-- Seasonal declines in both the same-store and total portfolio occupancy
from those levels at September 30, 2006
-- The closing of the credit facilities as outlined in this release
-- General and Administrative expenses of $4.9-$5.0 million
-- Increases in Libor of 25 basis points during the quarter
Chief Financial Officer Christopher Marr said, "We continue to implement
our strategy of focusing on our people, systems and processes and making
prudent changes where deemed necessary. In the last four months we added
key personnel, completed a software implementation and lowered the cost of
our short-term borrowing while meeting or exceeding our stated financial
goals."
2007 Financial Outlook
The Company will present its financial outlook for 2007 in an announcement
it intends to make in January, following the completion of its strategic
review and budget process.
Distributions
On November 3, 2006 the Board of Directors declared a quarterly
distribution of $0.29 per share, payable on January 22, 2007 to
shareholders of record on January 8, 2007.
Conference Call
Management will host a conference call at 11:00 a.m. EST on Tuesday,
November 7, 2006 to discuss financial results for the three months ended
September 30, 2006. A live webcast of the conference call will be available
online from the investor relations page of the Company's corporate website
at www.u-store-it.com. The dial-in numbers are (800) 810-0924 for domestic
callers and (913) 981-4900 for international callers. The reservation
number for both is 4851221. 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 November 12, 2006.
The replay dial-in number is (888) 203-1112 for domestic callers, (719)
457-0820 for international callers. The replay reservation number is
4851221. Supplemental operating and financial data as of September 30,
2006 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 estates
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 five 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 ("GAAP"). 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 and amortization, 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.
The Company discloses AFFO, excluding the costs incurred in the three
months and nine months ended September 30, 2006 to write off unamortized
loan fees associated with the early extinguishment of debt, write off of
software costs and severance costs. The Company discloses AFFO due to the
significance and infrequent nature of the charges. Given the significance
of these charges, the Company believes it is essential to a reader's
understanding of the Company's results of operations to emphasize the
impact on the Company's operating performance measures. AFFO is not and
should not be considered an alternative to net income (loss) or cash flows
from operating, investing, or financing activities as defined by GAAP.
Net operating income, which we refer to as "NOI," is defined 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, other depreciation and
general and administrative expense, and deducting from net income: income
from discontinued operations, gains on sale of self-storage facilities, and
interest income.
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 Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may
cause the actual results of the Company to differ materially from
historical results or from any results expressed or implied by such
forward-looking statements, including without limitation: 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; 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.
U-STORE-IT TRUST AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(Dollars in thousands, except par value September 30, December 31,
amount) 2006 2005
------------- -------------
ASSETS
Storage facilities-net $ 1,577,971 $ 1,246,295
Cash and cash equivalents 15,900 201,098
Restricted cash 14,714 14,672
Loan procurement costs - net of amortization 7,541 10,437
Other assets 8,639 8,986
------------- -------------
TOTAL ASSETS $ 1,624,765 $ 1,481,488
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Revolving credit facility $ 170,500 $ -
Loans payable 693,694 669,282
Accounts payable and accrued expenses 22,349 18,928
Distributions payable 18,124 16,624
Deferred revenue 10,365 8,857
Security deposits 682 685
------------- -------------
Total liabilities 915,714 714,376
COMMITMENTS AND CONTINGENCIES
MINORITY INTERESTS 58,985 64,108
SHAREHOLDERS' EQUITY
Common shares $.01 par value, 200,000,000
shares authorized, 57,295,490 and
57,010,162 shares issued and outstanding
at September 30, 2006 and December 31,
2005, respectively 573 570
Additional paid in capital 797,039 793,687
Accumulated deficit (147,546) (91,253)
------------- -------------
Total shareholders' equity 650,066 703,004
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,624,765 $ 1,481,488
============= =============
U-STORE-IT TRUST AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars and shares in -------------------- --------------------
thousands, except per share 2006 2005 2006 2005
data) --------- --------- --------- ---------
REVENUES:
Rental income $ 52,562 $ 38,561 $ 147,444 $ 97,638
Other property related
income 3,844 2,742 10,563 7,164
--------- --------- --------- ---------
Total revenues 56,406 41,303 158,007 104,802
OPERATING EXPENSES:
Property operating expenses 21,978 14,651 61,792 37,426
Property operating expenses
- related party 15 11 47 46
Depreciation 16,405 10,868 46,811 27,633
Asset write-off 307 - 307 -
General and administrative 7,289 3,494 16,810 9,444
General and administrative -
related party 73 192 523 496
--------- --------- --------- ---------
Total operating expenses 46,067 29,216 126,290 75,045
OPERATING INCOME 10,339 12,087 31,717 29,757
OTHER INCOME (EXPENSE)
Interest:
Interest expense on loans (12,009) (9,706) (32,986) (22,655)
Loan procurement
amortization expense (529) (570) (1,505) (1,328)
Write-off of loan
procurement cost due to
early extinguishment of
debt - - (1,273) -
Interest income 95 80 1,138 137
Other (13) (31) (73) (74)
--------- --------- --------- ---------
Total other expense (12,456) (10,227) (34,699) (23,920)
INCOME (LOSS) BEFORE MINORITY
INTERESTS (2,117) 1,860 (2,982) 5,837
MINORITY INTERESTS 176 (195) 249 (351)
--------- --------- --------- ---------
NET INCOME (LOSS) $ (1,941) $ 1,665 $ (2,733) $ 5,486
========= ========= ========= =========
Basic earnings (loss) per share $ (0.03) $ 0.04 $ (0.05) $ 0.15
Diluted earnings (loss) per
share $ (0.03) $ 0.04 $ (0.05) $ 0.15
Weighted-average basic shares
outstanding 57,351 37,492 57,308 37,492
Weighted-average diluted shares
outstanding 57,351 37,634 57,308 37,554
========= ========= ========= =========
Distributions declared per
common share $ 0.29 $ 0.28 $ 0.87 $ 0.84
========= ========= ========= =========
Same Store Facility Results (199 facilities)
Three months ended Nine months ended
September 30, Percent September 30, Percent
(Dollars in --------------------- ---------------------
thousands, except 2006 2005 Change 2006 2005 Change
for square feet) ---------- ---------- ------- ---------- ---------- ----
Rental income $ 29,000 $ 27,920 $ 85,677 $ 82,102
Other operating
income 1,299 1,279 3,851 3,820
---------- ---------- ---------- ----------
Total revenues 30,299 29,199 3.8% 89,528 85,922 4.2%
Property operating
expenses
Property taxes 3,463 2,117 63.6% 10,177 8,493 19.8%
Personnel
expense 3,135 2,914 7.6% 9,274 8,873 4.5%
Advertising 723 811 (10.9%) 2,139 2,005 6.7%
Repair and
maintenance 349 281 24.2% 935 650 43.8%
Utilities 1,152 1,117 3.1% 3,478 3,214 8.2%
Property
insurance 543 353 53.8% 1,288 1,004 28.3%
Other expenses 1,509 1,628 (7.3%) 4,710 4,515 4.3%
---------- ---------- ---------- ----------
Total property
operating
expenses 10,874 9,221 17.9% 32,001 28,754 11.3%
---------- ---------- ---------- ----------
Net Operating
Income (a) $ 19,425 $ 19,978 (2.8%) $ 57,527 $ 57,168 0.6%
========== ========== ========== ==========
Gross margin 64.1% 68.4% 64.3% 66.5%
Period average
occupancy (b) 82.0% 83.8% 81.9% 82.7%
Period end
occupancy (c) 81.0% 83.6% 81.0% 83.6%
Total net rentable
square feet 12,890,822 12,890,822 12,890,822 12,890,822
Realized annual
rent per occupied
square foot (d) $ 10.97 $ 10.34 6.1% $ 10.81 $ 10.27 5.3%
In place annual
rent per square
foot (e) $ 12.99 $ 11.78 10.3% $ 12.51 $ 11.64 7.5%
Reconciliation of Same Store Net Operating Income to Operating Income
Three months ended Nine months ended
September 30, September 30,
--------------------- ---------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Same store net
operating income(a) $ 19,425 $ 19,978 $ 57,527 $ 57,168
Non same store net
operating income(a) 14,988 6,663 38,641 10,162
Depreciation (16,405) (10,868) (46,811) (27,633)
Asset write-off (307) - (307) -
General and
administrative
expense (7,362) (3,686) (17,333) (9,940)
---------- ---------- ---------- ----------
Operating income $ 10,339 $ 12,087 $ 31,717 $ 29,757
========== ========== ========== ==========
a - Net operating income (NOI) is a non-GAAP (generally accepted accounting
principles) financial measure that excludes the impact of depreciation
and general & administrative expense. Although depreciation and
general & administrative expense are operating expenses, 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 comparing period-to-period and
market-to-market property operating results. NOI is not a substitute
for operating income as determined in accordance with GAAP in
evaluating our operating results.
b - Square foot occupancy represents the weighted average occupancy for the
period.
c - Represents occupancy at September 30.
d - Realized annual rent per occupied square foot is computed by dividing
rental income by the weighted average occupied square feet for the
period.
e - In place annual rent per square foot represents annualized contractual
rents per average square feet for the period.
NON-GAAP FINANCIAL MEASURES - COMPUTATION OF
FUNDS FROM OPERATIONS ("FFO")
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars and shares in thousands ------------------ ------------------
except per share data) 2006 2005 2006 2005
-------- -------- -------- --------
Net income (loss) $ (1,941) $ 1,665 $ (2,733) $ 5,486
Plus:
Real Estate Depreciation 16,243 10,868 46,339 27,633
Minority Interest (176) 195 (249) 351
-------- -------- -------- --------
FFO - Operating partnership $ 14,126 $ 12,728 $ 43,357 $ 33,470
FFO - Allocable to minority
interest $ (1,176) $ (1,173) $ (3,615) $ (2,011)
-------- -------- -------- --------
FFO - Allocable common shareholders $ 12,950 $ 11,555 $ 39,742 $ 31,459
======== ======== ======== ========
Weighted-average diluted shares
outstanding (1) 57,431 37,634 57,418 37,554
Funds From Operations per share $ 0.23 $ 0.31 $ 0.69 $ 0.84
Reconciliation of Dilutive Income
per Share to Funds From Operations
per share:
Dilutive income per share $ (0.03) $ 0.05 $ (0.05) $ 0.15
Adjustments:
Real Estate Depreciation 0.29 0.29 0.81 0.74
Funds attributable to
minority shareholders (0.03) (0.03) (0.07) (0.05)
-------- -------- -------- --------
Funds from operations per share $ 0.23 $ 0.31 $ 0.69 $ 0.84
======== ======== ======== ========
(1) The weighted average number of shares for the three and nine months
ended September 30, 2006 include approximately 0.1 million shares
related to certain equity awards issued that are dilutive for FFO.
NON-GAAP FINANCIAL MEASURES - COMPUTATION OF
ADJUSTED FUNDS FROM OPERATIONS ("AFFO")
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars and shares in thousands ------------------ ------------------
except per share data) 2006 2005 2006 2005
-------- -------- -------- --------
Net income (loss) $ (1,941) $ 1,665 $ (2,733) $ 5,486
Plus:
Real Estate Depreciation 16,243 10,868 46,339 27,633
Severance Costs and Other 2,289 - 2,289 -
Non-Cash Loan Procurement Cost
Write-off - - 1,273 -
Non-Cash Software Write-off 307 - 307 -
Minority Interest (176) 195 (249) 351
-------- -------- -------- --------
AFFO - Operating partnership $ 16,722 $ 12,728 $ 47,226 $ 33,470
AFFO - Allocable to minority
interest $ (1,393) $ (1,173) $ (3,937) $ (2,011)
-------- -------- -------- --------
AFFO - Allocable common
shareholders $ 15,329 $ 11,555 $ 43,289 $ 31,459
======== ======== ======== ========
Weighted-average diluted shares
outstanding (1) 57,431 37,634 57,418 37,554
Adjusted Funds From Operations per
share $ 0.27 $ 0.31 $ 0.75 $ 0.84
Reconciliation of Dilutive Income
per Share to Adjusted Funds From
Operations per share:
Dilutive income per share $ (0.03) $ 0.05 $ (0.05) $ 0.15
Adjustments:
Real Estate Depreciation 0.28 0.29 0.80 0.74
Severance Costs and Other 0.04 - 0.04 -
Non-Cash Loan Procurement
Cost Write-off - - 0.02 -
Non-Cash Software Write-off 0.01 - 0.01 -
Funds attributable to
minority shareholders (0.03) (0.03) (0.07) (0.05)
-------- -------- -------- --------
Adjusted funds from operations per
share $ 0.27 $ 0.31 $ 0.75 $ 0.84
======== ======== ======== ========
(1) The weighted average number of shares for the three and nine months
ended September 30, 2006 include approximately 0.1 million shares
related to certain equity awards issued that are dilutive for AFFO.
Contact Information: Contact: U-Store-It Trust Christopher P. Marr Chief Financial Officer (440) 234-0700