-- Funds from operations (FFO) were $0.18 per share compared with $0.26
per share in the third quarter of 2008.
-- Weighted average shares and units outstanding were 81.1 million and
63.2 million for the quarters ended September 30, 2009 and 2008,
respectively. The increase reflects the additional shares outstanding as a
result of the Company's follow-on offering of 32.2 million shares on August
19, 2009.
-- Same-store revenue (361 same-store facilities) decreased 2.8% to
$160.7 million from $165.3 million comparing the nine months ended
September 30, 2009 and 2008, respectively. For the quarter, same-store
revenue decreased 4.9% to $53.5 million from $56.2 million in the prior-
year quarter.
-- Same-store property operating expenses decreased 0.1% to $64.5 million
for the nine months ended September 30, 2009 from $64.6 million in the
prior-year period. For the quarter, same-store expenses decreased 6.4% to
$20.7 million from $22.1 million in the prior-year quarter.
-- Same-store net operating income (NOI) decreased 4.6% to $96.2 million
for the nine months ended September 30, 2009 from $100.8 million in the
prior-year period. For the quarter, same-store NOI decreased 3.9% to $32.8
million from $34.1 million in the prior-year quarter.
-- Same-store realized annual rent per occupied square foot (rental
income divided by average occupied square feet) grew 1.6% and 1.3% for the
nine months and three months ended September 30, 2009, respectively,
compared to the prior year periods.
-- Same-store average physical occupancy was 76.4% compared with 81.8% in
the prior-year quarter and was 76.2% compared with 80.3% for the nine month
periods ending September 30, 2009 and 2008, respectively.
Capital Raising Initiatives
"We are pleased to announce the closings of a significant number of
transactions during the third quarter," said U-Store-It President and Chief
Investment Officer Christopher Marr. "During last quarter's earnings
announcement, we announced a pipeline of capital-raising activities
including a joint venture, secured loans and asset dispositions. We
successfully executed those transactions during the quarter and also
accessed the public equity market raising $161 million in proceeds from our
follow-on equity offering. We continue to expect to close on our
previously announced $450 million secured credit facility in the fourth
quarter and closing of this three year facility will complete the
transformation of our balance sheet and maturity profile."
Joint Venture
On August 13, 2009, U-Store-It, through a wholly-owned affiliate, closed on
its joint venture with an affiliate of Heitman, LLC. As a result,
U-Store-It received approximately $51 million in cash for a 50% interest in
the unleveraged joint venture. The Company contributed 22 of its
wholly-owned properties, which are located in eight states and have an
agreed upon value of $102 million. U-Store-It receives a management fee and
continues
day-to-day operation of the properties.
U-Store-It and Heitman had been evaluating the potential to expand the
joint venture with an additional pool of assets. This evaluation has
concluded and the Company and its partner will not be adding additional
assets to the venture.
Secured Loans and Property Dispositions
During the third quarter, U-Store-It sold 13 facilities for an aggregate
sale price of $67.3 million and closed on seven secured term loans totaling
$21.4 million. Subsequent to quarter end, the Company has closed on the
sale of three additional facilities for an aggregate sale price of $9.9
million and closed additional term loans for $40.6 million.
To date in 2009, the Company has raised a total of $88.9 million through
the disposition of 19 facilities and a total of $113.4 million through 16
secured loans.
In the fourth quarter, the Company expects to complete its 2009 capital
raising efforts with the closing of a three-year, $450 million secured
credit facility consisting of a $200 million term loan and a $250 million
revolver. At closing the $200 million term loan portion will be fully
drawn and there will be nothing drawn on the revolver.
Common Share Offering
On August 19, 2009, the Company closed its public offering of 32,200,000
common shares at a public offering price per share of $5.25, including
4,200,000 common shares purchased by the underwriters pursuant to an
overallotment option. The Company received approximately $161.2 million in
net proceeds from the offering.
Third Quarter Financial Results
Third Quarter Funds from Operations
FFO for the third quarter of 2009 was $14.4 million, compared with $16.3
million for the third quarter of 2008. FFO per share was $0.18 in the
quarter compared with $0.26 in the prior-year quarter.
Third Quarter Operating Results
The Company reported net income of $7.5 million, or $0.09 per share, in the
third quarter of 2009, compared with net income of $4.4 million, or $0.07
per share, in the prior-year quarter. Total revenues decreased 3.5% to
$54.9 million from $57.3 million, primarily due to lower occupancy levels
and lower average scheduled rent per square foot. Total property operating
expenses decreased to $23.2 million from $24.7 million, primarily due to
lower advertising and utilities costs this year as compared to the
prior-year period. General and administrative expenses decreased to $5.6
million from $5.8 million.
Interest expense decreased approximately $0.8 million in the third quarter
of 2009, primarily as a result of reduced levels of debt outstanding and
lower interest rates during the third quarter of 2009, compared with the
same period in 2008.
The Company's 368 owned facilities, containing 23.8 million rentable square
feet, had a physical occupancy at September 30, 2009 of 75.7% and an
average physical occupancy of 76.6% for the third quarter.
Third Quarter Same-Store Results
The Company's same-store pool at September 30, 2009 represented 361
facilities containing approximately 23.3 million rentable square feet and
included approximately 97.9% of the aggregate rentable square feet of the
Company's 368 owned facilities. The same-store facilities represented
approximately 97.8% of property net operating income for the quarter ended
September 30, 2009.
Same-store total revenues decreased 4.9% and same-store operating expenses
decreased 6.4%, compared with the third quarter of 2008. Same-store net
operating income decreased 3.9% in the third quarter of 2009, compared with
the prior-year quarter.
Same-store average physical occupancy for the third quarter of 2009 was
76.4%, compared with 81.8% in the third quarter of 2008. Realized annual
rent per occupied square foot (rental income divided by average occupied
square feet) increased 1.3% over the prior year quarter.
Quarterly Dividend
On August 5, 2009, the Company's Board of Trustees declared a dividend of
$0.025 per share. The dividend was paid on October 22, 2009 to shareholders
of record on October 7, 2009.
Full-Year 2009 and Fourth Quarter Financial Outlook
"We ended the quarter with $61 million of cash on our balance sheet, a debt
to gross assets ratio of 38% and net debt to annualized third quarter
EBITDA of 6.4x. With the fourth quarter closing of our new credit
facility, we will have completed the restructuring of our balance sheet and
have in-place capital sources to meet our maturities through late 2012,"
said U-Store-It Chief Financial Officer Timothy Martin. "Our third quarter
results slightly outpaced our FFO guidance of $0.16 to $0.17 per share. We
are adjusting our full-year FFO guidance to reflect the timing and
increased amount of our disposition and secured financing activities. The
midpoint of our guidance range for 2009 same-store NOI performance remains
unchanged and continues to reflect a stabilizing operating environment."
For 2009, U-Store-It currently expects fully-diluted FFO per share will be
between $0.72 and $0.73 and fully diluted net loss per share will be
between $(0.05) and $(0.04). The Company's outlook is based on the
following key facts and assumptions:
-- General and administrative expenses of approximately $22.0 million to
$22.8 million
-- Same-store revenue growth of -4.0% to -3.0%, compared with 2008
-- Same-store expense change of -1.0% to 0.0%, compared with 2008
-- Same-store net operating income change of -5.5% to -4.5%, compared
with 2008
-- Secured loans closed to date of $113.4 million with a 7.0% weighted-
average interest rate
-- Dispositions closed to date of $88.9 million
-- Joint venture closed during the third quarter generating $51 million
in proceeds to the Company
-- New secured credit facility closing in the fourth quarter
-- Equity issuances completed in the second quarter totaling $10 million
through "at-the-market" equity program and in the third quarter through the
follow-on offering totaling $161.2 million
2009 Full Year Guidance Range or Value
-------------------------
Earnings (loss) per diluted share allocated to
common shareholders $ (0.05) to $ (0.04)
Less: gains on sales of real estate (0.19) (0.19)
Plus: real estate depreciation and amortization 0.96 0.96
------- -------
FFO per diluted share $ 0.72 to $ 0.73
======= =======
For the quarter ending December 31, 2009, the Company estimates
fully-diluted FFO per share will be between $0.12 and $0.13 and
fully-diluted net loss per share will be between $(0.06) and $(0.05).
Fourth Quarter 2009 Guidance Range or Value
-------------------------
Earnings (loss) per diluted share allocated to
common shareholders $ (0.06) to $ (0.05)
Plus: real estate depreciation and amortization 0.18 0.18
------- -------
FFO per diluted share $ 0.12 to $ 0.13
======= =======
Conference Call
Management will host a conference call at 11:00 a.m. ET on Friday, November
6, 2009, to discuss financial results for the three months ended September
30, 2009. A live webcast of the conference call will be available online
from the investor relations page of the Company's corporate website at
www.ustoreit.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 30 days. In addition, a telephonic replay of the call will be
available until December 6, 2009. 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 431540.
Supplemental operating and financial data as of September 30, 2009 is
available on the Company's corporate website under the heading "Investor
Relations and Financial Information."
About U-Store-It Trust
U-Store-It Trust is a self-administered and self-managed real estate
investment trust. The Company provides self-storage solutions across the
country. The Company owns and manages 367 facilities -- 345 wholly owned,
22 Joint Venture, and eight 3rd party managed facilities, and operates the
U-Store-It Network, which consists of approximately 547 additional self
storage facilities. The Company's self-storage facilities, storage space
and storage solutions are designed to offer affordable, easily accessible,
secure, and in most locations, climate-controlled storage space for
residential and commercial customers, as well as boat storage and mini
storage. According to the 2009 Self Storage Almanac, U-Store-It Trust is
one of the top four owners and operators of self-storage facilities in the
U.S.
Visitors may go online to http://www.ustoreit.com to learn more about the
company and to find a nearby storage facility. Visitors to ustoreit.com can
also view the sizes and features of individual self-storage units, reserve
storage space, and pay their storage bills online using a safe, secure
online payment function.
For more information about business or personal storage call U-Store-It
toll free at 1-888-U-STORE-IT.
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, non-controlling interests, depreciation
and general and administrative, and deducting from net income: gains on
sale of self-storage facilities, interest income and other. 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, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking statements
include statements concerning our plans, objectives, goals, strategies,
future events, future revenues or performance, capital expenditures,
financing needs, plans or intentions relating to acquisitions and other
information that is not historical information. In some cases,
forward-looking statements can be identified by terminology such as
"believes," "expects," "estimates," "may," "will," "should," "anticipates,"
or "intends" or the negative of such terms or other comparable terminology,
or by discussions of strategy. 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. As a
result, you should not rely on any forward-looking statements in this
Report, or which management may make orally or in writing from time to
time, as predictions of future events nor guarantees of future performance.
We caution you not to place undue reliance on forward-looking statements,
which speak only as the date of this Report or as of the dates indicated in
the statements. All of our forward-looking statements, including those in
this Report, are qualified in their entirely by this statement.
There are a number of risks and uncertainties that could cause our actual
results to differ materially from the forward-looking statements contained
in or contemplated by this Report. Any forward-looking statements should be
considered in light of the risks referenced in Item 1A. "Risk Factors" in
the U-Store-It Trust Annual Report on Form 10-K for the year ended December
31, 2008, in Part II. Item 1A. "Risk Factors" set forth below and in our
other filings with the Securities and Exchange Commission ("SEC"). These
risks include, but are not limited to, the following:
-- national and local economic, business, real estate and other market
conditions;
-- the effect of competition from new and existing self-storage
facilities or other storage alternatives, which would cause rents and
occupancy rates to decline;
-- 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;
-- recent disruptions in the credit and financial markets and resulting
difficulties in raising capital or obtaining credit at reasonable rates, or
at all;
-- increases in insurance premiums, property tax assessments and other
operating and maintenance expenses;
-- risks related to our participation in joint ventures;
-- 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;
-- difficulties in our ability to evaluate, finance and integrate
acquired and developed properties into our existing operations and to lease
up those properties, which could adversely affect our profitability;
-- delays in the development and construction process, which could
adversely affect our profitability;
-- the impact of the regulatory environment as well as national, state,
and local laws and regulations including, without limitation, those
governing REITs, which could increase our expenses and reduce our cash
available for distribution;
-- potential liability for uninsured losses and environmental
contamination;
-- risks associated with international operations including, but not
limited to, unfavorable foreign currency rate fluctuations that could
adversely affect our earnings and cash flows;
-- disruptions or shutdowns of our automated processes and systems; and
-- general risks associated with the ownership and operation of real
estate including changes in demand, adverse changes in tax, real estate
and zoning laws and regulations, the impact of natural disasters and
potential terrorist attacks and acts of war.
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)
(unaudited)
September 30, December 31,
2009 2008
------------- -------------
ASSETS
Storage facilities $ 1,784,520 $ 1,888,123
Less: Accumulated depreciation (338,407) (328,165)
------------- -------------
Storage facilities, net 1,446,113 1,559,958
Cash and cash equivalents 60,967 3,744
Restricted cash 16,524 16,217
Loan procurement costs, net of amortization 5,924 4,453
Assets held for sale 6,417 2,378
Other assets, net 31,578 10,909
------------- -------------
Total assets $ 1,567,523 $ 1,597,659
============= =============
LIABILITIES AND EQUITY
Revolving credit facility $ - $ 172,000
Unsecured term loan 200,000 200,000
Secured term loan - 57,419
Mortgage loans and notes payable 528,118 548,085
Accounts payable, accrued expenses and other
liabilities 38,908 39,410
Distributions payable 2,445 1,572
Deferred revenue 8,653 9,725
Security deposits 457 472
Other liabilities held for sale 157 22
------------- -------------
Total liabilities 778,738 1,028,705
Noncontrolling interests in the Operating
Partnership 46,057 46,026
Commitments and contingencies
Equity:
Common shares $.01 par value, 200,000,000
shares authorized, 92,382,990 and
57,623,491 shares issued and outstanding
at September 30, 2009 and December 31,
2008, respectively 923 576
Additional paid-in capital 974,111 801,029
Accumulated other comprehensive loss (2,480) (7,553)
Accumulated deficit (274,554) (271,124)
------------- -------------
Total U-Store-It Trust shareholders'
equity 698,000 522,928
------------- -------------
Noncontrolling interests in subsidiaries 44,728 -
------------- -------------
Total equity 742,728 522,928
------------- -------------
Total liabilities and equity $ 1,567,523 $ 1,597,659
============= =============
CONSOLIDATED STATEMENTS OF OPERATIONS
U-STORE-IT TRUST AND SUBSIDIARIES
(in thousands, except share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
REVENUES
Rental income $ 50,498 $ 52,895 $ 151,813 $ 156,372
Other property related income 4,361 4,412 12,545 11,703
--------- --------- --------- ---------
Total revenues 54,859 57,307 164,358 168,075
--------- --------- --------- ---------
OPERATING EXPENSES
Property operating expenses 23,153 24,741 71,791 72,201
Depreciation and amortization 17,894 18,433 53,535 56,004
General and administrative 5,556 5,849 16,658 17,813
--------- --------- --------- ---------
Total operating expenses 46,603 49,023 141,984 146,018
--------- --------- --------- ---------
OPERATING INCOME 8,256 8,284 22,374 22,057
--------- --------- --------- ---------
OTHER INCOME (EXPENSE)
Interest:
Interest expense on loans (12,008) (12,786) (34,834) (39,577)
Loan procurement
amortization expense (489) (486) (1,517) (1,443)
Interest income 150 34 249 126
Other - 49 (13) 188
--------- --------- --------- ---------
Total other expense (12,347) (13,189) (36,115) (40,706)
--------- --------- --------- ---------
LOSS FROM CONTINUING OPERATIONS (4,091) (4,905) (13,741) (18,649)
DISCONTINUED OPERATIONS
Income from discontinued
operations 684 1,735 2,342 5,566
Net gain on disposition of
discontinued operations 10,910 7,544 13,530 13,424
--------- --------- --------- ---------
Total discontinued
operations 11,594 9,279 15,872 18,990
--------- --------- --------- ---------
NET INCOME 7,503 4,374 2,131 341
NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
Noncontrolling interests in
the Operating Partnership $ (512) $ (354) $ (93) $ (39)
Noncontrolling interests in
subsidiaries (173) - (173) -
--------- --------- --------- ---------
NET INCOME ATTRIBUTABLE TO THE
COMPANY $ 6,818 $ 4,020 $ 1,865 $ 302
========= ========= ========= =========
Basic and diluted loss per
share from continuing
operations attributable to
common shareholders $ (0.05) $ (0.08) $ (0.20) $ (0.30)
Basic and diluted earnings per
share from discontinued
operations attributable to
common shareholders 0.14 0.15 0.23 0.31
--------- --------- --------- ---------
Basic and diluted earnings per
share attributable to common
shareholders $ 0.09 $ 0.07 $ 0.03 $ 0.01
========= ========= ========= =========
Weighted-average basic and
diluted shares outstanding 75,248 57,635 63,764 57,616
AMOUNTS ATTRIBUTABLE TO THE
COMPANY'S COMMON SHAREHOLDERS:
Loss from continuing operations $ (4,011) $ (4,507) $ (12,801) $ (17,150)
Total discontinued operations 10,829 8,527 14,666 17,452
--------- --------- --------- ---------
Net income $ 6,818 $ 4,020 $ 1,865 $ 302
========= ========= ========= =========
Same-store facility results (361 facilities)
(in thousands, except percentage and per square foot data)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------ ------------------
Percent Percent
2009 2008 Change 2009 2008 Change
-------- -------- ------- -------- -------- -------
REVENUES
Rental income $ 49,497 $ 52,326 -5.4% $149,185 $154,687 -3.6%
Other property
related income 3,982 3,903 2.0% 11,495 10,652 7.9%
-------- -------- ------- -------- -------- -------
Total revenues 53,479 56,229 -4.9% 160,680 165,339 -2.8%
-------- -------- ------- -------- -------- -------
OPERATING
EXPENSES
Property taxes 6,880 6,939 -0.9% 21,172 20,817 1.7%
Personnel
expense 6,091 5,771 5.5% 17,821 17,251 3.3%
Advertising 922 1,515 -39.1% 4,842 4,160 16.4%
Repair and
maintenance 787 895 -12.1% 2,159 2,520 -14.3%
Utilities 2,468 2,710 -8.9% 7,310 7,492 -2.4%
Property
insurance 698 658 6.1% 1,973 2,185 -9.7%
Other expenses 2,878 3,646 -21.1% 9,237 10,162 -9.1%
-------- -------- ------- -------- -------- -------
Total operating
expenses 20,724 22,134 -6.4% 64,514 64,587 -0.1%
-------- -------- ------- -------- -------- -------
Net operating
income (1) $ 32,755 $ 34,095 -3.9% $ 96,166 $100,752 -4.6%
======== ======== ======= ======== ======== =======
Gross margin 61.2% 60.6% 59.8% 60.9%
Period average
occupancy (2) 76.4% 81.8% 76.2% 80.3%
Period end
occupancy (3) 75.7% 81.5% 75.7% 81.5%
Total rentable
square feet 23,310 23,310 23,310 23,310
Realized annual
rent
per occupied
square foot (4) $ 11.12 $ 10.98 1.3% $ 11.20 $ 11.02 1.6%
Scheduled annual
rent per square
foot (5) $ 11.60 $ 12.47 -7.0% $ 11.84 $ 12.38 -4.4%
Reconciliation of
Same-Store Net
Operating Income
to Operating
Income
Same-store net
operating income
(1) $ 32,755 $ 34,095 $ 96,166 $100,752
Non same-store
net operating
income (1) 724 323 1,907 663
Indirect property
overhead (1,773) (1,852) (5,506) (5,541)
Depreciation (17,894) (18,433) (53,535) (56,004)
General and
administrative
expense (5,556) (5,849) (16,658) (17,813)
-------- -------- -------- --------
Operating Income $ 8,256 $ 8,284 $ 22,374 $ 22,057
======== ======== ======== ========
(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 September 30 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 scheduled
rents per available square foot for the period.
Non-GAAP Measure - Computation of Funds From Operations
(in thousands, except per share data)
(unaudited)
Three months ended
September 30,
------------------
2009 2008
-------- --------
Net income $ 7,503 $ 4,374
Add (deduct):
Real estate depreciation 18,342 19,424
Gains on sales of real estate (10,910) (7,544)
Noncontrolling interest share of FFO (577) -
-------- --------
FFO $ 14,358 $ 16,254
======== ========
Earnings per share attributable to common
shareholders - fully diluted $ 0.09 $ 0.07
FFO per share and unit - fully diluted $ 0.18 $ 0.26
Weighted-average diluted shares outstanding 75,248 57,635
Weighted-average diluted shares and units
outstanding 81,063 63,234
Dividend per common share and unit $ 0.025 $ 0.180
Payout ratio of FFO 14% 70%
Contact Information: Company Contact: U-Store-It Trust Timothy M. Martin Chief Financial Officer (610) 293-5700