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Sovran Self Storage Inc. (SSS)
Q3 2010 Earnings Call
November 04, 2010 09:00 am ET
Ken Myszka - President and COO
Dave Rogers - CFO
David Toti - FBR Capital Markets
Christy McElroy - UBS
Todd Thomas - KeyBanc Capital Market
Michael Bilerman - Citigroup
Mike Salinsky - RBC Capital Markets
Paul Adornato - BMO Capital Markets
Greetings and welcome to the Sovran Self Storage Third Quarter 2010 Earnings Release Conference Call. (Operator Instructions)
Previous Statements by SSS
» Sovran Self Storage, Inc. Q2 2010 Earnings Call Transcript
» Sovran Self Storage, Inc. Q1 2010 Earnings Call Transcript
» Sovran Self Storage Q1 2009 Earnings Call Transcript
Good morning and welcome to our third quarter conference call. As a reminder, the following discussions will include forward-looking statements. Sovran's actual results may differ materially from projected results. Additional information concerning the factors that may cause such differences is included in our company's SEC filings. The copies of these filings may be obtained by contacting the company or the SEC.
Despite continued challenging market conditions our results of operations, where well within our guidance for the quarter. Same store revenues were marginally positive with 0.32% increase over Q3 2009. Expenses increased by 0.8%, which resulted in a decrease in same store NOI of 0.43%.
We also achieved our quarterly FFO guidance of $0.63 per share. Although we didn’t acquire any stores last quarter, we are encouraged by the fact that the acquisitions environment finally seems to be improving with more quality stores being shop. Prices seem to have moderated a bit, however, this moderation in price appears to attracted more interest in buyers.
We completed two expansions in one climate control conversion at a total cost of $2.4 million and we have six more projects underway, which we expect will be completed before the end of the year.
We did see some encouraging signs continuing from the second quarter and to the third. We achieved positive same store revenues for the second consecutive quarter and we were able to attract substantially more new customers for the quarter and in the corresponding third quarter of last year.
In addition, the number of vacancies was much lower than last year, which continued the trend from the second quarter of this year. Further, we saw some encouraging signs in Florida. Yes, you did hear that right, some encouraging signs in Florida.
For the first time in about nine quarters, we had positive net rental activity in that state with the number of vacancies down year-over-year coupled with an increase in new tenants. We are very encouraged by that.
We are confident. Our team is generating every rental dollar available and we are working very hard to continue our business on this upward spiral and we are looking for your questions in a minute, but right now I would like to turn the call over to Dave Rogers, our Chief Financial Officer.
With regard to operations, total revenues increased $109,000 or 23 basis points from 09’s third quarter and property operating expenses increased by about $190,000 resulting in an overall NOI decrease of 27 basis points.
These overall results reflect the impact of the store we opened in Richmond last fall and the slight decline in same store NOI; I will get to in a minute, net of the operating results of the ten stores we sold earlier this year.
Average overall occupancy was 82.6% for the quarter ended September 30th, and average rent per square foot was $10.09. The overall occupancy rate at the end of the quarter was 82.3%, 70 basis points higher than that of last September end.
Same store results now include 345 of our 346 company-owned stores. Only the development store in Richmond and the 252 Heitman JV stores are excluded from the pool. As Ken mentioned, same store revenues increased by 3 basis points over those of the third quarter of 2009, this was primarily the result of occupancy improving by 60 basis points to 82.2% offset by a decline in the same store rent and occupied space from $10.21 to $10.10.
Other income especially commissions on tenant insurance increased by about $300,000. The quarter end occupancy rate for the same store pool was 82.5% about 110 basis points higher than that of last December 30th.
We continue to buy occupancy in this environment and reversing the trend of the past two quarters, our move-in incentives increased this quarter to on year-over-year basis.
Last year’s third quarter saw us granting $4.5 million worth of move-in specials, this year we gave up $4.7 million. As a result of adjusted and implemented by our revenue management team were utilized in the incentives less frequently, but when we do with the benefit to the customers a little bit greater.
87% of our third quarter move-ins were given incentive of some sort averaging $125 this year as opposed to over 95% of move-ins average $110 this quarter last year. The approach is having the desired impact. For the first time in 15 quarters, our year-over-year occupancy has increased.
Operating expenses on a same store basis increased by a total of 80 basis points, with modest increases in personnel costs and curb appeal expenses offset by a net decrease in property taxes. We were able to record the benefit of some assessment protest victories notably those in Atlanta and Stanford, Connecticut, this quarter.