Shurgard Announces Acquisition of Remaining Interest in Shurgard Europe
01 July 2005 - 6:06AM
Business Wire
Shurgard Storage Centers, Inc. (NYSE:SHU), a leading self-storage
real estate investment trust (REIT) in the United States and
Europe, announced it has acquired today the 12.77% interest in
Shurgard Europe held by entities affiliated with Fremont Realty
Capital for a purchase price of EUR 80 million (approximately $97
million) in cash. In connection with the acquisition, the Company
also announced the increase of its credit facility by $150 million.
With this acquisition, Shurgard Europe is now a wholly-owned
subsidiary of Shurgard. Shurgard Europe, the largest owner and
operator of self-storage in Europe, has been operating for over ten
years. It owns, or has an interest in, approximately 140
self-storage properties in principal cities throughout Western
Europe. Commenting on the transaction, Dave Grant, Shurgard
president and chief operating officer, said, "This concludes a very
successful phase in our European venture for both Shurgard and its
capital partners. This group of investors joined us in 1999 when we
had less than 20 stores in Europe. With their support over these
past years, we have succeeded in building a great portfolio of
properties that has established us as the clear leader in the
self-storage industry in Europe. We are also now well positioned to
continue to capitalize on long-term growth opportunities that lay
in front of us." "Fremont has been an active participant in
Shurgard Europe's development during its 5 1/2 years as a
shareholder," said Matthew Reidy, Managing Director of Fremont
Realty Capital in San Francisco. He added, "Our success with this
investment is a direct result of the tireless efforts of a great
management team that continues to capitalize on one of the best
market opportunities in real estate today: self-storage in Europe."
The investment was Fremont's third with Shurgard following two
successful joint ventures involving the expansion of Shurgard's
U.S. portfolio. Fremont Realty Capital is the real estate merchant
banking subsidiary of Fremont Group, a private investment firm
based in San Francisco, California. Mr. Grant continued,
"Additionally, now that we fully own and control Shurgard Europe,
we will be able to take full advantage of numerous opportunities we
see to integrate operations with the U.S. group and gain economies
of scale. In anticipation of this acquisition, the Company has
already begun to streamline some of the management and overhead
positions." The acquisition of the Fremont interest will be
dilutive to earnings and Funds From Operations (FFO) in the
short-term, since the acquisition was financed by borrowings under
the Company's term facility discussed below. Management projects
that FFO for the balance of 2005 will be reduced by about $0.05 per
share. Additionally, the Company anticipates reporting one-time
charges in connection with the integration process of approximately
$1.3 million or $0.03 per share of FFO in the second quarter with
an additional $500,000 estimated over the balance of 2005. In
addition to the increase in the credit facility, the Company also
announced the amendment of its term facility to extend its maturity
to February 14, 2008, the same maturity date as the existing
revolving credit facility. Harrell Beck, executive vice president
and chief investment officer, said, "The increase in the credit
facility gives us the flexibility to finance the acquisition of the
Fremont interest and demonstrates continued confidence in the
Company's business strategy from our bank group. Management felt
that the current liquidity in the bank market represented a great
opportunity for the Company to extend the term of some of its bank
debt at attractive rates." Mr. Beck also stated, "We are also
evaluating a number of other longer-term financing options,
especially given the exceptional interest in the self-storage asset
class, evidenced by recent transactions in the sector." About
Shurgard Storage Centers, Inc. Shurgard Storage Centers, Inc. is a
real estate investment trust headquartered in Seattle, Washington.
Shurgard specializes in all aspects of the self-storage industry
and operates a network of over 630 operating storage centers
located throughout the United States and in Europe. Cautionary and
Forward-Looking Statements This press release contains statements
that are not based on historical fact and are "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. 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 projections for
2005 and beyond; 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, depending on a variety of factors
including, but not limited to, Shurgard's ability to implement its
business strategy, competition in the market, as well as other risk
factors as described more fully in Shurgard's Annual Report on Form
10-K for the year ended December 31, 2004, filed with the
Securities and Exchange Commission on March 29, 2005 and its report
on Form 10-Q for the quarter ended March 31, 2005, filed on May 10,
2005. 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 herein.
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