Sovran Self Storage’s fourth quarter earnings jumped by 14 percent as occupancy soared at its Uncle Bob’s stores, the Amherst-based company said Thursday.
Sovran executives said the company’s earnings would have been even stronger – rising by 21 percent – if not for a spurt of acquisitions in December as sellers rushed to close deals before the capital gains tax rate increased.
“We had a very good quarter, which capped off an exceptional year,” said David Rogers, Sovran’s chief executive officer, noting that the company’s earnings for all of last year increased 37 percent.
The improvement stemmed from an 8 percent increase in revenues at its 361 stores that have been operated by the company for at least a year, as occupancy rates climbed to 87.4 percent from 81.5 percent a year ago as average rents remained stable at $10.64 per square foot.
Sovran executives said they expect their self-storage markets to remain robust this year, forecasting that earnings during 2013 will strengthen by 11 percent to between $3.46 and $3.50 per share, compared with $3.14 per share last year.
The company said it purchased 14 self-storage properties during December through six separate deals valued at a total of $83 million. The deals added six stores in Chicago, four in southwestern Florida, three in Austin, Texas and one in Phoenix.
Rogers said the flurry of activity, which expanded Sovran’s stable of Uncle Bob’s stores either owned outright or managed by them to 461 facilities across 25 states, occurred as property owners hurried to sell facilities before the year ended to cash in on the lower capital gains tax rates that were in place during 2012.
While Rogers said he expects Sovran to continue buying properties this year – probably in deals valued at between $100 million and $150 million – he said the year-end surge in selling has left fewer quality properties on the market.
“There is a dearth of available properties,” Rogers said during a conference call. “It’s a seller’s market, and the competition for quality assets is pretty fierce.”