Sovran Self Storage, Inc. (SSS)

Sovran Self Storage (SSS) is a self-administered and self-managed real estate investment trust (REIT) that acquires, owns and manages self-storage properties in self-storage properties. The company’s portfolio comprises of 328 self-storage facilities comprising of 20.3 million net rentable square feet spread across 22 states.

The demand for self-storage is on a rise, which has resulted in mushrooming of self-storage facilities that has intensified the competition among self-storage operators. Of the approximately 43,000 facilities in the United States, less than 12% are managed by the ten largest operators. The highly fragmented $22.6 billion self-storage industry competes on the basis of occupancy levels, rental rates and operating expenses of facilities.

The overwhelming demand for storage facility has made customers less price sensitive and considers convenient location as the major buying decision criterion. Moreover, shortage of skilled operators, the scarcity of equity capital available to small operators for acquisitions and expansions, and the potential for savings through economies of scale are factors that are leading to consolidation in the industry. This should benefit existing players like Sovran, which should be able to gain most out of this favorable self-storage environment.

The company through its implementation of the call center facility and free truck program has ensured a same store revenue growth of around 5% in each of the last four years. The company expects this market condition to remain stable and they should be able to generate a revenue growth of 4% on same store basis for fiscal 2007. Considering the growing demand for self-storage facilities it seems that Sovran should out perform the market in the coming year.