-- Funds from Operations ("FFO") of $0.26 per share for the three months
ended September 30, 2008, compared to $0.22 per share ($0.20 per share
including the impact of a non-recurring lease abandonment charge) for three
months ended September 30, 2007.
-- An increase in third quarter rental income and total revenue on the
369 same-store facilities by 3.7% and 4.3%, respectively, when compared to
the three months ended September 30, 2007.
-- An increase in same-store expenses of 0.9% compared to the three
months ended September 30, 2007.
-- An increase in third quarter net operating income ("NOI") on the 369
same-store facilities by 6.5% when compared to the three months ended
September 30, 2007.
-- Average same-store physical occupancy (calculated on square feet) of
82.1% for the third quarter of 2008 and 2007. Ending occupancy on the same-
store portfolio was 81.7% on September 30, 2008 compared to 81.9% on
September 30, 2007.
-- Same-store realized annual rent per occupied square foot during the
quarter of $10.87, an increase of 3.7% over the second quarter of 2007.
Mr. Jernigan commented, "Our people, systems and operating platform all
continue to contribute to our ability to deliver very strong same-store
growth. Same-store revenues grew 4.3% as we controlled discounts and
pushed rates to both existing and new customers. We were also able to
limit the growth of expenses on the same-store properties to less than 1%.
Delivering 6.5% same-store NOI growth is exciting to report at any time and
to do so in the current environment is a tribute to the efforts of our
entire team."
Funds from Operations
FFO grew 18.7% to $16.3 million for the third quarter of 2008, compared to
$13.7 million for the third quarter of 2007. The Company's reported third
quarter 2008 FFO per share of $0.26 was negatively impacted by
approximately $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 FFO of $0.26 per share is a penny better than the upper end of our
guidance and expectations. We were able to execute on our asset disposition
program during the quarter, selling nine assets for $28.0 million for gains
totaling $7.5 million which we do not include in FFO. We have closed on
three additional sales since the end of the quarter for an aggregate sale
price of $7.2 million. Sale proceeds during the quarter were the primary
driver in reducing our line of credit borrowings by $29.5 million to $182.7
million at quarter end. We are raising the midpoint of our 2008 full-year
guidance by 1.5 cents and expect full-year FFO per share of $0.96 to
$0.97," said Christopher Marr, Chief Financial Officer.
Operating Results
The Company reported net income of $4.0 million or $0.07 per share in the
third quarter of 2008, compared to a net loss of $4.1 million or ($0.07)
per share for the quarter ended September 30, 2007.
Total revenues increased $4.7 million and property operating expenses
increased $1.7 million in the third quarter of 2008, compared to the same
period in 2007. These increases are primarily attributable to the
acquisition of 15 self-storage facilities for approximately $134.3 million
since September 2007 and increases in same-store revenues and expenses.
Depreciation expense increased $2.8 million in the third 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.
Interest expense decreased from $13.7 million for the quarter ended
September 30, 2007 to $12.8 million for the quarter ended September 30,
2008; this decrease is attributable to a reduction in outstanding debt of
$27.9 million from September 30, 2007 to September 30, 2008, and lower
interest rates on variable rate debt in 2008.
The Company's 394 owned facilities, containing 25.4 million rentable square
feet, had a physical occupancy at September 30, 2008 of 81.5% and an
average physical occupancy for the quarter ended September 30, 2008 of
81.8%.
Same-Store Results
The Company's same-store pool at September 30, 2008 represented 369
facilities containing approximately 23.6 million rentable square feet and
representing approximately 92.9% of the aggregate rentable square feet of
the Company's 394 owned facilities. These same-store facilities represent
approximately 94.0% of property net operating income for the quarter ended
September 30, 2008.
Same-store average physical occupancy for the third quarter of 2008 and
2007 was 82.1%. In-place annual rent per square foot grew 1.7% to $12.43
in the third quarter of 2008 over the same quarter of last year.
Same-store rental income for the third quarter of 2008 grew 3.7% over the
same period in 2007. Same-store total revenues and operating expenses grew
4.3% and 0.9%, respectively, over the third quarter of 2007. Same-store net
operating income grew 6.5% in the third quarter of 2008 compared to the
same quarter of 2007.
Disposition Activity
During the quarter, we disposed of nine facilities for aggregate proceeds
of $28.0 million and recognized gains totaling $7.5 million. We do not
include these gains in our $0.26 of FFO per share.
Quarterly Dividend
On August 6, 2008, the Company declared a dividend of $0.18 per share. The
dividend was paid on October 22, 2008, to shareholders of record on October
7, 2008.
Fourth Quarter and Full Year 2008 Financial Outlook
The Company is raising its 2008 earnings guidance to the high end of its
previously provided FFO per share guidance range of $0.93 to $0.97 and now
estimates fully-diluted FFO per share will be between $0.96 and $0.97, and
that its fully-diluted net loss per share for the period will be between
$0.04 and $0.05. 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 $0.03 per share and from the asset disposition program of
approximately $0.01 per share
2008 Guidance Range or Value
-------------------
Earnings (loss) per diluted share allocated to
common shareholders $ (0.05) to $ (0.04)
Less: gains on sales of real estate, per share (0.23) (0.23)
Plus: real estate depreciation and amortization,
per share 1.24 1.24
------- -------
FFO per diluted share $ 0.96 to $ 0.97
======= =======
The Company estimates that its fully-diluted FFO per share for the three
months ending December 31, 2008, will be between $0.23 and $0.24, and that
its fully-diluted net loss per share for the period will be between $0.05
and $0.06.
Conference Call
Management will host a conference call at 11:00 a.m. ET on Friday, November
7, 2008, to discuss financial results for the three months ended September
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
December 8, 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 424128.
Supplemental operating and financial data as of September 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
Together with other statements and information publicly disseminated by
U-Store-It Trust ("we," "us," "our" or the "Company"), this document
contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). 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. Risks, 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 we operate;
-- the execution of our business plan;
-- financing risks, including the risk of overleverage and the
corresponding risk of default on our mortgage loans and other debt and
potential inability to refinance existing indebtedness;
-- increases in interest rates and operating costs;
-- counterparty non-performance related to the use of derivative
financial instruments;
-- our ability to maintain our status as a real estate investment trust
("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;
-- other factors affecting the real estate industry generally or the self-
storage industry in particular; and
-- other risks identified in our Annual Report on Form 10-K and, from
time to time, in other reports we file with the Securities and Exchange
Commission (the "SEC") or in other documents that we publicly disseminate.
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 in securities laws.
U-STORE-IT TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
September 30, December 31,
2008 2007
------------ ------------
ASSETS
Storage facilities $ 1,893,869 $ 1,916,396
Accumulated depreciation (312,259) (269,278)
------------ ------------
1,581,610 1,647,118
Cash and cash equivalents 2,540 4,517
Restricted cash 18,618 15,818
Loan procurement costs - net of amortization 4,781 6,108
Assets held for sale 7,194 -
Other assets - net of amortization 8,279 14,270
------------ ------------
Total assets $ 1,623,022 $ 1,687,831
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Revolving credit facility $ 182,700 $ 219,000
Unsecured term loan 200,000 200,000
Secured term loan 57,419 47,444
Mortgage loans and notes payable 551,256 561,057
Accounts payable, accrued expenses and other 33,825 33,623
Due to related parties - 110
Distributions payable 11,325 11,300
Deferred revenue 10,460 10,148
Security deposits 491 548
Other liabilities held for sale 251 -
------------ ------------
Total liabilities 1,047,727 1,083,230
Minority interests 46,681 48,982
Commitments and contingencies
Shareholders' Equity
Common shares $.01 par value, 200,000,000
shares authorized, 57,635,161 and
57,577,232 shares issued and outstanding
at September 30, 2008 and December 31,
2007, respectively 576 576
Additional paid in capital 800,039 797,940
Accumulated other comprehensive loss 165 (1,664)
Accumulated deficit (272,166) (241,233)
------------ ------------
Total shareholders' equity 528,614 555,619
------------ ------------
Total liabilities and shareholders' equity $ 1,623,022 $ 1,687,831
============ ============
U-STORE-IT TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share data)
Three Months Ended
September 30,
------------------
2008 2007
-------- --------
REVENUE
Rental income $ 56,079 $ 51,822
Other property related income 4,641 4,069
Other property related income - related party - 101
-------- --------
Total revenues 60,720 55,992
OPERATING EXPENSES
Property operating expenses 25,774 24,097
Property operating expenses - related party - 8
Depreciation and amortization 19,416 16,607
Lease abandonment - 1,316
General and administrative 5,849 5,173
General and administrative - related party - 118
-------- --------
Total operating expenses 51,039 47,319
Operating income 9,681 8,673
Other income (expense)
Interest:
Interest expense on loans (12,786) (13,666)
Loan procurement amortization expense (486) (445)
Interest income 34 104
Other 49 -
-------- --------
Total other expense (13,189) (14,007)
Loss before minority interests and discontinued
operations (3,508) (5,334)
Minority Interests 284 432
-------- --------
Loss from continuing operations (3,224) (4,902)
Discontinued Operations
Income from discontinued operations 338 840
Gain on disposition of discontinued operations 7,544 -
Minority interest attributable to discontinued
operations (638) (68)
-------- --------
Income from discontinued operations 7,244 772
-------- --------
Net income (loss) $ 4,020 $ (4,130)
======== ========
PER SHARE DATA
Basic and diluted (loss) per share from
continuing operations $ (0.06) $ (0.08)
Basic and diluted earnings per share from
discontinued operations $ 0.13 $ 0.01
-------- --------
Basic and diluted earnings (loss) per share $ 0.07 $ (0.07)
======== ========
Weighted-average basic and diluted shares outstanding 57,635 57,537
Distributions declared per common share and unit $ 0.18 $ 0.29
Same-store facility results (369 facilities)
(in thousands, except percentage and per square foot data)
Three months ended
September 30,
-------------------- Percent
2008 2007 Change
--------- --------- --------
REVENUES
Net rental income $ 52,598 $ 50,731 3.7%
Other property related income 4,229 3,779 11.9%
--------- --------- --------
Total revenues 56,827 54,510 4.3%
OPERATING EXPENSES
Property taxes 6,924 6,733 2.8%
Personnel expense 5,791 6,046 -4.2%
Advertising 1,506 1,507 -0.1%
Repair and maintenance 877 1,085 -19.2%
Utilities 2,693 2,443 10.2%
Property insurance 652 672 -3.0%
Other expenses 3,628 3,394 6.9%
--------- --------- --------
Total operating expenses 22,071 21,880 0.9%
Net operating income (1) $ 34,756 $ 32,630 6.5%
Gross margin 61.2% 59.9%
Period Average Occupancy (2) 82.1% 82.1%
Period End Occupancy (3) 81.7% 81.9%
Total Rentable square feet 23,569 23,569
Realized annual rent
per occupied square foot (4) $ 10.87 $ 10.49 3.7%
In place annual rent per
square foot (5) $ 12.43 $ 12.22 1.7%
Reconciliation of Same-Store Net
Operating Income to Operating Income
Same-store net operating income (1) $ 34,756 $ 32,630
Non same-store net operating income (1) 2,228 1,222
Indirect property overhead (2,038) (1,965)
Depreciation (19,416) (16,607)
Lease abandoment charge - (1,316)
General and administrative expense (5,849) (5,291)
--------- ---------
Operating Income $ 9,681 $ 8,673
(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 September 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
September 30,
--------------------
2008 2007
--------- ---------
Net income (loss) $ 4,020 $ (4,130)
Add (deduct):
Real estate depreciation 19,424 16,868
Gain on sale of real estate (7,544) -
Minority interests from continuing operations (284) (432)
Minority interests from discontinued operations 638 68
--------- ---------
FFO $ 16,254 $ 12,374
--------- ---------
Non-recurring lease abandonment charge - 1,316
--------- ---------
FFO, excluding non-recurring charge $ 16,254 $ 13,690
========= =========
Income per share - fully diluted $ 0.07 $ (0.07)
FFO per share and unit - fully diluted $ 0.26 $ 0.20
FFO per share, excluding non-recurring charge (1) $ 0.26 $ 0.22
Weighted-average basic and diluted shares outstanding 57,635 57,537
Weighted-average diluted shares and units outstanding 63,234 62,651
Dividend per common share and unit $ 0.18 $ 0.29
Payout ratio of FFO (Dividend per share divided by
FFO per share) 70% 133%
(1) Amount presented for the three months ended September 30, 2007
excludes a non-cash lease abandonment charge of $1.3 million.
Contact Information: Contact: U-Store-It Trust Christopher P. Marr Chief Financial Officer (610) 293-5700