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Public Storage Canadian Properties Announces Second Quarter 2010 Operating Results
By Benzinga Staff
July 30, 2010 3:00 PM
July 30, 2010 3:00 PM
TORONTO, ONTARIO--(Marketwire - July 30, 2010) - Public Storage Canadian Properties (TSX:PUB) today announced operating results for the second quarter ended June 30, 2010.
Operating Results
Net income of the Partnership was $1,517,000 or $0.17 per partnership unit ("Unit") and $2,757,000 or $0.30 per Unit for the three and six months ended June 30, 2010 compared to $1,717,000 or $0.19 per Unit and $3,247,000 or $0.36 per Unit for the same periods in 2009. The decreases in net income and net income per unit were due primarily to an increase in amortization of real estate facilities in connection with three new self-storage facilities placed in service during 2009.
Property Operations
The Partnership owns, and derives substantially all of its income from, 28 self-storage facilities, of which 16 are located in Ontario, 5 are located in British Columbia, 6 are located in Quebec and 1 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). "Same Store" facilities are defined as 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. 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.
As at June 30, 2010, the "Same Store" facilities consisted of 20 self-storage facilities located in the provinces of Alberta, British Columbia, Ontario and Quebec and contain approximately 1,683,000 net rentable square feet or approximately 72.7% of the total portfolio. The first of these properties opened in August 1979, and the last of these properties to commence operations opened in July 2006.
The following table summarizes the pre-amortization operating results of the Partnership's "Same Store" facilities.
Three months ended June 30, Six months ended June 30,
----------------------------------------------------------------
2010 2009 Change 2010 2009 Change
----------------------------------------------------------------
Rental
income $ 5,804,000 $ 5,122,000 13.3% $ 11,296,000 $ 10,323,000 9.4%
Less: cost
of
operations 1,965,000 1,658,000 18.5% 4,005,000 3,689,000 8.6%
Less:
management
fees 348,000 304,000 14.5% 678,000 613,000 10.6%
------------------------ --------------------------
Net
operating
income (1) $ 3,491,000 $ 3,160,000 10.5% $ 6,613,000 $ 6,021,000 9.8%
------------------------ --------------------------
------------------------ --------------------------
Gross margin
(2) 60.1% 61.7% 58.5% 58.3%
Weighted
average for
period:
Occupancy 87.3% 83.0% 85.0% 80.0%
Realized
annual
rent per
square
foot (3) $15.85 $14.71 7.7% $15.83 $15.37 3.0%
End of
period
occupancy 89.1% 85.0% 89.1% 85.0%
(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.
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 and six months ended June 30, 2010 and 2009:
Three months ended June 30, Six months ended June 30,
---------------------------------------------------------------
2010 2009 Change 2010 2009 Change
---------------------------------------------------------------
Calculation
of FFO:
-------------
Net income $ 1,517,000 $ 1,717,000 $ 2,757,000 $ 3,247,000
Amortization
of real
estate
facilities
Continuing
operations 1,419,000 1,161,000 2,829,000 2,271,000
Discontinued
operations 11,000 24,000 28,000 48,000
Loss on
disposition
of excess
land 143,000 - 143,000 -
Future income
tax expense
(benefit) 3,000 (12,000) 34,000 (34,000)
------------------------ ------------------------
FFO $ 3,093,000 $ 2,890,000 7.0% $ 5,791,000 $ 5,532,000 4.7%
------------------------ ------------------------
------------------------ ------------------------
Weighted
average
number of
units 9,040,181 9,040,181 9,040,181 9,040,181
FFO per Unit $0.34 $0.32 6.3% $0.64 $0.61 5.1%
Calculation
of EBITDA:
-------------
Net income $ 1,517,000 $ 1,717,000 $ 2,757,000 $ 3,247,000
Amortization
of real
estate
facilities
Continuing
operations 1,419,000 1,161,000 2,829,000 2,271,000
Discontinued
operations 11,000 24,000 28,000 48,000
Loss on
disposition
of excess
land 143,000 - 143,000 -
Interest and
commitment
fees 341,000 215,000 697,000 359,000
Future income
tax expense
(benefit) 3,000 (12,000) 34,000 (34,000)
Interest and
other income (1,000) (6,000) (5,000) (14,000)
------------------------ ------------------------
EBITDA $ 3,433,000 $ 3,099,000 10.8% $ 6,483,000 $ 5,877,000 10.3%
------------------------ ------------------------
------------------------ ------------------------
Weighted
average
number of
units 9,040,181 9,040,181 9,040,181 9,040,181
EBITDA per
Unit $0.38 $0.34 11.8% $0.72 $0.65 10.8%
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 Six Months Ended
June 30, June 30,
----------------------------------------------------
2010 2009 2010 2009
----------------------------------------------------
Revenue:
Rental income $ 6,807,000 $ 5,555,000 $ 13,163,000 $ 11,172,000
Interest and other
income 1,000 6,000 5,000 14,000
----------------------------------------------------
6,808,000 5,561,000 13,168,000 11,186,000
----------------------------------------------------
Costs and expenses:
Cost of operations 2,878,000 2,159,000 5,848,000 4,692,000
Management fees paid to
an affiliate 408,000 333,000 790,000 670,000
Amortization of real
estate facilities 1,419,000 1,161,000 2,829,000 2,271,000
Interest and commitment
fees 341,000 215,000 697,000 359,000
Administrative 162,000 112,000 274,000 235,000
Loss on disposition of
excess land 143,000 - 143,000 -
----------------------------------------------------
5,351,000 3,980,000 10,581,000 8,227,000
Income from continuing
operations before
income taxes 1,457,000 1,581,000 2,587,000 2,959,000
Future income tax
benefit (expense) (3,000) 12,000 (34,000) 34,000
----------------------------------------------------
Income from continuing
operations 1,454,000 1,593,000 2,553,000 2,993,000
Discontinued operations 63,000 124,000 204,000 254,000
----------------------------------------------------
Net income $ 1,517,000 $ 1,717,000 $ 2,757,000 $ 3,247,000
----------------------------------------------------
----------------------------------------------------
Net income / Unit -
continuing operations $ 0.16 $ 0.18 $ 0.28 $ 0.33
Net income / Unit -
discontinued operations 0.01 0.01 0.02 0.03
----------------------------------------------------
Net income per Unit $ 0.17 $ 0.19 $ 0.30 $ 0.36
----------------------------------------------------
----------------------------------------------------
Distributions per Unit $ 0.225 $ 0.225 $ 0.45 $ 0.45
Weighted average number
of Units outstanding 9,040,181 9,040,181 9,040,181 9,040,181
As at June 30, As at December 31,
2010 2009
----------------------------------------
Balance sheet data:
Cash and cash equivalents $ 776,000 $ 268,000
Real estate facilities, net (1) 125,605,000 129,283,000
Asset held for disposition 689,000 717,000
Properties under development 7,393,000 5,472,000
Receivables and other assets 1,610,000 523,000
Future income taxes 1,128,000 1,162,000
----------------------------------------
Total assets $ 137,201,000 $ 137,425,000
----------------------------------------
----------------------------------------
Accounts payable and accrued
liabilities $ 3,081,000 $ 3,346,000
Advance payments from renters 1,881,000 1,739,000
Interest rate swaps 105,000 263,000
Debt 46,102,000 44,892,000
Partners' equity 86,032,000 87,185,000
----------------------------------------
Total liabilities and partner's
equity $ 137,201,000 $ 137,425,000
----------------------------------------
----------------------------------------
Units outstanding at end of period 9,040,181 9,040,181
(1) 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 at October 1, 2009 the Partnership's real estate
portfolio (excluding properties under development and asset held for
disposition as at December 31, 2009) was valued at approximately $234
million.
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