One large benefit of my job here at The Motley Fool is that I get to look at a lot of companies and the results they report. This also means I get to do some valuation work and detailed analysis on companies that look particuarly appealing. Based on today's second-quarter earnings from U-Store-It Trust
The company, like Public Storage
Such statements are often made by management teams, but it's not too often you see a company willingly examine and tighten up its accounting practices. U-Store-It recently corrected an immaterial accounting error in its receivables and excluded depreciation from non-real estate assets in its calculation of funds from operations (FFO). Of the two items, the calculation of FFO is more important, because it gives a more conservative estimate of FFO. Many other REITs follow this practice as well, so it's not entirely unique, but the company is showing investors that it is serious about both cost control and giving shareholders a fair shake.
While the results were encouraging and the company's guidance remains reasonable -- at $0.24 to $0.26 per share in FFO for the third quarter -- it's a little early to get too excited. The dividend of $0.29 is still running above FFO, and there is a slightly larger dividend shortfall once FFO is adjusted for recurring capital expenditures and other items. That said, the company has an experienced management team, and is focused on controlling costs and driving up the occupancy on its properties. Adding up all the pluses and minuses, I'm convinced its time to add this company to my watch list, go back and listen to conference calls, and start digging into the details.
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