Shurgard Storage Ctr (NYSE:SHU)
Historical Stock Chart
From Jun 2019 to Jun 2024
![Click Here for more Shurgard Storage Ctr Charts. Click Here for more Shurgard Storage Ctr Charts.](/p.php?pid=staticchart&s=NY%5ESHU&p=8&t=15)
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 and nine months ended
September 30, 2005. The Company reported a net loss to common
shareholders of $1.4 million ($0.03 per share), after taking a charge
of $12.7 million ($0.27 per share) for costs of professional advisors
associated with an unsolicited takeover proposal and exploration of
strategic alternatives. For the third quarter of 2004, net income to
common shareholders was $15.1 million ($0.33 per share). For the nine
months ended September 30, 2005, the Company reported a loss to common
shareholders of $3 million ($0.06 per share) compared to net income to
common shareholders of $29.5 million ($0.64 per share) for the nine
months ended September 30, 2004. Funds from operations (FFO)
attributable to common shareholders for the third quarter of 2005 was
$13.6 million ($0.28 per share), compared to $29.6 million ($0.63 per
share) in the third quarter of 2004. FFO attributable to common
shareholders was $44.5 million ($0.94 per share) for the nine-month
period in 2005, compared to $71 million ($1.53 per share) for the
equivalent period in 2004. FFO for the three and nine months ended
September 30, 2005 was similarly affected by the charge described
above.
Operating Results
Combined Same Store revenue in the third quarter for the United
States and Europe increased by $8.0 million (or 7.8%) to $111 million
from $103 million, and NOI after indirect and leasehold expenses
increased by $4.7 million (or 8%) to $63.4 million from $58.7 million,
compared to the same quarter in 2004. For the nine-month period ended
September 30, 2005, combined Same Store revenue increased by $24.2
million (or 8.1%) to $321.4 million from $297.2 million, and combined
Same Store NOI after indirect and leasehold expenses increased by
$11.9 million (or 7.2%) to $177.9 million from $166 million during the
same period in 2004.
David K. Grant, President and Chief Operating Officer stated,
"This quarter was notable for the broad-based rate growth realized in
our domestic portfolio, along with continued solid occupancy gains in
our European portfolio. Over the past few quarters, customer gains in
Europe have been impressive, with Same Store occupancy reaching 83% at
the end of the quarter. We are also pleased to see the positive
effects of our cost-cutting initiatives taking hold. Third quarter
European Same Store indirect expenses were down over 19% from the
second quarter of 2005."
During the third quarter of 2005, the Company's Domestic Same
Store segment generated growth in revenue of 6.8% over the third
quarter of 2004, due primarily to an increase in average rates of
approximately 5%. Third quarter of 2005 growth in NOI after leasehold
and indirect expenses was 5.5% over the same quarter in 2004.
At constant exchange rates, the Europe Same Store segment in the
third quarter of 2005 generated increases in revenue of 11.8% and NOI
after leasehold and indirect expenses in the third quarter grew 23.9%,
compared to the same quarter in 2004. Strong revenue growth in the
Same Store portfolio during the quarter was due primarily to the
substantial improvement in average occupancy, which increased to 81%
from 71% in the comparable quarter in 2004. Occupancy improved in all
countries, but was particularly strong in the Netherlands, Sweden and
Denmark.
The Company's substantial investment ($551 million, or 18% of the
portfolio) in 87 New Stores provided 5% of the Company's NOI after
indirect and leasehold expenses in the third quarter 2005, compared to
3% in the second quarter 2005.
Improved operating results in the third quarter were offset by
higher interest expense, audit and Sarbanes-Oxley Section 404
compliance costs and personnel expenses. Interest expense increased by
$7.4 million ($0.16 per share) to $27.5 million in the third quarter
of 2005 from $20.1 million for the equivalent quarter in 2004. The
increase reflects higher borrowings, resulting primarily from
financing acquisitions and developments in 2005, higher interest rates
on the Company's domestic variable rate line of credit and an increase
in the interest rate on the Company's European borrowings as a result
of refinancing its variable rate credit facility that matured in 2004
with seven-year financing. Audit, Sarbanes-Oxley Section 404
compliance, legal and personnel costs increased $1.8 million ($0.04
per share). The Company also recognized a $142,000 foreign exchange
loss this quarter compared to a gain of $1.9 million ($0.04 per share)
in the third quarter of 2004. Of the $12.7 million charge in relation
to the unsolicited takeover proposal and exploration of strategic
alternatives, $1.4 million has been paid through the end of the third
quarter. The balance includes a provision for fees due in connection
with the financial advisor agreement that will be payable over the
next several quarters. Legal and other advisory costs are expensed as
incurred.
Portfolio
As of September 30, 2005, Shurgard operated an international
network of 644 operating properties containing approximately 40.5
million net rentable square feet. The total includes 483 owned,
partially owned or leased storage centers in operation in the United
States, 20 stores in the United States managed for third parties and
141 owned or partially owned stores in Europe.
In the third quarter of 2005, the Company opened four stores: two
in the United States (Oregon and California) and two in Europe
(Germany and the United Kingdom). In addition, the Company completed
the sale of three storage centers: one in Arizona and two in
Washington, for aggregate proceeds of $10.7 million and aggregate
gains of $5.4 million.
As of September 30, 2005, the Company had 20 new stores under
construction or pending construction (nine in the United States and
eleven in Europe) for an estimated total cost of $143.1 million and
six re-development projects underway in the United States for an
estimated total cost of $6.2 million. Also, during the quarter the
Company incurred impairment losses and abandoned project losses of
$1.1 million, relating primarily to land parcels held for sale and
abandoned development projects in the United States and Europe.
Impact of Hurricanes
Management announced that seven stores incurred damage as a result
of Hurricane Wilma, which struck southern Florida on October 24, 2005.
For the third quarter of 2005 these stores produced revenue of $2.7
million (2.2% of total revenue) and NOI of $1.8 million (2.3% of total
NOI). All stores are covered by insurance for losses due to physical
damage and business interruption and have already re-opened. The
Company's initial estimates are that store repairs (net of insurance
recovery) will be approximately $1.2 million, but as the hurricane
occurred after the end of the quarter, it does not impact our third
quarter 2005 operating results. Based on a significant increase in
inquiries, management projects that increased demand for available
unaffected units will more than offset the loss of units under repair
and that the overall impact on store revenue and NOI will be
immaterial. The Company's stores incurred no material damage from
Hurricane Katrina in August 2005 or from Hurricane Rita in September
2005.
2005 FFO and Earnings Guidance
Excluding all costs associated with the unsolicited takeover
proposal and exploration of strategic alternatives, management's
current FFO per share forecast for 2005 is $1.77 - $1.80. The revised
forecast reflects better than anticipated store operating results,
offset by unanticipated property abandonment and impairment costs,
hurricane damage costs and higher than previously projected interest
expense, audit and Sarbanes-Oxley compliance costs, as noted above.
Supplemental Information
Copies of this press release and supplemental information relating
to the third quarter of 2005 will be available on the company's
website at http://www.shurgard.com/ir or by request at 206-624-8100.
The Company will host a conference call to discuss third quarter
results on Tuesday, November 8, 2005, at 1:30 p.m. (Pacific). The
public is invited to listen to the call live via the Internet by
clicking the appropriate links on the Company's website. The call is
also available live on a listen-only basis by dialing 800-866-5043 (US
& CN callers) and 303-205-0033 (international callers). A taped replay
of the conference call will be available via the Internet address
listed above until November 15, 2005, or via telephone until November
15, 2005, at 800-405-2236 (US & CN callers) and 303-590-3000
(international callers) access code 11043936#.
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.
This release contains forward-looking statements as that term is
defined in Section 27A of the Securities Act of 1933, as amended, and
in Section 21F of the Securities Exchange Act of 1934 as amended.
These statements relate to future events or our future financial
performance. In some cases, you can identify forward-looking
statements by terminology such as "may," "will," "should," "expect,"
"plan," "intend," "anticipate," "believe," "estimate," "predict,"
"potential" or "continue," the negative of these terms or other
similar terminology. These statements are only predictions and are
inherently uncertain. Our actual results may differ significantly from
our expectations due to uncertainties, including the risk that:
-- changes in economic conditions in the markets in which we
operate or competition from new self-storage facilities or
other storage alternatives may cause a decline in rent or
occupancy rates or delays in rent-up of newly developed
properties;
-- new developments could be delayed or reduced by zoning and
permitting requirements outside of our control, increased
competition for desirable sites, construction delays due to
weather, unforeseen site conditions, labor shortages,
personnel turnover or scheduling problems with contractors,
subcontractors or suppliers;
-- we may experience increases in the cost of labor, taxes,
marketing and other operating and construction expenses;
-- tax law changes may change the taxability of future income;
-- increases in interest rates or changes to our credit ratings
may increase the cost of refinancing long-term debt;
-- our alternatives for funding our business plan may be impaired
by economic uncertainty due to war or terrorism;
-- Shurgard Self Storage SCA, our wholly owned European
subsidiary that we refer to as Shurgard Europe, may be
adversely affected if it is unable to complete funding of its
development joint ventures and maintain compliance with its
debt covenants;
-- we may not completely remediate our control deficiencies and
material weaknesses such that management would be able to
conclude that our internal control over financial reporting is
effective;
-- we may incur costs related to defending against hostile
takeover attempts; and
-- we may be adversely affected by legislation or changes in
regulations.
For a discussion of additional risks and other factors that could
affect these forward-looking statements and Shurgard's financial
performance, see Shurgard's report on Form 10-K for the year ended
December 31, 2004, filed with the SEC on March 29, 2005, report on
Form 10-Q for the quarter ended March 31, 2005, filed with the SEC on
May 10, 2005, report on Form 10-Q for the quarter ended June 30, 2005,
filed with the SEC on August 9, 2005, and its report on Form 10-K/A
for the year ended December 31, 2004, filed with the SEC on October
14, 2005. Forward-looking statements are based on estimates as of the
date of this release. Except as required by law, we disclaim any
obligation to publicly update these forward-looking statements
reflecting new estimates, events or circumstances after the date of
this release.
INDEX of TABLES TO FOLLOW:
-0-
*T
Table 1. Consolidated Statements of Net Income for the three months
and nine months ended September 30, 2005 and 2004
Table 2. Consolidated Balance Sheets as of September 30, 2005 and
December 31, 2004
Table 3. FFO Reconciliation for the three months and nine months ended
September 30, 2005 and 2004
Note that an additional 15 supplemental tables are included in the
release posted on the Company's website
Table 1: SHURGARD STORAGE CENTERS, INC.
OPERATING RESULTS (unaudited)
Condensed Consolidated Statements of Net Income for the three and
nine months ended September 30, 2005 and 2004
(in thousands except share data)
For the three months For the nine months
ended September 30, ended September 30,
-------------------- -------------------
2005 2004 2005 2004
-------- -------- -------- --------
Revenue
Storage center operations $124,418 $108,084 $354,175 $308,142
Other 748 1,299 3,484 3,887
-------- -------- -------- --------
Total revenue 125,166 109,383 357,659 312,029
-------- -------- -------- --------
Expenses
Operating 57,627 52,567 174,165 152,046
Real estate development 2,564 1,632 8,207 2,664
Depreciation and amortization 24,202 21,459 70,711 62,782
Impairment losses and
abandoned project loses 1,133 616 2,324 1,589
General, administrative and
other 8,015 6,257 26,958 23,327
-------- -------- -------- --------
Total storage center
expenses 93,541 82,531 282,365 242,408
-------- -------- -------- --------
Income from operations 31,625 26,852 75,294 69,621
-------- -------- -------- --------
Other income (expense)
Costs related to takeover
proposal and exploration
of strategic alternatives (12,712) - (12,712) -
Interest expense (27,503) (20,126) (77,113) (60,597)
Gain (loss) on derivatives 126 (274) (1,586) (389)
Foreign exchange (loss) gain (142) 1,899 (9,705) (493)
Interest income and other, net 1,277 1,106 3,505 2,307
-------- -------- -------- --------
Other expense, net (38,954) (17,395) (97,611) (59,172)
-------- -------- -------- --------
(Loss) income before equity in
earnings of other real estate
investments, net, minority
interest and income taxes (7,329) 9,457 (22,317) 10,449
Minority interest 3,249 4,002 16,235 12,355
Equity in earnings of other
real estate investments, net 27 22 60 47
Income tax benefit (expense) 47 (24) (342) (47)
-------- -------- -------- --------
(Loss) income from continuing
operations (4,006) 13,457 (6,364) 22,804
Discontinued operations
Income from discontinued
operations 188 363 686 1,867
Gain on sale of discontinued
operations 5,408 4,333 11,831 16,323
-------- -------- -------- --------
Discontinued operations 5,596 4,696 12,517 18,190
Cumulative effect of change in
accounting principle - - - (2,339)
-------- -------- -------- --------
Net income 1,590 18,153 6,153 38,655
Net income allocation
Preferred stock dividends and
other (3,038) (3,037) (9,118) (9,154)
-------- -------- -------- --------
Net (loss) income available
to common shareholders $ (1,448) $ 15,116 $ (2,965) $ 29,501
======== ======== ======== ========
Net (loss) income per Common
Share - Basic:
(Loss) Income from continuing
operations available to
common shareholders $ (0.15) $ 0.23 $ (0.33) $ 0.30
Total discontinued operations 0.12 0.10 0.27 0.39
Cumulative effect of change
in accounting principle - - - (0.05)
-------- -------- -------- --------
Net (loss) income available to
common shareholders per share $ (0.03) $ 0.33 $ (0.06) $ 0.64
======== ======== ======== ========
Net (loss) income per Common
Share - Diluted:
(Loss) Income from continuing
operations available to
common shareholders $ (0.15) $ 0.23 $ (0.33) $ 0.30
Discontinued operations 0.12 0.10 0.27 0.39
Cumulative effect of change
in accounting principle - - - (0.05)
-------- -------- -------- --------
Net (loss) income available to
common shareholders per share $ (0.03) $ 0.33 $ (0.06) $ 0.64
======== ======== ======== ========
Distributions per common share $ 0.56 $ 0.55 $ 1.67 $ 1.64
======== ======== ======== ========
Table 2: SHURGARD STORAGE CENTERS, INC.
BALANCE SHEET (unaudited)
Condensed Consolidated Balance Sheets as of September 30, 2005 and
December 31, 2004
(in thousands except share data)
September 30, December 31,
2005 2004
----------- ----------
ASSETS:
Storage centers:
Operating storage centers $ 3,188,377 $3,143,488
Less accumulated depreciation (531,013) (479,531)
----------- ----------
Operating storage centers, net 2,657,364 2,663,957
Construction in progress 81,395 58,431
Properties held for sale 8,875 8,328
----------- ----------
Total storage centers 2,747,634 2,730,716
----------- ----------
Cash and cash equivalents 38,352 50,277
Restricted cash 5,624 7,181
Goodwill 27,440 24,206
Other assets 115,954 120,504
----------- ----------
Total assets $ 2,935,004 $2,932,884
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable and accrued expenses $ 59,228 $ 60,938
Other liabilities 123,237 112,014
Lines of credit 568,500 397,300
Notes payable 1,261,697 1,287,202
----------- ----------
Total liabilities 2,012,662 1,857,454
----------- ----------
Minority interest 108,136 169,232
Commitments and contingencies
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; 46,793,460 and
46,624,900 shares issued and outstanding,
respectively 47 47
Additional paid-in capital 1,135,349 1,127,138
Accumulated deficit (435,745) (354,985)
Accumulated other comprehensive (loss)
income (16,628) 2,815
----------- ----------
Total shareholders' equity 814,206 906,198
----------- ----------
Total liabilities and shareholders'
equity $ 2,935,004 $2,932,884
=========== ==========
Table 3: SHURGARD STORAGE CENTERS, INC.
Funds From Operations (unaudited)
FFO Reconciliation for the three and nine months ended
September 30, 2005 and 2004
(in thousands except per share data)
For the three months For the nine months
ended September 30, ended September 30,
------------------- -------------------
2005 2004 2005 2004
------- ------- -------- --------
Net income $ 1,590 $18,153 $ 6,153 $ 38,655
Depreciation and
amortization (1) 20,930 18,932 59,795 55,548
Gain on sale of operating
properties (5,916) (4,472) (12,339) (16,386)
Cumulative effect of change
in accounting principle - - - 2,339
------- ------- -------- --------
FFO 16,604 32,613 53,609 80,156
Preferred distribution and
other (3,038) (3,037) (9,118) (9,154)
------- ------- -------- --------
FFO attributable to common
shareholders $13,566 $29,576 $ 44,491 $ 71,002
======= ======= ======== ========
FFO per share $ 0.28 $ 0.63 $ 0.94 $ 1.53
======= ======= ======== ========
Distributions per common
share $ 0.56 $ 0.55 $ 1.67 $ 1.64
======= ======= ======== ========
(1) Excludes depreciation related to non-real estate assets and
minority interests in depreciation and amortization and includes
depreciation and amortization of discontinued operations.
*T