Exhibit 99.1
Sovran Self Storage Reports First Quarter Results: Revenues Increase 12.8%;
Portfolio Expands by Five Facilities
BUFFALO, N.Y.--(BUSINESS WIRE)--May 4, 2005--Sovran Self Storage,
Inc. (NYSE:SSS), a self-storage real estate investment trust (REIT),
reported operating results for the quarter ended March 31, 2005.
Net income available to common shareholders for the first quarter
of 2005 was $6.5 million or $.40 per diluted share. Net income
available to common shareholders for the same period in 2004 was $5.4
million or $.37 per diluted share. Funds from operations per share for
the quarter increased 11% to $11.3 million or $.70 per fully diluted
common share compared to $9.2 million or $.63 per fully diluted share
for the quarter ended March 31, 2004. 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.
The Company also acquired three self storage facilities during the
quarter and two more in April for a total cost of $27.1 million.
David Rogers, the Company's Chief Financial Officer, commented,
"We had a good first quarter. Growth is strong in most markets, and
we're excited about the potential of our newly acquired stores."
OPERATIONS:
Total Company net operating income for the first quarter grew
12.5% compared with the same quarter in 2004 to $20.6 million. This
growth was the result of improved operating performance and the income
generated by 10 stores acquired in 2004. Overall average occupancy for
the quarter was 83.6% and average rent per square foot for the
portfolio was $9.53.
Revenues at the 261 stores owned and/or managed for the entire
quarter in both years increased 5.3% over the first quarter of 2004,
the result of a 4.0% increase in rental rates, a 60 basis point
increase in average occupancy and a $150,000 increase in truck rental
and other revenues. Same store operating expenses rose 5.6% primarily
as a result of increased insurance, snowplowing and benefits costs. As
a result, same store net operating income improved by 5.2% over the
1st quarter of 2004.
Strong performance was shown at the Company's stores throughout
the Southeast, especially Florida, while some of the Ohio, Michigan
and Texas stores experienced slower than expected growth during the
quarter.
ACQUISITIONS:
During the quarter, the Company acquired three stores totaling
157,000 sq. ft. at a total cost of $15.8 million. The stores are
located in markets where the Company already has an operating presence
- - Long Island, NY; Syracuse, NY; and Cape Cod, MA. In April, the
Company acquired two more facilities in its existing markets of
Stamford, CT and Springfield, MA. These two stores were acquired at a
total cost of $11.3 million.
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 101,000 shares through its
dividend reinvestment program, direct stock purchase plan and employee
option plan. A total of $3.6 million was received, which was used to
fund part of the above mentioned acquisitions.
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 March 31, 2005.
YEAR 2005 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 4% and 4.5%. 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.
Additionally, over the next three years, the Company plans 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.
Cost increases incurred by the Company, especially for 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 most of these costs to continue
and has adjusted guidance accordingly.
At March 31, 2005, all but $49 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 second
quarter of 2005 are projected at between $.74 and $.76 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 First Quarter Earnings Release
Conference Call at 9:00 a.m. Eastern Daylight Time on Thursday, May 5,
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 276 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)
March 31, 2005 December 31, 2004
(dollars in thousands)
- ---------------------- ----------- -----------
Assets
Investment in storage
facilities:
Land $151,460 $148,341
Building and equipment 678,242 663,175
----------- -----------
829,702 811,516
Less: accumulated
depreciation (114,761) (109,750)
----------- -----------
Investments in storage
facilities, net 714,941 701,766
Cash and cash equivalents 6,288 3,105
Accounts receivable 682 1,530
Receivable from related
parties 75 90
Notes receivable from joint
ventures 2,690 2,593
Investment in joint ventures 1,015 1,113
Prepaid expenses 3,358 3,282
Other assets 5,903 6,094
----------- -----------
Total Assets $734,952 $719,573
=========== ===========
Liabilities
Line of credit $59,000 $43,000
Term notes 200,000 200,000
Accounts payable and accrued
liabilities 8,094 9,121
Deferred revenue 4,191 3,824
Fair value of interest rate
swap agreements 1,632 3,425
Accrued dividends 9,731 9,663
Mortgage payable 45,867 46,075
----------- -----------
Total Liabilities 328,515 315,108
Minority interest -
Operating Partnership 11,947 12,007
Minority interest - Locke
Sovran II, LLC 14,755 15,007
Shareholders' Equity
8.375% Series C Convertible
Cumulative Preferred Stock 53,227 53,227
Common stock 172 171
Additional paid-in capital 422,105 418,007
Unearned restricted stock (2,162) (1,774)
Dividends in excess of net
income (64,971) (61,751)
Accumulated other
comprehensive loss (1,461) (3,254)
Treasury stock at cost (27,175) (27,175)
----------- -----------
Total Shareholders'
Equity 379,735 377,451
----------- -----------
Total Liabilities and
Shareholders' Equity $734,952 $719,573
=========== ===========
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
January 1, 2005 January 1, 2004
(dollars in thousands, except to to
per share data) March 31, 2005 March 31,2004
----------- -----------
Revenues:
Rental income $31,211 $27,750
Other operating income 938 754
----------- -----------
Total operating revenues 32,149 28,504
Expenses:
Property operations and
maintenance 8,500 7,412
Real estate taxes 3,017 2,745
General and administrative 2,947 2,463
Depreciation and amortization 5,228 4,692
----------- -----------
Total operating expenses 19,692 17,312
----------- -----------
Income from operations 12,457 11,192
Other income (expense)
Interest expense (4,481) (4,138)
Interest income 98 113
Minority interest -
Operating Partnership (239) (313)
Minority interest -
consolidated joint venture (92) (77)
Equity in income of joint ventures 25 45
----------- -----------
Income from continuing operations 7,768 6,822
Income from discontinued
operations - 753
----------- -----------
Net Income 7,768 7,575
Preferred stock dividends (1,256) (2,204)
----------- -----------
Net income available to common
shareholders $6,512 $5,371
=========== ===========
Per common share - basic:
Continuing operations $0.41 $0.32
Discontinued operations - 0.05
----------- -----------
Earnings per common share
- basic $0.41 $0.37
=========== ===========
Per common share - diluted:
Continuing operations $0.40 $0.32
Discontinued operations - 0.05
----------- -----------
Earnings per common share
- diluted $0.40 $0.37
=========== ===========
Common shares used in basic
earnings per share
calculation 16,037,627 14,519,510
Common shares used in diluted
earnings per share
calculation 16,187,848 14,707,935
Dividends declared per common
share $0.6050 $0.6025
=========== ===========
COMPUTATION OF FUNDS FROM OPERATIONS (FFO) (1)
(unaudited)
January 1, 2005 January 1, 2004
(dollars in thousands, except to to
per share data) March 31, 2005 March 31, 2004
----------- -----------
Net income $7,768 $7,575
Minority interest in income 331 390
Depreciation of real estate and
amortization of intangible
assets exclusive of deferred
financing fees 5,056 4,535
Depreciation of real estate
included in
discontinued operations - 70
Depreciation and amortization
from unconsolidated joint
ventures 118 116
Gain on sale of real estate - (593)
Preferred dividends (1,256) (2,204)
Funds from operations
allocable to minority interest
in Operating Partnership (349) (336)
Funds from operations
allocable to minority interest
in Locke Sovran II, LLC (341) (315)
----------- -----------
Funds from operations
available to common
shareholders 11,327 9,238
FFO per share - diluted $0.70 $0.63
(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) January 1, January 1,
2005 2004
to to Percentage
(dollars in thousands) March 31, March 31, Change
2005 2004
---------- ---------- -----------
Revenues:
Rental income $30,737 $29,286 5.0%
Other operating income 862 712 21.1%
---------- ----------- ----------
Total operating revenues 31,599 29,998 5.3%
Expenses:
Property operations,
maintenance, and real estate
taxes 11,286 10,687 5.6%
---------- ----------- ----------
Operating income $20,313 $19,311 5.2%
(2) Includes the 261 stores owned and/or managed by the Company
for the entire periods presented.
OTHER DATA Same Store (2) All Stores
---------------------- ----------------
2005 2004 2005 2004
--------- ---------- -------- ---------
Weighted average quarterly
occupancy 84.4% 83.8% 83.6% 83.8%
Occupancy at March 31 84.6% 83.6% 83.9% 83.6%
Rent per occupied square foot $9.47 $9.11 $9.53 $9.11
Investment in Storage Facilities:
- ---------------------------------
The following summarizes activity in storage facilities during
the three months ended March 31, 2005:
Beginning balance $811,516
Property acquisitions 15,773
Improvements and equipment
additions:
Dri-guard / climate
control installations 276
Expansions 709
Roofing, paving,
painting, and equipment 1,136
Rental trucks 338
Dispositions (46)
-----------
Storage facilities at cost at
period end $829,702
===========
March 31, 2005 March 31, 2004
----------- -----------
Common shares outstanding at
March 31 16,084,820 14,771,974
Operating Partnership Units
outstanding at March 31 494,269 520,787
CONTACT: Sovran Self Storage, Inc.
David Rogers or Diane Piegza, 716-633-1850