Table of Contents

 

 

 

**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, DC 20549**

 

**FORM 10-K**

 

**x**      ANNUALREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934

** **

**For the fiscal year ended December 31, 2009**

** **

**OR**

** **

**o**         TRANSITION REPORT PURSUANT TO SECTION 13OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

** **

**For the transition period from            to            **

 

**Commission file number 001-32324**

 

**U-STORE-IT TRUST**

(Exact Name of Registrant as Specified in ItsCharter)

 

| **Maryland**                             | ** ** | **20-1024732**      |
|------------------------------------------|------------|---------------------|
| (State or Other Jurisdiction of          |       | (IRS Employer       |
| Incorporation or Organization)           |       | Identification No.) |
| ** **                               | ** ** | ** **          |
| **460 East Swedesford Road**             | ** ** | ** **          |
| **Suite 3000**                      |       |                |
| **Wayne, Pennsylvania**                  | ** ** | **19087**           |
| (Address of Principal Executive Offices) | * *   | (Zip Code)          |

 

Registrant’s telephone number, including areacode**(610) 293-5700**

 

Securities registered pursuant to Section 12(b) ofthe Act:

 

| **Title of each class**        | ** ** | **Name of each exchange on which registered** |
|-----------------------------------------------|------------|-----------------------------------------------------------------------------|
| Common Shares, $0.01 par value per share |       | New York Stock Exchange                                                     |

 

Securities registered pursuant to Section 12(g) ofthe Act:

**None**

 

Indicate by check mark if theregistrant is a well-known seasoned issuer, as defined in Rule 405 of theSecurities Act.  **YES****o********NO** x

 

Indicate by check mark if theregistrant is not required to file reports pursuant to Section 13 or Section 15(d) ofthe Act.  **YES**o**NO** **x**

 

Indicate by check markwhether the registrant: (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months, and (2) has been subject to such filing requirements forthe past 90 days.  **YES** **x****NO****o**

 

Indicate by check markwhether the registrant has submitted electronically and posted on its corporateWeb site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T during the preceding 12months (or for such shorter period that the registrant was required to submitand post such files).  Yes o No o

 

Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 ofRegulation S-K is not contained herein, and will not be contained, to thebest of registrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K.  o

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer or a smaller reporting company. See definitions of “largeaccelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2of the Exchange Act:

 

| Large  Accelerated Filer o    |   | Accelerated  Filer **x**     |
|-------------------------------|--------|-----------------------------------|
|                          |   |                              |
| Non-Accelerated  Filer o |   | Smaller  Reporting Company o |

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).  **YES**o**NO****x**

 

As of June 30, 2009, thelast business day of the registrant’s most recently completed second quarter,the aggregate market value of common shares held by non-affiliates of theregistrant was $294,674,470.

 

As of February 26, 2010the number of common shares of the registrant outstanding was 92,864,448.

 

Documents incorporated byreference: Portions of the Proxy Statement for the 2010 Annual Meeting ofShareholders of the Registrant to be filed subsequently with the SEC areincorporated by reference into Part III of this report.

 

 

 

----

Table of Contents

 

**TABLEOF CONTENTS**

 
| **PART I**   |                                                                                                                | 3      |
|-------------------|---------------------------------------------------------------------------------------------------------------------|--------|
|              |                                                                                                                |   |
| Item 1.      | Business                                                                                                            | 4      |
|              |                                                                                                                |   |
| Item 1A.     | Risk Factors                                                                                                        | 9      |
|              |                                                                                                                |   |
| Item 1B.     | Unresolved Staff  Comments                                                                                          | 21     |
|              |                                                                                                                |   |
| Item 2.      | Properties                                                                                                          | 22     |
|              |                                                                                                                |   |
| Item 3.      | Legal Proceedings                                                                                                   | 30     |
|              |                                                                                                                |   |
| Item 4.           | Reserved                                                                                                            | 30     |
|              |                                                                                                                |   |
| **PART II**  |                                                                                                                | 31     |
|              |                                                                                                                |   |
| Item 5.      | Market for  Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases  of Equity Securities | 31     |
|              |                                                                                                                |   |
| Item 6.      | Selected Financial  Data                                                                                            | 34     |
|              |                                                                                                                |   |
| Item 7.      | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                         | 37     |
|              |                                                                                                                |   |
| Item 7A.     | Quantitative  and Qualitative Disclosures About Market Risk                                                         | 52     |
|              |                                                                                                                |   |
| Item 8.      | Financial  Statements and Supplementary Data                                                                        | 52     |
|              |                                                                                                                |   |
| Item 9.      | Changes in and Disagreements with  Accountants on Accounting and Financial Disclosure                               | 52     |
|              |                                                                                                                |   |
| Item 9A.     | Controls and  Procedures                                                                                            | 52     |
|              |                                                                                                                |   |
| Item 9B.     | Other Information                                                                                                   | 53     |
|              |                                                                                                                |   |
| **PART III** |                                                                                                                | 53     |
|              |                                                                                                                |   |
| Item 10.     | Trustees,  Executive Officers and Corporate Governance                                                              | 53     |
|              |                                                                                                                |   |
| Item 11.     | Executive  Compensation                                                                                             | 53     |
|              |                                                                                                                |   |
| Item 12.     | Security Ownership of Certain Beneficial  Owners and Management and Related Shareholder Matters                     | 53     |
|              |                                                                                                                |   |
| Item 13.     | Certain  Relationships and Related Transactions, and Trustee Independence                                           | 54     |
|              |                                                                                                                |   |
| Item 14.     | Principal  Accountant Fees and Services                                                                             | 54     |
|              |                                                                                                                |   |
| **PART IV**  |                                                                                                                | 54     |
|              |                                                                                                                |   |
| Item 15.     | Exhibits and  Financial Statement Schedules                                                                         | 54     |

 

2

----

Table of Contents

 

**PART I**

 

**Forward-LookingStatements**

 

This Annual Report on Form 10-K and other statementsand information publicly disseminated by U-Store-It Trust (“we,” “us,” “our” orthe “Company”), contain certain forward-looking statements within the meaningof Section 27A of the Securities Act of 1933 and Section 21E of theSecurities Exchange Act of 1934, as amended (the “Exchange Act”). Suchstatements are based on estimates, assumptions and expectations that may not berealized and are inherently subject to risks and uncertainties, many of whichwe cannot predict with accuracy and some of which we might not even anticipate.Although we believe the estimates, assumptions and expectations reflected inthese forward-looking statements are reasonable, our actual performance maydiffer materially from the results expressed or implied by the forward-lookingstatements.  Risks, uncertainties andother factors that might cause such differences, some of which could bematerial, include, but are not limited to:

 

·         changesin national and local economic, business, real estate and other marketconditions which, among other things, reduce demand for self-storage facilitiesor increase costs of owning and operating self-storage facilities;

 

·         competitionfrom other self-storage facilities and storage alternatives, which could resultin lower occupancy and decreased rents;

 

·         theexecution of our business plan;

 

·         financingrisks including the risk of over-leverage and the corresponding risk of defaulton our mortgage and other debt and potential inability to refinance existingindebtedness;

 

·         increasesin interest rates and operating costs;

 

·         counterpartynon-performance related to the use of derivative financial instruments;

 

·         ourability to maintain our status as a real estate investment trust (“REIT”) forfederal income tax purposes;

 

·         acquisitionand development risks, including unanticipated costs associated with theintegration and operation of acquisitions;

 

·         risks of investing through joint ventures, includingrisks that our joint venture partners may not fulfill their obligations or maypursue actions that are inconsistent with our objectives;

 

·         changesin real estate and zoning laws or regulations;

 

·         risksrelated to natural disasters;

 

·         potentialenvironmental and other liabilities; and

 

·         otherrisks identified in Item 1A of this Annual Report on Form 10-K and, fromtime to time, in other reports we file with the Securities and ExchangeCommission (the “SEC”) or in other documents that we publicly disseminate.

 

Given these uncertainties and the other risksidentified elsewhere in this Annual Report on Form 10-K, we cautionreaders not to place undue reliance on forward-looking statements.  We undertake no obligation to publicly updateor revise these forward-looking statements, whether as a result of newinformation, future events or otherwise except as may be required by securitieslaws.

 

3

----

Table of Contents

 

**ITEM 1.  *BUSINESS***

 

**Overview**

 

We are a self-administered and self-managed realestate company focused primarily on the ownership, operation, acquisition anddevelopment of self-storage facilities in the United States.

 

As of December 31, 2009, we owned 367self-storage facilities located in 26 states and in the District of Columbia containing an aggregate ofapproximately 23.7 million rentable square feet.  As of December 31, 2009, approximately75.2% of the rentable square footage at our facilities was leased toapproximately 150,000 tenants, and no single tenant represented a significantconcentration of our revenues.

 

Our self-storage facilities are designed to offeraffordable, easily-accessible and secure storage space for our residential andcommercial customers. Our customers rent storage units for their exclusive use,typically on a month-to-month basis. Additionally, some of our facilities offeroutside storage areas for vehicles and boats. Our facilities are specificallydesigned to accommodate both residential and commercial customers, withfeatures such as security systems and wide aisles and load-bearing capabilitiesfor large truck access. All of our facilities have an on-site manager duringbusiness hours, and 249, or approximately 68%, of our facilities have a managerwho resides in an apartment at the facility. Our customers can access theirstorage units during business hours, and some of our facilities providecustomers with 24-hour access through computer controlled access systems. Ourgoal is to provide customers with the highest standard of facilities and servicein the industry. To that end, approximately 68% of our facilities includeclimate controlled units, compared to the national average of 49% reported bythe 2009 Self-Storage Almanac.

 

We were formed in July 2004 as a MarylandREIT.  We own our assets and conduct ourbusiness through our operating partnership, U-Store-It, L.P. (our “OperatingPartnership”), and its subsidiaries.  Wecontrol the Operating Partnership as its sole general partner and, as of December 31,2009, we owned an approximately 95.1% interest in the OperatingPartnership.  Our Operating Partnershiphas been engaged in virtually all aspects of the self-storage business,including the development, acquisition, ownership and operation of self-storagefacilities.

 

**Acquisition and Disposition Activity**

 

As of December 31, 2009and 2008, we owned 367 and 387 facilities, respectively, that contained anaggregate of 23.7 million and 25.0 million rentable square feet with occupancyrates of 75.2% and 78.9%, respectively. As of December 31, 2009 we had facilities in the District of Columbia and the following 26states: Alabama, Arizona, California,Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Louisiana,Maryland, Massachusetts, Michigan, Mississippi, Nevada, New Jersey, New Mexico,New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Utah, Virginiaand Wisconsin.   A complete listing of,and additional information about, our facilities is included in Item 2 of thisAnnual Report on Form 10-K.  Thefollowing is a summary of our 2009 and 2008 acquisition and dispositionactivity:

 

4

----

Table of Contents

 
| **Facility/Portfolio**                 | ** ** | **Location**                 | ** ** | **Transaction Date** | ** ** | **Number of Facilities** | ** ** | **Purchase / Sales  Price (in thousands)** | ** ** |
|----------------------------------------|------------|------------------------------|------------|----------------------|------------|--------------------------|------------|--------------------------------------------|------------|
| * *                               |       |                         |       |                 |       |                     |       |                                       |       |
| *2009 Dispositions:*                   |       |                         |       |                 |       |                     |       |                                       |       |
| * *                               |       |                         |       |                 |       |                     |       |                                       |       |
| 68th  Street Asset                     |       | Miami,  FL                   |       | January 2009    |       | 1                        |       | $                                          | 2,973      |   |
| Albuquerque,  NM Asset                 |       | Albuquerque,  NM             |       | April 2009      |       | 1                        |       | 2,825                                      |       |
| S.  Palmetto Asset                     |       | Ontario,  CA                 |       | June 2009       |       | 1                        |       | 5,925                                      |       |
| Hotel  Circle Asset                    |       | Albuquerque,  NM             |       | July 2009       |       | 1                        |       | 3,600                                      |       |
| Jersey  City Asset                     |       | Jersey  City, NJ             |       | August 2009     |       | 1                        |       | 11,625                                     |       |
| Dale  Mabry Asset                      |       | Tampa,  FL                   |       | August 2009     |       | 1                        |       | 2,800                                      |       |
| Winner  Assets                         |       | Multiple  locations in CO    |       | September 2009  |       | 6                        |       | 17,300                                     |       |
| Baton  Rouge Asset (Eminent Domain)    |       | Baton  Rouge, LA             |       | September 2009  |       | (b)                      |       | 1,918                                      |       |
| North  H Street Asset (Eminent Domain) |       | San  Bernardino, CA          |       | September 2009  |       | 1                        |       | (c)                                        |       |
| Boulder  Assets (a)                    |       | Boulder,  CO                 |       | September 2009  |       | 4                        |       | 32,000                                     |       |
| Winner  Assets                         |       | Multiple  locations in CO    |       | October 2009    |       | 2                        |       | 6,600                                      |       |
| Brecksville  Asset                     |       | Brecksville,  OH             |       | November 2009   |       | 1                        |       | 3,300                                      |       |
|                                   |       |                         |       |                 |       | 20                       |       | $                                          | 90,866     |   |
| *2008 Acquisitions:*                   |       |                         |       |                 |       |                     |       |                                       |       |
| * *                               |       |                         |       |                 |       |                     |       |                                       |       |
| Uptown  Asset                          |       | Washington,  DC              |       | January 2008    |       | 1                        |       | $                                          | 13,300     |   |
|                                   |       |                         |       |                 |       |                     |       |                                       |       |
| *2008 Dispositions:*                   |       |                         |       |                 |       |                     |       |                                       |       |
| * *                               |       |                         |       |                 |       |                     |       |                                       |       |
| 77th  Street Asset                     |       | Miami,  FL                   |       | March 2008      |       | 1                        |       | $                                          | 2,175      |   |
| Leesburg  Asset                        |       | Leesburg,  FL                |       | March 2008      |       | 1                        |       | 2,400                                      |       |
| Lakeland  Asset                        |       | Lakeland,  FL                |       | April 2008      |       | 1                        |       | 2,050                                      |       |
| Endicott  Asset                        |       | Union,  NY                   |       | May 2008        |       | 1                        |       | 2,250                                      |       |
| Linden  Asset                          |       | Linden,  NJ                  |       | June 2008       |       | 1                        |       | 2,825                                      |       |
| Baton  Rouge/Prairieville Assets       |       | Multiple  locations in LA    |       | June 2008       |       | 2                        |       | 5,400                                      |       |
| Churchill  Assets                      |       | Multiple  locations in MS    |       | August 2008     |       | 4                        |       | 8,333                                      |       |
| Biloxi/Gulf  Breeze Assets             |       | Multiple  locations in MS/FL |       | September 2008  |       | 2                        |       | 10,760                                     |       |
| Deland  Asset                          |       | Deland,  FL                  |       | September 2008  |       | 1                        |       | 2,780                                      |       |
| Mobile  Assets                         |       | Mobile,  AL                  |       | September 2008  |       | 2                        |       | 6,140                                      |       |
| Hudson  Assets                         |       | Hudson,  OH                  |       | October 2008    |       | 2                        |       | 2,640                                      |       |
| Stuart/Vero  Beach Assets              |       | Multiple  locations in FL    |       | October 2008    |       | 2                        |       | 4,550                                      |       |
| Skipper  Road Assets                   |       | Multiple  locations in FL    |       | November 2008   |       | 2                        |       | 5,020                                      |       |
| Waterway  Asset                        |       | Miami,  FL                   |       | December 2008   |       | 1                        |       | 4,635                                      |       |
|                                   |       |                         |       |                 |       | 23                       |       | $                                          | 61,958     |   |

 

----

(a)          We provided $17.6 million in sellerfinancing to the buyer as part of the Boulder Assets disposition.

(b)         Approximately one third of the BatonRouge Asset was taken in conjunction with eminent domain proceedings.  We continue to own and operate the remainingtwo thirds of the asset and include the asset in our total portfolio propertycount.

(c)          The entirety of the North H Street Assetwas taken in conjunction with eminent domain proceedings and we have removedthis asset from our total portfolio asset count.  We expect to finalize compensatory terms withdiscussions with the State of California by the fourth quarter of 2010.

 

The following table summarizes the change in number ofour self-storage facilities from January 1, 2008 through December 31,2009:

 

5

----

Table of Contents

 
| ** **                       | ** ** | **2009** | ** ** | **2008** | ** ** |
|----------------------------------|------------|----------|------------|----------|------------|
| Balance - Beginning of year      |       | 387      |       | 409      |       |
| Facilities  acquired             |       | —   |       | 1        |       |
| Facilities  sold/ eminent domain |       | (20      | )          | (23      | )          |
| Balance  - End of year           |       | 367      |       | 387      |       |

 

**Financing Activities**

 

The following summarizes certain financing activitiesduring the year ended December 31, 2009:

 

·      *New Credit Facility.*  On December 8, 2009, we and ourOperating Partnership entered into a three-year, $450 million secured creditfacility with Wells Fargo Securities, LLC and Banc of America Securities LLC,as joint lead arrangers.  Our new creditfacility is comprised of a $200 million secured term loan and a $250 millionsecured revolving credit facility.  Ournew credit facility replaced our previous $450 million unsecured creditfacility.  As of December 31, 2009,$200 million was outstanding under the term loan portion of the new creditfacility and no amounts were outstanding under the revolving portion of the newcredit facility.  The interest rate underthe credit facility depends on our leverage levels and ranges from 3.25% to4.00% over LIBOR, with a LIBOR floor of 1.5%. Amounts that we repay under theterm loan may not be re-borrowed.  We,together with our wholly-owned subsidiaries, USI II, LLC and YSI XXIX, L.P.,are guarantors under the new credit facility. The new credit facility contains customary affirmative and negativecovenants, including restrictions on distributions to our shareholders, andfinancial covenants, including liquidity and net worth requirements.  Our ability to borrow from time to time underthe revolver is subject to our ongoing compliance with these covenants.

 

·      *Small Mortgages —**Regional Bank Financings*. During 2009, we obtained an aggregate of $119.8 million in securedfinancings with 17 community and regional banks.  These loans, which range in size from $1.1million to $25.6 million, are secured by mortgages on 45 of ourproperties.  The weighted averagematurity of these loans at December 31, 2009 was 6.6 years and theweighted average interest rate of the loans is 7.01%.  These loans contain customary affirmative,negative and financial covenants.  We orthe Operating Partnership are guarantors under each of these loans forcustomary non-recourse carve-outs.

 

·      *Joint Venture. *On August 13, 2009, weconsummated a joint venture with an affiliate of Heitman, LLC. We contributed22 properties to this joint venture, which are located in eight states, andreceived a distribution of approximately $51 million in cash at closing and a50% interest in this joint venture, which we consolidate.  We used the proceeds distributed to us by thejoint venture to reduce the outstanding balance under our prior unsecuredcredit facility and for general corporate purposes.  We provide day-to-day management services forthe properties of the joint venture in exchange for a market-rate managementfee.

 

·      *Public Offering. *On August 19, 2009, wesold 32.2 million common shares of beneficial interest for net proceeds ofapproximately $161.9 million. Additionally, during 2009 we sold 2.5 million shares in conjunction withour at the market program for net proceeds of approximately $9.7 million.  We used the net proceeds from these issuancesto repay existing indebtedness, including under our prior unsecured creditfacility, and for general corporate purposes.

 

**Business Strategy**

 

Our business strategy consists of several elements:

 

·         **Maximize cash flow from our facilities** — Our operating strategyfocuses on maximizing sustainable rents at our facilities while achieving andsustaining occupancy targets. We utilize our operating systems and experiencedpersonnel to manage the balance between rental rates, discounts, and physicaloccupancy with an objective of maximizing our rental revenue.

 

6

----

Table of Contents

 

·         **Acquire facilities within targeted markets** — Although our business plan doesnot contemplate significant facilities acquisitions in 2010, we expect tocontinue selective acquisitions in markets that we believe have high barriersto entry, strong demographic fundamentals and demand for storage in excess ofstorage capacity.  We expect to focus ourevaluation of acquisition opportunities in markets where we currently maintainmanagement that can be extended to additional facilities.  We believe the self-storage industry willcontinue to afford us opportunities for growth through acquisitions due to thehighly fragmented composition of the industry.

 

**Investment and Market SelectionProcess**

 

We maintain a disciplined and focused process in theacquisition and development of self-storage facilities. Our investmentcommittee, comprised of executive officers and led by Dean Jernigan, our ChiefExecutive Officer, oversees our investment process.  Our investment process involves sixstages — identification, initial due diligence, economic assessment,investment committee approval (and when required, Board approval), final duediligence, and documentation. Through our investment committee, we intend tofocus on the following criteria:

 

·         **Targeted markets** — Our targeted markets include areas wherewe currently maintain management that can be extended to additional facilities,or where we believe that we can acquire a significant number of facilitiesefficiently and within a short period of time. We evaluate both the broadermarket and the immediate area, typically five miles around the facility, fortheir ability to support above-average demographic growth. We seek to increaseour presence primarily in areas that we expect will experience growth,including areas within Illinois, Texas, Florida and the Northeastern UnitedStates and to enter new markets should suitable opportunities arise.

 

·         **Quality of facility** — We focus on self-storage facilities thathave good visibility and are located near retail centers, which typicallyprovide high traffic corridors and are generally located near residentialcommunities and commercial customers.

 

·         **Growth potential** — We target acquisitions that offer growthpotential through increased operating efficiencies and, in some cases, throughadditional leasing efforts, renovations or expansions. In addition to acquiringsingle facilities, we seek to invest in portfolio acquisitions, including thoseoffering significant potential for increased operating efficiency and theability to spread our fixed costs across a large base of facilities.

 

**Operating Segment**

 

We have one reportable operating segment: we own,operate, develop, and acquire self-storage facilities.

 

**Concentration**

 

Our self-storage facilities are located in majormetropolitan areas as well as rural areas and have numerous tenants perfacility.  No single tenant represented asignificant concentration of our 2009 revenues. Our facilities in Florida,California, Texas and Illinois provided approximately 18%, 15%, 10% and 7%,respectively, of our total 2009 revenues. Our facilities in these states provided approximately 19%, 15%, 9% and7%, respectively, of our total 2008 revenues.

 

**Seasonality**

 

We typically experience seasonal fluctuations inoccupancy levels at our facilities, with the levels generally slightly higherduring the summer months due to increased moving activity.

 

**Financing Strategy**

 

Although our organizational documents contain nolimitation on the amount of debt we may incur, we maintain a capital structurethat we believe is reasonable and prudent and that will enable us to have amplecash flow to cover debt service and make distributions to our shareholders. Asof December 31, 2009, our debt to total capitalization ratio (determinedby dividing the carrying value of our total indebtedness by the sum of (a) themarket value of our outstanding common shares and operating partnership unitsand (b) the carrying value of our total indebtedness) was approximately51.9%. Our ratio of debt to the depreciated cost of our real estate assets asof December 31, 2009 was approximately 53.7% compared to approximately62.7% as of December 31, 2008.  Weexpect to finance additional investments in self-storage facilities through themost attractive available source of capital at the time of the transaction, ina manner consistent with maintaining a strong

 

7

----

Tableof Contents

 

financial position and future financial flexibility.These capital sources may include borrowings under the revolving portion of oursecured credit facility and through additional secured financings, sales ofcommon or preferred shares in public offerings or private placements, issuancesof common or preferred units in our Operating Partnership in exchange forcontributed properties or cash and formations of joint ventures. We also maysell facilities that we no longer view as core assets and reallocate the salesproceeds to fund other growth.

 

**Competition**

 

New self-storage facility development has intensifiedthe competition among self-storage operators in many market areas in which weoperate. Self-storage facilities compete based on a number of factors,including location, rental rates, security, suitability of the facility’sdesign to prospective customers’ needs and the manner in which the facility isoperated and marketed. In particular, the number of competing self-storagefacilities in a particular market could have a material effect on our occupancylevels, rental rates and on the overall operating performance of ourfacilities. We believe that the primary competition for potential customers ofany of our self-storage facilities comes from other self-storage facilitieswithin a three-mile radius of that facility. We believe we have positioned ourfacilities within their respective markets as high-quality operators thatemphasize customer convenience, security and professionalism.

 

Our key competitors include local and regionaloperators as well as the other public self-storage REITS, including PublicStorage, Sovran Self Storage and Extra Space Storage Inc. These companies, someof which operate significantly more facilities than we do and have greaterresources than we have, and other entities may generally be able to accept morerisk than we determine is prudent, including risks with respect to thegeographic proximity of facility investments and the payment of higher facilityacquisition prices. This competition may generally reduce the number ofsuitable acquisition opportunities available to us, increase the price requiredto be able to consummate the acquisition of particular facilities and reducethe demand for self-storage space in certain areas where our facilities arelocated. Nevertheless, we believe that our experience in operating, acquiring,developing and obtaining financing for self-storage facilities should enable usto compete effectively.

 

**Government Regulation**

 

We are subject to various laws, ordinances andregulations, including regulations relating to lien sale rights and proceduresand various federal, state and local environmental regulations that applygenerally to the ownership of real property and the operation of self-storagefacilities.

 

Under various federal, state and local laws,ordinances and regulations, an owner or operator of real property may becomeliable for the costs of removal or remediation of hazardous substances releasedon or in its property. These laws often impose liability without regard towhether the owner or operator knew of, or was responsible for, the release ofsuch hazardous substances. The presence of hazardous substances, or the failureto properly remediate such substances, when released, may adversely affect theproperty owner’s ability to sell the real estate or to borrow using real estateas collateral, and may cause the property owner to incur substantialremediation costs. In addition to claims for cleanup costs, the presence ofhazardous substances on a property could result in a claim by a private partyfor personal injury or a claim by an adjacent property owner or user forproperty damage. We may also become liable for the costs of removal orremediation of hazardous substances stored at the facilities by a customer eventhough storage of hazardous substances would be without our knowledge orapproval and in violation of the customer’s storage lease agreement with us.

 

Our practice is to conduct or obtain environmentalassessments in connection with the acquisition or development of additionalfacilities. Whenever the environmental assessment for one of our facilitiesindicates that a facility is impacted by soil or groundwater contamination fromprior owners/operators or other sources, we will work with our environmentalconsultants and where appropriate, state governmental agencies, to ensure thatthe facility is either cleaned up, that no cleanup is necessary because the lowlevel of contamination poses no significant risk to public health or theenvironment, or that the responsibility for cleanup rests with a third party.

 

We are not aware of any environmental cleanupliability that we believe will have a material adverse effect on us. We cannotassure you, however, that these environmental assessments and investigationshave revealed or will reveal all potential environmental liabilities, that noprior owner created any material environmental condition not known to us or theindependent consultant or that future events or changes in environmental lawswill not result in the imposition of environmental liability on us.

 

8

----

Table of Contents

 

We have not received notice from any governmentalauthority of any material noncompliance, claim or liability in connection withany of our facilities, nor have we been notified of a claim for personal injuryor property damage by a private party in connection with any of our facilitiesrelating to environmental conditions.

 

We are not aware of any environmental condition withrespect to any of our facilities that could reasonably be expected to have amaterial adverse effect on our financial condition or results of operations,and we do not expect that the cost of compliance with environmental regulationswill have a material adverse effect on our financial condition or results ofoperations. We cannot assure you, however, that this will continue to be thecase.

 

**Insurance**

 

We carry comprehensive liability, fire, extendedcoverage and rental loss insurance covering all of the facilities in ourportfolio. We believe the policy specifications and insured limits areappropriate and adequate given the relative risk of loss, the cost of thecoverage and industry practice. We do not carry insurance for losses such asloss from riots, war or acts of God, and, in some cases, environmental hazards,because such coverage is not available or is not available at commerciallyreasonable rates. Some of our policies, such as those covering losses due toterrorist activities, hurricanes, floods and earthquakes, are insured subjectto limitations involving large deductibles or co-payments and policy limitsthat may not be sufficient to cover losses. We also carry liability insurance to insure against personal injuriesthat might be sustained on our properties and director and officer liabilityinsurance.

 

**Offices**

 

Our principal executive office is located at 460 E.Swedesford Road, Suite 3000, Wayne, PA 19087. Our telephone number is (610) 293-5700. We believe that ourcurrent facilities are adequate for our present and future operations.

 

**Employees**

 

As of December 31, 2009, we employed 953employees, of whom 145 were corporate executive and administrative personneland 808 were property level personnel. We believe that our relations with ouremployees are good.  Our employees arenot unionized.

 

**Available Information**

 

We file our annual report on Form 10-K, quarterlyreports on Form 10-Q, current reports on Form 8-K, and amendments tothose reports with the Securities and Exchange Commission (the “SEC”).  You may obtain copies of these documents byvisiting the SEC’s Public Reference Room at 100 F Street, N.E.,Washington, D.C. 20549, by calling the SEC at 1-800-SEC-0330 or byaccessing the SEC’s website at www.sec.gov. Our internet website address is www.ustoreit.com.  You alsocan obtain on our website, free of charge, a copy of our annual report on Form 10-K,our quarterly reports on Form 10-Q, our current reports on Form 8-K,and any amendments to those reports, as soon as reasonably practicable after weelectronically file such reports or amendments with, or furnish them to, theSEC. Our internet website and the information contained therein or connectedthereto are not intended to be incorporated by reference into this AnnualReport on Form 10-K.

 

Also available on our website, free of charge, arecopies of our Code of Business Conduct and Ethics, our Corporate GovernanceGuidelines, and the charters for each of the committees of our Board ofTrustees — the Audit Committee, the Corporate Governance andNominating Committee, and the Compensation Committee. Copies of each of thesedocuments are also available in print free of charge, upon request by anyshareholder. You can obtain copies of these documents by contacting InvestorRelations by mail at 460 E. Swedesford Road, Suite 3000, Wayne, PA 19087.

 

**ITEM 1A.  *RISK FACTORS***

 

**Overview**

 

Investors should carefully consider, among otherfactors, the risks set forth below. These risks are not the only ones that wemay face. Additional risks not presently known to us or that we currentlyconsider immaterial may also impair our business operations and hinder ourability to make expected distributions to our shareholders.

 

9

----

Table of Contents

 

***Weface risks related to current debt maturities, including refinancing andcounterparty risk.***

 

Approximately 15% (orapproximately $115 million) of the aggregate principal amount of our totaldebt, including our mortgage and revolving indebtedness is due on or before December 31,2010.  Certain of our mortgages will havesignificant outstanding balances on their maturity dates, commonly known as “balloonpayments.”  We may not have the cashresources available to repay those amounts, and we may have to raise funds forsuch repayment either through the issuance of capital stock, additionalborrowings (which may include extension of maturity dates), joint ventures orasset sales.  There can be no assurancethat we will be able to refinance the debt on favorable terms or at all. To theextent we cannot refinance debt on favorable terms or at all, we may be forcedto dispose of properties on disadvantageous terms or pay higher interest rates,either of which would have an adverse impact on our financial performance andability to pay dividends to investors

 

In addition, we may beexposed to the potential risk of counterparty default or non-payment withrespect to interest rate hedges, swap agreements, floors, caps and otherinterest rate hedging contracts that we may enter into from time to time, inwhich event we could suffer a material loss on the value of thoseagreements.  Although these agreementsmay lessen the impact of rising interest rates on us, they also expose us tothe risk that other parties to the agreements will not perform or that wecannot enforce the agreements.  There isno assurance that our potential counterparties on these agreements are likelyto perform their obligations under such agreements.

 

***Financing ourfuture growth plan or refinancing existing debt maturities could be impacted bynegative capital market conditions.***

 

Recently, domestic financial markets have experiencedextreme volatility and uncertainty. Overall liquidity has tightened in thedomestic financial markets, including the investment grade debt and equitycapital markets for which we historically sought financing. Consequently, thereis greater uncertainty regarding our ability to access the credit markets inorder to attract financing on reasonable terms nor can there be any assurancewe can issue common or preferred equity securities at a reasonable price. Ourability to finance new acquisitions and refinance future debt maturities couldbe adversely impacted by our inability to secure permanent financing onreasonable terms, if at all.

*** ***

***The terms andcovenants relating to our indebtedness could adversely impact our economicperformance.***

*** ***

Like other real estate companies that incur debt, weare subject to risks associated with debt financing, such as the insufficiencyof cash flow to meet required debt service payment obligations and theinability to refinance existing indebtedness.  If our debt cannot be paid,refinanced or extended at maturity, we may not be able to make distributions toshareholders at expected levels or at all and may not be able to acquire newproperties.  Failure to make distributions to our shareholders couldresult in our failure to qualify as a REIT for federal income taxpurposes.  Furthermore, an increase inour interest expense could adversely affect our cash flow and ability to makedistributions to shareholders.  If we donot meet our debt service obligations, any facilities securing suchindebtedness could be foreclosed on, which would have a material adverse effecton our cash flow and ability to make distributions and, depending on the numberof facilities foreclosed on, could threaten our continued viability.

 

Our secured credit facility contains (and any new oramended facility we may enter into from time to time will likely contain)customary affirmative and negative covenants, including financial covenantsthat, among other things, require us to comply with certain liquidity and networth tests.  Our ability to borrow underour credit facility is (and any new or amended facility we may enter into fromtime to time will be) subject to compliance with such financial and othercovenants.  In the event that we fail tosatisfy these covenants, we would be in default under the credit facility andmay be required to repay such debt with capital from other sources.  Under such circumstances, other sources ofdebt or equity capital may not be available to us, or may be available only onunattractive terms.  Moreover, thepresence of such covenants in our credit agreements could cause us to operateour business with a view toward compliance with such covenants, which might notproduce optimal returns for shareholders.

 

Increases in interest rates on variable rateindebtedness would increase our interest expense, which could adversely affectour cash flow and ability to make distributions to shareholders.  Rising interest rates could also restrict ourability to refinance existing debt when it matures.  In addition, anincrease in interest rates could decrease the amounts that third parties arewilling to pay for our assets, thereby limiting our ability to alter ourportfolio promptly in relation to economic or other conditions.  We may enter into, from time to time,agreements such as interest rate hedges, swap agreements, floors, caps andother interest rate hedging contracts with respect to a portion of our variablerate debt.  Although such agreements maylessen

 

10

----

Tableof Contents

 

the impact of rising interest rates on us, they alsoexpose us to the risk that other parties to the agreements will not perform orthat we cannot enforce the agreements. There is no assurance that our potential counterparties on swapagreements are likely to perform their obligations under such agreements.

 

***Our organizational documentscontain no limitation on the amount of debt we may incur.  As a result, we may become highly leveragedin the future.***

 

Our organizational documents contain no limitations onthe amount of indebtedness that we or our operating partnership may incur. Wecould alter the balance between our total outstanding indebtedness and the valueof our assets at any time. If we become more highly leveraged, then theresulting increase in debt service could adversely affect our ability to makepayments on our outstanding indebtedness and to pay our anticipateddistributions and/or the distributions required to maintain our REIT status,and could harm our financial condition.

 

***We depend on external sources ofcapital that are outside of our control; the unavailability of capital fromexternal sources could adversely affect our ability to acquire or developfacilities, satisfy our debt obligations and/or make distributions toshareholders.***

 

To continue to qualify as a REIT, we are required todistribute to our shareholders each year at least 90% of our REIT taxableincome, excluding net capital gains or pay applicable income taxes. In order toeliminate federal income tax, we will be required to distribute annually 100%of our net taxable income, including capital gains. Because of thesedistribution requirements, we likely will not be able to fund all futurecapital needs, including capital for acquisitions and facility development,with income from operations. We therefore will have to rely on third-partysources of capital, which may or may not be available on favorable terms, if atall. Our access to third-party sources of capital depends on a number ofthings, including the market’s perception of our growth potential and ourcurrent and potential future earnings and our ability to continue to qualify asa REIT for federal income tax purposes. If we are unable to obtain third-partysources of capital, we may not be able to acquire or develop facilities whenstrategic opportunities exist, satisfy our debt obligations or makedistributions to shareholders that would permit us to qualify as a REIT or avoidpaying tax on our REIT taxable income.

 

***Additionalissuances of equity securities may be dilutive to shareholders.***

*** ***

The interests of our shareholders could be diluted ifwe issue additional equity securities to finance future developments oracquisitions or to repay indebtedness. Our Board of Trustees may authorize the issuance of additional equitysecurities without shareholder approval. Our ability to execute our business strategy depends upon our access toan appropriate blend of debt financing, including unsecured lines of credit andother forms of secured and unsecured debt, and equity financing, including theissuance of common and preferred equity.

 

***Because realestate is illiquid, we may not be able to sell properties when appropriate.***

*** ***

Real estate property investments generally cannot besold quickly. Also, the tax laws applicable to REITs require that we hold ourfacilities for investment, rather than sale in the ordinary course of business,which may cause us to forgo or defer sales of facilities that otherwise wouldbe in our best interest. Therefore, we may not be able to dispose of facilitiespromptly, or on favorable terms, in response to economic or other marketconditions, which may adversely affect our financial position.

 

***Rising operating expenses couldreduce our cash flow and funds available for future******distributions.***

 

Our facilities and anyother facilities we acquire or develop in the future are and will be subject tooperating risks common to real estate in general, any or all of which maynegatively affect us. Our facilities are subject to increases in operatingexpenses such as real estate and other taxes, utilities, insurance,administrative expenses and costs for repairs and maintenance. If operatingexpenses increase without a corresponding increase in revenues, ourprofitability could diminish and limit our ability to make distributions to ourshareholders.

 

***Our insurancecoverage may not comply fully with certain loan requirements.***

 

We maintain comprehensiveinsurance on each of our self-storage facilities in amounts sufficient topermit replacement of the property, subject to applicable deductibles. Certainof our properties serve as collateral for our mortgage-backed debt, some ofwhich was assumed in connection with our acquisition of facilities, thatrequires us to maintain insurance at levels and on terms that are notcommercially reasonable in the current insurance environment. We may be unableto obtain

 

11

----

Tableof Contents

 

required insurancecoverage if the cost and/or availability make it impractical or impossible tocomply with debt covenants. If we cannot comply with a lender’s requirements inany respect, the lender could declare a default that could affect our abilityto obtain future financing and could have a material adverse effect on ourresults of operations and cash flows and our ability to obtain futurefinancing. In addition, we may be required to self-insure against certainlosses or the Company’s insurance costs may increase.

 

***Potential lossesmay not be covered by insurance, which could result in the loss of ourinvestment in a facility and the future cash flows from the facility.***

*** ***

We carry comprehensive liability, fire, extendedcoverage and rental loss insurance covering all of the facilities in ourportfolio. We believe the policy specifications and insured limits areappropriate and adequate given the relative risk of loss, the cost of thecoverage and industry practice. We do not carry insurance for losses such asloss from riots, war or acts of God, and, in some cases, flooding andenvironmental hazards, because such coverage is not available or is notavailable at commercially reasonable rates. Some of our policies, such as thosecovering losses due to terrorism, hurricanes, floods and earthquakes, areinsured subject to limitations involving large deductibles or co-payments andpolicy limits that may not be sufficient to cover losses. If we experience aloss at a facility that is uninsured or that exceeds policy limits, we couldlose the capital invested in that facility as well as the anticipated futurecash flows from that facility. Inflation, changes in building codes and ordinances,environmental considerations, and other factors also might make it impracticalor undesirable to use insurance proceeds to replace a facility after it hasbeen damaged or destroyed. In addition, if the damaged facilities are subjectto recourse indebtedness, we would continue to be liable for the indebtedness,even if these facilities were irreparably damaged.

 

***We cannot assure you of our ability to pay dividends in the future.***

*** ***

Historically, we have paidquarterly distributions to our shareholders, and we intend to pay quarterlydividends and to make distributions to our shareholders in amounts such thatall or substantially all of our taxable income in each year, subject to certainadjustments, is distributed.  This, alongwith other factors, should enable us to qualify for the tax benefits accordedto a REIT under the Internal Revenue Code. We have not established a minimum dividends payment level and all futuredistributions will be made at the discretion of our Board of Trustees. Ourability to pay dividends will depend upon, among other factors:

 

·                  the operational and financial performance of ourfacilities;

 

·                  capital expenditures with respect to existingand newly acquired facilities;

 

·                  general and administrative costs associated withour operation as a publicly-held REIT;

 

·                  maintenance of our REIT status;

 

·                  the amount of, and the interest rates on, ourdebt;

 

·                  the absence of significant expenditures relatingto environmental and other regulatory matters; and

 

·                  other risk factors described in this AnnualReport on Form 10-K.

 

Certain of these matters arebeyond our control and any significant difference between our expectations andactual results could have a material adverse effect on our cash flow and ourability to make distributions to shareholders.

 

***Our performance and thevalue of our self-storage facilities are subject to risks associated with ourproperties and with the real estate industry.***

*** ***

Our rental revenues and operating costs and the valueof our real estate assets, and consequently the value of our securities, aresubject to the risk that if our facilities do not generate revenues sufficientto meet our operating expenses, including debt service and capitalexpenditures, our cash flow and ability to pay distributions to ourshareholders will be adversely affected. Events or conditions beyond our control that may adversely affect ouroperations or the value of our facilities include:

 

12

----

Tableof Contents

 

·                  downturnsin the national, regional and local economic climate;

 

·                  localor regional oversupply, increased competition or reduction in demand forself-storage space;

 

·                  vacanciesor changes in market rents for self-storage space;

 

·                  inabilityto collect rent from customers;

 

·                  increasedoperating costs, including maintenance, insurance premiums and real estatetaxes;

 

·                  changesin interest rates and availability of financing;

 

·                  hurricanes,earthquakes and other natural disasters, civil disturbances, terrorist acts oracts of war that may result in uninsured or underinsured losses;

 

·                  significantexpenditures associated with acquisitions and development projects, such asdebt service payments, real estate taxes, insurance and maintenance costs whichare generally not reduced when circumstances cause a reduction in revenues froma property;

 

·                  costsof complying with changes in laws and governmental regulations, including thosegoverning usage, zoning, the environment and taxes; and

 

·                  therelative illiquidity of real estate investments.

 

In addition, prolonged periods of economic slowdown orrecession, rising interest rates or declining demand for self-storage, or thepublic perception that any of these events may occur, could result in a generaldecline in rental revenues, which could impair our ability to satisfy our debtservice obligations and to make distributions to our shareholders.

 

***Rental revenues are significantly******influenced by demand for self-storage space generally, and a decrease insuch demand****would likely have agreater adverse effect on our rental revenues than if we owned a morediversified real estate portfolio.***

 

Because our portfolio of facilities consists primarilyof self-storage facilities, we are subject to risks inherent in investments ina single industry. A decrease in the demand for self-storage space would have agreater adverse effect on our rental revenues than if we owned a morediversified real estate portfolio. Demand for self-storage space has been andcould be adversely affected by ongoing weakness in the national, regional andlocal economies, changes in supply of, or demand for, similar or competingself-storage facilities in an area and the excess amount of self-storage spacein a particular market. To the extent that any of these conditions occur, theyare likely to affect market rents for self-storage space, which could cause adecrease in our rental revenue. Any such decrease could impair our ability tosatisfy debt service obligations and make distributions to our shareholders.

 

***Adverse macroeconomic and business conditions may significantly andnegatively affect our revenues, profitability and results of operations.***

 

TheUnited States has recently experienced an economic slowdown that has resultedin higher unemployment, shrinking demand for products, large-scale businessfailures and tight credit markets.  Ourresults of operations may be sensitive to changes in overall economicconditions that impact consumer spending, including discretionary spending, aswell as to increased bad debts due to recessionary pressures.  A continuation of ongoing adverse economicconditions affecting disposable consumer income, such as employment levels,business conditions, interest rates, tax rates, fuel and energy costs, andother matters could reduce consumer spending or cause consumers to shift theirspending to other products and services. A general reduction in the level of discretionary spending or shifts inconsumer discretionary spending could adversely affect our growth and profitability.

 

Itis difficult to determine the breadth and duration of the economic andfinancial market problems and the many ways in which they may affect ourcustomers and our business in general. Nonetheless, continuation or furtherworsening of these difficult financial and macroeconomic conditions could havea significant adverse effect on our sales, profitability and results ofoperations.

 

13

----

Tableof Contents

 

***Our financialperformance is dependent upon the economic and other conditions of the marketsin which our facilities are located.***

*** ***

We are susceptible to adverse developments in themarkets in which we operate, such as business layoffs or downsizing, industryslowdowns, relocations of businesses, changing demographics and other factors.Our facilities in California, Florida, Texas, Ohio, Tennessee, Illinois andArizona accounted for approximately 17%, 16%, 11%, 8%, 7%, 7% and 5%,respectively, of our total rentable square feet as of December 31, 2009.As a result of this geographic concentration of our facilities, we areparticularly susceptible to adverse market conditions in these areas. Anyadverse economic or real estate developments in these markets, or in any of theother markets in which we operate, or any decrease in demand for self-storagespace resulting from the local business climate could adversely affect ourrental revenues, which could impair our ability to satisfy our debt serviceobligations and pay distributions to our shareholders.

 

***Many states and localjurisdictions are facing severe budgetary problems which may have an adverseimpact on our business and financial results.***

 

Many states and jurisdictions are facing severebudgetary problems. Action that may be taken in response to these problems,such as increases in property taxes on commercial properties, changes to salestaxes or other governmental efforts, including mandating medical insurance foremployees, could adversely impact our business and results of operations.

 

***Terrorist attacks andother acts of violence or war may adversely impact our performance and mayaffect the markets on which our securities are traded.***

*** ***

Terrorist attacks against our facilities, the UnitedStates or our interests, may negatively impact our operations and the value ofour securities.  Attacks or armedconflicts could negatively impact the demand for self-storage facilities andincrease the cost of insurance coverage for our facilities, which could reduceour profitability and cash flow. Furthermore, any terrorist attacks or armed conflicts could result inincreased volatility in or damage to the United States and worldwide financialmarkets and economy.

 

***Weface risks and significant competition associated with actions taken by ourcompetitors.***

 

Actions by our competitors may decrease or preventincreases of the occupancy and rental rates of our properties.  We compete with numerous developers, ownersand operators of self-storage, including other REITs, some of which own or mayin the future own properties similar to ours in the same submarkets in whichour properties are located and some of which may have greater capitalresources.  In addition, due to therelatively low cost of each individual self-storage facility, other developers,owners and operators have the capability to build additional facilities thatmay compete with our facilities.

 

If our competitors buildnew facilities that compete with our facilities or offer space at rental ratesbelow current market rates or below the rental rates we currently charge ourtenants, we may lose potential tenants, and we may be pressured to reduce ourrental rates below those we currently charge in order to retain tenants whenour tenants’ leases expire.  As a result,our financial condition, cash flow, cash available for distribution, marketprice of our stock and ability to satisfy our debt service obligations could bematerially adversely affected.  Inaddition, increased competition for customers may require us to make capitalimprovements to facilities that we would not have otherwise made. Anyunbudgeted capital improvements we undertake may reduce cash available fordistributions to our shareholders.

 

14

----

Table of Contents

 

***We also face significant competition for acquisitions and developmentopportunities.  Some of our competitorshave greater financial resources than we do and a greater ability to borrowfunds to acquire facilities.  Thesecompetitors may also be willing and/or able to accept more risk than we canprudently manage, including risks with respect to the geographic proximity ofinvestments and the payment of higher facility acquisition prices.  This competition for investments may reducethe number of suitable investment opportunities available to us, may increaseacquisition costs and may reduce demand for self-storage space in certain areaswhere our facilities are located and, as a result, adversely affect ouroperating results.***

*** ***

***We face risksassociated with facility acquisitions.***

*** ***

We have in the past acquired, and intend at some timein the future to acquire, individual and portfolios of self-storage facilitiesthat would increase our size and potentially alter our capital structure.  Although we believe that the acquisitionsthat we expect to undertake in the future will enhance our future financialperformance, the success of such transactions is subject to a number offactors, including the risks that:

 

·                  wemay not be able to obtain financing for acquisitions on favorable terms;

 

·                  acquisitionsmay fail to perform as expected;

 

·                  theactual costs of repositioning or redeveloping acquired facilities may be higherthan our estimates;

 

·                  acquisitionsmay be located in new markets where we may have limited knowledge andunderstanding of the local economy, an absence of business relationships in thearea or an unfamiliarity with local governmental and permitting procedures;

 

·                  thereis only limited recourse, or no recourse, to the former owners of newlyacquired facilities for unknown or undisclosed liabilities such as the clean-upof undisclosed environmental contamination; claims by tenants, vendors or otherpersons arising on account of actions or omissions of the former owners of thefacilities; ordinary course of business expenses; and claims by localgovernments, adjoining property owners, property owner associations, andeasement holders for fees, assessments, taxes on other property-relatedchanges.

 

As a result, if aliability were asserted against us based upon ownership of an acquiredfacility, we might be required to pay significant sums to settle it, whichcould adversely affect our financial results and cash flow.

 

***We will incur costs and will face integration challenges when weacquire additional facilities.***

 

Aswe acquire or develop additional self-storage facilities, we will be subject torisks associated with integrating and managing new facilities, includingcustomer retention and mortgage default risks. In the case of a large portfoliopurchase, we could experience strains in our existing management informationcapacity.  In addition, acquisitions ordevelopments may cause disruptions in our operations and divert management’sattention away from day-to-day operations. Furthermore, our profitability maysuffer because we will be required to expense acquisition-related costs andamortize in future periods costs for acquired goodwill and other intangibleassets. Our failure to successfully integrate any future facilities into ourportfolio could have an adverse effect on our operating costs and our abilityto make distributions to our shareholders.

 

***The acquisition ofnew facilities that lack operating history with us will give rise todifficulties in predicting revenue potential.***

*** ***

We intend to continue to acquire additionalfacilities.  These acquisitions couldfail to perform in accordance with expectations.  If we fail to accurately estimate occupancylevels, operating costs or costs of improvements to bring an acquired facilityup to the standards established for our intended market position, theperformance of the facility may be below expectations.  Acquired facilities may have characteristicsor deficiencies affecting their valuation or revenue potential that we have notyet discovered.  We cannot assure youthat the performance of facilities acquired by us will increase or bemaintained under our management.

 

***Property ownershipthrough joint ventures may limit our ability to act exclusively in ourinterest.***

*** ***

We have in the past, and may continue to, co-investwith third parties through joint ventures. In any such joint venture, we maynot be in a position to exercise sole decision-making authority regarding thefacilities owned through joint ventures.

 

15

----

Tableof Contents

 

Investments in joint ventures may, under certaincircumstances, involve risks not present when a third party is not involved,including the possibility that joint venture partners might become bankrupt orfail to fund their share of required capital contributions. Joint venturepartners may have business interests or goals that are inconsistent with ourbusiness interests or goals and may be in a position to take actions contraryto our policies or objectives. Such investments also have the potential risk ofimpasse on strategic decisions, such as a sale, in cases where neither we northe joint venture partner would have full control over the joint venture. In othercircumstances, joint venture partners may have the ability without ouragreement to make certain major decisions, including decisions about sales,capital expenditures and/or financing. Any disputes that may arise between us and our jointventure partners could result in litigation or arbitration that could increaseour expenses and distract our officers and/or Trustees from focusing their timeand effort on our business. In addition, we might in certain circumstances beliable for the actions of our joint venture partners, and the activities of ajoint venture could adversely affect our ability to qualify as a REIT, eventhough we do not control the joint venture.

 

***Weface system security risks as we depend upon automated processes and theInternet.***

 

We are increasinglydependent upon automated information technology processes.  While we attempt to mitigate this riskthrough offsite backup procedures and contracted data centers that include, insome cases, redundant operations, we could still be severely impacted by acatastrophic occurrence, such as a natural disaster or a terrorist attack. Inaddition, an increasing portion of our business operations are conducted overthe Internet, increasing the risk of viruses that could cause system failuresand disruptions of operations despite our deployment of anti-virus measures.Experienced computer programmers may be able to penetrate our network securityand misappropriate our confidential information, create system disruptions orcause shutdowns.

*** ***

***Potentialliability for environmental contamination could result in substantial costs.***

*** ***

We are subject to federal, state and localenvironmental regulations that apply generally to the ownership of realproperty and the operation of self-storage facilities. If we fail to complywith those laws, we could be subject to significant fines or other governmentalsanctions.

 

Under various federal, state and local laws,ordinances and regulations, an owner or operator of real estate may be requiredto investigate and clean up hazardous or toxic substances or petroleum productreleases at a facility and may be held liable to a governmental entity or tothird parties for property damage and for investigation and clean up costsincurred by such parties in connection with contamination. Such liability maybe imposed whether or not the owner or operator knew of, or was responsiblefor, the presence of these hazardous or toxic substances. The cost ofinvestigation, remediation or removal of such substances may be substantial,and the presence of such substances, or the failure to properly remediate suchsubstances, may adversely affect the owner’s ability to sell or rent suchfacility or to borrow using such facility as collateral. In addition, inconnection with the ownership, operation and management of real properties, weare potentially liable for property damage or injuries to persons and property.

 

Our practice is to conduct or obtain environmentalassessments in connection with the acquisition or development of additionalfacilities. We obtain or examine environmental assessments from qualified andreputable environmental consulting firms (and intend to conduct suchassessments prior to the acquisition or development of additional facilities).The environmental assessments received to date have not revealed, nor do wehave actual knowledge of, any environmental liability that we believe will havea material adverse effect on us. However, we cannot assure you that anyenvironmental assessments performed have identified or will identify allmaterial environmental conditions, that any prior owner of any facility did notcreate a material environmental condition not actually known to us or that amaterial environmental condition does not otherwise exist with respect to anyof our facilities.

 

***Americans withDisabilities Act and applicable state accessibility act compliance may requireunanticipated expenditures.***

*** ***

Under the Americans with Disabilities Act of 1990 andapplicable state accessibility act laws (collectively, the “ADA”), all placesof public accommodation are required to meet federal requirements related tophysical access and use by disabled persons. A number of other federal, stateand local laws may also impose access and other similar requirements at ourfacilities. A failure to comply with the ADA or similar state or localrequirements could result in the governmental imposition of fines or the awardof damages to private litigants affected by the noncompliance. Although webelieve that our facilities comply in all material respects with theserequirements (or would be eligible for applicable exemptions from materialrequirements because of adaptive assistance provided), a determination that oneor more of our facilities is not in compliance with the ADA or similar state orlocal requirements would result in the incurrence of additional costsassociated with

 

16

----

Table of Contents

 

bringing the facilities into compliance. If we arerequired to make substantial modifications to comply with the ADA or similarstate or local requirements, we may be required to incur significantunanticipated expenditures, which could have an adverse effect on our operatingcosts and our ability to make distributions to our shareholders.

 

***We may become subject tolitigation or threatened litigation which may divert management’s time andattention, require us to pay damages and expenses or restrict the operation ofour business.***

 

We may become subject to disputes with commercialparties with whom we maintain relationships or other parties with whom we dobusiness. Any such dispute could result in litigation between us and the otherparties. Whether or not any dispute actually proceeds to litigation, we may berequired to devote significant management time and attention to its successfulresolution (through litigation, settlement or otherwise), which would detractfrom our management’s ability to focus on our business. Any such resolutioncould involve the payment of damages or expenses by us, which may besignificant. In addition, any such resolution could involve our agreement withterms that restrict the operation of our business.

 

One type of commercial dispute could involve our useof our brand name and other intellectual property (for example, logos, signageand other marks), for which we generally have common law rights but no federaltrademark registration. There are other commercial parties, at both a local andnational level, that may assert that our use of our brand names and otherintellectual property conflict with their rights to use brand names and other intellectualproperty that they consider to be similar to ours. Any such commercial disputeand related resolution would involve all of the risks described above,including, in particular, our agreement to restrict the use of our brand nameor other intellectual property.

 

We also could be sued for personal injuries and/orproperty damage occurring on our properties. We maintain liability insurance with limits that we believe adequate toprovide for the defense and/or payment of any damages arising from suchlawsuits.  There can be no assurance thatsuch coverage will cover all costs and expenses from such suits.

 

***Failure to qualify as a REITwould subject us to U.S. federal income tax which would reduce the cashavailable for distribution to our shareholders.***

 

We operate our business to qualify to be taxed as aREIT for federal income tax purposes. We have not requested and do not plan torequest a ruling from the IRS that we qualify as a REIT, and the statements inthis Annual Report on Form 10-K are not binding on the IRS or any court.As a REIT, we generally will not be subject to federal income tax on the incomethat we distribute currently to our shareholders. Many of the REITrequirements, however, are highly technical and complex. The determination thatwe are a REIT requires an analysis of various factual matters and circumstancesthat may not be totally within our control. For example, to qualify as a REIT,at least 95% of our gross income must come from specific passive sources, suchas rent, that are itemized in the REIT tax laws. In addition, to qualify as aREIT, we cannot own specified amounts of debt and equity securities of someissuers. We also are required to distribute to our shareholders with respect toeach year at least 90% of our REIT taxable income (excluding net capitalgains). The fact that we hold substantially all of our assets through theoperating partnership and its subsidiaries further complicates the applicationof the REIT requirements for us. Even a technical or inadvertent mistake couldjeopardize our REIT status and, given the highly complex nature of the rules governingREITs and the ongoing importance of factual determinations, we cannot provideany assurance that we will continue to qualify as a REIT. Furthermore, Congressand the IRS might make changes to the tax laws and regulations, and the courtsmight issue new rulings, that make it more difficult, or impossible, for us toremain qualified as a REIT. If we fail to qualify as a REIT for federal incometax purposes and are able to avail ourselves of one or more of the statutorysavings provisions in order to maintain our REIT status, we would neverthelessbe required to pay penalty taxes of $50,000 or more for each such failure.

 

If we fail to qualify as a REIT for federal income taxpurposes, and are unable to avail ourselves of certain savings provisions setforth in the Internal Revenue Code, we would be subject to federal income taxat regular corporate rates on all of our income. As a taxable corporation, wewould not be allowed to take a deduction for distributions to shareholders incomputing our taxable income or pass through long term capital gains toindividual shareholders at favorable rates. We also could be subject to thefederal alternative minimum tax and possibly increased state and local taxes.We would not be able to elect to be taxed as a REIT for four years followingthe year we first failed to qualify unless the IRS were to grant us reliefunder certain statutory provisions. If we failed to qualify as a REIT, we wouldhave to pay significant income taxes, which would reduce our net earningsavailable for investment or distribution to our shareholders. This likely wouldhave a significant adverse effect on our earnings and likely would adverselyaffect the value of our securities. In addition, we would no longer be requiredto pay any distributions to shareholders.

 

17

----

Tableof Contents

 

***Tomaintain our REIT status, we may be forced to borrow funds on a short termbasis during unfavorable market conditions.***

 

As a REIT, we are subjectto certain distribution requirements, including the requirement to distribute90% of our REIT taxable income that may result in our having to makedistributions at disadvantageous time or to borrow funds at unfavorablerates.  Compliance with this requirementmay hinder our ability to operate solely on the basis of maximizing profits.

 

***We will pay some taxes even if wequalify as a REIT, which will reduce the cash available for distribution to ourshareholders.***

 

Even if we qualify as a REIT for federal income taxpurposes, we will be required to pay certain federal, state and local taxes onour income and property. For example, we will be subject to income tax to theextent we distribute less than 100% of our REIT taxable income, includingcapital gains. Additionally, we will be subject to a 4% nondeductible excisetax on the amount, if any, by which dividends paid by us in any calendar yearare less than the sum of 85% of our ordinary income, 95% of our capital gainnet income and 100% of our undistributed income from prior years. Moreover, ifwe have net income from “prohibited transactions,” that income will be subjectto a 100% penalty tax. In general, prohibited transactions are sales or otherdispositions of property held primarily for sale to customers in the ordinarycourse of business. The determination as to whether a particular sale is aprohibited transaction depends on the facts and circumstances related to thatsale. We cannot guarantee that sales of our properties would not be prohibitedtransactions unless we comply with certain statutory safe-harbor provisions.

 

In addition, any net taxable income earned directly byour taxable REIT subsidiaries, or through entities that are disregarded forfederal income tax purposes as entities separate from our taxable REITsubsidiaries, will be subject to federal and possibly state corporate incometax. We have elected to treat U-Store-It Mini Warehouse Co. as a taxable REITsubsidiary, and we may elect to treat other subsidiaries as taxable REITsubsidiaries in the future. In this regard, several provisions of the lawsapplicable to REITs and their subsidiaries ensure that a taxable REITsubsidiary will be subject to an appropriate level of federal income taxation.For example, a taxable REIT subsidiary is limited in its ability to deductcertain interest payments made to an affiliated REIT. In addition, the REIT hasto pay a 100% penalty tax on some payments that it receives or on somedeductions taken by a taxable REIT subsidiary if the economic arrangementsbetween the REIT, the REIT’s customers, and the taxable REIT subsidiary are notcomparable to similar arrangements between unrelated parties. Finally, somestate and local jurisdictions may tax some of our income even though as a REITwe are not subject to federal income tax on that income because not all statesand localities follow the federal income tax treatment of REITs. To the extentthat we and our affiliates are required to pay federal, state and local taxes,we will have less cash available for distributions to our shareholders.

 

***We are dependentupon our key personnel whose continued service is not guaranteed.***

*** ***

Our top executives, Dean Jernigan, Christopher Marrand Timothy Martin, have extensive self-storage, real estate and public companyexperience.  Although we have employmentagreements with these members of our senior management team, we cannot provideany assurance that any of them will remain in our employment.  The loss of services of one or more membersof our senior management team, particularly Dean Jernigan, our Chief ExecutiveOfficer, could adversely affect our operations and our future growth.

 

***Privacy concerns could result inregulatory changes that may harm our business.***

 

Personal privacy has becomea significant issue in the jurisdictions in which we operate. Manyjurisdictions in which we operate have imposed restrictions and requirements onthe use of personal information by those collecting such information. Changesto law or regulations affecting privacy, if applicable to our business, couldimpose additional costs and liability on us and could limit our use anddisclosure of such information.

 

***We are dependent upon our on-sitepersonnel to maximize customer satisfaction; any difficulties we encounter inhiring, training and retaining skilled field personnel may adversely affect ourrental revenues.***

 

As of December 31, 2009, we had 808 fieldpersonnel involved in the management and operation of our facilities. Thecustomer service, marketing skills and knowledge of local market demand andcompetitive dynamics of our facility managers are contributing factors to ourability to maximize our rental income and to achieve the highest sustainablerent levels at each of our facilities. We compete with various other companiesin attracting and retaining qualified and skilled personnel.

 

18

----

Tableof Contents

 

Competitive pressures may require that we enhance ourpay and benefits package to compete effectively for such personnel.  If there is an increase in these costs or ifwe fail to attract and retain qualified and skilled personnel, our business andoperating results could be harmed.

 

***Certain provisions of Marylandlaw could inhibit changes in control, which may******discourage third parties from conducting a tender offer or seeking otherchange of****control transactionsthat could involve a premium price for our shares or otherwise****benefit our shareholders.***

 

Certain provisions of Maryland law may have the effectof inhibiting a third party from making a proposal to acquire us or of impedinga change of control under circumstances that otherwise could provide theholders of our common shares with the opportunity to realize a premium over thethen-prevailing market price of those shares, including:

 

·         “businesscombination moratorium/fair price” provisions that, subject to limitations,prohibit certain business combinations between us and an “interestedshareholder” (defined generally as any person who beneficially owns 10% or moreof the voting power of our shares or an affiliate thereof) for five years afterthe most recent date on which the shareholder becomes an interestedshareholder, and thereafter imposes stringent fair price and super-majorityshareholder voting requirements on these combinations; and

 

·         “controlshare” provisions that provide that “control shares” of our company (defined asshares which, when aggregated with other shares controlled by the shareholder,entitle the shareholder to exercise one of three increasing ranges of votingpower in electing Trustees) acquired in a “control share acquisition” (definedas the direct or indirect acquisition of ownership or control of “controlshares” from a party other than the issuer) have no voting rights except to theextent approved by our shareholders by the affirmative vote of at least twothirds of all the votes entitled to be cast on the matter, excluding allinterested shares, and are subject to redemption in certain circumstances.

 

We have opted out ofthese provisions of Maryland law. However, our Board of Trustees may opt tomake these provisions applicable to us at any time without shareholderapproval.

 

Our Trustees also havethe discretion, granted in our bylaws and Maryland law, without shareholderapproval to, among other things (1) create a staggered Board of Trustees,and (2) amend our bylaws or repeal individual bylaws in a manner thatprovides the Board of Trustees with greater authority.  Any such action could inhibit or impede athird party from making a proposal to acquire us at a price that could bebeneficial to our shareholders.

 

***Robert J. Amsdell, our formerChairman and Chief Executive Officer; Barry L. Amsdell, a former Trustee; ToddC. Amsdell, our former Chief Operating Officer and former President of ourdevelopment subsidiary; and the Amsdell Entities (collectively, “The AmsdellFamily”)************collectively own an approximate 13.96 % beneficialinterest in our company on a fully************diluted basisand therefore have the ability to exercise significant influence on any matterpresented to our shareholders.***

 

The Amsdell Family collectively owns approximately12.6% of our outstanding common shares, and an approximate 13.96% beneficialinterest in our company on a fully diluted basis. Consequently, the AmsdellFamily may be able to significantly influence the outcome of matters submittedfor shareholder action, including the election of our Board of Trustees andapproval of significant corporate transactions, including businesscombinations, consolidations and mergers. As a result, Robert J. Amsdell, BarryL. Amsdell and Todd C. Amsdell have substantial influence on us and couldexercise their influence in a manner that conflicts with the interests of ourother shareholders.

 

***Our shareholders have limitedcontrol to prevent us from making any changes to our******investment and financing policies.***

 

Our Board of Trustees has adopted policies withrespect to certain activities. These policies may be amended or revised fromtime to time at the discretion of our Board of Trustees without a vote of ourshareholders. This means that our shareholders have limited control overchanges in our policies. Such changes in our policies intended to improve,expand or diversify our business may not have the anticipated effects andconsequently may adversely affect our business and prospects, results ofoperations and share price.

 

***Our rights and the rights of ourshareholders to take action against our Trustees and******officers are limited.***

 

19

----

Table of Contents

 

Maryland law provides that a trustee or officer has noliability in that capacity if he or she performs his or her duties in goodfaith, in a manner he or she reasonably believes to be in our best interestsand with the care that an ordinarily prudent person in a like position woulduse under similar circumstances. Our declaration of trust and bylaws require usto indemnify our Trustees and officers for actions taken by them in thosecapacities to the extent permitted by Maryland law. Accordingly, in the eventthat actions taken in good faith by any Trustee or officer impede ourperformance, our and our shareholders’ ability to recover damages from thatTrustee or officer will be limited.

 

***Our declaration of trust permitsour Board of Trustees to issue preferred shares with******terms that may discourage third parties from conducting a tender offer orseeking****other change of controltransactions that could involve a premium price for our****shares or otherwise benefit our shareholders.***

 

Our declaration of trust permits our Board of Trusteesto issue up to 40,000,000 preferred shares, having those preferences,conversion or other rights, voting powers, restrictions, limitations as todistributions, qualifications, or terms or conditions of redemption asdetermined by our Board. In addition, our Board may reclassify any unissuedcommon shares into one or more classes or series of preferred shares. Thus, ourBoard could authorize, without shareholder approval, the issuance of preferredshares with terms and conditions that could have the effect of discouraging atakeover or other transaction in which holders of some or a majority of ourshares might receive a premium for their shares over the then-prevailing marketprice of our shares. We currently do not expect that the Board would requireshareholder approval prior to such a preferred issuance. In addition, anypreferred shares that we issue would rank senior to our common shares withrespect to the payment of distributions, in which case we could not pay anydistributions on our common shares until full distributions have been paid withrespect to such preferred shares.

 

***Many factors couldhave an adverse effect on the market value of our securities.***

*** ***

A number of factors might adversely affect the priceof our securities, many of which are beyond our control.  These factorsinclude:

 

·                  increasesin market interest rates, relative to the dividend yield on our shares. If market interest rates go up, prospective purchasers of our securities mayrequire a higher yield.  Higher market interest rates would not, however,result in more funds for us to distribute and, to the contrary, would likelyincrease our borrowing costs and potentially decrease funds available fordistribution.  Thus, higher market interest rates could cause the marketprice of our common shares to go down;

 

·                  anticipatedbenefit of an investment in our securities as compared to investment insecurities of companies in other industries (including benefits associated withtax treatment of dividends and distributions);

 

·                  perceptionby market professionals of REITs generally and REITs comparable to us inparticular;

 

·                  levelof institutional investor interest in our securities;

 

·                  relativelylow trading volumes in securities of REITs;

 

·                  ourresults of operations and financial condition;

 

·                  investorconfidence in the stock market generally; and

 

·                  additionsand departures of key personnel.

 

The market value of our common shares is basedprimarily upon the market’s perception of our growth potential and our currentand potential future earnings and cash distributions.  Consequently, our common shares may trade atprices that are higher or lower than our net asset value per common share.  If our future earnings or cash distributionsare less than expected, it is likely that the market price of our common shareswill diminish.

 

***The market price ofour common shares has been, and may continue to be, particularly volatile, andour shareholders may be unable to resell their shares at a profit.***

 

20

----

Table of Contents

 

The market price of our common shares has been subjectto significant fluctuations and may continue to fluctuate or decline.  Since March 2009, our common stock hasbeen particularly volatile as the price of our common stock has ranged from ahigh of $7.83 to a low of $1.34.  In thepast several years, REIT stocks have experienced high levels of volatility andsignificant declines in value from their historic highs. Additionally, as aresult of the current global credit crisis and the concurrent economic downturnin the U.S. and globally, there have been significant declines in the values ofequity securities generally in the U.S. and abroad.

 

In the past, following periods of volatility in themarket price of a company’s securities, securities class action litigation hasoften been brought against that company. If our stock price is volatile, we maybecome the target of securities litigation. Securities litigation could resultin substantial costs and divert our management’s attention and resources fromour business.

 

**ITEM 1B.  *UNRESOLVEDSTAFF COMMENTS***

 

None.

 

21

----

Table of Contents

 

**ITEM 2.  *PROPERTIES***

 

**Overview**

 

As of December 31, 2009, we owned 367self-storage facilities located in 26 states and the District of Columbia; and aggregating approximately23.7 million rentable square feet. The following table sets forth certainsummary information regarding our facilities by state as of December 31,2009.

 
| ** **                 | ** ** | ** **     | ** ** | ** **    | ** ** | **Total**       | ** ** | **% of Total**  | ** ** | **% of**        | ** ** |
|----------------------------|------------|----------------|------------|---------------|------------|-----------------|------------|-----------------|------------|-----------------|------------|
| ** **                 | ** ** | **Number of**  | ** ** | **Number of** | ** ** | **Rentable**    | ** ** | **Rentable**    | ** ** | **Occupied**    | ** ** |
| **State**                  | ** ** | **Facilities** | ** ** | **Units**     | ** ** | **Square Feet** | ** ** | **Square Feet** | ** ** | **Square Feet** | ** ** |
| ** **                 | ** ** | ** **     | ** ** | ** **    | ** ** | ** **      | ** ** | ** **      | ** ** | ** **      | ** ** |
| California                 |       | 58             |       | 33,821        |       | 3,954,013       |       | 16.7            | %          | 67.6            | %          |
| Florida                    |       | 51             |       | 36,094        |       | 3,795,690       |       | 16.0            | %          | 75.5            | %          |
| Texas                      |       | 43             |       | 20,878        |       | 2,643,421       |       | 11.1            | %          | 79.9            | %          |
| Ohio                       |       | 33             |       | 15,347        |       | 1,879,352       |       | 7.9             | %          | 72.4            | %          |
| Illinois                   |       | 27             |       | 13,879        |       | 1,609,823       |       | 6.8             | %          | 81.5            | %          |
| Tennessee                  |       | 24             |       | 12,855        |       | 1,682,687       |       | 7.1             | %          | 76.0            | %          |
| Arizona                    |       | 24             |       | 11,713        |       | 1,246,619       |       | 5.3             | %          | 75.3            | %          |
| Connecticut                |       | 17             |       | 7,076         |       | 848,086         |       | 3.6             | %          | 78.0            | %          |
| New  Jersey                |       | 13             |       | 9,004         |       | 876,505         |       | 3.7             | %          | 74.1            | %          |
| Georgia                    |       | 9              |       | 6,092         |       | 759,215         |       | 3.2             | %          | 76.3            | %          |
| Indiana                    |       | 9              |       | 5,171         |       | 592,742         |       | 2.5             | %          | 71.3            | %          |
| New  Mexico                |       | 9              |       | 3,437         |       | 387,665         |       | 1.6             | %          | 80.4            | %          |
| Colorado                   |       | 8              |       | 4,067         |       | 491,394         |       | 2.1             | %          | 76.6            | %          |
| North  Carolina            |       | 8              |       | 4,756         |       | 557,721         |       | 2.4             | %          | 76.0            | %          |
| Maryland                   |       | 5              |       | 4,191         |       | 517,782         |       | 2.2             | %          | 83.0            | %          |
| New  York                  |       | 5              |       | 2,871         |       | 311,883         |       | 1.3             | %          | 77.7            | %          |
| Michigan                   |       | 4              |       | 1,885         |       | 270,869         |       | 1.1             | %          | 70.7            | %          |
| Utah                       |       | 4              |       | 2,255         |       | 241,524         |       | 1.0             | %          | 79.8            | %          |
| Louisiana                  |       | 3              |       | 1,423         |       | 195,267         |       | 0.8             | %          | 81.0            | %          |
| Massachusetts              |       | 3              |       | 1,784         |       | 173,413         |       | 0.7             | %          | 75.1            | %          |
| Pennsylvania               |       | 2              |       | 1,614         |       | 173,869         |       | 0.7             | %          | 79.9            | %          |
| Virginia                   |       | 2              |       | 1,174         |       | 130,682         |       | 0.6             | %          | 69.0            | %          |
| Nevada                     |       | 2              |       | 884           |       | 97,068          |       | 0.4             | %          | 82.0            | %          |
| Alabama                    |       | 1              |       | 798           |       | 128,951         |       | 0.5             | %          | 73.7            | %          |
| Washington,  DC            |       | 1              |       | 752           |       | 62,695          |       | 0.3             | %          | 89.5            | %          |
| Mississippi                |       | 1              |       | 509           |       | 61,251          |       | 0.2             | %          | 77.7            | %          |
| Wisconsin                  |       | 1              |       | 485           |       | 58,515          |       | 0.2             | %          | 76.4            | %          |
| **Total/Weighted Average** | ** ** | **367**        | ** ** | **204,815**   | ** ** | **23,748,702**  | ** ** | **100.0**       | **%**      | **75.2**        | **%**      |

 

**Our Facilities**

 

The following table sets forth certain additionalinformation with respect to each of our facilities as of December 31,2009. Our ownership of each facility consists of a fee interest in the facilityheld by U-Store-It, L.P., our operating partnership, or one of itssubsidiaries, except for our Morris Township, NJ facility, where we have aground lease. In addition, small parcels of land at five of our otherfacilities are subject to ground leases.

 

22

----

Table of Contents

 
| ** **                 | ** ** | **Year  Acquired/** | ** ** | **Year**   | ** ** | **Rentable**     | ** ** | ** **         | ** ** | ** ** | ** ** | **Manager**        | ** ** | **% Climate**       | ** ** |
|----------------------------|------------|---------------------|------------|------------|------------|------------------|------------|--------------------|------------|------------|------------|--------------------|------------|---------------------|------------|
| **Facility Location**      | ** ** | **Developed (1)**   | ** ** | **Built**  | ** ** | **Square  Feet** | ** ** | **Occupancy  (2)** | ** ** | **Units**  | ** ** | **Apartment  (3)** | ** ** | **Controlled  (4)** | ** ** |
| Mobile, AL †          |       | 1997                |       | 1974/90    |       | 128,951          |       | 73.7               | %          | 798        |       | Y                  |       | 1.6                 | %          |
| Chandler, AZ               |       | 2005                |       | 1985       |       | 47,520           |       | 81.7               | %          | 439        |       | Y                  |       | 6.9                 | %          |
| Glendale, AZ               |       | 1998                |       | 1987       |       | 56,850           |       | 76.5               | %          | 529        |       | Y                  |       | 0.0                 | %          |
| Green Valley, AZ           |       | 2005                |       | 1985       |       | 25,050           |       | 68.9               | %          | 257        |       | N                  |       | 8.0                 | %          |
| Mesa I, AZ                 |       | 2006                |       | 1985       |       | 52,375           |       | 80.5               | %          | 495        |       | N                  |       | 0.0                 | %          |
| Mesa II, AZ                |       | 2006                |       | 1981       |       | 45,145           |       | 78.0               | %          | 389        |       | Y                  |       | 8.4                 | %          |
| Mesa III, AZ               |       | 2006                |       | 1986       |       | 58,264           |       | 68.1               | %          | 482        |       | Y                  |       | 4.5                 | %          |
| Phoenix I, AZ              |       | 2006                |       | 1987       |       | 100,762          |       | 66.4               | %          | 757        |       | Y                  |       | 8.7                 | %          |
| Phoenix II, AZ             |       | 2006                |       | 1974       |       | 45,270           |       | 85.3               | %          | 409        |       | Y                  |       | 4.7                 | %          |
| Scottsdale, AZ             |       | 1998                |       | 1995       |       | 80,925           |       | 79.9               | %          | 635        |       | Y                  |       | 9.5                 | %          |
| Tempe, AZ                  |       | 2005                |       | 1975       |       | 53,890           |       | 72.9               | %          | 403        |       | Y                  |       | 13.0                | %          |
| Tucson I, AZ               |       | 1998                |       | 1974       |       | 59,350           |       | 74.6               | %          | 491        |       | Y                  |       | 0.0                 | %          |
| Tucson II, AZ              |       | 1998                |       | 1988       |       | 43,950           |       | 76.6               | %          | 525        |       | Y                  |       | 100.0               | %          |
| Tucson III, AZ             |       | 2005                |       | 1979       |       | 49,822           |       | 68.6               | %          | 494        |       | N                  |       | 0.0                 | %          |
| Tucson IV, AZ              |       | 2005                |       | 1982       |       | 48,040           |       | 81.1               | %          | 508        |       | Y                  |       | 3.7                 | %          |
| Tucson V, AZ               |       | 2005                |       | 1982       |       | 45,234           |       | 69.4               | %          | 419        |       | Y                  |       | 3.0                 | %          |
| Tucson VI, AZ              |       | 2005                |       | 1982       |       | 40,841           |       | 69.4               | %          | 417        |       | Y                  |       | 3.4                 | %          |
| Tucson VII, AZ             |       | 2005                |       | 1982       |       | 52,688           |       | 75.7               | %          | 605        |       | Y                  |       | 2.0                 | %          |
| Tucson VIII, AZ            |       | 2005                |       | 1979       |       | 46,650           |       | 73.9               | %          | 466        |       | Y                  |       | 0.0                 | %          |
| Tucson IX, AZ              |       | 2005                |       | 1984       |       | 67,656           |       | 73.9               | %          | 610        |       | Y                  |       | 2.0                 | %          |
| Tucson X, AZ               |       | 2005                |       | 1981       |       | 46,350           |       | 72.5               | %          | 430        |       | N                  |       | 0.0                 | %          |
| Tucson XI, AZ              |       | 2005                |       | 1974       |       | 42,700           |       | 75.4               | %          | 433        |       | Y                  |       | 0.0                 | %          |
| Tucson XII, AZ             |       | 2005                |       | 1974       |       | 42,325           |       | 83.7               | %          | 437        |       | Y                  |       | 4.8                 | %          |
| Tucson XIII, AZ            |       | 2005                |       | 1974       |       | 45,792           |       | 75.4               | %          | 522        |       | Y                  |       | 0.0                 | %          |
| Tucson XIV, AZ             |       | 2005                |       | 1976       |       | 49,170           |       | 85.8               | %          | 561        |       | Y                  |       | 8.8                 | %          |
| Apple Valley I, CA         |       | 1997                |       | 1984       |       | 73,250           |       | 48.1               | %          | 552        |       | N                  |       | 0.0                 | %          |
| Apple Valley II, CA        |       | 1997                |       | 1988       |       | 61,555           |       | 67.3               | %          | 471        |       | Y                  |       | 5.9                 | %          |
| Benicia, CA                |       | 2005                |       | 1988/93/05 |       | 74,770           |       | 83.8               | %          | 734        |       | Y                  |       | 0.0                 | %          |
| Bloomington I, CA          |       | 1997                |       | 1987       |       | 28,425           |       | 67.0               | %          | 216        |       | N                  |       | 0.0                 | %          |
| Bloomington II, CA †  |       | 1997                |       | 1987       |       | 25,860           |       | 67.4               | %          | 20         |       | N                  |       | 0.0                 | %          |
| Cathedral City, CA †  |       | 2006                |       | 1982/92    |       | 109,745          |       | 59.4               | %          | 708        |       | Y                  |       | 2.3                 | %          |
| Citrus Heights, CA         |       | 2005                |       | 1987       |       | 75,620           |       | 60.6               | %          | 658        |       | Y                  |       | 0.0                 | %          |
| Diamond Bar, CA            |       | 2005                |       | 1988       |       | 103,034          |       | 81.1               | %          | 898        |       | Y                  |       | 0.0                 | %          |
| Escondido, CA              |       | 2007                |       | 2002       |       | 142,970          |       | 74.5               | %          | 1226       |       | Y                  |       | 6.6                 | %          |
| Fallbrook, CA              |       | 1997                |       | 1985/88    |       | 46,370           |       | 88.6               | %          | 446        |       | Y                  |       | 0.0                 | %          |
| Hemet, CA                  |       | 1997                |       | 1989       |       | 66,040           |       | 66.1               | %          | 433        |       | Y                  |       | 0.0                 | %          |
| Highland I, CA             |       | 1997                |       | 1987       |       | 76,765           |       | 52.3               | %          | 841        |       | Y                  |       | 0.0                 | %          |
| Highland II, CA            |       | 2006                |       | 1982       |       | 62,257           |       | 57.8               | %          | 519        |       | Y                  |       | 1.0                 | %          |
| Lancaster, CA              |       | 2001                |       | 1987       |       | 60,665           |       | 42.7               | %          | 385        |       | Y                  |       | 0.0                 | %          |
| Long Beach, CA             |       | 2006                |       | 1974       |       | 124,363          |       | 60.7               | %          | 1349       |       | Y                  |       | 0.0                 | %          |
| Murrieta, CA               |       | 2005                |       | 1996       |       | 49,790           |       | 81.7               | %          | 426        |       | Y                  |       | 2.9                 | %          |
| North Highlands, CA        |       | 2005                |       | 1980       |       | 57,244           |       | 84.0               | %          | 471        |       | N                  |       | 0.0                 | %          |
| Orangevale, CA             |       | 2005                |       | 1980       |       | 51,142           |       | 70.5               | %          | 523        |       | Y                  |       | 0.0                 | %          |
| Palm Springs I, CA         |       | 2006                |       | 1989       |       | 72,675           |       | 59.4               | %          | 570        |       | Y                  |       | 0.0                 | %          |
| Palm Springs II, CA † |       | 2006                |       | 1982/89    |       | 122,370          |       | 61.6               | %          | 626        |       | Y                  |       | 8.7                 | %          |
| Pleasanton, CA             |       | 2005                |       | 2003       |       | 85,195           |       | 81.2               | %          | 693        |       | Y                  |       | 0.0                 | %          |
| Rancho Cordova, CA         |       | 2005                |       | 1979       |       | 53,928           |       | 64.7               | %          | 460        |       | Y                  |       | 0.0                 | %          |
| Redlands, CA               |       | 1997                |       | 1985       |       | 62,805           |       | 64.8               | %          | 538        |       | N                  |       | 0.0                 | %          |
| Rialto I, CA               |       | 1997                |       | 1987       |       | 57,371           |       | 68.8               | %          | 497        |       | Y                  |       | 0.0                 | %          |
| Rialto II, CA              |       | 2006                |       | 1980       |       | 99,783           |       | 74.3               | %          | 749        |       | Y                  |       | 0.0                 | %          |
| Riverside I, CA            |       | 1997                |       | 1989       |       | 28,310           |       | 76.8               | %          | 226        |       | N                  |       | 0.0                 | %          |
| Riverside II, CA †    |       | 1997                |       | 1989       |       | 20,420           |       | 67.6               | %          | 18         |       | N                  |       | 0.0                 | %          |
| Riverside III, CA          |       | 1998                |       | 1989       |       | 46,809           |       | 66.0               | %          | 429        |       | Y                  |       | 0.0                 | %          |
| Riverside IV, CA           |       | 2006                |       | 1977       |       | 67,220           |       | 76.7               | %          | 663        |       | Y                  |       | 0.0                 | %          |
| Riverside V, CA            |       | 2006                |       | 1985       |       | 85,346           |       | 50.0               | %          | 830        |       | Y                  |       | 3.9                 | %          |
| Riverside VI, CA           |       | 2007                |       | 2004       |       | 74,900           |       | 76.9               | %          | 409        |       | Y                  |       | 12.7                | %          |
| Roseville, CA              |       | 2005                |       | 1979       |       | 60,094           |       | 75.2               | %          | 547        |       | N                  |       | 0.0                 | %          |
| Sacramento I, CA           |       | 2005                |       | 1979       |       | 51,114           |       | 66.2               | %          | 543        |       | Y                  |       | 0.0                 | %          |
| Sacramento II, CA          |       | 2005                |       | 1986       |       | 62,130           |       | 65.9               | %          | 575        |       | Y                  |       | 0.0                 | %          |
| San Bernardino I, CA       |       | 1997                |       | 1987       |       | 83,253           |       | 58.8               | %          | 578        |       | Y                  |       | 2.0                 | %          |
| San Bernardino II, CA      |       | 1997                |       | 1987       |       | 31,070           |       | 53.7               | %          | 253        |       | N                  |       | 0.0                 | %          |
| San Bernardino III, CA     |       | 1997                |       | 1989       |       | 57,215           |       | 71.1               | %          | 584        |       | Y                  |       | 0.0                 | %          |
| San Bernardino IV, CA      |       | 1997                |       | 1991       |       | 41,546           |       | 69.3               | %          | 375        |       | Y                  |       | 0.0                 | %          |
| San Bernardino V, CA       |       | 1997                |       | 1985/92    |       | 35,671           |       | 63.9               | %          | 402        |       | N                  |       | 0.0                 | %          |
| San Bernardino VI, CA      |       | 2005                |       | 2002/04    |       | 83,507           |       | 63.9               | %          | 749        |       | N                  |       | 11.8                | %          |
| San Bernardino VII, CA     |       | 2006                |       | 1974       |       | 56,795           |       | 58.8               | %          | 499        |       | Y                  |       | 4.2                 | %          |
| San Bernardino VIII, CA    |       | 2006                |       | 1975       |       | 103,860          |       | 54.8               | %          | 951        |       | N                  |       | 0.0                 | %          |
| San Bernardino IX, CA      |       | 2006                |       | 1978       |       | 78,839           |       | 73.9               | %          | 645        |       | Y                  |       | 1.3                 | %          |
| San Bernardino X, CA       |       | 2006                |       | 1977       |       | 95,154           |       | 63.2               | %          | 889        |       | Y                  |       | 0.0                 | %          |
| San Marcos, CA             |       | 2005                |       | 1979       |       | 37,430           |       | 76.0               | %          | 246        |       | Y                  |       | 0.0                 | %          |
| Santa Ana, CA              |       | 2006                |       | 1984       |       | 64,571           |       | 69.6               | %          | 710        |       | N                  |       | 2.4                 | %          |
| South Sacramento, CA       |       | 2005                |       | 1979       |       | 51,740           |       | 48.8               | %          | 417        |       | Y                  |       | 0.0                 | %          |
| Spring Valley, CA          |       | 2006                |       | 1980       |       | 55,045           |       | 68.4               | %          | 711        |       | Y                  |       | 0.0                 | %          |

 

23

----

Tableof Contents

 
| ** **              | ** ** | **Year Acquired/** | ** ** | **Year**   | ** ** | **Rentable**     | ** ** | ** **         | ** ** | ** ** | ** ** | **Manager**        | ** ** | **% Climate**       | ** ** |
|-------------------------|------------|--------------------|------------|------------|------------|------------------|------------|--------------------|------------|------------|------------|--------------------|------------|---------------------|------------|
| **Facility Location**   | ** ** | **Developed  (1)** | ** ** | **Built**  | ** ** | **Square  Feet** | ** ** | **Occupancy  (2)** | ** ** | **Units**  | ** ** | **Apartment  (3)** | ** ** | **Controlled  (4)** | ** ** |
| Sun City, CA            |       | 1998               |       | 1989       |       | 38,335           |       | 90.0               | %          | 362        |       | N                  |       | 0.0                 | %          |
| Temecula I, CA          |       | 1998               |       | 1985/2003  |       | 81,700           |       | 72.3               | %          | 683        |       | Y                  |       | 46.4                | %          |
| Temecula II, CA         |       | 2006               |       | 2003       |       | 84,345           |       | 72.4               | %          | 643        |       | Y                  |       | 51.2                | %          |
| Thousand Palms, CA      |       | 2006               |       | 1988/01    |       | 75,445           |       | 58.0               | %          | 765        |       | Y                  |       | 27.1                | %          |
| Vista I, CA             |       | 2001               |       | 1988       |       | 74,605           |       | 82.8               | %          | 612        |       | Y                  |       | 0.0                 | %          |
| Vista II, CA            |       | 2005               |       | 2001/02/03 |       | 147,421          |       | 70.6               | %          | 1261       |       | Y                  |       | 2.3                 | %          |
| Walnut, CA              |       | 2005               |       | 1987       |       | 50,708           |       | 72.2               | %          | 536        |       | Y                  |       | 9.2                 | %          |
| West Sacramento, CA     |       | 2005               |       | 1984       |       | 39,715           |       | 73.0               | %          | 482        |       | Y                  |       | 0.0                 | %          |
| Westminster, CA         |       | 2005               |       | 1983/98    |       | 68,148           |       | 77.7               | %          | 558        |       | Y                  |       | 0.0                 | %          |
| Yucaipa, CA             |       | 1997               |       | 1989       |       | 77,560           |       | 71.1               | %          | 661        |       | Y                  |       | 0.0                 | %          |
| Aurora I, CO            |       | 2005               |       | 1981       |       | 75,627           |       | 72.0               | %          | 602        |       | Y                  |       | 0.0                 | %          |
| Colorado Springs I, CO  |       | 2005               |       | 1986       |       | 47,975           |       | 76.0               | %          | 454        |       | Y                  |       | 0.0                 | %          |
| Colorado Springs II, CO |       | 2006               |       | 2001       |       | 62,400           |       | 78.5               | %          | 433        |       | Y                  |       | 0.0                 | %          |
| Denver I, CO            |       | 2006               |       | 1997       |       | 59,200           |       | 70.4               | %          | 451        |       | Y                  |       | 0.0                 | %          |
| Federal Heights, CO     |       | 2005               |       | 1980       |       | 54,770           |       | 82.7               | %          | 559        |       | Y                  |       | 0.0                 | %          |
| Golden, CO              |       | 2005               |       | 1985       |       | 85,830           |       | 82.5               | %          | 621        |       | Y                  |       | 1.2                 | %          |
| Littleton I , CO        |       | 2005               |       | 1987       |       | 53,490           |       | 72.5               | %          | 449        |       | Y                  |       | 37.4                | %          |
| Northglenn, CO          |       | 2005               |       | 1980       |       | 52,102           |       | 76.5               | %          | 498        |       | Y                  |       | 0.0                 | %          |
| Bloomfield, CT          |       | 1997               |       | 1987/93/94 |       | 48,700           |       | 74.4               | %          | 436        |       | Y                  |       | 6.6                 | %          |
| Branford, CT            |       | 1995               |       | 1986       |       | 50,679           |       | 76.4               | %          | 431        |       | N                  |       | 2.2                 | %          |
| Bristol, CT             |       | 2005               |       | 1989/99    |       | 48,050           |       | 76.5               | %          | 438        |       | N                  |       | 22.3                | %          |
| East Windsor, CT        |       | 2005               |       | 1986/89    |       | 45,900           |       | 77.4               | %          | 296        |       | N                  |       | 0.0                 | %          |
| Enfield, CT             |       | 2001               |       | 1989       |       | 52,875           |       | 92.2               | %          | 365        |       | N                  |       | 0.0                 | %          |
| Gales Ferry, CT         |       | 1995               |       | 1987/89    |       | 54,130           |       | 72.7               | %          | 596        |       | N                  |       | 6.3                 | %          |
| Manchester I, CT (6)    |       | 2002               |       | 1999/00/01 |       | 47,125           |       | 86.3               | %          | 459        |       | N                  |       | 37.6                | %          |
| Manchester II, CT       |       | 2005               |       | 1984       |       | 52,725           |       | 74.1               | %          | 390        |       | N                  |       | 0.0                 | %          |
| Milford, CT             |       | 1994               |       | 1975       |       | 44,885           |       | 76.9               | %          | 376        |       | Y                  |       | 4.0                 | %          |
| Monroe, CT              |       | 2005               |       | 1996/03    |       | 58,500           |       | 76.9               | %          | 400        |       | N                  |       | 0.0                 | %          |
| Mystic, CT              |       | 1994               |       | 1975/86    |       | 50,725           |       | 81.2               | %          | 556        |       | Y                  |       | 2.3                 | %          |
| Newington I, CT         |       | 2005               |       | 1978/97    |       | 42,520           |       | 71.2               | %          | 248        |       | N                  |       | 0.0                 | %          |
| Newington II, CT        |       | 2005               |       | 1979/81    |       | 36,140           |       | 82.9               | %          | 198        |       | N                  |       | 0.0                 | %          |
| Old Saybrook I, CT      |       | 2005               |       | 1982/88/00 |       | 87,625           |       | 80.6               | %          | 713        |       | N                  |       | 5.8                 | %          |
| Old Saybrook II, CT     |       | 2005               |       | 1988/02    |       | 26,425           |       | 80.9               | %          | 254        |       | N                  |       | 54.6                | %          |
| South Windsor, CT       |       | 1994               |       | 1976       |       | 72,125           |       | 70.4               | %          | 553        |       | Y                  |       | 1.1                 | %          |
| Stamford, CT            |       | 2005               |       | 1997       |       | 28,957           |       | 78.3               | %          | 367        |       | N                  |       | 32.8                | %          |
| Washington, DC          |       | 2008               |       | 2002       |       | 62,695           |       | 89.5               | %          | 752        |       | Y                  |       | 96.5                | %          |
| Boca Raton, FL          |       | 2001               |       | 1998       |       | 37,958           |       | 76.5               | %          | 605        |       | Y                  |       | 68.2                | %          |
| Boynton Beach I, FL     |       | 2001               |       | 1999       |       | 61,977           |       | 78.6               | %          | 767        |       | Y                  |       | 54.2                | %          |
| Boynton Beach II, FL    |       | 2005               |       | 2001       |       | 61,777           |       | 67.8               | %          | 580        |       | Y                  |       | 82.3                | %          |
| Bradenton I, FL         |       | 2004               |       | 1979       |       | 68,391           |       | 58.5               | %          | 635        |       | N                  |       | 2.7                 | %          |
| Bradenton II, FL        |       | 2004               |       | 1996       |       | 87,810           |       | 77.5               | %          | 859        |       | Y                  |       | 40.1                | %          |
| Cape Coral, FL          |       | 2000*              |       | 2000       |       | 76,592           |       | 75.0               | %          | 864        |       | Y                  |       | 83.5                | %          |
| Dania, FL               |       | 1994               |       | 1988       |       | 58,270           |       | 78.7               | %          | 498        |       | Y                  |       | 26.9                | %          |
| Dania Beach, FL (6)     |       | 2004               |       | 1984       |       | 181,513          |       | 65.4               | %          | 1975       |       | N                  |       | 20.4                | %          |
| Davie, FL               |       | 2001*              |       | 2001       |       | 81,135           |       | 70.1               | %          | 853        |       | Y                  |       | 55.6                | %          |
| Deerfield Beach, FL     |       | 1998*              |       | 1998       |       | 57,280           |       | 82.8               | %          | 519        |       | Y                  |       | 38.8                | %          |
| Delray Beach, FL        |       | 2001               |       | 1999       |       | 67,821           |       | 74.8               | %          | 834        |       | Y                  |       | 39.3                | %          |
| Fernandina Beach, FL    |       | 1996               |       | 1986       |       | 110,785          |       | 71.7               | %          | 828        |       | N                  |       | 35.7                | %          |
| Ft. Lauderdale, FL      |       | 1999               |       | 1999       |       | 70,093           |       | 87.8               | %          | 690        |       | Y                  |       | 46.8                | %          |
| Ft. Myers, FL           |       | 1998               |       | 1998       |       | 67,642           |       | 68.8               | %          | 591        |       | Y                  |       | 67.0                | %          |
| Jacksonville I, FL      |       | 2005               |       | 2005       |       | 80,586           |       | 84.1               | %          | 730        |       | N                  |       | 100.0               | %          |
| Jacksonville II, FL     |       | 2007               |       | 2004       |       | 65,070           |       | 87.2               | %          | 664        |       | N                  |       | 100.0               | %          |
| Jacksonville III, FL    |       | 2007               |       | 2003       |       | 65,595           |       | 80.6               | %          | 691        |       | N                  |       | 100.0               | %          |
| Jacksonville IV, FL     |       | 2007               |       | 2006       |       | 78,370           |       | 73.3               | %          | 704        |       | N                  |       | 75.1                | %          |
| Jacksonville V, FL      |       | 2007               |       | 2004       |       | 82,160           |       | 80.2               | %          | 713        |       | N                  |       | 82.2                | %          |
| Kendall, FL             |       | 2007               |       | 2003       |       | 75,395           |       | 76.0               | %          | 703        |       | N                  |       | 71.0                | %          |
| Lake Worth, FL †   |       | 1998               |       | 1998/02    |       | 161,808          |       | 88.0               | %          | 1396       |       | Y                  |       | 37.2                | %          |
| Lakeland I, FL          |       | 1994               |       | 1988       |       | 49,095           |       | 78.5               | %          | 491        |       | Y                  |       | 79.4                | %          |
| Lutz I, FL              |       | 2004               |       | 2000       |       | 66,595           |       | 64.5               | %          | 614        |       | Y                  |       | 37.2                | %          |
| Lutz II, FL             |       | 2004               |       | 1999       |       | 69,232           |       | 80.2               | %          | 539        |       | Y                  |       | 20.6                | %          |
| Margate I, FL †    |       | 1994               |       | 1979/81    |       | 54,505           |       | 75.1               | %          | 339        |       | N                  |       | 10.0                | %          |
| Margate II, FL †   |       | 1996               |       | 1985       |       | 65,186           |       | 89.2               | %          | 425        |       | Y                  |       | 28.8                | %          |
| Merrit Island, FL       |       | 2000               |       | 2000       |       | 50,417           |       | 71.2               | %          | 465        |       | Y                  |       | 56.7                | %          |
| Miami I, FL             |       | 1995               |       | 1995       |       | 46,825           |       | 78.7               | %          | 560        |       | Y                  |       | 52.1                | %          |
| Miami II, FL            |       | 1994               |       | 1989       |       | 67,060           |       | 72.1               | %          | 567        |       | Y                  |       | 8.0                 | %          |
| Miami VI, FL            |       | 2005               |       | 1988/03    |       | 150,510          |       | 70.4               | %          | 1523       |       | N                  |       | 86.8                | %          |
| Naples I, FL            |       | 1996               |       | 1996       |       | 48,150           |       | 88.2               | %          | 336        |       | Y                  |       | 26.6                | %          |
| Naples II, FL           |       | 1997               |       | 1985       |       | 65,850           |       | 84.8               | %          | 644        |       | Y                  |       | 44.6                | %          |
| Naples III, FL          |       | 1997               |       | 1981/83    |       | 80,675           |       | 65.0               | %          | 818        |       | Y                  |       | 23.9                | %          |
| Naples IV, FL           |       | 1998               |       | 1990       |       | 40,700           |       | 70.9               | %          | 441        |       | N                  |       | 43.6                | %          |
| Ocoee, FL               |       | 2005               |       | 1997       |       | 76,130           |       | 81.2               | %          | 627        |       | Y                  |       | 15.5                | %          |
| Orange City, FL         |       | 2004               |       | 2001       |       | 59,586           |       | 76.0               | %          | 648        |       | N                  |       | 39.1                | %          |

 

24

----

Tableof Contents

 
| ** **                    | ** ** | **Year  Acquired/** | ** ** | **Year**   | ** ** | **Rentable**     | ** ** | ** **         | ** ** | ** ** | ** ** | **Manager**        | ** ** | **% Climate**       | ** ** |
|-------------------------------|------------|---------------------|------------|------------|------------|------------------|------------|--------------------|------------|------------|------------|--------------------|------------|---------------------|------------|
| **Facility Location**         | ** ** | **Developed  (1)**  | ** ** | **Built**  | ** ** | **Square  Feet** | ** ** | **Occupancy  (2)** | ** ** | **Units**  | ** ** | **Apartment  (3)** | ** ** | **Controlled  (4)** | ** ** |
| Orlando I, FL (6)             |       | 1997                |       | 1987       |       | 52,170           |       | 63.8               | %          | 497        |       | Y                  |       | 4.9                 | %          |
| Orlando II, FL                |       | 2005                |       | 2002/04    |       | 63,084           |       | 83.6               | %          | 586        |       | N                  |       | 74.2                | %          |
| Orlando III, FL               |       | 2006                |       | 1988/90/96 |       | 104,140          |       | 68.2               | %          | 790        |       | Y                  |       | 6.9                 | %          |
| Oviedo, FL                    |       | 2006                |       | 1988/1991  |       | 49,251           |       | 76.8               | %          | 425        |       | Y                  |       | 3.2                 | %          |
| Pembroke Pines, FL            |       | 1997                |       | 1997       |       | 67,321           |       | 83.0               | %          | 702        |       | Y                  |       | 63.2                | %          |
| Royal Palm Beach I, FL † |       | 1994                |       | 1988       |       | 98,961           |       | 64.7               | %          | 675        |       | N                  |       | 54.5                | %          |
| Royal Palm Beach II, FL       |       | 2007                |       | 2004       |       | 81,415           |       | 72.2               | %          | 770        |       | N                  |       | 82.3                | %          |
| Sanford, FL                   |       | 2006                |       | 1988/2006  |       | 61,810           |       | 70.8               | %          | 438        |       | Y                  |       | 28.6                | %          |
| Sarasota, FL                  |       | 1998                |       | 1998       |       | 71,102           |       | 70.6               | %          | 526        |       | Y                  |       | 42.5                | %          |
| St. Augustine, FL             |       | 1996                |       | 1985       |       | 59,725           |       | 64.7               | %          | 697        |       | Y                  |       | 29.9                | %          |
| Stuart, FL                    |       | 1997                |       | 1995       |       | 86,883           |       | 73.0               | %          | 980        |       | N                  |       | 51.7                | %          |
| SW Ranches, FL                |       | 2007                |       | 2004       |       | 64,955           |       | 81.9               | %          | 648        |       | N                  |       | 85.3                | %          |
| Tampa II, FL                  |       | 2007                |       | 2001/2002  |       | 83,763           |       | 84.2               | %          | 796        |       | N                  |       | 28.5                | %          |
| West Palm Beach I, FL         |       | 2001                |       | 1997       |       | 68,063           |       | 77.7               | %          | 993        |       | Y                  |       | 47.2                | %          |
| West Palm Beach II, FL        |       | 2004                |       | 1996       |       | 94,503           |       | 79.7               | %          | 835        |       | Y                  |       | 73.9                | %          |
| Alpharetta, GA                |       | 2001                |       | 1996       |       | 90,485           |       | 71.0               | %          | 665        |       | Y                  |       | 75.1                | %          |
| Austell , GA                  |       | 2006                |       | 2000       |       | 83,525           |       | 75.5               | %          | 640        |       | N                  |       | 66.0                | %          |
| Decatur, GA                   |       | 1998                |       | 1986       |       | 148,320          |       | 73.0               | %          | 1320       |       | Y                  |       | 3.1                 | %          |
| Norcross, GA                  |       | 2001                |       | 1997       |       | 85,140           |       | 75.6               | %          | 577        |       | Y                  |       | 55.4                | %          |
| Peachtree City, GA            |       | 2001                |       | 1997       |       | 49,845           |       | 80.7               | %          | 444        |       | N                  |       | 75.6                | %          |
| Smyrna, GA                    |       | 2001                |       | 2000       |       | 56,970           |       | 81.1               | %          | 497        |       | Y                  |       | 100.0               | %          |
| Snellville, GA                |       | 2007                |       | 1996/1997  |       | 80,100           |       | 88.9               | %          | 753        |       | Y                  |       | 27.1                | %          |
| Suwanee I, GA                 |       | 2007                |       | 2000/2003  |       | 85,190           |       | 72.2               | %          | 622        |       | Y                  |       | 28.7                | %          |
| Suwanee II, GA                |       | 2007                |       | 2005       |       | 79,640           |       | 75.2               | %          | 574        |       | N                  |       | 61.5                | %          |
| Addison, IL                   |       | 2004                |       | 1979       |       | 31,325           |       | 88.4               | %          | 369        |       | Y                  |       | 0.0                 | %          |
| Aurora, IL                    |       | 2004                |       | 1996       |       | 74,060           |       | 73.2               | %          | 553        |       | Y                  |       | 6.9                 | %          |
| Bartlett, IL                  |       | 2004                |       | 1987       |       | 51,425           |       | 93.4               | %          | 412        |       | Y                  |       | 33.1                | %          |
| Bellwood, IL                  |       | 2001                |       | 1999       |       | 86,525           |       | 82.5               | %          | 744        |       | Y                  |       | 52.2                | %          |
| Des Plaines, IL (6)           |       | 2004                |       | 1978       |       | 74,400           |       | 85.5               | %          | 638        |       | N                  |       | 0.0                 | %          |
| Elk Grove Village, IL         |       | 2004                |       | 1987       |       | 64,179           |       | 86.9               | %          | 631        |       | Y                  |       | 5.5                 | %          |
| Glenview, IL                  |       | 2004                |       | 1998       |       | 100,115          |       | 91.7               | %          | 738        |       | Y                  |       | 100.0               | %          |
| Gurnee, IL                    |       | 2004                |       | 1987       |       | 80,275           |       | 82.2               | %          | 726        |       | Y                  |       | 34.1                | %          |
| Hanover, IL                   |       | 2004                |       | 1987       |       | 41,178           |       | 67.0               | %          | 408        |       | N                  |       | 0.4                 | %          |
| Harvey, IL                    |       | 2004                |       | 1987       |       | 60,090           |       | 88.9               | %          | 575        |       | Y                  |       | 3.0                 | %          |
| Joliet, IL                    |       | 2004                |       | 1993       |       | 74,350           |       | 69.9               | %          | 483        |       | Y                  |       | 96.4                | %          |
| Kildeer, IL                   |       | 2004                |       | 1988       |       | 46,475           |       | 89.4               | %          | 431        |       | Y                  |       | 0.0                 | %          |
| Lombard, IL                   |       | 2004                |       | 1981       |       | 57,938           |       | 92.9               | %          | 547        |       | N                  |       | 9.8                 | %          |
| Mount Prospect, IL            |       | 2004                |       | 1979       |       | 65,000           |       | 85.3               | %          | 595        |       | Y                  |       | 12.7                | %          |
| Mundelein, IL                 |       | 2004                |       | 1990       |       | 44,700           |       | 79.8               | %          | 490        |       | Y                  |       | 8.9                 | %          |
| North Chicago, IL             |       | 2004                |       | 1985       |       | 53,300           |       | 83.2               | %          | 430        |       | N                  |       | 0.0                 | %          |
| Plainfield I, IL              |       | 2004                |       | 1998       |       | 53,800           |       | 88.1               | %          | 399        |       | N                  |       | 3.3                 | %          |
| Plainfield II, IL             |       | 2005                |       | 2000       |       | 52,100           |       | 67.8               | %          | 357        |       | N                  |       | 22.7                | %          |
| Schaumburg, IL                |       | 2004                |       | 1988       |       | 31,160           |       | 86.8               | %          | 321        |       | N                  |       | 5.6                 | %          |
| Streamwood, IL                |       | 2004                |       | 1982       |       | 64,305           |       | 73.8               | %          | 570        |       | N                  |       | 4.4                 | %          |
| Warrensville, IL              |       | 2005                |       | 1977/89    |       | 48,796           |       | 82.5               | %          | 378        |       | N                  |       | 0.0                 | %          |
| Waukegan, IL                  |       | 2004                |       | 1977       |       | 79,750           |       | 78.8               | %          | 692        |       | Y                  |       | 8.4                 | %          |
| West Chicago, IL              |       | 2004                |       | 1979       |       | 48,175           |       | 73.8               | %          | 423        |       | Y                  |       | 0.0                 | %          |
| Westmont, IL                  |       | 2004                |       | 1979       |       | 53,700           |       | 85.3               | %          | 390        |       | Y                  |       | 0.0                 | %          |
| Wheeling I, IL                |       | 2004                |       | 1974       |       | 54,210           |       | 80.3               | %          | 499        |       | N                  |       | 0.0                 | %          |
| Wheeling II, IL               |       | 2004                |       | 1979       |       | 67,825           |       | 67.7               | %          | 612        |       | Y                  |       | 7.3                 | %          |
| Woodridge, IL                 |       | 2004                |       | 1987       |       | 50,667           |       | 76.8               | %          | 468        |       | N                  |       | 7.5                 | %          |
| Indianapolis I, IN            |       | 2004                |       | 1987       |       | 43,600           |       | 79.8               | %          | 327        |       | N                  |       | 0.0                 | %          |
| Indianapolis II, IN           |       | 2004                |       | 1997       |       | 44,900           |       | 81.8               | %          | 454        |       | Y                  |       | 15.6                | %          |
| Indianapolis III, IN          |       | 2004                |       | 1999       |       | 60,850           |       | 67.7               | %          | 496        |       | Y                  |       | 32.8                | %          |
| Indianapolis IV, IN           |       | 2004                |       | 1976       |       | 62,105           |       | 67.0               | %          | 535        |       | Y                  |       | 0.0                 | %          |
| Indianapolis V, IN            |       | 2004                |       | 1999       |       | 74,825           |       | 91.0               | %          | 584        |       | Y                  |       | 33.6                | %          |
| Indianapolis VI, IN           |       | 2004                |       | 1976       |       | 73,003           |       | 68.9               | %          | 717        |       | Y                  |       | 0.0                 | %          |
| Indianapolis VII, IN          |       | 2004                |       | 1992       |       | 91,727           |       | 67.1               | %          | 811        |       | Y                  |       | 6.4                 | %          |
| Indianapolis VIII, IN         |       | 2004                |       | 1975       |       | 80,000           |       | 62.5               | %          | 703        |       | Y                  |       | 0.0                 | %          |
| Indianapolis IX, IN           |       | 2004                |       | 1976       |       | 61,732           |       | 62.5               | %          | 544        |       | Y                  |       | 0.0                 | %          |
| Baton Rouge I, LA             |       | 1997                |       | 1980       |       | 35,450           |       | 77.4               | %          | 331        |       | Y                  |       | 11.6                | %          |
| Baton Rouge II, LA            |       | 1997                |       | 1980/1995  |       | 80,277           |       | 84.4               | %          | 569        |       | Y                  |       | 40.5                | %          |
| Slidell, LA                   |       | 2001                |       | 1998       |       | 79,540           |       | 79.2               | %          | 523        |       | Y                  |       | 46.6                | %          |
| Boston, MA                    |       | 2002                |       | 2001       |       | 60,695           |       | 81.1               | %          | 630        |       | Y                  |       | 100.0               | %          |
| Leominster, MA                |       | 1998                |       | 1987/88/00 |       | 53,823           |       | 74.1               | %          | 500        |       | Y                  |       | 38.5                | %          |
| Medford, MA                   |       | 2007                |       | 2001       |       | 58,895           |       | 70.0               | %          | 654        |       | N                  |       | 96.0                | %          |
| Baltimore, MD                 |       | 2001                |       | 1999/00    |       | 93,625           |       | 70.9               | %          | 835        |       | Y                  |       | 45.4                | %          |
| California, MD                |       | 2004                |       | 1998       |       | 77,840           |       | 89.1               | %          | 723        |       | Y                  |       | 39.0                | %          |
| Gaithersburg, MD              |       | 2005                |       | 1998       |       | 86,970           |       | 80.6               | %          | 790        |       | Y                  |       | 42.0                | %          |
| Laurel, MD †             |       | 2001                |       | 1978/99/00 |       | 162,097          |       | 90.2               | %          | 1018       |       | N                  |       | 40.9                | %          |
| Temple Hills, MD              |       | 2001                |       | 2000       |       | 97,250           |       | 80.0               | %          | 825        |       | Y                  |       | 68.8                | %          |
| Grand Rapids, MI              |       | 1996                |       | 1976       |       | 87,381           |       | 64.5               | %          | 525        |       | Y                  |       | 0.0                 | %          |

 

25

----

Tableof Contents

 
| ** **                | ** ** | **Year  Acquired/** | ** ** | **Year**         | ** ** | **Rentable**     | ** ** | ** **         | ** ** | ** ** | ** ** | **Manager**        | ** ** | **% Climate**       | ** ** |
|---------------------------|------------|---------------------|------------|------------------|------------|------------------|------------|--------------------|------------|------------|------------|--------------------|------------|---------------------|------------|
| **Facility Location**     | ** ** | **Developed  (1)**  | ** ** | **Built**        | ** ** | **Square  Feet** | ** ** | **Occupancy  (2)** | ** ** | **Units**  | ** ** | **Apartment  (3)** | ** ** | **Controlled  (4)** | ** ** |
| Portage, MI (6)           |       | 1996                |       | 1980             |       | 50,280           |       | 84.1               | %          | 386        |       | N                  |       | 0.0                 | %          |
| Romulus, MI               |       | 1997                |       | 1997             |       | 42,050           |       | 72.1               | %          | 339        |       | Y                  |       | 7.4                 | %          |
| Wyoming, MI               |       | 1996                |       | 1987             |       | 91,158           |       | 68.7               | %          | 635        |       | N                  |       | 0.0                 | %          |
| Gulfport, MS              |       | 1997                |       | 1977/93          |       | 61,251           |       | 77.7               | %          | 509        |       | Y                  |       | 33.5                | %          |
| Belmont, NC               |       | 2001                |       | 1996/97/98       |       | 81,048           |       | 68.3               | %          | 582        |       | N                  |       | 23.8                | %          |
| Burlington I, NC          |       | 2001                |       | 1990/91/93/94/98 |       | 109,396          |       | 66.9               | %          | 956        |       | N                  |       | 4.7                 | %          |
| Burlington II, NC         |       | 2001                |       | 1991             |       | 42,205           |       | 70.1               | %          | 391        |       | Y                  |       | 12.1                | %          |
| Cary, NC                  |       | 2001                |       | 1993/94/97       |       | 111,772          |       | 74.2               | %          | 788        |       | N                  |       | 7.3                 | %          |
| Charlotte, NC             |       | 1999                |       | 1999             |       | 69,000           |       | 82.6               | %          | 736        |       | Y                  |       | 52.4                | %          |
| Fayetteville I, NC        |       | 1997                |       | 1981             |       | 41,400           |       | 89.0               | %          | 343        |       | N                  |       | 0.0                 | %          |
| Fayetteville II, NC       |       | 1997                |       | 1993/95          |       | 54,225           |       | 92.0               | %          | 547        |       | Y                  |       | 11.9                | %          |
| Raleigh, NC               |       | 1998                |       | 1994/95          |       | 48,675           |       | 80.5               | %          | 413        |       | Y                  |       | 8.2                 | %          |
| Brick, NJ                 |       | 1994                |       | 1981             |       | 51,740           |       | 66.8               | %          | 430        |       | N                  |       | 0.0                 | %          |
| Clifton, NJ               |       | 2005                |       | 2001             |       | 105,550          |       | 79.6               | %          | 1015       |       | Y                  |       | 85.5                | %          |
| Cranford, NJ              |       | 1994                |       | 1987             |       | 91,250           |       | 78.4               | %          | 851        |       | Y                  |       | 7.9                 | %          |
| East Hanover, NJ          |       | 1994                |       | 1983             |       | 107,579          |       | 70.0               | %          | 970        |       | N                  |       | 1.6                 | %          |
| Elizabeth, NJ             |       | 2005                |       | 1925/97          |       | 38,910           |       | 87.2               | %          | 671        |       | N                  |       | 0.0                 | %          |
| Fairview, NJ              |       | 1997                |       | 1989             |       | 27,925           |       | 73.8               | %          | 448        |       | N                  |       | 100.0               | %          |
| Hamilton, NJ              |       | 2006                |       | 1990             |       | 70,550           |       | 62.2               | %          | 610        |       | Y                  |       | 0.0                 | %          |
| Hoboken, NJ               |       | 2005                |       | 1945/97          |       | 34,180           |       | 81.1               | %          | 742        |       | N                  |       | 100.0               | %          |
| Linden, NJ                |       | 1994                |       | 1983             |       | 100,325          |       | 66.1               | %          | 1116       |       | N                  |       | 2.8                 | %          |
| Morris Township, NJ (5)   |       | 1997                |       | 1972             |       | 71,776           |       | 72.2               | %          | 566        |       | Y                  |       | 1.3                 | %          |
| Parsippany, NJ            |       | 1997                |       | 1981             |       | 66,325           |       | 84.2               | %          | 567        |       | Y                  |       | 6.9                 | %          |
| Randolph, NJ              |       | 2002                |       | 1998/99          |       | 52,565           |       | 78.5               | %          | 554        |       | Y                  |       | 82.5                | %          |
| Sewell, NJ                |       | 2001                |       | 1984/98          |       | 57,830           |       | 73.6               | %          | 464        |       | N                  |       | 5.3                 | %          |
| Albuquerque I, NM         |       | 2005                |       | 1985             |       | 65,852           |       | 89.1               | %          | 610        |       | Y                  |       | 3.2                 | %          |
| Albuquerque II, NM        |       | 2005                |       | 1985             |       | 58,798           |       | 81.8               | %          | 524        |       | Y                  |       | 4.1                 | %          |
| Albuquerque IV, NM        |       | 2005                |       | 1986             |       | 57,536           |       | 83.9               | %          | 514        |       | Y                  |       | 4.7                 | %          |
| Carlsbad, NM              |       | 2005                |       | 1975             |       | 39,999           |       | 91.7               | %          | 342        |       | Y                  |       | 0.0                 | %          |
| Deming, NM                |       | 2005                |       | 1973/83          |       | 33,005           |       | 90.9               | %          | 241        |       | Y                  |       | 0.0                 | %          |
| Las Cruces, NM            |       | 2005                |       | 1984             |       | 43,850           |       | 68.8               | %          | 378        |       | Y                  |       | 3.1                 | %          |
| Las Cruces, NM            |       | 2008                |       | 2007             |       | 21,890           |       | 44.5               | %          | 156        |       | N                  |       | 11.4                | %          |
| Lovington, NM             |       | 2005                |       | 1975             |       | 15,750           |       | 76.7               | %          | 261        |       | Y                  |       | 0.0                 | %          |
| Silver City, NM           |       | 2005                |       | 1972             |       | 26,975           |       | 74.8               | %          | 239        |       | Y                  |       | 0.0                 | %          |
| Truth or Consequences, NM |       | 2005                |       | 1977/99/00       |       | 24,010           |       | 74.3               | %          | 172        |       | Y                  |       | 0.0                 | %          |
| Las Vegas I, NV †    |       | 2006                |       | 1986             |       | 48,218           |       | 76.4               | %          | 378        |       | Y                  |       | 5.4                 | %          |
| Las Vegas II, NV          |       | 2006                |       | 1997             |       | 48,850           |       | 87.7               | %          | 506        |       | N                  |       | 75.2                | %          |
| Jamaica, NY               |       | 2001                |       | 2000             |       | 88,415           |       | 75.9               | %          | 918        |       | Y                  |       | 30.7                | %          |
| New Rochelle, NY          |       | 2005                |       | 1998             |       | 48,431           |       | 84.3               | %          | 399        |       | N                  |       | 15.0                | %          |
| North Babylon, NY         |       | 1998                |       | 1988/99          |       | 78,188           |       | 83.8               | %          | 649        |       | N                  |       | 9.0                 | %          |
| Riverhead, NY             |       | 2005                |       | 1985/86/99       |       | 38,240           |       | 74.7               | %          | 325        |       | N                  |       | 0.0                 | %          |
| Southold, NY              |       | 2005                |       | 1989             |       | 58,609           |       | 68.5               | %          | 580        |       | N                  |       | 3.1                 | %          |
| Boardman, OH              |       | 1980                |       | 1980/89          |       | 65,495           |       | 65.9               | %          | 513        |       | Y                  |       | 24.0                | %          |
| Canton I, OH              |       | 2005                |       | 1979/87          |       | 39,750           |       | 72.9               | %          | 407        |       | N                  |       | 0.0                 | %          |
| Canton II, OH             |       | 2005                |       | 1997             |       | 26,200           |       | 69.7               | %          | 191        |       | Y                  |       | 0.0                 | %          |
| Centerville I, OH         |       | 2004                |       | 1976             |       | 86,390           |       | 64.2               | %          | 639        |       | Y                  |       | 0.0                 | %          |
| Centerville II, OH        |       | 2004                |       | 1976             |       | 43,350           |       | 68.0               | %          | 305        |       | N                  |       | 0.0                 | %          |
| Cleveland I, OH           |       | 2005                |       | 1997/99          |       | 45,950           |       | 82.6               | %          | 335        |       | Y                  |       | 4.9                 | %          |
| Cleveland II, OH          |       | 2005                |       | 2000             |       | 58,425           |       | 55.2               | %          | 569        |       | Y                  |       | 0.0                 | %          |
| Columbus , OH             |       | 2006                |       | 1999             |       | 72,155           |       | 61.7               | %          | 598        |       | Y                  |       | 26.1                | %          |
| Dayton I, OH              |       | 2004                |       | 1978             |       | 43,100           |       | 69.0               | %          | 341        |       | N                  |       | 0.0                 | %          |
| Dayton II, OH             |       | 2005                |       | 1989/00          |       | 48,149           |       | 75.2               | %          | 387        |       | Y                  |       | 1.7                 | %          |
| Euclid I, OH              |       | 1988*               |       | 1988             |       | 46,910           |       | 65.0               | %          | 428        |       | Y                  |       | 22.2                | %          |
| Euclid II, OH             |       | 1988*               |       | 1988             |       | 47,275           |       | 70.8               | %          | 377        |       | Y                  |       | 0.0                 | %          |
| Grove City, OH            |       | 2006                |       | 1997             |       | 89,290           |       | 75.5               | %          | 776        |       | Y                  |       | 16.9                | %          |
| Hilliard, OH              |       | 2006                |       | 1995             |       | 89,715           |       | 66.7               | %          | 779        |       | Y                  |       | 24.5                | %          |
| Lakewood, OH              |       | 1989*               |       | 1989             |       | 39,337           |       | 77.9               | %          | 459        |       | Y                  |       | 24.6                | %          |
| Louisville, OH            |       | 2005                |       | 1988/90          |       | 53,960           |       | 74.0               | %          | 383        |       | N                  |       | 0.0                 | %          |
| Marblehead, OH            |       | 2005                |       | 1988/98          |       | 52,300           |       | 77.5               | %          | 383        |       | Y                  |       | 0.0                 | %          |
| Mason, OH                 |       | 1998                |       | 1981             |       | 33,900           |       | 77.1               | %          | 281        |       | Y                  |       | 0.0                 | %          |
| Mentor, OH                |       | 2005                |       | 1983/99          |       | 51,225           |       | 93.7               | %          | 366        |       | N                  |       | 16.1                | %          |
| Miamisburg, OH            |       | 2004                |       | 1975             |       | 59,930           |       | 68.2               | %          | 430        |       | Y                  |       | 0.0                 | %          |
| Middleburg Heights, OH    |       | 1980*               |       | 1980             |       | 93,025           |       | 81.9               | %          | 662        |       | N                  |       | 3.8                 | %          |
| North Canton I, OH        |       | 1979*               |       | 1979             |       | 45,400           |       | 80.8               | %          | 318        |       | N                  |       | 0.0                 | %          |
| North Canton II, OH       |       | 1983*               |       | 1983             |       | 44,140           |       | 80.8               | %          | 345        |       | Y                  |       | 15.8                | %          |
| North Olmsted I, OH       |       | 1979*               |       | 1979             |       | 48,665           |       | 74.7               | %          | 441        |       | N                  |       | 7.0                 | %          |
| North Olmsted II, OH      |       | 1988*               |       | 1988             |       | 47,850           |       | 79.9               | %          | 398        |       | Y                  |       | 14.2                | %          |
| North Randall, OH         |       | 1998*               |       | 1998/02          |       | 80,099           |       | 76.1               | %          | 800        |       | N                  |       | 90.8                | %          |
| Perry, OH                 |       | 2005                |       | 1992/97          |       | 63,700           |       | 68.4               | %          | 420        |       | Y                  |       | 0.0                 | %          |
| Reynoldsburg, OH          |       | 2006                |       | 1979             |       | 66,895           |       | 66.8               | %          | 663        |       | Y                  |       | 0.0                 | %          |
| Strongsville, OH          |       | 2007                |       | 1978             |       | 43,727           |       | 81.2               | %          | 402        |       | N                  |       | 100.0               | %          |
| Warrensville Heights, OH  |       | 1980*               |       | 1980/82/98       |       | 90,281           |       | 64.2               | %          | 710        |       | Y                  |       | 0.0                 | %          |

 

26

----

Tableof Contents

 
| ** **               | ** ** | **Year  Acquired/** | ** ** | **Year**  | ** ** | **Rentable**     | ** ** | ** **         | ** ** | ** ** | ** ** | **Manager**        | ** ** | **% Climate**       | ** ** |
|--------------------------|------------|---------------------|------------|-----------|------------|------------------|------------|--------------------|------------|------------|------------|--------------------|------------|---------------------|------------|
| **Facility Location**    | ** ** | **Developed  (1)**  | ** ** | **Built** | ** ** | **Square  Feet** | ** ** | **Occupancy  (2)** | ** ** | **Units**  | ** ** | **Apartment  (3)** | ** ** | **Controlled  (4)** | ** ** |
| Westlake, OH             |       | 2005                |       | 2001      |       | 62,750           |       | 80.8               | %          | 452        |       | Y                  |       | 6.1                 | %          |
| Willoughby, OH           |       | 2005                |       | 1997      |       | 34,064           |       | 72.3               | %          | 268        |       | Y                  |       | 10.1                | %          |
| Youngstown, OH           |       | 1977*               |       | 1977      |       | 65,950           |       | 70.1               | %          | 521        |       | Y                  |       | 1.2                 | %          |
| Levittown, PA            |       | 2001                |       | 2000      |       | 76,180           |       | 78.9               | %          | 653        |       | Y                  |       | 36.3                | %          |
| Philadelphia, PA         |       | 2001                |       | 1999      |       | 97,689           |       | 80.7               | %          | 961        |       | N                  |       | 47.2                | %          |
| Alcoa, TN                |       | 2005                |       | 1986      |       | 42,325           |       | 81.3               | %          | 359        |       | N                  |       | 0.0                 | %          |
| Antioch, TN              |       | 2005                |       | 1985/98   |       | 76,160           |       | 73.5               | %          | 617        |       | Y                  |       | 8.5                 | %          |
| Cordova I, TN            |       | 2005                |       | 1987      |       | 54,225           |       | 71.6               | %          | 385        |       | Y                  |       | 0.0                 | %          |
| Cordova II, TN           |       | 2006                |       | 1995      |       | 67,750           |       | 84.7               | %          | 714        |       | N                  |       | 7.2                 | %          |
| Knoxville I, TN          |       | 1997                |       | 1984      |       | 29,337           |       | 76.1               | %          | 293        |       | Y                  |       | 6.8                 | %          |
| Knoxville II, TN         |       | 1997                |       | 1985      |       | 38,000           |       | 81.2               | %          | 333        |       | Y                  |       | 6.9                 | %          |
| Knoxville III, TN        |       | 1998                |       | 1991      |       | 45,736           |       | 74.1               | %          | 451        |       | Y                  |       | 6.9                 | %          |
| Knoxville IV, TN         |       | 1998                |       | 1983      |       | 58,752           |       | 69.9               | %          | 436        |       | N                  |       | 1.1                 | %          |
| Knoxville V, TN          |       | 1998                |       | 1977      |       | 42,790           |       | 77.8               | %          | 370        |       | N                  |       | 0.0                 | %          |
| Knoxville VI, TN         |       | 2005                |       | 1975      |       | 63,440           |       | 84.0               | %          | 586        |       | Y                  |       | 0.0                 | %          |
| Knoxville VII, TN        |       | 2005                |       | 1983      |       | 55,094           |       | 71.2               | %          | 446        |       | Y                  |       | 0.0                 | %          |
| Knoxville VIII, TN       |       | 2005                |       | 1978      |       | 95,868           |       | 67.8               | %          | 769        |       | Y                  |       | 0.0                 | %          |
| Memphis I, TN            |       | 2001                |       | 1999      |       | 90,700           |       | 82.6               | %          | 696        |       | N                  |       | 50.3                | %          |
| Memphis II, TN           |       | 2001                |       | 2000      |       | 71,885           |       | 78.2               | %          | 558        |       | N                  |       | 46.2                | %          |
| Memphis III, TN          |       | 2005                |       | 1983      |       | 40,807           |       | 80.1               | %          | 350        |       | N                  |       | 6.4                 | %          |
| Memphis IV, TN           |       | 2005                |       | 1986      |       | 38,750           |       | 72.6               | %          | 322        |       | Y                  |       | 4.3                 | %          |
| Memphis V, TN            |       | 2005                |       | 1981      |       | 60,120           |       | 69.8               | %          | 494        |       | Y                  |       | 0.0                 | %          |
| Memphis VI, TN           |       | 2006                |       | 1985/93   |       | 108,771          |       | 81.2               | %          | 872        |       | Y                  |       | 3.3                 | %          |
| Memphis VII, TN          |       | 2006                |       | 1980/85   |       | 115,303          |       | 68.7               | %          | 578        |       | N                  |       | 0.0                 | %          |
| Memphis VIII, TN †  |       | 2006                |       | 1990      |       | 96,060           |       | 71.8               | %          | 557        |       | Y                  |       | 0.0                 | %          |
| Nashville I, TN          |       | 2005                |       | 1984      |       | 103,430          |       | 77.2               | %          | 693        |       | Y                  |       | 0.0                 | %          |
| Nashville II, TN         |       | 2005                |       | 1986/00   |       | 83,484           |       | 68.4               | %          | 632        |       | Y                  |       | 6.5                 | %          |
| Nashville III, TN        |       | 2006                |       | 1985      |       | 101,475          |       | 78.1               | %          | 622        |       | Y                  |       | 5.2                 | %          |
| Nashville IV, TN         |       | 2006                |       | 1986/00   |       | 102,425          |       | 83.8               | %          | 722        |       | N                  |       | 7.0                 | %          |
| Austin I, TX             |       | 2005                |       | 2001      |       | 59,595           |       | 80.2               | %          | 537        |       | Y                  |       | 58.7                | %          |
| Austin II, TX            |       | 2006                |       | 2000/03   |       | 65,401           |       | 83.2               | %          | 594        |       | Y                  |       | 38.8                | %          |
| Austin III, TX           |       | 2006                |       | 2004      |       | 70,610           |       | 73.8               | %          | 579        |       | Y                  |       | 85.4                | %          |
| Baytown, TX              |       | 2005                |       | 1981      |       | 38,950           |       | 76.6               | %          | 362        |       | Y                  |       | 0.0                 | %          |
| Bryan, TX                |       | 2005                |       | 1994      |       | 60,450           |       | 76.2               | %          | 495        |       | Y                  |       | 0.0                 | %          |
| College Station, TX      |       | 2005                |       | 1993      |       | 26,550           |       | 68.4               | %          | 346        |       | N                  |       | 0.0                 | %          |
| Dallas, TX               |       | 2005                |       | 2000      |       | 58,582           |       | 88.7               | %          | 542        |       | Y                  |       | 26.6                | %          |
| Denton, TX               |       | 2006                |       | 1996      |       | 60,836           |       | 89.2               | %          | 463        |       | Y                  |       | 3.9                 | %          |
| El Paso I, TX            |       | 2005                |       | 1980      |       | 59,652           |       | 80.4               | %          | 509        |       | N                  |       | 0.9                 | %          |
| El Paso II, TX           |       | 2005                |       | 1980      |       | 48,704           |       | 96.3               | %          | 412        |       | Y                  |       | 0.0                 | %          |
| El Paso III, TX          |       | 2005                |       | 1980      |       | 71,276           |       | 84.0               | %          | 595        |       | Y                  |       | 2.0                 | %          |
| El Paso IV, TX           |       | 2005                |       | 1983      |       | 67,058           |       | 73.7               | %          | 510        |       | Y                  |       | 3.2                 | %          |
| El Paso V, TX            |       | 2005                |       | 1982      |       | 62,300           |       | 69.0               | %          | 398        |       | Y                  |       | 0.0                 | %          |
| El Paso VI, TX           |       | 2005                |       | 1985      |       | 36,620           |       | 79.8               | %          | 258        |       | N                  |       | 0.0                 | %          |
| El Paso VII, TX †   |       | 2005                |       | 1982      |       | 34,545           |       | 80.3               | %          | 13         |       | N                  |       | 0.0                 | %          |
| Fort Worth I, TX         |       | 2005                |       | 2000      |       | 49,778           |       | 75.4               | %          | 406        |       | Y                  |       | 27.0                | %          |
| Fort Worth II, TX        |       | 2006                |       | 2003      |       | 72,925           |       | 83.8               | %          | 656        |       | N                  |       | 49.0                | %          |
| Frisco I, TX             |       | 2005                |       | 1996      |       | 50,854           |       | 83.1               | %          | 433        |       | Y                  |       | 17.5                | %          |
| Frisco II, TX            |       | 2005                |       | 1998/02   |       | 71,239           |       | 76.3               | %          | 513        |       | Y                  |       | 23.2                | %          |
| Frisco III, TX           |       | 2006                |       | 2004      |       | 75,215           |       | 78.6               | %          | 609        |       | Y                  |       | 88.0                | %          |
| Garland I, TX            |       | 2006                |       | 1991      |       | 70,100           |       | 80.6               | %          | 654        |       | Y                  |       | 4.4                 | %          |
| Garland II, TX           |       | 2006                |       | 2004      |       | 68,425           |       | 77.4               | %          | 472        |       | Y                  |       | 39.6                | %          |
| Greenville I, TX         |       | 2005                |       | 2001/04   |       | 59,385           |       | 72.8               | %          | 452        |       | Y                  |       | 28.8                | %          |
| Greenville II, TX        |       | 2005                |       | 2001      |       | 44,900           |       | 79.0               | %          | 319        |       | N                  |       | 36.3                | %          |
| Houston I, TX            |       | 2005                |       | 1981      |       | 100,820          |       | 86.7               | %          | 632        |       | Y                  |       | 0.0                 | %          |
| Houston II, TX           |       | 2005                |       | 1977      |       | 71,300           |       | 90.5               | %          | 391        |       | Y                  |       | 0.0                 | %          |
| Houston III, TX          |       | 2005                |       | 1984      |       | 61,145           |       | 74.0               | %          | 463        |       | Y                  |       | 4.3                 | %          |
| Houston IV, TX           |       | 2005                |       | 1987      |       | 43,775           |       | 75.7               | %          | 380        |       | Y                  |       | 6.2                 | %          |
| Houston V, TX †     |       | 2006                |       | 1980/1997 |       | 126,080          |       | 80.6               | %          | 1010       |       | Y                  |       | 55.2                | %          |
| Keller, TX               |       | 2006                |       | 2000      |       | 61,885           |       | 75.7               | %          | 487        |       | Y                  |       | 21.1                | %          |
| La Porte, TX             |       | 2005                |       | 1984      |       | 45,050           |       | 81.6               | %          | 432        |       | Y                  |       | 18.5                | %          |
| Lewisville, TX           |       | 2006                |       | 1996      |       | 58,140           |       | 63.2               | %          | 426        |       | Y                  |       | 19.3                | %          |
| Mansfield, TX            |       | 2006                |       | 2003      |       | 63,075           |       | 78.7               | %          | 495        |       | Y                  |       | 38.4                | %          |
| McKinney I, TX           |       | 2005                |       | 1996      |       | 46,940           |       | 90.8               | %          | 366        |       | Y                  |       | 9.0                 | %          |
| McKinney II, TX          |       | 2006                |       | 1996      |       | 70,050           |       | 88.7               | %          | 540        |       | Y                  |       | 46.3                | %          |
| North Richland Hills, TX |       | 2005                |       | 2002      |       | 57,175           |       | 81.2               | %          | 433        |       | N                  |       | 47.6                | %          |
| Roanoke, TX              |       | 2005                |       | 1996/01   |       | 59,300           |       | 91.7               | %          | 448        |       | Y                  |       | 30.0                | %          |
| San Antonio I, TX        |       | 2005                |       | 2005      |       | 73,530           |       | 83.5               | %          | 575        |       | Y                  |       | 78.5                | %          |
| San Antonio II, TX       |       | 2006                |       | 2005      |       | 73,280           |       | 78.2               | %          | 671        |       | N                  |       | 82.3                | %          |
| San Antonio III, TX      |       | 2007                |       | 2006      |       | 71,775           |       | 79.0               | %          | 565        |       | N                  |       | 87.4                | %          |
| Sherman I, TX            |       | 2005                |       | 1998      |       | 54,975           |       | 70.4               | %          | 509        |       | N                  |       | 20.9                | %          |
| Sherman II, TX           |       | 2005                |       | 1996      |       | 48,425           |       | 74.4               | %          | 392        |       | Y                  |       | 30.9                | %          |
| Spring, TX               |       | 2006                |       | 1980/86   |       | 72,751           |       | 73.4               | %          | 536        |       | Y                  |       | 14.1                | %          |

 

27

----

Tableof Contents

 
| ** **                                   | ** ** | **Year Acquired/** | ** ** | **Year**  | ** ** | **Rentable**    | ** ** | ** **        | ** ** | ** ** | ** ** | **Manager**       | ** ** | **% Climate**      | ** ** |
|----------------------------------------------|------------|--------------------|------------|-----------|------------|-----------------|------------|-------------------|------------|------------|------------|-------------------|------------|--------------------|------------|
| **Facility  Location**                       | ** ** | **Developed (1)**  | ** ** | **Built** | ** ** | **Square Feet** | ** ** | **Occupancy (2)** | ** ** | **Units**  | ** ** | **Apartment (3)** | ** ** | **Controlled (4)** | ** ** |
| Murray I, UT                                 |       | 2005               |       | 1976      |       | 60,180          |       | 77.7              | %          | 647        |       | Y                 |       | 0.0                | %          |
| Murray II, UT †                         |       | 2005               |       | 1978      |       | 71,222          |       | 90.2              | %          | 372        |       | N                 |       | 2.6                | %          |
| Salt Lake City I, UT                         |       | 2005               |       | 1976      |       | 56,446          |       | 74.0              | %          | 732        |       | Y                 |       | 0.0                | %          |
| Salt Lake City II, UT                        |       | 2005               |       | 1978      |       | 53,676          |       | 74.5              | %          | 504        |       | Y                 |       | 0.0                | %          |
| Fredericksburg I, VA                         |       | 2005               |       | 2001/04   |       | 69,475          |       | 74.2              | %          | 606        |       | N                 |       | 21.4               | %          |
| Fredericksburg II, VA                        |       | 2005               |       | 1998/01   |       | 61,207          |       | 63.2              | %          | 568        |       | N                 |       | 100.0              | %          |
| Milwaukee, WI                                |       | 2004               |       | 1988      |       | 58,515          |       | 76.4              | %          | 485        |       | Y                 |       | 0.0                | %          |
|                                         |       |               |       |      |       |            |       |              |       |       |       |              |       |               |       |
| **Total/Weighted  Average (367 Facilities)** | ** ** | **23,748,702**     | ** ** | **75.2**  | **%**      | **204,815**     |       |              |       |       |       |

 

----

* Denotesfacilities developed by us.

 

†Denotes facilities that contain a significant amount of commercial rentablesquare footage.  All of this commercialspace, which was developed in conjunction with the self-storage units, islocated within or adjacent to our self-storage facilities and is managed by ourself-storage facility managers.  As of December 31,2009, there was an aggregate of approximately 449,000 rentable square feet ofcommercial space at these facilities.

 

(1) Representsthe year acquired for those facilities acquired from a third party or the yeardeveloped for those facilities developed by us.

 

(2) Representsoccupied square feet divided by total rentable square feet at December 31,2009.

 

(3) Indicateswhether a facility has an on-site apartment where a manager resides.

 

(4) Representsthe percentage of rentable square feet in climate-controlled units.

 

(5) Wedo not own the land at this facility.  Weleased the land pursuant to a ground lease that expires in 2013, but have eightfive-year renewal options.

 

(6) We have groundleases for certain small parcels of land adjacent to these facilities thatexpire between 2010 and 2015.

 

Our growth has been achieved by adding facilities toour portfolio through acquisitions and development. The tables set forth belowshow the average occupancy, annual rent per occupied square foot, averageoccupied square feet and total revenues for our facilities owned as of December 31,2009, and for each of the last three years, grouped by the year end duringwhich we first owned or operated the facility.

 

**OurFacilities by Year Acquired - Average Occupied Square Feet (2)**

 
| ** **                                         | ** ** | ** **          | ** ** | **Rentable Square** | ** ** | **Average Occupancy** | ** ** |
|----------------------------------------------------|------------|---------------------|------------|---------------------|------------|-----------------------|------------|
| **Year  Acquired (1)**                             | ** ** | **# of Facilities** | ** ** | **Feet**            | ** ** | **2009**              | ** ** | **2008** | ** ** | **2007** | ** ** |
| 2006  and earlier                                  |       | 349                 |       | 22,345,852          |       | 75.9                  | %          | 80.0 | % | 79.7 | % |
| 2007                                               |       | 17                  |       | 1,318,265           |       | 77.2                  | %          | 76.1 | % | 71.3 | % |
| 2008                                               |       | 1                   |       | 84,585              |       | 72.3                  | %          | 69.5 | % | — |   |
| 2009                                               |       | —              |       | —              |       | —                |       | — |   | — |   |
| All  Facilities Owned as of December 31, 2009 |       | 367                 |       | 23,748,702          |       | 75.9                  | %          | 79.8 | % | 79.5 | % |

 

28

----

Tableof Contents

 

**OurFacilities by Year Acquired - Annual Rent Per Occupied Square Foot (2)**

 
| ** **                                         | ** ** | ** **          | ** ** | **Rent per Square Foot** | ** ** |
|----------------------------------------------------|------------|---------------------|------------|--------------------------|------------|
| **Year  Acquired (1)**                             | ** ** | **# of Facilities** | ** ** | **2009**                 | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** **                                         | ** ** | ** **          | ** ** | ** **               | ** ** | ** ** | ** ** | ** ** | ** ** |
| 2006  and earlier                                  |       | 349                 |       | $                        | 11.70      |   | $ | 11.45 |   | $ | 11.48 |   |
| 2007                                               |       | 17                  |       | 12.20                    |       | 12.29 |   | 11.29 |   |
| 2008                                               |       | 1                   |       | 22.13                    |       | 21.12 |   | — |   |
| 2009                                               |       | —              |       | —                   |       | — |   | — |   |
|                                               |       |                |       |                     |       |   |   |   |   |
| All  Facilities Owned as of December 31, 2009 |       | 367                 |       | $                        | 11.76      |   | $ | 11.52 |   | $ | 11.47 |   |

 

----

(1)  For facilitiesdeveloped by us, “Year Acquired” represents the year in which such facilitieswere acquired by our operating partnership from an affiliated entity, which insome cases is later than the year developed.

 

(2)  Determined bydividing the aggregate rental revenue for each twelve-month period by theaverage of the month-end occupied square feet for the period. Rental revenueincludes customer rental revenues, access, administrative and late fees andrevenues from auctions, but does not include ancillary revenues generated atour facilities.

 

**Facilities by Year Acquired - Average Occupied Square Feet(2)**

 
| ** **                                         | ** ** | ** **          | ** ** | **Average Occupied Square Feet** | ** ** |
|----------------------------------------------------|------------|---------------------|------------|----------------------------------|------------|
| **Year  Acquired (1)**                             | ** ** | **# of Facilities** | ** ** | **2009**                         | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** **                                         | ** ** | ** **          | ** ** | ** **                       | ** ** | ** ** | ** ** | ** ** | ** ** |
| 2006  and earlier                                  |       | 349                 |       | 16,964,729                       |       | 17,957,743 |   | 17,910,241 |   |
| 2007                                               |       | 17                  |       | 1,017,882                        |       | 1,003,961 |   | 934,799 |   |
| 2008                                               |       | 1                   |       | 61,113                           |       | 58,844 |   | — |   |
| 2009                                               |       | —              |       | —                           |       | — |   | — |   |
| ** **                                         |       |                |       |                             |       |   |   |   |   |
| All  Facilities Owned as of December 31, 2009 |       | 367                 |       | 18,043,724                       |       | 19,020,548 |   | 18,845,040 |   |

 

**Facilities by Year Acquired - Total Revenues (dollars inthousands) (3)**

 
| ** **                                         | ** ** | ** **          | ** ** | **Total Revenues** | ** ** |
|----------------------------------------------------|------------|---------------------|------------|--------------------|------------|
| **Year  Acquired (1)**                             | ** ** | **# of Facilities** | ** ** | **2009**           | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** **                                         | ** ** | ** **          | ** ** | ** **         | ** ** | ** ** | ** ** | ** ** | ** ** |
| 2006  and earlier                                  |       | 349                 |       | $                  | 202,393    |   | $ | 210,066 |   | $ | 202,161 |   |
| 2007                                               |       | 17                  |       | 12,852             |       | 12,682 |   | 4,891 |   |
| 2008                                               |       | 1                   |       | 1,404              |       | 1,309 |   | — |   |
| 2009                                               |       | —              |       | —             |       | — |   | — |   |
|                                               |       |                |       |               |       |   |   |   |   |
| All  Facilities Owned as of December 31, 2009 |       | 367                 |       | $                  | 216,649    |   | $ | 224,057 |   | $ | 207,052 |   |

 

----

(1)  For facilitiesdeveloped by us, “Year Acquired” represents the year in which such facilitieswere acquired by our operating partnership from an affiliated entity, which insome cases is later than the year developed.

 

(2)  Represents theaverage of the aggregate month-end occupied square feet for the twelve-monthperiod for each group of facilities.

 

(3)  Represents theresult obtained by multiplying total income per occupied square foot by theaverage occupied square feet for the twelve-month period for each group offacilities.

 

29

----

Table of Contents

 

**Planned Renovations and Improvements**

 

We have a capitalimprovement and property renovation program that includes office upgrades,adding climate control at selected units, construction of parking areas, safetyand security enhancements, and general facility upgrades.  For 2010, we anticipate spendingapproximately $7 million to $9 million associated with these capital expendituresand expect to enhance the safety and improve the aesthetic appeal of ourfacilities.

 

**ITEM 3.  *LEGAL PROCEEDINGS***

 

We are involved in claimsfrom time to time, including the proceeding identified below, which arise inthe ordinary course of business. In the opinion of management, we have madeadequate provision for potential liabilities, if any, arising from any suchmatters. However, litigation is inherently unpredictable, and the costs andother effects of pending or future litigation, governmental investigations,legal and administrative cases and proceedings (whether civil or criminal),settlements, judgments and investigations, claims and changes in any suchmatters, could have a material adverse effect on our business, financialcondition and operating results.

 

On November 4, 2009, our Operating Partnershipwas sued in the Delaware Court of Chancery by Robert J. Amsdell, Barry L.Amsdell, and Amsdell Holdings I, Inc. (collectively, the “AmsdellPlaintiffs”).  The Amsdell Plaintiffs’ lawsuit seeks to compel our Operating Partnershipto indemnify the Amsdell Plaintiffs for losses and expenses allegedly incurredby the Amsdell Plaintiffs from legal proceedings filed against the AmsdellPlaintiffs, which proceedings alleged, *interalia*, that the Amsdell Plaintiffs breached an agreement to purchasecertain real estate located in Brighton, Massachusetts in 2001.  We are vigorously defending againstthis action.  The matter is presently inthe discovery phase and no trial date has been set by the Court.

 

**ITEM 4.  *RESERVED***

 

30

----

Table of Contents

 

**PART II**

 

**ITEM 5.  *MARKET FOR REGISTRANT’S COMMON EQUITY, RELATEDSHAREHOLDER******MATTERS ANDISSUER PURCHASES OF EQUITY SECURITIES***

 

As of December 31, 2009, there were approximately54 registered record holders of our common shares. This figure does not includebeneficial owners who hold shares in nominee name. The following table showsthe high and low closing prices per share for our common shares, as reported bythe New York Stock Exchange, and the cash dividends declared with respect tosuch shares:

 
| ** **      | ** ** | ** ** | ** ** | ** ** | ** ** | **Cash Dividends** | ** ** |
|-----------------|------------|------------|------------|------------|------------|-------------------------|------------|
| ** **      | ** ** | **High**   | ** ** | **Low**    | ** ** | **Declared**            | ** ** |
| **2008**        |       |       |       |       |       |                    |       |
| First  quarter  |       | $          | 11.37      |       | $          | 7.86                    |       | $ | 0.18 |   |
| Second  quarter |       | $          | 13.38      |       | $          | 11.14                   |       | $ | 0.18 |   |
| Third  quarter  |       | $          | 13.17      |       | $          | 10.96                   |       | $ | 0.18 |   |
| Fourth  quarter |       | $          | 11.99      |       | $          | 3.62                    |       | $ | 0.025 |   |
| **2009**        |       |       |       |       |       |                    |       |
| First  quarter  |       | $          | 5.03       |       | $          | 1.40                    |       | $ | 0.025 |   |
| Second  quarter |       | $          | 4.93       |       | $          | 2.12                    |       | $ | 0.025 |   |
| Third  quarter  |       | $          | 6.83       |       | $          | 4.23                    |       | $ | 0.025 |   |
| Fourth  quarter |       | $          | 7.60       |       | $          | 5.70                    |       | $ | 0.025 |   |

 

Since our initial quarter as a publicly-traded REIT,we have made regular quarterly distributions to our shareholders.  Distributions to shareholders are usuallytaxable as ordinary income, although a portion of the distribution may be designatedas capital gain or may constitute a tax-free return of capital. Annually, weprovide each of our shareholders a statement detailing distributions paidduring the preceding year and their characterization as ordinary income,capital gain or return of capital. The characterization of our dividends for2009 was 100% capital gain distribution.

 

We intend to continue to declare quarterlydistributions. However, we cannot provide any assurance as to the amount ortiming of future distributions. Under our revolving credit facility, we arerestricted from paying distributions on our common shares that would exceed anamount equal to the greater of (i) 95% of our funds from operations, and (ii) suchamount as may be necessary to maintain our REIT status.

 

To the extent that we make distributions in excess ofour earnings and profits, as computed for federal income tax purposes, thesedistributions will represent a return of capital, rather than a dividend, forfederal income tax purposes. Distributions that are treated as a return ofcapital for federal income tax purposes generally will not be taxable as adividend to a U.S. shareholder, but will reduce the shareholder’s basis inits shares (but not below zero) and therefore can result in the shareholder havinga higher gain upon a subsequent sale of such shares. Return of capitaldistributions in excess of a shareholder’s basis generally will be treated asgain from the sale of such shares for federal income tax purposes.

 

**SharePerformance Graph**

 

The SEC requires us topresent a chart comparing the cumulative total shareholder return on our commonshares with the cumulative total shareholder return of (i) a broad equityindex and (ii) a published industry or peer group index. The followingchart compares the cumulative total shareholder return for our common shareswith the cumulative shareholder return of companies on (i) the S&P 500Index, (ii) the Russell 2000 and (iii) the NAREIT All Equity REITIndex as provided by NAREIT for the period beginning with December 31,2004 and ending December 31, 2009.

 

31

----

Table of Contents

 

 
| ** **                    | ** ** | **Period Ending** | ** ** |
|-------------------------------|------------|-------------------|------------|
| **Index**                     | ** ** | **12/31/04**      | ** ** | **12/31/05** | ** ** | **12/31/06** | ** ** | **12/31/07** | ** ** | **12/31/08** | ** ** | **12/31/09** | ** ** |
| U-Store-It  Trust             |       | 100.00            |       | 128.39 |   | 132.66 |   | 63.23 |   | 32.90 |   | 55.53 |   |
| S&P  500                  |       | 100.00            |       | 104.91 |   | 121.48 |   | 128.16 |   | 80.74 |   | 102.11 |   |
| Russell  2000                 |       | 100.00            |       | 104.55 |   | 123.76 |   | 121.82 |   | 80.66 |   | 102.58 |   |
| NAREIT  All Equity REIT Index |       | 100.00            |       | 112.16 |   | 151.49 |   | 127.72 |   | 79.53 |   | 101.79 |   |

 

Thefollowing table provides information about repurchases of the Company’s commonshares during the three-month period ended December 31, 2009:

 
| ** ** | ** ** | **Total Number of  Shares Purchased (1)** | ** ** | **Average Price Paid  Per Share** | ** ** | **Total Number of  Shares Purchased as  Part of Publicly  Announced Plans or  Programs** | ** ** | **Maximum Number  of Shares that May  Yet Be Purchased  Under the Plans********(2)** | ** ** |
|------------|------------|-------------------------------------------|------------|-----------------------------------|------------|-----------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------|------------|
| ** ** |       |                                      |       |                              |       |                                                                                          |       |                                                                                 |       |
| October    |       | 139                                       |       | 6.15                              |       | N/A                                                                                           |       | 3,000,000                                                                            |       |
| November   |       | N/A                                       |       | N/A                               |       | N/A                                                                                           |       | 3,000,000                                                                            |       |
| December   |       | 543                                       |       | 7.21                              |       | N/A                                                                                           |       | 3,000,000                                                                            |       |
|       |       |                                      |       |                              |       |                                                                                          |       |                                                                                 |       |
| Total      |       | 682                                       |       |                              |       | N/A                                                                                           |       | 3,000,000                                                                            |       |

 

----

(1) Represents shares of common stock withheld by the Company upon the vesting ofrestricted shares to cover employee tax obligations.

 

32

----

Table of Contents

 

(2) On June 27, 2007, the Company announced that the Board of Trusteesapproved a share repurchase program for up to 3.0 million of the Company’soutstanding common shares.  Unlessterminated earlier by resolution of the Board of Trustees, the program willexpire when the number of authorized shares has been repurchased.  For the three-month period ended December 31,2009, the Company made no repurchases under this program.

 

33

----

Table of Contents

 

**ITEM 6.  *SELECTED FINANCIAL DATA***

 

The following table sets forth selected financial andoperating data on a historical consolidated basis for the Company. The selectedhistorical financial information for the five-year period ended December 31,2009 was derived from the Company’s financial statements.

 

The following data should be read in conjunction withthe audited financial statements and notes thereto of the Company and “Management’sDiscussion and Analysis of Financial Condition and Results of Operations”included elsewhere in this report.

 

34

----

Tableof Contents

 
| ** **                                                                                              | ** ** | **For the  year ended December 31,**                     | ** ** |
|---------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------|------------|
| ** **                                                                                              | ** ** | **2009**                                                      | ** ** | **2008** | ** ** | **2007** | ** ** | **2006** | ** ** | **2005** | ** ** |
| ** **                                                                                              | ** ** | **(Dollars  and shares in thousands, except per share data)** | ** ** |
| **REVENUES**                                                                                            |       |                                                          |       |   |   |   |   |   |   |   |   |
| Rental  income                                                                                          |       | $                                                             | 200,630    |   | $ | 208,439 |   | $ | 192,275 |   | $ | 177,098 |   | $ | 123,579 |   |
| Other  property related income                                                                          |       | 16,659                                                        |       | 15,700 |   | 15,329 |   | 13,484 |   | 9,063 |   |
| Other  - related party                                                                                  |       | —                                                        |       | — |   | 365 |   | 457 |   | 405 |   |
| Total  revenues                                                                                         |       | 217,289                                                       |       | 224,139 |   | 207,969 |   | 191,039 |   | 133,047 |   |
| **OPERATING EXPENSES**                                                                                  |       |                                                          |       |   |   |   |   |   |   |   |   |
| Property  operating expenses                                                                            |       | 93,945                                                        |       | 95,156 |   | 88,628 |   | 77,883 |   | 50,170 |   |
| Property  operating expenses - related party                                                            |       | —                                                        |       | — |   | 59 |   | 69 |   | 43 |   |
| Depreciation  and amortization                                                                          |       | 70,832                                                        |       | 73,751 |   | 64,672 |   | 59,334 |   | 37,200 |   |
| Asset  write-off                                                                                        |       | —                                                        |       | — |   | — |   | 305 |   | — |   |
| Lease  abandonment                                                                                      |       | —                                                        |       | — |   | 1,316 |   | — |   | — |   |
| General  and administrative                                                                             |       | 22,569                                                        |       | 24,964 |   | 21,966 |   | 21,675 |   | 17,786 |   |
| General  and administrative - related party                                                             |       | —                                                        |       | — |   | 337 |   | 613 |   | 736 |   |
| Total  operating expenses                                                                               |       | 187,346                                                       |       | 193,871 |   | 176,978 |   | 159,879 |   | 105,935 |   |
| **OPERATING INCOME**                                                                                    |       | 29,943                                                        |       | 30,268 |   | 30,991 |   | 31,160 |   | 27,112 |   |
| **OTHER INCOME (EXPENSE)**                                                                              |       |                                                          |       |   |   |   |   |   |   |   |   |
| Interest:                                                                                               |       |                                                          |       |   |   |   |   |   |   |   |   |
| Interest  expense on loans                                                                              |       | (45,269                                                       | )          | (52,014 | ) | (54,108 | ) | (45,628 | ) | (31,907 | ) |
| Loan  procurement amortization expense                                                                  |       | (2,339                                                        | )          | (1,929 | ) | (1,772 | ) | (1,972 | ) | (2,045 | ) |
| Early  extinguishment of debt                                                                           |       | —                                                        |       | — |   | — |   | (1,907 | ) | (93 | ) |
| Interest  income                                                                                        |       | 681                                                           |       | 153 |   | 401 |   | 1,336 |   | 2,404 |   |
| Other                                                                                                   |       | (33                                                           | )          | 94 |   | 118 |   | 191 |   | (47 | ) |
| Total  other expense                                                                                    |       | (46,960                                                       | )          | (53,696 | ) | (55,361 | ) | (47,980 | ) | (31,688 | ) |
| **LOSS FROM CONTINUING OPERATIONS**                                                                     |       | (17,017                                                       | )          | (23,428 | ) | (24,370 | ) | (16,820 | ) | (4,576 | ) |
| **DISCONTINUED OPERATIONS**                                                                             |       |                                                          |       |   |   |   |   |   |   |   |   |
| Income  from discontinued operations                                                                    |       | 2,546                                                         |       | 6,810 |   | 7,606 |   | 7,496 |   | 6,078 |   |
| Net  gain on disposition of discontinued operations                                                     |       | 14,139                                                        |       | 19,720 |   | 2,517 |   | — |   | 179 |   |
| Total  discontinued operations                                                                          |       | 16,685                                                        |       | 26,530 |   | 10,123 |   | 7,496 |   | 6,257 |   |
| **NET INCOME (LOSS)**                                                                                   |       | (332                                                          | )          | 3,102 |   | (14,247 | ) | (9,324 | ) | 1,681 |   |
| **NET LOSS (INCOME) ATTRIBUTABLE TO****NONCONROLLING INTERESTS**                                        |       |                                                          |       |   |   |   |   |   |   |   |   |
| Noncontrolling  interests in the Operating Partnership                                                  |       | 60                                                            |       | (310 | ) | 1,170 |   | 773 |   | (113 | ) |
| Noncontrolling  interest in subsidiaries                                                                |       | (665                                                          | )          | — |   | — |   | — |   | — |   |
| **NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY**                                                       |       | $                                                             | (937       | ) | $ | 2,792 |   | $ | (13,077 | ) | $ | (8,551 | ) | $ | 1,568 |   |
|                                                                                                    |       |                                                          |       |   |   |   |   |   |   |   |   |
| Basic  and diluted loss per share from continuing operations attributable to common  shareholders       |       | $                                                             | (0.24      | ) | $ | (0.37 | ) | $ | (0.67 | ) | $ | (0.60 | ) | $ | (0.58 | ) |
| Basic  and diluted earnings per share from discontinued operations attributable to  common shareholders |       | $                                                             | 0.23       |   | $ | 0.42 |   | $ | 0.45 |   | $ | 0.45 |   | $ | 0.62 |   |
| Basic  and diluted earnings (loss) per share attributable to common shareholders                        |       | $                                                             | (0.01      | ) | $ | 0.05 |   | $ | (0.22 | ) | $ | (0.15 | ) | $ | 0.04 |   |
|                                                                                                    |       |                                                          |       |   |   |   |   |   |   |   |   |
| Weighted-average  basic and diluted shares outstanding (1)                                              |       | 70,988                                                        |       | 57,621 |   | 57,497 |   | 57,287 |   | 42,120 |   |
|                                                                                                    |       |                                                          |       |   |   |   |   |   |   |   |   |
|                                                                                                    |       |                                                          |       |   |   |   |   |   |   |   |   |
| **AMOUNTS ATTRIBUTABLE TO THE COMPANY’S****COMMON SHAREHOLDERS:**                                  |       |                                                          |       |   |   |   |   |   |   |   |   |
| Loss  from continuing operations                                                                        |       | $                                                             | (16,754    | ) | $ | (21,589 | ) | $ | (38,787 | ) | $ | (34,474 | ) | $ | (24,455 | ) |
| Total  discontinued operations                                                                          |       | 15,817                                                        |       | 24,381 |   | 25,710 |   | 25,923 |   | 26,023 |   |
| Net  income (loss)                                                                                      |       | $                                                             | (937       | ) | $ | 2,792 |   | $ | (13,077 | ) | $ | (8,551 | ) | $ | 1,568 |   |

 

35

----

Table ofContents

 
| ** **                                            | ** ** | **At December 31,**                  | ** ** |
|-------------------------------------------------------|------------|-------------------------------------------|------------|
| ** **                                            | ** ** | **2009**                                  | ** ** | **2008** | ** ** | **2007** | ** ** | **2006** | ** ** | **2005** | ** ** |
| ** **                                            | ** ** | **(in thousands, except per share data)** | ** ** |
| **Balance Sheet Data:**                               | ** ** | ** **                                |       |   |   |   |   |   |   |   |   |
| Storage  facilities, net                              |       | $                                         | 1,430,533  |   | $ | 1,559,958 |   | $ | 1,647,118 |   | $ | 1,566,815 |   | $ | 1,246,295 |   |
| Total  assets                                         |       | 1,598,870                                 |       | 1,597,659 |   | 1,687,831 |   | 1,615,339 |   | 1,476,321 |   |
| Revolving  credit facility                            |       | —                                    |       | 172,000 |   | 219,000 |   | 90,500 |   | — |   |
| Unsecured  term loan                                  |       | —                                    |       | 200,000 |   | 200,000 |   | 200,000 |   | — |   |
| Secured  term loan                                    |       | 200,000                                   |       | 57,419 |   | 47,444 |   | — |   | — |   |
| Mortgage  loans and notes payable                     |       | 569,026                                   |       | 548,085 |   | 561,057 |   | 588,930 |   | 669,282 |   |
| Total  liabilities                                    |       | 814,146                                   |       | 1,028,705 |   | 1,083,230 |   | 930,948 |   | 714,157 |   |
| Noncontrolling  interest in the Operating Partnership |       | 45,394                                    |       | 46,026 |   | 48,982 |   | 107,606 |   | 108,313 |   |
| U-Store-It  Trust shareholders’ equity           |       | 695,309                                   |       | 522,928 |   | 555,619 |   | 576,785 |   | 653,851 |   |
| Noncontrolling  interests in subsidiaries             |       | 44,021                                    |       | — |   | — |   | — |   | — |   |
| Total  liabilities and equity                         |       | 1,598,870                                 |       | 1,597,659 |   | 1,687,831 |   | 1,615,339 |   | 1,476,321 |   |
|                                                  |       |                                      |       |   |   |   |   |   |   |   |   |
| **Other Data:**                                       | ** ** | ** **                                |       |   |   |   |   |   |   |   |   |
| Number  of facilities                                 |       | 367                                       |       | 387 |   | 409 |   | 399 |   | 339 |   |
| Total  rentable square feet                           |       | 23,749                                    |       | 24,973 |   | 26,119 |   | 25,436 |   | 20,828 |   |
| Occupancy  percentage                                 |       | 75.2                                      | %          | 78.9 | % | 79.5 | % | 78.2 | % | 81.2 | % |
| Cash  dividends declared per share (2)                |       | $                                         | 0.100      |   | $ | 0.565 |   | $ | 1.05 |   | $ | 1.16 |   | $ | 1.13 |   |

 

----

(1)          Excludes5,198,855 operating partnership units issued at our IPO and in connection withthe acquisition of facilities subsequent to our IPO. Operating partnershipunits have been excluded from the earnings per share calculations as therewould be no effect on the earnings per share since, upon conversion, thenoncontrolling interests in the Operating Partnership’s share of income wouldalso be added back to net income (loss).

 

(2)          The Companyannounced full quarterly dividends of $0.28 per common share on March 2,2005, May 31, 2005 and August 24, 2005; dividends of $0.29 percommon share on December 1, 2005, February 22, 2006, April 24,2006, August 23, 2006, November 3, 2006, February 21, 2007, May 8,2007, and August 14, 2007; dividends of $0.18 per common share on December 13, 2007,  February 27, 2008,  May 7, 2008, and August 6,2008;  and dividends of $0.025 per commonshare on December 11, 2008, January 22, 2009, April 22, 2009, July 22,2009, October 22, 2009 and December 5, 2009.

 

36

----

Table of Contents

 

**ITEM 7.  *MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND******RESULTS OFOPERATIONS***

 

*The following discussion should beread in conjunction with the financial statements**andnotes thereto appearing elsewhere in this report. The Company makes certain**statements in this section that areforward-looking statements within the meaning of**the federal securities laws. For a completediscussion of forward-looking statements,**see the section in this report entitled “Forward-Looking Statements.”Certain risk**factors may causeactual results, performance or achievements to differ materially**from those expressed or implied by the followingdiscussion. For a discussion of such**risk factors, see the section in this report entitled “Risk Factors.”*

 

**Overview**

 

The Company is an integrated self-storage real estatecompany, which means that it has in-house capabilities in the operation,design, development, leasing, and acquisition of self-storage facilities. TheCompany has elected to be taxed as a REIT for federal tax purposes. At December 31,2009 and 2008, the Company owned 367 and 387 self-storage facilities,respectively, totaling approximately 23.7 million and 25.0 million rentablesquare feet, respectively.

 

The Company derives revenues principally from rentsreceived from its customers who rent units at its self-storage facilities undermonth-to-month leases. Therefore, our operating results depend materially onour ability to retain our existing customers and lease our availableself-storage units to new customers while maintaining and, where possible,increasing our pricing levels. In addition, our operating results depend on theability of our customers to make required rental payments to us. We believethat our decentralized approach to the management and operation of ourfacilities, which places an emphasis on local, market level oversight andcontrol, allows us to respond quickly and effectively to changes in localmarket conditions, where appropriate increasing rents while maintainingoccupancy levels, or increasing occupancy levels while maintaining pricinglevels.

 

The Company typically experiences seasonalfluctuations in the occupancy levels of our facilities, which are generallyslightly higher during the summer months due to increased moving activity.

 

The United States has recently experienced an economicdownturn that has resulted in higher unemployment, shrinking demand forproducts, large-scale business failures and tight credit markets.  Our results of operations may be sensitive tochanges in overall economic conditions that impact consumer spending, includingdiscretionary spending, as well as to increased bad debts due to recessionarypressures.  A continuation of ongoingadverse economic conditions affecting disposable consumer income, such asemployment levels, business conditions, interest rates, tax rates, fuel andenergy costs, and other matters could reduce consumer spending or causeconsumers to shift their spending to other products and services.  A general reduction in the level ofdiscretionary spending or shifts in consumer discretionary spending couldadversely affect our growth and profitability.

 

In the future, the Company intends to focus onincreasing our internal growth and selectively pursuing targeted acquisitionsand developments of self-storage facilities. We intend to incur additional debtin connection with any such future acquisitions or developments.

 

The Company has one reportable operating segment: weown, operate, develop, and acquire self-storage facilities.

 

The Company’s self-storage facilities are located inmajor metropolitan and rural areas and have numerous tenants per facility. Nosingle tenant represents a significant concentration of our revenues.  The facilities in Florida, California, Texasand Illinois provided approximately 18%, 15%, 10% and 7%, respectively, oftotal revenues for the year ended December 31, 2009.

 

37

----

Table of Contents

 

**Summary of Critical AccountingPolicies and Estimates**

 

Set forth below is a summary of the accountingpolicies that management believes are critical to the preparation of theconsolidated financial statements included in this report. Certain of theaccounting policies used in the preparation of these consolidated financialstatements are particularly important for an understanding of the financialposition and results of operations presented in the historical consolidatedfinancial statements included in this report. A summary of significantaccounting policies is also provided in the notes to our consolidated financialstatements (See Note 2 to the consolidated financial statements). Thesepolicies require the application of judgment and assumptions by management and,as a result, are subject to a degree of uncertainty. Due to this uncertainty,actual results could differ materially from estimates calculated and utilizedby management.

 

***Basis ofPresentation***

 

The accompanyingconsolidated financial statements include all of the accounts of the Company,and its majority-owned and/or controlled subsidiaries.  The portion of these entities not owned bythe Company is presented as noncontrolling interests as of and during theperiods consolidated.  All significantintercompany accounts and transactions have been eliminated in consolidation.

 

When the Company obtains aneconomic interest in an entity, the Company evaluates the entity to determineif the entity is deemed a variable interest entity (“VIE”), and if the Companyis deemed to be the primary beneficiary, in accordance with authoritative guidance issued by the FASBon the consolidation of variableinterest entities. When an entity is not deemed to be a VIE, the Companyconsiders the provisions of additional FASB guidance which determines whether ageneral partner, or the general partners as a group, controls a limitedpartnership or similar entity when the limited partners have certain rights.The Company consolidates (i) entities that are VIEs and of which theCompany is deemed to be the primary beneficiary and (ii) entities that arenon-VIEs which the Company controls and the limited partners do not have theability to dissolve the entity or remove the Company without cause norsubstantive participating rights.

 

For analytical presentation, all percentages arecalculated using the numbers presented in the financial statements contained inthis Annual Report on Form 10-K.

 

***Self-StorageFacilities***

 

The Company records self-storage facilities at costless accumulated depreciation. Depreciation on the buildings and equipment isrecorded on a straight-line basis over their estimated useful lives, whichrange from five to 40 years. Expenditures for significant renovations orimprovements that extend the useful life of assets are capitalized. Repairs andmaintenance costs are expensed as incurred. During 2009, 2008 and 2007, approximately $0.1 million, $0.5 million and$0.4 million of expense was incurred in conjunction with property relateddamage as a result of insured events such as fires, floods and hurricanes.

 

When facilities are acquired, the purchase price isallocated to the tangible and intangible assets acquired and liabilitiesassumed based on estimated fair values. When a portfolio of facilities isacquired, the purchase price is allocated to the individual facilities basedupon an income approach or a cash flow analysis using appropriate risk adjustedcapitalization rates, which take into account the relative size, age andlocation of the individual facility along with current and projected occupancyand rental rate levels or appraised values, if available. Allocations to theindividual assets and liabilities are based upon comparable market salesinformation for land, buildings and improvements and estimates of depreciatedreplacement cost of equipment.

 

In allocating the purchase price, the Companydetermines whether the acquisition includes intangible assets or liabilities,which may include the value of in-place leases, above or below market leaseintangibles, and tenant relationships. Substantially all of the leases in place at acquired facilities are atmarket rates, as the majority of the leases are month-to-month contracts.Accordingly, to date no portion of the purchase price has been allocated toabove- or below-market lease intangibles. To date, no intangible asset has been recorded for the value of tenantrelationships, because the Company does not have any concentrations ofsignificant tenants and the average tenant turnover is fairly frequent. TheCompany recorded a $6.8 million intangible asset to recognize the value ofin-place leases related to its acquisition of 14 self-storage facilities duringthe third quarter of 2007.  Subsequently,during the quarter ended March 31, 2008, the Company acquired a finite-livedintangible asset valued at approximately $1.0 million as part of itsacquisition of one self-storage facility. This asset represents the value of in-place leases at the time ofacquisition.

 

38

----

Table of Contents

 

Long-lived assets classified as “held for use” arereviewed for impairment when events and circumstances such as declines inoccupancy and operating results indicate that there may be impairment. Thecarrying value of these long-lived assets is compared to the undiscountedfuture net operating cash flows, plus a terminal value, attributable to theassets to determine if the property’s basis is recoverable. If a property’sbasis is not considered recoverable, an impairment loss is recorded to theextent the net carrying value of the asset exceeds the fair value. Theimpairment loss recognized equals the excess of net carrying value over therelated fair value of the asset.  Therewere no impairment losses recognized in accordance with these procedures during2009, 2008 and 2007.

 

The Company considers long-lived assets to be “heldfor sale” upon satisfaction of the following criteria: (a) managementcommits to a plan to sell a facility (or group of facilities), (b) thefacility is available for immediate sale in its present condition subject onlyto terms that are usual and customary for sales of such facilities, (c) anactive program to locate a buyer and other actions required to complete theplan to sell the facility have been initiated, (d) the sale of thefacility is probable and transfer of the asset is expected to be completedwithin one year, (e) the facility is being actively marketed for sale at aprice that is reasonable in relation to its current fair value, and (f) actionsrequired to complete the plan indicate that it is unlikely that significantchanges to the plan will be made or that the plan will be withdrawn.

 

Typically these criteria are all met when the relevantasset is under contract, significant non-refundable deposits have been made bythe potential buyer, the assets are immediately available for transfer andthere are no contingencies related to the sale that may prevent the transactionfrom closing. In most transactions, these contingencies are not satisfied untilthe actual closing of the transaction; and, accordingly, the facility is notidentified as held for sale until the closing actually occurs. However, eachpotential transaction is evaluated based on its separate facts andcircumstances.  Properties classified asheld for sale are reported as the lesser of carrying value or fair value lessestimated costs to sell.

 

***Revenue Recognition***

 

Management has determined that all our leases withtenants are operating leases. Rental income is recognized in accordance withthe terms of the lease agreements or contracts, which generally aremonth-to-month. Revenues from long-term operating leases are recognized on astraight-line basis over the term of the lease. The excess of rents recognizedover amounts contractually due pursuant to the underlying leases is included indeferred revenue, and contractually due but unpaid rents are included in otherassets.

 

The Company recognizes gains on disposition of propertiesonly upon closing in accordance with the guidance on sales of real estate.Payments received from purchasers prior to closing are recorded as deposits.Profit on real estate sold is recognized using the full accrual method uponclosing when the collectability of the sales price is reasonably assured andthe Company is not obligated to perform significant activities after the sale.Profit may be deferred in whole or part until the sale meets the requirementsof profit recognition on sales under this guidance.

 

***Share BasedPayments***

 

We apply the fair value method of accounting forcontingently issued shares and share options issued under our equity incentiveplans. Accordingly, share compensation expense was recorded ratably over thevesting period relating to such contingently issued shares and options. TheCompany has elected to recognize compensation expense on a straight-line methodover the requisite service period.

 

***NoncontrollingInterests***

 

Noncontrolling interests are the portion of equity(net assets) in a subsidiary not attributable, directly or indirectly, to aparent. The ownership interests in the subsidiary that are held by owners otherthan the parent are noncontrolling interests. Noncontrolling interests arereported on the consolidated balance sheets within equity, separately from theCompany’s equity. On the consolidated statements of operations, revenues,expenses and net income or loss from less-than-wholly-owned subsidiaries arereported at the consolidated amounts, including both the amounts attributableto the Company and noncontrolling interests. Presentation of consolidatedequity activity is included for both quarterly and annual financial statements,including beginning balances, activity for the period and ending balances for shareholders’equity, noncontrolling interests and total equity.  The Company has adjusted the carrying value of itsnoncontrolling interests subject to redemption value to the extent applicable.

 

39

----

Table of Contents

 

***Income Taxes***

 

The Company elected to be taxed as a real estateinvestment trust under Sections 856-860 of the Internal Revenue Code beginningwith the period from October 21, 2004 (commencement of operations) throughDecember 31, 2004.  In management’s opinion, the requirements tomaintain these elections are being met.  Accordingly, no provision forfederal income taxes has been reflected in the consolidated financialstatements other than for operations conducted through our taxable REITsubsidiaries.

 

Earnings and profits, which determine the taxabilityof distributions to shareholders, differ from net income reported for financialreporting purposes due to differences in cost basis, the estimated useful livesused to compute depreciation, and the allocation of net income and loss forfinancial versus tax reporting purposes.

 

The Company is subject to a 4% federal excise tax ifsufficient taxable income is not distributed within prescribed timelimits.  The excise tax equals 4% of the annual amount, if any, by whichthe sum of (a) 85% of the Company’s ordinary income and (b) 95% ofthe Company’s net capital gain exceeds cash distributions and certain taxespaid by the Company.

 

***Recent AccountingPronouncements***

 

The Financial AccountingStandards Board (“FASB”) established the *FASBAccounting Standards CodificationTM* (“Codification”) as the source ofauthoritative GAAP recognized by the FASB to be applied by nongovernmentalentities in the preparation of financial statements issued for interim andannual periods ending after September 15, 2009. The Codification haschanged the manner in which GAAP guidance is referenced, but did not have animpact on our consolidated financial position, results of operations or cashflows.

 

The FASB issuedauthoritative guidance on accountingfor transfers of financial assets**inJune 2009, which we will adopt on a prospective basis beginning January 1,2010.  The guidance requires entities toprovide more information regarding sales of securitized financial assets andsimilar transactions, particularly if the entity has continuing exposure to therisks related to transferred financial assets. It also eliminates the concept of a “qualifying special-purpose entity,”changes the requirements for derecognizing financial assets and requiresadditional disclosures.  The applicationwill not have an impact on our consolidated financial position, results ofoperations or cash flows.

 

TheFASB issued authoritative guidance on how a company determines when an entityshould be consolidated in June 2009, which we will adopt on a prospectivebasis beginning January 1, 2010. The guidance clarifies that the determination of whether a company isrequired to consolidate an entity is based on, among other things, an entity’spurpose and design and a company’s ability to direct the activities of theentity that most significantly impact the entity’s economic performance.  The guidance requires an ongoing reassessmentof whether a company is the primary beneficiary of a variable interestentity.  It also requires additionaldisclosures about a company’s involvement in variable interest entities and anysignificant changes in risk exposure due to that involvement.  The application will not have an impact onour consolidated financial position, results of operations or cash flows.

 

The FASB issuedauthoritative guidance on determining whether instruments granted inshare-based payment transactions are participating securities in June 2008,which we adopted on a prospective basis beginning January 1, 2009. The guidance states that unvested share-based payment awards that containnonforfeitable rights to dividends or dividend equivalents (whether paid orunpaid) are participating securities and should be included in the computationof earnings per share pursuant to the two-class method.  The application did not have an impact on ourconsolidated financial position, results of operations or cash flows.

 

The FASB issuedauthoritative guidance on accounting for convertible debt instruments thatmay be settled in cash upon conversion (including partial cash settlement)**in May 2008, which we adopted on a prospective basisbeginning January 1, 2009.  Theguidance requires that instruments within its scope be separated into theirliability and equity components at****initialrecognition by recording the liability component at the fair value of a similarliability that does not have an associated equity component and attributing theremaining proceeds from issuance to the equity component. The excess of theprincipal amount of the liability component over its initial fair value will beamortized to interest expense using the interest method.   The application did not have an impact on ourconsolidated financial position, results of operations or cash flows.

 

The FASB issuedauthoritative guidance regarding the hierarchy of generally accepted accountingprinciples in May 2008, which we adopted on a prospective basis beginning January 1,2009.  The guidance states that the GAAPhierarchy will now 

 

40

----

Table of Contents

 

reside in the accountingliterature established by the FASB.  Theguidance identifies the sources of accounting principles and the framework forselecting the principles used in the preparation of financial statements inconformity with GAAP.  The applicationdid not have an impact on our consolidated financial position, results ofoperations or cash flows.

 

The FASB issuedauthoritative guidance regarding disclosures about derivative instruments andhedging activities in March 2008, which we adopted on a prospective basisbeginning January 1, 2009.  Theguidance enhances required disclosures regarding derivatives and hedgingactivities, including enhanced disclosures regarding how an entity usesderivative instruments, how derivative instruments and related hedged items areaccounted for under previous guidance and the impact of derivative instrumentsand related hedged items on an entity’s financial position, financialperformance and cash flows.  Theapplication did not have an impact on our consolidated financial position,results of operations or cash flows.

 

The FASB issuedauthoritative guidance regarding businesscombinations**in December 2007,which we adopted on a prospective basis beginning January 1, 2009.  The guidance establishes principles andrequirements for recognizing identifiable assets acquired, liabilities assumed,noncontrolling interest in the acquiree, goodwill acquired in the combinationor the gain from a bargain purchase, and disclosurerequirements.  Under this guidance, all costs incurred to effect anacquisition will be recognized separately from theacquisition.  Also, restructuring costs that are expected but theacquirer is not obligated to incur will be recognized separately from theacquisition.  The application did not have an impact on ourconsolidated financial position, results of operations or cash flows.

 

The FASB issuedauthoritative guidance regarding noncontrollinginterests in consolidated Financial Statements in December 2007,which we adopted on a prospective basis beginning January 1, 2009.  The guidance requires that ownershipinterests in subsidiaries held by parties other than the parent be clearlyidentified.  In addition, it requires that the amount of consolidatednet income attributable to the parent and to the noncontrolling interest beclearly identified and presented on the face of the incomestatement.   The application impacted certain financial statementfootnote disclosures but did not affect our consolidated financial position,results of operations or cash flows.

 

**Results of Operations**

 

The following discussion of our results of operationsshould be read in conjunction with the consolidated financial statements andthe accompanying notes thereto. Historical results set forth in theconsolidated statements of operations reflect only the existing facilities andshould not be taken as indicative of future operations.

 

***Comparison ofOperating Results for the Years Ended December 31, 2009 and 2008***

 

*Acquisitionand Development Activities*

 

The Company’s results of operations are affected bythe acquisition activity in 2008 as listed below. At December 31, 2009 and2008, the Company owned 367 and 387 self-storage facilities and related assets,respectively.

 

·                  In 2009, 20 self-storage facilities were sold forapproximately $90.9 million (the “2009 Dispositions”).

 

·                  In 2008, one self-storage facility was acquired forapproximately $13.3 million (the “2008 Acquisition”).

 

·                  In 2008, 23 self-storage facilities were sold forapproximately $62.0 million (the “2008 Dispositions”).

 

41

----

Table of Contents

 

Comparison of the Year Ended December 31, 2009 tothe Year Ended December 31, 2008 (dollars in thousands)

 
| ** **                                             | ** ** | **Same  Store Property Portfolio** | ** ** | **Properties  Acquired** | ** ** | **Other/  Eliminations** | ** ** | **Total  Portfolio** | ** ** |
|--------------------------------------------------------|------------|------------------------------------|------------|--------------------------|------------|--------------------------|------------|----------------------|------------|
| ** **                                             | ** ** | ** **                         | ** ** | ** **               | ** ** | **Increase/**            | ** ** | **%**                | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Increase/** | ** ** | ** ** | ** ** |
| ** **                                             | ** ** | **2009**                           | ** ** | **2008**                 | ** ** | **(Decrease)**           | ** ** | **Change**           | ** ** | **2009** | ** ** | **2008** | ** ** | **2009** | ** ** | **2008** | ** ** | **2009** | ** ** | **2008** | ** ** | **(Decrease)** | ** ** | **Change** | ** ** |
| REVENUES:                                              |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Rental income                                          |       | $                                  | 196,383    |                     | $          | 204,898                  |       | $                    | (8,515     | ) | -4 | % | $ | 4,247 |   | $ | 3,541 |   | $ | — |   | $ | — |   | $ | 200,630 |   | $ | 208,439 |   | $ | (7,809 | ) | -4 | % |
| Other property  related income                         |       | 15,935                             |       | 15,343                   |       | 592                      |       | 4                    | %          | 724 |   | 357 |   | — |   | — |   | 16,659 |   | 15,700 |   | 959 |   | 6 | % |
| Total revenues                                         |       | 212,318                            |       | 220,241                  |       | (7,923                   | )          | -4                   | %          | 4,971 |   | 3,898 |   | — |   | — |   | 217,289 |   | 224,139 |   | (6,850 | ) | -3 | % |
|                                                   |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING  EXPENSES:                                   |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Property  operating expenses                           |       | 83,997                             |       | 85,109                   |       | (1,112                   | )          | -1                   | %          | 2,405 |   | 2,064 |   | 7,543 |   | 7,983 |   | 93,945 |   | 95,156 |   | (1,211 | ) | -1 | % |
| NET OPERATING  INCOME:                                 |       | 128,321                            |       | 135,132                  |       | (6,811                   | )          | -5                   | %          | 2,566 |   | 1,834 |   | (7,543 | ) | (7,983 | ) | 123,344 |   | 128,983 |   | (5,639 | ) | -4 | % |
|                                                   |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and  amortization                         |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   | 70,832 |   | 73,751 |   | (2,919 | ) | -4 | % |
| General and  administrative                            |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   | 22,569 |   | 24,964 |   | (2,395 | ) | -10 | % |
| Subtotal                                               |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   | 93,401 |   | 98,715 |   | (5,314 | ) | -5 | % |
| Operating income                                       |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   | 29,943 |   | 30,268 |   | (325 | ) | -1 | % |
|                                                   |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income  (Expense):                               |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest:                                              |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense  on loans                             |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   | (45,269 | ) | (52,014 | ) | 6,745 |   | -13 | % |
| Loan procurement  amortization expense                 |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   | (2,339 | ) | (1,929 | ) | (410 | ) | 21 | % |
| Interest income                                        |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   | 681 |   | 153 |   | 528 |   | 345 | % |
| Other                                                  |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   | (33 | ) | 94 |   | (127 | ) | -135 | % |
| Total other  expense                                   |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   | (46,960 | ) | (53,696 | ) | 6,736 |   | -13 | % |
|                                                   |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LOSS FROM  CONTINUING OPERATIONS                       |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   | (17,017 | ) | (23,428 | ) | 6,411 |   | -27 | % |
|                                                   |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| DISCONTINUED  OPERATIONS                               |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income from  discontinued operations                   |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   | 2,546 |   | 6,810 |   | (4,264 | ) | -63 | % |
| Net gain on  disposition of discontinued operations    |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   | 14,139 |   | 19,720 |   | (5,581 | ) | -28 | % |
| Total  discontinued operations                         |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   | 16,685 |   | 26,530 |   | (9,845 | ) | -37 | % |
| NET INCOME (LOSS)                                      |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   | (332 | ) | 3,102 |   | $ | (3,434 | ) | -111 | % |
| NET LOSS (INCOME)  ATTRIBUTABLE TO                     |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NONCONTROLLING INTERESTS                               |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noncontrolling  interests in the Operating Partnership |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   | 60 |   | (310 | ) | 370 |   | -119 | % |
| Noncontrolling  interests in subsidiaries              |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   | (665 | ) | — |   | (665 | ) | -100 | % |
| NET INCOME (LOSS)  ATTRIBUTABLE TO THE COMPANY         |       |                               |       |                     |       |                     |       |                 |       |   |   |   |   |   |   |   |   | $ | (937 | ) | $ | 2,792 |   | $ | (3,729 | ) | -134 | % |
|                                                        |            |                                    |            |                          |            |                          |            |                      |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

Total Portfolio

 

*Total Revenues*

 

Rental income decreased from $208.4 million in2008 to $200.6 million in 2009, a decrease of $7.8 million, or 4%.This decrease is primarily attributable to a decrease of rental income from thesame-store properties of $8.5 million due to decreased occupancy levels during2009 as compared to 2008, offset by an increase in rental income of $0.7million from assets that do not meet the same-store criteria, including managementfee revenue from property management services of $0.1 million during 2009 withno comparable income during 2008.

 

Other property relatedincome increased from $15.7 million in 2008 to $16.7 million in 2009, anincrease of $1.0 million, or 6%.  Thisincrease is primarily attributable to increased insurance commissions andmerchandise sales of $1.0 million across the portfolio of storage facilitiesduring 2009 as compared to 2008.

 

*Total Operating Expenses*

 

Property operating expenses decreased from $95.2 millionin 2008 to $93.9 million in 2009, a decrease of $1.3 million, or1%.  This decrease is primarilyattributable to a $0.7 million decrease in repairs and maintenance expenses anda $0.7 million decrease in utility expenses during the 2009 period as comparedto the 2008.

 

Depreciation and amortization decreased from $73.8million in 2008 to $70.8 million in 2009, a decrease of $3.0 million,or 4%.  The decrease is primarilyattributable to amortization expense of $6.8 million incurred during 2008related to two in-place lease intangible assets acquired in conjunction withproperty acquisitions during 2008 and 2007, with no similar

 

42

----

Tableof Contents

 

activity during 2009, offset by an increase indepreciation expense during the 2009 period of $3.8 million as compared to the2008 period related to capital improvements during 2008 and 2009.

 

General and administrative expenses decreased from$25.0 million in 2008 to $22.6 million in 2009, a decrease of$2.4 million, or 10%.  This decreaseis primarily attributable to a $0.3 million decrease in travel and lodgingexpenses during 2009 as compared to 2008, and $2.1 million in severance relatedcosts incurred during the 2008 period that the Company did not incur during the2009 period.

 

*Total Other Income (Expenses)*

 

Interest expensedecreased from $52.0 million in the 2008 period to $45.3 million inthe 2009 period, a decrease of $6.7 million, or 13%.  The decrease is attributable to lowerinterest rates on unsecured debt as well as lower outstanding borrowings on thecredit facility during the 2009 period as compared to the 2008 period resultingin an overall decrease in interest expense during 2009 as compared to 2008.

 

Loan procurementamortization expense increased from $1.9 million in the 2008 period to $2.3million in the 2009 period, an increase of $0.4 million, or 21%.  The increase is attributable to additionalcosts incurred in relation to the secured credit facility and 17 securedfinancings entered into in 2009.

 

Interest income increased to $0.7 million in the2009 period from $0.2 million in the 2008 period. This increase isprimarily attributable to interest income earned on proceeds from the secondaryoffering completed in August 2009.

 

*Discontinued Operations*

 

Gains on disposition of discontinued operationsdecreased from $19.7 million in the 2008 period to $14.1 million in the 2009period, a decrease of $5.6 million, as a result of the sale of 23 assets duringthe 2008 period as compared to 20 asset sales during the 2009 period.

 

*Noncontrolling Interests inSubsidiaries*

 

Noncontrolling interestsin subsidiaries decreased $0.7 million during the 2009 period as compared tothe 2008 period primarily as a result of activity related to the operations ofa joint venture (“HART”), which was formed in August 2009 to own andoperate 22 self-storage facilities.  TheCompany retained a 50% ownership interest in HART and accordingly presents 50%of the related results as an adjustment to net income (loss) when arriving atnet income (loss) attributable to shareholders.

 

**Same-Store Property Portfolio**

 

The Company considers itssame-store portfolio to consist of only those facilities owned and operated ona stabilized basis at the beginning and at the end of the applicable yearspresented. Same-store results are considered to be useful to investors inevaluating our performance because it provides information relating to changesin facility-level operating performance without taking into account the effectsof acquisitions, developments or dispositions.

 

Same-store revenues decreased from $220.2 millionin the 2008 period to $212.3 million in the 2009 period, a decrease of$7.9 million, or 4%.   This decreaseis primarily attributable to a decrease in realized rent per occupied squarefoot of 5.2% during the 2009 period as compared to the 2008 period.  Same-store property operating expensesdecreased from $85.1 million in 2008 to $84.0 million in 2009, adecrease of $1.1 million, or 1%.  Thedecrease primarily relates to a $0.5 million decrease in repairs andmaintenance expenses and a $0.5 million decrease in utility expenses during the2009 period as compared to the 2008.

 

43

----

Table of Contents

 

***Comparison ofOperating Results for the Years Ended December 31, 2008 and 2007***

 

*Acquisitionand Development Activities*

 

The comparability of the Company’s results ofoperations is significantly affected by the acquisition activity in 2008 and2007 as listed below. At December 31, 2008 and 2007, the Company owned 387and 409 self-storage facilities and related assets, respectively.

 

·                  In 2008, one self-storage facility was acquired forapproximately $13.3 million (the “2008 Acquisition”).

 

·                  In 2008, 23 self-storage facilities were sold forapproximately $62.0 million (the “2008 Dispositions”).

 

·                  In 2007, 17 self-storage facilities were acquired forapproximately $140.5 million (the “2007 Acquisitions”).

 

·                  In 2007, five self-storage facilities were sold forapproximately $19.2 million (the “2007 Dispositions”).

 

Comparison of the Year Ended December 31, 2008 tothe Year Ended December 31, 2007 (dollars in thousands)

 
| ** **                                                  | ** ** | **Same Store Property Portfolio** | ** ** | **Properties  Acquired** | ** ** | **Other/  Eliminations** | ** ** | **Total Portfolio** | ** ** |
|-------------------------------------------------------------|------------|-----------------------------------|------------|--------------------------|------------|--------------------------|------------|---------------------|------------|
| ** **                                                  | ** ** | ** **                        | ** ** | ** **               | ** ** | **Increase/**            | ** ** | **%**               | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Increase/** | ** ** | ** ** | ** ** |
| ** **                                                  | ** ** | **2008**                          | ** ** | **2007**                 | ** ** | **(Decrease)**           | ** ** | **Change**          | ** ** | **2008** | ** ** | **2007** | ** ** | **2008** | ** ** | **2007** | ** ** | **2008** | ** ** | **2007** | ** ** | **(Decrease)** | ** ** | **Change** | ** ** |
| REVENUES:                                                   |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Rental income                                               |       | $                                 | 194,367    |                     | $          | 186,729                  |       | $                   | 7,638      |   | 4 | % | $ | 14,072 |   | $ | 5,546 |   | $ | — |   | $ | — |   | $ | 208,439 |   | $ | 192,275 |   | $ | 16,164 |   | 8 | % |
| Other property related  income                              |       | 14,625                            |       | 14,487                   |       | 138                      |       | 1                   | %          | 1,075 |   | 842 |   | — |   | — |   | 15,700 |   | 15,329 |   | 371 |   | 2 | % |
| Other - related party                                       |       | —                            |       | —                   |       | —                   |       | 0                   | %          | — |   | 365 |   | — |   | — |   | — |   | 365 |   | (365 | ) | -100 | % |
| Total revenues                                              |       | 208,992                           |       | 201,216                  |       | 7,776                    |       | 4                   | %          | 15,147 |   | 6,753 |   | — |   | — |   | 224,139 |   | 207,969 |   | 16,170 |   | 8 | % |
|                                                        |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING EXPENSES:                                         |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Property operating  expenses                                |       | 80,503                            |       | 78,697                   |       | 1,806                    |       | 2                   | %          | 7,146 |   | 2,733 |   | 7,507 |   | 7,198 |   | 95,156 |   | 88,628 |   | 6,528 |   | 7 | % |
| Property operating  expenses - related party                |       | —                            |       | —                   |       | —                   |       | 0                   | %          | — |   | — |   | — |   | 59 |   | — |   | 59 |   | (59 | ) | -100 | % |
| Subtotal                                                    |       | 80,503                            |       | 78,697                   |       | 1,806                    |       | 2                   | %          | 7,146 |   | 2,733 |   | 7,507 |   | 7,257 |   | 95,156 |   | 88,687 |   | 6,469 |   | 7 | % |
| NET OPERATING INCOME:                                       |       | 128,489                           |       | 122,519                  |       | 5,970                    |       | 5                   | %          | 8,001 |   | 4,020 |   | (7,507 | ) | (7,257 | ) | 128,983 |   | 119,282 |   | 9,701 |   | 8 | % |
|                                                        |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and  amortization                              |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   | 73,751 |   | 64,672 |   | 9,079 |   | 14 | % |
| Lease abandonment charge                                    |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   | — |   | 1,316 |   | (1,316 | ) | -100 | % |
| General and  administrative                                 |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   | 24,964 |   | 21,966 |   | 2,998 |   | 14 | % |
| General and  administrative- related party                  |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   | — |   | 337 |   | (337 | ) | -100 | % |
| Subtotal                                                    |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   | 98,715 |   | 88,291 |   | 10,424 |   | 12 | % |
| Operating income                                            |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   | 30,268 |   | 30,991 |   | (723 | ) | -2 | % |
|                                                        |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income (Expense):                                     |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest:                                                   |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense on  loans                                  |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   | (52,014 | ) | (54,108 | ) | 2,094 |   | -4 | % |
| Loan procurement  amortization expense                      |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   | (1,929 | ) | (1,772 | ) | (157 | ) | 9 | % |
| Interest income                                             |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   | 153 |   | 401 |   | (248 | ) | -62 | % |
| Other                                                       |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   | 94 |   | 118 |   | (24 | ) | -20 | % |
| Total other expense                                         |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   | (53,696 | ) | (55,361 | ) | 1,665 |   | -3 | % |
|                                                        |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LOSS FROM CONTINUING  OPERATIONS                            |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   | (23,428 | ) | (24,370 | ) | 942 |   | -4 | % |
|                                                        |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| DISCONTINUED OPERATIONS                                     |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income from discontinued  operations                        |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   | 6,810 |   | 7,606 |   | (796 | ) | -10 | % |
| Net gain on disposition  of discontinued operations         |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   | 19,720 |   | 2,517 |   | 17,203 |   | 683 | % |
| Total discontinued  operations                              |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   | 26,530 |   | 10,123 |   | 16,407 |   | 162 | % |
| NET INCOME (LOSS)                                           |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   | 3,102 |   | (14,247 | ) | $ | 17,349 |   | -122 | % |
| NET LOSS (INCOME)  ATTRIBUTABLE TO NONCONTROLLING INTERESTS |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noncontrolling interests  in the Operating Partnership      |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   | (310 | ) | 1,170 |   | (1,480 | ) | -126 | % |
| NET INCOME (LOSS)  ATTRIBUTABLE TO THE COMPANY              |       |                              |       |                     |       |                     |       |                |       |   |   |   |   |   |   |   |   | $ | 2,792 |   | $ | (13,077 | ) | $ | 15,869 |   | -121 | % |
|                                                             |            |                                   |            |                          |            |                          |            |                     |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

44

----

Table of Contents

 

**Total Portfolio**

 

*Total Revenues*

 

Rentalincome increased from $192.3 million in 2007 to $208.4 million in2008, an increase of $16.1 million, or 8.4%. This increase is primarilyattributable to (i) additional rental income from the 2008 Acquisition of$1.2 million, (ii) a full year contribution from the 2007 Acquisitionsresulting in additional rental income of $7.5 million, and (iii) anincrease in rental income from our pool of same-store facilities ofapproximately $7.6 million resulting from rate increases and an increase inrealized rent per occupied square foot of 3.9% during the 2008 period ascompared to the 2007 period.

 

Otherproperty related income increased from $15.3 million in 2007 to $15.7 millionin 2008, an increase of $0.4 million, or 2.6%.  This increase is primarilyattributable to increased administrative fees across the portfolio of storagefacilities during 2008 as compared to 2007.

 

Other— related party decreased from $0.4 million in 2007 to $0 in 2008 due to adecrease in third party management fee income pursuant to the termination ofthe Rising Tide property management agreement in September 2007.

 

*TotalOperating Expenses*

 

Propertyoperating expenses, including property operating expenses — related party,increased from $88.7 million in 2007 to $95.2 million in 2008, an increaseof $6.5 million, or 7%. This increase is primarily attributable to (i) additionaloperating expenses from the 2008 Acquisition of $0.5 million, (ii) a fullyear contribution from the 2007 Acquisitions resulting in additional operatingexpenses of $3.3 million, and (iii) an increase in operating expenses fromour pool of same-store facilities of approximately $1.8 million.  Theincrease in our same-store facilities’ operating expenses in 2008 as comparedto 2007 primarily relates to increased property tax and utility expenses of$0.7 million and $0.5 million, respectively.

 

Depreciationand amortization increased from $64.7 million in 2007 to $73.8 million in2008, an increase of $9.1 million, or 14%. The increase is attributable toadditional depreciation expense of $1.8 million related to the 2008 Acquisitionand a full year of depreciation expense related to the 2007 Acquisitions in the2008 period as compared to the 2007 period, an increase from our pool ofsame-store facilities of approximately $1.4 million, and additional intangibleamortization expense of $5.5 million related to the 2008 Acquisition and 2007Acquisitions in the 2008 period as compared to the 2007 period.

 

In August 2007,the Company abandoned certain office space in Cleveland, OH that was previouslyused for its corporate offices.  The related leases have expiration datesranging from December 31, 2008 through December 31, 2014. Uponvacating the space, the Company entered into a sub-lease agreement with asub-tenant to lease the majority of the space for the duration of theterm.  As a result of this exit activity, the Company recognized a “Leaseabandonment charge” of $1.3 million during 2007.

 

Generaland administrative expenses, including General and administrative expenses —related party increased from $22.3 million in 2007 to $25.0 million in 2008, anincrease of $2.7 million, or 12%.  The increase is primarilyattributable to (i) approximately $1.1 million of due diligence costs thatwere written off during the 2008 period (ii) $0.9 million of increasedamortization of equity compensation during the 2008 period as compared to the2007 period and (iii) $2.1 million of severance related costs incurredduring the 2008 period, offset by $1.2 million of non-recurring legal costsincurred during the 2007 period.  Excluding the 2008 charges for duediligence and severance costs, reduced by the non-recurring charge for legalcosts in 2007, general and administrative expenses increased by approximately$0.7 million, or approximately 3%.

 

*TotalOther Income (Expenses)*

 

Interestexpense decreased from $54.1 million in the 2007 period to$52.0 million in the 2008 period, a decrease of $2.1 million, or 4%.Although the Company incurred additional debt to finance certain 2007 and 2008acquisitions, lower interest rates on unsecured debt and loan repayments duringthe 2008 period as compared to the 2007 period resulted in an overall decreasein interest expense during 2008 as compared to 2007.

 

Loanprocurement amortization expense increased from $1.8 million in the 2007 periodto $1.9 million in the 2008 period, an increase of $0.1 million, or 6%. The increase is attributable to additional costs incurred in relation to thesecured term loan entered into in April 2008 and the related amortizationof those costs in the 2008 period as compared to no similar amortization in the2007 period.

 

45

----

Table of Contents

 

Interestincome decreased to $0.2 million in the 2008 period from $0.4 millionin the 2007 period. This decrease is primarily attributable to lower interestrates earned on daily operating cash during the 2008 period as compared to the2007 period.

 

*DiscontinuedOperations*

 

Gainson disposition of discontinued operations increased from $2.5 million in the2007 period to $19.7 million in the 2008 period, an increase of $17.2 million,as a result of the sale of five assets during the 2007 period as compared to 23assets sold during the 2008 period.

 

**Same-Store PropertyPortfolio**

 

Same-store revenuesincreased from $201.2 million in the 2007 period to $209.0 million inthe 2008 period, an increase of $7.8 million, or 4%.   Thisincrease is primarily attributable to an increase in net rent per occupiedsquare foot of 4.5% during the 2008 period as compared to the 2007period.  Same-store property operating expenses increased from$78.7 million in 2007 to $80.5 million in 2008, an increase of$1.8 million, or 2%.  The increase in our same-store facilities’operating expenses in the 2008 period as compared to the 2007 period primarilyrelates to increased real estate taxes, repairs and maintenance expense, andutilities expense of $0.7 million, $0.3 million and $0.5 million, respectively.

 

46

----

Table of Contents

 

**Non-GAAP Financial Measures**

 

***NOI***

 

We define net operating income, which we refer to as “NOI,”as total continuing revenues less continuing property operating expenses. NOIalso can be calculated by adding back to net income (loss): interest expense onloans, loan procurement amortization expense, noncontrolling interests, other,depreciation and amortization, lease abandonment charge, general andadministrative, and general and administrative - related party; anddeducting from net income: income from discontinued operations, gains on saleof self-storage facilities, other, and interest income. NOI is not a measure ofperformance calculated in accordance with GAAP.

 

We use NOI as a measure of operating performance ateach of our facilities, and for all of our facilities in the aggregate. NOIshould not be considered as a substitute for operating income, net income, cashflows provided by operating, investing and financing activities, or otherincome statement or cash flow statement data prepared in accordance with GAAP.

 

We believe NOI is useful to investors in evaluatingour operating performance because:

 

·         Itis one of the primary measures used by our management and our facility managersto evaluate the economic productivity of our facilities, including our abilityto lease our facilities, increase pricing and occupancy and control ourproperty operating expenses;

 

·         Itis widely used in the real estate industry and the self-storage industry tomeasure the performance and value of real estate assets without regard tovarious items included in net income that do not relate to or are notindicative of operating performance, such as depreciation and amortization,which can vary depending upon accounting methods and the book value ofassets; and

 

·         Webelieve it helps our investors to meaningfully compare the results of ouroperating performance from period to period by removing the impact of ourcapital structure (primarily interest expense on our outstanding indebtedness)and depreciation of our basis in our assets from our operating results.

 

There are material limitations to using a measure suchas NOI, including the difficulty associated with comparing results among morethan one company and the inability to analyze certain significant items, includingdepreciation and interest expense, that directly affect our net income. Wecompensate for these limitations by considering the economic effect of theexcluded expense items independently as well as in connection with our analysisof net income. NOI should be considered in addition to, but not as a substitutefor, other measures of financial performance reported in accordance with GAAP,such as total revenues, operating income and net income.

 

**Cash Flows**

 

***Comparison of theYear Ended December 31, 2009 to the Year Ended December 31, 2008***

 

A comparison of cash flow provided by operating,investing and financing activities for the years ended December 31, 2009and 2008 is as follows:

 
| ** **                               | ** ** | **Year Ended December 31,** | ** ** | ** ** | ** ** |
|------------------------------------------|------------|--------------------------------------------|------------|------------|------------|
| **Net cash flow provided by (used in):** | ** ** | **2009**                                   | ** ** | **2008**   | ** ** | **Change** | ** ** |
| ** **                               | ** ** | **(in thousands)**                    | ** ** | ** ** | ** ** |
| Operating  activities                    |       | $                                          | 62,214     |       | $          | 67,012 |   | $ | (4,798 | ) |
| Investing  activities                    |       | $                                          | 98,852     |       | $          | 27,177 |   | $ | 71,675 |   |
| Financing  activities                    |       | $                                          | (62,042    | )          | $          | (94,962 | ) | $ | 32,920 |   |

 

47

----

Table of Contents

 

Cash flows provided byoperating activities for the year ended December 31, 2009 and 2008 were$62.2 million and $67.0 million, respectively, a decrease of $4.8 million.  The decrease primarily relates to reducedlevels of net operating income in 2009 as compared to 2008 of $5.6 million anda $1.0 million decrease in other assets during the 2009 period as compared tothe 2008 period as a result of the timing of certain payments offset by a $2.4million reduction in general and administrative expenses during the 2009 periodas compared to the 2008 period.

 

Cash provided byinvesting activities was $98.9 million for the year ended December 31,2009 and $27.2 million for the year ended December 31, 2008, an increaseof $71.7 million.  The increase primarily relates to increased proceedsfrom property dispositions of $11.4 million in the 2009 period as compared tothe 2008 period, net proceeds received from the closing of the a joint venturein August 2009 of approximately $48.7 million with no similar transactionsduring the 2008 period as well as higher acquisition activity in the 2008period (one facility for an aggregate purchase price of $13.3 million) relativeto the 2009 period (no facility acquisition activity).

 

Cash used in financing activities decreased from $95.0million in 2008 to $62.0 million in 2009, a decrease of $33.0 million. Thedecrease relates primarily to increased net debt payoffs of $158.5 millionduring the 2009 period as compared to the 2008 period, an increase of $16.1million in loan procurement costs related to the origination of 17 new securedfinancings during 2009, as well as the new secured term loan in December 2009,offset by proceeds of approximately $170.9 million from the issuance of commonshares in the 2009 period, and distributions paid at $0.72 per share in the2008 period as compared to similar distributions paid at $0.10 per share duringthe 2009 period.

 

***Comparison of theYear Ended December 31, 2008 to the Year Ended December 31, 2007***

 

A comparison of cash flow operating, investing andfinancing activities for the years ended December 31, 2008 and 2007 is asfollows:

 
| ** **                               | ** ** | **Year Ended December 31,** | ** ** | ** ** | ** ** |
|------------------------------------------|------------|--------------------------------------------|------------|------------|------------|
| **Net cash flow provided by (used in):** | ** ** | **2008**                                   | ** ** | **2007**   | ** ** | **Change** | ** ** |
| ** **                               | ** ** | **(in thousands)**                    | ** ** | ** ** | ** ** |
| Operating  activities                    |       | $                                          | 67,012     |       | $          | 62,699 |   | $ | 4,313 |   |
| Investing  activities                    |       | $                                          | 27,177     |       | $          | (153,401 | ) | $ | 180,578 |   |
| Financing  activities                    |       | $                                          | (94,962    | )          | $          | 75,503 |   | $ | (170,465 | ) |

 

Cash flows provided byoperating activities for the year ended December 31, 2008 and 2007 were$67.0 million and $62.7 million, respectively, an increase of $4.3million.  The increase primarily relates$4.2 million increase in other assets during the 2008 period as compared to the2007 period as a result of the timing of certain payments.

 

Cash used in or providedby investing activities changed from a use of $153.4 million in 2007 toproceeds of $27.2 million in 2008, a change of $180.6 million. The changeprimarily relates to higher acquisition activity in the 2007 period (17facilities for an aggregate purchase price of $140.5 million) relative to the2008 period (one facility for an aggregate purchase price of $13.3 million),higher capital improvement activity in the 2007 period, and increased propertydispositions in the 2008 period as compared to the 2007 period.

 

Cash used in or provided by financing activitieschanged from proceeds of $75.5 million in 2007 to a use of $95.0 million in2008, a change of $170.5 million. The change relates primarily to netborrowings of $148.4 million during the 2007 period as compared to netprincipal payments of $50.0 million in the 2008 period and distributions paidat $0.72 per share in the 2008 period as compared to similar distributions paidat $1.16 per share during the 2007 period.

 

**Liquidity and Capital Resources**

 

***Liquidity Overview***

 

Our cash flow from operations has historically beenone of our primary sources of liquidity to fund debt service, distributions andcapital expenditures. We derive substantially all of our revenue from customerswho lease space from us at our facilities. Therefore, our ability to generatecash from operations is dependent on the rents that we are able to charge and

 

48

----

Tableof Contents

 

collect from our customers.  We believe that the facilities in which weinvest — self-storage facilities — are less sensitive thanother real estate product types to current near-term economic downturns.However, prolonged economic downturns will adversely affect our cash flows fromoperations.

 

In order to qualify as a REIT for federal income taxpurposes, we are required to distribute at least 90% of our REIT taxable income,excluding capital gains, to our shareholders on an annual basis or pay federalincome tax.  The nature of our business,coupled with the requirement that we distribute a substantial portion of ourincome on an annual basis, will cause us to have substantial liquidity needsover both the short-term and the long term.

 

Our short-term liquidity needs consist primarily offunds necessary to pay operating expenses associated with our facilities,refinancing of certain mortgage indebtedness, interest expense and scheduledprincipal payments on debt, expected distributions to limited partners andshareholders and recurring capital expenditures. These expenses, as well as theamount of recurring capital expenditures that we incur, will vary from year toyear, in some cases significantly.  Weexpect such recurring capital expenditures remaining in the 2010 fiscal year tobe approximately $7 million to $9 million. In addition, our currently scheduled principal payments on debt,including borrowings outstanding on the credit facility and secured term loans,are approximately $114.5 million in 2010 and $90.5 million in 2011.

 

Our most restrictive debt covenants limit the amountof additional leverage we can add; however, we believe the sources of capitaldescribed above are adequate to execute our current business plan and remain incompliance with our debt covenants.

 

Our liquidity needs beyond 2010 consist primarily ofcontractual obligations which include repayments of indebtedness at maturity,as well as potential discretionary expenditures such as (i) non-recurringcapital expenditures; (ii) redevelopment of operating facilities; (iii) acquisitionsof additional facilities; and (iv) development of new facilities.  We will have to satisfy our needs througheither additional borrowings, including borrowings under a new or revisedrevolving credit facility, sales of common or preferred shares and/or cashgenerated through facility dispositions and joint venture transactions.

 

Notwithstanding the discussion above, we believe that,as a publicly traded REIT, we will have access to multiple sources of capitalto fund long-term liquidity requirements, including the incurrence ofadditional debt and the issuance of additional equity. However, we cannotprovide any assurance that this will be the case. Our ability to incuradditional debt will be dependent on a number of factors, including our degreeof leverage, the value of our unencumbered assets and borrowing restrictionsthat may be imposed by lenders. In addition dislocation in the United Statesdebt markets may significantly reduce the availability and increase the cost oflong-term debt capital, including conventional mortgage financing andcommercial mortgage-backed securities financing.  There can be no assurance that such capitalwill be readily available in the future. Our ability to access the equity capital markets will be dependent on anumber of factors as well, including general market conditions for REITs andmarket perceptions about us.

 

***Currentand Expected Sources of Cash Excluding Credit Facility***

 

As of December 31,2009, we had approximately $102.8 million in available cash and cashequivalents.  In addition, we hadapproximately $250.0 million of availability for borrowings under our revolvingcredit facility.

 

***BankCredit Facilities***

 

On December 8, 2009, the Company and its OperatingPartnership entered into a three-year, $450 million senior secured creditfacility (the “secured credit facility”), consisting of a $200 million securedterm loan and a $250 million secured revolving credit facility.  The secured credit facility is secured bymortgages on borrowing base properties. The outstanding balance on the Company’s securedcredit facility as of December 31, 2009 was comprised of $200 million ofsecured term loan borrowings.  As of December 31,2009, approximately $250 million was available under the Company’s securedcredit facility.  Borrowings under thesecured credit facility bear interest ranging from 3.25% to 4.00% over LIBOR,with a LIBOR floor of 1.5%, depending on our leverage ratio.  At December 31, 2009, borrowings underthe secured credit facility had a weighted average interest rate of 5.0% andthe Company was in compliance with all financial covenants of the agreement.

 

Our ability to borrow and extend the maturity dateunder this secured credit facility and secured term loan will be subject to ourongoing compliance with the following financial covenants, among others:

 

·         Maximum total indebtedness to totalasset value of 65% (67.5% in first year);

 

49

----

Table of Contents

 

·         Minimum fixed charge coverage ratio of1.45:1.0; and

 

·         Minimum tangible net worth of$827.0 million plus 75% of net proceeds from future equity issuances.

 

Further, under our secured credit facility, we arerestricted from paying distributions on our common shares that would exceed anamount equal to the greater of (i) 95% of our funds from operations, and (ii) suchamount as may be necessary to maintain our REIT status.

 

We are currently in compliance with all of ourcovenants and anticipate being in compliance with all of our covenants throughthe duration of the term of the credit facility and secured term loan,including any extension period.

 

The secured credit facility replaced the prior,three-year $450 million unsecured credit facility, which was entered into in November 2006,consisting of $200 million in an unsecured term loan and $250 million inunsecured revolving loans. The balance of the unsecured credit facility waspaid off in December 2009.  Borrowings underthe unsecured credit facility bore interest, at our option, at either analternative base rate or a Eurodollar rate, in each case, plus an applicablemargin based on our leverage ratio or our credit rating. The alternative baseinterest rate was a fluctuating rate equal to the higher of the prime rate orthe sum of the federal funds effective rate plus 50 basis points. Theapplicable margin for the alternative base rate varied from 0.00% to 0.50%depending on our leverage ratio.

 

On September 14,2007, the Company and its Operating Partnership entered into a credit agreementthat allowed for total secured term loan borrowings of $50.0 million andsubsequently amended the agreement on April 3, 2008 to allow for totalsecured term loan borrowings of $57.4 million. Each term loan bore interest at either an alternative base rate or aEurodollar rate, at our option, in each case plus an applicable margin. Theoutstanding term loans were secured by a pledge by our Operating Partnership ofall equity interests in YSI RT LLC, the wholly-owned subsidiary of theOperating Partnership that acquired eight self-storage facilities in September 2007and one self-storage facility in May 2008.   The balance of the term loans was paid offon August 11, 2009.

 

During 2007 and 2008, the Company entered intointerest rate swap agreements designated as cash flow hedges that are designedto reduce the impact of interest rate changes on its variable rate debt.  The swap agreements effectively fixed the30-day LIBOR interest rate on $50 million of borrowings at 4.7725% per annum,$25 million of borrowings at 4.716% per annum and on $25 million of borrowingsat 2.3400% per annum, in each case until they matured on November 20,2009.  Additionally, the Company enteredinto interest rate cap agreements on $40 million of LIBOR based borrowings at5.50% per annum that matured in June 2008. In May 2008, the Company entered into interest rate swap agreementsfor notional principal amounts aggregating $200 million, that effectively fixedthe 30-day LIBOR interest rate on $200 million of LIBOR based borrowings at2.7625% that matured on November 20, 2009.

 

**OtherMaterial Changes in Financial Position**

 
| ** **                        | ** ** | **December 31,**   | ** ** | **Increase** | ** ** |
|-----------------------------------|------------|-------------------------|------------|--------------|------------|
| ** **                        | ** ** | **2009**                | ** ** | **2008**     | ** ** | **(decrease)** | ** ** |
| ** **                        | ** ** | **(in thousands)** | ** ** |
| Selected  Assets                  |       |                    |       |         |       |   |   |
| Storage  facilities, net     |       | $                       | 1,430,533  |         | $          | 1,559,958 |   | $ | (129,425 | ) |
| Cash  and cash equivalents        |       | $                       | 102,768    |         | $          | 3,744 |   | $ | 99,024 |   |
| Notes  receivable, net            |       | $                       | 20,112     |         | $          | — |   | $ | 20,112 |   |
|                              |       |                    |       |         |       |   |   |
| Selected  Liabilities             |       |                    |       |         |       |   |   |
| Revolving  credit facility        |       | $                       | —     |         | $          | 172,000 |   | $ | (172,000 | ) |
| Unecured  term loan               |       | $                       | —     |         | $          | 200,000 |   | $ | (200,000 | ) |
| Secured  term loan                |       | $                       | 200,000    |         | $          | 57,419 |   | $ | 142,581 |   |
| Mortgage  loans and notes payable |       | $                       | 569,026    |         | $          | 548,085 |   | $ | 20,941 |   |

 

50

----

Table of Contents

 

Storage facilities, net decreased $129.4 millionduring 2009 primarily as a result of $73.6 million of depreciation expenserecognized during 2009 and $75.2 million related to the 2009 dispositions,offset by fixed asset additions.  Cashand cash equivalents increased $99.0 million primarily due to proceedsfrom dispositions and the origination of 17 new secured term loans during2009.  Notes receivable, net consists ofmultiple promissory notes related to storage facility dispositions.

 

Our revolving credit facility decreased $172.0 millionas a result of multiple paydowns related to proceeds from the 2009dispositions, and the unsecured term loan decreased $200 million due to thepayoff of the unsecured credit facility in 2009.  The secured term loan balance increased$142.6 million due to the closing of the secured credit facility and related$200 million secured term loan in December 2009 offset by the repayment of$57.4 million of term loans in August 2009.  Mortgage loans and notes payable increased$20.9 million due to the origination of 17 new secured financings during 2009,offset by scheduled principal payments of several mortgages during the year.

 

**Contractual Obligations**

 

The following table summarizes our known contractualobligations as of December 31, 2009 (in thousands):

 
| ** **                                            | ** ** | **Payments  Due by Period** | ** ** |
|-------------------------------------------------------|------------|-----------------------------|------------|
| ** **                                            | ** ** | ** **                  | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **2015  and** | ** ** |
| ** **                                            | ** ** | **Total**                   | ** ** | **2010** | ** ** | **2011** | ** ** | **2012** | ** ** | **2013** | ** ** | **2014** | ** ** | **thereafter** | ** ** |
| Mortgage  loans and notespayable (a)                  |       | $                           | 568,795    |   | $ | 114,516 |   | $ | 90,541 |   | $ | 163,817 |   | $ | 26,238 |   | $ | 91,091 |   | $ | 82,592 |   |
| Revolving  credit facilityand secured  term loans (b) |       | 200,000                     |       | — |   | — |   | 200,000 |   | — |   | — |   | — |   |
| Interest  payments (b)                                |       | 129,372                     |       | 39,447 |   | 30,066 |   | 28,106 |   | 12,558 |   | 12,644 |   | 6,551 |   |
| Ground  leases and third party office lease           |       | 697                         |       | 149 |   | 149 |   | 149 |   | 149 |   | 101 |   | — |   |
| Related  party office leases                          |       | 2,401                       |       | 453 |   | 475 |   | 475 |   | 499 |   | 499 |   | — |   |
| Software  and service contracts                       |       | 763                         |       | 763 |   | — |   | — |   | — |   | — |   | — |   |
| Employment  contracts                                 |       | 1,295                       |       | 1,295 |   | — |   | — |   | — |   | — |   | — |   |
|                                                  |       | $                           | 903,323    |   | $ | 156,623 |   | $ | 121,231 |   | $ | 392,547 |   | $ | 39,444 |   | $ | 104,335 |   | $ | 89,143 |   |

 

----

(a)  Amounts do notinclude unamortized discounts/premiums.

 

(b)  Interest onvariable rate debt calculated using LIBOR of 1.50% plus a spread of 3.50%.

 

We expect that thecontractual obligations owed in 2010 will be satisfied by a combination of cashgenerated from operations and from draws on the revolving credit facility.

 

51

----

Table of Contents

 

**Off-Balance Sheet Arrangements**

 

We do not currently haveany off-balance sheet arrangements.

 

**ITEM 7A.  *QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK***

 

The Company’s future income, cash flows and fairvalues relevant to financial instruments depend upon prevailing interest rates.

 

**Market Risk**

 

Our investmentpolicy relating to cash and cash equivalents is to preserve principal andliquidity while maximizing the return through investment of available funds.

 

**Effect of Changes in Interest Rateson our Outstanding Debt**

 

The analysis below presents the sensitivity of themarket value of our financial instruments to selected changes in marketrates.  The range of changes chosenreflects our view of changes which are reasonably possible over a one-yearperiod.  Market values are the presentvalue of projected future cash flows based on the market rates chosen.

 

Our financial instruments consist of both fixed andvariable rate debt.  As of December 31,2009, our consolidated debt consisted of $569.0 million in fixed rate loanspayable and $200.0 million in a variable rate unsecured term loan.  All financial instruments were entered intofor other than trading purposes and the net market value of these financialinstruments is referred to as the net financial position.  Changes in interest rates have differentimpacts on the fixed and variable rate portions of our debt portfolio.  A change in interest rates on the fixedportion of the debt portfolio impacts the net financial instrument position,but has no impact on interest incurred or cash flows.  A change in interest rates on the variableportion of the debt portfolio impacts the interest incurred and cash flows, butdoes not impact the net financial instrument position.

 

If market rates of interest on our variable rate debtincrease by 1%, the increase in annual interest expense on our variable ratedebt would decrease future earnings and cash flows by approximately $0.2million a year.  If market rates ofinterest on our variable rate debt decrease by 1%, the decrease in interestexpense on our variable rate debt would increase future earnings and cash flowsby approximately $0.2 million a year.

 

If market rates of interest increase by 1%, the fairvalue of our outstanding fixed-rate mortgage debt would decrease byapproximately $12.9 million.  If marketrates of interest decrease by 1%, the fair value of our outstanding fixed-ratemortgage debt would increase by approximately $13.5 million.

 

**ITEM 8.  *FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA***

 

Financial statements required by this item appear withan Index to Financial Statements and Schedules, starting on page F-1 ofthis report.

 

**ITEM 9.  *CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ONACCOUNTING AND******FINANCIALDISCLOSURE***

 

None.

 

**ITEM 9A.  *CONTROLS AND PROCEDURES***

 

**Evaluation of Disclosure Controls andProcedures**

 

As of the end of theperiod covered by this report, we carried out an evaluation, under the supervisionand with the participation of our management, including the Chief ExecutiveOfficer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness ofthe design and operation of our disclosure controls and procedures (as definedin Rules 13a-15(e) under the Securities Exchange Act of 1934, asamended (the “Exchange Act”)). Based on that evaluation, the CEO and the CFOhave concluded that our disclosure controls and procedures are effective.

 

52

----

Tableof Contents

 

**Changes in Internal Control OverFinancial Reporting**

 

There has been no change in our internal control overfinancial reporting (as defined in Rule 13a-15(f) under the ExchangeAct) during our most recent fiscal quarter, that has materially affected, or isreasonably likely to materially affect, our internal control over financialreporting.

 

**Management’s Report on InternalControl Over Financial Reporting**

 

Management’s report on internal control over financialreporting is set forth on page F-2 of this Annual Report on Form 10-K,and is incorporated herein by reference.

 

**ITEM 9B.  *OTHER INFORMATION***

 

Not applicable.

 

**PART III**

 

**ITEM 10.  *TRUSTEES AND EXECUTIVE OFFICERS***

 

We have adopted a Code of Ethics for all of ouremployees, officers and trustees, which is available on our website at www.ustoreit.com. We intend todisclose any amendment to, or a waiver from, a provision of our Code of Ethicson our website within four business days following the date of the amendment orwaiver.

 

The remaining information required by this itemregarding trustees, executive officers and corporate governance is herebyincorporated by reference to the material appearing in the Proxy Statement forthe Annual Shareholders Meeting to be held in 2010 (the “Proxy Statement”)under the captions “Proposal 1: Election of Trustees,” “Executive Officers”and “Meetings and Committees of the Board of Trustees.” The informationrequired by this item regarding compliance with Section 16(a) of theExchange Act is hereby incorporated by reference to the material appearing inthe Proxy Statement under the caption “Section 16(a) BeneficialOwnership Reporting Compliance.”

 

**ITEM 11.  *EXECUTIVE COMPENSATION***

 

The information required by this item is herebyincorporated by reference to the material appearing in the Proxy Statementunder the captions “Compensation Committee Report,” “Meetings and Committees ofthe Board of Trustees — Compensation Committee Interlocks and InsiderParticipation,” “Compensation Discussion and Analysis,” “ExecutiveCompensation,” “Potential Payments Upon Termination or Change in Control,” and “TrusteeCompensation.”

 

**ITEM 12.  *SECURITY OWNERSHIPOF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT******AND RELATED SHAREHOLDER MATTERS***

 

The information regardingsecurity ownership of certain beneficial owners and management required by thisitem is hereby incorporated by reference to the material appearing in the ProxyStatement under the caption “Security Ownership of Management” and ““SecurityOwnership of Beneficial Owners.”

 

53

----

Table of Contents

 

The following table setsforth certain information regarding our equity compensation plans as of December 31,2009.

 
| **Plan Category**                                  | ** ** | **Number of securities to  be issued upon exercise  of outstanding options,  warrants and rights** | ** ** | **Weighted-average  exercise price of  outstanding options,  warrants and rights** | ** ** | **Number of securities remaining  available for future issuance under  equity compensation plans  (excluding securities  reflected in column(a)** | ** ** |
|---------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| ** **                                              | ** ** | **(a)**                                                                                                                                              | ** ** | **(b)**                                                                                                     | ** ** | **(c)**                                                                                                                                                                                                       | ** ** |
| Equity  compensation plans approved by shareholders     |       | 4,546,304                                                                                                                                            | (1)        | $                                                                                                           | 10.71      | (2)                                                                                                                                                                                                           | 1,146,592  |   |
| Equity  compensation plans not approved by shareholders |       | —                                                                                                                                               |       | —                                                                                                      |       | —                                                                                                                                                                                                        |       |
| Total                                                   |       | 4,546,304                                                                                                                                            |       | $                                                                                                           | 10.71      |                                                                                                                                                                                                          | 1,146,592  |   |

 

----

| (1)    |   | Excludes 572,230 shares subject to outstanding  restricted share unit awards, and 14,781 shares subject to deferred shares  credited to the account of our Trustees in the U- Store-It Trust Deferred  Trustees Plan. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                       |
| (2)    |   | This number reflects the weighted-average exercise  price of outstanding options and has been calculated exclusive of outstanding  restricted unit awards.                                                                 |

 

**ITEM 13.  *CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS***

 

The information required by this item is herebyincorporated by reference to the material appearing in the Proxy Statementunder the captions “Corporate Governance,” “Policies and Procedures RegardingReview, Approval or Ratification of Transactions With Related Persons,” and “TransactionsWith Related Persons.”

 

**ITEM 14.  *PRINCIPAL ACCOUNTANT FEES AND SERVICES***

 

The information required by this item is herebyincorporated by reference to the material appearing in the Proxy Statementunder the captions “Audit Committee Matters - Fees Paid to Our IndependentRegistered Public Accounting Firm” and “— Audit Committee Pre-Approval Policiesand Procedures.”

 

**PART IV**

 

**ITEM 15.  *EXHIBITS AND FINANCIAL STATEMENT SCHEDULES***

 

(a) Documents filed as part of this report:

 

1. *Financial Statements.*

 

The response tothis portion of Item 15 is submitted as a separate section of this report.

 

2. *Financial Statement Schedules.*

 

The response tothis portion of Item 15 is submitted as a separate section of this report.

 

3. *Exhibits.*

 

The list of exhibitsfiled with this report is set forth in response to Item 15(b). Therequired exhibit index has been filed with the exhibits.

 

(b) *Exhibits.*  Thefollowing documents are filed as exhibits to this report:

 

54

----

Tableof Contents

 
| 3.1*   |   | Articles of Amendment  and Restatement of Declaration of Trust of U-Store-It Trust, incorporated by  reference to Exhibit 3.1 to the Company’s Current Report on  Form 8-K, filed on November 2, 2004.                                                                                                                                                                                                                                                       |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 3.2*   |   | Second Amended and  Restated Bylaws of U-Store-It Trust, incorporated by reference to  Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the  quarter ended September 30, 2008, filed on November 10, 2008.                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 4.1*   |   | Form of Common  Share Certificate, incorporated by reference to Exhibit 4.1 to Amendment  No. 3 to the Company’s Registration Statement on Form S-11, filed  on October 20, 2004, File No. 333-117848.                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.1*  |   | Second Amended and  Restated Agreement of Limited Partnership of U-Store-It, L.P. dated as of  October 27, 2004, incorporated by reference to Exhibit 10.1 to the  Company’s Current Report on Form 8-K, filed on November 2, 2004.                                                                                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.2*  |   | Amended and Restated  Credit Agreement dated December 7, 2009, by and among U-Store-It, L.P.,  U-Store-It Trust, Wells Fargo Securities, LLC, Bank of America Securities  LLC, Wachovia Bank, National Association, Bank of America, N.A., Regions Bank,  SunTrust Bank and the financial institutions initially signatory thereto,  incorporated by reference to Exhibit 10.1 to the Company’s Current  Report on Form 8-K, filed on December 8, 2009. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.3*  |   | Form of Guaranty,  incorporated by reference to Exhibit 10.1 to the Company’s Current  Report on Form 8-K, filed on December 8, 2009                                                                                                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.4*  |   | Form of Term Note,  incorporated by reference to Exhibit 10.1 to the Company’s Current  Report on Form 8-K, filed on December 8, 2009.                                                                                                                                                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.5*  |   | Form of Revolving  Note, incorporated by reference to Exhibit 10.1 to the Company’s Current  Report on Form 8-K, filed on December 8, 2009                                                                                                                                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.6*  |   | Form of Swingline  Note, incorporated by reference to Exhibit 10.1 to the Company’s Current  Report on Form 8-K, filed on December 8, 2009                                                                                                                                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.7*  |   | Form of Security  Interest regarding fixed rate mortgage loan between YSI XX LP and  Transamerica Financial Life Insurance Company, incorporated by reference to  Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on  November 4, 2005.                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.8*  |   | Secured Promissory  Note, dated November 1, 2005, between YSI XX LP and Transamerica  Financial Life Insurance Company, incorporated by reference to  Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on  November 4, 2005.                                                                                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.9*  |   | Loan Agreement, dated  August 4, 2005, by and between YASKY LLC and LaSalle Bank National  Association, incorporated by reference to Exhibit 10.2 to the Company’s  Quarterly Report on Form 10-Q for the quarter ended September 30,  2005, filed on November 14, 2005.                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.10* |   | Loan Agreement, dated  July 19, 2005, by and between YSI VI LLC and Lehman Brothers Bank, FSB,  incorporated by reference to Exhibit 10.1 to the Company’s Quarterly  Report on Form 10-Q for the quarter ended September 30, 2005, filed  on November 14, 2005.                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.11* |   | Loan Agreement, dated  as of October 27, 2004, by and between YSI I LLC and Lehman Brothers  Holdings Inc. d/b/a Lehman Capital, a division of Lehman Brothers Holdings  Inc., incorporated by reference to Exhibit 10.2 to the Company’s Current  Report on Form 8-K, filed on November 2, 2004.                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.12* |   | Loan Agreement, dated  as of October 27, 2004, by and between YSI II LLC and Lehman Brothers  Holdings Inc. d/b/a Lehman Capital, a division of Lehman Brothers Holdings  Inc., incorporated by reference to Exhibit 10.3 to the Company’s Current  Report on Form 8-K, filed on November 2, 2004.                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.13* |   | Standstill Agreement,  by and among, U-Store-It Trust, Robert J. Amsdell, Barry L. Amsdell and Todd  C. Amsdell, dated August 6, 2007, incorporated by reference to  Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on  August 7, 2007.                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.14* |   | Settlement Agreement  and Mutual Release, by and among U-Store-It Trust, U-Store-It, L.P., YSI  Management LLC, U-Store-It Mini Warehouse Co., U-Store-It Development, LLC,  Dean Jernigan, Kathleen A. Weigand, Robert J. Amsdell, Barry L. Amsdell, Todd  C. Amsdell, Kyle V. Amsdell, Rising Tide Development LLC, and Amsdell and  Amsdell, dated August 6, 2007, incorporated by                                                                                       |

 

55

----

Tableof Contents

 
|         |   | reference to  Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on  August 7, 2007.                                                                                                                                                                                                         |
|--------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |   |                                                                                                                                                                                                                                                                                                                          |
| 10.15*       |   | Purchase and Sale  Agreement, by and between U-Store-It, L.P. and Rising Tide Development, LLC,  dated August 6, 2007, incorporated by reference to Exhibit 10.2 to  the Company’s Current Report on Form 8-K, filed on August 7, 2007.                                                              |
|         |   |                                                                                                                                                                                                                                                                                                                          |
| 10.16*       |   | First Amendment to  Lease, by and between U-Store-It, L.P. and Amsdell and Amsdell, dated  August 6, 2007, amending Lease dated March 29, 2005, incorporated  by reference to Exhibit 10.4 to the Company’s Current Report on  Form 8-K, filed on August 7, 2007.                               |
|         |   |                                                                                                                                                                                                                                                                                                                          |
| 10.17*       |   | First Amendment to  Lease, by and between U-Store-It, L.P. and Amsdell and Amsdell, dated  August 6, 2007, amending Lease dated December 5, 2005, incorporated  by reference to Exhibit 10.5 to the Company’s Current Report on  Form 8-K, filed on August 7, 2007.                             |
|         |   |                                                                                                                                                                                                                                                                                                                          |
| 10.18*       |   | First Amendment to  Lease, by and between U-Store-It, L.P. and Amsdell and Amsdell, dated  August 6, 2007, amending Lease dated December 5, 2005, incorporated  by reference to Exhibit 10.6 to the Company’s Current Report on  Form 8-K, filed on August 7, 2007.                             |
|         |   |                                                                                                                                                                                                                                                                                                                          |
| 10.19*       |   | First Amendment to  Lease, by and between U-Store-It, L.P. and Amsdell and Amsdell, dated  August 6, 2007, amending Lease dated December 5, 2005, incorporated  by reference to Exhibit 10.7 to the Company’s Current Report on  Form 8-K, filed on August 7, 2007.                             |
|         |   |                                                                                                                                                                                                                                                                                                                          |
| 10.20*       |   | First Amendment to  Lease, by and between U-Store-It, L.P. and Amsdell and Amsdell, dated  August 6, 2007, amending Lease dated December 5, 2005, incorporated  by reference to Exhibit 10.8 to the Company’s Current Report on  Form 8-K, filed on August 7, 2007.                             |
|         |   |                                                                                                                                                                                                                                                                                                                          |
| 10.21*       |   | Lease, dated  March 29, 2005, by and between Amsdell and Amsdell and U-Store-It, L.P.,  incorporated by reference to Exhibit 10.41 to the Company’s Annual  Report on Form 10-K for the year ended December 31, 2004, filed on March 31,  2005.                                                 |
|         |   |                                                                                                                                                                                                                                                                                                                          |
| 10.22*       |   | Lease, dated  June 29, 2005, by and between Amsdell and Amsdell and U-Store-It, L.P.,  incorporated by reference to Exhibit 10.2 to the Company’s Quarterly  Report on Form 10-Q for the quarter ended June 30, 2005, filed on  August 12, 2005.                                                |
|         |   |                                                                                                                                                                                                                                                                                                                          |
| 10.23*       |   | Lease, dated  June 29, 2005, by and between Amsdell and Amsdell and U-Store-It, L.P.,  incorporated by reference to Exhibit 10.3 to the Company’s Quarterly  Report on Form 10-Q for the quarter ended June 30, 2005, filed on  August 12, 2005.                                                |
|         |   |                                                                                                                                                                                                                                                                                                                          |
| 10.24*       |   | Option Termination  Agreement, by and between U-Store-It, L.P. and Rising Tide Development LLC,  dated August 6, 2007, incorporated by reference to Exhibit 10.9 to  the Company’s Current Report on Form 8-K, filed on August 7, 2007.                                                              |
|         |   |                                                                                                                                                                                                                                                                                                                          |
| 10.25*       |   | Property Management  Termination Agreement, by and among U-Store-It Trust, YSI Management LLC, and  Rising Tide Development LLC, dated August 6, 2007, incorporated by  reference to Exhibit 10.10 to the Company’s Current Report on  Form 8-K, filed on August 7, 2007.                            |
|         |   |                                                                                                                                                                                                                                                                                                                          |
| 10.26*       |   | Marketing and Ancillary  Services Termination Agreement, by and among U-Store-It Trust, U-Store-It  Mini Warehouse Co., and Rising Tide Development LLC, dated August 6,  2007, incorporated by reference to Exhibit 10.11 to the Company’s Current  Report on Form 8-K, filed on August 7, 2007.    |
|         |   |                                                                                                                                                                                                                                                                                                                          |
| 10.27*† |   | Amended and Restated  Executive Employment Agreement, dated December 18, 2008, by and between  U-Store-It Trust and Dean Jernigan, incorporated by reference to  Exhibit 10.38 to the Company’s Annual Report on Form 10-K for the  year ended December 31, 2008, filed on March 2, 2009.       |
|         |   |                                                                                                                                                                                                                                                                                                                          |
| 10.28*† |   | Amended and Restated  Executive Employment Agreement, dated December 18, 2008, by and between  U-Store-It Trust and Christopher P. Marr, incorporated by reference to  Exhibit 10.39 to the Company’s Annual Report on Form 10-K for the  year ended December 31, 2008, filed on March 2, 2009. |
|         |   |                                                                                                                                                                                                                                                                                                                          |
| 10.29*† |   | Amended and Restated  Executive Employment Agreement, dated December 18, 2008, by and between  U-Store-It Trust and Timothy M. Martin, incorporated by reference to  Exhibit 10.40 to the Company’s Annual Report on Form 10-K for the  year ended December 31, 2008, filed on March 2, 2009.   |

 

56

----

Tableof Contents

 
| 10.30*† |   | Indemnification  Agreement, dated as of January 25, 2008, by and among U-Store-It Trust,  U-Store-It, L.P. and Daniel B. Hurwitz, incorporated by reference to  Exhibit 10.49 to the Company’s Annual Report on Form 10-K for the  year ended December 31, 2007, filed on February 29, 2008. |
|--------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |   |                                                                                                                                                                                                                                                                                                                       |
| 10.31*† |   | Indemnification  Agreement, dated as of March 22, 2007, by and among U-Store-It Trust,  U-Store-It, L.P. and Marianne M. Keler, incorporated by reference to  Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the  quarter ended March 31, 2007, filed on May 10, 2007.      |
|         |   |                                                                                                                                                                                                                                                                                                                       |
| 10.32*† |   | Indemnification  Agreement, dated as of December 11, 2006, by and among U-Store-It Trust,  U-Store-It, L.P. and Timothy M. Martin, incorporated by reference to  Exhibit 10.47 to the Company’s Annual Report on Form 10-K for the  year ended December 31, 2006, filed on March 16, 2007.   |
|         |   |                                                                                                                                                                                                                                                                                                                       |
| 10.33*† |   | Indemnification  Agreement, dated June 5, 2006, by and among U-Store-It Trust,  U-Store-It, L.P. and Christopher P. Marr, incorporated by reference to  Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the  quarter ended June 30, 2006, filed on August 8, 2006.           |
|         |   |                                                                                                                                                                                                                                                                                                                       |
| 10.34*† |   | Indemnification  Agreement, dated as of April 24, 2006, by and among U-Store-It Trust,  U-Store-It, L.P. and Dean Jernigan, incorporated by reference to  Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on  April 24, 2006                                                      |
|         |   |                                                                                                                                                                                                                                                                                                                       |
| 10.35*† |   | Indemnification  Agreement, dated as of October 27, 2004, by and among U-Store-It Trust,  U-Store-It, L.P. and Robert J. Amsdell, incorporated by reference to  Exhibit 10.12 to the Company’s Current Report on Form 8-K, filed on  November 2, 2004.                                            |
|         |   |                                                                                                                                                                                                                                                                                                                       |
| 10.36*† |   | Indemnification  Agreement, dated as of October 27, 2004, by and among U-Store-It Trust,  U-Store-It, L.P. and Barry L. Amsdell, incorporated by reference to  Exhibit 10.14 to the Company’s Current Report on Form 8-K, filed on  November 2, 2004.                                             |
|         |   |                                                                                                                                                                                                                                                                                                                       |
| 10.37*† |   | Indemnification  Agreement, dated as of October 27, 2004, by and among U-Store-It Trust,  U-Store-It, L.P. and Todd C. Amsdell, incorporated by reference to  Exhibit 10.15 to the Company’s Current Report on Form 8-K, filed on  November 2, 2004.                                              |
|         |   |                                                                                                                                                                                                                                                                                                                       |
| 10.38*† |   | Indemnification  Agreement, dated as of October 27, 2004, by and among U-Store-It Trust,  U-Store-It, L.P. and John C. Dannemiller, incorporated by reference to  Exhibit 10.17 to the Company’s Current Report on Form 8-K, filed on  November 2, 2004.                                          |
|         |   |                                                                                                                                                                                                                                                                                                                       |
| 10.39*† |   | Indemnification  Agreement, dated as of October 27, 2004, by and among U-Store-It Trust,  U-Store-It, L.P. and Thomas A. Commes, incorporated by reference to  Exhibit 10.18 to the Company’s Current Report on Form 8-K, filed on  November 2, 2004.                                             |
|         |   |                                                                                                                                                                                                                                                                                                                       |
| 10.40*† |   | Indemnification  Agreement, dated as of October 27, 2004, by and among U-Store-It Trust,  U-Store-It, L.P. and David J. LaRue, incorporated by reference to  Exhibit 10.19 to the Company’s Current Report on Form 8-K, filed on  November 2, 2004.                                               |
|         |   |                                                                                                                                                                                                                                                                                                                       |
| 10.41*† |   | Indemnification  Agreement, dated as of October 27, 2004, by and among U-Store-It Trust,  U-Store-It, L.P. and Harold S. Haller, incorporated by reference to  Exhibit 10.20 to the Company’s Current Report on Form 8-K, filed on  November 2, 2004.                                             |
|         |   |                                                                                                                                                                                                                                                                                                                       |
| 10.42*† |   | Indemnification  Agreement, dated as of October 27, 2004, by and among U-Store-It Trust,  U-Store-It, L.P. and William M. Diefenderfer III, incorporated by reference  to Exhibit 10.21 to the Company’s Current Report on Form 8-K, filed  on November 2, 2004.                                  |
|         |   |                                                                                                                                                                                                                                                                                                                       |
| 10.43†  |   | Indemnification  Agreement, dated as of November 5, 2009, by and among U-Store-It Trust,  U-Store-It, L.P. and John F. Remondi.                                                                                                                                                                                       |
|         |   |                                                                                                                                                                                                                                                                                                                       |
| 10.44*† |   | Noncompetition  Agreement, dated as of December 11, 2006, by and between U-Store-It  Trust and Timothy M. Martin, incorporated by reference to Exhibit 10.62  to the Company’s Annual Report on Form 10-K for the year ended  December 31, 2006, filed on March 16, 2007.                    |
|         |   |                                                                                                                                                                                                                                                                                                                       |
| 10.45*† |   | Noncompetition  Agreement, dated as of June 5, 2006, by and between U-Store-It Trust and  Christopher P. Marr, incorporated by reference to Exhibit 10.3 to the  Company’s Quarterly Report on Form 10-Q for the quarter ended  June 30, 2006, filed on August 8, 2006.                      |
|         |   |                                                                                                                                                                                                                                                                                                                       |
| 10.46*† |   | Noncompetition  Agreement, dated as of April 24, 2006, by and between U-Store-It Trust  and Dean Jernigan, incorporated by reference to Exhibit 10.3 to the  Company’s Current Report on Form 8-K,                                                                                                     |

 

57

----

Tableof Contents

 
|         |   | filed on April 24,  2006.                                                                                                                                                                                                                                                                                   |
|--------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |   |                                                                                                                                                                                                                                                                                                             |
| 10.47*† |   | Schedule of  Compensation for Non-Employee Trustees of U-Store-It Trust, effective  May 8, 2007, incorporated by reference to the Company’s Current Report  on Form 8-K, filed on February 24, 2010.                                                                                         |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 10.48*† |   | Nonqualified Share  Option Agreement, dated as of June 5, 2006, by and between U-Store-It  Trust and Christopher P. Marr, incorporated by reference to Exhibit 10.4  to the Company’s Quarterly Report on Form 10-Q for the quarter ended  June 30, 2006, filed on August 8, 2006. |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 10.49*† |   | Nonqualified Share  Option Agreement, dated as of April 19, 2006, by and between U-Store-It  Trust and Dean Jernigan, incorporated by reference to Exhibit 10.4 to  the Company’s Current Report on Form 8-K, filed on April 24, 2006.                                                  |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 10.50*† |   | Form of Restricted  Share Agreement for Non-Employee Trustees under the U-Store-It Trust 2007  Equity Incentive Plan, incorporated by reference to Exhibit 10.83 to the  Company’s Annual Report on Form 10-K for the year ended  December 31, 2007, filed on February 29, 2008.   |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 10.51*† |   | Form of Restricted  Share Agreement for Non-Employee Trustees under the U-Store-It Trust 2004  Equity Incentive Plan, incorporated by reference to Exhibit 10.12 to the  Company’s Quarterly Report on Form 10-Q for the quarter ended  March 31, 2007, filed on May 10, 2007.     |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 10.52*† |   | Form of  Nonqualified Share Option Agreement under the U-Store-It Trust 2007 Equity  Incentive Plan, incorporated by reference to Exhibit 10.1 to the  Company’s Current Report on Form 8-K, filed on January 25, 2008.                                                                 |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 10.53*† |   | Form of Nonqualified  Share Option Agreement under the U-Store-It Trust 2004 Equity Incentive Plan,  incorporated by reference to Exhibit 10.2 to the Company’s Quarterly  Report on Form 10-Q for the quarter ended March 31, 2007, filed on  May 10, 2007.                       |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 10.54*† |   | Form of  Performance-Vested Restricted Share Agreement under the U-Store-It Trust 2007  Equity Incentive Plan, incorporated by reference to Exhibit 10.3 to the  Company’s Current Report on Form 8-K, filed on January 25, 2008.                                                       |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 10.55*† |   | Form of  Performance-Vested Restricted Share Agreement under the U-Store-It Trust 2004  Equity Incentive Plan, incorporated by reference to Exhibit 10.3 to the  Company’s Quarterly Report on Form 10-Q for the quarter ended  March 31, 2007, filed on May 10, 2007.             |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 10.56*† |   | Form of Restricted  Share Agreement under the U-Store-It Trust 2007 Equity Incentive Plan,  incorporated by reference to Exhibit 10.2 to the Company’s Current  Report on Form 8-K, filed on January 25, 2008.                                                                          |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 10.57*† |   | Form of Restricted  Share Agreement under the U-Store-It Trust 2004 Equity Incentive Plan,  incorporated by reference to Exhibit 10.4 to the Company’s Quarterly  Report on Form 10-Q for the quarter ended March 31, 2007, filed on  May 10, 2007.                                |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 10.58*† |   | U-Store-It Trust  Trustees Deferred Compensation Plan, amended and restated effective  January 1, 2009, incorporated by reference to Exhibit 10.78 to the  Company’s Annual Report on Form 10-K for the year ended  December 31, 2008, filed on March 2, 2009.                     |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 10.59*† |   | U-Store-It Trust  Executive Deferred Compensation Plan, amended and restated effective  January 1, 2009, incorporated by reference to Exhibit 10.79 to the  Company’s Annual Report on Form 10-K for the year ended  December 31, 2008, filed on March 2, 2009.                    |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 10.60*† |   | U-Store-It Trust  Deferred Trustees Plan, effective as of May 31, 2005, incorporated by  reference to Exhibit 10.1 to the Company’s Current Report on  Form 8-K, filed on June 6, 2005.                                                                                                 |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 10.61*† |   | 2007 Equity Incentive  Plan of U-Store-It Trust, effective as of May 8, 2007, incorporated by  reference to Exhibit 10.1 to the Company’s Quarterly Report on  Form 10-Q for the quarter ended March 31, 2007, filed on  May 10, 2007.                                             |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 10.62*† |   | 2004 Equity Incentive  Plan of U-Store-It Trust, effective as of October 19, 2004, incorporated  by reference to Exhibit 10.6 to the Company’s Current Report on  Form 8- K, filed on November 2, 2004.                                                                                 |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 10.63*† |   | Indemnification  Agreement, dated as of February 26, 2009, by and among U-Store-It Trust,  U-Store-It, L.P. and Jeffrey Foster, incorporated by reference to  Exhibit 10.83 to the Company’s Annual                                                                                               |

 

58

----

Tableof Contents

 
|         |   | Report on  Form 10-K for the year ended December 31, 2008, filed on  March 2, 2009.                                                                                                                                                                                                           |
|--------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |   |                                                                                                                                                                                                                                                                                                         |
| 10.64*† |   | Severance and General  Release Agreement dated February 10, 2009 by and between U-Store-It  Trust and Kathleen Weigand, incorporated by reference to Exhibit 10.84  to the Company’s Annual Report on Form 10-K for the year ended  December 31, 2008, filed on March 2, 2009. |
|         |   |                                                                                                                                                                                                                                                                                                         |
| 10.65*† |   | Severance and General  Release Agreement dated December 31, 2008 by and between U-Store-It  Trust and Steve Nichols, incorporated by reference to Exhibit 10.85 to  the Company’s Annual Report on Form 10-K for the year ended  December 31, 2008, filed on March 2, 2009.    |
|         |   |                                                                                                                                                                                                                                                                                                         |
| 10.66*       |   | Contribution Agreement  dated August 6, 2009 by and between YSI Venture LP LLC and HART -YSI  Investor LP LLC, incorporated by reference to Exhibit 99.1 to the  Company’s Current Report on Form 8-K, filed on August 7, 2009.                                                     |
|         |   |                                                                                                                                                                                                                                                                                                         |
| 10.67*       |   | First Amendment to  Contribution Agreement dated August 13, 2009 by and between YSI Venture  LP LLC and HART -YSI Investor LP LLC, incorporated by reference to  Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on  August 14, 2009.                               |
|         |   |                                                                                                                                                                                                                                                                                                         |
| 10.68*       |   | Amended and Restated  Limited Partnership Agreement of YSI — HART LIMITED PARTNERSHIP dated  August 13, 2009, incorporated by reference to Exhibit 10.1 to the  Company’s Current Report on Form 8-K, filed on August 14, 2009.                                                |
|         |   |                                                                                                                                                                                                                                                                                                         |
| 10.69*       |   | Sales Agreement dated  April 3, 2009, among the U-Store-It Trust, U-Store-It, L.P., and Cantor  Fitzgerald & Co., incorporated by reference to Exhibit 1.1 to  the Company’s Current Report on Form 8-K, filed on April 3, 2009                                            |
|         |   |                                                                                                                                                                                                                                                                                                         |
| 10.70†  |   | Letter Agreement dated  January 9, 2009 between U-Store-It Trust and Jeffrey P. Foster                                                                                                                                                                                                                  |
|         |   |                                                                                                                                                                                                                                                                                                         |
| 10.71†  |   | Indemnification  Agreement, dated as of February 23, 2010, by and among U-Store-It Trust,  U-Store-It, L.P. and Piero Bussani.                                                                                                                                                                          |
|         |   |                                                                                                                                                                                                                                                                                                         |
| 12.1         |   | Statement regarding  Computation of Ratios of U-Store-It Trust                                                                                                                                                                                                                                               |
|         |   |                                                                                                                                                                                                                                                                                                         |
| 21.1         |   | List of Subsidiaries                                                                                                                                                                                                                                                                                         |
|         |   |                                                                                                                                                                                                                                                                                                         |
| 23.1         |   | Consent of KPMG LLP                                                                                                                                                                                                                                                                                          |
|         |   |                                                                                                                                                                                                                                                                                                         |
| 23.2         |   | Consent of  Deloitte & Touche LLP                                                                                                                                                                                                                                                                   |
|         |   |                                                                                                                                                                                                                                                                                                         |
| 31.1         |   | Certification of Chief  Executive Officer required by Rule 13a-14(a)/15d-14(a) under the  Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley  Act of 2002.                                                                                                                |
|         |   |                                                                                                                                                                                                                                                                                                         |
| 31.2         |   | Certification of Chief  Financial Officer required by Rule 13a-14(a)/15d-14(a) under the  Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley  Act of 2002.                                                                                                                |
|         |   |                                                                                                                                                                                                                                                                                                         |
| 32.1         |   | Certification of Chief  Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002.                                                                                                                  |
|         |   |                                                                                                                                                                                                                                                                                                         |
| 99.1         |   | Material Tax  Considerations                                                                                                                                                                                                                                                                                 |

 

----

| *      |   | Incorporated herein by reference as above indicated.                          |
|--------|--------|-------------------------------------------------------------------------------|
|   |   |                                                                          |
| † |   | Denotes a management contract or compensatory plan,  contract or arrangement. |

 

59

----

Table of Contents

 

**SIGNATURES**

 

Pursuant to the requirements of Section 13 or 15(d) ofthe Securities Exchange Act of 1934, the Registrant has duly caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized.

 
|   | U-STORE-IT TRUST |
|--------|------------------|
|   |             |
|   | By:              | /s/  Timothy M. Martin |
|   |             | Timothy M. Martin |
|   |             | Chief Financial Officer |

 

Date: March 1, 2010

 

Pursuant to the requirements of the SecuritiesExchange Act of 1934, this report has been signed below by the followingpersons on behalf of the Registrant and in the capacities and on the datesindicated:

 
| **Signature**                   | ** ** | **Title**                                    | ** ** | **Date**           |
|---------------------------------|------------|----------------------------------------------|------------|--------------------|
|                            |       |                                         |       |               |
| /s/ William M. Diefenderfer III |       | Chairman of the Board of Trustees            |       | March 1, 2010 |
| William M. Diefenderfer III     |       |                                         |       |               |
|                            |       |                                         |       |               |
| /s/ Dean Jernigan               |       | Chief Executive Officer and Trustee          |       | March 1, 2010 |
| Dean Jernigan                   |       | (Principal Executive Officer)                |       |               |
|                            |       |                                         |       |               |
| /s/ Timothy M. Martin           |       | Chief Financial Officer                      |       | March 1, 2010 |
| Timothy M. Martin               |       | (Principal Financial and Accounting Officer) |       |               |
|                            |       |                                         |       |               |
| /s/ Piero Bussani               |       | Trustee                                      |       | March 1, 2010 |
| Piero Bussani                   |       |                                         |       |               |
|                            |       |                                         |       |               |
| /s/ John C. Dannemiller         |       | Trustee                                      |       | March 1, 2010 |
| John C. Dannemiller             |       |                                         |       |               |
|                            |       |                                         |       |               |
| /s/ Harold S. Haller            |       | Trustee                                      |       | March 1, 2010 |
| Harold S. Haller                |       |                                         |       |               |
|                            |       |                                         |       |               |
| /s/ Daniel B. Hurwitz           |       | Trustee                                      |       | March 1, 2010 |
| Daniel B. Hurwitz               |       |                                         |       |               |
|                            |       |                                         |       |               |
| /s/ Marianne M. Keler           |       | Trustee                                      |       | March 1, 2010 |
| Marianne M. Keler               |       |                                         |       |               |
|                            |       |                                         |       |               |
| /s/ David J. LaRue              |       | Trustee                                      |       | March 1, 2010 |
| David J. LaRue                  |       |                                         |       |               |
|                            |       |                                         |       |               |
| /s/ John R. Remondi             |       | Trustee                                      |       | March 1, 2010 |
| John R. Remondi                 |       |                                         |       |               |

 

60

----

Table ofContents

 

**FINANCIAL STATEMENTS****INDEX TO THE CONSOLIDATED FINANCIALSTATEMENTS**

 
| ** **                                                                                            | ** ** | **Page No.** |
|-------------------------------------------------------------------------------------------------------|------------|-------------------|
| **Consolidated Financial  Statements of U-Store-It Trust and Subsidiaries (The “Company”)** |       |              |
| ** **                                                                                            |       |              |
| Management’s  Report on Internal Control Over Financial Reporting                                |       | F-2               |
|                                                                                                  |       |              |
| Reports of Independent Registered Public Accounting  Firms                                            |       | F-3               |
|                                                                                                  |       |              |
| Consolidated  Balance Sheets as of December 31, 2009 and 2008                                    |       | F-6               |
|                                                                                                  |       |              |
| Consolidated  Statements of Operations for the years ended December 31, 2009, 2008,  and 2007    |       | F-7               |
|                                                                                                  |       |              |
| Consolidated  Statements of Equity for the years ended December 31, 2009, 2008, and  2007        |       | F-8               |
|                                                                                                  |       |              |
| Consolidated  Statements of Cash Flows for the years ended December 31, 2009, 2008,  and 2007    |       | F-9               |
|                                                                                                  |       |              |
| Notes  to Consolidated Financial Statements                                                           |       | F-10              |

 

F-1

----

Table of Contents

 

**MANAGEMENT’S REPORT ON INTERNALCONTROL OVER FINANCIAL REPORTING**

 

Management of the Company is responsible forestablishing and maintaining adequate internal control over financial reportingas defined in Rules 13a-15(f) and 15d-15(f) under the ExchangeAct. Under Section 404 of the Sarbanes-Oxley Act of 2002, the Company’smanagement is required to assess the effectiveness of the Company’s internalcontrol over financial reporting as of the end of each fiscal year, and reporton the basis of that assessment whether the Company’s internal control overfinancial reporting is effective.

 

The Company’s internal control over financialreporting is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statementsfor external purposes in accordance with U.S. generally accepted accountingprinciples. The Company’s internal control over financial reporting includesthose policies and procedures that:

 

·                  pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and the disposition of theassets of the Company;

 

·                  provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with U.S.generally accepted accounting principles, and that the receipts andexpenditures of the Company are being made only in accordance with the authorizationof the Company’s management and its Board of Trustees; and

 

·                  provide reasonable assurance regarding prevention or timely detectionof unauthorized acquisition, use or disposition of the Company’s assets thatcould have a material effect on the financial statements.

 

There are inherentlimitations in the effectiveness of any system of internal control, includingthe possibility of human error and the circumvention or overriding of controls.Accordingly, even an effective internal control system can provide onlyreasonable assurance with respect to financial statement preparation. Further,because of changes in conditions, the effectiveness of an internal controlsystem may vary over time.

 

Under the supervision,and with the participation, of the Company’s management, including theprincipal executive officer and principal financial officer, we conducted areview, evaluation and assessment of the effectiveness of our internal controlover financial reporting as of December 31, 2009, based upon the Committeeof Sponsoring Organizations of the Treadway Commission (COSO) criteria. Inperforming its assessment of the effectiveness of internal control overfinancial reporting, management has concluded that, as of December 31,2009, our internal control over financial reporting was effective based on theCOSO framework.

 

The effectiveness of ourinternal control over financial reporting as of December 31, 2009, hasbeen audited by KPMG LLP, an independent registered public accounting firm, asstated in their report that appears herein.

 

March 1, 2010

 

F-2

----

Table of Contents

 

**REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

 

The Board of Trustees and Shareholders of

U-Store-It Trust:

 

We have audited U-Store-It Trust and subsidiaries’internal control over financial reporting as of December 31, 2009, basedon criteria established in *Internal Control -Integrated Framework* issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO). U-Store-It Trust’s managementis responsible for maintaining effective internal control over financialreporting and for its assessment of the effectiveness of internal control overfinancial reporting, included in the accompanying Management’s Report onInternal Control Over Financial Reporting. Our responsibility is to express anopinion on the Company’s internal control over financial reporting based on ouraudit.

 

We conducted our audit in accordance with thestandards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting wasmaintained in all material respects. Our audit included obtaining anunderstanding of internal control over financial reporting, assessing the riskthat a material weakness exists, and testing and evaluating the design andoperating effectiveness of internal control based on the assessed risk. Ouraudit also included performing such other procedures as we considered necessaryin the circumstances. We believe that our audit provides a reasonable basis forour opinion.

 

A company’s internal control over financial reportingis a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accountingprinciples.  A company’s internal control over financial reportingincludes those policies and procedures that (1) pertain to the maintenanceof records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally acceptedaccounting principles, and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directorsof the company; and (3) provide reasonable assurance regarding preventionor timely detection of unauthorized acquisition, use, or disposition of thecompany’s assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal controlover financial reporting may not prevent or detectmisstatements.  Also, projections of any evaluation of effectivenessto future periods are subject to the risk that controls may become inadequatebecause of changes in conditions, or that the degree of compliance with thepolicies or procedures may deteriorate.

 

In our opinion, U-Store-It Trust maintained, in allmaterial respects, effective internal control over financial reporting as of December 31,2009, based on criteria established in *Internal Control -Integrated Framework* issued by the Committee of SponsoringOrganizations of the Treadway Commission.

 

We also have audited, in accordance with the standardsof the Public Company Accounting Oversight Board (United States), theconsolidated balance sheets of U-Store-It Trust and subsidiaries as of December 31,2009, and the related consolidated statements of operations, equity, and cashflows for the year then ended, and our report dated March 1, 2010expressed an unqualified opinion on those consolidated financial statements.

 

 

/s/ KPMG LLP

 

Philadelphia,Pennsylvania

March 1, 2010

 

F-3

----

Table of Contents

 

**REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

 

The Board of Trustees and Shareholders of

U-Store-It Trust:

 

We have audited the accompanying consolidated balancesheet of U-Store-It Trust and subsidiaries as of December 31, 2009, andthe related consolidated statements of operations, equity, and cash flows forthe year then ended.  In connection withour audit of the consolidated financial statements, we have also audited thefinancial statement schedule for 2009 as listed in the accompanying index.  Theseconsolidated financial statements and financial statement schedule are theresponsibility of the Company’s management. Our responsibility is to express an opinion on these consolidatedfinancial statements and financial statement schedule based on ouraudit.  The accompanying consolidated financial statements ofU-Store-It Trust and subsidiaries as of December 31, 2008 and for the twoyears then ended, were audited by other auditors whose report thereon dated March 2,2009 (August 7, 2009, as to the retrospective effects of the application of authoritativeguidance regarding noncontrolling interests discussed in Note 2), expressed anunqualified opinion on those statements, before the effects of theretrospective adjustments that were applied for the discontinued operationsdescribed in note 10 to the consolidated financial statements.

 

We conducted our audit in accordance with thestandards of the Public Company Accounting Oversight Board (UnitedStates).  Those standards require that weplan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement.  An auditincludes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements.  An audit also includesassessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statementpresentation.  We believe that our audit provides a reasonable basisfor our opinion.

 

In our opinion, the 2009 consolidated financialstatements referred to above present fairly, in all material respects, thefinancial position of U-Store-It Trust and subsidiaries as of December 31,2009 and the results of their operations and their cash flows for the year thenended, in conformity with U.S. generally accepted accounting principles. Alsoin our opinion, the related financial statement schedule, when considered inrelation to the basic consolidated financial statements taken as a whole,presents fairly, in all material respects, the 2009 information set forththerein.

 

We also have audited theretrospective adjustments that were applied to the 2008 and 2007 consolidatedfinancial statements for the operations discontinued in 2009 as described innote 10 to the consolidated financial statements.  In our opinion, such adjustments areappropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the2008 and 2007 consolidated financial statements of the Company other than withrespect to the adjustments and, accordingly, we do not express an opinion orany other form of assurance on the 2008 and 2007 consolidated financialstatements taken as a whole.

 

We also have audited, in accordance with the standardsof the Public Company Accounting Oversight Board (United States), U-Store-ItTrust’s internal control over financial reporting as of December 31, 2009,based on criteria established in *Internal Control -Integrated Framework* issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO), and our report dated March 1,2010 expressed an unqualified opinion on the effectiveness of the Company’sinternal control over financial reporting.

 

 

/s/ KPMG LLP

 

Philadelphia,Pennsylvania

March 1, 2010

 

F-4

----

Table of Contents

 

**REPORT OF INDEPENDENT REGISTEREDPUBLIC ACCOUNTING FIRM**

 

Tothe Board of Trustees and Shareholders of U-Store-It TrustWayne, Pennsylvania

 

Wehave audited, before the effects of the retrospective adjustments for thediscontinued operations discussed in Note 10 to the consolidated financialstatements, the consolidated balance sheet of U-Store-It Trust and subsidiaries(the “Company”) as of December 31, 2008, and the related consolidatedstatements of operations, equity, and cash flows for the years ended December 31,2008 and 2007 (the 2008 and 2007 consolidated financial statements before theeffects of the retrospective adjustments discussed in Note 2 to theconsolidated financial statements are not presented herein). These financialstatements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based onour audits.

 

Weconducted our audits in accordance with the standards of the Public CompanyAccounting Oversight Board (United States). Those standards require that weplan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that ouraudits provide a reasonable basis for our opinion.

 

Inour opinion, such 2008 and 2007 consolidated financial statements, before theeffects of the retrospective adjustments for the discontinued operationsdiscussed in Note 10 to the consolidated financial statements, present fairly,in all material respects, the financial position of  U-Store-It Trust and subsidiaries as of December 31,2008, and the results of their operations and their cash flows for the yearsended December 31, 2008 and 2007, in conformity with accounting principlesgenerally accepted in the United States of America.

 

Wewere not engaged to audit, review, or apply any procedures to the retrospectiveadjustments for the discontinued operations discussed in Note 10 to theconsolidated financial statements and, accordingly, we do not express anopinion or any other form of assurance about whether such retrospectiveadjustments are appropriate and have been properly applied. Those retrospectiveadjustments were audited by other auditors.

 

Asdiscussed in Note 2 to the consolidated financial statements, the accompanying2008 and 2007 financial statements have been retrospectively adjusted for theapplication of authoritative guidance regarding noncontrolling interests.

 

 

/s/Deloitte & Touche LLPPhiladelphia, Pennsylvania

 

March 2,2009 (August 7, 2009, as to the retrospective effects of the applicationof authoritative guidance regarding noncontrolling interests discussed in Note2).

 

F-5

----

Table of Contents

 

**U-STORE-IT TRUST ANDSUBSIDIARIES**

**CONSOLIDATED BALANCE SHEETS**

**(in thousands, except share data)**

 
| ** **                                                                                                                                                                                 | ** ** | **December 31,  2009** | ** ** | **December 31,  2008** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------|------------|----------------------------------|------------|
|                                                                                                                                                                                       |       |                        |       |                             |       |
| **ASSETS**                                                                                                                                                                                 |       |                        |       |                             |       |
| Storage facilities                                                                                                                                                                         |       | $                           | 1,774,542  |                             | $          | 1,888,123 |   |
| Less:  Accumulated depreciation                                                                                                                                                       |       | (344,009                    | )          | (328,165                         | )          |
| Storage facilities, net                                                                                                                                                                    |       | 1,430,533                   |       | 1,559,958                        |       |
| Cash and cash  equivalents                                                                                                                                                                 |       | 102,768                     |       | 3,744                            |       |
| Restricted cash                                                                                                                                                                            |       | 16,381                      |       | 16,217                           |       |
| Loan procurement costs,  net of amortization                                                                                                                                               |       | 18,366                      |       | 4,453                            |       |
| Notes receivable, net                                                                                                                                                                      |       | 20,112                      |       | —                           |       |
| Assets held for sale                                                                                                                                                                       |       | —                      |       | 2,378                            |       |
| Other assets, net                                                                                                                                                                          |       | 10,710                      |       | 10,909                           |       |
| Total assets                                                                                                                                                                               |       | $                           | 1,598,870  |                             | $          | 1,597,659 |   |
|                                                                                                                                                                                       |       |                        |       |                             |       |
| **LIABILITIES  AND EQUITY**                                                                                                                                                                |       |                        |       |                             |       |
|                                                                                                                                                                                       |       |                        |       |                             |       |
| Revolving credit  facility                                                                                                                                                                 |       | $                           | —     |                             | $          | 172,000 |   |
| Unsecured term loan                                                                                                                                                                        |       | —                      |       | 200,000                          |       |
| Secured term loan                                                                                                                                                                          |       | 200,000                     |       | 57,419                           |       |
| Mortgage loans and  notes payable                                                                                                                                                          |       | 569,026                     |       | 548,085                          |       |
| Accounts payable,  accrued expenses and other liabilities                                                                                                                                  |       | 33,767                      |       | 39,410                           |       |
| Distributions payable                                                                                                                                                                      |       | 2,448                       |       | 1,572                            |       |
| Deferred revenue                                                                                                                                                                           |       | 8,449                       |       | 9,725                            |       |
| Security deposits                                                                                                                                                                          |       | 456                         |       | 472                              |       |
| Liabilities related to  assets held for sale                                                                                                                                               |       | —                      |       | 22                               |       |
| Total liabilities                                                                                                                                                                          |       | 814,146                     |       | 1,028,705                        |       |
|                                                                                                                                                                                       |       |                        |       |                             |       |
| Noncontrolling  interests in the Operating Partnership                                                                                                                                     |       | 45,394                      |       | 46,026                           |       |
|                                                                                                                                                                                       |       |                        |       |                             |       |
| Commitments and  contingencies                                                                                                                                                             |       |                        |       |                             |       |
|                                                                                                                                                                                       |       |                        |       |                             |       |
| Equity                                                                                                                                                                                     |       |                        |       |                             |       |
| Common shares $.01 par  value, 200,000,000 shares authorized, 92,654,979 and 57,623,491 shares issued  and outstanding at December 31, 2009 and December 31, 2008,  respectively |       | 927                         |       | 576                              |       |
| Additional paid in  capital                                                                                                                                                                |       | 974,926                     |       | 801,029                          |       |
| Accumulated other  comprehensive loss                                                                                                                                                      |       | (874                        | )          | (7,553                           | )          |
| Accumulated deficit                                                                                                                                                                        |       | (279,670                    | )          | (271,124                         | )          |
| Total U-Store-It Trust  shareholders’ equity                                                                                                                                          |       | 695,309                     |       | 522,928                          |       |
| Noncontrolling  interests in subsidiaries                                                                                                                                                  |       | 44,021                      |       | —                           |       |
| Total equity                                                                                                                                                                               |       | 739,330                     |       | 522,928                          |       |
| Total liabilities and  equity                                                                                                                                                              |       | $                           | 1,598,870  |                             | $          | 1,597,659 |   |

 

See accompanying notes tothe consolidated financial statements.

 

F-6

----

Table of Contents

 

**U-STORE-IT TRUST AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

 
| ** **                                                                                              | ** ** | **For the year ended December 31,**                                                             | ** ** |
|---------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------|------------|
| ** **                                                                                              | ** ** | **2009**                                                                                             | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** **                                                                                              | ** ** | **(Dollars and shares in thousands, except per share data)** | ** ** |
| **REVENUES**                                                                                            |       |                                                                                                 |       |   |   |   |   |
| Rental income                                                                                           |       | $                                                                                                    | 200,630    |   | $ | 208,439 |   | $ | 192,275 |   |
| Other property related  income                                                                          |       | 16,659                                                                                               |       | 15,700 |   | 15,329 |   |
| Other - related party                                                                                   |       | —                                                                                               |       | — |   | 365 |   |
| Total revenues                                                                                          |       | 217,289                                                                                              |       | 224,139 |   | 207,969 |   |
| **OPERATING  EXPENSES**                                                                                 |       |                                                                                                 |       |   |   |   |   |
| Property operating  expenses                                                                            |       | 93,945                                                                                               |       | 95,156 |   | 88,628 |   |
| Property operating  expenses - related party                                                            |       | —                                                                                               |       | — |   | 59 |   |
| Depreciation and  amortization                                                                          |       | 70,832                                                                                               |       | 73,751 |   | 64,672 |   |
| Lease abandonment                                                                                       |       | —                                                                                               |       | — |   | 1,316 |   |
| General and administrative                                                                              |       | 22,569                                                                                               |       | 24,964 |   | 21,966 |   |
| General and  administrative - related party                                                             |       | —                                                                                               |       | — |   | 337 |   |
| Total operating  expenses                                                                               |       | 187,346                                                                                              |       | 193,871 |   | 176,978 |   |
| **OPERATING  INCOME**                                                                                   |       | 29,943                                                                                               |       | 30,268 |   | 30,991 |   |
| **OTHER  INCOME (EXPENSE)**                                                                             |       |                                                                                                 |       |   |   |   |   |
| Interest:                                                                                               |       |                                                                                                 |       |   |   |   |   |
| Interest expense on  loans                                                                              |       | (45,269                                                                                              | )          | (52,014 | ) | (54,108 | ) |
| Loan procurement  amortization expense                                                                  |       | (2,339                                                                                               | )          | (1,929 | ) | (1,772 | ) |
| Interest income                                                                                         |       | 681                                                                                                  |       | 153 |   | 401 |   |
| Other                                                                                                   |       | (33                                                                                                  | )          | 94 |   | 118 |   |
| Total other expense                                                                                     |       | (46,960                                                                                              | )          | (53,696 | ) | (55,361 | ) |
| **LOSS  FROM CONTINUING OPERATIONS**                                                                    |       | (17,017                                                                                              | )          | (23,428 | ) | (24,370 | ) |
| **DISCONTINUED  OPERATIONS**                                                                            |       |                                                                                                 |       |   |   |   |   |
| Income from  discontinued operations                                                                    |       | 2,546                                                                                                |       | 6,810 |   | 7,606 |   |
| Net gain on disposition  of discontinued operations                                                     |       | 14,139                                                                                               |       | 19,720 |   | 2,517 |   |
| Total discontinued  operations                                                                          |       | 16,685                                                                                               |       | 26,530 |   | 10,123 |   |
| **NET INCOME  (LOSS)**                                                                                  |       | (332                                                                                                 | )          | 3,102 |   | (14,247 | ) |
| **NET  (INCOME) LOSS ATTRIBUTABLE TO NONCONROLLING****INTERESTS**                                       |       |                                                                                                 |       |   |   |   |   |
| Noncontrolling  interests in the Operating Partnership                                                  |       | 60                                                                                                   |       | (310 | ) | 1,170 |   |
| Noncontrolling interest  in subsidiaries                                                                |       | (665                                                                                                 | )          | — |   | — |   |
| **NET  INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY**                                                      |       | $                                                                                                    | (937       | ) | $ | 2,792 |   | $ | (13,077 | ) |
|                                                                                                    |       |                                                                                                 |       |   |   |   |   |
| Basic and diluted loss  per share from continuing operations attributable to common shareholders        |       | $                                                                                                    | (0.24      | ) | $ | (0.37 | ) | $ | (0.67 | ) |
| Basic and diluted  earnings per share from discontinued operations attributable to common  shareholders |       | $                                                                                                    | 0.23       |   | $ | 0.42 |   | $ | 0.45 |   |
| Basic and diluted  earnings (loss) per share attributable to common shareholders                        |       | $                                                                                                    | (0.01      | ) | $ | 0.05 |   | $ | (0.22 | ) |
|                                                                                                    |       |                                                                                                 |       |   |   |   |   |
| Weighted-average basic  and diluted shares outstanding                                                  |       | 70,988                                                                                               |       | 57,621 |   | 57,497 |   |
|                                                                                                    |       |                                                                                                 |       |   |   |   |   |
| **AMOUNTS  ATTRIBUTABLE TO THE COMPANY’S COMMON SHAREHOLDERS:**                                    |       |                                                                                                 |       |   |   |   |   |
| Loss from continuing  operations                                                                        |       | $                                                                                                    | (16,754    | ) | $ | (21,589 | ) | $ | (38,787 | ) |
| Total discontinued  operations                                                                          |       | 15,817                                                                                               |       | 24,381 |   | 25,710 |   |
| Net income (loss)                                                                                       |       | $                                                                                                    | (937       | ) | $ | 2,792 |   | $ | (13,077 | ) |

 

Seeaccompanying notes to the consolidated financial statements.

 

F-7

----

Table of Contents

** **

**U-STORE-IT TRUST AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF EQUITY**

**(inthousands)**

 
| ** **                                                       | ** ** | **Common  Shares** | ** ** | **Additional  Paid in** | ** ** | **Accumulated  Other Comprehensive** | ** ** | **Accumulated** | ** ** | **Total  Shareholders’** | ** ** | **Non controlling  Interest in** | ** ** | ** **       | ** ** | **Non controlling  Interests in  the Operating** | ** ** |
|------------------------------------------------------------------|------------|--------------------|------------|------------------------------|------------|-------------------------------------------|------------|-----------------|------------|-------------------------------|------------|---------------------------------------|------------|------------------|------------|------------------------------------------------------------|------------|
| ** **                                                       | ** ** | **Number**         | ** ** | **Amount**                   | ** ** | **Capital**                               | ** ** | **Loss**        | ** ** | **Deficit**                   | ** ** | **Equity**                            | ** ** | **Subsidiaries** | ** ** | **Total Equity**                                      | ** ** | **Partnership** | ** ** |
| **Balance  at December 31, 2006**                           |       | 57,335             |       | $                            | 573        |                                      | $          | 743,924         |       | $                             | —     |                                  | $          | (167,712         | )          | $                                                          | 576,785    |   | $ | — |   | $ | 576,785 |   | $ | 107,606 |   |
| Issuance of restricted  shares                                   |       | 123                |       | 2                            |       |                                      |       |            |       |                          |       | 2                                     |       |             |       | 2                                                          |       |   |   |
| Conversion from units to  shares                                 |       | 119                |       | 1                            |       |                                      |       |            |       |                          |       | 1                                     |       |             |       | 1                                                          |       |   |   |
| Amortization of  restricted shares                               |       |               |       |                         |       | 972                                       |       |            |       |                          |       | 972                                   |       |             |       | 972                                                        |       |   |   |
| Share compensation  expense                                      |       |               |       |                         |       | 867                                       |       |            |       |                          |       | 867                                   |       |             |       | 867                                                        |       |   |   |
| Adjustment for  noncontrolling interest in operating partnership |       |               |       |                         |       | 52,177                                    |       |            |       | 1,170                         |       | 53,347                                |       |             |       | 53,347                                                     |       | (52,073 | ) |
| Net loss                                                         |       |               |       |                         |       |                                      |       |            |       | (14,247                       | )          | (14,247                               | )          |             |       | (14,247                                                    | )          | (1,170 | ) |
| Other comprehensive  loss:                                       |       |               |       |                         |       |                                      |       |            |       |                          |       |                                  |       |             |       |                                                       |       |   |   |
| Unrealized loss on  interest rate swap                           |       |               |       |                         |       |                                      |       | (1,545          | )          |                          |       | (1,545                                | )          |             |       | (1,545                                                     | )          |   |   |
| Unrealized loss on  foreign currency translation                 |       |               |       |                         |       |                                      |       | (119            | )          |                          |       | (119                                  | )          |             |       | (119                                                       | )          |   |   |
| Distributions                                                    |       |               |       |                         |       |                                      |       |            |       | (60,444                       | )          | (60,444                               | )          |             |       | (60,444                                                    | )          | (5,381 | ) |
| **Balance  at December 31, 2007**                           |       | 57,577             |       | $                            | 576        |                                      | $          | 797,940         |       | $                             | (1,664     | )                                     | $          | (241,233         | )          | $                                                          | 555,619    |   | $ | — |   | $ | 555,619 |   | $ | 48,982 |   |
| Issuance of restricted  shares                                   |       | 46                 |       |                         |       |                                      |       |            |       |                          |       | —                                |       |             |       | —                                                     |       |   |   |
| Conversion from units to  shares                                 |       |               |       |                         |       |                                      |       |            |       |                          |       | —                                |       |             |       | —                                                     |       |   |   |
| Amortization of  restricted shares                               |       |               |       |                         |       | 1,297                                     |       |            |       |                          |       | 1,297                                 |       |             |       | 1,297                                                      |       |   |   |
| Share compensation  expense                                      |       |               |       |                         |       | 1,425                                     |       |            |       |                          |       | 1,425                                 |       |             |       | 1,425                                                      |       |   |   |
| Adjustment for  noncontrolling interest in operating partnership |       |               |       |                         |       | 367                                       |       |            |       | (310                          | )          | 57                                    |       |             |       | 57                                                         |       | (435 | ) |
| Net income                                                       |       |               |       |                         |       |                                      |       |            |       | 3,102                         |       | 3,102                                 |       |             |       | 3,102                                                      |       | 310 |   |
| Other comprehensive  loss:                                       |       |               |       |                         |       |                                      |       |            |       |                          |       |                                  |       |             |       |                                                       |       |   |   |
| Unrealized loss on  interest rate swap                           |       |               |       |                         |       |                                      |       | (4,608          | )          |                          |       | (4,608                                | )          |             |       | (4,608                                                     | )          |   |   |
| Unrealized loss on  foreign currency translation                 |       |               |       |                         |       |                                      |       | (1,281          | )          |                          |       | (1,281                                | )          |             |       | (1,281                                                     | )          |   |   |
| Distributions                                                    |       |               |       |                         |       |                                      |       |            |       | (32,683                       | )          | (32,683                               | )          |             |       | (32,683                                                    | )          | (2,831 | ) |
| **Balance  at December 31, 2008**                           |       | 57,623             |       | $                            | 576        |                                      | $          | 801,029         |       | $                             | (7,553     | )                                     | $          | (271,124         | )          | $                                                          | 522,928    |   | $ | — |   | $ | 522,928 |   | $ | 46,026 |   |
| Contributions from  noncontrolling interests in****subsidiaries  |       |               |       |                         |       |                                      |       |            |       |                          |       | —                                |       | 44,739           |       | 44,739                                                     |       | (131 | ) |
| Issuance of common  shares, net                                  |       | 34,677             |       | 347                          |       | 170,501                                   |       |            |       |                          |       | 170,848                               |       |             |       | 170,848                                                    |       |   |   |
| Issuance of restricted  shares                                   |       | 85                 |       | 1                            |       |                                      |       |            |       |                          |       | 1                                     |       |             |       | 1                                                          |       |   |   |
| Conversion from units to  shares                                 |       | 270                |       | 3                            |       |                                      |       |            |       |                          |       | 3                                     |       |             |       | 3                                                          |       |   |   |
| Amortization of  restricted shares                               |       |               |       |                         |       | 1,631                                     |       |            |       |                          |       | 1,631                                 |       |             |       | 1,631                                                      |       |   |   |
| Share compensation  expense                                      |       |               |       |                         |       | 1,765                                     |       |            |       |                          |       | 1,765                                 |       |             |       | 1,765                                                      |       |   |   |
| Adjustment for  noncontrolling interest in operating partnership |       |               |       |                         |       |                                      |       | (27             | )          |                          |       | (27                                   | )          |             |       | (27                                                        | )          |   |   |
| Net income (loss)                                                |       |               |       |                         |       |                                      |       |            |       | (937                          | )          | (937                                  | )          | 665              |       | (272                                                       | )          |   |   |
| Other comprehensive  income:                                     |       |               |       |                         |       |                                      |       |            |       |                          |       |                                  |       |             |       | —                                                     |       |   |   |
| Unrealized gain on  interest rate swap                           |       |               |       |                         |       |                                      |       | 6,153           |       |                          |       | 6,153                                 |       |             |       | 6,153                                                      |       |   |   |
| Unrealized gain on  foreign currency translation                 |       |               |       |                         |       |                                      |       | 553             |       |                          |       | 553                                   |       |             |       | 553                                                        |       |   |   |
| Distributions                                                    |       |               |       |                         |       |                                      |       |            |       | (7,609                        | )          | (7,609                                | )          | (1,383           | )          | (8,992                                                     | )          | (501 | ) |
| **Balance  at December 31, 2009**                           |       | 92,655             |       | $                            | 927        |                                      | $          | 974,926         |       | $                             | (874       | )                                     | $          | (279,670         | )          | $                                                          | 695,309    |   | $ | 44,021 |   | $ | 739,330 |   | $ | 45,394 |   |

 

See accompanying notes tothe consolidated financial statements.

 

F-8

----

Table of Contents

 

**U-STORE-IT TRUST AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(inthousands)**

 
| ** **                                                                                | ** ** | **Twelve Months Ended December 31,** | ** ** |
|-------------------------------------------------------------------------------------------|------------|-------------------------------------------|------------|
| ** **                                                                                | ** ** | **2009**                                  | ** ** | **2008** | ** ** | **2007** | ** ** |
| **Operating  Activities**                                                                 |       |                                      |       |   |   |   |   |
| Net income (loss)                                                                         |       | $                                         | (332       | ) | $ | 3,102 |   | $ | (14,247 | ) |
| Adjustments to  reconcile net income (loss) to net cash provided by operating activities: |       |                                      |       |   |   |   |   |
| Depreciation and  amortization                                                            |       | 75,908                                    |       | 80,132 |   | 72,218 |   |
| Lease abandonment  charge                                                                 |       | —                                    |       | — |   | 1,316 |   |
| Gain on disposition of  discontinued operations                                           |       | (14,139                                   | )          | (19,720 | ) | (2,311 | ) |
| Equity compensation  expense                                                              |       | 3,396                                     |       | 2,722 |   | 1,840 |   |
| Accretion of fair  market value adjustment of debt                                        |       | (463                                      | )          | (446 | ) | (367 | ) |
| Changes in other  operating accounts:                                                     |       |                                      |       |   |   |   |   |
| Other assets                                                                              |       | 388                                       |       | 1,425 |   | (2,756 | ) |
| Accounts payable and  accrued expenses                                                    |       | (1,797                                    | )          | (7 | ) | 6,660 |   |
| Other liabilities                                                                         |       | (747                                      | )          | (196 | ) | 346 |   |
| Net cash provided by  operating activities                                                |       | $                                         | 62,214     |   | $ | 67,012 |   | $ | 62,699 |   |
|                                                                                      |       |                                      |       |   |   |   |   |
| **Investing  Activities**                                                                 |       |                                      |       |   |   |   |   |
| Acquisitions, additions  and improvements to storage facilities                           |       | (17,882                                   | )          | (30,738 | ) | (48,014 | ) |
| Acquisitions, additions  and improvements to storage facilities- related party            |       | —                                    |       | — |   | (121,630 | ) |
| Insurance settlements                                                                     |       | —                                    |       | 1,447 |   | — |   |
| Proceeds from sales of  properties, net                                                   |       | 68,257                                    |       | 56,867 |   | 17,935 |   |
| Proceeds from sales to  noncontrolling interests                                          |       | 48,641                                    |       | — |   | — |   |
| Increase in restricted  cash                                                              |       | (164                                      | )          | (399 | ) | (1,692 | ) |
| Net cash provided by  (used in) investing activities                                      |       | $                                         | 98,852     |   | $ | 27,177 |   | $ | (153,401 | ) |
|                                                                                      |       |                                      |       |   |   |   |   |
| **Financing  Activities**                                                                 |       |                                      |       |   |   |   |   |
| Proceeds from:                                                                            |       |                                      |       |   |   |   |   |
| Revolving credit  facility                                                                |       | 9,500                                     |       | 57,300 |   | 156,500 |   |
| Secured term loans                                                                        |       | 200,000                                   |       | 9,975 |   | 47,444 |   |
| Mortgage loans and  notes payable                                                         |       | 116,615                                   |       | — |   | 4,651 |   |
| Principal payments on:                                                                    |       |                                      |       |   |   |   |   |
| Revolving credit facility                                                                 |       | (181,500                                  | )          | (104,300 | ) | (28,000 | ) |
| Unsecured term loans                                                                      |       | (200,000                                  | )          | — |   | — |   |
| Secured term loans                                                                        |       | (57,419                                   | )          | — |   | — |   |
| Mortgage loans and  notes payable                                                         |       | (95,211                                   | )          | (12,526 | ) | (32,157 | ) |
| Proceeds from issuance  of equity, net                                                    |       | 170,852                                   |       | — |   | — |   |
| Distributions paid to  shareholders                                                       |       | (6,736                                    | )          | (41,621 | ) | (66,816 | ) |
| Distributions paid to  noncontrolling interests in Operating Partnership                  |       | (508                                      | )          | (3,656 | ) | (5,975 | ) |
| Distributions paid to  noncontrolling interest in subsidiaries                            |       | (1,383                                    | )          | — |   | — |   |
| Loan procurement costs                                                                    |       | (16,252                                   | )          | (134 | ) | (144 | ) |
| Net cash (used in)  provided by financing activities                                      |       | $                                         | (62,042    | ) | $ | (94,962 | ) | $ | 75,503 |   |
|                                                                                      |       |                                      |       |   |   |   |   |
| Increase (decrease) in  cash and cash equivalents                                         |       | 99,024                                    |       | (773 | ) | (15,199 | ) |
|                                                                                      |       |                                      |       |   |   |   |   |
| Cash and cash  equivalents at beginning of year                                           |       | 3,744                                     |       | 4,517 |   | 19,716 |   |
| Cash and cash  equivalents at end of year                                                 |       | $                                         | 102,768    |   | $ | 3,744 |   | $ | 4,517 |   |
|                                                                                      |       |                                      |       |   |   |   |   |
| **Supplemental  Cash Flow and Noncash Information**                                       |       |                                      |       |   |   |   |   |
| Cash paid for interest,  net of interest capitalized                                      |       | $                                         | 43,764     |   | $ | 52,291 |   | $ | 53,952 |   |
| Supplemental disclosure  of noncash activities:                                           |       |                                      |       |   |   |   |   |
| Additions to storage  facilities                                                          |       | $                                         | —     |   | $ | 1,023 |   | $ | — |   |
| Disposition of  facilities:                                                               |       |                                      |       |   |   |   |   |
| Notes receivable  originated upon disposition of property                                 |       | $                                         | 17,600     |   | $ | 2,612 |   | $ | — |   |
| Derivative valuation  adjustment                                                          |       | $                                         | 6,153      |   | $ | (4,608 | ) | $ | (1,545 | ) |
| Foreign currency  translation adjustment                                                  |       | $                                         | 553        |   | $ | (1,281 | ) | $ | (119 | ) |
| Gain deferral on sales  to noncontrolling interests                                       |       | $                                         | 3,992      |   | $ | — |   | $ | — |   |

 

Seeaccompanying notes to the consolidated financial statements.

 

F-9

----

Table of Contents

 

**U-STORE-ITTRUST AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

 

**1.  ORGANIZATION AND NATUREOF OPERATIONS**

 

U-Store-It Trust, aMaryland real estate investment trust (collectively with its subsidiaries, “we”,“us” or the “Company”), is a self-administered and self-managed real estateinvestment trust, or REIT, active in acquiring, developing and operatingself-storage properties for business and personal use under month-to-monthleases.  The Company’s self-storagefacilities (collectively, the “Properties”) are located in 26 states throughoutthe United States, and in theDistrict of Columbia and are managed under one reportable operating segment: weown, operate, develop, and acquire self-storage facilities.  The Company owns substantially all of itsassets through U-Store-It, L.P., a Delaware limited partnership (the “OperatingPartnership”).  The Company is the sole general partner of the OperatingPartnership and, as of December 31, 2009, owned a 95.1% interest in theOperating Partnership.  The Company manages its assets through YSIManagement, LLC (the “Management Company”), a wholly owned subsidiary of theOperating Partnership.  The Company owns100% of U-Store-It Mini Warehouse Co. (the “TRS”) in addition to three othersubsidiaries, each of which has elected to be treated as a taxable REITsubsidiary. In general, a taxable REIT subsidiary may perform non-customaryservices for tenants, hold assets that the Company cannot hold directly andgenerally may engage in any real estate or non-real estate related business.

 

**2.  SUMMARY OF SIGNIFICANTACCOUNTING POLICIES**

 

Principlesof Consolidation

The accompanying consolidated financial statements include all of theaccounts of the Company, and its majority-owned and/or controlledsubsidiaries.  The portion of theseentities not owned by the Company is presented as noncontrolling interests asof and during the periods consolidated. All significant intercompany accounts and transactions have beeneliminated in consolidation.

 

When the Company obtains an economic interest in an entity, the Companyevaluates the entity to determine if the entity is deemed a variable interestentity (“VIE”), and if the Company is deemed to be the primary beneficiary, inaccordance with authoritativeguidance issued by the FASB on the consolidationof variable interest entities. When an entity is not deemed to be a VIE, theCompany considers the provisions of additional FASB guidance which determineswhether a general partner, or the general partners as a group, controls alimited partnership or similar entity when the limited partners have certainrights. The Company consolidates (i) entities that are VIEs and of whichthe Company is deemed to be the primary beneficiary and (ii) entities thatare non-VIEs which the Company controls and the limited partners do not havethe ability to dissolve the entity or remove the Company without cause norsubstantive participating rights.

 

Adoption ofSubsequent Accounting Pronouncements

TheFASB issued authoritative guidance regarding noncontrolling interests in consolidated financial statementswhich was effective on January 1, 2009. The guidance states that noncontrolling interests are the portion ofequity (net assets) in a subsidiary not attributable, directly or indirectly,to a parent. The ownership interests in the subsidiary that are held by ownersother than the parent are noncontrolling interests. Under the guidance, suchnoncontrolling interests are reported on the consolidated balance sheets withinequity, separately from the Company’s equity. On the consolidated statements ofoperations, revenues, expenses and net income or loss fromless-than-wholly-owned subsidiaries are reported at the consolidated amounts,including both the amounts attributable to the Company and noncontrollinginterests. Presentation of consolidated equity activity is included for bothquarterly and annual financial statements, including beginning balances, activityfor the period and ending balances for shareholders’ equity, noncontrollinginterests and total equity.

 

However,per the FASB issued authoritative guidance on the**classification andmeasurement of redeemable securities, securities that are redeemable forcash or other assets at the option of the holder, not solely within the controlof the issuer, must be classified outside of permanent equity. This wouldresult in certain outside ownership interests being included as redeemablenoncontrolling interests outside of permanent equity in the consolidatedbalance sheets. The Company makes this determination based on terms inapplicable agreements, specifically in relation to redemption provisions.Additionally, with respect to noncontrolling interests for which the Companyhas a choice to settle the contract by delivery of its own shares, the Companyconsidered the FASB issued guidance on**accounting for derivative financialinstruments indexed to, and potentially settled in, a Company’s own stockto evaluate whether the Company controls the actions or events necessary toissue the maximum number of shares that could be required to be delivered undershare settlement of the contract.  The guidance also requires thatnoncontrolling interests are adjusted each period so that the carrying valueequals the greater of its carrying value based on the accumulation ofhistorical cost or its redemption fair value.

 

F-10

----

Tableof Contents

 

Theconsolidated results of the Company include results attributable to units ofthe Operating Partnership that are not owned by the Company, which amounted toapproximately 8.1%, and 8.1%, respectively as of December 31, 2008, and2007 of all outstanding units.  These interests were issued in the form ofOperating Partnership units and were a component of the consideration theCompany paid to acquire certain self-storage facilities. Limited partners whoacquired Operating Partnership units have the right to require the OperatingPartnership to redeem part or all of their Operating Partnership units for, atthe Company’s option, an equivalent number of common shares of the Company orcash based upon the fair market value of an equivalent number of common sharesof the Company.  However, the operating agreement contains certaincircumstances that could result in a net cash settlement outside the control ofthe Company. Accordingly, consistent with the guidance discussed above, theCompany will continue to record these non controlling interests outside ofpermanent equity in the consolidated balance sheets.  Net income or lossrelated to these noncontrolling interests is excluded from net income or lossin the consolidated statements of operations.  Based on the Company’sevaluation of the redemption value of the redeemable noncontrolling interest,the Company has reflected these interests at their carrying value as of December 31,2008.

 

F-11

----

Tableof Contents

 

*Retrospective Impact of New Accounting Pronouncement AdoptedJanuary 1, 2009 (in thousands):*

 

**Statement of Operations****:**

 
| ** **                                                  | ** ** | **For the year ended December 31, 2008:**  | ** ** |
|-------------------------------------------------------------|------------|-------------------------------------------------|------------|
| ** **                                                  | ** ** | **As Previously Reported**                      | ** ** | **Adjustments (a)** | ** ** | **As Adjusted** | ** ** |
| Loss from  continuing operations                            |       | $                                               | (17,540    | ) | $ | (5,888 | ) | $ | (23,428 | ) |
| Total  discontinued operations                              |       | 20,332                                          |       | 6,198 |   | 26,530 |   |
| Net income  (loss)                                          |       | 2,792                                           |       | 310 |   | 3,102 |   |
| Net income (loss)  attributable to noncontrolling interests |       | —                                          |       | (310 | ) | (310 | ) |
| Net income  (loss) attributable to the company              |       | —                                          |       | 2,792 |   | 2,792 |   |
|                                                        |       |                                            |       |   |   |   |   |
|                                                        | ** ** | **For  the year ended December 31, 2007:** | ** ** |
|                                                        | ** ** | **As  Previously Reported**                     | ** ** | **Adjustments  (a)** | ** ** | **As  Adjusted** | ** ** |
| Loss from continuing  operations                            |       | $                                               | (19,048    | ) | $ | (5,322 | ) | $ | (24,370 | ) |
| Total  discontinued operations                              |       | 5,971                                           |       | 4,152 |   | 10,123 |   |
| Net income  (loss)                                          |       | (13,077                                         | )          | (1,170 | ) | (14,247 | ) |
| Net income  (loss) attributable to noncontrolling interests |       | —                                          |       | 1,170 |   | 1,170 |   |
| Net income  (loss) attributable to the company              |       | —                                          |       | (13,077 | ) | (13,077 | ) |

 

----

(a)  Includes adjustments for thediscontinued operations discussed in Note 10.

 
| **Statement  of Equity****:**                                                   |       |                                            |       |            |       |             |       |
|---------------------------------------------------------------------------------|------------|-------------------------------------------------|------------|-----------------|------------|------------------|------------|
|                                                                            | ** ** | **For  the year ended December 31, 2008:** | ** ** |
|                                                                            | ** ** | **As  Previously Reported**                     | ** ** | **Adjustments** | ** ** | **As  Adjusted** | ** ** |
| Adjustments for  noncontrolling interests in operating partnership              |       | $                                               | 367        |            | $          | (310             | )          | $ | 57 |   |
| Net income                                                                      |       | 2,792                                           |       | 310             |       | 3,102            |       |
|                                                                            |       |                                            |       |            |       |             |       |
|                                                                            | ** ** | **For  the year ended December 31, 2007:** | ** ** |
|                                                                            | ** ** | **As  Previously Reported**                     | ** ** | **Adjustments** | ** ** | **As  Adjusted** | ** ** |
| Adjustments for  noncontrolling interests in operating partnership              |       | $                                               | 1,469      |            | $          | 51,878           |       | $ | 53,347 |   |
| Net loss                                                                        |       | (13,077                                         | )          | (1,170          | )          | (14,247          | )          |
|                                                                            |       |                                            |       |            |       |             |       |
| **Statement  of Cash Flows****:**                                               |       |                                            |       |            |       |             |       |
|                                                                            | ** ** | **For  the year ended December 31, 2008:** | ** ** |
|                                                                            | ** ** | **As  Previously Reported**                     | ** ** | **Adjustments** | ** ** | **As  Adjusted** | ** ** |
| Net income                                                                      |       | $                                               | 2,792      |            | $          | 310              |       | $ | 3,102 |   |
| Minority  interests                                                             |       | 310                                             |       | (310            | )          | —           |       |
|                                                                            |       |                                            |       |            |       |             |       |
|                                                                            | ** ** | **For  the year ended December 31, 2007:** | ** ** |
|                                                                            | ** ** | **As  Previously Reported**                     | ** ** | **Adjustments** | ** ** | **As  Adjusted** | ** ** |
| Net loss                                                                        |       | $                                               | (13,077    | )               | $          | (1,170           | )          | $ | (14,247 | ) |
| Minority  interests                                                             |       | (995                                            | )          | 995             |       | —           |       |
| Net cash  provided by operating activities                                      |       | 62,874                                          |       | (175            | )          | 62,699           |       |
| Acquisitions,  additions and improvements to storage facilities - related party |       | (121,805                                        | )          | 175             |       | (121,630         | )          |
| Net cash used in  investing activities                                          |       | (153,576                                        | )          | 175             |       | (153,401         | )          |

 

Estimates

The preparation offinancial statements in conformity with accounting principles generallyaccepted in the United States of America requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during thereporting period. Actual results could differ from those estimates. Although webelieve the assumptions and estimates we made are reasonable and appropriate,as discussed in the applicable sections throughout these

 

F-12

----

Tableof Contents

 

consolidated financial statements, differentassumptions and estimates could materially impact our reported results.  The current economic environment hasincreased the degree of uncertainty inherent in these estimates and assumptionsand changes in market conditions could impact our future operating results.

 

StorageFacilities

Storage facilities arecarried at historical cost less accumulated depreciation and impairmentlosses.  The cost of storage facilities reflects their purchase price ordevelopment cost.  Costs incurred for the acquisition and renovation of astorage facility are capitalized to the Company’s investment in thatproperty.  Ordinary repairs and maintenance are expensed as incurred;major replacements and betterments, which improve or extend the life of theasset, are capitalized and depreciated over their estimated useful lives.  During 2009, 2008 and 2007, approximately$0.1 million, $0.5 million and $0.4 million of expense was incurred inconjunction with property related damage as a result of insured events such asfires, floods and hurricanes.

 

PurchasePrice Allocation

When facilities areacquired, the purchase price is allocated to the tangible and intangible assetsacquired and liabilities assumed based on estimated fair values. When aportfolio of facilities is acquired, the purchase price is allocated to theindividual facilities based upon an income approach or a cash flow analysisusing appropriate risk adjusted capitalization rates, which take into accountthe relative size, age and location of the individual facility along withcurrent and projected occupancy and rental rate levels or appraised values, ifavailable. Allocations to the individual assets and liabilities are based uponcomparable market sales information for land, buildings and improvements andestimates of depreciated replacement cost of equipment.

 

In allocating thepurchase price, the Company determines whether the acquisition includesintangible assets or liabilities. Substantially all of the leases in place atacquired facilities are at market rates, as the majority of the leases aremonth-to-month contracts. Accordingly, to date no portion of the purchase pricehas been allocated to above- or below-market lease intangibles.  To date, no intangible asset has beenrecorded for the value of tenant relationships, because the Company does nothave any concentrations of significant tenants and the average tenant turnoveris fairly frequent.

 

The Company recorded a$6.8 million intangible asset to recognize the value of in-place leases relatedto its acquisitions in 2007. Subsequently, during 2008, the Company acquired a finite-livedintangible asset valued at approximately $1.0 million as part of itsacquisition of one self-storage facility. This asset represents the value of in-place leases at the time ofacquisition and was fully amortized at December 31, 2009.

 

Depreciation andAmortization

Thecosts of self-storage facilities and improvements are depreciated using thestraight-line method based on useful lives ranging from five to 40 years.

 

Impairment of Long-LivedAssets

We evaluate long-livedassets for impairment when events and circumstances such as declines inoccupancy and operating results indicate that there may be impairment. Thecarrying value of these long-lived assets is compared to the undiscountedfuture net operating cash flows, plus a terminal value, attributable to theassets to determine if the property’s basis is recoverable. If a property’sbasis is not considered recoverable, an impairment loss is recorded to theextent the net carrying value of the asset exceeds the fair value. Theimpairment loss recognized equals the excess of net carrying value over therelated fair value of the asset.  Therewere no impairment losses recognized in accordance with these procedures during2009, 2008 and 2007.

 

Long-Lived Assets Heldfor Sale

We consider long-livedassets to be “held for sale” upon satisfaction of the following criteria: (a) managementcommits to a plan to sell a facility (or group of facilities), (b) thefacility is available for immediate sale in its present condition subject onlyto terms that are usual and customary for sales of such facilities, (c) anactive program to locate a buyer and other actions required to complete theplan to sell the facility have been initiated, (d) the sale of thefacility is probable and transfer of the asset is expected to be completedwithin one year, (e) the facility is being actively marketed for sale at aprice that is reasonable in relation to its current fair value, and (f) actionsrequired to complete the plan indicate that it is unlikely that significantchanges to the plan will be made or that the plan will be withdrawn.

 

Typically these criteriaare all met when the relevant asset is under contract, significant non-refundabledeposits have been made by the potential buyer, the assets are immediatelyavailable for transfer and there are no contingencies related to the sale thatmay prevent the transaction from closing. In most transactions, theseconditions or criteria are not satisfied until the

 

F-13

----

Tableof Contents

 

actual closing of the transaction; and, accordingly,the facility is not identified as held for sale until the closing actuallyoccurs. However, each potential transaction is evaluated based on its separatefacts and circumstances.  Propertiesclassified as held for sale are reported at the lesser of carrying value orfair value less estimated costs to sell.

 

During 2009, the Companysold 20 storage facilities throughout the United States (including one propertythat was held for sale as of December 31, 2008). During 2008, the Companysold 23 storage facilities throughout the United States.  During 2007, the Company sold three storagefacilities in South Carolina and two additional facilities in Arizona. Thesesales have been accounted for as discontinued operations and, accordingly, theaccompanying financial statements and notes reflect the results of operationsof the storage facilities sold as discontinued operations (see Note 10).

 

Cashand Cash Equivalents

Cashand cash equivalents are highly-liquid investments with original maturities ofthree months or less.  The Company may maintain cash equivalents infinancial institutions in excess of insured limits, but believes this risk ismitigated by only investing in or through major financial institutions.

 

RestrictedCash

Restricted cash consistsof purchase deposits and cash deposits required for debt service requirements,capital replacement, and expense reserves in connection with the requirementsof our loan agreements.

 

LoanProcurement Costs

Loan procurement costsrelated to borrowings consist of $26.4 million and $10.6 million at December 31,2009 and 2008, respectively and are reported net of accumulated amortization of$8.0 million and $6.2 million as of December 31, 2009 and 2008,respectively. The costs are amortized over the life of the related debt usingthe effective interest rate method and reported as loan procurementamortization expense.

 

OtherAssets

Other assets consistprimarily of accounts receivable, prepaid expenses and intangible assets.Accounts receivable were $2.3 million and $2.8 million as of December 31,2009 and 2008, respectively. The Company has recorded an allowance ofapproximately $0.4 million and $0.6 million, respectively, related to accountsreceivable as of December 31, 2009 and 2008.  The net carrying value of intangible assetsas of December 31, 2008 was $0.1 million and were fully amortized as of December 31,2009.

 

Notes Receivable

As of December 31,2009, notes receivable of $20.1 million included three promissory notesoriginated in conjunction with****multipleasset dispositions.  The original principal amounts of the promissorynotes ranged from $0.3 million to $17.6 million, bearing interest at ratesranging from 6 to 10 percent with maturity dates ranging from two to threeyears.  The Company periodically assesses the collectability of the notesreceivable in accordance with the FASB guidance on accounting by creditors forimpairment of a loan. No collectability issues were noted as of December 31,2009.

 

EnvironmentalCosts

Our practice is toconduct or obtain environmental assessments in connection with the acquisitionor development of additional facilities. Whenever the environmental assessmentfor one of our facilities indicates that a facility is impacted by soil orgroundwater contamination from prior owners/operators or other sources, we willwork with our environmental consultants and where appropriate, stategovernmental agencies, to ensure that the facility is either cleaned up, thatno cleanup is necessary because the low level of contamination poses nosignificant risk to public health or the environment, or that theresponsibility for cleanup rests with a third party.

 

RevenueRecognition

Management has determinedthat all of our leases are operating leases. Rental income is recognized inaccordance with the terms of the leases, which generally are month-to-month.Revenues from long-term operating leases are recognized on a straight-linebasis over the term of the respective lease. The excess of rents received overamounts contractually due pursuant to the underlying leases is included indeferred revenue in the accompanying consolidated balance sheets andcontractually due but unpaid rents are included in other assets.

 

The Company recognizesgains on disposition of properties only upon closing in accordance with theguidance on sales of real estate. Payments received from purchasers prior toclosing are recorded as deposits. Profit on real estate sold is recognizedusing the full accrual method upon closing when the collectability of the salesprice is reasonably assured and the 

 

F-14

----

Tableof Contents

 

Company is not obligated to perform significantactivities after the sale. Profit may be deferred in whole or part until thesale meets the requirements of profit recognition on sales under this guidance

 

CostsAssociated with Exit or Disposal Activities

In October 2006, the Company committed to a plan to relocate itsaccounting, finance and information technology functions to the Philadelphia,Pennsylvania area.  As part of therelocation of these functions, the Company provided severance arrangements forcertain existing employees related to those functions.  At the time the severance arrangements wereentered into, the Company estimated a total expense of $470,000, of which$45,000 was paid in 2006 and the remainder was paid in 2007.

 

In August 2007, theCompany abandoned certain office space in Cleveland, Ohio that was previouslyused for its corporate offices.  The relatedleases have expiration dates ranging from December 31, 2009 through December 31,2014. Upon vacating the space, the Company entered into a sub-lease agreementwith a sub-tenant to lease the majority of the space for the duration of theterm.

 

As a result of this exitactivity, the Company recognized a “Lease abandonment charge” of $1.3 millionduring the three months ended September 30, 2007.  The charge was comprised of approximately$0.8 million of costs that represent the present value of the net cash flowsassociated with leases and the sub-lease agreement (“Contract Termination Costs”)and approximately $0.5 million of costs associated with the write-off ofcertain assets related to the abandoned space (“Other Associated Costs”).  The Contract Termination Costs of $0.8million are presented as “Accounts payable and accrued rent” and the OtherAssociated Costs of $0.5 million were accounted for as a reduction of “Storagefacilities.”  The Company amortizes theContract Termination Costs against rental expense over the remaining life ofthe respective leases.

 

AdvertisingCosts

The Company incursadvertising costs primarily attributable to print advertisements in telephonebooks. The Company recognizes the costs when the related telephone book is firstpublished. The Company incurred $4.5 million, $3.8 million and$4.3 million in telephone book advertising expenses for the years ended2009, 2008 and 2007, respectively.

 

EquityOffering Costs

Underwriting discount andcommissions, financial advisory fees and offering costs are reflected as areduction to additional paid-in capital.

 

OtherProperty Related Income

Other property relatedincome consists of late fees, administrative charges, sales of storage suppliesand other ancillary revenues.

 

CapitalizedInterest

The Company capitalizesinterest incurred that is directly associated with construction activitiesuntil the asset is placed into service. Interest is capitalized to the relatedassets using a weighted-average rate of the Company’s outstanding debt. TheCompany capitalized $0.1 million during 2009, 2008 and 2007.

 

DerivativeFinancial Instruments

The Company carries allderivatives on the balance sheet at fair value. The Company determines the fairvalue of derivatives by observableprices that are based on inputs not quoted on active markets, but corroboratedby market data. The accounting for changes in the fair value of aderivative instrument depends on whether the derivative has been designated andqualifies as part of a hedging relationship and, if so, the reason for holdingit. The Company’s use of derivative instruments has been limited to cash flowhedges of certain interest rate risks.  The Company had interest rate swap agreements for notional principalamounts aggregating $300 million at December 31, 2008.  All of the Company’s derivative financialinstruments had matured by November 20, 2009.

 

IncomeTaxes

TheCompany elected to be taxed as a real estate investment trust under Sections856-860 of the Internal Revenue Code beginning with the period from October 21,2004 (commencement of operations) through December 31, 2004.  Inmanagement’s opinion, the requirements to maintain these elections are beingmet.  Accordingly, no provision for federal income taxes has beenreflected in the consolidated financial statements other than for operationsconducted through our taxable REIT subsidiaries.

 

F-15

----

Tableof Contents

 

Earningsand profits, which determine the taxability of distributions to shareholders,differ from net income reported for financial reporting purposes due todifferences in cost basis, the estimated useful lives used to computedepreciation, and the allocation of net income and loss for financial versustax reporting purposes.  The tax basis in the Company’s assets was $1.3billion as of December 31, 2009 and $1.5 billion as of December 31,2008.

 

Distributions toshareholders are usually taxable as ordinary income, although a portion of thedistribution may be designated as capital gain or may constitute a tax-freereturn of capital. Annually, the Company provides each of its shareholders astatement detailing distributions paid during the preceding year and theircharacterization as ordinary income, capital gain or return of capital. Thecharacterization of the Company’s dividends for 2009 was 100% capital gaindistribution.

 

TheCompany is subject to a 4% federal excise tax if sufficient taxable income isnot distributed within prescribed time limits.  The excise tax equals 4%of the annual amount, if any, by which the sum of (a) 85% of the Company’sordinary income and (b) 95% of the Company’s net capital gain exceeds cashdistributions and certain taxes paid by the Company.  No excise tax wasincurred in 2009, 2008, or 2007.

 

Taxable REITsubsidiaries, such as the TRS, are subject to federal and state incometaxes.  The TRS recorded a net deferred tax asset of $0.5 million as of December 31,2009 and 2008 related to expenses which are deductible for tax purposes infuture periods.

 

Noncontrolling Interests

Noncontrolling interestsare the portion of equity (net assets) in a subsidiary not attributable,directly or indirectly, to a parent. The ownership interests in the subsidiarythat are held by owners other than the parent are noncontrolling interests.Noncontrolling interests are reported on the consolidated balance sheets withinequity, separately from the Company’s equity. On the consolidated statements ofoperations, revenues, expenses and net income or loss fromless-than-wholly-owned subsidiaries are reported at the consolidated amounts,including both the amounts attributable to the Company and noncontrollinginterests. Presentation of consolidated equity activity is included for bothquarterly and annual financial statements, including beginning balances,activity for the period and ending balances for shareholders’ equity,noncontrolling interests and total equity.  The Company has adjusted the carrying value of itsnoncontrolling interests subject to redemption value to the extentapplicable.  Disclosure of suchredemption provisions is provided in Note 7.

 

Earningsper Share

Basic earnings per shareis calculated based on the weighted average number of common shares andrestricted shares outstanding and/or vested during the period. Diluted earningsper share is calculated by further adjusting for the dilutive impact of shareoptions, unvested restricted shares and contingently issuable shares outstandingduring the period using the treasury stock method.  Common shares of 547,000, 94,000 and 22,000in 2009, 2008 and 2007, respectively, were not included in the calculation ofdiluted earnings per share, as they were identified as anti-dilutive.

 

ShareBased Payments

We apply the fairvalue method of accounting for contingently issued shares and share optionsissued under our incentive award plan. Accordingly, share compensation expenseis recorded ratably over the vesting period relating to such contingentlyissued shares and options. The Company has recognized compensation expense on astraight-line method over the requisite service period.

 

Foreign Currency

Thefinancial statements of foreign subsidiaries are translated to U.S. Dollarsusing the period-end exchange rate for assets and liabilities and an averageexchange rate for each period for revenues, expenses, and capitalexpenditures.  The local currency is the functional currency for theCompany’s foreign subsidiaries.  Translation adjustments for foreignsubsidiaries are recorded as a component of accumulated other comprehensiveloss in shareholders’ equity.  The Company recognizes transactiongains and losses arising from fluctuations in currency exchange rates ontransactions denominated in currencies other than the functional currency inearnings as incurred. The Pound, which represents the functional currency usedby USIFB, LLP, our joint venture in England, was translated at an end-of-periodexchange rate of approximately 1.62212 and 1.4619 U.S. Dollars per Pound at December 31,2009 and December 31, 2008, respectively, and an average exchange rate of1.56476 and 1.8669 U.S. Dollars per Pound for the years ended December 31,2009 and December 31, 2008, respectively.

 

F-16

----

Tableof Contents

 

RecentAccounting Pronouncements

The FinancialAccounting Standards Board (“FASB”) established the *FASB Accounting Standards CodificationTM* (“Codification”) asthe source of authoritative GAAP recognized by the FASB to be applied bynongovernmental entities in the preparation of financial statements issued forinterim and annual periods ending after September 15, 2009. TheCodification has changed the manner in which GAAP guidance is referenced, butdid not have an impact on our consolidated financial position, results ofoperations or cash flows.

 

The FASB issuedauthoritative guidance on accountingfor transfers of financial assets**inJune 2009, which we adopted on a prospective basis beginning January 1,2010.  The guidance requires entities toprovide more information regarding sales of securitized financial assets andsimilar transactions, particularly if the entity has continuing exposure to therisks related to transferred financial assets. It also eliminates the concept of a “qualifying special-purpose entity,”changes the requirements for derecognizing financial assets and requiresadditional disclosures.  The applicationdid not have an impact on our consolidated financial position, results ofoperations or cash flows.

 

The FASB issued authoritative guidance on how acompany determines when an entity should be consolidated in June 2009,which we adopted on a prospective basis beginning January 1, 2010.  The guidance clarifies that the determinationof whether a company is required to consolidate an entity is based on, amongother things, an entity’s purpose and design and a company’s ability to directthe activities of the entity that most significantly impact the entity’seconomic performance.  The guidancerequires an ongoing reassessment of whether a company is the primarybeneficiary of a variable interest entity. It also requires additional disclosures about a company’s involvement invariable interest entities and any significant changes in risk exposure due tothat involvement.  The application didnot have an impact on our consolidated financial position, results ofoperations or cash flows.

 

TheFASB issued authoritative guidance on determining whether instruments grantedin share-based payment transactions are participating securities in June 2008,which we adopted on a prospective basis beginning January 1, 2009. The guidance states that unvested share-based payment awards that containnonforfeitable rights to dividends or dividend equivalents (whether paid orunpaid) are participating securities and should be included in the computationof earnings per share pursuant to the two-class method.  The application did not have an impact on ourconsolidated financial position, results of operations or cash flows.

 

TheFASB issued authoritative guidance on accounting for convertible debtinstruments that may be settled in cash upon conversion (including partialcash settlement)**in May 2008, which weadopted on a prospective basis beginning January 1, 2009.  The guidance requires that instruments withinits scope be separated into their liability and equity components at****initial recognition by recording theliability component at the fair value of a similar liability that does not havean associated equity component and attributing the remaining proceeds fromissuance to the equity component. The excess of the principal amount of theliability component over its initial fair value will be amortized to interestexpense using the interest method.  The application did not have an impact on our consolidated financialposition, results of operations or cash flows.

 

TheFASB issued authoritative guidance regarding the hierarchy of generallyaccepted accounting principles in May 2008, which we adopted on aprospective basis beginning January 1, 2009.  The guidance states that the GAAP hierarchywill now reside in the accounting literature established by the FASB.  The guidance identifies the sources ofaccounting principles and the framework for selecting the principles used inthe preparation of financial statements in conformity with GAAP.  The application did not have an impact on ourconsolidated financial position, results of operations or cash flows.

 

TheFASB issued authoritative guidance regarding disclosures about derivativeinstruments and hedging activities in March 2008, which we adopted on aprospective basis beginning January 1, 2009.  The guidance enhances required disclosures regardingderivatives and hedging activities, including enhanced disclosures regardinghow an entity uses derivative instruments, how derivative instruments andrelated hedged items are accounted for under previous guidance and the impactof derivative instruments and related hedged items on an entity’s financialposition, financial performance and cash flows. The application did not have an impact on our consolidated financialposition, results of operations or cash flows.

 

TheFASB issued authoritative guidance regarding business combinations**inDecember 2007, which we adopted on a prospective basis beginning January 1,2009.  The guidance establishesprinciples and requirements for recognizing identifiable assets acquired,liabilities assumed, noncontrolling interest in the acquiree, goodwill acquiredin the combination or the gain from a bargain purchase, and disclosurerequirements.  Under this guidance, all costs incurred to effect anacquisition will be recognized separately from the acquisition.  Also,restructuring costs that are expected but the acquirer is 

 

F-17

----

Tableof Contents

 

not obligated to incurwill be recognized separately from the acquisition.  The applicationdid not have an impact on our consolidated financial position, results ofoperations or cash flows.

 

The FASB issuedauthoritative guidance regarding noncontrollinginterests in consolidated Financial Statements in December 2007,which we adopted on a prospective basis beginning January 1, 2009.  The guidance requires that ownershipinterests in subsidiaries held by parties other than the parent be clearlyidentified.  In addition, it requires that the amount of consolidatednet income attributable to the parent and to the noncontrolling interest beclearly identified and presented on the face of the incomestatement.   The retrospective application to the financialstatements impacted certain financial statement footnote disclosures but didnot impact our consolidated financial position, results of operations or cashflows.

 

Concentration of Credit Risk

The storage facilitiesare located in major metropolitan and rural areas and have numerous tenants perfacility. No single tenant represents a significant concentration of ourrevenues. The facilities in Florida, California, Texas and Illinois providedtotal revenues of approximately 18%, 15%, 10% and 7%, respectively, for theyear ended December 31, 2009.  Thefacilities in Florida, California, Texas and Illinois provided total revenuesof approximately 19%, 15%, 9% and 7%, respectively, for the year ended December 31,2008.

 

F-18

----

Tableof Contents

 

**3.  STORAGE FACILITIES**

 

The following summarizesthe real estate assets of the Company as of December 31, 2009 and December 31,2008:

 
| ** **                    | ** ** | **December 31,**   | ** ** | **December 31,** | ** ** |
|-------------------------------|------------|-------------------------|------------|-----------------------|------------|
| ** **                    | ** ** | **2009**                | ** ** | **2008**              | ** ** |
| ** **                    | ** ** | **(in thousands)** | ** ** |
| Land                          |       | $                       | 369,842    |                  | $          | 387,831 |   |
| Buildings and improvements    |       | 1,243,047               |       | 1,300,711             |       |
| Equipment                     |       | 157,452                 |       | 198,981               |       |
| Construction in progress      |       | 4,201                   |       | 600                   |       |
| Total                         |       | 1,774,542               |       | 1,888,123             |       |
| Less accumulated depreciation |       | (344,009                | )          | (328,165              | )          |
| Storage facilities — net |       | $                       | 1,430,533  |                  | $          | 1,559,958 |   |

 

F-19

----

Table of Contents

 

The Company completed the following acquisitions,dispositions and consolidations for the years ended December 31, 2008 and2009:

 
| **Facility/Portfolio**                | ** ** | **Location**                | ** ** | **Transaction  Date** | ** ** | **Number  of Facilities** | ** ** | **Purchase  / Sales   Price (in thousands)** | ** ** |
|---------------------------------------|------------|-----------------------------|------------|-----------------------|------------|---------------------------|------------|----------------------------------------------|------------|
|                                  |       |                        |       |                  |       |                      |       |                                         |       |
| *2009  Dispositions:*                 |       |                        |       |                  |       |                      |       |                                         |       |
| * *                              |       |                        |       |                  |       |                      |       |                                         |       |
| 68th Street Asset                     |       | Miami, FL                   |       | January 2009     |       | 1                         |       | $                                            | 2,973      |   |
| Albuquerque, NM Asset                 |       | Albuquerque, NM             |       | April 2009       |       | 1                         |       | 2,825                                        |       |
| S. Palmetto Asset                     |       | Ontario, CA                 |       | June 2009        |       | 1                         |       | 5,925                                        |       |
| Hotel Circle Asset                    |       | Albuquerque, NM             |       | July 2009        |       | 1                         |       | 3,600                                        |       |
| Jersey City Asset                     |       | Jersey City, NJ             |       | August 2009      |       | 1                         |       | 11,625                                       |       |
| Dale Mabry Asset                      |       | Tampa, FL                   |       | August 2009      |       | 1                         |       | 2,800                                        |       |
| Winner Assets                         |       | Multiple locations in CO    |       | September 2009   |       | 6                         |       | 17,300                                       |       |
| Baton Rouge Asset (Eminent Domain)    |       | Baton Rouge, LA             |       | September 2009   |       | (b)                       |       | 1,918                                        |       |
| North H Street Asset (Eminent Domain) |       | San Bernardino, CA          |       | September 2009   |       | 1                         |       | (c                                           | )          |
| Boulder Assets (a)                    |       | Boulder, CO                 |       | September 2009   |       | 4                         |       | 32,000                                       |       |
| Winner Assets                         |       | Multiple locations in CO    |       | October 2009     |       | 2                         |       | 6,600                                        |       |
| Brecksville Asset                     |       | Brecksville, OH             |       | November 2009    |       | 1                         |       | 3,300                                        |       |
|                                  |       |                        |       |                  |       | 20                        |       | $                                            | 90,866     |   |
|                                  |       |                        |       |                  |       |                      |       |                                         |       |
| *2008 Acquisitions:*                  |       |                        |       |                  |       |                      |       |                                         |       |
| * *                              |       |                        |       |                  |       |                      |       |                                         |       |
| Uptown Asset                          |       | Washington, DC              |       | January 2008     |       | 1                         |       | $                                            | 13,300     |   |
|                                  |       |                        |       |                  |       |                      |       |                                         |       |
| *2008 Dispositions:*                  |       |                        |       |                  |       |                      |       |                                         |       |
| * *                              |       |                        |       |                  |       |                      |       |                                         |       |
| 77th Street Asset                     |       | Miami, FL                   |       | March 2008       |       | 1                         |       | $                                            | 2,175      |   |
| Leesburg Asset                        |       | Leesburg, FL                |       | March 2008       |       | 1                         |       | 2,400                                        |       |
| Lakeland Asset                        |       | Lakeland, FL                |       | April 2008       |       | 1                         |       | 2,050                                        |       |
| Endicott Asset                        |       | Union, NY                   |       | May 2008         |       | 1                         |       | 2,250                                        |       |
| Linden Asset                          |       | Linden, NJ                  |       | June 2008        |       | 1                         |       | 2,825                                        |       |
| Baton Rouge/Prairieville Assets       |       | Multiple Locations in LA    |       | June 2008        |       | 2                         |       | 5,400                                        |       |
| Churchill Assets                      |       | Multiple locations in MS    |       | August 2008      |       | 4                         |       | 8,333                                        |       |
| Biloxi/Gulf Breeze Assets             |       | Multiple locations in MS/FL |       | September 2008   |       | 2                         |       | 10,760                                       |       |
| Deland Asset                          |       | Deland, FL                  |       | September 2008   |       | 1                         |       | 2,780                                        |       |
| Mobile Assets                         |       | Mobile, AL                  |       | September 2008   |       | 2                         |       | 6,140                                        |       |
| Hudson Assets                         |       | Hudson, OH                  |       | October 2008     |       | 2                         |       | 2,640                                        |       |
| Stuart/Vero Beach Assets              |       | Multiple locations in FL    |       | October 2008     |       | 2                         |       | 4,550                                        |       |
| Skipper Road Assets                   |       | Multiple locations in FL    |       | November 2008    |       | 2                         |       | 5,020                                        |       |
| Waterway Asset                        |       | Miami, FL                   |       | December 2008    |       | 1                         |       | 4,635                                        |       |
|                                  |       |                        |       |                  |       | 23                        |       | $                                            | 61,958     |   |

 

----

(a)          The Company provided $17.6 million inseller financing to the buyer as part of the Boulder Assets disposition.

(b)         Approximately one third of the BatonRouge Asset was taken in conjunction with eminent domain proceedings.  The Company continues to own and operate theremaining two thirds of the asset and include the asset in the Company’s totalportfolio property count.

(c)          The entirety of the North H Street Assetwas taken in conjunction with eminent domain proceedings and the Companyremoved this asset from its total portfolio asset count.  The Company expects to finalize compensatoryterms with discussions with the State of California by the fourth quarter of2010.

 

F-20

----

Tableof Contents

 

**4. INTANGIBLE ASSETS**

 

During the year ended December 31,2007, the Company acquired finite-lived intangible assets valued atapproximately $6.8 million as part of its 2007 acquisitions.  These assets represent the value of in-placeleases at the time of acquisition.  Theintangible assets became fully amortized, with $4.6 million and $2.2 millionrecognized as amortization expense during the year ended December 31, 2008and 2007, respectively.

 

During the quarter ended March 31,2008, the Company acquired a finite-lived intangible asset valued atapproximately $1.0 million as part of its acquisition of one self-storagefacility.  This asset represents thevalue of in-place leases at the time of acquisition.  The estimated life of this asset at the timeof acquisition was 12 months.  TheCompany recognized amortization expense related to this asset of $0.1 millionand $0.9 million during the 2009 and 2008 periods, respectively.

 

**5.  SECURED CREDIT FACILITY,UNSECURED CREDIT FACILITY AND SECURED TERM LOANS**

 

OnDecember 8, 2009, theCompany and its Operating Partnership entered into a three-year, $450 millionsenior secured credit facility (the “secured credit facility”), consisting of a$200 million secured term loan and a $250 million secured revolving creditfacility.  The secured credit facility issecured by mortgages on borrowing base properties. The outstanding balance on the Company’s securedcredit facility as of December 31, 2009 was comprised of $200 million ofsecured term loan borrowings.  As of December 2009,approximately $250 million was available under the Company’s secured creditfacility.  Borrowings under the securedcredit facility bear interest ranging from 3.25% to 4.00% over LIBOR, with aLIBOR floor of 1.5%, depending on our leverage ratio.   At December 31, 2009, borrowings underthe secured credit facility had a weighted average interest rate of 5.0% andthe Company was in compliance with all financial covenants of the agreement.

 

The secured creditfacility replaced the prior, three-year $450 million unsecured credit facility,which was entered into in November 2006, consisting of $200 million in anunsecured term loan and $250 million in unsecured revolving loans. The balanceof the unsecured credit facility was paid off in December 2009.  Borrowings under this formercredit facility incurred interest, at our option, at either an alternative baserate or a Eurodollar rate, in each case, plus an applicable margin based on ourleverage ratio or our credit rating. The alternative base interest rate is afluctuating rate equal to the higher of the prime rate or the sum of thefederal funds effective rate plus 50 basis points. The applicable margin forthe alternative base rate will vary from 0.00% to 0.50% depending on ourleverage ratio prior to achieving an investment grade rating, and will varyfrom 0.00% to 0.25% depending on our credit rating after achieving aninvestment grade rating.

 

On September 14,2007, the Company and its Operating Partnership entered into a credit agreementthat allowed for total secured term loan borrowings of $50.0 million andsubsequently amended the agreement on April 3, 2008 to allow for totalsecured term loan borrowings of $57.4 million. Each term loan bore interest at either an alternative base rate or aEurodollar rate, at our option, in each case plus an applicable margin. Theoutstanding term loans were secured by a pledge by the Company’s OperatingPartnership of all equity interests in YSI RT LLC, the wholly-owned subsidiaryof the Operating Partnership that acquired eight self-storage facilities in September 2007and one self-storage facility in May 2008.   The balance of the term loans was paid offon August 11, 2009.

 

F-21

----

Table of Contents

 

**6.  MORTGAGE LOANS ANDNOTES PAYABLE**

 

The Company’s mortgageloans and notes payable are summarized as follows:

 
| ** **                             | ** ** | **Carrying Value as of:** | ** ** | ** **            | ** ** | ** **        | ** ** |
|----------------------------------------|------------|------------------------------------------|------------|-----------------------|------------|-------------------|------------|
| ** **                             | ** ** | **December 31,**                    | ** ** | **December 31,** | ** ** | **Effective**     | ** ** | **Maturity** | ** ** |
| **Mortgage Loan**                 | ** ** | **2009**                                 | ** ** | **2008**              | ** ** | **Interest Rate** | ** ** | **Date** | ** ** |
|                                   |       | **(in  thousands)**                      |       |                  |       |              |       |
| Acq 6                                  |       | —                                   |       | 1,701                 |       | 8.43              | %          | Aug-09 |   |
| YSI 3                                  |       | —                                   |       | 85,020                |       | 5.09              | %          | Nov-09 |   |
| YSI 1                                  |       | 83,342                                   |       | 85,105                |       | 5.19              | %          | May-10 |   |
| YSI 4                                  |       | 6,065                                    |       | 6,150                 |       | 5.25              | %          | Jul-10 |   |
| YSI 26                                 |       | 9,475                                    |       | 9,724                 |       | 5.00              | %          | Aug-10 |   |
| YSI 25                                 |       | 7,975                                    |       | 8,093                 |       | 5.00              | %          | Oct-10 |   |
| Promissory Notes                       |       | —                                   |       | 75                    |       | 5.97              | %          | Nov-10 |   |
| YSI 2                                  |       | 83,480                                   |       | 85,213                |       | 5.33              | %          | Jan-11 |   |
| YSI 12                                 |       | 1,520                                    |       | 1,561                 |       | 5.97              | %          | Sep-11 |   |
| YSI 13                                 |       | 1,307                                    |       | 1,342                 |       | 5.97              | %          | Sep-11 |   |
| YSI 6                                  |       | 77,370                                   |       | 78,543                |       | 5.13              | %          | Aug-12 |   |
| YASKY                                  |       | 80,000                                   |       | 80,000                |       | 4.96              | %          | Sep-12 |   |
| USIFB                                  |       | 3,834                                    |       | 3,509                 |       | 4.59              | %          | Oct-12 |   |
| YSI 14                                 |       | 1,812                                    |       | 1,862                 |       | 5.97              | %          | Jan-13 |   |
| YSI 7                                  |       | 3,163                                    |       | 3,224                 |       | 6.50              | %          | Jun-13 |   |
| YSI 8                                  |       | 1,808                                    |       | 1,842                 |       | 6.50              | %          | Jun-13 |   |
| YSI 9                                  |       | 1,988                                    |       | 2,026                 |       | 6.50              | %          | Jun-13 |   |
| YSI 17                                 |       | 4,246                                    |       | 4,365                 |       | 6.32              | %          | Jul-13 |   |
| YSI 27                                 |       | 516                                      |       | 532                   |       | 5.59              | %          | Nov-13 |   |
| YSI 30                                 |       | 7,567                                    |       | 7,804                 |       | 5.59              | %          | Nov-13 |   |
| YSI 11                                 |       | 2,486                                    |       | 2,548                 |       | 5.87              | %          | Dec-13 |   |
| YSI 5                                  |       | 3,281                                    |       | 3,363                 |       | 5.25              | %          | Jan-14 |   |
| YSI 28                                 |       | 1,598                                    |       | 1,638                 |       | 5.59              | %          | Feb-14 |   |
| YSI 34                                 |       | 14,955                                   |       | —                |       | 8.00              | %          | Jun-14 |   |
| YSI 37                                 |       | 2,244                                    |       | —                |       | 7.25              | %          | Aug-14 |   |
| YSI 40                                 |       | 2,581                                    |       | —                |       | 7.25              | %          | Aug-14 |   |
| YSI 42                                 |       | 3,263                                    |       | —                |       | 6.88              | %          | Aug-14 |   |
| YSI 44                                 |       | 1,121                                    |       | —                |       | 7.00              | %          | Sep-14 |   |
| YSI 41                                 |       | 3,976                                    |       | —                |       | 6.60              | %          | Sep-14 |   |
| YSI 38                                 |       | 4,078                                    |       | —                |       | 6.35              | %          | Sep-14 |   |
| YSI 45                                 |       | 5,527                                    |       | —                |       | 6.75              | %          | Oct-14 |   |
| YSI 46                                 |       | 3,486                                    |       | —                |       | 6.75              | %          | Oct-14 |   |
| YSI 43                                 |       | 2,994                                    |       | —                |       | 6.50              | %          | Nov-14 |   |
| YSI 48                                 |       | 25,652                                   |       | —                |       | 7.25              | %          | Nov-14 |   |
| YSI 39                                 |       | 3,991                                    |       | —                |       | 6.50              | %          | Nov-14 |   |
| YSI 50                                 |       | 2,380                                    |       | —                |       | 6.75              | %          | Dec-14 |   |
| YSI 10                                 |       | 4,166                                    |       | 4,237                 |       | 5.87              | %          | Jan-15 |   |
| YSI 15                                 |       | 1,920                                    |       | 1,961                 |       | 6.41              | %          | Jan-15 |   |
| YSI 20                                 |       | 64,258                                   |       | 65,953                |       | 5.97              | %          | Nov-15 |   |
| YSI 31                                 |       | 13,891                                   |       | —                |       | 6.75              | %          | Jun-19 | (a) |
| YSI 35                                 |       | 4,499                                    |       | —                |       | 6.90              | %          | Jul-19 | (a) |
| YSI 32                                 |       | 6,160                                    |       | —                |       | 6.75              | %          | Jul-19 | (a) |
| YSI 33                                 |       | 11,570                                   |       | —                |       | 6.42              | %          | Jul-19 |   |
| YSI 47                                 |       | 3,250                                    |       | —                |       | 6.63              | %          | Jan-20 | (a) |
| Unamortized fair value adjustment      |       | 231                                      |       | 694                   |       |              |       |   |   |
|                                   |       |                                     |       |                  |       |              |       |   |   |
| Total mortgage loans and notes payable |       | $                                        | 569,026    |                  | $          | 548,085           |       |   |   |   |   |
|                                        |            |                                          |            |                       |            |                   |            |  |  |  |  |

 

F-22

----

Tableof Contents

 

----

(a)                  These borrowings have a fixed interest rate for thefirst 5 years of their term, which then resets and remains constant over thefinal 5 years of the loan term.

 

During 2009, the Companyentered into secured financings with 17 regional banks.  The financings are summarized as follows(dollars in thousands):

 
| ** **             | ** ** | **Carrying**          | ** ** | ** **             | ** ** | ** **     | ** ** | ** **        | ** ** | ** **   | ** ** |
|------------------------|------------|-----------------------|------------|------------------------|------------|----------------|------------|-------------------|------------|--------------|------------|
| ** **             | ** ** | **Value as of:** | ** ** | ** **             | ** ** | ** **     | ** ** | ** **        | ** ** | ** **   | ** ** |
| ** **             | ** ** | **December 31,** | ** ** | ** **             | ** ** | **Properties** | ** ** | **Effective**     | ** ** | **Maturity** | ** ** |
| **Mortgage Loan** | ** ** | **2009**              | ** ** | **State(s)**           | ** ** | **Encumbered** | ** ** | **Interest Rate** | ** ** | **Date**     | ** ** |
|                   |       |                  |       |                   |       |           |       |              |       |         |       |
| YSI 34                 |       | $                     | 14,955     |                   | TX         |           | 8          |              | 8.00       | %            | Jun-14     |   |
| YSI 37                 |       | 2,244                 |       | GA                     |       | 1              |       | 7.25              | %          | Aug-14       |       |
| YSI 40                 |       | 2,581                 |       | TN                     |       | 1              |       | 7.25              | %          | Aug-14       |       |
| YSI 42                 |       | 3,263                 |       | FL                     |       | 1              |       | 6.88              | %          | Aug-14       |       |
| YSI 44                 |       | 1,121                 |       | FL                     |       | 1              |       | 7.00              | %          | Sep-14       |       |
| YSI 41                 |       | 3,976                 |       | TN                     |       | 2              |       | 6.60              | %          | Sep-14       |       |
| YSI 38                 |       | 4,078                 |       | TN                     |       | 3              |       | 6.35              | %          | Sep-14       |       |
| YSI 45                 |       | 5,527                 |       | TN                     |       | 1              |       | 6.75              | %          | Oct-14       |       |
| YSI 46                 |       | 3,486                 |       | IL                     |       | 1              |       | 6.75              | %          | Oct-14       |       |
| YSI 43                 |       | 2,994                 |       | AZ                     |       | 1              |       | 6.50              | %          | Nov-14       |       |
| YSI 48                 |       | 25,652                |       | CA                     |       | 9              |       | 7.25              | %          | Nov-14       |       |
| YSI 39                 |       | 3,991                 |       | FL                     |       | 1              |       | 6.50              | %          | Nov-14       |       |
| YSI 50                 |       | 2,380                 |       | IL                     |       | 1              |       | 6.75              | %          | Dec-14       |       |
| YSI 31                 |       | 13,891                |       | NJ                     |       | 4              |       | 6.75              | %          | Jun-19       |       |
| YSI 35                 |       | 4,499                 |       | VA                     |       | 2              |       | 6.90              | %          | Jul-19       |       |
| YSI 32                 |       | 6,160                 |       | NY                     |       | 2              |       | 6.75              | %          | Jul-19       |       |
| YSI 33                 |       | 11,570                |       | D.C., FL & TX |       | 4              |       | 6.42              | %          | Jul-19       |       |
| YSI 47                 |       | 3,250                 |       | MA                     |       | 1              |       | 6.63              | %          | Jan-20       |       |
|                   |       |                  |       |                   |       |           |       |              |       |         |       |
| Total                  |       | $                     | 115,618    |                   |       |           |       |              |       |         |       |   |

 

As of December 31,2009 and 2008, the Company’s mortgage loans payable were secured by certain ofits self-storage facilities with net book values of approximately $776 millionand $689 million, respectively. The following table represents the futureprincipal payment requirements on the outstanding mortgage loans and notespayable at December 31, 2009 (in thousands):

 
| 2010                                     |   | $       | 114,516 |   |
|------------------------------------------|--------|---------|---------|--------|
| 2011                                     |   | 90,541  |    |
| 2012                                     |   | 163,817 |    |
| 2013                                     |   | 26,238  |    |
| 2014                                     |   | 91,091  |    |
| 2015 and  thereafter                     |   | 82,592  |    |
| Total mortgage  payments                 |   | 568,795 |    |
| Plus:  Unamortized fair value adjustment |   | 231     |    |
| Total mortgage  indebtedness             |   | $       | 569,026 |   |

 

The Company currentlyintends to fund its 2010 future principal payment requirements from cashprovided by operating activities as well as additional borrowings under oursecured credit facility ($250 million available as of December 31, 2009).

 

F-23

----

Tableof Contents

 

**7.  NONCONTROLLINGINTERESTS**

 

**Variable Interests inConsolidated Real Estate Joint Ventures**

 

On August 13, 2009, the Company, through awholly-owned affiliate, formed a joint venture (“HART”) with an affiliate ofHeitman, LLC (“Heitman”) to own and operate 22 self-storage facilities, whichare located throughout the United States. Upon formation, Heitman contributed approximately $51 million of cash toa newly-formed limited partnership and the Company contributed certainunencumbered wholly-owned properties with an agreed upon value of approximately$102 million to such limited partnership. In exchange for its contribution ofthose properties, the Company received a cash distribution from HART ofapproximately $51 million and retained a 50 percent interest in HART.  The Company is the managing partner of HARTand the manager of the properties owned by HART, and receives a market ratemanagement fee for its management services.

 

In December 2003, the FASB issued a pronouncementregarding variable interest entities. The Company determined HART is a variable interest entity as defined bythe pronouncement, and that we are the primary beneficiary.  The 50% interest that is owned by Heitman isreflected in noncontrolling interest in subsidiaries within permanent equityand separate from the Company’s equity on the consolidated balance sheet.Accordingly, the assets, liabilities and results of operations of HART areconsolidated in our consolidated financial statements.  At December 31, 2009, HART had totalassets of $91.6 million and total liabilities of $1.9 million.

 

USIFB, LLP (“the Venture”) was formed to own, operate,acquire and develop self-storage facilities in England.  The Company has a 97% interest in theVenture, and through a wholly-owned subsidiary and together with its jointventure partner, operations began at one facility in London, England during2008. The Company has determined that the Venture is a variable interest entityas defined by the codification discussed above, and that the Company is theprimary beneficiary.  Accordingly, theassets, liabilities and results of operations of the Venture are consolidatedin the Company’s consolidated financial statements.  At December 31, 2009, the Venture hadtotal assets of $7.8 million and total liabilities of $4.3 million and amortgage loan of $3.8 million secured by assets with a net book value of $7.5million.  At December 31, 2009, theVenture’s creditors had no recourse to the general credit of the Company.

 

**Operating Partnership Ownership**

 

The Company has followedthe FASB guidance regarding the classification and measurement of redeemablesecurities.  Per this guidance, securitiesthat are redeemable for cash or other assets at the option of the holder, notsolely within the control of the issuer, must be classified outside ofpermanent equity. This would result in certain outside ownership interestsbeing included as redeemable noncontrolling interests outside of permanentequity in the consolidated balance sheets. The Company makes this determinationbased on terms in applicable agreements, specifically in relation to redemptionprovisions. Additionally, with respect to noncontrolling interests for whichthe Company has a choice to settle the contract by delivery of its own shares,the Company considered the guidance regarding accounting for derivativefinancial instruments indexed to, and potentially settled in, a company’s ownstock, to evaluate whether the Company controls the actions or events necessaryto presume share settlement.  Theguidance also requires that noncontrolling interests be adjusted each period sothat the carrying value equals the greater of its carrying value based on theaccumulation of historical cost or its redemption value.

 

The consolidated resultsof the Company include results attributable to units of the OperatingPartnership that are not owned by the Company, which amounted to approximately4.9% and 8.1% of all outstanding Partnership units as of December 31, 2009and December 31, 2008, respectively. These interests were issued in the form of Operating Partnership unitsand were a component of the consideration the Company paid to acquire certainself-storage facilities. Limited partners who acquired Operating Partnershipunits have the right to require the Operating Partnership to redeem part or allof their Operating Partnership units for, at the Company’s option, anequivalent number of common shares of the Company or cash based upon the fairmarket value of an equivalent number of common shares of the Company.  However, the partnership agreement containscertain circumstances that could result in a settlement outside the control ofthe Company. Accordingly, consistent with the guidance, the Company will recordthese noncontrolling interests outside of permanent equity in the consolidatedbalance sheets.  Net income or lossrelated to these noncontrolling interests is excluded from net income or lossin the consolidated statements of operations.

 

The fair value of theCompany’s common shares when calculated for the purposes of unit redemptionwill be equal to the average of the closing trading price of the Company’scommon shares on the New York Stock Exchange for the 10 trading

 

F-24

----

Tableof Contents

 

days before the date the Company receives theredemption notice.  At December 31,2009 and December 31, 2008, 4,809,636 units and 5,079,928 units were outstanding, respectively, and as of December 31,2009, the calculated aggregate redemption value of outstanding OperatingPartnership units based upon the Company’s share price was approximately $35.4million.  Based on the Company’sevaluation of the redemption value of the redeemable noncontrolling interest,the Company has reflected these interests at their carrying value as of December 31,2009 and December 31, 2008 as carrying cost exceeded the estimatedredemption value.

 

**8.  RELATED PARTYTRANSACTIONS**

 

RobertJ. Amsdell, former Chief Executive Officer and Chairman of the Board ofTrustees, retired from the Board effective as of February 13, 2007.  Barry L. Amsdell submitted his letter ofresignation from the Board on February 20, 2007.  Effective as of February 19, 2007, ToddC. Amsdell, President of U-Store-It Development LLC, a subsidiary of theCompany, resigned.

 

Amsdell Settlement/Rising Tide Acquisition

OnSeptember 14, 2007, the Company settled all pending state and federalcourt litigation involving the Company and the interests of Robert J. Amsdell,Barry L. Amsdell, Todd C. Amsdell and Kyle Amsdell, son of Robert and brotherof Todd Amsdell (collectively, the “Amsdells”), and Rising Tide DevelopmentLLC, a company owned and controlled by Robert J. Amsdell and Barry L. Amsdell (“RisingTide”).  The Board of Trustees of theCompany, along with the Corporate Governance and Nominating Committee, approvedthe terms of the settlement.

 

Inaddition, on September 14, 2007, the Operating Partnership purchased 14self-storage facilities from Rising Tide (the “Rising Tide Properties”) for anaggregate purchase price of $121 million pursuant to a purchase and saleagreement.  In connection with thesettlement agreement and acquisition of the 14 self storage facilities, theCompany considered the provisions of codification issued by the FASB onaccounting for pre-existing relationships between the parties to a businesscombination*,*and determined that all considerationpaid was allocable to the purchase of the storage facilities.

 

Pursuantto a Settlement Agreement and Mutual Release, dated August 6, 2007, (the “SettlementAgreement”) which was conditioned upon the acquisition of the 14 self-storagefacilities from Rising Tide for $121 million, each of the parties to theagreement executed various agreements.  Asummary of the various agreements follows:

 

·                  *StandstillAgreement.*  Robert J.Amsdell, Barry L. Amsdell and Todd C. Amsdell agreed they would not commence orparticipate in any proxy solicitation or initiate any shareholder proposal;take any action to convene a meeting of shareholders; or take any actions,including making any public or private proposal or announcement, that couldresult in an extraordinary corporate transaction relating to the Company.  The standstill agreement terminated on April 20,2008.

 

·                  *FirstAmendment to Lease.*  TheOperating Partnership and Amsdell and Amsdell, an entity owned by Robert andBarry Amsdell, entered into a First Amendment to Lease which modified certainterms of all of the lease agreements the Operating Partnership has with Amsdelland Amsdell for office space in Cleveland, Ohio.  The First Amendment provided the OperatingPartnership the ability to assign or sublease the office space previously usedfor its corporate office and certain operations.  Separately, Amsdell and Amsdell consented tothe Operating Partnership’s proposed sublease to an unrelated party ofapproximately 22,000 square feet of office space covered by the aforementionedleases.

 

·                  *Terminationof Option Agreement.*  TheOperating Partnership and Rising Tide entered into an Option TerminationAgreement that terminated an Option Agreement dated October 27, 2004, byand between the Operating Partnership and Rising Tide.  The Option Agreement provided the OperatingPartnership with an option to acquire Rising Tide’s right, title and interestto 18 properties, including:  the 14Rising Tide Properties discussed above; three properties that the OperatingPartnership acquired in 2005 pursuant to exercise of its option; and oneundeveloped property that Rising Tide has the option to acquire and that wasnot acquired as a part of the purchase and sale agreement.

 

·                  *Terminationof Property Management Agreement, and Marketing and Ancillary ServicesAgreement*.  Certain ofthe Company’s subsidiaries and Rising Tide entered into a Property ManagementTermination Agreement and a Marketing and Ancillary Services TerminationAgreement. Under the Property Management Agreement, the

 

F-25

----

Tableof Contents

 

Company provided property management services for the Rising TideProperties for a fee equal to the greater of 5.35% of the gross revenues ofeach property or $1,500 per property per month. Under the Marketing and Ancillary Services Agreement, the Companyprovided limited marketing and other miscellaneous services for the Rising Tideproperties.  Management fees earned by YSI Management LLC, fromRising Tide Development, were approximately $0, $0 million and$0.4 million for the years ended December 31, 2009, 2008 and 2007,respectively, and are included in other related party revenues. Accountsreceivable from Rising Tide Development at December 31, 2009, 2008 and2007 were approximately $0, $0 million and $0.4 million, respectively, andare included in due from related parties. No amounts were outstanding as of December 31,2009.  These amounts represent expensespaid on behalf of Rising Tide Development by YSI Management LLC and proceedsfrom the sale of ancillary items that were reimbursed under standard businessterms.  In connection with the termination of the Property Management Agreement,expenses relating to property management will be prorated.

 

·                  *Amendmentof Employment and Non-Compete Agreements. *As part of the Settlement Agreement, the Company entered into aModification of Noncompetition Agreement and Termination of EmploymentAgreement (each a “Modification of Noncompetition Agreement and Termination ofEmployment Agreement”) with each of Robert J. Amsdell and Todd C. Amsdell, anda Modification of Noncompetition Agreement (“Modification of NoncompetitionAgreement”) with Barry L. Amsdell, which terminates and modifies specificprovisions of the noncompetition agreement the Company has with each of them,dated October 27, 2004 (the “Original Noncompetition Agreements”).  The Original Noncompetition Agreementsrestrict the ability of Robert J., Barry L. and Todd C. Amsdell to compete withthe Company for one year and their ability to solicit employees of the Companyfor two years from the date of their termination of employment or resignationfrom service as a Trustee.  Pursuant tothese modification agreements, Todd C. Amsdell will be able to compete with theCompany, and Robert J. and Barry L. Amsdell will be able to (a) developthe one Rising Tide property that the Company did not acquire under thepurchase and sale agreement and (b) compete with respect to any propertyidentified as part of a Section 1031 “like-kind exchange” referenced inthe purchase and sale agreement. Further, each Original Noncompetition Agreement was modified to alloweach of them to hire, for any purpose, any employee or independent contractorwho was terminated, has resigned or otherwise left the employment or otherservice of the Company or any of its affiliates on or prior to June 1,2007.

 

TheModification and Noncompetition Agreement and Termination of EmploymentAgreement with each of Robert J. Amsdell and Todd C. Amsdell also terminatesthe employment agreements the Company had with each of them, effective as of February 13,2007 with respect to Robert J. Amsdell and February 19, 2007 with respectto Todd C. Amsdell.

 

Corporate Office Leases

Pursuant to lease agreementsthat the Operating Partnership entered into with Amsdell and Amsdell during2007, we rented office space from Amsdell and Amsdell at The Parkview Building,a multi-tenant office building of approximately 40,000 square feet located at6745 Engle Road, an office building of approximately 18,000 square feet locatedat 6751 Engle Road, and an office building of approximately 28,000 square feetlocated at 6779 Engle Road.  Each ofthese properties is part of Airport Executive Park, a 50-acre office and flexdevelopment located in Cleveland, Ohio, which is owned by Amsdell and Amsdell.Our independent Trustees approved the terms of, and entry into, each of theoffice lease agreements by the Operating Partnership.  The table below shows the office space subjectto these lease agreements and certain key provisions, including the term ofeach lease agreement, the period for which the Operating Partnership may extendthe term of each lease agreement, and the minimum and maximum rents payable permonth during the term.

 
| **Office Space**                                              | ** ** | **Approximate   Square Footage** | ** ** | **Term**   | ** ** | **Period of  Extension Option (1)** | ** ** | **Fixed Minimum  Rent Per Month** | ** ** | **Fixed  Maximum Rent  Per Month** | ** ** |
|--------------------------------------------------------------------|------------|--------------------------------------------|------------|------------|------------|----------------------------------------------------|------------|--------------------------------------------------|------------|----------------------------------------------|------------|
| The  Parkview Building — 6745 Engle Road; and 6751 Engle Road |       | 21,900                                     |       | 12/31/2014 |       | Five-year                                          |       | $                                                | 25,673     |                                         | $          | 31,205 |   |
| 6745  Engle Road — Suite 100                             |       | 2,212                                      |       | 12/31/2014 |       | Five-year                                          |       | $                                                | 3,051      |                                         | $          | 3,709 |   |
| 6745  Engle Road — Suite 110                             |       | 1,731                                      |       | 12/31/2014 |       | Five-year                                          |       | $                                                | 2,387      |                                         | $          | 2,901 |   |
| 6751  Engle Road — Suites C and D                             |       | 3,000                                      |       | 12/31/2014 |       | Five-year                                          |       | $                                                | 3,137      |                                         | $          | 3,771 |   |
| 6779  Engle Road — Suites G and H                             |       | 3,500                                      |       | 12/31/2008 |       | Five-year                                          |       | $                                                | 3,079      |                                         | $          | 3,347 |   |
| 6745  Engle Road — Suite 120                             |       | 1,600                                      |       | 4/30/2007  |       | Three-year                                         |       | $                                                | 1,800      |                                         | $          | 1,900 |   |
| 6779  Engle Road — Suites I and J                             |       | 3,500                                      |       | (2         | )          | N/A                                                |       | $                                                | 3,700      |                                         | N/A        |   |

 

F-26

----

Tableof Contents

 

----

(1)          Our operatingpartnership may extend the lease agreement beyond the termination date by theperiod set forth in this column at prevailing market rates upon the same termsand conditions contained in each of the lease agreements.

 

(2)          In June 2007,the Operating Partnership terminated this lease agreement which had amonth-to-month term.

 

In addition to monthlyrent, the office lease agreements provide that our Operating Partnershipreimburse Amsdell and Amsdell for certain maintenance and improvements to theleased office space.  The total amountsof lease payments incurred under the six office leases during the years ended December 31,2009 and December 31, 2008 were approximately $0.3 million and $0.4million, respectively.

 

Total future minimumrental payments under the related party lease agreements entered into as of December 31,2009 are as follows:

 
| ** ** | ** ** | **Due  to Related Party** | ** ** | **Due  from Subtenant** | ** ** |
|------------|------------|---------------------------|------------|-------------------------|------------|
| ** ** | ** ** | **Amount**                | ** ** | **Amount**              | ** ** |
| ** ** | ** ** | **(in  thousands)**       | ** ** |
|       |       |                      |       |                    |       |
| 2010       |       | $                         | 453        |                    | $          | 278 |   |
| 2011       |       | 475                       |       | 278                     |       |
| 2012       |       | 475                       |       | 278                     |       |
| 2013       |       | 499                       |       | 278                     |       |
| 2014       |       | 499                       |       | 278                     |       |
|       |       | $                         | 2,401      |                    | $          | 1,390 |   |

 

Other

During the fourth quarterof 2006, the Company engaged a consultant to assist in establishing certaindevelopment protocols and processes. In connection with that assignment, theoutside consultant utilized the services of the son-in-law of Dean Jernigan,President and Chief Executive Officer of the Company.  Our payments for Mr. Jernigan’s son-in-law’sservices totaled $168 thousand in 2008 and $149 thousand in 2007.  Mr. Jernigan’s son-in-law was hired as afull-time employee of the Company on September 15, 2008.

 

During the third quarterof 2009, the Company entered into a relocation transaction with a member ofmanagement whereby the Company purchased the former residence of the member ofmanagement for $985,000 which is recorded as a component of other assets. The Company anticipates selling the asset during 2010.

 

Registration Rights

Robert J. Amsdell, BarryL. Amsdell, Todd C. Amsdell and the “Amsdell Entities” that acquired commonshares or Operating Partnership units in the formation transactions which tookplace at the time of the IPO received certain registration rights. An aggregateof approximately 9.7 million common shares acquired in the formationtransactions were subject to a registration rights agreement (includingapproximately 1.1 million shares issuable upon redemption of approximately1.1 million Operating Partnership units issued in the formationtransactions).

 

In addition, Rising TideDevelopment received registration rights with respect to the OperatingPartnership units it received in connection with the Company’s acquisition ofthree option facilities. An aggregate of approximately 0.4 million commonshares (which shares are issuable upon redemption of approximately0.4 million Operating Partnership units issued in connection with theCompany’s option exercises) were subject to a registration rights agreement.

 

In March 2007, theCompany filed a Registration Statement on Form S-3 to satisfy all of theabovementioned registration rights.

 

**9.  FAIR VALUE OF FINANCIALINSTRUMENTS**

 

The fair value offinancial instruments, including cash and cash equivalents, accounts receivableand accounts payable approximates their respective book values at December 31,2009 and 2008. The Company has fixed interest rate loans with a carrying valueof $569.0 million and $548.1 million at December 31, 2009 and 2008,respectively.  The estimated fair values

 

F-27

----

Tableof Contents

 

of these fixed rate loans were $530.7 million and$527.8 million at December 31, 2009 and 2008, respectively. The Companyhas variable interest rate loans with a carrying value of $200.0 million and$429.4 million at December 31, 2009 and 2008, respectively.  The estimated fair values of the variableinterest rate loans were $200.0 million and $423.2 million at December 31,2009 and 2008, respectively.  Theseestimates are based on discounted cash flow analyses assuming market interestrates for comparable obligations at December 31, 2009 and 2008.

 

**10.  DISCONTINUEDOPERATIONS**

 

For the years ended December 31,2009, 2008 and 2007, discontinued operations relates to 20 properties that theCompany sold during 2009 (one of which was held-for-sale at December 31,2008), 23 properties that the Company sold during 2008, and five propertiesthat the Company sold during 2007 (see Note 3). Each of the sales during 2009, 2008, and 2007 resulted in therecognition of a gain, which in the aggregate totaled $14.1 million, $19.7million, and $2.5 million, respectively.

 

The following tablesummarizes the revenue and expense information for the properties classified asdiscontinued operations for the years ended December 31, 2009, 2008 and2007 (in thousands):

 
| ** **                                          | ** ** | **For the year ended December 31,** | ** ** |
|-----------------------------------------------------|------------|------------------------------------------|------------|
| ** **                                          | ** ** | **2009**                                 | ** ** | **2008** | ** ** | **2007** | ** ** |
| * *                                            | * *   | * *                                 | * *   | * * | * * | * * | * * |
| **REVENUES**                                        |       |                                     |       |   |   |   |   |
| Rental income                                       |       | $                                        | 7,512      |   | $ | 17,536 |   | $ | 21,206 |   |
| Other property  related income                      |       | 558                                      |       | 1,259 |   | 1,557 |   |
| Total revenues                                      |       | 8,070                                    |       | 18,795 |   | 22,763 |   |
| **OPERATING  EXPENSES**                             |       |                                     |       |   |   |   |   |
| Property  operating expenses                        |       | 2,787                                    |       | 6,876 |   | 9,009 |   |
| Depreciation and  amortization                      |       | 2,737                                    |       | 5,109 |   | 5,961 |   |
| Total operating  expenses                           |       | 5,524                                    |       | 11,985 |   | 14,970 |   |
| **OPERATING  INCOME**                               |       | 2,546                                    |       | 6,810 |   | 7,793 |   |
| **OTHER  INCOME (EXPENSE)**                         |       |                                     |       |   |   |   |   |
| Interest:                                           |       |                                     |       |   |   |   |   |
| Interest expense  on loans                          |       | —                                   |       | — |   | (189 | ) |
| Loan procurement  amortization expense              |       | —                                   |       | — |   | (3 | ) |
| Interest income                                     |       | —                                   |       | — |   | 5 |   |
| Total other  expense                                |       | —                                   |       | — |   | (187 | ) |
| Income from  discontinued operations                |       | 2,546                                    |       | 6,810 |   | 7,606 |   |
| Net gain on  disposition of discontinued operations |       | 14,139                                   |       | 19,720 |   | 2,517 |   |
| Income from  discontinued operations                |       | $                                        | 16,685     |   | $ | 26,530 |   | $ | 10,123 |   |

 

**11.  COMMITMENTS AND CONTINGENCIES**

 

The Company currentlyowns one self-storage facility subject to a ground lease and five self-storagefacilities having small parcels of land that are subject to ground leases. TheCompany recorded rent expense of approximately $0.2 million for each ofthe years ended December 31, 2009, 2008 and 2007, respectively.

 

F-28

----

Tableof Contents

 

Total future minimumrental payments under non-cancelable ground leases and related party officeleases in effect as of December 31, 2009 are as follows:

 
|       |       | **Third Party  Amount**              |       | **Related Party  Amount** |   |
|------------|------------|--------------------------------------|------------|---------------------------|--------|
| ** ** | ** ** | **(dollars in thousands)** | ** ** |
| 2010       |       | $                                    | 149        |                      | $      | 453 |   |
| 2011       |       | 149                                  |       | 475                       |   |
| 2012       |       | 149                                  |       | 475                       |   |
| 2013       |       | 149                                  |       | 499                       |   |
| 2014       |       | 101                                  |       | 499                       |   |
|       |       | $                                    | 697        |                      | $      | 2,401 |   |
|            |            |                                      |            |                           |        |  |  |  |  |

 

The Company has beennamed as a defendant in a number of lawsuits in the ordinary course ofbusiness. In most instances, these claims are covered by the Company’sliability insurance coverage. Management believes that the ultimate settlementof the suits will not have a material adverse effect on the Company’s financialstatements.

 

**12.  RISK MANAGEMENT ANDUSE OF FINANCIAL INSTRUMENTS**

 

The Company’s use of derivative instruments is limitedto the utilization of interest rate agreements or other instruments to manageinterest rate risk exposures and not for speculative purposes. The principalobjective of such arrangements is to minimize the risks and/or costs associatedwith the Company’s operating and financial structure, as well as to hedgespecific transactions. The counterparties to these arrangements are majorfinancial institutions with which the Company and its subsidiaries may alsohave other financial relationships. The Company is potentially exposed to creditloss in the event of non-performance by these counterparties. However, becauseof the high credit ratings of the counterparties, the Company does notanticipate that any of the counterparties will fail to meet these obligationsas they come due. The Company does not hedge credit or property value marketrisks.

 

The Company has entered into interest rate swapagreements that qualify and are designated as cash flow hedges designed toreduce the impact of interest rate changes on its variable rate debt.   Therefore, the interest rate swaps arerecorded in the consolidated balance sheet at fair value and the related gainsor losses are deferred in shareholders’ equity as Accumulated OtherComprehensive Loss.  These deferred gainsand losses are amortized into interest expense during the period or periods inwhich the related interest payments affect earnings.  However, to the extent that the interest rateswaps are not perfectly effective in offsetting the change in value of theinterest payments being hedged, the ineffective portion of these contracts isrecognized in earnings immediately. Ineffectiveness was immaterial for all periods presented.

 

The Company formally assesses, both at inception ofthe hedge and on an on-going basis, whether each derivative is highly-effectivein offsetting changes in cash flows of the hedged item. If managementdetermines that a derivative is highly-effective as a hedge, it accounts forthe derivative using hedge accounting, pursuant to which gains or lossesinherent in the derivative do not impact the Company’s results ofoperations.  If management determinesthat a derivative is not highly-effective as a hedge or if a derivative ceasesto be a highly-effective hedge, the Company will discontinue hedge accountingprospectively and will reflect in its statement of operations realized andunrealized gains and losses in respect of the derivative.

 

The Company had an interest rate cap agreement thateffectively limited the interest rate on $40 million of credit facilityborrowings at 5.50% per annum through January 2008.  All of the Company’s derivative financialinstruments were expired by November 20, 2009.  The following table is a three yearcomparison of the Company’s derivative financial instruments at December 31,2009 and 2008, respectively (dollars in thousands):

 

F-29

----

Tableof Contents

 
| **Hedge**   | ** ** | ** **     | ** ** | **Notional** | ** ** | ** ** | ** ** | ** **         | ** ** | ** **   | ** ** | **December 31,** | ** ** |
|-------------|------------|----------------|------------|--------------|------------|------------|------------|--------------------|------------|--------------|------------|-----------------------|------------|
| **Product** | ** ** | **Hedge Type** | ** ** | **Amount**   | ** ** | **Strike** | ** ** | **Effective Date** | ** ** | **Maturity** | ** ** | **2009**              | ** ** | **2008** | ** ** |
|        |       |           |       |         |       |       |       |               |       |         |       |                  |       |   |   |
| Swap        |       | Cash flow      |       | $            | 50,000     |       | 4.7725     | %                  | 8/24/2007  |         | 11/20/2009 |                  | $          | — |   | $ | (1,683 | ) |
| Swap        |       | Cash flow      |       | 25,000       |       | 4.7160     | %          | 9/4/2007           |       | 11/20/2009   |       | —                |       | (830 | ) |
| Swap        |       | Cash flow      |       | 25,000       |       | 2.3400     | %          | 3/28/2008          |       | 11/20/2009   |       | —                |       | (326 | ) |
| Swap        |       | Cash flow      |       | 200,000      |       | 2.7625     | %          | 5/28/2008          |       | 11/20/2009   |       | —                |       | (3,314 | ) |
|        |       |           |       |         |       |       |       |               |       |         |       | $                     | —     |   | $ | (6,153 | ) |
|             |            |                |            |              |            |            |            |                    |            |              |            |                       |            |  |  |  |  |  |

 

**13.  FAIR VALUEMEASUREMENTS**

 

Asstated in Note 2 “Summary of Significant Accounting Policies” on January 1,2008, the Company adopted the methods of fair value as described inauthoritative guidance issued by the FASB, to value its financial assets andliabilities. As defined in the guidance, fair value is based on the price thatwould be received from the sale of an asset or paid to transfer a liability inan orderly transaction between market participants at the measurement date. Inorder to increase consistency and comparability in fair value measurements, theguidance establishes a fair value hierarchy that prioritizes observable andunobservable inputs used to measure fair value into three broad levels, whichare described below:

 

Level1: Quoted prices (unadjusted) in active markets that are accessible at themeasurement date for assets or liabilities. The fair value hierarchy gives thehighest priority to Level 1 inputs.

 

Level2: Observable prices that are based on inputs not quoted on active markets, butcorroborated by market data.

 

Level3: Unobservable inputs are used when little or no market data is available. Thefair value hierarchy gives the lowest priority to Level 3 inputs.

 

Indetermining fair value, the Company utilizes valuation techniques that maximizethe use of observable inputs and minimize the use of unobservable inputs to theextent possible as well as considering counterparty credit risk in itsassessment of fair value.

 

Therewere no financial assets and liabilities carried at fair value as of December 31,2009.  Financial assets and liabilitiescarried at fair value as of December 31, 2008 are classified in the tablebelow in one of the three categories described above (dollars in thousands):

 
| ** **                                 | ** ** | **Level 1** | ** ** | **Level 2** | ** ** | **Level 3** | ** ** |
|--------------------------------------------|------------|-------------|------------|-------------|------------|-------------|------------|
|                                       |       |        |       |        |       |        |       |
| Interest Rate  Swap Derivative Liabilities |       | $           | —     |        | $          | 6,153       |       | $ | — |   |
| Total  liabilities at fair value           |       | $           | —     |        | $          | 6,153       |       | $ | — |   |

 

Financialassets and liabilities carried at fair value were classified as Level 2inputs.  For financial liabilities thatutilize Level 2 inputs, the Company utilizes both direct and indirectobservable price quotes, including LIBOR yield curves, bank price quotes for forwardstarting swaps, NYMEX futures pricing and common stock price quotes. Below is asummary of valuation techniques for Level 2 financial liabilities:

 

·                  Interest rate swapderivative assets and liabilities — valued using LIBOR yield curves at thereporting date. Counterparties to these contracts are most often highly ratedfinancial institutions none of which experienced any significant downgrades in2009 that would reduce the amount owed by the Company.

 

**14.  SHARE-BASEDCOMPENSATION PLANS**

 

On May 9, 2007, theCompany’s shareholders approved an equity-based employee compensation plan, the2007 Equity Incentive Plan (the “2007 Plan”). On October 19, 2004, theCompany’s sole shareholder approved a share-based employee compensation plan,the 2004 Equity Incentive Plan (the “2004 Plan” and collectively with the 2007Plan, the “Plans”). The purpose of the Plans are to attract and retain highlyqualified executive officers, Trustees and key employees and other 

 

F-30

----

Tableof Contents

 

persons and to motivate such officers, trustees, keyemployees and other persons to serve the Company and its affiliates to expendmaximum effort to improve the business results and earnings of the Company, byproviding to such persons an opportunity to acquire or increase a directproprietary interest in the operations and future success of the Company. Tothis end, the Plans provide for the grant of share options, share appreciationrights, restricted shares, share units, unrestricted shares, dividendequivalent rights and cash awards. Any of these awards may, but need not, bemade as performance incentives to reward attainment of annual or long-termperformance goals. Share options granted under the Plans may be non-qualifiedshare options or incentive share options.

 

The Plans areadministered by the Compensation Committee of the Company’s Board of Trustees(the “Compensation Committee”), which is appointed by the Board of Trustees.The Compensation Committee interprets the Plans and determines the terms andprovisions of option grants and share awards. A total of 3,900,000 and3,000,000 common shares are reserved for issuance under the 2007 Plan and 2004Plan, respectively. The maximum number of common shares underlying equityawards that may be granted to an individual participant under the 2004 Planduring any calendar year is 400,000 for options or share appreciation rightsand 100,000 for restricted shares or restricted share units, and 500,000 foroptions or share appreciation rights and 100,000 for restricted shares orrestricted share units under the 2007 Plan. The maximum number of common sharesthat can be awarded under the Plan to any person, other than pursuant to anoption, share appreciation rights or time-vested restricted shares, is250,000 per calendar year under the 2004 Plan.  In addition, under the 2007 Plan, the maximumnumber of performance awards that may be granted to an executive officer is100,000 and the maximum value of performance shares that can be settled in cashand that can be granted in any year is $1.5 million. To the extent that optionsexpire unexercised or are terminated, surrendered or canceled, the options andshare awards become available for future grants under the Plans, unless thePlans have been terminated.  Under thePlans, the Compensation Committee determines the vesting schedule of each shareaward and option. The exercise price for options is equivalent to the fairmarket value of the underlying common shares at the grant date. TheCompensation Committee also determines the term of each option, which shall notexceed 10 years from the grant date.

 

**ShareOptions**

 

The fair values foroptions granted in 2009, 2008, and 2007 were estimated at the time the optionswere granted using the Black-Scholes option-pricing model applying thefollowing weighted average assumptions:

 
| **Assumptions:**                                         | ** ** | **2009**  | ** ** | **2008**  | ** ** | **2007**  | ** ** |
|----------------------------------------------------------|------------|-----------|------------|-----------|------------|-----------|------------|
| Risk-free interest rate                                  |       | 2.6       | %          | 3.4       | %          | 4.7       | %          |
| Expected dividend yield                                  |       | 5.5       | %          | 6.9       | %          | 5.9       | %          |
| Volatility (a)                                           |       | 46.49     | %          | 27.3      | %          | 21.2      | %          |
| Weighted average expected life of the options (b)        |       | 9.8 years |       | 9.0 years |       | 9.4 years |       |
| Weighted average fair value of options granted per share |       | $         | 1.02       |      | $          | 1.09      |       | $ | 2.40 |   |
|                                                          |            |           |            |           |            |           |            |  |  |  |

 

----

(a)  Expected volatilityis based upon the level of volatility historically experienced.

(b) Expected life is based upon our expectations of stock option recipients’expected exercise and termination patterns.

 

The Black-Scholesoption-pricing model was developed for use in estimating the fair value oftraded options. In addition, option-pricing models require the input of highlysubjective assumptions, including the expected stock price volatility.Volatility for the 2007, 2008, and 2009 grants was based on the trading historyof the Company’s shares.

 

In 2009, 2008, and 2007,the Company recognized compensation expense related to options issued toemployees and executives of approximately $1.8 million, $1.4 million and$0.9 million, respectively, which was recorded in General andadministrative expense. As of December 31, 2009, the Company hadapproximately $2.4 million of unrecognized compensation cost that will berecorded over the next five years.

 

F-31

----

Tableof Contents

 

The table below summarizes the option activity underthe Plan for the years ended December 31, 2009, 2008 and 2007:

 
| ** **                                            | ** ** | ** **           | ** ** | ** **           | ** ** | **Weighted Average** | ** ** |
|-------------------------------------------------------|------------|----------------------|------------|----------------------|------------|----------------------|------------|
| ** **                                            | ** ** | **Number of Shares** | ** ** | **Weighted Average** | ** ** | **Remaining**        | ** ** |
| ** **                                            | ** ** | **Under Option**     | ** ** | **Exercise Price**   | ** ** | **Contractual Term** | ** ** |
| Balance at  December 31, 2006                    |       | 1,278,500            |       | $                    | 17.62      |                 | 8.92       |   |
| Options granted                                       |       | 960,271              |       | 19.82                |       | 9.24                 |       |
| Options canceled                                      |       | (322,000             | )          | 16.21                |       | —               |       |
| Options  exercised                                    |       | —               |       | —               |       | —               |       |
| Balance at  December 31, 2007                    |       | 1,916,771            |       | $                    | 18.95      |                 | 8.74       |   |
| Options granted                                       |       | 2,400,990            |       | 9.43                 |       | 9.09                 |       |
| Options canceled                                      |       | (1,006,662           | )          | 13.08                |       | —               |       |
| Options  exercised                                    |       | —               |       | —               |       | —               |       |
| Balance at  December 31, 2008                    |       | 3,311,099            |       | $                    | 13.84      |                 | 8.42       |   |
| Options granted                                       |       | 1,456,881            |       | 3.75                 |       | 9.09                 |       |
| Options canceled                                      |       | (221,676             | )          | 11.73                |       | —               |       |
| Options  exercised                                    |       | —               |       | —               |       | —               |       |
| Balance at  December 31, 2009                    |       | 4,546,304            |       | $                    | 10.71      |                 | 7.95       |   |
|                                                  |       |                 |       |                 |       |                 |       |
| Vested or  expected to vest at December 31, 2009 |       | 4,546,304            |       | 10.71                |       | 7.95                 |       |
| Exercisable at  December 31, 2009                |       | 1,422,263            |       | 15.55                |       | 7.16                 |       |

 

At December 31, 2009, the aggregate intrinsicvalue of options outstanding, of options that vested or expected to vest and ofoptions that were exercisable was $8,100.

 

**RestrictedShares**

 

The Company applies thefair value method of accounting for contingently issued shares.  As such, each grant is recognized ratablyover the related vesting period. Approximately 402,000 restricted shares were issued during 2009 forwhich the fair value of the restricted shares at their respective grant dateswas approximately $1.5 million, which vest over three years.  During 2008, approximately 259,000 restrictedshares were issued for which the fair value of the restricted shares at theirrespective grant dates was approximately $1.8 million.  As of December 31, 2009 the Company hadapproximately $1.4 million of remaining unrecognized compensation costs thatwill be recognized over the next two years.

 

The fair value forrestricted shares granted in 2008 was estimated at the time the units weregranted. Awards that contain a market feature were valued using a MonteCarlo-pricing model applying the following weighted average assumptions:

 
| **Asssumptions:**                             | ** ** | **2008** | ** ** |
|-----------------------------------------------|------------|----------|------------|
| Risk-free  interest rate                      |       | 2.1      | %          |
| Volatility of  total annual return            |       | 28.5     | %          |
| Weighted average  expected life of the units  |       | 3 years  |       |
| Weighted average  fair value of units granted |       | $        | 4.14       |   |
|                                               |            |          |            |  |

 

The Monte Carlo pricingmodel was not used to value the 2009 restricted shares granted as no marketconditions were present in these awards, as the fair value of the restrictedshare grants were equal to the stock price on the date of grant.

 

In May 2005, theCompany implemented the Deferred Trustees Plan, a component of the Plan, uponthe approval of the Company’s Board of Trustees. Pursuant to the terms of theDeferred Trustees Plan, each non-employee member of the Board of Trustees mayelect to receive all of his annual cash retainers and meeting fees payable forservice on the Board of Trustees or any committee of the Board of Trustees inthe form of either all common shares or all deferred share units.

 

Pursuant to the terms ofthe Deferred Trustees Plan, under the equity incentive plan, certain Trusteeselected to receive their Board of Trustee fees in 2005 and 2006 in the form ofdeferred share units. On December 31, 2006 an aggregate of 

 

F-32

----

Tableof Contents

 

8,564 deferred share units were granted to thoseTrustees and were valued at $20.55 per share and on December 31, 2005and aggregate of 3,876 deferred share units were granted and were valued at$21.05 per share.  There was no similaractivity in 2007, 2008 or 2009.

 

In 2009, 2008 and 2007,the Company recognized compensation expense related to restricted shares andrestricted share units issued to employees and Trustees of approximately $1.6million, $1.4 million and $1.1 million, respectively; these amounts wererecorded in General and administrative expense. The following table presentsnon-vested restricted share activity during 2009:

 
| ** **                            | ** ** | **Number of Non-** | ** ** |
|---------------------------------------|------------|------------------------------|------------|
| ** **                            | ** ** | **Vested Restricted**   | ** ** |
| ** **                            | ** ** | **Shares**                   | ** ** |
| Non-Vested  at January 1, 2009   |       | 292,673                      |       |
| Granted                               |       | 401,798                      |       |
| Vested                                |       | (92,748                      | )          |
| Forfeited                             |       | (29,403                      | )          |
| Non-Vested  at December 31, 2009 |       | 572,320                      |       |

 

**15.  EARNINGS PER SHARE ANDSHAREHOLDERS’ EQUITY**

 

The following is asummary of the elements used in calculating basic and diluted earnings pershare:

 
| ** **                                                                              | ** ** | **For the year ended December 31,**                                                                | ** ** |
|-----------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------|------------|
| ** **                                                                              | ** ** | **2009**                                                                                                | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** **                                                                              | ** ** | **(Dollars and shares in thousands, except per share amounts)** | ** ** |
| Loss from  continuing operations                                                        |       | $                                                                                                       | (17,017    | ) | $ | (23,428 | ) | $ | (24,370 | ) |
| Noncontrolling  interests in the Operating Partnership                                  |       | 928                                                                                                     |       | 1,839 |   | (14,417 | ) |
| Noncontrolling  interest in subsidiaries                                                |       | (665                                                                                                    | )          | — |   | — |   |
| Loss from  continuing operations attributable to the Company’s common shareholders |       | $                                                                                                       | (16,754    | ) | $ | (21,589 | ) | $ | (38,787 | ) |
|                                                                                    |       |                                                                                                    |       |   |   |   |   |
| Total  discontinued operations                                                          |       | 16,685                                                                                                  |       | 26,530 |   | 10,123 |   |
| Noncontrolling  interests in the Operating Partnership                                  |       | (868                                                                                                    | )          | (2,149 | ) | 15,587 |   |
| Total  discontinued operations attributable to the Company’s common shareholders   |       | $                                                                                                       | 15,817     |   | $ | 24,381 |   | $ | 25,710 |   |
| Net income  (loss) attributable to the Company                                          |       | $                                                                                                       | (937       | ) | $ | 2,792 |   | $ | (13,077 | ) |
|                                                                                    |       |                                                                                                    |       |   |   |   |   |
| Weighted-average  shares outstanding                                                    |       | 70,988                                                                                                  |       | 57,621 |   | 57,497 |   |
| Share options  and restricted share units (1)                                           |       | —                                                                                                  |       | — |   | — |   |
| Weighted-average  diluted shares outstanding (2)                                        |       | 70,988                                                                                                  |       | 57,621 |   | 57,497 |   |
|                                                                                    |       |                                                                                                    |       |   |   |   |   |
| Income (loss)  per Common Share:                                                        |       |                                                                                                    |       |   |   |   |   |
| Continuing  operations                                                                  |       | $                                                                                                       | (0.24      | ) | $ | (0.37 | ) | $ | (0.67 | ) |
| Discontinued  operations                                                                |       | 0.23                                                                                                    |       | 0.42 |   | 0.45 |   |
| Basic and  diluted earnings (loss) per share                                            |       | $                                                                                                       | (0.01      | ) | $ | 0.05 |   | $ | (0.22 | ) |

 

----

(1) For the years ended December 31,2009, 2008 and 2007, the potentially dilutive shares of approximately 547,000,94,000, and 22,000 respectively, were not included in the earnings per sharecalculation as their effect is antidilutive.

 

(2) For the years ended December 31, 2009,2008 and 2007, the Company declared cash dividends per share of $0.10, $0.565and $1.05, respectively

 

The operating partnershipunits and common shares have essentially the same economic characteristics asthey share equally in the total net income or loss and distributions of theoperating partnership. An operating partnership unit may be redeemed for cash,or at the Company’s option, common shares on a one-for-one basis. Outstandingnoncontrolling interest units in the operating partnership were 4,809,636,5,079,928 and 5,079,928 as of December 31, 2009, 2008 and 2007,respectively.  There were 92,654,979common shares outstanding as of December 31, 2009.

 

F-33

----

Tableof Contents

 

**Issuance of CommonShares**

 

On August 19,2009, the Company completed a public offering of 32.2 million common shares ofbeneficial interest.  The net proceeds from the offering of $161.9 millionthrough December 31, 2009 were used torepay existing indebtedness, including under the Company’s prior unsecuredcredit facility, and for general corporate purposes..

 

In addition to theAugust 19, 2009 public offering, the Company sold 2.5 million commonshares of beneficial interest through its at-the-market equity plan during thefirst half of 2009, generating net proceeds of $9.7 million that were used forgeneral corporate purposes.

 

**16.  INCOME TAXES**

 

Deferred income taxes areestablished for temporary differences between financial reporting basis and taxbasis of assets and liabilities at the enacted tax rates expected to be ineffect when the temporary differences reverse. A valuation allowance fordeferred tax assets is provided if the Company believes that it is more likelythan not that all or some portion of the deferred tax asset will not berealized. No valuation allowance was recorded at December 31, 2009 or2008. The Company had net deferred tax assets of $0.5 million and $0.5 million,which are included in other assets, as of December 31, 2009 and 2008,respectively.  The Company believes it ismore likely than not the deferred tax assets will be realized. The deferred taxasset primarily relates to past years’ tax net operating losses. These losscarryforwards will expire in 2026 through 2028 if not utilized by then.

 
| ** **                         | ** ** | **For the year ended December 31,** | ** ** |
|------------------------------------|------------|-------------------------------------|------------|
| ** **                         | ** ** | **2009**                            | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** **                         | ** ** | **(dollars in thousands)**          | ** ** |
| Income tax  provision              |       |                                |       |   |   |   |   |
| Current:                           |       |                                |       |   |   |   |   |
| U.S. Federal                       |       | $                                   | —     |   | $ | — |   | $ | — |   |
|                               |       |                                |       |   |   |   |   |
| Deferred:                          |       |                                |       |   |   |   |   |
| U.S. Federal                       |       | —                              |       | — |   | $ | (124 | ) |
| Income tax  provision              |       | $                                   | —     |   | $ | — |   | $ | (124 | ) |
|                               |       |                                |       |   |   |   |   |
| Effective income  tax rate         |       |                                |       |   |   |   |   |
| Statutory  federal income tax rate |       | 34                                  | %          | 34 | % | 34 | % |
| State and local  income taxes      |       | 4                                   | %          | 4 | % | 4 | % |
| Effective income  tax rate         |       | 38                                  | %          | 38 | % | 38 | % |

 
| ** **               | ** ** | **As of December 31,** | ** ** |
|--------------------------|------------|-----------------------------|------------|
| ** **               | ** ** | **2009**                    | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** **               | ** ** | **(dollars in thousands)**  | ** ** |
| ** **               | ** ** | **Assets**                  | ** ** | **Liabilities** | ** ** | **Assets** | ** ** | **Liabilities** | ** ** | **Assets** | ** ** | **Liabilities** | ** ** |
| Deferred taxes           |       |                        |       |   |   |   |   |   |   |   |   |   |   |
| Share based compensation |       | $                           | 2,177      |   | $ | 1,933 |   | $ | 1,325 |   | $ | 1,185 |   | $ | 694 |   | $ | 626 |   |
| Other                    |       | 258                         |       | — |   | 324 |   | — |   | 430 |   | — |   |
| Deferred taxes           |       | $                           | 2,435      |   | $ | 1,933 |   | $ | 1,649 |   | $ | 1,185 |   | $ | 1,124 |   | $ | 626 |   |

 

**17.  PRO FORMA FINANCIALINFORMATION (UNAUDITED)**

 

During 2007, the Companyacquired 17 self-storage facilities for an aggregate purchase price ofapproximately $140.5 million and sold five properties for an aggregate purchaseprice of approximately $19.2 million. During 2008, the Company acquired one self-storage facility for anaggregate purchase price of approximately $13.3 million and sold 23 propertiesfor an aggregate purchase price of approximately $62.0 million.  There were no acquisitions during 2009.

 

F-34

----

Tableof Contents

 

The unaudited condensedconsolidated pro forma financial information set forth below reflectsadjustments to the Company’s historical financial data to give effect to eachof the acquisitions and related financing activity (including the issuance ofcommon shares) that occurred subsequent to January 1, 2007 as if each hadoccurred on January 1, of each respective year.  The unaudited pro forma information presentedbelow does not purport to represent what the Company’s actual results ofoperations would have been for the periods indicated, nor does it purport torepresent the Company’s future results of operations.

 

The following tablesummarizes, on a pro forma basis, our consolidated results of operations forthe years ended December 31, 2008 and 2007 based on the assumptionsdescribed above:

 
| ** **                                        | ** ** | **2008**                                  | ** ** | **2007**   | ** ** |
|---------------------------------------------------|------------|-------------------------------------------|------------|------------|------------|
| ** **                                        | ** ** | **(unaudited)**                           | ** ** |
| ** **                                        | ** ** | **(in thousands, except per share data)** | ** ** |
| ** **                                        | ** ** | ** **                                | ** ** | ** ** | ** ** |
| Pro forma  revenue                                |       | $                                         | 224,204    |       | $          | 215,722 |   |
| Pro forma loss  from continuing operations        |       | (21,587                                   | )          | (33,633    | )          |
| Loss per common  share from continuing operations |       |                                      |       |       |       |
|                                              |       |                                      |       |       |       |
| Basic and  diluted — as reported             |       | $                                         | (0.37      | )          | $          | (0.67 | ) |
| Basic and  diluted — as pro forma            |       | (0.37                                     | )          | (0.58      | )          |

 

**18.  ASSET IMPAIRMENT ANDINSURANCE RECOVERIES**

 

During 2009, the Companyrecorded $0.1 million of impairment charges related to property damageassociated with extraordinary events including fires.  During 2008, the Company recorded $0.5million of impairment charges related to property damage associated with HurricaneIke and other extraordinary events including fires.  During 2007 the Company recorded $0.4 millionof impairment charges related to property damage incurred at six properties asa result of either a fire or flood.

 

**19.  SELECTEDQUARTERLY FINANCIAL DATA (UNAUDITED)**

 

Thefollowing is a summary of quarterly financial information for the years ended December 31,2009 and 2008 (in thousands, except per share data):

 
| ** **                                    | ** ** | **Three months ended** | ** ** |
|-----------------------------------------------|------------|----------------------------------|------------|
| ** **                                    | ** ** | **March 31,**               | ** ** | **June 30,** | ** ** | **September 30,** | ** ** | **December 31,** | ** ** |
| ** **                                    | ** ** | **2009**                         | ** ** | **2009** | ** ** | **2009** | ** ** | **2009** | ** ** |
| Total revenues                                |       | $                                | 54,933     |   | $ | 54,287 |   | $ | 54,727 |   | $ | 53,342 |   |
| Total operating expenses                      |       | 46,914                           |       | 48,304 |   | 46,517 |   | 45,611 |   |
| Net income (loss) attributable to the Company |       | (2,109                           | )          | (2,844 | ) | 6,818 |   | (2,802 | ) |
| Basic and diluted earnings (loss) per share   |       | (0.03                            | )          | (0.05 | ) | 0.09 |   | (0.03 | ) |
|                                               |            |                                  |            |  |  |  |  |  |  |  |  |  |  |

 
| ** **                                    | ** ** | **Three months ended** | ** ** |
|-----------------------------------------------|------------|----------------------------------|------------|
| ** **                                    | ** ** | **March 31,**               | ** ** | **June 30,** | ** ** | **September 30,** | ** ** | **December 31,** | ** ** |
| ** **                                    | ** ** | **2008**                         | ** ** | **2008** | ** ** | **2008** | ** ** | **2008** | ** ** |
| ** **                                    | ** ** | ** **                       | ** ** | ** ** | ** ** | ** ** | ** ** |   | ** ** |
| Total revenues                                |       | $                                | 54,820     |   | $ | 55,548 |   | $ | 57,166 |   | $ | 56,605 |   |
| Total operating expenses                      |       | 47,506                           |       | 49,223 |   | 48,935 |   | 48,207 |   |
| Net income (loss) attributable to the Company |       | (3,984                           | )          | 263 |   | 4,020 |   | 2,493 |   |
| Basic and diluted earnings (loss) per share   |       | (0.07                            | )          | 0.01 |   | 0.07 |   | 0.04 |   |
|                                               |            |                                  |            |  |  |  |  |  |  |  |  |  |  |

 

F-35

----

Tableof Contents

 

Thesummation of quarterly earnings per share amounts do not necessarily equal thefull year amounts.  The above informationwas updated to reclassify amounts to discontinued operations.  See note 10.

 

**20.  LEASEABANDONMENT CHARGE**

 

In August 2007, theCompany abandoned certain office space in Cleveland, OH that was previouslyused for its corporate offices.  Therelated leases have expiration dates ranging from December 31, 2009through December 31, 2014. Upon vacating the space, the Company enteredinto a sub-lease agreement with a sub-tenant to lease the majority of the spacefor the duration of the term.

 

As a result of this exitactivity, the Company recognized a “Lease abandonment charge” of $1.3 millionduring 2007.  The charge is comprised ofapproximately $0.8 million of costs that represent the present value of the netcash flows associated with leases and the sub-lease agreement (“ContractTermination Costs”) and approximately $0.5 million of costs associated with thewrite-off of certain assets related to the abandoned space (“Other AssociatedCosts”).  The Contract Termination Costsof $0.8 million are presented as “Accounts payable and accrued rent” and theOther Associated Costs of $0.5 million were accounted for as a reduction of “Storagefacilities.”  The Company will amortizethe Contract Termination Costs against rental expense over the remaining lifeof the respective leases.

 

**21. COMPREHENSIVE INCOME (LOSS)**

** **
| ** **                                                  | ** ** | **Year Ended December 31,** | ** ** |
|-------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                  | ** ** | **2009**                         | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** **                                                  | ** ** | **(in thousands)**               | ** ** |
| NET INCOME  (LOSS)                                          |       | $                                | (332       | ) | $ | 3,102 |   | $ | (14,247 | ) |
| Other  comprehensive income (loss):                         |       |                             |       |   |   |   |   |
| Unrealized gain  (loss) on derivative financial instruments |       | 6,153                            |       | (4,608 | ) | (1,545 | ) |
| Unrealized gain  (loss) on foreign currency translation     |       | 553                              |       | (1,281 | ) | (119 | ) |
| COMPREHENSIVE  INCOME (LOSS)                                |       | $                                | 6,374      |   | $ | (2,787 | ) | $ | (15,911 | ) |

 

**22. SUBSEQUENT EVENT**

 

On February 11,2010, the Company repaid the YSI 1 mortgage loan of approximately $83.3 millionwith available cash.

 

F-36

----

Table of Contents

 

**U-STORE-IT**

**SCHEDULE III**

**REAL ESTATE AND RELATED DEPRECIATION**

**DECEMBER 31, 2009**

**(inthousands)**

 
| ** **              | ** ** | ** **          | ** ** | ** **       | ** ** | **Initial  Cost** | ** ** | ** **                      | ** ** | **Gross  Carrying Amount  at December 31, 2009** | ** ** | ** ** | ** ** | ** **                      | ** ** |
|-------------------------|------------|---------------------|------------|------------------|------------|-------------------|------------|---------------------------------|------------|-------------------------------------------------------|------------|------------|------------|---------------------------------|------------|
| **Description**         | ** ** | **Square  Footage** | ** ** | **Encumbrances** | ** ** | **Land**          | ** ** | **Building  and  Improvements** | ** ** | **Costs  Subsequent to  Acquisition**                 | ** ** | **Land**   | ** ** | **Building  and  Improvements** | ** ** | **Total** | ** ** | **Accumulated  Depreciation (L)** | ** ** | **Year  Acquired /  Developed** | ** ** |
| Mobile, AL              |       | 128,951             |       | (A)              |       | 226               |       | 2,524                           |       | 987                                                   |       | 301        |       | 3,436                           |       | 3,737 |   | 1,155 |   | 1997 |   |
| Chandler, AZ            |       | 47,520              |       |             |       | 327               |       | 1,257                           |       | 272                                                   |       | 327        |       | 1,529                           |       | 1,856 |   | 387 |   | 2005 |   |
| Glendale, AZ            |       | 56,850              |       | (T)              |       | 201               |       | 2,265                           |       | 926                                                   |       | 418        |       | 2,974                           |       | 3,392 |   | 915 |   | 1998 |   |
| Green Valley, AZ        |       | 25,050              |       | (B)              |       | 298               |       | 1,153                           |       | 162                                                   |       | 298        |       | 1,314                           |       | 1,612 |   | 326 |   | 2005 |   |
| Mesa I, AZ              |       | 52,375              |       |             |       | 920               |       | 2,739                           |       | 154                                                   |       | 921        |       | 2,892                           |       | 3,813 |   | 678 |   | 2006 |   |
| Mesa II, AZ             |       | 45,145              |       |             |       | 731               |       | 2,176                           |       | 198                                                   |       | 731        |       | 2,374                           |       | 3,105 |   | 564 |   | 2006 |   |
| Mesa III, AZ            |       | 58,264              |       |             |       | 706               |       | 2,101                           |       | 177                                                   |       | 706        |       | 2,278                           |       | 2,984 |   | 544 |   | 2006 |   |
| Phoenix I, AZ           |       | 100,762             |       |             |       | 1,134             |       | 3,376                           |       | 286                                                   |       | 1,135      |       | 3,661                           |       | 4,796 |   | 866 |   | 2006 |   |
| Phoenix II, AZ          |       | 45,270              |       | (T)              |       | 756               |       | 2,251                           |       | 240                                                   |       | 756        |       | 2,492                           |       | 3,248 |   | 575 |   | 2006 |   |
| Scottsdale, AZ          |       | 80,925              |       | (T)              |       | 443               |       | 4,879                           |       | 1,635                                                 |       | 883        |       | 6,074                           |       | 6,957 |   | 1,850 |   | 1998 |   |
| Tempe, AZ               |       | 53,890              |       | (A)              |       | 749               |       | 2,159                           |       | 197                                                   |       | 749        |       | 2,356                           |       | 3,106 |   | 542 |   | 2005 |   |
| Tucson I, AZ            |       | 59,350              |       | (T)              |       | 188               |       | 2,078                           |       | 901                                                   |       | 384        |       | 2,784                           |       | 3,167 |   | 836 |   | 1998 |   |
| Tucson II, AZ           |       | 43,950              |       | 2,994            |       | 188               |       | 2,078                           |       | 880                                                   |       | 391        |       | 2,755                           |       | 3,146 |   | 822 |   | 1998 |   |
| Tucson III, AZ          |       | 49,822              |       | (C)              |       | 532               |       | 2,048                           |       | 123                                                   |       | 533        |       | 2,171                           |       | 2,703 |   | 542 |   | 2005 |   |
| Tucson IV, AZ           |       | 48,040              |       | (C)              |       | 674               |       | 2,595                           |       | 171                                                   |       | 675        |       | 2,765                           |       | 3,440 |   | 686 |   | 2005 |   |
| Tucson V, AZ            |       | 45,234              |       | (C)              |       | 515               |       | 1,980                           |       | 196                                                   |       | 515        |       | 2,176                           |       | 2,691 |   | 540 |   | 2005 |   |
| Tucson VI, AZ           |       | 40,841              |       | (C)              |       | 440               |       | 1,692                           |       | 166                                                   |       | 440        |       | 1,857                           |       | 2,297 |   | 471 |   | 2005 |   |
| Tucson VII, AZ          |       | 52,688              |       | (C)              |       | 670               |       | 2,576                           |       | 219                                                   |       | 670        |       | 2,795                           |       | 3,465 |   | 689 |   | 2005 |   |
| Tucson VIII, AZ         |       | 46,650              |       | (C)              |       | 589               |       | 2,265                           |       | 115                                                   |       | 589        |       | 2,380                           |       | 2,969 |   | 588 |   | 2005 |   |
| Tucson IX, AZ           |       | 67,656              |       | (C)              |       | 724               |       | 2,786                           |       | 247                                                   |       | 725        |       | 3,033                           |       | 3,757 |   | 744 |   | 2005 |   |
| Tucson X, AZ            |       | 46,350              |       | (C)              |       | 424               |       | 1,633                           |       | 192                                                   |       | 425        |       | 1,824                           |       | 2,249 |   | 448 |   | 2005 |   |
| Tucson XI, AZ           |       | 42,700              |       | (C)              |       | 439               |       | 1,689                           |       | 303                                                   |       | 439        |       | 1,991                           |       | 2,431 |   | 466 |   | 2005 |   |
| Tucson XII, AZ          |       | 42,325              |       | (C)              |       | 671               |       | 2,582                           |       | 185                                                   |       | 672        |       | 2,767                           |       | 3,439 |   | 675 |   | 2005 |   |
| Tucson XIII, AZ         |       | 45,792              |       | (C)              |       | 587               |       | 2,258                           |       | 158                                                   |       | 587        |       | 2,416                           |       | 3,003 |   | 594 |   | 2005 |   |
| Tucson XIV, AZ          |       | 49,170              |       | (T)              |       | 707               |       | 2,721                           |       | 209                                                   |       | 708        |       | 2,930                           |       | 3,637 |   | 716 |   | 2005 |   |
| Apple Valley I, CA      |       | 73,250              |       | (D)              |       | 140               |       | 1,570                           |       | 1,544                                                 |       | 476        |       | 2,778                           |       | 3,254 |   | 825 |   | 1997 |   |
| Apple Valley II, CA     |       | 61,555              |       | (E)              |       | 160               |       | 1,787                           |       | 1,158                                                 |       | 431        |       | 2,675                           |       | 3,105 |   | 828 |   | 1997 |   |
| Benicia, CA             |       | 74,770              |       | (T)              |       | 2,392             |       | 7,028                           |       | 164                                                   |       | 2,392      |       | 7,192                           |       | 9,585 |   | 1,684 |   | 2005 |   |
| Bloomington I, CA       |       | 28,425              |       |             |       | 42                |       | 463                             |       | 504                                                   |       | 100        |       | 910                             |       | 1,009 |   | 267 |   | 1997 |   |
| Bloomington II, CA      |       | 25,860              |       |             |       | 54                |       | 604                             |       | 466                                                   |       | 144        |       | 980                             |       | 1,124 |   | 293 |   | 1997 |   |
| Cathedral City, CA      |       | 109,745             |       | (T)              |       | 2,194             |       | 10,046                          |       | 203                                                   |       | 2,195      |       | 10,248                          |       | 12,443 |   | 3,105 |   | 2006 |   |
| Citrus Heights, CA      |       | 75,620              |       | (C)              |       | 1,633             |       | 4,793                           |       | 191                                                   |       | 1,634      |       | 4,983                           |       | 6,617 |   | 1,257 |   | 2005 |   |
| Diamond Bar, CA         |       | 103,034             |       | (T)              |       | 2,522             |       | 7,404                           |       | 236                                                   |       | 2,524      |       | 7,638                           |       | 10,162 |   | 1,925 |   | 2005 |   |
| Escondido, CA           |       | 142,970             |       | (S)              |       | 3,040             |       | 11,804                          |       | (755                                                  | )          | 3,040      |       | 11,049                          |       | 14,089 |   | 1,397 |   | 2007 |   |
| Fallbrook, CA           |       | 46,370              |       | (F)              |       | 133               |       | 1,492                           |       | 1,470                                                 |       | 432        |       | 2,663                           |       | 3,095 |   | 777 |   | 1997 |   |
| Hemet, CA               |       | 66,040              |       | (D)              |       | 125               |       | 1,396                           |       | 1,309                                                 |       | 417        |       | 2,413                           |       | 2,830 |   | 717 |   | 1997 |   |
| Highland I, CA          |       | 76,765              |       | (D)              |       | 215               |       | 2,407                           |       | 1,966                                                 |       | 582        |       | 4,006                           |       | 4,588 |   | 1,234 |   | 1997 |   |
| Highland II, CA         |       | 62,257              |       | (T)              |       | 1,277             |       | 5,847                           |       | 248                                                   |       | 1,277      |       | 6,095                           |       | 7,372 |   | 1,279 |   | 2006 |   |
| Lancaster, CA           |       | 60,665              |       | (E)              |       | 390               |       | 2,247                           |       | 684                                                   |       | 556        |       | 2,765                           |       | 3,321 |   | 659 |   | 2001 |   |
| Long Beach, CA          |       | 124,363             |       | (T)              |       | 3,138             |       | 14,368                          |       | 341                                                   |       | 3,138      |       | 14,709                          |       | 17,847 |   | 3,091 |   | 2006 |   |
| Murrieta, CA            |       | 49,790              |       | (S)              |       | 1,883             |       | 5,532                           |       | 188                                                   |       | 1,903      |       | 5,700                           |       | 7,603 |   | 1,344 |   | 2005 |   |
| North Highlands, CA     |       | 57,244              |       | (C)              |       | 868               |       | 2,546                           |       | 270                                                   |       | 868        |       | 2,816                           |       | 3,684 |   | 698 |   | 2005 |   |
| Orangevale, CA          |       | 51,142              |       | (C)              |       | 1,423             |       | 4,175                           |       | 237                                                   |       | 1,423      |       | 4,412                           |       | 5,835 |   | 1,093 |   | 2005 |   |
| Palm Springs I, CA      |       | 72,675              |       | (T)              |       | 1,565             |       | 7,164                           |       | 127                                                   |       | 1,566      |       | 7,291                           |       | 8,856 |   | 1,544 |   | 2006 |   |
| Palm Springs II, CA     |       | 122,370             |       | (T)              |       | 2,131             |       | 9,758                           |       | 354                                                   |       | 2,132      |       | 10,110                          |       | 12,243 |   | 2,127 |   | 2006 |   |
| Pleasanton, CA          |       | 85,195              |       |             |       | 2,799             |       | 8,222                           |       | 61                                                    |       | 2,799      |       | 8,283                           |       | 11,082 |   | 1,940 |   | 2005 |   |
| Rancho Cordova, CA      |       | 53,928              |       | (C)              |       | 1,094             |       | 3,212                           |       | 230                                                   |       | 1,095      |       | 3,442                           |       | 4,537 |   | 866 |   | 2005 |   |
| Redlands, CA            |       | 62,805              |       | (F)              |       | 196               |       | 2,192                           |       | 1,110                                                 |       | 449        |       | 3,049                           |       | 3,498 |   | 1,023 |   | 1997 |   |
| Rialto I, CA            |       | 57,371              |       | (S)              |       | 899               |       | 4,118                           |       | 165                                                   |       | 899        |       | 4,283                           |       | 5,183 |   | 902 |   | 2006 |   |
| Rialto II, CA           |       | 99,783              |       |             |       | 277               |       | 3,098                           |       | 1,705                                                 |       | 672        |       | 4,408                           |       | 5,080 |   | 1,407 |   | 1997 |   |
| Riverside I, CA         |       | 28,310              |       | (T)              |       | 42                |       | 465                             |       | 620                                                   |       | 141        |       | 986                             |       | 1,127 |   | 281 |   | 1997 |   |
| Riverside II, CA        |       | 20,420              |       | (T)              |       | 42                |       | 423                             |       | 355                                                   |       | 114        |       | 706                             |       | 820 |   | 222 |   | 1997 |   |
| Riverside III, CA       |       | 46,809              |       | (T)              |       | 91                |       | 1,035                           |       | 1,043                                                 |       | 310        |       | 1,859                           |       | 2,169 |   | 511 |   | 1998 |   |
| Riverside IV, CA        |       | 67,220              |       | (S)              |       | 1,351             |       | 6,183                           |       | 223                                                   |       | 1,351      |       | 6,406                           |       | 7,756 |   | 1,345 |   | 2006 |   |
| Riverside V, CA         |       | 85,346              |       | (T)              |       | 1,170             |       | 5,359                           |       | 294                                                   |       | 1,170      |       | 5,653                           |       | 6,824 |   | 1,193 |   | 2006 |   |
| Riverside VI, CA        |       | 74,900              |       | (T)              |       | 1,040             |       | 4,119                           |       | (168                                                  | )          | 1,040      |       | 3,951                           |       | 4,991 |   | 500 |   | 2007 |   |
| Roseville, CA           |       | 60,094              |       | (C)              |       | 1,284             |       | 3,767                           |       | 299                                                   |       | 1,284      |       | 4,065                           |       | 5,349 |   | 1,006 |   | 2005 |   |
| Sacramento I, CA        |       | 51,114              |       | (C)              |       | 1,152             |       | 3,380                           |       | 226                                                   |       | 1,152      |       | 3,605                           |       | 4,758 |   | 906 |   | 2005 |   |
| Sacramento II, CA       |       | 62,130              |       | (C)              |       | 1,406             |       | 4,128                           |       | 141                                                   |       | 1,407      |       | 4,268                           |       | 5,675 |   | 1,075 |   | 2005 |   |
| San Bernardino I, CA    |       | 83,253              |       | (F)              |       | 152               |       | 1,704                           |       | 1,422                                                 |       | 450        |       | 2,827                           |       | 3,278 |   | 867 |   | 1997 |   |
| San Bernardino II, CA   |       | 31,070              |       | (A)              |       | 51                |       | 572                             |       | 1,051                                                 |       | 182        |       | 1,492                           |       | 1,674 |   | 396 |   | 1997 |   |
| San Bernardino III, CA  |       | 57,215              |       | (F)              |       | 152               |       | 1,695                           |       | 1,630                                                 |       | 444        |       | 3,033                           |       | 3,477 |   | 1,049 |   | 1997 |   |
| San Bernardino IV, CA   |       | 41,546              |       | (A)              |       | 112               |       | 1,251                           |       | 992                                                   |       | 306        |       | 2,050                           |       | 2,355 |   | 619 |   | 1997 |   |
| San Bernardino V, CA    |       | 35,671              |       | (A)              |       | 98                |       | 1,093                           |       | 773                                                   |       | 242        |       | 1,722                           |       | 1,964 |   | 531 |   | 1997 |   |
| San Bernardino VI, CA   |       | 83,507              |       | (E)              |       | 1,872             |       | 5,391                           |       | 51                                                    |       | 1,872      |       | 5,442                           |       | 7,314 |   | 1,400 |   | 2005 |   |
| San Bernardino VII, CA  |       | 56,795              |       | (S)              |       | 783               |       | 3,583                           |       | 319                                                   |       | 783        |       | 3,902                           |       | 4,685 |   | 818 |   | 2006 |   |
| San Bernardino VIII, CA |       | 103,860             |       | (S)              |       | 1,205             |       | 5,518                           |       | 243                                                   |       | 1,205      |       | 5,761                           |       | 6,966 |   | 1,663 |   | 2006 |   |

 

F-37

----

Table of Contents

 
| ** **              | ** ** | ** **           | ** ** | ** **       | ** ** | **Initial  Cost** | ** ** | ** **                      | ** ** | **Gross  Carrying Amount**

**at  December 31, 2009** | ** ** | ** ** | ** ** | ** **                      | ** ** |
|-------------------------|------------|----------------------|------------|------------------|------------|-------------------|------------|---------------------------------|------------|------------------------------------------------------------|------------|------------|------------|---------------------------------|------------|
| **Description**         | ** ** | **Square   Footage** | ** ** | **Encumbrances** | ** ** | **Land**          | ** ** | **Building  and  Improvements** | ** ** | **Costs  Subsequent to  Acquisition**                      | ** ** | **Land**   | ** ** | **Building  and  Improvements** | ** ** | **Total** | ** ** | **Accumulated  Depreciation (L)** | ** ** | **Year  Acquired /  Developed** | ** ** |
| San Bernardino IX, CA   |       | 78,839               |       | (S)              |       | 1,475             |       | 6,753                           |       | 291                                                        |       | 1,476      |       | 7,043                           |       | 8,518 |   | 1,482 |   | 2005 |   |
| San Bernardino X, CA    |       | 95,154               |       | (T)              |       | 1,691             |       | 7,741                           |       | 283                                                        |       | 1,692      |       | 8,023                           |       | 9,714 |   | 2,506 |   | 2005 |   |
| San Marcos, CA          |       | 37,430               |       | (G)              |       | 775               |       | 2,288                           |       | 109                                                        |       | 776        |       | 2,395                           |       | 3,171 |   | 598 |   | 2005 |   |
| Santa Ana, CA           |       | 64,571               |       | (T)              |       | 1,223             |       | 5,600                           |       | 222                                                        |       | 1,223      |       | 5,822                           |       | 7,045 |   | 1,219 |   | 2005 |   |
| South Sacramento, CA    |       | 51,740               |       | (C)              |       | 790               |       | 2,319                           |       | 234                                                        |       | 791        |       | 2,552                           |       | 3,343 |   | 634 |   | 2005 |   |
| Spring Valley, CA       |       | 55,045               |       | (S)              |       | 1,178             |       | 5,394                           |       | 344                                                        |       | 1,178      |       | 5,738                           |       | 6,917 |   | 1,194 |   | 2005 |   |
| Sun City, CA            |       | 38,335               |       | (T)              |       | 140               |       | 1,579                           |       | 892                                                        |       | 324        |       | 2,287                           |       | 2,611 |   | 692 |   | 1998 |   |
| Temecula I, CA          |       | 81,700               |       |             |       | 660               |       | 4,735                           |       | 811                                                        |       | 899        |       | 5,309                           |       | 6,206 |   | 1,317 |   | 1998 |   |
| Temecula II, CA         |       | 84,345               |       | (S)              |       | 3,080             |       | 5,839                           |       | -3                                                         |       | 3,080      |       | 5,835                           |       | 8,915 |   | 739 |   | 2007 |   |
| Thousand Palms, CA      |       | 75,445               |       | (T)              |       | 1,493             |       | 6,835                           |       | 350                                                        |       | 1,493      |       | 7,185                           |       | 8,678 |   | 1,532 |   | 2005 |   |
| Vista I, CA             |       | 74,605               |       | (D)              |       | 711               |       | 4,076                           |       | 1,595                                                      |       | 1,118      |       | 5,264                           |       | 6,382 |   | 1,148 |   | 2001 |   |
| Vista II, CA            |       | 147,421              |       | (T)              |       | 4,629             |       | 13,599                          |       | 131                                                        |       | 4,629      |       | 13,730                          |       | 18,359 |   | 3,205 |   | 2005 |   |
| Walnut, CA              |       | 50,708               |       | (T)              |       | 1,578             |       | 4,635                           |       | 181                                                        |       | 1,595      |       | 4,799                           |       | 6,394 |   | 1,131 |   | 2005 |   |
| West Sacramento, CA     |       | 39,715               |       | (O)              |       | 1,222             |       | 3,590                           |       | 114                                                        |       | 1,222      |       | 3,704                           |       | 4,926 |   | 863 |   | 2005 |   |
| Westminster, CA         |       | 68,148               |       | (G)              |       | 1,740             |       | 5,142                           |       | 229                                                        |       | 1,743      |       | 5,368                           |       | 7,111 |   | 1,354 |   | 2005 |   |
| Yucaipa, CA             |       | 77,560               |       | (F)              |       | 198               |       | 2,221                           |       | 1,588                                                      |       | 525        |       | 3,482                           |       | 4,007 |   | 1,099 |   | 1997 |   |
| Aurora, CO              |       | 75,627               |       | (C)              |       | 1,343             |       | 2,986                           |       | 239                                                        |       | 1,343      |       | 3,224                           |       | 4,567 |   | 833 |   | 2005 |   |
| Colorado Springs I, CO  |       | 47,975               |       | (T)              |       | 771               |       | 1,717                           |       | 272                                                        |       | 771        |       | 1,989                           |       | 2,760 |   | 485 |   | 2005 |   |
| Colorado Springs II, CO |       | 62,400               |       | 1,920            |       | 657               |       | 2,674                           |       | 185                                                        |       | 656        |       | 2,860                           |       | 3,516 |   | 587 |   | 2005 |   |
| Denver II, CO           |       | 59,200               |       | (T)              |       | 673               |       | 2,741                           |       | 164                                                        |       | 674        |       | 2,904                           |       | 3,578 |   | 673 |   | 2005 |   |
| Federal Heights, CO     |       | 54,770               |       | (C)              |       | 878               |       | 1,953                           |       | 172                                                        |       | 879        |       | 2,125                           |       | 3,003 |   | 545 |   | 2005 |   |
| Golden, CO              |       | 85,830               |       | (C)              |       | 1,683             |       | 3,744                           |       | 239                                                        |       | 1,684      |       | 3,983                           |       | 5,666 |   | 1,025 |   | 2005 |   |
| Littleton I , CO        |       | 53,490               |       | (C)              |       | 1,268             |       | 2,820                           |       | 151                                                        |       | 1,268      |       | 2,970                           |       | 4,239 |   | 761 |   | 2005 |   |
| Northglenn, CO          |       | 52,102               |       | (C)              |       | 862               |       | 1,917                           |       | 137                                                        |       | 862        |       | 2,053                           |       | 2,916 |   | 538 |   | 2005 |   |
| Bloomfield, CT          |       | 48,700               |       | (T)              |       | 78                |       | 880                             |       | 2,176                                                      |       | 360        |       | 2,774                           |       | 3,134 |   | 822 |   | 1997 |   |
| Branford, CT            |       | 50,679               |       |             |       | 217               |       | 2,433                           |       | 1,198                                                      |       | 504        |       | 3,343                           |       | 3,848 |   | 1,225 |   | 1995 |   |
| Bristol, CT             |       | 48,050               |       | (E)              |       | 1,819             |       | 3,161                           |       | 87                                                         |       | 1,819      |       | 3,248                           |       | 5,067 |   | 915 |   | 2005 |   |
| East Windsor, CT        |       | 45,900               |       | (A)              |       | 744               |       | 1,294                           |       | 327                                                        |       | 744        |       | 1,621                           |       | 2,366 |   | 437 |   | 2005 |   |
| Enfield, CT             |       | 52,875               |       | (D)              |       | 424               |       | 2,424                           |       | -150                                                       |       | 473        |       | 2,225                           |       | 2,698 |   | 551 |   | 2001 |   |
| Gales Ferry, CT         |       | 54,130               |       | (T)              |       | 240               |       | 2,697                           |       | 1,028                                                      |       | 489        |       | 3,477                           |       | 3,965 |   | 1,101 |   | 1995 |   |
| Manchester I, CT (6)    |       | 47,125               |       | (D)              |       | 540               |       | 3,096                           |       | -317                                                       |       | 563        |       | 2,756                           |       | 3,319 |   | 640 |   | 2002 |   |
| Manchester II, CT       |       | 52,725               |       | (E)              |       | 996               |       | 1,730                           |       | 137                                                        |       | 996        |       | 1,867                           |       | 2,863 |   | 515 |   | 2005 |   |
| Milford, CT             |       | 44,885               |       | (T)              |       | 87                |       | 1,050                           |       | 1,059                                                      |       | 274        |       | 1,922                           |       | 2,196 |   | 664 |   | 1994 |   |
| Monroe, CT              |       | 58,500               |       | (E)              |       | 2,004             |       | 3,483                           |       | 548                                                        |       | 2,004      |       | 4,031                           |       | 6,035 |   | 1,113 |   | 2005 |   |
| Mystic, CT              |       | 50,725               |       | (T)              |       | 136               |       | 1,645                           |       | 1,733                                                      |       | 410        |       | 3,104                           |       | 3,514 |   | 1,074 |   | 1994 |   |
| Newington I, CT         |       | 42,520               |       | (E)              |       | 1,059             |       | 1,840                           |       | 80                                                         |       | 1,059      |       | 1,920                           |       | 2,978 |   | 541 |   | 2005 |   |
| Newington II, CT        |       | 36,140               |       | (E)              |       | 911               |       | 1,584                           |       | 155                                                        |       | 911        |       | 1,739                           |       | 2,650 |   | 479 |   | 2005 |   |
| Old Saybrook I, CT      |       | 87,625               |       | (E)              |       | 3,092             |       | 5,374                           |       | 304                                                        |       | 3,092      |       | 5,678                           |       | 8,770 |   | 1,588 |   | 2005 |   |
| Old Saybrook II, CT     |       | 26,425               |       | (E)              |       | 1,135             |       | 1,973                           |       | 205                                                        |       | 1,135      |       | 2,178                           |       | 3,313 |   | 597 |   | 2005 |   |
| South Windsor, CT       |       | 72,125               |       |             |       | 90                |       | 1,127                           |       | 1,121                                                      |       | 272        |       | 2,065                           |       | 2,338 |   | 678 |   | 1994 |   |
| Stamford, CT            |       | 28,957               |       | (E)              |       | 1,941             |       | 3,374                           |       | 76                                                         |       | 1,941      |       | 3,450                           |       | 5,391 |   | 980 |   | 2005 |   |
| Washington, DC          |       | 62,695               |       | (O)              |       | 871               |       | 12,759                          |       | 102                                                        |       | 894        |       | 11,987                          |       | 12,881 |   | 1,247 |   | 2008 |   |
| Boca Raton, FL          |       | 37,958               |       | (F)              |       | 529               |       | 3,054                           |       | 895                                                        |       | 813        |       | 3,665                           |       | 4,478 |   | 838 |   | 2001 |   |
| Boynton Beach I, FL     |       | 61,977               |       | (E)              |       | 667               |       | 3,796                           |       | 906                                                        |       | 958        |       | 4,411                           |       | 5,369 |   | 1,029 |   | 2001 |   |
| Boynton Beach II, FL    |       | 61,777               |       | (A)              |       | 1,030             |       | 2,968                           |       | 218                                                        |       | 1,030      |       | 3,186                           |       | 4,217 |   | 785 |   | 2005 |   |
| Bradenton I, FL         |       | 68,391               |       | (T)              |       | 1,180             |       | 3,324                           |       | 146                                                        |       | 1,180      |       | 3,470                           |       | 4,650 |   | 914 |   | 2005 |   |
| Bradenton II, FL        |       | 87,810               |       | (T)              |       | 1,931             |       | 5,561                           |       | 322                                                        |       | 1,931      |       | 5,883                           |       | 7,814 |   | 1,539 |   | 2005 |   |
| Cape Coral, FL          |       | 76,592               |       | (F)              |       | 472               |       | 2,769                           |       | 1,992                                                      |       | 830        |       | 4,403                           |       | 5,233 |   | 1,239 |   | 2005 |   |
| Dania Beach, FL (6)     |       | 181,513              |       | (T)              |       | 3,584             |       | 10,324                          |       | 838                                                        |       | 3,584      |       | 11,163                          |       | 14,746 |   | 2,870 |   | 2005 |   |
| Dania, FL               |       | 58,270               |       | (T)              |       | 205               |       | 2,068                           |       | 1,373                                                      |       | 481        |       | 3,165                           |       | 3,646 |   | 1,091 |   | 1994 |   |
| Davie, FL               |       | 81,135               |       | (D)              |       | 1,268             |       | 7,183                           |       | -1,089                                                     |       | 1,373      |       | 5,989                           |       | 7,362 |   | 1,124 |   | 2005 |   |
| Deerfield Beach, FL     |       | 57,280               |       | (A)              |       | 946               |       | 2,999                           |       | 1,875                                                      |       | 1,311      |       | 4,509                           |       | 5,820 |   | 1,120 |   | 1998 |   |
| Delray Beach, FL        |       | 67,821               |       | (A)              |       | 798               |       | 4,539                           |       | -232                                                       |       | 883        |       | 4,222                           |       | 5,105 |   | 1,044 |   | 2001 |   |
| Fernandina Beach, FL    |       | 110,785              |       | (T)              |       | 189               |       | 2,111                           |       | 4,875                                                      |       | 523        |       | 6,652                           |       | 7,175 |   | 1,729 |   | 1996 |   |
| Ft. Lauderdale, FL      |       | 70,093               |       | (D)              |       | 937               |       | 3,646                           |       | 2,177                                                      |       | 1,384      |       | 5,376                           |       | 6,760 |   | 1,340 |   | 1999 |   |
| Ft. Myers, FL           |       | 67,642               |       | (A)              |       | 303               |       | 3,329                           |       | 156                                                        |       | 328        |       | 3,459                           |       | 3,788 |   | 1,017 |   | 1998 |   |
| Jacksonville I, FL      |       | 80,586               |       | (T)              |       | 1,862             |       | 5,362                           |       | 40                                                         |       | 1,862      |       | 5,401                           |       | 7,263 |   | 1,163 |   | 2005 |   |
| Jacksonville II, FL     |       | 65,070               |       |             |       | 950               |       | 7,004                           |       | -631                                                       |       | 950        |       | 6,373                           |       | 7,323 |   | 807 |   | 2007 |   |
| Jacksonville III, FL    |       | 65,595               |       | (T)              |       | 860               |       | 7,409                           |       | 258                                                        |       | 1,670      |       | 6,857                           |       | 8,527 |   | 867 |   | 2007 |   |
| Jacksonville IV, FL     |       | 78,370               |       | (T)              |       | 870               |       | 8,049                           |       | 0                                                          |       | 870        |       | 8,049                           |       | 8,919 |   | 1,020 |   | 2007 |   |
| Jacksonville V, FL      |       | 82,160               |       | (T)              |       | 1,220             |       | 8,210                           |       | -463                                                       |       | 1,220      |       | 7,747                           |       | 8,967 |   | 977 |   | 2007 |   |
| Lake Worth, FL          |       | 161,808              |       | (F)              |       | 183               |       | 6,597                           |       | 3,802                                                      |       | 183        |       | 10,399                          |       | 10,582 |   | 3,403 |   | 2005 |   |
| Lakeland I, FL          |       | 49,095               |       | (A)              |       | 81                |       | 896                             |       | 799                                                        |       | 256        |       | 1,520                           |       | 1,776 |   | 556 |   | 1994 |   |
| Kendall, FL             |       | 75,395               |       | (O)              |       | 2,350             |       | 8,106                           |       | -711                                                       |       | 2,350      |       | 7,395                           |       | 9,745 |   | 934 |   | 2007 |   |
| Lutz I, FL              |       | 66,595               |       | (T)              |       | 901               |       | 2,478                           |       | 104                                                        |       | 901        |       | 2,582                           |       | 3,483 |   | 688 |   | 2005 |   |
| Lutz II, FL             |       | 69,232               |       |             |       | 992               |       | 2,868                           |       | 227                                                        |       | 992        |       | 3,095                           |       | 4,087 |   | 815 |   | 2005 |   |
| Margate I, FL           |       | 54,505               |       | (A)              |       | 161               |       | 1,763                           |       | 1,769                                                      |       | 399        |       | 3,294                           |       | 3,693 |   | 1,083 |   | 1994 |   |
| Margate II, FL          |       | 65,186               |       | (T)              |       | 132               |       | 1,473                           |       | 1,701                                                      |       | 383        |       | 2,924                           |       | 3,306 |   | 918 |   | 1996 |   |
| Merrit Island, FL       |       | 50,417               |       | (A)              |       | 716               |       | 2,983                           |       | -113                                                       |       | 796        |       | 2,790                           |       | 3,586 |   | 577 |   | 2005 |   |
| Miami I, FL             |       | 46,825               |       | (D)              |       | 179               |       | 1,999                           |       | 1,459                                                      |       | 484        |       | 3,153                           |       | 3,637 |   | 953 |   | 2005 |   |
| Miami II, FL            |       | 67,060               |       | (E)              |       | 253               |       | 2,544                           |       | 1,398                                                      |       | 561        |       | 3,634                           |       | 4,195 |   | 1,297 |   | 1994 |   |
| Miami IV, FL            |       | 150,510              |       | (T)              |       | 4,577             |       | 13,185                          |       | 459                                                        |       | 4,577      |       | 13,643                          |       | 18,220 |   | 2,962 |   | 2005 |   |
| Naples I, FL            |       | 48,150               |       | 1,121            |       | 90                |       | 1,010                           |       | 2,205                                                      |       | 270        |       | 3,035                           |       | 3,305 |   | 901 |   | 1996 |   |
| Naples II, FL           |       | 65,850               |       | (E)              |       | 148               |       | 1,652                           |       | 4,200                                                      |       | 558        |       | 5,443                           |       | 6,000 |   | 1,599 |   | 1997 |   |
| Naples III, FL          |       | 80,675               |       | (A)              |       | 139               |       | 1,561                           |       | 3,375                                                      |       | 598        |       | 4,477                           |       | 5,075 |   | 1,440 |   | 1997 |   |

 

F-38

----

Tableof Contents

 
| ** **              | ** ** | ** **          | ** ** | ** **       | ** ** | **Initial  Cost** | ** ** | ** **                      | ** ** | **Gross  Carrying Amount**

**at  December 31, 2009** | ** ** | ** ** | ** ** | ** **                       | ** ** |
|-------------------------|------------|---------------------|------------|------------------|------------|-------------------|------------|---------------------------------|------------|------------------------------------------------------------|------------|------------|------------|----------------------------------|------------|
| **Description**         | ** ** | **Square  Footage** | ** ** | **Encumbrances** | ** ** | **Land**          | ** ** | **Building  and  Improvements** | ** ** | **Costs   Subsequent to  Acquisition**                | ** ** | **Land**   | ** ** | **Building  and   Improvements** | ** ** | **Total** | ** ** | **Accumulated    Depreciation (L)** | ** ** | **Year  Acquired /  Developed** | ** ** |
| Naples IV, FL           |       | 40,700              |       | (T)              |       | 262               |       | 2,980                           |       | 461                                                        |       | 407        |       | 3,296                            |       | 3,703 |   | 1,106 |   | 1998 |   |
| Ocoee, FL               |       | 76,130              |       | 3,263            |       | 1,286             |       | 3,705                           |       | 95                                                         |       | 1,286      |       | 3,800                            |       | 5,087 |   | 926 |   | 2005 |   |
| Orange City, FL         |       | 59,586              |       | (T)              |       | 1,191             |       | 3,209                           |       | 85                                                         |       | 1,191      |       | 3,294                            |       | 4,485 |   | 862 |   | 2005 |   |
| Orlando I, FL (6)       |       | 52,170              |       | (T)              |       | 187               |       | 2,088                           |       | 520                                                        |       | 240        |       | 2,555                            |       | 2,795 |   | 1,064 |   | 1997 |   |
| Orlando II, FL          |       | 63,084              |       | (E)              |       | 1,589             |       | 4,576                           |       | 75                                                         |       | 1,589      |       | 4,651                            |       | 6,239 |   | 1,137 |   | 2005 |   |
| Orlando III, FL         |       | 104,140             |       | (T)              |       | 1,209             |       | 7,768                           |       | 220                                                        |       | 1,209      |       | 7,988                            |       | 9,197 |   | 1,584 |   | 2005 |   |
| Oviedo, FL              |       | 49,251              |       | (T)              |       | 440               |       | 2,824                           |       | 292                                                        |       | 440        |       | 3,116                            |       | 3,556 |   | 636 |   | 2005 |   |
| Pembroke Pines, FL      |       | 67,321              |       | (D)              |       | 337               |       | 3,772                           |       | 2,621                                                      |       | 953        |       | 5,777                            |       | 6,730 |   | 1,758 |   | 1997 |   |
| Royal Palm Beach I, FL  |       | 98,961              |       | (F)              |       | 205               |       | 2,148                           |       | 2,630                                                      |       | 741        |       | 4,242                            |       | 4,983 |   | 1,557 |   | 1994 |   |
| Royal Palm Beach II, FL |       | 81,415              |       | (T)              |       | 1,640             |       | 8,607                           |       | (462                                                       | )          | 1,640      |       | 8,146                            |       | 9,786 |   | 1,028 |   | 2007 |   |
| Sanford, FL             |       | 61,810              |       | (T)              |       | 453               |       | 2,911                           |       | 121                                                        |       | 453        |       | 3,032                            |       | 3,486 |   | 613 |   | 2005 |   |
| Sarasota, FL            |       | 71,102              |       | (A)              |       | 333               |       | 3,656                           |       | 661                                                        |       | 529        |       | 4,120                            |       | 4,650 |   | 1,186 |   | 1998 |   |
| St. Augustine, FL       |       | 59,725              |       | (T)              |       | 135               |       | 1,515                           |       | 3,133                                                      |       | 383        |       | 4,400                            |       | 4,783 |   | 1,377 |   | 1996 |   |
| Stuart, FL              |       | 86,883              |       | (E)              |       | 324               |       | 3,625                           |       | 2,673                                                      |       | 685        |       | 5,937                            |       | 6,622 |   | 1,803 |   | 1997 |   |
| SW Ranches, FL          |       | 64,955              |       | 3,991            |       | 1,390             |       | 7,598                           |       | (859                                                       | )          | 1,390      |       | 6,738                            |       | 8,128 |   | 853 |   | 2007 |   |
| Tampa II, FL            |       | 83,763              |       |             |       | 2,670             |       | 6,249                           |       | (423                                                       | )          | 2,670      |       | 5,826                            |       | 8,496 |   | 742 |   | 2007 |   |
| West Palm Beach I, FL   |       | 68,063              |       | (T)              |       | 719               |       | 3,420                           |       | 712                                                        |       | 835        |       | 4,016                            |       | 4,851 |   | 978 |   | 2001 |   |
| West Palm Beach II, FL  |       | 94,503              |       |             |       | 2,129             |       | 8,671                           |       | 261                                                        |       | 2,129      |       | 8,932                            |       | 11,061 |   | 2,695 |   | 2005 |   |
| Alpharetta, GA          |       | 90,485              |       | (F)              |       | 806               |       | 4,720                           |       | (409                                                       | )          | 967        |       | 4,150                            |       | 5,117 |   | 900 |   | 2001 |   |
| Austell , GA            |       | 83,525              |       | 2,244            |       | 1,635             |       | 4,711                           |       | 153                                                        |       | 1,643      |       | 4,856                            |       | 6,499 |   | 867 |   | 2005 |   |
| Decatur, GA             |       | 148,320             |       | (T)              |       | 616               |       | 6,776                           |       | 33                                                         |       | 616        |       | 6,809                            |       | 7,425 |   | 2,313 |   | 1998 |   |
| Norcross, GA            |       | 85,140              |       | (D)              |       | 514               |       | 2,930                           |       | 158                                                        |       | 632        |       | 2,969                            |       | 3,602 |   | 660 |   | 2001 |   |
| Peachtree City, GA      |       | 49,845              |       | (T)              |       | 435               |       | 2,532                           |       | 59                                                         |       | 529        |       | 2,497                            |       | 3,026 |   | 565 |   | 2001 |   |
| Smyrna, GA              |       | 56,970              |       | (F)              |       | 750               |       | 4,271                           |       | (799                                                       | )          | 750        |       | 3,472                            |       | 4,222 |   | 769 |   | 2001 |   |
| Snellville, GA          |       | 80,100              |       | (T)              |       | 1,660             |       | 4,781                           |       | 131                                                        |       | 1,660      |       | 4,912                            |       | 6,571 |   | 770 |   | 2007 |   |
| Suwanee I, GA           |       | 85,190              |       | (T)              |       | 1,737             |       | 5,010                           |       | 139                                                        |       | 1,737      |       | 5,149                            |       | 6,885 |   | 804 |   | 2007 |   |
| Suwanee II, GA          |       | 79,640              |       | (T)              |       | 800               |       | 6,942                           |       | (322                                                       | )          | 800        |       | 6,620                            |       | 7,420 |   | 838 |   | 2007 |   |
| Addison, IL             |       | 31,325              |       | (T)              |       | 428               |       | 3,531                           |       | 206                                                        |       | 428        |       | 3,737                            |       | 4,165 |   | 967 |   | 2005 |   |
| Aurora, IL              |       | 74,060              |       | (T)              |       | 644               |       | 3,652                           |       | 46                                                         |       | 644        |       | 3,698                            |       | 4,342 |   | 983 |   | 2005 |   |
| Bartlett, IL            |       | 51,425              |       | (T)              |       | 931               |       | 2,493                           |       | 133                                                        |       | 931        |       | 2,626                            |       | 3,557 |   | 683 |   | 2005 |   |
| Hanover, IL             |       | 41,178              |       | (E)              |       | 1,126             |       | 2,197                           |       | 145                                                        |       | 1,126      |       | 2,342                            |       | 3,468 |   | 609 |   | 2005 |   |
| Bellwood, IL            |       | 86,525              |       | (E)              |       | 1,012             |       | 5,768                           |       | (611                                                       | )          | 1,012      |       | 5,157                            |       | 6,169 |   | 1,199 |   | 2001 |   |
| Des Plaines, IL (6)     |       | 74,400              |       | 3,486            |       | 1,564             |       | 4,327                           |       | 252                                                        |       | 1,564      |       | 4,579                            |       | 6,143 |   | 1,191 |   | 2005 |   |
| Elk Grove Village, IL   |       | 64,179              |       | (T)              |       | 1,446             |       | 3,535                           |       | 224                                                        |       | 1,446      |       | 3,759                            |       | 5,205 |   | 1,005 |   | 2005 |   |
| Glenview, IL            |       | 100,115             |       | (T)              |       | 3,740             |       | 10,367                          |       | 129                                                        |       | 3,740      |       | 10,496                           |       | 14,236 |   | 2,764 |   | 2005 |   |
| Gurnee, IL              |       | 80,275              |       | (T)              |       | 1,521             |       | 5,440                           |       | 233                                                        |       | 1,521      |       | 5,673                            |       | 7,194 |   | 1,491 |   | 2005 |   |
| Harvey, IL              |       | 60,090              |       | (T)              |       | 869               |       | 3,635                           |       | 119                                                        |       | 869        |       | 3,754                            |       | 4,623 |   | 981 |   | 2005 |   |
| Joliet, IL              |       | 74,350              |       | (T)              |       | 547               |       | 4,704                           |       | 124                                                        |       | 547        |       | 4,828                            |       | 5,375 |   | 1,268 |   | 2005 |   |
| Kildeer, IL             |       | 46,475              |       |             |       | 2,102             |       | 2,187                           |       | 108                                                        |       | 2,102      |       | 2,295                            |       | 4,397 |   | 599 |   | 2005 |   |
| Lombard, IL             |       | 57,938              |       | (T)              |       | 1,305             |       | 3,938                           |       | 597                                                        |       | 1,305      |       | 4,535                            |       | 5,840 |   | 1,154 |   | 2005 |   |
| Mount Prospect, IL      |       | 65,000              |       |             |       | 1,701             |       | 3,114                           |       | 187                                                        |       | 1,701      |       | 3,301                            |       | 5,002 |   | 850 |   | 2005 |   |
| Mundelein, IL           |       | 44,700              |       | (T)              |       | 1,498             |       | 2,782                           |       | 136                                                        |       | 1,498      |       | 2,918                            |       | 4,416 |   | 768 |   | 2005 |   |
| North Chicago, IL       |       | 53,300              |       | (T)              |       | 1,073             |       | 3,006                           |       | 217                                                        |       | 1,073      |       | 3,223                            |       | 4,296 |   | 844 |   | 2005 |   |
| Plainfield I, IL        |       | 53,800              |       | (T)              |       | 1,770             |       | 1,715                           |       | 183                                                        |       | 1,770      |       | 1,898                            |       | 3,668 |   | 506 |   | 2005 |   |
| Plainfield II, IL       |       | 52,100              |       | (T)              |       | 694               |       | 2,000                           |       | 116                                                        |       | 694        |       | 2,116                            |       | 2,811 |   | 532 |   | 2005 |   |
| Schaumburg, IL          |       | 31,160              |       | (T)              |       | 538               |       | 645                             |       | 124                                                        |       | 538        |       | 769                              |       | 1,307 |   | 214 |   | 2005 |   |
| Streamwood, IL          |       | 64,305              |       | (A)              |       | 1,447             |       | 1,662                           |       | 235                                                        |       | 1,447      |       | 1,897                            |       | 3,344 |   | 506 |   | 2005 |   |
| Warrensville, IL        |       | 48,796              |       | (A)              |       | 1,066             |       | 3,072                           |       | 148                                                        |       | 1,066      |       | 3,220                            |       | 4,286 |   | 772 |   | 2005 |   |
| Waukegan, IL            |       | 79,750              |       | (T)              |       | 1,198             |       | 4,363                           |       | 229                                                        |       | 1,198      |       | 4,592                            |       | 5,790 |   | 1,198 |   | 2005 |   |
| West Chicago, IL        |       | 48,175              |       | (E)              |       | 1,071             |       | 2,249                           |       | 140                                                        |       | 1,071      |       | 2,389                            |       | 3,460 |   | 630 |   | 2005 |   |
| Westmont, IL            |       | 53,700              |       | (T)              |       | 1,155             |       | 3,873                           |       | 78                                                         |       | 1,155      |       | 3,951                            |       | 5,106 |   | 1,042 |   | 2005 |   |
| Wheeling I, IL          |       | 54,210              |       | (A)              |       | 857               |       | 3,213                           |       | 191                                                        |       | 857        |       | 3,404                            |       | 4,261 |   | 898 |   | 2005 |   |
| Wheeling II, IL         |       | 67,825              |       |             |       | 793               |       | 3,816                           |       | 202                                                        |       | 793        |       | 4,018                            |       | 4,811 |   | 1,055 |   | 2005 |   |
| Woodridge, IL           |       | 50,667              |       | 2,380            |       | 943               |       | 3,397                           |       | 177                                                        |       | 943        |       | 3,574                            |       | 4,517 |   | 925 |   | 2005 |   |
| Indianapolis I, IN      |       | 43,600              |       | (T)              |       | 1,871             |       | 1,230                           |       | 143                                                        |       | 1,871      |       | 1,373                            |       | 3,244 |   | 368 |   | 2005 |   |
| Indianapolis II, IN     |       | 44,900              |       | (T)              |       | 669               |       | 2,434                           |       | 134                                                        |       | 669        |       | 2,568                            |       | 3,237 |   | 692 |   | 2005 |   |
| Indianapolis III, IN    |       | 60,850              |       | (T)              |       | 1,229             |       | 2,834                           |       | 105                                                        |       | 1,229      |       | 2,939                            |       | 4,168 |   | 771 |   | 2005 |   |
| Indianapolis IV, IN     |       | 62,105              |       | (T)              |       | 641               |       | 3,154                           |       | 11                                                         |       | 552        |       | 3,253                            |       | 3,806 |   | 865 |   | 2005 |   |
| Indianapolis V, IN      |       | 74,825              |       | (T)              |       | 2,138             |       | 3,633                           |       | 152                                                        |       | 2,138      |       | 3,785                            |       | 5,923 |   | 996 |   | 2005 |   |
| Indianapolis VI, IN     |       | 73,003              |       | (A)              |       | 406               |       | 3,496                           |       | 186                                                        |       | 406        |       | 3,682                            |       | 4,088 |   | 963 |   | 2005 |   |
| Indianapolis VII, IN    |       | 91,727              |       | (T)              |       | 908               |       | 4,755                           |       | 450                                                        |       | 908        |       | 5,205                            |       | 6,113 |   | 1,345 |   | 2005 |   |
| Indianapolis VIII, IN   |       | 80,000              |       | (T)              |       | 887               |       | 3,548                           |       | 184                                                        |       | 887        |       | 3,732                            |       | 4,619 |   | 977 |   | 2005 |   |
| Indianapolis IX, IN     |       | 61,732              |       | (T)              |       | 1,133             |       | 4,103                           |       | 163                                                        |       | 1,133      |       | 4,266                            |       | 5,399 |   | 1,120 |   | 2005 |   |
| Baton Rouge I, LA       |       | 35,450              |       | (T)              |       | 112               |       | 1,248                           |       | 66                                                         |       | 139        |       | 1,287                            |       | 1,426 |   | 421 |   | 1997 |   |
| Baton Rouge II, LA      |       | 80,277              |       | (A)              |       | 118               |       | 1,181                           |       | 1,626                                                      |       | 331        |       | 2,594                            |       | 2,925 |   | 679 |   | 1997 |   |
| Slidell, LA             |       | 79,540              |       | (D)              |       | 188               |       | 3,175                           |       | 1,017                                                      |       | 802        |       | 3,578                            |       | 4,380 |   | 766 |   | 2001 |   |
| Boston, MA              |       | 60,695              |       | (F)              |       | 1,516             |       | 8,628                           |       | (1,501                                                     | )          | 1,516      |       | 7,127                            |       | 8,643 |   | 1,553 |   | 2002 |   |
| Leominster, MA          |       | 53,823              |       | (D)              |       | 90                |       | 1,519                           |       | 2,253                                                      |       | 338        |       | 3,524                            |       | 3,862 |   | 983 |   | 1998 |   |
| Medford, MA             |       | 58,895              |       | 3,250            |       | 1,330             |       | 7,165                           |       | (510                                                       | )          | 1,330      |       | 6,655                            |       | 7,985 |   | 841 |   | 2007 |   |
| Baltimore, MD           |       | 93,625              |       | (E)              |       | 1,050             |       | 5,997                           |       | (229                                                       | )          | 1,173      |       | 5,645                            |       | 6,818 |   | 1,384 |   | 2001 |   |
| California, MD          |       | 77,840              |       | (T)              |       | 1,486             |       | 4,280                           |       | 103                                                        |       | 1,486      |       | 4,383                            |       | 5,869 |   | 1,149 |   | 2005 |   |
| Gaithersburg, MD        |       | 86,970              |       | 6,065            |       | 3,124             |       | 9,000                           |       | 162                                                        |       | 3,124      |       | 9,162                            |       | 12,286 |   | 2,357 |   | 2005 |   |
| Laurel, MD              |       | 162,097             |       | (F)              |       | 1,409             |       | 8,035                           |       | 2,013                                                      |       | 1,928      |       | 9,529                            |       | 11,457 |   | 2,114 |   | 2001 |   |
| Temple Hills, MD        |       | 97,250              |       | (D)              |       | 1,541             |       | 8,788                           |       | 723                                                        |       | 1,800      |       | 9,252                            |       | 11,052 |   | 2,074 |   | 2001 |   |
| Grand Rapids, MI        |       | 87,381              |       | (A)              |       | 185               |       | 1,821                           |       | 1,145                                                      |       | 325        |       | 2,827                            |       | 3,151 |   | 960 |   | 1996 |   |

 

F-39

----

Tableof Contents

 
| ** **                 | ** ** | ** **              | ** ** | ** **       | ** ** | ** **        | ** ** | ** **        | ** ** | **Costs**                      | ** ** | **Gross  Carrying Amount** | ** ** | ** **        | ** ** | ** ** | ** ** |
|----------------------------|------------|-------------------------|------------|------------------|------------|-------------------|------------|-------------------|------------|--------------------------------|------------|----------------------------|------------|-------------------|------------|------------|------------|
| ** **                 | ** ** | ** **              | ** ** | ** **       | ** ** | **Initial  Cost** | ** ** | **Subsequent**    | ** ** | **at  December 31, 2009** | ** ** | ** **                 | ** ** | ** **        | ** ** |
| ** **                 | ** ** | ** **              | ** ** | ** **       | ** ** | ** **        | ** ** | **Building  and** | ** ** | **to**                         | ** ** | ** **                 | ** ** | **Building  and** | ** ** | ** ** | ** ** | **Accumulated** | ** ** | **Year  Acquired /** | ** ** |
| **Description**            | ** ** | **Square Footage** | ** ** | **Encumbrances** | ** ** | **Land**          | ** ** | **Improvements**  | ** ** | **Acquisition**                | ** ** | **Land**                   | ** ** | **Improvements**  | ** ** | **Total**  | ** ** | **Depreciation (L)** | ** ** | **Developed** | ** ** |
| Portage, MI (6)            |       | 50,280                  |       | (T)              |       | 104               |       | 1,160             |       | 637                            |       | 237                        |       | 1,664             |       | 1,901      |       | 550 |   | 1996 |   |
| Romulus, MI                |       | 42,050                  |       | (A)              |       | 308               |       | 1,743             |       | 283                            |       | 418                        |       | 1,916             |       | 2,334      |       | 388 |   | 2005 |   |
| Wyoming, MI                |       | 91,158                  |       | (A)              |       | 191               |       | 2,135             |       | 806                            |       | 354                        |       | 2,778             |       | 3,132      |       | 948 |   | 1996 |   |
| Gulfport, MS               |       | 61,251                  |       | (E)              |       | 172               |       | 1,928             |       | 905                            |       | 338                        |       | 2,667             |       | 3,005      |       | 896 |   | 1997 |   |
| Belmont, NC                |       | 81,048                  |       | (T)              |       | 385               |       | 2,196             |       | 187                            |       | 451                        |       | 2,317             |       | 2,768      |       | 587 |   | 2001 |   |
| Burlington I, NC           |       | 109,396                 |       | (A)              |       | 498               |       | 2,837             |       | (130                           | )          | 498                        |       | 2,707             |       | 3,205      |       | 654 |   | 2001 |   |
| Burlington II, NC          |       | 42,205                  |       | (T)              |       | 320               |       | 1,829             |       | (66                            | )          | 340                        |       | 1,742             |       | 2,083      |       | 418 |   | 2001 |   |
| Cary, NC                   |       | 111,772                 |       | (A)              |       | 543               |       | 3,097             |       | 183                            |       | 543                        |       | 3,281             |       | 3,823      |       | 875 |   | 2001 |   |
| Charlotte, NC              |       | 69,000                  |       | (F)              |       | 782               |       | 4,429             |       | 555                            |       | 1,068                      |       | 4,699             |       | 5,766      |       | 937 |   | 2005 |   |
| Fayetteville I, NC         |       | 41,400                  |       | (T)              |       | 156               |       | 1,747             |       | 757                            |       | 301                        |       | 2,359             |       | 2,660      |       | 887 |   | 1997 |   |
| Fayetteville II, NC        |       | 54,225                  |       | (F)              |       | 213               |       | 2,301             |       | 698                            |       | 399                        |       | 2,813             |       | 3,212      |       | 941 |   | 1997 |   |
| Raleigh, NC                |       | 48,675                  |       | (T)              |       | 209               |       | 2,398             |       | 205                            |       | 296                        |       | 2,516             |       | 2,812      |       | 837 |   | 1998 |   |
| Brick, NJ                  |       | 51,740                  |       | (T)              |       | 234               |       | 2,762             |       | 1,274                          |       | 485                        |       | 3,785             |       | 4,270      |       | 1,390 |   | 1994 |   |
| Clifton, NJ                |       | 105,550                 |       | (A)              |       | 4,346             |       | 12,520            |       | 140                            |       | 4,346                      |       | 12,660            |       | 17,007     |       | 2,934 |   | 2005 |   |
| Cranford, NJ               |       | 91,250                  |       | (M)              |       | 290               |       | 3,493             |       | 2,114                          |       | 779                        |       | 5,117             |       | 5,897      |       | 1,764 |   | 1994 |   |
| East Hanover, NJ           |       | 107,579                 |       |             |       | 504               |       | 5,763             |       | 3,887                          |       | 1,315                      |       | 8,839             |       | 10,154     |       | 3,005 |   | 1994 |   |
| Elizabeth, NJ              |       | 38,910                  |       |             |       | 751               |       | 2,164             |       | 279                            |       | 751                        |       | 2,443             |       | 3,194      |       | 561 |   | 2005 |   |
| Fairview, NJ               |       | 27,925                  |       | (M)              |       | 246               |       | 2,759             |       | 255                            |       | 246                        |       | 3,013             |       | 3,260      |       | 1,125 |   | 1997 |   |
| Hamilton, NJ               |       | 70,550                  |       | (T)              |       | 1,885             |       | 5,430             |       | 231                            |       | 1,893                      |       | 5,653             |       | 7,546      |       | 1,001 |   | 2005 |   |
| Hoboken, NJ                |       | 34,180                  |       | (M)              |       | 1,370             |       | 3,947             |       | 512                            |       | 1,370                      |       | 4,459             |       | 5,829      |       | 1,026 |   | 2005 |   |
| Linden, NJ                 |       | 100,325                 |       | (T)              |       | 517               |       | 6,008             |       | 1,943                          |       | 1,077                      |       | 7,391             |       | 8,468      |       | 2,481 |   | 1994 |   |
| Morris Township, NJ (5)    |       | 71,776                  |       | (D)              |       | 500               |       | 5,602             |       | 2,491                          |       | 1,072                      |       | 7,520             |       | 8,593      |       | 2,533 |   | 1997 |   |
| Parsippany, NJ             |       | 66,325                  |       | (M)              |       | 475               |       | 5,322             |       | 1,890                          |       | 844                        |       | 6,843             |       | 7,687      |       | 2,303 |   | 1997 |   |
| Randolph, NJ               |       | 52,565                  |       | (D)              |       | 855               |       | 4,872             |       | 244                            |       | 1,108                      |       | 4,863             |       | 5,971      |       | 1,077 |   | 2002 |   |
| Sewell, NJ                 |       | 57,830                  |       | (F)              |       | 484               |       | 2,766             |       | 585                            |       | 706                        |       | 3,128             |       | 3,835      |       | 732 |   | 2001 |   |
| Albuquerque I, NM          |       | 65,852                  |       | (C)              |       | 1,039             |       | 3,395             |       | 199                            |       | 1,039                      |       | 3,594             |       | 4,633      |       | 954 |   | 2005 |   |
| Albuquerque II, NM         |       | 58,798                  |       | (C)              |       | 1,163             |       | 3,801             |       | 184                            |       | 1,163                      |       | 3,985             |       | 5,148      |       | 1,043 |   | 2005 |   |
| Albuquerque IV, NM         |       | 57,536                  |       | (C)              |       | 664               |       | 2,171             |       | 205                            |       | 664                        |       | 2,376             |       | 3,040      |       | 625 |   | 2005 |   |
| Carlsbad, NM               |       | 39,999                  |       | (B)              |       | 490               |       | 1,613             |       | 97                             |       | 491                        |       | 1,709             |       | 2,200      |       | 457 |   | 2005 |   |
| Deming, NM                 |       | 33,005                  |       | (B)              |       | 338               |       | 1,114             |       | 153                            |       | 339                        |       | 1,267             |       | 1,606      |       | 332 |   | 2005 |   |
| Las Cruces, NM             |       | 21,890                  |       | (T)              |       | 354               |       | 1,256             |       | 2                              |       | 357                        |       | 1,267             |       | 1,624      |       | 131 |   | 2005 |   |
| Las Cruces, NM             |       | 43,850                  |       | (B)              |       | 611               |       | 2,012             |       | 194                            |       | 612                        |       | 2,205             |       | 2,816      |       | 584 |   | 2005 |   |
| Lovington, NM              |       | 15,750                  |       | (B)              |       | 222               |       | 740               |       | (139                           | )          | 169                        |       | 653               |       | 822        |       | 170 |   | 2005 |   |
| Silver City, NM            |       | 26,975                  |       | (B)              |       | 153               |       | 504               |       | 122                            |       | 153                        |       | 625               |       | 779        |       | 167 |   | 2005 |   |
| Truth or Consequences,  NM |       | 24,010                  |       | (B)              |       | 10                |       | 34                |       | 79                             |       | 11                         |       | 113               |       | 124        |       | 43 |   | 2005 |   |
| Las Vegas I, NV            |       | 48,218                  |       | (T)              |       | 1,851             |       | 2,986             |       | 220                            |       | 1,851                      |       | 3,206             |       | 5,057      |       | 664 |   | 2005 |   |
| Las Vegas II, NV           |       | 48,850                  |       | (T)              |       | 3,354             |       | 5,411             |       | 154                            |       | 3,355                      |       | 5,564             |       | 8,919      |       | 1,143 |   | 2005 |   |
| Jamaica, NY                |       | 88,415                  |       | (D)              |       | 2,043             |       | 11,658            |       | (1,698                         | )          | 2,043                      |       | 9,960             |       | 12,003     |       | 2,027 |   | 2001 |   |
| New Rochelle, NY           |       | 48,431                  |       | (A)              |       | 1,673             |       | 4,827             |       | 118                            |       | 1,673                      |       | 4,945             |       | 6,618      |       | 1,202 |   | 2005 |   |
| North Babylon, NY          |       | 78,188                  |       | (F)              |       | 225               |       | 2,514             |       | 3,692                          |       | 568                        |       | 5,863             |       | 6,431      |       | 1,741 |   | 1998 |   |
| Riverhead, NY              |       | 38,240                  |       | (N)              |       | 1,068             |       | 1,149             |       | 120                            |       | 1,068                      |       | 1,269             |       | 2,338      |       | 367 |   | 2005 |   |
| Southold, NY               |       | 58,609                  |       | (N)              |       | 2,079             |       | 2,238             |       | 196                            |       | 2,079                      |       | 2,434             |       | 4,513      |       | 692 |   | 2005 |   |
| Boardman, OH               |       | 65,495                  |       | (F)              |       | 64                |       | 745               |       | 1,679                          |       | 287                        |       | 2,201             |       | 2,488      |       | 988 |   | 2005 |   |
| Canton I, OH               |       | 39,750                  |       | (T)              |       | 138               |       | 679               |       | 254                            |       | 137                        |       | 934               |       | 1,071      |       | 229 |   | 2005 |   |
| Canton II, OH              |       | 26,200                  |       | (T)              |       | 122               |       | 595               |       | 115                            |       | 120                        |       | 712               |       | 832        |       | 189 |   | 2005 |   |
| Centerville I, OH          |       | 86,390                  |       | (T)              |       | 471               |       | 3,705             |       | 123                            |       | 471                        |       | 3,828             |       | 4,299      |       | 1,009 |   | 2005 |   |
| Centerville II, OH         |       | 43,350                  |       | (E)              |       | 332               |       | 1,757             |       | 168                            |       | 332                        |       | 1,925             |       | 2,257      |       | 500 |   | 2005 |   |
| Cleveland I, OH            |       | 45,950                  |       |             |       | 525               |       | 2,592             |       | 129                            |       | 524                        |       | 2,722             |       | 3,246      |       | 704 |   | 2005 |   |
| Cleveland II, OH           |       | 58,425                  |       | (T)              |       | 290               |       | 1,427             |       | 170                            |       | 289                        |       | 1,599             |       | 1,887      |       | 429 |   | 2005 |   |
| Columbus , OH              |       | 72,155                  |       | (T)              |       | 1,234             |       | 3,151             |       | 62                             |       | 1,239                      |       | 3,207             |       | 4,446      |       | 615 |   | 2005 |   |
| Dayton I, OH               |       | 43,100                  |       | (E)              |       | 323               |       | 2,070             |       | 118                            |       | 323                        |       | 2,188             |       | 2,511      |       | 575 |   | 2005 |   |
| Dayton II, OH              |       | 48,149                  |       | (T)              |       | 441               |       | 2,176             |       | 170                            |       | 440                        |       | 2,347             |       | 2,787      |       | 595 |   | 2005 |   |
| Euclid I, OH               |       | 46,910                  |       | (T)              |       | 200               |       | 1,053             |       | 1,970                          |       | 317                        |       | 2,906             |       | 3,223      |       | 1,614 |   | 1988 |   |
| Euclid II, OH              |       | 47,275                  |       | (T)              |       | 359               |       | —            |       | 1,638                          |       | 461                        |       | 1,535             |       | 1,997      |       | 451 |   | 1988 |   |
| Grove City, OH             |       | 89,290                  |       | (T)              |       | 1,756             |       | 4,485             |       | 103                            |       | 1,761                      |       | 4,584             |       | 6,345      |       | 872 |   | 2005 |   |
| Hilliard, OH               |       | 89,715                  |       | (T)              |       | 1,361             |       | 3,476             |       | 110                            |       | 1,366                      |       | 3,581             |       | 4,947      |       | 679 |   | 2005 |   |
| Lakewood, OH               |       | 39,337                  |       |             |       | 405               |       | 854               |       | 401                            |       | 405                        |       | 1,255             |       | 1,660      |       | 717 |   | 2005 |   |
| Louisville, OH             |       | 53,960                  |       | (T)              |       | 257               |       | 1,260             |       | 131                            |       | 255                        |       | 1,393             |       | 1,648      |       | 365 |   | 2005 |   |
| Marblehead, OH             |       | 52,300                  |       | (T)              |       | 374               |       | 1,843             |       | 165                            |       | 373                        |       | 2,009             |       | 2,382      |       | 518 |   | 2005 |   |
| Mason, OH                  |       | 33,900                  |       | (T)              |       | 127               |       | 1,419             |       | 85                             |       | 149                        |       | 1,482             |       | 1,631      |       | 538 |   | 1998 |   |
| Mentor, OH                 |       | 51,225                  |       |             |       | 206               |       | 1,011             |       | 1,431                          |       | 204                        |       | 2,444             |       | 2,648      |       | 438 |   | 2005 |   |
| Miamisburg, OH             |       | 59,930                  |       | (T)              |       | 375               |       | 2,410             |       | 220                            |       | 375                        |       | 2,630             |       | 3,005      |       | 679 |   | 2005 |   |
| Middleburg Heights, OH     |       | 93,025                  |       | (T)              |       | 63                |       | 704               |       | 1,955                          |       | 332                        |       | 2,390             |       | 2,722      |       | 768 |   | 2005 |   |
| North Canton I, OH         |       | 45,400                  |       | (T)              |       | 209               |       | 846               |       | 504                            |       | 299                        |       | 1,260             |       | 1,559      |       | 940 |   | 1979 |   |
| North Canton II, OH        |       | 44,140                  |       | (T)              |       | 70                |       | 1,226             |       | 0                              |       | 239                        |       | 1,057             |       | 1,296      |       | 275 |   | 1983 |   |
| North Olmsted I, OH        |       | 48,665                  |       | (T)              |       | 63                |       | 704               |       | 1,185                          |       | 214                        |       | 1,738             |       | 1,952      |       | 639 |   | 2005 |   |
| North Olmsted II, OH       |       | 47,850                  |       | (F)              |       | 290               |       | 1,129             |       | 1,043                          |       | 469                        |       | 1,993             |       | 2,462      |       | 1,041 |   | 2005 |   |
| North Randall, OH          |       | 80,099                  |       | (F)              |       | 515               |       | 2,323             |       | 2,440                          |       | 898                        |       | 4,380             |       | 5,278      |       | 1,129 |   | 1998 |   |
| Perry, OH                  |       | 63,700                  |       | (T)              |       | 290               |       | 1,427             |       | 115                            |       | 288                        |       | 1,544             |       | 1,832      |       | 410 |   | 2005 |   |
| Reynoldsburg, OH           |       | 66,895                  |       | (T)              |       | 1,290             |       | 3,295             |       | 191                            |       | 1,295                      |       | 3,481             |       | 4,776      |       | 652 |   | 2005 |   |
| Strongsville, OH           |       | 43,727                  |       | (T)              |       | 570               |       | 3,486             |       | (287                           | )          | 570                        |       | 3,199             |       | 3,769      |       | 403 |   | 2007 |   |
| Warrensville Heights, OH   |       | 90,281                  |       |             |       | 525               |       | 766               |       | 2,861                          |       | 935                        |       | 3,217             |       | 4,152      |       | 917 |   | 2005 |   |
| Westlake, OH               |       | 62,750                  |       | (T)              |       | 509               |       | 2,508             |       | 128                            |       | 508                        |       | 2,638             |       | 3,145      |       | 692 |   | 2005 |   |

 

F-40

----

Tableof Contents

 
| ** **                | ** ** | ** **          | ** ** | ** **       | ** ** | ** **        | ** ** | ** **                      | ** ** | **Gross  Carrying Amount**            | ** ** | ** ** | ** ** | ** **                      | ** ** |
|---------------------------|------------|---------------------|------------|------------------|------------|-------------------|------------|---------------------------------|------------|---------------------------------------|------------|------------|------------|---------------------------------|------------|
| ** **                | ** ** | ** **          | ** ** | ** **       | ** ** | **Initial  Cost** | ** ** | ** **                      | ** ** | **at  December 31, 2009**        | ** ** | ** ** | ** ** | ** **                      | ** ** |
| **Description**           | ** ** | **Square  Footage** | ** ** | **Encumbrances** | ** ** | **Land**          | ** ** | **Building  and  Improvements** | ** ** | **Costs  Subsequent to  Acquisition** | ** ** | **Land**   | ** ** | **Building  and  Improvements** | ** ** | **Total** | ** ** | **Accumulated  Depreciation (L)** | ** ** | **Year  Acquired /  Developed** | ** ** |
| Willoughby,  OH           |       | 34,064              |       | (T)              |       | 239               |       | 1,178                           |       | 173                                   |       | 238        |       | 1,352                           |       | 1,590 |   | 350 |   | 2005 |   |
| Youngstown,  OH           |       | 65,950              |       | (A)              |       | 67                |       | —                          |       | 1,306                                 |       | 204        |       | 1,169                           |       | 1,373 |   | 491 |   | 2005 |   |
| Levittown,  PA            |       | 76,180              |       | (F)              |       | 926               |       | 5,296                           |       | (107                                  | )          | 926        |       | 5,189                           |       | 6,115 |   | 1,294 |   | 2001 |   |
| Philadelphia,  PA         |       | 97,689              |       | (D)              |       | 1,461             |       | 8,334                           |       | (1,487                                | )          | 1,461      |       | 6,847                           |       | 8,308 |   | 1,455 |   | 2001 |   |
| Alcoa,  TN                |       | 42,325              |       | (J)              |       | 254               |       | 2,113                           |       | 117                                   |       | 254        |       | 2,229                           |       | 2,484 |   | 546 |   | 2005 |   |
| Antioch,  TN              |       | 76,160              |       | (T)              |       | 588               |       | 4,906                           |       | 239                                   |       | 588        |       | 5,145                           |       | 5,733 |   | 1,143 |   | 2005 |   |
| Cordova  I, TN            |       | 54,225              |       | (G)              |       | 296               |       | 2,482                           |       | 159                                   |       | 297        |       | 2,641                           |       | 2,937 |   | 664 |   | 2005 |   |
| Cordova  II, TN           |       | 67,750              |       | 2,581            |       | 429               |       | 3,580                           |       | 250                                   |       | 429        |       | 3,830                           |       | 4,259 |   | 774 |   | 2005 |   |
| Knoxville  I, TN          |       | 29,337              |       | (R)              |       | 99                |       | 1,113                           |       | 199                                   |       | 102        |       | 1,309                           |       | 1,411 |   | 467 |   | 1997 |   |
| Knoxville  II, TN         |       | 38,000              |       | (R)              |       | 117               |       | 1,308                           |       | 273                                   |       | 129        |       | 1,570                           |       | 1,698 |   | 533 |   | 1997 |   |
| Knoxville  III, TN        |       | 45,736              |       | (T)              |       | 182               |       | 2,053                           |       | 672                                   |       | 331        |       | 2,576                           |       | 2,907 |   | 805 |   | 1998 |   |
| Knoxville  IV, TN         |       | 58,752              |       | (T)              |       | 158               |       | 1,771                           |       | 701                                   |       | 310        |       | 2,320                           |       | 2,630 |   | 691 |   | 1998 |   |
| Knoxville  V, TN          |       | 42,790              |       | (R)              |       | 134               |       | 1,493                           |       | 399                                   |       | 235        |       | 1,791                           |       | 2,026 |   | 666 |   | 1998 |   |
| Knoxville  VI, TN         |       | 63,440              |       | (J)              |       | 439               |       | 3,653                           |       | 154                                   |       | 440        |       | 3,806                           |       | 4,246 |   | 929 |   | 2005 |   |
| Knoxville  VII, TN        |       | 55,094              |       | (J)              |       | 312               |       | 2,594                           |       | 199                                   |       | 312        |       | 2,792                           |       | 3,105 |   | 681 |   | 2005 |   |
| Knoxville  VIII, TN       |       | 95,868              |       | (J)              |       | 585               |       | 4,869                           |       | 200                                   |       | 586        |       | 5,067                           |       | 5,654 |   | 1,234 |   | 2005 |   |
| Memphis  I, TN            |       | 90,700              |       | (E)              |       | 677               |       | 3,880                           |       | 449                                   |       | 677        |       | 4,329                           |       | 5,006 |   | 964 |   | 2001 |   |
| Memphis  II, TN           |       | 71,885              |       | (Q)              |       | 395               |       | 2,276                           |       | (179                                  | )          | 395        |       | 2,097                           |       | 2,492 |   | 483 |   | 2001 |   |
| Memphis  III, TN          |       | 40,807              |       | (G)              |       | 212               |       | 1,779                           |       | 198                                   |       | 213        |       | 1,976                           |       | 2,189 |   | 499 |   | 2005 |   |
| Memphis  IV, TN           |       | 38,750              |       | (G)              |       | 160               |       | 1,342                           |       | 195                                   |       | 160        |       | 1,537                           |       | 1,697 |   | 389 |   | 2005 |   |
| Memphis  V, TN            |       | 60,120              |       | (G)              |       | 209               |       | 1,753                           |       | 468                                   |       | 210        |       | 2,220                           |       | 2,430 |   | 521 |   | 2005 |   |
| Memphis  VI, TN           |       | 108,771             |       | (Q)              |       | 462               |       | 3,851                           |       | 281                                   |       | 462        |       | 4,133                           |       | 4,594 |   | 842 |   | 2006 |   |
| Memphis  VII, TN          |       | 115,303             |       | (T)              |       | 215               |       | 1,792                           |       | 460                                   |       | 215        |       | 2,252                           |       | 2,467 |   | 453 |   | 2006 |   |
| Memphis  VIII, TN         |       | 96,060              |       | (T)              |       | 355               |       | 2,959                           |       | 321                                   |       | 355        |       | 3,280                           |       | 3,635 |   | 673 |   | 2006 |   |
| Nashville  I, TN          |       | 103,430             |       |             |       | 405               |       | 3,379                           |       | 432                                   |       | 405        |       | 3,811                           |       | 4,216 |   | 836 |   | 2005 |   |
| Nashville  II, TN         |       | 83,484              |       |             |       | 593               |       | 4,950                           |       | 215                                   |       | 593        |       | 5,165                           |       | 5,758 |   | 1,146 |   | 2005 |   |
| Nashville  III, TN        |       | 101,475             |       |             |       | 416               |       | 3,469                           |       | 287                                   |       | 416        |       | 3,756                           |       | 4,172 |   | 816 |   | 2006 |   |
| Nashville  IV, TN         |       | 102,425             |       | 5,527            |       | 992               |       | 8,274                           |       | 228                                   |       | 992        |       | 8,502                           |       | 9,494 |   | 1,855 |   | 2006 |   |
| Austin  I, TX             |       | 59,595              |       |             |       | 2,239             |       | 2,038                           |       | 186                                   |       | 2,410      |       | 2,052                           |       | 4,462 |   | 521 |   | 2005 |   |
| Austin  II, TX            |       | 65,401              |       | (O)              |       | 734               |       | 3,894                           |       | 157                                   |       | 738        |       | 4,046                           |       | 4,784 |   | 786 |   | 2006 |   |
| Austin  III, TX           |       | 70,610              |       |             |       | 1,030             |       | 5,468                           |       | 164                                   |       | 1,035      |       | 5,626                           |       | 6,661 |   | 990 |   | 2006 |   |
| Baytown,  TX              |       | 38,950              |       | (T)              |       | 946               |       | 863                             |       | 74                                    |       | 948        |       | 936                             |       | 1,884 |   | 236 |   | 2005 |   |
| Bryan,  TX                |       | 60,450              |       | (T)              |       | 1,394             |       | 1,268                           |       | 112                                   |       | 1,396      |       | 1,378                           |       | 2,774 |   | 343 |   | 2005 |   |
| College  Station, TX      |       | 26,550              |       | (H)              |       | 812               |       | 740                             |       | 84                                    |       | 813        |       | 823                             |       | 1,636 |   | 206 |   | 2005 |   |
| Dallas,  TX               |       | 58,582              |       | (K)              |       | 2,475             |       | 2,253                           |       | 224                                   |       | 2,475      |       | 2,476                           |       | 4,951 |   | 584 |   | 2005 |   |
| Denton,  TX               |       | 60,836              |       | 1,988            |       | 553               |       | 2,936                           |       | 131                                   |       | 569        |       | 3,051                           |       | 3,620 |   | 537 |   | 2006 |   |
| El  Paso I, TX            |       | 59,652              |       | (C)              |       | 1,983             |       | 1,805                           |       | 180                                   |       | 1,984      |       | 1,984                           |       | 3,968 |   | 488 |   | 2005 |   |
| El  Paso II, TX           |       | 48,704              |       | (C)              |       | 1,319             |       | 1,201                           |       | 148                                   |       | 1,320      |       | 1,349                           |       | 2,669 |   | 322 |   | 2005 |   |
| El  Paso III, TX          |       | 71,276              |       | (C)              |       | 2,408             |       | 2,192                           |       | 149                                   |       | 2,409      |       | 2,340                           |       | 4,749 |   | 565 |   | 2005 |   |
| El  Paso IV, TX           |       | 67,058              |       | (C)              |       | 2,073             |       | 1,888                           |       | (37                                   | )          | 2,074      |       | 1,850                           |       | 3,925 |   | 464 |   | 2005 |   |
| El  Paso V, TX            |       | 62,300              |       | (B)              |       | 1,758             |       | 1,617                           |       | 114                                   |       | 1,761      |       | 1,728                           |       | 3,489 |   | 417 |   | 2005 |   |
| El  Paso VI, TX           |       | 36,620              |       | (B)              |       | 660               |       | 607                             |       | 94                                    |       | 662        |       | 700                             |       | 1,361 |   | 175 |   | 2005 |   |
| El  Paso VII, TX          |       | 34,545              |       | (B)              |       | 563               |       | 517                             |       | 71                                    |       | 565        |       | 587                             |       | 1,152 |   | 146 |   | 2005 |   |
| Fort  Worth I, TX         |       | 49,778              |       | (K)              |       | 1,253             |       | 1,141                           |       | 124                                   |       | 1,253      |       | 1,265                           |       | 2,518 |   | 298 |   | 2005 |   |
| Fort  Worth II, TX        |       | 72,925              |       | (K)              |       | 868               |       | 4,607                           |       | 161                                   |       | 874        |       | 4,761                           |       | 5,636 |   | 919 |   | 2006 |   |
| Frisco  I, TX             |       | 50,854              |       | (A)              |       | 1,093             |       | 3,148                           |       | 75                                    |       | 1,093      |       | 3,223                           |       | 4,315 |   | 780 |   | 2005 |   |
| Frisco  II, TX            |       | 71,239              |       | 3,281            |       | 1,564             |       | 4,507                           |       | 111                                   |       | 1,564      |       | 4,618                           |       | 6,183 |   | 1,118 |   | 2005 |   |
| Frisco  III, TX           |       | 75,215              |       | (K)              |       | 1,147             |       | 6,088                           |       | 139                                   |       | 1,154      |       | 6,221                           |       | 7,374 |   | 1,202 |   | 2006 |   |
| Garland  I, TX            |       | 70,100              |       | 3,163            |       | 751               |       | 3,984                           |       | 350                                   |       | 767        |       | 4,318                           |       | 5,085 |   | 742 |   | 2006 |   |
| Garland  II, TX           |       | 68,425              |       | (K)              |       | 862               |       | 4,578                           |       | 117                                   |       | 862        |       | 4,695                           |       | 5,557 |   | 767 |   | 2006 |   |
| Greenville  I, TX         |       | 59,385              |       | (T)              |       | 1,848             |       | 1,682                           |       | 66                                    |       | 1,848      |       | 1,748                           |       | 3,596 |   | 416 |   | 2005 |   |
| Greenville  II, TX        |       | 44,900              |       | (T)              |       | 1,337             |       | 1,217                           |       | 69                                    |       | 1,337      |       | 1,286                           |       | 2,622 |   | 304 |   | 2005 |   |
| Houston  I, TX            |       | 100,820             |       | (T)              |       | 1,420             |       | 1,296                           |       | 139                                   |       | 1,422      |       | 1,433                           |       | 2,855 |   | 353 |   | 2005 |   |
| Houston  II, TX           |       | 71,300              |       | (T)              |       | 1,510             |       | 1,377                           |       | (11                                   | )          | 1,512      |       | 1,364                           |       | 2,876 |   | 365 |   | 2005 |   |
| Houston  III, TX          |       | 61,145              |       | 516              |       | 575               |       | 524                             |       | 189                                   |       | 576        |       | 712                             |       | 1,288 |   | 171 |   | 2005 |   |
| Houston  IV, TX           |       | 43,775              |       | (H)              |       | 960               |       | 875                             |       | 96                                    |       | 961        |       | 970                             |       | 1,931 |   | 235 |   | 2005 |   |
| Houston  V, TX            |       | 126,080             |       | 4,246            |       | 1,153             |       | 6,122                           |       | 315                                   |       | 1,156      |       | 6,434                           |       | 7,590 |   | 1,094 |   | 2006 |   |
| Keller,  TX               |       | 61,885              |       | 2,486            |       | 890               |       | 4,727                           |       | 98                                    |       | 890        |       | 4,825                           |       | 5,715 |   | 946 |   | 2006 |   |
| La  Porte, TX             |       | 45,050              |       | (T)              |       | 842               |       | 761                             |       | 295                                   |       | 843        |       | 1,055                           |       | 1,898 |   | 248 |   | 2005 |   |
| Lewisville,  TX           |       | 58,140              |       | 1,808            |       | 476               |       | 2,525                           |       | 270                                   |       | 492        |       | 2,779                           |       | 3,271 |   | 488 |   | 2006 |   |
| Mansfield,  TX            |       | 63,075              |       | (K)              |       | 837               |       | 4,443                           |       | 87                                    |       | 843        |       | 4,523                           |       | 5,367 |   | 878 |   | 2006 |   |
| McKinney  I, TX           |       | 46,940              |       | 1,307            |       | 1,632             |       | 1,486                           |       | 79                                    |       | 1,634      |       | 1,563                           |       | 3,197 |   | 363 |   | 2005 |   |
| McKinney  II, TX          |       | 70,050              |       | 4,166            |       | 855               |       | 5,076                           |       | 88                                    |       | 857        |       | 5,162                           |       | 6,019 |   | 1,015 |   | 2006 |   |
| North  Richland Hills, TX |       | 57,175              |       | (K)              |       | 2,252             |       | 2,049                           |       | 143                                   |       | 2,252      |       | 2,192                           |       | 4,444 |   | 518 |   | 2005 |   |
| Roanoke,  TX              |       | 59,300              |       | (K)              |       | 1,337             |       | 1,217                           |       | 99                                    |       | 1,337      |       | 1,316                           |       | 2,653 |   | 315 |   | 2005 |   |
| San  Antonio I, TX        |       | 73,530              |       | (T)              |       | 2,895             |       | 2,635                           |       | 147                                   |       | 2,895      |       | 2,782                           |       | 5,677 |   | 630 |   | 2005 |   |
| San  Antonio II, TX       |       | 73,280              |       | (T)              |       | 1,047             |       | 5,558                           |       | 83                                    |       | 1,052      |       | 5,636                           |       | 6,688 |   | 924 |   | 2006 |   |
| San  Antonio III, TX      |       | 71,775              |       | (T)              |       | 996               |       | 5,286                           |       | 41                                    |       | 996        |       | 5,327                           |       | 6,322 |   | 800 |   | 2007 |   |
| Sherman  I, TX            |       | 54,975              |       | 1,520            |       | 1,904             |       | 1,733                           |       | 75                                    |       | 1,906      |       | 1,806                           |       | 3,712 |   | 421 |   | 2005 |   |
| Sherman  II, TX           |       | 48,425              |       | 1,812            |       | 1,337             |       | 1,217                           |       | 110                                   |       | 1,337      |       | 1,327                           |       | 2,664 |   | 310 |   | 2005 |   |
| Spring,  TX               |       | 72,751              |       | (T)              |       | 580               |       | 3,081                           |       | 87                                    |       | 580        |       | 3,168                           |       | 3,749 |   | 621 |   | 2006 |   |

 

F-41

----

Tableof Contents

 
| ** **            | ** ** | ** **          | ** ** | ** **       | ** ** | ** **        | ** ** | ** **                      | ** ** | **Gross  Carrying Amount**            | ** ** | ** ** | ** ** | ** **                      | ** ** |
|-----------------------|------------|---------------------|------------|------------------|------------|-------------------|------------|---------------------------------|------------|---------------------------------------|------------|------------|------------|---------------------------------|------------|
| ** **            | ** ** | ** **          | ** ** | ** **       | ** ** | **Initial  Cost** | ** ** | ** **                      | ** ** | **at  December 31, 2009**        | ** ** | ** ** | ** ** | ** **                      | ** ** |
| **Description**       | ** ** | **Square  Footage** | ** ** | **Encumbrances** | ** ** | **Land**          | ** ** | **Building  and  Improvements** | ** ** | **Costs  Subsequent to  Acquisition** | ** ** | **Land**   | ** ** | **Building  and  Improvements** | ** ** | **Total** | ** ** | **Accumulated  Depreciation (L)** | ** ** | **Year  Acquired /  Developed** | ** ** |
| Murray I, UT          |       | 60,180              |       | (C)              |       | 3,847             |       | 1,017                           |       | 222                                   |       | 3,848      |       | 1,237                           |       | 5,085 |   | 301 |   | 2005 |   |
| Murray II, UT         |       | 71,222              |       | (C)              |       | 2,147             |       | 567                             |       | 300                                   |       | 2,148      |       | 866                             |       | 3,014 |   | 113 |   | 2005 |   |
| Salt Lake City I, UT  |       | 56,446              |       | (C)              |       | 2,695             |       | 712                             |       | 194                                   |       | 2,696      |       | 905                             |       | 3,601 |   | 230 |   | 2005 |   |
| Salt Lake City II, UT |       | 53,676              |       | (C)              |       | 2,074             |       | 548                             |       | 174                                   |       | 2,075      |       | 721                             |       | 2,796 |   | 183 |   | 2005 |   |
| Fredericksburg I, VA  |       | 69,475              |       | (P)              |       | 1,680             |       | 4,840                           |       | 252                                   |       | 1,680      |       | 5,092                           |       | 6,772 |   | 1,044 |   | 2005 |   |
| Fredericksburg II, VA |       | 61,207              |       | (P)              |       | 1,757             |       | 5,062                           |       | 313                                   |       | 1,758      |       | 5,374                           |       | 7,132 |   | 1,092 |   | 2005 |   |
| Milwaukee, WI         |       | 58,515              |       | (T)              |       | 375               |       | 4,333                           |       | 131                                   |       | 375        |       | 4,464                           |       | 4,839 |   | 1,188 |   | 2004 |   |
| USIFB                 |       |                |       |             |       |              |       | 7,057                           |       | 791                                   |       | —     |       | 7,848                           |       | 7,848 |   | 307 |   |   |   |
| Corporate Office      |       |                |       |             |       |              |       |                            |       |                                  |       |       |       | 11,015                          |       | 11,015 |   | 3,748 |   |   |   |
| Other                 |       |                |       |             |       |              |       |                            |       |                                  |       |       |       |                            |       |   |   | 575 |   |   |   |
|                  |       |                |       |             |       |              |       |                            |       |                                  |       |       |       |                            |       |   |   |   |   |   |   |
|                  |       | 23,748,702          |       |             |       | 343,312           |       | 1,251,704                       |       | 169,351                               |       | 369,842    |       | 1,404,700                       |       | 1,774,542 |   | 344,009 |   |   |   |

 

----

(A)  This facilityis part of Yasky Loan portfolio, with a balance of $80,000 as of December 31,2009.

(B)  This facilityis part of the YSI 25 Loan portfolio, with a balance of $7,975 as of December 31,2009.

(C)  This facilityis part of the YSI 20 Loan portfolio, with a balance of $64,258 as of December 31,2009.

(D)  This facilityis part of the YSI 2 Loan portfolio, with a balance of $83,480 as of December 31,2009.

(E)  This facilityis part of the YSI 6 Loan portfolio, with a balance of $77,370 as of December 31,2009.

(F)  This facility is part of the YSI 1 Loanportfolio, with a balance of $83,342 as of December 31, 2009.  This property became unencumbered on February 11,2010 when the YSI 1 loan was repaid.

(G)  This facilityis part of the YSI 26 Loan portfolio, with a balance of $9,475 as of December 31,2009.

(H)  This facilityis part of the YSI 28 Loan portfolio, with a balance of $1,598 as of December 31,2009.

(J)  This facilityis part of the YSI 30 Loan portfolio, with a balance of $7,567 as of December 31,2009.

(K) This facility ispart of the YSI 34 Loan protfolio, with a balance of $14,955 as of December 31,2009

(L)  Depreciation on the buildings and improvementsis recorded on a straight-line basis over their estimated useful lives, whichrange from five to 39 years.

(M)  This facilityis part of the YSI 31 Loan portfolio, with a balance of $13,891 as of December 31,2009.

(N)  This facilityis part of the YSI 32 Loan portfolio, with a balance of $6,160 as of December 31,2009.

(O)  This facilityis part of the YSI 33 Loan portfolio, with a balance of $11,570 as of December 31,2009.

(P)  This facilityis part of the YSI 35 Loan portfolio, with a balance of $4,499 as of December 31,2009.

(Q)  This facilityis part of the YSI 41 Loan portfolio, with a balance of $3,976 as of December 31,2009.

(R)  This facilityis part of the YSI 38 Loan portfolio, with a balance of $4,078 as of December 31,2009.

(S)  This facilityis part of the YSI 48 Loan portfolio, with a balance of $25,652 as of December 31,2009.

(T)  This facilityis part of the USILP secured credit facility portfolio, with a balance of$200,000 as of December 31, 2009.

 

 

Activity in real estate facilitiesduring 2009, 2008, and 2007 was as follows (in thousands):

 
| ** **                            | ** ** | **2009** | ** ** | **2008** | ** ** | **2007**  | ** ** |
|---------------------------------------|------------|----------|------------|----------|------------|-----------|------------|
| Storage  facilities                   |       |     |       |     |       |      |       |
| Balance  at beginning of year         |       | $        | 1,888,123  |     | $          | 1,916,396 |       | $ | 1,771,864 |   |
| Acquisitions &  improvements |       | 13,345   |       | 30,295   |       | 160,256   |       |
| Fully  depreciated assets             |       | (40,859  | )          | —   |       | —    |       |
| Dispositions  and other               |       | (89,668  | )          | (59,168  | )          | (21,206   | )          |
| Contstruction  in progress            |       | 3,601    |       | 600      |       | 5,482     |       |
| Balance  at end of year               |       | $        | 1,774,542  |     | $          | 1,888,123 |       | $ | 1,916,396 |   |
|                                  |       |     |       |     |       |      |       |
| Accumulated  depreciation             |       |     |       |     |       |      |       |
| Balance  at beginning of year         |       | $        | 328,165    |     | $          | 269,278   |       | $ | 205,049 |   |
| Depreciation  expense                 |       | 73,569   |       | 77,580   |       | 68,355    |       |
| Fully  depreciated assets             |       | (40,859  | )          | —   |       | —    |       |
| Dispositions  and other               |       | (16,866  | )          | (18,693  | )          | (4,126    | )          |
| Balance  at end of year               |       | $        | 344,009    |     | $          | 328,165   |       | $ | 269,278 |   |
|                                  |       |     |       |     |       |      |       |
| Net  Storage facility assets          |       | $        | 1,430,533  |     | $          | 1,559,958 |       | $ | 1,647,118 |   |

 

The unaudited aggregate costs of storage facilityassets for U.S. federal income tax purposes as of December 31, 2009 was approximately$1,346 million.

 

F-42

----