SmartStop Self Storage, Inc. Reports First Quarter Results
Increased Same-Store Revenues by 5.5%; Increased FFO by 34%
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E-mailLADERA RANCH, CA -- (Marketwired) -- 06/02/15 -- SmartStop Self Storage, Inc. announced operating results for the three months ended March 31, 2015.
"We continue to execute on our income and growth strategy," commented H. Michael Schwartz, CEO of SmartStop Self Storage, Inc. "We are happy to report that we have achieved our 13th consecutive quarter of year-over-year same-store revenue and net operating income growth."
Key Highlights for the Three Months Ended March 31, 2015:
- Increased same-store revenues and net operating income ("NOI") by 5.5% and 15.3%, respectively, for the three months ended March 31, 2015 compared to the three months ended March 31, 2014. As a result of the Self Administration and Investment Management Transaction, our NOI for the first quarter of 2015 was favorably impacted due to the effect of eliminating property management fees partially offset by new expenses associated with the direct oversight of our properties. Excluding property management fees and including the additional costs we now incur for the three months ended March 31, 2014, results in an increase in same-store operating income of approximately 8.2%.
- Increased same-store average occupancy by approximately 2.8% to 86.8% for the three months ended March 31, 2015 from 84.0% for the three months ended March 31, 2014.
- Increased same-store annualized rent per occupied square foot by approximately 2.3% to $11.10 for the three months ended March 31, 2015 from $10.85 for the three months ended March 31, 2014.
- Increased Funds From Operations ("FFO") by 34% to $7.1 million for the three months ended March 31, 2015 from $5.3 million for the three months ended March 31, 2014.
- Increased cash flows from operations by 14% to $7.1 million for the three months ended March 31, 2015 from $6.3 million for the three months ended March 31, 2014.
Self Administration and Investment Management Transaction Impact: Below we have summarized the impact, before noncontrolling interests, of the Self Administration and Investment Management Transaction to our financial statements for the three months ended March 31, 2015 (in millions):
Three Months
Ended
March 31,
Item: 2015
-------------
Elimination of property management, asset management, and
acquisition fees $ 3.1
Investment management revenue-affiliates 0.6
Incremental property operating expenses (0.5)
Incremental general and administrative expenses (1.4)
Investment management expenses (0.5)
Other 0.2
-------------
$ 1.5
=============
Acquisitions:
- On March 26, 2015, we acquired a self storage facility located in Tempe, Arizona from an unaffiliated third party for a total purchase price of approximately $4.4 million, plus closing costs and acquisition expenses.
Capital Transactions:
KeyBank Revolver In March 2015, we amended the KeyBank Revolver increasing the aggregate commitment from $100 million to $115 million. In addition, there are now five participating lenders, including KeyBank.
In March 2015, we borrowed an additional approximately $7.2 million on the KeyBank Revolver, bringing the then total outstanding amount to $106.2 million. The proceeds of the borrowings were used to purchase the Tempe property and to repay a previously outstanding mortgage on one of our other properties.
In May 2015, we borrowed an additional approximately $6.8 million on the KeyBank Revolver, bringing the total outstanding amount borrowed to approximately $113 million. The proceeds of the borrowings were used to repay a previously outstanding mortgage on one of our existing properties and for general corporate purposes.
KeyBank Bridge Loan During 2015, the SSTI Preferred Investor borrowed an additional approximately $60 million on the KeyBank Bridge Loan, bringing the total outstanding amount borrowed to approximately $77 million. The proceeds of the borrowings were used to fund our investments in additional Preferred Units in SST II and SSGT.
Investments in Managed REITs During 2015, the SSTI Preferred Investor invested an additional approximately $52.9 million in Preferred Units in the SST II Operating Partnership and an additional approximately $7.2 million in Preferred Units in the SSGT Operating Partnership.
SST II utilized the funds to purchase through its operating partnership, 26 self storage facilities in California, Colorado, Illinois, Maryland, Michigan, New Jersey and Washington for an aggregate purchase price of approximately $129.4 million.
SSGT utilized the funds to purchase through its operating partnership, six self storage facilities in California, Colorado and Illinois for an aggregate purchase price of approximately $16.2 million.
Quarterly Dividend: On March 18, 2015, our board of directors declared a distribution rate for the second quarter of 2015 of $0.001917808 per day per share on the outstanding shares of common stock payable to stockholders of record of such shares as shown on our books at the close of business on each day during the period, commencing on April 1, 2015 and continuing on each day thereafter through and including June 30, 2015.
About SmartStop Self Storage, Inc. (formerly Strategic Storage Trust, Inc.): SmartStop Self Storage, Inc. (SmartStop®) is now a fully integrated, self-administered and self-managed self storage company, owning and/or operating 168 self storage properties in 21 states and Canada. SmartStop® is a diversified real estate company that focuses on acquisition, advisory, asset management and property management services for self storage properties. SmartStop® is the sponsor of Strategic Storage Trust II, Inc., a public non-traded REIT that focuses on stabilized self storage properties, and Strategic Storage Growth Trust, Inc., a public non-traded REIT that focuses on growth-oriented self storage properties. SmartStop® facilities offer affordable, accessible and secure storage units for residential and commercial customers. In addition, SmartStop® offers secure interior and exterior storage units as well as outside storage areas for vehicles, RVs and boats. SmartStop® was recently ranked the 7th largest owner/operator in the United States by Mini-Storage Messenger Magazine.
To view SmartStop®'s self storage locations or to find self storage solutions at a nearby storage facility, visit https://SmartStopSelfStorage.com.
This press release may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as "may," "will," "expect," "intend," "anticipate," "estimate," "seek," "believe," "continue," or other similar words. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. These risks, uncertainties and contingencies include, but are not limited to: uncertainties relating to changes in general economic and real estate conditions; uncertainties relating to the implementation of our real estate investment strategy; uncertainties relating to financing availability and capital proceeds; uncertainties relating to the closing of property acquisitions; uncertainties related to the timing and availability of distributions; and other risk factors as outlined in the Company's public filings with the Securities and Exchange Commission, including those described in the Company's annual report on Form 10-K. This is neither an offer nor a solicitation to purchase securities.
SMARTSTOP SELF STORAGE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
2015 2014
------------ ------------
ASSETS
Real estate facilities:
Land $198,208,153 $198,963,903
Buildings 473,127,493 471,514,948
Site improvements 46,044,042 45,757,720
------------ ------------
717,379,688 716,236,571
Accumulated depreciation (70,460,667) (65,612,805)
------------ ------------
646,919,021 650,623,766
Construction in process 2,869,094 2,063,594
------------ ------------
Real estate facilities, net 649,788,115 652,687,360
Cash and cash equivalents 12,329,691 14,934,776
Restricted cash 5,080,296 5,124,979
Investments in unconsolidated entities 7,459,489 7,459,489
Investments in and advances to managed REITs 80,507,717 18,970,033
Other assets 4,861,693 4,785,443
Deferred financing costs, net of accumulated
amortization 6,185,037 6,595,933
Intangible assets, net of accumulated
amortization 7,664,028 10,700,348
Trademarks, net of accumulated amortization 11,430,000 11,460,000
Goodwill 12,705,000 12,705,000
------------ ------------
Total assets $798,011,066 $745,423,361
============ ============
LIABILITIES AND EQUITY
Debt $479,943,637 $421,314,180
Accounts payable and accrued liabilities 15,996,460 16,049,595
Distributions payable 3,614,269 3,587,764
Deferred tax liability 238,255 291,091
------------ ------------
Total liabilities 499,792,621 441,242,630
Commitments and contingencies
Equity:
SmartStop Self Storage, Inc. equity:
Preferred Stock, $0.001 par value; 200,000,000
shares authorized; none issued and outstanding
at March 31, 2015 and December 31, 2014,
respectively -- --
Common Stock, $0.001 par value; 700,000,000
shares authorized; 58,433,771 and 57,985,861
shares issued and outstanding at March 31, 2015
and December 31, 2014, respectively 58,434 57,986
Additional paid-in capital 499,736,388 495,105,818
Distributions (157,052,41 (147,014,44
6) 6)
Accumulated deficit (63,448,035) (64,692,729)
Accumulated other comprehensive loss (4,264,255) (2,831,301)
------------ ------------
Total SmartStop Self Storage, Inc. equity 275,030,116 280,625,328
------------ ------------
Noncontrolling interest in our Operating
Partnership 23,108,958 23,476,228
Other noncontrolling interests 79,371 79,175
------------ ------------
Total noncontrolling interests 23,188,329 23,555,403
------------ ------------
Total equity 298,218,445 304,180,731
------------ ------------
Total liabilities and equity $798,011,066 $745,423,361
============ ============
SMARTSTOP SELF STORAGE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
--------------------------
2015 2014
------------ ------------
Revenues:
Self storage rental revenue $ 24,077,927 $ 22,443,368
Ancillary operating revenue 723,467 689,576
Investment management revenue - affiliates 635,530 --
------------ ------------
Total revenues 25,436,924 23,132,944
------------ ------------
Operating expenses:
Property operating expenses 8,545,661 7,792,740
Property operating expenses - affiliates -- 2,887,210
Investment management expenses 523,199 --
General and administrative 2,742,661 1,187,223
Depreciation 5,148,918 4,829,150
Intangible amortization expense 1,323,046 1,663,256
Self administration and investment management
transaction expenses -- 192,315
Acquisition expenses - affiliates -- 508,542
Other acquisition expenses 78,359 44,794
------------ ------------
Total operating expenses 18,361,844 19,105,230
------------ ------------
Operating income 7,075,080 4,027,714
Other income (expense):
Interest expense (5,330,656) (4,620,158)
Deferred financing amortization expense (648,690) (288,188)
Equity in earnings of unconsolidated entities 1,576,302 200,447
Other (1,365,395) (359,471)
------------ ------------
Net income (loss) 1,306,641 (1,039,656)
Net (income) loss attributable to the
noncontrolling interests in our Operating
Partnership (61,751) 8,584
Net income attributable to other
noncontrolling interests (196) (2,611)
------------ ------------
Net income (loss) attributable to SmartStop Self
Storage, Inc $ 1,244,694 $ (1,033,683)
============ ============
Net income (loss) per share - basic $ 0.02 $ (0.02)
Net income (loss) per share - diluted $ 0.02 $ (0.02)
============ ============
Weighted average shares outstanding - basic 58,157,475 56,357,846
Weighted average shares outstanding - diluted 58,162,068 56,357,846
============ ============
SMARTSTOP SELF STORAGE, INC. AND SUBSIDIARIES
NON-GAAP MEASURE - COMPUTATION OF FUNDS FROM OPERATIONS
(Unaudited)
Three Months Ended
March 31,
--------------------------
2015 2014
------------ ------------
Net income (loss) attributable to SmartStop Self
Storage, Inc $ 1,244,694 $ (1,033,683)
Add:
Depreciation of real estate assets 5,016,734 4,740,574
Amortization of real estate related intangible
assets 1,163,046 1,663,256
Deduct:
Adjustment for noncontrolling interests (334,192) (71,250)
------------ ------------
FFO attributable to SmartStop Self Storage, Inc 7,090,282 5,298,897
Other Adjustments:
Self administration and investment management
transaction expenses -- 192,315
Acquisition expenses 78,359 553,336
Realized and unrealized losses on foreign
exchange holdings 1,320,073 264,581
Amortization of deferred financing costs 648,690 288,188
Stock based compensation expense 57,162 6,497
Amortization of fair value adjustments of
secured debt (28,981) (16,612)
Adjustment for noncontrolling interests (112,286) (14,756)
------------ ------------
FFO, as adjusted attributable to SmartStop Self
Storage, Inc $ 9,053,299 $ 6,572,446
============ ============
ADDITIONAL INFORMATION REGARDING NOI, AND FFO
Net Operating Income ("NOI") NOI is a non-GAAP measure that we define as net income (loss), computed in accordance with GAAP, generated from properties before corporate general and administrative expenses, asset management fees, interest expense, depreciation, amortization, acquisition expenses, self administration and investment management transaction expenses and other non-property related expenses. We believe that net operating income is useful for investors as it provides a measure of the operating performance of our operating assets because net operating income excludes certain items that are not associated with the operation of the properties. Additionally, we believe that NOI is a widely accepted measure of comparative operating performance in the real estate community. However, our use of the term NOI may not be comparable to that of other real estate companies as they may have different methodologies for computing this amount.
Funds from Operations ("FFO") Due to certain unique operating characteristics of real estate companies, the National Association of Real Estate Investment Trusts, or NAREIT, an industry trade group, has promulgated a measure known as funds from operations, or FFO, which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental performance measure.
We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as revised in February 2004, or the White Paper. The White Paper defines FFO as net income (loss) computed in accordance with GAAP, excluding gains or losses from sales of property and asset impairment write downs, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. Our FFO calculation complies with NAREIT's policy described above.
Presentation of FFO is intended to provide useful information to investors as they review our operating performance and as they compare our operating performance to different REITs, although it should be noted that not all REITs calculate FFO the same way, so comparisons with other REITs may not be meaningful. Furthermore, FFO is not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from operations as an indication of our performance, as an alternative to cash flows from operations, which is an indication of our liquidity, or indicative of funds available to fund our cash needs including our ability to make distributions to our stockholders. FFO should be reviewed in conjunction with other measurements as an indication of our performance.
For informational purposes, we provide FFO, as adjusted for the exclusion of self administration and investment management transaction expenses, acquisition related costs, amortization of deferred financing costs, realized and unrealized losses on foreign exchange holdings, amortization of fair value adjustments of secured debt and stock based compensation expenses. Although our calculation of FFO, as adjusted differs from NAREIT's definition of FFO and may not be comparable to that of other REITs and real estate companies, we believe it provides a meaningful supplemental measure of operating performance. We believe that by excluding the noted items, stockholders are presented with an indicator of our operating performance that more closely achieves the objectives of the real estate industry in presenting FFO. FFO, as adjusted should not be considered a replacement of the NAREIT definition of FFO.
Source: SmartStop Self Storage
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