Press Releases

Sovran Self Storage Reports Third Quarter Results; Credit Rating Upgrade

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 September 30, 2009.

Net income available to common shareholders for the third quarter of 2009 was $7.5 million or $.32 per diluted share. Net income available to common shareholders for the same period in 2008 was $9.5 million or $.44 per diluted share. Funds from operations for the quarter were $.68 per fully diluted common share. Higher interest expense and increased customer move-in incentives were the primary factors leading to lower earnings for 2009's third quarter.

Subsequent to the end of the quarter, the Company sold 4.025 million shares of common stock, realizing net proceeds of $113.8 million from the issuance. On October 5, 2009, the Company applied the proceeds of the offering to repay $100 million of its bank term notes maturing in 2012, and terminated interest rate swap agreements associated with the repaid debt obligation.

Primarily as a result of these actions, Fitch Ratings reinstated the Company's credit rating to BBB- (matching the rating issued by Standard and Poors). David Rogers, the Company's Chief Financial Officer said, "The reinstatement of our investment grade rating will reduce our borrowing costs by over $3 million per year, and the capacity and flexibility gained by the stock offering affords plenty of room to take advantage of the opportunities we expect to see in the next 12 - 18 months."

OPERATIONS:

Total Company net operating income for the third quarter declined 3.8% ($1.2 million) compared with the same quarter in 2008 to $31.4 million. Overall average occupancy for the quarter was 82.3% and average rent per square foot for the portfolio was $10.25. Occupancy at the Company's 382 storage facilities at September 30 was 81.6%.

The Company continues to make extensive use of move-in incentives; during the quarter over $4.5 million in "first month free" and other incentives were granted, almost $1.6 million more than those of last summer. As a result, even though street rates were increased in most markets, revenues at the 356 stores owned and/or managed for the entire quarter in both years decreased 3.6% over the third quarter 2008.

Kenneth F. Myszka, the Company's President and Chief Operating Officer, commented, "In a very challenging economic environment, we see positive signs at our Uncle Bob's stores. Our same store move-ins have exceeded those of last year for seven of the last nine months. Our call center and internet inquiries have remained high, so we know demand is there. Once we absorb the impact of the up-front leasing incentive, our revenue management systems have enabled us to optimize rental rates, to the extent that when a customer does move out, we have an opportunity in many instances to achieve a step up in the price charged for the vacated unit."

The Company's same store operating expenses decreased by 5.3% from last year's third quarter as a result of significant savings in all operating expense categories except property taxes, which increased by 7.2%, and increased marketing and internet advertising costs.

General and administrative expenses grew $300,000 over the same period in 2008, primarily due to increased expenses associated with operating the Joint Venture.

During the quarter, solid revenue growth was shown at the Company's Maryland and Michigan stores, while stores in Florida, Georgia, and parts of New England continued to show revenue declines.

PROPERTIES:

The Company did not acquire any properties during the quarter for its own portfolio or for that of the Joint Venture. The Company did, however, sell three of its solely owned stores that were located in non-core markets, thereby improving operating efficiencies. The stores were located in southeastern Massachusetts (2) and Fayetteville, NC (1) and sold for a total of $10.9 million.

On October 2, 2009, the Company opened its second store in Richmond, VA. The newly built 79,000 square foot self storage facility features both traditional and climate controlled storage as well as the Company's signature Dri-guard storage spaces. It also includes individual door alarms, a large retail area for moving and storage supplies, and conference room for customer use.

As previously announced, the Company has curtailed its program of expanding and enhancing its existing stores, awaiting improvements in both the capital markets and the general economy. Five projects that were started in 2008 have been completed thus far this year at a cost of $6.8 million. Most improvements have been postponed to 2010, except for about $8 million yet to be applied to projects this year.

CAPITAL TRANSACTIONS:

At September 30, 2009, the Company had $500 million of unsecured term note debt and $108 million of mortgage debt outstanding. $26 million of the mortgage debt matures in December of 2009; the Company expects to repay this with cash on hand. The next significant maturities are in 2012.

As noted above, the Company completed a 4.025 million share stock sale on October 5, 2009, the proceeds of which were used to repay $100 million of bank term debt and to extinguish the related interest rate swap contracts. Illustrated below is the impact that the offering and the resulting upgrade to the Company's credit rating had on certain key metrics:


                                               September 30  Post Offering

-- Debt to Enterprise Value (at $30.00/share)  45.9%         37.7%

-- Debt to Book Cost                           43.7%         36.5%

-- Debt to EBITDA ratio                        5.7x          4.7x

-- Debt service coverage                       2.5x          3.3x

-- Effective interest rate on unsecured debt   6.97%         6.19%



YEAR 2009 EARNINGS GUIDANCE:

The Company is experiencing soft consumer demand in many of its markets and expects conditions to remain competitive. It anticipates the continuation of leasing incentives as well as increased advertising and aggressive marketing to improve occupancy and, accordingly, estimates a decline in same store revenue of 2 to 4% from that of 2008. Property operating costs are projected to decrease by 1 to 2%. Management reiterates its previous forecast of an expected decline in same store NOI of 2 to 4%.

The Company has curtailed its expansion and enhancement program and, until market conditions significantly improve, will defer most of 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 or early 2010.

At present, the Company does not expect to actively pursue the purchase of additional facilities while the capital and real estate markets remain unstable. It is negotiating the sale of several of its non-core stores (as noted, three were sold during the quarter), and may sell several more in the fourth quarter of 2009 and/or early 2010.

General and administrative expenses are expected to increase by 5 to 7% in 2009.

At September 30, 2009, all 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%.

At September 30, 2009, the Company had 23,475,580 shares of common stock outstanding and 419,952 Operating Partnership Units outstanding.

On October 5, 2009, the Company sold 4.025 million shares and applied the proceeds to repayment of $100 million of bank term notes and to unwind interest rate swap contracts associated with the notes. As a result of these transactions, the Company will incur one-time charges of $8.4 million to cancel the swap contract, and $.64 million to expense unamortized financing costs associated with the note repayment.

On October 16, 2009, Fitch Ratings issued an upgrade to the Company's credit rating, which will reduce the interest rate the Company pays on two of its long term notes.

As a result of the above assumptions, management expects funds from operations for the fourth quarter of 2009 to be approximately $.26 to $.28 per share, and between $2.33 and $2.35 for the full 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 21E of the 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 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.

CONFERENCE CALL:

Sovran Self Storage will hold its Third Quarter Earnings Release Conference Call at 9:00 a.m. Eastern Time on Thursday, November 5, 2009. Anyone wishing to listen to the call may access the webcast via the event page at http://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 383 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)

                                                   September 30,  December 31,

(dollars in thousands)                             2009           2008

Assets

Investment in storage facilities:

Land                                               $ 237,813      $ 237,825

Building, equipment and construction in progress     1,152,598      1,136,938

                                                     1,390,411      1,374,763

Less: accumulated depreciation                       (239,152  )    (214,213  )

Investment in storage facilities, net                1,151,259      1,160,550

Cash and cash equivalents                            29,281         4,486

Accounts receivable                                  2,340          2,937

Receivable from related parties                      -              14

Receivable from joint ventures                       133            336

Investment in joint ventures                         19,974         20,111

Prepaid expenses                                     5,033          4,680

Intangible asset - in-place customer leases (net
of accumulated amortization of $5,422 in 2009 and    27             289
$5,160 in 2008)

Other assets                                         6,210          7,171

Net assets of discontinued operations                -              12,003

Total Assets                                       $ 1,214,257    $ 1,212,577

Liabilities

Line of credit                                     $ -            $ 14,000

Term notes                                           500,000        500,000

Accounts payable and accrued liabilities             25,912         23,979

Deferred revenue                                     5,185          5,610

Fair value of interest rate swap agreements          20,632         25,490

Accrued dividends                                    -              14,090

Mortgages payable                                    107,842        109,261

Total Liabilities                                    659,571        692,430

Noncontrolling redeemable Operating Partnership      12,779         15,118
Units at redemption value

Equity

Common stock                                         247            232

Additional paid-in capital                           699,783        666,633

Accumulated deficit                                  (123,551  )    (122,581  )

Accumulated other comprehensive loss                 (20,479   )    (25,162   )

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

Total Shareholders' Equity                           528,825        491,947

Noncontrolling interest - consolidated joint         13,082         13,082
venture

Total Equity                                         541,907        505,029

Total Liabilities and Equity                       $ 1,214,257    $ 1,212,577




CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

                                          July 1, 2009        July 1, 2008

                                          to                  to

(dollars in thousands, except share       September 30, 2009  September 30, 2008
data)

Revenues

Rental income                             $ 47,708            $ 49,355

Other operating income                      1,807               1,783

Management and acquisition fee income       313                 901

Total operating revenues                    49,828              52,039

Expenses

Property operations and maintenance         13,242              14,568

Real estate taxes                           5,165               4,816

General and administrative                  4,568               4,267

Depreciation and amortization               8,337               8,306

Amortization of in-place customer leases    27                  255

Total operating expenses                    31,339              32,212

Income from operations                      18,489              19,827

Other income (expense)

Interest expense (including amortization
of financing fees of $315 in 2009 and       (10,873    )        (10,034    )
$305 in 2008)

Interest income                             22                  94

Gain on sale of land                        1,127               -

Equity in income of joint ventures          60                  (56        )

Income from continuing operations           8,825               9,831

(Loss) gain from discontinued operations
(including loss on disposal of $1,009 in    (855       )        220
2009)

Net income                                  7,970               10,051

Net income attributable to                  (474       )        (523       )
noncontrolling interests

Net income attributable to common         $ 7,496             $ 9,528
shareholders

Earnings per common share attributable
to common shareholders - basic

Continuing operations                     $ 0.36              $ 0.43

Discontinued operations                     (0.04      )        0.01

Earnings per common share - basic         $ 0.32              $ 0.44

Earnings per common share attributable
to common shareholders - diluted

Continuing operations                     $ 0.36              $ 0.43

Discontinued operations                     (0.04      )        0.01

Earnings per common share - diluted       $ 0.32              $ 0.44

Common shares used in basic

earnings per share calculation              23,335,957          21,810,755

Common shares used in diluted

earnings per share calculation              23,349,479          21,833,622

Dividends declared per common share       $ 0.4500            $ 0.6400




CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

                                          January 1, 2009     January 1, 2008

                                          to                  to

(dollars in thousands, except share       September 30, 2009  September 30, 2008
data)

Revenues

Rental income                             $ 141,228           $ 144,991

Other operating income                      5,146               5,008

Management and acquisition fee income       929                 901

Total operating revenues                    147,303             150,900

Expenses

Property operations and maintenance         38,879              41,433

Real estate taxes                           15,394              14,326

General and administrative                  13,292              12,487

Depreciation and amortization               25,005              24,405

Amortization of in-place customer leases    262                 1,111

Total operating expenses                    92,832              93,762

Income from operations                      54,471              57,138

Other income (expense)

Interest expense (including amortization
of financing fees of $946 in 2009 and       (32,552    )        (27,966    )
$867 in 2008, and $923 of waiver fees in
2009)

Interest income                             75                  273

Gain on sale of land                        1,127               -

Equity in income of joint ventures          154                 (38        )

Income from continuing operations           23,275              29,407

(Loss) income from discontinued
operations (including loss on disposal      (441       )        1,400
of $1,009 in 2009 and gain on disposal
of $716 in 2008)

Net income                                  22,834              30,807

Net income attributable to                  (1,416     )        (1,785     )
noncontrolling interests

Net income attributable to common         $ 21,418            $ 29,022
shareholders

Earnings per common share attributable
to common shareholders - basic

Continuing operations                     $ 0.97              $ 1.27

Discontinued operations                     (0.02      )        0.07

Earnings per common share - basic         $ 0.95              $ 1.34

Earnings per common share attributable
to common shareholders - diluted

Continuing operations                     $ 0.97              $ 1.27

Discontinued operations                     (0.02      )        0.07

Earnings per common share - diluted       $ 0.95              $ 1.34

Common shares used in basic

earnings per share calculation              22,639,513          21,728,542

Common shares used in diluted

earnings per share calculation              22,646,131          21,752,986

Dividends declared per common share       $ 1.0900            $ 1.9000




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

                                         July 1, 2009        July 1, 2008

                                         to                  to

(dollars in thousands, except share      September 30, 2009  September 30, 2008
data)

Net income attributable to controlling   $ 7,496             $ 9,528
interests

Net income attributable to                 474                 523
noncontrolling interests

Depreciation of real estate and
amortization of intangible assets          8,408               8,639
exclusive of deferred financing fees

Depreciation and amortization from         205                 232
unconsolidated joint ventures

Gain on sale of real estate                (118       )        -

Funds from operations allocable to
noncontrolling

interest in Operating Partnership          (284       )        (350       )

Funds from operations allocable to
noncontrolling

interest in consolidated joint ventures    (340       )        (340       )

Funds from operations available to
common

shareholders                               15,841              18,232

FFO per share - diluted                  $ 0.68              $ 0.84

Common shares - diluted                    23,349,479          21,833,622

                                         January 1, 2009     January 1, 2008

                                         to                  to

(dollars in thousands, except share      September 30, 2009  September 30, 2008
data)

Net income attributable to controlling   $ 21,418            $ 29,022
interests

Net income attributable to                 1,416               1,785
noncontrolling interests

Depreciation of real estate and
amortization of intangible assets          25,471              25,795
exclusive of deferred financing fees

Depreciation and amortization from         620                 262
unconsolidated joint ventures

Gain on sale of real estate                (118       )        (716       )

Funds from operations allocable to
noncontrolling

interest in Operating Partnership          (868       )        (1,042     )

Funds from operations allocable to
noncontrolling

interest in consolidated joint ventures    (1,020     )        (1,224     )

Funds from operations available to
common

shareholders                               46,919              53,882

FFO per share - diluted                  $ 2.07              $ 2.48

Common shares - diluted                    22,646,131          21,752,986

(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   July 1, 2009        July 1, 2008
(2)

                            to                  to                  Percentage

(dollars in thousands)      September 30, 2009  September 30, 2008  Change

Revenues:

Rental income               $ 47,570            $ 49,355            -3.6%

Other operating income        1,715               1,758             -2.4%

Total operating revenues      49,285              51,113            -3.6%

Expenses:

Property operations and       13,172              14,542            -9.4%
maintenance

Real estate taxes             5,161               4,816             7.2%

Total operating expenses      18,333              19,358            -5.3%

Operating income            $ 30,952            $ 31,755            -2.5%

(2) Includes the 356 stores owned and/or managed by the Company for the entire
periods presented.




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

                              to                  to                  Percentage

(dollars in thousands)        September 30, 2009  September 30, 2008  Change

Alabama                       2,649               2,708               -2.2%

Arizona                       1,212               1,265               -4.2%

Connecticut                   1,026               1,125               -8.8%

Florida                       7,342               8,015               -8.4%

Georgia                       3,056               3,362               -9.1%

Louisiana                     1,951               1,972               -1.1%

Maine                         278                 296                 -6.1%

Maryland                      533                 480                 11.0%

Massachusetts                 1,710               1,724               -0.8%

Michigan                      641                 627                 2.2%

Mississippi                   1,803               1,892               -4.7%

Missouri                      1,070               1,125               -4.9%

New Hampshire                 543                 548                 -0.9%

New York                      4,555               4,685               -2.8%

North Carolina                1,513               1,568               -3.5%

Ohio                          2,004               2,038               -1.7%

Pennsylvania                  708                 746                 -5.1%

Rhode Island                  451                 480                 -6.0%

South Carolina                903                 969                 -6.8%

Tennessee                     500                 536                 -6.7%

Texas                         12,550              12,546              0.0%

Virginia                      2,287               2,406               -4.9%

Total same store              $ 49,285            $ 51,113            -3.6%




YEAR TO DATE SAME STORE DATA  January 1, 2009     January 1, 2008
(3)

                              to                  to                  Percentage

(dollars in thousands)        September 30, 2009  September 30, 2008  Change

Revenues:

Rental income                 $ 139,727           $ 143,999           -3.0%

Other operating income          4,881               4,938             -1.2%

Total operating revenues        144,608             148,937           -2.9%

Expenses:

Property operations and         38,489              41,162            -6.5%
maintenance

Real estate taxes               15,311              14,265            7.3%

Total operating expenses        53,800              55,427            -2.9%

Operating income              $ 90,808            $ 93,510            -2.9%

(3) Includes the 354 stores owned and/or managed by the Company for the entire
periods presented.




OTHER DATA                            Same Store (2)      All Stores

                                      2009      2008      2009      2008

Weighted average quarterly occupancy  82.4   %  83.4   %  82.3   %  83.3   %

Occupancy at September 30             81.6   %  83.3   %  81.6   %  83.1   %

Rent per occupied square foot         $10.15    $10.47    $10.25    $10.48




Investment in Storage Facilities:

The following summarizes activity in storage facilities during the nine
months ended September 30, 2009:

Beginning balance                                             $ 1,374,763

Property acquisitions                                           -

Improvements and equipment additions:

Expansions                                                      6,752

Roofing, paving, painting, and equipment:

Stabilized stores                                               4,003

Recently acquired and consolidated joint venture stores         260

Change in construction in progress (Total CIP $18.7 million)    4,733

Dispositions                                                    (100      )

Storage facilities at cost at period end                      $ 1,390,411




                                         September 30, 2009  September 30, 2008

Common shares outstanding at September   23,478,580          21,973,223
30

Operating Partnership Units outstanding  419,952             419,952
at September 30




    Source: Sovran Self Storage, Inc.