Sovran (NYSE:SSS).U-Store-It (NYSE:YSI), FBR's Top Choices in Self Storage REITs

Sovran Self Storage (NYSE:SSS) and U-Store-It Trust (NYSE:YSI) are the top picks of FBR Capital in the Real Estate/Self Storage REITs sector.

FBR said, "Management representatives from Sovran Self Storage (NYSE:SSS)(Outperform-rated) and U-Store-It Trust (NYSE:YSI)(Outperform) presented at the 2010 FBR Capital Markets Fall Investor Conference, held yesterday in New York City. While the message was not that different from the one we heard at NAREIT just two weeks ago, it seemed that the themes appeared somewhat more crystallized. We touch on a few in the text that follows. We continue to like the storage sector given (1) cash flow resilience, (2) recovery upside (aka, short lease cash flow elasticity), (3) simple fixed cost structures, (4) better earnings quality, (5) exemplary scales of economy, and finally (6) attractive relative pricing. We estimate that the group trades with an unweighted implied cap rate of 7.2%, versus 6.7% for REITs overall. On the basis of AFFO multiples, the group trades at 16.4x, versus 17.9x for REITs overall. Our collective return expectation for the group is 21.0%, versus 11.9% for REITs overall (based on our current RMZ target of 818, established on November 12, 2010)."

"Our top picks in the self storage space are SSS and YSI; we maintain Extra Space Storage (NYSE:EXR) at Market Perform and Public Storage (NYSE:PSA) at Underperform."

Sovran closed Wednesday at $36.41, gaining $0.38, or 1.05 percent. U-Store-It ended the session at $8.38, up $0.11, or 1.33 percent. Extra Space closed at $16.36, rising by $0.34, or 2.12 percent. Public Storage was at $98.21, soaring $1.61, or 1.67 percent.