Press Releases

Sovran Self Storage Reports Second Quarter Results

BUFFALO, N.Y.--(BUSINESS WIRE)-- Sovran Self Storage, Inc. (NYSE:SSS), a self storage real estate investment trust (REIT), reported operating results for the quarter ended June 30, 2016.

Net income attributable to common shareholders for the second quarter of 2016 was $43.5 million or $1.03 per fully diluted common share. For the same period in 2015, net income attributable to common shareholders was $28.5 million or $0.80 per fully diluted common share.

Highlights for the 2nd Quarter Included:

  • Increased same store revenue by 5.7% and net operating income ("NOI")(1) by 6.8% as compared to the second quarter of 2015.
  • Grew same store average occupancy for the quarter by 30 basis points to 92.3% compared to the same period in 2015.
  • Completed a follow-on equity offering of 6,900,000 shares of the Company’s common stock, resulting in net proceeds to the Company of approximately $665 million.
  • Issued $600 million of 10 year notes at an interest rate of 3.5% via an inaugural public debt offering.
  • Achieved adjusted funds from operations (“FFO”)(2) per fully diluted common share of $1.32. This includes approximately $0.09 of dilution resulting from the early issuance of the above referenced equity and debt for the LifeStorage acquisition. Absent these carry costs adjusted FFO was $1.41 per diluted share.
  • Acquired nine self storage facilities at a cost of approximately $106 million.
  • Sold eight non-core properties for net proceeds of approximately $34 million.
  • Paid a quarterly dividend of $0.95 per share of common stock.

Subsequent to the end of the quarter, the Company:

  • Completed its previously announced acquisition of 84 LifeStorage properties for $1.3 billion on July 15, 2016.
  • Issued $200 million of 12 year unsecured term notes at a fixed rate of 3.67% on July 21, 2016.
  • Announced that in August, 2016 it will change its name from Sovran Self Storage, Inc. to Life Storage, Inc. and will no longer operate its stores under the Uncle Bob’s Self Storage name, but will rebrand its existing portfolio to Life Storage®.

Funds from operations for the quarter were $1.10 per fully diluted common share compared to $1.22 for the same period last year. Absent $9.0 million of acquisition related costs (including bridge loan fees) incurred in the second quarter of 2016, and $0.8 million of acquisition costs in the second quarter of 2015, adjusted FFO per fully diluted common share was $1.32 and $1.24 for the quarters ended June 30, 2016 and 2015, respectively. The quarter ended June 30, 2016 adjusted FFO includes approximately $0.09 per share of dilution resulting from early issuance of 6.9 million shares of common stock and $600 million of long term debt to fund the LifeStorage acquisition.

Increased rental rates were the primary driver of the Company’s adjusted FFO growth during the quarter.

OPERATIONS:

Total revenues increased 17.9% over last year’s second quarter while operating costs increased 19.4%, resulting in an NOI increase of 17.3%. Overall occupancy averaged 91.4% for the period, and rental rates averaged $13.16 per sq. ft.

Revenues for the 420 stabilized stores wholly owned by the Company since December 31, 2014 increased 5.7% from those of the second quarter of 2015, the result of a 30 basis point increase in average occupancy, a 5.2% increase in rental rates and increases in tenant insurance administrative fees.

Same store operating expenses increased 3.3% for the second quarter of 2016 compared to the prior year period. Higher property taxes and internet advertising expenses were offset by reductions in utility costs and insurance expense.

Consequently, same store NOI increased 6.8% this period over the second quarter of 2015.

General and administrative expenses increased by approximately $0.4 million over the same period in 2015. Increases in personnel costs associated with operating 32 more stores during the quarter than at this time last year and higher legal fees were offset by reduced income taxes pertaining to the Company’s taxable REIT subsidiaries.

During the second quarter of 2016, the Company experienced same store revenue growth in 28 of its 29 major markets in the same store pool. Overall, the markets with the strongest revenue impact include Atlanta, GA; all Florida markets, particularly Miami and Tampa; Dallas and San Antonio, TX.

PROPERTIES:

The Company acquired nine stores during the quarter at a cost of $105.7 million. These include two stores each in southern Connecticut; downstate New York; and Buffalo, NY; also, one each in Los Angeles, CA; Dallas, TX; and Port St. Lucie, FL. Together they comprise a total of approximately 640,000 sq. ft. of storage space.

The Company also sold eight of its non-core stores for net proceeds of approximately $34 million. The stores sold were in Lynchburg, VA (4); Greenville, MS; Kingsland, GA; Birmingham, AL; and Dallas, TX.

At June 30, 2016, the Company was in contract to acquire four stores for $40 million upon issuance of a certificate of occupancy, anticipated at various dates between the third quarter 2016 and the first quarter 2017. These properties are located in Charleston, SC; Charlotte, NC; and Chicago, IL (2). The Charleston, SC property was acquired for $8.4 million in July 2016. At June 30, 2016 the Company was also under contract to acquire one stabilized store in Denver, CO for $9.5 million. The aforementioned purchases are subject to customary closing conditions, and there is no assurance that these properties will be acquired as described herein.

Subsequent to the end of the quarter, on July 15, 2016, the Company completed its acquisition of LifeStorage, LP for approximately $1.3 billion. This transaction added 84 wholly owned stores to the Company’s portfolio, and four third-party managed locations.

CAPITAL TRANSACTIONS:

On April 26, 2016, the Company repaid a ten year term note maturing on that date in the amount of $150 million. Funds were provided by a draw on the Company’s line of credit.

On May 19, 2016, the Company agreed to issue and sell 6,000,000 shares of the Company’s common stock, par value $.01 per share, plus up to 900,000 shares of common stock pursuant to the underwriters’ option, at a price to the public of $100.00 per share. The offering of 6,900,000 shares of the Company’s common stock closed on May 25, 2016 resulting in net proceeds to the Company of approximately $665 million.

On June 13, 2016 the Company offered for sale $600 million of unsecured 10 year notes. The notes were issued on June 20, 2016 at 99.45% of par value and a coupon rate of 3.5%, with the Company receiving net proceeds of approximately $591 million.

At June 30, 2016, the Company had approximately $901.9 million of cash on hand, and $500 million available on its line of credit. The cash on hand and the availability on the credit line were unusually high at quarter’s end due to the Company’s common share offering in May and its issuance of corporate debentures in June. The funds were ultimately used for the July acquisition of LifeStorage, LP.

In April, the Company issued approximately 22,974 shares at a price of $107.51 through its Dividend Reinvestment Plan.

Subsequent to the end of the quarter, the Company issued $200 million of 12 year notes at an interest rate of 3.67%.

COMMON STOCK DIVIDEND:

Subsequent to quarter-end, the Company’s Board of Directors approved a quarterly dividend of $0.95 per share or $3.80 annualized.

YEAR 2016 EARNINGS GUIDANCE:

The following assumptions covering operations have been utilized in formulating guidance for the third quarter and full year 2016:

     
Same Store

Projected Increases Over 2015

3Q 2016 Full Year 2016
Revenue 5.0 – 6.0% 5.5 – 6.5%
Operating Costs (excluding property taxes) 2.0 – 3.0% 2.0 – 3.0%
Property Taxes 5.0 – 6.0% 6.0 – 7.0%
Total Operating Expenses 3.0 – 4.0% 3.0 – 4.0%
Net Operating Income 5.5 – 6.5% 6.5 – 7.5%
 

The Company’s 2016 same store pool consists of the 420 stabilized stores owned since December 31, 2014. The stores purchased in 2014 at certificate of occupancy or that were in the early stages of lease-up are not included, regardless of their current occupancies. The Company believes that occupancy levels achieved during the lease-up period, using discounted rates, are not truly indicative of a new store’s performance, and therefore do not result in a meaningful year-over-year comparison in future years. The Company will include such stores in its same store pool in the second year after the stores achieve 80% sustained occupancy using market rates and incentives.

The Houston market is expected to comprise approximately 9.4% of the 2016 forecasted NOI of the Company’s wholly owned stores. Forecasts for the 41 same store pool of properties in the Company’s Houston market include revenue growth of 4.0% – 5.0%, operating expense increases of 4.0% – 5.0% (inclusive of a 6% projected increase in property taxes), and NOI growth of between 3.5% and 4.5%.

The Company plans to complete $25 – $30 million of expansions in 2016, and expects to incur up to $22 million in costs pertaining to the rebranding of Uncle Bob’s Self Storage to Life Storage. It is expected that the rebranding process will commence in August, 2016 and proceed on a market by market basis through April, 2017.

The Company has assumed an additional $20 million of accretive acquisitions in the second half of 2016. Per share FFO guidance is projected after adding back third party acquisition costs. Purchases of these additional properties are expected to be funded via draws on its line of credit which carries an interest rate of LIBOR plus 1.10%. The Company expects acquisition costs related to the LifeStorage purchase to be $32 - $33 million in the third quarter of 2016 including ordinary closing costs, loan defeasance, and employee severance costs.

At the conclusion of 2015, the Company operated six self-storage facilities that it acquired during 2014 and 2015 upon issuance of certificate of occupancy or in the early stages of lease-up. It also acquired one in Phoenix, AZ and one in Miami, FL in February 2016, and one in Los Angeles, CA in March 2016. Further, it expects to acquire four more such certificate of occupancy facilities at various dates later in 2016 and early 2017. Upon acquisition, these properties have insufficient rental revenue to cover operating costs; accordingly, for the first 24 to 36 months of operation, ownership of these facilities is dilutive to FFO per share. The Company expects that during the second half of 2016, it will incur such dilution to the extent of $0.03 to $0.04 per share due to the aforementioned acquisitions.

Annual general and administrative expenses are expected to be approximately $42 – $43 million. The increase over the prior year is primarily due to the need for additional personnel required for recent acquisitions.

The Company incurred dilution to FFO during the second quarter of approximately $.09 per share as a result of issuing 6.9 million shares of its common stock and $600 million of 10 year notes in advance of its July purchase of LifeStorage, LP. Similarly, $.05 of dilution is expected in the 3rd quarter due to these funds not being applied to the acquisition until July 15th. Another $.05 - $.06 of dilution is expected in 2016 as the properties grow to occupancy and rental rate stabilization. Further dilution of approximately $.02 per share is expected in the second half of 2016 as a result of the Company’s sale of eight properties in June. Proceeds of $34 million are in escrow awaiting investment pursuant to anticipated Section 1031 transactions.

As a result of the above assumptions, management expects adjusted funds from operations for the full year 2016 to be approximately $5.30 to $5.34 per share, and between $1.37 and $1.39 per share for the third quarter of 2016.

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 ability to enter new markets where it has little or no operational experience; 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 4, 2016. To help avoid connection delays, participants are encouraged to pre-register using this link. Anyone unable to pre-register may access the conference call at 877.737.7051 (domestic) or 201.689.8878 (international). Management will accept questions from registered financial analysts after prepared remarks; all others are encouraged to listen to the call via webcast by accessing “news and events” under the investor relations tab at www.unclebobs.com/company/.

The webcast will be archived for 90 days; a telephone replay will also be available for 72 hours by calling 877.660.6853 and entering conference ID 13640578.

ABOUT SOVRAN SELF STORAGE, INC:

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 approximately 650 self storage facilities in 29 states under the names Uncle Bob’s Self Storage and Life Storage. For more information, visit http://invest.unclebobs.com/.

         
SOVRAN SELF STORAGE, INC.
BALANCE SHEET DATA
 
June 30,
2016 December 31,
(dollars in thousands) (unaudited) 2015
Assets
Investment in storage facilities:
Land $ 626,454 $ 480,176
Building, equipment and construction in progress   2,295,840     2,011,526  
2,922,294 2,491,702
Less: accumulated depreciation   (486,521 )   (465,195 )
Investment in storage facilities, net 2,435,773 2,026,507
Cash and cash equivalents 901,897 7,032
Accounts receivable 4,670 6,805
Receivable from joint venture 1,045 929
Investment in joint venture 67,157 62,520
Prepaid expenses 6,446 5,431
Fair value of interest rate swap agreements - 550
Intangible asset - in-place customer leases (net of accumulated
amortization of $23,912 in 2016 and $21,017 in 2015) 4,325 1,303
Other assets   5,140     7,745  
Total Assets $ 3,426,453   $ 2,118,822  
 
Liabilities
Line of credit $ - $ 79,000
Term notes, net 1,187,770 746,650
Accounts payable and accrued liabilities 37,160 47,839
Deferred revenue 8,075 7,511
Fair value of interest rate swap agreements 22,010 15,343
Mortgages payable   10,205     1,993  
Total Liabilities 1,265,220 898,336
 
Noncontrolling redeemable Operating Partnership Units at redemption value 20,191 18,171
 
Equity
Common stock 464 367
Additional paid-in capital 2,339,074 1,388,343
Accumulated deficit (167,901 ) (171,980 )
Accumulated other comprehensive loss   (30,863 )   (14,415 )
Total Shareholders' Equity 2,140,774 1,202,315
Noncontrolling interest in consolidated subsidiary   268     -  
Total Equity   2,141,042     1,202,315  
Total Liabilities and Equity $ 3,426,453   $ 2,118,822  
 

         
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
April 1, 2016 April 1, 2015
to to
(dollars in thousands, except share data) June 30, 2016     June 30, 2015
 
Revenues
Rental income $ 98,795 $ 83,487
Other operating income 6,741 5,784
Management fee income   1,469     1,455  
Total operating revenues 107,005 90,726
 
Expenses
Property operations and maintenance 23,153 19,486
Real estate taxes 11,021 9,145
General and administrative 10,114 9,686
Acquisition related costs 1,694 788
Depreciation and amortization 16,414 13,611
Amortization of in-place customer leases   1,837     973  
Total operating expenses   64,233     53,689  
 
Income from operations 42,772 37,037
 
Other income (expense)
Interest expense (A) (8,244 ) (9,216 )
Interest expense - acquisition bridge loan commitment fee (7,329 ) -
Interest income 37 2
Gain on sale of real estate 15,270 -
Equity in income of joint ventures   998     853  
 
Net income 43,504 28,676
Noncontrolling interests in the Operating Partnership (208 ) (144 )
Noncontrolling interests in consolidated subsidiaries   160     -  
Net income attributable to common shareholders $ 43,456   $ 28,532  
 
Earnings per common share attributable to common shareholders - basic $ 1.04   $ 0.81  
 
Earnings per common share attributable to common shareholders - diluted $ 1.03   $ 0.80  
 
Common shares used in basic
earnings per share calculation 41,980,389 35,377,694
 
Common shares used in diluted
earnings per share calculation 42,227,388 35,603,020
 
Dividends declared per common share $ 0.95   $ 0.75  
 
 
(A) Interest expense for the three months ending June 30 consists of the following
Interest expense $ 7,894 $ 8,920
Amortization of debt issuance costs   350     296  
Total interest expense $ 8,244   $ 9,216  
 
 
January 1, 2016 January 1, 2015
to to
(dollars in thousands, except share data) June 30, 2016     June 30, 2015
 
Revenues
Rental income $ 190,337 $ 162,373
Other operating income 12,888 10,941
Management fee income   2,904     2,820  
Total operating revenues 206,129 176,134
 
Expenses
Property operations and maintenance 46,014 40,046
Real estate taxes 21,568 18,064
General and administrative 20,578 19,092
Acquisition related costs 4,078 1,369
Operating leases of storage facilities - 683
Depreciation and amortization 31,665 26,779
Amortization of in-place customer leases   3,011     1,987  
Total operating expenses   126,914     108,020  
 
Income from operations 79,215 68,114
 
Other income (expense)
Interest expense (A) (17,377 ) (18,377 )
Interest expense - acquisition bridge loan commitment fee (7,329 ) -
Interest income 43 4
Gain (loss) on sale of real estate 15,270 (7 )
Equity in income of joint ventures   1,913     1,499  
 
Net income 71,735 51,233
Noncontrolling interests in the Operating Partnership (338 ) (250 )
Noncontrolling interests in consolidated subsidiaries   399     -  
Net income attributable to common shareholders $ 71,796   $ 50,983  
 
Earnings per common share attributable to common shareholders - basic $ 1.79   $ 1.46  
 
Earnings per common share attributable to common shareholders - diluted $ 1.78   $ 1.45  
 
Common shares used in basic
earnings per share calculation 40,195,603 34,853,731
 
Common shares used in diluted
earnings per share calculation 40,445,263 35,078,946
 
Dividends declared per common share $ 1.80   $ 1.50  
 
 
(A) Interest expense for the six months ending June 30 consists of the following
Interest expense $ 16,671 $ 17,785
Amortization of debt issuance costs   706     592  
Total interest expense $ 17,377   $ 18,377  
 

COMPUTATION OF FUNDS FROM OPERATIONS (FFO) (2) - (unaudited)          
 
April 1, 2016 April 1, 2015
to to
(dollars in thousands, except share data) June 30, 2016     June 30, 2015
 
Net income attributable to common shareholders $ 43,456 $ 28,532
Noncontrolling interests in the Operating Partnership 208 144
Depreciation of real estate and amortization of intangible
assets exclusive of debt issuance costs 17,855 14,308
Depreciation and amortization from unconsolidated joint ventures 581 617
Gain on sale of real estate (15,270 ) -
Funds from operations allocable to noncontrolling
interest in Operating Partnership   (223 )   (220 )
Funds from operations available to common shareholders   46,607     43,381  
FFO per share - diluted $ 1.10 $ 1.22
 
Adjustments to FFO
Acquisition costs expensed 1,694 788
Interest expense - acquisition bridge loan commitment fee 7,329 -
Funds from operations resulting from non-recurring items allocable to noncontrolling
interest in Operating Partnership   (43 )   (4 )
Adjusted funds from operations available to common shareholders   55,587     44,165  
Adjusted FFO per share - diluted $ 1.32 $ 1.24
 
Common shares - diluted 42,227,388 35,603,020
 
 
January 1, 2016 January 1, 2015
to to
(dollars in thousands, except share data) June 30, 2016     June 30, 2015
 
Net income attributable to common shareholders $ 71,796 $ 50,983
Noncontrolling interests in the Operating Partnership 338 250
Depreciation of real estate and amortization of intangible
assets exclusive of debt issuance costs 33,889 28,219
Depreciation and amortization from unconsolidated joint ventures 1,153 1,235
(Gain) loss on sale of real estate (15,270 ) 7
Funds from operations allocable to noncontrolling
interest in Operating Partnership   (429 )   (394 )
Funds from operations available to common shareholders   91,477     80,300  
FFO per share - diluted $ 2.26 $ 2.29
 
Adjustments to FFO
Acquisition costs expensed 4,078 1,369
Interest expense - acquisition bridge loan commitment fee 7,329 -
Operating leases straight line rent adjustment - 146
Funds from operations resulting from non-recurring items allocable to noncontrolling
interest in Operating Partnership   (54 )   (7 )
Adjusted funds from operations available to common shareholders   102,830     81,808  
Adjusted FFO per share - diluted $ 2.54 $ 2.33
 
Common shares - diluted 40,445,263 35,078,946
 

         
QUARTERLY SAME STORE DATA (3) * 420 mature stores owned since 12/31/14 (unaudited) April 1, 2016 April 1, 2015
to to Percentage
(dollars in thousands) June 30, 2016   June 30, 2015 Change   Change
 
Revenues:
Rental income $ 85,320 $ 80,845 $ 4,475 5.5 %
Tenant insurance 3,259 2,851 408 14.3 %
Other operating income   1,559     1,602     (43 )   -2.7 %
Total operating revenues 90,138 85,298 4,840 5.7 %
 
Expenses:
Payroll and benefits 7,447 7,167 280 3.9 %
Real estate taxes 9,337 8,856 481 5.4 %
Utilities 2,595 2,676 (81 ) -3.0 %
Repairs and maintenance 3,001 2,954 47 1.6 %
Office and other operating expense 2,918 2,809 109 3.9 %
Insurance 993 1,107 (114 ) -10.3 %
Advertising & yellow pages 284 361 (77 ) -21.3 %
Internet marketing   1,660     1,401     259     18.5 %
Total operating expenses   28,235     27,331     904     3.3 %
 
Net operating income (1) $ 61,903   $ 57,967   $ 3,936     6.8 %
 
 
QTD Same store move ins 43,784 47,759 (3,975 )
 
QTD Same store move outs 38,798 40,747 (1,949 )
 
 
OTHER COMPARABLE QUARTERLY SAME STORE DATA * (unaudited) April 1, 2016 April 1, 2015
to to Percentage
June 30, 2016   June 30, 2015 Change   Change
Stores owned since 12/31/13 (391 stores)
Revenues $ 82,433 $ 78,125 $ 4,308 5.5 %
Expenses   25,616     24,787     829     3.3 %
Net operating income $ 56,817   $ 53,338   $ 3,479     6.5 %
 
 
 
Stores owned since 12/31/12 (376 stores)
Revenues $ 77,138 $ 73,127 $ 4,011 5.5 %
Expenses   24,006     23,164     842     3.6 %
Net operating income $ 53,132   $ 49,963   $ 3,169     6.3 %
 
 
* See exhibit A for supplemental quarterly same store data.
 
 
YEAR TO DATE SAME STORE DATA (3) * 420 mature stores owned since 12/31/14 (unaudited) January 1, 2016 January 1, 2015
to to Percentage
(dollars in thousands) June 30, 2016   June 30, 2015 Change   Change
 
Revenues:
Rental income $ 167,845 $ 158,321 $ 9,524 6.0 %
Tenant insurance 6,401 5,569 832 14.9 %
Other operating income   2,908     2,954     (46 )   -1.6 %
Total operating revenues 177,154 166,844 10,310 6.2 %
 
Expenses:
Payroll and benefits 14,842 14,298 544 3.8 %
Real estate taxes 18,672 17,605 1,067 6.1 %
Utilities 5,316 5,845 (529 ) -9.1 %
Repairs and maintenance 6,456 6,911 (455 ) -6.6 %
Office and other operating expense 5,828 5,538 290 5.2 %
Insurance 2,061 2,210 (149 ) -6.7 %
Advertising & yellow pages 584 710 (126 ) -17.7 %
Internet marketing   3,380     2,900     480     16.6 %
Total operating expenses   57,139     56,017     1,122     2.0 %
 
Net operating income (1) $ 120,015   $ 110,827   $ 9,188     8.3 %
 
 
YTD Same store move ins 83,582 89,187 (5,605 )
 
YTD Same store move outs 75,721 77,447 (1,726 )
 
 
OTHER DATA - unaudited Same Store (3) All Stores (4)

2016

2015

2016

2015

 
Weighted average quarterly occupancy 92.3 % 92.0 % 91.4 % 91.4 %
 
Occupancy at June 30 92.7 % 92.7 % 91.8 % 92.2 %
 
Rent per occupied square foot $ 13.05 $ 12.40 $ 13.16 $ 12.28
 
 

Investment in Storage Facilities: (unaudited)

The following summarizes activity in storage facilities during the six months ended June 30, 2016:
 
Beginning balance $ 2,491,702
Property acquisitions 431,460
Improvements and equipment additions:
Expansions 1,930
Roofing, paving, and equipment:
Stabilized stores 8,772
Recently acquired stores 2,922
Additions to consolidated subsidiary 2,117
Change in construction in progress (Total CIP $19.7 million) 12,724
Dispositions and Impairments   (29,333 )
Storage facilities at cost at period end $ 2,922,294  
 
 

Comparison of Selected G&A Costs (unaudited)

Quarter Ended
June 30, 2016 June 30, 2015
 
Management and administrative salaries and benefits 6,163 5,720
Training 214 225
Call center 601 491
Uncle Bob's Management costs 73 105
Income taxes 11 617
Legal, accounting and professional 1,027 662
Other administrative expenses (5)   2,025     1,866  
$ 10,114   $ 9,686  
 
 

Net rentable square feet

June 30, 2016
Wholly owned properties 32,594,332
Joint venture properties 5,186,901
Third party managed properties   897,433  
38,678,666
 
 

June 30, 2016

June 30, 2015

 
Common shares outstanding 46,369,391 35,833,639
Operating Partnership Units outstanding 196,008 178,866
 

(1) Net operating income or "NOI" is a non-GAAP (generally accepted accounting principles) financial measure that we define as total continuing revenues less continuing property operating expenses. NOI also can be calculated by adding back to net income: interest expense, impairment and casualty losses, depreciation and amortization expense, acquisition related costs, general and administrative expense, and deducting from net income: income from discontinued operations, interest income, gain on sale of real estate, and equity in income of joint ventures. We believe that NOI is a meaningful measure to investors in evaluating our operating performance, because we utilize NOI in making decisions with respect to capital allocations, in determining current property values, and comparing period-to-period and market-to-market property operating results. Additionally, NOI is widely used in the real estate industry and the self storage industry to measure the performance and value of real estate assets without regard to various items included in net income that do not relate to or are not indicative of operating performance, such as depreciation and amortization, which can vary depending on accounting methods and book value of assets. NOI should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as total revenues, operating income and net income.
 
(2) 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 available to common shareholders computed in accordance with generally accepted accounting principles (“GAAP”), excluding gains or losses on sales of properties, plus impairment of real estate assets, 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.
 
(3) Includes the 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 ventures or other stores managed by the Company.
 

(4) Does not include unconsolidated joint venture stores or other stores managed by the Company.

 
(5) Other administrative expenses include office rent, travel expense, investor relations and miscellaneous other expenses.
 

 
Exhibit A
                           
Sovran Self Storage, Inc.
 
Same Store Performance Summary by Market
Three Months Ended June 30, 2016
(unaudited)
 
 

Square

Feet

Avg Qtrly
Rent per
Occupied
Square Foot

Avg Qtrly Occupancy for
the Three Months Ended
June 30,

Revenue
for the Three Months
Ended June 30,

 

Expenses
for the Three Months
Ended June 30,

 

NOI
for the Three Months
Ended June 30,

 
Market     Stores       2016   2015   2016     2015   % Change   2016     2015   % Change   2016     2015   % Change  
 
Houston-The Woodlands-Sugar Land, TX 41 3,169 $ 13.45 92.7 % 92.4 % $ 10,390 $ 9,908 4.9 % $ 3,541 $ 3,380 4.8 % $ 6,849 $ 6,528 4.9 %
New England-CT-RI-NH-MA-ME 33 2,027 16.91 91.3 % 91.5 % 8,210 7,782 5.5 % 2,398 2,333 2.8 % 5,812 5,449 6.7 %
New York-Newark-Jersey City, NY-NJ-PA 24 1,401 21.51 91.5 % 90.0 % 7,195 6,826 5.4 % 2,356 2,313 1.9 % 4,839 4,513 7.2 %
Atlanta-Sandy Springs-Roswell, GA 21 1,450 12.46 92.4 % 93.2 % 4,465 4,041 10.5 % 1,165 1,124 3.6 % 3,300 2,917 13.1 %
Buffalo-Upstate, NY 19 1,268 13.02 89.3 % 92.6 % 3,887 3,784 2.7 % 1,246 1,204 3.5 % 2,641 2,580 2.4 %
Dallas-Fort Worth-Arlington, TX 19 1,287 11.95 95.2 % 95.1 % 3,807 3,592 6.0 % 1,228 1,233 -0.4 % 2,579 2,359 9.3 %
Austin-Round Rock, TX 17 1,351 12.35 90.2 % 89.9 % 3,952 3,887 1.7 % 1,391 1,339 3.9 % 2,561 2,548 0.5 %
Miami-Fort Lauderdale-West Palm Beach, FL 15 1,071 18.36 91.3 % 91.1 % 4,712 4,407 6.9 % 1,334 1,282 4.1 % 3,378 3,125 8.1 %
San Antonio-New Braunfels, TX 15 909 12.89 92.8 % 91.6 % 2,873 2,672 7.5 % 1,077 973 10.7 % 1,796 1,699 5.7 %
New Orleans-Lafayette, LA 15 919 11.60 91.3 % 92.6 % 2,575 2,580 -0.2 % 740 750 -1.3 % 1,835 1,830 0.3 %
St. Louis, MO 14 881 13.28 90.7 % 93.3 % 2,794 2,639 5.9 % 971 838 15.9 % 1,823 1,801 1.2 %
Tampa-St. Petersburg-Clearwater, FL 13 815 13.99 95.8 % 94.4 % 2,904 2,673 8.6 % 825 779 5.9 % 2,079 1,894 9.8 %
Virginia Beach-Norfolk-Newport News, VA 12 908 10.23 94.0 % 88.9 % 2,302 2,224 3.5 % 756 738 2.4 % 1,546 1,486 4.0 %
Chicago-Naperville-Elgin, IL 10 777 14.02 92.8 % 90.3 % 2,659 2,473 7.5 % 933 922 1.2 % 1,726 1,551 11.3 %
Phoenix-Mesa-Scottsdale, AZ 10 667 10.88 90.5 % 88.8 % 1,758 1,621 8.5 % 531 498 6.6 % 1,227 1,123 9.3 %
Cleveland-Elyria, OH 9 624 11.35 89.0 % 90.0 % 1,675 1,644 1.9 % 559 518 7.9 % 1,116 1,126 -0.9 %
Raleigh-Durham, NC 8 527 12.10 95.6 % 95.4 % 1,604 1,549 3.6 % 392 368 6.5 % 1,212 1,181 2.6 %
Jacksonville, FL 8 546 10.71 96.3 % 95.4 % 1,514 1,376 10.0 % 453 450 0.7 % 1,061 926 14.6 %
Pensacola-Ferry Pass-Brent, FL 8 602 8.13 94.5 % 84.4 % 1,264 1,171 7.9 % 440 435 1.1 % 824 736 12.0 %
Space Coast, FL 7 523 12.07 93.5 % 93.7 % 1,588 1,391 14.2 % 397 402 -1.2 % 1,191 989 20.4 %
Beaumont-Port Arthur, TX 7 426 13.32 94.1 % 96.6 % 1,417 1,343 5.5 % 447 462 -3.2 % 970 881 10.1 %
Charlotte-Concord-Gastonia, NC 7 441 11.67 96.1 % 95.8 % 1,311 1,195 9.7 % 361 330 9.4 % 950 865 9.8 %
Montgomery, AL 7 490 9.78 88.2 % 90.3 % 1,129 1,038 8.8 % 337 332 1.5 % 792 706 12.2 %
Jackson, MS 6 396 11.15 92.9 % 92.0 % 1,079 1,058 2.0 % 298 298 0.0 % 781 760 2.8 %
Cape Coral-Fort Myers, FL 6 314 12.02 95.1 % 94.2 % 964 848 13.7 % 293 280 4.6 % 671 568 18.1 %
Orlando-Kissimmee-Sanford, FL 5 358 11.46 91.0 % 96.3 % 993 916 8.4 % 294 306 -3.9 % 699 610 14.6 %
Chattanooga, TN-GA 5 353 11.29 94.1 % 90.3 % 992 878 13.0 % 320 307 4.2 % 672 571 17.7 %
Columbia, SC 5 287 10.11 95.0 % 94.6 % 745 723 3.0 % 276 276 0.0 % 469 447 4.9 %
Youngstown-Warren-Boardman, OH-PA 5 336 8.75 90.3 % 91.7 % 705 702 0.4 % 244 240 1.7 % 461 462 -0.2 %
Other markets 49 3,217 11.01 91.7 % 91.9 % 8,675 8,357 3.8 % 2,632 2,621 0.4 % 6,043 5,736 5.4 %
                                                     
Portfolio Total     420   28,340   $ 13.05   92.3 %   92.0 % $ 90,138   $ 85,298   5.7 % $ 28,235   $ 27,331   3.3 % $ 61,903   $ 57,967   6.8 %
 
 
Properties owned since 12/31/14 (detail shown above) 420 28,340 13.05 92.3 % 92.0 % 90,138 85,298 5.7 % 28,235 27,331 3.3 % 61,903 57,967 6.8 %
Properties owned since 12/31/13 391 26,228 12.87 92.4 % 92.1 % 82,433 78,125 5.5 % 25,616 24,787 3.3 % 56,817 53,338 6.5 %
Properties owned since 12/31/12 376 25,125 12.55 92.4 % 92.2 % 77,138 73,127 5.5 % 24,006 23,164 3.6 % 53,132 49,963 6.3 %
 
 
Dollars in thousands except for average quarterly rent per occupied square foot. Square feet in thousands.
List includes markets where the Company has five or more stores.
 

 
Exhibit B
                                       
Sovran Self Storage, Inc.
 
Debt Maturity Schedule
June 30, 2016
(unaudited)
 
Current
Interest
Rate (**)

Maturity
Date

Basis of
Rate
(dollars in thousands)                 2016     2017     2018     2019     2020     Thereafter     Total
 
Line of credit Dec-2019 Variable 1.54 % $ - $ - $ - $ - $ - $ - $ -
 
Term note Jun-2020 Swapped to fixed 3.52 % - - - - 125,000 - 125,000
Term note Jun-2020 Swapped to fixed 2.76 % - - - - 100,000 - 100,000
Term note Jun-2020 Swapped to fixed 2.52 % - - - - 100,000 - 100,000
Term note Aug-2021 Fixed 5.54 % - - - - - 100,000 100,000
Term note Apr-2024 Fixed 4.53 % - - - - - 175,000 175,000
Term note Jul-2026 Fixed 3.50 % - - - - - 600,000 600,000
Mortgage note Apr-2023 Fixed 4.07 % 42 88 92 96 99 3,832 4,249
Mortgage note Nov-2023 Fixed 5.26 % 30 63 67 71 74 3,728 4,033
Mortgage note May-2026 Fixed 5.99 % 71 151 160 170 181 1,190 1,923
                                     
$ 143 $ 302 $ 319 $ 337 $ 325,354 $ 883,750 $ 1,210,205
 
(**) Rate as of June 30, 2016 based on existing debt rating. Interest rates shown do not include amortization of debt issuance costs, bond discount, and facility fees which are expected to be $1.9 million in 2016.

 
Exhibit C
                 
Sovran Self Storage, Inc.
 
Certificate of Occupancy / Lease Up Performance Summary
June 30, 2016
(unaudited)
(dollars in thousands)
 
 

# of
Stores

Net Rentable
Square Feet

Occupancy at June 30,

Revenue
for the Three Months
Ended June 30,

Expenses
for the Three Months
Ended June 30,

NOI
for the Three Months
Ended June 30,

Market     Acquired     Cost   2016 2015 2016 2015 2016 2015 2016 2015
 
Chicago, IL May-2014 1 $ 5,500 52,168 88.8 % 86.4 % $ 178 $ 141 $ 91 $ 62 $ 87 $ 79
Chattanooga, TN Sep-2014 1 6,550 57,260 94.8 % 85.5 % 201 123 69 56 132 67
Chicago, IL Nov-2014 1 5,750 97,611 85.4 % 54.1 % 189 68 131 82 58 (14 )
Chicago, IL Mar-2015 1 8,690 64,780 61.6 % 17.8 % 122 19 87 57 35 (38 )
Phoenix, AZ Jun-2015 1 7,904 64,401 71.9 % 36.4 % 166 26 79 50 87 (24 )
Boston, MA Jun-2015 1 10,291 63,475 59.7 % 0.0 % 100 - 108 6 (8 ) (6 )
Phoenix, AZ Feb-2016 1 9,275 67,825 71.3 % 0.0 % 141 - 75 - 66 -
Miami, FL Feb-2016 1 11,274 69,361 36.1 % 0.0 % 70 - 89 - (19 ) -
Los Angeles, CA Mar-2016 1 18,600 79,835 18.7 % 0.0 % 35 - 101 - (66 ) -
                 
9 $ 83,834 616,716 $ 1,202 $ 377 $ 830 $ 313 $ 372   $ 64  
 
 
Certificate of Occupancy Properties Currently Under Contract
 
Expected Expected
Acquisition # of Stores Expected Net Rentable Square Feet
Market     Date       Cost    
 
Charleston, SC Jul-2016 1 $ 8,430 70,735
Chicago, IL Aug-2016 1 9,000 71,520
Chicago, IL Dec-2016 1 9,800 79,670
Charlotte, NC May-2017 1   12,425 71,780
4 $ 39,655 293,705

Sovran Self Storage, Inc.
Diane Piegza, 716-650-6115
Vice President
Investor Relations and Community Affairs

Source: Sovran Self Storage, Inc.