The Seattle-based storage REIT was to release its earnings on Friday, but instead only released its operating results, explaining that the company's independent auditor has not completed its review of a hedge transaction. In a conference call with analysts, company Chairman, President and CEO Charles Barbo expressed embarrassment about the situation, but said the earnings would be released "soon." Instead, the company discussed its operating results, which will not be affected by the review.
Same store NOI after leasehold and indirect expenses decreased 1.2% in the first quarter 2003 compared to first quarter 2002. The good news is that same store average collected rental rates decreased just two cents in the first quarter 2002 to $11.74 per sf, while same store occupancy for the first quarter 2003 increased one percent to 83%. As a result, same store rental revenue increased 1.6% over the first quarter 2002.
The revenue growth came primarily from the increase in occupancy, Barbo told analysts on Friday. "Demand is still soft in most markets," he said, "but we were able to hold collective rent as we head into the peak season."
The operating results moved the company's share price up by about $0.50 on Friday to close at $33.75. The price fell back $0.05 on Monday and on Tuesday fell back another $0.17 to close at $33.53. The company's 52-week high of $35.99 dates back to June 2002. Its 52-week low of $28.37 occurred in February.
As of the end of March, Shurgard operated a global network of 563 operating properties. The total includes 467 owned, leased, or managed properties in the United States and 96 in Europe. The company opened just one new store in 2003, but through its wholly owned subsidiary SSC Benelux Inc. the company has agreed to pay $49.6 million to increase its ownership of Shurgard Europe to 61% from about 50%.
Barbo told analysts he is "bullish" on Shurgard Europe and plans to increase the company's stake even further in 2003. Shurgard Self Storage SCA, the entity that develops, operates, and owns Shurgard Europe, reported a first quarter same store revenue increase of 10.5% over first quarter 2002. The revenue increases were a result of 2% increase in occupancy and a 7.5% increase in realized rent rates.
Shurgard Europe Chairman Dave Grant told analysts the company has entered into a joint venture agreement wherein the joint venture partner will provide 80%, and Shurgard Europe will provide the remaining 20%, of the equity necessary to develop approximately 30 new stores in Europe through 2004. As of March 31, Shurgard Europe had 11 stores under construction: one each in Belgium, Denmark, Sweden, and the United Kingdom, two in the Netherlands and Germany, and three in France.
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