-- Seasonal declines in both the same-store and total portfolio occupancy from those levels at September 30, 2006 -- The closing of the credit facilities as outlined in this release -- General and Administrative expenses of $4.9-$5.0 million -- Increases in Libor of 25 basis points during the quarterChief Financial Officer Christopher Marr said, "We continue to implement our strategy of focusing on our people, systems and processes and making prudent changes where deemed necessary. In the last four months we added key personnel, completed a software implementation and lowered the cost of our short-term borrowing while meeting or exceeding our stated financial goals." 2007 Financial Outlook The Company will present its financial outlook for 2007 in an announcement it intends to make in January, following the completion of its strategic review and budget process. Distributions On November 3, 2006 the Board of Directors declared a quarterly distribution of $0.29 per share, payable on January 22, 2007 to shareholders of record on January 8, 2007. Conference Call Management will host a conference call at 11:00 a.m. EST on Tuesday, November 7, 2006 to discuss financial results for the three months ended September 30, 2006. A live webcast of the conference call will be available online from the investor relations page of the Company's corporate website at www.u-store-it.com. The dial-in numbers are (800) 810-0924 for domestic callers and (913) 981-4900 for international callers. The reservation number for both is 4851221. After the live webcast, the call will remain available on U-Store-It's website for thirty days. In addition, a telephonic replay of the call will be available until November 12, 2006. The replay dial-in number is (888) 203-1112 for domestic callers, (719) 457-0820 for international callers. The replay reservation number is 4851221. Supplemental operating and financial data as of September 30, 2006 is available on our corporate website under the heading "Investor Relations and Corporate Information." About U-Store-It Trust U-Store-It Trust is a self-administered and self-managed real estates investment trust. The Company's self-storage facilities are designed to offer affordable, easily-accessible and secure storage space for residential and commercial customers. According to the Self-Storage Almanac, U-Store-It Trust is one of the top five owners and operators of self-storage facilities in the United States. Non-GAAP Performance Measurements FFO is a widely used performance measure for real estate companies and is provided here as a supplemental measure of operating performance. The Company calculates FFO in accordance with the best practices described in the April 2002 National Policy Bulletin of the National Association of Real Estate Investment Trusts (the "White Paper"). The White Paper defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Management uses FFO as a key performance indicator in evaluating the operations of the Company's facilities. Given the nature of its business as a real estate owner and operator, the Company considers FFO a key measure of its operating performance that is not specifically defined by accounting principles generally accepted in the United States ("GAAP"). The Company believes that FFO is useful to management and investors as a starting point in measuring its operational performance because it excludes various items included in net income that do not relate to or are not indicative of its operating performance such as gains (or losses) from sales of property and depreciation and amortization, which can make periodic and peer analyses of operating performance more difficult. FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indicator of the Company's financial performance, is not an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company's liquidity, and is not indicative of funds available to fund the Company's cash needs, including its ability to make distributions. The Company discloses AFFO, excluding the costs incurred in the three months and nine months ended September 30, 2006 to write off unamortized loan fees associated with the early extinguishment of debt, write off of software costs and severance costs. The Company discloses AFFO due to the significance and infrequent nature of the charges. Given the significance of these charges, the Company believes it is essential to a reader's understanding of the Company's results of operations to emphasize the impact on the Company's operating performance measures. AFFO is not and should not be considered an alternative to net income (loss) or cash flows from operating, investing, or financing activities as defined by GAAP. Net operating income, which we refer to as "NOI," is defined as total continuing revenues less continuing property operating expenses. NOI also can be calculated by adding back to net income: interest expense, loan procurement amortization expense, early extinguishment of debt, minority interest, loss on sale of storage facilities, other depreciation and general and administrative expense, and deducting from net income: income from discontinued operations, gains on sale of self-storage facilities, and interest income. Management uses NOI as a measure of operating performance at each of our facilities, and for all of our facilities in the aggregate. NOI should not be considered as a substitute for operating income, net income, cash flows provided by operating, investing and financing activities, or other income statement or cash flow statement data prepared in accordance with GAAP. Forward-Looking Statements Certain statements in this release that are not historical fact may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results of the Company to differ materially from historical results or from any results expressed or implied by such forward-looking statements, including without limitation: national and local economic, business, real estate and other market conditions; the competitive environment in which the Company operates; the execution of the Company's business plan; financing risks; increases in interest rates and operating costs; the Company's ability to maintain its status as a REIT for federal income tax purposes; acquisition and development risks; changes in real estate and zoning laws or regulations; risks related to natural disasters; potential environmental and other liabilities; and other factors affecting the real estate industry generally or the self-storage industry in particular. The Company refers you to the documents filed by the Company from time to time with the Securities and Exchange Commission, specifically the section titled "Business - Risk Factors" in the Company's Annual Report on Form 10-K, which discuss these and other risks and factors that could cause the Company's actual results to differ materially from any forward-looking statements.
U-STORE-IT TRUST AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Dollars in thousands, except par value September 30, December 31, amount) 2006 2005 ------------- ------------- ASSETS Storage facilities-net $ 1,577,971 $ 1,246,295 Cash and cash equivalents 15,900 201,098 Restricted cash 14,714 14,672 Loan procurement costs - net of amortization 7,541 10,437 Other assets 8,639 8,986 ------------- ------------- TOTAL ASSETS $ 1,624,765 $ 1,481,488 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES Revolving credit facility $ 170,500 $ - Loans payable 693,694 669,282 Accounts payable and accrued expenses 22,349 18,928 Distributions payable 18,124 16,624 Deferred revenue 10,365 8,857 Security deposits 682 685 ------------- ------------- Total liabilities 915,714 714,376 COMMITMENTS AND CONTINGENCIES MINORITY INTERESTS 58,985 64,108 SHAREHOLDERS' EQUITY Common shares $.01 par value, 200,000,000 shares authorized, 57,295,490 and 57,010,162 shares issued and outstanding at September 30, 2006 and December 31, 2005, respectively 573 570 Additional paid in capital 797,039 793,687 Accumulated deficit (147,546) (91,253) ------------- ------------- Total shareholders' equity 650,066 703,004 ------------- ------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,624,765 $ 1,481,488 ============= ============= U-STORE-IT TRUST AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Three Months Ended Nine Months Ended September 30, September 30, (Dollars and shares in -------------------- -------------------- thousands, except per share 2006 2005 2006 2005 data) --------- --------- --------- --------- REVENUES: Rental income $ 52,562 $ 38,561 $ 147,444 $ 97,638 Other property related income 3,844 2,742 10,563 7,164 --------- --------- --------- --------- Total revenues 56,406 41,303 158,007 104,802 OPERATING EXPENSES: Property operating expenses 21,978 14,651 61,792 37,426 Property operating expenses - related party 15 11 47 46 Depreciation 16,405 10,868 46,811 27,633 Asset write-off 307 - 307 - General and administrative 7,289 3,494 16,810 9,444 General and administrative - related party 73 192 523 496 --------- --------- --------- --------- Total operating expenses 46,067 29,216 126,290 75,045 OPERATING INCOME 10,339 12,087 31,717 29,757 OTHER INCOME (EXPENSE) Interest: Interest expense on loans (12,009) (9,706) (32,986) (22,655) Loan procurement amortization expense (529) (570) (1,505) (1,328) Write-off of loan procurement cost due to early extinguishment of debt - - (1,273) - Interest income 95 80 1,138 137 Other (13) (31) (73) (74) --------- --------- --------- --------- Total other expense (12,456) (10,227) (34,699) (23,920) INCOME (LOSS) BEFORE MINORITY INTERESTS (2,117) 1,860 (2,982) 5,837 MINORITY INTERESTS 176 (195) 249 (351) --------- --------- --------- --------- NET INCOME (LOSS) $ (1,941) $ 1,665 $ (2,733) $ 5,486 ========= ========= ========= ========= Basic earnings (loss) per share $ (0.03) $ 0.04 $ (0.05) $ 0.15 Diluted earnings (loss) per share $ (0.03) $ 0.04 $ (0.05) $ 0.15 Weighted-average basic shares outstanding 57,351 37,492 57,308 37,492 Weighted-average diluted shares outstanding 57,351 37,634 57,308 37,554 ========= ========= ========= ========= Distributions declared per common share $ 0.29 $ 0.28 $ 0.87 $ 0.84 ========= ========= ========= ========= Same Store Facility Results (199 facilities) Three months ended Nine months ended September 30, Percent September 30, Percent (Dollars in --------------------- --------------------- thousands, except 2006 2005 Change 2006 2005 Change for square feet) ---------- ---------- ------- ---------- ---------- ---- Rental income $ 29,000 $ 27,920 $ 85,677 $ 82,102 Other operating income 1,299 1,279 3,851 3,820 ---------- ---------- ---------- ---------- Total revenues 30,299 29,199 3.8% 89,528 85,922 4.2% Property operating expenses Property taxes 3,463 2,117 63.6% 10,177 8,493 19.8% Personnel expense 3,135 2,914 7.6% 9,274 8,873 4.5% Advertising 723 811 (10.9%) 2,139 2,005 6.7% Repair and maintenance 349 281 24.2% 935 650 43.8% Utilities 1,152 1,117 3.1% 3,478 3,214 8.2% Property insurance 543 353 53.8% 1,288 1,004 28.3% Other expenses 1,509 1,628 (7.3%) 4,710 4,515 4.3% ---------- ---------- ---------- ---------- Total property operating expenses 10,874 9,221 17.9% 32,001 28,754 11.3% ---------- ---------- ---------- ---------- Net Operating Income (a) $ 19,425 $ 19,978 (2.8%) $ 57,527 $ 57,168 0.6% ========== ========== ========== ========== Gross margin 64.1% 68.4% 64.3% 66.5% Period average occupancy (b) 82.0% 83.8% 81.9% 82.7% Period end occupancy (c) 81.0% 83.6% 81.0% 83.6% Total net rentable square feet 12,890,822 12,890,822 12,890,822 12,890,822 Realized annual rent per occupied square foot (d) $ 10.97 $ 10.34 6.1% $ 10.81 $ 10.27 5.3% In place annual rent per square foot (e) $ 12.99 $ 11.78 10.3% $ 12.51 $ 11.64 7.5% Reconciliation of Same Store Net Operating Income to Operating Income Three months ended Nine months ended September 30, September 30, --------------------- --------------------- 2006 2005 2006 2005 ---------- ---------- ---------- ---------- Same store net operating income(a) $ 19,425 $ 19,978 $ 57,527 $ 57,168 Non same store net operating income(a) 14,988 6,663 38,641 10,162 Depreciation (16,405) (10,868) (46,811) (27,633) Asset write-off (307) - (307) - General and administrative expense (7,362) (3,686) (17,333) (9,940) ---------- ---------- ---------- ---------- Operating income $ 10,339 $ 12,087 $ 31,717 $ 29,757 ========== ========== ========== ========== a - Net operating income (NOI) is a non-GAAP (generally accepted accounting principles) financial measure that excludes the impact of depreciation and general & administrative expense. Although depreciation and general & administrative expense are operating expenses, we believe that NOI is a meaningful measure of operating performance, because we utilize NOI in making decisions with respect to capital allocations, in determining current property values, and comparing period-to-period and market-to-market property operating results. NOI is not a substitute for operating income as determined in accordance with GAAP in evaluating our operating results. b - Square foot occupancy represents the weighted average occupancy for the period. c - Represents occupancy at September 30. d - Realized annual rent per occupied square foot is computed by dividing rental income by the weighted average occupied square feet for the period. e - In place annual rent per square foot represents annualized contractual rents per average square feet for the period. NON-GAAP FINANCIAL MEASURES - COMPUTATION OF FUNDS FROM OPERATIONS ("FFO") (unaudited) Three Months Ended Nine Months Ended September 30, September 30, (Dollars and shares in thousands ------------------ ------------------ except per share data) 2006 2005 2006 2005 -------- -------- -------- -------- Net income (loss) $ (1,941) $ 1,665 $ (2,733) $ 5,486 Plus: Real Estate Depreciation 16,243 10,868 46,339 27,633 Minority Interest (176) 195 (249) 351 -------- -------- -------- -------- FFO - Operating partnership $ 14,126 $ 12,728 $ 43,357 $ 33,470 FFO - Allocable to minority interest $ (1,176) $ (1,173) $ (3,615) $ (2,011) -------- -------- -------- -------- FFO - Allocable common shareholders $ 12,950 $ 11,555 $ 39,742 $ 31,459 ======== ======== ======== ======== Weighted-average diluted shares outstanding (1) 57,431 37,634 57,418 37,554 Funds From Operations per share $ 0.23 $ 0.31 $ 0.69 $ 0.84 Reconciliation of Dilutive Income per Share to Funds From Operations per share: Dilutive income per share $ (0.03) $ 0.05 $ (0.05) $ 0.15 Adjustments: Real Estate Depreciation 0.29 0.29 0.81 0.74 Funds attributable to minority shareholders (0.03) (0.03) (0.07) (0.05) -------- -------- -------- -------- Funds from operations per share $ 0.23 $ 0.31 $ 0.69 $ 0.84 ======== ======== ======== ======== (1) The weighted average number of shares for the three and nine months ended September 30, 2006 include approximately 0.1 million shares related to certain equity awards issued that are dilutive for FFO. NON-GAAP FINANCIAL MEASURES - COMPUTATION OF ADJUSTED FUNDS FROM OPERATIONS ("AFFO") (unaudited) Three Months Ended Nine Months Ended September 30, September 30, (Dollars and shares in thousands ------------------ ------------------ except per share data) 2006 2005 2006 2005 -------- -------- -------- -------- Net income (loss) $ (1,941) $ 1,665 $ (2,733) $ 5,486 Plus: Real Estate Depreciation 16,243 10,868 46,339 27,633 Severance Costs and Other 2,289 - 2,289 - Non-Cash Loan Procurement Cost Write-off - - 1,273 - Non-Cash Software Write-off 307 - 307 - Minority Interest (176) 195 (249) 351 -------- -------- -------- -------- AFFO - Operating partnership $ 16,722 $ 12,728 $ 47,226 $ 33,470 AFFO - Allocable to minority interest $ (1,393) $ (1,173) $ (3,937) $ (2,011) -------- -------- -------- -------- AFFO - Allocable common shareholders $ 15,329 $ 11,555 $ 43,289 $ 31,459 ======== ======== ======== ======== Weighted-average diluted shares outstanding (1) 57,431 37,634 57,418 37,554 Adjusted Funds From Operations per share $ 0.27 $ 0.31 $ 0.75 $ 0.84 Reconciliation of Dilutive Income per Share to Adjusted Funds From Operations per share: Dilutive income per share $ (0.03) $ 0.05 $ (0.05) $ 0.15 Adjustments: Real Estate Depreciation 0.28 0.29 0.80 0.74 Severance Costs and Other 0.04 - 0.04 - Non-Cash Loan Procurement Cost Write-off - - 0.02 - Non-Cash Software Write-off 0.01 - 0.01 - Funds attributable to minority shareholders (0.03) (0.03) (0.07) (0.05) -------- -------- -------- -------- Adjusted funds from operations per share $ 0.27 $ 0.31 $ 0.75 $ 0.84 ======== ======== ======== ======== (1) The weighted average number of shares for the three and nine months ended September 30, 2006 include approximately 0.1 million shares related to certain equity awards issued that are dilutive for AFFO.
Contact Information: Contact: U-Store-It Trust Christopher P. Marr Chief Financial Officer (440) 234-0700