InStorage Real Estate Investment Trust

InStorage Real Estate Investment Trust

November 13, 2006 19:29 ET

InStorage Real Estate Investment Trust Reports Financial Results for the Quarter Ended September 30, 2006

TORONTO, ONTARIO--(Marketwire - Nov. 13, 2006) - InStorage Real Estate Investment Trust ("InStorage"), (TSX VENTURE:IS.UN), announced today its financial results for the quarter ended September 30, 2006. The following highlights should be read in conjunction with the financial statements and Management's Discussion and Analysis of InStorage, which can be obtained from the SEDAR website at

HIGHLIGHTS - Third Quarter

- Plan of Arrangement Completed - On August, 4, 2006, SCOSS Capital
Corp. completed a plan of arrangement (the "Arrangement") to convert
into InStorage.

- Completed $75,000,000 Private Placement - On August 31, 2006,
InStorage successfully completed a private placement of 75,000,000
trust units at a price of $1.00 per unit.

- InStorage Purchased $102,214,848 of Self Storage Properties -
InStorage completed the purchase of 14 self storage properties that
were located in the GTA, London and Belleville, Ontario.

- Mezzanine Loan Program - InStorage funded InScotia Developments LP.,
with mezzanine loans in the aggregate principal amount of $10,426,537
used to finance the acquisition of three self-storage facilities
purchased by InScotia Developments.

HIGHLIGHTS - Recent Developments

- Expansion in Alberta - On October 13, 2006, InStorage completed the
acquisition of a self-storage property in Calgary for $8,450,000 and
waived conditions under an agreement to purchase two self-storage
properties in Edmonton for a total of $5,500,000.

- Additional Mezzanine Loan Commitment - InStorage agreed to provide
mezzanine loan financing to InScotia Developments and Talus Capital
Corp. in the aggregate principal amount of $5,552,000 to be funded in
two tranches. The purpose of the loan is to provide InScotia
Developments and Talus with financing to acquire and develop an
80,850 square foot self- storage facility in Calgary.


Three Months
September 30,
(in $'s) 2006

Total Revenue 1,246,166
Property operating income 668,227
Income (loss) (196,960)

Income (loss) per unit - basic and diluted (0.01)

Funds from operation (FFO)(1) 296,023
FFO per unit - basic and diluted(2) 0.007

Balance Sheet Highlights
September 30,
(in $'s) 2006
Income producing properties $110,320,295
Cash and cash equivalents 28,567,092
Liabilities and Unitholders' Equity
Mortgages payable 40,105,254
Bridge facility 25,285,000
Unitholders equity 84,610,219

(1) See "Use of Non-GAAP Financial Measures"
(2) "Basic" units calculated as weighted average number of InStorage
units and Class B&C exchangeable limited partnership units of
InStorage Limited Partnership outstanding for the period. "Diluted"
assumes exercise of outstanding InStorage unit options

InStorage had no commercial operations until the Arrangement was completed on August 4, 2006. Total revenue for the quarter was $1,246,166 and consists of property rental income of $1,061,506 and $184,660 in interest income. Property rental income is primarily made up of rental revenues from the properties acquired from the later of the date of the Arrangement or the date of acquisition of each property to September 30, 2006. Approximately $86,127 of interest income was earned by reinvesting the excess cash generated from the private placement in short term investments. The remaining $98,533 of interest income is a result of interest generated from InStorage's mezzanine lending program.

Direct property operating expenses for the period were $393,149. These expenses consist primarily of wages paid to staff operating the facilities, realty taxes, insurance, advertising, repairs and maintenance and other administrative costs.

InStorage incurred mortgage interest and bridge financing interest for the quarter of $360,386. These costs are directly attributable to financing put in place at the time of closing of the above noted acquisitions. In addition to first mortgage financing, InStorage utilized a short term bridge facility to help complete the acquisition of certain properties.

The REIT incurred amortization costs of $492,983 for the quarter. This expense is comprised of the amortization of the buildings, deferred financing costs and the value of in place leases.

InStorage also incurred general administration expenses during the quarter of $196,608. The majority of these expenses relate to wages, rent, office supplies and professional fees.

InStorage Real Estate Investment Trust

InStorage REIT is an unincorporated open-end real estate investment trust that invests primarily in self-storage properties and ancillary businesses. InStorage indirectly owns and operates 18 self-storage properties located in Ontario and Alberta.

Use of Non-GAAP Financial Measures

Funds from operations ("FFO") is a widely accepted supplemental measure of Canadian real estate investment trusts' performance and is not a measure defined by Canadian generally accepted accounting principles ("GAAP"). Readers are directed to the Management's Discussion and Analysis for the period ended September 30, 2006 for a description of the measure and a reconciliation of the measure to net loss. FFO should not be construed as an alternative to net income or cash flow from operating activities that have been calculated in accordance with GAAP and FFO may not be comparable to similar measures presented by other issuers.

Forward-Looking Information

This press release contains forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of InStorage to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Examples of such statements include the intention to complete the transactions mentioned above, as disclosed or at all, and the development intentions with respect to the aforementioned self-storage property in Calgary. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this press release. Such forward-looking statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to: the ability of InStorage and its subsidiaries to obtain necessary mortgage financing, satisfy conditions under the transaction agreements; the level of activity in the underlying self-storage business of InStorage, the self-storage industry and in the economy generally; consumer interest in the services and products of InStorage's subsidiaries; competition; and anticipated and unanticipated costs. While InStorage anticipates that subsequent events and developments may cause its views to change, it specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing InStorage's views as of any date subsequent to the date of this press release. Although InStorage has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The factors identified above are not intended to represent a complete list of the factors that could affect InStorage. Additional factors are noted under in Management's Discussion and Analysis of InStorage for the quarter ended September 30, 2006 under "Risks and Uncertainties".

Contact Information

  • InStorage Real Estate Investment Trust T. James Tadeson, CFA Chief Executive Officer (416) 867-9705
    InStorage Real Estate Investment Trust John Bartkiw, CA Chief Financial Officer (416) 867-9702