SELF STORAGE MARKET OVERVIEW - MJ...

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SELF STORAGE MARKET OVERVIEWFirst Quarter 2013 SUMMARY

• Robust revenue growth for each REIT, ranging from 5.4% to 8.1%, and net operating income growth of 7.6% to 10.8%.

• Slowfirstquarteracquisitionvolumebypubliccompaniesasestablishedprivateequitycompaniesdeploymorecapital.Publiccompaniesprefer“off-market”transactions,providingbetterpricingthanthroughabroker-marketedsales process.

• Increased Demand

U.S.homeownershipratefellduringfirstquarterto65%,thelowestlevelsince1995,frompeakof69.2%in2004,according to theU.S.CensusBureau.Theaveragehomeownermovesevery9years - about the sameoverpastdecade.Averagerentermovesevery2to3years.

“Relativeto2004,7.2millionmorerentersandonly400,000newhomeowners.” -Capital Economics

• “Our results continue to be the best I have seen in my 25 years in the business.” -Karl Haas, Chief Operating Officer, Extra Space Storage

• Publiccompaniescostofcapitalatrecord-lowlevelsrangingnear5%forequityand3%fordebt.

• Promotionaldiscountsdownover10%fromlastyear.PublicStoragediscountsdown18%

• AcquisitioncapratesforClassApropertiesinprimarymarketsinthe5’sanddriftinglower.Mid-marketpropertiesinsecondarymarketscapratesinhigh6’stolow7’s.

• Implied Cap Rates based on common share prices: PublicStorage(PSA) 4.3% Extra Space Storage (EXR) 4.7% CubeSmart (CUBE) 4.8% Sovran Self Storage (SSS) 6.0%

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SELF STORAGE MARKET OVERVIEWFirst Quarter 2013 EARNINGS RESULTS

Public Storage Extra Space Storage CubeSmart Sovran

Number of Properties: 2,103 U.S. 189 Europe

965 517 471

Third-Party Management:Joint Ventures:

35-40 236279

140 2155

RevenueQ1 2013 vs. last year:(same-store)

+5.4% +7.5% +6.8% +8.1%

Net Operating IncomeQ1 2013 vs. last year:(same-store)

+9.5% +10.8% +7.6% +10.6%

Occupancy:vs. last year:

92.4% 88.6%90.8% 85.7%

85.7%79.3%

87.6%82.9%

Rent Per Occupied Square Foot: $13.79 $13.61 $12.93 $10.61

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Public Storage Extra Space CubeSmart Sovran

REVENUE & NET OPERATING INCOMEQ1 2013 Versus One-Year Ago

Q1 2012 Q1 2013

PHYSICAL OCCUPANCYQ1 2013 Versus One-Year Ago

5.4%

7.5%6.8%

8.1%

9.5%

10.8%

7.6%

10.6%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

RevenueNet Operating Income

90.8%

92.4% Public Storage

85.7%

88.6% Extra Space

79.3%

85.7% CubeSmart

82.9%

87.6% Sovran

78.0%

80.0%

82.0%

84.0%

86.0%

88.0%

90.0%

92.0%

94.0%

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Public Storage Extra Space Storage CubeSmart Sovran

Market Capitalization $28.24 billion $4.84 billion $2.27 billion $2.11 billion

Funds From Operations (quarter)

$1.57/share $0.46/share(+39.4%)

$0.20/share(+25%)

$0.82/share

Dividend Per Common Share (quarter)

$1.25/share $0.25/share $0.11/share $0.45/share

Dividend Yield 3.00% 2.30% 2.60% 2.80%

Common Stock PriceMay10,2013:52-WeekRange:

$164.27$129.77 to $167.68

$43.72$27.55 to $44.50

$17.14$10.72 to $17.70

$69.41$46.93 to $70.71

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SELF STORAGE MARKET OVERVIEWFirst Quarter 2013 INVESTMENT ACTIVITY

PUBLIC STORAGE: • AcquiredtwoselfstoragefacilitiesinArizonaandGeorgiawith149,000netrentablesquarefeetinfirstquarterfortotalofapproxiomately$14million.

• Under contract to acquire one facility inArizona consisting of 80,000 net rentablesquarefeetfor$8millionincash.

• About$170millionofprojectsunderdevelopmentorredevelopment,andexpecttorampupmoreinnextonetotwoyears.

• Developmentsonaverage150to200basispointyieldpremiumoveracquisitions.

• Acquisitionscompleted in2010havegeneratedreturnsofabout10%cash-on-cash,excluding 10% insurance and merchandise. This represents 100 to 150 point spread aboveunderwritingprojections.

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EXTRA SPACE STORAGE: • Acquired partner’s interest in two existing joint ventures in the quarter forapproximately$12.9million,onepropertyinChicagoandoneinBaltimore.

• Fiveadditionalpropertiesundercontracttopurchaseforapproximately$53.6million,expectedtoclosebyendofsecondquarter.PropertieslocatedinHawaii,Maryland,North Carolina and Texas.

• Over9%morespacethanoneyearago.

• During the quarter, added 55 properties to third-partymanagement platform - 29propertiesonbehalfofKayneAndersonwithlocationsinFlorida,California,Ohio,and Indiana. Additional properties include 10 in Texas and 5 in Chicago.

• Acquisitiontargetscapratesinmid6’sorlow7’s,acknowledgingcertainhighqualitypropertiesinprimarymarketstradingatcapratesin5’sanddriftinglower.

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CUBESMART: • AcquiredoneassetinPhoenixmarketfor$6.9million.

• Inmarketsveryinterstedin6%to7%capratesforstabilizedassets.

• Disposition of five assets for total of $11.4millionwith locations inHouston andIndianapolismarkets.NowcompletesexitfromIndianapolismarket.

• Awarded9newmanagement contracts.Nowmanaging140properties totaling8.5millionsquarefeet.

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SOVRAN: • Acquired three self storage properties in first quarter for $22 million, featuringlocationsinSanAntonio(14thpropertyinthismarket),Boston(4thinmarket),andLongIsland(6thinthemarket),totalingapproximately131,000squarefeet.Fundedwithproceedsof“atthemarket”(ATM)commonstockoffering.

• Inplacecapratesof6.5%forSanAntonioacquisition(occupancy in low80’s),and5.1%inplacecaprateforLongIsland(occupancyinlow80’s).GreateropportunityforBostonacquisition,anewerconversionabout3.5yearsoldwithoccupancyof68%andlowinplacemarketrentsonly$13to$14whenacquired.

• AddedsevenstorestoUncleBob’sManagementplatforminthequarter.

• Sold$4.4millionequityinterestandmortgagenoteinjointventureconsistingofonefacility.

• Marketingforsalesixpropertiesforabout$30million.

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SELF STORAGE MARKET OVERVIEWFirst Quarter 2013 BALANCE SHEETS

PUBLIC STORAGE: • Issued5.2%PreferredSharesforgrossproceedsof$225million.

• Plans to issue additional Preferred Shares in near future to fund new development andacquisitions-hopefullybelow5%barrier.

• Approximately$400millioncashonhand.

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EXTRA SPACE STORAGE: • Percentageoffixed-ratedebttototaldebtis80.2%asofMarch31st.

• Weightedaverageinterestrateonfixedratedebtis4.6%,andonvariableratedebtis2.3%withcombinedaverageinterestrateof4.1%.

• Averageweightedmaturityofapproximately5.6years.

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CUBESMART: • Sold100,000commonsharesthroughits“at-the-market”equityprogramataveragesalespriceof$15.30pershare,resulting innetproceedsof$1.5million.3.8millionshares available for sale under existing Sales Agreement.

• Downto$24millionofdebtmaturitiesremainingin2013.

• Approximately$270millionavailableunderrevolvingcreditfacility.

• Declareddividendfor7.75%SeriesAPreferredSharesof$0.484375.

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SOVRAN: • Issued822,000sharesofcommonsstockviaATMprogram.Soldataveragepriceof$62.04,generatingnetproceedsof$50.2millionused to fundacquisitionsandpaydown line of credit balance.

• Allexcept$76millionoftotalcompanydebtiseitherfixedorcoveredbyrateswapcontractsthatessentiallyfixtherate.

• LineofcreditagreementatfloatingrateofLIBORplus2%.

• $6.9million cash onhand, $99million available on line of credit, plus $75millionavailable under expansion feature.

• Interest rates currentlyabout200basispoints lower than loansat current rates forSeptember maturities.

• KeyFinancialRatios:

DebttoEnterpriseValue(@$64.49/share) 24.3% DebttoBookCostofFacilities 36.9% Debt to EBITDA 4.7x DebttoServiceCoverage(DSC) 3.1x

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SELF STORAGE MARKET OVERVIEWFirst Quarter 2013 ADDITIONAL NOTES

PUBLIC STORAGE: • Net customer acquisition cost, consistingofmarketing andpromotionaldiscounts,declinedto$29pernewcustomerversus$31lastyear.

• Promotionaldiscountsdown18%.Lastyearalonegaveawayalmost$90millionofrental discounts.

• OccupancyatendofApril93%versus91.4%previousyearinApril.

• ExpectlowermediaandYellowPagesspendduetorecord-highoccupancies.

• Percentageoftenantsstayingoveroneyearis55.4%,about2,100totalmorethanoneyearago.

• Price increases expected on 70% to 75% of existing tenant base.

• BestPerformingRevenueGrowthMarkets: • Over 8% growth: • LosAngeles(largestmarket)+5.5%

Charlotte • San Francisco (second largest) +6.0% Denver NewYork

• MarketsPerformingBelowRevenueExpectations: • WashingtonD.C./NorthernVirginia +2%to3% • Philadelphia +1.5%

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PUBLIC STORAGE: • WesternEuropehastotalof1,400to1,500facilities,withabout800inGreatBritain.

• EuropeanPublicStoragepropertiesinsevencountries,occupancydownto80%from83.7%oneyearago.

• U.K.marketcontinuestobenegativelyimpactedbytheVATintroducedlastOctober,resulting inNetOperating Incomedeclineof 8%.Holland slowestmarketwith 30storeoccupancydroppingto70%.

• Moratoriumdeveloping new self storage properties in certain SouthernCaliforniamarketsincludingPasadenaandLongBeachforover8years.

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EXTRA SPACE STORAGE: • Pricing gap for rentals about 15% lower from internet reservations and quotes, ascomparedtowalk-insandcallers.

• StreetRatesincreased3%to4%year-over-year,discountsdownmorethan10%.

• Rateincreasesabout8%to9%onapproximately50,000customerspermonth.Incometaxincreaseshadlittleeffectonincreasingrents.

• Number of Properties:

Wholly Owned 450Joint Venture 279Third-Party Managed 236Total 965

• Increasedoccupancyto88.2%andrapidrevenuegrowthof17.66%for15Cincinnati-NorthernKentuckyassetsfromportfolioacquisitionofAmericanSelfStoragein2011.

• Chicagoarea12storesoccupancy90.9%,revenuegrowth9.41%.

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EXTRA SPACE STORAGE: • CapEx Budget approximately $0.35/sq. ft., and about the same for Repairs andMaintenanceExpensebudget.

• Solarpanelinvestmentshelpreduceelectricityexpensesabout10%.

• Almosthalfof7.5%rentalgrowthfromoccupancygains.

• GuidanceForFullYear:

-TenantInsuranceIncome: $34millionto$35million -Acquisitions: $150million

• Projectingtoincreasestreetrates4%to5%

• Tenantreinsurancerevenuegrowthof18%year-over-year.

• Tenantreinsurancepenetrationonnewtenantsisabove90%,andoverallpenetrationinthehigh60’s.Itwasinmid-60’soneyearago.

• Companyonthird-generationofrevenuemanagement.Today,tracking56differentinputsandvariablesandmetricstohelpdefinepricing.

• Solartaxcreditsprojectedat$5millionto$6millionin2013.

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CUBESMART: • 59%growthinwebreservationsversussametimelastyear.

• Salescenterexperiencedover25%increaseincallvolumeovercomparablequarterpreviousyear.

• 13.2%year-over-yearincreaseinsame-storemove-ins,vacatesup2%.

• Discountsdeclined10.9%fromfirstquarteroflastyear.

• Recentlywon3goldawards for sales andcustomer service--ContactCenterof theYear, Innovation in Customer Service, and Customer Service Department of the Year. MatchesDeltaAirlineswiththreefirst-placeawards.

• Scheduledannualwalk-inrentpersquarefootof$13.05,andincreaseof1.2%overbenchmarkJune30,2012.NewYorkCityaskingrentsupabout11%.

• StorageDeluxeyieldabitabove6%,andtargetingstabilized6.5%withmoreclaritynextquartersincestabilizedassetsnear87%occupancyandnon-stabilizedinlower80% range.

• Rate increases on existing customers of 6% to 8%.

• Consideringaddingsquarefootageandclimatecontrolspaceforanumberofassets.

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CUBESMART: • BestPerformingMarkets:

• Denver and Salt Lake City markets of 12 stores, 770 basis point increase inoccupancyto89.3%,11.6%revenuegain.

• Atlantamarketof10stores,610basispointincreaseinoccupancyto84.6%,8.7%gain in revenue.

• Florida’s51storesposted860basispointincreaseinoccupancytoabout86%,8.2%gain in revenue.

• Phoenix stores 560 basis point occupancy gain, 6.3% revenue growth. Thirdconsecutivequarterofstrongrevenuegrowth.

• Tucson370basisgaininoccupancy,2.2%revenuegrowth.

• Chicago 27 stores 5.4% revenue growth; Texas Major Markets 30 stores 6.9%revenuegrowth,Indiana/Ohio15stores6.5%revenuegrowth.

• InlandEmpire20assetsoccupancyupfrom72.4%to83.4%andrevenueup8.8%.

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SOVRAN: • Thirdconsecutivequarterrevenuegrowthofover8%,andnetoperatingincomeover10% growth.

• Projected$25millionexpansionandenhancementprogram.Alsobudgeted$13millionforrecurringcapitalexpendituresincludingroofing,paving,andofficerenovations.

• Mobiletrafficuniquevisitsup138%versusoveralltraffic.

• TenantInsurancepenetrationrateoverall52%,andcapturing79.6%ofnewcustomers.

• YellowPagesadvertisingdownto$600,000to$650,000annually,from$4.5millionfouryearsago.Mostly line listingsexceptcertainareaswith lowinternetuse, includingGulfCoastregions.

• Marginsof15%to20%onmanagedstores,and65%onwholly-ownedstores.

• OccupancyatendofApril88.2%,430basispointsabovesametimelastyear.

• Thirdpartymanagementfeesaddedalmost$170,000thisquarter.

• Askingratesup5.9%infirstquarter.

• Incentivesoffereddownsignificantlyfrom82%to73%,withincentivevaluedowntoabout$65permonth.

• Averagelengthofcustomerstayoveroneyear,anincreaseof2%.Ofallcustomers,55.3%staymorethanoneyear.

• Same store operating expenses increased 3.3% in first quarter primarily due toincreasedsnowremovalcosts,propertytaxes,andcreditcardfees.

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