The Seattle company reported a plunge in earnings after taking a $12.7 million charge for the cost of takeover-bid advice.

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Shurgard Storage Centers reported a plunge in earnings Tuesday after taking a $12.7 million charge for the cost of advice on a hostile takeover bid by rival Public Storage.

For the third quarter, the Seattle company reported a net loss to common shareholders of $1.4 million, compared with $15 million profit a year ago. Funds from operations (FFO), a financial benchmark for measuring the performance of a real-estate investment trust (REIT) such as Shurgard, dropped to $16.6 million from $32.6 million a year ago.

Public Storage, based in Glendale, Calif., made a $2.49 billion unsolicited bid for its smaller rival in July. Shurgard’s board initially rebuffed the offer but last month, reacting to complaints by shareholders, said it would consider a sale and other unnamed strategic alternatives.

Since then, neither company has commented on whether they were negotiating. In a conference call Tuesday, Shurgard officials refused to field questions on a possible deal, saying only that the matter was being discussed with its financial advisers at Citigroup and Bank of America.

The heavy consulting fees, and a $7.4 million increase in interest costs, overshadowed strong revenue growth for the self-storage company. Same-store revenue from its 537 outlets in the U.S. and seven European countries increased by 7.8 percent to $111 million. Taking into account new stores and redeveloped properties, revenue overall was up 15 percent, to $124 million.

Performance was particularly strong at the company’s 96 storage centers in Europe. An average 2 percent drop in rental fees helped boost occupancy levels to 81 percent from 71 percent a year ago.

“It’s a positive trend because traditionally they’ve had trouble reaching in Europe the same 85 percent occupancy level they enjoy in the U.S.,” said Michael Knot, an analyst at Green Street Advisors.

Management revised downward its forecast of 2005 FFO per share to between $1.77 and $1.80, reflecting costs related to damage from Hurricane Wilma and continued costs related to Sarbanes-Oxley compliance.

Shurgard’s results
Dollar figures in thousands, except per share; parentheses denote losses.
Sept. 30 %
3rd QTR 2005 2004 CHG
Profit ($1,448) $15,116
Per share (0.03) 0.33
Revenue 124,418 108,084 +15.1
9 mos. 2005 2004 CHG
Profit ($2,965) $29,501
Per share (0.06) 0.64
Revenue 354,175 308,142 +14.9