Sovran Self Storage, Inc. (NYSE:SSS), a self storage real estate investment trust (REIT), reported operating results for the quarter ended March 31, 2014.
Net income available to common shareholders for the first quarter of 2014 was $16.7 million or $0.51 per fully diluted common share. For the same period in 2013, net income available to common shareholders was $14.3 million, or $0.47 per fully diluted common share.
Funds from operations (FFO) for the quarter were $0.88 per fully diluted common share compared to $0.82 for the same period last year. In the first quarter of 2014, the Company incurred net acquisition costs of $2.8 million in connection with its property purchases and had a straight line rent adjustment of $0.5 million relating to the lease expense of the former Westy properties. In the first quarter of 2013, the Company incurred acquisition costs of $0.5 million. Absent these charges, adjusted FFO per share was $0.98 and $0.84 for the first quarter of 2014 and 2013, respectively.
Improved occupancies and increased rental rates more than offset the anticipated increases in property taxes, snow removal and utilities, resulting in the strong FFO growth.
David Rogers, the Company’s CEO, commented, “We had a strong first quarter. Our marketing and pricing strategies continue to attract customers who tend to stay with us for the long haul, and as a result we experienced fewer move-outs than we have in recent winters. This enabled us to maintain high occupancies throughout the slow leasing season and it set us up well for the busy months to come.”
Total revenues increased 18.1% over last year’s first quarter, while operating costs increased 16.6%, resulting in an NOI (3) increase of 18.9%. Overall occupancy averaged 88.7% for the period and rental rates increased 9.2% to an average of $11.75 per sq. ft.
Revenues for the 386 stores wholly owned by the Company since January 1, 2013 increased 8.3% from those of the first quarter of 2013, the result of a 310 basis point increase in average occupancy, a 3.4% increase in rental rates and strong growth in insurance commissions.
Same store operating expenses increased 6.4% for the first quarter of 2014 compared to the prior year period, primarily the result of increased property tax charges of 10.4%. Utility costs and snow removal expenses were also higher than expected due to the extended harsh winter.
Consequently, same store net operating income increased 9.3% this period over the first quarter of 2013.
General and administrative expenses increased by approximately $1.2 million over the same period in 2013, primarily due to increases in internet advertising and personnel costs associated with operating more stores during the quarter than at this time last year.
During the first quarter of 2014, the Company experienced positive same store revenue and NOI growth in most every state in which it operates. The stores with the strongest revenue impact include those in Texas, Florida, New York, North Carolina, and Georgia.
About Sovran Self Storage, Inc.
Sovran Self Storage, Inc. is an equity REIT that is in the business of acquiring and managing self storage facilities. The Company operates 486 self storage facilities in 25 states under the name Uncle Bob’s Self Storage®. For more information, visit www.unclebobs.com, like us on Facebook, or follow us on Twitter