-- Funds from Operations ("FFO") of $0.24 per share for the three months
ended March 31, 2008, a 14.6% increase over the $0.21 per share reported in
the same period of the previous year.
-- An increase in first quarter rental income and total revenue on the
386 same-store facilities by 6.6% and 5.0%, respectively, when compared to
the three months ended March 31, 2007.
-- An increase in first quarter net operating income ("NOI") on the 386
same-store facilities by 4.3% when compared to the three months ended March
31, 2007.
-- Average first quarter same-store physical occupancy (calculated on
square feet) of 79.4%, a gain of 100 basis points over the first quarter of
2007.
-- A 3.2% increase, or 1,100 additional units rented across the portfolio
in the first quarter of 2008 compared to the same quarter of last year.
President and Chief Executive Officer Dean Jernigan commented, "We are very
encouraged by our first quarter same-store revenue growth hitting the
top-end of our expectations and our same-store net operating income growth
and average physical occupancy exceeding our expectations. A second
straight quarter of solid internal growth and growth in FFO per share, as
well as a strong April, with net rentals up 29% from April of 2007,
provides us with an excellent platform to continue to build upon throughout
the balance of the year."
Funds from Operations
FFO for the first quarter of 2008 was $14.8 million, compared to $12.9
million for the first quarter of 2007. FFO per share grew 14.6% to $0.24
per share for the first quarter of 2008, compared to $0.21 for the same
quarter of last year. The Company's first quarter of 2008 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.
Operating Results
The Company reported a net loss of $4.0 million or $0.07 per share in the
first quarter of 2008, compared to a net loss of $3.4 million or $0.06 per
share for the quarter ended March 31, 2007.
Total revenues increased $5.4 million and property operating expenses
increased $2.5 million in the first quarter of 2008, compared to the same
period in 2007. Increases in total revenues and property operating expenses
are attributable to the acquisition of 15 self-storage facilities for
approximately $134.5 million since March 31, 2007 and increases in
same-store revenues and expenses. Depreciation expense increased $3.4
million in the first quarter of 2008 compared to the same quarter of 2007
due to additional depreciation and amortization of intangible assets
attributable to the acquisition of self-storage facilities. General and
administrative expenses decreased by $0.5 million in the first quarter of
2008 compared to the same period in 2007.
Interest expense increased approximately $1.0 million in the first quarter
of 2008, compared to the first quarter of 2007, primarily as a result of
the additional debt used to fund the acquisition of 15 facilities purchased
since March 31, 2007.
The Company's 408 owned facilities, containing 26.1 million rentable square
feet, had a physical occupancy at March 31, 2008 of 78.8% (79.1% exclusive
of the lease-up assets) and an average physical occupancy for the quarter
ended March 31, 2008 of 78.9% (79.3% exclusive of the lease-up assets).
Same-Store Results
The Company's same-store pool at March 31, 2008 represented 386 facilities
containing approximately 24.5 million rentable square feet and representing
approximately 93.7% of the aggregate rentable square feet of the Company's
408 owned facilities. These same-store facilities represent approximately
94.6% of property net operating income for the quarter ended March 31,
2008.
The same-store average physical occupancy for the first quarter of 2008 was
79.4% compared to 78.4% for the same quarter of last year. In-place annual
rent per square foot grew 1.9% to $12.16 in the first quarter of 2008 over
the same quarter of last year. Same-store rental income for the first
quarter of 2008 grew 6.6% over the same period in 2007. Same-store total
revenues and operating expenses grew 5.0% and 6.2%, respectively, over the
first quarter of 2007. Same-store net operating income grew 4.3% in the
first quarter of 2008 compared to the same quarter of 2007.
Acquisition and Disposition Activity
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.
During March 2008, we disposed of two facilities in Florida for aggregate
proceeds of $4.6 million and recognized gains totaling $0.6 million. We do
not include these gains in our $0.24 of FFO per share.
Quarterly Dividend
On February 27, 2008, the Company declared a dividend of $0.18 per share.
The dividend was paid on April 22, 2008, to shareholders of record on April
7, 2008.
Second Quarter and Full Year 2008 Financial Outlook
"As a result of our strong first quarter performance, we are raising our
full year guidance for FFO per share by 6% at the low-end and by 4% at the
mid-point of our range. Our revised guidance for 2008 represents growth of
8% to 13% over our 2007 FFO per share," said Christopher Marr, Chief
Financial Officer. "We intend to accelerate our efforts to improve our
balance sheet and create additional liquidity through both our asset
disposition program, as well as exploring raising institutional capital,
primarily through the joint venture format," Mr. Marr went on to say.
The Company is revising its previously issued 2008 earnings guidance and
estimates that its fully-diluted FFO per share will be between $0.93 and
$0.97, and that its fully-diluted net loss per share for the period will be
between $0.23 and $0.27. The Company's estimate is based on the following
key assumptions:
-- General and administrative expenses of approximately $22.5-$23.5
million
-- Same-store average occupancy of 82.0%-84.0%
-- Same-store revenue growth of 4.5%-5.0%
-- Same-store expense growth of 3.5%-4.0%
-- Same-store net operating income growth of 4.5%-5.5%
-- Dilution during 2008 from the 15 development/lease-up properties of
approximately $0.02 to $0.03 per share
2008 Guidance Range or Value
-------------------------
Earnings (loss) per diluted share allocated to
common shareholders $ (0.27) to $ (0.23)
Less: gains on sales of real estate, per share (0.02) (0.02)
Plus: real estate depreciation and amortization,
per share 1.22 1.22
------- -------
FFO per diluted share $ 0.93 to $ 0.97
======= =======
The Company estimates that its fully-diluted FFO per share for the three
months ending June 30, 2008 will be between $0.24 and $0.26, and that its
fully-diluted net loss per share for the period will be between $0.04 and
$0.06.
Conference Call
Management will host a conference call at 11:00 a.m. EDT on Friday, May 9,
2008, to discuss financial results for the three months ended March 31,
2008.
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 thirty
days. In addition, a telephonic replay of the call will be available until
June 30, 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 418197#.
Supplemental operating and financial data as of March 31, 2008 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
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, 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; 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; 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.
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 by securities laws.
U-STORE-IT TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
March 31, December 31,
2008 2007
----------- -----------
ASSETS
Storage facilities $ 1,929,658 $ 1,916,396
Accumulated depreciation (285,945) (269,278)
----------- -----------
1,643,713 1,647,118
Cash and cash equivalents 5,625 4,517
Restricted cash 16,090 15,818
Loan procurement costs - net of amortization 5,648 6,108
Other assets 10,679 14,270
----------- -----------
Total assets $ 1,681,755 $ 1,687,831
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Revolving credit facility $ 235,000 $ 219,000
Unsecured term loan 200,000 200,000
Secured term loan 47,444 47,444
Mortgage loans and notes payable 559,609 561,057
Accounts payable, accrued expenses and other 28,537 33,623
Due to related parties - 110
Distributions payable 11,326 11,300
Deferred revenue 11,044 10,148
Security deposits 553 548
----------- -----------
Total liabilities 1,093,513 1,083,230
Minority interests 47,770 48,982
Commitments and contingencies
Shareholders' Equity
Common shares $.01 par value, 200,000,000
shares authorized, 57,590,792 and 57,577,232
shares issued and outstanding at March 31,
2008 and December 31, 2007, respectively 576 576
Additional paid in capital 798,734 797,940
Accumulated other comprehensive loss (3,209) (1,664)
Accumulated deficit (255,629) (241,233)
----------- -----------
Total shareholders' equity 540,472 555,619
----------- -----------
Total liabilities and shareholders' equity $ 1,681,755 $ 1,687,831
=========== ===========
U-STORE-IT TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
------------------------
2008 2007
----------- -----------
REVENUES
Rental income $ 56,376 $ 50,306
Other property related income 3,687 4,235
Other - related party - 117
----------- -----------
Total revenues 60,063 54,658
OPERATING EXPENSES
Property operating expenses 25,389 22,842
Property operating expenses - related party - 37
Depreciation 19,950 16,560
General and administrative 5,495 5,888
General and administrative - related party - 101
----------- -----------
Total operating expenses 50,834 45,428
OPERATING INCOME 9,229 9,230
OTHER INCOME (EXPENSE)
Interest:
Interest expense on loans (13,826) (12,826)
Loan procurement amortization expense (471) (445)
Interest income 59 115
Other 67 (6)
----------- -----------
Total other expense (14,171) (13,162)
LOSS FROM CONTINUING OPERATIONS
BERFORE MINORITY INTERESTS (4,942) (3,932)
MINORITY INTERESTS 397 326
----------- -----------
LOSS FROM CONTINUING OPERATIONS (4,545) (3,606)
DISCONTINUED OPERATIONS
Income from operations 39 270
Gain on disposition of discontinued operations 571 -
Minority interest attributable to discontinued
operations (49) (22)
----------- -----------
Income from discontinued operations 561 248
----------- -----------
NET LOSS $ (3,984) $ (3,358)
=========== ===========
Basic and diluted loss per share from
continuing operations $ (0.08) $ (0.06)
Basic and diluted earnings per share from
discontinued operations 0.01 -
----------- -----------
Basic and diluted loss per share $ (0.07) $ (0.06)
=========== ===========
Weighted-average basic and diluted shares
outstanding 57,593 57,421
Distributions declared per common share and unit $ 0.18 $ 0.29
Same-store facility results (386 facilities)
(in thousands, except percentage and per square foot data)
Three months ended
March 31,
------------------
Percent
2008 2007 Change
-------- -------- -------
REVENUES
Rental income $ 53,087 $ 49,817 6.6%
Other property related income 3,536 4,104 -13.8%
-------- -------- -------
Total revenues $ 56,623 $ 53,921 5.0%
OPERATING EXPENSES
Property taxes 7,073 6,733 5.0%
Personnel expense 6,003 5,624 6.7%
Advertising 1,114 1,135 -1.9%
Repair and maintenance 797 589 35.3%
Utilities 2,529 2,544 -0.6%
Property insurance 805 1,090 26.1%
Other expenses 3,636 2,968 22.5%
-------- -------- -------
Total operating expenses $ 21,957 $ 20,683 6.2%
Net operating income (1) $ 34,666 $ 33,238 4.3%
Gross margin 61.2% 61.6%
Period average occupancy (2) 79.4% 78.4%
Period end occupancy (3) 79.3% 78.6%
Total rentable square feet 24,457 24,457
Realized annual rent
per occupied square foot (4) $ 10.94 $ 10.39
In place annual rent per square foot (5) $ 12.16 $ 11.93
Reconciliation of Same-Store Net Operating Income to Operating Income
Same-store net operating income (1) $ 34,666 $ 33,238
Non same-store net operating income (1) 1,901 373
Indirect property overhead (1,893) (1,832)
Depreciation (19,950) (16,560)
General and administrative expense (5,495) (5,989)
-------- --------
Operating Income $ 9,229 $ 9,230
(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 March 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
March 31,
------------------------
2008 2007
----------- -----------
Net loss $ (3,984) $ (3,358)
Add (deduct):
Real estate depreciation 19,708 16,610
Gain on sale of real estate (571) -
Minority interests from continuing operations (397) (326)
Minority interests from discontinued
operations 49 22
----------- -----------
FFO $ 14,805 $ 12,948
----------- -----------
Income (loss) per share - fully diluted $ (0.07) $ (0.06)
FFO per share and unit - fully diluted $ 0.24 $ 0.21
Weighted-average diluted shares outstanding 57,610 57,412
Weighted-average diluted shares and units
outstanding 62,690 62,811
Dividend per common share and unit $ 0.18 $ 0.29
Payout ratio of FFO (Dividend per share divided
by FFO per share) 76% 141%
Contact Information: Contact: U-Store-It Trust Christopher P. Marr Chief Financial Officer (610) 293-5700