Press Releases

Sovran Self Storage Reports Second Quarter 2010 Results; Sees Leasing Activity Improving

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 June 30, 2010.

Net income available to common shareholders for the second quarter of 2010 was $15.8 million or $.57 per diluted share. Exclusive of a $7.5 million gain on the sale of 8 properties, net income available to common shareholders was $8.2 million or $.30 per diluted share. Net income available to common shareholders for the same period in 2009 was $6.3 million or $.28 per diluted share. Funds from operations (FFO) for the quarter were $.61 per fully diluted common share compared to $.66 for the same period last year. The impact of the Company's $4 million share offering in October 2009 offset a significant decline in interest expense thereby contributing to the decline in per share FFO results.

OPERATIONS:

Revenues for the 345 stores owned by the Company for the entire quarter of each year increased by 0.2% from those of the second quarter of 2009, the result of a 20 basis point drop in average occupancy offset by a 40 basis point increase in rates, and solid improvements in other, non-rental revenues.

Ken Myszka, the Company's President and COO, commented, "We're encouraged by the high level of rental activity and also our ability to obtain rate increases from in-place customers. Two-thirds of the 24 states we operate in showed same store revenue growth this quarter - a tremendous improvement over the past five or six quarters. It appears that while our peak leasing season may have gotten off to a bumpy start, we're gaining steam as the summer goes on."

Same store operating expenses increased by a total of 3.8%, primarily the result of increased health care, workers compensation and property maintenance costs. Almost all other operating expense categories remained at 2009's suppressed levels with the exception of property taxes, which grew at a pace of 2.4%.

Total property net operating income for the second quarter declined 1.7% compared with the same quarter in 2009 to $29.6 million. Overall average occupancy for the quarter was 80.5% and average rent per square foot for the portfolio was $10.16.

General and administrative expenses grew by about $630,000 over the same period in 2009, primarily due to increased income taxes associated with operations of the Company's taxable REIT subsidiary and marketing and internet advertising costs.

During the quarter, revenue growth was seen at the Company's Georgia, Maryland, Michigan, Alabama and most of its New England stores, while stores in Florida, Louisiana, and Texas (primarily the Houston market area) showed 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 sold eight properties in early May - three in Jacksonville, NC; two each in Augusta and Macon, GA; and one in Dansville, VA. The properties total approximately 439,000 square feet of rental space and the combined sales price was $22.1 million. The Company realized a gain of $7.5 million on the sale of these stores.

The Company also sold two stores located in Holland, Michigan, thereby exiting that market. The stores sold for $2.4 million. The transaction took place in April, therefore, the impact of the sale was recorded in first quarter results.

Dave Rogers, the Company's Chief Financial Officer, commented, "We were glad for the opportunity to prune our portfolio of properties that were no longer a good fit. The proceeds generated from the sales, combined with our untapped line of credit, give us over $200 million of acquisition capacity. While at this time we don't see compelling opportunities, we do see signs in some markets that the bid/ask price imbalances are coming back into line. We hope to be active on the acquisition front in the coming quarters."

The Company has re-embarked on its program of expanding and enhancing its properties. Up to 20 projects providing approximately 500,000 square feet of additional and/or improved space at existing stores is planned during 2010 at an estimated cost of $20 million.

CAPITAL TRANSACTIONS:

At June 30, 2010, the Company had $400 million of unsecured term note debt and $80.1 million of mortgage debt outstanding. The Company has no significant debt maturities until mid-2012.


Illustrated below are key financial ratios at June 30, 2010:

- Debt to Enterprise Value (at $36.00/share)                  32.3 %

- Debt to Book Cost of Storage Facilities                     34.9 %

- Debt to EBITDA Ratio                                        4.9x

- Debt Service Coverage                                       3.1x



At June 30, 2010, the Company had approximately $28 million of cash on hand, and up to $175 million available on its line of credit.

YEAR 2010 EARNINGS GUIDANCE:

While consumer demand appears to be improving moderately in many of our markets, the Company expects conditions to remain competitive and anticipates the continuation of leasing incentives as well as increased advertising. Accordingly, a decline in same store revenue of 0% to 1% is projected from that of 2009. It is expected that the latter half of 2010 will show modestly stronger revenue growth than that of the first six months. Property operating costs are projected to increase by 2% to 3%, including an expected 6% increase in property taxes. Accordingly, the Company is anticipating a decline of 2% to 3% in same store net operating income for 2010.

The Company has identified some 20 properties at which it plans to add or improve approximately 500,000 square feet of storage space during 2010 at an estimated cost of $20 million. The Company also has budgeted $12 million to provide for recurring capitalized expenditures, including roofing, painting, paving, and office renovations.

The Company is selectively evaluating acquisition opportunities, but at present has no properties under contract and expects to remain prudent while the property market remains unsettled.

General and administrative expenses are expected to increase due to income taxes on its taxable REIT subsidiaries and the Company's plans to expand its internet marketing presence.

At June 30, 2010, 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 June 30, 2010, the Company had 27.6 million shares of common stock outstanding and .34 million Operating Partnership Units outstanding.

As a result of somewhat improved projected operating results, offset by the dilutive impact of the sale of 10 stores, management reiterates its prior forecast of expected funds from operations for the full year 2010 to be approximately $2.44 to $2.48 per share, and between $0.62 and $0.64 for the third quarter of 2010.

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 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 future ratings on the Company's debt instruments; 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 Second Quarter Earnings Release Conference Call at 9:00 a.m. Eastern Time on Thursday, August 5, 2010. To access the conference call, dial 877.407.8033 (domestic), or 201.689.8033 (international), at least five minutes prior to the scheduled start of the call. Management will accept questions from registered financial analysts after prepared remarks; all others are encouraged to listen to the call via webcast at www.unclebobs.com/company/investment/events.

The webcast will be archived for a period of 90 days; a telephone replay will also be available for 72 hours by calling 877.660.6853 and entering pass codes 286/353927.

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 371 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.


SOVRAN SELF STORAGE, INC.

BALANCE SHEET DATA

(unaudited)

                                                  June 30,       December 31,

(dollars in thousands)                            2010           2009

Assets

Investment in storage facilities:

Land                                              $ 235,123      $ 234,522

Building, equipment and construction in progress    1,138,604      1,129,932

                                                    1,373,727      1,364,454

Less: accumulated depreciation                      (255,309  )    (238,971  )

Investment in storage facilities, net               1,118,418      1,125,483

Cash and cash equivalents                           28,017         10,710

Accounts receivable                                 2,301          2,346

Receivable from joint venture                       225            173

Investment in joint venture                         19,791         19,944

Prepaid expenses                                    5,154          4,203

Other assets                                        4,825          5,313

Net assets of discontinued operations               -              16,926

Total Assets                                      $ 1,178,731    $ 1,185,098

Liabilities

Line of credit                                    $ -            $ -

Term notes                                          400,000        400,000

Accounts payable and accrued liabilities            19,379         22,316

Deferred revenue                                    5,074          4,980

Fair value of interest rate swap agreements         12,535         11,524

Mortgages payable                                   80,098         81,219

Total Liabilities                                   517,086        520,039

Noncontrolling redeemable Operating Partnership     11,807         15,005
Units at redemption value

Equity

Common stock                                        288            287

Additional paid-in capital                          815,903        814,988

Accumulated deficit                                 (140,011  )    (139,863  )

Accumulated other comprehensive loss                (12,249   )    (11,265   )

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

Total Shareholders' Equity                          636,756        636,972

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

Total Equity                                        649,838        650,054

Total Liabilities and Equity                      $ 1,178,731    $ 1,185,098




CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

                                                  April 1, 2010   April 1, 2009

                                                  to              to

(dollars in thousands, except share data)         June 30, 2010   June 30, 2009

Revenues

Rental income                                     $ 45,061        $ 45,094

Other operating income                              1,937           1,728

Management and acquisition fee income               311             305

Total operating revenues                            47,309          47,127

Expenses

Property operations and maintenance                 12,543          11,976

Real estate taxes                                   5,140           5,004

General and administrative                          4,967           4,338

Depreciation and amortization                       8,202           8,126

Amortization of in-place customer leases            -               90

Total operating expenses                            30,852          29,534

Income from operations                              16,457          17,593

Other income (expense)

Interest expense (including amortization of
financing fees

of $258 in 2010 and $315 in 2009)                   (7,929     )    (11,699    )

Interest income                                     21              20

Equity in income of joint ventures                  69              63

Income from continuing operations                   8,618           5,977

Income from discontinued operations, including a    7,686           765
gain on sale of $7,524 in 2010

Net income                                          16,304          6,742

Net income attributable to noncontrolling           (543       )    (456       )
interests

Net income attributable to common shareholders    $ 15,761        $ 6,286

Earnings per common share attributable to common
shareholders - basic

Continuing operations                             $ 0.29          $ 0.25

Discontinued operations                             0.28            0.03

Earnings per common share - basic                 $ 0.57          $ 0.28

Earnings per common share attributable to common
shareholders - diluted

Continuing operations                             $ 0.29          $ 0.25

Discontinued operations                             0.28            0.03

Earnings per common share - diluted               $ 0.57          $ 0.28

Common shares used in basic

earnings per share calculation                      27,463,500      22,613,518

Common shares used in diluted

earnings per share calculation                      27,508,097      22,616,553

Dividends declared per common share               $ 0.4500        $ -




CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

                                                January 1, 2010  January 1, 2009

                                                to               to

(dollars in thousands, except share data)       June 30, 2010    June 30, 2009

Revenues

Rental income                                   $ 90,410         $ 91,140

Other operating income                            3,560            3,254

Management and acquisition fee income             623              615

Total operating revenues                          94,593           95,009

Expenses

Property operations and maintenance               25,477           24,868

Real estate taxes                                 10,350           10,012

General and administrative                        10,107           8,724

Depreciation and amortization                     16,402           16,219

Amortization of in-place customer leases          -                235

Total operating expenses                          62,336           60,058

Income from operations                            32,257           34,951

Other income (expense)

Interest expense (including amortization of
financing fees

of $515 in 2010 and $630 in 2009)                 (15,808    )     (21,678    )

Interest income                                   41               53

Equity in income of joint ventures                139              94

Income from continuing operations                 16,629           13,420

Income from discontinued operations, including    7,562            1,443
a gain on sale of $6,944 in 2010

Net income                                        24,191           14,863

Net income attributable to noncontrolling         (1,003     )     (942       )
interests

Net income attributable to common shareholders  $ 23,188         $ 13,921

Earnings per common share attributable to
common shareholders - basic

Continuing operations                           $ 0.57           $ 0.56

Discontinued operations                           0.27             0.06

Earnings per common share - basic               $ 0.84           $ 0.62

Earnings per common share attributable to
common shareholders - diluted

Continuing operations                           $ 0.57           $ 0.56

Discontinued operations                           0.27             0.06

Earnings per common share - diluted             $ 0.84           $ 0.62

Common shares used in basic

earnings per share calculation                    27,454,301       22,291,292

Common shares used in diluted

earnings per share calculation                    27,493,623       22,294,457

Dividends declared per common share             $ 0.9000         $ 0.6400




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

                                                April 1, 2010    April 1, 2009

                                                to               to

(dollars in thousands, except share data)       June 30, 2010    June 30, 2009

Net income attributable to common shareholders  $ 15,761         $ 6,286

Net income attributable to noncontrolling         543              456
interests

Depreciation of real estate and amortization
of intangible

assets exclusive of deferred financing fees       8,202            8,216

Depreciation of real estate included in           54               306
discontinued operations

Depreciation and amortization from                196              209
unconsolidated joint ventures

Gain on sale of real estate                       (7,524     )     -

Funds from operations allocable to
noncontrolling

interest in Operating Partnership                 (215       )     (275       )

Funds from operations allocable to
noncontrolling

interest in consolidated joint ventures           (340       )     (340       )

Funds from operations available to common

shareholders                                      16,677           14,858

FFO per share - diluted                         $ 0.61           $ 0.66

Common shares - diluted                           27,508,097       22,616,553

                                                January 1, 2010  January 1, 2009

                                                to               to

(dollars in thousands, except share data)       June 30, 2010    June 30, 2009

Net income attributable to common shareholders  $ 23,188         $ 13,921

Net income attributable to noncontrolling         1,003            942
interests

Depreciation of real estate and amortization
of intangible

assets exclusive of deferred financing fees       16,402           16,454

Depreciation of real estate included in           217              609
discontinued operations

Depreciation and amortization from                391              416
unconsolidated joint ventures

Gain on sale of real estate                       (6,944     )     -

Funds from operations allocable to
noncontrolling

interest in Operating Partnership                 (463       )     (584       )

Funds from operations allocable to
noncontrolling

interest in consolidated joint ventures           (680       )     (680       )

Funds from operations available to common

shareholders                                      33,114           31,078

FFO per share - diluted                         $ 1.20           $ 1.39

Common shares - diluted                           27,493,623       22,294,457




(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) *   April 1, 2010    April 1, 2009

                                  to               to               Percentage

(dollars in thousands)            June 30, 2010    June 30, 2009    Change

Revenues:

Rental income                     $ 45,018         $ 45,094         -0.2 %

Other operating income              1,826            1,640          11.3 %

Total operating revenues            46,844           46,734         0.2  %

Expenses:

Property operations and             12,470           11,949         4.4  %
maintenance

Real estate taxes                   5,126            5,004          2.4  %

Total operating expenses            17,596           16,953         3.8  %

Operating income                  $ 29,248         $ 29,781         -1.8 %

(2) Includes the 345 stores owned and/or managed by the Company for the entire
periods presented that are consolidated in our financial statements. Does not
include unconsolidated joint venture stores managed by the Company.

* See exhibit A for supplemental same store data.

YEAR TO DATE SAME STORE DATA (2)  January 1, 2010  January 1, 2009

                                  to               to               Percentage

(dollars in thousands)            June 30, 2010    June 30, 2009    Change

Revenues:

Rental income                     $ 90,339         $ 91,140         -0.9 %

Other operating income              3,363            3,101          8.4  %

Total operating revenues            93,702           94,241         -0.6 %

Expenses:

Property operations and             25,330           24,817         2.1  %
maintenance

Real estate taxes                   10,322           10,012         3.1  %

Total operating expenses            35,652           34,829         2.4  %

Operating income                  $ 58,050         $ 59,412         -2.3 %




OTHER DATA                     Same Store (2)                 All Stores (3)

                               2010            2009           2010      2009

Weighted average quarterly       80.7       %   80.9       %   80.5  %   81.1  %
occupancy

Occupancy at June 30             82.0       %   82.5       %   81.8  %   82.7  %

Rent per occupied square foot  $10.16          $10.12         $10.16    $10.05

(3) Does not include 25 unconsolidated joint venture stores
managed by the Company

Investment in Storage
Facilities:

The following summarizes activity in storage facilities
during the six months ended June 30, 2010:

Beginning balance              $ 1,364,454

Property acquisitions            -

Improvements and equipment
additions:

Expansions                       2,330

Roofing, paving, painting,
and equipment:

Stabilized stores                5,511

Recently acquired and
consolidated joint venture       519
stores

Change in construction in
progress (Total CIP $10.9        1,025
million)

Dispositions                     (112       )

Storage facilities at cost at  $ 1,373,727
period end

                               June 30, 2010   June 30, 2009

Common shares outstanding        27,591,109     23,391,184

Operating Partnership Units      342,936        419,952
outstanding





Exhibit A

Sovran Self Storage, Inc.

Same Store Performance Summary

Three Months Ended June 30, 2010

(unaudited)

                                                                                   Expenses

                               Avg       Average       Revenue for the             for the Three               NOI for the
                               Qtrly     Quarterly

                                         Occupancy
                               Rent per  for the       Three Months                Months Ended                Three Months
                                         Three

                       Square  Occupied  Months Ended  Ended June 30,              June 30,                    Ended June 30,
                                         June 30,

State          Stores  Feet    Square    2010   2009   2010      2009      %       2010      2009      %       2010      2009      %
                               Foot                                        Change                      Change                      Change

Alabama        22      1,588   $ 8.08    75.0%  74.5%  $ 2,630   $ 2,536   3.70%   $ 967     $ 983     -1.60%  $ 1,663   $ 1,553   7.10%

Arizona        9       531       10.00   82.9%  84.7%    1,164     1,161   0.30%     415       394     5.30%     749       767     -2.30%

Connecticut    5       301       17.51   73.3%  75.7%    989       1,040   -4.90%    381       342     11.40%    608       698     -12.90%

Florida        54      3,420     10.16   78.1%  79.3%    7,001     7,222   -3.10%    2,863     2,813   1.80%     4,138     4,409   -6.10%

Georgia        22      1,421     9.34    79.2%  74.9%    2,747     2,587   6.20%     1,022     986     3.70%     1,725     1,601   7.70%

Louisiana      14      836       10.93   83.0%  81.1%    1,926     1,970   -2.20%    594       571     4.00%     1,332     1,399   -4.80%

Maine          2       113       10.75   79.9%  77.9%    252       255     -1.20%    86        92      -6.50%    166       163     1.80%

Maryland       4       172       13.96   86.4%  86.6%    531       489     8.60%     194       188     3.20%     337       301     12.00%

Massachusetts  12      664       12.32   81.2%  77.2%    1,701     1,646   3.30%     641       601     6.70%     1,060     1,045   1.40%

Michigan       4       229       9.05    84.9%  86.6%    462       428     7.90%     192       174     10.30%    270       254     6.30%

Mississippi    12      924       8.81    83.5%  82.8%    1,792     1,740   3.00%     565       547     3.30%     1,227     1,193   2.80%

Missouri       7       432       10.98   86.5%  87.3%    1,050     1,038   1.20%     409       408     0.20%     641       630     1.70%

New Hampshire  4       260       10.58   86.1%  76.1%    551       508     8.50%     200       188     6.40%     351       320     9.70%

New York       28      1,595     12.86   83.2%  85.2%    4,448     4,345   2.40%     1,511     1,416   6.70%     2,937     2,929   0.30%

North          11      540       9.56    79.7%  81.5%    1,032     1,052   -1.90%    398       369     7.90%     634       683     -7.20%
Carolina

Ohio           17      1,130     8.41    85.8%  84.9%    2,112     2,097   0.70%     785       723     8.60%     1,327     1,374   -3.40%

Pennsylvania   4       208       9.83    80.9%  79.5%    423       434     -2.50%    148       150     -1.30%    275       284     -3.20%

Rhode Island   4       168       12.06   79.9%  78.3%    441       428     3.00%     186       162     14.80%    255       266     -4.10%

South          8       443       9.55    79.6%  80.0%    877       879     -0.20%    382       341     12.00%    495       538     -8.00%
Carolina

Tennessee      4       291       8.23    85.2%  78.3%    519       487     6.60%     243       226     7.50%     276       261     5.70%

Texas          81      5,880     9.93    80.8%  83.3%    11,990    12,237  -2.00%    4,727     4,620   2.30%     7,263     7,617   -4.60%

Virginia       17      1,003     10.57   80.6%  78.0%    2,206     2,155   2.40%     687       659     4.20%     1,519     1,496   1.50%

Portfolio      345     22,149  $ 10.16   80.7%  80.9%  $ 46,844  $ 46,734  0.20%   $ 17,596  $ 16,953  3.80%   $ 29,248  $ 29,781  -1.80%
Total

Dollars in thousands except for average quarterly rent per occupied square foot. Square feet in thousands.

345 wholly owned same stores.




    Source: Sovran Self Storage, Inc.