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
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