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Operating Results
Net income of the Partnership was $1,510,000 or $0.17 per partnership unit ("Unit") for the three months ended September 30, 2009 compared to $2,138,000 or $0.24 per Unit for the same period in 2008. Net income of the Partnership was $4,757,000 or $0.53 per Unit for the nine months ended September 30, 2009 compared to $5,715,000 or $0.63 per Unit for the same period in 2008.
Property Operations
The Partnership owns, and derives substantially all of its income from, 27 self-storage facilities, of which fifteen are located in Ontario, five are located in British Columbia, six are located in Quebec and one is located in Alberta. In addition, the Partnership owns parcels of land in Oakville, Ontario; Orleans, Ontario; and Richmond Hill, Ontario for development into new self-storage facilities.
In order to evaluate the performance of the Partnership's portfolio, management analyzes the operating performance of a stabilized group of self-storage facilities (herein referred to as "Same Store" facilities). Management considers the operating performance of the "Same Store" facilities to be a more useful measure of the overall operating performance of the Partnership's portfolio to analyze trends and provide meaningful comparisons. "Same Store" facilities are facilities that have been owned and operated at a mature, stabilized occupancy level since January 1, of the earliest period presented. Management considers a facility to be stabilized after it has been opened for at least three years. As at September 30, 2009, the "Same Store" facilities consist of 16 facilities that have been owned and operated by the Partnership since its inception and two facilities that were opened in 2005 and contain approximately 1,366,000 net rentable square feet and 12,678 storage units.
The following table summarizes the pre-amortization operating results of the Partnership's "Same Store" facilities.
Three months ended September 30, Nine months ended September 30,
------------------------------- --------------------------------
2009 2008 Change 2009 2008 Change
----------- ----------- ------ ----------- ----------- -------
Rental
income $ 4,837,000 $ 5,043,000 (4.1%) $13,989,000 $14,837,000 (5.7%)
Less: cost
of
operations 1,553,000 1,390,000 11.7% 4,394,000 4,441,000 (1.1%)
Less:
management
fees 290,000 303,000 (4.3%) 839,000 890,000 (5.7%)
----------- ----------- ----------- -----------
Net
operating
income
(1) $ 2,994,000 $ 3,350,000 (10.6%) $ 8,756,000 $ 9,506,000 (7.9%)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Gross
margin
(2) 61.9% 66.4% 62.6% 64.1%
Weighted
average
for
period:
Occupancy 90.6% 86.8% 87.6% 85.9%
Realized
annual
rent per
square
foot (3) $15.65 $17.04 (8.2%) $15.61 $16.89 (7.6%)
End of
period
occupancy 89.0% 85.9% 89.0% 85.9%
(1) Net operating income ("NOI") is equal to rental income less cost of
operations and management fees paid to an affiliate before amortization.
This non-generally accepted accounting principles ("GAAP") financial
measure does not have any standardized meanings prescribed by GAAP and
is therefore unlikely to be comparable to similar measures presented by
other issuers.
(2) Gross margin is computed by dividing property net operating income by
rental income.
(3) Realized rent per square foot represents the actual revenue earned per
occupied square foot. Management believes this is a more relevant
measure than posted or scheduled rates as posted rates can be discounted
through promotions.
Funds from Operations ("FFO") and Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA")
FFO and EBITDA are supplementary performance measures for real estate companies used by investors and analysts. These performance measures do not have any standardized meanings prescribed by generally accepted accounting principles ("GAAP") and are therefore unlikely to be comparable to similar measures presented by other issuers. Many investors and analysts consider FFO and EBITDA to be measures of the performance of real estate companies.
The Real Property Association of Canada ("REALpac") defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable real estate and extraordinary items, plus depreciation and amortization, plus future income taxes and after adjustments for equity accounted for entities and non-controlling interests. Adjustments for equity accounted for entities and joint ventures and non-controlling interests are calculated to reflect funds from operations on the same basis as the consolidated properties.
EBITDA is equal to earnings before interest income, interest expense, taxes, depreciation and amortization.
FFO and EBITDA do not take into consideration scheduled principal payments on debt, capital improvements, distributions or other obligations of the Partnership. Accordingly, FFO and EBITDA are not substitutes for the Partnership's cash flow or net income as a measure of the Partnership's liquidity or operating performance or ability to pay distributions.
The following table calculates FFO and EBITDA for the three and nine months ended September 30, 2009 and 2008:
Three months ended September 30, Nine months ended September 30,
------------------------------- --------------------------------
2009 2008 Change 2009 2008 Change
----------- ----------- ------ ----------- ----------- -------
Calculation
of FFO:
--------
Net income $1,510,000 $2,138,000 $4,757,000 $5,715,000
Amorti-
zation
of real
estate
facil-
ities 1,336,000 1,112,000 3,655,000 3,227,000
Amorti-
zation
of
intan-
gible
assets - 17,000 - 116,000
Less:
future
income
tax
benefit (71,000) (47,000) (105,000) (164,000)
----------- ----------- ----------- -----------
FFO $2,775,000 $3,220,000 (13.8%) $8,307,000 $8,894,000 (6.6%)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted
average
number of
Units 9,040,181 9,040,181 9,040,181 9,040,181
FFO per
Unit $0.31 $0.36 (13.9%) $0.92 $0.98 (6.1%)
Calculation
of EBITDA:
-----------
Net income $1,510,000 $2,138,000 $4,757,000 $5,715,000
Amorti-
zation of
real
estate 1,336,000 1,112,000 3,655,000 3,227,000
Amorti-
zation of
intan-
gibles - 17,000 - 116,000
Interest and
commitment
fees 269,000 151,000 628,000 435,000
Less: income
tax benefit (71,000) (47,000) (105,000) (164,000)
Less:
interest
income (5,000) (17,000) (19,000) (92,000)
----------- ----------- ----------- -----------
EBITDA $3,039,000 $3,354,000 (9.4%) $8,916,000 $9,237,000 (3.5%)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted
average
number
of Units 9,040,181 9,040,181 9,040,181 9,040,181
EBITDA per
Unit $0.34 $0.37 (8.1%) $0.99 $1.02 (2.9%)
Distributions
The board of directors of the general partner today declared a distribution of $0.225 per Unit payable on December 31, 2009 to unitholders of record at the close of business on December 15, 2009.
IFRS Update - Property Valuations
The Canadian Accounting Standards Board ("AcSB") confirmed that the adoption of International Financial Reporting Standards ("IFRS") will be effective for Canadian publicly accountable enterprises on January 1, 2011, including the Partnership. IFRS will replace Canadian GAAP for these enterprises. Comparative information under IFRS will also need to be provided for reporting purposes.
The Partnership will be required to disclose the fair value of its investment properties under IFRS. In connection with the transition to IFRS, the Partnership commissioned an appraisal of its real estate portfolio by Colliers International Reality Advisors, Inc., an independent real estate appraisal firm. As of October 1, 2009 the Partnership's real estate portfolio (excluding properties under development) was valued at approximately $230 million.
Partnership Information
Public Storage Canadian Properties is a publicly held limited partnership that invests in self-storage facilities. More information about the Partnership is available on the Internet. The Partnership's main website is www.publicstoragecanada.com. The Partnership's investor website is www.pscinvestor.com.
PUBLIC STORAGE CANADIAN PROPERTIES
SELECTED FINANCIAL DATA
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------ 2009 2008 2009 2008
----------- ------------ ------------ ------------
Revenue:
Rental income $ 6,356,000 $ 6,320,000 $18,077,000 $18,225,000
Interest and other
income 5,000 17,000 19,000 92,000
----------- ------------ ------------ ------------
6,361,000 6,337,000 18,096,000 18,317,000
----------- ------------ ------------ ------------
Costs and expenses:
Cost of operations 2,785,000 2,390,000 7,691,000 7,361,000
Management fees paid
to an affiliate 382,000 380,000 1,085,000 1,094,000
Amortization of real
estate facilities 1,336,000 1,112,000 3,655,000 3,227,000
Amortization of
intangible assets - 17,000 - 116,000
Interest and
commitment fees 269,000 151,000 628,000 435,000
Administrative 150,000 196,000 385,000 533,000
----------- ------------ ------------ ------------
4,922,000 4,246,000 13,444,000 12,766,000
Income before income
taxes 1,439,000 2,091,000 4,652,000 5,551,000
----------- ------------ ------------ ------------
Future income tax
benefit 71,000 47,000 105,000 164,000
----------- ------------ ------------ ------------
Net income $ 1,510,000 $ 2,138,000 $ 4,757,000 $ 5,715,000
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
Net income per Unit $ 0.17 $ 0.24 $ 0.53 $ 0.63
Distributions per Unit $ 0.225 $ 0.45 $ 0.675 $ 1.35
Weighted average
number of Units
outstanding 9,040,181 9,040,181 9,040,181 9,040,181
As at As at
Balance sheet data: September 30, 2009 December 31, 2008
------------------ -----------------
Cash and cash equivalents $ 225,000 $ 2,390,000
Real estate facilities, net 115,147,000 98,309,000
Properties under development 18,073,000 16,881,000
Receivables and other assets 2,577,000 630,000
Future income taxes 1,399,000 1,294,000
--------------------------------------
Total assets $ 137,421,000 $ 119,504,000
--------------------------------------
--------------------------------------
Accounts payable and accrued
liabilities $ 2,748,000 $ 1,509,000
Advance payments from renters 1,586,000 1,326,000
Distributions payable - 2,252,000
Interest rate swaps 328,000 -
Debt 44,386,000 24,371,000
Partners' equity 88,373,000 90,046,000
--------------------------------------
Total liabilities and partner's equity $ 137,421,000 $ 119,504,000
--------------------------------------
--------------------------------------
Units outstanding at end of period 9,040,181 9,040,181
Contacts: Public Storage Canadian Properties Vincent Chan (866) PS-CANADA or (866) 772-2623 www.publicstoragecanada.com
SOURCE: Public Storage Canadian Properties
http://www.publicstoragecanada.com
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