-- General and administrative expenses of approximately $5.0 million
-- Same-store average occupancy of 81.5%-82.5%
-- Same-store revenue growth of 5.0%-6.0% over the second quarter of 2006
-- Same-store expense growth of 3.0%-6.0% over the second quarter of 2006
-- Same-store net operating income growth of 4.5%-7.0% over the second
quarter of 2006
-- No acquisitions during the quarter and dispositions of $10 to $20
million
The Company is revising its previous 2007 earnings guidance to reflect the
actual results of the first quarter at the low end of our expected range,
the slower than expected pace of acquisition activity, and the higher than
expected bad debts. The Company expects 2007 FFO per share of $1.05 to
$1.12 and EPS of $0.00 to $0.07.
Chief Financial Officer Christopher Marr said, "We met our baseline
expectations for the first quarter, and finished April with a strong rental
performance. We remain optimistic heading into the heart of the rental
season that we can continue to build upon this momentum. Our guidance
reflects the magnitude of the challenges we have faced and the reality that
the full effects of the turnaround may not be realized until later in the
year."
Conference Call
Management will host a conference call at 11:00 a.m. EDT on Friday, May 4,
2007, to discuss financial results for the three months ended March 31,
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 240811. 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 June 4, 2007. The
replay dial-in number is (877) 660-6853 for domestic callers, (201)
612-7415 for international callers. The replay reservation number is
240811. Supplemental operating and financial data as of March 31, 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: 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
CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands, except per share data)
March 31, December 31,
2007 2006
----------- -----------
ASSETS
Storage facilities $ 1,794,139 $ 1,771,864
Accumulated depreciation (221,752) (205,049)
----------- -----------
1,572,387 1,566,815
Cash and cash equivalents 5,649 19,716
Restricted cash 15,508 14,126
Loan procurement costs - net of amortization 7,132 7,575
Other assets 6,759 6,475
Due from related parties - 632
----------- -----------
Total assets $ 1,607,435 $ 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 586,804 588,930
Accounts payable and accrued expenses 21,113 22,590
Due to related parties - 336
Distributions payable 18,192 18,197
Deferred revenue 10,429 9,740
Security deposits 632 655
----------- -----------
Total liabilities 944,670 930,948
Minority interests 55,009 56,898
Shareholders' equity
Common shares $.01 par value, 200,000,000
shares authorized, 57,408,819 and 57,335,490
shares issued and outstanding at March 31,
2007 and December 31, 2006, respectively 574 573
Additional paid in capital 794,901 794,632
Accumulated deficit (187,719) (167,712)
----------- -----------
Total shareholders' equity 607,756 627,493
----------- -----------
Total liabilities and shareholders' equity $ 1,607,435 $ 1,615,339
=========== ===========
U-STORE-IT TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except per share data)
Three Months Ended
-----------------------
March 31, March 31,
2007 2006
(as restated)
-------- -------------
REVENUE
Rental income $ 51,250 $ 44,994
Other property related income 4,282 3,101
Other income - related party - 115
-------- -------------
Total revenues 55,532 48,210
OPERATING EXPENSES
Property operating expenses 23,276 18,917
Property operating expenses - related party - 20
Depreciation 16,767 14,672
Asset write-off - -
General and administrative 5,989 5,389
General and administrative - related party - 177
-------- -------------
Total operating expenses 46,032 39,175
Operating income 9,500 9,035
Other income (expense)
Interest:
Interest expense on loans (12,826) (10,000)
Loan procurement amortization expense (445) (462)
Write-off of loan procurement costs - (1,273)
Interest income 115 884
Other (6) 42
-------- -------------
Total other expense (13,162) (10,809)
Loss before minority interests (3,662) (1,774)
Minority Interests 304 149
-------- -------------
Net loss $ (3,358) $ (1,625)
======== =============
PER SHARE DATA
Basic and diluted loss per share $ (0.06) $ (0.03)
Weighted-average basic shares outstanding 57,421 57,257
Weighted-average diluted shares outstanding 57,421 57,257
======== =============
Distributions declared per common share and unit $ 0.29 $ 0.29
======== =============
Same-Store Facility Results (336 facilities)
(unaudited and in thousands, except per square foot data)
Three months ended
------------------------
March 31, March 31, Percent
2007 2006 Change
----------- ----------- --------
REVENUES
Gross revenues 47,829 45,922 (1) 4.2%
Rent and fee write-offs (1,924) (1,000) (1) 92.4%
----------- -----------
45,905 44,922
OPERATING EXPENSES
Property taxes 5,592 5,462 (2) 2.4%
Personnel expense 5,396 5,372 (2) 0.5%
Advertising 1,235 1,127 9.6%
Repair and maintenance 544 468 16.2%
Utilities 1,897 1,973 -3.9%
Property insurance 861 555 55.1%
Other expenses 2,770 2,891 -4.2%
----------- ----------- --------
Total operating expenses 18,295 17,848 2.5%
Net operating income (3) 27,610 27,074 2.0%
Gross margin 60.1% 60.3%
Period Average Occupancy (4) 79.6% 80.5%
Period End Occupancy (5) 79.7% 80.6%
Total Rentable square feet 20,434 20,434
Realized annual rent
per occupied square foot
(6) $ 10.92 $ 10.45
In place annual rent per
square foot (7) $ 12.05 $ 11.58
Reconciliation of Same-Store Net Operating Income to Operating Income
Same-store net operating
income (3) $ 27,610 $ 27,074
Non same-store net operating
income (3) 4,646 1,861
Real estate tax and workers
compensation adjustment - 338
Depreciation (16,767) (14,672)
General and administrative
expense (5,989) (5,566)
----------- -----------
Operating Income $ 9,500 $ 9,035
(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 second
and third quarter of 2007.
(2) – Adjusted for comparison purposes to reflect $192 thousand of
additional property taxes and $146 thousand of additional workers
compensation costs. These amounts, related to the first quarter of
2006 were expensed 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 second and 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. Although
depreciation and general & administrative expense are operating
expenses, we believe that NOI is more useful in making decisions
with respect to capital allocations, in determining current
property values, and in 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.
(4) – Square feet occupancy represents the weighted average occupancy
for the period.
(5) – Represents occupancy at March 31 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
-------------------------
March 31, March 31,
2007 2006
(as restated)
--------- --------------
Net loss $ (3,358) $ (1,625)
Add (deduct):
Real estate depreciation 16,610 14,672
Minority interests (304) (149)
--------- --------------
FFO (1) $ 12,948 $ 12,898
========= ==============
Loss per share - fully diluted $ (0.06) $ (0.03)
FFO per share and unit - fully diluted $ 0.21 $ 0.21
Weighted-average diluted shares outstanding 57,421 57,257
Weighted-average diluted shares and units
outstanding 62,854 62,444
Dividend per common share and unit $ 0.29 $ 0.29
Payout ratio of FFO (Dividend per share divided
by FFO per share and unit) 141% 140%
(1) Included as an expense in FFO is $1.0 million in the first quarter of
2007 of legal and other costs associated with the previously disclosed
inquiry and $1.3 million in the first quarter of 2006 related to the
write-off of unamortized loan costs associated with a loan which was
prepaid during the quarter.
Contact Information: Contact: U-Store-It Trust Christopher P. Marr Chief Financial Officer (610) 293-5700