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SOVRAN PROJECTS HIGHER EARNINGS

Stronger sales and lower expenses helped ease the sting of rising interest costs and allowed Sovran Self Storage to increase its fourth-quarter earnings by 5 percent, the Williamsville-based real estate investment trust said Wednesday.

Sovran also said it expects its earnings this year to rise by 6 percent to 7 percent to between $2.99 and $3.02 per share, which is slightly higher than the $2.98 per share that analysts surveyed by First Call Corp.were expecting.

The company's fourth-quarter funds from operations, which is the best way of measuring a REIT's earnings, matched analyst forecasts of $8.6 million, or 72 cents per share, which was up from $8.2 million, or 67 cents per share, a year earlier.

Sovran's revenues rose 5 percent to $22.8 million during the quarter, with sales at stores open at least a year rising by 3.1 percent due to a 2.9 percent rate increase and a slight rise in occupancy rates.

At the same time, the company's investment in its Flex-a-Space program, which uses moving walls to tailor storage space to a customer's needs, fell by about $250,000, while Sovran's operating expenses fell by nearly 6 percent.

Those gains, however, were partially offset by rising interest expenses, which grew by $1.4 million as the company's average interest rate on its $230 million in debt rose by more than a full percentage point.

Sovran, which operates 230 self-storage facilities in 21 states under the Uncle Bob's name, said it expects operating income to rise by 4.5 percent to 5 percent on a same-store basis this year, and first-quarter earnings to range between 64 cents and 66 cents per share.

Sovran, which formed a joint venture for some of its properties with the Locke Group earlier this month, said it expects to sell properties worth another $20 million to $40 million to other similar ventures in a bid to free up cash. The company also said it expects to invest up to $4 million in improvements.

For the year, Sovran's funds from operations fell 4 percent to $33.9 million, or $2.81 per share, from $35.3 million, or $2.85 per share, a year earlier.

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