Ahead Of The Bell: U-Store-It Offering

HARTFORD, Conn. (AP) — U-Store-It Trust, which provides business and personal self-storage facilities, is on the right track as it seeks to reduce its debt, but refinancing costs could cut into earnings, an analyst said Thursday.

The Wayne, Pa., company said Wednesday it will offer 22 million shares and up to 3.3 million more shares to cover overallotments, if any. The proceeds will be used to pay down debt, the company said.

KeyBanc analyst Todd M. Thomas said the offering will raise about $110 million. U-Store-It shares closed at $5.78 Wednesday.

The share offering, in addition to other recent initiatives, will "further support management's effort to bring down leverage," Thomas said in a client note.

While U-Store-It's actions are "another step in the right direction," revenue and earnings for the industry will erode for the rest of the year, early 2010 and perhaps longer, Thomas said.

And he said he does not believe the true cost of refinancing and paying down debt is reflected in U-Store-It's stock price, with downward pressure on earnings possible in the next few quarters.