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
For the fiscal year ended December 31, 2015
Commission File Number: 1-13820
SOVRAN SELF STORAGE, INC.
(Exact name of Registrant as specified in its charter)
Maryland
(State of incorporation or organization)
16-1194043
(I.R.S. Employer Identification No.)
6467 Main Street
Williamsville, NY 14221
(Address of principal executive offices) (Zip code)
(716) 633-1850
(Registrant's telephone number including area code)
Title of Securities
Common Stock, $.01 Par Value
Exchanges on which Registered
New York Stock Exchange
Securities registered pursuant to Section 12(b) of the Act:
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 [ X ] No [ ]
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 [ ]
No [ X ]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark 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 [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ X ]
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 [ X ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]
As of June 30, 2015, 35,833,639 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 $3,042,907,782 (based on the closing price of the Common Stock on the New York Stock
Exchange on June 30, 2015).
As of February 12, 2016, 39,399,691 shares of Common Stock, $.01 par value per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s Proxy Statement for the 2016 Annual Meeting of Shareholders are incorporated herein by reference in Part III of this
Annual Report on Form 10-K to the extent stated herein. Such proxy statement will be filed with the Securities and Exchange Commission within
120 days of the registrant’s fiscal year ended December 31, 2015.
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TABLE OF CONTENTS
Part I
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
Part II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Item 6. Selected Financial Data
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
Part IV
Item 15. Exhibits, Financial Statement Schedules
SIGNATURES
EX-12.1
EX-21.1
EX-23.1
EX-31.1
EX-31.2
EX-32.1
EX-101
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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
Company’s ability to evaluate, finance and integrate acquired businesses into the Company’s existing business and
operations; the Company’s ability to effectively compete in the industry in which it does business; the Company’s
existing indebtedness may mature in an unfavorable credit environment, preventing refinancing or forcing
refinancing of the indebtedness on terms that are not as favorable as the existing terms; interest rates may fluctuate,
impacting costs associated with the Company’s outstanding floating rate debt; the Company’s ability to comply with
debt covenants; any future ratings on the Company’s debt instruments; regional concentration of the Company’s
business may subject it to economic downturns in the states of Florida and Texas; the Company’s reliance on its call
center; the Company’s cash flow may be insufficient to meet required payments of operating expenses, 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 its 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, lease, and/or 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 December 31, 2015, we
had an ownership interest in and/or managed 542 self-storage properties in 25 states under the name Uncle Bob's
Self Storage ®. Among our 542 self-storage properties are 39 properties that we manage for an unconsolidated joint
venture (Sovran HHF Storage Holdings LLC) of which we are a 20% owner, 30 properties that we manage for an
unconsolidated joint venture (Sovran HHF Storage Holdings II LLC) of which we are a 15% owner, 21 properties
that we manage and have no ownership interest. We believe we are the fifth largest operator of self-storage
properties in the United States based on square feet owned and managed. Our Properties conduct business under the
user-friendly name Uncle Bob's Self Storage®.
At December 31, 2015, we own an indirect interest in 521 of the Properties through a limited partnership
(the "Partnership"). Included in the 521 properties are the 69 facilities in our unconsolidated joint ventures. In total,
we own a 99.5% economic interest in the Partnership and unaffiliated third parties own collectively a 0.5% limited
partnership interest at December 31, 2015. 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 seller’s 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 website is
www.unclebobs.com.
We seek to enhance shareholder value through internal growth and acquisition of additional storage
properties. Internal growth is achieved through aggressive property management: optimizing rental rates, increasing
occupancy levels, controlling costs, maximizing collections, and strategically expanding and enhancing 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
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susceptible to realization of increased economies of scale and improved 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 owned and/or managed by the Company, are usually
fenced and well lighted with automated access systems, surveillance cameras, and have a full-time manager. Our
customers rent space on a month-to-month basis and typically have access to their storage space up to 15 hours a
day and in certain circumstances are provided with 24-hour access. Individual storage spaces are secured by the
customer's lock, and the customer has sole control of access to the space.
According to the 2016 Self-Storage Almanac, of the approximately 51,000 facilities in the United States
(including both core and non-core storage businesses), approximately 14% are managed by the ten largest operators.
The remainder of the industry is characterized by numerous small, local operators. The scarcity of capital available
to small operators for acquisitions and expansions, internet marketing, and call centers, 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 to grow either through acquisitions or third party management platforms.
Property Management
We have 30 years of experience managing self storage facilities and the combined experience of our key
personnel makes us one of the leaders in the industry. All of our stores operate under the user-friendly name of
Uncle Bob’s Self Storage®, and we employ the following strategies with respect to our property management:
Our People:
We recognize the importance of quality people to the success of an organization. Accordingly, we hire and
train to ensure that all associates can reach their full potential. Each strives to conduct themselves in accordance
with our core values: Teamwork, Respect, Accountability, Integrity, and Innovation. In turn, we support them with
state of the art training tools including an online learning management system, a company intranet and a network of
certified training personnel. Every store team also has frequent, and sometimes daily, interaction with an Area
Manager, a Regional Vice President, an Accounting Representative, and other support personnel. As such, our store
associates are held to high standards for customer service, store appearance, financial performance, and overall
operations.
Training & Development:
Our employees benefit from a wide array of training and development opportunities. New store employees
undergo a comprehensive, proprietary training program designed to drive sales and operational results while
ensuring the delivery of quality customer service. To supplement their initial training, employees enjoy continuing
edification, coaching, and performance feedback throughout their tenure.
All learning and development activities are facilitated through our online training and development portal.
This portal delivers and tracks hundreds of on-demand computer based training and compliance courses; it also
administers tests, surveys, and the employee appraisal process. Sovran’s training and development program
encompasses the tools and support we deem essential to the success of our employees and business.
Marketing and Advertising:
We believe the avenues for attracting and capturing new customers have changed dramatically over the
years. As such, we have implemented the following strategies to market our properties and increase profitability:
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We employ a Customer Care Center (call center) that services an average of 35,000 rental inquiries per
month. Our Sales Representatives answer incoming sales calls for all of our stores, 361 days a year, 24
hours a day. The team undertakes continuous training and coaching in effective storage sales techniques,
which we believe results in higher conversions of inquiries to rentals.
The digital age has changed consumer behavior - the way people shop, their expectations, and the way we
communicate with them. Our aggressive internet marketing and website provide customers with real-
time pricing, online reservations, online payments, and support for mobile devices. We involve internal
and external expertise to manage our internet presence and leverage a mix of mobile, desktop, and social
media to attract and engage customers.
Since the need for storage is largely based on timing, the ultimate goal is to create as much positive brand
recognition as possible. When the time comes for a customer to select a storage company, we want the
Uncle Bob’s brand to be on the top of their mind. We employ a variety of different strategies to create
brand awareness; this includes our Uncle Bob’s rental trucks, branded merchandise such as moving and
packing supplies, and extensive regional marketing in the communities in which we operate. We strive to
gain the most exposure as possible for the longest period of time.
Dri-guard humidity-controlled spaces are a premium storage feature intended to protect metal,
electronics, furniture, fabrics and paper from moisture. We became the first self-storage operator to
utilize this humidity protection technology and we believe it helps to differentiate us from other
operators.
We also have a fleet of rental trucks that serve as an added incentive to choose our storage facilities. The
truck rental charge is waived for new move-in customers and we believe it provides a valuable service
and added incentive to choose us. Further, the prominent display of our logo turns each truck into a
moving billboard.
Ancillary Income:
We know that our 290,000 customers require more than just a storage space. Knowing this, we offer a
wide range of other products and services that fulfill their needs while providing us with ancillary income. Whereas
our Uncle Bob’s trucks are available with no rental charge for new move-in customers, they are available for rent to
non-customers and existing customers. We also rent moving dollies and blankets, and we carry a wide assortment
of moving and packing supplies including boxes, tape, locks, and other essential items. For those customers who do
not carry storage insurance, we make available renters insurance through a third party carrier, on which we earn an
administrative fee. We also receive incidental income from billboards and cell towers.
Information Systems:
Each of our primary business functions is linked to our customized computer applications, many
of which are proprietary. These systems provide for consistent, timely and accurate flow of information throughout
our critical platforms:
Our proprietary operating software (“ubOS”) is installed at all locations and performs the functions
necessary for field personnel to efficiently and effectively run a property. This includes customer account
management, automatic imposition of late fees, move-in and move-out analysis, generation of essential
legal notices, and marketing reports to aid in regional marketing efforts. Financial reports are automatically
transmitted to our Corporate Offices overnight to allow for strict accounting oversight.
ubOS is linked with each of our primary sales channels (customer care center, internet, store) allowing for
real-time access
inventory, pricing, promotions, and other pertinent store
information. This robust flow of information facilitates our commitment to capturing prospective
customers from all channels.
ubOS provides our revenue management team with raw data on historical pricing, move-in and move-out
activity, specials and occupancies, etc. This data is utilized in the various algorithms that form the
foundation of our revenue management program. Changes to pricing and specials are “pushed out” to all
sales channels instantaneously.
ubOS generates financial reports for each property that provide our accounting and audit departments with
the necessary oversight of transactions; this allows us to maintain proper control of receipts.
type and
to space
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Revenue Management:
Our proprietary revenue management system is constantly evolving through the efforts of our revenue
management team comprised of a group of analysts. We have the ability to change pricing instantaneously for any
one unit type, at any single location, based on the occupancy, competition, and forecasted changes in demand. By
analyzing current customer rent tenures, we can implement rental rate increases at optimal times to increase
revenues. Advanced pricing analytics enables us to reduce the amount of concessions, attracting a more stable
customer base and discouraging short-term price shoppers. This system continues to drive revenues throughout our
portfolio.
Property Maintenance:
We take great pride in the appearance and structural integrity of our Properties. All of our Properties go
through a thorough annual inspection performed by experienced Project Managers. Those inspections provide the
basis for short and long term planned projects that are all performed under a standardized set of
specifications. Routine maintenance such as landscaping, pest control, and snowplowing is contracted to local
providers who have a clear understanding of our standards. Further, our software tracks repairs, monitors contractor
performance and measures the useful life of assets. 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. In addition, we continually look to green alternatives and implement
energy saving alternatives as new technology becomes available. This includes the installation of solar panels, LED
lighting, energy efficient air conditioning units, and cool roofs which are all environmentally friendly and have the
potential to reduce energy consumption (thereby reducing costs) in the buildings in which they are installed.
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. We have elected to treat one of our subsidiaries as a taxable
REIT subsidiary. In general, our taxable REIT subsidiary may perform additional services for customers and
generally may engage in certain real estate or non-real estate related business. Our taxable REIT subsidiary is
subject to corporate federal and state income taxes. See Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations - REIT Qualification and Distribution Requirements."
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Competition
The primary factors upon which competition in the self-storage industry is based are location, rental rates,
suitability of the property's design to prospective 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 in a manner in which we can increase market share while
not adversely affecting any of our existing locations in that market. However, 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 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.
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 2015, we sold three non-strategic storage facilities purchased during 2014 and 2015 in Missouri and
South Carolina for net proceeds of approximately $4.6 million, resulting in a loss of approximately $0.5 million.
During 2014, we sold two non-strategic storage facilities in Texas for net proceeds of approximately $11.0 million
resulting in a gain of approximately $5.2 million. During 2013, we sold four non-strategic storage facilities in
Florida, Ohio, and Virginia for net proceeds of approximately $11.7 million resulting in a gain of approximately
$2.4 million.
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 the minimum requirements.
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Financing 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. In addition to our Board of Directors’ debt limits, our most restrictive debt
covenants limit our leverage. However, we believe cash flow from operations, access to the capital markets and
access to our credit facility, as described below, are adequate to execute our current business plan and remain in
compliance with our debt covenants.
We have a $300 million revolving line of credit bearing interest at a variable rate equal to LIBOR plus a
margin based on the Company’s credit rating (at December 31, 2015 the margin was 1.30%). At December 31,
2015, there was $221 million available on the unsecured line of credit without considering the additional availability
under the credit facility expansion feature. The revolving line of credit has a maturity date of December 2019. In
January 2016, the Company exercised the expansion feature of its revolving line of credit and increased the credit
limit from $300 million to $500 million.
On March 3, 2015, the Company completed the public offering of 1,380,000 shares of its common stock at
$90.40 per share. Net proceeds to the Company after deducting underwriting discounts and commissions and
offering expenses were approximately $119.5 million. The Company used the net proceeds from the offering to
repay a portion of the indebtedness outstanding on the Company’s unsecured line of credit.
On January 20, 2016, the Company agreed to issue and sell 2,300,000 shares of the Company’s common
stock, par value $.01 per share, plus up to an additional 345,000 shares of common stock pursuant to the
underwriters’ option, at a price to the public of $105.75 per share. The underwriters’ exercised their option in full.
The offering of 2,645,000 shares of the Company’s common stock closed on January 25, 2016, resulting in net
proceeds to the Company of approximately $269.7 million.
During 2015, the Company also issued 949,911 shares of common stock under the Company’s continuous
equity offering program (“Equity Program”) at a weighted average issue price of $96.80 per share, generating net
proceeds of $90.6 million. During 2014, we issued 924,403 shares under the Equity Program and 359,102 shares
under our previous Equity Program for net proceeds of approximately $99.2 million. During 2013, we issued
1,667,819 shares under our previous Equity Program for net proceeds of approximately $107.8 million. As of
December 31, 2015, the Company has $59.3 million availability for issuance of shares under the current Equity
Program.
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 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, "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" and Note 7 to the
Consolidated Financial Statements filed herewith.
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Employees
We currently employ a total of 1,429 employees, including 542 property managers, 33 area managers, and
645 associate managers and part-time employees. At our headquarters, in addition to our six senior executive
officers, we employ 203 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 SEC's 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.unclebobs.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 Committee, Audit Committee, and Compensation Committee
are available free of charge on our website at http://www.unclebobs.com.
Also, copies of our annual report and Charters of our Governance Committee, 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 hundreds of 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. 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 our standards may prove to be 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
bears 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 term notes and 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.
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 distressed conditions and seek replacement financing on
substantially more expensive terms.
Reduction in or Loss of Credit Rating. Certain of our debt instruments require us to maintain an investment
grade rating from at least one and in some cases two debt ratings agencies. Should we fail to attain an investment
grade rating from the agencies, the interest rate on our line of credit would increase by 0.30%, the interest rate on
$325 million of our bank term notes would increase by 0.40%, and the interest rates on our $150 million term note
due 2016, our $100 million term note due 2021, and our $175 million term note due 2024 would each increase by
1.750%.
10
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;
11
• Changes in real estate tax rates and other operating expenses;
• 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 customer’s 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
owner’s 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 (“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%.
12
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
• 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, Cohen & Steers, Inc. and Invesco Advisers, 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 specific 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. Our bylaws
contain a provision exempting from the MGCL control share acquisition statute any and all acquisitions by any
person of shares of our stock. However, this provision may be amended or eliminated at any time. In addition,
under the Partnership’s 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 continue to operate in a manner that will permit us to qualify as a REIT under the Code. We
have not requested and do not plan to request a ruling from the Internal Revenue Service (“IRS”) that we qualify as
a REIT, and the statements in this Annual Report on Form 10-K are not binding on the IRS or any court.
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.
The fact that we hold substantially all of our assets through our Partnership and its subsidiaries and joint ventures
further complicates the application of the REIT requirements for us. Even a technical or inadvertent mistake could
jeopardize our REIT status and, given the highly complex nature of the rules governing REITs and the ongoing
importance of factual determinations, we cannot provide any assurance that we will continue to qualify as a REIT.
Furthermore, Congress and the IRS might make changes to the tax laws and regulations, and the courts and the IRS
might issue new rulings, that make it more difficult, or impossible, for us to remain qualified as a REIT.
If we were to fail to qualify as a REIT in any taxable year, and are unable to avail ourselves of certain
13
savings provisions set forth in the Code, 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 and possibly increased state and local taxes) 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 continue 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. If we fail to qualify as a REIT for
federal income tax purposes and are able to avail ourselves of one or more of the statutory savings provisions in
order to maintain our REIT status, we would nevertheless be required to pay penalty taxes of $50,000 or more for
each such failure.
We Will Pay Some Taxes Even if We Qualify as a REIT, Reducing Cash Available for Shareholders
Even if we qualify as a REIT for federal income tax purposes, we are required to pay some federal, state
and local taxes on our income and property. For example, we will be subject to income tax to the extent we
distribute less than 100% of our REIT taxable income (including capital gains). Additionally, we will be subject to a
4% nondeductible excise tax on the amount, if any, by which dividends paid by us in any calendar year are less than
the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income
from prior years. Moreover, if we have net income from “prohibited transactions,” that income will be subject to a
100% tax. In general, prohibited transactions are sales or other dispositions of property held primarily for sale to
customers in the ordinary course of business. The determination as to whether a particular sale is a prohibited
transaction depends on the facts and circumstances related to that sale. While we will undertake sales of assets if
those assets become inconsistent with our long-term strategic or return objectives, we do not believe that those sales
should be considered prohibited transactions, but there can be no assurance that the IRS would not contend
otherwise. The need to avoid prohibited transactions could cause us to forego or defer sales of properties that might
otherwise be in our best interest to sell.
One of our subsidiaries has elected to be treated as a “taxable REIT subsidiary” of the Company for federal
income tax purposes. A taxable REIT subsidiary is taxed 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 subsidiary 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 we are 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.
Complying with REIT Requirements May Limit Our Ability to Hedge Effectively and May Cause Us to Incur
Tax Liabilities
The REIT provisions of the Code may limit our ability to hedge our assets and operations. Under these
provisions, any income that we generate from transactions intended to hedge our interest rate risk will be excluded
from gross income for purposes of the REIT 75% and 95% gross income tests if the instrument hedges interest rate
risk on liabilities used to carry or acquire real estate assets or manages the risk of certain currency fluctuations, and
such instrument is properly identified under applicable Treasury Regulations. Income from hedging transactions that
do not meet these requirements will generally constitute non-qualifying income for purposes of both the REIT 75%
and 95% gross income tests. As a result of these rules, we may have to limit our use of hedging techniques that
might otherwise be advantageous or implement those hedges through a taxable REIT subsidiary. This could increase
the cost of our hedging activities because our taxable REIT subsidiary would be subject to tax on gains or expose us
to greater risks associated with changes in interest rates than we would otherwise want to bear. In addition, losses in
14
our taxable REIT subsidiary will generally not provide any tax benefit, except for being carried back or forward
against past or future taxable income in the taxable REIT subsidiary.
Complying with the REIT Requirements May Cause Us to Forgo and/or Liquidate Otherwise Attractive
Investments
To qualify as a REIT, we must continually satisfy tests concerning, among other things, the sources of our
income, the nature and diversification of our assets, the amounts that we distribute to our shareholders and the
ownership of our shares. To meet these tests, we may be required to take or forgo taking actions that we would
otherwise consider advantageous. For instance, in order to satisfy the gross income or asset tests applicable to REITs
under the Code, we may be required to forgo investments that we otherwise would make. Furthermore, we may be
required to liquidate from our portfolio otherwise attractive investments. In addition, we may be required to make
distributions to shareholders at disadvantageous times or when we do not have funds readily available for
distribution. These actions could reduce our income and amounts available for distribution to our shareholders.
Thus, compliance with the REIT requirements may hinder our investment performance.
If the Partnership Fails to Qualify as a Partnership for Federal Income Tax Purposes, We Could Fail to
Qualify as a REIT and Suffer Other Adverse Consequences
We believe that our Partnership is organized and operated in a manner so as to be treated as a partnership
and not an association or a publicly traded partnership taxable as a corporation, for federal income tax purposes. As
a partnership, our Partnership is not subject to federal income tax on its income. Instead, each of the partners is
allocated its share of our Partnership’s income. No assurance can be provided, however, that the IRS will not
challenge our Partnership’s status as a partnership for federal income tax purposes, or that a court would not sustain
such a challenge. If the IRS were successful in treating our Partnership as an association or publicly traded
partnership taxable as a corporation for federal income tax purposes, we would fail to meet the gross income tests
and certain of the asset tests applicable to REITs and, accordingly, would cease to qualify as a REIT. Also, the
failure of the Partnership to qualify as a partnership would cause it to become subject to federal corporate income
tax, which would reduce significantly the amount of its cash available for distribution to its partners, including us.
We May Change the Dividend Policy for Our Common Stock in the Future
In 2015, our Board of Directors authorized and we declared quarterly common stock dividends of $0.75 per
share in January and April, and $0.85 per share for July and October, for a total 2015 dividend per share annual rate
of $3.20 per share. In addition, our board of directors authorized and we declared a quarterly common stock
dividend of $0.85 per share in January 2016. We can provide no assurance that our board will not reduce or
eliminate entirely dividend distributions on our common stock in the future.
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 decisions 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.
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.
15
Regional Concentration of Our Business May Subject Us to Economic Downturns in the States of Texas and
Florida
As of December 31, 2015, 218 of our 542 self-storage facilities are located in the states of Texas and
Florida. For the year ended December 31, 2015, these facilities accounted for approximately 41% 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 deteriorate, we may experience a reduction in
existing and new business, which may have an adverse effect on our business, financial condition and results of
operations.
When We Acquire Properties in New Markets, We Will Be Subject to Increased Operational Risks
We may acquire self-storage properties in markets where we have little or no operational experience. For
example, we have acquired in 2016 four self-storage properties and are under contract to acquire four more self-
storage properties in California, a state where we have not previously operated. When we enter into new markets, we
will be subject to increased risks resulting from our lack of experience and infrastructure in these markets and may
need to incur additional costs, both expected and unexpected, in order to develop our operating capabilities in these
markets. These risks could materially and adversely affect us, including our growth prospects, 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 federal law generally is 20%, 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. 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. However, the lower rate of taxation to dividends
paid by regular “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
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 for domestic noncorporate taxpayers.
We are heavily dependent on computer systems, telecommunications and the Internet to process transactions,
summarize results and manage our business. Security breaches or a failure of such networks, systems or
technology could adversely impact our business and customer relationships.
We are heavily dependent upon automated information technology and Internet commerce, with many of
our new customers coming from the Internet or the telephone, and the nature of our business involves the receipt and
retention of personal information about them. We centrally manage significant components of our operations with
our computer systems, including our financial information, and we also rely extensively on third-party vendors to
retain data, process transactions and provide other systems services. These systems are subject to damage or
interruption from power outages, computer and telecommunications failures, computer worms, viruses and other
destructive or disruptive security breaches and catastrophic events.
As a result, our operations could be severely impacted by a natural disaster, terrorist attack or other
circumstance that resulted in a significant outage of our systems or those of our third party providers, despite our use
of back up and redundancy measures. Further, viruses and other related risks could negatively impact our
information technology processes. We could also be subject to a “cyber-attack” or other data security breach which
would penetrate our network security, resulting in misappropriation of our confidential information, including
customer personal information. System disruptions and shutdowns could also result in additional costs to repair or
replace such networks or information systems and possible legal liability, including government enforcement actions
and private litigation. In addition, our customers could lose confidence in our ability to protect their personal
16
information, which could cause them to move out of rented storage spaces. Such events could lead to lost future
sales and adversely affect our results of operations.
Item 1B.
Unresolved Staff Comments
None.
17
Item 2.
Properties
At December 31, 2015, we held ownership interests in, leased, and/or managed a total of 542 Properties
situated in twenty-five states. Among our 542 self-storage properties are 39 properties that we manage for an
unconsolidated joint venture of which we are a 20% owner, 30 properties that we manage for an unconsolidated
joint venture of which we are a 15% owner and 21 properties that we manage and in which have no ownership
interest.
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 and well lighted with automated
access systems and surveillance cameras. 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 18,000 to
181,000 net rentable square feet, with an average of approximately 68,000 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. Generally, customers
have access to their storage space up to 15 hours a day, and some 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 Bob's Self Storage ®.
The following table provides certain information regarding the Properties in which we have an ownership
interest, lease, and/or manage as of December 31, 2015:
Alabama ..........................................................
Arizona ...........................................................
Colorado .........................................................
Connecticut .....................................................
Florida .............................................................
Georgia ...........................................................
Illinois .............................................................
Kentucky .........................................................
Louisiana.........................................................
Maine ..............................................................
Maryland .........................................................
Massachusetts .................................................
Mississippi ......................................................
Missouri ..........................................................
New Hampshire ..............................................
New Jersey ......................................................
New York........................................................
North Carolina ................................................
Ohio ................................................................
Pennsylvania ...................................................
Rhode Island ...................................................
South Carolina ................................................
Tennessee ........................................................
Texas ...............................................................
Virginia ...........................................................
Total ..............................................................
Number of
Stores at
December 31,
2015
22
13
5
8
84
30
16
2
16
4
3
14
12
14
4
29
39
20
23
10
4
12
5
134
19
542
Square
Feet
1,631,694
893,428
330,432
639,857
5,595,489
2,126,533
1,185,712
142,914
959,819
219,967
138,659
756,770
902,561
877,330
260,386
2,090,408
2,350,811
1,192,426
1,568,420
661,879
206,121
787,655
348,504
9,804,230
1,280,034
36,952,039
Number of
Spaces
12,345
7,828
2,773
6,414
53,982
18,054
11,150
1,322
8,171
2,181
1,618
7,697
6,913
7,865
2,352
21,877
22,408
10,810
13,015
5,579
1,922
6,935
3,005
80,902
11,704
328,822
Percentage
of Store
Revenue
3.2%
1.8%
1.2%
2.6%
14.4%
5.3%
3.0%
0.4%
2.5%
0.8%
0.5%
2.4%
2.0%
2.4%
0.7%
7.8%
8.1%
2.9%
3.5%
1.6%
0.6%
1.5%
0.8%
26.9%
3.1%
100.0%
At December 31, 2015, the Properties had an average occupancy of 89.0% and an annualized rent per
occupied square foot of $13.08.
18
Item 3.
Legal Proceedings
On or about August 25, 2014, a putative class action was filed against the Company in the Superior Court
of New Jersey Law Division Burlington County. The action seeks to obtain declaratory, injunctive and monetary
relief for a class of consumers based upon alleged violations by the Company of the New Jersey Truth in Customer
Contract, Warranty and Notice Act, the New Jersey Consumer Fraud Act and the New Jersey Insurance Producer
Licensing Act. On October 17, 2014, the action was removed from the Superior Court of New Jersey Law Division
Burlington County to the United States District Court for the District of New Jersey. The Company brought a
motion to partially dismiss the complaint for failure to state a claim, and on July 16, 2015, the Company’s motion
was granted in part and denied in part. The Company intends to vigorously defend the action, and the possibility of
any adverse outcome cannot be determined at this time.
Item 4. Mine Safety Disclosures
Not Applicable
19
Part II
Item 5. Market for Registrant's 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 2014
1st ..............................................................................
2nd .............................................................................
3rd ..............................................................................
4th ..............................................................................
High
$76.45
79.29
79.93
89.57
Quarter 2015
1st ..............................................................................
2nd .............................................................................
3rd ..............................................................................
4th ..............................................................................
High
$97.76
94.84
99.32
110.60
Low
$62.66
72.88
73.59
74.10
Low
$87.40
85.95
85.69
93.33
As of February 12, 2016, there were approximately 713 holders of record of our Common Stock. These
figures do not include common shares held by brokers and other institutions on behalf of shareholders.
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 2015 represent 100% ordinary income.
History of Dividends Declared on Common Stock
January 2014 ..............................................................
April 2014 ..................................................................
July 2014 ...................................................................
October 2014 .............................................................
$0.680 per share
$0.680 per share
$0.680 per share
$0.680 per share
January 2015 ..............................................................
April 2015 ..................................................................
July 2015 ...................................................................
October 2015 .............................................................
$0.750 per share
$0.750 per share
$0.850 per share
$0.850 per share
20
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth certain information as of December 31, 2015, with respect to equity
compensation plans under which shares of the Company’s Common Stock may be issued.
Plan Category
Equity compensation plans approved by
shareholders:
2005 Award and Option Plan ..............................
2015 Award and Option Plan (2) ........................
2009 Outside Directors' Stock Option and
Award Plan ......................................................
Deferred Compensation Plan for Directors (1) ...
Equity compensation plans not approved by
shareholders: ....................................................
Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights (#)
Weighted average
exercise price of
outstanding
options, warrants
and rights ($)
Number of
securities
remaining available
for future issuance
(#)
77,206
42,538
18,500
18,973
N/A
$45.49
$ -
$79.58
N/A
N/A
-
494,193
72,880
25,165
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 Company’s
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.
(2)
Includes the maximum number of shares (42,538) that could be issued as part of 2015 performance-based
awards. The actual number of shares to be issued will be determined at the end of the three year
performance period in 2018. See note 10 of our consolidated financial statements.
21
CORPORATE PERFORMANCE GRAPH
The following chart and line-graph presentation compares (i) the Company’s shareholder return on an
indexed basis since December 31, 2010 with (ii) the S&P Stock Index and (iii) the National Association of Real
Estate Investment Trusts Equity Index.
350
320
290
260
230
200
170
140
110
80
Dec. 31, 2010
Dec. 31, 2011
Dec. 31, 2012
Dec. 31, 2013
Dec. 31, 2014
Dec. 31, 2015
S&P 500
NAREIT
SSS
CUMULATIVE TOTAL SHAREHOLDER RETURN
SOVRAN SELF STORAGE, INC.
DECEMBER 31, 2010 - DECEMBER 31, 2015
S&P
NAREIT
SSS
Dec. 31,
2010
Dec. 31,
2011
Dec. 31,
2012
Dec. 31,
2013
Dec. 31,
2014
Dec. 31,
2015
100.00
100.00
100.00
102.11
108.29
121.40
118.45
127.85
182.69
156.82
131.01
197.54
178.28
170.49
274.38
180.75
175.94
349.56
The foregoing item assumes $100.00 invested on December 31, 2010, with dividends reinvested.
22
Item 6.
Selected Financial Data
The following selected financial and operating information should be read in conjunction with
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the consolidated
financial statements and related notes included elsewhere in this Annual Report on Form 10-K:
(dollars in thousands, except per
share data)
At or For Year Ended December 31,
2015
2014
2013
2012
2011
Operating Data
Operating revenues ..................................... $366,602
Income from continuing operations ............ 113,077
Income from discontinued
operations (1) ...........................................
-
Net income .................................................. 113,077
Net income attributable to common
shareholders .............................................
Income from continuing operations
per common share attributable to
common shareholders– diluted ................
Net income per common share
attributable to common
shareholders – basic .................................
Net income per common share
attributable to common
shareholders – diluted .............................
Dividends declared per common
share (2) ...................................................
112,524
3.16
3.20
3.16
3.18
Balance Sheet Data
Investment in storage facilities at cost ........
$2,491,702
Total assets ................................................. 2,122,856
Total debt .................................................... 830,993
Total liabilities ............................................ 902,370
Other Data
Net cash provided by operating
activities ...................................................
$186,655
Net cash used in investing activities ........... (328,689)
Net cash provided by (used in)
financing activities ...................................
140,523
$ 326,080
89,057
$ 273,507
71,472
$ 234,082
48,121
$ 200,860
27,314
-
89,057
3,123
74,595
7,520
55,641
4,215
31,529
88,531
74,126
55,128
30,592
2.67
2.26
1.61
0.95
2.68
2.37
1.88
1.11
2.67
2.72
2.36
1.87
2.02
1.80
1.10
1.80
$2,177,983
1,854,800
801,127
865,309
$1,864,637
1,561,875
626,254
678,226
$1,742,354
1,484,310
684,251
742,910
$1,525,283
1,343,544
625,423
673,539
$146,068
(334,993)
$120,646
(114,345)
$98,762
(175,664)
$79,897
(189,879)
187,944
(4,032)
76,836
111,537
(1) In 2013 we sold four stores and in 2012 we sold seventeen stores whose results of operations and gain
(loss) on disposal are classified as discontinued operations for all previous years presented.
(2) In 2011 and 2012 we declared regular quarterly dividends of $0.45 in January, April, July and October. In
2013 we declared regular quarterly dividends of $0.48 in January and April, and $0.53 in July and October.
In 2014 we declared regular quarterly dividends of $0.68 in January, April, July and October. In 2015 we
declared regular quarterly dividends of $0.75 in January and April, and $0.85 in July and October.
23
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of the consolidated financial condition and results of operations
should be read in conjunction with the financial statements and notes thereto included elsewhere in this report.
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 Company’s ability to evaluate,
finance and integrate acquired businesses into the Company’s existing business and operations; the Company’s
ability to effectively compete in the industry in which it does business; the Company’s existing indebtedness may
mature in an unfavorable credit environment, preventing refinancing or forcing refinancing of the indebtedness on
terms that are not as favorable as the existing terms; interest rates may fluctuate, impacting costs associated with the
Company’s outstanding floating rate debt; the Company’s ability to comply with debt covenants; any future ratings
on the Company’s debt instruments; the regional concentration of the Company’s business may subject it to
economic downturns in the states of Florida and Texas; the Company’s reliance on its call center; the Company’s
cash flow may be insufficient to meet required payments of operating expenses, principal, interest and dividends;
and tax law changes that may change the taxability of future income.
Business and Overview
We believe we are the fifth largest operator of self-storage properties in the United States based on square
feet owned and managed. All of our stores are operated under the user-friendly name “Uncle Bob’s 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, established in 2000, answers sales inquires and makes
reservations for all of our Properties on a centralized basis. Further, our call center and
customer contact software was developed in-house and is 100% supported by our in-house
experts;
The Uncle Bob’s truck move-in program, under which, at present, 362 of our stores offer a
free Uncle Bob’s truck to assist our customers moving into their spaces, and also serve as a
moving billboard further supporting our branding efforts;
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;
Strategic and efficient Web and Mobile marketing that places Uncle Bob’s in front of
customers in search engines at the right time for conversion;
Regional marketing which creates effective brand awareness in the cities where we do
business.
-
-
-
-
-
Our customized computer applications link each of our primary sales channels (customer care center,
24
web, and store) allowing for real time access to space type and inventory, pricing, promotions, and
other pertinent store information. This also provides us with raw data on historical and current
pricing, move-in and move-out activity, specials and occupancies, etc. This data is then used within
the advanced pricing analytics programs employed by our revenue management team.
-
All of our store employees receive a high level of training. New store associates are assigned a
Certified Training Manager as a mentor during their initial training period. In addition, all
employees have access to our online training and development portal for initial training as well as
continuing education. Finally, we have a company intranet that acts as a communications portal for
company policy and procedures, online ordering, incentive rankings, etc.
B. Acquiring additional stores:
-
-
Our objective is to acquire new stores in markets in which we currently operate. This is a proven
strategy we have employed over the years as it facilitates our branding efforts, grows market share,
and allows us to achieve improved economies of scale through shared advertising, payroll, and other
services.
We also look to enter new markets that are in the top 50 MSA by acquiring established multi-
property portfolios. With this strategy we are then able to seek out additional acquisition or third
party management opportunities to continue to grow market share, branding and enhance economies
of scale.
C.
Expanding our management business:
-
We see our management business as a source of future acquisitions. We hold a minority interest in
two joint ventures which hold a total of 69 properties that we manage. In addition, we manage 21
self-storage facilities for which we have no ownership. We may enter into additional management
agreements and develop additional joint ventures in the future.
D.
Expanding and enhancing our existing stores:
-
Over the past 5 years we have undertaken a program of expanding and enhancing our Properties. In
2011, we added 118,000 square feet to existing Properties and converted 2,000 square feet to
premium storage for a total cost of approximately $7.2 million; in 2012, we added 372,000 square
feet to existing Properties and converted 35,000 square feet to premium storage for a total cost of
approximately $22.5 million; in 2013, we added 295,000 square feet to existing Properties and
converted 9,000 square feet to premium storage for a total cost of approximately $17.9 million; in
2014, we added 272,000 square feet to existing Properties and converted 9,000 square feet to
premium storage for a total cost of approximately $18.3 million, and in 2015, we added 256,000
square feet to existing Properties and converted 5,000 square feet to premium storage for a total cost
of approximately $14.1 million. From 2011 through 2015 we also installed solar panels on 23
buildings for a total cost of approximately $6.8 million. Our solar panel initiative has reduced
energy consumption and operating cost at those installed locations.
Supply and Demand / Operating Trends
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 recent economic conditions and the
credit market environment have resulted in a decrease in new supply on a national basis in the last five years. With
the recent loosening of the debt and equity markets, we have seen capitalization rates on quality acquisitions
(expected annual return on investment) decrease from approximately 5.75% to 5.00%.
25
Although our industry experienced softness in 2008 through 2011, our same store sales showed positive
increases save for 2009, when we showed a 3.1% decrease in same store revenue. That was the first time in recent
history that we recorded negative same store sales. We feel our recent performance further supports the notion that
the self-storage industry holds up well through recessions.
We believe our same-store move-ins in 2015 were lower than 2014 due to the fact that our stores were
higher occupied in 2015, resulting in less space to rent. We believe the reduction in same store move outs is a result
of longer staying customers.
Same store move ins ...............................................................
Same store move outs .............................................................
Difference ...............................................................................
2015
160,553
156,900
3,653
2014
165,430
Change
(4,877)
161,965 (5,065)
3,465
188
We were able to maintain relatively flat expenses at the store operating level from 2009 through 2012, but
did see above average increases in property taxes and insurance in 2013, and above average increases in property
taxes in 2014 and 2015. We do expect same store expense growth to see pressure from wages, health costs and
property tax increases in 2016. We believe the same store expense increases will be at manageable levels.
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.
Assigning purchase price to assets acquired: The purchase price of acquired storage facilities is assigned
primarily to land, land improvements, building, equipment, and in-place customer leases based on the fair values of
these assets as of the date of acquisition. We use significant unobservable inputs in our determination of the fair
values of these assets. The determination of these inputs involves judgments and estimates that can vary for each
individual property based on a number of factors specific to the properties and the functional, economic and other
factors affecting each property. To determine the fair value of land, we use prices per acre derived from observed
transactions involving comparable land in similar locations. To determine the fair value of buildings, equipment and
improvements, we use current replacement cost based on information derived from construction industry data by
geographic region as adjusted for the age, condition, and economic obsolescence associated with these assets. The
fair values of in-place customer leases is based on the rent lost due to the amount of time required to replace existing
customers which is based on our historical experience with turnover in our facilities.
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 the carrying value of our storage
facilities for impairment 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, significant damage sustained from accidents or natural disasters, or an expectation 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 group. If cash flow projections are inaccurate and in the
26
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. No assets had been
determined to be impaired under this policy in 2015.
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 do not have any current expectation of making
significant changes in 2016.
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 or have the power to direct the
activities most significant to the economic performance of the entity. Investments in joint ventures that we do not
control but over which we have significant influence 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.
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 condition and results of operations.
See Note 2 to the financial statements.
Recent Accounting Pronouncements
YEAR ENDED DECEMBER 31, 2015 COMPARED TO YEAR ENDED DECEMBER 31, 2014
We recorded rental revenues of $338.4 million for the year ended December 31, 2015, an increase of $36.4
million or 12.0% when compared to 2014 rental revenues of $302.0 million. Of the increase in rental revenue, $16.9
million resulted from a 5.9% increase in rental revenues at the 399 core properties considered in same store sales
(those properties included in the consolidated results of operations since January 1, 2014, excluding the properties
we sold in 2015 and 2014). The increase in same store rental revenues was a result of a 110 basis point increase in
average occupancy and a 4.3% increase in rental income per square foot. The remaining increase in rental revenue
of $19.5 million resulted from the revenues from the acquisition of 56 properties completed since January 1, 2014
(excluding the four properties purchased in 2015 that had been leased since November 2013 and are included in the
same store pool), slightly offset with the revenue decrease as a result of three self storage properties sold in 2015.
Other operating income, which includes merchandise sales, insurance administrative fees, truck rentals, management
fees and acquisition fees, increased by $4.1 million for the year ended December 31, 2015 compared to 2014
primarily as a result of increased administrative fees earned on customer insurance and an increase in management
fees.
Property operations and maintenance expenses increased $6.6 million or 8.7% in 2015 compared to 2014.
27
The 399 core properties considered in the same store pool experienced a $1.3 million or 1.9% increase in operating
expenses as a result of increases in payroll and maintenance costs. The same store pool benefited from reduced
utilities, insurance and yellow page advertising expense. In addition to the same store operating expense increase,
operating expenses increased $5.3 million from the acquisition of 56 properties completed since January 1, 2014
(excluding the four properties purchased in 2015 that had been leased since November 2013 and are included in the
same store pool). Real estate tax expense increased $4.5 million as a result of a 5.2% increase in property taxes on
the 399 same store pool and the inclusion of taxes on the properties acquired or leased in 2015 and 2014.
Our 2015 same store results consist of only those properties that were included in our consolidated results
since January 1, 2014, excluding the properties we sold in 2015 and 2014. The following table sets forth operating
data for our 399 same store properties. These results provide information relating to property operating changes
without the effects of acquisition.
Same Store Summary
(dollars in thousands)
Year ended December 31,
2015 2014
Percentage
Change
Same store rental income ........................................................
Same store other operating income .........................................
Total same store operating income......................................
$301,525
16,406
317,931
$ 284,613
14,791
299,404
5.9%
10.9%
6.2%
Payroll and benefits ................................................................
Real estate taxes......................................................................
Utilities ...................................................................................
Repairs and maintenance ........................................................
Office and other operating expenses .......................................
Insurance.................................................................................
Advertising and yellow pages .................................................
Internet marketing...................................................................
3.6%
5.2%
-4.1%
10.2%
-0.9%
-2.2%
1,441 -10.0%
0.2%
5,307
Total same store operating expenses ................................... 103,356 100,494 2.8%
7.9%
27,469
31,593
10,925
12,400
10,294
4,059
1,297
5,319
Same store net operating income ............................................
26,518
30,041
11,389
11,256
10,390
4,152
$ 214,575
$ 198,910
Net operating income increased $29.5 million or 13.5% as a result of a 7.9% increase in our same store net
operating income and the acquisitions completed since January 1, 2014.
Net operating income or "NOI" is a non-GAAP (generally accepted accounting principles) financial
measure that we define as total continuing revenues less continuing property operating expenses. NOI also can be
calculated by adding back to net income: interest expense, impairment and casualty losses, operating lease expense,
depreciation and amortization expense, acquisition related costs, general and administrative expense, and deducting
from net income: income from discontinued operations, interest income, gain on sale of real estate, and equity in
income of joint ventures. We believe that NOI is a meaningful measure of operating performance because we
utilize NOI in making decisions with respect to capital allocations, in determining current property values, and in
comparing period-to-period and market-to-market property operating results. NOI should be considered in addition
to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as
total revenues, operating income and net income. There are material limitations to using a measure such as NOI,
including the difficulty associated with comparing results among more than one company and the inability to
analyze certain significant items, including depreciation and interest expense, that directly affect our net
income. We compensate for these limitations by considering the economic effect of the excluded expense items
independently as well as in connection with our analysis of net income.
Reclassification
Internet advertising expense, which had been included in the general and administrative expense line in
prior year financial statements, has been reclassified to property operations and maintenance expense to conform
28
with the current year presentation. The Company believes the classification of internet advertising expenses as
property operations and maintenance expense is more consistent with industry trends. As a result of this reclass, for
the year ended December 31, 2014, the Company’s financial statements show an increase in property operations and
maintenance expense and a reduction of general and administrative expenses of $5,570 (dollars in thousands) as
compared to the amounts previously reported for that period.
The following table reconciles NOI generated by our self-storage facilities to our net income presented in
the 2015 and 2014 consolidated financial statements.
(dollars in thousands)
Net operating income
Year ended December 31,
2015 2014
Same store ................................................................................. $ 214,575
Other stores and management fee income ................................. 33,549
Total net operating income ............................................................... 248,124
General and administrative ............................................................... (38,659)
Acquisition related costs ................................................................... (2,991)
Operating leases of storage facilities ................................................
(683)
Depreciation and amortization .......................................................... (58,506)
Interest expense ................................................................................ (37,124)
5
Interest income .................................................................................
(Loss) gain on sale of real estate ....................................................... (494)
Equity in income of joint ventures .................................................... 3,405
Net income ........................................................................................ $ 113,077
$ 198,910
19,740
218,650
(35,222)
(7,359)
(7,987)
(51,749)
(34,578)
40
5,176
2,086
$ 89,057
General and administrative expenses increased $3.4 million or 9.8% from 2014 to 2015. The key drivers of
the increase were a $1.6 million increase in salaries and performance incentives, and a $1.0 million increase in
professional fees mainly stemming from an increase in legal fees related to the lawsuit in New Jersey. The
remaining $0.8 million increase is the result of various other administrative costs related to managing the increased
number of stores in our portfolio as compared to 2014.
Acquisition related costs were $3.0 million in 2015 as a result of the acquisition of 27 stores. Acquisition
related costs for 2014 were $7.4 million as a result of the acquisition of 33 stores in 2014, and included a $1.3
million loan defeasance cost paid by the Company.
The operating lease expense for storage facilities in the 2015 and 2014 periods relates to leases which
commenced in November 2013 with respect to four self storage facilities in New York (2) and Connecticut (2).
Such leases had annual lease payments of $6 million with a provision for 4% annual increases, and an exclusive
option to purchase the facilities for $120 million. We completed the purchase of these four facilities on February 2,
2015, which eliminated the lease payment at that time.
Depreciation and amortization expense increased to $58.5 million in 2015 from $51.8 million in 2014,
primarily as a result of depreciation on the properties acquired in 2014 and 2015.
Interest expense increased from $34.6 million in 2014 to $37.1 million in 2015. The increase was due to
the additional $175 million term note borrowings in April 2014 and additional line of credit borrowings in 2015
which were used to fund a portion of our acquisitions.
During 2015, we sold three non-strategic storage facilities purchased during 2014 and 2015 in Missouri and
South Carolina for net proceeds of approximately $4.6 million, resulting in a loss of approximately $0.5 million.
During 2014, we sold two non-strategic facilities in Texas for net proceeds of approximately $11.0 million resulting
in a gain on the sale of real estate of $5.2 million. Since the 2014 and 2015 sales occurred subsequent to the
Company’s adoption of ASU 2014-08, these sales were not classified as discontinued operations since they did not
29
meet the criteria for such classification under ASU 2014-08 guidance.
YEAR ENDED DECEMBER 31, 2014 COMPARED TO YEAR ENDED DECEMBER 31, 2013
We recorded rental revenues of $302.0 million for the year ended December 31, 2014, an increase of $48.7
million or 19.2% when compared to 2013 rental revenues of $253.4 million. Of the increase in rental revenue, $18.1
million resulted from a 7.3% increase in rental revenues at the 384 core properties considered in same store sales
(those properties included in the consolidated results of operations since January 1, 2013, excluding the properties
we sold in 2013 and 2014). The increase in same store rental revenues was a result of a 195 basis point increase in
average occupancy and a 4.4% increase in rental income per square foot. The remaining increase in rental revenue
of $30.6 million resulted from the revenues from the acquisition of 44 properties and the lease of four properties
completed in 2013 and 2014, slightly offset with the revenue decrease as a result of two self storage properties sold
in 2014. Other operating income, which includes merchandise sales, insurance administrative fees, truck rentals,
management fees and acquisition fees, increased by $3.9 million for the year ended December 31, 2014 compared to
2013 primarily as a result of increased administrative fees earned on customer insurance and an increase in
management and acquisition fees.
Property operations and maintenance expenses, including the reclassification of internet advertising from
general and administrative expenses to property operations and maintenance expense, increased $9.2 million or
13.9% in 2014 compared to 2013. The 384 core properties considered in the same store pool experienced a $2.4
million or 3.8% increase in operating expenses as a result of increases in payroll, utilities, credit card fees and
maintenance costs. The same store pool benefited from reduced insurance and yellow page advertising expense. In
addition to the same store operating expense increase, operating expenses increased $6.8 million from the
acquisition of 44 properties and the lease of four properties completed in 2013 and 2014. Real estate tax expense
increased $5.6 million as a result of a 6.3% increase in property taxes on the 384 same store pool and the inclusion
of taxes on the properties acquired or leased in 2014 and 2013.
Our 2014 same store results consist of only those properties that were included in our consolidated results
since January 1, 2013, excluding the properties we sold in 2014 and 2013. The following table sets forth operating
data for our 384 same store properties. These results provide information relating to property operating changes
without the effects of acquisition.
2014 Same Store Summary
(dollars in thousands)
Same store rental income ........................................................
Same store other operating income .........................................
Total same store operating income......................................
Year ended December 31,
2014 2013
$ 247,678
12,923
260,601
$ 265,788
14,426
280,214
Percentage
Change
7.3%
11.6%
7.5%
Payroll and benefits ................................................................
Real estate taxes......................................................................
Utilities ...................................................................................
Repairs and maintenance ........................................................
Office and other operating expenses .......................................
Insurance.................................................................................
Advertising and yellow pages .................................................
Internet marketing...................................................................
25,178
27,289
10,608
10,540
9,783
3,987
1,391
5,107
Total same store operating expenses ................................... 93,883
Same store net operating income ............................................
$ 186,331
Reclassification
24,505
25,671
10,155
9,448
9,555
4,303
2.7%
6.3%
4.5%
11.6%
2.4%
-7.3%
1,528 -9.0%
4,673 9.3%
89,838 4.5%
9.1%
$ 170,763
Internet advertising expense, which had been included in the general and administrative expense line in
30
prior year financial statements, has been reclassified to property operations and maintenance expense to conform
with the current year presentation. The Company believes the classification of internet advertising expenses as
property operations and maintenance expense is more consistent with industry trends. As a result of this reclass, for
the years ended December 31, 2014 and 2013, the Company’s financial statements show an increase in property
operations and maintenance expense and a reduction of general and administrative expenses of $5,570 for 2014 and
$4,803 for 2013 (dollars in thousands) as compared to the amounts previously reported for that period.
The following table reconciles NOI generated by our self-storage facilities to our net income presented in
the 2014 and 2013 consolidated financial statements after the reclassification of the internet advertising expense.
(dollars in thousands)
Net operating income
Year ended December 31,
2014 2013
Same store ................................................................................. $ 186,331
Other stores and management fee income ................................. 32,319
Total net operating income ............................................................... 218,650
General and administrative ............................................................... (35,222)
Acquisition related costs ................................................................... (7,359)
Operating leases of storage facilities ................................................ (7,987)
Depreciation and amortization .......................................................... (51,749)
Interest expense ................................................................................ (34,578)
Interest income .................................................................................
40
Gain on sale of real estate ................................................................. 5,176
Equity in income of joint ventures ....................................................
2,086
Income from discontinued operations............................................... -
Net income ........................................................................................ $ 89,057
$ 170,763
10,129
180,892
(30,136)
(3,129)
(1,331)
(45,233)
(32,000)
40
421
1,948
3,123
$ 74,595
Net operating income increased $37.8 million or 20.9% as a result of a 9.1% increase in our same store net
operating income and the acquisitions and property leases completed in 2013 and 2014.
General and administrative expenses increased $5.1 million or 16.9% from 2013 to 2014. The key driver
of the increase was a $3.6 million increase in salaries and performance incentives. The remaining $1.5 million
increase is the result of various other administrative costs related to managing the increased number of stores in
2014 as compared to 2013.
Acquisition related costs were $7.4 million in 2014 as a result of the acquisition of 33 stores. Acquisition
related costs for 2013 were $3.1 million as a result of the acquisition of 11 stores in 2013.
The Operating leases of storage facilities in 2013 and 2014 relate to lease agreements entered in November
2013 with respect to four self storage facilities in New York (2) and Connecticut (2). Such leases had annual lease
payments of $6 million with a provision for 4% annual increases, and an exclusive option to purchase the facilities
for $120 million. We exercised the purchase option and acquired these four stores in February 2015.
Depreciation and amortization expense increased to $51.7 million in 2014 from $45.2 million in 2013,
primarily as a result of depreciation on the properties acquired in 2013 and 2014.
Interest expense increased from $32.0 million in 2013 to $34.6 million in 2014. The increase was mainly
due to the new $175 million 10 year term unsecured note entered in April 2014, offset by reduced rates on our bank
revolving credit facility and term notes. In addition, in September 2013 we replaced a maturing fixed rate term note
with a bank term loan with a lower interest rate.
31
During 2014 we sold two non-strategic facilities in Texas for net proceeds of approximately $11.0 million
resulting in a gain on the sale of real estate of $5.2 million. Since the two sales occurred subsequent to the
Company’s adoption of ASU 2014-08, these sales were not classified as discontinued operations since they did not
meet the criteria for such classification under ASU 2014-08 guidance.
In the 4th quarter of 2013, we sold four non-strategic facilities in Ohio, Florida (2), and Virginia for net
proceeds of approximately $11.7 million resulting in a gain of approximately $2.4 million. The 2013 operations of
these facilities are reported in income from discontinued operations for all periods presented since the sales occurred
prior to ASU 2014-08.
During 2013, we sold our equity interest and mortgage note in a formerly consolidated joint venture for
$4.4 million resulting in a gain on the sale of $0.4 million.
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 available to common shareholders computed in accordance with generally accepted accounting principles
(“GAAP”), excluding gains or losses on sales of properties, plus impairment of real estate assets, 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.
In October and November of 2011, NAREIT issued guidance for reporting FFO that reaffirmed NAREIT's
view that impairment write-downs of depreciable real estate should be excluded from the computation of FFO. This
view is based on the fact that impairment write-downs are akin to and effectively reflect the early recognition of
losses on prospective sales of depreciable property or represent adjustments of previously charged depreciation.
Since depreciation of real estate and gains/losses from sales are excluded from FFO, it is NAREIT's view that it is
consistent and appropriate for write-downs of depreciable real estate to also be excluded. Our calculation of FFO
excludes impairment write-downs of investments in storage facilities.
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.
32
Reconciliation of Net Income to Funds From Operations
(dollars in thousands)
Net income attributable to common
For Year Ended December 31,
2011
2014
2012
2013
2015
shareholders .........................................
$112,524
$88,531
$74,126
$55,128
$30,592
Net income attributable to
noncontrolling interests ........................
553
526
469
513
937
Depreciation of real estate and
amortization of intangible assets
exclusive of deferred financing fees.....
Depreciation of real estate included in
57,429
50,827
44,369
40,153
34,835
discontinued operations ........................
-
-
313
1,137
1,742
Depreciation and amortization from
unconsolidated joint ventures ...............
Casualty and impairment loss ..................
Loss (gain) on sale of real estate ..............
Funds from operations allocable to
noncontrolling interest in Operating
Partnership ...........................................
Funds from operations allocable to
noncontrolling interest in consolidated
joint ventures ........................................
Funds from operations available to
2,435
-
494
1,666
-
(5,176)
1,496
-
(2,852)
1,595
-
(5,185)
1,018
1,173
(1,511)
(848)
(806)
(742)
(881)
(812)
-
-
-
-
(567)
common shareholders ..........................
$172,587
$135,568
$117,179
$92,460
$67,407
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, 2015, the Company was in compliance with all
debt covenants. The most sensitive covenant is the leverage ratio covenant contained in certain of our term note
agreements. This covenant limits our total consolidated liabilities to 55% of our gross asset value. At December 31,
2015, our leverage ratio as defined in the agreements was approximately 34.4%. 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
and other items ("Adjusted EBITDA") as defined in the agreements. In the event that the Company violates its debt
covenants in the future, the amounts due under the agreements could be callable by the lenders and could adversely
affect our credit rating requiring us to pay higher interest and other debt-related costs. 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, 2015, the entire availability under our line of credit could be drawn without violating
our debt covenants.
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 the availability on our line of
credit will be sufficient to fund ongoing operations, capital improvements, dividends and debt service requirements.
Cash flows from operating activities were $186.2 million, $146.1 million and $120.6 million for the years
ended December 31, 2015, 2014, and 2013, respectively. The increase in operating cash flows from 2014 to 2015
and from 2013 to 2014 was primarily due to an increase in net income.
33
Cash used in investing activities was $328.7 million, $335.0 million, and $114.3 million for the years ended
December 31, 2015, 2014, and 2013 respectively. The decrease in cash used from 2014 to 2015 was a result of
lower investments in unconsolidated joint ventures in 2015 as compared to 2014. The increase in cash used from
2013 to 2014 was primarily due to $281.7 million spent in 2014 to purchase 33 storage facilities compared to the
$94.8 million spent in 2013 on the acquisition of 11 storage facilities. In addition, in 2014 we invested $28.6
million in an unconsolidated joint venture to fund our share of the acquisition of 14 stores.
Cash provided by financing activities was $141.0 million in 2015 compared to $187.9 million in 2014. The
decrease from 2014 to 2015 was a result of a $23.0 million increase in dividends paid and a reduction in debt from
2014 to 2015. Cash provided by financing activities was $187.9 million in 2014 compared to cash used in financing
activities of $4.0 million in 2013. In 2015 we used the $225.7 million net proceeds from the sale of common stock
and $30.0 million in net proceeds from draws on our line of credit to fund property acquisitions. In 2014 we used
the $112.7 million net proceeds from the sale of common stock and $175.0 million in term note proceeds to fund
property acquisitions. In 2013, we used the $119.5 million net proceeds from the sale of common stock to paydown
our line of credit and to fund a portion of the property acquisitions.
On December 10, 2014, the Company amended its existing unsecured credit agreement. As part of the
amended agreement, the Company increased its revolving credit limit from $175 million to $300 million. The
interest rate on the revolving credit facility bears interest at a variable rate equal to LIBOR plus a margin based on
the Company’s credit rating (at December 31, 2015 the margin is 1.30%), and requires a 0.20% facility fee. The
amended agreement also reduced the interest rate on the $325 million unsecured term note maturing June 4, 2020,
with the term note bearing interest at LIBOR plus a margin based on the Company’s credit rating (at December 31,
2015 the margin is 1.40%). The interest rate at December 31, 2015 on the Company's line of credit was
approximately 1.72% (1.46% at December 31, 2014). At December 31, 2015, there was $221 million available on
the unsecured line of credit. The revolving line of credit has a maturity date of December 10, 2019. The amended
agreement also provides for an increase in the revolving credit facility and the bank term notes at the Company’s
request to an aggregate amount up to $850 million. In January 2016, the Company exercised the expansion feature
and increased the revolving credit limit from $300 million to $500 million.
In connection with the execution of the 2014 amendment to our unsecured credit agreement, it was
determined that the borrowing capacity of nine of the lenders participating in the revolving line of credit exceeded
their borrowing capacities prior to the amendment. As a result, for these nine lenders the unamortized deferred
financing costs associated with the agreement prior to its amendment remain deferred and are being amortized to
interest expense over the term of the newly amended agreement. Fees and other costs paid to execute the amendment
relating to the revolving line of credit totaling $1.3 million were recorded as additional deferred financing costs and
are being amortized to interest expense over the term of the newly amended agreement.
In 2014 the Company paid $1.0 million in fees to lenders for their commitments under the unsecured term
note portion of the newly amended agreement. These lenders' commitments were determined to be a modification of
their unsecured term note commitments prior to the amendment. Such costs were recorded as additional deferred
financing costs and are being amortized to interest expense over the term of the newly amended agreement. In
addition, for the nine continuing lenders’ the previously unamortized deferred financing costs associated with the
unsecured term note commitments prior to the amendment remain deferred and are being amortized to interest
expense over the term of the newly amended agreement.
On April 8, 2014, the Company entered into a $175 million term note maturing April 2024 bearing interest
at a fixed rate of 4.533%. The interest rate on the term note increases to 6.283% if the Company is not rated by at
least one rating agency or if the Company’s credit rating is downgraded. The proceeds from this term note were used
to repay the $115 million outstanding on the Company’s line of credit at April 8, 2014, with the excess proceeds
used for acquisitions.
In 2011, the Company entered into a $100 million term note maturing August 5, 2021 bearing interest at a
fixed rate of 5.54%. The interest rate on the term note increases to 7.29% if the notes are not rated by at least one
34
rating agency, the credit rating on the notes is downgraded or if the Company’s credit rating is downgraded. The
proceeds from this term note were used to fund acquisitions and investments in unconsolidated joint ventures.
The Company also maintains a $150 million unsecured term note maturing April 13, 2016 bearing interest
at 6.38%. The interest rate on the $150 million unsecured term note increases to 8.13% if the notes are not rated by
at least one rating agency, the credit rating on the notes is downgraded or the Company’s credit rating is
downgraded. The Company is reviewing various options regarding funding this maturing note, including using
availability on its line of credit or issuing a new long-term unsecured note.
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, 2015, the Company was in compliance with its
debt covenants.
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, 2015 the entire availability on the line of
credit could be drawn without violating our debt covenants.
The Company’s fixed rate term notes contain a provision that allows for the noteholders to call the debt
upon a change of control of the Company at an amount that includes a make whole premium based on rates in effect
on the date of the change of control.
Our line of credit facility and term notes have an investment grade rating from Standard and Poor's and
Fitch Ratings (BBB), as well as Moody’s (Baa2).
In addition to the unsecured financing mentioned above, our consolidated financial statements also include
$2.0 million of mortgages payable at December 31, 2015, that are secured by a storage facility.
On May 12, 2014, the Company entered into a continuous equity offering program (“Equity Program”)
with Wells Fargo Securities, LLC (“Wells Fargo”), Jefferies LLC (“Jefferies”), SunTrust Robinson Humphrey, Inc.
(“SunTrust”), Piper Jaffray & Co. (“Piper”), HSBC Securities (USA) Inc. (“HSBC”), and BB&T Capital Markets, a
division of BB&T Securities, LLC (“BB&T”), pursuant to which the Company may sell from time to time up to
$225 million in aggregate offering price of shares of the Company’s common stock. Actual sales under the Equity
Program will depend on a variety of factors and conditions, including, but not limited to, market conditions, the
trading price of the Company’s common stock, and determinations of the appropriate sources of funding for the
Company. The Company expects to continue to offer, sell, and issue shares of common stock under the Equity
Program from time to time based on various factors and conditions, although the Company is under no obligation to
sell any shares under the Equity Program.
During 2015, the Company issued 949,911 shares of common stock under the Equity Program at a
weighted average issue price of $96.80 per share, generating net proceeds of $90.6 million. During 2014, we issued
924,403 shares under the Equity Program and 359,102 shares under our previous Equity Program for net proceeds of
approximately $99.2 million. During 2013, we issued 1667,819 shares under our previous Equity Program for net
proceeds of approximately $107.8 million. As of December 31, 2015, the Company has $59.3 million availability
for issuance of shares under the current Equity Program.
On March 3, 2015, the Company completed the public offering of 1,380,000 shares of its common stock at
$90.40 per share. Net proceeds to the Company after deducting underwriting discounts and commissions and
offering expenses were approximately $119.5 million. The Company used the net proceeds from the offering to
repay a portion of the indebtedness outstanding on the Company’s unsecured line of credit.
On January 20, 2016, the Company agreed to issue and sell 2,300,000 shares of the Company’s common
stock, par value $.01 per share, plus up to an additional 345,000 shares of common stock pursuant to the
35
underwriters’ option, at a price to the public of $105.75 per share. The underwriters’ exercised their option in full.
The offering of 2,645,000 shares of the Company’s common stock closed on January 25, 2016, resulting in net
proceeds to the Company of approximately $269.7 million.
We implemented a Dividend Reinvestment Plan in March 2013. We issued 151,246 and 171,854 shares
under the plan in 2015 and 2014, respectively.
During 2015 and 2014, 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, 2015, 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, issuance of common and preferred stock, the issuance of unsecured term
notes, sale of properties, and private placement solicitation of joint venture equity. Should the capital markets
deteriorate, we may have to curtail acquisitions, our expansion and enhancement program, and share repurchases.
CONTRACTUAL OBLIGATIONS
The following table summarizes our future contractual obligations:
Payments due by period (in thousands)
Contractual obligations
Total
2016
2017-2018
2019-2020
2021 and thereafter
Line of credit ............
Term notes ...............
Mortgages payable ...
Interest payments .....
Interest rate swap
payments ................
Land lease ................
Expansion and
enhancement
contracts .................
Building leases .........
Self storage facility
acquisitions ...........
Total .........................
$79,000
750,000
1,993
130,857
-
$150,000
$142
23,315
15,343
749
4,612
53
-
-
$311
41,727
5,776
106
$79,000
325,000
351
36,595
4,955
110
15,368
7,259
15,368
963
-
1,944
-
1,970
-
$275,000
1,189
29,220
-
480
-
2,382
88,555
$1,089,124
88,555
$283,008
-
$49,864
-
$447,981
-
$308,271
Interest payments include actual interest on fixed rate debt and estimated interest for floating-rate debt
based on December 31, 2015 rates. Interest rate swap payments include estimated net settlements of swap liabilities
based on forecasted variable rates.
At December 31, 2015, the Company was under contract to acquire 12 self-storage facilities for cash
consideration of approximately $88.6 million (net of property deposits of $5.8 million). Seven of the properties
were acquired in January and February 2016 from unrelated parties for $46.4 million. The purchase of the
remaining facilities by the Company is subject to customary conditions to closing, and there is no assurance that
these facilities will be acquired.
36
ACQUISITION OF PROPERTIES
In 2015, we acquired 27 self storage facilities comprising 2.0 million square feet in Arizona (1),
Connecticut (2), Florida (6), Illinois (2), Massachusetts (1), New York (6), North Carolina (1), Pennsylvania (1),
South Carolina (6) and Texas (1) for a total purchase price of $281.2 million. Based on the trailing financial
information of the entities from which the properties were acquired, the weighted average capitalization rate was
5.3% on these purchases and ranged from 0% on recently constructed facilities to 6.4% on mature facilities. Four
facilities acquired in Connecticut and New York in 2015 had been leased by the Company since November 1, 2013
and the operating results of these four facilities have been included in the Company’s operations since that date. In
2014, we acquired 33 self storage facilities comprising 2.4 million square feet in Florida (4), Georgia (1), Illinois
(3), Louisiana (1), Maine (2), Missouri (7), New Jersey (6), New York (1), Texas (6), Tennessee (1), and Virginia
(1) for a total purchase price of $291.9 million. Based on the trailing financial information of the entities from
which the properties were acquired, the weighted average capitalization rate was 5.5% on these purchases and
ranged from 0% on recently constructed facilities to 7.4% on mature facilities. In 2013, we acquired 11 self storage
facilities comprising 0.6 million square feet in Colorado (1), Connecticut (1), Florida (1), Massachusetts (1), New
Jersey (2), New York (3), and Texas (2) for a total purchase price of $94.9 million. Based on the trailing financials
of the entities from which the properties were acquired, the weighted average capitalization rate was 4.8% on these
purchases and ranged from 2.3% to 6.5%. In addition to the properties acquired, in November 2013 the Company
entered into lease agreements with respect to four self storage facilities in New York (2) and Connecticut (2). Such
leases had annual lease payments of $6 million with a provision for 4% annual increases, and an exclusive option to
purchase the facilities for $120 million. We exercised our purchase option in November 2014 and completed the
acquisition of these four properties in February 2015.
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 into new markets by acquiring several facilities at
once in those new markets. We are actively pursuing acquisitions in 2016 and at December 31, 2015 we had 12
properties under contract to be purchased for $94.4 million. Seven of the properties were acquired in January and
February 2016.
In January and February of 2016 the Company entered contacts with unrelated parties to acquire 22 self-
storage properties. Thirteen of the properties located in New Hampshire (5), California (4), Texas (3) and
Massachusetts (1) were acquired on January 21, 2016. The purchase price was funded through draws on the
Company’s line of credit, which draws have been subsequently repaid through proceeds of the Company’s
underwritten 2016 public offering.
In 2015, we added 256,000 square feet to existing Properties and converted 5,000 square feet to premium
storage for a total cost of approximately $14.1 million. In 2015 we also installed solar panels on 5 buildings for a
total cost of approximately $2.1 million. Although we do not expect to construct any new facilities in 2016, we do
plan to complete approximately $40 million in expansions and enhancements to existing facilities of which $5.5
million was paid prior to December 31, 2015.
In 2015, the Company spent approximately $23.6 million for recurring capitalized expenditures including
roofing, paving, and office renovations. We expect to spend $19.4 million in 2016 on similar capital expenditures.
DISPOSITION OF PROPERTIES
During 2015, we sold three non-strategic storage facilities purchased during 2014 and 2015 in Missouri and
South Carolina for net proceeds of approximately $4.6 million, resulting in a loss of approximately $0.5 million.
During 2014, we sold two non-strategic storage facilities in Texas for net proceeds of approximately $11.0 million
resulting in a gain of approximately $5.2 million. During 2013, we sold four non-strategic storage facilities in
Florida, Ohio, and Virginia for net proceeds of approximately $11.7 million resulting in a gain of approximately
37
$2.4 million.
We may seek to sell additional Properties to third parties or joint venture partners in 2016.
OFF-BALANCE SHEET ARRANGEMENTS
Our off-balance sheet arrangements consist of our investment in three self storage joint ventures in which
we have an 85%, 20% and 15% ownership, as well as our investment in the entity that owns the building that houses
our corporate office in which we have a 49% ownership. We account for these real estate entities under the equity
method. The debt held by the unconsolidated real estate entity is secured by the real estate owned by these entities,
and is non-recourse to us. See Note 12 to our consolidated financial statements appearing elsewhere in this annual
report on Form 10-K.
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 we satisfy certain requirements, including distributing at least 90% of our REIT taxable income for a
taxable year. 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 they are paid not later than the date of the first regular dividend
of the following year.
As a REIT, we must derive at least 95% of our total gross income from income related to real property,
interest and dividends. In 2015, our percentage of revenue from such sources was approximately 97%, 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
The primary market risk to which we believe we are exposed is interest rate risk, which may result from
many factors, including government monetary and tax policies, domestic and international economic and political
considerations, and other factors that are beyond our control.
We have entered into interest rate swap agreements in order to mitigate the effects of fluctuations in interest
rates on our variable rate debt. 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 $325 million of our floating rate bank debt through the interest rate swap termination dates. Forward starting
interest rate swaps are also used by the Company to hedge the risk of changes in the interest-related cash outflows
associated with the potential issuance of long-term debt. In 2015 we entered into a forward starting swap with a
notional amount of $50 million to hedge the risk of changes in the interest-related cash outflows associated with the
potential issuance of long-term debt in 2016. See Note 8 to our consolidated financial statements appearing
elsewhere in this annual report on Form 10-K.
Through September 2018, $325 million of our $404 million of floating rate unsecured debt is on a fixed
rate basis after taking into account our interest rate swap agreements. Based on our outstanding unsecured floating
rate debt of $404 million at December 31, 2015, a 100 basis point increase in interest rates would have a $0.8
million effect on our interest expense. These amounts were determined by considering the impact of the
hypothetical interest rates on our borrowing cost and our interest rate hedge agreements in effect on December 31,
2015. These analyses do not consider the effects of the reduced level of overall economic activity that could exist in
such an environment. Further, in the event of a change of such magnitude, we would consider taking actions to
further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be
taken and their possible effects, the sensitivity analysis assumes no changes in our capital structure.
38
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 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 and college student activity 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. Management's Discussion and Analysis of Financial Condition and Results of
Operations" above.
39
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, 2015 and 2014, and the related consolidated statements of operations, comprehensive income,
shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2015. 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 Company’s 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, 2015 and 2014, and the consolidated
results of its operations and its cash flows for each of the three years in the period ended December 31, 2015, 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, Sovran Self Storage, Inc. changed its
method for reporting discontinued operations effective January 1, 2014.
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, 2015,
based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) and our report dated February 25, 2016 expressed an
unqualified opinion thereon.
/s/ Ernst & Young LLP
Buffalo, New York
February 25, 2016
40
SOVRAN SELF STORAGE, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data)
Assets
Investment in storage facilities:
Land ..............................................................................................................
Building, equipment, and construction in progress ......................................
Less: accumulated depreciation ....................................................................
Investment in storage facilities, net ...............................................................
Cash and cash equivalents .............................................................................
Accounts receivable .......................................................................................
Receivable from unconsolidated joint ventures .............................................
Investment in unconsolidated joint ventures..................................................
Prepaid expenses............................................................................................
Fair value of interest rate swap agreements ...................................................
Other assets ....................................................................................................
Total Assets .................................................................................................
Liabilities
Line of credit .................................................................................................
Term notes .....................................................................................................
Accounts payable and accrued liabilities .......................................................
Deferred revenue ...........................................................................................
Fair value of interest rate swap agreements ...................................................
Mortgages payable .........................................................................................
Total Liabilities............................................................................................
December 31,
2015
2014
$ 480,176
2,011,526
2,491,702
(465,195)
2,026,507
7,032
6,805
929
62,520
5,431
550
12,398
$ 2,122,172
$ 79,000
750,000
47,839
7,511
15,343
1,993
901,686
$ 397,642
1,780,341
2,177,983
(411,701)
1,766,282
8,543
5,758
583
57,803
6,533
-
9,298
$ 1,854,800
$ 49,000
750,000
43,551
7,290
13,341
2,127
865,309
Noncontrolling redeemable Operating Partnership Units at
redemption value .......................................................................................
18,171
13,622
Shareholders' Equity
Common stock $.01 par value, 100,000,000 shares authorized, 36,710,673
shares outstanding at December 31, 2015 (34,105,955 at
December 31, 2014) ...................................................................................
Additional paid-in capital ..............................................................................
Dividends in excess of net income ................................................................
Accumulated other comprehensive loss ........................................................
Total Shareholders' Equity ...........................................................................
Total Liabilities and Shareholders' Equity ...................................................
See notes to consolidated financial statements.
367
1,388,343
(171,980)
(14,415)
1,202,315
$ 2,122,172
341
1,156,225
(167,692)
(13,005)
975,869
$ 1,854,800
41
SOVRAN SELF STORAGE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
2015
2014
2013
Year Ended December 31,
Revenues
Rental income ........................................................................
Other operating income .........................................................
Total operating revenues.......................................................
Expenses
Property operations and maintenance ....................................
Real estate taxes.....................................................................
General and administrative ....................................................
Acquisition costs....................................................................
Operating leases of storage facilities .....................................
Depreciation and amortization ...............................................
Total operating expenses .....................................................
$ 338,435
28,167
366,602
$ 302,044
24,036
326,080
$ 253,384
20,123
273,507
81,915
36,563
38,659
2,991
683
58,506
219,317
75,333
32,097
35,222
7,359
7,987
51,749
209,747
66,119
26,496
30,136
3,129
1,331
45,233
172,444
Income from operations .........................................................
147,285
116,333
101,063
Other income (expenses)
Interest expense ......................................................................
Interest income .......................................................................
(Loss) gain on sale of storage facilities ..................................
Gain on sale of real estate .......................................................
Equity in income of joint ventures ..........................................
Income from continuing operations ........................................
Income from discontinued operations (including a
gain on disposal of $2,431 in 2013) ......................................
Net income .............................................................................
Net income attributable to noncontrolling interest ...............
Net income attributable to common shareholders ..................
Earnings per common share attributable to common
shareholders - basic
Continuing operations .............................................................
Discontinued operations .........................................................
Earnings per share - basic .....................................................
Earnings per common share attributable to common
shareholders - diluted
Continuing operations .............................................................
Discontinued operations .........................................................
Earnings per share - diluted ..................................................
See notes to consolidated financial statements.
42
(37,124)
5
(494)
-
3,405
(34,578)
40
5,176
-
2,086
(32,000)
40
-
421
1,948
113,077
89,057
71,472
-
113,077
(553)
$ 112,524
-
89,057
(526)
$ 88,531
3,123
74,595
(469)
$ 74,126
$ 3.18
-
$ 3.18
$ 3.16
-
$ 3.16
$ 2.68
-
$ 2.68
$ 2.67
-
$ 2.67
$ 2.27
0.10
$ 2.37
$ 2.26
0.10
$ 2.36
SOVRAN SELF STORAGE, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(dollars in thousands, except per share data)
2015
2014
2013
Year Ended December 31,
Net income ..............................................................................
Other comprehensive income:
Change in fair value of derivatives net of reclassification to
interest expense ...............................................................
Total comprehensive income ..................................................
Comprehensive income attributable to noncontrolling interest
Comprehensive income attributable to common shareholders
$ 113,077
$ 89,057
$ 74,595
(1,410)
111,667
(546)
$ 111,121
(6,603)
82,454
(487)
$ 81,967
8,840
83,435
(525)
$ 82,910
See notes to consolidated financial statements.
43
SOVRAN SELF STORAGE, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(dollars in thousands, except share data)
Common
Stock
Shares
Common
Stock
Additional
Paid-in
Capital
Dividends in
Excess of
Net Income
Accumulated
Other
Comprehensive
Income (loss)
Total
Shareholders’
Equity
30,446,620
Balance January1, 2013 ...................................................................
$ 304
$ 916,441
$ (172,773)
$ (15,242)
$728,730
Net proceeds from the issuance of common stock ............................
1,667,819
Net proceeds from the issuance of common stock
through Dividend Reinvestment Plan ............................................
68,957
Exercise of stock options .................................................................
160,515
189,080
Issuance of non-vested stock ............................................................
Earned portion of non-vested stock .................................................. -
Stock option expense ....................................................................... -
Deferred compensation outside directors ......................................... -
Carrying value less than redemption value on
redeemed noncontrolling interest ..................................................
-
Adjustment to redemption value of noncontrolling
redeemable Operating Partnership Units .......................................
-
Net income attributable to common shareholders ............................. -
Change in fair value of derivatives ................................................... -
Dividends.........................................................................................
-
32,532,991
Balance December 31, 2013 ............................................................
Net proceeds from the issuance of common stock ............................
1,283,505
Net proceeds from the issuance of common stock
through Dividend Reinvestment Plan ............................................
171,854
Exercise of stock options .................................................................
27,462
Issuance of non-vested stock ............................................................
90,143
Earned portion of non-vested stock .................................................. -
Stock option expense ....................................................................... -
Deferred compensation outside directors ......................................... -
Carrying value less than redemption value on
redeemed noncontrolling interest ..................................................
-
Adjustment to redemption value of noncontrolling
redeemable Operating Partnership Units .......................................
-
Net income attributable to common shareholders ............................. -
Change in fair value of derivatives ................................................... -
Dividends.........................................................................................
-
34,105,955
Balance December 31, 2014 ............................................................
Net proceeds from the issuance of common stock ............................
2,329,911
Net proceeds from the issuance of common stock
through Dividend Reinvestment Plan ............................................
151,246
Exercise of stock options .................................................................
30,900
Issuance of non-vested stock ............................................................
64,244
Earned portion of non-vested stock .................................................. -
Stock option expense ....................................................................... -
28,417
Deferred compensation outside directors .........................................
Carrying value less than redemption value on
redeemed noncontrolling interest ..................................................
-
Adjustment to redemption value of noncontrolling
redeemable Operating Partnership Units .......................................
-
Net income attributable to common shareholders ............................. -
Change in fair value of derivatives ................................................... -
Dividends.........................................................................................
-
36,710,673
Balance December 31, 2015 ............................................................
See notes to consolidated financial statements
17
1
1
2
-
-
-
-
107,810
4,677
7,016
(2)
2,876
301
118
(1)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
325
-
-
-
-
1,039,236
(524)
74,126
-
(63,279)
(162,450)
-
-
8,840
-
(6,402)
13
2
-
1
-
-
-
-
-
-
-
-
341
23
1
1
1
-
-
-
-
98,968
12,447
1,245
(1)
4,556
223
121
(570)
-
-
-
-
1,156,225
210,119
13,925
1,632
(1)
6,254
210
59
(80)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,738)
88,531
-
(90,035)
(167,692)
-
-
(6,603)
-
(13,005)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
107,827
4,678
7,017
-
2,876
301
118
(1)
(524)
74,126
8,840
(63,279)
870,709
98,981
12,449
1,245
-
4,556
223
121
(570)
(3,738)
88,531
(6,603)
(90,035)
975,869
210,142
13,926
1,633
-
6,254
210
59
(80)
-
-
-
-
$ 367
-
-
-
-
$ 1,388,343
(3,328)
112,524
-
(113,484)
$ (171,980)
-
-
(1,410)
-
$ (14,415)
(3,328)
112,524
(1,410)
(113,484)
$1,202,315
44
SOVRAN SELF STORAGE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
Operating Activities
Net income ..................................................................................................................
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization......................................................................................
Amortization of deferred financing fees .......................................................................
Loss (gain) on sale of storage facilities ........................................................................
Gain on disposal of discontinued operations ................................................................
Gain on sale of real estate .............................................................................................
Equity in (income) losses of joint ventures ...................................................................
Distributions from unconsolidated joint venture...........................................................
Non-vested stock earned ..............................................................................................
Stock option expense ....................................................................................................
Changes in assets and liabilities (excluding the effects of acquisitions):
Accounts receivable ....................................................................................................
Prepaid expenses .........................................................................................................
(Advances to) receipts from joint ventures ..................................................................
Accounts payable and other liabilities .........................................................................
Deferred revenue .........................................................................................................
Net cash provided by operating activities .....................................................................
Investing Activities
Acquisition of storage facilities ...................................................................................
Improvements, equipment additions, and construction in progress .............................
Net proceeds from the sale of storage facilities ...........................................................
Net proceeds from the disposal of discontinued operations .........................................
Net proceeds from the sale of real estate .....................................................................
Investment in unconsolidated joint ventures ................................................................
Return of capital from unconsolidated joint ventures ..................................................
Property deposits ........................................................................................................
Net cash used in investing activities .............................................................................
Financing Activities
Net proceeds from sale of common stock ....................................................................
Proceeds from line of credit ........................................................................................
Proceeds from term notes ............................................................................................
Repayment of line of credit .........................................................................................
Repayment of term notes .............................................................................................
Financing costs ............................................................................................................
Dividends paid - common stock ..................................................................................
Distributions to noncontrolling interest holders ...........................................................
Redemption of operating partnership units ..................................................................
Mortgage principal payments ......................................................................................
Net cash provided by (used in) financing activities ......................................................
Net (decrease) increase in cash .....................................................................................
Cash at beginning of period ..........................................................................................
Cash at end of period ...................................................................................................
Year Ended December 31,
2013
2014
2015
$ 113,077
$ 89,057
$ 74,595
58,506
1,184
494
-
-
(3,405)
4,821
6,313
210
(1,038)
1,144
(346)
5,847
(597)
186,210
(280,010)
(41,739)
4,646
-
-
(6,151)
-
(5,435)
(328,689)
225,701
330,000
-
(300,000)
-
-
(113,039)
(555)
(1,005)
(134)
140,968
(1,511)
8,543
$ 7,032
51,749
942
(5,176)
-
-
(2,086)
3,123
4,677
223
(606)
(457)
590
5,187
(1,155)
146,068
(281,731)
(35,097)
11,191
-
-
(28,650)
-
(706)
(334,993)
112,676
202,000
175,000
(202,000)
-
(3,001)
(90,035)
(541)
(6,028)
(127)
187,944
(981)
9,524
$ 8,543
45,546
834
-
(2,431)
(421)
(1,948)
2,630
2,994
301
(1,659)
(810)
(27)
1,079
(37)
120,646
(94,759)
(33,889)
-
11,741
4,866
(4,237)
7,360
(5,427)
(114,345)
119,522
152,000
325,000
(208,000)
(325,000)
(1,554)
(63,279)
(402)
(322)
(1,997)
(4,032)
2,269
7,255
$ 9,524
Supplemental cash flow information
Cash paid for interest, net of interest capitalized ..........................................................
Cash paid for income taxes, net of refunds ...................................................................
$ 35,926
$ 1,084
$ 31,764
$ 665
$ 32,909
$ 778
See notes to consolidated financial statements.
45
SOVRAN SELF STORAGE, INC.
DECEMBER 31, 2015
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, 2015, we had an ownership interest in, and/or managed
542 self-storage properties in 25 states under the name Uncle Bob's Self Storage ®. Among our 542 self-storage
properties are 39 properties that we manage for an unconsolidated joint venture (Sovran HHF Storage Holdings
LLC) of which we are a 20% owner, 30 properties that we manage for an unconsolidated joint venture (Sovran HHF
Storage Holdings II LLC) of which we are a 15% owner, and 21 properties that we manage and have no ownership
interest. Approximately 41% of the Company's revenue is derived from stores in the states of Texas and Florida. In
addition, approximately 11% of the Company’s revenue is derived from the Houston, Texas market.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: All of the Company's assets are owned by, and all its operations are conducted
through, Sovran Acquisition Limited Partnership (the "Operating Partnership"). Sovran Holdings, Inc., a wholly-
owned subsidiary of the Company (the "Subsidiary"), is the sole general partner 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 99.5% ownership interest
therein as of December 31, 2015. The remaining ownership interests in the Operating Partnership (the "Units") are
held by certain former owners of assets acquired by the Operating Partnership.
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, Uncle Bob’s Management, LLC (the Company’s taxable REIT subsidiary),
Locke Sovran I, LLC (a wholly-owned subsidiary), and Locke Sovran II, LLC (a wholly-owned subsidiary). 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 accounted for using the equity method.
On June 30, 2011, the Company entered into a newly formed joint venture agreement with an owner of a
self-storage facility in New Jersey (West Deptford JV LLC). As part of the agreement the Company contributed
$4.2 million to the joint venture for a $2.8 million mortgage note at 8%, a 20% common interest, and a $1.4 million
preferred interest with an 8% preferred return. The Company had concluded that this joint venture is a variable
interest entity pursuant to the guidance in FASB ASC Topic 810, “Consolidation” on the basis that the total equity
investment in the joint venture is not sufficient to permit the joint venture to finance its activities without additional
subordinated financial support from its investors. On February 5, 2013 the Company entered into a Membership
Interest Purchase Agreement to sell its common and preferred interests in West Deptford JV LLC to the other joint
venture partner for approximately $1.4 million, resulting in a gain of $0.4 million. Simultaneous with this
transaction the joint venture partner also repaid the $2.8 million mortgage note held by the Company. As a result of
these transactions the Company no longer holds any ownership interest in this joint venture. The results of
operations of this joint venture are included in our consolidated financial statements through the February 5, 2013
date of divesture.
Included in the consolidated balance sheets are noncontrolling redeemable operating partnership units.
These interests are presented in the "mezzanine" section of the consolidated balance sheet because they do not meet
the functional definition of a liability or equity under current accounting literature. These represent the outside
ownership interests of the limited partners in the Operating Partnership. At December 31, 2015, there were 168,866
noncontrolling redeemable operating partnership Units outstanding (155,484 at December 31, 2014). These
46
unitholders are entitled to receive distributions per unit equivalent to the dividends declared per share on the
Company’s common stock. 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 Company's 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. The Company accounts for
these noncontrolling redeemable Operating Partnership Units under the provisions of EITF D-98, "Classification
and Measurement of Redeemable Securities" which was codified in 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
dividends in excess of net income. Accordingly, in the accompanying consolidated balance sheet, noncontrolling
redeemable Operating Partnership Units are reflected at redemption value at December 31, 2015 and 2014, equal to
the number of Units outstanding multiplied by the fair market value of the Company's common stock at that date.
Redemption value exceeded the value determined under the Company's historical basis of accounting at those dates.
(Dollars in thousands)
2015
2014
Beginning balance noncontrolling redeemable Operating Partnership Units ..............
Redemption of Operating Partnership Units ..............................................................
Redemption value in excess of carrying value ..........................................................
Issuance of Operating Partnership Units ...................................................................
Net income attributable to noncontrolling interests – consolidated joint venture ......
Distributions .............................................................................................................
Adjustment to redemption value ...............................................................................
Ending balance noncontrolling redeemable Operating Partnership Units ...................
$13,622
(1,005)
80
2,148
553
(555)
3,328
$18,171
$12,940
(6,028)
570
2,417
526
(541)
3,738
$13,622
In 2015 the Company issued 23,382 Units with a fair value of $2.1 million to acquire one self-storage
property. In 2014 the Company issued 28,481 Units with a fair value of $2.4 million to acquire one self-storage
property. The fair value of the Units on the date of issuance was determined based upon the fair market value of the
Company’s common stock on that date.
Cash and Cash Equivalents: The Company considers all highly liquid investments purchased with
maturities of three months or less to be cash equivalents. Cash and cash equivalents include $12,000 and $6,000
held in escrow for an encumbered property at December 31, 2015 and 2014, respectively.
Accounts Receivable: Accounts receivable are composed of trade and other receivables recorded at billed
amounts and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the
amount of probable uncollectible amounts in the Company’s existing accounts receivable. The Company determines
the allowance based on a number of factors, including experience, credit worthiness of customers, and current
market and economic conditions. The Company reviews the allowance for doubtful accounts on a regular basis.
Account balances are charged against the allowance after all means of collection have been exhausted and the
potential for recovery is considered remote. The allowance for doubtful accounts is recorded as a reduction of
accounts receivable and amounted to $0.4 million, $0.5 million and $0.4 million at December 31, 2015, 2014 and
2013, respectively.
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, 2015, 2014, and 2013, advertising costs were $7.3 million, $6.2
47
million, and $5.4 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 administrative fees, incidental truck rentals, and management and acquisition 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, land improvements, building, equipment, and in-place customer leases based on the
fair value of each component. The fair values of land are determined based upon comparable market sales
information. The fair values of buildings are determined based upon estimates of current replacement costs adjusted
for depreciation on the properties. For the years ended December 31, 2015, 2014, and 2013, $3.0 million, $7.4
million and $3.1 million of acquisition related costs were incurred and expensed, respectively.
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, 2015, 2014, and 2013 was $0.1 million, $0.1 million and $0.1 million, respectively. Repair and
maintenance costs are expensed as incurred.
Whenever events or changes in circumstances indicate that the basis of the Company's property may not be
recoverable, the Company's policy is to complete an assessment of impairment. Impairment is evaluated based upon
comparing the sum of the property’s expected undiscounted future cash flows to the carrying value of the property.
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. For the years ended December
31, 2015, 2014 and 2013, no assets had been determined to be impaired under this policy.
In general, sales of real estate and related profits / losses are recognized when all consideration has changed
hands and risks and rewards of ownership have been transferred.
Other Assets: Included in other assets are net deferred financing costs, property deposits, and the value
placed on in-place customer leases at the time of acquisition. The gross deferred financing costs were $8.2 million at
December 31, 2015, and 2014, respectively. Accumulated amortization on gross deferred financing costs was
approximately $3.0 million and $1.9 million at December 31, 2015, and 2014, respectively. Deferred financing
costs are amortized over the terms of the related debt. Property deposits at December 31, 2015 and 2014 were $5.9
million and $0.8 million, respectively.
The Company allocates a portion of the purchase price of acquisitions to in-place customer leases. The
methodology used to determine the fair value of in-place customer leases is disclosed in Note 9. The Company
amortizes in-place customer leases on a straight-line basis over 12 months (the estimated future benefit period).
Amortization expense related to deferred financing costs was $1.2 million, $0.9 million and $0.8 million
for the periods ended December 31, 2015, 2014 and 2013, respectively, and is included in interest expense in the
consolidated statement of operations.
Investment in Unconsolidated Joint Ventures: The Company's investment in unconsolidated joint
ventures, where the Company has significant influence, but not control and joint ventures which are variable interest
entities in which the Company is not the primary beneficiary, are recorded under the equity method of accounting in
the accompanying consolidated financial statements. Under the equity method, the Company's investment in
unconsolidated joint ventures is stated at cost and adjusted for the Company's share of net earnings or losses and
reduced by distributions. Equity in earnings of unconsolidated joint ventures is generally recognized based on the
Company's ownership interest in the earnings of each of the unconsolidated joint ventures. For the purposes of
48
presentation in the statement of cash flows, the Company follows the "look through" approach for classification of
distributions from joint ventures. Under this approach, distributions are reported under operating cash flow unless
the facts and circumstances of a specific distribution clearly indicate that it is a return of capital (e.g., a liquidating
dividend or distribution of the proceeds from the joint venture's sale of assets), in which case it is reported as an
investing activity.
Accounts Payable and Accrued Liabilities: Accounts payable and accrued liabilities consists primarily of
trade payables, accrued interest, and property tax accruals.
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 its taxable income to its
shareholders and complies with certain other requirements.
The Company has elected to treat one of its subsidiaries as a taxable REIT subsidiary. In general, the
Company's taxable REIT subsidiary may perform additional services for tenants and generally may engage in
certain real estate or non-real estate related business. A taxable REIT subsidiary is subject to corporate federal and
state income taxes. Deferred tax assets and liabilities are determined based on differences between financial
reporting and tax bases of assets and liabilities.
For the years ended December 31, 2015, 2014 and 2013, the Company recorded federal and state income
tax expense of $1.3 million, $0.9 million and $0.9 million, respectively. The 2015 income tax expense includes
current expense of $0.7 million and deferred tax expense of $0.6 million. At December 31, 2015 and 2014, there
were no material unrecognized tax benefits. Interest and penalties relating to uncertain tax positions will be
recognized in income tax expense when incurred. As of December 31, 2015 and 2014, the Company had no interest
or penalties related to uncertain tax provisions. Net income taxes payable and the deferred tax liability of our
taxable REIT subsidiary are classified within accounts payable and accrued liabilities, and the prepaid taxes are
classified within prepaid expenses in the consolidated balance sheet. As of December 31, 2015, the Company’s
taxable REIT subsidiary has current prepaid taxes of $0.2 million and a deferred tax liability of $1.2 million. As of
December 31, 2014, the Company’s taxable REIT subsidiary had current prepaid taxes of $0.5 million and a
deferred tax liability of $1.3 million.
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 using an income approach. 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 Company's use of derivative instruments is limited to cash flow
hedges of certain interest rate risks.
Recent Accounting Pronouncements: In May 2014, the FASB issued ASU 2014-09, “Revenue from
Contracts with Customers,” which supersedes the revenue recognition requirements in “Revenue Recognition (Topic
605),” and requires an entity to recognize revenue in a way that depicts the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for
those goods or services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning
after December 15, 2017. The Company has the option to apply the provisions of ASU 2014-09 either
retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially
applying the new guidance recognized at the date of initial application. The Company has not yet completed its
assessment of the impact that the adoption of ASU 2014-09 will have on its consolidated financial statements.
In June 2014, the FASB issued ASU 2014-12, “Accounting for Share-Based Payments When the Terms of
an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period,” which
requires a reporting entity to treat a performance target that affects vesting and that could be achieved after the
requisite service period as a performance condition. ASU 2014-12 is effective for annual periods, and interim
periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. ASU 2014-12
49
may be adopted either prospectively for share-based payment awards granted or modified on or after the effective
date, or retrospectively, using a modified retrospective approach. The modified retrospective approach would apply
to share-based payment awards outstanding as of the beginning of the earliest annual period presented in the
financial statements on adoption, and to all new or modified awards thereafter. The Company does not expect the
adoption of ASU 2014-12 to have a material impact on its consolidated financial statements.
In February 2015, the FASB issued ASU No. 2015-02, “Consolidation (Topic 810): Amendments to the
Consolidation Analysis.” This ASU is effective for annual reporting periods beginning after December 15, 2015
including interim periods within that reporting period. ASU 2015-02 amends the current consolidation model
specifically as it relates to variable interest entities (“VIE’s”) and provides reporting entities with a revised
consolidation analysis procedure. The Company is currently evaluating the impact that the adoption of this guidance
will have on its financial position, results of operations, comprehensive income, cash flows and/or disclosures.
During April 2015, the FASB issued ASU No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-
30): Simplifying the Presentation of Debt Issuance Costs,” which amends the requirements for the presentation of
debt issuance costs and requires that debt issuance costs related to a recognized debt liability be presented in the
balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.
ASU No. 2015-03 is effective for fiscal years, beginning after December 15, 2015 and interim periods within those
fiscal years. The implementation of this update is not expected to cause any material changes to our consolidated
financial statements other than the reclassification of debt issuance costs from assets to a reduction of liabilities on
our consolidated balance sheets.
ASU No. 2015-03 was amended in August 2015 by ASU No. 2015-15, “Interest - Imputation of Interest
(Subtopic 835-30) - Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-
Credit Arrangements,” to add to the Codification SEC staff guidance that the SEC staff will not object to an entity
presenting the costs of securing line-of-credit arrangements as an asset, regardless of whether there are any
outstanding borrowings. The SEC Observer to the Emerging Issues Task Force announced the staff guidance in
response to questions that arose after the FASB issued ASU No. 2015-03.
In September 2015, the FASB issued ASU No. 2015-16, “Business Combinations (Topic 805): Simplifying
the Accounting for Measurement-Period Adjustments. ASU 2015-16 requires that an acquirer recognize
adjustments to provisional amounts that are identified during the measurement period in the reporting period in
which the adjustment amounts are determined. ASU 2015-16 is effective for fiscal years, and interim reporting
periods within those fiscal years, beginning after December 15, 2015. The Company is still evaluating the impact
that the adoption of ASU 2015-16 will have on its consolidated financial statements.
In April 2014, the FASB issued ASU 2014-08, "Presentation of Financial Statements (Topic 205) and
Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and disclosures of Components of
an Entity". Under this ASU, only disposals representing a strategic shift in operations should be presented as
discontinued operations. Those strategic shifts should have a major effect on the organization’s operations and
financial results. The ASU also requires new disclosures of both discontinued operations and certain other disposals
that do not meet the definition of a discontinued operation. It is effective for fiscal years, and interim periods within
those years, beginning after December 15, 2014, with early adoption permitted. The Company adopted this
guidance effective January 1, 2014 and the adoption is expected to significantly reduce the classification of property
sales by the Company as discontinued operations.
Stock-Based Compensation: The Company accounts for stock-based compensation under the provisions
of ASC Topic 718, "Compensation - Stock Compensation". The Company recognizes compensation cost in its
financial statements for all share based payments granted, modified, or settled during the period. For awards with
graded vesting, compensation cost is recognized on a straight-line basis over the related vesting period.
The Company recorded compensation expense (included in general and administrative expense) of
$210,000, $223,000 and $301,000 related to stock options and $6.3 million, $4.6 million and $2.9 million related to
50
amortization of non-vested stock grants for the years ended December 31, 2015, 2014 and 2013, 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 2015 are as follows:
Expected life (years) ......................................
Risk free interest rate .....................................
Expected volatility .........................................
Expected dividend yield ................................
Fair value .......................................................
Weighted Average
4.50
1.57%
19.90%
3.71%
$9.90
The weighted-average fair value of options granted during the years ended December 31, 2014 and 2013,
were $10.04 and $13.95, 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 Company's 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.
During 2015, 2014 and 2013, the Company issued performance based non-vested stock awards to certain
executives. The fair value for the performance based awards in 2015, 2014 and 2013 was estimated at the time the
awards were granted using a Monte Carlo pricing model applying the following assumptions:
Expected life (years) ......................................
Risk free interest rate .....................................
Expected volatility .........................................
Fair value .......................................................
2015
3.0
1.33%
18.88%
$101.43
2014
3.0
1.18%
18.42%
$46.95
2013
3.0
0.64%
24.78%
$35.32
The Monte Carlo pricing model was not used to value any other 2015, 2014 and 2013 non-vested shares
granted as no market conditions were present in these awards. The value of these other non-vested shares was equal
to the stock price on the date of grant.
Reclassification: As noted below, certain amounts in the 2014 and 2013 financial statements have been
reclassified to conform with the current year presentation.
Internet advertising expense, which had been included in the general and administrative expense line in
prior year financial statements, has been reclassified to property operations and maintenance expense to conform
with the current year presentation. The Company believes the classification of internet advertising expenses as
property operations and maintenance expense is more consistent with industry trends. The amount of internet
advertising expense that was reclassified for the years December 31, 2014 and 2013 was $5,570 and $4,803,
respectively (dollars in thousands).
From 1998 through 2003, the Company repurchased 1,171,886 common shares pursuant to a Share
Repurchase Program authorized by the Company's Board of Directors. These repurchased shares are subject to state
corporate laws that establish the legal status of redeemed shares and prevent them from being reported as treasury
shares within the consolidated financial statements. The Company previously misclassified the repurchased shares
as treasury stock. The share repurchases should have been classified as reductions of common stock and additional
paid-in capital. The accompanying consolidated balance sheet of the Company as of December 31, 2014 has been
restated to correct the misclassification. The correction results in reductions in common shares and additional paid-
51
in capital at December 31, 2014 of $11,719 and $27.2 million, respectively from the previously reported amounts of
$353,000 and $1,183.4 million, respectively. The reclassification has no impact on the previously reported
consolidated statements of operations or comprehensive income, nor does it have any effect on the previously
reported consolidated statements of cash flows.
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 with 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 Company has calculated its basic and diluted earnings per
share using the two-class method. The following table sets forth the computation of basic and diluted earnings per
common share utilizing the two-class method.
(Amounts in thousands, except per share data)
2015
Year Ended December 31,
2014
2013
Numerator:
Net income from continuing operations attributable to common shareholders .............
$ 112,524
$ 88,531
$ 71,023
Denominator:
Denominator for basic earnings per share - weighted average shares ...........................
Effect of Dilutive Securities:
Stock options and non-vested stock ..............................................................................
35,379
33,019
31,297
222
172
156
Denominator for diluted earnings per share - adjusted weighted average shares
and assumed conversion ..........................................................................................
35,601
33,191
31,453
Basic Earnings per Common Share from continuing operations attributable to
common shareholders ..............................................................................................
Basic Earnings per Common Share attributable to common shareholders ....................
$ 3.18
$ 3.18
Diluted Earnings per Common Share from continuing operations attributable to
common shareholders ..............................................................................................
Diluted Earnings per Common Share attributable to common shareholders
$ 3.16
$ 3.16
$ 2.68
$ 2.68
$ 2.67
$ 2.67
$ 2.27
$ 2.37
$ 2.26
$ 2.36
Not included in the effect of dilutive securities above are 5,500 stock options and 152,835 unvested
restricted shares for the year ended December 31, 2015; and 5,000 stock options and 151,474 unvested restricted
shares for the year ended December 31, 2014; and 2,000 stock options and 112,664 unvested restricted shares for the
year ended December 31, 2013, because their effect would be antidilutive.
52
4. INVESTMENT IN STORAGE FACILITIES
The following summarizes activity in storage facilities during the years ended December 31, 2015 and
December 31, 2014.
(Dollars in thousands)
Cost:
Beginning balance ................................................................
Acquisition of storage facilities ............................................
Improvements and equipment additions ...............................
Increase (decrease) in construction in progress ....................
Dispositions and impairments ...............................................
Ending balance .......................................................................
2015
2014
$2,177,983
278,572
39,807
2,239
(6,899)
$2,491,702
$1,864,637
286,691
40,137
(5,040)
(8,442)
$2,177,983
Accumulated Depreciation:
Beginning balance ................................................................
Additions during the year .....................................................
Dispositions and impairments ...............................................
Ending balance .......................................................................
$ 411,701
55,101
(1,607)
$ 465,195
$ 366,472
47,656
(2,427)
$ 411,701
The Company acquired 27 facilities during 2015. The four facilities acquired in Connecticut and New
York on February 2, 2015 had been leased by the Company since November 1, 2013. The acquisitions of these four
stores and three stores that were acquired at certificate of occupancy were accounted for as asset acquisitions. The
cost of these seven stores, including closing costs, was assigned to their land, building, equipment and
improvements components based upon their relative fair values. The assets and liabilities of the other 20 storage
facilities acquired in 2015, which primarily consist of tangible and intangible assets, are measured at fair value on
the date of acquisition in accordance with the principles of FASB ASC Topic 820, “Fair Value Measurements and
Disclosures” and were accounted for as business combinations in accordance with the principles of FASB ASC
Topic 805 “Business Combinations.” The purchase price of the 27 facilities acquired in 2015 and the 33 facilities
acquired in 2014 has been assigned as follows (as of December 31, 2015 the purchase price assignments relating to
the facilities acquired during the second half of 2015 are preliminary):
(dollars in thousands)
Consideration paid
Acquisition Date Fair Value
State
Number of
Properties
Date of
Acquisition
Purchase
Price
Cash Paid
Value of
Operating
Partnership
Units Issued
Net Other
Liabilities
(Assets)
Assumed
Building,
Equipment, and
Improvements
In-Place
Customer
Leases
Closing
Costs
Expensed
Land
2015
Connecticut
New York
Illinois
Illinois
Florida
Texas
Florida
Florida
Arizona
Massachusetts
New York
North Carolina
South Carolina
Pennsylvania
2
2
1
1
1
1
1
4
1
1
4
1
6
1
2/2/2015
$ 61,116
$ 62,377
$ -
$ (1,261)
$ 19,389
$ 41,727
$ -
$ -
2/2/2015
57,900
59,103
2/5/2015
3/9/2015
4/1/2015
4/16/2015
4/21/2015
5/1/2015
6/16/2015
6/19/2015
8/25/2015
9/1/2015
9/1/2015
6,800
8,690
6,290
8,800
8,750
32,465
7,904
10,291
17,900
3,775
44,000
6,652
6,466
6,236
8,713
8,687
32,279
7,904
10,286
17,690
3,762
43,564
-
-
2,148
-
-
-
-
-
-
-
-
-
(1,203)
148
76
54
87
63
186
-
5
210
13
436
10,084
47,816
2,579
1,719
1,793
3,864
2,118
12,184
852
2,110
4,685
718
17,461
4,066
6,971
4,382
4,777
6,501
19,672
7,052
8,181
12,826
2,977
25,644
-
155
-
115
159
131
609
-
-
389
80
895
-
146
-
359
140
122
516
-
-
409
80
684
12/30/2015
6,550
6,541
-
9
1,926
4,498
126
190
Total acquired 2015
27
$ 281,231
$ 280,260
$ 2,148
$ (1,177)
$ 81,482
$ 197,090
$ 2,659
$ 2,646
53
2014
Florida
Texas
Texas
Maine
Illinois
Illinois
Texas
Missouri
New Jersey
New York
New Jersey
Georgia
New Jersey
New Jersey
Florida
Virginia
Texas
Tennessee
Louisiana
Florida
Texas
Illinois
Texas
2
1
1
2
1
1
1
7
1
1
1
1
3
1
1
1
1
1
1
1
1
1
1
1/9/2014
$ 54,000
$ 53,599
$ -
$ 401
$ 23,309
$ 29,867
$ 824
$ 1,674
1/17/2014
2/10/2014
9,000
8,900
8,962
8,857
2/11/2014
14,750
14,602
3/31/2014
5/5/2014
5/13/2014
5/22/2014
6/5/2014
6/11/2014
6/12/2014
6/12/2014
6/18/2014
7/10/2014
8/28/2014
9/5/2014
9/10/2014
9/18/2014
10/10/2014
10/21/2014
10/28/2014
11/14/2014
8,700
5,500
6,075
35,050
12,600
8,000
2,500
7,700
18,325
11,590
10,200
6,400
11,200
6,550
16,750
11,250
13,125
5,750
8,582
5,487
6,017
34,786
12,526
7,988
2,431
7,616
18,221
11,572
10,111
6,373
11,046
6,535
16,630
11,119
13,095
3,239
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,417
38
43
148
118
13
58
264
74
12
69
84
104
18
89
27
154
15
120
131
30
94
3,999
2,235
2,639
1,837
598
2,000
9,420
5,161
1,741
-
2,263
2,543
1,512
2,958
2,349
2,658
759
5,771
6,091
4,196
889
4,856
6,564
11,824
6,724
4,902
3,935
24,835
7,201
6,106
2,319
5,293
15,377
9,880
7,055
3,947
8,299
5,749
10,697
4,971
8,721
4,850
145
101
287
139
-
140
795
238
153
181
144
405
198
187
104
243
42
282
188
208
11
216
204
409
224
45
181
622
281
202
64
179
542
321
184
267
196
144
238
495
267
206
12/18/2014
8,000
7,937
-
63
1,598
6,193
209
197
Total acquired 2014
33
$ 291,915
$ 287,331
$ 2,417
$ 2,167
$ 86,526
$ 200,165
$ 5,224
$ 7,358
All of the properties acquired were purchased from unrelated third parties. The operating results of the four
facilities which had been leased since November 1, 2013 have been included in the Company’s operations since that
date. The operating results of the other facilities acquired have been included in the Company’s operations since the
respective acquisition dates. Of the $280.3 million paid at closing for the properties acquired during 2015, $250,000
represented deposits that were paid in 2014 when certain of these properties originally went under contract. In
addition to the closing costs expensed on 2015 acquisitions, the Company also incurred $345,000 of acquisition
costs in 2015 related to facilities acquired in 2016. Non-cash investing activities during 2015 include the issuance of
$2.1 million in Operating Partnership Units, the assumption of $1.3 million of other net liabilities and $2.5 million
for the settlement of a straight-line rent liability in connection with the acquisition of self-storage facilities.
The Company measures the fair value of in-place customer lease intangible assets based on the Company's
experience with customer turnover. The Company amortizes in-place customer leases on a straight-line basis over
12 months (the estimated future benefit period). In -place customer leases are included in other assets on the
Company’s balance sheet as follows:
(Dollars in thousands)
In-place customer leases .........................................................
Accumulated amortization ......................................................
Net carrying value at December 31, .......................................
2015
$22,320
(21,017)
$ 1,303
2014
$19,867
(17,663)
$ 2,204
Amortization expense related to in-place customer leases was $3.4 million, $4.1 million, and $3.3 million
for the years ended December 31, 2015, 2014, and 2013, respectively. Amortization expense on 2015 acquisitions is
expected to be $1.3 million in 2016.
As noted above, during 2014, the Company acquired 33 properties. The following unaudited pro forma
information is based on the combined historical financial statements of the Company and the 33 properties acquired,
54
and presents the Company's results as if the acquisitions had occurred as of January 1, 2013:
2013
(dollars in thousands)
Total revenues ....................................................................................... $ 366,602 $ 337,168 $ 300,589
Net income attributable to common shareholders ................................. $ 114,733
$ 63,098
Earnings per common share
2015
2014
$ 99,093
$ 3.24
Basic ...............................................................................................
Diluted ............................................................................................ $ 3.22
$ 2.94
$ 2.93
$ 1.87
$ 1.86
Property Dispositions
During 2015 the Company sold three non-strategic properties purchased in 2014 and 2015 with a carrying
value of $5.1 million and received cash proceeds of $4.6 million, resulting in a $0.5 million loss on sale. During
2014 the Company sold two properties with a carrying value of $5.8 million and received cash proceeds of $11.0
million, resulting in a $5.2 million gain on sale. The following table summarizes the revenues and expenses up to the
dates of sale of the five properties sold in 2015 and 2014 that are included in the Company’s consolidated statements
of operations for 2015, 2014 and 2013.
(dollars in thousands)
2015
Total revenues ....................................................................................... $ 235
(114)
Property operations and maintenance expense ......................................
(18)
Real estate tax expense ..........................................................................
(81)
Depreciation and amortization expense .................................................
(494)
(Loss) gain on sale of storage facilities .................................................
$ (472)
2014
$ 1,422
(332)
(180)
(169)
5,176
$ 5,917
2013
$ 1,480
(362)
(187)
(179)
-
$ 752
5. DISCONTINUED OPERATIONS
In the 4th quarter of 2013, the Company sold four non-strategic storage facilities in Florida (2), Ohio (1),
and Virginia (1) for net proceeds of approximately $11.7 million resulting in a gain of approximately $2.4 million.
The operations of these facilities and the loss or gain on sale are reported as discontinued operations. 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, 2013. The Company did not
report any dispositions of facilities as discontinued operations in 2015 or 2014. The following is a summary of the
amounts reported as discontinued operations in 2013:
(dollars in thousands)
Total revenue
Property operations and maintenance expense ................
Real estate tax expense ....................................................
Depreciation and amortization expense ...........................
Net realized gain (loss) on sale of property .....................
Total income from discontinued operations ......................
Year Ended
December31,
2013
$ 1,726
(576)
(145)
(313)
2,431
$ 3,123
Income from continuing operations attributable to common shareholders was $71.0 million in 2013.
Income from discontinued operations attributable to common shareholders was $3.1 million in 2013.
6. UNSECURED LINE OF CREDIT AND TERM NOTES
Borrowings outstanding on our unsecured line of credit and term notes are as follows:
55
(Dollars in thousands)
Revolving line of credit borrowings .......................................
Term note due April 13, 2016 .................................................
Term note due June 4, 2020 ....................................................
Term note due August 5, 2021 ...............................................
Term note due April 8, 2024...................................................
Total term notes payable .........................................................
Dec. 31,
2015
$79,000
150,000
325,000
100,000
175,000
$ 750,000
Dec. 31,
2014
$49,000
150,000
325,000
100,000
175,000
$ 750,000
On December 10, 2014, the Company amended its existing unsecured credit agreement. As part of the
amended agreement, the Company increased its revolving credit limit from $175 million to $300 million. The
interest rate on the revolving credit facility bears interest at a variable rate equal to LIBOR plus a margin based on
the Company’s credit rating (at December 31, 2015 the margin is 1.30%), and requires a 0.20% facility fee. The
amended agreement also reduced the interest rate on the $325 million unsecured term note maturing June 4, 2020,
with the term note bearing interest at LIBOR plus a margin based on the Company’s credit rating (at December 31,
2015 the margin is 1.40%). The interest rate at December 31, 2015 on the Company's line of credit was
approximately 1.72% (1.46% at December 31, 2014). At December 31, 2015, there was $221 million available on
the unsecured line of credit. The revolving line of credit has a maturity date of December 10, 2019. The amended
agreement also provides for an increase in the revolving credit facility and the bank term notes at the Company’s
request to an aggregate amount up to $850 million. In January 2016, the Company exercised the expansion feature
and increased the revolving credit limit from $300 million to $500 million.
In connection with the execution of the amendment to our unsecured credit agreement, it was determined
that the borrowing capacity of nine of the lenders participating in the revolving line of credit exceeded their
borrowing capacities prior to the amendment. As a result, for these nine lenders the unamortized deferred financing
costs associated with the agreement prior to its amendment remain deferred and are being amortized to interest
expense over the term of the newly amended agreement. Fees and other costs paid to execute the amendment
relating to the revolving line of credit totaling $1.3 million were recorded as additional deferred financing costs and
are being amortized to interest expense over the term of the newly amended agreement.
The Company paid $1.0 million in fees to lenders for their commitments under the unsecured term note
portion of the newly amended agreement. These lenders' commitments were determined to be a modification of their
unsecured term note commitments prior to the amendment. Such costs were recorded as additional deferred
financing costs and are being amortized to interest expense over the term of the newly amended agreement. In
addition, for the nine continuing lenders’ the previously unamortized deferred financing costs associated with the
unsecured term note commitments prior to the amendment remain deferred and are being amortized to interest
expense over the term of the newly amended agreement.
On April 8, 2014, the Company entered into a $175 million term note maturing April 2024 bearing interest
at a fixed rate of 4.533%. The interest rate on the term note increases to 6.283% if the Company is not rated by at
least one rating agency or if the Company’s credit rating is downgraded. The proceeds from this term note were used
to repay the $115 million outstanding on the Company’s line of credit at April 8, 2014, with the excess proceeds
used for acquisitions.
In 2011, the Company entered into a $100 million term note maturing August 5, 2021 bearing interest at a
fixed rate of 5.54%. The interest rate on the term note increases to 7.29% if the notes are not rated by at least one
rating agency, the credit rating on the notes is downgraded or if the Company’s credit rating is downgraded. The
proceeds from this term note were used to fund acquisitions and investments in unconsolidated joint ventures.
The Company also maintains a $150 million unsecured term note maturing April 13, 2016 bearing interest
at 6.38%. The interest rate on the $150 million unsecured term note increases to 8.13% if the notes are not rated by
at least one rating agency, the credit rating on the notes is downgraded or the Company’s credit rating is
56
downgraded.
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, 2015, the Company was in compliance with its
debt covenants.
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, 2015 the entire availability on the line of
credit could be drawn without violating our debt covenants.
The Company’s fixed rate term notes contain a provision that allows for the noteholders to call the debt
upon a change of control of the Company at an amount that includes a make whole premium based on rates in effect
on the date of the change of control.
7.
MORTGAGES PAYABLE AND DEBT MATURITIES
Mortgages payable at December 31, 2015 and 2014 consist of the following:
(dollars in thousands)
5.99% mortgage notes due May 1, 2026, secured by 1 self-storage facility
with an aggregate net book value of $4.3 million, principal and interest
paid monthly (effective interest rate 6.20%) ....................................................
Total mortgages payable ......................................................................................
December 31,
2015
December 31,
2014
1,993
$ 1,993
2,127
$ 2,127
The table below summarizes the Company's debt obligations and interest rate derivatives at December 31,
2015. 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 notes and mortgage notes 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. These assumptions are considered Level 2 inputs within the fair
value hierarchy as described in Note 9. The carrying values of our variable rate debt instruments approximate their
fair values as these debt instruments bear interest at current market rates that approximate market participant rates.
This is considered a Level 2 input within the fair value hierarchy. 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.
(dollars in thousands)
Line of credit - variable rate LIBOR +
1.30% (1.72% at December 31, 2015).............
Notes Payable:
Expected Maturity Date Including Discount
2016
2017
2018
2019
2020
Thereafter
Total
Fair
Value
-
-
-
$79,000
-
-
$79,000
$79,000
Term note - fixed rate 6.38% ........................... $ 150,000
Term note - variable rate LIBOR+1.40%
(1.70% at December 31, 2015) ....................
-
Term note - fixed rate 5.54% ...........................
Term note - fixed rate 4.533% .........................
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$150,000
$156,962
325,000
-
$325,000
$325,000
-
-
$ 100,000
$100,000
$111,988
$ 175,000
$175,000
$175,295
Mortgage note - fixed rate 5.99% .....................
$142
$151
$160
$170
$181
$1,189
$ 1,993
$ 2,147
Interest rate derivatives – asset .........................
Interest rate derivatives – liability ....................
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$ (550)
$ 15,343
57
8. 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. Forward starting interest rate swaps are also used by the
Company to hedge the risk of changes in the interest-related cash outflows associated with the potential issuance of
long-term debt. 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 into 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 Loss ("AOCL"). These deferred gains and losses are recognized in 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 de minimis in
2015, 2014, and 2013.
The Company has interest rate swap agreements in effect at December 31, 2015 as detailed below to
effectively convert a total of $325 million of variable-rate debt to fixed-rate debt, and a $50 million notional pre-
issuance swap agreement to hedge the risk of changes in interest-related cash outflows associated with a potential
issuance of long-term debt.
Notional Amount
Effective Date
Expiration Date
$125 Million ...........................
$100 Million ...........................
$100 Million ...........................
$100 Million ...........................
$125 Million ...........................
$50 Million .............................
9/1/2011
12/30/11
9/4/13
12/29/17
8/1/18
5/31/16
8/1/18
12/29/17
9/4/18
11/29/19
6/1/20
5/31/2026
Fixed
Rate Paid
Floating Rate
Received
2.3700%
1.6125%
1.3710%
3.9680%
4.1930%
2.1560%
1 month LIBOR
1 month LIBOR
1 month LIBOR
1 month LIBOR
1 month LIBOR
3 month LIBOR
The interest rate swap agreements are the only derivative instruments, as defined by FASB ASC Topic 815
“Derivatives and Hedging”, held by the Company. During 2015, 2014, and 2013, the net reclassification from
AOCL to interest expense was $5.2 million, $5.5 million and $5.3 million, respectively, based on payments made
under the swap agreements. Based on current interest rates, the Company estimates that payments under the interest
rate swaps will be approximately $4.6 million in 2016. 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 an asset of $550,000 and a liability of $15.3 million at December 31, 2015, and a liability of $13.3
million at December 31, 2014.
The Company’s agreements with its interest rate swap counterparties contain provisions pursuant to which
the Company could be declared in default of its derivative obligations if the Company defaults on any of its
indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender. The
interest rate swap agreements also incorporate other loan covenants of the Company. Failure to comply with the
loan covenant provisions would result in the Company being in default on the interest rate swap agreements. As of
December 31, 2015, the Company had not posted any collateral related to the interest rate swap agreements. If the
Company had breached any of these provisions as of December 31, 2015, it could have been required to settle its
obligations under the agreements at their net termination value of $14.8 million.
58
The changes in AOCL for the years ended December 31, 2015, 2014 and 2013 are summarized as follows:
(dollars in thousands)
Accumulated other comprehensive loss beginning of
Jan. 1, 2015
to
Dec. 31, 2015
Jan. 1, 2014
to
Dec. 31, 2014
Jan. 1, 2013
to
Dec. 31, 2013
period .....................................................................................
$ (13,005)
$ (6,402)
$ (15,242)
Realized loss reclassified from accumulated other
comprehensive loss to interest expense ..................................
5,229
5,506
5,299
Unrealized gain (loss) from changes in the fair value
of the effective portion of the interest rate swaps .................
(Loss) gain included in other comprehensive loss .....................
Accumulated other comprehensive loss end of period ..............
(6,639)
(1,410)
$ (14,415)
(12,109)
(6,603)
$ (13,005)
3,541
8,840
$ (6,402)
9. FAIR VALUE MEASUREMENTS
The Company applies the provisions of ASC Topic 820 “Fair Value Measurements and Disclosures” in
determining the fair value of its financial and nonfinancial assets and liabilities. ASC Topic 820 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. Level
3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value.
A financial asset or liability's classification within the hierarchy is determined based on the lowest level input that is
significant to the fair value measurement.
Refer to Note 7 for presentation of the fair values of debt obligations which are disclosed at fair value on a
recurring basis.
The following table provides the assets and liabilities carried at fair value measured on a recurring basis as
of December 31, 2015 (in thousands):
Interest rate swaps .........................................
Interest rate swaps .........................................
Asset
(Liability)
550
(15,343)
Level 1
-
-
Level 2
550
(15,343)
Level 3
-
-
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.
During 2015, assets and liabilities measured at fair value on a non-recurring basis included the assets
acquired and liabilities assumed in connection with the acquisition of 20 storage facilities accounted for as business
combinations under FASB Topic 805 (see note 4). To determine the fair value of land, the Company used prices per
acre derived from observed transactions involving comparable land in similar locations, which is considered a Level
2 input. To determine the fair value of buildings, equipment and improvements, the Company used current
replacement cost based on information derived from construction industry data by geographic region which is
considered a Level 2 input. The replacement cost is then adjusted for the age, condition, and economic obsolescence
associated with these assets, which are considered Level 3 inputs. The fair value of in-place customer leases is based
on the rent lost due to the amount of time required to replace existing customers which is based on the Company's
historical experience with turnover at its facilities, which is a Level 3 input. Other assets acquired and liabilities
assumed in the acquisitions consist primarily of prepaid or accrued real estate taxes and deferred revenues from
advance monthly rentals paid by customers. The fair values of these assets and liabilities are based on their carrying
values as they typically turn over within one year from the acquisition date and these are Level 3 inputs.
59
10. STOCK BASED COMPENSATION
The Company established the 2015 Award and Option Plan (the "2015 Plan") which replaced the expired
2005 Award and Option Plans for the purpose of attracting and retaining the Company's executive officers and other
key employees, such plans being the “Plans”. There were 561,000 shares authorized for issuance under the 2015
Plan. Options granted under the Plans 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, 2015, options for 77,206 shares were
outstanding under the Plans and options for 494,193 shares of common stock were available for future issuance.
The Company may also grant other stock-based awards under the 2015 Plan, including restricted stock and
performance-based awards.
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 2015, 1,396 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, 2015, options for 18,500 common shares and 15,120 of
non-vested shares were outstanding under the Non-employee Plans. As of December 31, 2015 options for 72,880
shares of common stock were available for future issuance.
A summary of the Company's stock option activity and related information for the years ended December
31 follows:
2015
2014
2013
Weighted
average
exercise
price
Options
Options
115,606
11,000
(30,900)
-
$ 48.54
91.58
52.87
-
130,568
14,000
(27,462)
(1,500)
Weighted
average
exercise
price
$ 44.82
76.01
45.34
40.07
Options
273,248
8,000
(160,515)
9,835
Weighted
average
exercise
price
$ 43.45
69.90
43.72
36.37
Outstanding at beginning
of year: ................................
Granted ...................................
Exercised ................................
Adjusted / (forfeited) ..............
Outstanding at end of year ......
95,706
$ 52.08
115,606
$ 48.54
130,568
$ 44.82
Exercisable at end of year .......
63,815
$ 48.73
67,316
$ 49.18
60,382
$ 46.85
60
A summary of the Company's stock options outstanding at December 31, 2015 follows:
Outstanding
Exercisable
Exercise Price Range
$30.00 – 39.99 .........................................
$40.00 – 69.99 .........................................
$70.00 – 91.58 .........................................
Total .........................................................
Options
1,100
77,106
17,500
95,706
Weighted
average
exercise
price
$ 35.73
$ 44.67
$ 85.8
$ 52.08
Options
1,100
56,715
6,000
63,815
Weighted
average
exercise
price
$ 35.73
$ 45.00
$ 86.41
$ 48.73
Intrinsic value of outstanding stock options at December 31, 2015 ........................................
Intrinsic value of exercisable stock options at December 31, 2015 .........................................
$ 5,285,460
$ 3,738,043
The intrinsic value of stock options exercised during the years ended December 31, 2015, 2014, and 2013,
was $1.4 million, $0.9 million, and $3.6 million respectively.
Proceeds from stock options exercised during the years ended December 31, 2015, 2014, and 2013
amounted to $1.6 million, $1.2 million, and $7.0 million respectively.
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying
awards and the quoted price of the Company's common stock at December 31, 2015, or the price on the date of
exercise for those exercised during the year. As of December 31, 2015, there was approximately $0.1 million of
total unrecognized compensation cost related to stock option compensation arrangements granted under our stock
award plans. That cost is expected to be recognized over a weighted-average period of approximately 0.6 years.
The weighted average remaining contractual life of all options is 3.9 years, and for exercisable options is 3.5 years.
Non-vested stock
The Company has also issued shares of non-vested stock to employees which vest over one 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, 2015, the fair market
value of the non-vested stock on the date of grant ranged from $88.84 to $105.46. During 2015, 64,665 shares of
non-vested stock were issued to employees and directors with an aggregate fair value of $6.1 million. The Company
charges the fair value ratably to expense over the vesting period. The Company uses the average of the high and
low price of its common stock on the date the award is granted as the fair value for non-vested stock awards that do
not have a market condition.
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:
2015
2014
2013
Non-
vested
Shares
Weighted
average
grant date
fair value
Non-
vested
Shares
Weighted
average
grant date
fair value
Non-
vested
Shares
Weighted
average
grant date
fair value
Unvested at beginning
of year: ................................
310,463
$ 51.93
293,196
$ 49.20
187,535
$ 37.36
Granted ...................................
Vested .....................................
Forfeited .................................
64,665
(69,187)
(421)
94.74
60.28
76.07
92,665
(72,876)
(2,522)
60.87
53.11
28.66
189,080
(83,419)
-
54.78
35.28
-
Unvested at end of year ..........
305,520
$ 59.09
310,463
$ 51.93
293,196
$ 49.20
61
Compensation expense of $6.3 million, $4.6 million and $2.9 million was recognized for the vested portion
of non-vested stock grants in 2015, 2014 and 2013, respectively. The fair value of non-vested stock that vested
during 2015, 2014 and 2013 was $4.2 million, $3.9 million and $2.9 million, respectively. The total unrecognized
compensation cost related to non-vested stock was $14.0 million at December 31, 2015, and the remaining
weighted-average period over which this expense will be recognized was 3.3 years.
Performance-based awards
During 2015, the Company granted performance-based awards that entitle the recipients to earn up to
42,538 shares if certain performance criteria are achieved over a three year period. The actual number of shares to
be issued will be determined at the end of a three year period, and no performance-based shares were issued in 2015.
The Company granted and issued a total of 60,654 and 87,040 performance shares under the Plan during 2014 and
2013, respectively, which are included in the table above. The performance-based awards granted are based upon
the Company’s performance over a three year period depending on the Company’s total shareholder return relative
to a group of peer companies. Performance based awards are recognized as compensation expense based on fair
value on date of grant, the number of shares ultimately expected to vest and the vesting period. For accounting
purposes, the performance shares are considered to have a market condition. The effect of the market condition is
reflected in the grant date fair value of the award and thus, compensation expense is recognized on this type of
award provided that the requisite service is rendered (regardless of whether the market condition is achieved). The
Company estimated the fair value of each performance-based award granted under the Plans on the date of grant
using a Monte Carlo simulation that uses the assumptions noted in Note 2.
During 2015, compensation expense of $1.9 million (included in the $6.3 million discussed above) was
recognized for the performance awards granted in 2013, and 2014. The total unrecognized compensation cost related
to non-vested performance awards was $5.0 million at December 31, 2015 and the weighted-average period over
which this expense will be recognized is 1.7 years.
Deferred compensation plan for directors
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 this plan are 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 Company’s 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. The Directors may not elect to receive cash in lieu of shares. Under this plan there were a total of
18,973 units outstanding at December 31, 2015. Fees that were earned and credited to Directors’ accounts are
recorded as compensation expense which totaled $0.1 million, $0.1 million and $0.1 million in 2015, 2014 and
2013, respectively.
11. 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 25% of the first 4% of gross wages
that the employee contributes. Total expense to the Company was approximately $276,000, $192,000, and $78,000
for the years ended December 31, 2015, 2014 and 2013, respectively.
12. 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 are managed by the Company. The
carrying value of the Company’s investment at December 31, 2015 and 2014 was $44.6 million and $45.2 million,
62
respectively. Twenty-five properties were acquired by Sovran HHF in 2008 for approximately $171.5 million and
14 additional properties were acquired by Sovran HHF in 2014 for $187.2 million. In 2008, the Company
contributed $18.6 million to the joint venture as its share of capital required to fund the acquisitions. In 2012 the
Company contributed an additional $1.2 million to the joint venture. In 2013 the Company received a return of
capital distribution of $3.4 million as part of the refinancing of Sovran HHF. In 2014 the Company contributed an
additional $28.6 million in cash to the joint venture as its share of capital required to fund acquisitions. In 2015 the
Company contributed an additional $0.4 million in cash to the joint venture as its share of capital required to fund
certain capital expenditures and property taxes related to 2014 acquisitions. As of December 31, 2015, the carrying
value of the Company's 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 in 2008. This
difference is included in the carrying value of the investment, which is assessed for other-than-temporary
impairment on a periodic basis. No other-than-temporary impairments have been recorded on this investment.
The Company has a 15% ownership interest in Sovran HHF Storage Holdings II LLC (“Sovran HHF II”), a
joint venture that was formed in 2011 to acquire self-storage properties that are managed by the Company. The
carrying value of the Company’s investment at December 31, 2015 and 2014 was $13.9 million and $12.6 million,
respectively. Twenty properties were acquired by Sovran HHF II during 2011 for approximately $166.1 million.
During 2011, the Company contributed $12.8 million to the joint venture as its share of capital required to fund the
acquisitions. Ten additional properties were acquired by Sovran HHF II during 2012 for approximately $29 million.
During 2012, the Company contributed $2.4 million to the joint venture as its share of capital required to fund the
acquisitions. In 2015 the Company contributed an additional $1.7 million in cash to the joint venture as its share of
capital required to fund the payoff of a mortgage note. The carrying value of this investment is assessed for other-
than-temporary impairment on a periodic basis and no such impairments have been recorded on this investment.
As manager of Sovran HHF and Sovran HHF II, the Company earns a management and call center fee of
7% of gross revenues which totaled $4.9 million, $3.9 million, and $3.4 million for 2015, 2014, and 2013,
respectively. The Company also received an acquisition fee of $0.4 million and $0.1 million, for securing purchases
for Sovran HHF and Sovran HHF II in 2014 and 2012, respectively. The Company's share of Sovran HHF and
Sovran HHF II’s income for 2015, 2014 and 2013 was $3.2 million, $1.9 million, and $1.9 million, respectively.
The Company has a 49% ownership interest in Iskalo Office Holdings, LLC, which owns the building that
houses the Company's headquarters and other tenants. The carrying value of the Company's investment is a liability
of $0.5 million at December 31, 2015 and 2014, and is included in accounts payable and accrued liabilities in the
accompanying consolidated balance sheets. For the years ended December 31, 2015, 2014, and 2013, the
Company's share of Iskalo Office Holdings, LLC's income was $189,000, $107,000, and $59,000, respectively. The
Company paid rent to Iskalo Office Holdings, LLC of $1.1 million, $1.0 million and $0.8 million in 2015, 2014, and
2013, respectively.
The Company holds an 85% equity interest in Urban Box Coralway Storage, LLC (Urban Box), a joint
venture with an unrelated third party. Urban Box was formed in 2015 and is currently developing a self-storage
property in Florida. During 2015, the Company contributed $4.0 million to Urban Box as its share of capital to
develop the property, which primarily consists of the acquisition of land in 2015. Urban Box will enter into a non-
recourse mortgage loan in order to finance the future development costs. The Company and the other joint venture
member have participation rights which require the agreement of both members in order to implement the activities
of Urban Box which are most significant to its economic performance. Accordingly, the interest is recorded using
the equity method.
The Company will perform property management services for Urban Box in exchange for a management
fee based on 6% of property revenues. There were no management fees in 2015.
A summary of the unconsolidated joint ventures' financial statements as of and for the year ended
December 31, 2015 is as follows:
63
(dollars in thousands)
Sovran HHF
Storage
Holdings
LLC
Sovran
HHF
Storage
Holdings II
LLC
Iskalo Office
Holdings,
LLC
Urban Box
Coralway
Storage, LLC
Balance Sheet Data:
Investment in storage facilities, net .....................................
Investment in office building ...............................................
Other assets ..........................................................................
Total Assets .......................................................................
Due to the Company ............................................................
Mortgages payable ...............................................................
Other liabilities ....................................................................
Total Liabilities..................................................................
$ 335,434
-
5,247
$ 340,681
=======
$ 434
123,391
2,760
126,585
Unaffiliated partners' equity (deficiency) ............................
Company equity (deficiency) ..............................................
Total Partners’ Equity (Deficiency) .....................................
Total Liabilities and Partners' Equity
171,277
42,819
214,096
$ 182,592
-
3,553
$ 186,145
=======
$ 496
91,220
1,616
93,332
$ - $ 3,559
-
1,240
$ 4,799
=======
$ -
-
32
32
5,039
3,166
$ 8,205
=======
$ -
9,020
425
9,445
78,897
13,916
92,813
(708)
(532)
(1,240)
715
4,052
4,767
(Deficiency) ..................................................................
$ 340,681
=======
$ 186,145
=======
$ 8,205
=======
$ 4,799
=======
Income Statement Data:
Total revenues .....................................................................
Property operating expenses ................................................
Administrative, management and call center fees ...............
Depreciation and amortization of customer list ...................
Amortization of financing fees ............................................
Income tax expense .............................................................
Interest expense ...................................................................
Net income ........................................................................
$ 39,847
(12,657)
(2,946)
(8,470)
(215)
(176)
(5,616)
$ 9,767
=======
$ 29,996
(9,947)
(2,224)
(4,220)
(203)
(37)
(4,945)
$ 8,420
=======
$ 1,490
(593)
-
(219)
(21)
-
(271)
$ 386
=======
$ 5
(2)
-
-
-
-
-
$ 3
=======
The Company does not guarantee the debt of Sovran HHF, Sovran HHF II, Iskalo Office Holdings, LLC or
Urban Box.
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. A summary of our cash flows arising from the off-balance sheet
arrangements with Sovran HHF, Sovran HHF II, Iskalo Office Holdings, LLC and Urban Box for the three years
ended December 31, 2015 are as follows:
(dollars in thousands)
Statement of Operations
Other operating income (management fees and acquisition fee
income) ....................................................................................
General and administrative expenses (corporate office rent) ........
Equity in income (losses) of joint ventures ...................................
Distributions from unconsolidated joint ventures .........................
(Advances to) receipts from joint ventures ...................................
Year ended December 31,
2015
2014
2013
$ 4,889
1,053
3,405
4,821
(346)
$ 4,231
1,023
2,086
3,123
590
$ 3,358
811
1,948
2,630
(27)
64
Investing activities
Investment in unconsolidated joint ventures .................................
Return of capital from unconsolidated joint ventures ...................
(6,151)
-
(28,650)
-
(4,237)
7,360
13. SHAREHOLDERS’ EQUITY
On March 3, 2015, the Company completed the public offering of 1,380,000 shares of its common stock at
$90.40 per share. Net proceeds to the Company after deducting underwriting discounts and commissions and
offering expenses were approximately $119.5 million. The Company used the net proceeds from the offering to
repay a portion of the indebtedness outstanding on the Company’s unsecured line of credit.
On May 12, 2014, the Company entered into a continuous equity offering program (“Equity Program”)
with Wells Fargo Securities, LLC (“Wells Fargo”), Jefferies LLC (“Jefferies”), SunTrust Robinson Humphrey, Inc.
(“SunTrust”), Piper Jaffray & Co. (“Piper”), HSBC Securities (USA) Inc. (“HSBC”), and BB&T Capital Markets, a
division of BB&T Securities, LLC (“BB&T”), pursuant to which the Company may sell from time to time up to
$225 million in aggregate offering price of shares of the Company’s common stock. Actual sales under the Equity
Program will depend on a variety of factors and conditions, including, but not limited to, market conditions, the
trading price of the Company’s common stock, and determinations of the appropriate sources of funding for the
Company. The Company expects to continue to offer, sell, and issue shares of common stock under the Equity
Program from time to time based on various factors and conditions, although the Company is under no obligation to
sell any shares under the Equity Program.
During 2015, the Company issued 949,911 shares of common stock under the Equity Program at a
weighted average issue price of $96.80 per share, generating net proceeds of $90.6 million after deducting $1.1
million of sales commissions paid to Jefferies, Piper, and HSBC, as well as other expenses of $0.2 million. As of
December 31, 2015, the Company had $59.3 million available for issuance under the Equity Program. The
Company used the proceeds from the equity programs to fund a portion of the acquisition of 27 storage facilities.
During 2014, the Company issued 924,403 shares of common stock under the Equity Program at a
weighted average issue price of $79.77 per share, generating net proceeds of $72.8 million after deducting $0.9
million of sales commissions paid to Piper, HSBC and BB&T. As of December 31, 2014, the Company had $151.3
million available for issuance under the Equity Program. During the three months ended March 31, 2014, the
Company issued 359,102 shares of common stock under a previous equity program at a weighted average issue
price of $74.32 per share, generating net proceeds of $26.4 million after deducting $0.3 million of sales
commissions payable to SunTrust. In addition to sales commissions, the Company incurred expenses of $0.2
million in connection with these equity programs during 2014. The Company used the proceeds from the equity
programs to fund a portion of the acquisition of 33 storage facilities.
In 2013, the Company implemented a Dividend Reinvestment Plan. The Company issued 151,246 shares
under the plan in 2015.
65
14. SUPPLEMENTARY QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a summary of quarterly results of operations for the years ended December 31, 2015 and
2014 (dollars in thousands, except per share data):
March 31
June 30
Sept. 30
Dec. 31
2015 Quarter Ended
Operating revenue ........................................... $ 85,408
Income from continuing operations ................
22,557
Net Income ...................................................... 22,557
Net income attributable to common
shareholders ...................................................
Net Income Per Share Attributable to
22,451
Common Shareholders
$ 90,726
28,676
28,676
$ 95,428
31,661
31,661
$ 95,040
30,183
30,183
28,532
31,504
30,037
Basic .............................................................. $ 0.65
Diluted ........................................................... $ 0.65
$ 0.81
$ 0.80
$ 0.88
$ 0.88
$ 0.83
$ 0.83
March 31
June 30
Sept. 30
Dec. 31
2014 Quarter Ended
Operating revenue ........................................... $ 75,457
Income from continuing operations ................
16,775
Net Income ...................................................... 16,775
Net income attributable to common
shareholders ...................................................
Net Income Per Share Attributable to
16,673
Common Shareholders
$ 80,444
20,701
20,701
$ 85,249
25,743
25,743
$ 84,930
25,838
25,838
20,576
25,589
25,693
Basic .............................................................. $ 0.51
Diluted ........................................................... $ 0.51
$ 0.63
$ 0.62
$ 0.77
$ 0.77
$ 0.76
$ 0.76
15. COMMITMENTS AND CONTINGENCIES
The Company's current practice is to conduct environmental investigations in connection with property
acquisitions. At this time, the Company is not aware of any environmental contamination of any of its facilities that
individually or in the aggregate would be material to the Company's overall business, financial condition, or results
of operations.
Future minimum lease payments on a building lease and the lease of the Company’s headquarters are as
follows (dollars in thousands):
2016 .................................................................
2017 .................................................................
2018 .................................................................
2019 .................................................................
2020 .................................................................
Thereafter ........................................................
Total .................................................................
Building
Lease
$ 48
48
48
51
52
159
$ 406
Corporate
Headquarters
$ 915
924
924
924
943
2,223
$ 6,853
Total
$ 963
972
972
975
995
2,382
$ 7,259
At December 31, 2015, the Company was under contract to acquire 12 self-storage facilities for cash
consideration of approximately $94.4 million. Seven of the properties were acquired in January and February 2016
from unrelated parties for $46.4 million. The Company has not yet determined the assignment of the purchase
prices of these seven facilities to the individual assets acquired. These acquisitions were funded with draws on the
66
Company’s line of credit. The following is a summary of the properties under contract at December 31, 2015
(dollars in thousands).
State
Florida .............................................................................................
Florida. ............................................................................................
Arizona* ..........................................................................................
Pennsylvania ....................................................................................
Colorado ..........................................................................................
Illinois* ............................................................................................
Illinois* ............................................................................................
S. Carolina* .....................................................................................
Florida* ...........................................................................................
No. of
Properties
4
1
1
1
1
1
1
1
1
12
Contract
Amount
$20,350 Jan. 2016
Acquisition
Date
8,100
9,275 Feb. 2016
5,750 Feb. 2016
12,600
9,800
9,000
8,430
11,050 Feb. 2016
$94,355
* Properties purchased or expected to be purchased upon completion of construction.
The purchase of the remaining facilities by the Company is subject to customary conditions to closing, and
there is no assurance that this facility will be acquired.
At December 31, 2015, the Company has signed contracts in place with third party contractors for
expansion and enhancements at its existing facilities. The Company expects to pay $15.4 million under these
contracts in 2016.
On or about August 25, 2014, a putative class action was filed against the Company in the Superior Court
of New Jersey Law Division Burlington County. The action seeks to obtain declaratory, injunctive and monetary
relief for a class of consumers based upon alleged violations by the Company of the New Jersey Truth in Customer
Contract, Warranty and Notice Act, the New Jersey Consumer Fraud Act and the New Jersey Insurance Producer
Licensing Act. On October 17, 2014, the action was removed from the Superior Court of New Jersey Law Division
Burlington County to the United States District Court for the District of New Jersey. The Company brought a
motion to partially dismiss the complaint for failure to state a claim, and on July 16, 2015, the Company’s motion
was granted in part and denied in part. The Company intends to vigorously defend the action, and the possibility of
any adverse outcome cannot be determined at this time.
16. SUBSEQUENT EVENTS
On January 4, 2016, the Company declared a quarterly dividend of $0.85 per common share. The dividend
was paid on January 26, 2016 to shareholders of record on January 20, 2016. The total dividend paid amounted to
$31.1 million.
In January and February of 2016 the Company entered contacts with unrelated parties to acquire 22 self-
storage properties. The following is a summary of the properties placed under contract in 2016 (dollars in
thousands).
State
California (4), Massachusetts (1), N. Hampshire (5), Texas (3) ..
California .....................................................................................
Connecticut (2), New York (2) ....................................................
California .....................................................................................
No. of
Properties
13
4
4
1
22
Acquisition
Date
Jan. 2016
Contract
Amount
$186,400
106,750
41,800
17,320
$352,270
67
Thirteen of the properties located in New Hampshire (5), California (4), Texas (3) and Massachusetts (1)
were acquired on January 21, 2016. The purchase price was funded through draws on the Company’s line of credit,
which draws have been subsequently repaid through proceeds of the Company’s underwritten public offering
described below. The purchase of the remaining nine properties by the Company is subject to customary conditions
to closing, and there is no assurance that these properties will be acquired.
On January 20, 2016, the Company agreed to issue and sell 2,300,000 shares of the Company’s common
stock, par value $.01 per share, plus up to an additional 345,000 shares of common stock pursuant to the
underwriters’ option, at a price to the public of $105.75 per share. The underwriters’ exercised their option in full.
The offering of 2,645,000 shares of the Company’s common stock closed on January 25, 2016, resulting in net
proceeds to the Company of approximately $269.7 million.
On January 4, 2016, the Company increased its line of credit facility from $300 million to $500 million.
This increase was pursuant to an expansion feature set forth in the Company’s existing unsecured credit agreement.
The other terms of the Company’s line of credit facility were unchanged.
68
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, 2015. There have not been changes in the Company's internal controls
or in other factors that could significantly affect these controls during the quarter ended December 31, 2015.
Management’s 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, 2015. 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 Company's
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, 2015 based upon criteria in Internal Control – Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (''COSO''). Based on our
assessment, management determined that our internal control over financial reporting was effective as of December
31, 2015 based on the criteria in Internal Control-Integrated Framework issued by COSO.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2015 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/ David L. Rogers
Chief Executive Officer
/S/ Andrew J. Gregoire
Chief Financial Officer
69
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,
2015, based on criteria established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework) (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
Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on
the company’s 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 company’s 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 company’s 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 company’s
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, 2015, 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, 2015 and
2014 and the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash
flows for each of the three years in the period ended December 31, 2015 of Sovran Self Storage, Inc. and our report
dated February 25, 2016 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Buffalo, New York
February 25, 2016
70
Item 9B.
Other Information
None.
Part III
Item 10.
Directors, Executive Officers and Corporate Governance
The information contained in the our Proxy Statement for the 2016 Annual Meeting of Shareholders to be
filed with the SEC within 120 days of the fiscal year ended December 31, 2015 (“2016 Proxy Statement”), 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.unclebobs.com.
Item 11.
Executive Compensation
The information required is incorporated by reference to "Executive Compensation" and "Director
Compensation" in the 2016 Proxy Statement and is incorporated herein by reference.
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 2016 Proxy Statement and is
incorporated herein by reference.
Item 13.
Certain Relationships and Related Transactions, and Director Independence
The information required herein is incorporated by reference to "Certain Transactions” and “Election of
Directors—Director Independence” in the 2016 Proxy Statement and is incorporated herein by reference.
Item 14.
Principal Accountant Fees and Services
The information required herein is incorporated by reference to "Appointment of Independent Registered
Public Accounting Firm" in the 2016 Proxy Statement and is incorporated herein by reference.
Item 15.
Exhibits, Financial Statement Schedules
(a)
Documents filed as part of this Annual Report on Form 10-K:
Part IV
1.
The following consolidated financial statements of Sovran Self Storage, Inc. are included in Item 8.
(i)
(ii)
(iii)
Consolidated Balance Sheets as of December 31, 2015 and 2014.
Consolidated Statements of Operations for Years Ended December 31, 2015, 2014, and 2013.
Consolidated Statements of Comprehensive Income for Years Ended December 31, 2015, 2014, and
2013.
Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2015, 2014, and
2013.
(iv)
71
(v)
(vi)
Consolidated Statements of Cash Flows for Years Ended December 31, 2015, 2014, and 2013 and
Notes to Consolidated Financial Statements.
2.
The following financial statement Schedule as of the period ended December 31, 2015 is included in this
Annual Report on Form 10-K.
Schedule III Real Estate and Accumulated Depreciation at December 31, 2015.
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
3.2
3.3
3.4
3.5
3.6
4.1
10.1+
10.2+
10.3+
Amended and Restated Articles of Incorporation of Sovran Self Storage, Inc. (incorporated by reference
to Exhibit 3.1 (a) to the Sovran Self Storage, Inc.’s Registration Statement on Form S-11 (File No. 33-
91422) filed June 19, 1995).
Articles Supplementary to the Amended and Restated Articles of Incorporation of Sovran Self Storage,
Inc. classifying and designating the Series A Junior Participating Cumulative Preferred Stock
(incorporated by reference to Exhibit 3.1 to Sovran Self Storage, Inc.'s Form 8-A filed December 3,
1996).
Articles Supplementary to the Amended and Restated Articles of Incorporation of Sovran Self Storage,
Inc. classifying and designating the 9.85% Series B Cumulative Redeemable Preferred Stock
(incorporated by reference to Exhibit 1.6 to Sovran Self Storage, Inc.'s Form 8-A filed July 29, 1999).
Articles Supplementary to the Amended and Restated Articles of Incorporation of Sovran Self Storage,
Inc. classifying and designating the 8.375% Series C Convertible Cumulative Preferred Stock
(incorporated by reference to Exhibit 4.1 to Sovran Self Storage, Inc.'s Current Report on Form 8-K filed
July 12, 2002).
Articles Supplementary to the Amended and Restated Articles of Incorporation of Sovran Self Storage,
Inc. reclassifying shares of Series B Cumulative Redeemable Preferred Stock into Preferred.
(incorporated by reference to Exhibit 3.1 to Sovran Self Storage, Inc.'s Current Report on Form 8-K filed
May 31, 2011).
Bylaws, as amended, of Sovran Self Storage, Inc. (incorporated by reference to Exhibit 3.1 to Sovran
Self Storage, Inc.’s Current Report on Form 8-K filed July 17, 2012).
Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Sovran Self Storage,
Inc.’s Registration Statement on Form S-11 (File No. 33-91422) filed June 19, 1995).
Sovran Self Storage, Inc. 2015 Award and Option Plan, as amended (incorporated by reference to
Exhibit 10.1 to Sovran Self Storage, Inc.’s Report on Form 10-K filed May 11, 2015).
Sovran Self Storage, Inc. 2005 Award and Option Plan, as amended (incorporated by reference to
Exhibit 10.1 to Sovran Self Storage, Inc.’s Report on Form 10-K filed February 28, 2012).
Employment Agreement between Sovran Self Storage, Inc., Sovran Acquisition Limited Partnership, and
Robert J. Attea (incorporated by reference to Exhibit 10.3 to Sovran Self Storage, Inc.’s Annual Report
72
on Form 10-K filed February 27, 2009).
10.4+
10.5+
10.6+
10.7+
10.8+
10.9+
10.10+
10.11+
10.12+
10.13+
Amendment to Employment Agreement between Sovran Self Storage, Inc., Sovran Acquisition Limited
Partnership, and Robert J. Attea (incorporated by reference to Exhibit 10.1 to Sovran Self Storage, Inc.’s
Current Report on Form 8-K filed January 21, 2015).
Employment Agreement between Sovran Self Storage, Inc., Sovran Acquisition Limited Partnership,
and Kenneth F. Myszka (incorporated by reference to Exhibit 10.4 to Sovran Self Storage, Inc.’s Annual
Report on Form 10-K filed February 27, 2009).
Amendment to Employment Agreement between Sovran Self Storage, Inc., Sovran Acquisition Limited
Partnership, and Kenneth F. Myszka (incorporated by reference to Exhibit 10.2 to Sovran Self Storage,
Inc.’s Current Report on Form 8-K filed January 21, 2015).
Employment Agreement between Sovran Self Storage, Inc., Sovran Acquisition Limited Partnership,
and David L. Rogers (incorporated by reference to Exhibit 10.5 to Sovran Self Storage, Inc.’s Annual
Report on Form 10-K filed February 27, 2009).
Amendment to Employment Agreement between Sovran Self Storage, Inc. and David L. Rogers
(incorporated by reference to Exhibit 10.3 to Sovran Self Storage, Inc.’s Current Report on Form 8-K
filed January 21, 2015).
Form of restricted stock grant pursuant to Sovran Self Storage, Inc. 2005 Award and Option Plan
(incorporated by reference to Exhibit 10.6 to Sovran Self Storage, Inc.’s Report on Form 10-K filed
February 28, 2012).
Form of stock option grant pursuant to Sovran Self Storage, Inc. 2005 Award and Option Plan
(incorporated by reference to Exhibit 10.7 to Sovran Self Storage, Inc.’s Report on Form 10-K filed
February 28, 2012).
Form of restricted stock grant pursuant to Sovran Self Storage, Inc. 2005 Award and Option Plan
(incorporated by reference to Exhibit 10.1 and Exhibit 10.2 to Sovran Self Storage, Inc.’s Current Report
on Form 8-K filed August 6, 2013).
Form of Long Term Incentive Restricted Stock Award Notice pursuant to Sovran Self Storage, Inc. 2005
Award and Option Plan (incorporated by reference to Exhibit 10.1 to Sovran Self Storage, Inc.’s Current
Report on Form 8-K filed December 19, 2013).
Form of Performance-Based Vesting Restricted Stock Award Notice pursuant to Sovran Self Storage,
Inc. 2005 Award and Option Plan (incorporated by reference to Exhibit 10.2 to Sovran Self Storage,
Inc.’s Current Report on Form 8-K filed December 19, 2013).
10.14+
Deferred Compensation Plan for Directors (incorporated by reference to Sovran Self Storage, Inc.’s
Schedule 14A Proxy Statement filed April 8, 2015).
10.15
Amended Indemnification Agreements with members of the Board of Directors and Executive Officers
(incorporated by reference to Exhibit 10.35 and 10.36 to Sovran Self Storage, Inc.’s Current Report on
Form 8-K filed July 20, 2006, SEC File Number 001-13820, Film Number 06971617).
10.16
Agreement of Limited Partnership of Sovran Acquisition Limited Partnership (incorporated by reference
to Exhibit 3.1 on Form 10 filed April 22, 1998).
10.17
Amendments to the Agreement of Limited Partnership of Sovran Acquisition Limited Partnership dated
73
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
July 30, 1999 and July 3, 2002 (incorporated by reference to Exhibit 10.13 to Sovran Self Storage, Inc.’s
Annual Report on Form 10-K filed February 27, 2009).
Sixth Amended and Restated Revolving Credit and Term Loan Agreement dated as of December 10,
2014 among Sovran Self Storage, Inc. and Sovran Acquisition Limited Partnership, Wells Fargo Bank,
National Association, Manufacturers and Traders Trust Company and certain other lenders a party
thereto or which may become a party thereto (collectively, the "Lenders"), Manufacturers and Traders
Trust Company, as administrative agent for itself and the other Lenders, Wells Fargo Bank, National
Association, as syndication agent, and U.S. Bank National Association, HSBC Bank USA, National
Association, PNC Bank, National Association, and SunTrust Bank as co-documentation agents, for
themselves and the other Lenders (incorporated by reference to Exhibit 10.1 to Sovran Self Storage,
Inc.’s Current Report on Form 8-K filed December 15, 2014).
Agreement Regarding Revolving Credit Commitment Increases and First Amendment to Credit
Agreement dated January 4, 2016 among Sovran Self Storage, Inc., Sovran Acquisition Limited
Partnership, Manufacturers & Traders Trust Company, as Administrative Agent, and various other
financial institutions (incorporated by reference to Exhibit 10.1 to Sovran Self Storage, Inc.’s Current
Report on Form 8-K filed January 4, 2016).
Note Purchase Agreement dated as of August 5, 2011 among Sovran Self Storage, Inc., Sovran
Acquisition Limited Partnership and the institutions named in Schedule A thereto as purchasers of $100
million, 5.54% Senior Guaranteed Notes, Series D due August 5, 2021 (incorporated by reference to
Exhibit 10.2 to Sovran Self Storage, Inc.’s Current Report on Form 8-K filed August 8, 2011).
$150 million, 6.38% Senior Guaranteed Notes, Series C due April 26, 2016 (incorporated by reference to
Exhibit 10.27 to Sovran Self Storage, Inc.’s Current Report on Form 8-K filed May 1, 2006, SEC File
Number 001-13820, Film Number 06795352).
Note Purchase Agreement dated as of April 8, 2014 among Sovran Self Storage, Inc., Sovran Acquisition
Limited Partnership and the institutions named in Schedule A thereto as purchasers of $175 million,
4.533% Senior Guaranteed Notes, Series E due April 8, 2024 (incorporated by reference to Exhibit 10.1
to Sovran Self Storage, Inc.’s Current Report on Form 8-K filed April 9, 2014).
Equity Distribution Agreement dated as of May 12, 2014 by and among Sovran Self Storage, Inc.,
Sovran Acquisition Limited Partnership, Sovran Holdings, Inc., and Wells Fargo Securities, LLC, as
agent (incorporated by reference to Exhibit 1.1 to Sovran Self Storage, Inc.’s Current Report on Form 8-
K filed May 12, 2014).
Equity Distribution Agreement dated as of May 12, 2014 by and among Sovran Self Storage, Inc.,
Sovran Acquisition Limited Partnership, Sovran Holdings, Inc., and Jefferies LLC, as agent
(incorporated by reference to Exhibit 1.2 to Sovran Self Storage, Inc.’s Current Report on Form 8-K filed
May 12, 2014).
Equity Distribution Agreement dated as of May 12, 2014 by and among Sovran Self Storage, Inc.,
Sovran Acquisition Limited Partnership, Sovran Holdings, Inc., and SunTrust Robinson Humphrey, as
agent (incorporated by reference to Exhibit 1.3 to Sovran Self Storage, Inc.’s Current Report on Form 8-
K filed May 12, 2014).
Equity Distribution Agreement dated as of May 12, 2014 by and among Sovran Self Storage, Inc.,
Sovran Acquisition Limited Partnership, Sovran Holdings, Inc., and Piper Jaffray & Co, as agent
(incorporated by reference to Exhibit 1.4 to Sovran Self Storage, Inc.’s Current Report on Form 8-K filed
May 12, 2014).
74
10.27
10.28
Equity Distribution Agreement dated as of May 12, 2014 by and among Sovran Self Storage, Inc.,
Sovran Acquisition Limited Partnership, Sovran Holdings, Inc., and HSBC Securities (USA) Inc., as
agent (incorporated by reference to Exhibit 1.5 to Sovran Self Storage, Inc.’s Current Report on Form 8-
K filed May 12, 2014).
Equity Distribution Agreement dated as of May 12, 2014 by and among Sovran Self Storage, Inc.,
Sovran Acquisition Limited Partnership, Sovran Holdings, Inc., and BB&T Capital Markets, a division
of BB&T Securities, LLC, as agent (incorporated by reference to Exhibit 1.6 to Sovran Self Storage,
Inc.’s Current Report on Form 8-K filed May 12, 2014).
10.29+
Sovran Self Storage, Inc. 2009 Outside Directors Stock Option and Award Plan (incorporated by
reference to Sovran Self Storage, Inc.’s Schedule 14A Proxy Statement filed April 9, 2009).
10.30+
Outside Director Fee Schedule (incorporated by reference to Exhibit 10.1 to Sovran Self Storage, Inc.’s
Current Report on Form 8-K filed November 5, 2010).
10.31+
10.32+
10.33+
10.34+
10.35
10.36
10.37
10.38+
10.39+
Sovran Self Storage, Inc. Annual Incentive Compensation Plan for Executive Officers (incorporated by
reference to Exhibit 10.1 to Sovran Self Storage, Inc.’s Current Report on Form 8-K filed February 21,
2012).
Employment Agreement between Sovran Self Storage, Inc., Sovran Acquisition Limited Partnership and
Andrew Gregoire amended and restated effective January 1, 2009 (incorporated by reference to Exhibit
10.1 to Sovran Self Storage, Inc.’s Current Report on Form 8-K filed February 14, 2012).
Employment Agreement between Sovran Self Storage, Inc., Sovran Acquisition Limited Partnership and
Paul Powell amended and restated effective January 1, 2009 (incorporated by reference to Exhibit 10.2 to
Sovran Self Storage, Inc.’s Current Report on Form 8-K filed February 14, 2012).
Employment Agreement between Sovran Self Storage, Inc., Sovran Acquisition Limited Partnership and
Edward Killeen amended and restated effective January 1, 2009 (incorporated by reference to Exhibit
10.3 to Sovran Self Storage, Inc.’s Current Report on Form 8-K filed February 14, 2012).
Indemnification Agreement dated July 16, 2012 between Sovran Self Storage, Inc., Sovran Acquisition
Limited Partnership and Stephen R. Rusmisel, a director of the Company (incorporated by reference to
Exhibit 10.1 to Sovran Self Storage, Inc.’s Current Report on Form 8-K filed July 17, 2012).
Indemnification Agreement dated January 30, 2015 between Sovran Self Storage, Inc., Sovran
Acquisition Limited Partnership and Arthur L. Havener, Jr., a director of the Company (incorporated by
reference to Exhibit 10.1 to Sovran Self Storage, Inc.’s Current Report on Form 8-K filed February 3,
2015).
Indemnification Agreement dated January 30, 2015 between Sovran Self Storage, Inc., Sovran
Acquisition Limited Partnership and Mark G. Barberio, a director of the Company (incorporated by
reference to Exhibit 10.2 to Sovran Self Storage, Inc.’s Current Report on Form 8-K filed February 3,
2015).
Form of Long Term Incentive Restricted Stock Award Notice pursuant to Sovran Self Storage, Inc. 2005
Award and Option Plan (incorporated by reference to Exhibit 10.1 to Sovran Self Storage, Inc.’s Current
Report on Form 8-K filed December 29, 2014).
Form of Performance-Based Vesting Restricted Stock Award Notice pursuant to Sovran Self Storage,
Inc. 2005 Award and Option Plan (incorporated by reference to Exhibit 10.2 to Sovran Self Storage,
Inc.’s Current Report on Form 8-K filed December 29, 2014).
75
10.40+
10.41+
Form of Long Term Incentive Restricted Stock Award Notice pursuant to Sovran Self Storage, Inc. 2015
Award and Option Plan (incorporated by reference to Exhibit 10.1 to Sovran Self Storage, Inc.’s Current
Report on Form 8-K filed December 22, 2015).
Form of Performance-Based Award Notice pursuant to Sovran Self Storage, Inc. 2015 Award and
Option Plan (incorporated by reference to Exhibit 10.2 to Sovran Self Storage, Inc.’s Current Report on
Form 8-K filed December 22, 2015).
12.1*
Statement Re: Computation of Earnings to Fixed Charges of Sovran Self Storage, Inc.
21.1*
Subsidiaries of the Company.
23.1*
Consent of Independent Registered Public Accounting Firm related to the financial statements of Sovran
Self Storage, Inc.
24.1*
Powers of Attorney (included on signature pages).
31.1*
31.2*
32.1*
101*
*
+
Certification of Chief Executive Officer of Sovran Self Storage, Inc. pursuant to Rule 13a-14(a) and Rule
15d-14(a) of the Securities Exchange Act, as amended.
Certification of Chief Financial Officer of Sovran Self Storage, Inc. pursuant to Rule 13a-14(a) and Rule
15d-14(a) of the Securities Exchange Act, as amended.
Certification of Chief Executive Officer and Chief Financial Officer of Sovran Self Storage, Inc.
Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
The following financial statements from the Company’s Annual Report on Form 10-K for the year ended
December 31, 2015, formatted in XBRL, as follows:
(i)
(ii)
(iii)
Consolidated Balance Sheets at December 31, 2015 and 2014;
Consolidated Statements of Operations for Years Ended December 31, 2015, 2014, and 2013;
Consolidated Statements of Comprehensive Income for Years Ended December 31, 2015, 2014,
and 2013.
Consolidated Statements of Shareholders' Equity for Years Ended December 31, 2015, 2014, and
2013;
Consolidated Statements of Cash Flows for Years Ended December 31, 2015, 2014, and 2013;
and
Notes to Consolidated Financial Statements
(iv)
(v)
(vi)
Filed herewith.
Management contract or compensatory plan or arrangement.
76
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.
SIGNATURES
February 25, 2016
SOVRAN SELF STORAGE, INC.
By: /s/ Andrew J. Gregoire
Andrew J. Gregoire,
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
Robert J. Attea
Executive Chairman of the Board of
Directors and Director
February 25, 2016
/s/ Kenneth F. Myszka
Kenneth F. Myszka
President and Director
February 25, 2016
/s/ David L. Rogers
David L. Rogers
Chief Executive Officer (Principal
Executive Officer)
/s/ Andrew J. Gregoire
Andrew J. Gregoire
Chief Financial Officer (Principal
Financial and Accounting Officer)
/s/ Charles E. Lannon
Charles E. Lannon
/s/ Stephen R. Rusmisel
Stephen R. Rusmisel
/s/ Arthur L. Havener, Jr.
Arthur L. Havener, Jr.
/s/ Mark. G. Barberio
Mark G. Barberio
Director
Director
Director
Director
February 25, 2016
February 25, 2016
February 25, 2016
February 25, 2016
February 25, 2016
February 25, 2016
77
Sovran Self Storage, Inc.
Schedule III
Combined Real Estate and Accumulated Depreciation
(in thousands)
December 31, 2015
Initial Cost to Company
Building,
Equipment
and
Impvmts.
Land
Encum
brance
Cost
Capitalized
Subsequent
to
Acquisition
Building,
Equipment
and
Impvmts.
416
397
308
239
701
395
483
224
423
395
152
268
363
230
680
463
444
649
387
844
302
315
321
361
189
488
430
513
194
1,503
398
423
483
308
170
413
154
479
883
316
632
715
304
1,375
244
834
234
256
313
278
307
730
1,516
1,424
1,102
1,110
1,659
1,501
1,752
808
1,531
1,404
728
1,248
1,679
847
1,616
1,684
1,613
2,329
1,402
2,021
1,103
745
1,150
1,331
719
1,188
1,579
1,930
912
3,619
1,035
1,015
1,166
1,116
786
999
555
1,742
2,104
1,471
2,962
1,695
1,118
3,220
901
2,066
861
1,244
1,462
1,004
1,415
1,725
2,276
1,645
3,496
2,546
3,745
1,026
2,283
1,012
3,474
660
3,869
704
814
2,316
652
4,937
3,077
1,404
3,938
956
680
4,020
824
863
1,183
2,060
2,321
794
581
1,058
423
569
1,197
776
830
806
1,473
2,919
1,788
973
1,618
1,318
2,793
2,802
643
3,461
3,369
2,144
2,618
453
1,916
2,950
78
Description
Charleston
Lakeland
Charlotte
Youngstown
Cleveland
Pt. St. Lucie
Orlando - Deltona
NY Metro-Middletown
Buffalo
Rochester
Jacksonville
Columbia
Boston
Rochester
Boston
Savannah
Greensboro
Raleigh-Durham
Hartford-New Haven
Atlanta
Atlanta
Buffalo
Raleigh-Durham
Columbia
Columbia
Columbia
Atlanta
Orlando
Sharon
Ft. Lauderdale
West Palm
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta
Baltimore
Baltimore
Melbourne
Newport News
Pensacola
Hartford
Atlanta
Alexandria
Pensacola
Melbourne
Hartford
Atlanta
Norfolk
Norfolk II
Birmingham
Birmingham
ST
SC
FL
NC
OH
OH
FL
FL
NY
NY
NY
FL
SC
MA
NY
MA
GA
NC
NC
CT
GA
GA
NY
NC
SC
SC
SC
GA
FL
PA
FL
FL
GA
GA
GA
GA
GA
MD
MD
FL
VA
FL
CT
GA
VA
FL
FL
CT
GA
VA
VA
AL
AL
Land
Total
Gross Amount at Which
Carried at Close of Period
Building,
Equipment
and
Impvmts.
3,792
3,069
4,159
3,656
5,069
2,143
4,035
1,820
4,931
2,064
4,062
1,952
2,493
3,159
2,268
5,639
4,690
3,733
5,340
2,977
1,782
4,563
1,974
2,181
1,902
3,248
3,728
2,724
1,493
4,677
1,458
1,583
2,363
1,892
1,612
1,805
1,876
4,661
3,892
2,444
4,561
3,013
3,596
6,021
1,544
4,770
3,852
3,388
4,080
1,457
3,253
4,675
416
397
747
239
1,036
779
483
224
497
395
687
268
363
234
680
1,445
444
649
387
844
303
517
321
374
189
488
602
513
194
1,503
398
424
483
308
174
413
306
479
883
316
651
715
619
1,376
244
1,591
612
256
313
278
385
730
4,208
3,466
4,906
3,895
6,105
2,922
4,518
2,044
5,428
2,459
4,749
2,220
2,856
3,393
2,948
7,084
5,134
4,382
5,727
3,821
2,085
5,080
2,295
2,555
2,091
3,736
4,330
3,237
1,687
6,180
1,856
2,007
2,846
2,200
1,786
2,218
2,182
5,140
4,775
2,760
5,212
3,728
4,215
7,397
1,788
6,361
4,464
3,644
4,393
1,735
3,638
5,405
Life on
which
depreciation
in latest
income
statement
Date
Acquired
is computed
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
Accum.
Deprec.
1,477
1,217
1,131
1,210
1,271
1,150
1,676
900
1,848
1,045
977
955
1,212
767
1,135
2,117
1,592
1,703
1,320
1,448
858
1,187
967
1,098
910
1,069
1,433
1,416
743
2,121
805
812
1,028
996
782
994
782
1,770
1,897
1,218
2,351
1,382
1,430
2,737
812
1,393
1,105
1,404
1,359
782
1,326
1,412
Date of
Const.
1985
1985
1986
1980
1987
1985
1984
1988
1981
1981
1985
1985
1980
1980
1986
1981
1986
1985
1985
1988
1988
1984
1985
1987
1989
1986
1988
1988
1975
1985
1985
1989
1988
1986
1981
1975
1984
1988
1986
1988
1983
1988
1988
1984
1986
1986
1992
1988
1984
1989
1990
1990
Initial Cost to Company
Building,
Equipment
and
Impvmts.
Land
Encum
brance
Cost
Capitalized
Subsequent
to
Acquisition
Building,
Equipment
and
Impvmts.
863
326
369
244
226
1,088
526
672
343
209
443
1,161
424
360
627
470
205
412
442
353
237
766
442
408
328
436
289
481
279
345
229
359
251
344
557
777
568
436
535
487
315
314
704
600
751
725
637
495
761
418
606
474
346
432
634
566
293
335
328
155
260
289
491
2,041
1,515
1,358
1,128
1,046
2,597
1,958
2,439
1,580
964
1,602
2,755
1,506
1,641
2,224
1,712
912
1,703
1,592
1,299
858
1,800
1,767
1,662
1,324
1,759
1,161
1,559
1,014
1,262
884
1,287
917
1,254
1,988
2,770
2,028
1,635
2,033
1,754
1,131
1,113
2,496
2,142
2,676
2,586
2,918
1,781
2,714
1,921
2,164
1,686
1,236
1,560
2,565
2,279
1,357
1,342
1,315
710
1,043
1,160
1,756
947
693
3,169
2,814
779
1,117
1,479
900
2,508
802
1,088
2,071
1,177
710
3,841
1,512
436
725
1,393
897
919
767
403
1,293
455
1,480
2,381
2,540
1,425
537
2,823
1,278
2,521
576
964
683
1,317
836
575
671
498
1,284
2,499
2,313
4,225
2,260
2,027
1,141
1,655
2,916
1,500
550
577
2,051
1,464
551
698
1,565
1,140
473
3,483
2,446
761
79
Description
Montgomery
Jacksonville
Pensacola
Pensacola
Pensacola
Tampa
Clearwater
Clearwater-Largo
Jackson
Jackson
Richmond
Orlando
Birmingham
Harrisburg
Harrisburg
Syracuse
Ft. Myers
Ft. Myers
Newport News
Montgomery
Charleston
Tampa
Dallas-Ft. Worth
Dallas-Ft. Worth
Dallas-Ft. Worth
San Antonio
San Antonio
Syracuse
Montgomery
West Palm
Ft. Myers
Lakeland
Boston - Springfield
Ft. Myers
Cincinnati
Baltimore
Jacksonville
Jacksonville
Jacksonville
Charlotte
Charlotte
Orlando
Rochester
Youngstown
Cleveland
Cleveland
Cleveland
Cleveland
Cleveland
Cleveland
Cleveland
San Antonio
San Antonio
San Antonio
Houston-Beaumont
Houston-Beaumont
Houston-Beaumont
Lynchburg-Lakeside
Lynchburg-Timberlake
Lynchburg-Amherst
Chesapeake
Orlando-W 25th St
Delray
ST
AL
FL
FL
FL
FL
FL
FL
FL
MS
MS
VA
FL
AL
PA
PA
NY
FL
FL
VA
AL
SC
FL
TX
TX
TX
TX
TX
NY
AL
FL
FL
FL
MA
FL
OH
MD
FL
FL
FL
NC
NC
FL
NY
OH
OH
OH
OH
OH
OH
OH
OH
TX
TX
TX
TX
TX
TX
VA
VA
VA
VA
FL
FL
Land
Total
Gross Amount at Which
Carried at Close of Period
Building,
Equipment
and
Impvmts.
2,988
2,208
4,527
3,466
1,825
3,714
3,437
3,339
3,635
1,766
2,690
4,825
2,683
2,351
6,000
3,222
1,347
2,427
2,985
2,196
1,782
2,567
2,170
2,955
1,779
3,239
3,542
3,909
2,285
1,799
3,553
2,565
3,392
1,864
2,821
3,453
3,345
2,471
2,605
2,425
1,629
2,397
4,992
4,362
6,901
4,846
4,881
2,922
4,369
4,837
3,664
2,206
1,813
3,611
4,029
2,830
2,055
2,907
2,455
1,186
4,526
3,279
2,517
863
326
369
720
226
1,088
526
672
796
209
443
1,162
424
360
692
472
206
413
442
353
232
766
442
408
328
436
289
671
433
345
383
359
297
310
688
777
568
436
538
487
315
314
707
693
751
725
701
495
761
418
606
504
346
432
634
566
293
335
328
152
260
616
491
3,851
2,534
4,896
4,186
2,051
4,802
3,963
4,011
4,431
1,975
3,133
5,987
3,107
2,711
6,692
3,694
1,553
2,840
3,427
2,549
2,014
3,333
2,612
3,363
2,107
3,675
3,831
4,580
2,718
2,144
3,936
2,924
3,689
2,174
3,509
4,230
3,913
2,907
3,143
2,912
1,944
2,711
5,699
5,055
7,652
5,571
5,582
3,417
5,130
5,255
4,270
2,710
2,159
4,043
4,663
3,396
2,348
3,242
2,783
1,338
4,786
3,895
3,008
Life on
which
depreciation
in latest
income
statement
Date
Acquired
is computed
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
6/26/1995 5 to 40 years
8/25/1995 5 to 40 years
9/29/1995 5 to 40 years
1/16/1996 5 to 40 years
12/29/1995 5 to 40 years
12/29/1995 5 to 40 years
12/27/1995 5 to 40 years
12/28/1995 5 to 40 years
12/28/1995 5 to 40 years
1/5/1996 5 to 40 years
1/23/1996 5 to 40 years
3/1/1996 5 to 40 years
3/28/1996 5 to 40 years
3/29/1996 5 to 40 years
3/29/1996 5 to 40 years
3/29/1996 5 to 40 years
3/29/1996 5 to 40 years
3/29/1996 5 to 40 years
6/5/1996 5 to 40 years
5/21/1996 5 to 40 years
5/29/1996 5 to 40 years
5/29/1996 5 to 40 years
6/26/1996 5 to 40 years
6/28/1996 5 to 40 years
6/28/1996 5 to 40 years
7/23/1996 5 to 40 years
7/26/1996 5 to 40 years
8/23/1996 5 to 40 years
8/26/1996 5 to 40 years
8/30/1996 5 to 40 years
9/16/1996 5 to 40 years
9/16/1996 5 to 40 years
10/30/1996 5 to 40 years
12/20/1996 5 to 40 years
1/10/1997 5 to 40 years
1/10/1997 5 to 40 years
1/10/1997 5 to 40 years
1/10/1997 5 to 40 years
1/10/1997 5 to 40 years
1/10/1997 5 to 40 years
1/10/1997 5 to 40 years
1/10/1997 5 to 40 years
1/30/1997 5 to 40 years
1/30/1997 5 to 40 years
1/30/1997 5 to 40 years
3/26/1997 5 to 40 years
3/26/1997 5 to 40 years
3/26/1997 5 to 40 years
3/31/1997 5 to 40 years
3/31/1997 5 to 40 years
3/31/1997 5 to 40 years
3/31/1997 5 to 40 years
3/31/1997 5 to 40 years
4/11/1997 5 to 40 years
Accum.
Deprec.
1,520
1,113
1,758
1,103
924
2,022
1,552
1,672
1,372
923
1,295
2,059
1,327
1,230
1,906
1,436
775
1,359
1,298
974
831
1,259
1,091
1,352
886
1,428
271
1,653
920
839
753
1,249
1,464
922
799
1,641
1,615
1,184
1,347
1,114
785
1,099
1,851
1,641
2,200
2,005
2,458
1,398
2,061
1,822
1,507
996
825
1,528
1,807
1,300
888
1,224
1,139
593
1,353
854
1,248
Date of
Const.
1982
1987
1986
1990
1990
1989
1985
1988
1990
1990
1987
1986
1970
1983
1985
1987
1988
1991/94
1988/93
1984
1985
1985
1987
1986
1986
1986
2012
1983
1988
1986
1986
1988
1986
1987
1988
1990
1987
1985
1987/92
1995
1995
1975
1990
1988
1986
1978
1979
1979
1977
1970
1982
1981
1985
1995
1993/95
1995
1995
1982
1985
1987
1988/95
1984
1969
Initial Cost to Company
Building,
Equipment
and
Impvmts.
Land
Encum
brance
Cost
Capitalized
Subsequent
to
Acquisition
Building,
Equipment
and
Impvmts.
296
921
301
965
370
1,033
769
735
268
89
396
282
635
542
620
540
864
1,243
709
441
843
397
488
492
733
345
384
296
349
544
702
775
940
742
522
512
662
744
419
1,208
944
903
1,503
489
447
635
548
840
324
492
484
550
670
390
460
507
447
556
708
314
188
963
651
1,196
3,282
1,214
3,864
1,486
3,753
2,788
3,429
1,097
376
1,831
1,303
2,550
2,210
2,532
2,211
3,994
5,019
3,235
1,788
3,394
1,834
1,746
1,990
2,941
1,268
1,371
1,198
1,250
1,942
2,821
3,103
3,763
2,977
1,864
1,829
2,654
3,021
1,524
4,854
3,803
3,643
6,059
1,813
1,790
2,302
1,988
3,373
1,493
1,995
1,951
1,998
2,407
1,570
1,642
2,058
1,776
1,951
2,860
1,095
652
3,896
2,600
590
696
2,308
1,626
750
712
607
474
806
1,809
1,128
469
737
491
1,274
478
1,074
965
913
1,090
954
704
730
1,259
1,492
2,038
620
2,301
1,811
1,304
4,028
914
928
584
1,387
2,043
3,664
258
4,024
642
629
462
-1,924
1,743
2,484
273
403
609
2,180
2,594
668
888
1,735
1,446
605
1,763
962
1,268
1,258
949
1,659
1,041
1,286
80
Description
Savannah
Delray
Cleveland-Avon
Dallas-Fort Worth
Dallas-Fort Worth
Atlanta-Alpharetta
Atlanta-Marietta
Atlanta-Doraville
Greensboro-Hilltop
Greensboro-StgCch
Baton Rouge-Airline
Baton Rouge-Airline2
Harrisburg-Peiffers
Chesapeake-Military
Chesapeake-Volvo
Virginia Beach-Shell
Virginia Beach-Central
Norfolk-Naval Base
Tampa-E. Hillsborough
Boston-Northbridge
NY Metro-Middletown
Greensboro-High Point
Lynchburg-Timberlake
Titusville
Boston-Salem
Providence
Chattanooga-Lee Hwy
Chattanooga-Hwy 58
Ft. Oglethorpe
Birmingham-Walt
Providence
Raleigh-Durham
Raleigh-Durham
Salem-Policy
Youngstown-Warren
Youngstown-Warren
Melbourne
Jackson
Houston-Katy
Hollywood-Sheridan
Pompano Beach-Atlantic
Pompano Beach-Sample
Boca Raton-18th St
Vero Beach
Houston-Humble
Houston-Webster
Dallas-Fort Worth
Hollywood-N.21st
San Marcos
Austin-McNeil
Austin-FM
Dallas-Fort Worth
Dallas-Fort Worth
Cincinnati-Batavia
Jackson-N.West
Houston-Katy
Providence
Lafayette-Pinhook 1
Lafayette-Pinhook2
Lafayette-Ambassador
Lafayette-Evangeline
Lafayette-Guilbeau
Phoenix-Gilbert
ST
GA
FL
OH
TX
TX
GA
GA
GA
NC
NC
LA
LA
PA
VA
VA
VA
VA
VA
FL
MA
NY
NC
VA
FL
MA
RI
TN
TN
GA
AL
RI
NC
NC
NH
OH
OH
FL
MS
TX
FL
FL
FL
FL
FL
TX
TX
TX
FL
TX
TX
TX
TX
TX
OH
MS
TX
RI
LA
LA
LA
LA
LA
AZ
Land
Total
Gross Amount at Which
Carried at Close of Period
Building,
Equipment
and
Impvmts.
1,786
3,978
3,519
5,512
2,236
4,465
3,339
3,903
1,940
2,185
2,934
1,772
3,285
2,701
3,806
2,689
5,068
5,984
4,148
2,625
4,348
2,538
2,476
3,053
4,433
3,165
1,991
3,381
2,946
3,246
6,849
4,017
4,691
3,561
3,204
3,751
6,318
3,279
5,548
5,496
4,432
4,105
4,787
3,461
3,981
2,575
2,391
3,982
3,673
4,571
2,622
2,886
4,142
3,016
2,247
3,821
2,738
3,219
4,118
2,044
2,311
4,937
3,765
296
921
304
943
370
1,033
825
735
231
89
421
282
637
542
620
540
864
1,243
709
694
843
397
488
688
733
486
384
414
464
544
702
775
940
742
569
633
662
744
419
1,208
944
903
851
584
740
635
548
840
324
510
481
550
670
390
460
507
447
556
708
314
188
963
772
2,082
4,899
3,823
6,455
2,606
5,498
4,164
4,638
2,171
2,274
3,355
2,054
3,922
3,243
4,426
3,229
5,932
7,227
4,857
3,319
5,191
2,935
2,964
3,741
5,166
3,651
2,375
3,795
3,410
3,790
7,551
4,792
5,631
4,303
3,773
4,384
6,980
4,023
5,967
6,704
5,376
5,008
5,638
4,045
4,721
3,210
2,939
4,822
3,997
5,081
3,103
3,436
4,812
3,406
2,707
4,328
3,185
3,775
4,826
2,358
2,499
5,900
4,537
Date
Acquired
Life on
which
depreciation
in latest
income
statement
is computed
5/8/1997 5 to 40 years
5/21/1997 5 to 40 years
6/4/1997 5 to 40 years
6/30/1997 5 to 40 years
6/30/1997 5 to 40 years
7/24/1997 5 to 40 years
7/24/1997 5 to 40 years
8/21/1997 5 to 40 years
9/25/1997 5 to 40 years
9/25/1997 5 to 40 years
10/9/1997 5 to 40 years
11/21/1997 5 to 40 years
12/3/1997 5 to 40 years
2/5/1998 5 to 40 years
2/5/1998 5 to 40 years
2/5/1998 5 to 40 years
2/5/1998 5 to 40 years
2/5/1998 5 to 40 years
2/4/1998 5 to 40 years
2/9/1998 5 to 40 years
2/4/1998 5 to 40 years
2/10/1998 5 to 40 years
2/18/1998 5 to 40 years
2/25/1998 5 to 40 years
3/3/1998 5 to 40 years
6/26/1995 5 to 40 years
3/27/1998 5 to 40 years
3/27/1998 5 to 40 years
3/27/1998 5 to 40 years
3/27/1998 5 to 40 years
3/26/1998 5 to 40 years
4/9/1998 5 to 40 years
4/9/1998 5 to 40 years
4/7/1998 5 to 40 years
4/22/1998 5 to 40 years
4/22/1998 5 to 40 years
6/2/1998 5 to 40 years
5/13/1998 5 to 40 years
5/20/1998 5 to 40 years
7/1/1998 5 to 40 years
7/1/1998 5 to 40 years
7/1/1998 5 to 40 years
7/1/1998 5 to 40 years
6/12/1998 5 to 40 years
6/16/1998 5 to 40 years
6/19/1998 5 to 40 years
6/19/1998 5 to 40 years
8/3/1998 5 to 40 years
6/30/1998 5 to 40 years
6/30/1998 5 to 40 years
6/30/1998 5 to 40 years
9/29/1998 5 to 40 years
10/9/1998 5 to 40 years
11/19/1998 5 to 40 years
12/1/1998 5 to 40 years
12/15/1998 5 to 40 years
2/2/1999 5 to 40 years
2/17/1999 5 to 40 years
2/17/1999 5 to 40 years
2/17/1999 5 to 40 years
2/17/1999 5 to 40 years
2/17/1999 5 to 40 years
5/18/1999 5 to 40 years
Accum.
Deprec.
820
1,911
1,340
2,515
1,111
2,091
1,553
1,870
751
854
1,277
836
1,521
1,221
1,613
1,224
2,267
2,691
1,963
726
1,929
1,155
1,088
851
2,049
1,092
958
1,188
972
1,459
2,103
1,782
2,091
1,572
1,368
1,436
1,378
1,471
1,490
2,469
2,059
1,861
2,161
1,035
1,436
1,136
1,051
1,808
1,284
1,404
1,126
1,162
1,580
1,054
1,081
1,364
1,184
1,507
1,456
971
998
1,976
1,497
Date of
Const.
1988
1980
1989
1977
1975
1994
1996
1995
1995
1997
1982
1985
1984
1996
1995
1991
1993/95
1975
1985
1988
1989/95
1993
1990/96
1986/90
1979
1984
1987
1985
1989
1984
1984/88
1988/91
1990/96
1980
1986
1986
1985
1995
1994
1988
1985
1988
1991
1997
1986
1997
1997
1987
1994
1994
1996
1996
1996
1988
1984
1993
1986/94
1980
1992/94
1975
1977
1994
1995
Initial Cost to Company
Building,
Equipment
and
Impvmts.
Land
Encum
brance
Cost
Capitalized
Subsequent
to
Acquisition
Building,
Equipment
and
Impvmts.
565
330
339
291
354
453
872
849
410
667
335
276
633
633
384
254
1,716
837
733
787
1,035
1,024
883
552
470
534
1,004
670
294
734
394
381
919
612
689
817
407
817
2,207
1,131
635
1,251
1,039
827
2,713
773
1,195
1,103
1,061
388
1,720
1,167
1,365
2,047
527
1,131
612
1,612
1,214
1,906
470
537
556
2,596
1,309
1,346
1,026
1,405
1,610
3,476
3,401
1,626
2,373
1,521
1,312
2,573
2,617
1,422
1,059
6,920
2,977
3,392
3,249
3,737
3,649
3,139
1,970
1,902
1,914
4,584
3,060
1,203
2,956
1,595
1,545
3,696
2,468
3,159
3,286
1,650
3,287
8,866
4,564
2,918
5,744
4,201
3,776
11,013
3,170
4,877
4,550
4,427
1,640
6,986
4,744
5,569
5,857
2,121
4,609
2,501
6,585
4,949
7,726
1,902
2,183
2,265
768
2,579
730
1,073
565
1,019
3,598
864
1,958
988
617
1,299
1,012
456
648
1,361
1,682
3,591
783
716
710
784
1,434
1,093
3,587
469
2,365
600
1,194
791
451
3,876
671
455
638
2,220
290
480
762
595
444
498
225
485
500
1,866
334
488
2,898
1,011
283
3,559
1,658
866
866
210
274
245
336
358
1,654
-281
534
81
Description
Phoenix-Glendale
Phoenix-Mesa
Phoenix-Mesa
Phoenix-Mesa
Phoenix-Mesa
Phoenix-Camelback
Phoenix-Bell
Phoenix-35th Ave
Portland
Space Coast-Cocoa
Dallas-Fort Worth
NY Metro-Middletown
Boston-N. Andover
Houston-Seabrook
Ft. Lauderdale
Birmingham-Bessemer
NY Metro-Brewster
Austin-Lamar
Houston
Ft. Myers
Boston-Dracut
Boston-Methuen
Columbia
Myrtle Beach
Kingsland
Maine-Saco
Boston-Plymouth
Boston-Sandwich
Syracuse
Dallas-Fort Worth
Dallas-Fort Worth
San Antonio-Hunt
Houston-Humble
Houston-Pasadena
Houston-League City
Houston-Montgomery
Houston-S. Hwy 6
Houston-Beaumont
The Hamptons
The Hamptons
The Hamptons
The Hamptons
Dallas-Fort Worth
Dallas-Fort Worth
Stamford
Houston-Tomball
Houston-Conroe
Houston-Spring
Houston-Bissonnet
Houston-Alvin
Clearwater
Houston-Missouri City
Chattanooga-Hixson
Austin-Round Rock
Syracuse - Cicero
Long Island-Bayshore
Boston-Springfield
Stamford
Houston-Jones
Montgomery-Richard
Boston-Oxford
Austin-290E
San Antonio-Marbach
ST
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
ME
FL
TX
NY
MA
TX
FL
AL
NY
TX
TX
FL
MA
MA
SC
SC
GA
ME
MA
MA
NY
TX
TX
TX
TX
TX
TX
TX
TX
TX
NY
NY
NY
NY
TX
TX
CT
TX
TX
TX
TX
TX
FL
TX
TN
TX
NY
NY
MA
CT
TX
AL
MA
TX
TX
Land
Total
Gross Amount at Which
Carried at Close of Period
Building,
Equipment
and
Impvmts.
3,364
3,485
2,076
2,099
1,970
2,629
7,074
4,265
3,584
3,361
2,138
2,611
3,585
3,073
2,070
2,420
8,337
6,439
4,067
3,850
4,378
4,366
4,514
3,026
5,293
2,347
6,949
3,616
2,364
3,697
2,019
5,184
4,367
2,923
3,797
5,204
1,940
3,767
9,628
5,159
3,362
6,241
4,426
4,261
11,513
5,036
5,211
5,038
7,325
2,651
7,269
7,904
7,227
6,794
2,987
4,819
2,775
6,830
5,284
8,084
3,556
1,948
2,799
565
733
339
291
354
453
872
849
410
667
335
276
633
633
384
254
1,981
966
841
902
1,104
1,091
942
589
666
570
1,004
714
327
784
421
618
919
612
689
1,119
407
817
2,207
1,131
635
1,252
1,039
827
2,713
773
1,195
1,103
1,061
388
1,720
1,566
1,365
1,976
527
1,131
612
1,612
1,215
1,906
470
491
556
3,929
4,218
2,415
2,390
2,324
3,082
7,946
5,114
3,994
4,028
2,473
2,887
4,218
3,706
2,454
2,674
10,318
7,405
4,908
4,752
5,482
5,457
5,456
3,615
5,959
2,917
7,953
4,330
2,691
4,481
2,440
5,802
5,286
3,535
4,486
6,323
2,347
4,584
11,835
6,290
3,997
7,493
5,465
5,088
14,226
5,809
6,406
6,141
8,386
3,039
8,989
9,470
8,592
8,770
3,514
5,950
3,387
8,442
6,499
9,990
4,026
2,439
3,355
Life on
which
depreciation
in latest
income
statement
Date
Acquired
is computed
5/18/1999 5 to 40 years
5/18/1999 5 to 40 years
5/18/1999 5 to 40 years
5/18/1999 5 to 40 years
5/18/1999 5 to 40 years
5/18/1999 5 to 40 years
5/18/1999 5 to 40 years
5/21/1999 5 to 40 years
8/2/1999 5 to 40 years
9/29/1999 5 to 40 years
11/9/1999 5 to 40 years
2/2/2000 5 to 40 years
2/15/2000 5 to 40 years
3/1/2000 5 to 40 years
5/2/2000 5 to 40 years
11/15/2000 5 to 40 years
12/27/2000 5 to 40 years
2/22/2001 5 to 40 years
3/2/2001 5 to 40 years
3/13/2001 5 to 40 years
12/1/2001 5 to 40 years
12/1/2001 5 to 40 years
12/1/2001 5 to 40 years
12/1/2001 5 to 40 years
12/1/2001 5 to 40 years
12/3/2001 5 to 40 years
12/19/2001 5 to 40 years
12/19/2001 5 to 40 years
2/5/2002 5 to 40 years
2/13/2002 5 to 40 years
2/13/2002 5 to 40 years
2/13/2002 5 to 40 years
6/19/2002 5 to 40 years
6/19/2002 5 to 40 years
6/19/2002 5 to 40 years
6/19/2002 5 to 40 years
6/19/2002 5 to 40 years
6/19/2002 5 to 40 years
12/16/2002 5 to 40 years
12/16/2002 5 to 40 years
12/16/2002 5 to 40 years
12/16/2002 5 to 40 years
8/26/2003 5 to 40 years
10/1/2003 5 to 40 years
3/17/2004 5 to 40 years
5/19/2004 5 to 40 years
5/19/2004 5 to 40 years
5/19/2004 5 to 40 years
5/19/2004 5 to 40 years
5/19/2004 5 to 40 years
6/3/2004 5 to 40 years
6/23/2004 5 to 40 years
8/4/2004 5 to 40 years
8/5/2004 5 to 40 years
3/16/2005 5 to 40 years
3/15/2005 5 to 40 years
4/12/2005 5 to 40 years
4/14/2005 5 to 40 years
6/6/2005 5 to 40 years
6/1/2005 5 to 40 years
6/23/2005 5 to 40 years
7/12/2005 5 to 40 years
7/12/2005 5 to 40 years
Accum.
Deprec.
1,383
1,071
830
771
854
1,140
2,160
1,799
1,334
1,406
884
944
1,360
1,281
839
812
1,870
1,103
1,184
1,117
1,610
1,553
1,499
1,083
1,437
835
2,113
1,266
697
1,287
717
1,043
1,468
987
1,241
1,572
676
1,291
3,238
1,690
1,092
2,035
1,399
1,314
3,603
1,456
1,531
1,535
2,009
742
2,157
1,980
2,133
2,011
887
1,351
790
1,975
1,450
2,235
902
602
783
Date of
Const.
1997
1986
1986
1976
1986
1984
1984
1996
1988
1982
1985
1998
1989
1996
1994
1998
1991/97
1996/99
1993/97
1997
1986
1984
1985
1984
1989
1988
1996
1984
1987
1984
1985
1980
1998/02
1999
1994/97
1998
1997
1996
1989/95
1998
1997
1994/98
1995/99
1998/01
1998
2000
2001
2001
2003
2003
2001
1998
1998/02
2000
1988/02
2003
1965/75
2002
1997/99
1997
2002
2003
2003
Initial Cost to Company
Building,
Equipment
and
Impvmts.
Land
Encum
brance
Cost
Capitalized
Subsequent
to
Acquisition
Building,
Equipment
and
Impvmts.
754
484
811
719
721
628
596
937
707
411
463
601
542
832
617
1,270
929
696
1,220
1,113
766
828
734
899
890
697
1,256
605
607
1,073
549
644
963
773
1,175
619
699
1,158
590
694
736
975
0
439
813
532
437
638
348
323
315
961
375
1,003
1,100
929
1,537
1,607
1,016
1,423
1,206
1,216
1,345
3,065
1,977
3,397
2,927
2,994
2,532
2,411
3,779
2,933
1,621
1,831
2,406
1,319
3,268
2,422
5,037
3,676
2,739
4,805
4,359
3,040
3,290
2,867
3,596
3,552
2,711
4,946
2,434
2,428
4,276
2,180
2,542
3,836
3,060
4,624
2,471
2,784
4,639
2,361
2,758
2,905
3,854
3,680
1,745
3,213
2,119
1,794
2,531
1,344
1,331
2,185
3,827
1,498
4,002
4,386
3,647
6,018
6,338
4,013
5,624
4,775
4,819
5,325
226
1,526
551
2,554
2,299
613
314
227
2,789
271
190
1,414
2,210
172
565
349
325
190
272
361
1,459
199
2,382
304
418
183
441
152
208
95
1,159
143
231
1,970
371
141
2,002
993
510
305
273
1,350
289
283
2,040
3,477
669
656
420
200
1,092
2,568
479
138
704
181
571
1,001
378
185
350
351
114
82
Description
Austin-South 1st
Houston-Pinehurst
Atlanta-Marietta
Baton Rouge
Houston-Cypress
San Marcos-Hwy 35S
Houston-Baytown
Rochester
Houston-Jones Rd 2
Lafayette
Lafayette
Lafayette
Lafayette
Manchester
Nashua
Clearwater-Largo
Clearwater-Pinellas Park
Clearwater-Tarpon Spring
New Orleans
St Louis-Meramec
St Louis-Charles Rock
St Louis-Shackelford
St Louis-W.Washington
St Louis-Howdershell
St Louis-Lemay Ferry
St Louis-Manchester
Dallas-Fort Worth
Dallas-Fort Worth
Dallas-Fort Worth
Dallas-Fort Worth
Dallas-Fort Worth
Dallas-Fort Worth
San Antonio-Blanco
San Antonio-Broadway
San Antonio-Huebner
Chattanooga-Lee Hwy II
Lafayette
Montgomery-E.S.Blvd
Auburn-Pepperell Pkwy
Auburn-Gatewood Dr
Columbus-Williams Rd
Columbus-Miller Rd
Columbus-Armour Rd
Columbus-Amber Dr
Concord
Buffalo-Langner Rd
Buffalo-Transit Rd
Buffalo-Lake Ave
Buffalo-Union Rd
Buffalo-NF Blvd
Buffalo-Young St
Buffalo-Sheridan Dr
Bufrfalo-Transit Rd
Rochester-Phillips Rd
Greenville
Houston-Beaumont
Houston-Beaumont
Huntsville-Memorial
Huntsville-Madison 1
Bilox-Gulfport
Huntsville-Hwy 72
Mobile-Airport Blvd
Bilox-Gulfport
ST
TX
TX
GA
LA
TX
TX
TX
NY
TX
LA
LA
LA
LA
NH
NH
FL
FL
FL
LA
MO
MO
MO
MO
MO
MO
MO
TX
TX
TX
TX
TX
TX
TX
TX
TX
TN
LA
AL
AL
AL
GA
GA
GA
GA
NH
NY
NY
NY
NY
NY
NY
NY
NY
NY
MS
TX
TX
AL
AL
MS
AL
AL
MS
Land
Total
Gross Amount at Which
Carried at Close of Period
Building,
Equipment
and
Impvmts.
3,291
3,503
3,948
5,481
5,293
2,791
2,725
4,006
5,722
1,892
2,021
3,820
3,529
3,440
2,987
5,386
4,001
2,929
5,077
4,720
4,499
3,489
5,249
3,900
3,970
2,894
5,387
2,586
2,636
4,371
3,339
2,685
4,067
5,030
4,995
2,612
4,786
5,632
2,871
3,063
3,178
5,204
3,969
2,028
5,253
5,596
2,463
3,187
1,764
1,531
3,276
6,395
1,977
4,140
5,090
3,827
6,589
7,269
4,390
5,809
5,125
5,170
5,483
754
484
811
719
721
982
596
937
707
411
463
601
542
832
617
1,270
929
696
1,220
1,113
766
828
734
899
890
697
1,256
605
607
1,073
549
644
963
773
1,175
619
699
1,158
590
694
736
975
0
439
813
532
437
638
348
323
316
961
375
1,003
1,100
930
1,537
1,677
1,017
1,423
1,206
1,216
1,301
4,045
3,987
4,759
6,200
6,014
3,773
3,321
4,943
6,429
2,303
2,484
4,421
4,071
4,272
3,604
6,656
4,930
3,625
6,297
5,833
5,265
4,317
5,983
4,799
4,860
3,591
6,643
3,191
3,243
5,444
3,888
3,329
5,030
5,803
6,170
3,231
5,485
6,790
3,461
3,757
3,914
6,179
3,969
2,467
6,066
6,128
2,900
3,825
2,112
1,854
3,592
7,356
2,352
5,143
6,190
4,757
8,126
8,946
5,407
7,232
6,331
6,386
6,784
Life on
which
depreciation
in latest
income
statement
Date
Acquired
is computed
7/12/2005 5 to 40 years
7/12/2005 5 to 40 years
9/15/2005 5 to 40 years
11/15/2005 5 to 40 years
1/13/2006 5 to 40 years
1/10/2006 5 to 40 years
1/10/2006 5 to 40 years
2/1/2006 5 to 40 years
3/9/2006 5 to 40 years
4/13/2006 5 to 40 years
4/13/2006 5 to 40 years
4/13/2006 5 to 40 years
4/13/2006 5 to 40 years
4/26/2006 5 to 40 years
6/29/2006 5 to 40 years
6/22/2006 5 to 40 years
6/22/2006 5 to 40 years
6/22/2006 5 to 40 years
6/22/2006 5 to 40 years
6/22/2006 5 to 40 years
6/22/2006 5 to 40 years
6/22/2006 5 to 40 years
6/22/2006 5 to 40 years
6/22/2006 5 to 40 years
6/22/2006 5 to 40 years
6/22/2006 5 to 40 years
6/22/2006 5 to 40 years
6/22/2006 5 to 40 years
6/22/2006 5 to 40 years
6/22/2006 5 to 40 years
6/22/2006 5 to 40 years
6/22/2006 5 to 40 years
6/22/2006 5 to 40 years
6/22/2006 5 to 40 years
6/22/2006 5 to 40 years
8/7/2006 5 to 40 years
8/1/2006 5 to 40 years
9/28/2006 5 to 40 years
9/28/2006 5 to 40 years
9/28/2006 5 to 40 years
9/28/2006 5 to 40 years
9/28/2006 5 to 40 years
9/28/2006 5 to 40 years
9/28/2006 5 to 40 years
10/31/2006 5 to 40 years
3/30/2007 5 to 40 years
3/30/2007 5 to 40 years
3/30/2007 5 to 40 years
3/30/2007 5 to 40 years
3/30/2007 5 to 40 years
3/30/2007 5 to 40 years
3/30/2007 5 to 40 years
3/30/2007 5 to 40 years
3/30/2007 5 to 40 years
1/11/2007 5 to 40 years
3/8/2007 5 to 40 years
3/8/2007 5 to 40 years
6/1/2007 5 to 40 years
6/1/2007 5 to 40 years
6/1/2007 5 to 40 years
6/1/2007 5 to 40 years
6/1/2007 5 to 40 years
6/1/2007 5 to 40 years
Date of
Const.
2003
2002/04
2003
1984/94
2003
2001
2002
2002/06
2000
1997
2001/04
2002
1997/99
2000
1989
1998
2000
1999
2000
1999
1999
1999
1980/01
2000
1999
2000
1998/03
2004
2004
2003
1998
1999
2004
2000
1998
2002
1995/99
1996/97
1998
2002/03
Accum.
Deprec.
950
867
1,099
1,124
1160
709
691
1029
1358
520
529
952
804
877
745
1336
969
740
1274
1181
872
878
966
965
973
722
1319
637
652
1086
711
669
1026
964
1194
647
1117
1363
673
715
781 2002/04/06
947
943
496
1142
770
540
747
389
362
692
1122
470
933
1178
898
1488
1545
1000
1304
1125
1181
1201
1995
2004/05
1998
2000
1993/07
1998
1997
1998
1998
1999/00
1999
1990/95
1999
1994
2002/04
2003/06
1989/06
1993/07
1998/05
1998/06
2000/07
2002/04
Initial Cost to Company
Building,
Equipment
and
Impvmts.
Land
Encum
brance
Cost
Capitalized
Subsequent
to
Acquisition
Building,
Equipment
and
Impvmts.
1,164
1,346
1,029
686
1,811
732
1,075
885
676
742
444
384
437
1,479
1,337
852
1,047
846
961
574
513
1,129
381
965
796
885
197
1,043
825
693
1,243
1,559
691
1,012
575
705
1,168
2,152
402
1,653
1,474
177
1,438
272
536
1,478
1,315
3,189
1,049
2,054
2,848
197
2,960
1,932
1,940
911
1,560
664
772
739
1,384
856
855
4,624
5,474
4,180
2,732
7,152
3,015
4,333
3,586
2,685
3,024
1,799
1,548
1,757
5,965
5,377
3,409
5,981
4,095
3,702
3,975
5,317
4,767
3,575
3,355
9,467
3,073
2,132
8,252
4,201
3,552
3,106
2,727
4,435
3,312
3,557
4,223
2,315
3,027
3,602
4,947
4,500
3,223
4,583
3,236
2,687
4,145
6,142
3,974
5,175
2,138
5,892
4,281
12,077
11,606
4,880
5,862
6,766
5,719
3,882
3,858
9,266
4,315
3,838
274
1,549
184
210
122
82
256
211
373
199
180
107
190
524
169
259
50
132
583
186
40
118
70
85
196
621
40
81
330
109
135
87
2,461
206
160
179
185
316
198
322
105
116
134
176
170
156
216
191
504
385
70
179
117
152
249
48
55
45
68
53
61
65
87
83
1,993
ST
Description
AL
Huntsville-Madison 2
AL
Foley-Hwy 59
FL
Pensacola 6-Nine Mile
AL
Auburn-College St
MS
Biloxi-Gulfport
FL
Pensacola 7-Hwy 98
AL
Montgomery-Arrowhead
AL
Montgomery-McLemore
TX
San Antonio-Foster
TX
Houston-Beaumont
MS
Hattiesburg-Clasic
MS
Biloxi-Ginger
AL
Foley-7905 St Hwy 59
MS
Jackson-Ridgeland
MS
Jackson-5111
OH
Cincinnati-Robertson
VA
Richmond-Bridge Rd
NC
Raleigh-Durham
NC
Charlotte-Wallace
NC
Raleigh-Durham
NC
Charlotte-Westmoreland
NC
Charlotte-Matthews
NC
Raleigh-Durham
NC
Charlotte-Zeb Morris
NJ
Fair Lawn
NJ
Elizabeth
MO
Saint Louis-High Ridge
GA
Atlanta-Decatur
TX
Houston-Humble
TX
Dallas-Fort Worth
TX
Houston-Hwy 6N
TX
Austin-Cedar Park
TX
Houston-Katy
TX
Houston-Deer Park
TX
Houston-W.Little York
TX
Houston-Pasadena
TX
Houston-Friendswood
TX
Houston-Spring
TX
Houston-W.Sam Houston
TX
Austin-Pond Springs Rd
TX
Houston-Spring
TX
Austin-Round Rock
TX
Houston-Silverado Dr
TX
Houston-Sugarland
TX
Houston-Westheimer Rd
TX
Houston-Wilcrest Dr
TX
Houston-Woodlands
TX
Houston-Woodlands
TX
Houston-Katy Freeway
Houston-Webster
TX
Newport News-Brick Kiln VA
FL
Penasacola-Palafox
FL
Miami
IL
Chicago - Lake Forest
IL
Chicago - Schaumburg
VA
Norfolk - E. Little Creek
GA
Atlanta-14th St.
FL
Jacksonville - Middlebg
FL
Jacksonville - Orange Pk
FL
Jacksonville - St.Augustne
GA
Atlanta - NE Expressway
GA
Atlanta - Kennesaw
GA
Atlanta - Lawrenceville
Land
Total
Gross Amount at Which
Carried at Close of Period
Building,
Equipment
and
Impvmts.
4,898
7,022
4,364
2,942
7,274
3,097
4,588
3,797
3,058
3,223
1,979
1,655
1,947
6,489
5,546
3,668
6,031
4,227
4,285
4,160
5,357
4,885
3,645
3,440
9,663
3,694
2,172
8,333
4,531
3,661
3,241
2,814
6,896
3,518
3,717
4,402
2,500
3,343
3,800
5,269
4,605
3,339
4,717
3,412
2,857
4,301
6,358
4,165
5,679
2,523
5,962
4,460
12,194
11,758
5,129
5,910
6,821
5,784
3,950
3,911
9,327
4,380
3,925
1,164
1,347
1,029
686
1,811
732
1,076
885
676
742
444
384
437
1,479
1,337
852
1,047
846
961
575
513
1,129
381
965
796
885
197
1,043
825
693
1,243
1,559
691
1,012
575
705
1,168
2,152
402
1,653
1,474
177
1,438
272
536
1,478
1,315
3,189
1,049
2,054
2,848
197
2,960
1,932
1,940
911
1,560
644
772
739
1,384
856
855
6,062
8,369
5,393
3,628
9,085
3,829
5,664
4,682
3,734
3,965
2,423
2,039
2,384
7,968
6,883
4,520
7,078
5,073
5,246
4,735
5,870
6,014
4,026
4,405
10,459
4,579
2,369
9,376
5,356
4,354
4,484
4,373
7,587
4,530
4,292
5,107
3,668
5,495
4,202
6,922
6,079
3,516
6,155
3,684
3,393
5,779
7,673
7,354
6,728
4,577
8,810
4,657
15,154
13,690
7,069
6,821
8,381
6,428
4,722
4,650
10,711
5,236
4,780
Date
Acquired
Life on
which
depreciation
in latest
income
statement
is computed
6/1/2007 5 to 40 years
6/1/2007 5 to 40 years
6/1/2007 5 to 40 years
6/1/2007 5 to 40 years
6/1/2007 5 to 40 years
6/1/2007 5 to 40 years
6/1/2007 5 to 40 years
6/1/2007 5 to 40 years
5/21/2007 5 to 40 years
11/14/2007 5 to 40 years
12/19/2007 5 to 40 years
12/19/2007 5 to 40 years
12/19/2007 5 to 40 years
1/17/2008 5 to 40 years
1/17/2008 5 to 40 years
12/31/2008 5 to 40 years
10/1/2009 5 to 40 years
12/28/2010 5 to 40 years
12/29/2010 5 to 40 years
12/29/2010 5 to 40 years
12/29/2010 5 to 40 years
12/29/2010 5 to 40 years
12/29/2010 5 to 40 years
12/29/2010 5 to 40 years
7/14/2011 5 to 40 years
7/14/2011 5 to 40 years
7/28/2011 5 to 40 years
8/17/2011 5 to 40 years
9/22/2011 5 to 40 years
9/22/2011 5 to 40 years
9/22/2011 5 to 40 years
9/22/2011 5 to 40 years
9/22/2011 5 to 40 years
9/22/2011 5 to 40 years
9/22/2011 5 to 40 years
9/22/2011 5 to 40 years
9/22/2011 5 to 40 years
9/22/2011 5 to 40 years
9/22/2011 5 to 40 years
9/22/2011 5 to 40 years
9/22/2011 5 to 40 years
9/22/2011 5 to 40 years
9/22/2011 5 to 40 years
9/22/2011 5 to 40 years
9/22/2011 5 to 40 years
9/22/2011 5 to 40 years
9/22/2011 5 to 40 years
9/22/2011 5 to 40 years
9/22/2011 5 to 40 years
5 to 40 years
9/29/2011 5 to 40 years
11/15/2011 5 to 40 years
5/16/2012 5 to 40 years
6/6/2012 5 to 40 years
6/6/2012 5 to 40 years
6/20/2012 5 to 40 years
7/18/2012 5 to 40 years
9/18/2012 5 to 40 years
9/18/2012 5 to 40 years
9/18/2012 5 to 40 years
9/18/2012 5 to 40 years
9/18/2012 5 to 40 years
9/18/2012 5 to 40 years
9/22/2011
Accum.
Deprec.
1090
1313
1050
680
1588
732
1011
825
721
712
429
345
397
1341
1137
661
1092
562
527
537
692
648
477
450
1134
374
307
938
548
445
403
356
601
412
472
523
317
422
434
596
546
403
550
424
346
491
709
465
648
307
691
496
1109
1071
483
552
627
497
349
352
802
380
345
Date of
Const.
2002/06
2003/06
2003/06
2003
2004/06
2006
2006
2006
2003/06
2002/05
1998
2000
2000
1997/00
2003
2003/04
2009
2000
2008
2008
2009
2009
2008
2007
1999
1988
2007
2006
1993
2001
2000
1998
2000
1998
1998
2000
1994
1993
1999
1984
2006
1999
2000
2001
1997
1999
1997
2000
1999
1982
2004
1996
2005
1996/2004
1998
2007
2009
2008
2007
2007
2009
2008
2007
Initial Cost to Company
Building,
Equipment
and
Impvmts.
Land
Encum
brance
Cost
Capitalized
Subsequent
to
Acquisition
Building,
Equipment
and
Impvmts.
1,342
2,337
1,213
1,050
1,501
515
1,234
1,555
269
910
2,593
1,718
395
1,246
2,373
774
632
337
2,122
1,553
1,096
2,224
629
1,843
868
1,547
1,174
1,639
7,629
15,680
3,999
2,235
2,146
493
1,837
598
2,000
2,444
638
2,010
508
1,989
1,538
5,161
1,741
2,263
0
819
1,097
626
1,512
2,958
2,349
2,658
759
5,771
6,091
4,196
889
1,599
9,747
9,642
5,153
4,692
4,901
3,129
5,894
3,775
2,280
4,018
5,978
3,126
3,656
5,029
6,466
3,226
5,740
9,869
3,327
1,985
2,005
8,735
7,186
8,276
10,102
5,201
6,544
5,306
5,226
8,816
10,946
11,918
17,520
4,297
6,269
6,418
5,234
6,301
4,789
3,749
5,966
3,518
3,544
2,042
4,045
4,510
7,063
6,006
4,931
2,292
4,734
5,618
4,549
9,707
6,904
3,875
8,190
5,608
10,375
4,641
8,374
4,700
5,813
18,374
23,352
27,401
70
185
141
96
126
80
103
80
164
93
220
682
112
124
34
89
66
178
116
63
93
81
135
97
630
85
112
69
186
442
650
319
182
77
528
152
430
418
311
225
365
440
358
617
217
431
249
383
307
231
614
204
145
350
175
412
352
544
427
494
57
82
60
84
ST
Description
GA
Atlanta - Woodstock
NC
Raleigh-Durham
IL
Chicago - Lindenhurst
IL
Chicago - Orland Park
FL
Bradenton
FL
Ft. Myers-Cleveland
FL
Clearwater-Drew St.
FL
Clearwater-N. Myrtle
IL
Chicago-Aurora
AZ
Phoenix-83rd
IL
Chicago-North Austin
IL
Chicago-North Western
IL
Chicago-West Pershing
TX
Austin-Cedar Park
IL
Chicago – N. Broadway
TX
Austin-Round Rock
TX
Austin-Round Rock
San Antonio - Marbach
TX
Long Island - Lindenhurst NY
MA
Boston - Somerville
NY
Long Island - Deer Park
NY
Long Island - Amityville
CO
Colorado Springs
NJ
Toms River – Rte. 37 W
FL
Lake Worth - S Military
TX
Austin-Round Rock
CT
Hartford-Bristol
NJ
Piscataway - Brunswick
FL
Fort Lauderdale - 3rd Ave
FL
West Palm - Mercer
TX
Austin - Manchaca
TX
San Antonio
ME
Portland
ME
Portland-Topsham
IL
Chicago - St. Charles
IL
Chicago - Ashland
TX
San Antonio - Walzem
MO
St. Louis - Woodson
MO
St. Louis - Mexico
MO
St. Louis - Vogel
St. Louis - Manchester
MO
St. Louis - North Highway MO
MO
St. Louis - Dunn
Trenton-Hamilton Twnship NJ
NY
NY Metro-Fishkill
GA
Atlanta-Peachtree City
NJ
Wayne - Willowbrook
NJ
Asbury Park - 1st Ave
Farmingdale - Tinton Falls NJ
NJ
Lakewood - Route 70
NJ
Matawan - Highway 34
St. Petersburg - Gandy
FL
Chesapeake - Campostella VA
TX
San Antonio-Castle Hills
TN
Chattanooga - Broad St
LA
New Orleans-Kenner
FL
Orlando-Celebration
TX
Austin-Cedar Park
IL
Chicago - Pulaski
TX
Houston - Gessner
CT
New England - Danbury
CT
New England - Milford
NY
Long Island - Hicksville
Land
Total
Gross Amount at Which
Carried at Close of Period
Building,
Equipment
and
Impvmts.
4,762
5,086
3,270
5,990
3,901
2,360
4,121
6,058
3,290
3,749
5,249
7,068
3,338
5,864
9,903
3,416
2,051
2,183
8,851
7,249
8,369
10,183
5,336
6,641
5,936
5,311
8,928
11,015
12,104
17,962
4,947
6,588
6,600
5,311
6,829
4,941
4,179
6,384
3,829
3,769
2,407
4,485
4,868
7,680
6,223
5,362
2,541
5,117
5,925
4,780
10,321
7,108
4,020
6,654
5,783
10,787
4,993
8,918
5,127
6,307
18,431
23,434
27,461
1,342
2,337
1,213
1,050
1,501
515
1,234
1,555
269
910
2,593
1,798
395
1,246
2,373
774
632
337
2,122
1,553
1,096
2,224
629
1,843
868
1,547
1,174
1,639
7,629
15,680
3,999
2,235
2,146
493
1,837
598
2,000
2,444
638
2,010
508
1,989
1,538
5,161
1,741
2,263
0
819
1,097
626
1,512
2,958
2,349
4,544
759
5,771
6,091
4,196
889
1,599
9,747
9,642
5,153
6,104
7,423
4,483
7,040
5,402
2,875
5,355
7,613
3,559
4,659
7,842
8,866
3,733
7,110
12,276
4,190
2,683
2,520
10,973
8,802
9,465
12,407
5,965
8,484
6,804
6,858
10,102
12,654
19,733
33,642
8,946
8,823
8,746
5,804
8,666
5,539
6,179
8,828
4,467
5,779
2,915
6,474
6,406
12,841
7,964
7,625
2,541
5,936
7,022
5,406
11,833
10,066
6,369
11,198
6,542
16,558
11,084
13,114
6,016
7,906
28,178
33,076
32,614
Life on
which
depreciation
in latest
income
statement
Date
Acquired
is computed
9/18/2012 5 to 40 years
9/19/2012 5 to 40 years
9/27/2012 5 to 40 years
12/10/2012 5 to 40 years
12/21/2012 5 to 40 years
12/21/2012 5 to 40 years
12/21/2012 5 to 40 years
12/21/2012 5 to 40 years
12/31/2012 5 to 40 years
12/18/2012 5 to 40 years
12/20/2012 5 to 40 years
12/20/2012 5 to 40 years
12/20/2012 5 to 40 years
12/27/2012 5 to 40 years
12/20/2012 5 to 40 years
12/27/2012 5 to 40 years
12/27/2012 5 to 40 years
2/11/2013 5 to 40 years
3/22/2013 5 to 40 years
3/22/2013 5 to 40 years
8/29/2013 5 to 40 years
8/29/2013 5 to 40 years
9/30/2013 5 to 40 years
11/26/2013 5 to 40 years
12/4/2013 5 to 40 years
12/27/2013 5 to 40 years
12/30/2013 5 to 40 years
12/30/2013 5 to 40 years
1/9/2014 5 to 40 years
1/9/2014 5 to 40 years
1/17/2014 5 to 40 years
2/10/2014 5 to 40 years
2/11/2014 5 to 40 years
2/11/2014 5 to 40 years
3/31/2014 5 to 40 years
5/5/2014 5 to 40 years
5/13/2014 5 to 40 years
5/22/2014 5 to 40 years
5/22/2014 5 to 40 years
5/22/2014 5 to 40 years
5/22/2014 5 to 40 years
5/22/2014 5 to 40 years
5/22/2014 5 to 40 years
6/5/2014 5 to 40 years
6/11/2014 5 to 40 years
6/12/2014 5 to 40 years
6/12/2014 5 to 40 years
6/18/2014 5 to 40 years
6/18/2014 5 to 40 years
6/18/2014 5 to 40 years
7/10/2014 5 to 40 years
8/28/2014 5 to 40 years
9/5/2014 5 to 40 years
9/10/2014 5 to 40 years
9/18/2014 5 to 40 years
10/10/2014 5 to 40 years
10/21/2014 5 to 40 years
10/28/2014 5 to 40 years
11/14/2014 5 to 40 years
12/18/2014 5 to 40 years
2/2/2015 5 to 40 years
2/2/2015 5 to 40 years
2/2/2015 5 to 40 years
Accum.
Deprec.
421
442
290
493
307
191
321
473
251
311
413
519
254
463
758
270
185
177
631
516
512
618
308
361
303
292
453
555
617
926
268
339
327
259
321
221
199
284
171
162
105
199
210
314
256
241
253
194
231
186
390
246
142
247
190
353
158
273
156
173
430
548
638
Date of
Const.
2009
2002
1999/2006
2007
1997
1998
2000
2000
2010
2008
2005
2005
2008
2006
2011
2004
2007
2005
2002
2008
2009
2009
2006
2007
2000
2008
2004
2006
1998
2000
1998/2002
2012
2000
2006
2004/2013
2014
1997
1998
1998
2000
1996
1997
2000
1980
2005
2007
2000
2003
2004
2003
2005
2007
2000
2002
2014
2008
2006
2003
2014
2006
1999
1999
2002
Initial Cost to Company
Building,
Equipment
and
Impvmts.
Land
Encum
brance
4,931
2,579
1,719
1,793
3,864
2,118
1,169
4,957
3,372
2,687
852
2,110
2,711
668
473
834
718
7,604
2,511
3,640
3,084
1,926
0
0
20,415
4,066
6,971
4,382
4,777
6,501
4,409
6,045
4,206
5,012
7,052
8,182
3,795
1,957
5,368
1,705
2,977
9,086
6,147
3,452
3,192
4,498
0
68
Cost
Capitalized
Subsequent
to
Acquisition
Building,
Equipment
and
Impvmts.
96
44
137
74
134
57
26
61
53
164
46
67
52
54
26
23
339
6
2
3
38
2
6,999
27,954
Description
ST
Long Island - Farmingdale NY
Chicago - Alsip
Chicago - N. Pulaski
Fort Myers - Tamiami
Dallas - Allen
Jacksonville - Beach Blvd.
Space Coast - Vero Beach
Port St. Lucie - Federal
West Palm - N. Military
Ft. Myers - Bonita Springs
Phoenix - Tatum Blvd.
Boston - Lynn
Syracuse - Ainsely Dr.
Syracuse - Cicero
Syracuse - Camillus
Syracuse - Manlius
Charlotte - Brookshire
Charleston III
Myrtle Beach II
Columbia VI
Hilton Head - Blufton
Philadelphia - Eagleville
Construction in Progress
Corporate Office
IL
IL
FL
TX
FL
FL
FL
FL
FL
AZ
MA
NY
NY
NY
NY
NC
SC
SC
SC
SC
PA
NY
Land
Total
Gross Amount at Which
Carried at Close of Period
Building,
Equipment
and
Impvmts.
20,511
4,110
7,108
4,456
4,911
6,558
4,435
6,106
4,259
5,176
7,098
8,249
3,847
2,011
5,394
1,728
3,316
9,092
6,149
3,455
3,230
4,500
6,999
26,391
4,931
2,579
1,719
1,793
3,864
2,118
1,169
4,957
3,372
2,687
852
2,110
2,711
668
473
834
718
7,604
2,511
3,640
3,084
1,926
0
1,631
25,442
6,689
8,827
6,249
8,775
8,676
5,604
11,063
7,631
7,863
7,950
10,359
6,558
2,679
5,867
2,562
4,034
16,696
8,660
7,095
6,314
6,426
6,999
28,022
Date
Acquired
Life on
which
depreciation
in latest
income
statement
is computed
2/2/2015 5 to 40 years
2/5/2015 5 to 40 years
3/9/2015 5 to 40 years
4/1/2015 5 to 40 years
4/16/2015 5 to 40 years
4/21/2015 5 to 40 years
5/1/2015 5 to 40 years
5/1/2015 5 to 40 years
5/1/2015 5 to 40 years
5/1/2015 5 to 40 years
6/16/2015 5 to 40 years
6/16/2015 5 to 40 years
8/25/2015 5 to 40 years
8/25/2015 5 to 40 years
8/25/2015 5 to 40 years
8/25/2015 5 to 40 years
9/1/2015 5 to 40 years
9/1/2015 5 to 40 years
9/1/2015 5 to 40 years
9/1/2015 5 to 40 years
9/1/2015 5 to 40 years
12/30/2015 5 to 40 years
5/1/2000 5 to 40 years
Accum.
Deprec.
480
98
154
87
86
114
76
106
74
88
97
110
35
18
47
16
27
79
55
32
29
0
0
14,701
Date of
Const.
2000
1986
2015
2004
2002
2013
1997
2001
1985
2000
2015
2015
2000
2002
2005/2011
2000
2000
2005
1999
2004/2008
1998
2010
2015
2000
$1,993
$465,864
$1,576,411
$449,427
$480,176
$2,011,526
$2,491,702
$465,195
85
December 31, 2015
December 31, 2014
December 31, 2013
Cost:
Balance at beginning of period ......................
Additions during period:
Acquisitions through foreclosure ...............
Other acquisitions .......................................
Improvements, etc. .....................................
$ -
278,572
42,046
Deductions during period:
Cost of assets disposed ...............................
Impairment write-down ................................
Casualty loss.................................................
(6,899)
-
-
$2,177,983
$1,864,637
$1,742,354
$ -
286,691
35,097
$ -
93,376
33,811
320,618
321,788
127,187
(8,442)
-
-
(4,904)
-
-
Balance at close of period ..............................
(6,899)
$2,491,702
(8,442)
$2,177,983
(4,904)
$1,864,637
Accumulated Depreciation:
Balance at beginning of period .......................
Additions during period:
Depreciation expense ................................. $ 55,101
Deductions during period:
Accumulated depreciation of
assets disposed ............................................
Accumulated depreciation on
(1,607)
impaired asset .............................................
Accumulated depreciation on
casualty loss ...............................................
-
-
$ 411,701
$ 366,472
$ 324,963
$ 47,656
$ 41,929
55,101
47,656
41,929
(2,427)
(420)
-
-
-
-
Balance at close of period ..............................
(1,607)
$ 465,195
(2,427)
$ 411,701
(420)
$ 366,472
86
Statement Re: Computation of Earnings to
Combined Fixed Charges and Preferred Stock Dividends
Exhibit 12.1
Amounts in thousands
Earnings:
Income from continuing operations
before noncontrolling interest in
consolidated subsidiaries and
income from equity investees
Add: Income tax expense
Add: Fixed charges
Add: Distributed income of equity
investees
Less: Capitalized interest
Preferred dividend requirements of
consolidated subsidiaries
Earnings (1)
Fixed charges:
Interest expense
Amortization of financing fees
Capitalized interest
Estimate of interest included in rent
expense
Preferred stock dividends
Fixed charges (2)
Ratio of earnings to combined fixed
charges and preferred stock dividends
(1)/(2)
2015
Year ended December 31,
2014
2013
2012
2011
$109,672
1,251
37,864
4,821
(62)
$86,971
927
39,024
3,123
(84)
$69,524
936
32,720
2,630
(113)
$47,185
1,326
33,547
2,184
(149)
$27,654
1,524
38,848
944
(72)
-
153,546
-
129,961
-
105,697
-
84,093
-
68,898
35,940
1,184
62
678
-
$37,864
33,719
859
84
4,362
-
$39,024
31,166
834
113
607
-
$32,720
32,330
836
149
232
-
$33,547
37,365
1,184
72
227
-
$38,848
4.06
3.33
3.23
2.51
1.77
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