UPDATE 1-Sovran Q3 FFO beats Street, may sell non-core stores

* Q3 FFO/shr of $0.68 beats Street view of $0.66/shr

* Looking to sell several non-core stores in Q4, 2010

* Q3 same-store rev down 4 pct, NOI falls 4 pct

* Sees continuing leasing incentives

Nov 4 (Reuters) - Real estate investment trust Sovran Self Storage Inc (SSS.N) posted quarterly funds from operations that scraped past market estimates, helped by lower operating expenses, and said it was looking to sell several non-core stores in the fourth quarter and early 2010.

The storage REIT also said it will defer most of its planned 2009 expenditures of $50 million until market conditions improve, and has curtailed its expansion programs.

For the third quarter, Sovran reported FFO available to shareholders of $15.8 million, or 68 cents a share, compared with $18.2 million, or 84 cents a share, a year earlier.

Analysts on average were expecting Sovran to report FFO of 66 cents a share, according to Thomson Reuters I/B/E/S.

Operating expenses fell 3 percent to $31.3 million.

Same-store revenue dropped 4 percent to $49.3 million, while overall average quarterly occupancy was down to 82.3 percent from 83.3 percent a year earlier.

Sovran's net operating income (NOI) dropped 4 percent to $31.4 million from a year ago.

The recession -- the worst in several decades -- has sucked out demand for storage services as people viewed such expenses as discretionary.

The company said that it expected to continue its leasing incentives to improve occupancy. For 2009, it expects a same-store revenue decline of 2 percent to 4 percent.

Shares of Sovran closed at $29.20 Wednesday on the New York Stock Exchange. (Reporting by Biswarup Gooptu in Bangalore; Editing by Anne Pallivathuckal)