Sovran Self Storage, Inc. (NYSE:SSS), a self storage real estate
investment trust (REIT), reported operating results for the quarter
ended June 30, 2010.
Net income available to common shareholders for the second
quarter of 2010 was $15.8 million or $.57 per diluted share.
Exclusive of a $7.5 million gain on the sale of 8 properties, net
income available to common shareholders was $8.2 million or $.30
per diluted share. Net income available to common shareholders for
the same period in 2009 was $6.3 million or $.28 per diluted share.
Funds from operations (FFO) for the quarter were $.61 per fully
diluted common share compared to $.66 for the same period last
year. The impact of the Company’s $4 million share offering in
October 2009 offset a significant decline in interest expense
thereby contributing to the decline in per share FFO results.
OPERATIONS:
Revenues for the 345 stores owned by the Company for the entire
quarter of each year increased by 0.2% from those of the second
quarter of 2009, the result of a 20 basis point drop in average
occupancy offset by a 40 basis point increase in rates, and solid
improvements in other, non-rental revenues.
Ken Myszka, the Company’s President and COO, commented, “We’re
encouraged by the high level of rental activity and also our
ability to obtain rate increases from in-place customers.
Two-thirds of the 24 states we operate in showed same store revenue
growth this quarter – a tremendous improvement over the past five
or six quarters. It appears that while our peak leasing season may
have gotten off to a bumpy start, we’re gaining steam as the summer
goes on.”
Same store operating expenses increased by a total of 3.8%,
primarily the result of increased health care, workers compensation
and property maintenance costs. Almost all other operating expense
categories remained at 2009’s suppressed levels with the exception
of property taxes, which grew at a pace of 2.4%.
Total property net operating income for the second quarter
declined 1.7% compared with the same quarter in 2009 to $29.6
million. Overall average occupancy for the quarter was 80.5% and
average rent per square foot for the portfolio was $10.16.
General and administrative expenses grew by about $630,000 over
the same period in 2009, primarily due to increased income taxes
associated with operations of the Company’s taxable REIT subsidiary
and marketing and internet advertising costs.
During the quarter, revenue growth was seen at the Company’s
Georgia, Maryland, Michigan, Alabama and most of its New England
stores, while stores in Florida, Louisiana, and Texas (primarily
the Houston market area) showed revenue declines.
PROPERTIES:
The Company did not acquire any properties during the quarter
for its own portfolio or for that of the Joint Venture. The Company
sold eight properties in early May – three in Jacksonville, NC; two
each in Augusta and Macon, GA; and one in Dansville, VA. The
properties total approximately 439,000 square feet of rental space
and the combined sales price was $22.1 million. The Company
realized a gain of $7.5 million on the sale of these stores.
The Company also sold two stores located in Holland, Michigan,
thereby exiting that market. The stores sold for $2.4 million. The
transaction took place in April, therefore, the impact of the sale
was recorded in first quarter results.
Dave Rogers, the Company’s Chief Financial Officer, commented,
“We were glad for the opportunity to prune our portfolio of
properties that were no longer a good fit. The proceeds generated
from the sales, combined with our untapped line of credit, give us
over $200 million of acquisition capacity. While at this time we
don’t see compelling opportunities, we do see signs in some markets
that the bid/ask price imbalances are coming back into line. We
hope to be active on the acquisition front in the coming
quarters.”
The Company has re-embarked on its program of expanding and
enhancing its properties. Up to 20 projects providing approximately
500,000 square feet of additional and/or improved space at existing
stores is planned during 2010 at an estimated cost of $20
million.
CAPITAL TRANSACTIONS:
At June 30, 2010, the Company had $400 million of unsecured term
note debt and $80.1 million of mortgage debt outstanding. The
Company has no significant debt maturities until mid-2012.
Illustrated below are key financial ratios at June 30, 2010:
- Debt to Enterprise Value (at
$36.00/share)
32.3 %
- Debt to Book Cost of Storage
Facilities
34.9 %
- Debt to EBITDA Ratio
4.9x
- Debt Service Coverage
3.1x
At June 30, 2010, the Company had approximately $28 million of
cash on hand, and up to $175 million available on its line of
credit.
YEAR 2010 EARNINGS GUIDANCE:
While consumer demand appears to be improving moderately in many
of our markets, the Company expects conditions to remain
competitive and anticipates the continuation of leasing incentives
as well as increased advertising. Accordingly, a decline in same
store revenue of 0% to 1% is projected from that of 2009. It is
expected that the latter half of 2010 will show modestly stronger
revenue growth than that of the first six months. Property
operating costs are projected to increase by 2% to 3%, including an
expected 6% increase in property taxes. Accordingly, the Company is
anticipating a decline of 2% to 3% in same store net operating
income for 2010.
The Company has identified some 20 properties at which it plans
to add or improve approximately 500,000 square feet of storage
space during 2010 at an estimated cost of $20 million. The Company
also has budgeted $12 million to provide for recurring capitalized
expenditures, including roofing, painting, paving, and office
renovations.
The Company is selectively evaluating acquisition opportunities,
but at present has no properties under contract and expects to
remain prudent while the property market remains unsettled.
General and administrative expenses are expected to increase due
to income taxes on its taxable REIT subsidiaries and the Company’s
plans to expand its internet marketing presence.
At June 30, 2010, all of the Company’s debt is either fixed rate
or covered by rate swap contracts that essentially fix the rate.
Subsequent borrowings that may occur will be pursuant to the
Company’s Line of Credit agreement at a floating rate of LIBOR plus
1.375%.
At June 30, 2010, the Company had 27.6 million shares of common
stock outstanding and .34 million Operating Partnership Units
outstanding.
As a result of somewhat improved projected operating results,
offset by the dilutive impact of the sale of 10 stores, management
reiterates its prior forecast of expected funds from operations for
the full year 2010 to be approximately $2.44 to $2.48 per share,
and between $0.62 and $0.64 for the third quarter of 2010.
FORWARD LOOKING STATEMENTS:
When used within this news release, the words “intends,”
“believes,” “expects,” “anticipates,” and similar expressions are
intended to identify “forward looking statements” within the
meaning of that term in Section 27A of the Securities Act of 1933,
and in Section 21E of the Securities Exchange Act of 1934. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual
results, performance or achievements of the Company to be
materially different from those expressed or implied by such
forward looking statements. Such factors include, but are not
limited to, the effect of competition from new self storage
facilities, which could cause rents and occupancy rates to decline;
the Company’s ability to evaluate, finance and integrate acquired
businesses into the Company’s existing business and operations; the
Company’s existing indebtedness may mature in an unfavorable credit
environment, preventing refinancing or forcing refinancing of the
indebtedness on terms that are not as favorable as the existing
terms; interest rates may fluctuate, impacting costs associated
with the Company’s outstanding floating rate debt; the Company’s
ability to comply with debt covenants; the future ratings on the
Company’s debt instruments; the regional concentration of the
Company’s business may subject it to economic downturns in the
states of Florida and Texas; the Company’s ability to effectively
compete in the industries in which it does business; the Company’s
reliance on its call center; the Company’s cash flow may be
insufficient to meet required payments of principal, interest and
dividends; and tax law changes which may change the taxability of
future income.
CONFERENCE CALL:
Sovran Self Storage will hold its Second Quarter Earnings
Release Conference Call at 9:00 a.m. Eastern Time on Thursday,
August 5, 2010. To access the conference call, dial 877.407.8033
(domestic), or 201.689.8033 (international), at least five minutes
prior to the scheduled start of the call. Management will accept
questions from registered financial analysts after prepared
remarks; all others are encouraged to listen to the call via
webcast at www.unclebobs.com/company/investment/events.
The webcast will be archived for a period of 90 days; a
telephone replay will also be available for 72 hours by calling
877.660.6853 and entering pass codes 286/353927.
Sovran Self Storage, Inc. is a self-administered and
self-managed equity REIT that is in the business of acquiring and
managing self storage facilities. The Company operates 371 self
storage facilities in 24 states under the name “Uncle Bob’s Self
Storage”®. For more information, please contact David Rogers, CFO
or Diane Piegza, VP Corporate Communications at 716.633.1850 or
visit the Company’s Web site.
SOVRAN SELF STORAGE, INC. BALANCE SHEET
DATA (unaudited) June 30, December 31, (dollars
in thousands) 2010 2009
Assets Investment in storage
facilities: Land $ 235,123 $ 234,522 Building, equipment and
construction in progress
1,138,604
1,129,932 1,373,727 1,364,454 Less:
accumulated depreciation
(255,309
) (238,971 )
Investment in storage facilities, net 1,118,418 1,125,483 Cash and
cash equivalents 28,017 10,710 Accounts receivable 2,301 2,346
Receivable from joint venture 225 173 Investment in joint venture
19,791 19,944 Prepaid expenses 5,154 4,203 Other assets 4,825 5,313
Net assets of discontinued operations
-
16,926 Total Assets
$
1,178,731 $ 1,185,098
Liabilities Line of credit $ - $ - Term notes
400,000 400,000 Accounts payable and accrued liabilities 19,379
22,316 Deferred revenue 5,074 4,980 Fair value of interest rate
swap agreements 12,535 11,524 Mortgages payable
80,098 81,219 Total
Liabilities 517,086 520,039 Noncontrolling redeemable
Operating Partnership Units at redemption value 11,807 15,005
Equity Common stock 288 287 Additional paid-in
capital 815,903 814,988 Accumulated deficit (140,011 ) (139,863 )
Accumulated other comprehensive loss (12,249 ) (11,265 ) Treasury
stock at cost
(27,175 )
(27,175 ) Total Shareholders' Equity
636,756 636,972 Noncontrolling interest - consolidated joint
venture
13,082
13,082 Total Equity
649,838
650,054 Total Liabilities and
Equity
$ 1,178,731 $
1,185,098 CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited) April 1, 2010 April
1, 2009 to to (dollars in thousands, except share data) June 30,
2010 June 30, 2009
Revenues Rental income $
45,061 $ 45,094 Other operating income 1,937 1,728 Management and
acquisition fee income
311
305 Total operating revenues 47,309 47,127
Expenses Property operations and maintenance 12,543
11,976 Real estate taxes 5,140 5,004 General and administrative
4,967 4,338 Depreciation and amortization 8,202 8,126 Amortization
of in-place customer leases
-
90 Total operating expenses
30,852 29,534
Income from operations 16,457 17,593 Other income (expense)
Interest expense (including amortization of financing fees of $258
in 2010 and $315 in 2009) (7,929 ) (11,699 ) Interest income 21 20
Equity in income of joint ventures
69
63 Income from continuing
operations 8,618 5,977 Income from discontinued operations,
including a gain on sale of $7,524 in 2010
7,686 765 Net income
16,304 6,742 Net income attributable to noncontrolling interests
(543 ) (456
) Net income attributable to common
shareholders $ 15,761
$ 6,286 Earnings per
common share attributable to common shareholders - basic
Continuing operations $ 0.29 $ 0.25 Discontinued operations
0.28 0.03 Earnings
per common share - basic
$ 0.57
$ 0.28 Earnings per
common share attributable to common shareholders - diluted
Continuing operations $ 0.29 $ 0.25 Discontinued operations
0.28 0.03 Earnings
per common share - diluted
$ 0.57
$ 0.28 Common shares used
in basic earnings per share calculation 27,463,500 22,613,518
Common shares used in diluted earnings per share calculation
27,508,097 22,616,553
Dividends declared per common
share $ 0.4500 $
- CONSOLIDATED STATEMENTS OF
OPERATIONS (unaudited) January 1, 2010 January 1, 2009
to to (dollars in thousands, except share data) June 30, 2010
June 30, 2009
Revenues Rental income $ 90,410
$ 91,140 Other operating income 3,560 3,254 Management and
acquisition fee income
623
615 Total operating revenues 94,593 95,009
Expenses Property operations and maintenance 25,477
24,868 Real estate taxes 10,350 10,012 General and administrative
10,107 8,724 Depreciation and amortization 16,402 16,219
Amortization of in-place customer leases
-
235 Total operating expenses
62,336 60,058
Income from operations 32,257 34,951 Other income
(expense) Interest expense (including amortization of financing
fees of $515 in 2010 and $630 in 2009) (15,808 ) (21,678 ) Interest
income 41 53 Equity in income of joint ventures
139 94 Income
from continuing operations 16,629 13,420 Income from discontinued
operations, including a gain on sale of $6,944 in 2010
7,562 1,443 Net
income 24,191 14,863 Net income attributable to noncontrolling
interests
(1,003 )
(942 ) Net income attributable to
common shareholders $ 23,188
$ 13,921 Earnings per
common share attributable to common shareholders - basic
Continuing operations $ 0.57 $ 0.56 Discontinued operations
0.27 0.06 Earnings
per common share - basic
$ 0.84
$ 0.62 Earnings per
common share attributable to common shareholders - diluted
Continuing operations $ 0.57 $ 0.56 Discontinued operations
0.27 0.06 Earnings
per common share - diluted
$ 0.84
$ 0.62 Common shares used
in basic earnings per share calculation 27,454,301 22,291,292
Common shares used in diluted earnings per share calculation
27,493,623 22,294,457
Dividends declared per common
share $ 0.9000 $
0.6400 COMPUTATION OF FUNDS FROM
OPERATIONS (FFO) (1) - (unaudited) April 1, 2010 April
1, 2009 to to (dollars in thousands, except share data) June 30,
2010 June 30, 2009 Net income attributable to common
shareholders $ 15,761 $ 6,286 Net income attributable to
noncontrolling interests 543 456 Depreciation of real estate and
amortization of intangible assets exclusive of deferred financing
fees 8,202 8,216 Depreciation of real estate included in
discontinued operations 54 306 Depreciation and amortization from
unconsolidated joint ventures 196 209 Gain on sale of real estate
(7,524 ) - Funds from operations allocable to noncontrolling
interest in Operating Partnership (215 ) (275 ) Funds from
operations allocable to noncontrolling interest in consolidated
joint ventures
(340 )
(340 ) Funds from operations available to
common shareholders 16,677 14,858 FFO per share - diluted $ 0.61 $
0.66 Common shares - diluted 27,508,097 22,616,553
January 1, 2010 January 1, 2009 to to (dollars in thousands,
except share data) June 30, 2010 June 30, 2009 Net income
attributable to common shareholders $ 23,188 $ 13,921 Net income
attributable to noncontrolling interests 1,003 942 Depreciation of
real estate and amortization of intangible assets exclusive of
deferred financing fees 16,402 16,454 Depreciation of real estate
included in discontinued operations 217 609 Depreciation and
amortization from unconsolidated joint ventures 391 416 Gain on
sale of real estate (6,944 ) - Funds from operations allocable to
noncontrolling interest in Operating Partnership (463 ) (584 )
Funds from operations allocable to noncontrolling interest in
consolidated joint ventures
(680 )
(680 ) Funds from operations
available to common shareholders 33,114 31,078 FFO per share -
diluted $ 1.20 $ 1.39 Common shares - diluted 27,493,623
22,294,457 (1) We believe that Funds from Operations (“FFO”)
provides relevant and meaningful information about our operating
performance that is necessary, along with net earnings and cash
flows, for an understanding of our operating results. FFO adds back
historical cost depreciation, which assumes the value of real
estate assets diminishes predictably in the future. In fact, real
estate asset values increase or decrease with market conditions.
Consequently, we believe FFO is a useful supplemental measure in
evaluating our operating performance by disregarding (or adding
back) historical cost depreciation. Funds from operations is
defined by the National Association of Real Estate Investment
Trusts, Inc. (“NAREIT”) as net income computed in accordance with
generally accepted accounting principles (“GAAP”), excluding gains
or losses on sales of properties, plus depreciation and
amortization and after adjustments to record unconsolidated
partnerships and joint ventures on the same basis. We believe that
to further understand our performance, FFO should be compared with
our reported net income and cash flows in accordance with GAAP, as
presented in our consolidated financial statements. Our
computation of FFO may not be comparable to FFO reported by other
REITs or real estate companies that do not define the term in
accordance with the current NAREIT definition or that interpret the
current NAREIT definition differently. FFO does not represent cash
generated from operating activities determined in accordance with
GAAP, and should not be considered as an alternative to net income
(determined in accordance with GAAP) as an indication of our
performance, as an alternative to net cash flows from operating
activities (determined in accordance with GAAP) as a measure of our
liquidity, or as an indicator of our ability to make cash
distributions.
QUARTERLY SAME STORE DATA
(2) * April 1, 2010 April 1, 2009 to to Percentage (dollars in
thousands) June 30, 2010 June 30, 2009 Change
Revenues: Rental income $ 45,018 $ 45,094 -0.2 % Other
operating income
1,826
1,640 11.3 % Total operating
revenues 46,844 46,734 0.2 %
Expenses: Property
operations and maintenance 12,470 11,949 4.4 % Real estate taxes
5,126 5,004
2.4 % Total operating expenses
17,596 16,953 3.8
% Operating income $ 29,248 $ 29,781 -1.8 %
(2) Includes the 345 stores owned and/or managed by the
Company for the entire periods presented that are consolidated in
our financial statements. Does not include unconsolidated joint
venture stores managed by the Company. * See exhibit A for
supplemental same store data.
YEAR TO DATE SAME STORE
DATA (2) January 1, 2010 January 1, 2009 to to Percentage
(dollars in thousands) June 30, 2010 June 30, 2009 Change
Revenues: Rental income $ 90,339 $ 91,140 -0.9 %
Other operating income
3,363
3,101 8.4 % Total operating
revenues 93,702 94,241 -0.6 %
Expenses: Property
operations and maintenance 25,330 24,817 2.1 % Real estate taxes
10,322 10,012
3.1 % Total operating expenses
35,652 34,829 2.4
% Operating income $ 58,050 $ 59,412 -2.3 %
OTHER DATA Same Store (2) All Stores (3)
2010
2009
2010
2009
Weighted average quarterly occupancy 80.7 % 80.9 %
80.5 % 81.1 % Occupancy at June 30 82.0 % 82.5
% 81.8 % 82.7 % Rent per occupied square foot $10.16 $10.12
$10.16 $10.05 (3) Does not include 25 unconsolidated joint
venture stores managed by the Company
Investment in Storage Facilities:
The following summarizes activity in storage facilities during the
six months ended June 30, 2010: Beginning balance $
1,364,454 Property acquisitions - Improvements and equipment
additions: Expansions 2,330 Roofing, paving, painting, and
equipment: Stabilized stores 5,511 Recently acquired and
consolidated joint venture stores 519 Change in construction in
progress (Total CIP $10.9 million) 1,025 Dispositions
(112 ) Storage facilities at cost at
period end
$ 1,373,727
June 30, 2010
June 30, 2009
Common shares outstanding 27,591,109 23,391,184 Operating
Partnership Units outstanding 342,936 419,952
Exhibit
A
Sovran Self Storage,
Inc. Same Store Performance Summary Three
Months Ended June 30, 2010 (unaudited)
Expenses
Avg Qtrly Average Quarterly Revenue for the
for the Three
NOI for the Rent per Occupancy for the Three
Three Months Months Ended Three Months
Square Occupied Months Ended June 30,
Ended June 30, June 30,
Ended June 30, State
Stores
Feet
Square Foot
2010 2009 2010
2009 % Change 2010 2009
% Change 2010 2009 %
Change Alabama 22 1,588 $ 8.08 75.0% 74.5% $ 2,630 $
2,536 3.70% $ 967 $ 983 -1.60% $ 1,663 $ 1,553 7.10% Arizona 9 531
10.00 82.9% 84.7% 1,164 1,161 0.30% 415 394 5.30% 749 767 -2.30%
Connecticut 5 301 17.51 73.3% 75.7% 989 1,040 -4.90% 381 342 11.40%
608 698 -12.90% Florida 54 3,420 10.16 78.1% 79.3% 7,001 7,222
-3.10% 2,863 2,813 1.80% 4,138 4,409 -6.10% Georgia 22 1,421 9.34
79.2% 74.9% 2,747 2,587 6.20% 1,022 986 3.70% 1,725 1,601 7.70%
Louisiana 14 836 10.93 83.0% 81.1% 1,926 1,970 -2.20% 594 571 4.00%
1,332 1,399 -4.80% Maine 2 113 10.75 79.9% 77.9% 252 255 -1.20% 86
92 -6.50% 166 163 1.80% Maryland 4 172 13.96 86.4% 86.6% 531 489
8.60% 194 188 3.20% 337 301 12.00% Massachusetts 12 664 12.32 81.2%
77.2% 1,701 1,646 3.30% 641 601 6.70% 1,060 1,045 1.40% Michigan 4
229 9.05 84.9% 86.6% 462 428 7.90% 192 174 10.30% 270 254 6.30%
Mississippi 12 924 8.81 83.5% 82.8% 1,792 1,740 3.00% 565 547 3.30%
1,227 1,193 2.80% Missouri 7 432 10.98 86.5% 87.3% 1,050 1,038
1.20% 409 408 0.20% 641 630 1.70% New Hampshire 4 260 10.58 86.1%
76.1% 551 508 8.50% 200 188 6.40% 351 320 9.70% New York 28 1,595
12.86 83.2% 85.2% 4,448 4,345 2.40% 1,511 1,416 6.70% 2,937 2,929
0.30% North Carolina 11 540 9.56 79.7% 81.5% 1,032 1,052 -1.90% 398
369 7.90% 634 683 -7.20% Ohio 17 1,130 8.41 85.8% 84.9% 2,112 2,097
0.70% 785 723 8.60% 1,327 1,374 -3.40% Pennsylvania 4 208 9.83
80.9% 79.5% 423 434 -2.50% 148 150 -1.30% 275 284 -3.20% Rhode
Island 4 168 12.06 79.9% 78.3% 441 428 3.00% 186 162 14.80% 255 266
-4.10% South Carolina 8 443 9.55 79.6% 80.0% 877 879 -0.20% 382 341
12.00% 495 538 -8.00% Tennessee 4 291 8.23 85.2% 78.3% 519 487
6.60% 243 226 7.50% 276 261 5.70% Texas 81 5,880 9.93 80.8% 83.3%
11,990 12,237 -2.00% 4,727 4,620 2.30% 7,263 7,617 -4.60% Virginia
17 1,003 10.57 80.6% 78.0% 2,206 2,155 2.40% 687 659 4.20% 1,519
1,496 1.50%
Portfolio Total 345 22,149 $ 10.16
80.7% 80.9% $ 46,844 $ 46,734 0.20% $
17,596 $ 16,953 3.80% $ 29,248 $ 29,781
-1.80%
Dollars in thousands except for average quarterly
rent per occupied square foot. Square feet in thousands. 345
wholly owned same stores.
Life Storage (NYSE:LSI)
Historical Stock Chart
From May 2024 to Jun 2024
Life Storage (NYSE:LSI)
Historical Stock Chart
From Jun 2023 to Jun 2024
