Shurgard Ups Stake in Overseas Operation for $97M

SEATTLE-Shurgard Self Storage SCA, better known as Shurgard Europe, is now a wholly-owned subsidiary of Shurgard Storage Centers Inc. Locally based Shurgard Storage acquired the 12.8% it didn’t already own from affiliates of San Francisco, CA-based Fremont Realty Capital for about $97 million (80 million euros).Shurgard COO Dave Grant, who will become CEO at the end of the year, says (Fremont Realty) joined forces with Shurgard in 1999 when the company had less than 20 stores in Europe. Shurgard Europe is now the largest owner and operator of self-storage in Europe. It owns, or has an interest in, approximately 140 self-storage properties in principal cities throughout Western Europe. Top fund the acquisition, Shurgard doubled the size of its credit facility to $300 million and extended its maturity from August 14, 2005 to February 14, 2008, the same maturity date as its existing revolving credit facility. As of June 29, the interest rate on the term loan was 90 basis points over LIBOR. “Management felt that the current liquidity in the bank market represented a great opportunity for the Company to extend the term of some of its bank debt at attractive rates,” says Shurgard EVP Harrell Beck. “We are also evaluating a number of other longer-term financing options, especially given the exceptional interest in the self-storage asset class, evidenced by recent transactions in the sector.” Shurgard Storage Centers operates a network of over 630 operating storage centers located throughout the United States and in Europe. In May, it 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. In May 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. Grant will hold the positions of both president and CEO effective Jan. 1.