TORONTO, ONTARIO - (Marketwire - March 10, 2010) - Public Storage Canadian Properties (TSX:PUB) today announced operating results for the fourth quarter ended December 31, 2009.
Operating Results
Net income of the Partnership was $781,000 or $0.09 per partnership unit ("Unit") for the three months ended December 31, 2009 compared to $1,552,000 or $0.17 per Unit for the same period in 2008. The decreases in net income and net income per unit were due primarily to a slowdown in rental activity, the dilutive impact in connection with the lease-up of newly developed self-storage facilities whereby operating costs exceed rental income, additional amortization expense of the new facilities placed in service and the write-off of repositioning costs on the Brampton facility included in administrative expenses.
Net income of the Partnership was $5,538,000 or $0.61 per Unit for the year ended December 31, 2009 compared to $7,267,000 or $0.80 per Unit for the same period in 2008. The decreases in net income and net income per unit were due primarily to the same reasons as stated above.
Property Operations
The Partnership owns, and derives substantially all of its income from, 28 self-storage facilities, of which sixteen are located in Ontario, five are located in British Columbia, six are located in Quebec and one is located in Alberta. In addition, the Partnership owns parcels of land in Orleans, Ontario, and Richmond Hill, Ontario for development into new self-storage facilities.
In order to evaluate the performance of the Partnership's portfolio, management analyzes the operating performance of a stabilized group of self-storage facilities (herein referred to as "Same Store" facilities). Management considers the operating performance of the "Same Store" facilities to be a more useful measure of the overall operating performance of the Partnership's portfolio to analyze trends and provide meaningful comparisons. "Same Store" facilities are facilities that have been owned and operated at a mature, stabilized occupancy level since January 1, of the earliest period presented. Management considers a facility to be stabilized after it has been opened for at least three years. As at December 31, 2009, the "Same Store" facilities consist of 16 facilities that have been owned and operated by the Partnership since its inception and two facilities that were opened in 2005 and contain approximately 1,366,000 net rentable square feet and 12,620 storage units.
The following table summarizes the pre-amortization operating results of the Partnership's "Same Store" facilities.
Three months ended December 31, Year ended December 31,
---------------------------------- --------------------------------
2009 2008 Change 2009 2008 Change
----------- ----------- --------- ----------- ------------ -------
Rental
income $ 4,683,000 $ 4,773,000 (1.9%) $ 18,672,000 $ 19,610,000 (4.8%)
Less:
cost of
operat-
ions 1,559,000 1,409,000 10.6% 5,953,000 5,850,000 1.8%
Less:
management
fees 281,000 286,000 (1.7%) 1,120,000 1,176,000 (4.8%)
----------- ----------- --------- ----------- ------------ -------
Net
operating
income
(1) $ 2,843,000 $ 3,078,000 (7.6%) $11,599,000 $ 12,584,000 (7.8%)
----------- ----------- --------- ----------- ------------ -------
Gross
margin(2) 60.7% 64.5% 62.1% 64.2%
Weighted
average
for period:
Occupancy 87.2% 84.0% 87.5% 85.4%
Realized
annual
rent per
square
foot(3) $15.74 $16.67 (5.6%) $15.64 $16.84 (7.1%)
End of
period
occupancy 86.0% 81.8% 86.0% 81.8%
____________________
(1) Net operating income ("NOI") is equal to rental income less cost of
operations and management fees paid to an affiliate before amortization.
This non-GAAP financial measure does not have any standardized meanings
prescribed by GAAP and is therefore unlikely to be comparable to similar
measures presented by other issuers.
(2) Gross margin is computed by dividing property net operating income by
rental income.
(3) Realized rent per square foot represents the actual revenue earned per
occupied square foot. Management believes this is a more relevant measure
than posted or scheduled rates as posted rates can be discounted through
promotions.
Effective January 1, 2010, the Partnership will reclassify three facilities that were acquired and/or opened in 2006 and remove one facility that has been identified for expropriation to the pool of "Same Store" facilities. The new pool of "Same Store" facilities will include 20 self-storage facilities and contain approximately 1,683,000 net rentable square feet or approximately 72.7% of the total portfolio. The Partnership will begin reporting the results of the new pool of "Same Store" facilities beginning with the first quarter ending March 31, 2010.
Funds from Operations ("FFO") and Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA")
FFO and EBITDA are supplementary performance measures for real estate companies used by investors and analysts. These performance measures do not have any standardized meanings prescribed by generally accepted accounting principles ("GAAP") and are therefore unlikely to be comparable to similar measures presented by other issuers. Many investors and analysts consider FFO and EBITDA to be measures of the performance of real estate companies.
The Real Property Association of Canada ("REALpac") defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable real estate and extraordinary items, plus depreciation and amortization, plus future income taxes and after adjustments for equity accounted for entities and non-controlling interests. Adjustments for equity accounted for entities and joint ventures and non-controlling interests are calculated to reflect funds from operations on the same basis as the consolidated properties.
EBITDA is equal to earnings before interest income, interest expense, taxes, depreciation and amortization.
FFO and EBITDA do not take into consideration scheduled principal payments on debt, capital improvements, distributions or other obligations of the Partnership. Accordingly, FFO and EBITDA are not substitutes for the Partnership's cash flow or net income as a measure of the Partnership's liquidity or operating performance or ability to pay distributions.
The following table calculates FFO and EBITDA for the three months and years ended December 31, 2009 and 2008:
Three months ended December 31, Year ended December 31,
---------------------------------- --------------------------------
2009 2008 Change 2009 2008 Change
----------- ----------- --------- ----------- ------------ -------
Calcul-
ation of
FFO:
---------
Net income $ 781,000 $ 1,552,000 $ 5,538,000 $ 7,267,000
Amortiz-
ation of
real
estate
facil-
ities 1,370,000 1,220,000 5,025,000 4,447,000
Amortiz-
ation of
intang-
ible
assets - - - 116,000
Less:
future
income
tax
(benefit)
expense 237,000 68,000 132,000 (96,000)
----------- ----------- ----------- -------------
FFO $ 2,388,000 $ 2,840,000 (15.9%) $10,695,000 $11,734,000 (8.9%)
----------- ----------- ----------- -------------
Weighted
average
number
of units 9,040,181 9,040,181 9,040,181 9,040,181
FFO per
Unit $0.26 $0.31 (16.1%) $1.18 $1.30 (9.2%)
Calcul-
ation of
EBITDA:
---------
Net income $ 781,000 $ 1,552,000 $ 5,538,000 $ 7,267,000
Amortiz-
ation of
real
estate
facil-
ities 1,370,000 1,220,000 5,025,000 4,447,000
Amortiz-
ation of
intang-
ible
assets - - - 116,000
Interest
and
commitment
fees 260,000 148,000 888,000 583,000
Less:
future
income
tax
(benefit)
expense 237,000 68,000 132,000 (96,000)
Less:
interest
and other
income
(loss) (7,000) 79,000 (26,000) (13,000)
----------- ----------- ----------- -------------
EBITDA $ 2,641,000 $ 3,067,000 (13.9%) $11,557,000 $12,304,000 (6.1%)
----------- ----------- ----------- -------------
Weighted
average
number
of units 9,040,181 9,040,181 9,040,181 9,040,181
EBITDA
per Unit $0.29 $0.34 (14.7%) $1.28 $1.36 (5.9%)
IFRS Update - Property Valuations
The Canadian Accounting Standards Board ("AcSB") confirmed that the adoption of International Financial Reporting Standards ("IFRS") will be effective for Canadian publicly accountable enterprises on January 1, 2011, including the Partnership. IFRS will replace Canadian GAAP for these enterprises. Comparative information under IFRS will also need to be provided for reporting purposes.
The Partnership will be required to disclose the fair value of its investment properties under IFRS. In connection with the transition to IFRS, the Partnership commissioned an appraisal of its real estate portfolio by Colliers International Reality Advisors, Inc., an independent real estate appraisal firm. As of October 1, 2009 the Partnership's real estate portfolio (excluding properties under development) was valued at approximately $230 million.
Partnership Information
Public Storage Canadian Properties is a publicly held limited partnership that invests in self-storage facilities. More information about the Partnership is available on the Internet. The Partnership's main web site is www.publicstoragecanada.com. The Partnership's investor web site is www.pscinvestor.com.
PUBLIC STORAGE CANADIAN PROPERTIES
SELECTED FINANCIAL DATA
Three Months Ended December
31, Years Ended December 31,
---------------------------- ---------------------------
2009 2008 2009 2008
---------------------------- ---------------------------
Revenue
Rental income
$ 6,295,000 $ 6,042,000 $ 24,372,000 $ 24,267,000
Interest and other
income (loss) 7,000 (79,000) 26,000 13,000
---------------------------- ---------------------------
6,302,000 5,963,000 24,398,000 24,280,000
---------------------------- ---------------------------
Costs and expenses
Cost of operations 2,729,000 2,397,000 10,420,000 9,758,000
Management fees paid
to an affiliate 377,000 362,000 1,462,000 1,456,000
Amortization of real
estate facilities 1,370,000 1,220,000 5,025,000 4,447,000
Amortization of
intangible assets - - - 116,000
Interest and
commitment fees 260,000 148,000 888,000 583,000
Administrative 548,000 216,000 933,000 749,000
---------------------------- ---------------------------
5,284,000 4,343,000 18,728,000 17,109,000
---------------------------- ---------------------------
Income before income
taxes 1,018,000 1,620,000 5,670,000 7,171,000
Future income tax
benefit (expense) (237,000) (68,000) (132,000) 96,000
---------------------------- ---------------------------
Net income $ 781,000 $ 1,552,000 $ 5,538,000 $ 7,267,000
---------------------------- ---------------------------
---------------------------- ---------------------------
Net income per Unit
$ 0.09 $ 0.17 $ 0.61 $ 0.80
Declared
distributions per
Unit $ 0.225 $ 0.45 $ 0.90 $ 1.80
Weighted average
number of Units
outstanding 9,040,181 9,040,181 9,040,181 9,040,181
As at December 31, 2009 As at December 31, 2008
-------------------------- -------------------------
Balance sheet data:
Cash and cash
equivalents $ 268,000 $ 2,390,000
Real estate
facilities, net 130,000,000 98,309,000
Properties under
development 5,472,000 16,881,000
Receivables and other
assets 523,000 630,000
Future income taxes 1,162,000 1,294,000
----------------------------------------------------
Total assets $ 137,425,000 $ 119,504,000
----------------------------------------------------
----------------------------------------------------
Accounts payable and
accrued liabilities $ 3,346,000 $ 1,509,000
Advance payments from
renters 1,739,000 1,326,000
Distributions payable - 2,252,000
Interest rate swaps 263,000 -
Debt 44,892,000 24,371,000
Partners' equity 87,185,000 90,046,000
----------------------------------------------------
Total liabilities and
partner's equity $ 137,425,000 $ 119,504,000
----------------------------------------------------
----------------------------------------------------
Units outstanding at
end of period 9,040,181 9,040,181
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