More than $600,000 in damage from the four hurricanes that hit Florida this summer, coupled with debt redemption costs, caused Sovran Self Storage's third-quarter earnings to slip by 3 percent, the Williamsville-based real estate investment trust said Wednesday.
While Sovran's profits matched analyst forecasts, the company also repeated its earnings outlook for the entire year, predicting that the firm would earn between 71 cents and 73 cents per share during the current quarter and between $2.64 and $2.67 for the year.
Sovran's funds from operations slipped to $9.7 million, or 62 cents per share, from $10 million, or 74 cents per share, a year earlier. Earnings per share fell at a greater pace because the company has issued nearly 2 million additional shares over the last year through Sovran's dividend reinvestment and employee stock option plans.
The company, which refinanced its debt last year to give it more borrowing flexibility and fixed the interest rate on those borrowings through hedging, said its earnings were hurt by a $1.4 million charge, equal to 9 cents per share, to cover costs associated with its redemption of its Series B preferred stock earlier this month.
Sovran also was hit by more than $600,000 in damages stemming from the four hurricanes this summer that hit Florida, where the company has 49 facilities.
Those costs offset improvement in the operations at the 259 Uncle Bob's stores that have been open for at least a year as rental rates rose 4 percent to $9.40 per square foot. Revenues grew by 5.4 percent during the third quarter, while occupancy levels inched up by 0.2 percentage points to 86 percent. Operating earnings from those facilities rose by 2.5 percent.
"The costs associated with the preferred stock redemption and the hurricanes masked an otherwise excellent quarter," said David Rogers, Sovran's chief financial officer.
Sovran said it acquired two stores during the quarter: one in Chattanooga, Tenn., for $6.9 million, giving the company four in that market, and a fifth store in Austin, Texas, for $7.9 million. The company also sold its facility in Spartanburg, S.C. Sovran officials said they don't expect any more purchases or sales this year.