U-Store-It Packs in the Revenue

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Benefiting from 15 self-storage facilities acquisitions since September 2007 and an increase in same-store revenue, U-Store-It Trust's (YSI Quote) third-quarter fiscal 2008 total revenue increased 8.3% to $60.75 million from $56.10 million in third-quarter 2007.

Rental income increased 8.2% to $56.08 million a result of increases in effective rental rates and additional rental income from the 2007 and 2008 acquisitions. Other property-related income improved 14.1% to $4.64 million.

On a same-store facilities basis, revenue notched up 4.3% to $56.83 million, driven by a 3.7% rise in same-store rental income and an 11.9% growth in other property-related income. Same-store net operating income increased 6.5% to $34.76 million. Realized annual revenue per occupied square foot rose 3.7% to $10.87. In-place annual rent per square foot grew 1.7% to $12.43.

Property operating expenses increased 7.0% to $25.77 million, while depreciation and amortization expenses soared 16.9% to $19.42 million. As a result, operating margin dropped 200 basis points to 15.99% from 17.99% a year ago. In addition, interest expenses declined 6.0% to $13.27 million due to a reduction in outstanding debt and lower interest rates. Interest coverage ratio edged up to 0.73 from 0.72.

Finally, the company swung to a net income of $4.02 million from a net loss of $4.13 million in third-quarter 2007, boosted by a gain of $7.54 million on a disposition of discontinued operations. However, on a per share basis, net loss stood at 6 cents compared to 8 cents a year ago. Excluding the gain, YSI recorded a loss from continuing operations of $3.22 million.

However, funds from operations (FFO), adjusted for nonrecurring charges, grew 18.7% to $16.25 million or 26 cents per share and unit from $13.69 million or 22 cents per share and unit. This per share FFO was negatively affected by a 1 cent per share of acquisition-related costs linked with development assets and the lease-up portfolio acquired during 2007.

Cash and cash equivalents dwindled 16.5% to $21.16 million. Return on equity deteriorated to a negative 3.76% from a negative 3.06%, while return on assets was a negative 0.34% compared to a negative 0.76%. Total shareholders' equity dipped 7.6% to $528.61 million, whereas total debt slipped 2.7% to $991.38 million. Concurrently, the debt-to-equity ratio worsened to 1.88 from 1.78 a year ago.

During third-quarter 2008, the company disposed nine facilities for aggregate proceeds of $28.00 million and gained $7.50 million as a part of an asset disposition program. The company paid a dividend of 18 cents per share for third-quarter 2008, compared to 29 cents per share in third-quarter 2007.

Recently, U-Store-It closed three additional sales since the end of the quarter for an aggregate sale price of $7.20 million. U-Store-It declared a dividend of 2.5 cents per share for fourth-quarter 2008.

Looking forward to fourth-quarter 2008, the company expects diluted FFO to be in the range of 23 cents to 24 cents and net loss between 5 cents and 6 cents per share. For 2008, U-Store-It projects FFO per share to be in the range of 96 cents to 97 cents and net loss per share to be between 4 cents and 5 cents. In addition, same-store average occupancy is projected to be in the range of 80.0% to 82.0%, with same-store revenue growth of 4.0% to 4.5%.

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