-- Funds from Operations ("FFO") of $0.21 per share for the three months
ended December 31, 2007, a 16.7% increase over the $0.18 per share reported
in the same period of the previous year. FFO per share was negatively
impacted during the current quarter by approximately $0.01 per share due to
dilution from the development/lease-up assets acquired in 2007.
-- An increase in fourth quarter rental income and total revenue on the
329 same-store facilities by 7.1% and 5.5%, respectively, when compared to
the three months ended December 31, 2006.
-- An increase in fourth quarter net operating income ("NOI") on the 329
same-store facilities by 7.2% when compared to the three months ended
December 31, 2006.
-- Average fourth quarter same-store physical occupancy (calculated on
square feet) of 82%, a gain of 200 basis points over the fourth quarter of
2006.
-- At December 31, 2007, the Company had approximately 3,300 or 2.4% more
occupied self-storage units in the same-store portfolio compared to January
1, 2007.
-- An increase of approximately 24,000 or 23.9% in the number of units
rented at the same-store facilities during 2007 compared to 2006.
-- A $1.1 million or 40% reduction in bad debt write-offs during the
fourth quarter of 2007 compared to the fourth quarter of 2006.
-- During 2007, we made significant investments into our portfolio
including painting 112 facilities, completing asphalt and concrete projects
at 42 facilities, remodeling 29 offices/apartments and expanding 4
facilities.
President and Chief Executive Officer Dean Jernigan commented, "We are
extremely pleased to end the year on such a high note. At the end of the
third quarter, we believed that our turnaround efforts were beginning to
show positive and tangible results. These results are even more obvious in
the fourth quarter. During 2007, we rented approximately 157,000 units,
increased physical occupancy on the same-store pool 150 basis points at
year-end, cleaned up our tenant receivables, completed the staffing in both
our operations and administrative functions, enhanced our systems and
streamlined our processes. While we always knew internally that our
efforts would produce the desired effect, our results in the fourth quarter
are tangible signs of those efforts. In 2008, we will continue to invest
in our assets, systems and people. We also will be aggressive in our
marketing and leasing efforts with the belief that the result will be a
continuation of strong financial and operational performance."
Funds from Operations FFO for the fourth quarter of 2007 was $12.9 million, compared to $11.6 million for the fourth quarter of 2006. FFO per share grew 16.7% to $0.21 per share for the fourth quarter of 2007, compared to $0.18 for the same quarter of last year. The Company's fourth quarter 2007 FFO 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. FFO for the year ended December 31, 2007 (excluding the third quarter non-recurring lease abandonment charge) was $53.9 million or $0.86 per share. Included in our first quarter 2007 FFO is $1.0 million of legal and professional costs associated with an inquiry into actions of a former Trustee and a former officer. After adjusting for this item, FFO per share for the year ended 2007 was $0.88 compared to $54.8 million or $0.87 per share for the year ended December 31, 2006. Operating Results The Company reported a net loss of $5.9 million or $0.10 per share in the fourth quarter of 2007, compared to a net loss of $5.7 million or $0.10 per share for the quarter ended December 31, 2006. For the year ended December 31, 2007, the Company reported a net loss of $13.1 million or $0.22 per share as compared to a net loss of $8.6 million or $0.15 per share for the year ended December 31, 2006. The increase in net loss is primarily attributable to increased depreciation expense of $2.2 million and $6.1 million in the quarter and year ended December 31, 2007 as compared to the quarter and year ended December 31, 2006, respectively. Total revenues increased $5.8 million and total operating expenses increased $4.8 million in the fourth quarter of 2007, compared to the same period in 2006. Increases in total revenues and property operating expenses are attributable to the acquisition of 17 self-storage facilities for approximately $140.5 million since December 31, 2006 and increases in same-store revenues and expenses. General and administrative expenses increased by $0.3 million in the fourth quarter of 2007 compared to the same period in 2006. Interest expense increased approximately $1.8 million in the fourth quarter of 2007, compared to the fourth quarter of 2006, primarily as a result of the additional debt used to fund the acquisition of 17 facilities purchased since December 31, 2006. The Company's 409 owned facilities, containing 26.1 million rentable square feet, had a physical occupancy at December 31, 2007 of 79.5% (80.0% exclusive of the lease-up assets) and an average physical occupancy for the quarter ended December 31, 2007 of 80.3% (80.8% exclusive of the lease-up assets). Same-Store Results The Company's same-store pool at December 31, 2007 represented 329 facilities containing approximately 20.0 million rentable square feet and included approximately 76.7% of the aggregate rentable square feet of the Company's 409 owned facilities. These same-store facilities represent approximately 85.5% of property net operating income for the quarter ended December 31, 2007. The same-store average physical occupancy for the fourth quarter of 2007 was 82.0% compared to 80.0% for the same quarter of last year. In-place annual rent per square foot grew 0.6% to $12.31 in the fourth quarter of 2007 over the same quarter of last year. Same-store rental income for the fourth quarter of 2007 grew 7.1% over the same period in 2006. Same-store total revenues and operating expenses grew 5.5% and 3.2%, respectively, over the fourth quarter of 2006. Same-store net operating income grew 7.2% in the fourth quarter of 2007 compared to the same quarter of 2006. For the year ended December 31, 2007, the same-store revenue, operating expenses and net operating income grew 2.2%, 4.0%, and 1.1%, respectively, as compared to the results for the year ended December 31, 2006. Average physical occupancy of the same-store pool for 2007 was 81.7% as compared to 81.2% during 2006. Acquisition and Disposition Activity During the fourth quarter, the Company disposed of two business park assets in Tucson, Arizona for $6.4 million. The Company recognized a gain of approximately $395 thousand on the sale. The proceeds were used repay mortgage debt and to reduce balances outstanding under our revolving credit facility. During January 2008, we acquired a self-storage facility in Washington, D.C. of approximately 63,000 square feet for $13.3 million. This is one of our identified core growth markets and we plan to recycle a portion of our capital into these markets going forward. Quarterly Dividend On December 13, 2007, the Company declared a dividend of $0.18 per share. The dividend was paid on January 22, 2008, to shareholders of record on January 7, 2008. On February 27, 2008, the Company declared a dividend of $0.18 per share payable on April 22, 2008, to shareholders of record on April 7, 2008. First Quarter 2008 Financial Outlook The Company estimates that its fully-diluted FFO per share for the three months ending March 31, 2008 will be between $0.19 and $0.21, and that its fully-diluted net loss per share for the period will be between $0.10 and $0.12. The Company's estimate is based on the following key assumptions:
-- General and administrative expenses of approximately $5.5 million
-- Same-store average occupancy of approximately 79.0%
-- Same-store revenue growth of 4.25%-5.25% over the first quarter of
2007
-- Same-store expense growth of 6.0%-7.0% over the first quarter of 2007
-- Same-store net operating income growth of 3.0%-4.0% over the first
quarter of 2007
-- Dilution during the first quarter of 2008 from the 15
development/lease-up properties of approximately $0.01 per share
Guidance for 2008 Range or Value
---------------------
Earnings (loss) per diluted share allocated to
common shareholders $ (0.12) to $ (0.10)
Less: gains on sales of real estate - -
Plus: real estate depreciation and amortization 0.31 0.31
------- -------
FFO per diluted share $ 0.19 to $ 0.21
======= =======
"We are affirming our previously issued full-year 2008 guidance. Our
outlook for the first quarter of 2008 is one of appropriate cautious
optimism. While many signs point to our economy being in a recession and
while our credit markets remain dislocated, we continue to experience
strong fundamentals in our business," said Christopher Marr, Chief
Financial Officer.
Conference Call
Management will host a conference call at 11:00 a.m. EDT on Friday,
February 29, 2008, to discuss financial results for the year and three
months ended December 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 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
March 31, 2008. The replay dial-in number is 1-877-344-7529 for domestic
callers and +1
412-317-0088 for international callers. The replay passcode number is
415385#.
Supplemental operating and financial data as of December 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 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
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;
-- increases in interest rates and operating costs;
-- 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 Item 1A of this 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)
December 31, December 31,
2007 2006
----------- -----------
ASSETS
Storage facilities $ 1,916,396 $ 1,771,864
Accumulated depreciation (269,278) (205,049)
----------- -----------
1,647,118 1,566,815
Cash and cash equivalents 4,517 19,716
Restricted cash 15,818 14,126
Loan procurement costs - net of amortization 6,108 7,575
Other assets 14,270 6,475
Due from related parties - 632
----------- -----------
Total assets $ 1,687,831 $ 1,615,339
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Revolving credit facility $ 219,000 $ 90,500
Unsecured term loan 200,000 200,000
Secured term loan 47,444 -
Mortgage loans and notes payable 561,057 588,930
Accounts payable and accrued expenses 33,623 22,590
Due to related parties 110 336
Distributions payable 11,300 18,197
Deferred revenue 10,148 9,740
Security deposits 548 655
----------- -----------
Total liabilities 1,083,230 930,948
Minority interests 48,982 56,898
Commitments and contingencies
Shareholders' Equity
Common shares $.01 par value, 200,000,000 shares
authorized,57,577,232 and 57,335,490 shares
issued and outstanding at December 31, 2007
and December 31, 2006, respectively 576 573
Additional paid in capital 797,940 794,632
Accumulated other comprehensive income (1,664) -
Accumulated deficit (241,233) (167,712)
----------- -----------
Total shareholders' equity 555,619 627,493
----------- -----------
Total liabilities and shareholders' equity $ 1,687,831 $ 1,615,339
=========== ===========
U-STORE-IT TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Three
months months Year Year
ended ended ended ended
December December December December
31, 31, 31, 31,
2007 2006 2007 2006
--------- --------- --------- ---------
(Dollars and shares in thousands, except
per share data)
REVENUES
Rental income $ 56,173 $ 49,911 $ 211,974 $ 195,331
Other property related income 3,912 4,315 16,828 14,816
Other - related party 25 118 365 457
--------- --------- --------- ---------
Total revenues 60,110 54,344 229,167 210,604
OPERATING EXPENSES
Property operating expenses 26,702 24,313 96,802 85,415
Property operating expenses -
related party 7 22 59 69
Depreciation 19,930 17,754 70,192 64,079
Asset write-off - - - 305
Lease abandonment - - 1,316 -
General and administrative 5,221 4,866 21,966 21,675
General and administrative -
related party - 88 337 613
--------- --------- --------- ---------
Total operating expenses 51,860 47,043 190,672 172,156
OPERATING INCOME 8,250 7,301 38,495 38,448
OTHER INCOME (EXPENSE)
Interest:
Interest expense on loans (14,813) (13,060) (54,108) (45,628)
Loan procurement amortization
expense (440) (478) (1,772) (1,972)
Write-off of loan procurement
cost due to early extinguishment
of debt - (634) - (1,907)
Interest income 97 200 401 1,336
Other 124 264 118 191
--------- --------- --------- ---------
Total other expense (15,032) (13,708) (55,361) (47,980)
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE MINORITY
INTERESTS (6,782) (6,407) (16,866) (9,532)
MINORITY INTERESTS 574 530 1,385 790
--------- --------- --------- ---------
INCOME (LOSS) FROM CONTINUING
OPERATIONS (6,208) (5,877) (15,481) (8,742)
DISCONTINUED OPERATIONS
Income from operations (39) 206 102 208
Gain on disposition of
discontinued operations 395 - 2,517 -
Minority interest attributable
to discontinued operations (32) (17) (215) (17)
--------- --------- --------- ---------
Income from discontinued
operations 324 189 2,404 191
--------- --------- --------- ---------
NET INCOME (LOSS) $ (5,884) $ (5,688) $ (13,077) $ (8,551)
========= ========= ========= =========
Basic and diluted loss per
share from continuing
operations $ (0.10) $ (0.10) $ (0.26) $ (0.15)
Basic and diluted earnings per
share from discontinued
operations $ - $ - $ 0.04 $ -
--------- --------- --------- ---------
Basic and diluted loss per
share $ (0.10) $ (0.10) $ (0.22) $ (0.15)
========= ========= ========= =========
Weighted-average basic shares
outstanding 57,589 57,412 57,497 57,287
Weighted-average diluted shares
outstanding 57,589 57,412 57,497 57,287
========= ========= ========= =========
Distributions declared per
common share and unit $ 0.18 $ 0.29 $ 1.05 $ 1.16
========= ========= ========= =========
Same-store facility results (329 facilities)
(in thousands, except percentage and per square foot data)
Three months ended
December 31,
------------------
Percent
2007 2006 Change
-------- -------- --------
REVENUES
Rental income $ 44,660 $ 41,683 7.1%
Other property related income 3,030 3,505 -13.6%
-------- -------- --------
Total revenues $ 47,690 $ 45,188 5.5%
OPERATING EXPENSES
Property taxes 5,094 5,879 -13.4%
Personnel expense 5,450 5,303 2.8%
Advertising 1,359 1,636 -16.9%
Repair and maintenance 813 543 49.7%
Utilities 2,134 1,883 13.3%
Property insurance 646 806 -19.9%
Other expenses 3,638 2,498 45.6%
-------- -------- --------
Total operating expenses $ 19,134 $ 18,548 3.2%
Net operating income (1) $ 28,556 $ 26,640 7.2%
Gross margin 59.9% 59.0%
Period average occupancy (2) 82.0% 80.0%
Period end occupancy (3) 81.2% 79.7%
Total rentable square feet 20,040 20,040
Realized annual rent
per occupied square foot (4) $ 10.87 $ 10.40
In place annual rent per square foot (5) $ 12.31 $ 12.23
Reconciliation of Same-Store Net Operating
Income to Operating Income
Same-store net operating income (1) $ 28,556 $ 26,640
Non same-store net operating income (1) 6,435 5,140
Indirect property overhead (1,590) (1,771)
Depreciation (19,930) (17,754)
General and administrative expense (5,221) (4,954)
-------- --------
Operating Income $ 8,250 $ 7,301
(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 December 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) In place annual rent per square foot represents annualized contractual
rents per available square foot for the period.
Same-store facility results (329 facilities)
(in thousands, except percentage and per square foot data)
Year ended December 31,
-----------------------
Percent
2007 2006 Change
--------- --------- ---------
REVENUES
Rental income $ 173,409 $ 170,101 1.9%
Other property related income 13,300 12,653 5.1%
--------- --------- ---------
Total revenues $ 186,709 $ 182,754 2.2%
OPERATING EXPENSES
Property taxes 21,634 21,303 1.6%
Personnel expense 20,099 19,114 5.2%
Advertising 4,738 5,549 -14.6%
Repair and maintenance 2,886 1,946 48.3%
Utilities 8,165 8,111 0.7%
Property insurance 2,855 2,863 -0.3%
Other expenses 11,630 10,371 12.1%
--------- --------- ---------
Total operating expenses $ 72,007 $ 69,257 4.0%
Net operating income (1) $ 114,702 $ 113,497 1.1%
Gross margin 61.5% 62.1%
Period average occupancy (2) 81.7% 81.2%
Period end occupancy (3) 81.2% 79.7%
Total rentable square feet 20,040 20,040
Realized annual rent
per occupied square foot (4) $ 10.59 $ 10.45
In place annual rent per square
foot (5) $ 12.31 $ 12.23
Reconciliation of Same-Store Net Operating
Income to Operating Income
Same-store net operating income (1) $ 114,702 $ 113,497
Non same-store net operating income (1) 24,108 16,944
Indirect property overhead (6,504) (5,321)
Depreciation (70,192) (64,079)
Asset write off - (305)
Lease abandonment charge (1,316) -
General and administrative expense (22,303) (22,288)
--------- ---------
Operating Income $ 38,495 $ 38,448
(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 December 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) 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 Year ended
December 31, December 31,
-------------------- ---------------------
2007 2006 2007 2006
--------- --------- ---------- ---------
Net loss $ (5,884) $ (5,688) $ (13,077) $ (8,551)
Add (deduct):
Real estate depreciation 19,740 17,760 69,402 64,099
Gains on sales of real
estate (395) - (2,517) -
Minority interests from
continuing operations (574) (530) (1,385) (790)
Minority interests from
discontinued operations 32 17 215 17
--------- --------- ---------- ---------
FFO $ 12,919 $ 11,559 $ 52,638 $ 54,775
--------- --------- ---------- ---------
Non-recurring lease
abandonment charge - - 1,316 -
--------- --------- ---------- ---------
FFO, excluding non-recurring
charge $ 12,919 $ 11,559 $ 53,954 $ 54,775
--------- --------- ---------- ---------
Loss per share - fully diluted $ (0.10) $ (0.10) $ (0.23) $ (0.15)
FFO per share and unit - fully
diluted $ 0.21 $ 0.18 $ 0.84 $ 0.87
FFO per share, excluding
non-recurring charge (1) $ 0.21 $ 0.18 $ 0.86 $ 0.87
Weighted-average diluted
shares outstanding 57,599 57,412 57,497 57,287
Weighted-average diluted
shares and units outstanding 62,679 62,811 62,660 62,606
Dividend per common share and
unit $ 0.18 $ 0.29 $ 1.05 $ 1.16
Payout ratio of FFO 87% 158% 125% 133%
(1) Included as an expense in FFO is $1.0 million in the first quarter of
2007 of legal and professional costs associated with an inquiry into
actions of a former Trustee and a former officer. After adjusting for this
item, 2007 FFO per share is $0.88.
Contact Information: Contact: U-Store-It Trust Christopher P. Marr Chief Financial Officer (610) 293-5700