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Sovran Self Storage Releases 3Q 2009 Financial Results

Sovran Self Storage Inc., a self-storage real estate investment trust, reported operating results for the third quarter ended Sept. 30, 2009.
 
Net income available to common shareholders for the third quarter of 2009 was $7.5 million or $.32 per diluted share, compared to $9.5 million or $.44 per diluted share for the same quarter in 2008. Funds from operations for the quarter were $.68 per fully diluted common share. Higher interest expense and increased customer move-in incentives were the primary factors leading to lower earnings.
 
At the end of the quarter, the company sold 4.025 million shares of common stock, realizing net proceeds of $113.8 million. On Oct. 5, it applied the proceeds to repay $100 million of Sovran’s bank term notes maturing in 2012, and terminated interest-rate swap agreements associated with the repaid debt obligation.
 
Primarily as a result of these actions, Fitch Ratings reinstated the company’s credit rating to BBB- (matching the rating issued by Standard and Poors). "The reinstatement of our investment-grade rating will reduce our borrowing costs by more than $3 million per year,” said David Rogers, chief financial officer.
 
Compared with the same quarter in 2008, total net operating income for the third quarter of 2009 declined 3.8 percent ($1.2 million) to $31.4 million. Overall average occupancy for the quarter was 82.3 percent, and average rent per square foot for the portfolio was $10.25. Occupancy at the company`s 382 storage facilities at Sept. 30 was 81.6 percent.
 
Sovran continues to make extensive use of move-in incentives. During the quarter, the company granted more than $4.5 million in "first month free" and other promotions. As a result, even though street rates were increased in most markets, revenue at the 356 stores owned or managed by the company decreased 3.6 percent over the same quarter in 2008.
 
Same-store operating expenses decreased by 5.3 percent from last year’s third quarter as a result of significant savings in all operating-expense categories except property taxes, which increased by 7.2 percent, and increased marketing and Internet-advertising costs.
 
General and administrative expenses grew $300,000 over the same period in 2008,
primarily due to increased expenses associated with operating the joint venture.
 
 
During the quarter, solid revenue growth was shown at Sovran’s Maryland and Michigan facilities, while facilities in Florida, Georgia and parts of New England continued to show revenue declines.
 
Sovran did not acquire any properties during the quarter for its own portfolio or for that of the joint venture. The company did, however, sell three of its solely owned facilities that were in non-core markets: Southeast Massachusetts (2) and Fayetteville, N.C. (1).
 
As previously announced, Sovran has curtailed its program of expanding and enhancing existing sites, awaiting improvements in the capital markets and the general economy. Five projects that were started in 2008 have been completed thus far this year at a cost of $6.8 million. Most improvements have been postponed to 2010, except for about $8 million yet to be applied to projects this year.
 
As of Sept.30, the company had $500 million of unsecured term note debt and $108 million of mortgage debt outstanding. Of the mortgage debt, $26 million matures in December. The company expects to repay this with cash on hand. The next significant maturities are in 2012.
 
Sovran is experiencing soft consumer demand in many of its markets and expects conditions to remain competitive. It anticipates the continuation of leasing incentives as well as increased advertising and aggressive marketing to improve occupancy and, accordingly, estimates a decline in same store revenue of 2 percent to 4 percent from that of 2008. Property operating costs are projected to decrease by 1 percent to 2 percent. Management reiterates its previous forecast of an expected decline in same-store NOI of 2 percent to 4 percent.
 
Sovran held a third-quarter earnings-release conference call on Nov. 5. The call has been archived for 90 days and is accessible at www.unclebobs.com/company/investment.

Sovran is a real estate investment trust that acquires and manages self-storage facilities. The company operates 383 facilities in 24 states under the name "Uncle Bob`s Self Storage.”

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AMERCO Reports Financial Results for 2Q Fiscal 2009

AMERCO, parent company of U-Haul International Inc., reported its second-quarter fiscal 2009 financial results.

Net earnings available to common shareholders for the second quarter ending Sept. 30, 2009, were $41.5 million, or $2.14 per share, compared with net earnings of $40.6 million, or $2.10 per share, for the same period last year. Other highlights of the results are: 

  • Self-storage revenue decreased $0.5 million for the second quarter of fiscal 2010 compared with the same period last year.
  • Revenue from the rental of self-moving equipment decreased $12 million for the second quarter of fiscal 2010 compared with the same quarter last year. 
  • Revenue from one-way truck rentals declined during the quarter. Total truck-rental transactions increased, with growth in one-way and in-town activity. 
  • Foreign-currency exchange rates between the Untied States and Canada continued to negatively affect revenue.
  • The company reported net gains from the disposal of equipment of $3.1 million due to the improvement in resale value of used rental equipment. 

AMERCO held an investor call for the second quarter on Nov. 5. A replay of the call can be accessed at Amerco.com. 

U-Haul International is North America's largest "do-it-yourself" moving and storage operator. AMERCO includes AMERCO Real Estate Co., Republic Western Insurance Co. and Oxford Life Insurance Co.

Source: Reuters, AMERCO Reports Second Quarter Fiscal 2010 Financial Results

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Port St. Lucie Storage Supports Toys for Tots in 2009

Port St. Lucie (Fla.) Storage, in partnership with the Florida Self Storage Association, is collaborating with the Marine Toys for Tots Foundation during the upcoming holiday season. The self-storage facility will serve as a collection site for new toys to be distributed to needy children in the area.

Toys can be donated at 1547 S.E. Village Green Drive from 9 a.m. to 5 p.m., Monday through Friday, and 10 a.m. to 2 p.m. on Saturday. Items must be new, unwrapped and in their original packaging. Toy guns and weapons can not be accepted.

Source: TCPalm, Self storage company is drop-off site for Toys For Tots

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Marketing Through Community

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Self-Storage Developer Negotiates With Town in Upper Freehold, N.J.

On Oct. 27, the planning board of Upper Freehold Township, N.J., approved the site plan for a new self-storage facility, but with one fewer building than proposed. While the plan originally called for an office building and 10 self-storage buildings, the buffer requirements set by the New Jersey Department of Environmental Protection prevented one of the storage structures.
 
The township’s Environmental Advisory Committee had concerns about endangered species on the 23-acre property, according to an article in the Millstone Examiner, resulting in the creation of a 150-foot buffer. In addition, a six-foot fence will be erected around the site.
 
Property owner Yong Sim is also debating with the board over the color of the facility doors. Sim, who has worked in the self-storage business for 20 years, wants eye-catching orange doors to help promote the business. Some members of the board feel this will be an eyesore.
 
Per a board member’s request, Sim agreed to install more landscaping in front of the fence.
 
Four of the storage buildings will measure 8,400 square feet. The rest will measure 6,300 square feet.

Source: Millstone Examiner, Self-storage facility will be built in UF

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Hawaii Self Storage Hosts Craft Fair in Mililani

Hawaii Self-Storage of Mililani, Hawaii, will host the town’s first-ever craft fair on Nov. 7 and 8, 9 a.m. to 2 p.m. The event will feature nearly 40 craft vendors selling handmade items including quilts, t-shirts, hats, flameless candles, jewelry, bath products and more.
 
HSS is Hawaii's largest self-storage operator, with facilities in Kaimuki, Kapolei, Mililani, Pearl City and Salt Lake. The company has numerous programs designed to give back to the Oahu community, including annual high school scholarships, the Lockers for Literacy program and support of athletic teams. This year, HSS was named a winner of the Inside Self-Storage Humanitarian Service Award, and has been named “Best of the Best” by the Honolulu Advertiser for four years running.
 
Source: Honolulu Advertiser, Hawaii Self Storage Mililani Holds Holiday Craft Fair This Weekend 

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Morningstar Joint Venture Acquires Texas Self-Storage Portfolio

Morningstar Properties LLC, of Matthews, N.C., and 180 Development Services of Phoenix, in their joint venture with Harrison Street Real Estate Capital LLC of Chicago, have purchased a nine-facility self-storage portfolio in Texas. The sites, totaling 536,000 square feet and 5,300 units, are in Austin, Dallas, Houston, Plano and San Antonio. With this purchase, the joint venture now owns 16 self-storage properties in the state. The stores will be re- branded as Morningstar Mini-Storage and managed by 180 Management Services LLC.
 
Founded in Matthews, N.C., in 1981, Morningstar is a developer, builder and operator of specialty real estate types across the Southeast. The company owns or operates 46 self-storage projects totaling nearly 3 million square feet. The company continues to grow through development and acquisition.
 
Headquartered in Gilbert, Ariz., 180 Development Services is an operator and developer of self-storage properties. The company operates 18 storage properties in two states.
 Based in Chicago, HSRE provides equity capital at the property level to developers and operators in the healthcare, education and storage sectors. With this investment, Harrison Street has a self-storage portfolio of 74 properties throughout 16 states.

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That Storage Place in Kensington, N.Y., Sells for $2.4M

Guy Blake of Pyramid Brokerage Co. represented the seller and buyer in the sale of That Storage Place in Kingston, N.Y. The property sold for $2.4 million at an 8.6 percent cap rate based on 2008 actual income and expenses. 

Built in 2004, the facility is a fully stabilized, class-A self-storage center with 41,200 rentable square feet on 2.9 acres. The seller was interested in selling the property before the end of 2009 due to concerns over a potential increase in capital gains taxes.  The buyer is a local operator of self-storage facilities, gas stations and car washes.

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Colorado's A Storage Place Changes Hands

A Storage Place LLC of Evergreen, Colo., purchased a 100 percent share an industrial building in Evergreen from AOS Development and DS-Colorado LLC for $2.6 million, or about $38 per square foot. The buyer previously had a 20 percent share in the structure.

With the purchase of Evergreen DeSoto's 40 percent stake, as well as AOS Development's 40 percent share, the buyer now has 100 percent ownership.

The property is a one-story, 69,750-square-foot, class-B industrial building with four units constructed in 2002. It is in the West Denver Industrial market. Neither the buyer nor the seller had broker representation.

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Chesterfield County, Va., Self-Storage Facilities Thriving

The number of self-storage facilities in Chesterfield County, Va., has continued to grow despite the slow economy over the past two years. The county now has 35 facilities, up 13 percent from two years ago, and offers roughly 1.3 million square feet of storage space. That’s about 4.63 square feet of storage per county citizen. There are about 1,060 self-storage facilities in Virginia.

Storage professionals believe the increase is, in part, due to the changing face of self-storage. More facilities are located near residential and retail and blend aesthetically. While most renters are residential, the commercial business is also growing.  

Source:  Chesterfield Observer,  Consumerism Drives Opening of More Self-Storage Facilities

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ISS Blog

Crime Prevention: What Are You Doing?

While crime has always been a threat to self-storage owners and managers, it seems the number of robberies, arsons and break-ins has been on the rise over the past year as people struggle for simple survival in today’s economy.

Don’t get me wrong, there have always been plenty of baddies lurking in the shadows looking to make an easy score. But it does seem that people are more willing to dabble in crime today than in the past.

Just in the past few months, ISS has reported on guns stolen from a unit, break-ins, an arson fire to cover up a break-in, robbery at gunpoint and even a police shooting after a facility robbery. It’s a mad, mad world!

Yesterday, I asked Self-Storage Talk forum members if they’re concerned about the increase in self-storage crime and if they’re taking any new precautions. And they most definitely are. Senior member tnsd shared worry over an upcoming auction sale in which at least one customer could be a problem. Another senior member, MusicCity Gal, said eight security cameras have been recently added to her facility.

There are a number of security measures you can take to keep criminals at bay: video surveillance and monitors, digital video recorders, motion-detector lighting, perimeter fencing and security gates, and onsite managers.

But beyond the physical security attributes of a facility, there are also steps managers can take to ensure they won’t become the victim of a crime. Mel Holsinger, president of Professional Self Storage Management, offers up some sound advice in Creating the ‘Illusion’ of Self-Storage Security. Mel tells managers to walk their property every day. Be vigilant. Check locks. Ask tenants questions. Knock on that unit door when it’s only open a foot or so. You’re not being nosy. You’re doing your job—keeping yourself, your customers and their goods safe.

Consider making friends with your local police department. Offer them a unit to store their tactical equipment and let them train at your facility after-hours. Give officers a discount to store their personal items. These guys and gals are trained to spot crime. And let’s not forget, good old-fashioned intuition. If something or someone seems off, it probably is!

Share your thoughts about self-storage crime and the security measures you’re taking by posting a comment below, or join the discussion at Self-Storage Talk.