Higher rents and a strong jump in occupancy helped Sovran Self Storage’s fourth-quarter profits surge by 34 percent, the Amherst-based company said today.
Sovran’s funds from operations jumped to $31.3 million, or 98 cents per share, from $23.4 million, or 83 cents per share, a year earlier, as the self storage facility operator extended its string of big jumps in quarterly earnings. The earnings were stronger than the 96 cents per share that analysts were expecting.
“The fourth quarter provided a good coda for a really nice 2013,” with earnings jumping by 27 percent, said David Rogers, Sovran’s chief executive officer, during a conference call. “We’re very pleased with what’s been going on here.”
Sovran executives said they expect the company’s earnings to keep rising at a double-digit pace this year, but not as briskly as last year, with revenues increasing by 5 percent to 6 percent, while Sovran’s funds from operations are forecast to rise by about 13 percent to between $4.19 and $4.23 per share, up from $3.72 per share during 2013.
Sovran executives said they expect occupancy to continue to improve, with peak occupancy levels strengthening to 93 percent to 94 percent this year, compared with a peak of 92 percent last year.
During the fourth quarter, Sovran’s profits were bolstered by solid growth in occupancy levels at the 484 Uncle Bob’s self storage facilities that it operates in 25 states, mainly in the eastern half of the United States.
Occupancy levels at stores that have been open for at least a year jumped to 89.5 percent from 87.4 percent at the end of 2012. That strong demand allowed Sovran to charge more for its space, with average rents rising by 3.2 percent to $11.02 per square foot at its stores that have been open for at least a year.
The company said it spent $86.7 million during the fourth quarter to buy six new stores, including two in southeast Florida, two in Portland, Maine, and one each in San Antonio, Texas, and Austin, Texas.
Sovran said it expects its funds from operations to range between 94 cents and 96 cents per share during the current quarter.