Press Releases

Sovran Self Storage Reports Fourth Quarter Results

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

Net income available to common shareholders for the fourth quarter of 2008 was $8.4 million or $.38 per diluted share. Net income available to common shareholders for the same period in 2007 was $10.7 million or $.50 per diluted share. Funds from operations for the quarter were $.78 per fully diluted common share. Costs associated with acquisitions that the Company no longer intends to pursue were written off during the quarter and reserves were established against potential losses relating to customer accounts receivable and for settlement of a long standing legal dispute. These write-downs and reserves had a negative impact of $.02 per share on the Company's FFO for the quarter. Higher interest expense associated with the Company's recent long-term financing and increased customer move-in incentives were the other significant factors resulting in lower earnings for 2008's fourth quarter compared to 2007's.

David Rogers, the Company's Chief Financial Officer, said "Although adding significantly to our interest costs, the steps we took earlier this year to refinance our short term debt have put us on sound financial footing. We've maintained a conservatively leveraged balance sheet, have no significant debt maturities until 2012, are obligated on less than $15 million of forward capital commitments, and have sufficient liquidity to enable us to navigate these difficult capital market and operating environments. We will continue to focus on improving operating results at our 385 stores, and protecting shareholder value."

OPERATIONS:

Total Company net operating income for the fourth quarter declined 0.5% ($150,000) compared with the same quarter in 2007 to $32.3 million. Overall average occupancy for the quarter was 81.6% and average rent per square foot for the portfolio was $10.54.

Revenues at the 353 stores owned and/or managed for the entire quarter in both years increased 50 basis points over the fourth quarter of 2007, the result of a slight increase in effective rental rates. Although average occupancy was only 50 basis points lower during the fourth quarter of this year compared to last year's same store fourth quarter, it was expensive to maintain that level as the Company continues to make extensive use of move-in incentives. During the quarter, almost $2 million in "first month free" incentives were granted; more than double that of last fall. Further pressuring the top line was a charge of $170,000 against accounts receivable, which was taken as a result of longer than usual delinquencies at a number of our stores that have a significant military customer base.

Same store operating expenses increased 4.7%; property taxes increased by 21.2% over last year's fourth quarter while all other costs grew by only 0.2%. This year's fourth quarter property taxes appear high on a comparative basis because the fourth quarter of 2007 had an artificially reduced expense due to an over-accrual during the first three quarters of that year. For the full year 2008, the Company's same store property tax expense increase was 6.9%. The modest revenue growth, offset by the property tax aberration, resulted in a same store net operating income decline of 1.8% from that of the fourth quarter of 2007.

General and administrative expenses rose $780,000 over the same period in 2008, primarily due to the aforementioned write-off of costs associated with abandoned acquisitions, the lawsuit reserves, and increased expenses associated with operating the Joint Venture.

During the quarter, strong revenue growth was shown at the Company's South Carolina, Missouri, New York, Louisiana, and Texas stores. Stores in Florida, Georgia, and the Capitol District markets experienced slower than expected growth during the quarter.

PROPERTIES:

In 2008, the Company formed a joint venture with an affiliate of Heitman, LLC (the "JV") to acquire and manage up to $350 million of storage properties to be purchased from unaffiliated owners. In July, the JV purchased 21 properties at a cost of $144 million. Ten of the stores represent new markets including four in Columbus, OH; two in Louisville, KY; and four in Denver, CO. The remaining stores are located in markets where Sovran already has a presence; two each in Tampa, FL and San Antonio, TX; six in Dallas, TX; and one in Houston, TX.

During the fourth quarter, the JV acquired four properties for approximately $27 million. The facilities are located in the Company's existing Southeast Florida, Atlanta, GA and Columbus, OH markets.

The Company also acquired a store in Cincinnati, OH for its own portfolio at a cost of $4.4 million.

The Company has severely curtailed its program of expanding and enhancing its existing stores. Seven projects were completed during the quarter at a cost of $9.1 million, bringing a total of 20 stores that were improved in 2008 at a total cost of $25.6 million. This was $20 million less than projected; 2009 improvement projects will, except for those substantially underway, be postponed indefinitely.

CAPITAL TRANSACTIONS:

As previously reported in June of 2008, the Company refinanced it's near term maturities and repaid its line of credit with the proceeds of a $250 million four year term note. The Company then entered into a group of interest rate swaps, effectively setting the interest rate on the note at 5.97% through 2012.

Simultaneously with the term note agreement, the Company entered into a new, three year Line of Credit agreement, which provides $125 million of unsecured financing at a rate of LIBOR plus 1.375%. The facility is expandable, at the Company's option, to $175 million and can be extended for one additional year. At December 31, 2008, $14 million had been drawn on the Line.

During the quarter, the Company issued 43,125 shares through its Dividend Reinvestment Program, Direct Stock Purchase Plan and Employee Option Plan. A total of $1.3 million was received, and was used to fund capital improvements.

YEAR 2009 EARNINGS GUIDANCE:

The Company is anticipating reduced consumer demand in many of its markets and for conditions to become increasingly more competitive. It expects to utilize leasing incentives as well as increased advertising and aggressive marketing to improve occupancy and, accordingly, estimates a decline in same store revenue of 1-2% from that of 2008. Property operating costs are projected to grow by 3 - 3 1/2%, resulting in a decline in same store NOI of 2-4%.

The Company has curtailed its expansion and enhancement program and, until market conditions significantly improve, will defer its planned 2009 expenditures of $50 million. It has an estimated total of $9.5 million of commitments outstanding on construction projects expected to be completed in 2009.

At present, the Company does not have any properties under contract and does not expect to actively pursue the purchase of additional facilities while the capital markets remain unstable. Approximately $5 million of additional capital remains committed by the Company as its share of the equity for the JV formed in 2008.

General and administrative expenses are not expected to increase significantly in 2009.

At December 31, 2008, all but $14 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 1.375%.

Management expects funds from operations for the first quarter of 2009 to be approximately $.72 to $.74 per share, and between $3.00 and $3.08 for the year 2009.

FORWARD LOOKING STATEMENTS:

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.

CONFERENCE CALL:

Sovran Self Storage will hold its Fourth Quarter Earnings Release Conference Call at 9:00 a.m. Eastern Time on Wednesday, February 18, 2009. Anyone wishing to listen to the call may access the webcast via the event page at www.unclebobs.com/company/investment. 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 385 self-storage facilities in 24 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 www.unclebobs.com.


SOVRAN SELF STORAGE, INC.

BALANCE SHEET DATA

(unaudited)

                                                     December 31,  December 31,

(dollars in thousands)                               2008          2007

Assets

Investment in storage facilities:

Land                                                 $ 240,525     $ 236,349

Building, equipment and construction in progress     1,148,676     1,086,359

                                                     1,389,201     1,322,708

Less: accumulated depreciation                       (216,644)     (183,679)

Investment in storage facilities, net                1,172,557     1,139,029

Cash and cash equivalents                            4,486         4,010

Accounts receivable                                  2,971         2,794

Receivable from related parties                      14            27

Receivable from joint ventures                       336           -

Investment in joint ventures                         20,111        -

Prepaid expenses                                     4,691         4,771

Intangible asset - in-place customer leases (net of
accumulated amortization of $5,160 in 2008 and       289           833
$3,840 in 2007)

Other assets                                         7,171         6,741

Net assets of discontinued operations                -             6,383

Total Assets                                         $ 1,212,626   $ 1,164,588

Liabilities

Line of credit                                       $ 14,000      $ 100,000

Term notes                                           500,000       356,000

Accounts payable and accrued liabilities             23,979        23,752

Deferred revenue                                     5,659         5,602

Fair value of interest rate swap agreements          25,490        1,230

Accrued dividends                                    14,090        13,656

Mortgages payable                                    109,261       110,517

Total Liabilities                                    692,479       610,757

Minority interest - Operating Partnership            9,265         9,659

Minority interest - consolidated joint ventures      13,082        16,783

Shareholders' Equity

Common stock                                         232           228

Additional paid-in capital                           666,633       654,141

Dividends in excess of net income                    (116,728)     (98,437)

Accumulated other comprehensive income               (25,162)      (1,368)

Treasury stock at cost                               (27,175)      (27,175)

Total Shareholders' Equity                           497,800       527,389

Total Liabilities and Shareholders' Equity           $ 1,212,626   $ 1,164,588




CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

                                            October 1, 2008    October 1, 2007

                                            to                 to

(dollars in thousands, except share data)   December 31, 2008  December 31, 2007

Revenues

Rental income                               $ 48,928           $ 48,275

Other operating income                      1,603              1,573

Management and acquisition fee income       234                -

Total operating revenues                    50,765             49,848

Expenses

Property operations and maintenance         13,887             13,643

Real estate taxes                           4,598              3,774

General and administrative                  4,792              4,012

Depreciation and amortization               8,463              7,951

Amortization of in-place customer leases    208                492

Total operating expenses                    31,948             29,872

Income from operations                      18,817             19,976

Other income (expense)

Interest expense (including amortization
of financing fees of $325 in 2008 and $247  (10,130)           (8,954)
in 2007)

Interest income                             49                 140

Casualty gain                               -                  114

Minority interest - Operating Partnership   (160)              (202)

Minority interest - consolidated joint      (340)              (462)
ventures

Equity in income of joint ventures          142                23

Income from continuing operations           8,378              10,635

Income from discontinued operations         -                  102

Net Income                                  $ 8,378            $ 10,737

Per Common Share - basic

Continuing operations                       $ 0.38             $ 0.50

Discontinued operations                     0.00               0.00

Earnings per common share - basic           $ 0.38             $ 0.50

Earnings per common share - diluted

Continuing operations                       $ 0.38             $ 0.50

Discontinued operations                     0.00               0.00

Earnings per common share - diluted         $ 0.38             $ 0.50

Common shares used in basic earnings per    21,862,359         21,535,833
share calculation

Common shares used in diluted earnings per  21,872,257         21,575,908
share calculation

Dividends declared per common share         $ 0.6400           $ 0.6300




CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

                                            January 1, 2008    January 1, 2007

                                            to                 to

(dollars in thousands, except share data)   December 31, 2008  December 31, 2007

Revenues

Rental income                               $ 195,220          $ 186,581

Other operating income                      6,648              6,276

Management and acquisition fee income       1,135              -

Total operating revenues                    203,003            192,857

Expenses

Property operations and maintenance         55,739             52,317

Real estate taxes                           19,004             17,370

General and administrative                  17,279             15,234

Depreciation and amortization               33,101             30,011

Amortization of in-place customer leases    1,320              3,840

Total operating expenses                    126,443            118,772

Income from operations                      76,560             74,085

Other income (expense)

Interest expense (including amortization
of financing fees of $1,192 in 2008 and     (38,097)           (33,861)
$963 in 2007)

Interest income                             322                954

Casualty gain                               -                  114

Minority interest - Operating Partnership   (721)              (783)

Minority interest - consolidated joint      (1,563)            (1,848)
ventures

Equity in income of joint ventures          104                119

Income from continuing operations           36,605             38,780

Income from discontinued operations
(including gain on disposal of $716 in      794                434
2008)

Net Income                                  37,399             39,214

Preferred stock dividends                   -                  (1,256)

Net income available to common              $ 37,399           $ 37,958
shareholders

Per Common Share - basic

Continuing operations                       $ 1.68             $ 1.79

Discontinued operations                     0.04               0.02

Earnings per common share - basic           $ 1.72             $ 1.81

Earnings per common share - diluted

Continuing operations                       $ 1.68             $ 1.79

Discontinued operations                     0.04               0.02

Earnings per common share - diluted         $ 1.72             $ 1.81

Common shares used in basic earnings per    21,761,997         20,954,649
share calculation

Common shares used in diluted earnings per  21,782,804         21,003,851
share calculation

Dividends declared per common share         $ 2.5400           $ 2.5000




COMPUTATION OF FUNDS FROM OPERATIONS (FFO) (1) - (unaudited)

                                            October 1, 2008    October 1, 2007

                                            to                 to

(dollars in thousands, except share data)   December 31, 2008  December 31, 2007

Net income                                  $ 8,378            $ 10,737

Minority interest in income                 500                664

Depreciation of real estate and
amortization of intangible assets           8,671              8,489
exclusive of deferred financing fees

Depreciation and amortization from          72                 15
unconsolidated joint ventures

Casualty gain                               -                  (114)

Funds from operations allocable to          (325)              (356)
minority interest in Operating Partnership

Funds from operations allocable to
minority interest in consolidated joint     (340)              (462)
ventures

Funds from operations available to common   16,956             18,973
shareholders

FFO per share - diluted                     $ 0.78             $ 0.88

Common shares - diluted                     21,872,257         21,575,908

                                            January 1, 2008    January 1, 2007

                                            to                 to

(dollars in thousands, except share data)   December 31, 2008  December 31, 2007

Net income                                  $ 37,399           $ 39,214

Minority interest in income                 2,284              2,631

Depreciation of real estate and
amortization of intangible assets           34,466             34,036
exclusive of deferred financing fees

Depreciation and amortization from          334                59
unconsolidated joint ventures

Gain on sale of real estate                 (716)              -

Casualty gain                               -                  (114)

Preferred dividends                         -                  (1,256)

Funds from operations allocable to          (1,366)            (1,425)
minority interest in Operating Partnership

Funds from operations allocable to
minority interest in consolidated joint     (1,564)            (1,848)
ventures

Funds from operations available to common   70,837             71,297
shareholders

FFO per share - diluted (a)                 $ 3.25             $ 3.38

Common shares - diluted                     21,782,804         21,003,851

Common shares if Series C Preferred Stock   -                  480,127
is converted

Total shares used in FFO per share          21,782,804         21,483,978
calculation (a)




(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 distributions.

(a) The Series C Convertible Preferred Shares were converted on July 9, 2007
into 920,244 common shares. The prorated shares through the conversion date have
been added to the diluted shares outstanding to calculate the FFO per share in
2007.




QUARTERLY SAME STORE DATA (2)  October 1, 2008    October 1, 2007

                               to                 to                 Percentage

(dollars in thousands)         December 31, 2008  December 31, 2007  Change

Revenues:

Rental income                  $ 48,202           $ 47,904           0.6%

Other operating income         1,529              1,573              -2.8%

Total operating revenues       49,731             49,477             0.5%

Expenses:

Property operations and        13,632             13,604             0.2%
maintenance

Real estate taxes              4,563              3,766              21.2%

Total operating expenses       18,195             17,370             4.7%

Operating income               $ 31,536           $ 32,107           -1.8%

(2) Includes the 353 stores owned and/or managed by the Company for the entire
periods presented.

Same Store Revenues by State   October 1, 2008    October 1, 2007
(2)

                               to                 to                 Percentage

(dollars in thousands)         December 31, 2008  December 31, 2007  Change

Alabama                        2,546              2,584              -1.5%

Arizona                        1,243              1,242              0.1%

Connecticut                    1,092              1,130              -3.4%

Florida                        7,845              8,299              -5.5%

Georgia                        3,186              3,304              -3.6%

Louisiana                      1,919              1,800              6.6%

Maine                          271                271                0.0%

Maryland                       467                505                -7.5%

Massachusetts                  1,972              1,941              1.6%

Michigan                       567                542                4.6%

Mississippi                    1,303              1,275              2.2%

Missouri                       1,089              1,059              2.8%

New Hampshire                  525                517                1.5%

New York                       4,455              4,237              5.1%

North Carolina                 1,600              1,629              -1.8%

Ohio                           2,018              2,049              -1.5%

Pennsylvania                   719                716                0.4%

Rhode Island                   448                487                -8.0%

South Carolina                 940                907                3.6%

Tennessee                      501                550                -8.9%

Texas                          12,819             12,064             6.3%

Virginia                       2,206              2,369              -6.9%

Total same store               $ 49,731           $ 49,477           0.5%

YEAR TO DATE SAME STORE DATA   January 1, 2008    January 1, 2007
(3)

                               to                 to                 Percentage

(dollars in thousands)         December 31, 2008  December 31, 2007  Change

Revenues:

Rental income                  $ 178,225          $ 177,061          0.7%

Other operating income         5,459              5,633              -3.1%

Total operating revenues       183,684            182,694            0.5%

Expenses:

Property operations and        50,191             48,978             2.5%
maintenance

Real estate taxes              17,635             16,491             6.9%

Total operating expenses       67,826             65,469             3.6%

Operating income               $ 115,858          $ 117,225          -1.2%

(3) Includes the 326 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  81.8%              82.3%              81.6%   82.2%
occupancy

Occupancy at December 31    80.6%              81.5%              80.5%   81.4%

Rent per occupied square    $10.47             $10.42             $10.54  $10.42
foot

Investment in Storage
Facilities:

The following summarizes activity in storage facilities during the twelve months
ended December 31, 2008:

Beginning balance           $ 1,322,708

Property acquisitions       18,454

Additional investment in
consolidated joint          2,473
ventures

Improvements and equipment
additions:

Expansions                  25,584

Roofing, paving, painting,
and equipment:

Stabilized stores           15,230

Recently acquired and       4,184
joint venture stores

Change in construction in
progress (Total CIP $14.0   761
million)

Dispositions                (193)

Storage facilities at cost  $ 1,389,201
at period end

                            December 31, 2008  December 31, 2007

Common shares outstanding   22,016,348         21,676,586
at December 31

Operating Partnership
Units outstanding at        419,952            422,726
December 31




    Source: Sovran Self Storage, Inc.