-- Funds from Operations ("FFO")
-- FFO of $0.12 per share for the three months ended March 31, 2010
compared to our expectation entering the quarter of $0.10 to $0.11
per share.
-- Weighted Average Shares and Units Outstanding
-- Weighted average shares and units outstanding were 98.4 million and
62.8 million for the first quarter of 2010 and 2009, respectively.
-- Same-store Revenue (364 same-store facilities)
-- Same-store total revenue decreased 3.2% from the first quarter of
2009.
-- Same-store Property Operating Expenses
-- Same-store property operating expenses decreased 2.7% when compared
to the first quarter of 2009.
-- Same-store Net Operating Income ("NOI")
-- Same-store NOI decreased 3.6% from the first quarter of 2009.
-- Realized Annual Rent
-- Same-store realized annual rent per square foot decreased to $11.01
or 2.1% compared to the first quarter of 2009.
-- Same-store Physical Occupancy
-- At March 31, 2010, ending physical occupancy was 75.1% compared to
75.3% at March 31, 2009.
-- Average physical occupancy was 75.1% for the first quarter of 2010
on the same-store facilities compared to 76.7% for the first
quarter of 2009.
-- Ending sequential quarterly occupancy declined 20 basis points
(75.1% as of 3/31/10 compared to 75.3% as of 12/31/09) compared to
a decline of 340 basis points in the same period last year (75.3%
as of 3/31/09 compared to 78.7% as of 12/31/08).
Funds from Operations
FFO for the first quarter of 2010 was $11.8 million, compared to $15.6
million for the first quarter of 2009. FFO per share was $0.12 per share
for the first quarter of 2010, compared to $0.25 per share for the same
quarter of last year.
Operating Results
The Company reported a net loss attributable to the Company of $3.5 million
or $0.04 per common share in the first quarter of 2010, compared to a net
loss attributable to the Company of $2.1 million or $0.03 per common share
in the first quarter of 2009. Total revenues decreased $1.8 million and
total property operating expenses decreased $0.6 million in the first
quarter of 2010, compared to the same period in 2009. Decreases in total
revenues are attributable to reduced asking rental rates and decreased
occupancy levels in the same-store portfolio during the 2010 period as
compared to the 2009 period. Decreases in property operating expenses are
attributable to a reduction in utility, advertising and other expenses,
offset by increases in property insurance and repair and maintenance
expenses.
Interest expense decreased approximately $1.3 million in the first quarter
of 2010, compared to the first quarter of 2009, primarily as a result of
lower interest rates and lower outstanding principal balances during the
first quarter of 2010 as compared to the same period in 2009.
Loan procurement amortization expense increased approximately $1.1 million
in the first quarter of 2010, compared to the first quarter of 2009, due to
loan procurement cost amortization associated with the $450 million Secured
Credit Facility that closed in December of 2009 and the additional $116.1
million of secured property level loans the Company obtained during 2009.
The Company's 367 owned facilities, containing 23.7 million rentable square
feet, had a physical occupancy at March 31, 2010 of 75.1% and an average
physical occupancy for the quarter ended March 31, 2010 of 75.1%.
Same-Store Results
The Company's same-store pool at March 31, 2010 represented 364 facilities
containing approximately 23.6 million rentable square feet and included
approximately 99.2% of the aggregate rentable square feet of the Company's
367 owned facilities. These same-store facilities represent approximately
99.6% of property net operating income for the quarter ended March 31,
2010.
The same-store average physical occupancy for the first quarter of 2010 was
75.1% compared to 75.3% for the same quarter of last year. Same-store net
rental income for the first quarter of 2010 decreased 4.1% over the same
period in 2009. Same-store total revenues decreased 3.2% and same-store
operating expenses decreased 2.7% as compared to the first quarter of 2009.
Same-store net operating income decreased 3.6% in the first quarter of 2010
compared to the same quarter of 2009.
Investment Activity
The Company acquired management and other contracts from United Stor-All
Management, LLC ("United Stor-All") on April 28, 2010. U-Store-It added 85
self-storage facilities to its existing portfolio of 375 owned and operated
assets. The 85 facilities are located in 16 states and the District of
Columbia and contain approximately 5.4 million square feet.
"The United Stor-All transaction is an exciting opportunity for us to both
utilize our existing systems and platform while enhancing the depth of our
team," said Christopher Marr, U-Store-It's President and Chief Investment
Officer. "The transaction provides us with a significant third party
management platform which we will continue to grow and additional
relationships with several high-quality self-storage owners. This
transaction represents an excellent allocation of our investment capital."
Balance Sheet
During the quarter, the Company used cash on hand to repay an $83.3 million
CMBS loan that was scheduled to mature in May 2010. Additionally, during
the quarter the Company was repaid $17.6 million in notes receivable
related to seller financing the Company provided as part of a portfolio
disposition in 2009.
Quarterly Dividend
On February 24, 2010, the Company declared a dividend of $0.025 per share.
The dividend was paid on April 22, 2010, to shareholders of record on April
7, 2010.
2010 Financial Outlook
"Our first quarter results exceeded our FFO guidance of $0.10 to $0.11 per
share as revenues from our same-store portfolio came in ahead of plan.
During the quarter, we satisfied an $83.3 million CMBS loan with cash and
have cash available to address all of our remaining 2010 maturities," said
Chief Financial Officer Tim Martin. "We are increasing our 2010 FFO per
share guidance to a range of $0.45 to $0.51 to reflect our first quarter
outperformance and the impact of the acquisition of the third-party
management business. Our guidance reflects our cautiously optimistic view
that we are able to attract more than our share of the recovering
self-storage consumer demand as we enter our peak rental season."
The Company is revising its previously issued estimates and now expects
that its fully-diluted FFO per share for 2010 will be between $0.45 and
$0.51, and that its fully-diluted net loss per share for the period will be
between $(0.18) and $(0.12). The Company's estimate is based on the
following key assumptions:
-- General and administrative expenses of approximately $23.6 million to
$24.4 million
-- For 2010, the same-store pool will consist of 364 assets totaling
23.6 million square feet
-- Same-store revenue growth of -0.5% to -2.5% over 2009
-- Same-store expense growth of 2.0% to 3.0% over 2009
-- Same-store net operating income growth of -5.0% to -4.0% over 2009
2010 Full Year Guidance Range or Value
------------------------------------------------- ----------------------
Earnings (loss) per diluted share allocated to
common shareholders $ (0.18) to $ (0.12)
Plus: real estate depreciation and amortization 0.63 0.63
------- -------
FFO per diluted share $ 0.45 to $ 0.51
======= =======
The Company estimates that its fully-diluted FFO per share for the quarter
ending June 30, 2010 will be between $0.10 and $0.11, and that its
fully-diluted net loss per share for the period will be between $(0.06) and
$(0.05).
2nd Quarter 2010 Guidance Range or Value
------------------------------------------------- ----------------------
Earnings (loss) per diluted share allocated to
common shareholders $ (0.06) to $ (0.05)
Plus: real estate depreciation and amortization 0.16 0.16
------- -------
FFO per diluted share $ 0.10 to $ 0.11
======= =======
Conference Call
Management will host a conference call at 11:00 a.m. ET on Friday, May 7,
2010, to discuss financial results for the three months ended March 31,
2010.
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 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
July 6, 2010. 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
439491.
Supplemental operating and financial data as of March 31, 2010 is available
on our corporate website under Investor Relations - Financial Information -
Financial Reports.
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 (loss): interest expense on
loans, loan procurement amortization expense, amounts attributable to
noncontrolling interests, other expense, depreciation and amortization
expense, general and administrative expense, and deducting from net income:
income from discontinued operations, gains on disposition of discontinued
operations, other income, 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
This presentation, together with other statements and information publicly
disseminated by U-Store-It Trust ("we," "us," "our" or the "Company"),
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 over-leverage and the
corresponding risk of default on our mortgage 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)
March 31, December 31,
2010 2009
------------ ------------
ASSETS
Storage facilities $ 1,743,312 $ 1,774,542
Less: Accumulated depreciation (326,935) (344,009)
------------ ------------
Storage facilities, net 1,416,377 1,430,533
Cash and cash equivalents 41,524 102,768
Restricted cash 13,521 16,381
Loan procurement costs, net of amortization 18,006 18,366
Notes receivable 2,532 20,112
Other assets, net 10,016 10,710
------------ ------------
Total assets $ 1,501,976 $ 1,598,870
============ ============
LIABILITIES AND EQUITY
Secured term loan $ 200,000 $ 200,000
Mortgage loans and notes payable 483,324 569,026
Accounts payable, accrued expenses and other
liabilities 27,749 33,767
Distributions payable 2,456 2,448
Deferred revenue 9,008 8,449
Security deposits 458 456
------------ ------------
Total liabilities 722,995 814,146
------------ ------------
Noncontrolling interests in the Operating
Partnership 45,086 45,394
------------ ------------
Commitments and contingencies
Equity
Common shares $.01 par value, 200,000,000
shares authorized, 92,902,133 and 92,654,979
shares issued and outstanding at March 31, 2010
and December 31, 2009, respectively 929 927
Additional paid in capital 976,145 974,926
Accumulated other comprehensive loss (1,056) (874)
Accumulated deficit (285,487) (279,670)
------------ ------------
Total U-Store-It Trust shareholders' equity 690,531 695,309
------------ ------------
Noncontrolling interest in subsidiaries 43,364 44,021
------------ ------------
Total equity 733,895 739,330
------------ ------------
Total liabilities and equity $ 1,501,976 $ 1,598,870
============ ============
U-STORE-IT TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share data)
Three Months Ended
March 31,
--------------------------
2010 2009
------------ ------------
REVENUES
Rental income $ 49,042 $ 51,243
Other property related income 4,081 3,690
------------ ------------
Total revenues 53,123 54,933
------------ ------------
OPERATING EXPENSES
Property operating expenses 22,973 23,613
Depreciation and amortization 16,378 17,825
General and administrative 5,868 5,476
------------ ------------
Total operating expenses 45,219 46,914
------------ ------------
OPERATING INCOME 7,904 8,019
------------ ------------
OTHER INCOME (EXPENSE)
Interest:
Interest expense on loans (10,051) (11,353)
Loan procurement amortization expense (1,539) (483)
Interest income 535 43
Other (41) (12)
------------ ------------
Total other expense (11,096) (11,805)
------------ ------------
LOSS FROM CONTINUING OPERATIONS (3,192) (3,786)
DISCONTINUED OPERATIONS
Income from discontinued operations - 1,000
Net gain on disposition of discontinued
operations - 500
------------ ------------
Total discontinued operations - 1,500
------------ ------------
NET LOSS (3,192) (2,286)
NET LOSS (INCOME) ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
Noncontrolling interests in the Operating
Partnership 178 177
Noncontrolling interest in subsidiaries (461) -
------------ ------------
NET LOSS ATTRIBUTABLE TO THE COMPANY $ (3,475) $ (2,109)
============ ============
Basic and diluted loss per share from
continuing operations attributable to common
shareholders $ (0.04) $ (0.06)
Basic and diluted earnings per share from
Discontinued operations attributable to common
shareholders $ - $ 0.03
Basic and diluted loss per share attributable
to common shareholders ------------ ------------
$ (0.04) $ (0.03)
============ ============
Weighted-average basic and diluted shares
outstanding 92,834 57,687
AMOUNTS ATTRIBUTABLE TO THE COMPANY'S
COMMON SHAREHOLDERS:
Loss from continuing operations $ (3,475) $ (3,488)
Total discontinued operations - 1,379
------------ ------------
Net loss $ (3,475) $ (2,109)
============ ============
Same-store facility results (364 facilities)
(in thousands, except percentage and per square foot data)
Three months ended
----------------------
March 31, March 31, Percent
2010 2009 Change
---------- ---------- --------
REVENUES
Net rental income $ 48,717 $ 50,790 -4.1%
Other property related income 3,941 3,621 8.9%
---------- ---------- --------
Total revenues 52,658 54,411 -3.2%
---------- ---------- --------
OPERATING EXPENSES
Property taxes 7,140 7,129 0.2%
Personnel expense 5,932 5,975 -0.7%
Advertising 743 1,154 -35.6%
Repair and maintenance 637 599 6.3%
Utilities 2,474 2,592 -4.6%
Property insurance 767 622 23.3%
Other expenses 3,281 3,477 -5.6%
---------- ---------- --------
Total operating expenses 20,974 21,548 -2.7%
---------- ---------- --------
Net operating income (1) $ 31,684 $ 32,863 -3.6%
========== ========== ========
Gross margin 60.2% 60.4%
Period Average Occupancy (2) 75.1% 76.7%
Period End Occupancy (3) 75.1% 75.3%
Total rentable square feet 23,570 23,570
Realized annual rent per occupied square
foot (4) $ 11.01 $ 11.24 -2.1%
Scheduled annual rent per square
foot (5) $ 11.59 $ 12.28 -5.7%
Reconciliation of Same-Store Net
Operating Income to Operating Income
Same-store net operating income (1) $ 31,684 $ 32,863
Non same-store net operating income (1) 120 204
Indirect property overhead (1,654) (1,747)
Depreciation (16,378) (17,825)
General and administrative expense (5,868) (5,476)
---------- ----------
Operating Income $ 7,904 $ 8,019
========== ==========
(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 March 31 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) Scheduled 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
----------------------------
March 31, March 31,
2010 2009
------------- -------------
Net loss $ (3,192) $ (2,286)
Add (deduct):
Real estate depreciation 15,970 18,400
Gains on sale of real estate - (500)
Noncontrolling interests in subsidiaries
share of FFO (1,021) -
------------- -------------
FFO $ 11,757 $ 15,614
============= =============
Loss per share attributable to common $ (0.04) $ (0.03)
shareholders - fully diluted
FFO per share and unit - fully diluted $ 0.12 $ 0.25
Weighted-average basic and diluted shares
outstanding 92,834 57,687
Weighted-average diluted shares and units
outstanding 98,421 62,768
Dividend per common share and unit $ 0.025 $ 0.025
Payout ratio of FFO (Dividend per share
divided by FFO per share) 21% 10%
Contact Information: Contact: U-Store-It Trust Timothy M. Martin Chief Financial Officer (610) 293-5700