Shurgard Storage Ctr (NYSE:SHU)
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Shurgard Storage Centers, Inc. (NYSE:SHU), a leading
self-storage real estate investment trust in the United States and
Europe, today released results for the quarter ended March 31, 2005.
The Company announced that net income for the first quarter 2005 was
$5.3 million, compared to a loss of $0.3 million reported in the first
quarter of 2004. Basic and diluted net income per share attributable
to common shareholders was $0.05 in first quarter 2005 compared to a
loss of $0.07 in first quarter 2004.
The improvement in net income was driven by the continuing growth
in U.S. and European Net Operating Income (NOI) and gains on the sale
of certain domestic properties. Total Same Store revenue was up 7.5%
and NOI after indirect and leasehold expenses was up 5.5% across all
540 Same Stores, compared to the same quarter in 2004. Two properties
sold during the quarter generated gains in excess of $6.4 million on
sales proceeds of approximately $13.0 million. These store-level
improvements and gains were offset, in part, by increased real estate
development expenses ($2.7 million) and unrealized foreign exchange
losses ($1.9 million). Net income was also affected by increased
interest expense ($4.3 million), as short-term domestic interest rates
rose and short-term floating rate debt in Europe was replaced by a
seven-year bond last October.
FFO attributable to common shareholders for the first quarter of
2005 was $15.5 million, down 8% from $16.9 million in the first
quarter of 2004. FFO per share was $0.33 for the first quarter of
2005, compared to $0.36 for the same period in 2004. The computation
of FFO excludes the gains on property sales described above but
includes the unrealized foreign exchange loss ($0.04 per share higher
than 2004).
The Company also announced that it had 12 new stores under
construction in the U.S. and Europe as of the end of the quarter and
had recently acquired or agreed to acquire nine existing stores in the
U.S. (one during the first quarter for approximately $3.0 million and
eight scheduled to close in May 2005 for a total cost of approximately
$38.0 million).
Domestic Operating Results
During the first quarter of 2005, the Domestic Same Store segment
generated growth in revenue of 5.8% and NOI before leasehold and
indirect expenses of 4.8% over the first quarter of 2004. Growth in
NOI after leasehold and indirect expenses in the quarter was 3.3% over
the same quarter in 2004. David K. Grant, president and chief
operating officer stated, "U.S. same store NOI growth was in line with
our expectations. We continue to see solid performance in most of our
U.S. markets while, as anticipated, we are experiencing high growth in
our indirect operating expenses reflecting the effect of our increase
in accounting and related field positions."
European Operating Results
At constant exchange rates, the Europe Same Store segment in the
first quarter of 2005 generated increases in revenue of 13% and NOI
before leasehold and indirect expenses of 15.5% over the first quarter
of 2004. NOI after leasehold and indirect expenses in the quarter grew
17.1% compared to the same quarter in 2004. Strong revenue growth was
due mainly to an increase in average occupancy in the Same Store
portfolio from 66% to 73%. While results were generally encouraging,
continued sluggish occupancy gains in some areas have led management
to moderate its new store development pace from approximately 20 to 15
openings for 2005.
Portfolio
As of March 31, 2005, Shurgard operated an international network
of 634 operating properties containing approximately 40 million net
rentable square feet. The total includes 475 owned, partially owned or
leased storage centers in operation in the United States, 24 stores in
the United States that we manage for third parties and 135 owned or
partially owned stores in Europe. Of the 610 owned, partially owned or
leased stores in the United States and Europe, 540 are classified as
Same Store and 70 are classified as New Store. Together, the Domestic
and Europe New Store groups now represent 15% of Shurgard's investment
in storage centers, but these are not yet producing positive NOI after
leasehold and indirect expenses, reflecting the early stage of rent-up
of those properties.
During the first quarter of 2005, the Company opened no new stores
in the U.S. or Europe but had 12 projects under construction (three in
the U.S. and nine in Europe) as of the end of the quarter. In
addition, there were 18 domestic stores undergoing redevelopment for
an estimated cost of $15.7 million.
Executive Announcements
Shurgard announced that Steven De Tollenaere, Chief Financial
Officer of Shurgard Europe, will assume the duties of Managing
Director of Europe, from Bruno Roqueplo who will be leaving the
Company to pursue other opportunities. Commenting on the change Mr.
Grant stated, "In his eight years with our European Company, Steven
has developed a strong knowledge of the business and has established
solid working relationships with our employees and our outside
business partners. We wish to acknowledge Bruno's contribution to
Shurgard Europe and wish him well in his future endeavors."
In other executive moves, the Company announced the hiring of Ray
Loeffler as the new Regional Vice President for the Southeastern
United States. Mr. Loeffler has spent many years in the retail
industry, most recently as Senior Vice President of Store Operations
for Eckerd Drug Stores and prior to that, a long career with the
Macy's department store group. Sydney Johnson-Gorrell has recently
joined the company as its new Vice President of Human Resources.
Previously, Ms. Johnson-Gorrell served for five years as the Senior
Vice President of Human Resources and Administration for Wizards of
the Coast, a subsidiary of Hasbro. Prior to that she spent ten years
at Oberto Sausage Company where she was responsible for developing the
Human Resources function.
Status of Management's Report on Internal Control over Financial
Reporting
On March 29, 2005, the Company reported that management had not
completed its assessment of internal control over financial reporting
as of December 31, 2004. Management is now nearing completion of its
2004 assessment. The Company expects to file an amendment to its Form
10-K for 2004 once management completes its assessment and the
Company's independent registered public accounting firm completes its
attestation of management's 2004 assessment of internal control over
financial reporting.
Guidance for 2005
Previously, management had provided FFO guidance for 2005 of $2.25
to $2.40 per share and earnings guidance of $0.39 to $0.54 per share.
We are revising that FFO guidance to $2.16 to $2.31 per share to
include the $4.2 million ($0.09 per share) unrealized derivative and
foreign exchange losses related to intercompany debt experienced in
the first quarter. Earnings guidance remains unchanged.
Quarterly Management Conference Call
A conference call is scheduled for Wednesday, May 11, 2005, at
10:00 a.m. PDT to discuss the 2005 first quarter results. The public
is invited to listen to the call live via the Internet by clicking the
appropriate links on the Company's website at
http://investorrelations.shurgard.com. The call also is available live
on a listen-only basis by dialing 800-257-7087 (U.S. & Canadian
callers) and 303-262-2137 (international callers). A taped replay of
the conference call is available via the Internet address listed above
or via telephone until May 18, 2005, at 800-405-2236 (U.S. & Canadian
callers) and 303-590-3000 (international callers) access code
11030155#.
A copy of this release and table attachments will also be
available on the Company's website at
http://investorrelations.shurgard.com.
The Company uses FFO in addition to net earnings to report its
operating results. The Company uses the definition of FFO adopted by
the National Association of Real Estate Investment Trusts.
Accordingly, FFO is defined as net earnings (computed in accordance
with GAAP), excluding gains (losses) on dispositions of interests in
depreciated operating properties and real estate depreciation and
amortization expenses. FFO includes the Company's share of FFO of
unconsolidated real estate ventures and discontinued operations and
excludes minority interests in FFO. The Company believes FFO is a
meaningful disclosure as a supplement to net earnings because net
earnings assumes that the values of real estate assets diminish
predictably over time as reflected through depreciation and
amortization expenses. The Company believes that the values of real
estate assets fluctuate due to market conditions. The Company's
calculation of FFO may not be comparable to similarly titled measures
reported by other companies because not all companies calculate FFO in
the same manner. FFO is not a liquidity measure and should not be
considered as an alternative to cash flows or indicative of cash
available for distribution. It also should not be considered an
alternative to net earnings, as determined in accordance with U.S.
GAAP, as an indication of the Company's financial performance. A
reconciliation of GAAP net income to FFO is included in the tables
attached to this release.
Statements in this release concerning the beliefs, expectations,
intentions, future events, future performance, business prospects and
business strategy in the United States and Europe, including
statements regarding the earnings guidance, projected development
activity, including our projected revenues, expenses, FFO projections,
and net income projections for 2005 and beyond, constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act and are based on several assumptions.
If any of these assumptions are not satisfied or prove to be
incorrect, actual results could differ materially from those indicated
in the forward-looking statements. The risks and uncertainties that
may cause these forward-looking statements to prove to be incorrect
include the risks that implementation of the business plan, including
marketing and sales initiatives, will not be successful and that the
Company's earnings, expenses or revenues may be affected by other
factors, such as: the risk that changes in economic conditions in the
markets in which we operate; the risk that competition from new self
storage facilities or other storage alternatives may cause rent to
decline and may cause occupancy rates to drop, or may cause delays in
lease up of newly developed properties; the risk that new developments
could be delayed or reduced; the risk that the Company may experience
increases in the cost of labor, taxes, marketing and other operating
and construction expenses; the risk that tax law changes may change
the taxability of future income; the risk that increases in interest
rates may increase the cost of refinancing long term debt; and the
risk that the Company's alternatives for funding its business plan may
be impaired by the economic uncertainty due to the impact of war or
terrorism; and the risk that the Company's interest in Shurgard Europe
may be adversely impacted if that entity is unable to complete
formation and funding of its contemplated development joint ventures.
We may also be affected by deadlines imposed by the Sarbanes-Oxley Act
of 2002 and other pending legislation. Changes in accounting
principles, including impending changes in accounting for stock
options, may affect the Company's reported results of operations and
financial position. The information presented in this release reflects
Shurgard's expectations as of the date of this release. Except as
required by law, Shurgard undertakes no obligation to update or revise
the information provided herein.
For a discussion of additional risks and other factors that could
affect these forward-looking statements and Shurgard's financial
performance, see Shurgard's Annual Report on Form 10-K for the year
ended December 31, 2004, filed with the SEC on March 29, 2005.
-0-
*T
INDEX of TABLES TO FOLLOW:
Table 1. Consolidated Statements of Net Income for the three months
ended March 31, 2005 and 2004
Table 2. Consolidated Balance Sheet as of March 31, 2005 and
December 31, 2004
Table 3. FFO Reconciliation for the three months ended March 31,
2005 and 2004
Table 4. Split of FFO between European Joint Ventures and the rest
of Shurgard Storage Centers, Inc. for the quarter ended
March 31, 2005
Table 5. Earnings Per Share and FFO Per Share for the three months
ended March 31, 2005 and 2004
Table 6. Segment reporting information results for the three months
ended March 31, 2005
Table 7. Segment reporting information results for the three months
ended March 31, 2004
Table 8. Domestic Same Store Results for the three months ended
March 31, 2005 and 2004
Table 9. Summary of Operating Self Storage Properties as of March
31, 2005
Table 10. Europe Same Store Results for the three months ended March
31, 2005 and 2004
Table 11. Quarterly comparison for Europe Same Store of first quarter
2005 versus first quarter 2004
Table 12. Domestic Same Store Vintage Analysis for the three months
ended March 31, 2005 and 2004
Table 13. European Development Performance Vintage Analysis for the
three months ended March 31, 2005 and 2004
Table 14. Foreign exchange translation for the three months ended
March 31, 2005 and 2004
Table 15. Store Asset Values and Operating Information for the three
months ended March 31, 2005
Table 1: SHURGARD STORAGE CENTERS, INC.
QUARTER-TO-DATE OPERATING RESULTS (unaudited)
Condensed Consolidated Statements of Net Income for the three months
ended March 31, 2005 and 2004
(Amounts in thousands except share data)
For the three
months
ended March 31,
-------------------
2005 2004
-------- --------
Revenue
Storage center operations $112,478 $ 97,988
Other 1,386 1,320
-------- --------
Total revenue 113,864 99,308
-------- --------
Expenses
Operating 49,378 41,231
Real estate taxes 9,815 9,081
Real estate development expenses 3,253 561
Depreciation and amortization 23,373 20,163
General, administrative and other 8,029 9,220
-------- --------
Total expenses 93,848 80,256
-------- --------
Income from storage center operations 20,016 19,052
-------- --------
Other Income (Expense)
Interest expense (24,125) (19,809)
Loss on derivatives (359) (777)
Foreign exchange loss (3,848) (1,950)
Interest income and other, net 960 515
-------- --------
Other expense, net (27,372) (22,021)
-------- --------
Loss before equity in earnings of other
real estate investments, net, minority
interest and income taxes (7,356) (2,969)
Minority interest 6,110 4,532
Equity in earnings of other real estate
investments 21 2
Income tax expense (10) (23)
-------- --------
(Loss) income from continuing operations (1,235) 1,542
-------- --------
Discontinued operations
Income from discontinued operations 68 492
Gain on sale of discontinued operations 6,423 -
-------- --------
Total income from discontinued operations 6,491 492
-------- --------
Cumulative effect of change in accounting
principle - (2,339)
-------- --------
Net Income (loss) 5,256 (305)
Net Income (loss) Allocation
Preferred stock dividends and other (3,042) (3,058)
-------- --------
Net income (loss) available to common
shareholders $ 2,214 $ (3,363)
======== ========
Net Income (loss) per Common Share - Basic and Diluted:
Loss from continuing operations
available to common shareholders $ (0.09) $ (0.03)
Total discontinued operations 0.14 0.01
Cumulative effect of change in accounting
principle - (0.05)
-------- --------
Net income (loss) per share $ 0.05 $ (0.07)
======== ========
Distributions per common share $ 0.55 $ 0.54
======== ========
Table 2: SHURGARD STORAGE CENTERS, INC.
BALANCE SHEET (unaudited)
Condensed Consolidated Balance Sheet as of March 31, 2005 and
December 31, 2004
(Amounts in thousands except share data)
March 31, December 31,
2005 2004
----------- -----------
ASSETS:
Storage centers:
Operating storage centers $ 3,102,262 $ 3,143,488
Less accumulated depreciation (495,438) (479,531)
----------- -----------
Operating storage centers, net 2,606,824 2,663,957
Construction in progress 72,784 58,431
Properties held for sale 5,718 8,328
----------- -----------
Total storage centers 2,685,326 2,730,716
----------- -----------
Cash and cash equivalents 52,148 50,277
Restricted cash 5,575 7,181
Goodwill 24,206 24,206
Other assets 119,800 120,504
----------- -----------
Total assets $ 2,887,055 $ 2,932,884
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable and accrued expenses $ 52,227 $ 60,938
Other liabilities 98,897 112,014
Lines of credit 418,100 397,300
Notes payable 1,278,293 1,287,202
----------- -----------
Total liabilities 1,847,517 1,857,454
----------- -----------
Minority interest 160,367 169,232
Commitments and contingencies (Notes 15)
Shareholders' equity:
Series C Cumulative Redeemable Preferred
Stock; $0.001 par value; 2,000,000
shares authorized; 2,000,000 shares
issued and outstanding; liquidation
preference of $50,000 48,115 48,115
Series D Cumulative Redeemable Preferred
Stock; $0.001 par value; 3,450,000
shares authorized; 3,450,000 shares
issued and outstanding; liquidation
preference of $86,250 83,068 83,068
Class A Common Stock, $0.001 par value;
120,000,000 authorized; 46,658,253 and
46,624,900 shares issued and outstanding,
respectively 47 47
Additional paid-in capital 1,128,533 1,127,138
Accumulated deficit (378,292) (354,985)
Accumulated other comprehensive (loss)
income (2,300) 2,815
----------- -----------
Total shareholders' equity 879,171 906,198
----------- -----------
Total liabilities and shareholders'
equity $ 2,887,055 $ 2,932,884
=========== ===========
Table 3: SHURGARD STORAGE CENTERS, INC.
FFO (unaudited)
FFO Reconciliation for the three months ended March 31, 2005 and 2004
(in thousands except share data)
For the three months
ended March 31,
-----------------
(in thousands) 2005 2004
------- -------
Net income (loss) $ 5,256 $ (305)
Depreciation and amortization (1) 19,723 17,879
Gain on sale of operating properties (6,423) -
Cumulative effect of change in accounting principle - 2,339
------- -------
FFO 18,556 19,913
Preferred distribution and other (3,042) (3,058)
------- -------
FFO attributable to common shareholders $15,514 $16,855
======= =======
FFO per share $ 0.33 $ 0.36
======= =======
Distributions per common share $ 0.55 $ 0.54
======= =======
(1) Excludes depreciation related to non-real estate assets and
minority interests in depreciation and amortization and includes
depreciation and amortization of discontinued operations.
Table 4: SHURGARD STORAGE CENTERS, INC.
Split of FFO between European joint ventures and the rest of Shurgard
Storage Centers, Inc.
For the quarter ended March 31, 2005
(in thousands except share data)
Shurgard Shurgard Remainder
Europe Europe of Consolidated
20% (Excluding Shurgard Shurgard
owned joint Storage Storage
joint ventures) Centers, Centers,
ventures(2) (2) Inc. Inc.
--------- ----------- --------- ------------
Net income (loss) $(1,079) $(9,698) $16,033 $ 5,256
Depreciation and
amortization (1) 237 3,696 15,790 19,723
Gain on sales of operating
properties - - (6,423) (6,423)
------- ------- ------- -------
FFO $ (842) $(6,002) $25,400 $18,556
======= ======= ======= =======
(1) Excludes depreciation related to non-real estate assets and
minority interests in depreciation and amortization and includes
depreciation and amortization of discontinued operations.
(2) Balances are presented net of minority interests.
Table 5: SHURGARD STORAGE CENTERS, INC.
EARNINGS PER SHARE AND FFO PER SHARE (unaudited)
Earnings Per Share and FFO Per Share for the three months ended March
31, 2005 and 2004
Basic and Diluted
(in thousands except share data) Earnings Per share
---------- -----------------
For the three months ended March 31, 2005
Number of shares 46,514
Loss from continuing operations $ (1,235)
Less: preferred distributions and other (3,042)
---------
Loss from continuing operations available
to common shareholders adjusted (4,277) $ (0.09)
Discontinued operations 6,491 0.14
Cumulative effect of change in accounting
principle - -
--------- ----------
Net Income $ 2,214 $ 0.05
========= ==========
For the three months ended March 31, 2004
Number of shares 45,654
Income from continuing operations $ 1,542
Less: preferred distributions and other (3,058)
---------
Loss from continuing operations available
to common shareholders adjusted (1,516) $ (0.03)
Discontinued operations 492 0.01
Cumulative effect of change in accounting
principle (2,339) (0.05)
--------- ----------
Net Loss $ (3,363) $ (0.07)
========= ==========
(in thousands except share data) FFO Per share
---------- -----------------
For the three months ended March 31, 2005
Number of shares Basic share 46,514
Effect of dilutive stock options 673
Number of shares Diluted share 47,187
FFO $ 18,556
Less: preferred distributions and other (3,042)
---------
FFO available to common
shareholders adjusted $ 15,514 $ 0.33
========= ==========
For the three months ended March 31, 2004
Number of shares Basic share 45,654
Effect of dilutive stock options 701
Number of shares Diluted share 46,355
FFO $ 19,913
Less: preferred distributions and other (3,058)
---------
FFO available to common
shareholders adjusted $ 16,855 $ 0.36
========= ==========
Table 6: SHURGARD STORAGE CENTERS, INC.
SEGMENT REPORTING INFORMATION RESULTS (unaudited)
Segment reporting information results for the three months ended
March 31, 2005
Three months ended March 31, 2005
(dollars in thousands except average rent)
Domestic Europe Total
----------------- ----------------- -----------------
% of % of % of
Same Store (1) Amount total Amount total Amount total
---------------- ----------------- ----------------- -----------------
Number of
Storage Centers 444 93% 96 71% 540 89%
Revenues $ 78,239 95% $ 25,298 83% $ 103,537 91%
NOI after
indirect
and leasehold
expense $ 45,102 96% $ 9,611 122% $ 54,713 100%
Avg. annual rent
per sq. ft. (3) $ 11.81 $ 23.69
Avg. sq. ft.
occupancy 84% 73%
Total Storage
Center
Costs (4) $1,769,855 91% $ 817,787 74% $2,587,642 85%
New Store (2)
----------------
Number of
Storage Centers 31 7% 39 29% 70 11%
Revenues $ 4,543 5% $ 5,140 17% $ 9,683 9%
NOI after
indirect
and leasehold
expense $ 1,679 4% (1,720) -22% $ (41) 0%
Avg. sq. ft.
occupancy 67% 38%
Total Storage
Center
Costs (4) $ 174,559 9% $ 294,765 26% $ 469,324 15%
Combined New and
Same Stores
----------------
Number of
Storage Centers 475 100% 135 100% 610 100%
Revenues $ 82,782 100% $ 30,438 100% $ 113,220 100%
NOI after
indirect
and leasehold
expense $ 46,781 100% $ 7,891 100% $ 54,672 100%
Total Storage
Center
Costs (4) $1,944,414 100% 1,112,552 100% $3,056,966 100%
(1) Our definition of Same Store includes existing storage centers
acquired prior to January 1 of the previous year as well as developed
properties that have been operating for a full two years as of January
1 of the current year. Our definition of Same Store results in the
addition of storage centers each year as new acquisitions and
developments meet the criteria for inclusion, so we then include these
storage centers in the previous year's comparable data. Other storage
companies may define Same Store differently, which will affect the
comparability of the data.
(2) Our definition of New Store, as shown in the table above,
includes existing domestic facilities that had not been acquired or
leased as of January 1 of the previous year as well as developed
properties that have not been operating a full two years as of January
1 of the current year.
(3) Average annual rent per square foot is calculated by dividing
actual rent collected by the average number of square feet occupied
during the period.
(4) Total costs capitalized to storage centers.
Table 7: SHURGARD STORAGE CENTERS, INC.
SEGMENT REPORTING INFORMATION RESULTS (unaudited)
Segment reporting information results for the three months ended
March 31, 2004
Three months ended March 31, 2004
(dollars in thousands except average rent)
Domestic Europe Total
-------------- -------------- --------------
% of % of % of
Same Store (1) Amount total Amount total Amount total
---------------------------------------- -------------- --------------
Number of Storage Centers 444 96% 96 79% 540 92%
Revenues $73,974 99% $22,379 94% $96,353 97%
NOI after indirect
and leasehold expense $43,677 101% $ 8,206 149% $51,883 106%
Avg. annual rent per sq.
ft.(3) $ 11.36 $ 23.24
Avg. sq. ft. occupancy 82% 66%
New Store (2)
--------------------------
Number of Storage Centers 18 4% 26 21% 44 8%
Revenues $ 1,073 1% $ 1,406 6% $ 2,479 3%
NOI after indirect
and leasehold expense $ (379) -1% (2,685) -49% $(3,064) -6%
Avg. sq. ft. occupancy 38% 11%
Combined New and Same
Stores
--------------------------
Number of Storage Centers 462 100% 122 100% 584 100%
Revenues $75,047 100% $23,785 100% $98,832 100%
NOI after indirect
and leasehold expense $43,298 100% $ 5,521 100% $48,819 100%
(1) Our definition of Same Store includes existing storage centers
acquired prior to January 1 of the previous year as well as developed
properties that have been operating for a full two years as of January
1 of the current year. Our definition of Same Store results in the
addition of storage centers each year as new acquisitions and
developments meet the criteria for inclusion, so we then include these
storage centers in the previous year's comparable data. Other storage
companies may define Same Store differently, which will affect the
comparability of the data.
(2) Our definition of New Store, as shown in the table above,
includes existing domestic facilities that had not been acquired or
leased as of January 1 of the previous year as well as developed
properties that have not been operating a full two years as of January
1 of the current year.
(3) Average annual rent per square foot is calculated by dividing
actual rent collected by the average number of square feet occupied
during the period.
Table 8: SHURGARD STORAGE CENTERS, INC.
DOMESTIC QUARTER TO DATE SAME STORE RESULTS (unaudited)
Domestic Same Store Results for the three months ended
March 31, 2005 and 2004
Same Store Results (1)
For the three months ended March 31,
(dollars in thousands) 2005 2004 % Change
----------- ----------- ---------
Storage center operations
revenue $ 78,239 $ 73,974 5.8%
Operating expense:
Personnel expenses 9,026 8,232 9.6%
Real estate taxes 7,524 7,268 3.5%
Repairs and maintenance 2,284 2,462 -7.2%
Marketing expense 1,931 1,748 10.5%
Utilities and phone expenses 2,900 2,884 0.6%
Cost of goods sold 834 747 11.6%
Store admin and other expenses 3,309 2,515 31.6%
----------- -----------
Direct operating and real estate
tax expense 27,808 25,856 7.5%
----------- -----------
NOI 50,431 48,118 4.8%
Leasehold expense 1,129 1,025 10.1%
----------- -----------
NOI after leasehold expense 49,302 47,093 4.7%
Indirect operating expense (2) 4,200 3,416 23.0%
----------- -----------
NOI after indirect operating and
leasehold expense $ 45,102 $ 43,677 3.3%
=========== ===========
Avg. annual rent per sq.ft. (3) $ 11.81 $ 11.36 4.0%
Avg. sq.ft. occupancy 84% 82%
Total net rentable sq.ft. 29,246,000 29,246,000
Number of properties as
of December 31 444 444
(1) Table includes the total operating results of each storage
center regardless of our percentage ownership interest in that storage
center.
(2) Indirect operating expense includes certain shared property
costs such as district and corporate management, purchasing, national
contracts personnel and marketing, as well as certain overhead costs
allocated to property operations such as business information
technology, legal services, human resources and accounting. Does not
include containerized storage operations, internal real estate
acquisition cost or abandoned development expense. Indirect operating
expense is allocated to storage centers based on number of months in
operation during the period.
(3) Average annual rent per square foot is calculated by dividing
actual rent collected by the average number of square feet occupied
during the period.
Table 9: SHURGARD STORAGE CENTERS, INC.
SUMMARY OF OPERATING SELF STORAGE PROPERTIES (unaudited)
Summary of Operating Self Storage Properties as of March 31, 2005
Domestic European
----------------------- ------------------------
Number of Net Rentable Number of Net Rentable
Properties Square Feet Properties Square Feet
---------- ------------ ----------- ------------
100% owned or leased 372 23,938,000 1 38,000
Partially owned or
leased, consolidated 100 7,004,000 134 7,224,000
Properties under
leasing arrangements 3 211,000 - -
Fee managed 24 1,454,000 - -
---------- ------------ ----------- ------------
499 32,607,000 135 7,262,000
========== ============ =========== ============
Total
------------------------
Number of Net Rentable
Properties Square Feet
----------- ------------
100% owned or leased 373 23,976,000
Partially owned or leased,
consolidated 234 14,228,000
Properties under
leasing arrangements 3 211,000
Fee managed 24 1,454,000
----------- ------------
634 39,869,000
=========== ============
Table 10: SHURGARD STORAGE CENTERS, INC.
EUROPE QUARTER TO DATE SAME STORE RESULTS (unaudited)
Europe Same Store Results for three months ended
March 31, 2005 and 2004 (1)
Three months ended March 31,
---------------------------------
(in thousands except average rent) 2005 2004 % Change
---------- ---------- ---------
Storage center operations revenue $ 25,298 $ 22,379 13.0%
Operating expense:
Personnel expenses 3,497 3,309 5.7%
Real estate taxes 1,194 1,191 0.3%
Repairs and maintenance 931 917 1.5%
Marketing expense 2,349 1,956 20.1%
Utilities and phone expenses 886 772 14.8%
Cost of goods sold 899 771 16.6%
Store admin and other expenses 2,028 1,764 15.0%
---------- ----------
Direct operating and real estate
tax expense 11,784 10,680 10.3%
---------- ----------
NOI 13,514 11,699 15.5%
Leasehold expense 521 498 4.6%
---------- ----------
NOI after leasehold expense 12,993 11,201 16.0%
Indirect operating expense (2) 3,382 2,995 12.9%
---------- ----------
NOI after indirect operating and
leasehold expense $ 9,611 $ 8,206 17.1%
========== ==========
Avg. annual rent per sq. ft. (3) $ 23.69 $ 23.24 1.9%
Avg. sq. ft. occupancy 73% 66% 10.6%
Total net rentable sq. ft. 5,288,000 5,288,000
Number of properties 96 96
(1) Amounts for both years have been translated from local
currencies at a constant exchange rate using the average exchange rate
for the three months ended March 31, 2005 for the 2005 to 2004
comparison.
(2) Indirect operating expense includes certain shared property
costs such as district and regional management, national contracts
personnel and marketing, as well as certain overhead costs allocated
to property operations such as business information technology, human
resources and accounting. It does not include internal real estate
acquisition cost or abandoned development expense. Indirect operating
expense is allocated to storage centers based on number of months in
operation during the period.
(3) Average annual rent per square foot is calculated by dividing
actual rent collected by the average number of square feet occupied
during the period.
Table 11: SHURGARD STORAGE CENTERS, INC.
EUROPEAN 2004 QUARTERLY COMPARISON (unaudited)
Quarterly comparison for European same store of first quarter 2005
versus first quarter 2004
Percent change compared to prior
quarter
---------------------------------
Q1 NOI
Q1 2005 (after
Number of Average Q1 leasehold Q1 Q1
Properties Occupancy Revenue expenses) Occupancy Rate
------------------------------------------------------
Belgium 17 72.1% 3.1% -1.1% 1.1% 1.7%
Netherlands 22 63.9% 18.8% 5.5% 12.7% 5.6%
France 23 79.2% 14.5% 22.5% 11.9% 1.3%
Sweden 20 75.2% 12.9% 20.2% 11.3% 2.1%
Denmark 4 79.2% 37.6% 56.8% 36.7% 0.0%
United Kingdom 10 72.8% 8.5% 23.8% 18.9% -6.3%
---------- --------- ------- --------- --------- -----
Europe Totals 96 72.9% 13.0% 16.0% 10.6% 1.9%
========== ========= ======= ========= ========= =====
Table 12: SHURGARD STORAGE CENTERS, INC.
DOMESTIC YEAR TO DATE SAME STORE VINTAGE TABLE (unaudited)
Domestic Same Store Vintage Analysis for the three months ended
March 31, 2005 and 2004
Total Net
(In millions) Rentable
Total sq. ft. Average Occupancy
Storage when Three months ended
Number of Center all phases --------------------
Properties Cost (1) are complete 3/31/2005 3/31/2004
----------- ------------- ------------ --------------------
Same Store
since 2005 34 $ 178.0 2,322,000 80% 74%
Same Store
since 2004 59 217.2 4,382,000 78% 75%
Same Store
since 2003
or prior 351 1,374.7 22,542,000 85% 85%
----------- ------------ ------------ --------------------
Same Store
total 444 $ 1,769.9 29,246,000 84% 82%
=========== ============ ============ ====================
(1) Total capitalized costs to storage centers since the store was
acquired or developed.
(2) Average annual rent per square foot is calculated by dividing
actual rent collected by the average number of square feet occupied
during the period.
(In thousands)
NOI
Average Annual Rent (In thousands) (after leasehold
(per sq. ft) (2) Revenue expenses)
-------------------- -------------------- --------------------
Three months ended Three months ended Three months ended
-------------------- -------------------- --------------------
3/31/2005 3/31/2004 3/31/2005 3/31/2004 3/31/2005 3/31/2004
-------------------- -------------------- --------------------
Same
Store
since
2005 $12.49 $11.67 $6,177 $5,380 $3,364 $2,644
Same
Store
since
2004 8.43 7.91 7,826 6,970 4,853 3,933
Same
Store
since
2003
or
prior 12.35 11.92 64,236 61,624 41,085 40,516
-------------------- -------------------- --------------------
Same
Store
total $11.81 $11.36 $78,239 $73,974 $49,302 $47,093
==================== ==================== ====================
(1) Total capitalized costs to storage centers since the store was
acquired or developed.
(2) Average annual rent per square foot is calculated by dividing
actual rent collected by the average number of square feet occupied
during the period.
Table 13: SHURGARD STORAGE CENTERS, INC.
EUROPEAN DEVELOPMENT (unaudited)
European Development Performance Vintage Analysis for the three months
ended March 31, 2005 and 2004
Average
Occupancy
(in millions) -------------
Storage Center Total Net For the three
Cost Rentable months
Number ----------------- sq. ft. ended March
of Devel- when all 31,
Prop- opment Total phases are -------------
New store: erties Cost (1) Cost (2) complete 2005 2004
--------------------------- -------- -------- ---------- ------- -----
Opened in 2005
Germany - $ - $ - - - -
Denmark - - - - - -
United Kingdom - - - - - -
------ ------- ------- ---------- ------- -----
Total opened in 2005 - $ - $ - - - -
====== ======= ======= ========== ======= =====
Opened in 2004
Germany 4 $ 26.8 $ 26.8 202,000 21.1% -
France 4 23.9 23.9 217,000 12.0% -
Denmark 2 14.9 14.9 101,000 34.3% -
United Kingdom 3 32.0 32.0 123,000 28.4% 0.2%
------ ------- ------- ---------- ------- -----
Total opened in 2004 13 $ 97.6 $ 97.6 643,000 21.5% -
====== ======= ======= ========== ======= =====
Opened in 2003
Belgium 1 $ 3.6 $ 4.9 45,000 62.7% 31.3%
Netherlands 7 40.0 42.2 351,000 43.9% 14.9%
Germany 5 36.2 36.2 268,000 41.4% 12.4%
France 7 44.6 47.6 372,000 42.0% 13.1%
Sweden 2 11.9 14.6 94,000 54.5% 23.1%
Denmark 1 8.0 10.5 49,000 87.8% 31.3%
United Kingdom 3 33.3 41.2 152,000 48.6% 16.3%
------ ------- ------- ---------- ------- -----
Total opened in 2003 26 $ 177.6 $ 197.2 1,331,000 46.4% 15.8%
====== ======= ======= ========== ======= =====
------ -------- -------- ---------- ------- -----
New Store Total 39 $ 275.2 $ 294.8 1,974,000 38.3% 10.7%
====== ======= ======= ========== ======= =====
Same store:
---------------------
Opened in 2002
Belgium 2 $ 7.5 $ 10.3 101,000 48.7% 42.1%
Netherlands 7 41.6 56.5 368,000 52.2% 41.1%
France 7 44.4 61.7 378,000 66.1% 50.4%
Sweden 3 19.0 26.2 151,000 73.4% 55.3%
Denmark 2 14.9 20.8 102,000 78.6% 47.4%
United Kingdom 3 34.8 47.9 166,000 70.4% 47.1%
------ ------- ------- ---------- ------- -----
Total opened in 2002 24 $ 162.2 $ 223.4 1,266,000 63.1% 46.9%
====== ======= ======= ========== ======= =====
Opened in 2001 and
before
Belgium 15 $ 72.5 $ 101.1 894,000 74.7% 74.6%
Netherlands 15 82.8 115.2 821,000 69.1% 63.6%
France 16 94.0 129.9 855,000 85.0% 79.7%
Sweden 17 97.3 135.2 974,000 75.5% 69.5%
Denmark 2 13.6 18.9 107,000 79.8% 68.0%
United Kingdom 7 68.1 94.1 371,000 73.8% 67.5%
------ ------- ------- ---------- ------- -----
Total opened before
2002 72 $ 428.3 $ 594.4 4,022,000 76.0% 71.4%
====== ======= ======= ========== ======= =====
------ -------- -------- ---------- ------- -----
Same Store Total 96 $ 590.5 $ 817.8 5,288,000 72.9% 65.5%
====== ======= ======= ========== ======= =====
(1) The total development cost of these projects is reported in
U.S. dollars translated at the March 31, 2005 exchange rate of $1.29
to the euro. The operating results (see note (2) below) are reported
at the average exchange rate for the three months ended March 31, 2005
which was $1.31 to the euro. As these exchange rates are different we
believe it does not allow for an accurate measure of property
investment yield. We believe the application of a constant exchange
rate to both the property cost and operating results would provide a
more meaningful measure of investment yield.
(2) The total cost of the storage centers includes additional
costs of approximately $247 million we paid to acquire additional
interests in Shurgard Europe in 2003 and 2004. The amounts have been
translated at the March 31, 2005 exchange rate.
(3) The amounts have been translated from local currencies at a
constant exchange rate using the average exchange rate for the first
quarter of 2005.
(4) Average annual rent per square foot is calculated by dividing
actual rent collected by the average number of square feet occupied
during the period. On the year of opening the average annual rent is
lower as the store had not been opened a full year.
(5) Expenses in some instances may include certain pre-opening
costs.
Average Annual (In thousands)
Rent NOI (3)
(per sq. ft) (In thousands) (after leasehold
(3)(4) Revenue (3) expense)
----------------- ---------------- -------------------
For the three For the three For the three
months months months
ended March 31, ended March 31, ended March 31,
----------------- ---------------- -------------------
New store: 2005 2004 2005 2004 2005 (5) 2004
--------------- ------- ------- ------- ------- -------- --------
Opened in 2005
Germany $ - $ - $ - $ - $ (16) $ -
Denmark - - - - (47) -
United Kingdom - - - - (54) -
------- ------- ------- ------- -------- --------
Total opened in
2005 $ - $ - $ - $ - $ (117) $ -
======= ======= ======= ======= ======== ========
Opened in 2004
Germany $ 19.49 $ - $ 221 $ - $ (302) $ -
France 22.04 - 181 2 (324) (93)
Denmark 21.84 - 230 - (32) (27)
United Kingdom 53.32 31.09 498 4 111 (25)
------- ------- ------- ------- -------- --------
Total opened in
2004 $ 29.10 $ 31.09 $ 1,130 $ 6 $ (547) $ (145)
======= ======= ======= ======= ======== ========
Opened in 2003
Belgium $ 16.70 $ 15.99 $ 128 $ 63 $ 48 $ (9)
Netherlands 22.71 21.70 922 311 20 (378)
Germany 16.17 16.21 475 148 (56) (379)
France 23.30 23.23 1,038 341 85 (450)
Sweden 19.47 17.45 297 115 67 (108)
Denmark 24.67 23.21 291 103 145 2
United Kingdom 42.32 43.32 859 319 336 (125)
------- ------- ------- ------- -------- --------
Total opened in
2003 $ 23.62 $ 23.03 $ 4,010 $ 1,400 $ 645 $ (1,447)
======= ======= ======= ======= ======== ========
-------- -------- ---------------- -------- ---------
New Store Total $ 24.65 $ 23.06 $ 5,140 $ 1,406 $ (19) $ (1,592)
======= ======= ======= ======= ======== ========
Same store:
---------------
Opened in 2002
Belgium $ 14.19 $ 13.42 $ 189 $ 154 $ 25 $ (11)
Netherlands 22.66 21.17 1,150 854 433 268
France 21.27 21.01 1,536 1,155 534 171
Sweden 22.81 21.58 699 514 376 209
Denmark 22.99 23.91 506 318 243 100
United Kingdom 39.38 46.00 1,263 1,018 702 425
------- ------- ------- ------- -------- --------
Total opened in
2002 $ 24.21 $ 24.12 $ 5,343 $ 4,013 $ 2,313 $ 1,162
======= ======= ======= ======= ======== ========
Opened in 2001
and before
Belgium $ 17.55 $ 17.27 $ 3,240 $ 3,172 $ 1,932 $ 1,990
Netherlands 23.09 21.92 3,507 3,068 1,681 1,735
France 26.60 25.99 5,409 4,910 2,813 2,562
Sweden 21.82 21.48 4,551 4,136 2,397 2,098
Denmark 23.12 22.52 550 450 242 210
United Kingdom 35.85 37.30 2,698 2,630 1,615 1,444
------- ------- ------- ------- -------- --------
Total opened
before 2002 $ 23.55 $ 23.06 $19,955 $18,366 $ 10,680 $ 10,039
======= ======= ======= ======= ======== ========
-------- -------- ---------------- -------- ---------
Same Store
Total $ 23.69 $ 23.24 $25,298 $22,379 $ 12,993 $ 11,201
======= ======= ======= ======= ======== ========
(1) The total development cost of these projects is reported in
U.S. dollars translated at the March 31, 2005 exchange rate of $1.29
to the euro. The operating results (see note (2) below) are reported
at the average exchange rate for the three months ended March 31, 2005
which was $1.31 to the euro. As these exchange rates are different we
believe it does not allow for an accurate measure of property
investment yield. We believe the application of a constant exchange
rate to both the property cost and operating results would provide a
more meaningful measure of investment yield.
(2) The total cost of the storage centers includes additional
costs of approximately $247 million we paid to acquire additional
interests in Shurgard Europe in 2003 and 2004. The amounts have been
translated at the March 31, 2005 exchange rate.
(3) The amounts have been translated from local currencies at a
constant exchange rate using the average exchange rate for the first
quarter of 2005.
(4) Average annual rent per square foot is calculated by dividing
actual rent collected by the average number of square feet occupied
during the period. On the year of opening the average annual rent is
lower as the store had not been opened a full year.
(5) Expenses in some instances may include certain pre-opening
costs.
Table 14: SHURGARD STORAGE CENTERS, INC.
FOREIGN EXCHANGE TRANSLATION (unaudited)
Foreign exchange translation for three months ended
March 31, 2005 and 2004
With the growth in the Company's foreign operations, foreign
currency translation has a greater impact on the quarterly reporting
of our financial results. Foreign currency translation could cause
volatility in the reported financial results of the Company and
otherwise limit the comparability of operating results and financial
position from one period over another. Specifically, generally
accepted accounting principles ("GAAP") prescribe specific foreign
currency translation standards. For example, assets and liabilities
are translated at the exchange rate in effect at the end of the
applicable period. Revenue, expenses, and other components of the
income statement and statement of cash flows are shown at the average
exchange rate during the applicable period. For the quarter ended
March 31, 2005, the average exchange rate between the Euro and the
U.S. Dollar was $1.31 per Euro. During the quarter ended March 31,
2004, the average exchange rate was $1.25 per Euro. Revenues and total
expenses for Shurgard Europe increased $1.1 million and $1.2 million,
respectively, in the first quarter of 2005 over the first quarter of
2004. As of December 31, 2004 the exchange rate between the Euro and
the U.S. Dollar was $1.36 per Euro compared to $1.29 per Euro as of
March 31, 2005. Total assets and total liabilities decreased
approximately $51 million and $40 million, respectively, from December
31, 2004 to March 31, 2005, as a result of exchange rate variances.
Table 15: SHURGARD STORAGE CENTERS, INC.
STORE ASSET VALUES AND OPERATING INFORMATION SCHEDULE (unaudited)
Store asset values and operating information schedule for the
three months ended March 31, 2005
(in thousands except for Weighted Net
number of properties) average Rentable
No. of ownership Square Occupancy
Properties interest Feet (Q1 Avg)
---------- --------- --------- ---------
Same Store
------------------------------
Domestic wholly owned
or leased (1) 357 100% 23,051 84.1%
Domestic consolidated
joint ventures (2) 87 79% 6,195 81.2%
European consolidated
subsidiary (4) 96 87% 5,288 72.9%
---------- --------- --------- ---------
Total Same Store 540 94% 34,534 81.9%
========== ========= ========= =========
New Store
------------------------------
Domestic wholly owned
or leased developments(1) 11 100% 605 58.8%
Domestic consolidated
joint ventures developments(2) 9 68% 532 50.8%
Domestic acquisitions (3) 8 90% 559 85.0%
Domestic Properties under
leasing arrangements (6) 3 0% 211 67.9%
European consolidated
subsidiary developments(4) 6 87% 287 46.4%
European 20% development
ventures developments(5) 32 17% 1,649 33.0%
European acquisition (3) 1 100% 38 78.0%
---------- --------- --------- ---------
Total New Store 70 52% 3,881 50.3%
========== ========= ========= =========
TOTALS 610 89% 38,415 78.7%
========== ========= ========= =========
(1) Includes owned and leased properties in which we have a 100%
interest.
(2) Includes properties in which we own an interest less than 100%
but that are consolidated in our financial statements. The store
information and results reflected the full 100% amounts.
(3) Includes all stores acquired in 2005 and 2004.
(4) Includes properties developed under Shurgard Europe in which
we hold an 87.23% interest.
(5) Includes properties developed under First and Second Shurgard
in which we hold a 17.4% interest.
(6) Three storage centers are operated through a leasing
arrangement with a California developer for which the storage centers
assets are consolidated in our financial statements but not the store
operations.
(7) Gross Book Value represents the cost of developing properties
at the time they were developed, not the value at which partners
interests in the properties may have been acquired for at a later
date. The actual completed cost of these projects are reported in U.S.
dollars translated at the March 31, 2005 exchange rate of $1.29 to the
Euro. Operating results are reported at the average exchange rate for
the three months ended March 31, 2005 which was $1.31 to the Euro. As
these exchange rates are different we believe it does not allow for an
accurate measure of property investment yield. However, we believe the
application of a constant exchange rate to both the property cost and
operating results may provide a more meaningful measure of investment
yield.
(8) Applicable debt represents debt secured by asset pool.
(9) Represents Net Operating Income after Direct Expenses. The
indirect expenses not included in NOI for Domestic Same Store,
European Same Store, Domestic New Store and European New Store are the
following (in thousands except indirect expense per revenue dollar):
Gross Book Applicable Q1 Q1 Leasehold
(in thousands except Value (7) debt (8) Revenue NOI (9) Expense
for number of -----------------------------------------------
properties)
Same Store
-----------------------
Domestic wholly owned
or leased (1) $1,407,261 $ 49,973 $ 63,889 $40,680 $ 1,097
Domestic consolidated
joint ventures (2) 362,594 162,143 14,350 9,751 32
European consolidated
subsidiary (4) 817,787 405,153 25,298 13,514 521
---------- -------- -------- ------- -------
Total Same Store $2,587,642 $617,269 $103,537 $63,945 $ 1,650
========== ======== ======== ======= =======
New Store
-----------------------
Domestic wholly owned
or leased
developments(1) $ 59,525 $ - $ 1,231 $ 308 $ 35
Domestic consolidated
joint ventures
developments(2) 36,802 1,205 922 313 -
Domestic acquisitions
(3) 55,751 34,070 1,728 1,011 -
Domestic Properties
under leasing
arrangements (6) 22,481 - 662 376 -
European consolidated
subsidiary
developments (4) 58,454 25,058 1,157 401 -
European 20% development
ventures
developments (5) 220,869 150,437 3,574 (606) 80
European acquisition
(3) 15,442 - 409 266 -
---------- -------- -------- ------- -------
Total New Store $ 469,324 $210,770 $ 9,683 $ 2,069 $ 115
========== ======== ======== ======= =======
TOTALS $3,056,966 $828,039 $113,220 $66,014 $ 1,765
========== ======== ======== ======= =======
(1) Includes owned and leased properties in which we have a 100%
interest.
(2) Includes properties in which we own an interest less than 100%
but that are consolidated in our financial statements. The store
information and results reflected the full 100% amounts.
(3) Includes all stores acquired in 2005 and 2004.
(4) Includes properties developed under Shurgard Europe in which
we hold an 87.23% interest.
(5) Includes properties developed under First and Second Shurgard
in which we hold a 17.4% interest.
(6) Three storage centers are operated through a leasing
arrangement with a California developer for which the storage centers
assets are consolidated in our financial statements but not the store
operations.
(7) Gross Book Value represents the cost of developing properties
at the time they were developed, not the value at which partners
interests in the properties may have been acquired for at a later
date. The actual completed cost of these projects are reported in U.S.
dollars translated at the March 31, 2005 exchange rate of $1.29 to the
Euro. Operating results are reported at the average exchange rate for
the three months ended March 31, 2005 which was $1.31 to the Euro. As
these exchange rates are different we believe it does not allow for an
accurate measure of property investment yield. However, we believe the
application of a constant exchange rate to both the property cost and
operating results may provide a more meaningful measure of investment
yield.
(8) Applicable debt represents debt secured by asset pool.
(9) Represents Net Operating Income after Direct Expenses. The
indirect expenses not included in NOI for Domestic Same Store,
European Same Store, Domestic New Store and European New Store are the
following (in thousands except indirect expense per revenue dollar):
Q1 indirect Indirect expense
expense Q1 revenue per revenue dollar
------------------ ------------------- --------------------
Domestic Europe Domestic Europe Domestic Europe
-------- -------- --------- --------- ---------- ---------
Same Store $ 4,200 $ 3,382 $ 78,239 $ 25,298 $ 0.05 $ 0.13
------- ------- -------- -------- --------- --------
New Store $ 294 $ 1,701 $ 4,543 $ 5,140 $ 0.06 $ 0.33
------- ------- -------- -------- --------- --------
*T