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, 2015.

Fourth Quarter 2015 Highlights:
  • Achieved adjusted funds from operations per fully diluted common share of $1.28, representing a 13.3% increase over the same period last year.
  • Increased same store revenue by 6.7% and net operating income ("NOI") (1) by 7.8% as compared to the fourth quarter of 2014.
  • Grew same store average occupancy for the quarter by 120 basis points to 90.5% compared to the same period in 2014. Same store occupancy at December 31, 2015, was 90.1%; a full 120 basis points over December 31, 2014.
  • Paid a quarterly dividend of $0.85 per share of common stock.
  • Achieved full year adjusted funds from operations per fully diluted common share of $4.94, representing a 13.3% increase over full year 2014 results. This is the Company's fifth consecutive year of double digit percentage adjusted FFO growth.
  • Attained credit rating upgrades from both Standard and Poor's and Fitch (to BBB from BBB-). Moody's Investors Service also initiated coverage with a 'Baa2' credit rating on the Company's corporate credit and issue-level ratings.

Net income available to common shareholders for the fourth quarter of 2015 was $30.0 million or $0.83 per fully diluted common share. For the same period in 2014, net income available to common shareholders was $25.7 million or $0.76 per fully diluted common share.

Funds from operations ("FFO") (2) for the quarter were $1.26 per fully diluted common share compared to $1.08 for the same period last year. Absent $0.6 million of acquisition costs incurred in the fourth quarter of 2015 and $1.9 million of acquisition costs and straight-line rent adjustments in the fourth quarter of 2014, adjusted FFO per fully diluted common share was $1.28 and $1.13 for the fourth quarter of 2015 and 2014, respectively.

Increased occupancy and rental rates were the primary contributors to the Company's strong FFO growth during the quarter.

OPERATIONS:

Total revenues increased 11.9% over last year's fourth quarter while operating costs increased 10.6%, resulting in an NOI increase of 12.5%. Overall occupancy averaged 89.8% for the period, and rental rates averaged $12.83 per sq. ft.

Revenues for the 399 stores wholly owned by the Company since January 1, 2014 increased 6.7% from those of the fourth quarter of 2014, the result of a 120 basis point increase in average occupancy, a 5.0% increase in rental rates and increases in tenant insurance administrative fees and other income.

Same store operating expenses increased 4.6% for the fourth quarter of 2015 compared to the prior year period, primarily the result of increased real estate taxes.

Consequently, same store net operating income increased 7.8% this period over the fourth quarter of 2014.

General and administrative expenses increased by approximately $1.1 million over the same period in 2014, primarily due to increases in personnel costs associated with operating 24 more stores during the quarter than at this time last year, and legal fees. Beginning with the first quarter of 2015, the company reclassified internet marketing costs from general and administrative expenses to property operations expense for all periods presented so as to be consistent with industry practices.

During the fourth quarter of 2015, 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 those in Florida, New York and Georgia.

For the full year 2015, same store revenues increased by 6.2% and same store NOI improved by 7.9%. Same store occupancy at December 31, 2015 increased by 120 basis points over that of December 31, 2014 to 90.1%.

PROPERTIES:

During the quarter, the Company acquired one store near Philadelphia, PA at a cost of approximately $6.6 million. It also sold two non-strategic facilities in South Carolina for approximately $4.0 million. Both were acquired as part of a portfolio purchased in September, 2015.

As described in its prospectus filed January 19, 2016, the Company entered into contracts to acquire 30 self storage facilities in ten different states for a total purchase price of approximately $398 million (including the Philadelphia store referenced above). The facilities include five single store acquisitions and four portfolio acquisitions; one comprised of 13 stores, and three comprised of four properties each. In aggregate, the newly announced transactions include 21 stabilized properties in the Company's existing markets of Boston/SE New Hampshire (6), Central/Southern Florida (5), Connecticut (2), Dallas (3), Denver (1), New York City metro area (2) and Philadelphia (2). A contract to acquire a recently developed facility in Phoenix, AZ, another market in which the Company has a presence, was also executed. The balance of the acquisitions includes eight properties in the Los Angeles, CA metro area, a new market for the Company. Seven of these properties are stabilized while the eighth property is a newly developed store in North Los Angeles County.

As noted above, one of the Philadelphia properties was acquired in December, 2015, at a cost of approximately $6.6 million. In January and February, 2016, 19 of the aforementioned stores were acquired at a cost of approximately $222 million; four in Southern Florida, four in Los Angeles, six in Boston/SE New Hampshire, three in Dallas and one each in Phoenix and Philadelphia. The purchase price of all of these acquisitions was funded through draws on the Company's line of credit, which draws have been subsequently repaid through proceeds of the Company's underwritten public offering described below. The remaining 10 previously announced properties are expected to be acquired at various dates through April, 2016, at a total cost of approximately $169 million.

In addition to the transactions described above, the Company is also under contract to purchase three Certificate of Occupancy properties; two in Chicago, one in Charleston, SC and one in Miami, FL. The Miami property was acquired at a cost of approximately $11 million in February 2016. The Company expects to execute the purchase of the three remaining properties upon completion of construction at various dates later in 2016 for total consideration of approximately $27 million.

The purchase of the remaining facilities by the Company is subject to customary conditions to closing, and there is no assurance that these properties will be acquired.

CAPITAL TRANSACTIONS:

Illustrated below are key financial ratios at December 31, 2015:
  • Debt to Enterprise Value (at $107.31/share) 17.4%
  • Debt to Book Cost of Storage Facilities 33.4%
  • Debt to EBITDA Ratio 3.8x
  • Debt Service Coverage 6.1x

At December 31, 2015, the Company had approximately $7.0 million of cash on hand, and $221 million available on its line of credit, excluding its expansion feature.

During the quarter, the Company issued 450,000 shares pursuant to its "At The Market" program at an average price of $99.58 per share. The net proceeds of $44.2 million were used, in part, to acquire the aforementioned properties. In October, the Company issued 45,370 shares at a price of $96.45 through its Dividend Reinvestment Plan.

On January 4, 2016, the Company increased its line of credit facility from $300 million to $500 million. This increase was pursuant to an expansion feature set forth in the Company's existing unsecured credit agreement. The other terms of the Company's line of credit facility were unchanged.

On January 20, 2016, the Company agreed to issue and sell 2,300,000 shares of the Company's common stock, par value $.01 per share, plus up to an additional 345,000 shares of common stock pursuant to the underwriters' option, at a price to the public of $105.75 per share. The offering of 2,645,000 shares of the Company's common stock closed on January 25, 2016, resulting in net proceeds to the Company of approximately $269.7 million, part of which was used to fund the aforementioned properties.

COMMON STOCK DIVIDEND:

Subsequent to quarter-end, the Company's Board of Directors approved a quarterly dividend of $0.85 per share or $3.40 annualized.

YEAR 2016 EARNINGS GUIDANCE:

Management is encouraged by its occupancy gains and its ability to attain significant rental rate growth in most markets. The following assumptions covering operations have been utilized in formulating guidance for the first quarter and full year 2016:
         

Same Store

Projected Increases Over 2015

1Q 2016
         

Full Year 2016
Revenue 6.0 - 7.0% 6.0 - 7.0%
Operating Costs (excluding property taxes) 3.0 - 4.0% 3.0 - 4.0%
Property Taxes

6.0 - 7.0%

6.0 - 7.0%
Total Operating Expenses 4.0 - 5.0% 4.0 - 5.0%
Net Operating Income 7.0 - 8.0% 7.0 - 8.0%
 

The Company's 2016 same store pool consists of the 428 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 first year after the stores achieve 80% sustained occupancy using market rates and incentives.

The Houston market is expected to comprise approximately 10.0% 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 5.75% - 6.25%, operating expense increases of 4.0% - 5.0% (inclusive of a 6% projected increase in property taxes), and NOI growth of between 6.0% and 7.0%.

The Company intends to spend up to $40 million on its expansion and enhancement program. It has also budgeted $19 million to provide for recurring capitalized expenditures including roofing, paving, and office renovations.

The Company has assumed $100 million of accretive acquisitions in 2016 in addition to the aforementioned properties under contract or already acquired. Per share FFO guidance is projected after adding back third party acquisition costs. Purchases of these additional properties are expected to be funded via proceeds from the Company's January 2016 common stock offering and draws on its line of credit which carries an interest rate of LIBOR plus 1.10%.

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 expects to acquire another in Los Angeles, CA in March. Further, it expects to acquire three more such Certificate of Occupancy facilities at various dates later in 2016. 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 2016, it will incur such dilution to the extent of $0.07 to $0.08 per share due to the aforementioned acquisitions.

Annual general and administrative expenses are expected to be approximately $41-42 million. The increase over the prior year is primarily due to the need for additional personnel required for recent acquisitions and the Company's plans to continue expanding its Corporate Alliance program.

Subsequent to our common stock offering in January, 2016, the Company had 39.4 million shares of common stock outstanding and 0.2 million Operating Partnership Units outstanding.

As a result of the above assumptions, management expects adjusted funds from operations for the full year 2016 to be approximately $5.45 to $5.51 per share, and between $1.17 and $1.19 per share for the first 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 Fourth Quarter Earnings Release Conference Call at 9:00 a.m. Eastern Time on Thursday, February 18, 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 13628177.

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 over 500 self storage facilities in 26 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.
SOVRAN SELF STORAGE, INC.
BALANCE SHEET DATA
(unaudited)
                   
December 31, December 31,
(dollars in thousands)         2015           2014
Assets
Investment in storage facilities:
Land $ 480,176 $ 397,642
Building, equipment and construction in progress   2,011,526     1,780,341  
2,491,702 2,177,983
Less: accumulated depreciation   (465,195 )   (411,701 )
Investment in storage facilities, net 2,026,507 1,766,282
Cash and cash equivalents 7,032 8,543
Accounts receivable 6,805 5,758
Receivable from joint venture 929 583
Investment in joint venture 62,520 57,803
Prepaid expenses 6,115 6,533
Fair value of interest rate swap agreements 550 -
Intangible asset - in-place customer leases (net of accumulated
amortization of $21,017 in 2015 and $17,662 in 2014) 1,303 2,204
Other assets   11,095     7,094  
Total Assets $ 2,122,856   $ 1,854,800  
 
Liabilities
Line of credit $ 79,000 $ 49,000
Term notes 750,000 750,000
Accounts payable and accrued liabilities 48,523 43,551
Deferred revenue 7,511 7,290
Fair value of interest rate swap agreements 15,343 13,341
Mortgages payable   1,993     2,127  
Total Liabilities 902,370 865,309
 
Noncontrolling redeemable Operating Partnership Units at redemption value 18,171 13,622
 
Equity
Common stock 367 341
Additional paid-in capital 1,388,343 1,156,225
Accumulated deficit (171,980 ) (167,692 )
Accumulated other comprehensive loss   (14,415 )   (13,005 )
Total Shareholders' Equity   1,202,315     975,869  
Total Liabilities and Equity $ 2,122,856   $ 1,854,800  
 
 

CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)            
October 1, 2015 October 1, 2014
to to
(dollars in thousands, except share data) December 31, 2015       December 31, 2014
 
Revenues
Rental income $ 87,996 $ 78,605
Other operating income 5,552 4,811
Management fee income 1,492 1,272
Acquisition fee income   -     241  
Total operating revenues 95,040 84,929
 
Expenses
Property operations and maintenance (3) 20,915 19,611
Real estate taxes 9,252 7,664
General and administrative (3) 10,201 9,113
Acquisition related costs 576 1,432
Operating leases of storage facilities - 1,997
Depreciation and amortization 14,349 12,580
Amortization of in-place customer leases   719     1,389  
Total operating expenses   56,012     53,786  
 
Income from operations 39,028 31,143
 
Other income (expense)
Interest expense (A) (9,328 ) (9,247 )
Interest income - 9
(Loss) gain on sale of real estate (487 ) 3,399
Equity in income of joint ventures   970     533  
 
Net income 30,183 25,837
Net income attributable to noncontrolling interests   (146 )   (144 )
Net income attributable to common shareholders $ 30,037   $ 25,693  
 
Earnings per common share attributable to common shareholders - basic $ 0.83   $ 0.76  
 
Earnings per common share attributable to common shareholders - diluted $ 0.83   $ 0.76  
 
Common shares used in basic
earnings per share calculation 36,109,010 33,656,369
 
Common shares used in diluted
earnings per share calculation 36,327,085 33,845,905
 
Dividends declared per common share $ 0.85   $ 0.68  
 
 
(A) Interest expense for the three months ending December 31 consists of the following
Interest expense $ 9,032 $ 9,007
Amortization of deferred financing fees   296     240  
Total interest expense $ 9,328   $ 9,247  
 
 
January 1, 2015 January 1, 2014
to to
(dollars in thousands, except share data) December 31, 2015       December 31, 2014
 
Revenues
Rental income $ 338,435 $ 302,044
Other operating income 22,331 18,934
Management fee income 5,836 4,722
Acquisition fee income   -     380  
Total operating revenues 366,602 326,080
 
Expenses
Property operations and maintenance (3) 81,915 75,333
Real estate taxes 36,563 32,097
General and administrative (3) 38,659 35,222
Acquisition related costs 2,991 7,359
Operating leases of storage facilities 683 7,987
Depreciation and amortization 55,083 47,637
Amortization of in-place customer leases   3,423     4,112  
Total operating expenses   219,317     209,747  
 
Income from operations 147,285 116,333
 
Other income (expense)
Interest expense (A) (37,124 ) (34,578 )
Interest income 5 40
(Loss) gain on sale of real estate (494 ) 5,176
Equity in income of joint ventures   3,405     2,086  
 
Net income 113,077 89,057
Net income attributable to noncontrolling interests   (553 )   (526 )
Net income attributable to common shareholders $ 112,524   $ 88,531  
 
Earnings per common share attributable to common shareholders - basic $ 3.18   $ 2.68  
 
Earnings per common share attributable to common shareholders - diluted $ 3.16   $ 2.67  
 
Common shares used in basic
earnings per share calculation 35,379,212 33,018,716
 
Common shares used in diluted
earnings per share calculation 35,600,520 33,190,673
 
Dividends declared per common share $ 3.20   $ 2.72  
 
(A) Interest expense for the year ending December 31 consists of the following
Interest expense $ 35,940 $ 33,719
Amortization of deferred financing fees   1,184     859  
Total interest expense $ 37,124   $ 34,578  
 
 

COMPUTATION OF FUNDS FROM OPERATIONS (FFO) (2) - (unaudited)
           
October 1, 2015 October 1, 2014
to to
(dollars in thousands, except share data) December 31, 2015       December 31, 2014
 
Net income attributable to common shareholders $ 30,037 $ 25,693
Net income attributable to noncontrolling interests 146 144
Depreciation of real estate and amortization of intangible
assets exclusive of deferred financing fees 14,780 13,730
Depreciation and amortization from unconsolidated joint ventures 590 500
Gain on sale of real estate 487 (3,399 )
Funds from operations allocable to noncontrolling
interest in Operating Partnership   (223 )   (205 )
Funds from operations available to common shareholders   45,817     36,463  
FFO per share - diluted $ 1.26 $ 1.08
 
Adjustments to FFO
Acquisition costs expensed 576 1,432
Company's share of acquisition costs expensed by Sovran HHF Storage Holdings - 182
Acquisition fee income from Sovran HHF Storage Holdings - (240 )
Operating leases straight line rent adjustment - 497
Funds from operations resulting from non-recurring items allocable to noncontrolling
interest in Operating Partnership   (3 )   (10 )
Adjusted funds from operations available to common shareholders   46,390     38,324  
Adjusted FFO per share - diluted $ 1.28 $ 1.13
 
Common shares - diluted 36,327,085 33,845,905
 
 
January 1, 2015 January 1, 2014
to to
(dollars in thousands, except share data) December 31, 2015       December 31, 2014
 
Net income attributable to common shareholders $ 112,524 $ 88,531
Net income attributable to noncontrolling interests 553 526
Depreciation of real estate and amortization of intangible
assets exclusive of deferred financing fees 57,429 50,827
Depreciation and amortization from unconsolidated joint ventures 2,435 1,666
Loss (gain) on sale of real estate 494 (5,176 )
Funds from operations allocable to noncontrolling
interest in Operating Partnership   (848 )   (806 )
Funds from operations available to common shareholders   172,587     135,568  
FFO per share - diluted $ 4.85 $ 4.08
 
Adjustments to FFO
Acquisition costs expensed 2,991 7,359
Company's share of acquisition costs expensed by Sovran HHF Storage Holdings - 367
Acquisition fee income from Sovran HHF Storage Holdings - (376 )
Operating leases straight line rent adjustment 146 1,987
Funds from operations resulting from non-recurring items allocable to noncontrolling
interest in Operating Partnership   (15 )   (56 )
Adjusted funds from operations available to common shareholders   175,709     144,849  
Adjusted FFO per share - diluted $ 4.94 $ 4.36
 
Common shares - diluted 35,600,520 33,190,673
 
 

QUARTERLY SAME STORE DATA (4) * 399 stores owned since 12/31/13 (unaudited)     October 1, 2015     October 1, 2014        
to to Percentage
(dollars in thousands) December 31, 2015     December 31, 2014 Change     Change
 
Revenues:
Rental income $ 76,654 $ 71,921 $ 4,733 6.6 %
Tenant insurance 2,778 2,455 323 13.2 %
Other operating income   1,203   1,164   39   3.4 %
Total operating revenues 80,635 75,540 5,095 6.7 %
 
Expenses:
Payroll and benefits 6,989 6,739 250 3.7 %
Real estate taxes 7,766 6,859 907 13.2 %
Utilities 2,409 2,580 (171 ) -6.6 %
Repairs and maintenance 3,274 3,231 43 1.3 %
Office and other operating expense 2,721 2,612 109 4.2 %
Insurance 1,016 1,019 (3 ) -0.3 %
Advertising & yellow pages 306 342 (36 ) -10.5 %
Internet marketing (3)   1,208   1,185   23   1.9 %
Total operating expenses   25,689   24,567   1,122   4.6 %
 
Net operating income $ 54,946 $ 50,973 $ 3,973   7.8 %
 
 
QTD Same store move ins 34,870 35,744 (874 )
 
QTD Same store move outs 37,512 39,354 (1,842 )
 
 
OTHER COMPARABLE QUARTERLY SAME STORE DATA * (unaudited) October 1, 2015 October 1, 2014
to to Percentage
December 31, 2015     December 31, 2014 Change     Change
Stores owned since 12/31/12 (384 stores)
Revenues $ 75,461 $ 70,722 $ 4,739 6.7 %
Expenses including internet advertising   24,237   23,070   1,167   5.1 %
Net operating income $ 51,224 $ 47,652 $ 3,572   7.5 %
 
 
 
Stores owned since 12/31/11 (356 stores)
Revenues $ 68,437 $ 64,245 $ 4,192 6.5 %
Expenses including internet advertising   22,282   21,193   1,089   5.1 %
Net operating income $ 46,155 $ 43,052 $ 3,103   7.2 %
 
 
* See exhibits A and B for supplemental quarterly same store data.
 
 
YEAR TO DATE SAME STORE DATA * 399 stores owned since 12/31/13 (unaudited) January 1, 2015 January 1, 2014
to to Percentage
(dollars in thousands) December 31, 2015     December 31, 2014 Change     Change
 
Revenues:
Rental income $ 301,525 $ 284,613 $ 16,912 5.9 %
Tenant insurance 10,979 9,644 1,335 13.8 %
Other operating income   5,427   5,147   280   5.4 %
Total operating revenues 317,931 299,404 18,527 6.2 %
 
Expenses:
Payroll and benefits 27,469 26,518 951 3.6 %
Real estate taxes 31,593 30,041 1,552 5.2 %
Utilities 10,925 11,389 (464 ) -4.1 %
Repairs and maintenance 12,400 11,256 1,144 10.2 %
Office and other operating expense 10,294 10,390 (96 ) -0.9 %
Insurance 4,059 4,152 (93 ) -2.2 %
Advertising & yellow pages 1,297 1,441 (144 ) -10.0 %
Internet marketing (3)   5,319   5,307   12   0.2 %
Total operating expenses   103,356   100,494   2,862   2.8 %
 
Net operating income $ 214,575 $ 198,910 $ 15,665   7.9 %
 
YTD Same store move ins 160,553 165,430 (4,877 )
 
YTD Same store move outs 156,900 161,965 (5,065 )
 
 

OTHER DATA     Same Store (4)     All Stores (5)

2015
   

2014

2015
   

2014
 
Weighted average quarterly occupancy 90.5 % 89.3 % 89.8 % 88.9 %
 
Occupancy at December 31 90.1 % 88.9 % 89.4 % 88.4 %
 
Rent per occupied square foot $12.64 $12.04 $12.83 $12.19
 
 

Investment in Storage Facilities: (unaudited)
The following summarizes activity in storage facilities during the year ended December 31, 2015:
 
Beginning balance $ 2,177,983
Property acquisitions 278,572
Improvements and equipment additions:
Expansions 16,203
Roofing, paving, and equipment:
Stabilized stores 19,322
Recently acquired stores 4,282
Change in construction in progress (Total CIP $7.0 million) 2,239
Dispositions and Impairments   (6,899 )
Storage facilities at cost at period end $ 2,491,702  
 
 

Comparison of Selected G&A Costs (unaudited)
Quarter Ended Year Ended

December 31, 2015

December 31, 2014

December 31, 2015

December 31, 2014
 
Management and administrative salaries and benefits 6,645 5,995 23,947 22,337
Training 351 287 1,017 1,046
Call center 491 444 1,896 1,651
Uncle Bob's Management costs 205 51 496 448
Income taxes (374 ) (27 ) 1,251 927
Legal, accounting and professional 1,147 684 2,853 1,873
Other administrative expenses (6)   1,736     1,679     7,199     6,940  
$ 10,201   $ 9,113   $ 38,659   $ 35,222  
 
 

Net rentable square feet

December 31, 2015
Wholly owned properties 30,582,611
Joint venture properties 5,189,872
Third party managed properties   1,179,556  
36,952,039
 
 

December 31, 2015

December 31, 2014
 
Common shares outstanding 36,710,673 34,105,955
Operating Partnership Units outstanding 168,866 155,484
 
 
(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 of 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. 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) For all periods presented internet marketing costs are included in property operations and maintenance expense. The internet marketing costs had previously been included in general and administrative expenses. For the three months ended December 31, 2015 and 2014, total internet marketing expense was $1,367 and $1,280, respectively. For the year ended December 31, 2015 and 2014, total internet marketing expense was $5,884 and $5,570, respectively.
 
(4) 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.
 
(5) Does not include unconsolidated joint venture stores or other stores managed by the Company
 
(6) 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 December 31, 2015
(unaudited)
 

 

 

Avg Qtrly
Avg Qtrly Occupancy for Revenue Expenses NOI

 

Rent per
the Three Months Ended for the Three Months for the Three Months for the Three Months

Square

Occupied
December 31, Ended December 31,   Ended December 31,   Ended December 31,  
Market     Stores    

Feet
   

Square Foot
    2015     2014 2015     2014     % Change 2015     2014     % Change 2015     2014     % Change
 
Houston-The Woodlands-Sugar Land, TX

40
3,069 $ 13.56 90.6 % 92.4 % $ 9,843 $ 9,290 6.0 % $ 3,115 $ 3,288 -5.3 % $ 6,728 $ 6,002 12.1 %
New England-CT-RI-NH-MA-ME 31 1,913 16.58 90.2 % 88.4 % 7,480 6,991 7.0 % 2,326 2,227 4.4 % 5,154 4,764 8.2 %
Dallas-Fort Worth-Arlington, TX 20 1,364 11.61 93.3 % 92.0 % 3,835 3,553 7.9 % 1,291 1,113 16.0 % 2,544 2,440 4.3 %
Atlanta-Sandy Springs-Roswell, GA 20 1,353 12.15 91.5 % 91.7 % 4,005 3,653 9.6 % 1,120 957 17.0 % 2,885 2,696 7.0 %
Buffalo-Upstate, NY 19 1,266 12.98 87.6 % 88.0 % 3,750 3,499 7.2 % 1,308 1,254 4.3 % 2,442 2,245 8.8 %
New York-Newark-Jersey City, NY-NJ-PA 18 1,068 22.70 92.1 % 88.1 % 5,783 5,282 9.5 % 1,610 1,722 -6.5 % 4,173 3,560 17.2 %
Austin-Round Rock, TX 15 1,167 12.70 86.7 % 85.2 % 3,359 3,153 6.5 % 1,388 1,077 28.9 % 1,971 2,076 -5.1 %
New Orleans-Lafayette, LA 14 810 11.34 92.3 % 88.9 % 2,242 2,188 2.5 % 619 640 -3.3 % 1,623 1,548 4.8 %
Miami-Fort Lauderdale-West Palm Beach, FL 13 858 16.38 91.2 % 89.7 % 3,383 3,128 8.2 % 957 861 11.1 % 2,426 2,267 7.0 %
San Antonio-New Braunfels, TX 12 713 12.25 91.3 % 89.3 % 2,099 1,912 9.8 % 991 545 81.8 % 1,108 1,367 -18.9 %
Tampa-St. Petersburg-Clearwater, FL 12 746 13.36 93.7 % 91.4 % 2,472 2,311 7.0 % 737 690 6.8 % 1,735 1,621 7.0 %
Virginia Beach-Norfolk-Newport News, VA 11 838 10.38 88.1 % 85.2 % 2,012 1,979 1.7 % 710 680 4.4 % 1,302 1,299 0.2 %
Phoenix-Mesa-Scottsdale, AZ 10 668 10.46 89.6 % 87.2 % 1,670 1,556 7.3 % 456 449 1.6 % 1,214 1,107 9.7 %
Chicago-Naperville-Elgin, IL 9 693 14.15 90.4 % 87.0 % 2,305 2,129 8.3 % 569 770 -26.1 % 1,736 1,359 27.7 %
Cleveland-Elyria, OH 9 629 11.44 87.8 % 89.0 % 1,660 1,578 5.2 % 503 586 -14.2 % 1,157 992 16.6 %
Raleigh-Durham, NC 8 534 11.70 93.0 % 91.1 % 1,541 1,465 5.2 % 392 384 2.1 % 1,149 1,081 6.3 %
Pensacola-Ferry Pass-Brent, FL 8 602 8.15 87.0 % 77.3 % 1,159 1,160 -0.1 % 454 449 1.1 % 705 711 -0.8 %
Jacksonville, FL 8 547 10.33 94.3 % 94.5 % 1,416 1,316 7.6 % 476 447 6.5 % 940 869 8.2 %
St. Louis, MO 8 515 12.86 90.1 % 87.1 % 1,555 1,442 7.8 % 709 470 50.9 % 846 972 -13.0 %
Montgomery, AL 7 490 9.49 89.4 % 85.7 % 1,100 984 11.8 % 313 313 0.0 % 787 671 17.3 %
Space Coast, FL 7 525 11.86 90.3 % 94.5 % 1,462 1,328 10.1 % 407 395 3.0 % 1,055 933 13.1 %
Beaumont-Port Arthur, TX 7 428 12.84 93.4 % 93.9 % 1,355 1,311 3.4 % 413 568 -27.3 % 942 743 26.8 %
Charlotte-Concord-Gastonia, NC 7 428 11.51 93.3 % 92.7 % 1,218 1,133 7.5 % 365 344 6.1 % 853 789 8.1 %
Jackson, MS 6 397 11.20 91.6 % 92.5 % 1,068 1,042 2.5 % 294 293 0.3 % 774 749 3.3 %
Cape Coral-Fort Myers, FL 6 314 11.37 93.7 % 87.8 % 905 788 14.8 % 279 250 11.6 % 626 538 16.4 %
Chattanooga, TN-GA 5 353 11.07 89.2 % 88.0 % 913 852 7.2 % 317 287 10.5 % 596 565 5.5 %
Youngstown-Warren-Boardman, OH-PA 5 333 8.81 88.7 % 89.5 % 695 677 2.7 % 253 241 5.0 % 442 436 1.4 %
Birmingham-Hoover, AL 5 313 8.39 88.8 % 84.1 % 626 584 7.2 % 235 213 10.3 % 391 371 5.4 %
Columbia, SC 5 287 10.00 95.7 % 88.6 % 735 674 9.1 % 271 294 -7.8 % 464 380 22.1 %
Other markets 54 3,603 10.54 89.3 % 88.9 % 8,989 8,582 4.7 % 2,811 2,760 1.8 % 6,178 5,822 6.1 %
                                                                         
Portfolio Total     399     26,824     $ 12.64     90.5 %     89.3 % $ 80,635     $ 75,540     6.7 % $ 25,689     $ 24,567     4.6 % $ 54,946     $ 50,973     7.8 %
 
 
Properties owned since 12/31/13 (detail shown above) 399 26,824 12.64 90.5 % 89.3 % $ 80,635 $ 75,540 6.7 % $ 25,689 $ 24,567 4.6 % $ 54,946 $ 50,973 7.8 %
Properties owned since 12/31/12 384 25,721 12.32 90.5 % 89.4 % $ 75,461 $ 70,722 6.7 % $ 24,237 $ 23,070 5.1 % $ 51,224 $ 47,652 7.5 %
Properties owned since 12/31/11 356 23,532 12.21 90.4 % 89.5 % $ 68,437 $ 64,245 6.5 % $ 22,282 $ 21,193 5.1 % $ 46,155 $ 43,052 7.2 %
 
 
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.
 
Same Store Performance Summary by Market
Twelve Months Ended December 31, 2015
(unaudited)
 
                  Revenue             Expenses             NOI      
for the Twelve Months for the Twelve Months for the Twelve Months
Square Ended December 31,         Ended December 31,         Ended December 31,        
Market       Stores      

Feet
2015       2014       % Change 2015       2014       % Change 2015       2014       % Change
                 
Houston-The Woodlands-Sugar Land, TX 40 3,069 $ 38,750 $ 36,477 6.2 % $ 13,108 $ 13,205 -0.7 % $ 25,642 $ 23,272 10.2 %
New England-CT-RI-NH-MA-ME 31 1,913 29,393 27,907 5.3 % 9,575 9,002 6.4 % 19,818 18,905 4.8 %
Dallas-Fort Worth-Arlington, TX 20 1,364 15,057 14,081 6.9 % 5,123 4,974 3.0 % 9,934 9,107 9.1 %
Atlanta-Sandy Springs-Roswell, GA 20 1,353 15,560 14,350 8.4 % 4,386 4,297 2.1 % 11,174 10,053 11.2 %
Buffalo-Upstate, NY 19 1,266 15,066 14,053 7.2 % 5,157 4,943 4.3 % 9,909 9,110 8.8 %
New York-Newark-Jersey City, NY-NJ-PA 18 1,068 22,313 21,048 6.0 % 7,279 7,215 0.9 % 15,034 13,833 8.7 %
Austin-Round Rock, TX 15 1,167 13,433 12,714 5.7 % 4,832 4,343 11.3 % 8,601 8,371 2.7 %
New Orleans-Lafayette, LA 14 810 8,975 8,781 2.2 % 2,578 2,500 3.1 % 6,397 6,281 1.8 %
Miami-Fort Lauderdale-West Palm Beach, FL 13 858 13,202 12,320 7.2 % 3,789 3,751 1.0 % 9,413 8,569 9.8 %
San Antonio-New Braunfels, TX 12 713 8,250 7,420 11.2 % 2,999 2,572 16.6 % 5,251 4,848 8.3 %
Tampa-St. Petersburg-Clearwater, FL 12 746 9,725 9,124 6.6 % 2,879 2,781 3.5 % 6,846 6,343 7.9 %
Virginia Beach-Norfolk-Newport News, VA 11 838 8,161 8,118 0.5 % 2,757 2,630 4.8 % 5,404 5,488 -1.5 %
Phoenix-Mesa-Scottsdale, AZ 10 668 6,566 6,115 7.4 % 1,985 2,109 -5.9 % 4,581 4,006 14.4 %
Chicago-Naperville-Elgin, IL 9 693 8,997 8,377 7.4 % 3,145 3,414 -7.9 % 5,852 4,963 17.9 %
Cleveland-Elyria, OH 9 629 6,581 6,230 5.6 % 2,109 2,060 2.4 % 4,472 4,170 7.2 %
Raleigh-Durham, NC 8 534 6,144 5,852 5.0 % 1,513 1,479 2.3 % 4,631 4,373 5.9 %
Pensacola-Ferry Pass-Brent, FL 8 602 4,679 4,672 0.1 % 1,807 1,858 -2.7 % 2,872 2,814 2.1 %
Jacksonville, FL 8 547 5,530 5,035 9.8 % 1,857 1,829 1.5 % 3,673 3,206 14.6 %
St. Louis, MO 8 515 6,098 5,766 5.8 % 2,179 1,970 10.6 % 3,919 3,796 3.2 %
Montgomery, AL 7 490 4,226 3,968 6.5 % 1,325 1,286 3.0 % 2,901 2,682 8.2 %
Space Coast, FL 7 525 5,622 5,155 9.1 % 1,586 1,527 3.9 % 4,036 3,628 11.2 %
Beaumont-Port Arthur, TX 7 428 5,378 5,118 5.1 % 1,813 1,774 2.2 % 3,565 3,344 6.6 %
Charlotte-Concord-Gastonia, NC 7 428 4,784 4,396 8.8 % 1,382 1,344 2.8 % 3,402 3,052 11.5 %
Jackson, MS 6 397 4,242 4,054 4.6 % 1,206 1,196 0.8 % 3,036 2,858 6.2 %
Cape Coral-Fort Myers, FL 6 314 3,430 2,943 16.5 % 1,108 1,036 6.9 % 2,322 1,907 21.8 %
Chattanooga, TN-GA 5 353 3,571 3,360 6.3 % 1,270 1,201 5.7 % 2,301 2,159 6.6 %
Youngstown-Warren-Boardman, OH-PA 5 333 2,788 2,696 3.4 % 1,016 925 9.8 % 1,772 1,771 0.1 %
Birmingham-Hoover, AL 5 313 2,457 2,250 9.2 % 910 836 8.9 % 1,547 1,414 9.4 %
Columbia, SC 5 287 2,874 2,689 6.9 % 1,114 1,088 2.4 % 1,760 1,601 9.9 %
Other markets 54 3,603 36,079 34,335 5.1 % 11,569 11,349 1.9 % 24,510 22,986 6.6 %
                                                                       
Portfolio Total       399       26,824 $ 317,931       $ 299,404       6.2 % $ 103,356       $ 100,494       2.8 % $ 214,575       $ 198,910       7.9 %
 
 
Dollars and square feet in thousands.
List includes markets where the Company has five or more stores.
 
 

Exhibit C
 
Sovran Self Storage, Inc.
 
Debt Maturity Schedule
December 31, 2015
(unaudited)
                                       
Current
Maturity Basis of Interest
(dollars in thousands)     Date     Rate     Rate (**)     2016     2017     2018     2019     2020     Thereafter     Total
 
Line of credit Dec-2019 Variable 1.72 % $ - $ - $ - $ 79,000 $ - $ - $ 79,000
 
Term note Apr-2016 Fixed 6.38 % 150,000 - - - - - 150,000
Term note Jun-2020 Swapped to fixed 3.77 % - - - - 125,000 - 125,000
Term note Jun-2020 Swapped to fixed 3.01 % - - - - 100,000 - 100,000
Term note Jun-2020 Swapped to fixed 2.77 % - - - - 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
Mortgage note May-2026 Fixed 5.99 % 142 151 160 170 181 1,189 1,993
                                     
$ 150,142 $ 151 $ 160 $ 79,170 $ 325,181 $ 276,189 $ 830,993
 
(**) Rate as of December 31, 2015 based on existing debt rating. Interest rates shown do not include amortization of financing fees and facility fees which are expected to be $1.4 million in 2016.
 
 

Exhibit D
                                               
Sovran Self Storage, Inc.
 
Certificate of Occupancy Performance Summary
December 31, 2015
(unaudited)
(dollars in thousands)
 
Revenue Expenses NOI
for the Three Months for the Three Months for the Three Months
# of Net Rentable Occupancy at December 31, Ended December 31, Ended December 31, Ended December 31,
Market     Acquired    

Stores
    Cost    

Square Feet
2015     2014 2015     2014 2015     2014 2015     2014
 
Chicago, IL May-2014 1 $ 5,500 52,168 75.8 % 47.8 % $ 164 $ 82 $ 77 $ 100 $ 87 $ (18 )
Chattanooga, TN Sep-2014 1 6,550 57,260 91.5 % 49.6 % 164 73 82 45 82 28
Chicago, IL Nov-2014 1 5,750 97,611 69.2 % 34.7 % 144 12 127 51 17 (39 )
Chicago, IL Mar-2015 1 8,690 64,780 36.1 % 0.0 % 78 - 121 - (43 ) -
Phoenix, AZ Jun-2015 1 7,904 64,401 48.1 % 0.0 % 107 - 67 - 40 -
Boston, MA Jun-2015 1 10,291 63,475 17.9 % 0.0 % 29 - 48 - (19 ) -
                                     
6     $ 44,685     399,695 $ 686     $ 167 $ 522     $ 196 $ 164       $ (29 )
 

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