SHU Shurgard Storage Ctr

Shurgard Storage Centers, Inc. (NYSE:SHU), a leading self-storage real estate investment trust in the United States and Europe, today released results for the quarter and six months ended June 30, 2005. The Company announced continued strong performance from its store operations, but reported a net loss for the second quarter of 2005 of $693,000 compared with net income of $20.8 million in the second quarter of 2004. The loss reported this period was due primarily to $5.2 million of non-cash expenses relating to foreign currency exchange and derivative losses. The comparable quarter in 2004 included a $12 million gain on the sale of properties. The diluted net loss per share from continuing operations was $0.08 in the second quarter of 2005 compared to diluted net income per share from continuing operations of $0.11 in the second quarter of 2004. Funds from Operations (FFO) attributable to common shareholders for the second quarter of 2005 was $15.4 million (after $5.2 million of foreign currency exchange and derivative losses, net of minority interest), compared to $24.5 million (after $300,000 of foreign currency exchange and derivative gains, net of minority interest) in the second quarter of 2004. FFO per share was $0.33 (after $0.11 of foreign exchange and derivative losses, net of minority interest) for the second quarter of 2005, compared to $0.53 (after $0.01 of foreign exchange and derivative gains, net of minority interest) for the same period in 2004. Store Operating Results Store operating results in both the United States and Europe continued on an upward trend during the quarter. At constant exchange rates, total Same Store revenue increased 7.1%, and net operating income (NOI) after indirect and leasehold expenses increased 6.2%, compared to the same quarter in 2004. The revenue growth was driven primarily by occupancy gains in Europe and a combination of both occupancy and rate gains in the United States. The European Same Store portfolio achieved a combined occupancy of 80% at the end of the second quarter, a 5% gain from the end of the first quarter. Same Store occupancy gains were realized in each country in Europe. David K. Grant, president and chief operating officer stated, "During the quarter, we increased our entire European tenant base by almost 5,000 customers, reaching a total count in excess of 64,000. Clearly, we are seeing the benefits of more focused rate management and our strategic decision to slow the pace of development in some of our European markets, such as the Netherlands." Mr. Grant added, "This trend has continued into the third quarter with occupancy of the same store pool surpassing 81% as of the end of July. The Company's 40 U.S. and 43 European New Stores also showed strong occupancy growth during the quarter." The Company's strong store performance was offset by higher borrowing costs ($4.8 million, equivalent to $0.10 per share), increased general and administrative expenses relating primarily to the Sarbanes-Oxley Section 404 internal control assessment and related process improvements ($1.7 million, equivalent to $0.04 per share), increased real estate costs charged to income due to the change in volume and mix of real estate investment activities from the prior year ($2 million, equivalent to $0.04 per share) and restructuring charges related to the company's previously announced integration plan between the United States and Europe ($1.3 million, equivalent to $0.03 per share). Portfolio As of June 30, 2005, Shurgard operated an international network of 643 properties containing approximately 40.5 million net rentable square feet. The total includes 484 owned, partially owned or leased storage centers in operation in the United States, 20 stores in the United States managed for third parties and 139 owned or partially owned stores in Europe. Of the 623 owned, partially owned or leased stores in the United States and Europe, 540 are classified as Same Store and 83 are classified as New Store. Shurgard's Domestic and European New Store group represents 17% of the Company's total investment in storage centers. The New Store group is in various stages of lease-up and currently produces approximately 3% of Shurgard's total NOI after leasehold and indirect expenses. Mr. Grant stated, "There is significant embedded future growth in our New Store portfolio. Lease-up of our New Store group, which represents an investment of approximately $530 million, is expected to be a key driver of Shurgard's FFO growth for the next several years." As of the end of the quarter, the Company had 16 new stores under construction or pending construction (seven in the United States and nine in Europe) for an estimated total cost of $114 million and seven re-development projects underway for an estimated cost of $11.4 million. The Company also completed the acquisition of nine stores in the United States (six in North Carolina, two in Florida and one in California) for a total cost of $41 million, adding 698,000 net rentable square feet. Same Store Operating Results During the second quarter of 2005, the Domestic Same Store segment generated growth in revenue of 5.9% and in NOI before leasehold and indirect expenses of 5.5% over the second quarter of 2004. Growth in NOI after leasehold and indirect expenses in the quarter was 3.5% over the same quarter in 2004. The growth in indirect operating expenses reflects the increase in field management and marketing positions in the past year. Management believes the current quarterly run-rate of indirect expenses is at a stabilized level. At constant exchange rates, the Europe Same Store segment in the second quarter of 2005 generated increases in revenue of 11.3% and in NOI before leasehold and indirect expenses of 19.8% over the second quarter of 2004. NOI after leasehold and indirect expenses in the quarter grew 21.6% for Same Stores, compared to the same quarter in 2004. Strong revenue growth was due mainly to the substantial improvement in average occupancy during the quarter in the Same Store portfolio, which increased to 78% from 68% in the comparable quarter in 2004. Occupancy improved in all countries, but occupancy growth was particularly strong in the Netherlands, Sweden and Denmark. Long-term Cost Reductions The Company believes there are significant synergies possible with the integration of Shurgard Europe. In particular, Europe's rate of indirect expenses as a percentage of revenue is currently running at 13% for the Same Store group. Management believes this can be reduced to a stabilized level of approximately 6% of revenue by the fourth quarter of 2007. Consolidated general and administrative expenses are currently running at a rate of approximately 8% of revenue. Management forecasts that these will be cut to approximately 4% of revenue by the fourth quarter of 2007. Of the $34 million in general and administrative expenses expected for the full year 2005, approximately $11 million relates to audit, tax, and Sarbanes-Oxley Section 404 compliance and consulting expenses. These expenses are projected to decline to an annual run-rate of closer to $3 million by the fourth quarter of 2007. Additionally, benefits from the full integration of Europe will generate further savings in general and administrative expenses. 2005 FFO and Earnings Guidance The Company believes that 2005 FFO per share will be in the range of $1.90 to $1.95, reflecting the additional non-cash foreign exchange and derivative losses reported this quarter and lower than expected store development in Europe. In aggregate, the Company has reported $0.18 of adjustments to FFO guidance related to foreign exchange and derivative losses and $0.09 related to dilution and restructuring charges related to the acquisition of the remaining partner's interest in Shurgard Europe in 2005. Going forward, foreign exchange gains or losses on intercompany debt will not be reported in earnings. After deducting estimated depreciation (net of minority interest) of $1.75 per share and adding estimated gains from dispositions of $0.25 per share, which are not included in the calculation of FFO, the Company expects to report earnings per share in 2005 of $0.40 to $0.45. This guidance does not include any estimate for costs incurred in connection with the recent unsolicited proposal. A copy of this press release and table attachments will also be available on the Company's website at http://investorrelations.shurgard.com. The Company uses FFO in addition to net earnings (loss) to report its operating results. The Company uses the definition of FFO adopted by the National Association of Real Estate Investment Trusts. Accordingly, FFO is defined as net earnings (computed in accordance with GAAP), excluding gains (losses) on dispositions of interests in depreciated operating properties and real estate depreciation and amortization expenses. FFO includes the Company's share of FFO of unconsolidated real estate ventures and discontinued operations and excludes minority interests in FFO. The Company believes FFO is a meaningful disclosure as a supplement to net earnings (loss) because net earnings (loss) assumes that the values of real estate assets diminish predictably over time as reflected through depreciation and amortization expenses. The Company believes that the values of real estate assets fluctuate due to market conditions. The Company's calculation of FFO may not be comparable to similarly titled measures reported by other companies because not all companies calculate FFO in the same manner. FFO is not a liquidity measure and should not be considered as an alternative to cash flows or indicative of cash available for distribution. It also should not be considered an alternative to net earnings (loss), as determined in accordance with U.S. GAAP, as an indication of the Company's financial performance. A reconciliation of GAAP net income (loss) to FFO is included in the tables attached to this release. Statements in this release concerning the beliefs, expectations, intentions, future events, future performance, business prospects and business strategy in the United States and Europe, including statements regarding the earnings guidance, projected development activity, including projected revenues, expenses, FFO projections, and net income projections for 2005 and beyond, 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 implementation of the business plan, including marketing and sales initiatives, will not be successful; -- the risk that the Company's earnings (loss), expenses or revenues may be affected by other factors, such as the risk of changes in economic conditions in the markets in which we operate; -- 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 lease up of newly developed properties; -- the risk that new developments could be delayed or reduced; -- the risk that the Company may experience increases in the cost of labor, taxes, marketing and other operating and construction expenses; -- the risk that tax law changes may change the taxability of future income; -- the risk that increases in interest rates and/or downgrades of our credit ratings may increase the cost of refinancing long term debt; -- the risk that we may incur significant expenses defending against hostile takeover attempts; -- the risk that the Company's alternatives for funding its business plan may be impaired by its inability to access its shelf registration statement or the economic uncertainty due to the impact of war or terrorism; and -- the risk that Shurgard Europe may be adversely impacted if that entity is unable to complete funding of its development joint ventures. We may also be affected by deadlines imposed by the Sarbanes-Oxley Act of 2002 and other pending legislation. Changes in accounting principles, including impending changes in accounting for stock options, may affect the Company's reported results of operations and financial position. The information presented in this release reflects Shurgard's expectations as of the date of this release. Except as required by law, Shurgard undertakes no obligation to update or revise the information provided herein. 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 Form 10-K for the year ended December 31, 2004, filed with the SEC on March 29, 2005, Form 10-Q for the quarter ended March 31, 2005, filed with the SEC on May 10, 2005, and Form 10-Q for the quarter ended June 30, 2005, filed with the SEC on August 9, 2005. -0- *T INDEX of TABLES TO FOLLOW: Table 1. Consolidated Statements of Net Income for the three months and half year ended June 30, 2005 and 2004 Table 2. Consolidated Balance Sheet as of June 30, 2005 and December 31, 2004 Table 3. FFO Reconciliation for the three months and half year ended June 30, 2005 and 2004 Table 4. Split of FFO between European Joint Ventures and the rest of Shurgard Storage Centers, Inc. for the quarter and half year ended June 30, 2005 Table 5. Earnings Per Share for the three months and half year ended June 30, 2005 and 2004 Table 6. FFO Per Share for the three months and half year ended June 30, 2005 and 2004 Table 7. Segment reporting information results for the three months ended June 30, 2005 Table 8. Segment reporting information results for the three months ended June 30, 2004 Table 9. Domestic Same Store Results for the three months and half year ended June 30, 2005 and 2004 Table 10. Summary of Operating Self Storage Properties as of June 30, 2005 Table 11. Europe Same Store Results for the three months and half year ended June 30, 2005 and 2004 Table 12. Quarterly comparison for Europe Same Store of second quarter 2005 versus second quarter 2004 Table 13. Domestic Same Store Vintage Analysis for the three months ended June 30, 2005 and 2004 Table 14. European Development Performance Vintage Analysis (in dollars) for the three months ended June 30, 2005 and 2004 Table 15. European Development Performance Vintage Analysis (in euros) for the three months ended June 30, 2005 and 2004 Table 16. Foreign exchange translation for the three months and half year ended June 30, 2005 and 2004 Table 17. Store Asset Values and Operating Information for the three months ended June 30, 2005 Table 1: SHURGARD STORAGE CENTERS, INC. OPERATING RESULTS (unaudited) Condensed Consolidated Statements of Net Income for the three and six months ended June 30, 2005 and 2004 (in thousands except share data) For the three months For the six months ended June 30, ended June 30, ------------------- ------------------- 2005 2004 2005 2004 -------- -------- -------- -------- Revenue Storage center operations $118,384 $103,143 $230,862 $201,131 Other 1,350 1,268 2,736 2,588 -------- -------- -------- -------- Total revenue 119,734 104,411 233,598 203,719 -------- -------- -------- -------- Expenses Operating 57,898 49,562 117,079 99,874 Real estate development 2,713 681 5,643 1,032 Depreciation and amortization 23,292 21,327 46,677 41,490 Impairment losses and abandoned project loses 868 763 1,191 973 General, administrative and other 10,914 7,850 18,943 17,070 -------- -------- -------- -------- Total expenses 95,685 80,183 189,533 160,439 -------- -------- -------- -------- Income from storage center operations 24,049 24,228 44,065 43,280 -------- -------- -------- -------- Other income (expense) Interest expense (25,485) (20,662) (49,610) (40,471) (Loss) gain on derivatives (1,353) 662 (1,712) (115) Foreign exchange loss (5,715) (442) (9,563) (2,392) Interest income and other, net 1,268 686 2,228 1,201 -------- -------- -------- -------- Other expense, net (31,285) (19,756) (58,657) (41,777) -------- -------- -------- -------- (Loss) income before equity in earnings of other real estate investments, net, minority interest and income taxes (7,236) 4,472 (14,592) 1,503 Minority interest 6,876 3,821 12,986 8,353 Equity in earnings of other real estate investments, net 12 23 33 25 Income tax expense (379) - (389) (23) -------- -------- -------- -------- (Loss) income from continuing operations (727) 8,316 (1,962) 9,858 Discontinued operations Income from discontinued operations 34 501 102 993 Gain on sale of discontinued operations - 11,990 6,423 11,990 -------- -------- -------- -------- Discontinued operations 34 12,491 6,525 12,983 Cumulative effect of change in accounting principle - - - (2,339) -------- -------- -------- -------- Net (loss) income (693) 20,807 4,563 20,502 Net (loss) income allocation Preferred stock dividends and other (3,039) (3,059) (6,080) (6,116) -------- -------- -------- -------- Net (loss) income available to common shareholders $ (3,732) $ 17,748 $ (1,517) $ 14,386 ======== ======== ======== ======== For the three months For the six months ended June 30, ended June 30, ------------------- ------------------- 2005 2004 2005 2004 -------- -------- -------- -------- Net (loss) income per Common Share - Basic: (Loss) income from continuing operations available to common shareholders $ (0.08) $ 0.12 $ (0.17) $ 0.08 Total discontinued operations - 0.27 0.14 0.28 Cumulative effect of change in accounting principle - - - (0.05) -------- -------- -------- -------- Net (loss) income per share $ (0.08) $ 0.39 $ (0.03) $ 0.31 ======== ======== ======== ======== Net (loss) income per Common Share - Diluted: (Loss) income from continuing operations available to common shareholders $ (0.08) $ 0.11 $ (0.17) $ 0.08 Discontinued operations - 0.27 0.14 0.28 Cumulative effect of change in accounting principle - - - (0.05) -------- -------- -------- -------- Net (loss) income per share $ (0.08) $ 0.38 $ (0.03) $ 0.31 ======== ======== ======== ======== Distributions per common share $ 0.56 $ 0.55 $ 1.11 $ 1.09 ======== ======== ======== ======== Table 2: SHURGARD STORAGE CENTERS, INC. BALANCE SHEET (unaudited) Condensed Consolidated Balance Sheet as of June 30, 2005 and December 31, 2004 (in thousands except share data) June 30, December 31, 2005 2004 ---------- ---------- ASSETS: Storage centers: Operating storage centers $3,173,780 $3,143,488 Less accumulated depreciation (510,956) (479,531) ---------- ---------- Operating storage centers, net 2,662,824 2,663,957 Construction in progress 73,700 58,431 Properties held for sale 5,442 8,328 ---------- ---------- Total storage centers 2,741,966 2,730,716 ---------- ---------- Cash and cash equivalents 37,479 50,277 Restricted cash 5,303 7,181 Goodwill 27,440 24,206 Other assets 117,181 120,504 ---------- ---------- Total assets $2,929,369 $2,932,884 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY: Accounts payable and accrued expenses $ 61,714 $ 60,938 Other liabilities 114,029 112,014 Lines of credit 557,400 397,300 Notes payable 1,253,128 1,287,202 ---------- ---------- Total liabilities 1,986,271 1,857,454 ---------- ---------- Minority interest 104,328 169,232 Commitments and contingencies (Notes 16) Shareholders' equity: Series C Cumulative Redeemable Preferred Stock; $0.001 par value; 2,000,000 shares authorized; 2,000,000 shares issued and outstanding; liquidation preference of $50,000 48,115 48,115 Series D Cumulative Redeemable Preferred Stock; $0.001 par value; 3,450,000 shares authorized; 3,450,000 shares issued and outstanding; liquidation preference of $86,250 83,068 83,068 Class A Common Stock, $0.001 par value; 120,000,000 authorized; 46,789,519 and 46,624,900 shares issued and outstanding, respectively 47 47 Additional paid-in capital 1,134,675 1,127,138 Accumulated deficit (408,160) (354,985) Accumulated other comprehensive (loss) income (18,975) 2,815 ---------- ---------- Total shareholders' equity 838,770 906,198 ---------- ---------- Total liabilities and shareholders' equity $2,929,369 $2,932,884 ========== ========== Table 3: SHURGARD STORAGE CENTERS, INC. Funds From Operations (unaudited) FFO Reconciliation for the three and six months ended June 30, 2005 and 2004 (in thousands except per share data) For the three For the six months months ended June 30, ended June 30, ------------------ ------------------ 2005 2004 2005 2004 ------- -------- ------- -------- Net income (loss) $ (693) $ 20,807 $ 4,563 $ 20,502 Depreciation and amortization (1) 19,130 18,737 38,865 36,616 Gain on sale of operating properties - (11,990) (6,423) (11,990) Cumulative effect of change in accounting principle - - - 2,339 ------- -------- ------- -------- FFO 18,437 27,554 37,005 47,467 Preferred distribution and other (3,039) (3,059) (6,080) (6,116) ------- -------- ------- -------- FFO attributable to common shareholders $15,398 $ 24,495 $30,925 $ 41,351 ======= ======== ======= ======== FFO per share $ 0.33 $ 0.53 $ 0.65 $ 0.89 ======= ======== ======= ======== Distributions per common share $ 0.56 $ 0.55 $ 1.11 $ 1.09 ======= ======== ======= ======== (1) Excludes depreciation related to non-real estate assets and minority interests in depreciation and amortization and includes depreciation and amortization of discontinued operations. Table 4: SHURGARD STORAGE CENTERS, INC. Split of FFO between European joint ventures and the rest of Shurgard Storage Centers, Inc. For the three and six months ended June 30, 2005 (in thousands) For the three months ended Shurgard Shurgard Remainder Consolidated June 30, 2005 Europe Europe of Shurgard 20% (Excluding Shurgard Storage owned joint Storage Centers, joint ventures) Centers, Inc. ventures (2) Inc. (2) --------- --------- ----------- ---------- Net income (loss) $(1,140) $(13,551) $13,998 $ (693) Depreciation and amortization (1) 255 4,517 14,358 19,130 Gain on sales of operating properties - - - - ------- -------- ------- ------- FFO $ (885) $ (9,034) $28,356 $18,437 ======= ======== ======= ======= (in thousands) For the six months ended Shurgard Shurgard Remainder Consolidated June 30, 2005 Europe Europe of Shurgard 20% (Excluding Shurgard Storage owned joint Storage Centers, joint ventures) Centers, Inc. ventures (2) Inc. (2) --------- --------- ----------- ---------- Net income (loss) $(2,220) $(24,589) $31,372 $ 4,563 Depreciation and amortization (1) 492 9,418 28,955 38,865 Gain on sales of operating properties - - (6,423) (6,423) ------- -------- ------- ------- FFO $(1,728) $(15,171) $53,904 $37,005 ======= ======== ======= ======= (1) Excludes depreciation related to non-real estate assets and minority interests in depreciation and amortization and includes depreciation and amortization of discontinued operations. (2) Balances are presented net of minority interests. Foreign Exchange and Derivative Losses included in FFO presented above (in thousands) For the three months ended Shurgard Shurgard Remainder Consolidated June 30, 2005 Europe Europe of Shurgard 20% (Excluding Shurgard Storage owned joint Storage Centers, joint ventures) Centers, Inc. ventures (2) Inc. (2) --------- --------- ----------- ---------- Gain (loss) on derivatives $(1,435) $ (1,271) $ 1,353 $(1,353) Foreign exchange gain (loss) - (4,286) (1,429) (5,715) Minority interest 1,185 709 - 1,894 ------- -------- ------- ------- Net amount included in FFO $ (250) $ (4,848) $ (76) $(5,174) ======= ======== ======= ======= (in thousands) For the six months ended Shurgard Shurgard Remainder Consolidated June 30, 2005 Europe Europe of Shurgard 20% (Excluding Shurgard Storage owned joint Storage Centers, joint ventures) Centers, Inc. ventures (2) Inc. (2) --------- --------- ----------- ---------- Gain (loss) on derivatives $(1,873) $ (1,886) $ 2,047 $(1,712) Foreign exchange gain (loss) - (7,601) (1,962) (9,563) Minority interest 1,546 1,212 - 2,758 ------- -------- ------- ------- Net amount included in FFO $ (327) $ (8,275) $ 85 $(8,517) ======= ======== ======= ======= Table 5: SHURGARD STORAGE CENTERS, INC. EARNINGS PER SHARE (unaudited) Earnings Per Share Per Share for the three and six months ended June 30, 2005 and 2004 Basic & Diluted (in thousands except per share Earnings Per data) share -------- ------- For the three months ended June 30, 2005 Weighted-average number of shares 46,600 Loss from continuing operations $ (727) Less: preferred distributions and other (3,039) ------- Loss from continuing operations available to common shareholders adjusted (3,766)$ (0.08) Discontinued operations 34 - ------- ------- Net Loss $(3,732)$ (0.08) ======= ======= Effect of Basic dilutive Diluted (in thousands except per share Per stock Per data) Earnings share options share -------- ------ --------- -------- For the three months ended June 30, 2004 Weighted-average number of shares 45,763 579 46,342 Income from continuing operations $ 8,316 Less: preferred distributions and other (3,059) ------- Income from continuing operations available to common shareholders adjusted 5,257 $ 0.12 $(0.01) $ 0.11 Discontinued operations 12,491 0.27 - 0.27 ------- ------- ------ ------- Net Income $17,748 $ 0.39 $(0.01) $ 0.38 ======= ======= ====== ======= Basic & Diluted (in thousands except per share Earnings Per data) share -------- ------- For the six months ended June 30, 2005 Weighted-average number of shares 46,557 Loss from continuing operations $(1,962) Less: preferred distributions and other (6,080) ------- Loss from continuing operations available to common shareholders adjusted (8,042)$ (0.17) Discontinued operations 6,525 0.14 ------- ------- Net Loss $(1,517)$ (0.03) ======= ======= Effect of Basic dilutive Diluted (in thousands except per share Per stock Per data) Earnings share options share -------- ------ --------- -------- For the six months ended June 30, 2004 Weighted-average number of shares 45,708 641 46,349 Income from continuing operations $ 9,858 Less: preferred distributions and other (6,116) ------- Income from continuing operations available to common shareholders adjusted 3,742 $ 0.08 $ - $ 0.08 Discontinued operations 12,983 0.28 - 0.28 Cumulative effect of change in accounting principle (2,339) (0.05) - (0.05) ------- ------- ------ ------- Net Income $14,386 $ 0.31 $ - $ 0.31 ======= ======= ====== ======= Table 6: SHURGARD STORAGE CENTERS, INC. FFO PER SHARE (unaudited) FFO Per Share for the three and six months ended June 30, 2005 and 2004 Effect of Basic dilutive Diluted (in thousands except per share Per stock Per data) Earnings share options share -------- ------- --------- -------- For the three months ended June 30, 2005 Weighted-average number of shares 46,600 727 47,327 FFO $18,437 Less: preferred distributions and other (3,039) ------- FFO available to common shareholders adjusted $15,398 $ 0.33 $ - $ 0.33 ======= ======= ====== ======= Effect of Basic dilutive Diluted (in thousands except per share Per stock Per data) Earnings share options share -------- ------- --------- -------- For the three months ended June 30, 2004 Weighted-average number of shares 45,763 579 46,342 FFO $27,554 Less: preferred distributions and other (3,059) ------- FFO available to common shareholders adjusted $24,495 $ 0.55 $(0.02) $ 0.53 ======= ======= ====== ======= Effect of Basic dilutive Diluted (in thousands except per share Per stock Per data) Earnings share options share -------- ------- --------- -------- For the six months ended June 30, 2005 Weighted-average number of shares 46,557 713 47,270 FFO $37,005 Less: preferred distributions and other (6,080) ------- FFO available to common shareholders adjusted $30,925 $ 0.66 $(0.01) $ 0.65 ======= ======= ====== ======= Effect of Basic dilutive Diluted (in thousands except per share Per stock Per data) Earnings share options share -------- ------- --------- -------- For the six months ended June 30, 2004 Weighted-average number of shares 45,708 641 46,349 FFO $47,467 Less: preferred distributions and other (6,116) ------- FFO available to common shareholders adjusted $41,351 $ 0.90 $(0.01) $ 0.89 ======= ======= ====== ======= Table 7: SHURGARD STORAGE CENTERS, INC. SEGMENT REPORTING INFORMATION RESULTS (unaudited) Segment reporting information results for the three months ended June 30, 2005 Three months ended June 30, 2005 (dollars in Domestic Europe Total thousands except average rent) ----------------- ----------------- ----------------- Same Store (1) Amount % of Amount % of Amount % of total total total ---------------- ----------------- ----------------- ----------------- Number of Storage Centers 444 92% 96 69% 540 87% Segment Revenues $ 82,431 93% $ 25,139 81% $ 107,570 90% NOI after indirect and leasehold expense $ 49,770 95% $ 10,355 110% $ 60,125 97% Avg. annual rent per sq. ft.(3) $ 11.99 $ 22.16 Avg. sq. ft. occupancy 86% 78% Total Storage Center Costs (4) $1,776,408 89% $ 823,157 73% $2,599,565 83% New Store (2) ---------------- Number of Storage Centers 40 8% 43 31% 83 13% Segment Revenues $ 5,899 7% $ 5,764 19% $ 11,663 10% NOI after indirect and leasehold expense $ 2,710 5% $ (959) (10)% $ 1,751 3% Avg. sq. ft. occupancy 75% 45% Total Storage Center Costs (4) $ 218,971 11% $ 310,513 27% $ 529,484 17% Combined New and Same Stores ---------------- Number of Storage Centers 484 100% 139 100% 623 100% Segment Revenues $ 88,330 100% $ 30,903 100% $ 119,233 100% NOI after indirect and leasehold expense $ 52,480 100% $ 9,396 100% $ 61,876 100% Total Storage Center Costs (4) $1,995,379 100% $1,133,670 100% $3,129,049 100% (1) Our definition of Same Store includes existing storage centers acquired prior to January 1 of the previous year as well as developed properties that have been operating for a full two years as of January 1 of the current year. Our definition of Same Store results in the addition of storage centers each year as new acquisitions and developments meet the criteria for inclusion, so we then include these storage centers in the previous year's comparable data. Other storage companies may define Same Store differently, which will affect the comparability of the data. (2) Our definition of New Store, as shown in the table above, includes existing domestic facilities that had not been acquired or leased as of January 1 of the previous year as well as developed properties that have not been operating a full two years as of January 1 of the current year. (3) Average annual rent per square foot is calculated by dividing actual rent collected by the average number of square feet occupied during the period. (4) Total costs capitalized to storage centers. Table 8: SHURGARD STORAGE CENTERS, INC. SEGMENT REPORTING INFORMATION RESULTS (unaudited) Segment reporting information results for the three months ended June 30, 2004 Three months ended June 30, 2004 (dollars in thousands Domestic Europe (4) Total except average rent) -------------- -------------- --------------- Same Store (1) Amount % of Amount % of Amount % of total total total -------------------------------- ------ ------- ------ ------- ------- Number of Storage Centers 444 96% 96 77% 540 92% Segment Revenues $77,863 98% $22,579 91% $100,442 96% NOI after indirect and leasehold expense $48,102 100% $ 8,514 134% $ 56,616 104% Avg. annual rent per sq. ft. (3) $ 11.49 $ 22.46 Avg. sq. ft. occupancy 85% 68% New Store (2) ------------------------- Number of Storage Centers 20 4% 28 23% 48 8% Segment Revenues $ 1,747 2% $ 2,243 9% $ 3,990 4% NOI after indirect and leasehold expense $ 115 0% $(2,160) (34)% $ (2,045) (4)% Avg. sq. ft. occupancy 51% 16% Combined New and Same Stores ------------------------- Number of Storage Centers 464 100% 124 100% 588 100% Segment Revenues $79,610 100% $24,822 100% $104,432 100% NOI after indirect and leasehold expense $48,217 100% $ 6,354 100% $ 54,571 100% (1) Our definition of Same Store includes existing storage centers acquired prior to January 1 of the previous year as well as developed properties that have been operating for a full two years as of January 1 of the current year. Our definition of Same Store results in the addition of storage centers each year as new acquisitions and developments meet the criteria for inclusion, so we then include these storage centers in the previous year's comparable data. Other storage companies may define Same Store differently, which will affect the comparability of the data. (2) Our definition of New Store, as shown in the table above, includes existing domestic facilities that had not been acquired or leased as of January 1 of the previous year as well as developed properties that have not been operating a full two years as of January 1 of the current year. (3) Average annual rent per square foot is calculated by dividing actual rent collected by the average number of square feet occupied during the period. (4) Amounts for 2004 have been translated from local currencies to U.S. dollars at a constant exchange rate using the average exchange rates for the quarter ended 2005. Table 9: SHURGARD STORAGE CENTERS, INC. DOMESTIC QUARTER TO DATE SAME STORE RESULTS (unaudited) Domestic Same Store Results for the three and six months ended June 30, 2005 and 2004 Same Store Results (1) For the three months ended June 30, ----------------------------------- (dollars in thousands except average rent) 2005 2004 % Change ----------- ----------- ---------- Segment revenue $ 82,431 $ 77,863 5.9% Operating expense: Personnel expenses 9,176 8,656 6.0% Real estate taxes 7,341 6,679 9.9% Repairs and maintenance 2,293 2,300 (0.3)% Marketing expense 2,313 2,015 14.8% Utilities and phone expenses 2,440 2,507 (2.7)% Cost of goods sold 1,197 1,034 15.8% Store admin and other expenses 2,500 2,366 5.7% ----------- ----------- Direct operating and real estate tax expense 27,260 25,557 6.7% ----------- ----------- NOI 55,171 52,306 5.5% Leasehold expense 1,029 939 9.6% ----------- ----------- NOI after leasehold expense 54,142 51,367 5.4% Indirect operating expense (2) 4,372 3,265 33.9% ----------- ----------- NOI after indirect operating and leasehold expense $ 49,770 $ 48,102 3.5% =========== =========== Avg. annual rent per sq.ft. $ 11.99 $ 11.49 4.4% Avg. sq.ft. occupancy 86% 85% Total net rentable sq.ft. 29,284,000 29,284,000 Number of properties as of June 30 444 444 For the six months ended June 30, ------------------------------------- (dollars in thousands except average rent) 2005 2004 % Change ----------- ----------- ----------- Segment revenue $ 160,671 $ 151,838 5.8% Operating expense: Personnel expenses 18,028 16,887 6.8% Real estate taxes 14,865 13,947 6.6% Repairs and maintenance 4,577 4,762 (3.9)% Marketing expense 4,244 3,763 12.8% Utilities and phone expenses 5,390 5,391 0.0% Cost of goods sold 2,031 1,781 14.0% Store admin and other expenses 5,717 4,785 19.5% ----------- ----------- Direct operating and real estate tax expense 54,852 51,316 6.9% ----------- ----------- NOI 105,819 100,522 5.3% Leasehold expense 2,158 1,964 9.9% ----------- ----------- NOI after leasehold expense 103,661 98,558 5.2% Indirect operating expense (2) 8,199 6,473 26.7% ----------- ----------- NOI after indirect operating and leasehold expense $ 95,462 $ 92,085 3.7% =========== =========== Avg. annual rent per sq.ft. $ 11.91 $ 11.43 4.2% Avg. sq.ft. occupancy 85% 84% Total net rentable sq.ft. 29,284,000 29,284,000 Number of properties as of June 30 444 444 (1) Table includes the total operating results of each storage center regardless of our percentage ownership interest in that storage center. (2) Indirect operating expense includes certain shared property costs such as district and corporate management, purchasing, national contracts personnel and marketing, as well as certain overhead costs allocated to property operations such as business information technology, legal services, human resources and accounting. Does not include containerized storage operations, internal real estate acquisition cost or abandoned development expense. Indirect operating expense is allocated to storage centers based on number of months in operation during the period. (3) Average annual rent per square foot is calculated by dividing actual rent collected by the average number of square feet occupied during the period. Table 10: SHURGARD STORAGE CENTERS, INC. SUMMARY OF OPERATING SELF STORAGE PROPERTIES (unaudited) Summary of Operating Self Storage Properties as of June 30, 2005 Domestic European ---------------------- --------------------- Number of Net Number of Net Rentable Rentable Properties Square Feet Properties Square Feet ---------- ----------- ---------- ---------- 100% owned or leased 380 24,605,000 103 5,613,000 Partially owned or leased, consolidated 104 7,285,000 36 1,788,000 Fee managed 20 1,206,000 - - ---------- ----------- ---------- ---------- 504 33,096,000 139 7,401,000 ========== =========== ========== ========== Total ----------------------- Number of Net Rentable Properties Square Feet ---------- ------------ 100% owned or leased 483 30,218,000 Partially owned or leased, consolidated 140 9,073,000 Fee managed 20 1,206,000 ---------- ------------ 643 40,497,000 ========== ============ Table 11: SHURGARD STORAGE CENTERS, INC. EUROPE QUARTER TO DATE SAME STORE RESULTS (unaudited) Europe Same Store Results for three and six months ended June 30, 2005 and 2004 (1) Three months ended June 30, ------------------------------- (in thousands except average rent) 2005 2004 % Change ---------- ---------- ---------- Segment revenue $ 25,139 $ 22,579 11.3% Operating expense: Personnel expenses 3,629 3,392 7.0% Real estate taxes 1,164 1,131 2.9% Repairs and maintenance 806 929 (13.2)% Marketing expense 1,840 2,117 (13.1)% Utilities and phone expenses 685 585 17.1% Cost of goods sold 938 845 11.0% Store admin and other expenses 1,919 1,760 9.0% ---------- ---------- Direct operating and real estate tax expense 10,981 10,759 2.1% ---------- ---------- NOI 14,158 11,820 19.8% Leasehold expense 498 476 4.6% ---------- ---------- NOI after leasehold expense 13,660 11,344 20.4% Indirect operating expense (2) 3,305 2,830 16.8% ---------- ---------- NOI after indirect operating and leasehold expense $ 10,355 $ 8,514 21.6% ========== ========== Avg. annual rent per sq. ft. (3) $ 22.16 $ 22.46 (1.3)% Avg. sq. ft. occupancy 78% 68% 14.7% Total net rentable sq. ft. 5,287,000 5,287,000 Number of properties 96 96 Six months ended June 30, ----------------------------------- (in thousands except average rent) 2005 2004 (5) % Change ---------- ---------- ---------- Segment revenue $ 50,437 $ 44,958 12.2% Operating expense: Personnel expenses 7,126 6,701 6.3% Real estate taxes 2,358 2,323 1.5% Repairs and maintenance 1,737 1,846 (5.9)% Marketing expense 4,189 4,073 2.8% Utilities and phone expenses 1,571 1,358 15.7% Cost of goods sold 1,837 1,616 13.7% Store admin and other expenses 3,948 3,524 12.0% ---------- ---------- Direct operating and real estate tax expense 22,766 21,441 6.2% ---------- ---------- NOI 27,671 23,517 17.7% Leasehold expense 1,020 974 4.7% ---------- ---------- NOI after leasehold expense 26,651 22,543 18.2% Indirect operating expense (2) 6,687 5,825 14.8% ---------- ---------- NOI after indirect operating and leasehold expense $ 19,964 $ 16,718 19.4% ========== ========== Avg. annual rent per sq. ft. (3) $ 22.90 $ 22.81 0.4% Avg. sq. ft. occupancy 75% 67% 11.9% Total net rentable sq. ft. 5,287,000 5,287,000 Number of properties 96 96 (1) Amounts for both years have been translated from local currencies at a constant exchange rate using the average exchange rate for the three and six months ended June 30, 2005 for the 2005 to 2004 comparison. (2) Indirect operating expense includes certain shared property costs such as district and regional management, national contracts personnel and marketing, as well as certain overhead costs allocated to property operations such as business information technology, human resources and accounting. It does not include internal real estate acquisition cost or abandoned development expense. Indirect operating expense is allocated to storage centers based on number of months in operation during the period. (3) Average annual rent per square foot is calculated by dividing actual rent collected by the average number of square feet occupied during the period. Table 12: SHURGARD STORAGE CENTERS, INC. EUROPEAN 2005 QUARTERLY COMPARISON (unaudited) Quarterly comparison for European same store of second quarter 2005 versus second quarter 2004 Percent change compared to prior year quarter ---------------------------------- Number of Q2 2005 Q2 Q2 NOI Q2 Q2 Properties Average Segment (after Occupancy Rate Occupancy Revenue leasehold expenses) ---------- --------- ------- --------- --------- ------ Belgium 17 76% 2.5% (0.2)% 5.3% (1.1)% Netherlands 22 71% 15.5% 6.7% 21.9% (3.6)% France 23 83% 11.7% 41.1% 11.4% 0.0% Sweden 20 79% 12.8% 27.5% 14.4% 1.8% Denmark 4 87% 35.9% 97.5% 32.4% 0.7% United Kingdom 10 76% 6.8% 8.1% 18.4% (8.6)% ---------- --------- ------- --------- --------- ------ Europe Totals 96 78% 11.3% 20.4% 14.7% (1.3)% ========== ========= ======= ========= ========= ====== Table 13: SHURGARD STORAGE CENTERS, INC. DOMESTIC YEAR TO DATE SAME STORE VINTAGE TABLE (unaudited) Domestic Same Store Vintage Analysis for the three months ended June 30, 2005 and 2004 Total Net (in Rentable millions) sq. ft. Average Occupancy Total when -------------------- Storage all phases Three months ended Number of Center are -------------------- Properties Cost (1) complete 6/30/2005 6/30/2004 ----------- ---------- ----------- -------------------- Same Store since 2005 34 $178.3 2,322,000 83% 79% Same Store since 2004 59 217.7 4,389,000 81% 78% Same Store since 2003 or prior 351 1,380.4 22,573,000 87% 87% ----------- ---------- ----------- -------------------- Same Store total 444 $1,776.4 29,284,000 86% 85% =========== ========== =========== ==================== (in thousands) (in thousands) NOI Average Annual Rent Segment (after leasehold (per sq. ft) (2) Revenue expense) -------------------- -------------------- ------------------- Three months ended Three months ended Three months ended -------------------- -------------------- ------------------- 6/30/2005 6/30/2004 6/30/2005 6/30/2004 6/30/2005 6/30/2004 --------- ---------- --------- ---------- --------- --------- Same Store since 2005 $12.50 $11.80 $6,515 $5,834 $3,682 $3,184 Same Store since 2004 8.58 7.96 8,379 7,477 5,092 4,436 Same Store since 2003 or prior 12.56 12.08 67,537 64,552 45,368 43,747 --------- ----------- -------- ------------ ------- --------- Same Store total $11.99 $11.49 $82,431 $77,863 $54,142 $51,367 ========= =========== ======== ============ ======= ========= (1) Total capitalized costs to storage centers since the store was acquired or developed. (2) Average annual rent per square foot is calculated by dividing actual rent collected by the average number of square feet occupied during the period. Table 14: SHURGARD STORAGE CENTERS, INC. EUROPEAN DEVELOPMENT (in US Dollars) (unaudited) European Development Performance Vintage Analysis for the three months ended June 30, 2005 and 2004 Average (in millions) Occupancy Storage Center Total Net ----------- Cost Rentable For the Number ---------------- sq. ft. three months of Devel- when all ended June 30, Prop- opment Total phases are ----------- New store: erties Cost (1) Cost (2) complete 2005 2004 ---------- ------- ------- ------- ---------- ----------- Opened in 2005 Germany 1 $ 5.2 $ 5.3 47,000 1.9% - France 1 4.5 4.5 56,000 3.4% - Denmark 1 6.1 6.1 50,000 9.7% - United Kingdom 1 11.8 11.8 37,000 5.9% - ------ ------ ------ ---------- ----------- Total opened in 2005 4 $ 27.6 $ 27.7 190,000 5.2% - ------ ------ ------ ---------- ----------- Opened in 2004 Germany 4 $ 25.3 $ 25.4 202,000 31.5% - France 4 22.8 22.9 167,000 29.7% - Denmark 2 14.0 14.0 101,000 48.9% 8.3% United Kingdom 3 31.2 31.6 123,000 31.4% 1.4% ------ ------ ------ ---------- ----------- Total opened in 2004 13 $ 93.3 $ 93.9 593,000 33.9% 1.7% ------ ------ ------ ---------- ----------- Opened in 2003 Belgium 1 $ 3.3 $ 4.6 45,000 73.2% 45.5% Netherlands 7 37.6 39.9 351,000 55.3% 25.2% Germany 5 33.8 33.9 268,000 48.7% 20.1% France 7 41.7 45.4 372,000 51.4% 20.7% Sweden 2 10.9 13.8 94,000 62.6% 31.0% Denmark 1 7.5 10.0 49,000 97.4% 46.0% United Kingdom 3 32.2 41.3 152,000 55.4% 26.7% ------ ------ ------ ---------- ----------- Total opened in 2003 26 $167.0 $188.9 1,331,000 55.5% 24.9% ------ ------ ------ ---------- ----------- ------ ------- ------- ---------- ----------- New Store Total 43 $287.9 $310.5 2,114,000 44.9% 16.2% ====== ====== ====== ========== =========== Same store: ------------------- Opened in 2002 Belgium 2 $ 7.0 $ 9.9 101,000 52.5% 42.9% Netherlands 7 38.9 55.1 368,000 60.4% 43.4% France 7 41.5 59.4 378,000 72.3% 57.0% Sweden 3 17.2 25.0 151,000 78.0% 62.4% Denmark 2 14.0 20.0 102,000 86.7% 56.9% United Kingdom 3 33.5 50.4 166,000 74.0% 54.7% ------ ------ ------ ---------- ----------- Total opened in 2002 24 $152.1 $219.8 1,266,000 69.3% 52.3% ------ ------ ------ ---------- ----------- Opened in 2001 and before Belgium 15 $ 67.8 $101.2 894,000 78.9% 75.8% Netherlands 15 77.7 114.9 821,000 76.2% 65.3% France 16 87.9 133.1 854,000 87.3% 81.9% Sweden 17 87.9 137.0 974,000 79.0% 69.9% Denmark 2 12.9 18.7 107,000 86.3% 73.3% United Kingdom 7 65.6 98.5 371,000 77.1% 68.6% ------ ------ ------ ---------- ----------- Total opened before 2002 72 $399.8 $603.4 4,021,000 80.2% 72.8% ------ ------ ------ ---------- ----------- Same Store Total 96 $551.9 $823.2 5,287,000 77.6% 67.9% ====== ====== ====== ========== =========== $293.9 Average Annual (in thousands) Rent (in thousands) NOI (3) (per sq. ft) (3) Segment (after leasehold (4) Revenue (3) expense) ---------------- ---------------- ---------------- For the three For the three For the three months months months ended June 30, ended June 30, ended June 30, ---------------- ---------------- ---------------- New store: 2005 2004 2005 2004 2005 (5) 2004 ------------------- ------ ------ ------- ------- -------- ------ Opened in 2005 Germany $ - $ - $ - $ - $ (157)$ - France - - 1 - (45) - Denmark 10.31 - 21 - (119) - United Kingdom 14.44 - 10 - (122) - ------ ------ ------- ------- -------- ------ Total opened in 2005 $ 8.37 $ - $ 32 $ - $ (443)$ - ------ ------ ------- ------- -------- ------ Opened in 2004 Germany $17.25 $ - $ 291 $ - $ (65) $ (88) France 19.76 - 288 - (99) (97) Denmark 20.36 6.42 301 23 53 (114) United Kingdom 47.56 50.82 497 35 143 (43) ------ ------ ------- ------- -------- ------ Total opened in 2004 $24.46 $13.97 $ 1,377 $ 58 $ 32 $ (342) ------ ------ ------- ------- -------- ------ Opened in 2003 Belgium $14.87 $14.93 $ 135 $ 84 $ 53 $ 26 Netherlands 19.55 21.41 1,003 510 116 (117) Germany 14.50 17.07 507 247 29 (262) France 20.85 22.79 1,151 529 367 (352) Sweden 18.60 17.90 323 164 93 (30) Denmark 22.66 22.85 299 148 147 49 United Kingdom 40.27 44.18 937 503 409 24 ------ ------ ------- ------- -------- ------ Total opened in 2003 $21.27 $23.20 $ 4,355 $ 2,185 $ 1,214 $ (662) ------ ------ ------- ------- -------- ------ New Store Total $21.81 $22.93 $ 5,764 $ 2,243 $ 803 $(1,004) ====== ====== ======= ======= ======== ====== Same store: ------------------- Opened in 2002 Belgium $12.67 $13.05 $ 182 $ 152 $ 37 $ 18 Netherlands 19.53 20.77 1,164 882 385 360 France 20.12 20.16 1,598 1,265 761 276 Sweden 22.17 20.73 732 555 403 224 Denmark 21.94 22.65 533 359 287 112 United Kingdom 37.78 43.38 1,286 1,094 718 546 ------ ------ ------- ------- -------- ------ Total opened in 2002 $22.45 $23.33 $ 5,495 $ 4,307 $ 2,591 $ 1,536 ------ ------ ------- ------- -------- ------ Opened in 2001 and before Belgium $16.24 $16.38 $ 3,154 $ 3,103 $ 1,953 $ 1,976 Netherlands 20.67 21.25 3,375 3,047 1,758 1,649 France 25.48 25.22 5,347 4,953 3,104 2,464 Sweden 20.86 20.79 4,487 4,071 2,374 1,954 Denmark 22.24 21.45 582 462 300 185 United Kingdom 33.89 37.49 2,699 2,636 1,580 1,580 ------ ------ ------- ------- -------- ------ Total opened before 2002 $22.08 $22.38 $19,644 $18,272 $11,069 $ 9,808 ------ ------ ------- ------- ------- ------ ---------------- ---------------- ------- ------ Same Store Total $22.16 $22.46 $25,139 $22,579 $13,660 $11,344 ====== ====== ======= ======= ======= ====== (1) The total development cost of these projects is reported in U.S. dollars translated at the June 30, 2005 exchange rate of $1.21 to the euro. The operating results (see note (2) below) are reported at the average exchange rate for the three months ended June 30, 2005 which was $1.26 to the euro. As these exchange rates are different we believe it does not allow for an accurate measure of property investment yield. We believe the application of a constant exchange rate to both the property cost and operating results would provide a more meaningful measure of investment yield. (2) The total cost of the storage centers includes additional costs of approximately $293.9 million we paid to acquire additional interests in Shurgard Europe in 2003 through 2005. The amounts have been translated at the June 30, 2005 exchange rate. (3) The amounts have been translated from local currencies at a constant exchange rate using the average exchange rate for the second quarter of 2005. (4) Average annual rent per square foot is calculated by dividing actual rent collected by the average number of square feet occupied during the period. On the year of opening the average annual rent is lower as the store had not been opened a full year. (5) Expenses in some instances may include certain pre-opening costs. Table 15: SHURGARD STORAGE CENTERS, INC. EUROPEAN DEVELOPMENT (in Euros) (unaudited) European Development Performance Vintage Analysis for the three months ended June 30, 2005 and 2004 (in millions) Storage Center Total Net Cost Rentable Number ---------------------- sq. ft. of Devel- when all Prop- opment Total phases are New store: erties Cost Cost (1) complete ------------------ ------- ---------- ----------- ---------- Opened in 2005 Germany 1 EUR 4.3 EUR 4.4 47,000 France 1 3.7 3.7 56,000 Denmark 1 5.1 5.1 50,000 United Kingdom 1 9.8 9.8 37,000 ------- ---------- ----------- ---------- Total opened in 2005 4 EUR 22.9 EUR 23.0 190,000 ------- ---------- ----------- ---------- Opened in 2004 Germany 4 EUR 21.0 EUR 21.2 202,000 France 4 18.9 19.0 167,000 Denmark 2 11.6 11.6 101,000 United Kingdom 3 25.9 26.3 123,000 ------- ---------- ----------- ---------- Total opened in 2004 (a) 13 EUR 77.4 EUR 78.1 593,000 ------- ---------- ----------- ---------- Opened in 2003 Belgium 1 EUR 2.7 EUR 3.8 45,000 Netherlands 7 31.2 33.1 351,000 Germany 5 28.0 28.1 268,000 France 7 34.6 37.5 372,000 Sweden 2 9.0 11.4 94,000 Denmark 1 6.2 8.3 49,000 United Kingdom 3 26.7 34.2 152,000 ------- ---------- ----------- ---------- Total opened in 2003 (b) 26 EUR 138.4 EUR 156.4 1,331,000 ------- ---------- ----------- ---------- New Store Total 43 EUR 238.7 EUR 257.5 2,114,000 ======= ========== =========== ========== Same store: ------------------ Opened in 2002 Belgium 2 EUR 5.8 EUR 8.2 101,000 Netherlands 7 32.2 45.7 368,000 France 7 34.4 49.2 377,000 Sweden 3 14.3 20.7 151,000 Denmark 2 11.6 16.6 102,000 United Kingdom 3 27.8 41.8 166,000 ------- ---------- ----------- ---------- Total opened in 2002 (c) 24 EUR 126.1 EUR 182.2 1,265,000 ------- ---------- ----------- ---------- Opened in 2001 and before Belgium 15 EUR 56.2 EUR 83.9 894,000 Netherlands 15 64.4 95.3 821,000 France 16 72.9 110.2 855,000 Sweden 17 72.9 113.6 974,000 Denmark 2 10.7 15.5 107,000 United Kingdom 7 54.4 81.6 371,000 ------- ---------- ----------- ---------- Total opened before 2002 72 EUR 331.5 EUR 500.1 4,022,000 ------- ---------- ----------- ---------- Same Store Total 96 EUR 457.6 EUR 682.3 5,287,000 ======= ========== =========== ========== Average Average Annual Rent Occupancy (per sq. ft) (2)(3) -------------- ------------------------- For the For the three months three months ended June 30, ended June 30, --------------------- ------------------------- New store: 2005 2004 2005 2004 ---------- -------- ----------- ------------- ----------- Opened in 2005 Germany 1.9% - EUR - EUR - France 3.4% - - - Denmark 9.7% - 8.18 - United Kingdom 5.9% - 11.46 - -------- ----------- ------------- ----------- Total opened in 2005 5.2% - EUR 6.64 EUR - -------- ----------- ------------- ----------- Opened in 2004 Germany 31.5% - EUR 13.69 EUR - France 29.7% - 15.69 - Denmark 48.9% 8.3% 16.17 5.10 United Kingdom 31.4% 1.4% 37.77 40.36 -------- ----------- ------------- ----------- Total opened in 2004 (a) 33.9% 1.7% EUR 19.43 EUR 11.09 -------- ----------- ------------- ----------- Opened in 2003 Belgium 73.2% 45.5% EUR 11.81 EUR 11.85 Netherlands 55.3% 25.2% 15.52 17.00 Germany 48.7% 20.1% 11.51 13.55 France 51.4% 20.7% 16.56 18.10 Sweden 62.6% 31.0% 14.77 14.21 Denmark 97.4% 46.0% 18.00 18.14 United Kingdom 55.4% 26.7% 31.98 35.08 -------- ----------- ------------- ----------- Total opened in 2003 (b) 55.5% 24.9% EUR 16.89 EUR 18.42 -------- ----------- ------------- ----------- New Store Total 44.9% 16.2% EUR 17.32 EUR 18.21 ======== =========== ============= =========== Same store: ------------------ Opened in 2002 Belgium 52.5% 42.9% EUR 10.06 EUR 10.36 Netherlands 60.4% 43.4% 15.51 16.49 France 72.3% 57.0% 15.98 16.01 Sweden 78.0% 62.4% 17.61 16.46 Denmark 86.7% 56.9% 17.42 17.99 United Kingdom 74.0% 54.7% 30.00 34.45 -------- ----------- ------------- ----------- Total opened in 2002 (c) 69.3% 52.3% EUR 17.83 EUR 18.52 -------- ----------- ------------- ----------- Opened in 2001 and before Belgium 78.9% 75.8% EUR 12.89 EUR 13.01 Netherlands 76.2% 65.3% 16.42 16.87 France 87.3% 81.9% 20.23 20.03 Sweden 79.0% 69.9% 16.56 16.51 Denmark 86.3% 73.3% 17.66 17.03 United Kingdom 77.1% 68.6% 26.91 29.77 -------- ----------- ------------- ----------- Total opened before 2002 80.2% 72.8% EUR 17.53 EUR 17.77 -------- ----------- ------------- ----------- Same Store Total 77.6% 67.9% EUR 17.59 EUR 17.91 ======== =========== ============= =========== (in thousands) Segment Revenue (2) ------------------------- For the three months ended June 30, ------------------------- New store: 2005 2004 ------------------ ------------ ------------ Opened in 2005 Germany EUR - EUR - France 1 - Denmark 17 - United Kingdom 8 - ------------ ------------ Total opened in 2005 EUR 26 EUR - ------------ ------------ Opened in 2004 Germany EUR 231 EUR - France 229 - Denmark 239 19 United Kingdom 394 29 ------------ ------------ Total opened in 2004 (a) EUR 1,093 EUR 48 ------------ ------------ Opened in 2003 Belgium EUR 107 EUR 67 Netherlands 796 405 Germany 402 196 France 914 419 Sweden 256 131 Denmark 238 118 United Kingdom 744 407 ------------ ------------ Total opened in 2003 (b) EUR 3,457 EUR 1,743 ------------ ------------ New Store Total EUR 4,576 EUR 1,791 ============ ============ Same store: ------------------ Opened in 2002 Belgium EUR 144 EUR 121 Netherlands 924 700 France 1,269 1,005 Sweden 582 443 Denmark 423 285 United Kingdom 1,021 884 ------------ ------------ Total opened in 2002 (c) EUR 4,363 EUR 3,438 ------------ ------------ Opened in 2001 and before Belgium EUR 2,505 EUR 2,464 Netherlands 2,680 2,419 France 4,246 3,933 Sweden 3,563 3,255 Denmark 462 367 United Kingdom 2,143 2,131 ------------ ------------ Total opened before 2002 EUR 15,599 EUR 14,569 ------------ ------------ Same Store Total EUR 19,962 EUR 18,007 ============ ============ (in thousands) NOI (2) (after leasehold expense) ---------------------------- For the three months ended June 30, ---------------------------- New store: 2005 (4) 2004 ------------------ --------------- ------------ Opened in 2005 Germany EUR (125) EUR - France (36) - Denmark (95) - United Kingdom (97) - --------------- ------------ Total opened in 2005 EUR (353) EUR - --------------- ------------ Opened in 2004 Germany EUR (52) EUR (70) France (79) (77) Denmark 42 (90) United Kingdom 113 (35) --------------- ------------ Total opened in 2004 (a) EUR 24 EUR (272) --------------- ------------ Opened in 2003 Belgium EUR 42 EUR 20 Netherlands 92 (93) Germany 23 (208) France 292 (280) Sweden 74 (24) Denmark 117 39 United Kingdom 325 19 --------------- ------------ Total opened in 2003 (b) EUR 965 EUR (527) --------------- ------------ New Store Total EUR 636 EUR (799) =============== ============ Same store: ------------------ Opened in 2002 Belgium EUR 29 EUR 14 Netherlands 306 286 France 604 219 Sweden 320 179 Denmark 228 89 United Kingdom 570 441 --------------- ------------ Total opened in 2002 (c) EUR 2,057 EUR 1,228 --------------- ------------ Opened in 2001 and before Belgium EUR 1,551 EUR 1,569 Netherlands 1,396 1,309 France 2,465 1,956 Sweden 1,885 1,562 Denmark 238 147 United Kingdom 1,255 1,277 --------------- ------------ Total opened before 2002 EUR 8,790 EUR 7,820 --------------- ------------ Same Store Total EUR 10,847 EUR 9,048 =============== ============ (1) The total cost of the storage centers includes additional costs of approximately EUR 243.5 million we paid to acquire additional interests in Shurgard Europe in 2003 through 2005. (2) The amounts have been translated from local currencies at a constant exchange rate using the average exchange rate for the second quarter of 2005. (3) Average annual rent per square foot is calculated by dividing actual rent collected by the average number of square feet occupied during the period. On the year of opening the average annual rent is lower as the store had not been opened a full year. (4) Expenses in some instances may include certain pre-opening costs. Table 16: SHURGARD STORAGE CENTERS, INC. FOREIGN EXCHANGE TRANSLATION (unaudited) Foreign exchange translation for three and six months ended June 30, 2005 and 2004 With the growth in the Company's foreign operations, foreign currency translation has a greater impact on the quarterly reporting of our financial results. Foreign currency translation could cause volatility in the reported financial results of the Company and otherwise limit the comparability of operating results and financial position from one period over another. Specifically, generally accepted accounting principles ("GAAP") prescribe specific foreign currency translation standards. For example, assets and liabilities are translated at the exchange rate in effect at the end of the applicable period. Revenue, expenses, and other components of the income statement and statement of cash flows are shown at the average exchange rate during the applicable period. For the quarter ended June 30, 2005, the average exchange rate between the Euro and the U.S. Dollar was $1.26 per Euro. During the quarter ended June 30, 2004, the average exchange rate was $1.20 per Euro. During the six months ended June 30, 2005, the average exchange rate was $1.29 per Euro. During the six months ended June 30, 2004, the average exchange rate was $1.23 per Euro. Revenues and total expenses for Shurgard Europe increased $1.0 million and $0.9 million, respectively, in the second quarter of 2005 over the second quarter of 2004. Revenues and total expenses for Shurgard Europe increased $2.1 million and $1.9 million, respectively, in the first six months of 2005 over the first six months of 2004. As of December 31, 2004 the exchange rate between the Euro and the U.S. Dollar was $1.36 per Euro compared to $1.21 per Euro as of June 30, 2005. Total assets and total liabilities decreased approximately $84.9 million and $16.1 million, respectively, from December 31, 2004 to June 30, 2005, as a result of exchange rate variances. Table 17: SHURGARD STORAGE CENTERS, INC. STORE ASSET VALUES AND OPERATING INFORMATION SCHEDULE (unaudited) Store asset values and operating information schedule for the three months ended June 30, 2005 (in thousands except for number of properties) Net No. of Ownership Rentable Occupancy Properties interest (5) Square Feet (Q2 Avg) ---------- ------------ ----------- --------- Same Store ----------------------- Domestic wholly owned or leased (1) 357 100% 23,085 85.1% Domestic joint ventures (2) 87 79% 6,199 82.5% European wholly owned or leased (1) 96 100% 5,287 77.6% ------ ------- ------- Total Same Store 540 34,571 83% ====== ======= ======= New Store ----------------------- Domestic wholly owned or leased developments (1) 11 100% 605 66.1% Domestic joint ventures developments (2) 12 68% 743 61.0% Domestic acquisitions (3) 17 94% 1,258 85.3% European wholly owned or leased developments (1) 6 100% 288 53.5% European 20% development ventures developments(4) 36 20% 1,788 44.3% European acquisition (3) 1 100% 38 78.9% ------ ------- ------- Total New Store 83 4,720 61.5% ====== ======= ======= TOTALS 623 39,291 81% ====== ======= ======= (in thousands except for Gross Book Applicable Segment Q2 Leasehold number of properties) Value (6) debt (7) Revenue NOI (8) Expense ---------- ---------- ------- ------- -------- Same Store ----------------------- Domestic wholly owned or leased (1) $1,413,303 $ 50,027 $ 67,104 $44,985 $ 993 Domestic joint ventures (2) 363,105 161,395 15,327 10,186 36 European wholly owned or leased (1) 823,157 378,527 25,139 14,158 498 ---------- -------- -------- ------- ------ Total Same Store $2,599,565 $589,949 $107,570 $69,329 $ 1,527 ========== ======== ======== ======= ====== New Store ----------------------- Domestic wholly owned or leased developments (1) $ 59,592 $ - $ 1,417 $ 441 $ 31 Domestic joint ventures developments (2) 62,619 2,364 1,816 922 - Domestic acquisitions (3) 96,760 33,973 2,666 1,733 - European wholly owned or leased developments (1) 59,378 23,407 1,606 733 - European 20% development ventures developments(4) 236,141 153,200 3,780 (98) 84 European acquisition (3) 14,994 - 378 252 - ---------- -------- -------- ------- ----- Total New Store $ 529,484 $212,944 $ 11,663 $ 3,983 $ 115 ========== ======== ======== ======= ===== TOTALS $3,129,049 $802,893 $119,233 $73,312 $ 1,642 ========== ======== ======== ======= ===== (1) Includes owned and leased properties in which we have a 100% interest. (2) Includes properties in which we own an interest less than 100% but that are consolidated in our financial statements. The store information and results reflected the full 100% amounts. (3) Includes all stores acquired in 2005 and 2004. (4) Includes properties developed under First and Second Shurgard in which we hold a 20% interest. (5) Represents ownership interest as of June 30, 2005. (6) The actual completed cost of these projects are reported in U.S. dollars translated at the June 30, 2005 exchange rate of $1.21 to the Euro. Operating results are reported at the average exchange rate for the three months ended June 30, 2005 which was $1.26 to the Euro. As these exchange rates are different we believe it does not allow for an accurate measure of property investment yield. However, we believe the application of a constant exchange rate to both the property cost and operating results may provide a more meaningful measure of investment yield. (7) Applicable debt represents debt secured by asset pool. (8) Represents Net Operating Income after Direct Expenses. The indirect expenses not included in NOI for Domestic Same Store, European Same store, Domestic New Store and Europe Store are the following (in thousands except indirect expense per revenue dollar): (9) Other items -- Shurgard Europe's balance sheet contains the following line items: Assets Properties held for sale $ 3.2 m Cash and cash equivalents $ 21.2 m Other assets $ 64.7 m Liabilities and equity Intercompany note payable (a) This note is an asset on $ 63.3 m the books of Shurgard Inc. Other liabilities $ 104.2 m Minority interest $ 81.2 m Indirect expense Q2 indirect expense Q2 segment revenue per revenue dollar -------------------------------------- -------------- Domestic Europe Domestic Europe Domestic Europe ---------- ------- -------- -------- ------- ------ Same Store $4,372 $ 3,305 $82,431 $25,139 $0.05 $0.13 ------ ------- ------- ------- ----- ----- New Store $ 355 $ 1,762 $ 5,899 $ 5,764 $0.06 $0.31 ------ ------- ------- ------- ----- ----- *T