Press Releases

Sovran Self Storage Reports First Quarter 2011 Earnings; Management Increases Guidance After Posting Strong 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 March 31, 2011.

Net income available to common shareholders for the first quarter of 2011 was $8.3 million or $0.30 per fully diluted share. For the same period in 2010, net income available to common shareholders was $7.4 million, or $0.27 per fully diluted common share. Funds from operations (FFO) for the quarter were $0.62 per fully diluted common share compared to $0.60 for the same period last year.

Improved occupancy and the reduced use of move-in incentives contributed to the increase in earnings and FFO for the first quarter of 2011.

"We're encouraged by the recovering demand for space in most of our markets, and our ability to regain pricing power," said Kenneth F. Myszka, the Company's President and COO. "We expect to see continued improvements as the busy season gets started."

OPERATIONS:

Total revenues increased 4.8% over last year's first quarter, while operating costs increased 2.3%, resulting in an NOI increase of 6.3%. Overall occupancy averaged 79.2% for the period and rental rates improved to an average of $10.48 per sq. ft.

Revenues for the 344 stores wholly owned by the Company for the entire quarter of each year increased 3.0% from those of the first quarter of 2010, the result of a 60 basis point increase in average occupancy, a 0.7% increase in rental rates and strong growth in other revenues.

Same store operating expenses increased 0.6% for the first quarter of 2011 compared to the prior year period, the result of modest increases in property payroll expenses and snow removal costs offset by a property tax decrease of 4.6%.

Consequently, same store net operating income increased 4.4% this period over the first quarter of 2010.

General and administrative expenses grew by about $0.7 million over the same period in 2010, primarily due to increased training, internet advertising and personnel costs.

During the first quarter of 2011, all but 2 of the 22 states included in the Company's same store base achieved sales greater than the same period in 2010. The stores with the strongest revenue growth include those in New England, New York, and Tennessee. With regard to these results, Myszka commented, "We are especially encouraged by the 2.5% revenue increase shown in the Florida portfolio."

PROPERTIES:

The Company is in negotiations and/or contract to acquire approximately $200 million of property. $160 million of this total is on behalf of a joint venture to be sponsored by the Company to which it expects to contribute 15% of the equity required. The remaining $40 million of properties are expected to be acquired by the Company on a wholly owned basis. Since all of the acquisitions are subject to remaining due diligence and other contingencies, no assurance can be given that any or all of the transactions will be consummated.

The Company is kick-starting its program of expanding and enhancing its properties. In 2011, 27 projects providing up to 700,000 square feet of additional and/or improved space at existing stores are planned. "We are pleased to revitalize our expansion and enhancement program following the hiatus triggered by the industry slowdown of 2009-10," said Robert J. Attea, Chairman and CEO. "This is yet another positive sign that business is returning to normal."

CAPITAL TRANSACTIONS:

At March 31, 2011, the Company had $400 million of unsecured term note debt, $78.3 million of mortgage debt outstanding and $16 million drawn on its line of credit. The Company has no significant debt maturities until mid-2012.

Illustrated below are key financial ratios at March 31, 2011:


 -- Debt to Enterprise Value (at $39.55/share)  30.8%

 -- Debt to Book Cost of Storage Facilities     34.7%

 -- Debt to EBITDA Ratio                        4.9x

 -- Debt Service Coverage                       3.2x



At March 31, 2011, the Company had approximately $4.9 million of cash on hand, and up to $109 million available on its line of credit.

YEAR 2011 EARNINGS GUIDANCE:

Management is encouraged by improving demand in most markets. Nonetheless, the Company anticipates the continuation of leasing incentives supplemented by aggressive and increased advertising. An increase in same store revenue of 2% to 4% is projected from that of 2010. Property operating costs are projected to increase by 2% to 3%, including an expected 4% annual increase in property taxes. Accordingly, the Company is anticipating an increase of 2% to 4% in same store net operating income for 2011.

The Company intends to spend up to $32 million on its aforementioned expansion and enhancement program. It has also budgeted $11 million to provide for recurring capitalized expenditures including roofing, painting, paving, and office renovations.

Purchases of properties made in 2011 are not expected to impact 2011's guidance inasmuch as the Company expects to invest in both low occupancy "turn-around" opportunities as well as stabilized properties. No significant acquisitions are expected to close until the second half of the year. The impact of the aforementioned joint venture has not been included in current guidance.

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

At March 31, 2011, all but $16 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%.

At March 31, 2011, the Company had 27.7 million shares of common stock outstanding and 0.34 million Operating Partnership Units outstanding.

As a result of the above assumptions, management expects funds from operations for the full year 2011 to be approximately $2.61 to $2.65 per share, and between $0.64 and $0.66 for the second quarter of 2011.

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 First Quarter Earnings Release Conference Call at 9:00 a.m. Eastern Time on Thursday, May 5, 2011. To access the conference call, dial 877.407.8033 (domestic), or 201.689.8033 (international). Management will accept questions from registered financial analysts after prepared remarks; all others are encouraged to listen to the call via webcast by accessing "events and conference calls" under the investor relations tab at www.unclebobs.com/company/.

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 286/369892.

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 377 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)

                                                    March 31,      December 31,

(dollars in thousands)                              2011           2010

Assets

Investment in storage facilities:

Land                                                $ 240,656      $ 240,651

Building, equipment and construction                  1,182,707      1,179,305
in progress

                                                      1,423,363      1,419,956

Less: accumulated depreciation                        (280,147  )    (271,797  )

Investment in storage facilities,                     1,143,216      1,148,159
net

Cash and cash equivalents                             4,859          5,766

Accounts receivable                                   1,914          2,377

Receivable from joint venture                         232            253

Investment in joint venture                           19,604         19,730

Prepaid expenses                                      6,355          4,408

Other assets                                          5,812          4,848

Total Assets                                        $ 1,181,992    $ 1,185,541

Liabilities

Line of credit                                      $ 16,000       $ 10,000

Term notes                                            400,000        400,000

Accounts payable and accrued                          18,018         23,991
liabilities

Deferred revenue                                      5,034          4,925

Fair value of interest rate swap                      8,777          10,528
agreements

Mortgages payable                                     78,344         78,954

Total Liabilities                                     526,173        528,398

Noncontrolling redeemable Operating Partnership       13,408         12,480
Units at redemption value

Equity

Common stock                                          289            288

Additional paid-in capital                            818,343        816,986

Accumulated deficit                                   (153,429  )    (148,264  )

Accumulated other comprehensive loss                  (8,699    )    (10,254   )

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

Total Shareholders' Equity                            629,329        631,581

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

Total Equity                                          642,411        644,663

Total Liabilities and Equity                        $ 1,181,992    $ 1,185,541




CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

                                               January 1, 2011  January 1, 2010

                                               to               to

(dollars in thousands, except share data)      March 31, 2011   March 31, 2010

Revenues

Rental income                                  $ 47,126         $ 45,349

Other operating income                           2,092            1,624

Management and acquisition fee income            317              311

Total operating revenues                         49,535           47,284

Expenses

Property operations and maintenance              13,513           12,934

Real estate taxes                                5,044            5,211

General and administrative                       5,814            5,139

Depreciation and amortization                    8,484            8,200

Amortization of in-place customer leases         141              -

Total operating expenses                         32,996           31,484

Income from operations                           16,539           15,800

Other income (expense)

Interest expense (A)                             (7,897     )     (7,878     )

Interest income                                  18               20

Equity in income of joint ventures               40               70

Income from continuing operations                8,700            8,012

Loss from discontinued operations (including     -                (124       )
loss on disposal of $580 in 2010)

Net income                                       8,700            7,888

Net income attributable to noncontrolling        (440       )     (461       )
interests

Net income attributable to common              $ 8,260          $ 7,427
shareholders

Earnings per common share attributable to
common shareholders - basic

Continuing operations                          $ 0.30           $ 0.27

Discontinued operations                          -                -

Earnings per common share - basic              $ 0.30           $ 0.27

Earnings per common share attributable to
common shareholders - diluted

Continuing operations                          $ 0.30           $ 0.27

Discontinued operations                          -                -

Earnings per common share - diluted            $ 0.30           $ 0.27

Common shares used in basic

earnings per share calculation                   27,537,278       27,445,101

Common shares used in diluted

earnings per share calculation                   27,577,435       27,479,148

Dividends declared per common share            $ 0.4500         $ 0.4500

(A) Interest expense for the three months
ending March 31 consists of the following

Interest expense                               $ 7,640          $ 7,620

Amortization of deferred financing fees          257              258

Total interest expense                         $ 7,897          $ 7,878




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

                                                January 1, 2011  January 1, 2010

                                                to               to

(dollars in thousands, except share data)       March 31, 2011   March 31, 2010

Net income attributable to common shareholders  $ 8,260          $ 7,427

Net income attributable to noncontrolling         440              461
interests

Depreciation of real estate and amortization
of intangible

assets exclusive of deferred financing fees       8,625            8,200

Depreciation of real estate included in           -                163
discontinued operations

Depreciation and amortization from                198              194
unconsolidated joint ventures

Loss on sale of real estate                       -                580

Funds from operations allocable to
noncontrolling

interest in Operating Partnership                 (206       )     (248       )

Funds from operations allocable to
noncontrolling

interest in consolidated joint ventures           (340       )     (340       )

Funds from operations available to common

shareholders                                      16,977           16,437

FFO per share - diluted                         $ 0.62           $ 0.60

Common shares - diluted                           27,577,435       27,479,148




(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     January 1, 2011       January 1, 2010
DATA (2) *

                         to                    to                    Percentage

(dollars in              March 31, 2011        March 31, 2010        Change
thousands)

Revenues:

Rental income            $ 46,283              $ 45,321              2.1  %

Other operating            1,960                 1,537               27.5 %
income

Total operating            48,243                46,858              3.0  %
revenues

Expenses:

Property operations        13,214                12,860              2.8  %
and maintenance

Real estate taxes          4,955                 5,196               -4.6 %

Total operating            18,169                18,056              0.6  %
expenses

Operating income         $ 30,074              $ 28,802              4.4  %




(2) Includes the 344 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.




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

Open                                      2011    2010         2011    2010

Weighted average quarterly occupancy      79.7%   79.1%        79.2%   79.0%

Occupancy at March 31                     79.7%   78.9%        79.2%   78.8%

Rent per occupied square foot             $10.49  $10.42       $10.48  $10.36

(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 three months
ended March 31, 2011:

Beginning balance                                 $ 1,419,956

Property acquisitions                               -

Improvements and equipment additions:

Expansions                                          4,884

Roofing, paving, painting, and equipment:

Stabilized stores                                   1,666

Recently acquired and consolidated joint venture    186
stores

Change in construction in progress (Total CIP       (3,177     )
$4.9 million)

Dispositions                                        (152       )

Storage facilities at cost at period end          $ 1,423,363

                                                  March 31, 2011  March 31, 2010

Common shares outstanding                           27,679,360    27,566,605

Operating Partnership Units outstanding             339,025       384,952





Exhibit A

Sovran Self Storage, Inc.

Same Store Performance Summary

Three Months Ended March 31, 2011

(unaudited)

                                         Avg Quarterly   Revenue                       Expenses                     NOI
                               Avg       Occupancy       for the Three                 for the Three                for the Three
                               Qtrly     for the Three   Months                        Months                       Months
                       Square  Rent per  Months Ended    Ended March 31,               Ended March 31,              Ended March 31,
                       Feet    Occupied  March 31,
                               Square
State          Stores          Foot      2011    2010    2011      2010      %         2011      2010      %        2011      2010      %
                                                                             Change                        Change                       Change

Alabama        22      1,588   $ 8.19    76.2 %  74.0 %  $ 2,671   $ 2,575   3.73  %   $ 985     $ 982     0.31  %  $ 1,686   $ 1,593   5.84  %

Arizona        9       530       10.18   85.0 %  83.0 %    1,233     1,190   3.61  %     435       418     4.07  %    798       772     3.37  %

Connecticut    5       301       17.04   81.1 %  72.1 %    1,059     977     8.39  %     444       417     6.47  %    615       560     9.82  %

Florida        53      3,449     10.58   77.2 %  77.5 %    7,311     7,135   2.47  %     2,769     2,814   -1.60 %    4,542     4,321   5.11  %

Georgia        22      1,422     9.56    77.4 %  78.7 %    2,762     2,760   0.07  %     1,001     1,016   -1.48 %    1,761     1,744   0.97  %

Louisiana      14      865       10.58   81.1 %  79.2 %    1,883     1,916   -1.72 %     573       571     0.35  %    1,310     1,345   -2.60 %

Maine          2       113       12.08   74.3 %  75.0 %    264       251     5.18  %     125       120     4.17  %    139       131     6.11  %

Maryland       4       172       14.56   85.7 %  85.1 %    549       523     4.97  %     199       219     -9.13 %    350       304     15.13 %

Massachusetts  12      664       12.78   81.1 %  79.2 %    1,798     1,697   5.95  %     798       744     7.26  %    1,000     953     4.93  %

Michigan       4       239       8.51    90.3 %  83.5 %    478       443     7.90  %     223       214     4.21  %    255       229     11.35 %

Mississippi    12      926       9.34    80.2 %  82.4 %    1,826     1,792   1.90  %     550       559     -1.61 %    1,276     1,233   3.49  %

Missouri       7       432       11.43   83.6 %  83.7 %    1,058     1,044   1.34  %     440       421     4.51  %    618       623     -0.80 %

New Hampshire  4       260       10.97   82.6 %  77.9 %    589       547     7.68  %     232       231     0.43  %    357       316     12.97 %

New York       28      1,598     13.37   83.7 %  80.9 %    4,634     4,372   5.99  %     1,886     1,737   8.58  %    2,748     2,635   4.29  %

North          11      539       9.35    78.3 %  78.8 %    1,006     1,018   -1.18 %     400       381     4.99  %    606       637     -4.87 %
Carolina

Ohio           17      1,132     8.99    83.8 %  84.2 %    2,209     2,126   3.90  %     868       874     -0.69 %    1,341     1,252   7.11  %

Pennsylvania   4       230       10.07   81.5 %  80.4 %    439       425     3.29  %     164       181     -9.39 %    275       244     12.70 %

Rhode Island   4       168       12.43   79.5 %  77.9 %    458       441     3.85  %     207       182     13.74 %    251       259     -3.09 %

South          8       443       9.81    79.4 %  77.2 %    905       872     3.78  %     349       370     -5.68 %    556       502     10.76 %
Carolina

Tennessee      4       291       8.63    87.9 %  80.4 %    573       521     9.98  %     254       250     1.60  %    319       271     17.71 %

Texas          81      5,887     10.32   79.2 %  79.5 %    12,336    12,094  2.00  %     4,553     4,630   -1.66 %    7,783     7,464   4.27  %

Virginia       17      1,030     10.84   77.0 %  76.5 %    2,202     2,139   2.95  %     714       725     -1.52 %    1,488     1,414   5.23  %

Portfolio      344     22,279  $ 10.49   79.7 %  79.1 %  $ 48,243  $ 46,858  2.96  %   $ 18,169  $ 18,056  0.63  %  $ 30,074  $ 28,802  4.42  %
Total

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

344 wholly owned same stores.




    Source: Sovran Self Storage, Inc.