USI Buys 14 Sites for $121M in Settlement

The deal, which encompasses 1.1 million sf, was funded with a $50-million secured credit facility and borrowings under a $250-million unsecured revolving credit facility. U-Store-It, a subsidiary of YSI Management LLC and USI Warehouse, owns more than 378 facilities across the country.

The properties were owned by Rising Tide Development, a joint partnership of Robert Amsdell and Barry Amsdell. Both men, and other relatives, were former officers in USI company before it went public in October 2004. As part of the public offering, U-Store-It entered into an option agreement with Rising Tide that granted the REIT the option to purchase 18 self-storage facilities, according to an SEC filing by USI. At least three of the properties were purchased by U-Store-It, according to the SEC filing.

However, according to a complaint filed in the Court of Common Pleas, Cuyahoga County, Ohio on May 29, 2007, U-Store-It alleged that the Amsdells "improperly diverted for their own benefit the company's corporate opportunities and manipulated occupancy rates at Rising Tide self-storage development properties to avoid triggering a provision in the option agreement…that provides the company with an option to purchase these properties, excluded from the company's portfolio at the time of its initial public offering because these properties had not yet achieved stabilized occupancy, upon achievement of 85% physical occupancy for three consecutive months." Rising Tide, and Robert and Todd Amsdell, filed counterclaims and further lawsuits, including a case in the District Court of Baltimore.

A settlement agreement was signed Aug. 6 by all parties. According to the agreement, the sale of 14 of the properties to U-Store-It was allowed, as well as the termination of the option, management and marketing agreements, non-competition promises by the Amsdels and the resignation of Todd Amsdell from USI with the return of 34,645 shares of his common stock. "The parties have agreed to mutually waive and release the other parties of any and all claims which may exist between them," according to the settlement agreement. The agreement also stipulates that it "does not constitute, nor shall it be construed as, an admission by any party of the truth or validity of any claims or contentions asserted by any party or any matter relating to the subject matter of this agreement, nor shall it be construed as an acknowledgement of any fault or liability to any party or to any other person or entity in connection with any matter or thing."

The properties include 1531 Montiel Rd., Escondido, CA; 28401 Rancho California Rd., Temecula, CA; 2020 Mt. Baldy Dr., Riverside, CA; 4309 Ehrlich Rd., Tampa, FL; 8585 Touchton Rd., Jacksonville, FL; 11570 Beach Blvd., Jacksonville, FL; 8121 Point Meadows Dr., Jacksonville, FL; 1201 N. State Rod. 7, Royal Palm Beach, FL; 12701 SW 124th St., Kendall, FL; 6550 SW 160th Ave., Southwest Ranches, FL; 3024 Plummer Cove Rd., Jacksonville, FL; 105 Old Peachtree Rd., Suwanne, GA; 55 Commercial St., Medford, MA; and 15910 Pearl Rd., Strongsville, OH. Neither Christopher Marr, CFO for U-Store-It, nor Robert Amsdell returned calls for comment. According to the agreement, none of the parties are allowed to comment on the matter except to discuss factual statements.