PUBLIC STORAGE CANADIAN PROPERTIES
TSX : PUB

PUBLIC STORAGE CANADIAN PROPERTIES

March 10, 2010 18:52 ET

Public Storage Canadian Properties Announces Fourth Quarter 2009 Operating Results

TORONTO, ONTARIO--(Marketwire - March 10, 2010) - Public Storage Canadian Properties (TSX:PUB) today announced operating results for the fourth quarter ended December 31, 2009.

Operating Results

Net income of the Partnership was $781,000 or $0.09 per partnership unit ("Unit") for the three months ended December 31, 2009 compared to $1,552,000 or $0.17 per Unit for the same period in 2008. The decreases in net income and net income per unit were due primarily to a slowdown in rental activity, the dilutive impact in connection with the lease-up of newly developed self-storage facilities whereby operating costs exceed rental income, additional amortization expense of the new facilities placed in service and the write-off of repositioning costs on the Brampton facility included in administrative expenses.

Net income of the Partnership was $5,538,000 or $0.61 per Unit for the year ended December 31, 2009 compared to $7,267,000 or $0.80 per Unit for the same period in 2008. The decreases in net income and net income per unit were due primarily to the same reasons as stated above.

Property Operations

The Partnership owns, and derives substantially all of its income from, 28 self-storage facilities, of which sixteen are located in Ontario, five are located in British Columbia, six are located in Québec and one is located in Alberta. In addition, the Partnership owns parcels of land in Orleans, Ontario, and Richmond Hill, Ontario for development into new self-storage facilities. 

In order to evaluate the performance of the Partnership's portfolio, management analyzes the operating performance of a stabilized group of self-storage facilities (herein referred to as "Same Store" facilities). Management considers the operating performance of the "Same Store" facilities to be a more useful measure of the overall operating performance of the Partnership's portfolio to analyze trends and provide meaningful comparisons. "Same Store" facilities are facilities that have been owned and operated at a mature, stabilized occupancy level since January 1, of the earliest period presented. Management considers a facility to be stabilized after it has been opened for at least three years. As at December 31, 2009, the "Same Store" facilities consist of 16 facilities that have been owned and operated by the Partnership since its inception and two facilities that were opened in 2005 and contain approximately 1,366,000 net rentable square feet and 12,620 storage units.

The following table summarizes the pre-amortization operating results of the Partnership's "Same Store" facilities.

  Three months ended December 31,   Year ended December 31,
  2009 2008 Change   2009 2008 Change
               
Rental income $ 4,683,000   $ 4,773,000   (1.9 %)   $ 18,672,000   $ 19,610,000   (4.8 %)
Less: cost of operations   1,559,000     1,409,000   10.6 %     5,953,000     5,850,000   1.8 %
Less: management fees   281,000     286,000   (1.7 %)     1,120,000     1,176,000   (4.8 %)
Net operating income(1) $ 2,843,000   $ 3,078,000   (7.6 %)   $ 11,599,000   $ 12,584,000   (7.8 %)
                                   
Gross margin(2)   60.7 %   64.5 %         62.1 %   64.2 %    
Weighted average for period:                                  
 Occupancy   87.2 %   84.0 %         87.5 %   85.4 %    
 Realized annual rent per square foot(3) $ 15.74   $ 16.67   (5.6 %)   $ 15.64   $ 16.84   (7.1 %)
 End of period occupancy   86.0 %   81.8 %         86.0 %   81.8 %    
____________________
(1) Net operating income ("NOI") is equal to rental income less cost of operations and management fees paid to an affiliate before amortization. This non-GAAP financial measure does not have any standardized meanings prescribed by GAAP and is therefore unlikely to be comparable to similar measures presented by other issuers. 
(2) Gross margin is computed by dividing property net operating income by rental income.
(3) Realized rent per square foot represents the actual revenue earned per occupied square foot. Management believes this is a more relevant measure than posted or scheduled rates as posted rates can be discounted through promotions.

Effective January 1, 2010, the Partnership will reclassify three facilities that were acquired and/or opened in 2006 and remove one facility that has been identified for expropriation to the pool of "Same Store" facilities. The new pool of "Same Store" facilities will include 20 self-storage facilities and contain approximately 1,683,000 net rentable square feet or approximately 72.7% of the total portfolio. The Partnership will begin reporting the results of the new pool of "Same Store" facilities beginning with the first quarter ending March 31, 2010.

Funds from Operations ("FFO") and Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA")

FFO and EBITDA are supplementary performance measures for real estate companies used by investors and analysts. These performance measures do not have any standardized meanings prescribed by generally accepted accounting principles ("GAAP") and are therefore unlikely to be comparable to similar measures presented by other issuers. Many investors and analysts consider FFO and EBITDA to be measures of the performance of real estate companies. 

The Real Property Association of Canada ("REALpac") defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable real estate and extraordinary items, plus depreciation and amortization, plus future income taxes and after adjustments for equity accounted for entities and non-controlling interests. Adjustments for equity accounted for entities and joint ventures and non-controlling interests are calculated to reflect funds from operations on the same basis as the consolidated properties.

EBITDA is equal to earnings before interest income, interest expense, taxes, depreciation and amortization. 

FFO and EBITDA do not take into consideration scheduled principal payments on debt, capital improvements, distributions or other obligations of the Partnership. Accordingly, FFO and EBITDA are not substitutes for the Partnership's cash flow or net income as a measure of the Partnership's liquidity or operating performance or ability to pay distributions.

The following table calculates FFO and EBITDA for the three months and years ended December 31, 2009 and 2008:

  Three months ended December 31,   Years ended December 31,
  2009 2008 Change   2009 2008 Change
               
Calculation of FFO:              
Net income $ 781,000 $ 1,552,000     $ 5,538,000 $ 7,267,000  
 Amortization of real estate facilities 1,370,000 1,220,000     5,025,000 4,447,000  
 Amortization of intangible assets - -     - 116,000  
Less: future income tax (benefit) expense 237,000 68,000     132,000 (96,000)  
FFO $ 2,388,000 $ 2,840,000 (15.9%)   $ 10,695,000 $ 11,734,000 (8.9%)
Weighted average number of units 9,040,181 9,040,181     9,040,181 9,040,181  
FFO per Unit $0.26 $0.31 (16.1%)   $1.18 $1.30 (9.2%)
               
Calculation of EBITDA:              
Net income. $ 781,000 $ 1,552,000     $ 5,538,000 $ 7,267,000  
 Amortization of real estate facilities 1,370,000 1,220,000     5,025,000 4,447,000  
 Amortization of intangible assets - -     - 116,000  
Interest and commitment fees 260,000 148,000     888,000 583,000  
Less: future income tax (benefit) expense 237,000 68,000     132,000 (96,000)  
Less: interest and other income (loss) (7,000) 79,000     (26,000) (13,000)  
EBITDA $ 2,641,000 $ 3,067,000 (13.9%)   $ 11,557,000 $ 12,304,000 (6.1%)
Weighted average number of units 9,040,181 9,040,181     9,040,181 9,040,181  
EBITDA per Unit $0.29 $0.34 (14.7%)   $1.28 $1.36 (5.9%)

IFRS Update – Property Valuations

The Canadian Accounting Standards Board ("AcSB") confirmed that the adoption of International Financial Reporting Standards ("IFRS") will be effective for Canadian publicly accountable enterprises on January 1, 2011, including the Partnership. IFRS will replace Canadian GAAP for these enterprises. Comparative information under IFRS will also need to be provided for reporting purposes. 

The Partnership will be required to disclose the fair value of its investment properties under IFRS. In connection with the transition to IFRS, the Partnership commissioned an appraisal of its real estate portfolio by Colliers International Reality Advisors, Inc., an independent real estate appraisal firm. As of October 1, 2009 the Partnership's real estate portfolio (excluding properties under development) was valued at approximately $230 million.

Partnership Information

Public Storage Canadian Properties is a publicly held limited partnership that invests in self-storage facilities. More information about the Partnership is available on the Internet. The Partnership's main web site is www.publicstoragecanada.com. The Partnership's investor web site is www.pscinvestor.com.

PUBLIC STORAGE CANADIAN PROPERTIES
SELECTED FINANCIAL DATA
       
  Three Months Ended December 31,   Years Ended December 31,
  2009 2008   2009 2008
           
Revenue          
Rental income $            6,295,000   $            6,042,000     $          24,372,000   $          24,267,000
Interest and other income (loss)   7,000     (79,000 )     26,000     13,000
    6,302,000     5,963,000       24,398,000     24,280,000
                         
Costs and expenses                        
Cost of operations   2,729,000     2,397,000       10,420,000     9,758,000
Management fees paid to an affiliate   377,000     362,000       1,462,000     1,456,000
Amortization of real estate facilities   1,370,000     1,220,000       5,025,000     4,447,000
Amortization of intangible assets   -     -       -     116,000
Interest and commitment fees   260,000     148,000       888,000     583,000
Administrative   548,000     216,000       933,000     749,000
    5,284,000     4,343,000       18,728,000     17,109,000
                         
Income before income taxes   1,018,000     1,620,000       5,670,000     7,171,000
                         
Future income tax benefit (expense)   (237,000 )   (68,000 )     (132,000 )   96,000
                         
Net income $               781,000   $            1,552,000     $            5,538,000   $            7,267,000
                         
Net income per Unit $                   0.09   $                   0.17     $                   0.61   $                   0.80
Declared distributions per Unit $                   0.225   $                   0.45     $                   0.90   $                   1.80
                         
Weighted average number of Units outstanding   9,040,181     9,040,181       9,040,181     9,040,181
  As at December 31, 2009   As at December 31, 2008    
Balance sheet data:          
Cash and cash equivalents $               268,000   $            2,390,000    
Real estate facilities, net   130,000,000     98,309,000    
Properties under development   5,472,000     16,881,000    
Receivables and other assets   523,000     630,000    
Future income taxes   1,162,000     1,294,000    
Total assets $        137,425,000   $       119,504,000    
               
Accounts payable and accrued liabilities $            3,346,000   $           1,509,000    
Advance payments from renters   1,739,000     1,326,000    
Distributions payable   -     2,252,000    
Interest rate swaps   263,000     -    
Debt   44,892,000     24,371,000    
Partners' equity   87,185,000     90,046,000    
Total liabilities and partner's equity $        137,425,000   $       119,504,000    
               
Units outstanding at end of period   9,040,181     9,040,181    

Contact Information

  • Public Storage Canadian Properties
    Vincent Chan
    (866) PS-CANADA
    (866) 772-2623