Press Releases

Sovran Self Storage Reports First Quarter Results; Announces Planned Dividend Reduction

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 March 31, 2009.

Net income available to common shareholders for the first quarter of 2009 was $7.6 million or $.35 per diluted share. Net income available to common shareholders for the same period in 2008 was $9.0 million or $.41 per diluted share. Funds from operations for the quarter were $.74 per fully diluted common share. Higher interest expense associated with the Company's recent long-term financing and increased customer move-in incentives were the primary factors leading to the lower earnings for 2009's first quarter compared to 2008's.

Kenneth F. Myszka, the Company's President and Chief Operating Officer, said: "The overall economic climate has had an impact on our operating performance, but our scale and management systems put us in good stead to weather this downturn. We've made great strides this quarter getting ready for what is shaping up to be a busy rental season - our web site is newly revamped, our marketing programs are in place, and we've unleashed our call center operators and store managers to make deals to win customers."

The Company also plans to reduce its regular quarterly dividend by approximately 30% (from $0.64 to $0.45 per share) commencing with 2009's second quarter payment. David Rogers, the Company's Chief Financial Officer, stated: "Given the current economic outlook and its impact on our business, the reduced distributions will preserve liquidity and provide additional flexibility. Despite the fact that we have a solid balance sheet, we continue to place a high priority on capital preservation and believe such prudence is in the Company's long term best interest."


Total Company net operating income for the first quarter declined 0.4% ($120,000) compared with the same quarter in 2008 to $31.0 million. Overall average occupancy for the quarter was 79.3% and average rent per square foot for the portfolio was $10.57.

Revenues at the 357 stores owned and/or managed for the entire quarter in both years decreased 1.4% over the first quarter of 2008, the result of a slight increase in effective rental rates offset by a 150 basis point drop in average occupancy. The Company continues to make extensive use of move-in incentives; during the quarter, over $2.7 million in "first month free" incentives were granted; almost 75% more than those of last winter.

Property taxes increased by 8.3% over last year's first quarter while all other operating costs declined by a total of 3.0%. Of these, utility costs increased 5.5% and advertising almost 20%, but most other operating costs decreased.

General and administrative expenses rose $262,000 over the same period in 2008, primarily due to increased expenses associated with operating the Joint Venture.

During the quarter, strong revenue growth was shown at the Company's New York, Louisiana, and Texas stores. Stores in Florida, Georgia, and New England experienced slower than expected growth.


The Company did not acquire any properties during the quarter for its own portfolio or that of the Joint Venture's.

As previously announced, the Company has severely curtailed its program of expanding and enhancing its existing stores. Three projects were started in 2008 and completed during the quarter at a cost of $5 million. Most improvements will be postponed indefinitely, except for about $8 million of projects already underway.


As previously reported in June of 2008, the Company refinanced its 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 March 31, 2009, $23 million had been drawn on the Line.

The Company's line of credit and term notes require it to meet certain financial covenants, including prescribed leverage, fixed charge coverage, minimum net worth, limitations on additional indebtedness and limitations on dividend payouts. One such covenant limits total consolidated liabilities to 55% of gross asset value; at March 31st this ratio was 55.4%. The Company expects to receive a waiver from its lenders, and is in the process of negotiating an amendment to the unsecured line of credit and term note agreements. As of April 30, 2009, the Company believes it is again in compliance with the original covenant provision.

During the quarter, the Company issued 56,071 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.


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 2-3% from that of 2008. Property operating costs are projected to grow by 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 $8 million of commitments outstanding on construction projects remaining 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 Joint Venture formed in 2008.

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

At March 31, 2009, all but $23 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 second quarter of 2009 to be approximately $.73 to $.75 per share, and between $3.00 and $3.08 for the year 2009.


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 Exchange Act of 1933, and in Section 21E of the Securities 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 Company's ability to comply with debt covenants; 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 7, 2009. 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 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




                                                    March 31,      December 31,

(dollars in thousands)                              2009           2008


Investment in storage facilities:

Land                                                $ 240,525      $ 240,525

Building, equipment and construction in progress      1,155,454      1,148,676

                                                      1,395,979      1,389,201

Less: accumulated depreciation                        (225,009  )    (216,644  )

Investment in storage facilities, net                 1,170,970      1,172,557

Cash and cash equivalents                             7,416          4,486

Accounts receivable                                   1,842          2,971

Receivable from related parties                       -              14

Receivable from joint ventures                        183            336

Investment in joint ventures                          20,010         20,111

Prepaid expenses                                      3,626          4,691

Intangible asset - in-place customer leases (net
of accumulated                                        144            289
amortization of $5,305 in 2009 and $5,160 in 2008)

Other assets                                          6,843          7,171

Total Assets                                        $ 1,211,034    $ 1,212,626


Line of credit                                      $ 23,000       $ 14,000

Term notes                                            500,000        500,000

Accounts payable and accrued liabilities              18,532         23,979

Deferred revenue                                      5,747          5,659

Fair value of interest rate swap agreements           25,493         25,490

Accrued dividends                                     14,136         14,090

Mortgages payable                                     108,777        109,261

Total Liabilities                                     695,685        692,479

Noncontrolling redeemable Operating Partnership       8,433          15,118
Units at redemption value


Common stock                                          233            232

Additional paid-in capital                            668,402        666,633

Accumulated deficit                                   (122,523  )    (122,581  )

Accumulated other comprehensive loss                  (25,103   )    (25,162   )

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

Total Shareholders' Equity                            493,834        491,947

Noncontrolling interest - consolidated joint          13,082         13,082

Total Equity                                          506,916        505,029

Total Liabilities and Equity                        $ 1,211,034    $ 1,212,626



                                             January 1, 2009  January 1, 2008

                                             to               to

(dollars in thousands, except share data)    March 31, 2009   March 31, 2008


Rental income                                $ 47,660         $ 48,057

Other operating income                         1,575            1,562

Management and acquisition fee income          311              -

Total operating revenues                       49,546           49,619


Property operations and maintenance            13,438           13,795

Real estate taxes                              5,144            4,740

General and administrative                     4,387            4,125

Depreciation and amortization                  8,396            8,072

Amortization of in-place customer leases       145              529

Total operating expenses                       31,510           31,261

Income from operations                         18,036           18,358

Other income (expense)

Interest expense (including amortization of
financing fees                                 (9,979     )     (8,955     )
of $315 in 2009 and $273 in 2008)

Interest income                                33               92

Equity in income of joint ventures             30               12

Income from continuing operations              8,120            9,507

Income from discontinued operations            -                82

Consolidated net income                        8,120            9,589

Less: net income attributable to               (485       )     (636       )
noncontrolling interests

Net income attributable to controlling       $ 7,635          $ 8,953

Earnings per common share attributable to
controlling interest - basic

Continuing operations                        $ 0.35           $ 0.41

Discontinued operations                        0.00             0.00

Earnings per common share - basic            $ 0.35           $ 0.41

Earnings per common share attributable to
controlling interest - diluted

Continuing operations                        $ 0.35           $ 0.41

Discontinued operations                        0.00             0.00

Earnings per common share - diluted          $ 0.35           $ 0.41

Common shares used in basic                    21,969,065       21,647,366
earnings per share calculation

Common shares used in diluted                  21,972,360       21,664,445
earnings per share calculation

Dividends declared per common share          $ 0.6400         $ 0.6300


                                              January 1, 2009  January 1, 2008

                                              to               to

(dollars in thousands, except share data)     March 31, 2009   March 31, 2008

Net income attributable to controlling        $ 7,635          $ 8,953

Net income attributable to noncontrolling       485              636

Depreciation of real estate and amortization
of intangible                                   8,541            8,647
assets exclusive of deferred financing fees

Depreciation and amortization from              208              15
unconsolidated joint ventures

Funds from operations allocable to
noncontrolling                                  (309       )     (339       )
interest in Operating Partnership

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

Funds from operations available to common       16,220           17,450

FFO per share - diluted                       $ 0.74           $ 0.81

Common shares - diluted                         21,972,360       21,664,445

(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.

QUARTERLY SAME STORE DATA (2)     January 1, 2009  January 1, 2008

                                  to               to               Percentage

(dollars in thousands)            March 31, 2009   March 31, 2008   Change


Rental income                     $ 47,158         $ 47,769         -1.3 %

Other operating income              1,505            1,561          -3.6 %

Total operating revenues            48,663           49,330         -1.4 %


Property operations and             13,316           13,725         -3.0 %

Real estate taxes                   5,116            4,722          8.3  %

Total operating expenses            18,432           18,447         -0.1 %

Operating income                  $ 30,231         $ 30,883         -2.1 %

(2) Includes the 357 stores owned and/or managed by the Company for the entire
periods presented.

Same Store Revenues by State (2)  January 1, 2009  January 1, 2008

                                  to               to               Percentage

(dollars in thousands)            March 31, 2009   March 31, 2008   Change

Alabama                             2,540            2,600          -2.3 %

Arizona                             1,202            1,247          -3.6 %

Connecticut                         1,055            1,122          -6.0 %

Florida                             7,465            8,121          -8.1 %

Georgia                             3,049            3,288          -7.3 %

Louisiana                           1,991            1,899          4.8  %

Maine                               265              274            -3.3 %

Maryland                            470              487            -3.5 %

Massachusetts                       1,930            1,947          -0.9 %

Michigan                            557              533            4.5  %

Mississippi                         1,389            1,420          -2.2 %

Missouri                            1,030            1,048          -1.7 %

New Hampshire                       518              509            1.8  %

New York                            4,385            4,287          2.3  %

North Carolina                      1,590            1,624          -2.1 %

Ohio                                1,983            2,020          -1.8 %

Pennsylvania                        698              707            -1.3 %

Rhode Island                        441              481            -8.3 %

South Carolina                      893              913            -2.2 %

Tennessee                           489              532            -8.1 %

Texas                               12,521           11,989         4.4  %

Virginia                            2,202            2,282          -3.5 %

Total same store                  $ 48,663         $ 49,330         -1.4 %

OTHER DATA                            Same Store (2)       All Stores

                                      2009      2008       2009      2008

Weighted average quarterly            79.5%     81.0%      79.3%     81.0%

Occupancy at March 31                 79.0%     80.7%      78.9%     80.7%

Rent per occupied square foot         $10.45    $10.43     $10.57    $10.50

Investment in Storage Facilities:

The following summarizes activity in storage facilities during the three months
ended March 31, 2009:

Beginning balance                                 $ 1,389,201

Property acquisitions                               -

Improvements and equipment additions:

Expansions                                          5,049

Roofing, paving, painting, and equipment:

Stabilized stores                                   1,580

Recently acquired and joint venture stores          80

Change in construction in progress (Total CIP       110
$14.1 million)

Dispositions                                        (41        )

Storage facilities at cost at period end          $ 1,395,979

                                                  March 31, 2009  March 31, 2008

Common shares outstanding at March 31               22,086,901    21,801,855

Operating Partnership Units outstanding at March    419,952       422,527

    Source: Sovran Self Storage, Inc.