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 announced results for the quarter and six months ended
June 30, 2006. Net income to common shareholders for the quarter was
$9 million ($0.19 per share), compared to a loss of $3.7 million
($0.08 per share) in the second quarter of 2005. Net income to common
shareholders for the six months was $11 million ($0.23 per share),
compared to a loss of $1.5 million ($0.03 per share) in the first six
months of 2005. Funds from operations (FFO) attributable to common
shareholders for the second quarter of 2006 were $31 million ($0.64
per share), compared to $15.4 million ($0.33 per share) for the second
quarter of 2005. FFO attributable to common shareholders for the first
half of 2006 was $55.6 million ($1.15 per share), compared to $30.9
million ($0.65 per share) for the second quarter of 2005. The
substantial increase in FFO is primarily attributable to strong
revenue growth in both the Company's domestic and European portfolios
along with reductions achieved in operating and general and
administrative costs. Of the 648 properties in Shurgard's global
portfolio, the 585 stores classified in the Same Store group generated
a combined increase in revenue and net operating income (NOI) after
leasehold and indirect expenses (at constant exchange rates) of 9.4%
and 17.8%, respectively, for the second quarter of 2006, compared to
the second quarter of 2005.
FFO in the second quarter of 2006 benefited from a $13 million
($0.27 per share), or 21%, improvement in NOI after leasehold and
indirect expenses from all stores and a $3.9 million ($0.08 per share)
reduction in general and administrative expenses, compared to the
second quarter of 2005. There was a net positive swing in foreign
currency exchange and derivative fluctuations (net of minority
interest share) of approximately $5.5 million ($0.11 per share) from
the second quarter of 2005 to the second quarter of 2006. Partially
offsetting these gains were increases in interest expense of $5.4
million ($0.11 per share) due to higher borrowings and interest rates,
and costs incurred in the second quarter of 2006 associated with the
Company's proposed merger with Public Storage, Inc. totaling $1.4
million ($0.03 per share).
Operating Results
Compared to the second quarter of 2005 and at constant exchange
rates, combined domestic and European Same Store revenue for the
second quarter of 2006 increased by $10.8 million (or 9.4%) to $126.1
million from $115.3 million, and NOI after indirect and leasehold
expenses increased by $11 million (or 17.8%) to $72.9 million from
$61.9 million. Combined domestic and European Same Store revenue for
the first half of 2006, compared to the first half of 2005, increased
by $22.3 million (or 10%) to $245.8 million from $223.5 million, and
NOI after indirect and leasehold expenses increased by $22.4 million
(or 19.2%) to $139 million from $116.6 million.
The 462 stores in the Company's domestic Same Store segment
generated a 6.6% increase in revenue and a 9.1% increase in NOI after
leasehold and indirect expenses in the second quarter of 2006,
compared to the second quarter of 2005, due primarily to a 7.4%
increase in rental rates. At constant exchange rates, the 123 stores
in the European Same Store segment in the second quarter of 2006
generated a 17.5% increase in revenue and a 59.6% increase in NOI
after leasehold and indirect expenses, compared to the same quarter in
2005. European Same Store revenue growth came from a combination of a
4.6% increase in rental rates and gains in occupancy, which averaged
82% during the second quarter of 2006 compared to 73% in the second
quarter of 2005. European Same Store occupancy ended the second
quarter at 85%, almost equal to occupancy in the Company's domestic
Same Store portfolio, which ended the second quarter at 86%. European
indirect operating expenses were down by 28.2%, primarily as a result
of the cost reduction initiatives announced last summer.
Portfolio
As of June 30, 2006, Shurgard operated an international network of
662 operating properties containing approximately 41.3 million net
rentable square feet. The total includes 488 owned, partially-owned or
leased storage centers and 13 storage centers managed for third
parties in the United States and 161 owned or partially-owned storage
centers in Europe.
The Company's New Store portfolio increased to a total of 63
storage centers, representing an investment of $375.5 million, or 11%
of the total portfolio. This portfolio, however, made up only 2% of
the total NOI after leasehold and indirect expenses in the second
quarter of 2006.
As of June 30, 2006, the Company had 20 new storage centers or
major redevelopment projects under construction or pending
construction (13 in the United States and 7 in Europe) for an
estimated total cost at completion of approximately $119.9 million.
Proposed Merger with Public Storage, Inc.
As previously announced, on March 6, 2006, the boards of directors
of Public Storage, Inc. and Shurgard approved a definitive merger
agreement under which Public Storage will acquire Shurgard at a total
transaction value of approximately $5.0 billion. In connection with
the proposed merger, on July 24, 2006, Public Storage and Shurgard
filed the definitive joint proxy statement/prospectus statement with
the SEC and began mailing it to their shareholders. Each company
scheduled a shareholders meeting to be held on August 22, 2006 to,
among other things, vote on approval of the merger.
Under the terms of the merger agreement, which is taxable, Public
Storage will issue approximately 41 million shares of common stock in
exchange for outstanding Shurgard common stock and assume Shurgard's
debt of approximately $2 billion (as of June 30, 2006). In addition,
approximately $136 million of Shurgard's preferred stock will be
redeemed. The merger is currently targeted to close on or shortly
after the date of the shareholder meetings.
More information with respect to the proposed merger can be found
in the definitive proxy statement/prospectus dated July 24, 2006 filed
with the SEC as part of the registration statement regarding the
proposed merger.
Supplemental Information
Copies of this press release and supplemental tables relating to
the quarter ended June 30, 2006, will be available on the Company's
website at http://www.shurgard.com/ir or by request at 206-624-8100.
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 as
interpreted by the Securities and Exchange Commission. Accordingly,
FFO is defined as net earnings (computed in accordance with U.S.
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 U.S. GAAP net income to FFO is included in the
tables attached to this release.
Although net operating income (NOI) is a non-U.S. GAAP measure,
the Company believes it is a meaningful measure of operating
performance as a supplement to net income because the Company relies
on NOI for purposes of making decisions with respect to resource
allocations, current property values, segment performance, and
comparing period-to-period and market-to-market property operating
results. NOI is defined as storage center operations revenues less
direct operating and real estate tax expense for each of the Company's
properties. A reconciliation of Same Store and New Store NOI to income
(loss) from continuing operations is provided in the tables attached
to this release and in supplemental tables posted to our website at
http://www.shurgard.com/ir.
Additional Information Regarding Merger with Public Storage
In connection with the proposed transaction, Public Storage and
Shurgard have filed a definitive joint proxy statement/prospectus
dated July 24, 2006 with the Securities and Exchange Commission as
part a registration statement regarding the proposed merger of Public
Storage and Shurgard. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ
THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT
MATERIAL BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT PUBLIC
STORAGE AND SHURGARD AND THE PROPOSED MERGER. Investors and security
holders may obtain a free copy of the definitive proxy
statement/prospectus and other documents filed by Public Storage and
Shurgard with the SEC at the SEC's website at www.sec.gov. Each
company has scheduled a shareholders' meeting to be held on August 22,
2006, to, among other things, vote on approval of the merger. The
definitive joint proxy statement/prospectus and other relevant
documents may also be obtained free of charge from Public Storage or
Shurgard by directing such request to: Public Storage, Inc. 701
Western Avenue, Glendale, CA 91201-2349, Attention: Investor Relations
or Shurgard Storage Centers, Inc., 1155 Valley Street, Suite 400,
Seattle, WA 98109-4426, Attention: Investor Relations.
Public Storage and Shurgard and their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies from the shareholders of Public Storage and
Shurgard in connection with the merger. Information about Public
Storage and its directors and executive officers, and their ownership
of Public Storage securities and information about Shurgard and its
directors and executive officers, and their ownership of Shurgard
securities, is set forth in the definitive joint proxy
statement/prospectus dated July 24, 2006 included in the registration
statement on Form S-4 filed with the SEC by Public Storage on April
20, 2006 and amended May 24, 2006, June 12, 2006, June 19, 2006 and
July 24, 2006. Additional information regarding the interests of those
persons may be obtained by reading the definitive proxy
statement/prospectus.
This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities
laws of any such jurisdiction. No offering of securities shall be made
except by means of a prospectus meeting the requirements of Section 10
of the Securities Act of 1933.
Forward-Looking Statements
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. The Company's actual results may differ
significantly from its expectations due to uncertainties, including
the risk that:
-- the Company may encounter difficulties in realizing the
proposed merger with Public Storage, Inc. and integrating the
two companies; Shurgard or Public Storage may fail to obtain
approval of the transaction by their respective shareholders
or to satisfy other closing conditions to the transaction;
-- changes in economic conditions in the markets in which the
Company operates 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 the Company's 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;
-- the Company 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;
-- alternatives for funding the Company's business plan may be
impaired by economic uncertainty due to war or terrorism;
-- Shurgard Self Storage SCA, the Company's wholly-owned European
subsidiary, may be adversely affected if it is unable to find
adequate sites to complete the targeted number of developments
in its Second Shurgard joint venture;
-- the Company may not maintain compliance with its debt
covenants; and
-- the Company 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, 2005, filed with the SEC on March 20, 2006 and Shurgard's
report on Form 10-Q for the quarter ended March 31, 2006, filed with
the SEC on May 10, 2006. 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.
-0-
*T
INDEX of TABLES TO FOLLOW:
Table 1. Condensed Consolidated Statements of Operations for the three
and six months ended June 30, 2006 and 2005.
Table 2. Condensed Consolidated Balance Sheets as of June 30, 2006 and
December 31, 2005.
Table 3. FFO Reconciliation for the three and six months ended
June 30, 2006 and 2005.
Table 4. Segment Totals for the three and six months ended June 30,
2006 and 2005.
Table 5. Reconciliation of Segment NOI to income from continuing
operations for the three and six months ended June 30,
2006 and 2005.
Table 6. Segment exchange rate differences for the three and six
months ended June 30, 2005.
Table 1: SHURGARD STORAGE CENTERS, INC.
OPERATING RESULTS (unaudited)
Condensed Consolidated Statements of Operations for the three and
six months ended June 30, 2006 and 2005
(in thousands except per share data)
Three months Six months
ended June 30, ended June 30,
------------------- -------------------
2006 2005 2006 2005
-------- -------- -------- --------
Revenue
Storage center operations $135,165 $118,118 $261,933 $230,356
Other 1,089 1,350 1,931 2,736
-------- -------- -------- --------
Total revenue 136,254 119,468 263,864 233,092
-------- -------- -------- --------
Expenses
Operating 61,510 57,812 122,604 116,890
Real estate development 1,945 2,713 3,615 5,643
Depreciation and amortization 26,342 23,252 52,265 46,596
Impairment losses and
abandoned project expense 255 868 800 1,191
General, administrative and
other 7,018 10,914 14,471 18,943
-------- -------- -------- --------
Total storage center
expenses 97,070 95,559 193,755 189,263
-------- -------- -------- --------
Income from operations 39,184 23,909 70,109 43,829
-------- -------- -------- --------
Other income (expense)
Costs related to proposed
merger (1,363) - (2,828) -
Interest expense (30,845) (25,485) (60,249) (49,610)
Gain (loss) on derivatives,
net 418 (1,353) 1,109 (1,712)
Foreign exchange gain (loss) 378 (5,715) 503 (9,563)
Interest income and other, net 464 1,270 869 2,230
-------- -------- -------- --------
Other expense, net (30,948) (31,283) (60,596) (58,655)
-------- -------- -------- --------
Income (loss) before minority
interest, equity in earnings
of other real estate
investments, net and income
tax expense 8,236 (7,374) 9,513 (14,826)
Minority interest 3,953 6,876 7,886 12,986
Equity in earnings of other
real estate investments, net - 12 - 33
Income tax expense (75) (379) (94) (389)
-------- -------- -------- --------
Income (loss) from continuing
operations 12,114 (865) 17,305 (2,196)
Discontinued operations
(Loss) income from
discontinued operations (74) 172 (6) 336
Gain on sale of discontinued
operations - - - 6,423
-------- -------- -------- --------
Total (loss) income from
discontinued operations (74) 172 (6) 6,759
Cumulative effect of change in
accounting principle - - (200) -
-------- -------- -------- --------
Net income (loss) 12,040 (693) 17,099 4,563
Net Income (loss) allocation
Preferred stock dividends and
other (3,035) (3,039) (6,072) (6,080)
-------- -------- -------- --------
Net income (loss) available to
common shareholders $ 9,005 $ (3,732) $ 11,027 $ (1,517)
======== ======== ======== ========
Basic per share amounts:
Income (loss) from continuing
operations available to
common shareholders $ 0.19 $ (0.08) $ 0.23 $ (0.18)
Total discontinued operations - - - 0.15
Cumulative effect of change in
accounting principle - - - -
-------- -------- -------- --------
Net income (loss) available to
common shareholders per share $ 0.19 $ (0.08) $ 0.23 $ (0.03)
======== ======== ======== ========
Diluted per share amounts:
Income (loss) from continuing
operations available to
common shareholders $ 0.19 $ (0.08) $ 0.23 $ (0.18)
Discontinued operations - - - 0.15
Cumulative effect of change in
accounting principle - - - -
-------- -------- -------- --------
Net income (loss) available to
common shareholders per share $ 0.19 $ (0.08) $ 0.23 $ (0.03)
======== ======== ======== ========
Distributions per common share $ 0.56 $ 0.56 $ 1.12 $ 1.11
======== ======== ======== ========
Table 2: SHURGARD STORAGE CENTERS, INC.
BALANCE SHEET
Condensed Consolidated Balance Sheets as of June 30, 2006 and December
31, 2005
(in thousands except share and per share data)
June 30, Dec. 31,
2006 2005
---------- ----------
ASSETS: (unaudited)
Storage centers:
Operating storage centers $3,402,653 $3,244,258
Less accumulated depreciation (605,228) (552,171)
---------- ----------
Operating storage centers, net 2,797,425 2,692,087
Construction in progress 77,396 67,073
Properties held for sale 3,893 6,774
---------- ----------
Total storage centers 2,878,714 2,765,934
---------- ----------
Cash and cash equivalents 40,938 39,778
Restricted cash 3,236 4,972
Goodwill 27,440 27,440
Other assets 132,038 119,248
---------- ----------
Total assets $3,082,366 $2,957,372
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable and other liabilities $ 153,874 $ 181,435
Lines of credit 626,700 583,500
Notes payable 1,355,320 1,275,720
---------- ----------
Total liabilities 2,135,894 2,040,655
---------- ----------
Minority interest 145,679 116,365
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 shares authorized; 47,434,615
and 47,041,680 shares issued and
outstanding, respectively 47 47
Additional paid-in capital 1,156,916 1,142,288
Accumulated deficit (501,327) (459,586)
Accumulated other comprehensive (loss) income 13,974 (13,580)
---------- ----------
Total shareholders' equity 800,793 800,352
---------- ----------
Total liabilities and shareholders' equity $3,082,366 $2,957,372
========== ==========
Table 3: SHURGARD STORAGE CENTERS, INC.
FUNDS FROM OPERATIONS (unaudited)
FFO Reconciliation for the three and six months ended
June 30, 2006 and 2005
(in thousands except per share data)
Three months Six months
ended June 30, ended June 30,
----------------- -----------------
2006 2005 2006 2005
------- ------- ------- -------
Net income (1) $12,040 $ (693) $17,099 $ 4,563
Depreciation and amortization (2) 21,942 19,130 44,214 38,865
Loss (gain) on sale of operating
properties (10) - 71 (6,423)
Cumulative effect of change in
accounting principle - - 200 -
------- ------- ------- -------
FFO 33,972 18,437 61,584 37,005
Preferred dividends and other (3,011) (3,039) (6,025) (6,080)
------- ------- ------- -------
FFO attributable to common
shareholders - Diluted $30,961 $15,398 $55,559 $30,925
======= ======= ======= =======
Weighted-average number of basic
shares 47,220 46,600 47,089 46,557
Effect of dilutive stock based
awards 1,102 697 1,185 685
------- ------- ------- -------
Weighted-average number of diluted
shares 48,322 47,297 48,274 47,242
======= ======= ======= =======
FFO per share - Diluted $ 0.64 $ 0.33 $ 1.15 $ 0.65
======= ======= ======= =======
Distributions per common share $ 0.56 $ 0.56 $ 1.12 $ 1.11
======= ======= ======= =======
(1) Net income includes the following:
Q2 2006 Q2 2005 Q2 2006 Q2 2005
QTD QTD YTD YTD
-----------------------------------
Foreign exchange gain (loss) 378 (5,715) 503 (9,563)
-------- -------- -------- -------
Costs related to proposed merger (1,363) - (2,828) -
-------- -------- -------- -------
(2) 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.
SEGMENT TOTALS (unaudited)
Segment Totals for the three and six months ended
June 30, 2006 and 2005
(in thousands)
Domestic Domestic Europe Europe
Same New Same New
Three months ended June 30, 2006 Store Store Store Store
--------- -------- -------- --------
Storage center operations revenue $ 91,242 $3,994 $34,832 $ 5,097
Direct operating expense 29,896 1,605 13,998 4,373
-------- ------ ------- -------
Net operating income (loss) 61,346 2,389 20,834 724
-------- ------ ------- -------
Indirect operating expense 4,435 231 3,115 1,027
Leasehold expense 1,053 176 685 419
-------- ------ ------- -------
Indirect and leasehold expense 5,488 407 3,800 1,446
-------- ------ ------- -------
Net operating income (loss) after
indirect and leasehold expense $ 55,858 $1,982 $17,034 $ (722)
======== ====== ======= =======
Domestic Domestic Europe Europe
Same New Same New
Three months ended June 30, 2005 Store Store Store Store
--------- -------- -------- --------
Storage center operations revenue $ 85,615 $1,589 $29,871 $ 1,032
Direct operating expense 28,643 845 14,166 1,692
-------- ------ ------- -------
Net operating income (loss) 56,972 744 15,705 (660)
-------- ------ ------- -------
Indirect operating expense 4,726 153 4,354 713
Leasehold expense 1,029 31 576 6
-------- ------ ------- -------
Indirect and leasehold expense 5,755 184 4,930 719
-------- ------ ------- -------
Net operating income (loss) after
indirect and leasehold expense $ 51,217 $ 560 $10,775 $(1,379)
======== ====== ======= =======
Domestic Domestic Europe Europe
Same New Same New
Six months ended June 30, 2006 Store Store Store Store
--------- -------- -------- --------
Storage center operations revenue $178,825 $7,542 $66,955 $ 8,611
Direct operating expense 60,503 3,186 27,921 8,377
-------- ------ ------- -------
Net operating income (loss) 118,322 4,356 39,034 234
-------- ------ ------- -------
Indirect operating expense 9,184 459 5,739 1,897
Leasehold expense 2,055 338 1,339 735
-------- ------ ------- -------
Indirect and leasehold expense 11,239 797 7,078 2,632
-------- ------ ------- -------
Net operating income (loss) after
indirect and leasehold expense $107,083 $3,559 $31,956 $(2,398)
======== ====== ======= =======
Domestic Domestic Europe Europe
Same New Same New
Six months ended June 30, 2005 Store Store Store Store
--------- -------- -------- --------
Storage center operations revenue $166,756 $2,242 $59,588 $ 1,753
Direct operating expense 57,964 1,388 29,375 3,344
-------- ------ ------- -------
Net operating income (loss) 108,792 854 30,213 (1,591)
-------- ------ ------- -------
Indirect operating expense 9,157 244 8,852 1,298
Leasehold expense 2,158 66 1,179 6
-------- ------ ------- -------
Indirect and leasehold expense 11,315 310 10,031 1,304
-------- ------ ------- -------
Net operating income (loss) after
indirect and leasehold expense $ 97,477 $ 544 $20,182 $(2,895)
======== ====== ======= =======
Discontinued
Three months ended June 30, 2006 Other Stores Stores Total
------------ ------------ ---------
Storage center operations revenue $ - $ - $135,165
Direct operating expense 74 (74) 49,872
----------- ----------- --------
Net operating income (loss) (74) 74 85,293
----------- ----------- --------
Indirect operating expense - - 8,808
Leasehold expense - - 2,333
----------- ----------- --------
Indirect and leasehold expense - - 11,141
----------- ----------- --------
Net operating income (loss) after
indirect and leasehold expense $ (74) $ 74 $ 74,152
=========== =========== ========
Discontinued
Three months ended June 30, 2005 Other Stores Stores Total
------------ ------------ ---------
Storage center operations revenue $ 375 $ (364) $118,118
Direct operating expense 133 (120) 45,359
----------- ----------- --------
Net operating income (loss) 242 (244) 72,759
----------- ----------- --------
Indirect operating expense 26 (31) 9,941
Leasehold expense - - 1,642
----------- ----------- --------
Indirect and leasehold expense 26 (31) 11,583
----------- ----------- --------
Net operating income (loss) after
indirect and leasehold expense $ 216 $ (213) $ 61,176
=========== =========== ========
Discontinued
Six months ended June 30, 2006 Other Stores Stores Total
------------ ------------ ---------
Storage center operations revenue $ 98 $ (98) $261,933
Direct operating expense 104 (104) 99,987
----------- ----------- --------
Net operating income (loss) (6) 6 161,946
----------- ----------- --------
Indirect operating expense - - 17,279
Leasehold expense - - 4,467
----------- ----------- --------
Indirect and leasehold expense - - 21,746
----------- ----------- --------
Net operating income (loss) after
indirect and leasehold expense $ (6) $ 6 $140,200
=========== =========== ========
Other Discontinued
Six months ended June 30, 2005 Stores Stores Total
------------ ------------ ---------
Storage center operations revenue $ 800 $ (783) $230,356
Direct operating expense 312 (289) 92,094
----------- ----------- --------
Net operating income (loss) 488 (494) 138,262
----------- ----------- --------
Indirect operating expense 66 (65) 19,552
Leasehold expense - - 3,409
----------- ----------- --------
Indirect and leasehold expense 66 (65) 22,961
----------- ----------- --------
Net operating income (loss) after
indirect and leasehold expense $ 422 $ (429) $115,301
=========== =========== ========
Table 5: SHURGARD STORAGE CENTERS, INC.
RECONCILIATION OF SEGMENT NOI TO INCOME FROM CONTINUING
OPERATIONS (unaudited)
Reconciliation of Segment NOI to income from continuing operations for
the three and six months ended June 30, 2006 and 2005
(in thousands)
Three months Six months
ended June 30, ended June 30,
------------------- -------------------
2006 2005 2006 2005
-------- -------- -------- --------
NOI after indirect and
leasehold expense $ 74,152 $ 61,176 $140,200 $115,301
Other revenue 1,089 1,350 1,931 2,736
Other operating expense, net (497) (870) (871) (1,835)
Real estate development
expense (1,945) (2,713) (3,615) (5,643)
Depreciation and amortization (26,342) (23,252) (52,265) (46,596)
Impairment and abandoned
project expense (255) (868) (800) (1,191)
General, administrative and
other (7,018) (10,914) (14,471) (18,943)
Costs related to proposed
merger (1,363) - (2,828) -
Interest expense (30,845) (25,485) (60,249) (49,610)
Gain (loss) on derivatives,
net 418 (1,353) 1,109 (1,712)
Foreign exchange gain (loss) 378 (5,715) 503 (9,563)
Interest income and other, net 464 1,270 869 2,230
Minority interest 3,953 6,876 7,886 12,986
Equity in earnings of other
real estate investments, net - 12 - 33
Income tax expense (75) (379) (94) (389)
-------- -------- -------- --------
Income (loss) from continuing
operations $ 12,114 $ (865) $ 17,305 $ (2,196)
======== ======== ======== ========
Table 6: SHURGARD STORAGE CENTERS, INC.
SEGMENT EXCHANGE RATE DIFFERENCES (unaudited)
Segment exchange rate differences for
the three and six months ended June 30, 2005
(in thousands)
Three months ended Europe New Exchange
June 30, 2005 Store (1) Difference Total (2)
----------- ---------- ---------
Segment revenue $ 1,027 $ 5 $ 1,032
Direct operating and real estate tax
expense 1,681 11 1,692
---------- --------- --------
NOI (654) (6) (660)
Leasehold expense 6 - 6
---------- --------- --------
NOI after leasehold expense (660) (6) (666)
Indirect operating expense 710 3 713
---------- --------- --------
NOI after indirect and leasehold
expense $ (1,370) $ (9) $ (1,379)
========== ========= ========
Three months ended Europe Same Exchange
June 30, 2005 Store (1) Difference Total (2)
----------- ---------- ---------
Segment revenue $ 29,646 $ 225 $ 29,871
Direct operating and real estate tax
expense 14,063 103 14,166
---------- --------- --------
NOI 15,583 122 15,705
Leasehold expense 572 4 576
---------- --------- --------
NOI after leasehold expense 15,011 118 15,129
Indirect operating expense 4,341 13 4,354
---------- --------- --------
NOI after indirect and leasehold
expense $ 10,670 $ 105 $ 10,775
========== ========= ========
Six months ended Europe New Exchange
June 30, 2005 Store (3) Difference Total (4)
----------- ---------- ---------
Segment revenue $ 1,688 $ 65 $ 1,753
Direct operating and real estate tax
expense 3,198 146 3,344
---------- --------- --------
NOI (1,510) (81) (1,591)
Leasehold expense 6 - 6
---------- --------- --------
NOI after leasehold expense (1,516) (81) (1,597)
Indirect operating expense 1,247 51 1,298
---------- --------- --------
NOI after indirect and leasehold
expense $ (2,763) $ (132) $ (2,895)
========== ========= ========
Six months ended Europe Same Exchange
June 30, 2005 Store (3) Difference Total (4)
----------- ---------- ---------
Segment revenue $ 56,780 $ 2,808 $ 59,588
Direct operating and real estate tax
expense 27,956 1,419 29,375
---------- --------- --------
NOI 28,824 1,389 30,213
Leasehold expense 1,120 59 1,179
---------- --------- --------
NOI after leasehold expense 27,704 1,330 29,034
Indirect operating expense 8,463 389 8,852
---------- --------- --------
NOI after indirect and leasehold
expense $ 19,241 $ 941 $ 20,182
========== ========= ========
(1) Amounts are translated from local currencies to U.S. dollars using
the average exchange rate for the second quarter of 2006 for the
purpose of comparison with 2006 results.
(2) Amounts are translated from local currencies to U.S. dollars using
the average exchange rate for the second quarter of 2005.
(3) Amounts are translated from local currencies to U.S. dollars using
the average exchange rate for the first six months of 2006 for the
purpose of comparison with 2006 results.
(4) Amounts are translated from local currencies to U.S. dollars using
the average exchange rate for the first six months of 2005.
*T