-- Funds from Operations ("FFO") of $0.24 per share for the three months
ended June 30, 2008.
-- An increase in second quarter rental income and total revenue on the
382 same-store facilities by 5.6% and 4.8%, respectively, when compared to
the three months ended June 30, 2007.
-- An increase in second quarter net operating income ("NOI") on the 382
same-store facilities by 2.3% when compared to the three months ended June
30, 2007.
-- Average second quarter same-store physical occupancy (calculated on
square feet) of 80.7%, a gain of 50 basis points over the second quarter of
2007. Ending occupancy on the same-store portfolio was 81.9% on June 30,
2008 compared to 81.7% on June 30, 2007.
-- A 260 basis point sequential increase in same-store physical occupancy
from March 31, 2008 to June 30, 2008.
-- A 2.2% increase, or 900 additional units rented across the same-store
portfolio in the second quarter of 2008 compared to the same quarter of
last year.
-- Same-store realized annual rent per square foot during the quarter of
$10.77, an increase of 5.0% over the second quarter of 2007.
President and Chief Executive Officer Dean Jernigan commented, "Again this
quarter, we are pleased to report very strong same-store growth. We are
encouraged by our progress in growing occupancy in our portfolio as
evidenced by our increases in same-store physical occupancy over the second
quarter of last year. Our top-line growth continues to be driven not only
by occupancy, but by solid increases in our in-place rents as we focus
daily on controlling discounts and selectively pushing rates."
Funds from Operations
FFO grew 2.0% to $15.0 million for the second quarter of 2008, compared to
$14.7 million for the second quarter of 2007. The Company's reported second
quarter 2008 FFO per share of $0.24 was negatively impacted by
approximately (i) $0.01 per share (approximately $0.6 million of costs
included in General and Administrative Expense) related to a write-off of
due diligence costs, and (ii) $0.01 per share attributable to the Company's
development asset acquired in January 2007 and the lease-up portfolio
acquired in September 2007.
"Our results are in line with our guidance and expectations. Our FFO was
$0.25 per share, the mid-point of our guidance, had we not written off
certain third-party due-diligence costs during the quarter. We continue to
make solid progress on our asset disposition program and in our marketing
of a potential joint venture. As expected, our same-store operating
expense growth reflects the investment of marketing dollars at the
beginning of the rental season in order to generate the greatest return and
we are pleased with the result. We are affirming our previously issued
2008 full-year FFO per share and same-store NOI guidance," said Christopher
Marr, Chief Financial Officer.
Operating Results
The Company reported net income of $0.3 million or $0.01 per share in the
second quarter of 2008, compared to net income of $0.3 million or $0.00 per
share for the quarter ended June 30, 2007.
Total revenues increased $4.9 million and property operating expenses
increased $3.6 million in the second quarter of 2008, compared to the same
period in 2007. These increases are attributable to the acquisition of 15
self-storage facilities for approximately $134.3 million since June 30,
2007 and increases in same-store revenues and expenses. Depreciation
expense increased $3.7 million in the second quarter of 2008, compared to
the same quarter of 2007 due to additional depreciation and amortization of
intangible assets attributable to the acquisition of self-storage
facilities. General and administrative expenses increased by $0.7 million
in the second quarter of 2008, compared to the same period in 2007,
primarily attributable to the aforementioned write-off of due diligence
costs of $0.6 million.
Interest expense was $13.0 million in both the second quarter of 2008 and
the second quarter of 2007, as a result of the additional interest expense
on debt used to fund the acquisition of 15 facilities purchased since June
30, 2007 offset by lower interest rates on variable rate debt during the
2008 period. In April 2008, the Company entered into interest rate swap
agreements that effectively fix the 30-day LIBOR interest rate on and
additional $200 million of LIBOR based borrowings at 2.7625% per annum
until November 2009.
The Company's 403 owned facilities, containing 25.9 million rentable square
feet, had a physical occupancy at June 30, 2008 of 81.5% (81.8% excluding
the lease-up assets) and an average physical occupancy for the quarter
ended June 30, 2008 of 80.3% (80.6% excluding the lease-up assets).
Same-Store Results
The Company's same-store pool at June 30, 2008 represented 382 facilities
containing approximately 24.3 million rentable square feet and representing
approximately 93.9% of the aggregate rentable square feet of the Company's
403 owned facilities. These same-store facilities represent approximately
94.8% of property net operating income for the quarter ended June 30, 2008.
The same-store average physical occupancy for the second quarter of 2008
was 80.7% compared to 80.2% for the same quarter of last year. In-place
annual rent per square foot grew 1.1% to $12.22 in the second quarter of
2008 over the same quarter of last year. Same-store rental income for the
second quarter of 2008 grew 5.6% over the same period in 2007. Same-store
total revenues and operating expenses grew 4.8% and 9.0%, respectively,
over the second quarter of 2007. Same-store net operating income grew 2.3%
in the second quarter of 2008 compared to the same quarter of 2007.
Disposition Activity
During the quarter, we disposed of five facilities for aggregate proceeds
of $12.5 million and recognized gains totaling $5.3 million. We do not
include these gains in our $0.24 of FFO per share.
Quarterly Dividend
On May 7, 2008, the Company declared a dividend of $0.18 per share. The
dividend was paid on July 22, 2008, to shareholders of record on July 7,
2008.
Third Quarter and Full Year 2008 Financial Outlook
The Company affirms its previously issued 2008 earnings guidance estimating
fully-diluted FFO per share will be between $0.93 and $0.97, and that its
fully-diluted net loss per share for the period will be between $0.16 and
$0.21. The Company's estimate is based on the following key assumptions:
-- General and administrative expenses of approximately $23.0-$24.0
million
-- Same-store average occupancy of 80.0%-82.0%
-- Same-store revenue growth of 4.0%-4.5%
-- Same-store expense growth of 3.0%-3.5%
-- Same-store net operating income growth of 4.5%-5.5%
-- Dilution during 2008 from the 15 development/lease-up properties of
approximately $0.02 to $0.03 per share
2008 Guidance Range or Value
-------------------
Earnings (loss) per diluted share allocated to common
shareholders $ (0.21) to $ (0.16)
Less: gains on sales of real estate, per share (0.10) (0.10)
Plus: real estate depreciation and amortization, per
share 1.24 1.23
------- -------
FFO per diluted share $ 0.93 to $ 0.97
======= =======
The Company estimates that its fully-diluted FFO per share for the three
months ending September 30, 2008 will be between $0.23 and $0.25, and that
its fully-diluted net loss per share for the period will be between $0.06
and $0.08.
Conference Call
Management will host a conference call at 11:00 a.m. ET on Friday, August
8, 2008, to discuss financial results for the three months ended June 30,
2008.
A live webcast of the conference call will be available online from the
investor relations page of the Company's corporate website at
www.ustoreit.com. The dial-in numbers are 1-800-860-2442 for domestic
callers and +1 412-858-4600 for international callers. After the live
webcast, the call will remain available on U-Store-It's website for thirty
days. In addition, a telephonic replay of the call will be available until
September 9, 2008. The replay dial-in number is 1-877-344-7529 for domestic
callers and +1 412-317-0088 for international callers. The reservation
number for both is 421601.
Supplemental operating and financial data as of June 30, 2008 is available
on our corporate website under the heading "Investor Relations and
Corporate Information."
About U-Store-It Trust
U-Store-It Trust is a self-administered and self-managed real estate
investment trust. The Company's self-storage facilities are designed to
offer affordable, easily accessible and secure storage space for
residential and commercial customers. According to the Self-Storage
Almanac, U-Store-It Trust is one of the top four owners and operators of
self-storage facilities in the United States.
Non-GAAP Performance Measurements
FFO is a widely used performance measure for real estate companies and is
provided here as a supplemental measure of operating performance. The
Company calculates FFO in accordance with the best practices described in
the April 2002 National Policy Bulletin of the National Association of Real
Estate Investment Trusts (the "White Paper"). The White Paper defines FFO
as net income (computed in accordance with GAAP), excluding gains (or
losses) from sales of property, plus depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint ventures.
Management uses FFO as a key performance indicator in evaluating the
operations of the Company's facilities. Given the nature of its business as
a real estate owner and operator, the Company considers FFO a key measure
of its operating performance that is not specifically defined by accounting
principles generally accepted in the United States. The Company believes
that FFO is useful to management and investors as a starting point in
measuring its operational performance because it excludes various items
included in net income that do not relate to or are not indicative of its
operating performance such as gains (or losses) from sales of property and
depreciation, which can make periodic and peer analyses of operating
performance more difficult. FFO should not be considered as an alternative
to net income (determined in accordance with GAAP) as an indicator of the
Company's financial performance, is not an alternative to cash flow from
operating activities (determined in accordance with GAAP) as a measure of
the Company's liquidity, and is not indicative of funds available to fund
the Company's cash needs, including its ability to make distributions.
We define net operating income, which we refer to as "NOI," as total
continuing revenues less continuing property operating expenses. NOI also
can be calculated by adding back to net income: interest expense, loan
procurement amortization expense, early extinguishment of debt, minority
interest, loss on sale of storage facilities, depreciation and general and
administrative, and deducting from net income: income from discontinued
operations, gains on sale of self-storage facilities, and interest income.
NOI is not a measure of performance calculated in accordance with GAAP.
Management uses NOI as a measure of operating performance at each of our
facilities, and for all of our facilities in the aggregate. NOI should not
be considered as a substitute for operating income, net income, cash flows
provided by operating, investing and financing activities, or other income
statement or cash flow statement data prepared in accordance with GAAP.
Forward-Looking Statements
Certain statements in this release that are not historical fact may
constitute forward-looking statements within the meaning of the Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Such statements are based on assumptions and expectations
that may not be realized and are inherently subject to risks, uncertainties
and other factors, many of which cannot be predicted with accuracy and some
of which might not even be anticipated. Although we believe the
expectations reflected in these forward-looking statements are based on
reasonable assumptions, future events and actual results, performance,
transactions or achievements, financial and otherwise, may differ
materially from the results, performance, transactions or achievements
expressed or implied by the forward-looking statements. Risk,
uncertainties and other factors that might cause such differences, some of
which could be material, include but are not limited to: national and local
economic, business, real estate and other market conditions; the
competitive environment in which the Company operates; the execution of the
Company's business plan; financing risks, including the risk of
over-leverage and the corresponding risk of default on our mortgage and
other debt; increases in interest rates and operating costs; the Company's
ability to maintain its status as a REIT for federal income tax purposes;
acquisition and development risks; changes in real estate and zoning laws
or regulations; risks related to natural disasters; potential environmental
and other liabilities; and other factors affecting the real estate industry
generally or the self-storage industry in particular. The Company refers
you to the documents filed by the Company from time to time with the
Securities and Exchange Commission, specifically the section titled
"Business-Risk Factors" in the Company's Annual Report on Form 10-K, which
discuss these and other risks and factors that could cause the Company's
actual results to differ materially from any forward-looking statements.
We undertake no obligation to publicly update or revise these
forward-looking statements, whether as a result of new information, future
events or otherwise except as may be required by securities laws.
U-STORE-IT TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
June 30, December 31,
2008 2007
------------- -------------
ASSETS
Storage facilities $ 1,925,616 $ 1,916,396
Accumulated depreciation (302,356) (269,278)
------------- -------------
1,623,260 1,647,118
Cash and cash equivalents 651 4,517
Restricted cash 18,199 15,818
Loan procurement costs - net of amortization 5,284 6,108
Other assets - net of amortization 10,031 14,270
------------- -------------
Total assets $ 1,657,425 $ 1,687,831
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Revolving credit facility $ 212,200 $ 219,000
Unsecured term loan 200,000 200,000
Secured term loan 57,419 47,444
Mortgage loans and notes payable 556,441 561,057
Accounts payable, accrued expenses and other 28,098 33,623
Due to related parties - 110
Distributions payable 11,324 11,300
Deferred revenue 10,908 10,148
Security deposits 522 548
------------- -------------
Total liabilities 1,076,912 1,083,230
Minority interests 47,124 48,982
Commitments and contingencies
Shareholders' Equity
Common shares $.01 par value, 200,000,000
shares authorized, 57,620,495 and
57,577,232 shares issued and outstanding
at June 30, 2008 and December 31, 2007,
respectively 576 576
Additional paid in capital 799,300 797,940
Accumulated other comprehensive loss (713) (1,664)
Accumulated deficit (265,774) (241,233)
------------- -------------
Total shareholders' equity 533,389 555,619
------------- -------------
Total liabilities and shareholders' equity $ 1,657,425 $ 1,687,831
============= =============
U-STORE-IT TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
June 30,
----------------------
2008 2007
---------- ----------
REVENUES
Rental income $ 56,158 $ 50,965
Other property related income 4,249 4,387
Other - related party - 122
---------- ----------
Total revenues 60,407 55,474
OPERATING EXPENSES
Property operating expenses 25,494 21,890
Property operating expenses - related party - 14
Depreciation 20,251 16,562
General and administrative 6,469 5,648
General and administrative - related party - 118
---------- ----------
Total operating expenses 52,214 44,232
OPERATING INCOME 8,193 11,242
OTHER INCOME (EXPENSE)
Interest:
Interest expense on loans (12,965) (12,955)
Loan procurement amortization expense (486) (445)
Interest income 32 91
Other 71 -
---------- ----------
Total other expense (13,348) (13,309)
LOSS FROM CONTINUING OPERATIONS
BERFORE MINORITY INTERESTS (5,155) (2,067)
MINORITY INTERESTS 407 168
---------- ----------
LOSS FROM CONTINUING OPERATIONS (4,748) (1,899)
DISCONTINUED OPERATIONS
Income from operations 145 267
Gain on disposition of discontinued operations 5,308 2,122
Minority interest attributable to discontinued
operations (442) (195)
---------- ----------
Income from discontinued operations 5,011 2,194
---------- ----------
NET INCOME $ 263 $ 295
========== ==========
Basic and diluted loss per share from
continuing operations $ (0.08) $ (0.03)
Basic and diluted earnings per share from
discontinued operations 0.09 0.03
---------- ----------
Basic and diluted loss per share $ 0.01 $ -
========== ==========
Weighted-average basic and diluted shares
outstanding 57,620 57,438
Distributions declared per common share and unit $ 0.18 $ 0.29
Same-store facility results (382 facilities)
(in thousands, except percentage and per square foot data)
Three months ended
June 30,
------------------
Percent
2008 2007 Change
-------- -------- --------
REVENUES
Rental income $ 52,804 $ 49,991 5.6%
Other property related income 4,008 4,232 -5.3%
-------- -------- --------
Total revenues $ 56,812 $ 54,223 4.8%
OPERATING EXPENSES
Property taxes 7,043 6,676 5.5%
Personnel expense 5,926 5,473 8.3%
Advertising 1,706 980 74.1%
Repair and maintenance 875 725 20.8%
Utilities 2,216 2,042 8.5%
Property insurance 802 924 -13.2%
Other expenses 3,113 3,068 1.5%
-------- -------- --------
Total operating expenses $ 21,681 $ 19,888 9.0%
Net operating income (1) $ 35,131 $ 34,335 2.3%
Gross margin 61.8% 63.3%
Period average occupancy (2) 80.7% 80.2%
Period end occupancy (3) 81.9% 81.7%
Total rentable square feet 24,297 24,297
Realized annual rent
per occupied square foot (4) $ 10.77 $ 10.26
In place annual rent per square foot (5) $ 12.22 $ 12.09
Reconciliation of Same-Store Net Operating
Income to Operating Income
Same-store net operating income (1) $ 35,131 $ 34,335
Non same-store net operating income (1) 1,737 1,054
Indirect property overhead (1,955) (1,819)
Depreciation (20,251) (16,562)
General and administrative expense (6,469) (5,766)
-------- --------
Operating Income $ 8,193 $ 11,242
(1) Net operating income (NOI) is a non-GAAP (generally accepted
accounting principles) financial measure that excludes the impact of
depreciation and general & administrative expense.
(2) Square feet occupancy represents the weighted average occupancy for
the period.
(3) Represents occupancy at June 30 of the respective year.
(4) Realized annual rent per occupied square foot is computed by dividing
rental income by the weighted average occupied square feet for the
period.
(5) In place annual rent per square foot represents annualized contractual
rents per available square foot for the period.
Non-GAAP Measure - Computation of Funds From Operations
(in thousands, except per share data)
Three months ended
June 30,
----------------------
2008 2007
---------- ----------
Net income $ 263 $ 295
Add (deduct):
Real estate depreciation 20,025 16,527
Gain on sale of real estate (5,308) (2,122)
Minority interests from continuing operations (407) (168)
Minority interests from discontinued operations 442 195
---------- ----------
FFO $ 15,015 $ 14,727
---------- ----------
Income per share - fully diluted $ 0.01 $ -
FFO per share and unit - fully diluted $ 0.24 $ 0.24
Weighted-average basic and diluted shares
outstanding 57,620 57,473
Weighted-average diluted shares and units
outstanding 63,241 62,659
Dividend per common share and unit $ 0.18 $ 0.29
Payout ratio of FFO (Dividend per share divided by
FFO per share) 76% 121%
Contact Information: Contact: U-Store-It Trust Christopher P. Marr Chief Financial Officer (610) 293-5700