-- General and administrative expenses of approximately $5.0-$5.5 million
-- Same-store average occupancy of approximately 83.0%
-- Same-store revenue growth of 2.0%-3.0% over the third quarter of 2006
-- Same-store expense growth of 1.5%-2.5% over the third quarter of 2006
-- Same-store net operating income growth of 2.0%-4.0% over the third
quarter of 2006
These estimates exclude an estimated $800 thousand non-cash charge the
Company will incur during the third quarter of 2007 in connection with
certain operating leases for its office space in Middleburg Heights, Ohio
which it expects to abandon during the third quarter.
The Company is revising its previous 2007 earnings guidance to reflect the
actual results of the first six months. The Company expects 2007 FFO per
share of $0.96 to $1.00 and EPS of $(0.09) to $(0.05). These estimates
exclude the above mentioned third quarter charge as well as the litigation
costs incurred during the first quarter 2007.
Conference Call
Management will host a conference call at 11:00 a.m. EDT on Tuesday August
7, 2007, to discuss financial results for the three months ended June 30,
2007. 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 877-407-8035 for domestic
callers and 201-689-8035 for international callers. The reservation number
for both is 250454. 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 7, 2007. The replay dial-in
number is 877-660-6853 for domestic callers, 201-612-7415 for international
callers. The account number for both is 286. The replay reservation number
is 250454. Supplemental operating and financial data as of June 30, 2007 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 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. 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: whether the transactions described in this press
release will close and become effective, 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; material weaknesses in our
internal financial reporting; 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
(in thousands, except share data)
(unaudited)
June 30, December 31,
2007 2006
------------ ------------
ASSETS
Storage facilities $ 1,784,051 $ 1,771,864
Accumulated depreciation (235,193) (205,049)
------------ ------------
1,548,858 1,566,815
Cash and cash equivalents 3,443 19,716
Restricted cash 16,865 14,126
Loan procurement costs - net of amortization 6,673 7,575
Other assets 10,361 6,475
Due from related parties 1,358 632
------------ ------------
Total assets $ 1,587,558 $ 1,615,339
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Revolving credit facility $ 107,500 $ 90,500
Unsecured term loan 200,000 200,000
Mortgage loans and notes payable 583,427 588,930
Accounts payable and accrued expenses 21,868 22,590
Due to related parties 119 336
Distributions payable 18,196 18,197
Deferred revenue 10,437 9,740
Security deposits 608 655
------------ ------------
Total liabilities 942,155 930,948
Minority interests 52,921 56,898
Commitments and contingencies
Shareholders' Equity
Common shares $.01 par value, 200,000,000
shares authorized, 57,495,530 and
57,335,490 shares issued and outstanding
at June 30, 2007 and December 31, 2006,
respectively 574 573
Additional paid-in capital 796,077 794,632
Accumulated deficit (204,169) (167,712)
------------ ------------
Total shareholders' equity 592,482 627,493
------------ ------------
Total liabilities and shareholders' equity $ 1,587,558 $ 1,615,339
============ ============
U-STORE-IT TRUST AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2007 2006 2007 2006
(as (as
restated restated
and and
reclassified) reclassified)
--------- ----------- --------- -----------
REVENUES
Rental income $ 51,933 $ 49,268 $ 102,512 $ 93,885
Other property related
income 4,433 3,597 8,693 6,678
Other - related party 122 98 239 213
--------- ----------- --------- -----------
Total revenues 56,488 52,963 111,444 100,776
OPERATING EXPENSES
Property operating
expenses 22,391 20,875 45,197 39,637
Property operating
expenses - related party 118 12 219 32
Depreciation 16,722 15,641 33,407 30,221
General and administrative 5,752 4,132 11,745 9,521
General and administrative
- related party 14 273 37 450
--------- ----------- --------- -----------
Total operating
expenses 44,997 40,933 90,605 79,861
OPERATING INCOME 11,491 12,030 20,839 20,915
OTHER INCOME (EXPENSE)
Interest:
Interest expense on
loans (12,955) (10,888) (25,732) (20,797)
Loan procurement
amortization expense (445) (512) (889) (973)
Write-off of loan
procurement cost due
to early extinguishment
of debt - - - (1,273)
Interest income 91 159 204 1,042
Other - (102) (6) (60)
--------- ----------- --------- -----------
Total other expense (13,309) (11,343) (26,423) (22,061)
INCOME (LOSS) BEFORE
MINORITY INTERESTS (1,818) 687 (5,584) (1,146)
MINORITY INTERESTS 149 (57) 458 96
--------- ----------- --------- -----------
INCOME (LOSS) FROM
CONTINUING OPERATIONS (1,669) 630 (5,126) (1,050)
DISCONTINUED OPERATIONS
Income from operations 17 103 118 162
Gain on disposition of
discontinued operations 2,122 - 2,122 -
Minority interest
attributable to
discontinued
operations (175) (9) (184) (13)
--------- ----------- --------- -----------
Income from
discontinued
operations 1,964 94 2,056 149
--------- ----------- --------- -----------
NET INCOME (LOSS) $ 295 $ 724 $ (3,070) $ (901)
========= =========== ========= ===========
Basic and diluted earnings
(loss) per share from
continuing operations $ (0.03) $ 0.01 $ (0.09) $ (0.02)
Basic and diluted earnings
(loss) per share from
discontinued operations $ 0.03 $ 0.00 $ 0.04 $ 0.00
--------- ----------- --------- -----------
Basic and diluted earnings
(loss) per share $ - $ 0.01 $ (0.05) $ (0.02)
========= =========== ========= ===========
Weighted-average basic
shares outstanding 57,438 57,325 57,429 57,286
Weighted-average diluted
shares outstanding 57,473 57,399 57,429 57,286
========= =========== ========= ===========
Distributions declared per
common share and unit $ 0.29 $ 0.29 $ 0.58 $ 0.58
========= =========== ========= ===========
Same-Store Facility Results (331 facilities)
(unaudited and in thousands, except per square foot data)
Three months ended
--------------------
June 30, June 30, Percent
2007 2006 Change
--------- --------- ---------
REVENUES
Gross revenues 48,247 47,710 (1) 1.1%
Rent and fee write-offs (1,574) (1,000) (1)
--------- ---------
46,673 46,710
OPERATING EXPENSES
Property taxes 5,555 5,527 (2) 0.5%
Personnel expense 4,755 5,003 (2) -4.9%
Advertising 869 1,456 -40.3%
Repair and maintenance 685 231 196.5%
Utilities 1,458 1,569 -7.1%
Property insurance 778 684 13.7%
Other expenses 3,300 3,405 -3.1%
--------- --------- ---------
Total operating expenses 17,400 17,875 -2.7%
Net operating income (3) 29,273 28,835 1.5%
Gross margin 62.7% 61.7%
Period Average Occupancy (4) 81.4% 82.1%
Period End Occupancy (5) 82.9% 83.1%
Total Rentable square feet 20,158 20,158
Realized annual rent
per occupied square foot (6) $ 10.51 $ 10.22
In place annual rent per
square foot (7) $ 12.22 $ 11.71
Reconciliation of Same-Store Net Operating Income to Operating Income
Same-store net operating income (3) $ 29,273 $ 28,835
Non same-store net operating income (3) 4,706 3,241
Depreciation (16,722) (15,641)
General and administrative expense (5,766) (4,405)
--------- ---------
Operating Income $ 11,491 $ 12,030
(1) In 2006, the Company's prior property management system did not capture
rent and fee writeoffs separate from rental income. As the information
is unavailable to present a meaningful comparison of same-store
results, management’s best estimate of writeoffs during the 2006 period
is $1,000. This adjustment to present revenues on a gross basis and net
of writeoffs has no impact on 2006 net operating income, but management
believes presents the most relevant comparison of our same-store
results. The company began to capture specific amounts related to rent
and fee writeoffs effective with its conversion to a new property
management system at the beginning of the fourth quarter of 2006.
Accordingly, management anticipates making a similar estimate of prior
year writeoffs in its presentation of same-store results in the third
quarter of 2007.
(2) Adjusted for comparison purposes to reflect $195 thousand of
additional property taxes and $73 thousand of additional workers
compensation costs. These amounts, related to the second quarter of
2006, were expenses in the fourth quarter of 2006, as management
reevaluated its method of estimating these expenses. Accordingly,
management anticipates making a similar adjustment in its presentation
of same-store results in the third quarter of 2007.
(3) Net operating income (NOI) is a non-GAAP (generally accepted
accounting principles) financial measure that excludes the impact of
depreciation and general & administrative expense.
(4) Square feet occupancy represents the weighted average occupancy for
the period.
(5) Represents occupancy at June 30 of the respective year.
(6) Realized annual rent per occupied square foot is computed by dividing
rental income by the weighted average occupied square feet for the
period.
(7) In place annual rent per square foot represents annualized
contractual rents per available square foot for the period.
Non-GAAP Financial Measures - Computation of Funds From Operations (FFO)
(unaudited and in thousands, except per share data)
Three months ended
----------------------------
June 30, June 30,
2007 2006
(as restated
and
reclassified)
------------- -------------
Net income $ 295 $ 724
Add (deduct):
Real estate depreciation 16,527 15,424
Gain on sale of real estate (2,122) -
Minority interests from continuting
operations (149) 57
Minority interests from discontinued
operations 175 9
------------- -------------
FFO $ 14,726 $ 16,214
============= =============
Income (loss) per share - fully diluted $ - $ 0.01
FFO per share and unit - fully diluted $ 0.24 $ 0.26
Weighted-average diluted shares outstanding 57,473 57,399
Weighted-average diluted shares and units
outstanding 62,659 62,598
Dividend per common share and unit $ 0.29 $ 0.29
Payout ratio of FFO (Dividend per share
divided by FFO per share and unit) 121% 112%
Contact Information: Contact: U-Store-It Trust Christopher P. Marr Chief Financial Officer (610) 293-5700