SALT LAKE CITY, UT, May 04, 2009 (MARKET WIRE via COMTEX) -- Extra Space Storage Inc. (the "Company") (NYSE: EXR) announced today
operating results for the three months ended March 31, 2009. "In the
first quarter, our properties performed well despite a challenging
operating environment. Although asking rates and occupancy are
experiencing downward pressure, our operations team, aided by further
improvements in our systems and processes, has again done an
excellent job of controlling expenses and optimizing revenue. We've
made good progress on refinancing our upcoming debt maturities and
continue to see interest from financial institutions in our
refinancing efforts," said Spencer F. Kirk, Chairman and CEO of Extra
Space Storage Inc.
Highlights for the Three Months Ended March 31, 2009:
-- The Company's funds from operations ("FFO") for the three months ended
March 31, 2009, including development dilution of $0.02 per share, was
$0.47 per diluted share. After adjusting to exclude a $0.25 gain on
repurchase of exchangeable senior notes and adding back $0.01 of non-cash
interest charges related to the new accounting pronouncement FASB Staff
Position No. APB 14-1 ("APB 14-1"), FFO was $0.23 per diluted share.
-- The Company's revenue and net operating income ("NOI") at its 252 same-
store portfolio decreased by 0.1% and 0.5%, respectively, when compared to
the three months ended March 31, 2008. Same-store revenue and NOI includes
tenant reinsurance income.
-- The Company secured $67.0 million of financing consisting of a
revolving line of credit of $50.0 million, a term loan of $9.1 million and
a construction loan of $7.9 million.
-- The Company repurchased $71.5 million principal amount of exchangeable
senior notes on the open market resulting in a gain on early extinguishment
of debt of approximately $22.5 million, or $0.25 per share. The gain
includes $0.04 per share of non-cash charges related to the write off of
the discount associated with the repurchased exchangeable senior notes as
required by APB 14-1.
-- The Company declared and paid a quarterly cash dividend of $0.25 per
common share.
At March 31, 2009, the Company operated or had ownership interests
in 698 operating properties, 280 of which were wholly-owned and
consolidated, five of which were held in joint ventures and
consolidated, 343 of which were held in joint ventures and accounted
for using the equity method, and 70 of which were managed and in
which the Company held no ownership interest. This compares to March
31, 2008, at which time the Company operated or had ownership
interests in 654 operating properties, 260 of which were wholly-owned
and consolidated, two of which were held in joint ventures and
consolidated, 345 of which were held in joint ventures and accounted
for using the equity method, and 47 of which were managed and in which
the Company held no ownership interest. Results for both periods
include equity in earnings of real estate joint ventures, management
fees, tenant reinsurance and other income.
FFO Per Share for the Three Months Ended March 31, 2009:
The Company's funds from operations ("FFO") for the three months
ended March 31, 2009, including development dilution of $0.02 per
share, was $0.47 per diluted share. After adjusting to exclude a
$0.25 gain on repurchase of exchangeable senior notes and adding back
$0.01 of non-cash interest charges related to APB 14-1, FFO was $0.23
per diluted share.
On January 1, 2009 the company adopted APB 14-1, which requires
companies to expense certain implied costs of the option value related
to convertible debt. Retrospective adoption of this accounting
standard has resulted in the restatement of certain prior period
numbers.
FFO provides relevant and meaningful information about the Company's
operating performance that is necessary, along with net income and
cash flows, for an understanding of the Company's operating results.
The Company believes FFO is a meaningful disclosure as a supplement
to net earnings. Net earnings assume that the values of real estate
assets diminish predictably over time as reflected through
depreciation and amortization expenses. The values of real estate
assets fluctuate due to market conditions and the Company believes
FFO more accurately reflects the value of the Company's real estate
assets. FFO is defined by the National Association of Real Estate
Investment Trusts, Inc. ("NAREIT") as net income computed in
accordance with accounting principles generally accepted in the
United States ("GAAP"), excluding gains or losses on sales of
operating properties, plus depreciation and amortization and after
adjustments to record unconsolidated partnerships and joint ventures
on the same basis. The Company believes that to further understand
the Company's performance, FFO should be considered along with the
reported net income and cash flows in accordance with GAAP, as
presented in the Company's consolidated financial statements.
For informational purposes, the Company provides FFO adjusted for the
exclusion of gains from early extinguishment of debt and non-cash
interest and other charges related to APB 14-1. Although the
Company's calculation of FFO as adjusted differs from NAREIT's
definition of FFO and may not be comparable to that of other REITs
and real estate companies, the Company believes it provides a
meaningful supplemental measure of operating performance. The
Company believes that by excluding gains from early extinguishment of
debt and non-cash interest and other charges related to APB 14-1,
stockholders and potential investors are presented with an indicator
of its operating performance that more closely achieves the
objectives of the real estate industry in presenting FFO. FFO as
adjusted by the Company should not be considered a replacement of the
NAREIT definition of FFO or used as an alternative to net income as an
indication of the Company's performance, as an alternative to net cash
flow from operating activities, as a measure of liquidity, or as an
indicator of the Company's ability to make cash distributions.
The Company's computation of FFO may not be comparable to FFO
reported by other REITs or real estate companies that do not define
the term in accordance with the current NAREIT definition or that
interpret the current NAREIT definition differently. FFO does not
represent cash generated from operating activities determined in
accordance with GAAP, and should not be considered as an alternative
to net income as an indication of the Company's performance, as an
alternative to net cash flow from operating activities, as a measure
of liquidity, or as an indicator of the Company's ability to make
cash distributions.
The following table sets forth the Company's calculation of FFO and
FFO -- adjusted for the three months ended March 31, 2009 and 2008
(in thousands, except share and per share data):
Three months ended
March 31,
----------------------
2009 2008
---------- ----------
Net income attributable to common stockholders $ 28,974 $ 5,671
Adjustments:
Real estate depreciation 11,430 9,760
Amortization of intangibles 523 1,278
Joint venture real estate depreciation and
amortization 1,395 1,052
Distributions paid on Preferred Operating
Partnership units (1,438) (1,438)
Income allocated to Operating Partnership
non-controlling interest 2,037 510
---------- ----------
Funds from operations $ 42,921 $ 16,833
========== ==========
Adjustments:
Non-cash interest expense related to
amortization of discount on exchangeable senior
notes (APB 14-1) 841 1,029
Gain on repurchase of exchangeable senior notes (22,483) -
---------- ----------
Funds from operations - adjusted $ 21,279 $ 17,862
========== ==========
Diluted funds from operations per share $ 0.47 $ 0.23
========== ==========
Diluted funds from operations per share - adjusted $ 0.23 $ 0.25
========== ==========
Weighted average number of shares - diluted 91,222,295 71,699,461
The following table sets forth a reconciliation of the Company's
calculation of FFO per diluted share to GAAP net income per diluted
share for the three months ended March 31, 2009 and 2008:
For the Three Months
Ended March 31,
------------------------
2009 2008
----------- -----------
Net income $ 0.32 $ 0.08
Income allocated to Operating Partnership
minority interest 0.02 0.01
----------- -----------
Net income attributable to common stockholders
per diluted share 0.34 0.09
Adjustments:
Real estate depreciation 0.12 0.14
Amortization of intangibles 0.01 0.01
Joint venture real estate depreciation and
amortization 0.02 0.01
Distributions paid on Preferred Operating
Partnership units (0.02) (0.02)
----------- -----------
Diluted funds from operations per share $ 0.47 $ 0.23
=========== ===========
Adjustments:
Non-cash interest expense related to
amortization of discount on exchangeable senior
notes (APB 14-1) 0.01 0.02
Gain on repurchase of exchangeable senior notes (0.25) -
----------- -----------
Diluted funds from operations per share -
adjusted $ 0.23 $ 0.25
=========== ===========
Operating Results for the Three Months Ended March 31, 2009:
Total revenues for the three months ended March 31, 2009 were $69.3
million compared to $65.7 million for the three months ended March 31,
2008. Total expenses for the three months ended March 31, 2009 were
$48.0 million compared to $43.7 million for the three months ended
March 31, 2008. Interest expense, including non-cash interest charges
relating to APB 14-1, for the three months ended March 31, 2009 was
$16.6 million compared to $17.4 million for the three months ended
March 31, 2008. Net income for the three months ended March 31, 2009
was $30.8 million compared to $6.0 million for the three months ended
March 31, 2008.
For the three months ended March 31, 2009, the Company's top
performing revenue growth markets were Boston, Columbus, Houston and
San Francisco. Markets performing below the Company's portfolio
average in revenue growth included Las Vegas, Indianapolis, Memphis,
Phoenix and Tampa/St. Petersburg.
Same-Store Property Performance:
The Company's same-store stabilized properties for the three months
ended March 31, 2009 and 2008 consisted of 252 properties that were
wholly-owned and operated and that were stabilized by the first day of
each period. The Company considers a property to be stabilized once
it has been open three years or has sustained average square foot
occupancy of 80.0% or more for one calendar year. These results
provide information relating to property operations without the
effects of acquisitions or completed developments. The results shown
should not be used as a basis for future same-store performance or
for the performance of the Company's properties as a whole.
The following table sets forth the performance of the Company's
same-store properties for the three months ended March 31, 2009 and
2008. (In thousands, except occupancy and property counts. Revenues
include tenant reinsurance income):
Three Months Ended
March 31,
-------------------- Percent
2009 2008 Change
--------- --------- ---------
Same-store rental revenues $ 56,633 $ 56,683 -0.1%
Same-store operating expenses 19,952 19,808 0.7%
Same-store net operating income 36,681 36,875 -0.5%
Non same-store rental revenues 2,776 341 714.1%
Non same-store operating expenses 2,915 833 249.9%
Total rental revenues 59,409 57,024 4.2%
Total operating expenses 22,867 20,641 10.8%
Same-store square foot occupancy as of
quarter end 81.3% 83.7%
Properties included in same-store 252 252
The decrease in same-store rental revenue for the three months ended
March 31, 2009 as compared to the three months ended March 31, 2008
was due to decreased rental rates to incoming customers and a
reduction in occupancy due to lower move-in activity and higher
move-out activity. The increase in same-store operating expenses was
primarily due to increases in property taxes.
Balance Sheet:
During the quarter, the Company secured $67.0 million of financing
consisting of a revolving line of credit of $50.0 million, a term
loan of $9.1 million and a construction loan of $7.9 million.
As of March 31, 2009, the Company's total debt, including notes
payable, notes payable to trusts, exchangeable senior notes and lines
of credit, was $1.3 billion, compared to $1.3 billion at March 31,
2008. Total cash as of March 31, 2009 was $54.5 million. The
Company's percentage of total fixed rate debt to total debt was
81.7%. The weighted average interest rate was 5.2% for fixed rate
loans and 1.8% for variable rate loans. The weighted average interest
rate of all fixed and variable rate loans was 4.6%.
Subsequent to the end of the quarter, the Company closed three term
loans for $38.4 million secured by unleveraged, stabilized properties.
In addition, the Company closed two construction loans for $8.0
million.
Repurchase of Exchangeable Senior Notes:
During March 2009, the Company repurchased $71.5 million principal
amount of exchangeable senior notes for approximately $44.5 million.
The repurchases resulted in a gain on early extinguishment of debt of
approximately $22.5 million, or $0.25 per share, for the three months
ended March 31, 2009. The gain includes non-cash charges related to
the write off of the discount associated with the repurchased
exchangeable senior notes of $0.04 per share as required by APB 14-1.
First Quarter 2009 Dividend Paid - Dividend Adjusted for Remainder of
Fiscal 2009:
On February 17, 2009, the Company's board of directors declared a
quarterly cash dividend of $0.25 per share on the common stock of the
Company for the first quarter of 2009. The dividend was paid on
March 31, 2009 to stockholders of record at the close of business on
March 13, 2009.
On April 6, 2009, the Company's board of directors announced dividend
modifications for the remainder of fiscal 2009. The Company does not
expect to distribute a dividend in the second or third quarter of
2009. The Company expects to pay an estimated fourth quarter dividend
of between $0.24 and $0.30 per share using a combination of
approximately 10.0% cash and 90.0% common stock, as allowed by the
Internal Revenue Service Revenue Procedure 2009-15, to fully
distribute its 2009 net taxable income. The fourth quarter dividend,
when combined with the first quarter 2009 cash dividend, is expected
to satisfy REIT distribution requirements. The Company reserves the
right to change the percentage of the fourth quarter dividend that it
pays in cash, including paying such dividend entirely in cash if that
is determined to be in the best interest of stockholders.
The Company currently estimates its annual net taxable income for
2009 to be between $45.0 million and $50.0 million and that its total
annual distributions for 2009 will be between $0.27 and $0.28 per
share in cash and between $0.22 and $0.27 per share in stock. The
adjustment to the dividend for the remainder of 2009 will enable the
Company to retain up to approximately $67.0 million of additional
liquidity, depending on the proportion of the fourth quarter dividend
that is distributed in cash, or stock in lieu of cash.
Outlook:
The Company currently estimates that fully diluted FFO per share
adjusted for the three months ending June 30, 2009 will be between
$0.21 and $0.23 including lease-up dilution of $0.02 per share. For
the year ending December 31, 2009, the Company currently estimates
that fully diluted FFO per share adjusted will be between $0.92 and
$0.96 including lease-up dilution of $0.07 per share. FFO estimates
for the quarter and the year are fully diluted for an estimated
average number of shares and Operating Partnership units ("OP units")
outstanding during the year. The Company's estimates are
forward-looking and based on management's view of current and future
market conditions. The Company's actual results may differ
materially from these estimates, which include the following
annual
assumptions:
-- Excludes gains on extinguishment of exchangeable senior notes of
approximately $22.5 million and non-cash charges associated with
exchangeable senior notes (APB 14-1) of approximately $2.7 million.
-- Same-store property revenue growth, including tenant reinsurance
income, between -4.0% and -3.0%.
-- Same-store property expense growth between 2.0% and 3.0%.
-- Same-store property NOI growth, including tenant reinsurance income,
between -6.0% and -5.0%.
-- Net tenant reinsurance income between $12.0 million and $13.0
million.
-- General and administrative expenses, net of development fees, between
$41.0 million and $43.0 million, including non-cash compensation
expense of approximately $3.5 million.
-- Average monthly cash balance of approximately $150.0 million.
-- Interest expense between $68.0 million and $71.0 million.
-- Weighted average LIBOR of 1.1%.
-- Weighted average number of outstanding shares, including OP units, of
approximately 91.2 million.
-- Dilution associated with the Company's development program of between
$6.0 million and $7.0 million.
-- Taxes associated with the Company's taxable REIT subsidiary of
approximately $2.4 million.
Following is a GAAP reconciliation of the range of estimated fully
diluted net income per share to estimated fully diluted FFO per share
for the three months ending June 30, 2009 and the year ending
December 31, 2009.
For the Three Months For the Year Ended
Ended June 30, 2009 December 31, 2009
-------------------- --------------------
Low End High End Low End High End
--------- --------- --------- ---------
Net income $ 0.06 $ 0.08 $ 0.57 $ 0.61
Income allocated to Operating
Partnership minority interest 0.01 0.01 0.04 0.04
--------- --------- --------- ---------
Net income attributable to
common stockholders per
diluted share 0.07 0.09 0.61 0.65
Adjustments:
Real estate depreciation 0.12 0.12 0.50 0.50
Amortization of intangibles 0.01 0.01 0.02 0.02
Joint venture real estate
depreciation and amortization 0.02 0.02 0.07 0.07
Distributions paid on
Preferred Operating
Partnership units (0.02) (0.02) (0.06) (0.06)
--------- --------- --------- ---------
Diluted funds from operations
per share $ 0.20 $ 0.22 $ 1.14 $ 1.18
========= ========= ========= =========
Adjustments:
Non-cash interest expense
related to amortization of
discount on exchangeable
senior notes (APB 14-1) 0.01 0.01 0.03 0.03
Gain on repurchase of
exchangeable senior notes - - (0.25) (0.25)
--------- --------- --------- ---------
Diluted funds from operations
per share - adjusted $ 0.21 $ 0.23 $ 0.92 $ 0.96
========= ========= ========= =========
Forward-Looking Statements
Certain information set forth in this release contains
"forward-looking statements" within the meaning of the federal
securities laws. Forward-looking statements include statements
concerning our plans, objectives, goals, strategies, future events,
future revenues or performance, capital expenditures, financing
needs, plans or intentions relating to acquisitions and other
information that is not historical information. In some cases,
forward-looking statements can be identified by terminology such as
"believes," "estimates," "expects," "may," "will," "should,"
"anticipates," or "intends" or the negative of such terms or other
comparable terminology, or by discussions of strategy. We may also
make additional forward-looking statements from time to time. All
such subsequent forward-looking statements, whether written or oral,
by us or on our behalf, are also expressly qualified by these
cautionary statements. There are a number of risks and uncertainties
that could cause our actual results to differ materially from the
forward-looking statements contained in or contemplated by this
release. Any forward looking statements should be considered in
light of the risks referenced in the "Risk Factors" section included
in our most recent Annual Report on Form 10-K and Quarterly Reports
on Form 10-Q. Such factors include, but are not limited
to:
-- changes in general economic conditions and in the markets in which we
operate;
-- the effect of competition from new self-storage facilities or other
storage alternatives, which could cause rents and occupancy rates to
decline;
-- potential liability for uninsured losses and environmental
contamination;
-- difficulties in our ability to evaluate, finance and integrate
acquired and developed properties into our existing operations and to
lease up those properties, which could adversely affect our
profitability;
-- the impact of the regulatory environment as well as national, state,
and local laws and regulations including, without limitation, those
governing REITs, which could increase our expenses and reduce our cash
available for distribution;
-- recent disruptions in credit and financial markets and resulting
difficulties in raising capital at reasonable rates or at all, which
could impede our ability to grow;
-- delays in the development and construction process, which could
adversely affect our profitability;
-- economic uncertainty due to the impact of war or terrorism, which
could adversely affect our business plan;
-- the successful realignment of our executive management team; and
-- our ability to attract and retain qualified personnel and management
members.
All forward-looking statements are based upon our current
expectations and various assumptions. Our expectations, beliefs and
projections are expressed in good faith and we believe there is a
reasonable basis for them, but there can be no assurance that
management's expectations, beliefs and projections will result or be
achieved. All forward-looking statements apply only as of the date
made. We undertake no obligation to publicly update or revise
forward-looking statements which may be made to reflect events
or
circumstances after the date made or to reflect the occurrence of
unanticipated events.
Supplemental Financial Information
Supplemental unaudited financial information regarding the Company's
performance can be found on the Company's web site at
www.extraspace.com. Click on the "Investor Relations" link at the
bottom of the home page, then on "Financial Reports," then on the tab
"Quarterly and Other Reports" in the middle of the page and the
document entitled "Q1 2009 Supplemental Financial Information." This
supplemental information provides investors additional detail on
items that include property occupancy and financial performance by
geographic area, debt maturity schedules, and performance and
progress of property development.
Conference Call
Extra Space Storage Inc. will host a conference call at 1:00 p.m.
Eastern Time on Tuesday, May 5, 2009 to discuss its financial results
for the three months ended March 31, 2009. The conference call will
be broadcast live over the Internet and can be accessed by all
interested parties through the Company's website at
www.extraspace.com and then by clicking on the "Investor Relations"
link at the bottom of the home page. To listen to the live call,
please go to the website at least fifteen minutes prior to the start
of the call to register, download, and install any necessary audio
software. A digital replay will be available on Tuesday, May 5, 2009
at 4:00 p.m. Eastern Time through Tuesday, May 19, 2009 at midnight
Eastern Time. To access the replay, dial 888-286-8010 and enter
passcode 45178021. International callers should dial 617-801-6888 and
enter the same passcode.
About Extra Space Storage Inc.
Extra Space Storage Inc., headquartered in Salt Lake City, Utah, is a
fully integrated, self-administered and self-managed real estate
investment trust that owns and/or operates 698 self-storage
properties in 33 states and Washington, D.C. The Company's properties
comprise approximately 475,000 units and over 51 million square feet
of rentable space. The Company is the second largest owner and/or
operator of self-storage properties in the United States.
Extra Space Storage Inc.
Consolidated Balance Sheets - Unaudited
(In thousands, except share data)
March 31, December 31,
2009 2008
----------- -----------
Assets:
Real estate assets:
Net operating real estate assets $ 1,955,543 $ 1,938,922
Real estate under development 77,022 58,734
----------- -----------
Net real estate assets 2,032,565 1,997,656
Investments in real estate ventures 135,785 136,791
Cash and cash equivalents 54,478 63,972
Restricted cash 34,877 38,678
Receivables from related parties and affiliated
real estate joint ventures 5,035 11,335
Other assets, net 40,996 42,576
----------- -----------
Total assets $ 2,303,736 $ 2,291,008
=========== ===========
Liabilities, Non-controlling Interests and
Stockholders' Equity:
Notes payable $ 945,288 $ 943,598
Notes payable to trusts 119,590 119,590
Exchangeable senior notes 138,163 209,663
Discount on exchangeable senior notes (7,982) (13,031)
Line of credit 100,000 27,000
Accounts payable and accrued expenses 33,343 35,128
Other liabilities 22,297 22,267
----------- -----------
Total liabilities 1,350,699 1,344,215
----------- -----------
Commitments and contingencies
Stockholders' equity:
Extra Space Storage Inc. stockholders' equity:
Preferred stock, $0.01 par value, 50,000,000
shares authorized, no shares issued or
outstanding - -
Common stock, $0.01 par value, 300,000,000
shares authorized, 86,104,311 and 85,790,331
shares issued and outstanding at March 31, 2009
and December 31, 2008, respectively 861 858
Paid-in capital 1,131,150 1,130,964
Other comprehensive deficit (1,109) -
Accumulated deficit (238,880) (246,328)
----------- -----------
Total Extra Space Storage Inc.
stockholders' equity 892,022 885,494
Non-controlling interest represented by Preferred
Operating Partnership units, net of $100,000
note receivable 28,394 28,529
Non-controlling interest in Operating Partnership 30,632 31,212
Other non-controlling interests 1,989 1,558
----------- -----------
Total stockholders' equity 953,037 946,793
----------- -----------
Total liabilities, non-controlling
interests and stockholders' equity $ 2,303,736 $ 2,291,008
=========== ===========
Extra Space Storage Inc.
Consolidated Statement of Operations - Unaudited
(In thousands, except share and per share data)
Three months ended
March 31,
----------------------
2009 2008
---------- ----------
Revenues:
Property rental $ 59,409 $ 57,024
Management and franchise fees 5,219 5,077
Tenant reinsurance 4,619 3,478
Other income 7 128
---------- ----------
Total revenues 69,254 65,707
---------- ----------
Expenses:
Property operations 22,867 20,641
Tenant reinsurance 1,261 1,162
Unrecovered development and acquisition costs 82 164
General and administrative 11,246 10,179
Depreciation and amortization 12,523 11,581
---------- ----------
Total expenses 47,979 43,727
---------- ----------
Income before interest, equity in earnings of real
estate ventures, gain on repurchase of exchangeable
senior notes and loss on investments
available for sale 21,275 21,980
Interest expense (15,795) (16,354)
Non-cash interest expense related to amortization
of discount on exchangeable senior notes (841) (1,029)
Interest income 532 425
Interest income on note receivable from Preferred
Operating Partnership unit holder 1,213 1,213
Equity in earnings of real estate ventures 1,895 1,222
Gain on repurchase of exchangeable senior notes 22,483 -
Loss on sale of investments available for sale - (1,415)
---------- ----------
Net income 30,762 6,042
---------- ----------
Net income allocated to Preferred Operating
Partnership (1,551) (1,256)
Net income allocated to Operating Partnership and
other non-controlling interests (237) 885
---------- ----------
Net income attributable to common stockholders $ 28,974 $ 5,671
========== ==========
Net income per common share
Basic $ 0.34 $ 0.09
Diluted $ 0.34 $ 0.09
Weighted average number of shares
Basic 85,940,389 66,165,159
Diluted 91,222,295 71,699,461
Cash dividends paid per common share $ 0.25 $ 0.25
For Information:
James Overturf
Extra Space Storage Inc.
(801) 365-4501
Mark Collinson
CCG Investor Relations
(310) 477-9800
Extra Space Storage Inc.
PHONE (801) 562-5556
FAX (801) 562-5579
2795 East Cottonwood Parkway, Suite 400
Salt Lake City, Utah 84121
www.extraspace.com
SOURCE: Extra Space Storage Inc.
http://www.extraspace.com
