Press Releases

Sovran Self Storage Reports First Quarter Results: Revenues Increase 11.7%


Sovran Self Storage, Inc. (NYSE:SSS), a self-storage real estate investment trust (REIT), reported operating results for the quarter ended March 31, 2008.

Net income available to common shareholders for the first quarter of 2008 was $9.0 million or $.41 per diluted share. Net income available to common shareholders for the same period in 2007 was $8.9 million or $.44 per diluted share. Funds from operations for the quarter increased 5.2% to $.81 per fully diluted common share compared to $.77 per fully diluted share for the quarter ended March 31, 2007. The increase in funds from operations was generated by strong rental rate growth in most markets.

David Rogers, the Company's Chief Financial Officer, said, "We're off to a good start in 2008. We've been able to increase revenues, contain expenses and continue our program of expanding and enhancing our stores."


Total Company net operating income for the first quarter grew 12.3% compared with the same quarter in 2007 to $31.2 million. This growth was the result of an overall improvement in the operating performance of the Company's core portfolio and the income generated by the 31 stores acquired during 2007. Overall average occupancy for the quarter was 81.0% and average rent per square foot for the portfolio was $10.50.

Revenues at the 327 stores owned and/or managed for the entire quarter in both years increased 2.9% over the first quarter of 2007, the result of a 3.9% increase in rental rates offset by a 170 basis point decrease in average occupancy. Same store operating expenses increased 1.6%; as a result, same store net operating income improved by 3.7% over the first quarter of 2007. General and administrative expenses rose $570,000 over the same period in 2007; this is primarily due to increased expenses involved in operating 31 more facilities this year.

During the quarter, strong performance was shown at the Company's Texas, Missouri and New England stores, as well as those in the Phoenix and Buffalo markets. Stores in Florida, Alabama and the Washington, DC markets experienced slower than expected growth during the quarter.


As previously announced, the Company acquired two new stores during the quarter at a total cost of $14.3 million. Both facilities are in Jackson, MS; the Company now operates a total of eight stores in the Jackson area.

Subsequent to the end of the quarter, the Company sold its storage facility just outside Detroit, Michigan for $7.4 million. The Company has no remaining stores in that market.

The Company is continuing its program of expanding and enhancing its existing stores. While only one expansion was completed during the quarter, 17 such projects are expected to be placed on line during the 2nd quarter.


During the quarter, the Company issued 93,696 shares through its Dividend Reinvestment Program, Direct Stock Purchase Plan and Employee Option Plan. A total of $3.3 million was received, and was used to fund capital improvements.

The Company's Board of Directors authorized the repurchase of up to two million shares of the Company's common stock. To date, the Company has acquired approximately 1.2 million shares pursuant to the program. The Company expects such repurchases to be effected from time to time, in the open markets or in private transactions. The amount and timing of shares to be purchased will be subject to market conditions and will be based on several factors, including compliance with lender covenants and the price of the Company's stock. No assurance can be given as to the specific timing or amount of the share repurchases or as to whether and to what extent the share repurchase will be consummated. The Company did not acquire any shares in the quarter ended March 31, 2008.


The Company expects conditions in most of its markets to remain relatively stable, and estimates growth in net operating income on a same store basis to be approximately 3% - 3 1/2% for the year.

The Company will continue to expand and improve its existing properties. The projected cost of these revenue enhancing projects is estimated at between $40 and $50 million in 2008, providing for up to 450,000 sq. ft. of additional premium space at as many as 40 stores.

As opportunities arise, the Company may acquire self-storage facilities with high growth potential for its own portfolio, and may sell certain facilities depending on market conditions. For purposes of issuing 2008 guidance, the Company is forecasting accretive acquisitions of $50 million.

Funding of the acquisitions and the above mentioned revenue enhancing and refurbishing improvements will be provided primarily from borrowings on the Company's line of credit, term note borrowings, issuance of common shares in the Company's Dividend Reinvestment Program and Stock Purchase Programs, and issuance of common or preferred stock. It is possible that the Company may enter into joint venture agreements to secure equity capital for its acquisitions.

General and administrative expenses are expected to increase as the Company adds properties and enters new markets.

At March 31, 2008, all but $132 million of the Company's debt is either fixed rate or covered by rate swap contracts that essentially fix the rate. Subsequent borrowings that may occur will be pursuant to the Company's Line of Credit agreement at a floating rate of LIBOR plus 0.9% or pursuant to short term notes of LIBOR plus 1.2%.

Management expects funds from operations for the second quarter of 2008 to be between $.86 and $.88 per share, and between $3.50 and $3.56 per share for the full year 2008.


When used within this news release, the words "intends," "believes," "expects," "anticipates," and similar expressions are intended to identify "forward looking statements" within the meaning of that term in Section 27A of the Securities Act of 1933, and in Section 21F of Securities Exchange Act of 1934. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward looking statements. Such factors include, but are not limited to, the effect of competition from new self storage facilities, which could cause rents and occupancy rates to decline; the Company's ability to evaluate, finance and integrate acquired businesses into the Company's existing business and operations; the Company's ability to form joint ventures and sell existing properties to those joint ventures; the Company's existing indebtedness may mature in an unfavorable credit environment, preventing refinancing or forcing refinancing of the indebtedness on terms that are not as favorable as the existing terms; interest rates may fluctuate, impacting costs associated with the Company's outstanding floating rate debt; the regional concentration of the Company's business may subject it to economic downturns in the states of Florida and Texas; the Company's ability to effectively compete in the industries in which it does business; the Company's reliance on its call center; the Company's cash flow may be insufficient to meet required payments of principal, interest and dividends; and tax law changes which may change the taxability of future income.


Sovran Self Storage will hold its First Quarter Earnings Release Conference Call at 9:00 a.m. Eastern Time on Thursday, May 1, 2008. Anyone wishing to listen to the call may access the webcast via the event page at The call will be archived for a period of 90 days after initial airing.

Sovran Self Storage, Inc. is a self-administered and self-managed equity REIT that is in the business of acquiring and managing self-storage facilities. The Company operates 359 self-storage facilities in 22 states under the name "Uncle Bob's Self Storage"(R). For more information, please contact David Rogers, CFO or Diane Piegza, VP Corporate Communications at (716) 633-1850 or visit the Company's Web site at


                                               March 31,  December 31,
(dollars in thousands)                           2008         2007
--------------------------------------------- ------------------------
  Investment in storage facilities:
     Land                                     $  240,622   $  237,836
     Building, equipment and construction in
      progress                                 1,113,457    1,092,803
                                              ----------- ------------
                                               1,354,079    1,330,639
     Less: accumulated depreciation             (193,350)    (185,258)
                                              ----------- ------------
  Investment in storage facilities, net        1,160,729    1,145,381
  Cash and cash equivalents                        7,233        4,010
  Accounts receivable                              2,425        2,802
  Receivable from related parties                     14           27
  Prepaid expenses                                 6,752        4,842
  Intangible asset - in-place customer leases
   (net of accumulated
    amortization of $4,370 in 2008 and $3,840
     in 2007)                                        596          833
  Other assets                                     7,826        6,741
                                              ----------- ------------
     Total Assets                             $1,185,575   $1,164,636
                                              =========== ============

  Line of credit                              $  100,000   $  100,000
  Term notes                                     382,000      356,000
  Accounts payable and accrued liabilities        19,474       23,755
  Deferred revenue                                 6,027        5,647
  Fair value of interest rate swap agreements      4,350        1,230
  Accrued dividends                               13,735       13,656
  Mortgages payable                              110,114      110,517
                                              ----------- ------------
     Total Liabilities                           635,700      610,805

  Minority interest - Operating Partnership        9,558        9,659
  Minority interest - consolidated joint
   ventures                                       16,783       16,783

Shareholders' Equity
  Common stock                                       230          228
  Additional paid-in capital                     657,931      654,141
  Dividends in excess of net income             (103,231)     (98,437)
  Accumulated other comprehensive income          (4,221)      (1,368)
  Treasury stock at cost                         (27,175)     (27,175)
                                              ----------- ------------
     Total Shareholders' Equity                  523,534      527,389
                                              ----------- ------------

  Total Liabilities and Shareholders' Equity  $1,185,575   $1,164,636
                                              =========== ============
                                       January 1, 2008 January 1, 2007
                                             to              to
(dollars in thousands, except share
 data)                                 March 31, 2008  March 31, 2007
                                       --------------- ---------------

  Rental income                        $       48,272  $       43,265
  Other operating income                        1,565           1,335
                                       --------------- ---------------
     Total operating revenues                  49,837          44,600

  Property operations and maintenance          13,859          12,411
  Real estate taxes                             4,766           4,390
  General and administrative                    4,125           3,555
  Depreciation and amortization                 8,118           7,026
  Amortization of in-place customer
   leases                                         529               -
                                       --------------- ---------------
     Total operating expenses                  31,397          27,382
                                       --------------- ---------------

Income from operations                         18,440          17,218

Other income (expense)
  Interest expense (including
   amortization of financing fees of
   $273 in
   2008 and $242 in 2007)                      (8,955)         (7,599)
  Interest income                                  92             528
  Minority interest - Operating
   Partnership                                   (174)           (199)
  Minority interest - consolidated
   joint ventures                                (462)           (462)
  Equity in income of joint ventures               12              51
                                       --------------- ---------------

Net Income                                      8,953           9,537
  Preferred stock dividends                         -            (628)
                                       --------------- ---------------
Net income available to common
 shareholders                          $        8,953  $        8,909
                                       =============== ===============

    Earnings per common share - basic  $         0.41  $         0.44
                                       =============== ===============

    Earnings per common share -
     diluted                           $         0.41  $         0.44
                                       =============== ===============

Common shares used in basic
  earnings per share calculation           21,647,366      20,413,257

Common shares used in diluted
  earnings per share calculation           21,664,445      20,479,656

Dividends declared per common share    $       0.6300  $       0.6200
                                       =============== ===============

                                       January 1, 2008 January 1, 2007
                                             to              to
(dollars in thousands, except share
 data)                                 March 31, 2008  March 31, 2007
                                       --------------- ---------------

Net income                             $        8,953  $        9,537
Minority interest in income                       636             661
Depreciation of real estate and
 amortization of intangible assets
 exclusive of deferred financing fees           8,647           7,026
Depreciation and amortization from
 unconsolidated joint ventures                     15              14
Preferred dividends                                 -            (628)
Funds from operations allocable to
 minority interest in
 Operating Partnership                           (339)           (330)
Funds from operations allocable to
 minority interest in
 consolidated joint ventures                     (462)           (462)
                                       --------------- ---------------
Funds from operations available to
 common shareholders                           17,450          15,818
FFO per share - diluted (a)            $         0.81  $         0.77

Common shares - diluted                    21,664,445      20,479,656
Common shares if Series C Preferred
 Stock is converted                                 -         920,244
                                       --------------- ---------------
Total shares used in FFO per share
 calculation (a)                           21,664,445      21,399,900
(1) We believe that Funds from Operations ("FFO") provides relevant
 and meaningful information about our operating performance that is
 necessary, along with net earnings and cash flows, for an
 understanding of our operating results. FFO adds back historical cost
 depreciation, which assumes the value of real estate assets
 diminishes predictably in the future. In fact, real estate asset
 values increase or decrease with market conditions. Consequently, we
 believe FFO is a useful supplemental measure in evaluating our
 operating performance by disregarding (or adding back) historical
 cost depreciation.

Funds from operations is defined by the National Association of Real
 Estate Investment Trusts, Inc. ("NAREIT") as net income computed in
 accordance with generally accepted accounting principles ("GAAP"),
 excluding gains or losses on sales of properties, plus depreciation
 and amortization and after adjustments to record unconsolidated
 partnerships and joint ventures on the same basis. We believe that to
 further understand our performance, FFO should be compared with our
 reported net income and cash flows in accordance with GAAP, as
 presented in our consolidated financial statements.

Our computation of FFO may not be comparable to FFO reported by other
 REITs or real estate companies that do not define the term in
 accordance with the current NAREIT definition or that interpret the
 current NAREIT definition differently. FFO does not represent cash
 generated from operating activities determined in accordance with
 GAAP, and should not be considered as an alternative to net income
 (determined in accordance with GAAP) as an indication of our
 performance, as an alternative to net cash flows from operating
 activities (determined in accordance with GAAP) as a measure of our
 liquidity, or as an indicator of our ability to make cash

(a) The Series C Convertible Preferred Shares were converted on July
 9, 2007 into 920,244 common shares. These shares have been added to
 the diluted shares outstanding to calculate the FFO per share in
                               January 1,     January 1,
QUARTERLY SAME STORE DATA (2)      2008           2007
                                    to             to       Percentage
(dollars in thousands)        March 31, 2008 March 31, 2007   Change

  Rental income               $       44,257 $       42,964       3.0%
  Other operating income               1,322          1,334      -0.9%
                              -------------- -------------- ----------
     Total operating revenues         45,579         44,298       2.9%

  Property operations,
   maintenance, and real
   estate taxes                       16,979         16,707       1.6%
                              -------------- -------------- ----------

Operating income              $       28,600 $       27,591       3.7%

(2) Includes the 327 stores owned and/or managed by the Company for
 the entire periods presented.
OTHER DATA                             Same Store (2)    All Stores
                                       --------------- ---------------
                                        2008    2007    2008    2007
                                       ------- ------- ------- -------

Weighted average quarterly occupancy     81.3%   83.0%   81.0%   83.0%

Occupancy at March 31                    81.0%   83.4%   80.7%   83.2%

Rent per occupied square foot          $10.63  $10.23  $10.50  $10.23
Investment in Storage Facilities:
The following summarizes activity in storage facilities during the
 three months ended March 31, 2008:

Beginning balance                        $   1,330,639
  Property acquisitions                         14,013
  Improvements and equipment additions:
      Expansions                                   619
      Roofing, paving, painting, and
          Stabilized stores                      3,175
          Recently acquired and joint
           venture stores                          797
  Change in construction in progress
   (Total CIP $18.1 million)                     4,872
  Dispositions                                     (36)
Storage facilities at cost at period end $   1,354,079

                                         March 31, 2008 March 31, 2007

Common shares outstanding at March 31       21,801,855      20,544,203
Operating Partnership Units outstanding
 at March 31                                   422,527         427,335

Source: Sovran Self Storage, Inc.