Exhibit 99.1
Sovran Self Storage Reports Second Quarter Results: Revenues Increase 19%;
Portfolio Expands by 15 Facilities
BUFFALO, N.Y.--(BUSINESS WIRE)--Aug. 1, 2007--Sovran Self Storage,
Inc. (NYSE:SSS), a self-storage real estate investment trust (REIT),
reported operating results for the quarter ended June 30, 2007.
Net income available to common shareholders for the second quarter
of 2007 was $7.4 million or $.36 per diluted share. Net income
available to common shareholders for the same period in 2006 was $8.8
million or $.50 per diluted share. Of significant impact was a non
cash charge of $2.7 million relating to amortization of in-place
customer leases. Funds from operations per share for the quarter
increased 18.3% to $17.4 million or $.84 per fully diluted common
share compared to $.82 per fully diluted share for the quarter ended
June 30, 2006. Strong rental rate growth was offset by higher
operating costs and the impact of a decline in occupancy in most of
the Company's Florida markets.
As previously announced, the Company acquired fifteen self-storage
facilities during the quarter for a total cost of $87.4 million.
David Rogers, the Company's Chief Financial Officer, said, "The 58
stores we've acquired since this time last year are performing very
well and our core group is solid. We're looking forward to a strong
second half of 2007."
OPERATIONS:
Total Company net operating income for the second quarter grew
15.6% compared with the same quarter in 2006 to $30.6 million. This
growth was the result of improved operating performance and the income
generated by the 58 stores acquired since mid 2006. Overall average
occupancy for the quarter was 84.8% and average rent per square foot
for the portfolio was $10.24.
Revenues at the 291 stores owned and/or managed for the entire
quarter in both years increased 4.0% over the second quarter of 2006,
the result of a 4.4% increase in rental rates (offset by a 180 basis
point decrease in average occupancy) and a 2.3% increase in other
income. Same store operating expenses rose 8.1% primarily as a result
of an increase in insurance premiums and property maintenance costs.
As a result, same store net operating income improved by 1.9% over the
second quarter of 2006. General and administrative expenses were
essentially flat over the same period in 2006.
Strong performance was shown at the Company's Texas and North and
South Carolina stores as well as those in the Atlanta and Buffalo
markets. Stores in Florida, Michigan and Louisiana have experienced
slower than expected growth during the quarter.
ACQUISITIONS:
During the quarter, the Company acquired fifteen stores totaling
1.3 million sq. ft. at a total cost of $87.4 million. Six of the
stores are located in markets where the Company already has an
operating presence: two each in Pensacola, FL and Montgomery, AL and
one each in Auburn, AL and San Antonio, TX. Also acquired were four
stores in Huntsville, AL and five on the Gulf Coast, both of which are
new markets for the Company.
CAPITAL TRANSACTIONS:
During the quarter, the Company issued 61,768 shares through its
Dividend Reinvestment Program, Direct Stock Purchase Plan and Employee
Option Plan. A total of $3.2 million was received, and was used to
fund capital improvements.
The Company borrowed $89 million pursuant to its revolving line of
credit to fund the above mentioned acquisitions and additional capital
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 June 30, 2007.
YEAR 2007 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 approximately 4.0% for the balance of the year.
As previously announced, the Company has implemented 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) spaces over
the next two years. The projected cost of these revenue enhancing
improvements is estimated at between $45 and $50 million. $19 million
was expended in 2006 on such improvements and up to $25 million is
expected in 2007. $13.3 million was expended during the six months
ended June 30, 2007.
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 2007 guidance, the Company is forecasting accretive
acquisitions of $135 million, opportunistic acquisitions of $10
million and no sales of existing facilities.
Funding of the acquisitions and the above mentioned revenue
enhancing and refurbishing improvements will be provided primarily
from borrowings on the Company's line of credit, term note borrowings,
issuance of common shares in the Company's Dividend Reinvestment
Program and Stock Purchase Programs, and issuance of common or
preferred stock.
General and administrative expenses are expected to increase as
the Company adds properties and enters new markets.
At June 30, 2007, all but $89 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 initially 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 2007 to be between
$3.38 and $3.42 per share. Funds from operations for the third quarter
of 2007 are projected at between $.88 and $.90 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 Second Quarter Earnings Release
Conference Call at 9:00 a.m. Eastern Daylight Time on Thursday, August
2, 2007. Anyone wishing to listen to the call may access the webcast
via the Investment portion of 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 that is in the business of acquiring and managing
self-storage facilities. The Company operates 354 self-storage
facilities in 22 states under the name "Uncle Bob's Self Storage"(R).
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) 2007 2006
- ---------------------------------------------- -----------------------
Assets
Investment in storage facilities:
Land $ 235,090 $ 208,644
Building, equipment and construction in
progress 1,055,199 935,260
---------- ------------
1,290,289 1,143,904
Less: accumulated depreciation (170,233) (155,843)
---------- ------------
Investment in storage facilities, net 1,120,056 988,061
Cash and cash equivalents 6,767 47,730
Accounts receivable 2,491 2,166
Receivable from related parties 27 37
Prepaid expenses 5,791 5,336
Fair value of interest rate swap agreements 2,888 2,274
Intangible asset - in-place customer leases
(net of accumulated amortization of $2,742) 1,702 -
Other assets 5,532 7,606
---------- ------------
Total Assets $1,145,254 $1,053,210
========== ============
Liabilities
Line of credit $ 89,000 $ -
Term notes 350,000 350,000
Accounts payable and accrued liabilities 18,957 15,358
Deferred revenue 6,338 5,292
Accrued dividends 12,776 12,675
Mortgages payable 111,280 112,027
---------- ------------
Total Liabilities 588,351 495,352
Minority interest - Operating Partnership 9,902 10,164
Minority interest - consolidated joint
ventures 16,783 16,783
Shareholders' Equity
8.375% Series C Convertible Cumulative
Preferred Stock 26,613 26,613
Common stock 219 216
Additional paid-in capital 620,588 612,738
Dividends in excess of net income (92,778) (83,609)
Accumulated other comprehensive income 2,751 2,128
Treasury stock at cost (27,175) (27,175)
---------- ------------
Total Shareholders' Equity 530,218 530,911
---------- ------------
Total Liabilities and Shareholders' Equity $1,145,254 $1,053,210
========== ============
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
April 1, 2007 April 1, 2006
to to
(dollars in thousands, except share data) June 30, 2007 June 30, 2006
---------------------------
Revenues
Rental income $ 46,526 $ 38,960
Other operating income 1,575 1,336
------------- -------------
Total operating revenues 48,101 40,296
Expenses
Property operations and maintenance 12,908 10,104
Real estate taxes 4,631 3,759
General and administrative 3,698 3,662
Depreciation and amortization 7,389 6,058
Amortization of in-place customer leases 2,742 -
------------- -------------
Total operating expenses 31,368 23,583
------------- -------------
Income from operations 16,733 16,713
Other income (expense)
Interest expense (including amortization
of financing fees of $242 in 2007 and
$257 in 2006) (8,217) (6,871)
Interest income 149 205
Minority interest - Operating
Partnership (167) (230)
Minority interest - consolidated joint
ventures (462) (462)
Equity in income of joint ventures 28 31
------------- -------------
Net Income 8,064 9,386
Preferred stock dividends (628) (628)
------------- -------------
Net income available to common
shareholders $ 7,436 $ 8,758
============= =============
Earnings per common share - basic $ 0.36 $ 0.50
============= =============
Earnings per common share - diluted $ 0.36 $ 0.50
============= =============
Common shares used in basic earnings per
share calculation 20,479,201 17,614,604
Common shares used in diluted earnings per
share calculation 20,532,878 17,674,126
Dividends declared per common share $ 0.6200 $ 0.6150
============= =============
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
January 1, January 1,
2007 2006
to to
(dollars in thousands, except share data) June 30, 2007 June 30, 2006
---------------------------
Revenues
Rental income $ 89,791 $ 74,443
Other operating income 2,910 2,510
------------- -------------
Total operating revenues 92,701 76,953
Expenses
Property operations and maintenance 25,319 19,752
Real estate taxes 9,021 7,260
General and administrative 7,254 7,101
Depreciation and amortization 14,415 11,679
Amortization of in-place customer leases 2,742 -
------------- -------------
Total operating expenses 58,751 45,792
------------- -------------
Income from operations 33,950 31,161
Other income (expense)
Interest expense (including amortization
of financing fees of $484 in 2007 and
$508 in 2006) (15,816) (12,571)
Interest income 678 356
Minority interest - Operating
Partnership (367) (465)
Minority interest - consolidated joint
ventures (924) (606)
Equity in income of joint ventures 80 106
------------- -------------
Net Income 17,601 17,981
Preferred stock dividends (1,256) (1,256)
------------- -------------
Net income available to common
shareholders $ 16,345 $ 16,725
============= =============
Earnings per common share - basic $ 0.80 $ 0.95
============= =============
Earnings per common share - diluted $ 0.80 $ 0.95
============= =============
Common shares used in basic earnings per
share calculation 20,446,229 17,578,879
Common shares used in diluted earnings per
share calculation 20,506,267 17,643,302
Dividends declared per common share $ 1.2400 $ 1.2300
============= =============
COMPUTATION OF FUNDS FROM OPERATIONS (FFO) (1) - (unaudited)
April 1, 2007 April 1, 2006
to to
(dollars in thousands, except share data) June 30, 2007 June 30, 2006
---------------------------
Net income $ 8,064 $ 9,386
Minority interest in income 629 692
Depreciation of real estate and
amortization of intangible assets
exclusive of deferred financing fees 10,131 6,058
Depreciation and amortization from
unconsolidated joint ventures 14 14
Preferred dividends (628) (628)
Funds from operations allocable to
minority interest in
Operating Partnership (361) (361)
Funds from operations allocable to
minority interest in
consolidated joint ventures (462) (462)
------------- -------------
Funds from operations available to common
shareholders 17,387 14,699
FFO per share - diluted (a) $ 0.84 $ 0.82
Common shares - diluted 20,532,878 17,674,126
Common shares if Series C Preferred Stock
is converted 920,244 920,244
------------- -------------
Total shares used in FFO per share
calculation (a) 21,453,122 18,594,370
January 1, January 1,
2007 2006
to to
(dollars in thousands, except share data) June 30, 2007 June 30, 2006
------------- -------------
Net income $ 17,601 $ 17,981
Minority interest in income 1,291 1,071
Depreciation of real estate and
amortization of intangible assets
exclusive of deferred financing fees 17,157 11,679
Depreciation and amortization from
unconsolidated joint ventures 28 134
Preferred dividends (1,256) (1,256)
Funds from operations allocable to
minority interest in Operating
Partnership (691) (726)
Funds from operations allocable to
minority interest in consolidated joint
ventures (924) (861)
------------- -------------
Funds from operations available to common
shareholders 33,206 28,022
FFO per share - diluted (a) $ 1.61 $ 1.57
Common shares - diluted 20,506,267 17,643,302
Common shares if Series C Preferred Stock
is converted 920,244 920,244
------------- -------------
Total shares used in FFO per share
calculation (a) 21,426,511 18,563,546
(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.
(a) The Series C Convertible Preferred Shares are convertible into
920,244 common shares. These shares have been added to the diluted
shares outstanding to calculate the FFO per share in 2007 and 2006.
QUARTERLY SAME STORE DATA (2) April 1, 2007 April 1, 2006
to to Percentage
(dollars in thousands) June 30, 2007 June 30, 2006 Change
--------------------------------------
Revenues:
Rental income $39,789 $38,227 4.1%
Other operating income 1,356 1,326 2.3%
------------- ------------- ----------
Total operating revenues 41,145 39,553 4.0%
Expenses:
Property operations,
maintenance, and real estate
taxes 14,651 13,552 8.1%
------------- ------------- ----------
Operating income $26,494 $26,001 1.9%
(2) Includes the 291 stores owned and/or managed by the Company for
the entire periods presented.
YEAR TO DATE SAME STORE DATA January 1, January 1,
(3) 2007 2006
to to Percentage
(dollars in thousands) June 30, 2007 June 30, 2006 Change
--------------------------------------
Revenues:
Rental income $76,851 $74,158 3.6%
Other operating income 2,531 2,443 3.6%
------------- ------------- ----------
Total operating revenues 79,382 76,601 3.6%
Expenses:
Property operations,
maintenance, and real estate
taxes 28,699 26,648 7.7%
------------- ------------- ----------
Operating income $50,683 $49,953 1.5%
(3) Includes the 285 stores owned and/or managed by the Company for
the entire periods presented.
OTHER DATA Same Store (2) All Stores
--------------------------- ------------
2007 2006 2007 2006
------------- ------------- ------ -----
Weighted average quarterly
occupancy 84.8% 86.6% 84.8% 86.6%
Occupancy at June 30 85.8% 87.5% 85.4% 87.5%
Rent per occupied square foot $10.34 $9.90 $10.24 $9.90
Investment in Storage
Facilities:
- -----------------------------
The following summarizes activity in storage facilities during the six
months ended June 30, 2007:
Beginning balance $1,143,904
Property acquisitions 124,701
Improvements and equipment
additions:
Dri-guard / climate
control installations 1,055
Expansions 6,437
Roofing, paving,
painting, and equipment:
Stabilized stores 5,826
Recently acquired and
joint venture stores 2,273
Rental trucks 333
Increase in construction in
progress (Total CIP $12.4
million) 5,803
Dispositions (43)
-------------
Storage facilities at cost at
period end $1,290,289
=============
June 30, 2007 June 30, 2006
---------------------------
Common shares outstanding at
June 30 20,606,535 17,797,653
Operating Partnership Units
outstanding at June 30 427,335 427,927
CONTACT: Sovran Self Storage, Inc.
David Rogers, CFO
or
Diane Piegza, VP Corporate Communications
716-633-1850