Close

S&P Upgrades Sovran Self Storage (SSS) to 'BBB'; Sees Maintaining Improved Credit Measures

December 4, 2015 7:53 AM EST

Standard & Poor's Ratings Services raised its corporate credit and issue-level ratings on Sovran Self Storage Inc. (NYSE: SSS) to 'BBB' from 'BBB-'. The outlook is stable.

"The upgrade reflects our expectation that Sovran will maintain its improved credit protection measures as healthy U.S. self-storage fundamentals continue, marked by limited new supply and steady demand from a gradually improving economy. We do not anticipate any significant shifts in financial policy and believe the company will manage future acquisitions with a combination of equity and debt," said credit analyst Kristina Koltunicki. "Even though Sovran has a less diversified funding base compared with peers, with a historical reliance on bank term loans, and its revolving credit facility, we think the company will refinance debt maturities with more diverse sources of capital over the next two years."

The stable outlook incorporates our view that positive operating trends will continue over the next two years as we anticipate industry fundamentals to be strong. We believe the pipeline of acquisitions for Sovran could remain in line with recent years; however, any meaningful portfolio expansion is unlikely.

We could lower the rating if debt to EBITDA rose to higher than 5.5x or debt to undepreciated book capital rose to higher than 40%, potentially because of a shift in funding strategy or weaker-than-expected operating performance.

Although unlikely over the next 24 months, we would consider raising the rating if Sovran was able to increase its scale meaningfully on a leverage-neutral basis. This would include significantly diversifying its geographic concentration through profitable portfolio expansion while maintaining debt to EBITDA of less than 5x and debt to undepreciated book capital of less than 35%.



Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

Credit Ratings

Related Entities

Standard & Poor's