Exhibit 99.1
------------
Sovran Self Storage Reports Fourth Quarter Results: Revenues up 12.6%, Funds
From Operations Per Share Increase 9.1%
BUFFALO, N.Y.--(BUSINESS WIRE)--Feb. 16, 2005--Sovran Self
Storage, Inc. (NYSE:SSS), a self-storage real estate investment trust
(REIT), reported operating results for the quarter and year ended
December 31, 2004.
Net income available to common shareholders for the fourth quarter
of 2004 was $6.7 million or $.42 per diluted share. Net income
available to common shareholders for the same period in 2003 was $5.0
million or $.35 per diluted share. Funds from operations for the
quarter were $11.5 million or $.72 per fully diluted common share
compared to $9.3 million or $.66 per fully diluted share for the
quarter ended December 31, 2003. Strong revenue and operating income
growth and the benefits earned from the previously announced
redemption of the Series B Preferred Stock contributed to the
Company's performance this quarter.
David Rogers, the Company's Chief Financial Officer, commented,
"We enjoyed a solid quarter. Our initiatives have really taken hold,
our cost of capital is significantly reduced and our prospects on all
fronts are very good for 2005."
OPERATIONS:
Total Company net operating income for the fourth quarter grew
13.9% compared with the same quarter in 2003 to $21.2 million. This
growth was the result of improved operating performance and the income
generated by the 10 stores acquired in 2004. Overall average occupancy
for the quarter was 84.4% and average rent per square foot for the
portfolio was $9.46.
Revenues at the 260 stores owned and/or managed for the entire
quarter in both years increased 5.6% over the fourth quarter of 2003,
the result of a 4.1% increase in rental rates, a 20 basis point
increase in average occupancy and a 23% increase in truck rental and
other revenues. Increased personnel, utilities, and insurance costs
were offset by lower property tax charges resulting in a net increase
in same store operating expenses of 2.5%. As a result, same store net
operating income improved by 7.3% over the 4th quarter of 2003.
For the full year, the Company achieved a 5.4% increase in same
store revenues, and incurred a 6.5% increase in operating expenses.
This resulted in an increase in net operating income of 4.9% from the
255 stores owned/operated for all of 2003 and 2004.
Strong performance was shown at the Company's stores throughout
the Southeast, especially Florida, while some of the Ohio and Texas
stores experienced slower than expected growth during the quarter.
ACQUISITIONS:
No facilities were acquired or sold during the 4th quarter of
2004. At December 31, 2004, the Company was in negotiations to acquire
five properties for an approximate total cost of $20 million. None of
the five have been purchased as of today's date.
CAPITAL TRANSACTIONS:
In December, the Company increased its line of credit capacity
from $75 million to $100 million, and provided for another $100
million of availability.
Interest rate reductions were negotiated on the Company's $100
million five year note (it now pays 1.2% over LIBOR) and on the line
of credit (it now pays 90 basis points over LIBOR).
Both the five year note and the line of credit were extended by
one year; the $100 million note now matures in September, 2009, and
the line expires in September 2007, with the option to extend to 2008.
During the quarter, the Company issued 335,000 shares through its
dividend reinvestment program, direct stock purchase plan and employee
option plan. A total of $12.8 million was received, which was used to
repay borrowings on the line of credit and fund property improvements.
The Company's Board of Directors authorized the repurchase of up
to two million shares of the Company's common stock. To date, the
Company has acquired approximately 1.2 million shares pursuant to the
program. The Company expects such repurchases to be effected from time
to time, in the open markets or in private transactions. The amount
and timing of shares to be purchased will be subject to market
conditions and will be based on several factors, including compliance
with lender covenants and the price of the Company's stock. No
assurance can be given as to the specific timing or amount of the
share repurchases or as to whether and to what extent the share
repurchase will be consummated. The Company did not acquire any shares
in the quarter ended December 31, 2004.
YEAR 2004 EARNINGS GUIDANCE:
The Company expects conditions in most of its markets to remain
stable, and estimates growth in net operating income on a same store
basis to be between 3.5 and 4%. It expects to continue implementation
of its Dri-guard and Uncle Bob's Truck initiatives, as well as other
revenue enhancing programs, in which the Company is investing $6 to $7
million this year.
In addition, the Company plans, over the next three years, to
implement a program that will add 450,000 to 600,000 square feet of
rentable space at existing stores and convert up to an additional
250,000 to 300,000 square feet to premium (climate and humidity
controlled) space. The projected cost of these revenue enhancing
improvements is estimated at between $32 and $40 million. Funding of
these and the above mentioned improvements will be provided primarily
from borrowings on the Company's line of credit, and issuance of
common shares in the Company's Dividend Reinvestment Program and Stock
Purchase Programs.
As opportunities arise, the Company may acquire self-storage
facilities with high growth potential for its own portfolio, and may
sell certain facilities depending on market conditions. For purposes
of issuing guidance, the Company is forecasting acquisitions of $50
million in 2005 and no sales of existing facilities.
Recent cost increases incurred by the Company, especially for
property insurance, Directors and Officers insurance, and fees and
expenses associated with Sarbanes Oxley Section 404 Compliance, have
negatively affected operating results in 2004. The Company expects
these costs to continue and has adjusted guidance accordingly.
At December 31, 2004, all but $33 million 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 0.9%.
Management expects funds from operations for 2005 to be between
$2.94 and $2.98 per share. Funds from operations for the first quarter
of 2005 are projected at between $.69 and $.71 per share.
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 21F of 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 ability to form joint ventures and sell
existing properties to those joint ventures; 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 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 ability to
successfully extend its truck leasing program and Dri-guard product
roll-out; the Company's reliance on its call center; the Company's
cash flow may be insufficient to meet required payments of principal
and interest; and tax law changes which may change the taxability of
future income.
CONFERENCE CALL:
Sovran Self Storage will hold its Fourth Quarter Earnings Release
Conference Call at 9:00 a.m. Eastern Standard Time on Thursday,
February 17, 2005. Anyone wishing to listen to the call may access the
webcast via Sovran's homepage www.sovranss.com. The call will be
archived for a period of 90 days after initial airing.
Sovran Self Storage, Inc. is a self-administered and self-managed
equity REIT whose business is acquiring, developing and managing
self-storage facilities. The Company owns and/or operates 271 stores
under the "Uncle Bob's Self Storage"(R) trade name in 21 states. 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)
December December
31, 31,
(dollars in thousands) 2004 2003
- ----------------------------------------------- ----------------------
Assets
Investment in storage facilities:
Land $148,341 $134,248
Building and equipment 663,175 593,041
---------- -----------
811,516 727,289
Less: accumulated depreciation (109,750) (90,682)
---------- -----------
Investments in storage facilities, net 701,766 636,607
Cash and cash equivalents 3,105 20,101
Accounts receivable 1,530 1,626
Receivable from related parties 90 95
Notes receivable from joint ventures 2,593 2,133
Investment in joint ventures 1,113 2,926
Prepaid expenses 3,282 3,093
Other assets 6,094 6,079
Net assets of discontinued operations - 10,676
---------- -----------
Total Assets $719,573 $683,336
========== ===========
Liabilities
Line of credit $43,000 $9,000
Term notes 200,000 200,000
Accounts payable and accrued liabilities 9,121 10,069
Deferred revenue 3,824 3,440
Fair value of interest rate swap agreements 3,425 7,835
Accrued dividends 9,663 8,592
Mortgage payable 46,075 46,819
---------- -----------
Total Liabilities 315,108 285,755
Minority interest - Operating Partnership 12,007 13,671
Minority interest - Locke Sovran II, LLC 15,007 15,713
Shareholders' Equity
9.85% Series B Cumulative Preferred Stock - 28,585
8.375% Series C Convertible Cumulative
Preferred Stock 53,227 67,129
Common stock 171 154
Additional paid-in capital 418,007 356,875
Unearned restricted stock (1,774) (1,722)
Dividends in excess of net income (61,751) (48,069)
Accumulated other comprehensive loss (3,254) (7,580)
Treasury stock at cost (27,175) (27,175)
---------- -----------
Total Shareholders' Equity 377,451 368,197
---------- -----------
Total Liabilities and Shareholders' Equity $719,573 $683,336
========== ===========
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
October 1, October 1,
2004 2003
to to
December 31, December 31,
(dollars in thousands, except per share data) 2004 2003
-------------------------
Revenues:
Rental income $31,103 $27,718
Other operating income 1,043 824
---------- -----------
Total operating revenues 32,146 28,542
Expenses:
Property operations and maintenance 8,346 7,540
Real estate taxes 2,597 2,381
General and administrative 3,255 2,441
Depreciation and amortization 5,217 4,737
---------- -----------
Total operating expenses 19,415 17,099
---------- -----------
Income from operations 12,731 11,443
Other income (expense)
Interest expense (4,486) (4,277)
Interest income 79 105
Minority interest - Operating Partnership (261) (283)
Minority interest - consolidated joint
venture (154) (134)
Equity in income of joint ventures 53 89
---------- -----------
Income from continuing operations 7,962 6,943
Income from discontinued operations - 220
---------- -----------
Net Income 7,962 7,163
Preferred stock dividends (1,256) (2,205)
---------- -----------
Net income available to common shareholders $6,706 $4,958
========== ===========
Per common share - basic:
Continuing operations $0.42 $0.34
Discontinued operations - 0.02
---------- -----------
Earnings per common share - basic $0.42 $0.36
========== ===========
Per common share - diluted:
Continuing operations $0.42 $0.33
Discontinued operations - 0.02
---------- -----------
Earnings per common share - diluted $0.42 $0.35
========== ===========
Common shares used in basic
earnings per share calculation 15,804,391 13,925,050
Common shares used in diluted
earnings per share calculation 15,965,425 14,090,804
Dividends declared per common share $0.6050 $0.6025
========== ===========
January 1, January 1,
2004 2003
to to
December 31, December 31,
(dollars in thousands, except per share data) 2004 2003
-------------------------
Revenues:
Rental income $119,605 $108,524
Other operating income 3,681 2,890
---------- -----------
Total operating revenues 123,286 111,414
Expenses:
Property operations and maintenance 32,166 28,545
Real estate taxes 11,014 9,977
General and administrative 11,071 9,616
Depreciation and amortization 19,895 18,687
---------- -----------
Total operating expenses 74,146 66,825
---------- -----------
Income from operations 49,140 44,589
Other income (expense)
Interest expense (17,408) (15,102)
Interest income 301 416
Write-off of unamortized financing fees - (713)
Minority interest - Operating Partnership (1,043) (1,176)
Minority interest - consolidated joint
venture (499) (614)
Equity in income of joint ventures 207 186
---------- -----------
Income from continuing operations 30,698 27,586
Income from discontinued operations 1,306 837
---------- -----------
Net Income 32,004 28,423
Redemption amount in excess of carrying
value of Series B Preferred Stock (1,415) -
Preferred stock dividends (7,168) (8,818)
---------- -----------
Net income available to common shareholders $23,421 $19,605
========== ===========
Per common share - basic:
Continuing operations $1.45 $1.41
Discontinued operations 0.09 0.06
---------- -----------
Earnings per common share - basic $1.54 $1.47
========== ===========
Per common share - diluted:
Continuing operations $1.44 $1.40
Discontinued operations 0.09 0.06
---------- -----------
Earnings per common share - diluted $1.53 $1.46
========== ===========
Common shares used in basic
earnings per share calculation 15,160,873 13,345,517
Common shares used in diluted
earnings per share calculation 15,294,881 13,473,369
Dividends declared per common share $2.4150 $2.4050
========== ===========
COMPUTATION OF FUNDS FROM OPERATIONS (FFO) (1)
(unaudited)
October 1, October 1,
2004 2003
to to
December 31, December 31,
(dollars in thousands, except per share data) 2004 2003
-------------------------
Net income $7,962 $7,163
Minority interest in income 415 417
Depreciation of real estate and amortization of
intangible assets exclusive of deferred
financing fees 5,037 4,487
Depreciation of real estate included in
discontinued operations - 73
Depreciation and amortization from
unconsolidated joint ventures 123 122
Gain on sale of real estate (33) -
Preferred dividends (1,256) (2,205)
Funds from operations allocable to
minority interest in Operating Partnership (372) (368)
Funds from operations allocable to
minority interest in Locke Sovran II, LLC (403) (372)
---------- -----------
Funds from operations available to common
shareholders 11,473 9,317
FFO per share - diluted $0.72 $0.66
January 1, January 1,
2004 2003
to to
December 31, December 31,
(dollars in thousands, except per share data) 2004 2003
-------------------------
Net income $32,004 $28,423
Minority interest in income 1,542 1,790
Depreciation of real estate and amortization of
intangible assets exclusive of deferred
financing fees 19,175 17,856
Depreciation of real estate included in
discontinued operations 90 293
Depreciation and amortization from
unconsolidated joint ventures 473 460
Gain on sale of real estate (1,137) -
Preferred dividends (7,168) (8,818)
Redemption amount in excess of carrying
value of Series B Preferred Stock (1,415) -
Funds from operations allocable to
minority interest in Operating Partnership (1,333) (1,563)
Funds from operations allocable to
minority interest in Locke Sovran II, LLC (1,475) (1,539)
---------- -----------
Funds from operations available to common
shareholders 40,756 36,902
FFO per share - diluted $2.66 $2.79
(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) October October
1, 1,
2004 2003
to to
(dollars in thousands) December December Percentage
31, 2004 31, 2003 Change
----------------------------
Revenues:
Rental income $30,565 $29,070 5.1%
Other operating income 981 797 23.1%
-------- -------- ----------
Total operating revenues 31,546 29,867 5.6%
Expenses:
Property operations, maintenance, and
real estate taxes 10,582 10,327 2.5%
-------- -------- ----------
Operating income $20,964 $19,540 7.3%
(2) Includes the 260 stores owned and/or managed by the Company
for the entire periods presented.
YEAR TO DATE SAME STORE DATA (3) January January
1, 1,
2004 2003
to to
(dollars in thousands) December December Percentage
31, 2004 31, 2003 Change
-----------------------------
Revenues:
Rental income $116,582 $111,083 5.0%
Other operating income 3,419 2,718 25.8%
-------- -------- ----------
Total operating revenues 120,001 113,801 5.4%
Expenses:
Property operations, maintenance, and
real estate taxes 42,329 39,762 6.5%
-------- -------- ----------
Operating income $77,672 $74,039 4.9%
(3) Includes the 255 stores owned and/or managed by the Company
for the entire periods presented.
OTHER DATA Same All
Store (2) Stores
------------ -------------
2004 2003 2004 2003
------------ -------------
Weighted average quarterly occupancy 85.2% 85.0% 84.4% 85.0%
Occupancy at December 31 84.7% 84.4% 83.9% 84.4%
Rent per occupied square foot $9.38 $9.01 $9.46 $9.02
Investment in Storage Facilities:
- ---------------------------------
The following summarizes activity in storage facilities during the
twelve months ended December 31, 2004:
Beginning balance $727,289
Property acquisitions 66,373
Improvements and equipment additions:
Dri-guard / climate control installations 1,909
Expansions 5,676
Roofing, paving, painting, and equipment 9,415
Rental trucks 1,075
Dispositions (221)
---------
Storage facilities at cost at period end $811,516
=========
December 31, December 31,
2004 2003
-------------------------
Common shares outstanding at December 31 15,972,227 14,259,863
Operating Partnership Units outstanding at
December 31 494,269 540,745
CONTACT: Sovran Self Storage, Inc
David Rogers
or
Diane Piegza, 716-633-1850