Fitch Rates Sovran Self Storage's $175MM 4.533% Senior Unsecured Term Notes 'BBB-'

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    Fitch Ratings has assigned a ‘BBB-‘ rating to the $175 million 4.533% Series E senior unsecured term notes due 2024 jointly issued by Sovran Self Storage, Inc. and its operating partnership, Sovran Acquisition, L.P. (NYSE: SSS, collectively Sovran). Net proceeds will be used to repay amounts outstanding on Sovran’s line of credit and to fund future investment activity.   Fitch currently rates Sovran as follows: Sovran Self Storage, Inc.

    • Issuer Default Rating (IDR) ‘BBB-‘;
    • Unsecured revolving credit facility ‘BBB-‘;
    • Unsecured term notes ‘BBB-‘.
    Sovran Acquisition, L.P.
    • IDR ‘BBB-‘;
    • Unsecured revolving credit facility ‘BBB-‘;
    • Unsecured term notes ‘BBB-‘.
    KEY RATING DRIVERS The ratings reflect the strength of Sovran’s credit metrics, driven in large part by the sustained robustness of operating fundamentals. Leverage and fixed-charge coverage are strong for the rating but expected to moderate along with fundamentals through 2015. These positive elements are balanced, in part, by a concentrated debt maturity schedule, the inherent cyclicality in fundamentals and a small, geographically concentrated portfolio. ROBUST OPERATING FUNDAMENTALS Sovran’s portfolio continues to perform well with same-store NOI (SSNOI) growth of 9.9% for 2013 following growth of 10.3% and 6.2% in 2012 and 2011, respectively. Operating performance has been driven by a variety of factors including the traditional drivers (e.g. the single-family home market and economic growth), the implementation of sophisticated revenue management software and the long-anticipated consolidation of market share from smaller competitors. Since implementing its revenue management system and cutting rents during the downturn, same-store occupancy has improved to 89.1% at Dec. 31, 2013 as compared to 79% at March 31, 2010. In 2013, asking rents grew by +5.7% and average rent increases in 4Q’13 were +3.3% year-over-year. Fitch’s base case assumes SSNOI growth moderates through 2015 to the low-to-mid single digits and will be mostly rate driven as compared to the past few years when occupancy was the main supporter of growth. Click Here to View The Entire Report … (via PRNewswire)]]>

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