Shurgard Storage Reports 8% Drop in Q1 FFO

SEATTLE-The locally headquartered REIT Shurgard Storage Centers on Tuesday reported an 8% drop in its first quarter funds from operations. FFO attributable to common shareholders for the first quarter of 2005 was $15.5 million or $0.33 per share, down 8% from $16.9 million or $0.36 per share in the first quarter of 2004. Net income for the first quarter was $5.3 million or $0.05 per share, compared to a loss of $0.3 million or $0.07 per share reported in the first quarter of 2004. The improvement was due in part to increased same store revenues and property sales.Total same store revenue was up 7.5% and NOI after indirect and leasehold expenses was up 5.5% compared to the same quarter in 2004. Two properties sold during the quarter generated gains in excess of $6.4 million on sales proceeds of approximately $13 million. Those gains were offset somewhat by these increased real estate development expenses ($2.7 million) and unrealized foreign exchange losses ($1.9 million). Net income was also affected by increased interest expense ($4.3 million), as short-term domestic interest rates rose and short-term floating rate debt in Europe was replaced by a seven-year bond last October. As of the end of March, Shurgard operated an international network of 634 self-storage properties containing 40 million net rentable sf and had another 12 under construction in the US (three) and Europe (nine). It also recently agreed to acquire nine existing stores in the US for approximately $38 million. Shurgard closed on one of those properties during the first quarter for $3 million. The rest are scheduled to close this month. In addition, Shurgard has 18 US stores undergoing redevelopment for an estimated cost of $15.7 million. On Friday, Shurgard chairman, CEO Charles K. Barbo said he will relinquish his position as CEO at the end of the year and will remain as non-executive chairman of the board of directors. Barbo, who founded Shurgard over 30 years ago, plans to continue to focus on strategic planning issues as well as spending time in the field in support of the company’s mission and values. He will be succeeded by David K. Grant, currently president and chief operating officer, will hold the positions of both president and CEO effective on Jan. 1, 2006.