SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
February 7, 2000
---------------
Date of Report
(Date of earliest
event reported)
SHURGARD STORAGE CENTERS, INC.
(Exact name of registrant as specified in its charter)
Washington 0-23466 91-1603837
-------------- ---------- -------------
(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation)
1155 Valley Street, Suite 400
Seattle, Washington 98109
(Address of principal executive offices, including zip code)
(206) 624-8100
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events.
On February 7, 2000, the Company reported operating results for
the fourth quarter and year ended December 31, 1999.
Year End Financial Results (Unaudited)
For the year ended December 31, 1999, Funds From Operations (FFO)
were $78.6 million, representing a 9.3% increase over 1998. On a
per share basis FFO was $2.70, a 7.6% increase when compared to
1998. FFO is defined as net income plus depreciation and
amortization (excluding amortization of financing costs), minus
non-recurring income and expense. For a more detailed definition
please refer to the Company's Annual Report on Form 10-K for the
year ended December 31, 1998. Beginning in the fourth quarter of
1999, the Company's European operations are no longer being
consolidated and are now being reported under the equity method.
For reporting purposes this change has been made retroactive to
January 1, 1999.
Consolidated net operating income (NOI), defined as rental revenue
less direct property operating expenses and real estate taxes,
rose to $122.7 million for the year, a 12.7% increase over 1998
consolidated domestic NOI of $108.9 million. This increase
resulted from Same Store NOI growth of 5.1%, with the remaining
increase coming from acquisitions and the opening of newly
developed stores in both 1998 and 1999. The increase in Same
Store NOI was the result of a 4.3% revenue increase, with expense
growth limited to 2.3%. Net income was $50.7 million for the
year, up 13.3% from 1998. The Company is implementing a change in
its late fee policy in the first quarter of 2000. This policy
change may result in a decrease in annual late fee revenue in 2000
of between $1.1 million and $1.75 million as compared to
historical levels of late fee revenue. For a more detailed
definition of Same Store please refer to the Company's 1998 Annual
Report on Form 10-K.
Consolidated rental revenue for the year was $175.0 million,
representing an increase of 13.1% over consolidated domestic
revenue of $154.7 million for the same period of 1998. This
increase is the result of Same Store revenue growth of 4.3%, with
the remaining increase coming from acquisitions and the opening of
newly developed stores in both 1998 and 1999. Same Store revenue
growth was primarily the result of increased Same Store rental
rates. Same Store rental rates were $10.37 for 1999, up 4.4% when
compared to 1998. Same Store occupancy remained consistent at 86%
for both 1998 and 1999. At December 31, 1999, the Company's Same
Store portfolio consisted of 264 stores.
The Company's total assets and debt, as of December 31, 1999, were
$1.2 billion and $434.3 million respectively, with a total market
capitalization of $1.2 billion. The Company has a debt to total
market capitalization ratio of 36% as of December 31, 1999.
Fourth Quarter Financial Results
FFO for the fourth quarter was $20.1 million, representing an
increase of 8.9% over the fourth quarter of 1998. On a per share
basis, FFO was $0.69 per share representing a 7.8% increase over
fourth quarter 1998 results.
Consolidated NOI for the fourth quarter was $31.2 million, an
increase of 9.1% over consolidated domestic NOI of $28.6 million
for the fourth quarter of 1998. This increase resulted from Same
Store NOI growth of 3.2% with the remaining increase coming from
acquisitions and the opening of newly developed stores in both
1998 and 1999. The increase of Same Store NOI growth was the
result of a 4.2% revenue increase and an expense increase of 6.6%.
Net income for the quarter was $13.7 million, up 22.1% over the
fourth quarter of 1998. In the first quarter of 2000 the Company
is implementing several sales initiatives, including expansion of
its commercial accounts and direct sale programs, and the roll out
of enhanced e-commerce capability designed to allow on line sales
of all of the Company's products. These new sale initiatives are
expected to result in expense beginning in the first quarter that
will be higher then historical levels; however, these higher
expenses are not expected to have a negative impact the Company's
performance for the full year 2000.
Total consolidated rental revenue for the fourth quarter of 1999
was $45.5 million, which represents an 11% increase over
consolidated domestic revenue of $41.0 million for the fourth
quarter of last year. This increase is the result of Same Store
revenue growth of 4.2%, with the remaining increase coming from
acquisitions made during 1999 and the opening of newly developed
stores in both 1998 and 1999. Same Store revenue growth was
primarily the result of increases in Same Store rental rates.
Same Store rental rates were $10.49, up 3.7% when compared to the
fourth quarter of 1998. Same Store occupancy remained consistent
at 86%.
Fourth Quarter Dividend Declared and Date of Annual
Shareholder's Meeting Set
The Company's Board of Directors declared a fourth quarter
dividend of $0.50 per share payable on February 25, 2000 to
shareholders of record as of February 11, 2000. The Board of
Directors also set the date of the annual shareholder's meeting
for May 9, 2000, with a record date of March 16, 2000.
This report contains statements regarding the expected impact of
the implementation of the Company's revised late fee policy and
sales initiatives on the Company's revenues and expenses for the
first quarter and full year 2000. These expectations constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act and are based on several
assumptions. If any of these assumptions are not satisfied or
prove to be incorrect, actual results could differ materially from
those indicated in the forward-looking statements. The risks and
uncertainties that may cause these forward-looking statements to
prove to be incorrect include the risks that the sales initiatives
will not be successful and that the Company's expenses or revenues
may be affected by other factors, such as the risk that
competition from new self storage facilities or other storage
alternatives may cause rent to decline and may cause occupancy
rates to drop, or may cause delays in rent up of newly developed
properties, and the risk that the Company may experience increases
in labor, taxes, marketing and other operating and construction
expenses. For a discussion of additional risks and other factors
that could affect these forward-looking statements and Shurgard's
financial performance, see Shurgard's Annual Report on From 10-K
for the year ended December 31, 1998, as filed with the SEC.
<PAGE>
SHURGARD STORAGE CENTERS, INC.
Consolidated Balance Sheets (unaudited)
(Amounts in thousands except share data)
<TABLE>
December 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
ASSETS:
Storage centers:
Land $ 228,601 $ 212,154
Buildings and equipment,net 761,921 750,700
Construction in progress 49,939 81,043
--------- ---------
1,040,461 1,043,897
Other real estate investments 33,929 33,057
Cash and cash equivalents 11,645 9,474
Restricted cash 7,166 6,864
Other assets 60,025 60,615
---------- ----------
Total assets $ 1,153,226 $ 1,153,907
========== ==========
LIABILITIES & SHAREHOLDERS'
EQUITY:
Accounts payable and other
liabilities $ 34,312 $ 41,312
Lines of credit 102,002 95,028
Notes payable 332,347 330,998
-------- --------
Total liabilities 468,661 467,338
-------- --------
Minority interest in other
real estate investments 40,763 34,759
Shareholders' equity:
Series B Cumulative
Redeemable Preferred Stock;
$0.001 par value: 2,300,000
shares authorized; 2,000,000
shares issued and outstanding;
liquidation preference 48,056 48,056
Series C Cumulative
Redeemable Preferred Stock;
$0.001 par value: 2,000,000
shares authorized; 2,000,000
shares issued and outstanding;
liquidation preference 48,115 48,115
Class A Common Stock, $0.001
par value; 120,000,000
authorized; 29,093,474 and
28,677,367 shares issued and
outstanding 611,973 605,484
Class B Common Stock, $0.001
par value; 500,000 shares authorized;
154,604 issued and outstanding,
net of loans to shareholders
of $4,002 (1,086) (1,086)
Accumulated net income less
distributions (63,256) (47,312)
Accumulated other
comprehensive income (1,447)
------- -------
Total shareholders' equity 643,802 651,810
------- -------
Total liabilities and
shareholders' equity $ 1,153,226 $ 1,153,907
=========== ============
</TABLE>
As of the fourth quarter of 1999 the Company's European
operations are
no longer being consolidated, but are now reported under the
equity
method. This reporting change has been made retroactive to
January 1,
1999.
<PAGE>
SHURGARD STORAGE CENTERS, INC.
QUARTERLY AND YEAR-TO-DATE OPERATING RESULTS
Consolidated Statements of Net Income (unaudited)
(Amounts in thousands except share data)
<TABLE>
For The Three For
The
Months Ended Year
Ended
December 31,
December 31,
---------------- --------
- -------
1999 1998 1999
1998
<S> <C> <C> <C>
<C>
Revenue
Rental revenue $ 45,549 $ 42,497 $ 175,045
$ 158,989
Revenue from other real
estate investments (890) (384) (3,302)
(1,628)
Property management
revenue 364 90 1,411
1,893
------ ------ -------
- -------
Total revenue 45,023 42,203 173,154
159,254
------ ------ -------
- -------
Expenses
Operating 12,832 12,697 47,660
46,421
Depreciation and
amortization 9,416 9,375 36,858
33,644
Real estate taxes 4,372 3,687 15,777
13,195
General and
administrative 982 1,679 4,193
4,578
------ ------ -------
- ------
Total expenses 27,602 27,438 104,488
97,838
------ ------ -------
- ------
Income from
operations 17,421 14,765 68,666
61,416
------ ------ ------
- ------
Other Income (Expense)
Interest and other
income 1,664 389 2,826
1,431
Interest expense (6,248) (5,635) (22,445)
(21,076)
Total other income ------ ------ -------
- -------
(expense) (4,584) (5,246) (19,619)
(19,645)
------ ------- -------
- -------
Minority interest 878 1,713 2,724
2,963
------ ------ -------
- -------
Income before cumulative
effect of a change in
accounting principle 13,715 11,232 51,771
44,734
Cumulative effect of a
change in accounting 1,098
principle ------- ------- -------
- ------
Net Income $ 13,715 $ 11,232 $ 50,673
$ 44,734
======== ======== ========
========
BASIC EARNINGS PER SHARE:
Income before cumulative
effect of a change in
accounting principle $ 0.39 $ 0.34 $ 1.49
$ 1.40
Cumulative effect of a
change in accounting principle (0.04)
------ ------ ------
- ------
Net Income $ 0.39 $ 0.34 $ 1.45
$ 1.40
====== ====== ======
======
DILUTED EARNINGS PER SHARE:
Income before cumulative
effect of a change in
accounting principle $ 0.39 $ 0.34 $ 1.48
$ 1.40
Cumulative effect of a
change in accounting principle (0.04)
------ ------ ------
- ------
Net Income $ 0.39 $ 0.34 $ 1.44
$ 1.40
====== ====== ======
======
FFO RECONCILIATION:
Net income $ 13,715 $ 11,232 $ 50,673
$ 44,734
Non-recurring items (391) 1,091
(416)
Preferred dividend (2,187) (1,390) (8,750)
(4,690)
Depreciation/amortization 9,416 9,375 36,858
33,644
Adjustment for
depreciation/amortization
from joint ventures and
subsidiaries (143) (522) (59)
(252)
Deferred financing costs (350) (280) (1,209)
(1,120)
----- ------ ------
- ------
Funds from operations (FFO) $ 20,060 $ 18,415 $ 78,604
$ 71,900
======== ======== ========
========
SELECTED ADDITIONAL
INFORMATION:
Basic FFO per share $ 0.69 $ 0.64 $ 2.70
$ 2.51
====== ====== ======
======
Diluted FFO per share $ 0.69 $ 0.64 $ 2.70
$ 2.51
====== ====== ======
======
Net operating income (NOI)(1) $ 31,206 $ 29,059 $ 122,728
$ 111,055
======== ======== =========
=========
Cash dividends $ 0.50 $ 0.49 $ 2.00
$ 1.96
====== ====== ======
======
Basic avg. shares
outstanding 29,199,121 28,789,792 29,087,160
28,693,218
Diluted avg. shares
outstanding 29,242,845 28,789,792 29,129,920
28,693,218
</TABLE>
(1) NOI is defined as rental revenue less direct property
operating
expenses and real estate taxes.
As of the fourth quarter of 1999 the Company's European
operations are
no longer being consolidated, but are now reported under the
equity
method. This reporting change has been made retroactive to
January 1,
1999.
<PAGE>
Pro Rata Statement of Assets and Liabilities at Historical Cost
(1)
Supplemental Financial Data
December 31, 1999
(Unaudited)
<TABLE>
Consolidated Unconsolidated Total
European
(in thousands) Domestic Domestic Domestic Self
Operations Operations Operations
Storage Total
----------- ------------ ---------- ------
- - --------
<S> <C> <C> <C> <C>
<C>
Operating storage
centers $945,523 $68,369 $1,013,892 $8,290
$1,022,182
Construction in
progress 51,447 2,831 54,278 1,892
56,170
Containerized storage
assets 3,839 3,839
3,839
Corp. Office 9,627 9,627
9,627
Accumulated
depreciation (121,495) (5,095) (126,590)
(416) (127,006)
-------- ------ -------- -----
- - ---------
Storage assets,net 885,102 69,944 955,046
9,766 964,812
Participating mortgages 13,230 13,230
13,230
Cash and Other assets 53,018 5,848 58,866
3,022 61,888
Amortizable assets 30,287 1,877 32,164
1 32,165
------- ------ --------- -----
- - ---------
Total assets 981,637 77,669 1,059,306
12,789 1,072,095
======= ====== =========
====== =========
Accounts payable and
other liabilities 29,715 2,970 32,685
1,217 33,902
Lines of credit 98,959 35,260 134,219
3,043 137,262
Notes payable 234,277 31,233 265,510
7,085 272,595
------- ------ ------- -----
- - -------
Total liabilities 362,951 69,463 432,414
11,345 443,759
======= ====== =======
====== =======
</TABLE>
Other Selected Pro Rata Self Storage Operating Data (1)
For the 12 months ended December 31, 1999
<TABLE>
Historical
NOI Cost
--------- ----------
<S> <C> <C>
Domestic:
Same store (2) $ 114,419 $ 854,317
New store 8,309 159,575
--------- ----------
122,728 1,013,892
European: ========= =========
Same store 345 1,940
New store 61 6,350
--------- ---------
406 8,290
========= =========
</TABLE>
(1) The information is presented on a combined basis and
represents both consolidated and unconsolidated
entities at pro-rata ownership percentages.
(2) Includes NOI of $1.1 million relating to stores
sold during 1999.
Summary of Operating Self Storage Properties
<TABLE>
Domestic European Total
------------------ ------------------- ----------
- ----------
Number Net Number Net Number
Net
of Rentable of Rentable of
Rentable
Properties Square Ft. Properties Square Ft. Properties
Square Ft.
---------- ---------- ---------- ---------- ----------
- ----------
<S> <C> <C> <C> <C> <C>
<C>
100% owned 258 16,763,000 258
16,763,000
Partially
owned,
consolidated 42 2,732,000 42
2,732,000
Partially
owned,
unconsolidated 24 1,420,000 28 1,671,000 52
3,091,000
Fee managed 33 1,851,000 33
1,851,000
---- ---------- ---- --------- ---
- ----------
357 22,766,000 28 1,671,000 385
24,437,000
==== ========== ==== ========= ===
==========
</TABLE>
The following statements include a comparative presentation of
results
of operations as if our European investment had been accounted
for
using the equity method throughout 1998 and 1999. Our
European
operations were consolidated in our 1998 GAAP financial
statements.
<PAGE>
SHURGARD STORAGE CENTERS, INC.
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
For the Year Ended
-----------------------------
- --------
December 31, 1999 December
31, 1998
----------------- ---------
- --------
<S> <C> <C>
Revenue
Rental Revenue $ 175,045 $
154,745
Revenue from other real estate investments (3,302)
(2,041)
Property management revenue 1,411
1,893
------- ----
- ---
Total revenue 173,154
154,597
------- ----
- ---
Expenses
Operating 47,660
43,086
Depreciation and amortization 36,858
31,876
Real Estate Taxes 15,777
13,063
General & administrative 4,193
4,162
------- ----
- ---
Total expenses 104,488
92,187
------- ----
- ---
Income from operations 68,666
62,410
------- ----
- ---
Other Income (Expense)
Interest expense (22,445)
(19,265)
Interest and other income 2,826
1,407
------- ----
- ---
Total other income (expense) (19,619)
(17,858)
------- ----
- ---
Minority Interest 2,724
182
------- ----
- ---
Income before cumulative effect of
a change in accounting principle 51,771
44,734
Cumulative effect of a change in
accounting principle 1,098
------ ---
- ---
Net Income $ 50,673 $
44,734
========
========
</TABLE>
