006 | 1,760 | 1975 | 2/5/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Tampa-E.Hillsborough |
FL | 709 | 3,235 | 750 | 709 | 3,985 | 4,694 | 1,331 | 1985 | 2/4/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Northbridge |
MA | (2 | ) | 441 | 1,788 | 990 | 694 | 2,525 | 3,219 | 263 | 1988 | 2/9/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Harriman |
NY | 843 | 3,394 | 490 | 843 | 3,884 | 4,727 | 1,225 | 1989/95 | 2/4/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Greensboro-High Point |
NC | 397 | 1,834 | 554 | 397 | 2,388 | 2,785 | 732 | 1993 | 2/10/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Lynchburg-Timberlake |
VA | 488 | 1,746 | 498 | 488 | 2,244 | 2,732 | 680 | 1990/96 | 2/18/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Titusville |
FL | (2 | ) | 492 | 1,990 | 934 | 688 | 2,728 | 3,416 | 292 | 1986/90 | 2/25/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Salem |
MA | 733 | 2,941 | 1,236 | 733 | 4,177 | 4,910 | 1,255 | 1979 | 3/3/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Chattanooga-Lee Hwy |
TN | 384 | 1,371 | 536 | 384 | 1,907 | 2,291 | 613 | 1987 | 3/27/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Chattanooga-Hwy 58 |
TN | 296 | 1,198 | 2,090 | 414 | 3,170 | 3,584 | 657 | 1985 | 3/27/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Ft. Oglethorpe |
GA | 349 | 1,250 | 584 | 349 | 1,834 | 2,183 | 574 | 1989 | 3/27/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Birmingham-Walt |
AL | 544 | 1,942 | 831 | 544 | 2,773 | 3,317 | 922 | 1984 | 3/27/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
East Greenwich |
RI | 702 | 2,821 | 1,080 | 702 | 3,901 | 4,603 | 1,151 | 1984/88 | 3/26/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Durham-Hillsborough |
NC | 775 | 3,103 | 710 | 775 | 3,813 | 4,588 | 1,143 | 1988/91 | 4/9/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Durham-Cornwallis |
NC | 940 | 3,763 | 749 | 940 | 4,512 | 5,452 | 1,342 | 1990/96 | 4/9/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Salem-Policy |
NH | 742 | 2,977 | 468 | 742 | 3,445 | 4,187 | 994 | 1980 | 4/7/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Warren-Elm |
OH | (1 | ) | 522 | 1,864 | 1,218 | 569 | 3,035 | 3,604 | 814 | 1986 | 4/22/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Warren-Youngstown |
OH | 512 | 1,829 | 1,860 | 675 | 3,526 | 4,201 | 779 | 1986 | 4/22/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Indian Harbor Beach |
FL | 662 | 2,654 | -602 | 662 | 2,052 | 2,714 | 674 | 1985 | 6/2/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Jackson 3 - I55 |
MS | 744 | 3,021 | 132 | 744 | 3,153 | 3,897 | 964 | 1995 | 5/13/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Katy-N.Fry |
TX | 419 | 1,524 | 3,284 | 419 | 4,808 | 5,227 | 704 | 1994 | 5/20/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Hollywood-Sheridan |
FL | 1,208 | 4,854 | 358 | 1,208 | 5,212 | 6,420 | 1,548 | 1988 | 7/1/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Pompano Beach-Atlantic |
FL | 944 | 3,803 | 352 | 944 | 4,155 | 5,099 | 1,254 | 1985 | 7/1/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Pompano Beach-Sample |
FL | 903 | 3,643 | 341 | 903 | 3,984 | 4,887 | 1,175 | 1988 | 7/1/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Boca Raton-18th St |
FL | 1,503 | 6,059 | 832 | 1,503 | 6,891 | 8,394 | 2,043 | 1991 | 7/1/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Vero Beach |
FL | 489 | 1,813 | 116 | 489 | 1,929 | 2,418 | 635 | 1997 | 6/12/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Humble |
TX | 447 | 1,790 | 2,246 | 740 | 3,743 | 4,483 | 824 | 1986 | 6/16/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Houston-Old Katy |
TX | (1 | ) | 659 | 2,680 | 377 | 698 | 3,018 | 3,716 | 810 | 1996 | 6/19/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Webster |
TX | 635 | 2,302 | 131 | 635 | 2,433 | 3,068 | 727 | 1997 | 6/19/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Carrollton |
TX | 548 | 1,988 | 295 | 548 | 2,283 | 2,831 | 668 | 1997 | 6/19/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Hollywood-N.21st |
FL | 840 | 3,373 | 363 | 840 | 3,736 | 4,576 | 1,139 | 1987 | 8/3/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
San Marcos |
TX | 324 | 1,493 | 2,012 | 324 | 3,505 | 3,829 | 667 | 1994 | 6/30/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Austin-McNeil |
TX | 492 | 1,995 | 494 | 510 | 2,471 | 2,981 | 729 | 1994 | 6/30/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Austin-FM |
TX | 484 | 1,951 | 462 | 481 | 2,416 | 2,897 | 714 | 1996 | 6/30/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Jacksonville-Center |
NC | 327 | 1,329 | 678 | 327 | 2,007 | 2,334 | 500 | 1995 | 8/6/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Jacksonville-Gum Branch |
NC | 508 | 1,815 | 1,271 | 508 | 3,086 | 3,594 | 761 | 1989 | 8/17/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Jacksonville-N.Marine |
NC | 216 | 782 | 721 | 216 | 1,503 | 1,719 | 468 | 1985 | 9/24/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Euless |
TX | 550 | 1,998 | 660 | 550 | 2,658 | 3,208 | 709 | 1996 | 9/29/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
N. Richland Hills |
TX | 670 | 2,407 | 1,540 | 670 | 3,947 | 4,617 | 905 | 1996 | 10/9/1998 | 5 to 40 years |
66
Table of Contents
Cost Capitalized | Life on | |||||||||||||||||||||||||||||||||||||||||||||||
Subsequent to | Gross Amount at Which | which | ||||||||||||||||||||||||||||||||||||||||||||||
Initial Cost to Company | Acquisition | Carried at Close of Period | depreciation | |||||||||||||||||||||||||||||||||||||||||||||
Building, | Building, | Building, | in latest | |||||||||||||||||||||||||||||||||||||||||||||
Equipment | Equipment | Equipment | income | |||||||||||||||||||||||||||||||||||||||||||||
Encum | and | and | and | Accum. | Date of | Date | statement | |||||||||||||||||||||||||||||||||||||||||
Description | ST | brance | Land | Improvements | Improvements | Land | Improvements | Total | Deprec. | Construction | Acquired | is computed | ||||||||||||||||||||||||||||||||||||
Batavia |
OH | 390 | 1,570 | 909 | 390 | 2,479 | 2,869 | 625 | 1988 | 11/19/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Jackson-N.West |
MS | 460 | 1,642 | 480 | 460 | 2,122 | 2,582 | 707 | 1984 | 12/1/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Katy-Franz |
TX | 507 | 2,058 | 1,599 | 507 | 3,657 | 4,164 | 741 | 1993 | 12/15/1998 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
W.Warwick |
RI | 447 | 1,776 | 813 | 447 | 2,589 | 3,036 | 717 | 1986/94 | 2/2/1999 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Lafayette-Pinhook 1 |
LA | 556 | 1,951 | 977 | 556 | 2,928 | 3,484 | 973 | 1980 | 2/17/1999 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Lafayette-Pinhook2 |
LA | 708 | 2,860 | 285 | 708 | 3,145 | 3,853 | 895 | 1992/94 | 2/17/1999 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Lafayette-Ambassador |
LA | 314 | 1,095 | 665 | 314 | 1,760 | 2,074 | 631 | 1975 | 2/17/1999 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Lafayette-Evangeline |
LA | 188 | 652 | 1,507 | 188 | 2,159 | 2,347 | 628 | 1977 | 2/17/1999 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Lafayette-Guilbeau |
LA | 963 | 3,896 | 776 | 963 | 4,672 | 5,635 | 1,224 | 1994 | 2/17/1999 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Gilbert-Elliot Rd |
AZ | 651 | 2,600 | 1,101 | 772 | 3,580 | 4,352 | 864 | 1995 | 5/18/1999 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Glendale-59th Ave |
AZ | 565 | 2,596 | 556 | 565 | 3,152 | 3,717 | 852 | 1997 | 5/18/1999 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Mesa-Baseline |
AZ | 330 | 1,309 | 2,399 | 733 | 3,305 | 4,038 | 482 | 1986 | 5/18/1999 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Mesa-E.Broadway |
AZ | 339 | 1,346 | 593 | 339 | 1,939 | 2,278 | 493 | 1986 | 5/18/1999 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Mesa-W.Broadway |
AZ | 291 | 1,026 | 874 | 291 | 1,900 | 2,191 | 414 | 1976 | 5/18/1999 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Mesa-Greenfield |
AZ | 354 | 1,405 | 336 | 354 | 1,741 | 2,095 | 516 | 1986 | 5/18/1999 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Phoenix-Camelback |
AZ | 453 | 1,610 | 834 | 453 | 2,444 | 2,897 | 665 | 1984 | 5/18/1999 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Phoenix-Bell |
AZ | 872 | 3,476 | 871 | 872 | 4,347 | 5,219 | 1,196 | 1984 | 5/18/1999 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Phoenix-35th Ave |
AZ | 849 | 3,401 | 666 | 849 | 4,067 | 4,916 | 1,094 | 1996 | 5/21/1999 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Westbrook |
ME | 410 | 1,626 | 1,759 | 410 | 3,385 | 3,795 | 728 | 1988 | 8/2/1999 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Cocoa |
FL | 667 | 2,373 | 775 | 667 | 3,148 | 3,815 | 850 | 1982 | 9/29/1999 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Cedar Hill |
TX | 335 | 1,521 | 377 | 335 | 1,898 | 2,233 | 535 | 1985 | 11/9/1999 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Monroe |
NY | 276 | 1,312 | 1,159 | 276 | 2,471 | 2,747 | 515 | 1998 | 2/2/2000 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
N.Andover |
MA | 633 | 2,573 | 808 | 633 | 3,381 | 4,014 | 755 | 1989 | 2/15/2000 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Seabrook |
TX | 633 | 2,617 | 343 | 633 | 2,960 | 3,593 | 768 | 1996 | 3/1/2000 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Plantation |
FL | 384 | 1,422 | 415 | 384 | 1,837 | 2,221 | 463 | 1994 | 5/2/2000 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Birmingham-Bessemer |
AL | 254 | 1,059 | 1,194 | 254 | 2,253 | 2,507 | 411 | 1998 | 11/15/2000 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Brewster |
NY | (2 | ) | 1,716 | 6,920 | 905 | 1,981 | 7,560 | 9,541 | 797 | 1991/97 | 12/27/2000 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Austin-Lamar |
TX | (2 | ) | 837 | 2,977 | 496 | 966 | 3,344 | 4,310 | 400 | 1996/99 | 2/22/2001 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Houston-E.Main |
TX | (2 | ) | 733 | 3,392 | 572 | 841 | 3,856 | 4,697 | 428 | 1993/97 | 3/2/2001 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Ft.Myers-Abrams |
FL | (2 | ) | 787 | 3,249 | 374 | 902 | 3,508 | 4,410 | 424 | 1997 | 3/13/2001 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Dracut |
MA | (1 | ) | 1,035 | 3,737 | 590 | 1,104 | 4,258 | 5,362 | 887 | 1986 | 12/1/2001 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Methuen |
MA | (1 | ) | 1,024 | 3,649 | 567 | 1,091 | 4,149 | 5,240 | 856 | 1984 | 12/1/2001 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Columbia 5 |
SC | (1 | ) | 883 | 3,139 | 1,212 | 942 | 4,292 | 5,234 | 816 | 1985 | 12/1/2001 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Myrtle Beach |
SC | (1 | ) | 552 | 1,970 | 881 | 589 | 2,814 | 3,403 | 582 | 1984 | 12/1/2001 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Kingsland |
GA | (1 | ) | 470 | 1,902 | 2,914 | 666 | 4,620 | 5,286 | 642 | 1989 | 12/1/2001 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Saco |
ME | (1 | ) | 534 | 1,914 | 279 | 570 | 2,157 | 2,727 | 452 | 1988 | 12/3/2001 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Plymouth |
MA | 1,004 | 4,584 | 2,282 | 1,004 | 6,866 | 7,870 | 1,043 | 1996 | 12/19/2001 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Sandwich |
MA | (1 | ) | 670 | 3,060 | 408 | 714 | 3,424 | 4,138 | 714 | 1984 | 12/19/2001 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Syracuse |
NY | (1 | ) | 294 | 1,203 | 402 | 327 | 1,572 | 1,899 | 358 | 1987 | 2/5/2002 | 5 to 40 years |
67
Table of Contents
Cost Capitalized | Life on | |||||||||||||||||||||||||||||||||||||||||||||||
Subsequent to | Gross Amount at Which | which | ||||||||||||||||||||||||||||||||||||||||||||||
Initial Cost to Company | Acquisition | Carried at Close of Period | depreciation | |||||||||||||||||||||||||||||||||||||||||||||
Building, | Building, | Building, | in latest | |||||||||||||||||||||||||||||||||||||||||||||
Equipment | Equipment | Equipment | income | |||||||||||||||||||||||||||||||||||||||||||||
Encum | and | and | and | Accum. | Date of | Date | statement | |||||||||||||||||||||||||||||||||||||||||
Description | ST | brance | Land | Improvements | Improvements | Land | Improvements | Total | Deprec. | Construction | Acquired | is computed | ||||||||||||||||||||||||||||||||||||
Houston-Westward |
TX | (1 | ) | 853 | 3,434 | 855 | 912 | 4,230 | 5,142 | 883 | 1976 | 2/13/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Houston-Boone |
TX | (1 | ) | 250 | 1,020 | 495 | 268 | 1,497 | 1,765 | 319 | 1983 | 2/13/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Houston-Cook |
TX | (1 | ) | 285 | 1,160 | 326 | 306 | 1,465 | 1,771 | 323 | 1986 | 2/13/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Houston-Harwin |
TX | (1 | ) | 449 | 1,816 | 597 | 480 | 2,382 | 2,862 | 506 | 1981 | 2/13/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Houston-Hempstead |
TX | (1 | ) | 545 | 2,200 | 935 | 583 | 3,097 | 3,680 | 627 | 1974/78 | 2/13/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Houston-Kuykendahl |
TX | (1 | ) | 517 | 2,090 | 1,258 | 553 | 3,312 | 3,865 | 601 | 1979/83 | 2/13/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Houston-Hwy 249 |
TX | (1 | ) | 299 | 1,216 | 1,053 | 320 | 2,248 | 2,568 | 428 | 1983 | 2/13/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Mesquite-Hwy 80 |
TX | (1 | ) | 463 | 1,873 | 655 | 496 | 2,495 | 2,991 | 482 | 1985 | 2/13/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Mesquite-Franklin |
TX | (1 | ) | 734 | 2,956 | 678 | 784 | 3,584 | 4,368 | 694 | 1984 | 2/13/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Dallas-Plantation |
TX | (1 | ) | 394 | 1,595 | 283 | 421 | 1,851 | 2,272 | 394 | 1985 | 2/13/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
San Antonio-Hunt |
TX | (1 | ) | 381 | 1,545 | 781 | 408 | 2,299 | 2,707 | 431 | 1980 | 2/13/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||
Humble-5250 FM |
TX | 919 | 3,696 | 363 | 919 | 4,059 | 4,978 | 763 | 1998/02 | 6/19/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Pasadena |
TX | 612 | 2,468 | 232 | 612 | 2,700 | 3,312 | 514 | 1999 | 6/19/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
League City-E.Main |
TX | 689 | 3,159 | 269 | 689 | 3,428 | 4,117 | 658 | 1994/97 | 6/19/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Montgomery |
TX | 817 | 3,286 | 2,066 | 1,119 | 5,050 | 6,169 | 736 | 1998 | 6/19/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Texas City |
TX | 817 | 3,286 | 129 | 817 | 3,415 | 4,232 | 671 | 1999 | 6/19/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Houston-Hwy 6 |
TX | 407 | 1,650 | 182 | 407 | 1,832 | 2,239 | 359 | 1997 | 6/19/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Lumberton |
TX | 817 | 3,287 | 191 | 817 | 3,478 | 4,295 | 670 | 1996 | 6/19/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
The Hamptons l |
NY | 2,207 | 8,866 | 627 | 2,207 | 9,493 | 11,700 | 1,714 | 1989/95 | 12/16/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
The Hamptons 2 |
NY | 1,131 | 4,564 | 489 | 1,131 | 5,053 | 6,184 | 890 | 1998 | 12/16/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
The Hamptons 3 |
NY | 635 | 2,918 | 357 | 635 | 3,275 | 3,910 | 566 | 1997 | 12/16/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
The Hamptons 4 |
NY | 1,251 | 5,744 | 357 | 1,252 | 6,100 | 7,352 | 1,078 | 1994/98 | 12/16/2002 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Duncanville |
TX | 1,039 | 4,201 | 46 | 1,039 | 4,247 | 5,286 | 693 | 1995/99 | 8/26/2003 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Dallas-Harry Hines |
TX | 827 | 3,776 | 297 | 827 | 4,073 | 4,900 | 641 | 1998/01 | 10/1/2003 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Stamford |
CT | 2,713 | 11,013 | 304 | 2,713 | 11,317 | 14,030 | 1,732 | 1998 | 3/17/2004 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Houston-Tomball |
TX | 773 | 3,170 | 1,775 | 773 | 4,945 | 5,718 | 648 | 2000 | 5/19/2004 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Houston-Conroe |
TX | 1,195 | 4,877 | 109 | 1,195 | 4,986 | 6,181 | 734 | 2001 | 5/19/2004 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Houston-Spring |
TX | 1,103 | 4,550 | 253 | 1,103 | 4,803 | 5,906 | 716 | 2001 | 5/19/2004 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Houston-Bissonnet |
TX | 1,061 | 4,427 | 2,663 | 1,061 | 7,090 | 8,151 | 822 | 2003 | 5/19/2004 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Houston-Alvin |
TX | 388 | 1,640 | 852 | 388 | 2,492 | 2,880 | 296 | 2003 | 5/19/2004 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Clearwater |
FL | 1,720 | 6,986 | 82 | 1,720 | 7,068 | 8,788 | 1,020 | 2001 | 6/3/2004 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Houston-Missouri City |
TX | 1,167 | 4,744 | 3,459 | 1,566 | 7,804 | 9,370 | 746 | 1998 | 6/23/2004 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Chattanooga-Hixson |
TN | 1,365 | 5,569 | 1,182 | 1,365 | 6,751 | 8,116 | 947 | 1998/02 | 8/4/2004 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Austin-Round Rock |
TX | 2,047 | 5,857 | 675 | 2,051 | 6,528 | 8,579 | 902 | 2000 | 8/5/2004 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Cicero |
NY | 527 | 2,121 | 564 | 527 | 2,685 | 3,212 | 355 | 1988/02 | 3/16/2005 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Bay Shore |
NY | 1,131 | 4,609 | 59 | 1,131 | 4,668 | 5,799 | 593 | 2003 | 3/15/2005 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Springfield-Congress |
MA | 612 | 2,501 | 106 | 612 | 2,607 | 3,219 | 337 | 1965/75 | 4/12/2005 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Stamford-Hope |
CT | 1,612 | 6,585 | 201 | 1,612 | 6,786 | 8,398 | 855 | 2002 | 4/14/2005 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Houston-Jones |
TX | 3,369 | 1,214 | 4,949 | 82 | 1,215 | 5,030 | 6,245 | 603 | 1997/99 | 6/6/2005 | 5 to 40 years |
68
Table of Contents
Cost Capitalized | Life on | |||||||||||||||||||||||||||||||||||||||||||||||
Subsequent to | Gross Amount at Which | which | ||||||||||||||||||||||||||||||||||||||||||||||
Initial Cost to Company | Acquisition | Carried at Close of Period | depreciation | |||||||||||||||||||||||||||||||||||||||||||||
Building, | Building, | Building, | in latest | |||||||||||||||||||||||||||||||||||||||||||||
Equipment | Equipment | Equipment | income | |||||||||||||||||||||||||||||||||||||||||||||
Encum | and | and | and | Accum. | Date of | Date | statement | |||||||||||||||||||||||||||||||||||||||||
Description | ST | brance | Land | Improvements | Improvements | Land | Improvements | Total | Deprec. | Construction | Acquired | is computed | ||||||||||||||||||||||||||||||||||||
Montgomery-Richard |
AL | 1,906 | 7,726 | 135 | 1,906 | 7,861 | 9,767 | 950 | 1997 | 6/1/2005 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Oxford |
MA | 470 | 1,902 | 1,577 | 470 | 3,479 | 3,949 | 288 | 2002 | 6/23/2005 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Austin-290E |
TX | 537 | 2,183 | 167 | 537 | 2,350 | 2,887 | 291 | 2003 | 7/12/2005 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
SanAntonio-Marbach |
TX | 556 | 2,265 | 206 | 556 | 2,471 | 3,027 | 290 | 2003 | 7/12/2005 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Austin-South 1st |
TX | 754 | 3,065 | 148 | 754 | 3,213 | 3,967 | 388 | 2003 | 7/12/2005 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Pinehurst |
TX | 484 | 1,977 | 1,361 | 484 | 3,338 | 3,822 | 303 | 2002/04 | 7/12/2005 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Marietta-Austell |
GA | 811 | 3,397 | 433 | 811 | 3,830 | 4,641 | 449 | 2003 | 9/15/2005 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Baton Rouge-Florida |
LA | 719 | 2,927 | 927 | 719 | 3,854 | 4,573 | 295 | 1984/94 | 11/15/2005 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Cypress |
TX | 721 | 2,994 | 1,094 | 721 | 4,088 | 4,809 | 414 | 2003 | 1/13/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Texas City |
TX | 867 | 3,499 | 106 | 867 | 3,605 | 4,472 | 377 | 2003 | 1/10/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
San Marcos-Hwy 35S |
TX | 628 | 2,532 | 450 | 982 | 2,628 | 3,610 | 274 | 2001 | 1/10/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Baytown |
TX | 596 | 2,411 | 86 | 596 | 2,497 | 3,093 | 266 | 2002 | 1/10/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Webster |
NY | 937 | 3,779 | 116 | 937 | 3,895 | 4,832 | 392 | 2002/06 | 2/1/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Houston-Jones Rd 2 |
TX | 707 | 2,933 | 2,013 | 707 | 4,946 | 5,653 | 447 | 2000 | 3/9/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Cameron-Scott |
LA | 977 | 411 | 1,621 | 136 | 411 | 1,757 | 2,168 | 205 | 1997 | 4/13/2006 | 5 to 40 years | ||||||||||||||||||||||||||||||||||||
Lafayette-Westgate |
LA | 463 | 1,831 | 83 | 463 | 1,914 | 2,377 | 193 | 2001/04 | 4/13/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Broussard |
LA | 601 | 2,406 | 1,250 | 601 | 3,656 | 4,257 | 315 | 2002 | 4/13/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Congress-Lafayette |
LA | 1,072 | 542 | 1,319 | 2,101 | 542 | 3,420 | 3,962 | 224 | 1997/99 | 4/13/2006 | 5 to 40 years | ||||||||||||||||||||||||||||||||||||
Manchester |
NH | 832 | 3,268 | 90 | 832 | 3,358 | 4,190 | 320 | 2000 | 4/26/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Nashua |
NH | 617 | 2,422 | 489 | 617 | 2,911 | 3,528 | 256 | 1989 | 6/29/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Largo 2 |
FL | 1,270 | 5,037 | 171 | 1,270 | 5,208 | 6,478 | 487 | 1998 | 6/22/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Pinellas Park |
FL | 929 | 3,676 | 109 | 929 | 3,785 | 4,714 | 344 | 2000 | 6/22/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Tarpon Springs |
FL | 696 | 2,739 | 110 | 696 | 2,849 | 3,545 | 263 | 1999 | 6/22/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
New Orleans |
LA | 1,220 | 4,805 | 83 | 1,220 | 4,888 | 6,108 | 450 | 2000 | 6/22/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
St Louis-Meramec |
MO | 1,113 | 4,359 | 190 | 1,113 | 4,549 | 5,662 | 414 | 1999 | 6/22/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
St Louis-Charles Rock |
MO | 766 | 3,040 | 111 | 766 | 3,151 | 3,917 | 282 | 1999 | 6/22/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
St Louis-Shackelford |
MO | 828 | 3,290 | 141 | 828 | 3,431 | 4,259 | 315 | 1999 | 6/22/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
St Louis-W.Washington |
MO | 734 | 2,867 | 555 | 734 | 3,422 | 4,156 | 328 | 1980/01 | 6/22/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
St Louis-Howdershell |
MO | 899 | 3,596 | 180 | 899 | 3,776 | 4,675 | 350 | 2000 | 6/22/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
St Louis-Lemay Ferry |
MO | 890 | 3,552 | 208 | 890 | 3,760 | 4,650 | 338 | 1999 | 6/22/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
St Louis-Manchester |
MO | 697 | 2,711 | 96 | 697 | 2,807 | 3,504 | 258 | 2000 | 6/22/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Arlington-Little Rd |
TX | 1,951 | 1,256 | 4,946 | 159 | 1,256 | 5,105 | 6,361 | 463 | 1998/03 | 6/22/2006 | 5 to 40 years | ||||||||||||||||||||||||||||||||||||
Dallas-Goldmark |
TX | 605 | 2,434 | 58 | 605 | 2,492 | 3,097 | 228 | 2004 | 6/22/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Dallas-Manana |
TX | 607 | 2,428 | 115 | 607 | 2,543 | 3,150 | 233 | 2004 | 6/22/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Dallas-Manderville |
TX | 1,073 | 4,276 | 62 | 1,073 | 4,338 | 5,411 | 398 | 2003 | 6/22/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Ft. Worth-Granbury |
TX | 1,751 | 549 | 2,180 | 90 | 549 | 2,270 | 2,819 | 210 | 1998 | 6/22/2006 | 5 to 40 years | ||||||||||||||||||||||||||||||||||||
Ft. Worth-Grapevine |
TX | 644 | 2,542 | 52 | 644 | 2,594 | 3,238 | 238 | 1999 | 6/22/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
San Antonio-Blanco |
TX | 963 | 3,836 | 55 | 963 | 3,891 | 4,854 | 357 | 2004 | 6/22/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
San Antonio-Broadway |
TX | 773 | 3,060 | 106 | 773 | 3,166 | 3,939 | 293 | 2000 | 6/22/2006 | 5 to 40 years |
69
Table of Contents
Cost Capitalized | Life on | |||||||||||||||||||||||||||||||||||||||||||||||
Subsequent to | Gross Amount at Which | which | ||||||||||||||||||||||||||||||||||||||||||||||
Initial Cost to Company | Acquisition | Carried at Close of Period | depreciation | |||||||||||||||||||||||||||||||||||||||||||||
Building, | Building, | Building, | in latest | |||||||||||||||||||||||||||||||||||||||||||||
Equipment | Equipment | Equipment | income | |||||||||||||||||||||||||||||||||||||||||||||
Encum | and | and | and | Accum. | Date of | Date | statement | |||||||||||||||||||||||||||||||||||||||||
Description | ST | brance | Land | Improvements | Improvements | Land | Improvements | Total | Deprec. | Construction | Acquired | is computed | ||||||||||||||||||||||||||||||||||||
San Antonio-Huebner |
TX | 2,177 | 1,175 | 4,624 | 118 | 1,175 | 4,742 | 5,917 | 424 | 1998 | 6/22/2006 | 5 to 40 years | ||||||||||||||||||||||||||||||||||||
Chattanooga-Lee Hwy II |
TN | 619 | 2,471 | 62 | 619 | 2,533 | 3,152 | 228 | 2002 | 8/7/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Lafayette-Evangeline |
LA | 699 | 2,784 | 1,885 | 699 | 4,669 | 5,368 | 310 | 1995/99 | 8/1/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Montgomery-E.S.Blvd |
AL | 1,158 | 4,639 | 304 | 1,158 | 4,943 | 6,101 | 433 | 1996/97 | 9/28/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Auburn-Pepperell Pkwy |
AL | 590 | 2,361 | 152 | 590 | 2,513 | 3,103 | 214 | 1998 | 9/28/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Auburn-Gatewood Dr |
AL | 694 | 2,758 | 111 | 694 | 2,869 | 3,563 | 237 | 2002/03 | 9/28/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Columbus-Williams Rd |
GA | 736 | 2,905 | 118 | 736 | 3,023 | 3,759 | 263 | 2002/04/06 | 9/28/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Columbus-Miller Rd |
GA | 975 | 3,854 | 129 | 975 | 3,983 | 4,958 | 333 | 1995 | 9/28/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Columbus-Armour Rd |
GA | 0 | 3,680 | 98 | 0 | 3,778 | 3,778 | 324 | 2004/05 | 9/28/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Columbus-Amber Dr |
GA | 439 | 1,745 | 63 | 439 | 1,808 | 2,247 | 155 | 1998 | 9/28/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Concord |
NH | 813 | 3,213 | 1,919 | 813 | 5,132 | 5,945 | 337 | 2000 | 10/31/2006 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Buffalo-Langner Rd |
NY | 532 | 2,119 | 442 | 532 | 2,561 | 3,093 | 171 | 1993/07 | 3/30/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Buffalo-Transit Rd |
NY | 437 | 1,794 | 76 | 437 | 1,870 | 2,307 | 142 | 1998 | 3/30/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Buffalo-Lake Ave |
NY | 638 | 2,531 | 242 | 638 | 2,773 | 3,411 | 219 | 1997 | 3/30/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Buffalo-Union Rd |
NY | 348 | 1,344 | 108 | 348 | 1,452 | 1,800 | 108 | 1998 | 3/30/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Buffalo-Niagara Falls
Blvd |
NY | 323 | 1,331 | 64 | 323 | 1,395 | 1,718 | 104 | 1998 | 3/30/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Buffalo-Young St |
NY | 315 | 2,185 | 118 | 316 | 2,302 | 2,618 | 147 | 1999/00 | 3/30/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Buffalo-Sheridan Dr |
NY | 961 | 3,827 | 101 | 961 | 3,928 | 4,889 | 280 | 1999 | 3/30/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Lockport-Transit Rd |
NY | 375 | 1,498 | 253 | 375 | 1,751 | 2,126 | 142 | 1990/95 | 3/30/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Rochester-Phillips Rd |
NY | 1,003 | 4,002 | 63 | 1,003 | 4,065 | 5,068 | 289 | 1999 | 3/30/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Greenville |
MS | 1,100 | 4,386 | 116 | 1,100 | 4,502 | 5,602 | 360 | 1994 | 1/11/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Port Arthur-9595 Hwy69 |
TX | 929 | 3,647 | 123 | 930 | 3,769 | 4,699 | 279 | 2002/04 | 3/8/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Beaumont-Dowlen Rd |
TX | 1,537 | 6,018 | 224 | 1,537 | 6,242 | 7,779 | 460 | 2003/06 | 3/8/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Huntsville-Memorial Pkwy |
AL | 1,607 | 6,338 | 171 | 1,607 | 6,509 | 8,116 | 436 | 1989/06 | 6/1/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Huntsville-Madison 1 |
AL | 1,016 | 4,013 | 151 | 1,017 | 4,163 | 5,180 | 285 | 1993/07 | 6/1/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Gulfport-Ocean Springs |
MS | 1,423 | 5,624 | 45 | 1,423 | 5,669 | 7,092 | 373 | 1998/05 | 6/1/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Huntsville-Hwy 72 |
AL | 1,206 | 4,775 | 69 | 1,206 | 4,844 | 6,050 | 324 | 1998/06 | 6/1/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Mobile-Airport Blvd |
AL | 1,216 | 4,819 | 132 | 1,216 | 4,951 | 6,167 | 339 | 2000/07 | 6/1/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Gulfport-Hwy 49 |
MS | 1,345 | 5,325 | 42 | 1,345 | 5,367 | 6,712 | 354 | 2002/04 | 6/1/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Huntsville-Madison 2 |
AL | 1,164 | 4,624 | 52 | 1,164 | 4,676 | 5,840 | 314 | 2002/06 | 6/1/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Foley-Hwy 59 |
AL | 1,346 | 5,474 | 95 | 1,347 | 5,568 | 6,915 | 380 | 2003/06 | 6/1/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Pensacola 6-Nine Mile |
FL | 1,029 | 4,180 | 92 | 1,029 | 4,272 | 5,301 | 307 | 2003/06 | 6/1/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Auburn-College St |
AL | 686 | 2,732 | 85 | 686 | 2,817 | 3,503 | 197 | 2003 | 6/1/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Gulfport-Biloxi |
MS | 1,811 | 7,152 | 47 | 1,811 | 7,199 | 9,010 | 472 | 2004/06 | 6/1/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Pensacola 7-Hwy 98 |
FL | 732 | 3,015 | 34 | 732 | 3,049 | 3,781 | 217 | 2006 | 6/1/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Montgomery-Arrowhead |
AL | 1,075 | 4,333 | 35 | 1,076 | 4,367 | 5,443 | 294 | 2006 | 6/1/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Montgomery-McLemore |
AL | 885 | 3,586 | 19 | 885 | 3,605 | 4,490 | 244 | 2006 | 6/1/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
San Antonio-Foster |
TX | 676 | 2,685 | 135 | 676 | 2,820 | 3,496 | 194 | 2003/06 | 5/21/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Beaumont-S.Major |
TX | 742 | 3,024 | 113 | 742 | 3,137 | 3,879 | 181 | 2002/05 | 11/14/2007 | 5 to 40 years |
70
Table of Contents
Cost Capitalized | Life on | |||||||||||||||||||||||||||||||||||||||||||||||
Subsequent to | Gross Amount at Which | which | ||||||||||||||||||||||||||||||||||||||||||||||
Initial Cost to Company | Acquisition | Carried at Close of Period | depreciation | |||||||||||||||||||||||||||||||||||||||||||||
Building, | Building, | Building, | in latest | |||||||||||||||||||||||||||||||||||||||||||||
Equipment | Equipment | Equipment | income | |||||||||||||||||||||||||||||||||||||||||||||
Encum | and | and | and | Accum. | Date of | Date | statement | |||||||||||||||||||||||||||||||||||||||||
Description | ST | brance | Land | Improvements | Improvements | Land | Improvements | Total | Deprec. | Construction | Acquired | is computed | ||||||||||||||||||||||||||||||||||||
Hattiesburg-Clasic |
MS | 444 | 1,799 | 73 | 444 | 1,872 | 2,316 | 99 | 1998 | 12/19/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Biloxi-Ginger |
MS | 384 | 1,548 | 46 | 384 | 1,594 | 1,978 | 84 | 2000 | 12/19/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Foley-7905 St Hwy 59 |
AL | 437 | 1,757 | 34 | 437 | 1,791 | 2,228 | 93 | 2000 | 12/19/2007 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Ridgeland |
MS | 1,479 | 5,965 | 85 | 1,479 | 6,050 | 7,529 | 297 | 1997/00 | 1/17/2008 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Jackson-5111 |
MS | 1,337 | 5,377 | 61 | 1,337 | 5,438 | 6,775 | 267 | 2003 | 1/17/2008 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Cincinnati-Robertson |
OH | 852 | 3,409 | 75 | 852 | 3,484 | 4,336 | 90 | 2003/04 | 12/31/2008 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Richmond-Bridge Rd |
VA | 1,047 | 5,981 | 0 | 1,047 | 5,981 | 7,028 | 0 | 2009 | 10/1/2009 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
Construction in progress |
0 | 0 | 9,846 | 0 | 9,846 | 9,846 | 0 | 2009 | ||||||||||||||||||||||||||||||||||||||||
Corporate Office |
NY | 0 | 68 | 11,167 | 1,616 | 9,619 | 11,235 | 7,819 | 2000 | 5/1/2000 | 5 to 40 years | |||||||||||||||||||||||||||||||||||||
$ | 225,290 | $ | 875,528 | $ | 286,765 | $ | 237,684 | $ | 1,149,899 | $ | 1,387,583 | $ | 245,178 | |||||||||||||||||||||||||||||||||||
(1) | These properties are encumbered through one mortgage loan with an outstanding balance of $41.5 million at December 31, 2009. | |
(2) | These properties are encumbered through one mortgage loan with an outstanding balance of $28.4 million at December 31, 2009. |
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December 31, 2009 | December 31, 2008 | December 31, 2007 | ||||||||||||||||||||||
Cost: |
||||||||||||||||||||||||
Balance at beginning of period |
$ | 1,366,615 | $ | 1,300,847 | $ | 1,115,255 | ||||||||||||||||||
Additions during period: |
||||||||||||||||||||||||
Acquisitions through foreclosure |
$ | | $ | | $ | | ||||||||||||||||||
Other acquisitions |
| 18,454 | 136,653 | |||||||||||||||||||||
Improvements, etc. |
22,135 | 47,507 | 51,363 | |||||||||||||||||||||
22,135 | 65,961 | 188,016 | ||||||||||||||||||||||
Deductions during period: |
||||||||||||||||||||||||
Cost of real estate sold |
(1,167 | ) | (1,167 | ) | (193 | ) | (193 | ) | (2,424 | ) | (2,424 | ) | ||||||||||||
Balance at close of period |
$ | 1,387,583 | $ | 1,366,615 | $ | 1,300,847 | ||||||||||||||||||
Accumulated Depreciation: |
||||||||||||||||||||||||
Balance at beginning of period |
$ | 212,301 | $ | 179,880 | $ | 151,138 | ||||||||||||||||||
Additions during period: |
||||||||||||||||||||||||
Depreciation expense |
$ | 33,096 | $ | 32,556 | $ | 29,523 | ||||||||||||||||||
33,096 | 32,556 | 29,523 | ||||||||||||||||||||||
Deductions during period: |
||||||||||||||||||||||||
Accumulated depreciation of
real estate sold |
(219 | ) | (219 | ) | (135 | ) | (135 | ) | (781 | ) | (781 | ) | ||||||||||||
Balance at close of period |
$ | 245,178 | $ | 212,301 | $ | 179,880 | ||||||||||||||||||
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