Published: August 03, 2011

Sovran Self Storage Reports Second Quarter Results; Same Store NOI Increases 8.5%; Announces Acquisition of Four Properties

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BUFFALO, N.Y. - (BUSINESS WIRE) - Sovran Self Storage, Inc. (NYSE:SSS), (www.unclebobs.com/company) a self storage real estate investment trust (REIT), reported operating results for the quarter ended June 30, 2011.

Net income available to common shareholders for the second quarter of 2011 was $9.7 million or $0.35 per fully diluted share. For the same period in 2010, net income available to common shareholders was $15.8 million, or $0.57 (including income from discontinued operations and a gain on sale of properties of $7.7 million or $.28 per share) per fully diluted common share.

Funds from operations (FFO) for the quarter were $0.67 per fully diluted common share compared to $0.61 for the same period last year.

Higher rental rates and the reduced use of move-in incentives contributed to the increase in earnings and FFO for the second quarter of 2011.

The Company acquired one store at the end of June and three more subsequent to the end of the quarter for total consideration of $21.2 million.

Kenneth F. Myszka, the Company's President and COO said, "As the busy season is well under way, we're encouraged by the strong showing in all of our markets and the healthy rebound of our pricing power. Occupancy is holding steady while we substantially reduce the use of move-in concessions."

OPERATIONS:

Total revenues increased 7.2% over last year's second quarter, while operating costs increased 1.4%, resulting in an NOI⁽³⁾ increase of 10.6%. Overall occupancy averaged 80% for the period and rental rates improved to an average of $10.56 per sq. ft.

Revenues for the 344 stores wholly owned by the Company for the entire quarter of each year increased 5.2% from those of the second quarter of 2010, the result of a 4.0% increase in rental rates and strong growth in other revenues, primarily insurance commissions.

Same store operating expenses decreased 0.4% for the second quarter of 2011 compared to the prior year period, the result of a property tax decrease of 3.3%, offset somewhat by modest increases in property payroll expenses and maintenance costs.

Consequently, same store net operating income increased 8.5% this period over the second quarter of 2010.

General and administrative expenses grew by about $1.1 million over the same period in 2011, primarily due to increased training, internet advertising and personnel costs.

During the second quarter of 2011, all 24 states included in the Company's same store pool achieved sales greater than the same period in 2010. The stores with the strongest revenue growth include those in New England, New York, Tennessee, and South Carolina. With regard to these results, Myszka commented, "We are especially pleased by the solid results shown in the Florida and Texas stores, with NOI increases of 8.3% and 7.7% respectively."

PROPERTIES:

The Company acquired one store in West Deptford, NJ (just outside Philadelphia, PA) during the quarter via a consolidated joint venture at a cost of $4.2 million. In July, it acquired two additional stores in Newark, New Jersey; and one in St. Louis, MO. The total purchase price for the three properties acquired in July was $17 million and was financed via borrowings on the Company's line of credit.

In May 2011, the Company made an additional investment of $17.0 million in Locke Sovran II, LLC and now owns 100% of that entity.

As previously announced, the Company entered into a joint venture agreement to acquire 19 properties in New Jersey and eastern Pennsylvania. Subsequent to the end of the quarter, the venture paid $164 million for the properties, of which approximately $89 million was financed via mortgage notes, $64 million was contributed by the JV Partner, and $11 million was contributed by the Company. All of the properties will be re-branded "Uncle Bob's Self Storage" and will be managed by the Company.

The Company is in negotiations and/or contract to directly acquire approximately $129 million of property in Georgia, Texas and Virginia. 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 also added three properties to its management platform, which now has a total of 47 properties under management through joint venture and third party contracts.

The Company continues its program of expanding and enhancing its properties, expecting construction of over 500,000 square feet of additional and/or improved space at existing stores in 2011/2012.

CAPITAL TRANSACTIONS:

At June 30, 2011, the Company had $400 million of unsecured term note debt, $77.8 million of mortgage debt outstanding and $35 million drawn on its line of credit. The Company is currently in negotiations to refinance its 2011 and 2012 obligations and renew its revolving credit facility.

Illustrated below are key financial ratios at June 30, 2011:

Debt to Enterprise Value (at $40.50/share) 31.1%
Debt to Book Cost of Storage Facilities 35.7%
Debt to EBITDA Ratio 4.9x
Debt Service Coverage 3.4x

At June 30, 2011, the Company had approximately $7.7 million of cash on hand, and $90 million available on its line of credit.

YEAR 2011 EARNINGS GUIDANCE:

Management is encouraged by improving pricing power and resiliency 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 3% 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 continues to anticipate an increase of 2% to 4% in same store net operating income for 2011.

The Company intends to spend up to $30 million on its aforementioned expansion and enhancement program. It has also budgeted $12 million to provide for recurring capitalized expenditures including roofing, painting, paving, and office renovations.

Future purchases of properties made in 2011 are not expected to significantly impact 2011's guidance inasmuch as the Company expects to invest in both low occupancy "turn-around" opportunities as well as stabilized properties. The majority of the anticipated acquisitions are not expected to close until later in the year.

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 and personnel required for expected acquisitions.

At June 30, 2011, all but $35 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%. As previously mentioned, the Company is in negotiations to refinance its 2011 and 2012 obligations and renew its revolving credit facility, but the potential effect of these refinancing arrangements has not been factored into guidance.

At June 30, 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, exclusive of the potential impact of debt refinancing and/or acquisition costs pertaining to acquisition of additional properties, management expects funds from operations for the full year 2011 to be approximately $2.64 to $2.68 per share, and between $0.69 and $0.71 for the third 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 Second Quarter Earnings Release Conference Call at 9:00 a.m. Eastern Time on Thursday, August 4, 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 286/375595.

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 402 self storage facilities in 25 states under the name "Uncle Bob's Self Storage" . For more information, visit www.unclebobs.com, like us on Facebook, or follow us on Twitter.


SOVRAN SELF STORAGE, INC.
BALANCE SHEET DATA
(unaudited)

	June 30,			December 31,
(dollars in thousands)	2011			2010
Assets
Investment in storage facilities:
Land	$	242,121		$	240,651
Building, equipment and construction in progress		1,192,001			1,179,305
		1,434,122			1,419,956
Less: accumulated depreciation		(288,529	)		(271,797	)
Investment in storage facilities, net		1,145,593			1,148,159
Cash and cash equivalents		7,691			5,766
Accounts receivable		2,148			2,377
Receivable from joint venture		315			253
Investment in joint venture		19,558			19,730
Prepaid expenses		5,385			4,408
Other assets		3,505			4,848
Total Assets	$	1,184,195		$	1,185,541

Liabilities
Line of credit	$	35,000		$	10,000
Term notes		400,000			400,000
Accounts payable and accrued liabilities		20,461			23,991
Deferred revenue		5,162			4,925
Fair value of interest rate swap agreements		7,780			10,528
Mortgages payable		77,753			78,954
Total Liabilities		546,156			528,398

Noncontrolling redeemable Operating Partnership Units at redemption value		13,900			12,480

Equity
Common stock		289			288
Additional paid-in capital		815,199			816,986
Accumulated deficit		(156,675	)		(148,264	)
Accumulated other comprehensive loss		(7,499	)		(10,254	)
Treasury stock at cost		(27,175	)		(27,175	)
Total Shareholders' Equity		624,139			631,581
Noncontrolling interest - consolidated joint venture		-			13,082
Total Equity		624,139			644,663
Total Liabilities and Equity	$	1,184,195		$	1,185,541


CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
	April 1, 2011			April 1, 2010
	to			to
(dollars in thousands, except share data)	June 30, 2011			June 30, 2010

Revenues
Rental income	$	48,014		$	45,061
Other operating income		2,307			1,937
Management and acquisition fee income		388			311
Total operating revenues		50,709			47,309

Expenses
Property operations and maintenance		12,890			12,543
Real estate taxes		5,044			5,140
General and administrative		6,028			4,967
Depreciation and amortization		8,516			8,202
Amortization of in-place customer leases		141			-
Total operating expenses		32,619			30,852

Income from operations		18,090			16,457

Other income (expense)
Interest expense (A)		(8,082	)		(7,929	)
Interest income		8			21
Equity in income of joint ventures		64			69

Income from continuing operations		10,080			8,618
Income from discontinued operations (including gain on disposal of $7,524 in 2010)		-			7,686
Net income		10,080			16,304
Net income attributable to noncontrolling interests		(343	)		(543	)
Net income attributable to common shareholders	$	9,737		$	15,761

Earnings per common share attributable to common shareholders - basic
Continuing operations	$	0.35		$	0.29
Discontinued operations		-			0.28
Earnings per common share - basic	$	0.35		$	0.57

Earnings per common share attributable to common shareholders - diluted
Continuing operations	$	0.35		$	0.29
Discontinued operations		-			0.28
Earnings per common share - diluted	$	0.35		$	0.57

Common shares used in basic
earnings per share calculation		27,559,992			27,463,500

Common shares used in diluted
earnings per share calculation		27,611,237			27,508,097

Dividends declared per common share	$	0.4500		$	0.4500


(A) Interest expense for the three months ending June 30 consists of the following
Interest expense	$	7,746		$	7,671
Amortization of deferred financing fees		336			258
Total interest expense	$	8,082		$	7,929


CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
	January 1, 2011			January 1, 2010
	to			to
(dollars in thousands, except share data)	June 30, 2011			June 30, 2010

Revenues
Rental income	$	95,140		$	90,410
Other operating income		4,399			3,560
Management and acquisition fee income		705			623
Total operating revenues		100,244			94,593

Expenses
Property operations and maintenance		26,402			25,477
Real estate taxes		10,088			10,350
General and administrative		11,842			10,107
Depreciation and amortization		17,000			16,402
Amortization of in-place customer leases		282			-
Total operating expenses		65,614			62,336

Income from operations		34,630			32,257

Other income (expense)
Interest expense (A)		(15,979	)		(15,808	)
Interest income		26			41
Equity in income of joint ventures		104			139

Income from continuing operations		18,781			16,629
Income from discontinued operations (including gain on disposal of $6,944 in 2010)		-			7,562
Net income		18,781			24,191
Net income attributable to noncontrolling interests		(784	)		(1,003	)
Net income attributable to common shareholders	$	17,997		$	23,188

Earnings per common share attributable to common shareholders - basic
Continuing operations	$	0.65		$	0.57
Discontinued operations		-			0.27
Earnings per common share - basic	$	0.65		$	0.84

Earnings per common share attributable to common shareholders - diluted
Continuing operations	$	0.65		$	0.57
Discontinued operations		-			0.27
Earnings per common share - diluted	$	0.65		$	0.84

Common shares used in basic
earnings per share calculation		27,548,635			27,454,301

Common shares used in diluted
earnings per share calculation		27,594,336			27,493,623

Dividends declared per common share	$	0.9000		$	0.9000


(A) Interest expense for the six months ending June 30 consists of the following
Interest expense	$	15,386		$	15,293
Amortization of deferred financing fees		593			515
Total interest expense	$	15,979		$	15,808


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

	April 1, 2011			April 1, 2010
	to			to
(dollars in thousands, except share data)	June 30, 2011			June 30, 2010

Net income attributable to common shareholders	$	9,737		$	15,761
Net income attributable to noncontrolling interests		343			543
Depreciation of real estate and amortization of intangible
assets exclusive of deferred financing fees		8,657			8,202
Depreciation of real estate included in discontinued operations		-			54
Depreciation and amortization from unconsolidated joint ventures		199			196
Loss on sale of real estate		-			(7,524	)
Funds from operations allocable to noncontrolling
interest in Operating Partnership		(222	)		(215	)
Funds from operations allocable to noncontrolling
interest in consolidated joint ventures		(227	)		(340	)
Funds from operations available to common
shareholders		18,487			16,677
FFO per share - diluted	$	0.67		$	0.61

Common shares - diluted		27,611,237			27,508,097


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

	January 1, 2011			January 1, 2010
	to			to
(dollars in thousands, except share data)	June 30, 2011			June 30, 2010

Net income attributable to common shareholders	$	17,997		$	23,188
Net income attributable to noncontrolling interests		784			1,003
Depreciation of real estate and amortization of intangible
assets exclusive of deferred financing fees		17,282			16,402
Depreciation of real estate included in discontinued operations		-			217
Depreciation and amortization from unconsolidated joint ventures		397			391
Gain on sale of real estate		-			(6,944	)
Funds from operations allocable to noncontrolling
interest in Operating Partnership		(428	)		(463	)
Funds from operations allocable to noncontrolling
interest in consolidated joint ventures		(567	)		(680	)
Funds from operations available to common
shareholders		35,465			33,114
FFO per share - diluted	$	1.29		$	1.20

Common shares - diluted		27,594,336			27,493,623

(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, 2011		April 1, 2010
	to		to		Percentage
(dollars in thousands)	June 30, 2011		June 30, 2010		Change

Revenues:
Rental income	$	47,125	$	45,018	4.7	%
Other operating income		2,150		1,826	17.7	%
Total operating revenues		49,275		46,844	5.2	%

Expenses:
Property operations and maintenance		12,572		12,470	0.8	%
Real estate taxes		4,955		5,126	-3.3	%
Total operating expenses		17,527		17,596	-0.4	%

Net operating income (3)	$	31,748	$	29,248	8.5	%

(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.

(3) Net operating income or "NOI" is a non-GAAP (generally accepted accounting principles) financial measure that we define as total continuing revenues less continuing property operating expenses. NOI also can be calculated by adding back to net income: interest expense, amounts attributable to noncontrolling interests, depreciation and amortization expense, general and administrative expense, and deducting from net income: income from discontinued operations, interest income, and equity in income of joint ventures. We believe that NOI is a meaningful measure of operating performance, because we utilize NOI in making decisions with respect to capital allocations, in determining current property values, and comparing period-to-period and market-to-market property operating results. NOI should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as total revenues, operating income and net income.

* See exhibit A for supplemental same store data.

YEAR TO DATE SAME STORE DATA (2)	January 1, 2011		January 1, 2011
	to		to		Percentage
(dollars in thousands)	June 30, 2011		June 30, 2011		Change

Revenues:
Rental income	$	93,407	$	90,339	3.4	%
Other operating income		4,110		3,363	22.2	%
Total operating revenues		97,517		93,702	4.1	%

Expenses:
Property operations and maintenance		25,785		25,330	1.8	%
Real estate taxes		9,909		10,322	-4.0	%
Total operating expenses		35,694		35,652	0.1	%

Net operating income (3)	$	61,823	$	58,050	6.5	%


OTHER DATA	Same Store (2)						All Stores (4)
Open	2011			2010			2011			2010

Weighted average quarterly occupancy		80.5	%		80.7	%		80.0	%		80.5	%

Occupancy at June 30		81.0	%		82.0	%		80.5	%		81.8	%

Rent per occupied square foot	$	10.57		$	10.16		$	10.56		$	10.16

(4) 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, 2011:

Beginning balance	$	1,419,956
Property acquisitions		4,045
Improvements and equipment additions:
Expansions		6,773
Roofing, paving, and equipment:
Stabilized stores		6,466
Recently acquired stores		117
Change in construction in progress (Total CIP $5.1 million)		(2,918	)
Dispositions		(317	)
Storage facilities at cost at period end	$	1,434,122


	June 30, 2011			June 30, 2010

Common shares outstanding		27,699,279			27,591,109
Operating Partnership Units outstanding		339,025			342,936

Exhibit A

Sovran Self Storage, Inc.

Same Store Performance Summary
Three Months Ended June 30, 2011
(unaudited)


		Square	Avg Qtrly Rent per Occupied		Avg Quarterly Occupancy for the Three Months Ended June 30,				Revenue for the Three Months Ended June 30,						Expenses for the Three Months Ended June 30,						NOI for the Three Months Ended June 30,
State	Stores	Feet	Square Foot		2011		2010		2011		2010		% Change		2011		2010		% Change		2011		2010		% Change

Alabama	22	1,588	$	8.19	77.4	%	75.0	%	$	2,742	$	2,630	4.26	%	$	969	$	967	0.21	%	$	1,773	$	1,663	6.61	%
Arizona	9	531		10.54	82.6	%	82.9	%		1,226		1,164	5.33	%		416		415	0.24	%		810		749	8.14	%
Connecticut	5	301		17.30	81.2	%	73.3	%		1,085		989	9.71	%		354		381	-7.09	%		731		608	20.23	%
Florida	53	3,442		10.64	76.3	%	78.1	%		7,327		7,001	4.66	%		2,847		2,863	-0.56	%		4,480		4,138	8.26	%
Georgia	22	1,422		9.57	78.1	%	79.2	%		2,797		2,747	1.82	%		978		1,022	-4.31	%		1,819		1,725	5.45	%
Louisiana	14	865		10.64	82.3	%	83.0	%		1,950		1,926	1.25	%		602		594	1.35	%		1,348		1,332	1.20	%
Maine	2	113		11.95	80.6	%	79.9	%		284		252	12.70	%		95		86	10.47	%		189		166	13.86	%
Maryland	4	172		14.58	86.8	%	86.4	%		558		531	5.08	%		190		194	-2.06	%		368		337	9.20	%
Massachusetts	12	664		12.88	82.0	%	81.2	%		1,841		1,701	8.23	%		645		641	0.62	%		1,196		1,060	12.83	%
Michigan	4	238		9.10	92.7	%	84.9	%		526		462	13.85	%		201		192	4.69	%		325		270	20.37	%
Mississippi	12	926		9.50	80.9	%	83.5	%		1,882		1,792	5.02	%		566		565	0.18	%		1,316		1,227	7.25	%
Missouri	7	432		11.59	84.8	%	86.5	%		1,094		1,050	4.19	%		394		409	-3.67	%		700		641	9.20	%
New Hampshire	4	260		11.15	82.7	%	86.1	%		607		551	10.16	%		196		200	-2.00	%		411		351	17.09	%
New York	28	1,609		13.56	86.3	%	83.2	%		4,857		4,448	9.20	%		1,548		1,511	2.45	%		3,309		2,937	12.67	%
North Carolina	11	539		9.58	79.6	%	79.7	%		1,049		1,032	1.65	%		391		398	-1.76	%		658		634	3.79	%
Ohio	17	1,132		9.00	85.0	%	85.8	%		2,251		2,112	6.58	%		794		785	1.15	%		1,457		1,327	9.80	%
Pennsylvania	4	219		10.07	86.8	%	80.9	%		449		423	6.15	%		149		148	0.68	%		300		275	9.09	%
Rhode Island	4	168		12.32	81.6	%	79.9	%		466		441	5.67	%		182		186	-2.15	%		284		255	11.37	%
South Carolina	8	443		9.85	81.9	%	79.6	%		939		877	7.07	%		358		382	-6.28	%		581		495	17.37	%
Tennessee	4	291		8.83	90.4	%	85.2	%		602		519	15.99	%		251		243	3.29	%		351		276	27.17	%
Texas	81	5,917		10.33	79.9	%	80.8	%		12,495		11,990	4.21	%		4,673		4,727	-1.14	%		7,822		7,263	7.70	%
Virginia	17	1,031		10.95	77.0	%	80.6	%		2,248		2,206	1.90	%		728		687	5.97	%		1,520		1,519	0.07	%

Portfolio Total	344	22,303	$	10.57	80.5	%	80.7	%	$	49,275	$	46,844	5.19	%	$	17,527	$	17,596	-0.39	%	$	31,748	$	29,248	8.55	%

Dollars in thousands except for average quarterly rent per occupied square foot. Square feet in thousands.
344 wholly owned same stores.

Sovran Self Storage, Inc.
David Rogers, CFO / Diane Piegza, VP of Communications
716-633-1850

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Sovran Self Storage Reports Second Quarter Results; Same Store NOI Increases 8.5%; Announces Acquisition of Four Properties

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