2008: A time to deliver
Because of our conservative approach, we remain comfortable with our debt ratios. Our leverage, measured by the percentage of total debt to market capitalization, was 58.0% at year-end, compared to 56.6% at the end of 2007. Our fixed-charge coverage ratio was 2.4 times for the full year, compared to 2.3 times for 2007. More than 88% of our debt was fixed rate at the end of 2008.
In addition to the cash on hand, undrawn lines of credit and loans, we also have the ability to tap our joint venture partners for equity if the right opportunities arise. Over the years we have built strong relationships with our joint-venture partners, including Prudential, TIAA-CREF and Heitman. In today’s environment, self storage remains an attractive product type among private equity investors, given the size of the individual assets, consistent cash flow and increased institutional acceptance.
Backed by our strong balance sheet in 2008, we focused on delivering another year of growth and positive operating performance. With more than three decades of experience, we remain confident that our company has the right people, properties and processes in place. These fundamental strengths have allowed us to keep renting units at the highest possible rate, despite the downturn in the economy.
This is a good time to be in the self-storage industry. As a whole, publicly-held self-storage companies have increased same-store revenue by an average of over 4% per year over the past 12 years, thanks to consistent cash flows and a high base-level of demand. Historically, loans on self-storage properties have had one of the lowest default and loss rates of any commercial property type. With very little new supply coming on line, existing properties are well positioned for future growth.
The core of our business is solid, with demand related to life changes continuing to drive rental activity. While we may lose some customers who have utilized storage as a discretionary service, we will pick up others who are downsizing or undergoing a transition as a direct result of the challenging economy. In addition to continued residential customer demand, business demand remains stable, with many firms using storage to augment their existing retail or office space.
