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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

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FORM 10-K

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|x |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ------------------------------------------------------------------------------------

For the fiscal year
ended December 31, 2003

OR

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

For the transition period
from            to            .

Commission file number 0-11455

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SHURGARD STORAGE
CENTERS, INC.

(Exact name of registrant as specified in its charter)

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|                        |  |                                  
|----------------------- |  | ---------------------------------
|Washington              |  | 91-1603837                       
|(State of organization) |  | (IRS Employer Identification No.)

1155 Valley Street, Suite 400, Seattle, Washington 98109

(Address of principal executive offices) (Zip code)

Registrants telephone number, including area code:  (206) 624-8100

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Securities registered pursuant to Section 12(b) of the Act:



|                                                                               |  |                                          
|------------------------------------------------------------------------------ |  | -----------------------------------------
|Title of each class                                                            |  | Name of each exchange on which registered
|Class A Common Stock, par value $.001 per share                                |  | New York Stock Exchange                  
|Preferred Share Purchase Rights                                                |  | New York Stock Exchange                  
|8.7% Series C Cumulative Redeemable Preferred Stock,par value $.001 per share  |  | New York Stock Exchange                  
|8.75% Series D Cumulative Redeemable Preferred Stock,par value $.001 per share |  | New York Stock Exchange                  

Securities registered pursuant to Section 12(g) of the Act:  None

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes ̈No  x

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ̈

Indicate by check mark whether the registrant
is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  x    No ̈

Aggregate market value of voting stock held by nonaffiliates of the
registrant as of June 30, 2003: $1,249,634,937

Class A Common Stock, par value $.001 per share, outstanding as of April 30, 2004:
45,891,542 shares

Documents incorporated by reference:    none.

There are 170 pages.

This Form 10-K
of Shurgard Storage Centers, Inc. includes restatements of previously reported historical financial data and related descriptions for the years ended December 31, 2002 and 2001 and for the quarters ended March 31, June 30, September 30, 2003 and
2002, as well as the quarter ended December 31, 2002. We have reassessed certain accounting policies applied historically to the items described in Note B to our Consolidated Financial Statements. We have concluded that these items have been
accounted for incorrectly in the past and have restated them accordingly in this report. In addition, we have identified certain other accounting errors impacting prior periods which are also corrected in our restatements. See Note B to our
Consolidated Financial Statements for further discussion of this matter, and Note W for quarterly financial data.

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PART I



Item 1Business



Overview



When used in
this discussion and elsewhere in this Annual Report on Form 10-K, the words believes, anticipates, projects, should, estimates, expects and similar expressions are intended to
identify forward-looking statements within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and in Section 21F of the Securities and Exchange Act of 1934 as amended. Actual results may differ materially due to
uncertainties including the risk that changes in economic conditions in the markets in which we operate, and/or competition from new self storage facilities or other storage alternatives may cause rent to decline and may cause occupancy rates to
drop, or may cause delays in rent up of newly developed properties, the risk that new developments could be delayed or reduced by zoning and permitting requirements outside of our control, increased competition for desirable sites, construction
delays due to weather, unforeseen site conditions, labor shortages, personnel turnover, scheduling problems with contractors, subcontractors or suppliers, the risk that we may experience increases in the cost of labor, taxes, marketing and other
operating and construction expenses, the risk that tax law changes may change the taxability of operating and construction, the risk that tax law changes may change the taxability of future income, the risk that increases in interest rates may
increase the cost of refinancing long term debt, the risk that our alternatives for funding our business plan may be impaired by the economic uncertainty due to the impact of war or terrorism; and the risk that our interest in Shurgard Europe may be
adversely affected if that entity is unable to complete formation and funding of its contemplated development joint ventures. We may also be affected by legislation or changes in regulations or interpretations regarding certain accounting standards
applied to our operations and certain of our existing financial and joint venture structures of the Company. Other factors that could affect our financial results are described below and in Item 1 (Business) of this Annual Report on Form 10-K.
Forward-looking statements are based on estimates as of the date of this report. We disclaim any obligation to publicly release the results of any revisions to these forward-looking statements reflecting new estimates, events or circumstances after
the date of this report.



Shurgard Storage Centers, Inc (we,
our, the Company or Shurgard) is an equity real estate investment trust, or REIT, that develops, acquires, invests in, operates and manages self storage centers and related operations in the United States and Europe. Our self storage centers offer
easily accessible storage space for personal and business uses. We are one of the largest owners and operators of self storage centers in the United States and the largest owner in Europe. As of December 31, 2003, we operated a network of 617
storage centers containing approximately 39 million net rentable square feet located throughout the United States and in Europe. In 2003, through a series of acquisitions we increased our direct and indirect ownership interest in Shurgard Self
Storage, SCA (Shurgard Europe) from 7.57% to 85.47%.



We were
incorporated in Delaware on July 23, 1993 and began operations through the consolidation on March 1, 1994 of 17 publicly held real estate limited partnerships that were sponsored by Shurgard Incorporated. On March 24, 1995, Shurgard Incorporated
merged with and into Shurgard Storage Centers, Inc. and we became self-administered and self-managed. In May 1997, we reincorporated in the state of Washington. We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as
amended. To the extent that we continue to qualify as a REIT, we will not be subject to tax, with certain limited exceptions, on the taxable income that is distributed to our shareholders.



Our investment objective is to increase shareholder value through: (i)
continued improvement in the performance of our portfolio as measured by year over year increases in Net Operating Income (NOI), (ii) acquisition of additional self storage properties, (iii) the development of new storage centers, (iv) redevelopment
of selected properties, and (v) opportunities to sell properties when we feel market conditions warrant or where a property no longer fits in our strategic plans. We believe our access to capital, the geographic diversification of our portfolio, and
operating economies of scale will enhance our ability to achieve this objective.



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Business Strategy



Our mission is to become the global leader in storage products and services and to ensure satisfaction and value for our customers through security,
quality and innovation. Our strategy in the United States and Europe involves an emphasis on customer service and satisfaction, portfolio management, storage center development and acquisitions management systems.



Customer Service and Satisfaction



| |  |  | Quality Employees.    We view the quality of customers interaction with employees as critical to our long-term success. Accordingly, we emphasize
customer service and teamwork in our employee training programs. Through our focus on training, personnel development and decentralized decision-making, we believe we attract well-qualified, highly motivated employees who are committed to providing
superior levels of customer service.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Convenient and Secure Stores.    Our stores are easily accessible, offer a range of storage products and services for customer convenience and emphasize
security and product quality. We believe our strategy of offering high-quality, convenient stores strengthens our Shurgard brand image, attracts customers and enables us to maintain premium rents.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Store Location and Hours.    Our stores are generally located in major metropolitan areas along retail and high-traffic corridors for easy customer access
and often have significant road frontage for high visibility. Although hours vary from store to store, customers can generally access their individual units between 6 a.m. and 9 p.m. seven days a week.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | One-Stop Convenience and Services.    Most of our stores have retail services and offer a range of storage products and ancillary services, including
supplies such as packing materials, locks and boxes, as well as services such as stored property insurance referrals, moving company referrals and truck rentals that we believe conveniently and efficiently address customers storage needs. In
addition, we generally offer premium features such as computer-controlled access and electronic security systems. Finally, a number of our stores offer climate-controlled storage space.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Property Security.    We use a variety of measures at our stores, as appropriate, to enhance security. Such measures may include, among others, on-site
personnel, electronic devices such as intrusion and fire alarms, access controls, video and intercom surveillance devices, individual unit alarms, fencing and lighting. We assign each customer a designated personal identification number for use in
connection with a computerized gate access system. Each access is automatically logged into a computer database. In addition to those discussed directly above, we have developed and plan to continue to improve our package of security controls,
including software, video and interactive communication.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Capital Expenditures and Maintenance.    We budget for a level of capital expenditures consistent with our commitment to maintaining attractive,
well-maintained and secure self storage centers, which enables us to pursue a premium pricing strategy. In addition, capital expenditures for consistent signage and color scheme among our properties strengthen our brand image.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Marketing and Sales.    We train store managers in fundamental sales skills to elicit customer needs and turn prospects into customers. We also have a
national sales center in the United States to field telephone sales calls from individual properties. Employees at our U.S. sales center are able to sell space at the store most convenient to the customer. We have implemented additional sales and
marketing programs to broaden our distribution channels, such as a web site for our enhanced e-commerce business and an expanded direct sales force in selected markets.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Market Research.    We maintain an extensive market research database on our primary markets and closely track occupancy levels, rental
rates and other operational data regarding self storage properties within these markets. We have conducted focus group research and telephone surveys,
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| | and use customer comment cards to identify the primary considerations in customers self storage choices and satisfaction so that we can better attract
and service customers.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Market Share.    We employ various means to increase our share of the self storage market. We place prominent advertisements in the yellow pages and seek
to promote customer awareness of our stores through highly visible store locations, site signage and architectural features. We locate our stores along retail and high-traffic corridors, usually with significant road frontage to increase visibility.
We build on most newly developed stores a distinctive lighthouse office to distinguish us from competitors and to increase customer awareness of the Shurgard brand. We promote our 24-hour free access sales center number and website in
our advertising, collateral materials and site signage.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Portfolio Management



Our portfolio management
strategy is to increase cash flow by achieving the highest rental rate structure consistent with strong occupancy rates, cost containment, improved operating leverage and expansion of our existing stores.



| |  |  | Revenue Optimization.    We seek to optimize our revenue by achieving the highest sustainable rental rate structure for our stores, consistent with high
levels of occupancy, through the use of teams of store employees and district managers who are trained and authorized to set rental rates and make rental rate changes based on their analysis of demand and availability at a particular store. Market
personnel regularly evaluate their properties rental rates, based on unit demand and unit availability, and can quickly change marginal rental rates to ensure that revenue is optimized.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Cost Containment and Improved Operating Leverage.    We seek to increase cash flow by carefully containing operating expenses. For example, we closely
monitor our real estate tax assessments, appealing such assessments as appropriate, and engage consultants to manage certain utility costs. In addition, as we increase the number of properties in our targeted markets, we achieve economies of scale
and lessen the impact of corporate overhead expense. We believe that our management and operational procedures, which can be implemented over a large number of properties, enable us to add new properties quickly and with little disruption to our
operations.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Strategic Expansions.    We seek to increase revenue by building additional rentable storage space at suitable stores either through on-site expansion or
acquisition of property adjacent to existing stores. We typically receive higher incremental return on investments in build-out investments, because resulting revenue increases are achieved with little increase in fixed operating costs.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Economies of Scale.    We will continue to focus our growth in markets where we are already present so that we improve the efficiency of our support
system and achieve economies of scale.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Development and Acquisitions



Our external
growth strategy is to develop new, high-quality self storage properties and to acquire additional self storage properties that meet, or can be upgraded to meet our standards. In general, we plan to develop or acquire new properties primarily in our
existing markets and in new markets that create economies of scale for our current network of stores. In most markets, we seek to own at least 15 stores in order to realize operating and marketing efficiencies and increase brand awareness. We
believe that the experience of our management team in developing and acquiring self storage properties strengthens our ability to pursue our external growth strategy.



We rely on our market personnel to target areas in which to develop and acquire new stores. Our staff of real estate
professionals in various markets develops and acquires new stores for us in the markets presenting the best opportunities. We have developed comprehensive market expansion plans for each of our target markets, including those in Europe, and use
these plans as the basis for selecting new store locations and acquisition



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targets. The market expansion plans use a demographic analysis of an area along with an evaluation of competitors locations, rates and product quality
to determine the optimum number and location of new stores.



| |  |  | Development.    We believe that several factors favor our development strategy:
| | - |  | -------------------------------------------------------------------------------



| |  |  | Joint Venture Investments.    Our joint venture strategy is important as it allows us to partner with experienced self storage developers in markets we
otherwise dont have a significant presence in, share the development and lease-up risk of new developments, to expand our brand through the use of our partners capital, and access cost effective capital for expansion and growth.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Development Expertise.    We have substantial real estate development, construction management and project design expertise that has been developed in the
United States over the past 30 years. Along with our predecessor companies, we developed more than a third of the properties we currently own, lease or manage, and, since 1972, we have maintained an internal development staff. We have built over 120
stores in Europe using our locally based internal development staff.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Strategic Site Selection.    To obtain the best store locations, we target sites for development in urban areas and upscale retail areas that often
require rezoning and other complex development measures. We believe that the difficulties of developing storage properties in such urban areas may discourage competitors from locating nearby and, as a result, enable us to operate in underserved
areas. This in turn enables us to charge higher rental rates.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Focus on Quality and Brand Image.    We have greater control of quality and brand image by developing our own self storage properties. This enables us to
focus on high construction quality and standards and a consistent and inviting building design. We believe our focus on quality and consistency will enable us to further strengthen awareness of the Shurgard brand, obtain repeat business, maintain
premium prices and differentiate us from our competitors.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Acquisitions.    We also selectively acquire high-quality properties that are consistent with our business plan. Additional acquisitions allow us to
spread overhead and certain management, marketing and advertising costs over a greater number of revenue-producing assets. As a result, we can achieve increasing economies of scale with each new property acquired. We complete a thorough analysis of
each property that we intend to acquire, including, but not limited to, a review of capital expenditures that will be required for the property to meet our standards. In addition to adding high-quality properties, we look for high-quality portfolios
of properties that would establish a market presence for us in a new market.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Property Management Systems



We have integrated property management systems and procedures for marketing, advertising, leasing, operations and security of properties and the management of on-site personnel. Our computerized management information system links our
corporate office with each store. We use proprietary software that facilitates financial statement and budget preparations, allows the daily exchange of information with our corporate office and manages detailed information with respect to the
tenant mix, demographics, occupancy levels, rental rates, revenue optimization, payroll and other information relating to each store. Additionally, we use a network-based accounting package that has aided in the compilation and dissemination of
information from and to our stores. The software integration enables our national sales center, commercial accounts department and our corporate employees to have access to store information. We are developing significant upgrades to this software
that we expect will improve management information and increase effectiveness in information compilation and dissemination to our stores.



Other Activities



Shurgard Storage to Go, LLC (STG), one of our subsidiaries, was a containerized storage business that brought storage directly to the customer through
weather-resistant 8 x 5 x 8 storage containers. STG delivered



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these containers to customers for packing and then picked up the containers and delivered them to a warehouse for storage. Customers had access to their
storage containers in a showroom at the warehouse or could have it redelivered to their home. In addition to the monthly rental charge, we would charge service fees for transportation of the container. In December 2003, we made the decision to exit
this business venture and we ceased activity in this enterprise in the first quarter of 2004. This business venture operated in 2003 in the Seattle, Portland and San Francisco markets. STG is owned by our taxable REIT subsidiary which is a
disregarded entity for tax purposes and therefore is subject to federal income tax. Also, in December 2003 we made the decision to discontinue the operations of Shurgard Preferred Partners, a service and affiliation arrangement with small
self-storage operators.



We also manage, under the Shurgard
name, self storage properties owned by others that meet our quality standards. Management of such properties enables us to spread the cost of overhead across a greater number of properties. Additionally, it allows us to expand our presence in the
markets in which we operate, to offer customers a broader geographic selection of self storage properties to suit their needs and to establish relationships with property owners that may lead to future acquisitions. Management fees that we earn are
not qualifying income for REIT qualification purposes. Accordingly, we closely monitor the level of these activities to ensure our continued qualification as a REIT.



Capital Strategy



We seek to maintain a strong, flexible capital structure with a corporate strategy of:



| |  |  | maintaining a moderate level of leverage
| | - |  | ----------------------------------------



| |  |  | maintaining a consistent dividend policy
| | - |  | ----------------------------------------



| |  |  | extending and staggering our debt maturities
| | - |  | --------------------------------------------



| |  |  | increasing the amount of our unencumbered assets
| | - |  | ------------------------------------------------



| |  |  | mitigating our exposure to interest rate risk
| | - |  | ---------------------------------------------



| |  |  | maintaining sufficient liquidity
| | - |  | --------------------------------



We believe these strategies will continue to enable us to maintain our unsecured credit rating and allow us to access a broad array of capital sources,
including bank or institutional borrowings, secured and unsecured debt and private and public equity financings.



Our notes payable are structured to create a staggered principal maturity schedule.



In order to mitigate our currency and interest rate risk, we contract with financial institutions for derivative products
that help us manage this exposure. Our investment policy prohibits us from entering into any such contract solely to secure profit by speculating on the direction of currency exchange or interest rates if unrelated to capital borrowed, lent or
invested by us.



We currently are assigned investment grade
corporate credit ratings on our senior unsecured notes from Fitch Ratings, Moodys Investors Service and Standard & Poors Ratings Group. Currently, Fitch has assigned a rating of BBB, Moodys has assigned a rating of Baa2 and
Standard & Poors has assigned a rating of BBB to our senior notes.



We also have received credit ratings from the same rating agencies on our redeemable preferred stock. Fitch Ratings has assigned a rating of BBB-, Moodys Investors Service has assigned a rating of Baa3 and
Standard & Poors Ratings Group has assigned a rating of BBB-. These ratings, for both our unsecured notes and our senior notes, could change based upon, among other things, our operating results, financial condition and cash flows. At



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the present time each of these rating agencies has announced that our ratings are under reconsideration pending the filing of this 2003 Form 10-K.



We have maintained consistent dividend growth. We paid
dividends of $2.15 per Share of Common Stock in 2003, representing a 22% increase from the annualized rate in 1994, the year we became a public company. Additionally, we have paid 40 consecutive quarterly dividends. However there can be no assurance
of future dividend payments.



We anticipate funding our short
and long-term liquidity needs through a combination of retained operating cash, borrowings under our variable rate unsecured credit facilities, selling existing stores or excess land that does not fit our long term strategic plan, and/or through the
issuance of additional debt or equity securities. A determination to engage in an equity or debt offering depends on a variety of factors such as general market conditions, interest rates, short and long term liquidity needs, the relative cost of
debt and equity capital, and our ability to execute such transactions at a given time. A summary of debt and equity activity for the last three years is reflected on our Consolidated Statement of Cash Flows of the Consolidated Financial Statements
set forth in Item 8 of this report.



While we believe we will
have the financial position and access to the capital markets as needed, for our currently anticipated liquidity requirements, we cannot assure you that we will be successful in completing future arrangements, sales or offerings.



We have and may continue to enter into joint ventures, partnerships and
limited liability companies as an alternative method to investing in real estate. Our decision whether to hold a property directly or indirectly is based on a variety of facts and considerations, including: (i) the economic and tax considerations of
the partner or seller, (ii) our desire to diversify our capital sources based on product type and risk, (iii) our ability to enter into a new market and establish a long term relationship with an existing self storage operator/developer, (iv) our
desire to preserve our capital resources to maintain liquidity or balance sheet strength, and (v) our desire to achieve higher returns on our invested capital or reduce our risk. These joint ventures, partnerships and limited liability companies
utilize secured mortgage financing for a portion of their overall capitalization.



We have and will continue to seek opportunities to issue our common equity in exchange for self storage and other real estate investments. Future issuance will depend upon market conditions at the time including the
market price of our equity securities.



Regulation



Environmental Regulations



We are subject to federal, state, local and foreign environmental
regulations that apply to the ownership, management and development of real property, including regulations affecting both the construction and operation of self storage properties.



In developing properties and constructing improvements, we use environmental consultants and/or governmental data to
determine whether there are any flood plains, wetlands or environmentally sensitive areas that are part of the property to be developed. If any such areas are identified, development and construction are planned in conformance with federal, state,
and local environmental and land-use requirements. The principal laws in the U.S. that could affect us are the Resource Conservation and Recovery Act and the Comprehensive Environmental Response, Compensation and Liability Act. State and local
governments have also adopted separate but similar environmental laws and regulations that vary from state to state and locality to locality.



Under various federal, state, local and foreign laws, ordinances and regulations, an owner or operator of real property may become liable for the costs of
removal or remediation of certain hazardous substances released on or in its property. Such laws may impose liability without regard to whether the owner or operator knew of, or



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was responsible for, the release of such hazardous substances. The presence of hazardous substances on a property may adversely affect the owners
ability to sell the property or to borrow using the property as collateral and may cause the owner or manager of the property to incur substantial remediation costs. In addition to claims for cleanup costs, the presence of hazardous substances on a
property could cause the owner or manager to incur substantial liabilities as a result of a claim by a private party for personal injury or a claim by an adjacent property owner for property damage.



We have not been notified by any governmental authority of any current,
material environmental noncompliance, claim or liability in connection with any of the properties we own or manage, except for the property in St. Louis discussed below. We have not been notified of any current claims for personal injury or property
damage by a private party in connection with environmental conditions at any of the properties we own or manage. We obtained a Phase I environmental assessment report prepared by an independent environmental consultant for the properties we own in
the United States, and similar environmental reports for properties acquired in Europe.



In 1995, we notified the Missouri Department of Natural Resources (MDNR) of elevated levels of hydrocarbons found in groundwater monitoring wells on a property in St. Louis, Missouri that we had been monitoring in
accordance with a work plan approved by the MDNR. In 1998, a quarterly monitoring report revealed continued contamination in the groundwater samples. The MDNR notified us that it would continue requiring quarterly groundwater monitoring. During
1999, at the MDNRs request, with the help of an environment consultant, we developed a work plan to address the MDNRs question regarding whether on-site contamination might be spreading to adjacent properties. The work plan encompasses a
broader scope of monitoring, including installation of four additional monitoring wells on adjacent properties. The work plan required on-going monitoring through April 2003, when the MDNR indicated that based on test results, ongoing testing was no
long required. The MDNR could change its opinion on the need for monitoring and be more aggressive in the future, and may require identification of the location of the groundwater contamination and construction of a system to remediate the problem.



We are not aware of any environmental condition with respect
to the properties we own or manage that could have a material adverse effect on our financial condition, operating results and cash flows. We cannot give assurance however, that any environmental assessments undertaken with respect to the properties
have revealed all potential environmental liabilities, that any prior owner or operator of the properties did not create any material environmental condition not known to us or that an environmental condition does not otherwise exist as to any one
or more of the properties that could have a material adverse effect on our financial condition, operating results or cash flows. In addition, we cannot give assurance that (i) future laws, ordinances or regulations will not impose any material
environmental liability, (ii) the current environmental condition of our owned or managed properties will not be affected by the condition of properties in the vicinity of such properties (such as the presence of leaking underground storage tanks)
or by third parties unrelated to us, or (iii) tenants will not violate their leases by introducing hazardous or toxic substances into our owned or managed properties that could expose us to liability under federal, state, local or foreign
environmental laws.



Risk Factors



The following factors are risks associated with our business.



Real Estate Investment Risks



We have significant real estate holdings that can be difficult to sell in
unfavorable economic conditions and that can have unpredictable decreases in value.    Our primary business involves owning real estate-related assets and operating self storage centers. Real estate investments can be
difficult to sell, especially when economic conditions are unfavorable. This makes it difficult for us to diversify our investment portfolio and to limit our risk when economic conditions change. Decreases in market rents, negative tax, real estate
and zoning law



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changes, and changes in environmental protection laws may also increase our costs, lower the value of our investments and decrease our income, which would
adversely affect our business, financial condition, operating results and cash flows.



Our real estate development and acquisition activities can result in unforeseen liabilities and increases in costs.    Real estate development involves risks in addition to those involved in
owning and operating existing properties. For example, we must hire contractors or subcontractors to develop our properties. Problems can develop with these relationships, including contract and labor disputes, unforeseen property conditions that
require additional work and construction delays. These problems can increase construction and other costs and delay the date when tenants can occupy the property and pay us rent. Properties that we acquire may not meet our performance expectations,
including projected occupancy and rental rates, and we may have overpaid for acquisitions. Failure of our properties to perform as expected or unforeseen significant capital improvements could decrease our cash flow. We may also have underestimated
the cost of improvements needed for us to market a property effectively, requiring us to pay more to complete a project. If a number of these events were to occur, our business, financial condition, operating results and cash flows would be
adversely affected.



We focus almost exclusively on the self
storage business, which makes us vulnerable to changes in the profitability of self storage properties.    Our investments focus on self storage business and related real estate interests. We do not expect to invest in other
real estate or businesses to hedge against the risk that industry trends might decrease the profitability of our self storage-related investments. As a result, unfavorable changes in the self storage industry may have a material adverse effect on
our business, financial condition, operating results and cash flows.



We would have great difficulty acquiring or developing properties without access to financing.    In order to acquire and develop properties, we need access to financing sources. Currently, we finance acquisitions
and development of properties through our existing credit facilities. Fluctuations in market conditions or in our operating results may cause us to violate the covenants of these existing credit facilities. If we cannot access our existing financing
sources, we may need to obtain equity and/or alternative debt financing in order to continue to acquire and develop properties. If we obtain financing by issuing additional capital stock, we could further dilute the ownership of our existing
shareholders. If we attempt to obtain financing by entering into alternative debt financing, we might not be able to obtain financing at reasonable interest rates, or at all. The inability to acquire and develop properties would have a material,
adverse effect on our business, financial condition, operating results and cash flows.



We face risks due to our investments through joint ventures.    We invest and may continue to invest in properties through joint ventures. We often share control over the operations of the
joint venture assets. Therefore, these investments may, under certain circumstances involve risks such as the possibility that our partner in an investment might become bankrupt, or have economic or business interests or goals that are inconsistent
with ours, or be in a position to take action contrary to our instructions or requests or our policies or objectives. As a result, actions by one of our partners might result in subjecting properties owned by the joint venture to additional risk.
Although we generally seek to maintain a sufficient level of control of any joint venture to permit our objectives to be achieved, we may be unable to take action without the approval of our joint venture partners or our joint venture partners could
take actions binding on the joint venture without our consent.



If we are unable to compete successfully against other companies in the self storage industry, our occupancy rates may decline.    We face intense competition in every U.S. market in which our stores are located
and to a lesser extent in Europe. Our competitors include national, regional and many local self storage operators and developers. Entry into the self storage business by acquiring existing properties is relatively easy for persons or entities with
the required initial capital. Competition may increase if available funds for investment in real estate increase. Some of our competitors may have more resources than we do, including better access to financing, greater cash reserves and less
demanding rules governing distributions to shareholders. Some competitors may have lower prices, better locations, better services or other advantages. Local market conditions



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will play a significant part in how competition affects us; additional competition has lowered occupancy levels and rental revenue of our self storage
properties in specific markets from time to time. For example, from 2002 to 2003, occupancy of our properties in the Chicago market, where we had opened additional self storage facilities, dropped 6.6% resulting in decreased revenue of $299,000. If
our occupancy rates or rental revenue decline our business, financial condition, operating results and cash flows will be adversely affected.



We face possible liability for environmental cleanup costs and damages for contamination related to our properties.    Because
we own and operate real property, various federal, state, local and foreign laws (including European Union requirements) might impose liability on us for the costs of removing or remediation of various hazardous substances released on, from or in
our property. The principal U.S. federal laws that could affect us are the Resource Conservation and Recovery Act and the Comprehensive Environmental Response, Compensation, and Liability Act; foreign, state and local governments have also adopted
separate but similar environmental laws and regulations that vary from country to country, state to state and locality to locality. These laws may impose liability whether or not we knew of or caused the release. Some of our properties were used for
commercial activities involving matters regulated under environmental laws before we acquired them. We obtain environmental assessment reports on the properties we acquire, own or operate as we deem appropriate. However, the environmental
assessments that we have undertaken might not have revealed all potential environmental liabilities or claims for such liabilities. The presence of hazardous substances on a property or the failure to meet environmental regulatory requirements may
materially adversely affect our ability to use or sell the property, or to use the property as collateral for borrowing, and may cause us to incur substantial remediation or compliance costs. In addition, if hazardous substances are located on or
released from one of our properties, we could incur substantial liabilities through a private party personal injury claim, a claim by an adjacent property owner for property damage or a claim by a governmental entity for other damages. This
liability may be imposed on us under environmental laws or common-law principles. It is also possible that future enacted, amended or reinterpreted laws, ordinances or regulations will impose material environmental liability on us, that the current
environmental conditions of properties we own or operate will be affected by other properties in the vicinity or by the actions of third parties unrelated to us or that our tenants will violate their leases by introducing hazardous or toxic
substances into the properties we own or manage and expose us to liability under federal, state, local or foreign environmental laws or otherwise engage in activities that could expose us to such liabilities. The costs of defending these claims,
conducting this environmental remediation, resolving liabilities caused by tenants or third parties or responding to such changed conditions could materially adversely affect our financial condition, operating results and cash flows.



We must comply with the Americans with Disabilities Act and fire and
safety regulations, which can require significant expenditures.    All of our properties must comply with the applicable portions of the Americans with Disabilities Act and the related regulations, rules and orders, commonly
referred to as the ADA, or similar applicable foreign laws. The ADA, for example, has separate compliance requirements for public accommodations and commercial facilities, but generally requires that buildings be made
accessible to persons with disabilities. If we fail to comply with the ADA and other applicable laws, the U.S. or foreign government might impose fines on us and award damages to individuals affected by the failure. In addition, we must operate our
properties in compliance with numerous local and foreign fire and safety regulations, building codes and other land use regulations. Compliance with these requirements could require us to spend substantial amounts of money, which could adversely
affect our operating results. Failure to comply with these requirements may also affect the marketability of the properties.



If property taxes increase, our yields on investments could decline.    Each of our properties is subject to real property
taxes. These real property taxes may increase in the future as property tax rates change and as our property values are assessed or reassessed by tax authorities. Depending on local market conditions, we may not be able to offset the tax increases
through increases in rents or other income, which may adversely affect our business, financial condition, operating results and cash flows.



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We face potential underinsured losses on our investments.    We maintain title
insurance on all of our U.S. properties and other property-related insurance on all of our U.S. and European properties. We exercise discretion in determining amounts, coverage limits and deductibility provisions of title, casualty and other
insurance relating to our properties, taking into account the appraised or estimated value of the property in each case to obtain appropriate insurance coverage at a reasonable cost and on suitable terms. We currently carry the following insurance
coverage:



| |  |  | commercial general liability insurance for our U.S. properties, covering up to an aggregate of $50,000,000, and subject to deductibles of $50,000 or $10,000 depending on the
circumstances;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | commercial general liability insurance for our European properties, covering up to an aggregate amount ranging from 1 million ($1.2 million as of March 19, 2004) to 6
million ($7.4 million as of March 19, 2004), and subject to deductibles ranging from  0 to 375 ($399 as of March 19, 2004), depending on the country in which the property is located;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | property insurance for our U.S. properties, covering up to an aggregate of $50,000,000, with deductibles of $20,000 or $10,000 for general damages depending on the property,
deductibles ranging from $25,000 to $1,000,000 in the case of flood damage depending on the circumstances of the flood, a minimum deductible of $100,000 in the case of damages due to named wind storms depending on the state in which the property is
located, and a minimum deductible of $250,000 for earthquake damages depending on the state in which the property is located; earthquake deductible for California, Arkansas, and Washington is 5% of property value or $250,000, whichever is greater.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | property insurance for our European properties, covering up to an aggregate amount ranging from 50 million ($81.9 million as of March 19, 2004) to 88.9 million ($94.6
million as of March 19, 2004), and subject to deductibles ranging from 857 ($912 as of March 19, 2004) to 612,000 ($651,984 as of March 19, 2004), depending on the country in which the property is located;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | boiler & machinery insurance for our U.S. properties, covering up to $50,000,000 of direct damages with a $20,000 deductible;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------



| |  |  | terrorism insurance on our U.S. properties, covering up to an aggregate amount of $50,000,000 subject to deductibles ranging from $10,000 to $20,000, depending on the location of
the property; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | terrorism insurance on our properties in Belgium, France, the Netherlands, Denmark, and the United Kingdom, covering up to an aggregate amount in each country ranging from 8
million ($8.7 million as of March 19, 2004) to 88.9 million ($94.6 million as of March 19, 2004) or for full value in some countries, and subject to deductibles ranging from 1,365 ($1,431 as of March 19, 2004) to 612,000 ($651,984
as of March 19, 2004), depending on the country in which the property is located.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Depending on the type of insurance, and subject to deductibles and coverage limits, we either receive direct payment of the replacement value of losses or
tender the defense of a claim to the insurance carrier. This might mean that, in the event of a loss, our insurance coverage would not pay the full current market value or current replacement cost of our lost investment. Inflation, changes in
building codes and ordinances, environmental considerations and other factors might also increase the replacement cost of a facility after it has been damaged or destroyed. In that case, the insurance proceeds that we receive might not be enough to
restore us to our economic position with respect to the property.



Terrorist attacks and the possibility of armed conflict may have an adverse effect on our business, financial condition, operating results and cash flows and could decrease the value of our assets.    Terrorist
attacks and other acts of violence or war, such as those that took place on September 11, 2001, or the recent war with Iraq, could have a material adverse effect on our business and operating results. There can be no assurance that there will not be
further terrorist attacks against the United States or any of the European countries in which we operate. Attacks or armed conflicts that directly impact one or more of our properties could significantly affect our ability to operate those
properties and thereby impair our ability to achieve our expected results. Further, we may not have sufficient insurance coverage for losses caused by a terrorist attack. Such insurance may not be



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available, or if it is available and we decide, or are required by our lenders, to obtain such terrorism coverage, the cost for the insurance may be
significant in relationship to the risk covered. In addition, the adverse effects that such violent acts and threats of future attacks could have on the U.S. economy or relevant foreign economies could similarly have a material adverse effect on our
business, financial condition, operating results and cash flows. Finally, further terrorist acts could cause the United States or other countries where we operate to enter into armed conflict, which could further impact our business, financial and
operating results.



International Operations



We have significant international operations that
carry additional risks.    We invest in, and conduct, operations outside the United States. With our increased investment and ownership position in Shurgard Europe, we face increased exposure to risks related to Shurgard
Europes operations. The inherent risks we face in international business operations include, but are not limited to:



| |  |  | currency risks, including currency fluctuations;
| | - |  | ------------------------------------------------



| |  |  | unexpected changes in legislative and regulatory requirements;
| | - |  | --------------------------------------------------------------



| |  |  | potentially adverse tax burdens;
| | - |  | --------------------------------



| |  |  | burdens of complying with different permitting standards, labor laws and a wide variety of foreign laws
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | obstacles to the repatriation of earnings and cash;
| | - |  | ---------------------------------------------------



| |  |  | regional, national and local political uncertainty;
| | - |  | ---------------------------------------------------



| |  |  | economic slowdown and/or downturn in foreign markets;
| | - |  | -----------------------------------------------------



| |  |  | difficulties in staffing and managing international operations; and
| | - |  | -------------------------------------------------------------------



| |  |  | reduced protection for intellectual property in some countries.
| | - |  | ---------------------------------------------------------------



Each of these risks might impact our cash flow or impair our ability to borrow funds, which ultimately could adversely affect our business, financial
condition, operating results and cash flows.



Our European
operations have not been profitable to date and may not become profitable.    New and recently developed self storage centers require a significant amount of start-up capital and generally take a considerable amount of
time to complete the lease-up period. During the early stage of the lease-up period, properties are not profitable. Because over 40% of the European properties in which we have an investment have been developed since January 1, 2002 and are still
undergoing lease-up, most of these properties, and therefore our European operations in general, have not been profitable. Also our expansion efforts may require more funding than we currently anticipate, and we will need to generate significant
additional revenue once the lease-up period is achieved, before we will be able to sustain or increase profitability. We cannot assure you that these properties, or other properties that Shurgard Europe and its development joint venture First
Shurgard Sprl (First Shurgard) acquire and develop, will become profitable even after the lease-up periods. Failure of Shurgard Europes operations to become profitable would have a material adverse effect on our business, financial condition,
operating results and cash flows.



Our growth strategy in
Europe may not be successful.    We entered the European market in 1995 because we believed that the size and potential growth of that market made it a significant opportunity for our continued
growth. Our ability to achieve our strategy in Europe depends on a number of factors, including:



| |  |  | the continued growth in acceptance of the self storage concept in a market where the concept remains relatively new;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to compete effectively as the European market develops and we face increased competition; and
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | our ability to locate, acquire and develop appropriate new properties.
| | - |  | ----------------------------------------------------------------------



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We cannot assure you that we will be successful in overcoming these risks or any other problems
encountered with our European operations, some of which may be beyond our control.



We do not have operating control over Shurgard Europe.    We hold a combined indirect and direct 85.47% ownership interest in Shurgard Europe as of December 31,
2003 and Fremont Investors, Inc. our partners that we refer to as Fremont, currently holds a 12.77% ownership interest. Under the joint venture agreement governing Shurgard Europe, substantially all of the major decisions of Shurgard Europe require
both our approval and the approval of Fremont, notwithstanding the difference in ownership positions. These decisions include among other things, the disposition and acquisition of assets, entry into new markets, approval of the annual business
plan, the hiring of key executives and financing arrangements. As a result, we may not be able to pursue business opportunities that we consider beneficial to Shurgard Europe if Fremont does not vote in favor of these actions.



The joint venture agreement provides that if, by December 31, 2004, Fremont
has not had an opportunity to liquidate its interest through an initial public offering or a sale of its ownership interest, it may initiate steps to retain an investment bank to value Shurgard Europe, at which time we have a preemptive right to
purchase Fremonts ownership interest at that value. If we do not purchase Fremonts interest, certain procedures under the joint venture agreement could lead to an initial public offering or to the sale of Shurgard Europe or its assets.
All joint venture partners interests in Shurgard Europe are subject to a right of first refusal. We are subject to other restrictions on the transfer and sale of our ownership interests in Shurgard Europe. The operation of these provisions
could continue to affect our ownership interest in, and the structure of, our European investment.



Risks Relating to Qualification and Operation as a REIT



We might lose our REIT status and incur significant tax liabilities.    We have elected to be
taxed as a REIT under the Internal Revenue Code of 1986, as amended, or the Code, commencing with our taxable year ended December 31, 1994. So long as we meet the requirements under the Code for qualification as a REIT each year, we can deduct
dividends paid to our shareholders when calculating our taxable income. For us to qualify as a REIT, we must meet detailed technical requirements, including income, asset, distribution and stock ownership tests, under several Code provisions that
have not been extensively interpreted by judges or administrative officers. In addition, we do not control the determination of all factual matters and circumstances that affect our ability to qualify as a REIT. New legislation, regulations,
administrative interpretations or court decisions might significantly change the tax laws with respect to REIT qualification or the federal income tax consequences of such qualification. We believe that we are organized so that we qualify as a REIT
under the Code and that we have operated and will continue to operate so that we continue to qualify. However, we cannot guarantee that we will qualify as a REIT in any given year because:



| |  |  | the rules governing REITs are highly complex;
| | - |  | ---------------------------------------------



| |  |  | we do not control all factual determinations that affect REIT status; and
| | - |  | -------------------------------------------------------------------------



| |  |  | our circumstances may change in the future.
| | - |  | -------------------------------------------



As a result of an administrative error, it is possible that entity classification elections for certain subsidiaries may not have been timely filed. We do
not believe that our status as a real estate investment trust would be impacted as the result of such an error. However, we are currently attempting to resolve this issue definitively with the Internal Revenue Service. For any taxable year that we
fail to qualify as a REIT, we would not be entitled to deduct dividends paid to our shareholders from our taxable income. Consequently, our net assets and distributions to shareholders would be substantially reduced because of our increased tax
liability. If we made distributions in anticipation of our qualification as a REIT, we might be required to borrow additional funds or to liquidate some of our investments in order to pay the applicable tax. If our qualification as a REIT
terminates, we may not be able to elect to be treated as a REIT for the four taxable years following the year during which we lost the qualification.



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We may pay taxes even if we continue to qualify as a REIT.    Even if we
continue to qualify as a REIT, we are required to pay some federal, state, local and foreign taxes on our income and our property. For example, Shurgard TRS, Inc. and certain of our other corporate subsidiaries have elected to be treated as taxable
REIT subsidiaries. We will be subject to a 100% penalty tax on payments we receive from these subsidiaries if the economic arrangements between the REIT and the taxable subsidiaries are not comparable to similar arrangements between unrelated third
parties. In addition, all of our European subsidiaries are subject to local taxation. We also could be subject to tax in the event we, among other things:



| |  |  | sell property that is considered to be inventory for federal income tax purposes;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | sell prior to March 25, 2005, certain assets we acquired from Shurgard Incorporated, our predecessor company; or
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | fail to satisfy certain distribution rules, as described below.
| | - |  | ---------------------------------------------------------------



Our REIT distribution requirements are complex and may create tax difficulties.    To maintain our status as a REIT for federal
income tax purposes, we generally must distribute to our shareholders at least 90% of our taxable income each year. In addition, we are subject to a 4% nondeductible excise tax on the amount by which our distributions for a calendar year are less
than the sum of:



| |  |  | 85% of our ordinary income for the calendar year;
| | - |  | -------------------------------------------------



| |  |  | 95% of our capital gain net income for the calendar year; and
| | - |  | -------------------------------------------------------------



| |  |  | any amount of our income that we did not distribute in prior years.
| | - |  | -------------------------------------------------------------------



For tax purposes, we may be required to treat interest, rent and other items as earned even though we have not yet received these amounts. In addition, we
may not be able to deduct currently as expenses for tax purposes some items that we have actually paid. We could also realize income, such as income from cancellation of indebtedness that is not accompanied by cash proceeds. If one or more of these
events happened, we could have taxable income in excess of cash available for distribution. In such circumstances, we might have to borrow money or sell investments on unfavorable terms in order to meet the distribution requirement applicable to a
REIT.



Our indirect investments may result in liabilities
against which we cannot protect.    We have and may continue to make participating mortgages or acquire equity interests in partnerships, joint ventures or other legal entities that have invested in real estate. Our bylaws
require that we satisfy several conditions before we make these indirect investments, including that the joint investment not jeopardize our eligibility to be taxed as a REIT or result in our becoming an investment company under the Investment
Company Act of 1940, as amended. These investments carry risks that are not present when we invest directly in real estate and against which we may not be able to protect ourselves, including the risk that we may not control the legal entity that
has title to the real estate, the possibility that the enterprise in which we invest has liabilities that are not disclosed at the time of the investment and the possibility that our investments are not easily sold or readily accepted as collateral
by our lenders.



All of our real estate investments in Europe
are held indirectly through partnerships and joint venture arrangements, including our First Shurgard joint venture. If we are unable to effectively control these indirect investments, or if they result in significant liabilities that were
undisclosed at the time we entered into them, our business, financial condition, operating results and cash flows may be materially adversely affected.



Other Risks



Legislation or changes in accounting regulations or interpretations relating to such matters as consolidation of joint ventures and subsidiaries, stock
options and capitalization of certain development overhead costs could substantially affect our financial reporting.    We may be affected by legislation or changes



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in regulations or interpretations regarding certain accounting standards applied to our operations and certain of our existing financial and joint venture
structures. Changes in consolidation and stock options may affect the accounting treatment or net income of certain of our investments. The Financial Accounting Standards Board, or FASB, has issued rules on variable interest entities that will
likely affect materially the accounting treatment of certain of our financial and joint venture structures and result in the consolidation of the assets, liabilities and operations of joint ventures that we have not previously consolidated. We have
concluded that under FASB Interpretation No. (FIN) 46R Consolidation of Variable Interest Entities, we will consolidate both Shurgard Europe and First Shurgard in 2004. These rules are new and are subject to an evolving set of
interpretations that dictate whether we consolidate or not the assets, liabilities and operations of Shurgard Europe and First Shurgard. Further evolution of the interpretation of these rules may result in a different application of these rules to
our financial reporting in the future.



The implementation
of the Jobs and Growth Tax Relief Reconciliation Act of 2003 may adversely affect the value of our Common Stock.    On May 28, 2003, President Bush signed the Jobs and Growth Tax Relief and Reconciliation Act of 2003 into
law, which provides favorable income tax rates for certain corporate dividends received by individuals through December 31, 2008. Under this new law, REIT dividends are not eligible for the preferential capital gain rates applicable to dividends
unless the dividends are attributable to income that has been subject to corporate-level tax. As a result, substantially all of the distributions paid on our shares are not expected to qualify for such lower rates. This new law could cause stock in
non-REIT corporations to be more attractive to investors than stock in REITs, which may negatively affect the value of, and the market for, our Common Stock.



Inability to access the capital markets or delisting of our stock could delay or adversely affect execution of our business
plan.    Due to the delay in filing our annual report on Form 10-K we will be unable for at least one year subsequent to the date hereof, to access the capital markets to raise equity or debt using our Form S-3 shelf
registration, which may mean delays in registering additional securities for sale. In addition, we may face delays in applying to register our securities due to lengthy review by the SEC staff of this report and our subsequent filings. If our
securities are delisted by the NYSE because we were late in filing this report we may face a lengthy appeal process to relist our securities, and will likewise cause us to not be in compliance under our other debt agreements.



Material weakness may still exist in our internal
controls.    During 2004, our independent auditors concluded that there were deficiencies in the internal control structure of the Company, which, in the aggregate, they considered to be a material weakness under current
accounting standards established by the American Institute of Certified Public Accountants. Consequently, additional review, evaluation and oversight were required on the part of Company management, during the course of the audits to ensure such
internal control deficiencies were adequately compensated for. Certain corrective actions have been initiated to rectify the internal control weakness; however, we cannot assure you that these corrective actions will be effective. It is expected
that our auditors will be unable to comment on the effectiveness of our remedial actions until the completion of the 2004 audit. If we do not effectively execute our plans to strengthen our internal controls, including plans to prepare us to comply
with the annual internal control certification required pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 and the related SEC rules, our auditors in the future could continue to find deficiencies in our internal control structure.



Employees



As of December 31, 2003, Shurgard and Shurgard Europe employed approximately
1,400 and 460 persons, respectively. None of our employees in the U.S. is covered by a collective bargaining agreement. One country in Europe has representation of employees through an internal collective bargaining council. We believe that our
relations with our employees are good.



Executive Officers of the Registrant



The following table sets forth certain information
regarding the executive officers of Shurgard as of December 31, 2003.



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|                |  |     |  |                                                                           
|--------------- |  | --- |  | --------------------------------------------------------------------------
|Name            |  | Age |  | Positions and Offices with the Company                                    
|Charles Barbo   |  | 62  |  | Chairman of the Board and Chief Executive Officer                         
|David Grant     |  | 50  |  | President, Chief Operating Officer and Interim Chief Financial Officer    
|Harrell Beck    |  | 47  |  | Director, Executive Vice President, Chief Investment Officer and Treasurer
|Christine McKay |  | 42  |  | Senior Vice President, Secretary and General Counsel                      
|Steve Tyler     |  | 51  |  | Senior Vice President, Retail Services                                    



Charles K.
Barbo has been involved as a principal in the real estate investment industry since 1969. Mr. Barbo is one of the co-founders of Shurgard Incorporated, which was organized in 1972 to provide property management services for self storage
facilities and other real estate and commercial ventures. Prior to the merger of our former management company, Shurgard Incorporated, with and into Shurgard in 1995, he served as Chairman of the Board and President of Shurgard Incorporated. On the
closing of the merger with Shurgard Incorporated, he was named Chairman of the Board, President, and Chief Executive Officer of Shurgard. Mr. Barbo is a graduate of the Owner/President Management Program of Harvard Business School and has a Bachelor
of Arts degree in history from the University of Washington. He is an alumnus of the Young Presidents Organization.



David Grant joined Shurgard Incorporated in November 1985 as Director of Real Estate. Mr. Grant served as our Executive Vice President and Director
of Real Estate Investment from December 1993. In January 1996, Mr. Grant became President of Shurgard Europe and moved to Brussels, Belgium where our European headquarters are located. During this time, he also continued to serve as an Executive
Vice President of Shurgard Incorporated. He returned to the U.S. in August 2003 to take on the role of President and Chief Operating Officer, and in January 2004 became Interim Chief Financial Officer. Mr. Grant has a Bachelor of Arts degree in
Business Administration and a Bachelor of Science degree in Accounting, both from Washington State University.



Harrell L. Beck has served as a director of Shurgard since July 1993 and in February 2004 was appointed Executive Vice President and Chief
Investment Officer. Prior to the closing of Shurgards merger with Shurgard Incorporated, Mr. Beck also served as Shurgards President. He was named Senior Vice President of Shurgard upon the closing of the merger with Shurgard
Incorporated. He joined Shurgard Incorporated in April 1986 as the Eastern Regional Vice President, in 1990 became its Chief Financial Officer, and, in 1992, its Treasurer, which positions he held until his appointment as Executive Vice President in
February 2004. Prior to joining Shurgard Incorporated, Mr. Beck was a manager with Touche Ross & Co., where he was employed for approximately six years, during which time he provided services primarily to clients in the real estate and aerospace
industries. Mr. Beck has a Bachelor of Arts degree in Business Administration from Washington State University.



Christine McKayhas served as Senior Vice President, Secretary and General Counsel since October 1999. She joined Shurgard Incorporated in June
1993, as an Assistant General Counsel. She previously served as our Assistant Secretary from October 1998 to 1999, and has served as Assistant Secretary and Division Counsel for STG, from July 1997. Ms. McKay was previously an attorney with
Williams, Kastner & Gibbs, in Seattle. She has a Bachelor of Arts degree in Business Administration from Chadron State College, and a Juris Doctorate, with honors, from Creighton University. She is a member of the Washington State Bar
Association and the Corporate Counsel Section of the Washington State Bar Association.



Steve Tylerhas served as Senior Vice President of Retail Services since August 2003, overseeing marketing, sales center and human resources. He also interfaces with field leadership regarding business plan
implementation. He was Senior Vice President in charge of sales, marketing and domestic operations from November 2000 to August 2003. Mr. Tyler joined Shurgard Incorporated in May of 1996 as Regional Vice President of Midwest and East Coast markets.
Prior to joining Shurgard, he was a Regional Operations Manager with Victorias Secret (a division of the Limited), Casual Corner (a division of U.S. Shoe), and a District Operating manager with The Gap and Sears. He has a Bachelor of Arts
degree in Business Administration from the University of Minnesota-Duluth.



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Other Available Information



We file our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to
those reports with the Securities and Exchange Commission (SEC). You may obtain copies of these documents by visiting the SECs Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549, by calling the SEC at 1-800-SEC-0330 or by
accessing the SECs website at http://www.sec.gov. In addition, as soon as reasonably practicable, after such materials are filed with or furnished to the SEC, we make copies of these documents (other than exhibits) available to the public free
of charge through our web site at www.shurgard.com or by contacting our Secretary at our principal offices, which are located at 1155 Valley Street, Suite 400, Seattle, Washington 98109, telephone number (206) 624-8100.



In addition Shurgards corporate governance guidelines, director
independence criteria, committee charters, codes of conduct and ethics, and other documents setting forth our corporate governance practices can be accessed in the Corporate Governance section of Shurgards web site at
http://investorrelations.shurgard.com or by writing to the Shurgards Investor Relations department at our address set forth above.



Item 2Properties



U.S. and European Properties



As of December 31, 2003, we operated a network of 617 storage centers and two business parks located throughout the United States and in Europe. Of these properties, we own or lease, directly and through our subsidiaries and joint ventures,
591 properties containing approximately 37.6 million net rentable square feet and manage for third parties 26 properties containing approximately 1.5 million rentable square feet.



Of the 591 properties:



| |  |  | we owned or leased 469 U.S. properties in 21 states, including 114 properties in which we hold joint venture interests ranging from 20% to 93%.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Shurgard Europe and First Shurgard owned or leased 122 properties in seven European countries containing approximately 6.7 million rentable square feet.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



Our self storage properties are designed to offer accessible storage space
for personal and business use. Individuals typically rent individual units in self storage properties for storage of personal belongings such as furniture, appliances, boats and other household and recreational goods. Businesses typically rent space
for storage of business property such as equipment, seasonal goods, records and fixtures. We believe that it is desirable to have commercial customers because they tend to rent larger units, stay for longer terms and are more reliable payers. Based
on surveys of our customers, we estimate that commercial users account for approximately 25% to 30% of our total customer base in the United States.



Our self storage properties are divided into a number of self-enclosed rental units that generally range in size from approximately 25 to 625 square feet.
Many properties have uncovered storage outside the buildings for parking motor vehicles, boats, campers and other similar items suitable for outside storage. Additionally, a number of our properties include climate-controlled storage units for which
we typically charge a premium.



Customers of self storage
properties are generally responsible for delivering and retrieving their goods. Many leased spaces can be accessed directly by automobile or truck, but some properties, in particular the multistory buildings, have separate loading docks and
elevators available for delivery and retrieval of stored goods. Customers generally have access to their unit without additional charge during normal business hours and control access to such space through the use of their personal padlocks.



The leasing, maintenance and operation of our stores are the
responsibility of our store managers. Security is provided through a variety of systems that may include, among others, on-site personnel, electronic devices such as intrusion and fire alarms, access controls, video and intercom surveillance
devices, property fencing and lighting.





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Although our stores range considerably in size, most domestic properties consist of one or more
single-story buildings. The smallest store has approximately 21,000 net rentable square feet, while the largest store has approximately 280,000 net rentable square feet. The properties generally are constructed with concrete block or tilt-up
concrete panels, with steel columns or pre-cast concrete columns that rest on concrete footings and slabs, and have built-up tar roofs or pitched truss roofs with shingles or standing seam metal roofs. The interior walls are generally constructed
with metal studs and partitions or other construction materials that are secure but readily movable. The parking areas and driveways are generally asphalt or concrete. All stores have fencing, floodlights and electronic gates.



In some cases, multistory buildings have been converted into self storage
properties. In addition, similar multistory buildings for self storage have been constructed in dense urban areas where land costs, zoning and other development considerations make it impractical or undesirable to construct single-story buildings.



The following table sets forth the geographic dispersion of
our self storage properties as of December 31, 2003.



|                         |  |                                            |  |                                  |  
|------------------------ |  | ------------------------------------------ |  | -------------------------------- | -
|                         |  | Number ofProperties as ofDecember 31, 2003 |  | Percentageof 2003StoreRevenue(2) |  
|Texas                    |  | 65                                         |  | 10.6                             | %
|California               |  | 53                                         |  | 13.0                             | %
|Washington               |  | 52                                         |  | 10.4                             | %
|Virginia                 |  | 35                                         |  | 6.5                              | %
|North Carolina           |  | 33                                         |  | 4.2                              | %
|Florida                  |  | 29                                         |  | 5.6                              | %
|Michigan                 |  | 26                                         |  | 4.2                              | %
|Arizona                  |  | 23                                         |  | 3.6                              | %
|Illinois                 |  | 23                                         |  | 3.2                              | %
|Minnesota                |  | 19                                         |  | 1.8                              | %
|Georgia                  |  | 18                                         |  | 3.1                              | %
|Oregon                   |  | 14                                         |  | 2.4                              | %
|South Carolina           |  | 14                                         |  | 1.4                              | %
|Indiana                  |  | 13                                         |  | 1.6                              | %
|Maryland                 |  | 11                                         |  | 1.7                              | %
|New York                 |  | 11                                         |  | 3.9                              | %
|Tennessee                |  | 10                                         |  | 1.2                              | %
|Other domestic States    |  | 20                                         |  | 3.0                              | %
|                         |  |                                            |  |                                  |  
|Domestic Total(1)        |  | 469                                        |  | 81.4                             | %
|                         |  |                                            |  |                                  |  
|France                   |  | 30                                         |  | 5.0                              | %
|Netherlands              |  | 29                                         |  | 3.3                              | %
|Sweden                   |  | 22                                         |  | 3.8                              | %
|Belgium                  |  | 18                                         |  | 3.0                              | %
|United Kingdom           |  | 13                                         |  | 2.9                              | %
|Other European Countries |  | 10                                         |  | 0.6                              | %
|                         |  |                                            |  |                                  |  
|Europe Total             |  | 122                                        |  | 18.6                             | %
|                         |  |                                            |  |                                  |  
|Total                    |  | 591                                        |  | 100.0                            | %
|                         |  |                                            |  |                                  |  

---

|(1) |  | Includes 469 facilities owned or leased by us and entities in which we have a controlling financial interest. See Schedule III in this Form 10-K for a complete list of properties
for which we consolidate financial information.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) |  | Revenue includes revenue of all stores we actively operate regardless of ownership interest in the property and whether the store is owned by an entity that is consolidated in our
financial statements.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



17



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##### Table of Contents

Rental of Storage Units.    Storage units are usually rented on a
month-to-month basis. Based on our most recent evaluation of customer move-outs for the year ended December 31, 2003, the average rental period for a tenant is approximately 12 months. This average is comprised of the rental periods of business
tenants, whose average stay approximates 20 months, and those of residential customers, whose average stay approximates 11 months. Rental income from leased space constitutes the primary revenue from such properties, but we receive additional
revenue from incidental services rendered at the properties, such as lock and box sales and truck rentals. Rental rates vary substantially depending on the size of the storage space, the property location, the quality of the property and the
proximity of competition.



Other
Properties.Shurgard owns two business parks located near Tacoma, Washington and Burke, Virginia. The business parks were built in 1979 and 1984, respectively, and they contain an aggregate of approximately 158,000
net rentable square feet.



Item 3Legal Proceedings



We are a defendant in litigation filed on June 17, 2002, in the Superior
Court of California for Orange County styled as Gary Drake v. Shurgard Storage Centers, Inc. et al (Case No. 02CC00152). The complaint alleges that we misrepresent the size of our storage units and seeks class action status and seeks damages,
injunctive relief and declaratory relief against us under California statutory and common law relating to consumer protection, unfair competition, fraud and deceit and negligent misrepresentation. We do not currently believe that the outcome of this
litigation will have a material adverse effect on our financial position, operating results or cash flows. However, we cannot presently determine the potential total damages, if any, or the ultimate outcome of the litigation. We are vigorously
defending this action.



We are a defendant in litigation filed
on October 30, 2002, in the United States District Court for the Northern District of California styled as Patricia Scura et al. v. Shurgard Storage Centers, Inc. (Case No. C 02-5246-WDB). The complaint alleges that we required our hourly store
employees to perform work before and after their scheduled work times and failed to pay overtime compensation for work performed before and after hours and during meal periods. The lawsuit seeks class action status and seeks damages, injunctive
relief and a declaratory judgment against us under the Federal Fair Labor Standards Act and California statutory wage and hour laws and laws relating to unlawful and unfair business practices. We do not currently believe that the outcome of this
litigation will have a material adverse effect upon our financial position, operating results or cash flows. However, we cannot presently determine the potential total damages, if any, or the ultimate outcome of the litigation. We are vigorously
defending this action.



The Company is party to various claims,
complaints and other legal actions that have arisen in the normal course of business from time to time that are not described above. We believe that it is unlikely that the outcome of these other pending legal proceedings, including employment and
tenant claims, in the aggregate, will have a material adverse effect upon the financial position, operating results, or cash flows of the Company.



Item 4Submission of Matters to a Vote of Security Holders



No matters were submitted to a vote of shareholders during the fourth quarter of 2003.





18



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##### Table of Contents

PART II



Item 5Market for the Registrants Common Equity and Related Stockholder Matters



Our Common Stock is traded on the New York Stock Exchange (NYSE), under the symbol SHU. As of April 30, 2004
there were 16,732 holders of record of our Common Stock and the reported NYSE closing price per share of Common Stock was $33.30.



The table below sets forth for the fiscal periods indicated the high and low sales prices per share of Common Stock as reported in the NYSE composite
tapes for applicable periods, and distributions declared.



|               |  |      |       |     |   |                          |  |   |     
|-------------- |  | ---- | ----- | --- | - | ------------------------ |  | - | ----
|               |  | High |       | Low |   | DistributionsDeclared(1)
|2003           |  |      |       |     |   |                          |  |   |     
|Fourth Quarter |  | $    | 39.32 |     | $ | 34.86                    |  | $ | 0.54
|Third Quarter  |  |      | 35.30 |     |   | 32.09                    |  |   | 0.54
|Second Quarter |  |      | 34.99 |     |   | 31.00                    |  |   | 0.54
|First Quarter  |  |      | 32.30 |     |   | 28.37                    |  |   | 0.54
|2002           |  |      |       |     |   |                          |  |   |     
|Fourth Quarter |  | $    | 31.68 |     | $ | 27.99                    |  | $ | 0.53
|Third Quarter  |  |      | 34.25 |     |   | 28.09                    |  |   | 0.53
|Second Quarter |  |      | 35.40 |     |   | 32.06                    |  |   | 0.53
|First Quarter  |  |      | 33.50 |     |   | 29.22                    |  |   | 0.53

---

|(1) |  | Distributions declared by our Board of Directors based on financial results for the quarter specified, but declared and paid in the following quarter.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



Holders of shares of Common Stock are entitled to receive distributions when
declared by our Board of Directors out of any assets legally available for payment. There are covenants in our various debt agreements that may restrict our dividends. We are required to distribute annually to our shareholders at least 90% of our
REIT taxable income, which, as defined by the relevant tax statutes and regulations, is generally equivalent to net taxable ordinary income, to maintain our REIT status for federal income tax purposes.



19



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##### Table of Contents

Item 6Selected Financial Data



This Form 10-K includes restatements of previously reported historical financial data and related descriptions for the years
ended December 31, 2002 and 2001. We have reassessed certain accounting policies applied historically to the items as described in Note B to our Consolidated Financial Statements and concluded that these items have been accounted for incorrectly. In
addition, we have identified certain other accounting errors impacting prior periods. As a result, we have made the appropriate adjustments to our previously issued financial statements for the years ended December 31, 2002, 2001, 2000 and 1999.



|                                |  |                                      |           |                   |   |                   |  |                   |           |                   |   |           |  |   |          
|------------------------------- |  | ------------------------------------ | --------- | ----------------- | - | ----------------- |  | ----------------- | --------- | ----------------- | - | --------- |  | - | ---------
|                                |  | For the years ended December 31,    
|                                |  | 2003                                 |           | 2002(as restated) |   | 2001(as restated) |  | 2000(as restated) |           | 1999(as restated)
|OPERATING DATA:                 |  |                                      |           |                   |   |                   |  | (2)               |           | (2)              
|                                |  | (in thousands except per share data)
|Total revenue                   |  | $                                    | 302,314   |                   | $ | 272,817           |  | $                 | 242,291   |                   | $ | 211,794   |  | $ | 184,108  
|Net income                      |  | $                                    | 37,638    |                   | $ | 48,059            |  | $                 | 22,787    |                   | $ | 29,156    |  | $ | 36,461   
|Net income per common share:    |  |                                      |           |                   |   |                   |  |                   |           |                   |   |           |  |   |          
|Basic                           |  | $                                    | 0.64      |                   | $ | 0.91              |  | $                 | 0.25      |                   | $ | 0.69      |  | $ | 0.95     
|Diluted                         |  | $                                    | 0.62      |                   | $ | 0.90              |  | $                 | 0.25      |                   | $ | 0.69      |  | $ | 0.95     
|Distributions per common share: |  |                                      |           |                   |   |                   |  |                   |           |                   |   |           |  |   |          
|Ordinary income                 |  | $                                    | 1.67      |                   | $ | 1.92              |  | $                 | 1.74      |                   | $ | 1.73      |  | $ | 1.91     
|Capital gain                    |  |                                      | 0.06      |                   |   | 0.08              |  |                   | 0.07      |                   |   |          |  |   | 0.05     
|Return of capital               |  |                                      | 0.42      |                   |   | 0.11              |  |                   | 0.26      |                   |   | 0.30      |  |   | 0.03     
|                                |  |                                      |           |                   |   |                   |  |                   |           |                   |   |           |  |   |          
|Total                           |  | $                                    | 2.15      |                   | $ | 2.11              |  | $                 | 2.07      |                   | $ | 2.03      |  | $ | 1.99     
|                                |  |                                      |           |                   |   |                   |  |                   |           |                   |   |           |  |   |          
|                                | 
|                                |  | (in thousands)                      
|BALANCE SHEET DATA:             |  |                                      |           |                   |   | (2)               |  | (2)               |           | (2)              
|Total assets                    |  | $                                    | 2,067,091 |                   | $ | 1,620,327         |  | $                 | 1,353,296 |                   | $ | 1,303,816 |  | $ | 1,201,629
|Total borrowings (1)            |  | $                                    | 1,014,869 |                   | $ | 826,423           |  | $                 | 590,934   |                   | $ | 660,402   |  | $ | 544,264  

---

|(1) |  | Total borrowings includes participation rights liability net of discount (See Note I to our Consolidated Financial Statements).
|--- |  | -------------------------------------------------------------------------------------------------------------------------------

|(2) |  | This financial information has been restated to reflect the consolidation of certain domestic joint ventures and other adjustments relating to certain items that had been accounted
for incorrectly, as described in Note B to our Consolidated Financial Statements. The restated balances for 2001 (balance sheet data only), 2000 and 1999 have not been audited.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

We previously reported the following selected financial data:



|                                |  |                                                         |           |      |   |           |  |      |           |  |   |          
|------------------------------- |  | ------------------------------------------------------- | --------- | ---- | - | --------- |  | ---- | --------- |  | - | ---------
|                                |  | As previously reported For the years ended December 31,
|                                |  | 2002                                                    |           | 2001 |   | 2000      |  | 1999
|                                |  | (in thousands except per share data)                   
|OPERATING DATA:                 |  |                                                         |           |      |   |           |  |      |           |  |   |          
|Total revenue                   |  | $                                                       | 264,113   |      | $ | 232,590   |  | $    | 201,958   |  | $ | 176,456  
|Net income                      |  | $                                                       | 56,633    |      | $ | 33,312    |  | $    | 32,307    |  | $ | 36,579   
|Net income per common share:    |  |                                                         |           |      |   |           |  |      |           |  |   |          
|Basic                           |  | $                                                       | 1.20      |      | $ | 0.59      |  | $    | 0.80      |  | $ | 0.95     
|Diluted                         |  | $                                                       | 1.18      |      | $ | 0.59      |  | $    | 0.79      |  | $ | 0.95     
|Distributions per common share: |  |                                                         |           |      |   |           |  |      |           |  |   |          
|Ordinary income                 |  | $                                                       | 1.92      |      | $ | 1.74      |  | $    | 1.73      |  | $ | 1.91     
|Capital gain                    |  |                                                         | 0.08      |      |   | 0.07      |  |      |          |  |   | 0.05     
|Return of capital               |  |                                                         | 0.11      |      |   | 0.26      |  |      | 0.30      |  |   | 0.03     
|                                |  |                                                         |           |      |   |           |  |      |           |  |   |          
|Total                           |  | $                                                       | 2.11      |      | $ | 2.07      |  | $    | 2.03      |  | $ | 1.99     
|                                |  |                                                         |           |      |   |           |  |      |           |  |   |          
|                                | 
|                                |  | (in thousands)                                         
|BALANCE SHEET DATA:             |  |                                                         |           |      |   |           |  |      |           |  |   |          
|Total assets                    |  | $                                                       | 1,420,176 |      | $ | 1,238,805 |  | $    | 1,230,242 |  | $ | 1,149,860
|Total borrowings (1)            |  | $                                                       | 607,834   |      | $ | 470,747   |  | $    | 595,524   |  | $ | 488,075  

---

|(1) |  | Total borrowings includes participation rights liability net of discount (See Note I to our Consolidated Financial Statements).
|--- |  | -------------------------------------------------------------------------------------------------------------------------------



Item 7Managements Discussion and Analysis of Financial Condition and Results
of Operations



When used in this discussion and elsewhere
in this Annual Report on Form 10-K, the words believes, anticipates, projects, should, estimates, expects and similar expressions are intended to identify forward-looking
statements within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and in Section 21F of the Securities and Exchange Act of 1934, as amended. Actual results may differ materially due to uncertainties including
the risk that changes in economic conditions in the markets in which we operate, and/or competition from new self storage facilities or other storage alternatives may cause rent to decline and may cause occupancy rates to drop, or may cause delays
in rent up of newly developed properties, the risk that new developments could be delayed or reduced by zoning and permitting requirements outside of our control, increased competition for desirable sites, construction delays due to weather,
unforeseen site conditions, labor shortages, personnel turnover, scheduling problems with contractors, subcontractors or suppliers, the risk that we may experience increases in the cost of labor, taxes, marketing and other operating and construction
expenses, the risk that tax law changes may change the taxability of operating and construction expenses, the risk that tax law changes may change the taxability of future income, the risk that increases in interest rates may increase the cost of
refinancing long term debt, the risk that our alternatives for funding our business plan may be impaired by the economic uncertainty due to the impact of war or terrorism; and the risk that our interest in Shurgard Europe may be adversely affected
if that entity is unable to complete formation and funding of its contemplated development joint ventures. We may also be affected by legislation or changes in regulations or interpretations regarding certain accounting standards applied to our
operations and certain of our existing financial and joint venture structures of the Company.Other factors that could affect our financial results are described below and in Item 1 (Business) of the Annual Report on Form 10-K. Forward-looking
statements are based on estimates as of the date of this report. We disclaim any obligation to publicly release the results of any revisions to these forward-looking statements reflecting new estimates, events or circumstances after the date of this
report.



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##### Table of Contents

OVERVIEW



Our Business



We own, operate and develop self storage properties in principal cities in the U.S. and Europe. Headquartered in Seattle, Washington, we operate as a
REIT. Since our founding in 1972, Shurgard (and its predecessor company) has steadily grown its self storage investment business. We own or lease, directly and through our subsidiaries and joint ventures, 591 properties containing approximately 37.6
million net rentable square feet and manage for third parties 26 properties containing approximately 1.6 million rentable square feet. Today we are estimated to be one of the largest self storage property owners in the U.S. with a network of 469
stores located in 21 different states. We are the largest self storage owner in Europe with 122 stores located in seven countries. We directly own most of these properties but also hold an interest in some of them indirectly through our subsidiaries
and joint ventures.



Our Approach to Investment in Self
Storage



Our objective is to maximize shareholder
value through continued improvement in the performance of our existing portfolio and through acquisition and development and investment in additional self storage properties. Historically, we have been long-term holders of storage properties that we
acquire or develop because we believe these assets have steady long-term growth characteristics, low functional obsolescence and cost benefits relating to economies of scale. However, we will, from time to time, sell properties when we feel market
conditions warrant or where a property fails to fit into our strategic plans. We take a long-term view of planning and executing this objective.



Over the years, we have developed significant expertise in the acquisition, design, development and management of self storage properties. We believe
these capabilities enhance our investment options by giving us a better sense of local market conditions and opportunities. Relying on these capabilities, we have the flexibility to react to changing market conditions by expanding through the
development of new storage properties or by acquiring existing storage properties from competitors. Further, the significant market diversification of our self storage properties adds stability and predictability to our portfolio.



We have observed that changes in peoples lives or circumstances are the
key driver of demand for short-term storage space. Private individuals represent approximately 70% of our customer base. Business customers looking for expansion or transition space make up the balance, although this ratio may vary from storage
center to storage center. Our customer base spans a wide range of economic strata and business types. Based on our experience in the business, we have determined that most customers place a high value on convenience through the location of the
center and ease of renting, access and moving. Consequently, we have elected to focus our investment activities in densely populated, high quality neighborhoods and offer high quality products and services. We believe a growing segment of
prospective customers are willing to pay higher rates for these benefits.



When we enter a new market, we seek highly visible, easily accessible locations in retail corridors to create customer awareness. Through multiple locations of this kind in a metropolitan area, we seek to establish
brand recognition as well as economies of scale in operating our storage centers. In most markets, our goal is to own at least 15 stores in order to realize these efficiencies. To further enhance brand recognition, we strive to achieve a uniform
look to our properties through the use of signage, color schemes, quality of the buildings and our trademark lighthouse office design in new developments.



Our Approach to Managing the Business



We believe that the supply and demand characteristics of the self storage industry are defined by neighborhood trade areas
that can range in size from one to five miles in radius. To effectively manage the business at any given location, we must be aware of the local dynamics of demand, pricing and competitor actions within the applicable neighborhood trade area.



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##### Table of Contents

As a result, we approach the management of our business and portfolio on a decentralized basis by
maintaining local management and market expertise in all our key markets. Our field personnel constantly monitor market trends in supply, competition, pricing and internal performance, making strategic and tactical adjustments at the storage centers
as needed. Key metrics in monitoring the supply of self storage properties include construction starts, sales of doors by suppliers to the industry and inquiry levels at the storage centers. We monitor competition and pricing by watching our closing
rate on inquiries and our volume of discounting for new customers. Centrally, we maintain an in-house asset management team that evaluates all investment proposals and monitors progress and performance of each property.



We take a similar approach to the business in Europe where we maintain fully
integrated investment and management teams made up almost entirely of nationals in each of the countries we invest.



Our Approach to Raising Capital



Ownership in the self storage industry is highly fragmented, with the vast majority of properties owned privately by local and regional operators. We have
chosen to operate as a self-managed, publicly traded REIT due to the tax benefits and flexibility it provides us for accessing new sources of capital. As a REIT we are required to distribute the majority of our annual cash flow from operations,
which provides our investors a regular dividend stream that has grown steadily over time. We believe our assets are well-suited to meet this type of investment objective as they provide a highly stable cash flow. This dividend strategy means that we
must fund growth by raising additional capital on a regular basis. We maintain a skilled team who regularly monitors the debt and equity markets, both private and public, to obtain the best available capital and minimize our cost of capital.



We anticipate funding our short and long-term liquidity needs
through a combination of retained operating cash, borrowings under our variable rate unsecured credit facilities, selling existing stores or excess land that does not fit our long-term strategic plan, and/or through the issuance of additional debt
or equity securities. A determination to engage in an equity or debt offering depends on a variety of factors such as general market conditions, interest rates, short and long-term liquidity needs, and the relative cost of debt and equity capital.



Covenants and regulatory compliance



The indenture governing our approximately $450 million of debt securities
requires us to deliver our annual and quarterly filings with the SEC to the indenture trustee within 15 days after the date such periodic filings are due, and to deliver a copy of our annual report to the bondholders within 120 days of the end of
our fiscal year. Failure to meet these deadlines could cause the indenture trustee to declare us in default of our bond indenture. The indenture contains a 60 day cure period following our receipt of notice from the trustee of a default. To date, we
have not received notice of a default from the trustee or the bondholders. With the filing of this annual report on Form 10-K (and the delivery of copies of this filing to the trustee) we believe that we will cure any default of the reporting
covenants in the indenture.



The New York Stock Exchange (NYSE)
also requires that its listed companies distribute annual reports to shareholders no later than 120 days after the close of each fiscal year. On April 2, 2004 we received a letter from the NYSE that we would be included in a list of late filers
posted on our Company and market data pages on the NYSEs website. The late filer designation is a LF added to our trading symbol. Failure to mail the annual report to the shareholders on a timely basis could subject us to potential
delisting of our securities on the NYSE. As of the date of filing this annual report on Form 10-K we have not received a notice from the NYSE that it intends to delist our stock. We believe that the LF designation will be removed from
our trading symbol on the business day following receipt of this report by the NYSE.



23



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##### Table of Contents

Current Industry Trends and Outlook



Supply and Demand



For the two years following the events of September 11, 2001, we have in
general experienced a softening in demand at our U.S. storage centers. In addition, our new storage centers have been requiring a longer period of time to reach rental stabilization, which is typically considered to be 85% occupancy. We have
historically projected new storage centers will reach their stabilized investment yields within 18 to 24 months of opening. In the last several years, new storage centers have been taking 24 to 48 months to reach stabilization. In order to
counteract this slow down in the rent up pace, we offered reduced rates to attract new customers.



We believe there are two main factors contributing to the trends during this period: the slowdown in the U.S. economy, and the volume of new supply
entering our markets. We believe some areas, such as Northern California and Puget Sound, have been more affected by the downturn in the local economies. Other markets, such as Chicago and parts of Texas, we believe have seen a significant amount of
new supply over the past three years, contributing to weaker operating results.



In our view, the sustained rate at which new supply came in to the markets over the past three years was unusual. We attribute the continued development, in the face of declining industry fundamentals, to the
historically low interest rates available to developers. Reported new construction starts have only noticeably started to decline over the past 12 months.



Beginning in 2002, in response to the reduced demand and increased competition, we became more aggressive with our sales training programs and increased
our store operating hours. Additionally in 2003, we intensified our store maintenance program. We believe these efforts began to show results in the third quarter of 2003. Although customer inquires continued to be down slightly year over year, we
experienced an increase in our closing rate. During the third quarter, our average occupancies stabilized and our average rental rates improved slightly.



During the fourth quarter, customer inquiries continued to be slightly lower compared to the same quarter of the previous year but average rental rates
grew by 0.9% and occupancy by 1%. Our performance in the fourth quarter resulted in slightly improved overall results for 2003 when compared to annual results for 2002 (see SEGMENT PERFORMANCE for details).



Since 2002, our operations in Europe have experienced a similar softening in
demand due, we believe, to the general economic conditions in Europe. Similar to new storage centers in the U.S., the periods required for new European storage centers to reach stabilization has increased, now ranging from 24 to 48 months.



Some of our European storage centers have also been affected
by additional new storage centers that we have developed as we expand to reach targeted economies of scale in various markets. We believe that these effects, which include lower than expected occupancy and rental rates, are temporary. Consumer
awareness of the self storage product is dramatically different in Europe as compared to the U.S. In the U.S., where self storage has existed for over 30 years, the product is well known and accepted by the U.S. consumer. Today, there are a reported
35,000 self storage facilities in the U.S. In Europe, however, self storage is still relatively new and general consumer awareness is lower. There are reported to be approximately 650 self storage properties in the European countries where we
operate. As consumer awareness and acceptance grows in Europe, we believe that these effects of expansion will begin to decline.



Our European Same Store pool also exhibited some improvement in the fourth quarter of 2003 compared to the fourth quarter of 2002. Occupancy increased to
77.4% from 74.8% and the annual average rental rate increased to $20.50 per square foot from $20.21 per square foot.



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##### Table of Contents

As a leader and innovator in the self storage industry, we have actively examined and experimented with
new approaches to the business and related products. While we expect to continue with this approach, we have decided to exit several business lines that do not provide sufficient value to our core self storage business. At the end of 2003, we made
the decision to close our STG (containerized storage) and Shurgard Preferred Partners business lines. We ceased operations in both of these activities prior to the end of the first quarter of 2004. Although we no longer operate a containerized
storage business, we still see the strategic need to help our customers with the transportation of their goods and will actively continue to pursue our role as a coordinator of pack, load, and move services, without providing these services
directly. We will also continue to actively operate our rental truck activities.



Acquisition and Development of Real Estate



Historically, we have grown in the U.S. both through development and acquisition, taking advantage of current market conditions to select either alternative. In Europe, most of our growth has been through development
of new stores. We have made limited dispositions of properties in the past.



Currently, we believe that low interest rates in the U.S. have contributed to a rise in the price being paid by private investors to acquire existing self-storage facilities in the U.S. In this environment, we have
focused on acquisitions we consider unique or strategic in nature. The current environment has also created opportunities to sell some of the assets in our portfolio that no longer meet our long-term strategic goals and we may consider some of these
opportunities.



Our development of new storage centers in the
U.S. has slowed in recent years as quality opportunities have become more limited. In general, we view the U.S. market as mature, with a strong supply of self storage properties. We believe future development growth opportunities will result
primarily from population growth in new markets. We have placed renewed emphasis on performance and opportunities for improvement within our existing portfolio, in some instances through redevelopment of our older stores. A recent dramatic rise in
steel prices may further affect our ability to develop or redevelop cost effectively.



In Europe, where we have a significant market leadership position in an emerging industry, we continue to develop new storage centers at a steady pace due to the availability of quality real estate at attractive
prices. New European countries are considered from time to time as we feel conditions are appropriate. We believe continued growth in Europe will help solidify our position as market leader and improve our economies of scale in marketing and
management.



Company Financial Reporting



We have experienced the following events relating to
our financial reporting over the past year:



| | ü |  | In May 2003, we restated our historical financial statements for the years ended 2001 and 2002 to reflect the proper accounting for certain interest rate swaps;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ü |  | In November 2003 (as further described in Item 9), our auditors resigned without completing the interim review of our 2003 third quarter financial statements; as a result we were
delayed in filing our third quarter Form 10-Q;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ü |  | In November 2003, we filed our 2003 third quarter Form 10-Q that failed to meet interim financial statements review requirement because of our auditors resignation;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ü |  | In January 2004, we retained a new audit firm to perform an audit of our 2003 financial statements and a re-audit of our financial statements for 2001 and 2002;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ü |  | In January 2004, we appointed a new Interim Chief Financial Officer and a new Interim Chief Accounting Officer.
| | - |  | ---------------------------------------------------------------------------------------------------------------



25



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##### Table of Contents

| | ü |  | In March 2004, we did not meet the 2003 Form 10-K filing deadline, and announced that our 2003 Form 10-K would include restatements of our 2002 and 2001 annual financial statements;
and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ü |  | In May 2004, our new auditors provided the audit committee with a letter identifying a material weakness in our systems of internal controls (see Item 9A).
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



The culmination of these events was the completion of the audit for 2003,
and re-audits of 2002 and 2001 and the related audited financial statements that are included in this Form 10-K. Although the completed re-audits resulted in restatements of our prior financial statements (as disclosed in the following section of
this Overview), the audit process did not result in the discovery of any material new facts or information. In addition, we have taken steps to address the need for additional personnel, improved internal control structure and stronger accounting
systems that have been identified during the auditing process.



Implications and Impact of Restatements



We have restated our previously issued financial statements for the years ended December 31, 2002 and 2001, as well as for the quarters ended March 31, June 30 and September 30, 2003 and 2002 and the quarter ended December 31, 2002 for the
items described below.



Consolidation of Domestic Joint
Ventures



Domestically, we hold interests in 31 properties
through 27 joint ventures with a variety of outside investors. Historically, these joint ventures have been included in our financial statements either on a consolidated or an equity basis.



We have determined that certain partially owned U.S. entities historically
accounted for using the equity method should have been consolidated since inception of each entity. This restatement affects 26 entities and ventures in which we maintain ownership interests ranging from 50% to 90% and which hold a total of 30
storage centers. Consolidation of these entities has the effect of showing all of the assets and liabilities, revenues and expenses of these entities in our financial statements rather than showing our net investment and net earnings from these
operations. At December 31, 2003 and 2002, total consolidated assets for these entities and ventures amounted to $95.6 million and $95.3 million, respectively, and total liabilities amounted to $72.9 million and $65.6 million, respectively. There
was no impact on net income for any period as a result of this restatement. We had previously announced our intent to consolidate these joint ventures beginning in the quarter ended March 31, 2004 under FIN 46R. As a result of the restatement, all
periods will now be reported on a comparable basis.



Valuation of Deferred Tax Assets



Historically
we have incurred tax operating losses in Shurgard Europe, which includes our European operations, and in our U.S. taxable REIT subsidiary (TRS), which includes the operations of Storage To Go. We expect to continue to incur these losses in 2004. We
have historically recorded in income the anticipated tax benefit of these loss carry-forwards in current year earnings.



We have determined that there was insufficient historical evidence of future profitability in both Shurgard Europe and the TRS to justify the recording of
these tax benefits. These restatements result in the Company recording a full valuation allowance against its deferred tax assets on the balance sheet and eliminating approximately $870,000 ($0.03 per diluted share) and $3.1 million ($0.10 per
diluted share) previously recognized as a part of our net income for the years ended December 31, 2002 and 2001, respectively. Notwithstanding the change in accounting treatment, the underlying accumulated tax losses are still available to the
Company to be utilized in future years to the extent Shurgard Europe and the TRS are able to generate taxable income.



26



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##### Table of Contents

Tax Retention Operating Lease (TROL)



In 2001, we entered into a financing structure utilizing a tax retention
operating lease (TROL) in order to facilitate the development of new storage properties. In June 2003 we purchased all properties remaining in the TROL and fully consolidated the assets and related debt as of June 30, 2003.



We have determined that our historical accounting for the TROL was incorrect.
We previously recorded the TROL assets as operating leases, which required us to record in our financial statements a rental payment for the lease of the TROL assets and residual lease guarantee. The proper accounting treatment requires that we
carry the TROL properties and related debt on our balance sheet from inception resulting in a restatement in our financial statements beginning in 2001. We are also required to reflect the financing costs related to these properties as interest
expense in lieu of the rental payments and depreciate the properties. Because the rental payments in 2001 and 2002 were less than the interest and depreciation expense, net income has been reduced in these periods, by $1.7 million ($0.05 per diluted
share) and $6.8 million ($0.19 per diluted share), respectively. There will be no further impact of this change in accounting on future financial statements, other than reduced depreciation expense.



Other restatement items



We also have restated our consolidated financial statements for the effects
of the following items:



| |  |  | We corrected the accounting for certain accrued liabilities to recognize the expenses in the appropriate periods. These accruals primarily consisted of compensation and related
payroll costs, workers compensation costs and lease accruals.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We corrected for certain items that impacted the computation of depreciation expense and capitalization of overhead and interest.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | We reversed amortization of amounts that should have been recognized as a gain in connection with the sale of certain storage centers in prior years.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We corrected the accounting for advertising costs related to print advertisements in telephone books to recognize the expenses when the related telephone book is first published.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We corrected the 2002 calculation of weighted average shares outstanding for both basic and diluted shares. Weighted average basic shares outstanding decreased from 34,836,000 to
34,454,000 and diluted shares outstanding decreased from 35,401,000 to 34,963,000. The impact of this correction resulted in an increase in net income per common share of $0.02 for both basic and diluted earnings per share.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Summary



The aggregate impact of all restatement items including the restatement for
preferred stock issuance costs discussed in Note C, resulted in a decrease in net income available to common shareholders compared to previously reported amounts of $10.5 million ($0.28 per diluted share) and $10.5 million ($0.34 per diluted share)
for the years ended December 31, 2002 and 2001, respectively.



27



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##### Table of Contents

The effects of the restatement items described above on our net income available to common shareholders
and earnings per share are as follows:



|                                                                 |  |                                      |        |   |                              |   |       |         |  |   |                    |   |  |       |        |   |         |   |       |   |  |   |       |  
|---------------------------------------------------------------- |  | ------------------------------------ | ------ | - | ---------------------------- | - | ----- | ------- |  | - | ------------------ | - |  | ----- | ------ | - | ------- | - | ----- | - |  | - | ----- | -
|                                                                 |  | Year Ended December 31, 2002         |        |   | Year Ended December 31, 2001 |  
|                                                                 |  |                                      |        |   | Earnings per share           |   |       |         |  |   | Earnings per share |  
|                                                                 |  |                                      |        |   | Basic                        |   |       | Diluted |  |   |                    |   |  | Basic |        |   | Diluted |  
|                                                                 |  | (In thousands except per share data) |       
|As previously reported                                           |  | $                                    | 41,938 |   |                              | $ | 1.20  |         |  | $ | 1.18               |   |  | $     | 18,214 |   |         | $ | 0.59  |   |  | $ | 0.59  |  
|Impact of adjustments for:                                       |  |                                      |        |   |                              |   |       |         |  |   |                    |   |  |       |        |   |         |   |       |   |  |   |       |  
|Consolidation of domestic joint ventures                         |  |                                      |       |   |                              |   |      |         |  |   |                   |   |  |       |       |   |         |   |      |   |  |   |      |  
|Valuation of Deferred tax assets                                 |  |                                      | (870   | ) |                              |   | (0.03 | )       |  |   | (0.03              | ) |  |       | (3,132 | ) |         |   | (0.10 | ) |  |   | (0.10 | )
|Tax Retention Operating Leases                                   |  |                                      | (6,787 | ) |                              |   | (0.20 | )       |  |   | (0.19              | ) |  |       | (1,701 | ) |         |   | (0.05 | ) |  |   | (0.05 | )
|Period end accruals                                              |  |                                      | (474   | ) |                              |   | (0.01 | )       |  |   | (0.01              | ) |  |       | (2,172 | ) |         |   | (0.07 | ) |  |   | (0.07 | )
|Depreciation expense and capitalization of overhead and interest |  |                                      | 380    |   |                              |   | 0.01  |         |  |   | 0.01               |   |  |       | (1,557 | ) |         |   | (0.05 | ) |  |   | (0.05 | )
|Gain on sale of storage centers                                  |  |                                      | (500   | ) |                              |   | (0.01 | )       |  |   | (0.01              | ) |  |       | (500   | ) |         |   | (0.02 | ) |  |   | (0.02 | )
|Advertising costs                                                |  |                                      | (465   | ) |                              |   | (0.01 | )       |  |   | (0.01              | ) |  |       | (341   | ) |         |   | (0.01 | ) |  |   | (0.01 | )
|Weighted average shares outstanding                              |  |                                      |       |   |                              |   | 0.02  |         |  |   | 0.02               |   |  |       |       |   |         |   |      |   |  |   |      |  
|Other                                                            |  |                                      | 142    |   |                              |   |      |         |  |   |                   |   |  |       | (1,122 | ) |         |   | (0.04 | ) |  |   | (0.04 | )
|EITF Topic D-42 (1)                                              |  |                                      | (1,944 | ) |                              |   | (0.06 | )       |  |   | (0.06              | ) |  |       |       |   |         |   |      |   |  |   |      |  
|                                                                 |  |                                      |        |   |                              |   |       |         |  |   |                    |   |  |       |        |   |         |   |       |   |  |   |       |  
|As restated                                                      |  | $                                    | 31,420 |   |                              | $ | 0.91  |         |  | $ | 0.90               |   |  | $     | 7,689  |   |         | $ | 0.25  |   |  | $ | 0.25  |  
|                                                                 |  |                                      |        |   |                              |   |       |         |  |   |                    |   |  |       |        |   |         |   |       |   |  |   |       |  

---

|(1) |  | Restated for the application of EITF Topic D-42 (see Note C to our Consolidated Financial Statements).
|--- |  | ------------------------------------------------------------------------------------------------------



The following is a comparison of the major changes to the Companys balance sheet as of December 31, 2002 as a result
of the restatements:



|                                                  |  |                |           |   |                                 |   |         |               |  |              |         |  |   |         |  
|------------------------------------------------- |  | -------------- | --------- | - | ------------------------------- | - | ------- | ------------- |  | ------------ | ------- |  | - | ------- | -
|                                                  |  | StorageCenters |           |   | OtherReal estateInvestments (1) |   |         | Line ofCredit |  | NotesPayable |        
|As restated                                       |  | $              | 1,500,881 |   |                                 | $ | 789     |               |  | $            | 267,639 |  | $ | 511,312 |  
|As previously reported                            |  |                | 1,263,155 |   |                                 |   | 29,403  |               |  |              | 113,525 |  |   | 446,837 |  
|                                                  |  |                |           |   |                                 |   |         |               |  |              |         |  |   |         |  
|Difference                                        |  | $              | 237,726   |   |                                 | $ | (28,614 | )             |  | $            | 154,114 |  | $ | 64,475  |  
|                                                  |  |                |           |   |                                 |   |         |               |  |              |         |  |   |         |  
|Summary of differences:                           |  |                |           |   |                                 |   |         |               |  |              |         |  |   |         |  
|Impact of consolidating additional joint ventures |  | $              | 93,941    |   |                                 | $ | (27,734 | )             |  | $            |        |  | $ | 64,503  |  
|Impact of consolidating TROL properties           |  |                | 146,367   |   |                                 |   |         |               |  |              | 154,114 |  |   |         |  
|Other changes                                     |  |                | (2,582    | ) |                                 |   | (880    | )             |  |              |        |  |   | (28     | )
|                                                  |  |                |           |   |                                 |   |         |               |  |              |         |  |   |         |  
|Total                                             |  | $              | 237,726   |   |                                 | $ | (28,614 | )             |  | $            | 154,114 |  | $ | 64,475  |  
|                                                  |  |                |           |   |                                 |   |         |               |  |              |         |  |   |         |  

---

|(1) |  | The other real estate investments balance as restated is not significant and therefore included in other assets in our Consolidated Balance Sheets.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Most of our cash flow is generated from our self storage properties (see our discussion of same store and
new store included in SEGMENT PERFORMANCE). The following chart shows our storage center revenue as a result of the restatement. Increased operating expenses relate primarily to the accrual of certain expenses in the proper periods.



|                                                                      |  |                                 |          |   |             |   |          |                       |  |   |             |   |  |   |         |  
|--------------------------------------------------------------------- |  | ------------------------------- | -------- | - | ----------- | - | -------- | --------------------- |  | - | ----------- | - |  | - | ------- | -
|                                                                      |  | For The Year Ended December 31, |         
|                                                                      |  | 2002                            |          |   | 2001        |  
|                                                                      |  | As previouslyreported           |          |   | As restated |   |          | As previouslyreported |  |   | As restated |  
|Storage center operations revenue (1)                                 |  | $                               | 267,532  |   |             | $ | 268,221  |                       |  | $ | 241,802     |   |  | $ | 242,388 |  
|Direct and indirect cost, real estate taxes and leasehold expense (1) |  |                                 | (103,930 | ) |             |   | (104,464 | )                     |  |   | (90,371     | ) |  |   | (93,044 | )
|                                                                      |  |                                 |          |   |             |   |          |                       |  |   |             |   |  |   |         |  
|NOI after indirect and leasehold expense                              |  | $                               | 163,602  |   |             | $ | 163,757  |                       |  | $ | 151,431     |   |  | $ | 149,344 |  
|                                                                      |  |                                 |          |   |             |   |          |                       |  |   |             |   |  |   |         |  

---

|(1) |  | Includes storage centers held by domestic consolidated and unconsolidated joint ventures.
|--- |  | -----------------------------------------------------------------------------------------



Item 6Selected Financial Data, Results of Operations, and Note B to our Consolidated Financial Statements further
discuss these restatements and their specific impact on our historical financial statements.



CONSOLIDATED STATEMENTS OF INCOME



Our discussion and analysis of financial condition and operating results is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the
United States (GAAP). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and contingencies as of the date of the financial statements and the
reported amounts of revenues and expenses during the reporting periods. We evaluate our assumptions and estimates on an on-going basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable
under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different
assumptions or conditions.



Net Income:  Net
income was $37.6 million for 2003, a decrease of $10.4 million, or 22% compared to the results for 2002 due to decreased income from storage center operations, as well as an increase in the interest expense on loans related to our development
activity. The decline in income from storage center operations is the result of an increase in impairment of long lived assets, and general, administrative and other. The increase from $22.8 million in 2001 to $48.1 million in 2002 is primarily due
to an increase in income from storage center operations and a decrease in the amortization of participation rights discount and interest on loans.



Storage Center Operations Revenue:  Storage center operations revenue was $297.0 million for 2003, an increase of $29.2 million, or 11%
compared to the results for 2002 as a result of factors discussed under SEGMENT PERFORMANCE.



Other Revenue:  Other revenue increased from $5.0 million in 2002 to $5.3 million in 2003 primarily due to the increased revenue from our
tenant insurance referral program. Our insurance referral program generated $1.4 million in 2003 compared to $765,000 in 2002. Other revenue also included $3.2 million in 2003, $3.2 million in 2002 and $2.0 million in 2001 from our containerized
storage operations which we began consolidating in June 30, 2001.



Operating Expenses:  Operating expenses, in addition to the expenses identified under SEGMENT PERFORMANCE, include internal acquisition costs and development expenses related to abandoned development efforts of $1.2
million, $1.2 million and $773,000 for 2003, 2002 and 2001, respectively. Direct and indirect operating expenses of $4.0 million, $3.4 million and $2.7 million for our containerized storage operations are also included in operating expenses for
2003, 2002 and 2001, respectively.



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##### Table of Contents

Depreciation and Amortization:  Depreciation and amortization was $56.4 million for
2003, compared to $51.3 million for 2002 and $47.2 million for 2001. The increase is due to an increased number of stores included in our consolidated financial statements over the same period of time. Beginning January 1, 2002, we ceased
amortization of goodwill (see Note O to our Consolidated Financial Statements).



Impairment Expenses:  We recorded impairment expenses of $12.7 million, $1.6 million, and $2.3 million in 2003, 2002 and 2001, respectively. In 2003, we recorded a $9.9 million impairment expense
related to certain real estate assets, of this amount $7.5 million relates to four properties associated with our joint venture CCP/Shurgard (see Note I to our Consolidated Financial Statements). Additionally in 2003 we recognized a $1.1 million
impairment expense related to our decision to exit the containerized storage business and a $1.6 million write down of a note receivable. The $2.3 million impairment expense we recorded in 2001 relates primarily to the cost associated with closing
the operations of certain warehouses of STG (see note M to our consolidated financial statements).



General, Administrative and Other Expenses:  General and administrative expenses were $18.0 million for 2003, an increase of $8.1
million, or 82% compared to 2002 This increase is primarily attributable to a $5.2 million increase in accounting and professional fees and a $1.1 million increase in compensation expense related to newly created positions. The decrease in general
and administrative expense of $1.5 million from 2001 to 2002 is primarily the result of accruing $2.8 million in 2001 related to exit costs associated with the closure of certain warehouses of STG ( see note M to our consolidated financial
statements).



Interest Income and Other,
Net:  Interest income and other decreased from $6.3 million in 2002 to $4.5 million in 2003. This is primarily attributable to recording a one-time lease termination settlement of $1.8 million in 2002.



Interest Expense:  Interest expense consists of two
components: interest on loans and amortization of participation rights discount. Interest expense on the lines of credit and notes payable decreased from 2001 to 2002 and increased from 2002 to 2003 due to variances in the outstanding balances. The
increase in 2003 relates primarily to an increase in mortgage notes payable related to the purchase of 74% of Morningstar in June 2002 and to additional senior notes payable of $200 million that were issued in March 2003. Additionally, we
capitalized interest related to the construction of domestic storage centers of $2.3 million, $2.3 million and $1.9 million in 2003, 2002 and 2001, respectively. In 2003, we reduced the participation rights liability by $6.9 million, which resulted
in a corresponding reduction of interest expense (See Note I to our Consolidated Financial Statements). In 2002, we reduced the participation rights liability associated with CCP/Shurgard by $6.4 million which resulted in decreased amortization for
the second half of 2002. Interest expense also included amortization of loan costs of $2.6 million, $2.4 million and $2.9 million in 2003, 2002 and 2001, respectively.



Unrealized Loss on Financial Instruments:  During 2001, we entered into three interest rate swaps to
mitigate the risk of interest rate fluctuations related to the Companys various options at the end of its TROL transaction. Since these transactions do not qualify for hedge accounting treatment under SFAS No. 133, we recorded $2.2 million,
$11.0 million and $1.6 million in unrealized loss for these financial instruments for the years ended December 31, 2003, 2002 and 2001, respectively.



Minority Interest:  Minority interest increased from $645,000 in 2001 to $866,000 in 2002 and to $1.2 million in 2003, which relates to
the growing operations of our consolidated subsidiaries and the inclusion of the 26% non-controlled interest in Morningstar for the first full year in 2003, as discussed previously.



Income Tax Expense:  Income tax expense consists of a current tax expense on a consolidated Belgian
subsidiary, Recom & Co., SNC (Recom), that we started consolidating in June 2003. We have recorded a full valuation allowance against our net deferred tax assets for the years ended December 31, 2003, 2002 and 2001.



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##### Table of Contents

UNCONSOLIDATED OPERATIONS



The following table shows losses from unconsolidated real estate investments for the years ended December 31, 2003, 2002 and
2001. All income and loss amounts reflect our pro rata ownership percentage and are reported under Expenses as Equity in Losses from Other Real Estate Investments, net in our Consolidated Statements of Income.



Equity in losses of other real estate investments, net



|                              |  |                                  |        |   |                   |   |        |                   |  |   |        |  
|----------------------------- |  | -------------------------------- | ------ | - | ----------------- | - | ------ | ----------------- |  | - | ------ | -
|                              |  | For the years ended December 31, |       
|                              |  | 2003                             |        |   | 2002(as restated) |   |        | 2001(as restated) | 
|                              |  | (in thousands)                   |       
|Shurgard Europe               |  | $                                | (3,165 | ) |                   | $ | (1,166 | )                 |  | $ | (2,637 | )
|Other real estate investments |  |                                  | 66     |   |                   |   | (43    | )                 |  |   | (58    | )
|Participating mortgages       |  |                                  |       |   |                   |   | 31     |                   |  |   | 1,500  |  
|Containerized storage         |  |                                  |       |   |                   |   |       |                   |  |   | (2,499 | )
|                              |  |                                  |        |   |                   |   |        |                   |  |   |        |  
|                              |  | $                                | (3,099 | ) |                   | $ | (1,178 | )                 |  | $ | (3,694 | )
|                              |  |                                  |        |   |                   |   |        |                   |  |   |        |  



Shurgard Europe



In 2003, we increased our direct and indirect
ownership interest in Shurgard Europe from 7.57% to 85.47% through the following transactions: (i) in April, we completed the purchase of a 10.64% ownership interest for $49.7 million; (ii) in June, we increased our indirect ownership by 42.5%
through a purchase of additional ownership interest in Recom (a Belgian entity that holds a 53.8% ownership interest in Shurgard Europe) for a price of $856,000; (iii) in July, we completed the purchases of a 19.86% ownership interest for
approximately $101.6 million; (iv) in October, a further transaction increased our direct and indirect ownership through Recom by 4.63% for 395,000 shares of our Class A Common Stock with an approximate value of $14.3 million and the forgiveness of
certain promissory notes totaling $1.7 million and; (v) in December, we further increased our ownership in Recom resulting in a 0.25% increase in our ownership of Shurgard Europe by converting $24.9 million of outstanding bonds to equity. We also
purchased $153 million of Recom bonds and started consolidating Recom in June 2003. Although we own 85.47% of Shurgard Europe as of December 31, 2003, the results of European operations are not consolidated in our financial statements. Our interest
in Shurgard Europe is accounted for under the equity method of accounting because our remaining partner maintains substantive and important approval rights relating to certain significant operating decisions (see OFF BALANCE SHEET
TRANSACTIONS). We recorded losses from European operations of $3.2 million, $1.2 million, and $2.6 million for the years ended December 31, 2003, 2002 and 2001, respectively. Shurgard Europes properties generated $34.0 million in Net
Operating Income (NOI) after leasehold expense in 2003 compared to $21.3 million in 2002 and $11.0 million in 2001.



Participating Mortgages



As of December 31, 2001, we had $2.6 million invested in a participating mortgage loan for which we recorded $1.5 million of equity in earnings. We
received contingent interest payments from the mortgaged property equal to 50% of both operating cash flow and distributions from the gain on sale of real property, in accordance with the terms of the applicable agreement. We purchased the mortgaged
property in February 2002 and the related participating mortgage receivable was repaid. Operating results for the five properties are included in Same Store results for 2003, 2002 and 2001 (see SEGMENT PERFORMANCE).



Containerized Storage



STG, a containerized storage business, is wholly owned by Shurgard TRS, a
taxable REIT subsidiary, and is subject to federal income tax. Prior to October 2002, STG operated as Shurgard Storage To Go, Inc., a separate



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##### Table of Contents

taxable REIT subsidiary. In June 2001, we purchased all of the issued and outstanding shares of STG and converted our outstanding note receivable to equity.
As a result of this transaction, we began consolidating STG in our financial statements as of the date of the purchase of the shares. Operating results prior to June 2001 are accounted for under the equity method. The amount in equity in losses of
other real estate investments for 2001 includes the first six months of operations prior to consolidation (See Containerized Storage Operations under TAXABLE REIT SUBSIDIARY OPERATIONS). In December 2003, we made the decision
that we would exit the containerized storage business and we had ceased to use the warehouses as of the end of the first quarter 2004.



SEGMENT PERFORMANCE



We evaluate performance of our real estate assets in two segments. The first segment, Same Store, represents those storage centers and business parks that
are not in the rent-up stage and for which historical information is available. The second segment, New Store, represents those storage centers recently acquired or developed for which performance is measured primarily based on original investment
expectations. We evaluate all stores on the same basis regardless of ownership interest in the property. We believe net operating income (NOI) is a meaningful disclosure of operating performance as a supplement to net income because we rely on NOI
for purposes of making decisions with respect to resource allocations, current property values, segment performance, and comparing period-to-period and market-to-market property operating results. NOI is defined as Storage center operations revenues
less direct operating and real estate tax expense for each of our properties. For a reconciliation of Same Store and New Store NOI to net income see Note V to our Consolidated Financial Statements. The following sections discuss the performance of
these segments for domestic properties.



Domestic Same
Stores



Our definition of Same Store includes domestic
existing stores acquired prior to January 1 of the previous year as well as domestic developed properties that have been operating for a full two years as of January 1 of the current year. Our definition of Same Store results in the addition of
stores each year as new acquisitions and developments meet the criteria for inclusion, so we then include these stores in the previous years comparable data. Other storage companies may define Same Store differently, which will affect the
comparability of the data. The following table summarizes Same Store operating performance as defined at December 31, 2003. The 2002 and 2001 information has been restated (see Note B to our Consolidated Financial Statements).



|                               |  |                      |  |                                           |         |                                                      |            |                   |    |   |                                     |    |   |      |    |      |  |      |       |  |   |       |  |   |      
|------------------------------ |  | -------------------- |  | ----------------------------------------- | ------- | ---------------------------------------------------- | ---------- | ----------------- | -- | - | ----------------------------------- | -- | - | ---- | -- | ---- |  | ---- | ----- |  | - | ----- |  | - | -----
|                               |  | Number of Properties |  | (In millions)TotalStorage Center Cost (1) |         | Total NetRentablesq. ft. whenall phases are complete |            | Average Occupancy |    |   | Average Annual Rent(per sq. ft) (2)
|                               |  |                      |  |                                           | 2003    |                                                      |            | 2002              |    |   | 2001                                |    |   | 2003 |    | 2002 |  | 2001
|Same Store since 2003 (3)      |  | 34                   |  | $                                         | 157.3   |                                                      | 2,127,000  |                   | 78 | % |                                     | 67 | % |      | 51 | %    |  | $    | 12.63 |  | $ | 12.61 |  | $ | 12.31
|Same Store since 2002          |  | 26                   |  |                                           | 122.2   |                                                      | 1,659,000  |                   | 89 | % |                                     | 87 | % |      | 82 | %    |  |      | 12.85 |  |   | 12.51 |  |   | 11.96
|Same Store since 2001 or prior |  | 301                  |  |                                           | 1,075.4 |                                                      | 19,600,000 |                   | 85 | % |                                     | 85 | % |      | 87 | %    |  |      | 11.71 |  |   | 11.76 |  |   | 11.42
|                               |  |                      |  |                                           |         |                                                      |            |                   |    |   |                                     |    |   |      |    |      |  |      |       |  |   |       |  |   |      
|Same Store total               |  | 361                  |  | $                                         | 1,354.9 |                                                      | 23,386,000 |                   | 84 | % |                                     | 83 | % |      | 84 | %    |  | $    | 11.87 |  | $ | 11.88 |  | $ | 11.50
|                               |  |                      |  |                                           |         |                                                      |            |                   |    |   |                                     |    |   |      |    |      |  |      |       |  |   |       |  |   |      



|                               |  |                |         |                             |   |         |  |      |         |      |   |         |  |   |         |  |   |        
|------------------------------ |  | -------------- | ------- | --------------------------- | - | ------- |  | ---- | ------- | ---- | - | ------- |  | - | ------- |  | - | -------
|                               |  | (In thousands) |         | (In thousands) NOI         
|                               |  | Revenue        |         | (after leaseholds expenses)
|                               |  | 2003           |         | 2002                        |   | 2001    |  | 2003 |         | 2002 |   | 2001   
|Same Store since 2003 (3)      |  | $              | 23,092  |                             | $ | 20,055  |  | $    | 12,687  |      | $ | 11,605  |  | $ | 9,008   |  | $ | 4,080  
|Same Store since 2002          |  |                | 20,459  |                             |   | 19,356  |  |      | 17,511  |      |   | 13,373  |  |   | 12,571  |  |   | 11,223 
|Same Store since 2001 or prior |  |                | 211,587 |                             |   | 211,250 |  |      | 209,459 |      |   | 144,795 |  |   | 146,397 |  |   | 146,661
|                               |  |                |         |                             |   |         |  |      |         |      |   |         |  |   |         |  |   |        
|Same Store total               |  | $              | 255,138 |                             | $ | 250,661 |  | $    | 239,657 |      | $ | 169,773 |  | $ | 167,976 |  | $ | 161,964
|                               |  |                |         |                             |   |         |  |      |         |      |   |         |  |   |         |  |   |        

---

|(1) |  | Total capitalized costs to storage centers since the store was acquired or developed.
|--- |  | -------------------------------------------------------------------------------------

|(2) |  | Average annual rent per square foot is calculated by dividing actual rent collected by the average number of square feet occupied during the period.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Table excludes three stores that were disposed of in 2003.
|--- |  | ----------------------------------------------------------



32



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##### Table of Contents

Same Store Results (1)



|                                                   |  |                                 |               |      |   |          |  |      |     
|-------------------------------------------------- |  | ------------------------------- | ------------- | ---- | - | -------- |  | ---- | ----
|                                                   |  | For the year ended December 31, |              
|                                                   |  | 2003                            |               | 2002 |   | % Change | 
|                                                   |  |                                 | (as restated) |     
|                                                   |  | (dollars in thousands)          |              
|Storage center operations revenue                  |  | $                               | 255,138       |      | $ | 250,661  |  | 1.8  | %(a)
|Operating expense:                                 |  |                                 |               |      |   |          |  |      |     
|Personnel expense                                  |  |                                 | 25,172        |      |   | 22,883   |  | 10.0 | %(b)
|Real estate taxes                                  |  |                                 | 22,526        |      |   | 23,271   |  | -3.2 | %   
|Repairs and maintenance                            |  |                                 | 6,954         |      |   | 5,597    |  | 24.2 | %(c)
|Marketing expense                                  |  |                                 | 7,624         |      |   | 8,273    |  | -7.8 | %   
|Utilities and phone expense                        |  |                                 | 8,664         |      |   | 8,465    |  | 2.4  | %   
|Store admin and other expense                      |  |                                 | 11,185        |      |   | 10,995   |  | 1.7  | %   
|                                                   |  |                                 |               |      |   |          |  |      |     
|Direct operating and real estate tax expense       |  |                                 | 82,125        |      |   | 79,484   |  | 3.3  | %   
|                                                   |  |                                 |               |      |   |          |  |      |     
|NOI                                                |  |                                 | 173,013       |      |   | 171,177  |  | 1.1  | %(d)
|Leasehold expense                                  |  |                                 | 3,240         |      |   | 3,201    |  | 1.2  | %   
|                                                   |  |                                 |               |      |   |          |  |      |     
|NOI after leasehold expense                        |  |                                 | 169,773       |      |   | 167,976  |  | 1.1  | %   
|Indirect operating expense (2)                     |  |                                 | 11,829        |      |   | 10,312   |  | 14.7 | %(e)
|                                                   |  |                                 |               |      |   |          |  |      |     
|NOI after indirect operating and leasehold expense |  | $                               | 157,944       |      | $ | 157,664  |  | 0.2  | %   
|                                                   |  |                                 |               |      |   |          |  |      |     

---

|(1) |  | Includes storage centers held by domestic consolidated and unconsolidated joint ventures.
|--- |  | -----------------------------------------------------------------------------------------

|(2) |  | Indirect operating expense includes certain shared property costs such as district and corporate management, purchasing, national contracts personnel and marketing, as well as
certain overhead costs allocated to property operations such as business information technology, legal services, human resources and accounting. Does not include containerized storage operations, internal real estate acquisition cost or abandoned
development expense. Indirect operating expense is allocated to stores based on number of months in operation during the period.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



(a) During 2003, Same Store revenue increased 1.8% over 2002. In 2002, we started to experience erosion in occupancy and in rental rates that we
attributed to general economic conditions and to the rate reductions being offered by competitors. In response to these conditions, we provided additional training to our direct sales team and store management personnel, and we re-aligned our sales
center to improve our closing ratios on inquiries made by customers. We believe these initiatives, together with an improvement in the general economic conditions starting in the fourth quarter of 2003, resulted in an increase in our average
occupancy without having to further adjust our rates downward. Additionally, increases in retail sales contributed approximately $594,000 in revenue increases from 2002 to 2003, which reflect improvements in the management of our inventory and the
portfolio of retail products offered. Also the increases in late fees contributed to approximately $586,000 increase in revenue.



(b) Personnel expenses increased due to Sunday openings and incentive-based wage increases for store employees.



(c) Repair and maintenance costs increased significantly in 2003 over 2002
due to higher than normal snow removal costs experienced by our properties in the northeastern region of the U.S. Additionally, we created a centralized maintenance program that enabled us to accelerate our repair activities for our older U.S.
properties.



(d) NOI has risen from 2002 to 2003 primarily due
to increases in storage center operations revenue, which is a function of changes in rental rates and occupancy. While the storage business is seasonal, with spring and summer being peak occupancy periods, the year-over-year trends from 2002 to
2003, we believe, are representative of general market changes. Revenue increases from 2002 to 2003 resulted primarily from occupancy increases in stores that became Same Store in 2003 and were offset by a slight decrease in the rental rate.



33



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##### Table of Contents

(e) Indirect operating expenses increased primarily due to increased salaries, new management positions
and incentive compensation expenses.



The following table
summarizes Same Store operating performance as defined at December 31, 2002. The 2002 and 2001 information has been restated (see Note B to our Consolidated Financial Statements).



Same Store Results (1)



|                                                   |  |                                            |            |   |                   |   |            |          |  |       |     
|-------------------------------------------------- |  | ------------------------------------------ | ---------- | - | ----------------- | - | ---------- | -------- |  | ----- | ----
|                                                   |  | For the year ended December 31,            |           
|                                                   |  | 2002(as restated)                          |            |   | 2001(as restated) |   |            | % Change | 
|                                                   |  | (dollars in thousands except average rent) |           
|Storage center operations revenue                  |  | $                                          | 231,921    |   |                   | $ | 228,355    |          |  | 1.6   | %(a)
|Operating expense:                                 |  |                                            |            |   |                   |   |            |          |  |       |     
|Personnel expenses                                 |  |                                            | 20,779     |   |                   |   | 20,261     |          |  | 2.6   | %   
|Real estate taxes                                  |  |                                            | 20,257     |   |                   |   | 19,314     |          |  | 4.9   | %   
|Repairs and maintenance                            |  |                                            | 5,002      |   |                   |   | 4,737      |          |  | 5.6   | %   
|Marketing expense                                  |  |                                            | 7,482      |   |                   |   | 7,415      |          |  | 0.9   | %   
|Utilities and phone expenses                       |  |                                            | 7,380      |   |                   |   | 7,757      |          |  | -4.9  | %   
|Store admin and other expenses                     |  |                                            | 10,017     |   |                   |   | 8,967      |          |  | 11.7  | %   
|                                                   |  |                                            |            |   |                   |   |            |          |  |       |     
|Direct operating and real estate tax expense       |  |                                            | 70,917     |   |                   |   | 68,451     |          |  | 3.6   | %   
|                                                   |  |                                            |            |   |                   |   |            |          |  |       |     
|NOI                                                |  |                                            | 161,004    |   |                   |   | 159,904    |          |  | 0.7   | %(b)
|Leasehold expense                                  |  |                                            | 1,225      |   |                   |   | 1,122      |          |  | 9.2   | %   
|                                                   |  |                                            |            |   |                   |   |            |          |  |       |     
|NOI after leasehold expense                        |  |                                            | 159,779    |   |                   |   | 158,782    |          |  |       |     
|Indirect operating expense (2)                     |  |                                            | 9,340      |   |                   |   | 12,326     |          |  | -24.2 | %(c)
|                                                   |  |                                            |            |   |                   |   |            |          |  |       |     
|NOI after indirect operating and leasehold expense |  | $                                          | 150,439    |   |                   | $ | 146,456    |          |  | 2.7   | %   
|                                                   |  |                                            |            |   |                   |   |            |          |  |       |     
|Avg. annual rent per sq. ft. (3)                   |  | $                                          | 11.80      |   |                   | $ | 11.44      |          |  | 3.1   | %   
|Avg. sq. ft. occupancy                             |  |                                            | 85         | % |                   |   | 87         | %        |  |       |     
|Total net rentable sq. ft.                         |  |                                            | 21,346,000 |   |                   |   | 21,346,000 |          |  |       |     
|No. of properties as of December 31, 2002 (4)      |  |                                            | 330        |   |                   |   | 330        |          |  |       |     

---

|(1) |  | Includes storage centers held by domestic consolidated and unconsolidated joint ventures.
|--- |  | -----------------------------------------------------------------------------------------

|(2) |  | Indirect operating expense includes certain shared property costs such as district and corporate management, purchasing, national contracts personnel and marketing, as well as
certain overhead costs allocated to property operations such as business information technology, legal services, human resources and accounting. Does not include containerized storage operations, internal real estate acquisition cost or abandoned
development expense. Indirect operating expense is allocated to stores based on number of months in operation during the period.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Average annual rent per square foot is calculated by dividing actual rent collected by the average number of square feet occupied during the period.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | Number of Same Store properties are as of December 31, 2002.
|--- |  | ------------------------------------------------------------



(a) During 2002, we experienced a decrease in demand evidenced by a decrease in recorded inquiries at the stores. Occupancies dropped two and a half
percentage points from January through April. In order to stop this erosion we began to make rate concessions. Although the average rate for the year increased 3.1%, quarterly trends showed that this increase was the result of a 5.4% increase in the
first quarter, followed by a slow erosion of rates from May through December. Despite these rate adjustments, our seasonal occupancy increase that normally occurs over late spring and summer was not as significant as most years and we continued to
lag 2001 occupancy levels. In response to decreasing demand and increasing competition, we reviewed our marketing and sales programs to identify areas for potential improvement. During the spring and summer of 2001, we refocused our national sales
center, and during 2002, we realigned our direct sales team to achieve lower overhead and retain the highest performing representatives. As a result of this, as well as additional training of store management personnel, abandonment ratios by our
sales and customer service representatives dropped significantly during 2002 and closing ratios increased.



34



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##### Table of Contents

(b) NOI rose from 2001 to 2002 due to increases in revenue, which is a function of changes in rental
rates and occupancy. While the storage business is seasonal, spring and summer being peak occupancy periods, the year over year trends from 2001 to 2002 reflected general market changes. Revenue increases from 2001 to 2002 resulted from rate
increases and were offset by occupancy decreases.



(c)
Decreased indirect operating expenses resulted in an increase in NOI after indirect costs of 2.7% for 2002 compared to 2001. Indirect operating expenses decreased for 2002 primarily due to a reduction in corporate marketing initiatives, and the
result of economies of scale achieved by spreading certain fixed costs over a greater number of stores, and the fact that more indirect expenses were allocated to New Stores.



Domestic New Store



Our definition of New Store, as shown in the table below, includes existing domestic facilities that had not been acquired or leased as of January 1 of
the previous year as well as domestic developed properties that have not been operating a full two years as of January 1 of the current year. The following table summarizes New Store operating performance as defined at December 31, 2003. The 2002
and 2001 information has been restated (see Note B to our Consolidated Financial Statements).



New Store Results (1)



|                                                   |  |                                            |        |   |                                      |   |        |                                          |  |   |                   |   |  |      |       |   |                   |   |        |   |  |   |        |  
|-------------------------------------------------- |  | ------------------------------------------ | ------ | - | ------------------------------------ | - | ------ | ---------------------------------------- |  | - | ----------------- | - |  | ---- | ----- | - | ----------------- | - | ------ | - |  | - | ------ | -
|                                                   |  | Acquisitions Year Ended December 31,       |        |   | Developments Year Ended December 31, |   |        | Total New Stores Year Ended December 31, | 
|                                                   |  | 2003                                       |        |   | 2002(as restated)                    |   |        | 2003                                     |  |   | 2002(as restated) |   |  | 2003 |       |   | 2002(as restated) |  
|                                                   |  | (dollars in thousands except average rent) |       
|Storage center operations revenue                  |  | $                                          | 28,192 |   |                                      | $ | 10,898 |                                          |  | $ | 12,778            |   |  | $    | 4,896 |   |                   | $ | 40,970 |   |  | $ | 15,794 |  
|Operating expense:                                 |  |                                            |        |   |                                      |   |        |                                          |  |   |                   |   |  |      |       |   |                   |   |        |   |  |   |        |  
|Personnel expenses                                 |  |                                            | 3,468  |   |                                      |   | 1,523  |                                          |  |   | 2,742             |   |  |      | 1,304 |   |                   |   | 6,210  |   |  |   | 2,827  |  
|Real estate taxes                                  |  |                                            | 2,669  |   |                                      |   | 917    |                                          |  |   | 2,739             |   |  |      | 1,281 |   |                   |   | 5,408  |   |  |   | 2,198  |  
|Repairs and maintenance                            |  |                                            | 1,398  |   |                                      |   | 534    |                                          |  |   | 599               |   |  |      | 180   |   |                   |   | 1,997  |   |  |   | 714    |  
|Marketing expense                                  |  |                                            | 1,170  |   |                                      |   | 504    |                                          |  |   | 1,308             |   |  |      | 603   |   |                   |   | 2,478  |   |  |   | 1,107  |  
|Utilities and phone expenses                       |  |                                            | 1,265  |   |                                      |   | 550    |                                          |  |   | 1,003             |   |  |      | 462   |   |                   |   | 2,268  |   |  |   | 1,012  |  
|Store admin and other expenses                     |  |                                            | 1,199  |   |                                      |   | 501    |                                          |  |   | 1,050             |   |  |      | 601   |   |                   |   | 2,249  |   |  |   | 1,102  |  
|                                                   |  |                                            |        |   |                                      |   |        |                                          |  |   |                   |   |  |      |       |   |                   |   |        |   |  |   |        |  
|Direct operating and real estate tax expense       |  |                                            | 11,169 |   |                                      |   | 4,529  |                                          |  |   | 9,441             |   |  |      | 4,431 |   |                   |   | 20,610 |   |  |   | 8,960  |  
|                                                   |  |                                            |        |   |                                      |   |        |                                          |  |   |                   |   |  |      |       |   |                   |   |        |   |  |   |        |  
|NOI                                                |  |                                            | 17,023 |   |                                      |   | 6,369  |                                          |  |   | 3,337             |   |  |      | 465   |   |                   |   | 20,360 |   |  |   | 6,834  |  
|Leasehold expense                                  |  |                                            | 1      |   |                                      |   |       |                                          |  |   | 444               |   |  |      | 26    |   |                   |   | 445    |   |  |   | 26     |  
|                                                   |  |                                            |        |   |                                      |   |        |                                          |  |   |                   |   |  |      |       |   |                   |   |        |   |  |   |        |  
|NOI after leasehold expense                        |  |                                            | 17,022 |   |                                      |   | 6,369  |                                          |  |   | 2,893             |   |  |      | 439   |   |                   |   | 19,915 |   |  |   | 6,808  |  
|Indirect operating expense (2)                     |  |                                            | 2,486  |   |                                      |   | 1,156  |                                          |  |   | 1,081             |   |  |      | 529   |   |                   |   | 3,567  |   |  |   | 1,685  |  
|                                                   |  |                                            |        |   |                                      |   |        |                                          |  |   |                   |   |  |      |       |   |                   |   |        |   |  |   |        |  
|NOI after indirect operating and leasehold expense |  | $                                          | 14,536 |   |                                      | $ | 5,213  |                                          |  | $ | 1,812             |   |  | $    | (90   | ) |                   | $ | 16,348 |   |  | $ | 5,123  |  
|                                                   |  |                                            |        |   |                                      |   |        |                                          |  |   |                   |   |  |      |       |   |                   |   |        |   |  |   |        |  
|Avg. sq. ft. occupancy                             |  |                                            | 75     | % |                                      |   | 69     | %                                        |  |   | 56                | % |  |      | 38    | % |                   |   | 69     | % |  |   | 58     | %
|No. of properties                                  |  |                                            | 68     |   |                                      |   | 48     |                                          |  |   | 40                |   |  |      | 26    |   |                   |   | 108    |   |  |   | 74     |  

---

|(1) |  | Includes storage centers held by domestic consolidated and unconsolidated joint ventures.
|--- |  | -----------------------------------------------------------------------------------------

|(2) |  | Indirect operating expense includes certain shared property costs such as district and corporate management, purchasing, national contracts personnel and marketing, as well as
certain overhead costs allocated to property operations such as business information technology, legal services, human resources and accounting. Does not include containerized storage operations, internal real estate acquisition cost or abandoned
development expense. Indirect operating expense is allocated to stores based on number of months in operation during the period.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



35



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##### Table of Contents

The following table summarizes New Store operating performance as defined at December 31, 2002. The 2002
and 2001 information has been restated (see Note B to our Consolidated Financial Statements).



New Store Results (1)



|                                                   |  |                                            |        |   |                                      |   |       |                                          |  |   |                   |   |  |                   |        |   |                   |   |        |   |  |   |        |  
|-------------------------------------------------- |  | ------------------------------------------ | ------ | - | ------------------------------------ | - | ----- | ---------------------------------------- |  | - | ----------------- | - |  | ----------------- | ------ | - | ----------------- | - | ------ | - |  | - | ------ | -
|                                                   |  | Acquisitions Year Ended December 31,       |        |   | Developments Year Ended December 31, |   |       | Total New Stores Year Ended December 31, | 
|                                                   |  | 2002(as restated)                          |        |   | 2001(as restated)                    |   |       | 2002(as restated)                        |  |   | 2001(as restated) |   |  | 2002(as restated) |        |   | 2001(as restated) |  
|                                                   |  | (dollars in thousands except average rent) |       
|Storage center operations revenue                  |  | $                                          | 16,026 |   |                                      | $ | 1,848 |                                          |  | $ | 20,072            |   |  | $                 | 11,422 |   |                   | $ | 36,098 |   |  | $ | 13,270 |  
|Operating expense:                                 |  |                                            |        |   |                                      |   |       |                                          |  |   |                   |   |  |                   |        |   |                   |   |        |   |  |   |        |  
|Personnel expenses                                 |  |                                            | 2,063  |   |                                      |   | 194   |                                          |  |   | 3,086             |   |  |                   | 1,887  |   |                   |   | 5,149  |   |  |   | 2,081  |  
|Real estate taxes                                  |  |                                            | 1,585  |   |                                      |   | 188   |                                          |  |   | 3,796             |   |  |                   | 2,227  |   |                   |   | 5,381  |   |  |   | 2,415  |  
|Repairs and maintenance                            |  |                                            | 676    |   |                                      |   | 40    |                                          |  |   | 670               |   |  |                   | 440    |   |                   |   | 1,346  |   |  |   | 480    |  
|Marketing expense                                  |  |                                            | 725    |   |                                      |   | 67    |                                          |  |   | 1,252             |   |  |                   | 705    |   |                   |   | 1,977  |   |  |   | 772    |  
|Utilities and phone expenses                       |  |                                            | 735    |   |                                      |   | 66    |                                          |  |   | 1,437             |   |  |                   | 1,054  |   |                   |   | 2,172  |   |  |   | 1,120  |  
|Store admin and other expenses                     |  |                                            | 743    |   |                                      |   | 105   |                                          |  |   | 1,430             |   |  |                   | 818    |   |                   |   | 2,173  |   |  |   | 923    |  
|                                                   |  |                                            |        |   |                                      |   |       |                                          |  |   |                   |   |  |                   |        |   |                   |   |        |   |  |   |        |  
|Direct operating and real estate tax expense       |  |                                            | 6,527  |   |                                      |   | 660   |                                          |  |   | 11,671            |   |  |                   | 7,131  |   |                   |   | 18,198 |   |  |   | 7,791  |  
|                                                   |  |                                            |        |   |                                      |   |       |                                          |  |   |                   |   |  |                   |        |   |                   |   |        |   |  |   |        |  
|NOI                                                |  |                                            | 9,499  |   |                                      |   | 1,188 |                                          |  |   | 8,401             |   |  |                   | 4,291  |   |                   |   | 17,900 |   |  |   | 5,479  |  
|Leasehold expense                                  |  |                                            | 1,140  |   |                                      |   | 920   |                                          |  |   | 862               |   |  |                   | 840    |   |                   |   | 2,002  |   |  |   | 1,760  |  
|                                                   |  |                                            |        |   |                                      |   |       |                                          |  |   |                   |   |  |                   |        |   |                   |   |        |   |  |   |        |  
|NOI after leasehold expense                        |  |                                            | 8,359  |   |                                      |   | 268   |                                          |  |   | 7,539             |   |  |                   | 3,451  |   |                   |   | 15,898 |   |  |   | 3,719  |  
|Indirect operating expense (2)                     |  |                                            | 1,369  |   |                                      |   | 102   |                                          |  |   | 1,288             |   |  |                   | 1,115  |   |                   |   | 2,657  |   |  |   | 1,217  |  
|                                                   |  |                                            |        |   |                                      |   |       |                                          |  |   |                   |   |  |                   |        |   |                   |   |        |   |  |   |        |  
|NOI after indirect operating and leasehold expense |  | $                                          | 6,990  |   |                                      | $ | 166   |                                          |  | $ | 6,251             |   |  | $                 | 2,336  |   |                   | $ | 13,241 |   |  | $ | 2,502  |  
|                                                   |  |                                            |        |   |                                      |   |       |                                          |  |   |                   |   |  |                   |        |   |                   |   |        |   |  |   |        |  
|Avg. sq. ft. occupancy                             |  |                                            | 70     | % |                                      |   | 68    | %                                        |  |   | 54                | % |  |                   | 45     | % |                   |   | 61     | % |  |   | 47     | %
|No. of properties                                  |  |                                            | 56     |   |                                      |   | 8     |                                          |  |   | 53                |   |  |                   | 39     |   |                   |   | 109    |   |  |   | 47     |  

---

|(1) |  | Includes storage centers held by domestic consolidated and unconsolidated joint ventures.
|--- |  | -----------------------------------------------------------------------------------------

|(2) |  | Indirect operating expense includes certain shared property costs such as district and corporate management, purchasing, national contracts personnel and marketing, as well as
certain overhead costs allocated to property operations such as business information technology, legal services, human resources and accounting. Does not include containerized storage operations internal real estate acquisition cost or abandoned
development expense. Indirect operating expense is allocated to stores based on number of months in operation during the period.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Acquisitions



We continue to seek acquisition opportunities for high quality storage centers that meet our investment standards. We typically target our acquisitions to
generate an unleveraged annual yield of 9% to 11% once they have reached stabilization. We have limited our efforts to pursue only those storage centers that enhance our existing network of stores or allow us to establish significant market presence
in new markets (i.e. establish greater market presence or expand an established market to create greater economies of scale). The operating results of our acquisitions are discussed below.



We can give no assurance that the yield projections noted above regarding the
acquisitions will occur. Actual occupancy levels, rates and revenue could be lower if we experience competition from other self storage properties and other storage alternatives in close proximity to our storage centers or general economic
conditions



36



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##### Table of Contents

impact demand for our product. Actual yields may also be lower if major expenses such as real estate taxes, labor and marketing, among others, increase more
than projected. See Risk Factors in Item 1 Business of the Annual Report on Form 10-K.



The following table summarizes our acquisition activity from 2001 to 2003:



|                     |  |                      |  |                                          |       |                                                     |           |                   |    |   |                                      |    |   |      |    |      |  |      |       |  |   |       |  |   |      
|-------------------- |  | -------------------- |  | ---------------------------------------- | ----- | --------------------------------------------------- | --------- | ----------------- | -- | - | ------------------------------------ | -- | - | ---- | -- | ---- |  | ---- | ----- |  | - | ----- |  | - | -----
|                     |  | Number of Properties |  | (In millions)TotalStorage CenterCost (1) |       | Total NetRentablesq. ft. whenall phasesare complete |           | Average Occupancy |    |   | Average Annual Rent (per sq. ft) (2)
|                     |  |                      |  |                                          | 2003  |                                                     |           | 2002              |    |   | 2001                                 |    |   | 2003 |    | 2002 |  | 2001
|Acquisitions in 2003 |  | 20                   |  | $                                        | 99.0  |                                                     | 1,449,000 |                   | 79 | % |                                      |   |   |      |   |      |  | $    | 11.60 |  | $ |      |  | $ |     
|Acquisitions in 2002 |  | 48                   |  |                                          | 129.5 |                                                     | 3,626,000 |                   | 74 | % |                                      | 69 | % |      |   |      |  |      | 7.34  |  |   | 6.62  |  |   |     
|Acquisitions in 2001 |  | 8                    |  |                                          | 34.2  |                                                     | 561,000   |                   | 79 | % |                                      | 72 | % |      | 68 | %    |  |      | 11.89 |  |   | 11.72 |  |   | 11.34

|                     |  |   |        |  |   |        |  |                       |       |                                             |   |        |  |      |       |      |   |      |  |  |  |  |  | 
|-------------------- |  | - | ------ |  | - | ------ |  | --------------------- | ----- | ------------------------------------------- | - | ------ |  | ---- | ----- | ---- | - | ---- |  |  |  |  |  | 
|                     |  |   |        |  |  
|                     |  |   |        |  |   |        |  | (In thousands)Revenue |       | (In thousands)NOI(after leasehold expenses)
|                     |  |   |        |  |   |        |  | 2003                  |       | 2002                                        |   | 2001   |  | 2003 |       | 2002 |   | 2001
|Acquisitions in 2003 |  | $ | 6,731  |  | $ |       |  | $                     |      |                                             | $ | 3,934  |  | $    |      |      | $ |    
|Acquisitions in 2002 |  |   | 21,461 |  |   | 10,898 |  |                       |      |                                             |   | 13,088 |  |      | 6,369 |      |   |    
|Acquisitions in 2001 |  |   | 5,726  |  |   | 5,128  |  |                       | 1,848 |                                             |   | 2,529  |  |      | 1,990 |      |   | 268 

---

|(1) |  | Total capitalized costs to storage centers since the store was acquired or developed.
|--- |  | -------------------------------------------------------------------------------------

|(2) |  | Average annual rent per square foot is calculated by dividing actual rent collected by the average number of square feet occupied during the period.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



During 2003, we purchased 20 storage centers. On June 30, 2003, we purchased
19 storage centers from the owners of Minnesota Mini Storage for 3,050,000 shares of our Common Stock (see Note E to our Consolidated Financial Statements), the equivalent of $89.5 million. These 19 stores had occupancy of 77% at December 31, 2003
and the fourth quarter yield was 8.8% (calculated as the fourth quarter 2003 NOI annualized divided by the purchase price). One additional storage center was purchased from a California developer on December 31, 2003 for $6.3 million, and had
occupancy of 87% at December 31, 2003.



During 2002, we
purchased eight individual storage centers totaling 481,000 net rentable square feet for a purchase price of $27.1 million. These properties are in the following locations: three in Indiana, one in Maryland, one in California, one in Illinois and
two in Florida. The average occupancy of these stores was 61% as of December 31, 2003, which is below our projected stabilized occupancy as five of these stores are still in rent-up. We expect these stores to reach stabilization within the next ten
to twenty-four months. The fourth quarter 2003 yield on these eight storage centers is 6.2% (calculated as fourth quarter 2003 NOI annualized divided by the purchase price).



On June 26, 2002, we purchased for $62.1 million a 74% interest in Morningstar Storage Centers, LLC (Morningstar) which owns
and operates 40 storage centers in North Carolina and South Carolina that consist of 3,145,000 net rentable square feet. We also entered into an agreement with certain members of Morningstar to form one or more joint ventures for the purpose of
developing and operating high quality self storage properties in North and South Carolina. (See Note E to our Consolidated Financial Statements). Occupancy for these 40 stores is 76%. Under this agreement we receive distribution in excess of our
ownership interest in the first three years. From July 1, 2003 to June 30, 2004, we receive 87% of available cash flows (as defined in the purchase agreement). Beginning July 1, 2004, we will receive 75% of available cash flows. The Companys
fourth quarter 2003 yield on our investment is 9% (calculated as the cash flow we received from distributions divided by the purchase price of the investment).



During 2001, we purchased eight storage centers totaling 561,000 net rentable square feet for $31.8 million. Four of these properties are located in
California, three are in Michigan and one is in Illinois. The fourth quarter



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2003 yield on these eight storage centers was approximately 9.0% (calculated as fourth quarter 2003 NOI after leasehold expense divided by the purchase
price).



Developments



Our investment strategy includes development of new storage centers in
markets in which we currently operate where we have identified underserved markets with high barriers to entry.



The following table summarizes our domestic development activity from 2001 to 2003.



|                     |  |                      |  |                                           |       |                                                      |           |                   |    |   |                                     |    |   |      |    |      |  |      |       |  |   |      |  |   |     
|-------------------- |  | -------------------- |  | ----------------------------------------- | ----- | ---------------------------------------------------- | --------- | ----------------- | -- | - | ----------------------------------- | -- | - | ---- | -- | ---- |  | ---- | ----- |  | - | ---- |  | - | ----
|                     |  | Number of Properties |  | (In millions)TotalStorage Center Cost (1) |       | Total NetRentablesq. ft. whenall phases are complete |           | Average Occupancy |    |   | Average Annual Rent(per sq. ft) (2)
|                     |  |                      |  |                                           | 2003  |                                                      |           | 2002              |    |   | 2001                                |    |   | 2003 |    | 2002 |  | 2001
|Developments in 2003 |  | 14                   |  | $                                         | 64.8  |                                                      | 842,000   |                   | 29 | % |                                     |   |   |      |   |      |  | $    | 7.91  |  | $ |     |  | $ |    
|Developments in 2002 |  | 14                   |  |                                           | 77.1  |                                                      | 870,000   |                   | 54 | % |                                     | 25 | % |      |   |      |  |      | 10.59 |  |   | 8.06 |  |   |    
|Developments in 2001 |  | 12                   |  |                                           | 55.8  |                                                      | 746,000   |                   | 72 | % |                                     | 45 | % |      | 20 | %    |  |      | 10.27 |  |   | 9.80 |  |   | 8.83
|                     |  |                      |  |                                           |       |                                                      |           |                   |    |   |                                     |    |   |      |    |      |  |      |       |  |   |      |  |   |     
|Development total    |  | 40                   |  | $                                         | 197.7 |                                                      | 2,458,000 |                   | 56 | % |                                     | 38 | % |      | 20 | %    |  | $    | 10.17 |  | $ | 9.37 |  | $ | 8.83
|                     |  |                      |  |                                           |       |                                                      |           |                   |    |   |                                     |    |   |      |    |      |  |      |       |  |   |      |  |   |     

|                     |  |   |        |  |   |       |  |                       |     |                                              |   |       |   |      |   |      |      |  |   |      |   |  |  |  |  |  | 
|-------------------- |  | - | ------ |  | - | ----- |  | --------------------- | --- | -------------------------------------------- | - | ----- | - | ---- | - | ---- | ---- |  | - | ---- | - |  |  |  |  |  | 
|                     |  |   |        |  |  
|                     |  |   |        |  |   |       |  | (In thousands)Revenue |     | (In thousands) NOI(after leasehold expenses) |  
|                     |  |   |        |  |   |       |  | 2003                  |     | 2002                                         |   | 2001  |   | 2003 |   |      | 2002 |  |   | 2001 |  
|Developments in 2003 |  | $ | 1,106  |  | $ |      |  | $                     |    |                                              | $ | (948  | ) |      | $ |     |      |  | $ |     |  
|Developments in 2002 |  |   | 5,600  |  |   | 1,136 |  |                       |    |                                              |   | 1,077 |   |      |   | (521 | )    |  |   |     |  
|Developments in 2001 |  |   | 6,072  |  |   | 3,760 |  |                       | 529 |                                              |   | 2,764 |   |      |   | 960  |      |  |   | (300 | )
|                     |  |   |        |  |   |       |  |                       |     |                                              |   |       |   |      |   |      |      |  |   |      |   |  |  |  |  |  | 
|Development total    |  | $ | 12,778 |  | $ | 4,896 |  | $                     | 529 |                                              | $ | 2,893 |   |      | $ | 439  |      |  | $ | (300 | )
|                     |  |   |        |  |   |       |  |                       |     |                                              |   |       |   |      |   |      |      |  |   |      |   |  |  |  |  |  | 

---

|(1) |  | Total capitalized costs to storage centers since the store was acquired or developed.
|--- |  | -------------------------------------------------------------------------------------

|(2) |  | Average annual rent per square foot is calculated by dividing actual rent collected by the average number of square feet occupied during the period. On the year of opening the
average annual rent is lower as the store has not been opened a full year.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We typically target yields for developments at 11% to 12% once we achieve stable occupancy. Targeted yield is calculated as projected annualized NOI divided by the total invested cost. We normally project new storage
properties to rent-up at occupancy rates of between 3% and 4% per month. In order to maintain this pace of lease-up over the past three years we have needed to offer reduced rates to attract new customers. As a result, on the developments of the
past three years our stores have been renting with occupancy growth at 3.6% per month. We can give no assurance that the projections noted above regarding the development projects will occur. Actual occupancy levels and rates could be lower if we
experience competition from other self storage properties and other storage alternatives in close proximity to our developments. Actual yields may also be lower if major expenses such as property taxes, labor and marketing, among others, are more
than projected or if we are unable to obtain the projected rental rates for the project. See Risk Factors in Item 1 Business of the Annual Report on Form 10-K.



During 2003, we opened fourteen new storage centers. These storage centers are still in the early stages of rent-up. The
first of these storage centers was opened in March; the next three opened in the second quarter; seven were opened in the third quarter and the remaining three opened in the fourth quarter. The 2003 developments were open an average 5 months of
operations. These stores had an occupancy rate of 35% at December 31, 2003 and at this stage are performing according to projections.



During 2002, we opened fourteen domestic storage centers. These 2002 developments as a group generated $1.1 million (after leasehold expenses) in NOI in
2003, have been open an average of 18 months and had an



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average occupancy of about 63% at year end 2003. This represents a rent-up which is somewhat below projections. This is attributable primarily to two storage
centers that have been particularly slow to rent up that had occupancies at December 31, 2003 of 40% and 42%.



During 2001, we opened 12 domestic storage centers. The 2001 developments together generated $2.8 million in NOI (after leasehold expenses) in 2003. For
the month of December 2003, these developments had NOI of $297,000 and averaged 78% occupancy after an average of 28 months of operations.



These 2001 developments as a group were under 2003 anticipated revenues by 5%, which is entirely attributable to one storage center that has been slow to
rent up and had occupancy at December 31, 2003 of 42%. Excluding that storage center from the analysis, the remaining 2001 developments in this group were 3.0% over 2003 anticipated revenues, and as of December 31, 2003 had an occupancy of 80% and a
yield of 7.3% (calculated as fourth quarter 2003 NOI annualized divided by the purchase price). Expenses were higher than initially projected in most of these storage centers primarily due to increased personnel expenses associated with Sunday
openings.



Developments under construction



In addition to the operating properties discussed in
Segment Performance, we have nine properties under construction or pending construction. The following table summarizes the properties under construction as of December 31, 2003.



|                                    |  |                        |  |                                        |        |                                          |   |       
|----------------------------------- |  | ---------------------- |  | -------------------------------------- | ------ | ---------------------------------------- | - | ------
|                                    |  | NumberofProjects       |  | Estimated CompletedCost ofProjects (1) |        | Total Cost to Date as ofDecember 31,2003
|                                    |  | (dollars in thousands)
|Developments Under Construction:    |  |                        |  |                                        |        |                                          |   |       
|Construction in progress            |  | 7                      |  | $                                      | 42,129 |                                          | $ | 28,797
|Land purchased pending construction |  | 2                      |  |                                        | 11,692 |                                          |   | 4,006 
|                                    |  |                        |  |                                        |        |                                          |   |       
|Total                               |  | 9                      |  | $                                      | 53,821 |                                          | $ | 32,803
|                                    |  |                        |  |                                        |        |                                          |   |       

---

|(1) |  | The actual completed cost of these projects could vary due to delays during construction caused by weather, unforeseen site conditions, labor shortages, personnel turnover,
scheduling problems with contractors, subcontractors or suppliers, or resource constraints.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Included in construction in progress at December 31, 2003 is $1.6 million in costs related to ongoing capital improvement projects and $4.4 million in
development costs incurred on projects prior to commencement of construction.



OWNERSHIP AND LEASING ARRANGEMENTS



We have
various ownership and leasing arrangements with respect to properties included in our Same Store and New Store portfolios. The table below includes information as of and for the year ended December 31, 2003 that identifies the proportion of Same
Store and New Store results attributable to each of these various arrangements. The following tables include 100% of the cost, operating results and other information presented regardless of our percentage ownership interest in that property. Each
of the categories presented is discussed in greater detail in sections following the table and are reconciled in Note V to our Consolidated Financial Statements.



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Same Store



|                                        |  |                                                |  |                       |  |                 |           |         |   |         |  |              |         |  |   |      
|--------------------------------------- |  | ---------------------------------------------- |  | --------------------- |  | --------------- | --------- | ------- | - | ------- |  | ------------ | ------- |  | - | -----
|                                        |  | No. ofProperties                               |  | NetRentableSquareFeet |  | Gross BookValue |           | Revenue |   | NOI     |  | LeaseExpense
|                                        |  | (in thousands except for number of properties)
|Wholly owned or leased (1)              |  | 301                                            |  | 19,608                |  | $               | 1,092,459 |         | $ | 214,276 |  | $            | 146,965 |  | $ | 2,478
|Development financing joint venture (2) |  | 21                                             |  | 1,343                 |  |                 | 98,861    |         |   | 14,588  |  |              | 8,373   |  |   | 633  
|Consolidated joint ventures (3)         |  | 39                                             |  | 2,435                 |  |                 | 163,617   |         |   | 26,274  |  |              | 17,675  |  |   | 129  
|                                        |  |                                                |  |                       |  |                 |           |         |   |         |  |              |         |  |   |      
|Total Same Store                        |  | 361                                            |  | 23,386                |  | $               | 1,354,937 |         | $ | 255,138 |  | $            | 173,013 |  | $ | 3,240
|                                        |  |                                                |  |                       |  |                 |           |         |   |         |  |              |         |  |   |      
|                                       
|New Store                              
|Wholly owned or leased (1)              |  | 54                                             |  | 3,516                 |  | $               | 261,864   |         | $ | 19,126  |  | $            | 7,478   |  | $ | 349  
|Consolidated joint ventures (4)         |  | 54                                             |  | 4,017                 |  |                 | 164,377   |         |   | 21,844  |  |              | 12,882  |  |   | 96   
|                                        |  |                                                |  |                       |  |                 |           |         |   |         |  |              |         |  |   |      
|Total New Store                         |  | 108                                            |  | 7,533                 |  | $               | 426,241   |         | $ | 40,970  |  | $            | 20,360  |  | $ | 445  
|                                        |  |                                                |  |                       |  |                 |           |         |   |         |  |              |         |  |   |      

---

|(1) |  | Includes owned and leased properties in which we have a 100% interest. One New Store is operated through a leasing arrangement with a California developer.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Includes properties developed by CCP/Shurgard Venture, LLC, that are included in our Consolidated Financial Statements. There were mortgage notes payable of $66.3 million on these
properties as of December 31, 2003.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Includes properties in which we own an interest less than 100% but that are consolidated in our financial statements. The store information and results reflected represents the full
100% amounts. There were mortgage notes payable of $75.4 million on these properties as of December 31, 2003. Our average pro-rata share in these stores is approximately 85%.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | Includes properties in which we own an interest less than 100% but that are consolidated in our financial statements. The store information and results reflected represents the full
100% amounts. There were mortgage notes payable of $66.3 million on these properties as of December 31, 2003. Our average pro-rata share in these stores is approximately 69%.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Wholly Owned or Leased



The majority of our storage centers are owned directly or through wholly
owned subsidiaries. Additionally, as of December 31, 2003, we operated 14 properties that are subject to land or building leases requiring non-contingent rent payments.



Development Financing Joint Ventures



In order to expand our development capacity and broaden our access to capital, we have pursued alternative financing
options. In connection with this initiative, we formed a joint venture, CCP/Shurgard Venture, LLC (CCP/Shurgard), in December 2000 with an affiliate of JP Morgan Partners. Under this joint venture agreement, we constructed storage centers financed
through the use of cash flows provided by operations and our line of credit and, on completion, contributed those storage centers to the joint venture. At the time of contribution, we were reimbursed to the extent that our historical cost plus
negative cash flow prior to the transfer exceeded our pro rata portion of required equity (calculated as total required funding less amounts provided from financial institutions multiplied by our ownership percentage). Our partner has the right to
cause the joint venture to put those storage centers to us. The purchase price for the put is calculated as the greater of (a) that amount necessary to provide a specified return on the partners contributed capital (12% in the case of
CCP/Shurgard) or (b) annualized NOI divided by 9.25%. Should we choose not to purchase the properties in connection with the put option and the properties are sold in the open market, our partners have a priority right to proceeds on liquidation



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up to their 12% return. We have continuing involvement with this joint venture and do not recognize the contribution of the storage centers as a transfer in
ownership for financial reporting purposes. We account for this joint venture as a financing arrangement and, as such, recognize all activities related to those properties in our financial statements. Additionally, we recognize a participation
rights liability and a related discount on the underlying liability for the estimated fair value of our partners share of the estimated purchase price. The discount is amortized over the estimated term of the related agreement as a component
of interest expense. As of December 31, 2003, 21 storage centers are owned by the joint venture and are subject to $66.3 million in mortgage debt. We periodically re-evaluate our estimate of the option price, the projected timing of our joint
venture partners exercise of their put option and the related expected cash flows. Changes in the estimated fair value of the participation rights and related discount are recognized prospectively over the remaining term of the agreement.



In September 2003, CCPRE-Storage, LLC exercised its right to
have the joint venture put to us five properties. In March 2004 we gave notice of our intention to acquire one of the properties subject to the put for $4.4 million and declined to purchase the remaining four properties at the put price. The
properties that we did not agree to purchase under the put may be sold on the open market at the discretion of our joint venture partner. The decision not to purchase these four properties resulted in a $6.9 million reduction of our net
participation rights liability at December 31, 2003, representing the accrued participation liability recorded for these properties through September 30, 2003, and a corresponding increase in interest income and other, net was recorded in
amortization of participation rights discounts. An impairment loss of $7.5 million was recorded at December 31, 2003 to reflect the anticipated value to be recovered by us upon disposition of the related properties in 2004.



The following is a summary of the estimated participation rights liability
balances for the years ended December 31, 2003 and 2002:



|                                                |  |                         |        |   |      |   |        |  
|----------------------------------------------- |  | ----------------------- | ------ | - | ---- | - | ------ | -
|                                                |  | Year ended December 31, |       
|                                                |  | 2003                    |        |   | 2002 |  
|                                                |  | (in thousands)          |       
|Gross participation rights                      |  | $                       | 44,676 |   |      | $ | 49,842 |  
|Participation rights discount                   |  |                         | (4,053 | ) |      |   | (2,370 | )
|                                                |  |                         |        |   |      |   |        |  
|Participation rights liability, net of discount |  | $                       | 40,623 |   |      | $ | 47,472 |  
|                                                |  |                         |        |   |      |   |        |  



Consolidated
Joint Ventures



We develop and operate properties with
various partners through joint ventures in which we have ownership interests ranging from 38% to 93%. The 93 properties that are held by joint ventures that we consolidate are part of the following partnership arrangements:



We operate eleven properties through Tennessee joint ventures and nineteen
properties through Florida joint ventures, in which our ownership ranges from 50% to 90%. Those joint ventures are managed by two separate groups with whom we have established affiliation relationships to develop and manage jointly-owned storage
centers. Under the joint venture agreements, all major decisions require unanimous consent of both parties. However, we have the ability to exercise unilateral control without incurring significant costs and therefore we consider that we have
effective control over those joint ventures (see Note C to our Consolidated Financial Statements).



Upon purchase of the remaining properties that were under our TROL, see discussion below, we contributed ten properties to various joint ventures. Our
ownership interests in these entities range from 51% to 80% and we retain control over all major decisions in these entities.



In 2002, we purchased a 74% interest in Morningstar, which owns 40 storage centers in North and South Carolina. This acquisition closed on June 26, 2002,
and the operating results of these storage centers are included



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in our consolidated financial statements commencing on that date. We have entered into an agreement with Morningstar members to form one or more joint
ventures for the purpose of developing and operating self storage properties in North and South Carolina. As of December 31, 2003, we had one property operating under this joint venture. The properties owned by the entity and the properties to be
developed in the joint ventures are managed by the members of Morningstar through an affiliated entity using the Shurgard brand, management systems and standards. At the time of the purchase of Morningstar, we entered into a management services
agreement with Morningstar Property Management, LLC who manages all of our properties in North Carolina and South Carolina for a property management fee equal to the greater of $1,000 per property per month or 4.25% of the gross revenues of each
property per month.



We operate six storage centers owned
through a joint venture with a California developer. Under our agreement with this developer, the California developer purchases sites in southern California and constructs storage centers on them according to our specifications. On completion of
the rent-up period, the storage centers are purchased by a joint venture that is consolidated in our financial statements. Prior to such purchase, we have no ownership interest in the properties and accordingly, they are not included in any
discussions of our operating results. At December 31, 2003, we had guaranteed $14.0 million in outstanding debt for three properties related to this agreement. In addition, in 2003 we entered into a loan agreement with this developer collateralized
by one property under construction. As of December 31, 2003, $1.7 million had been drawn on this note, which is included in other assets on the Consolidated Balance Sheet, and $4.5 million remained available for additional draw to finance the
construction of the property.



Additionally, we consolidate our
partnership with institutional investors that own seven storage centers and one joint venture that owns one storage center. Our ownership in these joint ventures are 93% and 79%, respectively.



Tax Retention Operating Lease



In 2001, we executed an agreement with a third party, Storage Center Trust
(SCT) to enter into up to $250 million of tax retention operating leases (collectively referred to as the TROL). SCT was a trust that took title to development properties identified by us, constructed them to our specifications and then leased them
to us. Under the agreements, we functioned as construction agent and tenant. We had the option to acquire the properties at or before the end of the lease. If we did not acquire the properties at the end of the lease, they could be sold to a third
party or the lease could be extended by mutual agreement. Prior to purchase, we had no ownership interest in these properties. In 2002, there were 36 properties in the TROL, including 21 operating properties. In 2003, no new properties were added to
the TROL. As of June 2003, the Company had exercised its right to purchase all the TROL properties. We initially accounted for these properties as operating leases, and the related properties and debt were not included in our Consolidated Balance
Sheets. We have concluded that this treatment was not proper, and that we should have recorded both the TROL properties and related debt since inception. The financial statements for 2001 and 2002 have been restated accordingly (see Note B to the
Consolidated Financial Statements).



European Operations



European Business Summary



European operations are conducted in Belgium, Sweden, France, the
Netherlands, the United Kingdom, Denmark and Germany through Shurgard Self Storage, SCA (Shurgard Europe).



In 2003, in a series of transactions we increased our direct and indirect ownership interest in Shurgard Europe from 7.57% to 85.47%. Our interest in
Shurgard Europe is accounted for under the equity method of accounting, because our remaining partner maintains substantive and important approval rights relating to certain



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significant operating decisions. The data included in the following discussion and tables reflect total European operations, not our pro rata percentage.



Shurgard Europe, which has tested the self storage product on
European consumers since 1995, is now the largest owner and operator of self-storage facilities in Europe. European consumers tend to live in more crowded population densities and smaller living spaces than U.S. consumers which makes self storage an
attractive option. The self storage industry is not well established in much of Europe, and we believe this presents Shurgard Europe with a significant growth opportunity for the foreseeable future. Although we are seeing other industry players
entering the European markets, we believe that the supply being added to the market still leaves significant opportunity when compared to the overall size of the market. Shurgard Europe and its subsidiaries have established expansion plans that
focus now in five regional markets: the Benelux region (which includes Belgium and the Netherlands), France, Scandinavia (including Sweden and Denmark), the UK, and more recently Germany.



In order to take advantage of these market opportunities, Shurgard Europe continues to expand in those countries. Although
revenue is growing as the increasing portfolio of stores are continuing to rent-up, we anticipate this expansion will continue to produce losses for the next two to three years as financing costs, start up losses from the additional stores and
overhead cost necessary to carry out the expansion plans will continue to exceed operating income. As further new development activity is currently being carried out through a joint venture agreement, as described below, these losses should be
offset by the revenue growth from Shurgard Europes own portfolio. In January 2003, Shurgard Europe entered into an agreement with Crescent to create a new joint venture entity, First Shurgard, to develop approximately 38 storage facilities in
Western Europe. Shurgard Europe has a 20% interest in this venture.



As part of the First Shurgard joint venture agreement, Shurgard Europe receives development fees equal to 7% of the cost of newly developed storage centers, together with reimbursement of certain out-of-pocket costs of 150,000 per
storage center and certain financing fees. In addition, First Shurgard and Shurgard Europe have entered into a 20-year management agreement under which Shurgard Europe receives management fees equal to 7% of revenues, but not less than 50,000
per year for each storage center in operation for the first two years. The First Shurgard joint venture arrangement also provides that, in addition to its initial 20% ownership interest, Shurgard Europe will receive an additional 20% of First
Shurgards terminal value in 2008 providing that each of Shurgard Europe and Crescent has received an internal rate of return of 12% on its equity investment. First Shurgard will own the developed storage centers property. Although Shurgard
Europe has no obligation to purchase the properties, if the properties are put up for sale, it has a right of first offer.



|               |  |                         |  |                              |  |                        |       |                         |    |                              |           |                        |   |      
|-------------- |  | ----------------------- |  | ---------------------------- |  | ---------------------- | ----- | ----------------------- | -- | ---------------------------- | --------- | ---------------------- | - | -----
|               |  | Shurgard Europe         |  | First Shurgard              
|               |  | Numberof OpenProperties |  | Total NetRentableSq. Ft. (1) |  | EstimatedTotalCost (2) |       | Numberof OpenProperties |    | Total NetRentableSq. Ft. (1) |           | EstimatedTotalCost (2)
|               |  | (dollars in millions)  
|Country:       |  |                         |  |                              |  |                        |       |                         |    |                              |           |                        |   |      
|Belgium        |  | 18                      |  | 1,052,000                    |  | $                      | 80.5  |                         |   |                              |          |                        | $ |     
|France         |  | 24                      |  | 1,294,000                    |  |                        | 139.0 |                         | 6  |                              | 318,000   |                        |   | 36.3 
|Netherlands    |  | 23                      |  | 1,247,000                    |  |                        | 127.1 |                         | 6  |                              | 301,000   |                        |   | 36.9 
|Sweden         |  | 20                      |  | 1,143,000                    |  |                        | 113.9 |                         | 2  |                              | 94,000    |                        |   | 12.1 
|Denmark        |  | 4                       |  | 215,000                      |  |                        | 27.5  |                         | 1  |                              | 51,000    |                        |   | 7.7  
|Germany        |  |                        |  |                             |  |                        |      |                         | 5  |                              | 268,000   |                        |   | 34.8 
|United Kingdom |  | 12                      |  | 635,000                      |  |                        | 118.6 |                         | 1  |                              | 53,000    |                        |   | 11.1 
|               |  |                         |  |                              |  |                        |       |                         |    |                              |           |                        |   |      
|               |  | 101                     |  | 5,586,000                    |  | $                      | 606.6 |                         | 21 |                              | 1,085,000 |                        | $ | 138.9
|               |  |                         |  |                              |  |                        |       |                         |    |                              |           |                        |   |      

---

|(1) |  | Total net rentable square feet when all phases are complete.
|--- |  | ------------------------------------------------------------

|(2) |  | The actual completed cost of these projects are reported in U.S. dollars translated at the December 31, 2003 exchange rate of $1.26 to the Euro.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------



43



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##### Table of Contents

European Same Store Operations



The definition for European Same Store includes existing stores acquired
prior to January 1 of the previous year as well as developed properties that have been operating for a full two years as of January 1 of the current year. The following table summarizes Same Store operating performance as defined for the period
ended December 31, 2003 and 2002.



Year ended December 31,
2003 annual comparison for European Same Store (1)



|               |  |                     |  |                       |   |  |                                       |   |  |           |   |  |      |   |  |      |  
|-------------- |  | ------------------- |  | --------------------- | - |  | ------------------------------------- | - |  | --------- | - |  | ---- | - |  | ---- | -
|               |  | Number ofProperties |  | 2003 AverageOccupancy |   |  | Percent change compared to prior year |  
|               |  |                     |  | Revenue               |   |  | NOI                                   |   |  | Occupancy |   |  | Rate |  
|Belgium        |  | 14                  |  | 77.3                  | % |  | 1.2                                   | % |  | -4.0      | % |  | -0.9 | % |  | 4.5  | %
|France         |  | 11                  |  | 78.5                  | % |  | 14.2                                  | % |  | 21.8      | % |  | 6.1  | % |  | 6.5  | %
|United Kingdom |  | 5                   |  | 74.7                  | % |  | 7.0                                   | % |  | 11.7      | % |  | 7.3  | % |  | 0.2  | %
|Netherlands    |  | 6                   |  | 75.4                  | % |  | 10.7                                  | % |  | 12.9      | % |  | 5.2  | % |  | 4.7  | %
|Sweden (a)     |  | 11                  |  | 70.9                  | % |  | -0.8                                  | % |  | -5.8      | % |  | 1.4  | % |  | -3.0 | %
|               |  |                     |  |                       |   |  |                                       |   |  |           |   |  |      |   |  |      |  
|Europe Totals  |  | 47                  |  | 75.5                  | % |  | 5.8                                   | % |  | 5.7       | % |  | 2.7  | % |  | 3.3  | %
|               |  |                     |  |                       |   |  |                                       |   |  |           |   |  |      |   |  |      |  



|                                                   |  |                                    |           |   |      |   |           |          |  |      |     
|-------------------------------------------------- |  | ---------------------------------- | --------- | - | ---- | - | --------- | -------- |  | ---- | ----
|                                                   |  | Year ended December 31,            |          
|                                                   |  | 2003                               |           |   | 2002 |   |           | % Change | 
|                                                   |  | (in thousands except average rent) |          
|Storage center operations revenue                  |  | $                                  | 42,930    |   |      | $ | 40,560    |          |  | 5.8  | %(b)
|Operating expense:                                 |  |                                    |           |   |      |   |           |          |  |      |     
|Personnel expenses                                 |  |                                    | 5,435     |   |      |   | 4,832     |          |  | 12.5 | %   
|Real estate taxes                                  |  |                                    | 1,714     |   |      |   | 1,830     |          |  | -6.3 | %   
|Repairs and maintenance                            |  |                                    | 1,447     |   |      |   | 1,287     |          |  | 12.4 | %   
|Marketing expense                                  |  |                                    | 2,309     |   |      |   | 2,150     |          |  | 7.4  | %   
|Utilities and phone expenses                       |  |                                    | 1,436     |   |      |   | 1,347     |          |  | 6.6  | %   
|Store admin and other expenses                     |  |                                    | 2,239     |   |      |   | 2,291     |          |  | -2.3 | %   
|                                                   |  |                                    |           |   |      |   |           |          |  |      |     
|Direct operating and real estate tax expense       |  |                                    | 14,580    |   |      |   | 13,737    |          |  | 6.1  | %   
|                                                   |  |                                    |           |   |      |   |           |          |  |      |     
|NOI                                                |  |                                    | 28,350    |   |      |   | 26,823    |          |  | 5.7  | %(c)
|Leasehold expense                                  |  |                                    | 1,167     |   |      |   | 1,062     |          |  | 9.9  | %   
|Indirect operating expense (2)                     |  |                                    | 5,328     |   |      |   | 5,480     |          |  | -2.8 | %(d)
|                                                   |  |                                    |           |   |      |   |           |          |  |      |     
|NOI after indirect operating and leasehold expense |  | $                                  | 21,855    |   |      | $ | 20,281    |          |  | 7.8  | %   
|                                                   |  |                                    |           |   |      |   |           |          |  |      |     
|Avg. annual rent per sq. ft. (3)                   |  | $                                  | 19.28     |   |      | $ | 18.66     |          |  | 3.3  | %   
|Avg. sq. ft. occupancy                             |  |                                    | 75.5      | % |      |   | 73.5      | %        |  | 2.7  | %   
|Total net rentable sq. ft.                         |  |                                    | 2,736,000 |   |      |   | 2,736,000 |          |  |      |     
|No. of properties                                  |  |                                    | 47        |   |      |   | 47        |          |  |      |     

---

|(1) |  | Amounts have been translated from local currencies at a constant exchange rate using the average exchange rate for 2003 for the 2003 to 2002 comparison.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Indirect operating expense includes certain shared property costs such as district and regional management, national contracts personnel and marketing, as well as certain overhead
costs allocated to property operations such as business information technology, human resources and accounting. It does not include internal real estate acquisition cost or abandoned development expense. Indirect operating expense is allocated to
stores based on number of months in operation during the period.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Average annual rent per square foot is calculated by dividing actual rent collected by the average number of square feet occupied during the period.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



44



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##### Table of Contents

(a) We attributed the drop in performance in Sweden to the drop in the general Swedish economy impacting
demand, the opening of several of our new stores in the Stockholm market temporarily diluting demand at our older stores and underperformance of our management team in the early part of 2003. We believe the actions, we have taken to address these
issues, including a focus on training store personnel and increased local marketing activities are starting to generate positive results. For the first time, in the fourth quarter of 2003, quarterly revenue was 0.8% higher when compared to the
fourth quarter of 2002. Occupancy in our Swedish stores was at 74.0% for the fourth quarter of 2003, compared to 70.0% in the fourth quarter of 2002.



(b) Revenue growth in U.S. dollars, when translated at the applicable average period rates, increased by 24.9% due to a significant change in currency
exchange rates in 2003 compared to 2002.



(c) The December 2003
yield for these stores was 12.6% (calculated as annualized December 2003 NOI after lease payments divided by the property cost). This Same Store pool includes properties located in all of the markets in which we operate with exception of Denmark and
Germany.



(d) The decrease in indirect operating expense
allocated to Same Store is primarily the result of spreading certain fixed costs over more stores as the European market expands.



The following table summarizes Same Store operating performance as defined for the period ended December 31, 2002 and 2001.



|                                                   |  |                                    |           |   |      |   |           |              |  |       |     
|-------------------------------------------------- |  | ---------------------------------- | --------- | - | ---- | - | --------- | ------------ |  | ----- | ----
|                                                   |  | Year ended December 31,            |          
|                                                   |  | 2002                               |           |   | 2001 |   |           | % Change (1) | 
|                                                   |  | (in thousands except average rent) |          
|Storage center operations revenue                  |  | $                                  | 21,897    |   |      | $ | 18,924    |              |  | 15.7  | %(a)
|Operating expense:                                 |  |                                    |           |   |      |   |           |              |  |       |     
|Personnel expenses                                 |  |                                    | 2,454     |   |      |   | 2,171     |              |  | 13.0  | %   
|Real estate taxes                                  |  |                                    | 876       |   |      |   | 1,016     |              |  | -13.8 | %   
|Repairs and maintenance                            |  |                                    | 622       |   |      |   | 614       |              |  | 1.3   | %   
|Marketing expense                                  |  |                                    | 715       |   |      |   | 943       |              |  | -24.2 | %   
|Utilities and phone expenses                       |  |                                    | 673       |   |      |   | 699       |              |  | -3.7  | %   
|Store admin and other expenses                     |  |                                    | 1,124     |   |      |   | 1,209     |              |  | -7.0  | %   
|                                                   |  |                                    |           |   |      |   |           |              |  |       |     
|Direct operating and real estate tax expense       |  |                                    | 6,464     |   |      |   | 6,652     |              |  | -2.8  | %   
|                                                   |  |                                    |           |   |      |   |           |              |  |       |     
|NOI                                                |  |                                    | 15,433    |   |      |   | 12,272    |              |  | 25.8  | %   
|Leasehold expense                                  |  |                                    | 833       |   |      |   | 752       |              |  | 10.8  | %   
|Indirect operating expense (2)                     |  |                                    | 2,600     |   |      |   | 3,018     |              |  | -13.9 | %(b)
|                                                   |  |                                    |           |   |      |   |           |              |  |       |     
|NOI after indirect operating and leasehold expense |  | $                                  | 12,000    |   |      | $ | 8,502     |              |  | 41.1  | %   
|                                                   |  |                                    |           |   |      |   |           |              |  |       |     
|Avg. annual rent per sq. ft. (3)                   |  | $                                  | 15.66     |   |      | $ | 14.57     |              |  | 7.5   | %   
|Avg. sq. ft. occupancy                             |  |                                    | 80.7      | % |      |   | 75.5      | %            |  | 6.9   | %   
|Total net rentable sq. ft.                         |  |                                    | 1,612,000 |   |      |   | 1,612,000 |              |  |       |     
|No. of properties                                  |  |                                    | 28        |   |      |   | 28        |              |  |       |     

---

|(1) |  | Amounts have been translated from local currencies at a constant exchange rate using the average exchange rate for 2002 for the 2002 to 2001 comparison.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Indirect operating expense includes certain shared property costs such as district and regional management, national contracts personnel and marketing, as well as certain overhead
costs allocated to property operations such as business information technology, human resources and accounting. It does not include internal real estate acquisition cost or abandoned development expense. Indirect operating expense is allocated to
stores based on number of months in operation during the period.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Average annual rent per square foot is calculated by dividing actual rent collected by the average number of square feet occupied during the period.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



45



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##### Table of Contents

(a) Revenue increased 15.7% from 2001 to 2002 when translated at constant exchange rates primarily as a
result of increases in rates and occupancy. Revenue growth in U.S. dollars, when translated at the applicable average period rates increased by 22.9% due to a change in currency exchange rates from the fourth quarter of 2001 to the same period in
2002. The December 2002 yield for these stores was 12.7% (calculated as December 2002 NOI annualized divided by the development cost of the store).



(b) Decreases in indirect operating expense are the result of spreading certain fixed costs over more stores as our European network expands.



European Development



The following table summarizes performance of European developments opened
through 2002 by country during the past three years:



|                          |  |                     |  |                                          |       |                                                     |           |                  |      |   |                                    |      |      |  |   |       |  |   |      
|------------------------- |  | ------------------- |  | ---------------------------------------- | ----- | --------------------------------------------------- | --------- | ---------------- | ---- | - | ---------------------------------- | ---- | ---- |  | - | ----- |  | - | -----
|                          |  | Number ofProperties |  | (In millions)TotalStorage CenterCost (1) |       | Total NetRentablesq. ft. whenall phasesare complete |           | AverageOccupancy |      |   | Average AnnualRent(per sq. ft) (2)
|                          |  |                     |  |                                          | 2003  |                                                     |           | 2002             |      |   | 2003                               |      | 2002
|Opened in 2002            |  |                     |  |                                          |       |                                                     |           |                  |      |   |                                    |      |      |  |   |       |  |   |      
|Belgium                   |  | 2                   |  | $                                        | 7.1   |                                                     | 101,000   |                  | 33.7 | % |                                    | 11.7 | %    |  | $ | 11.00 |  | $ | 10.05
|France                    |  | 7                   |  |                                          | 42.9  |                                                     | 376,000   |                  | 35.0 | % |                                    | 10.2 | %    |  |   | 18.57 |  |   | 17.46
|United Kingdom            |  | 3                   |  |                                          | 33.0  |                                                     | 163,000   |                  | 27.2 | % |                                    | 3.7  | %    |  |   | 38.15 |  |   | 31.74
|Netherlands               |  | 7                   |  |                                          | 40.8  |                                                     | 368,000   |                  | 29.7 | % |                                    | 5.1  | %    |  |   | 17.12 |  |   | 12.88
|Sweden                    |  | 3                   |  |                                          | 19.0  |                                                     | 151,000   |                  | 40.8 | % |                                    | 12.5 | %    |  |   | 16.28 |  |   | 15.49
|Denmark                   |  | 2                   |  |                                          | 14.4  |                                                     | 106,000   |                  | 25.1 | % |                                    | 2.1  | %    |  |   | 18.73 |  |   | 9.13 
|                          |  |                     |  |                                          |       |                                                     |           |                  |      |   |                                    |      |      |  |   |       |  |   |      
|Total opened in 2002      |  | 24                  |  | $                                        | 157.2 |                                                     | 1,265,000 |                  | 32.2 | % |                                    | 7.6  | %    |  | $ | 19.35 |  | $ | 15.79
|                          |  |                     |  |                                          |       |                                                     |           |                  |      |   |                                    |      |      |  |   |       |  |   |      
|Opened in 2001            |  |                     |  |                                          |       |                                                     |           |                  |      |   |                                    |      |      |  |   |       |  |   |      
|Belgium                   |  | 1                   |  | $                                        | 3.7   |                                                     | 51,000    |                  | 53.5 | % |                                    | 25.8 | %    |  | $ | 13.38 |  | $ | 12.32
|France                    |  | 5                   |  |                                          | 32.8  |                                                     | 280,000   |                  | 65.2 | % |                                    | 40.5 | %    |  |   | 19.76 |  |   | 19.99
|United Kingdom            |  | 2                   |  |                                          | 20.4  |                                                     | 102,000   |                  | 56.2 | % |                                    | 47.1 | %    |  |   | 37.31 |  |   | 34.94
|Netherlands               |  | 9                   |  |                                          | 48.5  |                                                     | 484,000   |                  | 54.2 | % |                                    | 32.3 | %    |  |   | 16.24 |  |   | 15.51
|Sweden                    |  | 6                   |  |                                          | 32.8  |                                                     | 315,000   |                  | 55.6 | % |                                    | 28.3 | %    |  |   | 15.81 |  |   | 16.43
|Denmark                   |  | 2                   |  |                                          | 13.1  |                                                     | 110,000   |                  | 63.1 | % |                                    | 42.0 | %    |  |   | 18.84 |  |   | 18.05
|                          |  |                     |  |                                          |       |                                                     |           |                  |      |   |                                    |      |      |  |   |       |  |   |      
|Total opened in 2001      |  | 25                  |  | $                                        | 151.3 |                                                     | 1,342,000 |                  | 57.7 | % |                                    | 34.7 | %    |  | $ | 18.66 |  | $ | 18.94
|                          |  |                     |  |                                          |       |                                                     |           |                  |      |   |                                    |      |      |  |   |       |  |   |      
|                          |  |                     |  |                                          |       |                                                     |          
|Same store:               |  |                     |  |                                          |       |                                                     |           |                  |      |   |                                    |      |      |  |   |      
|Opened in 2000            |  |                     |  |                                          |       |                                                     |           |                  |      |   |                                    |      |      |  |   |       |  |   |      
|Belgium                   |  | 3                   |  | $                                        | 14.6  |                                                     | 186,000   |                  | 66.1 | % |                                    | 63.5 | %    |  | $ | 13.32 |  | $ | 11.79
|France                    |  | 7                   |  |                                          | 40.5  |                                                     | 407,000   |                  | 74.6 | % |                                    | 67.6 | %    |  |   | 21.82 |  |   | 19.90
|United Kingdom            |  | 2                   |  |                                          | 19.1  |                                                     | 95,000    |                  | 71.6 | % |                                    | 69.8 | %    |  |   | 33.23 |  |   | 34.17
|Netherlands               |  | 5                   |  |                                          | 24.7  |                                                     | 284,000   |                  | 74.7 | % |                                    | 69.8 | %    |  |   | 19.27 |  |   | 17.95
|Sweden                    |  | 2                   |  |                                          | 11.8  |                                                     | 123,000   |                  | 55.1 | % |                                    | 43.8 | %    |  |   | 13.82 |  |   | 14.38
|                          |  |                     |  |                                          |       |                                                     |           |                  |      |   |                                    |      |      |  |   |       |  |   |      
|Total opened in 2000      |  | 19                  |  | $                                        | 110.7 |                                                     | 1,095,000 |                  | 70.7 | % |                                    | 65.0 | %    |  | $ | 20.07 |  | $ | 18.92
|                          |  |                     |  |                                          |       |                                                     |           |                  |      |   |                                    |      |      |  |   |       |  |   |      
|Opened in 1999 and before |  |                     |  |                                          |       |                                                     |           |                  |      |   |                                    |      |      |  |   |       |  |   |      
|Belgium                   |  | 11                  |  | $                                        | 51.6  |                                                     | 669,000   |                  | 80.4 | % |                                    | 82.1 | %    |  | $ | 14.27 |  | $ | 13.57
|France                    |  | 4                   |  |                                          | 15.4  |                                                     | 178,000   |                  | 87.5 | % |                                    | 88.7 | %    |  |   | 27.36 |  |   | 25.55
|United Kingdom            |  | 3                   |  |                                          | 24.6  |                                                     | 179,000   |                  | 76.3 | % |                                    | 69.5 | %    |  |   | 25.36 |  |   | 25.86
|Netherlands               |  | 1                   |  |                                          | 7.8   |                                                     | 61,000    |                  | 78.5 | % |                                    | 80.5 | %    |  |   | 20.07 |  |   | 19.37
|Sweden                    |  | 9                   |  |                                          | 50.2  |                                                     | 554,000   |                  | 74.5 | % |                                    | 75.8 | %    |  |   | 19.55 |  |   | 20.13
|                          |  |                     |  |                                          |       |                                                     |           |                  |      |   |                                    |      |      |  |   |       |  |   |      
|Total opened before 2000  |  | 28                  |  | $                                        | 149.6 |                                                     | 1,641,000 |                  | 78.7 | % |                                    | 79.3 | %    |  | $ | 18.92 |  | $ | 18.54
|                          |  |                     |  |                                          |       |                                                     |           |                  |      |   |                                    |      |      |  |   |       |  |   |      
|Same Store Total          |  | 47                  |  | $                                        | 260.3 |                                                     | 2,736,000 |                  | 75.5 | % |                                    | 73.5 | %    |  | $ | 19.28 |  | $ | 18.66
|                          |  |                     |  |                                          |       |                                                     |           |                  |      |   |                                    |      |      |  |   |       |  |   |      



46



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|                          |  |                            |        |                                                  |   |                                                  |  |      |        |      |   |        |      |   |        |   |  |   |        |  
|------------------------- |  | -------------------------- | ------ | ------------------------------------------------ | - | ------------------------------------------------ |  | ---- | ------ | ---- | - | ------ | ---- | - | ------ | - |  | - | ------ | -
|                          |  | (In thousands) Revenue (2) |        | (In thousands) Expense (2)(Direct expenses only) |   | (In thousands) NOI (2) (after leaseholdexpenses) | 
|                          |  | 2003                       |        | 2002                                             |   | 2003                                             |  | 2002 |        | 2003 |   |        | 2002 |  
|Opened in 2002            |  |                            |        |                                                  |   |                                                  |  |      |        |      |   |        |      |   |        |   |  |   |        |  
|Belgium                   |  | $                          | 396    |                                                  | $ | 106                                              |  | $    | 527    |      | $ | 340    |      | $ | (131   | ) |  | $ | (235   | )
|France                    |  |                            | 3,279  |                                                  |   | 747                                              |  |      | 3,170  |      |   | 1,476  |      |   | 109    |   |  |   | (729   | )
|United Kingdom            |  |                            | 1,910  |                                                  |   | 91                                               |  |      | 1,371  |      |   | 266    |      |   | 333    |   |  |   | (247   | )
|Netherlands               |  |                            | 2,035  |                                                  |   | 131                                              |  |      | 2,114  |      |   | 659    |      |   | (79    | ) |  |   | (528   | )
|Sweden                    |  |                            | 1,102  |                                                  |   | 210                                              |  |      | 892    |      |   | 593    |      |   | 173    |   |  |   | (383   | )
|Denmark                   |  |                            | 534    |                                                  |   | 4                                                |  |      | 702    |      |   | 237    |      |   | (168   | ) |  |   | (233   | )
|                          |  |                            |        |                                                  |   |                                                  |  |      |        |      |   |        |      |   |        |   |  |   |        |  
|                          |  | $                          | 9,256  |                                                  | $ | 1,289                                            |  | $    | 8,776  |      | $ | 3,571  |      | $ | 237    |   |  | $ | (2,355 | )
|                          |  |                            |        |                                                  |   |                                                  |  |      |        |      |   |        |      |   |        |   |  |   |        |  
|Opened in 2001            |  |                            |        |                                                  |   |                                                  |  |      |        |      |   |        |      |   |        |   |  |   |        |  
|Belgium                   |  | $                          | 392    |                                                  | $ | 181                                              |  | $    | 261    |      | $ | 231    |      | $ | 131    |   |  | $ | (50    | )
|France                    |  |                            | 3,278  |                                                  |   | 2,255                                            |  |      | 1,541  |      |   | 1,504  |      |   | 1,737  |   |  |   | 751    |  
|United Kingdom            |  |                            | 2,348  |                                                  |   | 1,783                                            |  |      | 958    |      |   | 855    |      |   | 1,390  |   |  |   | 928    |  
|Netherlands               |  |                            | 4,494  |                                                  |   | 2,695                                            |  |      | 2,528  |      |   | 2,573  |      |   | 1,861  |   |  |   | 24     |  
|Sweden                    |  |                            | 3,023  |                                                  |   | 1,591                                            |  |      | 1,708  |      |   | 1,748  |      |   | 1,278  |   |  |   | (194   | )
|Denmark                   |  |                            | 1,365  |                                                  |   | 892                                              |  |      | 785    |      |   | 790    |      |   | 580    |   |  |   | 102    |  
|                          |  |                            |        |                                                  |   |                                                  |  |      |        |      |   |        |      |   |        |   |  |   |        |  
|                          |  | $                          | 14,900 |                                                  | $ | 9,397                                            |  | $    | 7,781  |      | $ | 7,701  |      | $ | 6,977  |   |  | $ | 1,561  |  
|                          |  |                            |        |                                                  |   |                                                  |  |      |        |      |   |        |      |   |        |   |  |   |        |  
|                          |  |                            |        |                                                  |   |                                                 
|Same store:               |  |                            |        |                                                  |   |                                                  |  |      |        |      |   |        |      |  
|Opened in 2000            |  |                            |        |                                                  |   |                                                  |  |      |        |      |   |        |      |   |        |   |  |   |        |  
|Belgium                   |  | $                          | 1,982  |                                                  | $ | 1,773                                            |  | $    | 737    |      | $ | 759    |      | $ | 1,245  |   |  | $ | 1,014  |  
|France                    |  |                            | 7,067  |                                                  |   | 5,872                                            |  |      | 2,607  |      |   | 2,535  |      |   | 4,460  |   |  |   | 3,337  |  
|United Kingdom            |  |                            | 2,458  |                                                  |   | 2,370                                            |  |      | 838    |      |   | 841    |      |   | 1,620  |   |  |   | 1,529  |  
|Netherlands               |  |                            | 4,325  |                                                  |   | 3,823                                            |  |      | 1,444  |      |   | 1,349  |      |   | 2,820  |   |  |   | 2,411  |  
|Sweden                    |  |                            | 1,055  |                                                  |   | 833                                              |  |      | 632    |      |   | 632    |      |   | 423    |   |  |   | 201    |  
|                          |  |                            |        |                                                  |   |                                                  |  |      |        |      |   |        |      |   |        |   |  |   |        |  
|                          |  | $                          | 16,887 |                                                  | $ | 14,671                                           |  | $    | 6,258  |      | $ | 6,116  |      | $ | 10,568 |   |  | $ | 8,492  |  
|                          |  |                            |        |                                                  |   |                                                  |  |      |        |      |   |        |      |   |        |   |  |   |        |  
|Opened in 1999 and before |  |                            |        |                                                  |   |                                                  |  |      |        |      |   |        |      |   |        |   |  |   |        |  
|Belgium                   |  | $                          | 8,038  |                                                  | $ | 8,140                                            |  | $    | 2,614  |      | $ | 2,202  |      | $ | 5,424  |   |  | $ | 5,938  |  
|France                    |  |                            | 4,554  |                                                  |   | 4,318                                            |  |      | 1,457  |      |   | 1,361  |      |   | 2,461  |   |  |   | 2,368  |  
|United Kingdom            |  |                            | 3,744  |                                                  |   | 3,427                                            |  |      | 1,225  |      |   | 1,244  |      |   | 2,519  |   |  |   | 2,183  |  
|Netherlands               |  |                            | 1,068  |                                                  |   | 1,060                                            |  |      | 224    |      |   | 222    |      |   | 844    |   |  |   | 838    |  
|Sweden                    |  |                            | 8,639  |                                                  |   | 8,944                                            |  |      | 2,802  |      |   | 2,592  |      |   | 5,367  |   |  |   | 5,942  |  
|                          |  |                            |        |                                                  |   |                                                  |  |      |        |      |   |        |      |   |        |   |  |   |        |  
|                          |  | $                          | 26,043 |                                                  | $ | 25,889                                           |  | $    | 8,322  |      | $ | 7,621  |      | $ | 16,615 |   |  | $ | 17,269 |  
|                          |  |                            |        |                                                  |   |                                                  |  |      |        |      |   |        |      |   |        |   |  |   |        |  
|Same Store Total          |  | $                          | 42,930 |                                                  | $ | 40,560                                           |  | $    | 14,580 |      | $ | 13,737 |      | $ | 27,183 |   |  | $ | 25,761 |  
|                          |  |                            |        |                                                  |   |                                                  |  |      |        |      |   |        |      |   |        |   |  |   |        |  

---

|(1) |  | The actual completed cost of these projects are reported in U.S. dollars translated at the December 31, 2003 exchange rate of $1.26 to the Euro. Operating results (see note (2)
below) are reported at the average exchange rate for the year 2003 which was $1.13 to the Euro. As these exchange rates are different we believe it does not allow for an accurate measure of property investment yield. However, we believe the
application of a constant exchange rate to both the property cost and operating results may provide a more meaningful measure of investment yield.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | The amounts have been translated from local currencies at a constant exchange rate using the average exchange rate for 2003.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------



The 24 storage centers that Shurgard Europe opened in 2002 had an average
occupancy at the end of December 2003 of 46.7% after an average of 15 months of operations. These storage centers generated $0.9 million and $0.2 million of NOI for the three months and twelve months ended December 31, 2003, respectively.



The 25 storage centers opened in 2001 had an average occupancy
at the end of December 2003 of 64.9% after an average of 27 months of operations. These 2001 storage centers generated $2.4 million and $7.0 million of NOI for the three months and twelve months ended December 31, 2003, respectively.



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The 26 storage centers opened by Shurgard Europe and First Shurgard in 2003 had an estimated total cost
of $176.4 million and will have approximately 1.3 million net rentable square feet when all phases are complete. Since these stores mainly opened in the latter part of the year, they had very little effect on NOI for the year ended December 31,
2003.



The following table summarizes European development
projects in progress at December 31, 2003.



|                         |  |                       |  |                                       |     |                                         |   |                  |  |                                   |  |                                         |      |  |   |    
|------------------------ |  | --------------------- |  | ------------------------------------- | --- | --------------------------------------- | - | ---------------- |  | --------------------------------- |  | --------------------------------------- | ---- |  | - | ---
|                         |  | Shurgard Europe       |  | First Shurgard                       
|                         |  | NumberofProjects      |  | EstimatedCompletedCost ofProjects (1) |     | Total Cost toDate as ofDecember 31,2003 |   | NumberofProjects |  | EstimatedCompletedCost ofProjects |  | Total Cost toDate as ofDecember 31,2003
|                         |  | (dollars in millions)
|Construction in Progress |  |                       |  |                                       |     |                                         |   |                  |  |                                   |  |                                         |      |  |   |    
|France                   |  |                      |  | $                                     |    |                                         | $ |                 |  | 2                                 |  | $                                       | 12.5 |  | $ | 5.8
|Denmark                  |  |                      |  |                                       |    |                                         |   |                 |  | 1                                 |  |                                         | 7.7  |  |   | 3.0
|United Kingdom           |  | 1                     |  |                                       | 9.9 |                                         |   | 4.6              |  |                                  |  |                                         |     |  |   |   
|                         |  |                       |  |                                       |     |                                         |   |                  |  |                                   |  |                                         |      |  |   |    
|                         |  | 1                     |  | $                                     | 9.9 |                                         | $ | 4.6              |  | 3                                 |  | $                                       | 20.2 |  | $ | 8.8
|                         |  |                       |  |                                       |     |                                         |   |                  |  |                                   |  |                                         |      |  |   |    

---

|(1) |  | The actual completed cost of projects could vary due to delays during construction caused by weather, unforeseen site conditions, labor shortages, personnel turnover, scheduling
problems with contractors, subcontractors or suppliers, or resource constraints. (See Item 1 BusinessRisk Factors)
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



European Consolidated Statement of Income

(See separate Consolidated Financial Statements of Shurgard Europe included in Item 8 Financial Statements and Supplementary Data)



Shurgard Europes financial statements have been restated from previously reported financial statements for the years
ended December 31, 2002 and 2001 to eliminate the recognition of deferred tax assets. Based on the fact that Shurgard Europe has not demonstrated a history of taxable income in any jurisdiction since inception, we have concluded that it is not
appropriate to recognize the potential future benefit of these deferred tax assets until such time as it becomes more likely than not, based on objective evidence the related net operating losses will be utilized (see Note B to our Consolidated
Financial Statements).



Net Loss:  The net
loss of Shurgard Europe was $29.9 million in 2003, $29.8 million in 2002 and $29.6 million in 2001.



The increase in both revenue and expenses was influenced by the exchange rate in between the Euro and the U.S. dollar which averaged $1.13 per Euro in
2003 compared to $0.95 per Euro in 2002 and $0.90 per Euro in 2001. Revenues and total expenses increased $35.2 million and $31.4 million, respectively, from 2002 to 2003, at each periods average rate. At a constant rate, using the 2003
average rate, total increase in revenues and total expenses would be $26.9 million and $21.5 million, respectively, from 2002 to 2003.



Storage Centers Operations Revenue:  Storage centers operations revenue increased to $67.3 million in 2003 from $43.5 million in 2002 and
$26.5 million in 2001 as a result of the increasing portfolio of stores in Europe, the performance of which is discussed more fully above under European Business Summary.



Other Revenue:  Other revenue of $11.4 million in 2003 is comprised of development, management and other
initial financing fees invoiced to First Shurgard, less our share of losses in the joint venture of $1.1 million.



Operating Expenses:  The increase in operating expenses to $54.4 million in 2003 from $32.2 million in 2002 and $24.3 million in 2001 is
attributed to (i) an increase in total store direct and indirect expense on the increasing store portfolio and (ii) an increase in real estate development operations costs of $6.8 million in 2003



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compared 2002. The development costs increase reflects not only the expensing in 2003 of the cost of development activities on behalf of First Shurgard but
also the development activity in Germany in the second half of 2003.



General, Administrative and Other Expenses:  The increase in General, administrative and other expenses in 2003 from $4.8 million in 2002 to $6.2 million in 2003 is primarily due to legal and consultancy fees incurred in
2003.



Interest Expense:  The increase in
interest and other charges and the interest expense on bonds payable reflects the increase in the revolving credit agreement and bonds payable to Shurgard, respectively, both of which have been drawn down as necessary to finance Shurgard
Europes own development activity. The subordinated loan payable to Recom was repaid in September 2003 from proceeds of the subscription of share warrants in Shurgard Europe.



Income Tax Expense:  A full valuation allowance against its net deferred tax assets was recorded and
therefore no tax benefit was recognized in the year ended December 31, 2003, 2002 and 2001.



TAXABLE REIT SUBSIDIARY OPERATIONS



Containerized Storage Operations



Since 1996 we have invested in STG, a Washington corporation whose business is to provide services ancillary to self storage, including, but not limited, to containerized storage services. We originally owned five
percent (5%) of the Series A Common Stock in STG and 75% of the non-voting Series B Common Stock for a combined economic interest of 71.25%. In June 2001, we purchased the remaining 95% of the Series A Common Stock of STG for approximately $60,000
that was formerly owned by ten current and former employees and officers. At that time, we converted our $16 million note receivable to equity and began consolidating STG in our Consolidated Financial Statements.



In March 2001, our Board of Directors decided to close the Chicago
containerized storage operations. In 2001, we incurred approximately $554,000 in expenses related to this closing. In April 2001, we opened a new warehouse in Orange County, California to take advantage of business opportunities in the Southern
California market. Despite a new, more aggressive advertising approach, the Orange County warehouse failed to rent up as expected. In the fourth quarter of 2001, based on poor performance outlooks, we decided to close both the Orange County and
Atlanta warehouses. We accrued $2.8 million in costs for closing down operations in these two locations. The $2.8 million exit costs included estimates of the costs associated with subleasing the warehouses, lease termination fees for warehouses and
equipment, severance costs, charges to prepaid expenses, estimated loss on sale of containers and estimated loss from operations during closing. During 2002, we charged $1.8 million to the liability and an additional $507,000 in 2003. These costs
consisted primarily of lease expenses.



In December 2003, our
Board of Directors approved an exit plan to close the remaining operations of STG in the Northern California, Oregon and Washington markets. This decision caused us to evaluate the assets associated with these operations. Using the discounted cash
flow method for determining the fair value of assets associated with the warehouses, we determined that the remaining net book value of assets of our containerized storage operations of $843,000, and the $491,000 goodwill associated with the
Northern California and Washington warehouses were impaired. Accordingly, we recognized impairment losses of $1.1 million in 2003.



By the end of the first quarter of 2004, we had ceased to use all of our containerized facilities. As of December 31, 2003, we had operating lease
obligations through 2008 for all the warehouses and certain equipment of $10.3 million. As of May 2004, we had entered into subleasing agreements for two warehouses and we were still examining subleasing possibilities for one warehouse. In the first
quarter 2004, we recognized at its



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fair value a liability for the remaining lease rentals reduced by estimated sublease rentals of approximately $1.8 million. Also, in the first quarter of
2004 we incurred termination benefits, contract termination costs and costs associated with the relocation of customers of approximately $385,000.



Our losses related to STG for the years ended December 31, 2003, 2002 and 2001 were $1.8 million, $1.2 million, and $5.4 million, respectively. The losses
for 2003 include $652,000 of impairment related to the closure of the Northern California, Oregon and Washington operations. The losses for 2001 include expenses accrued in the fourth quarter 2001 in connection with the closure of the Orange County
and Atlanta warehouses discussed above, as well as $269,000 in impairment of existing warehouse assets. In addition, we recognized goodwill impairment for those warehouses of $491,000 in 2003 and $1.9 million in 2001. In connection with the
warehouse closures discussed above, we performed an impairment analysis on the remaining assets and goodwill related to STG. Impairment expense was calculated as the difference between fair value, using the discounted cash flow method, and the book
value. The goodwill and asset impairment expenses are in impairment expenses and the exit cost accruals are recorded in General, administrative expenses and other in the 2003 and 2001 Consolidated Statements of Income.



Other



In June 2002, we began a new tenant insurance referral program. Under this
program, policies are issued and administered by a third party for a fee, and the storage centers receive a cost reimbursement for handling certain administrative duties. SS Income Plan, a taxable REIT subsidiary, receives income, if any, from the
policies sold to a customer referred by the Company, less claims and expenses. SS Income Plan reimburses the third party administrator for reinsuring losses of SS Income Plans maximum loss exposure. During 2003 and 2002, we recognized $1.4
million and $765,000, respectively, in revenue based on profits.



In December 2002, we contributed all inventory owned by us and our wholly-owned subsidiaries into SS Income Plan. Beginning in 2003, all inventory sales by wholly-owned subsidiaries are conducted through this entity. We do not conduct any
other significant taxable operations.



As of December 31, 2003
we had net operating losses (NOLs) of $24.4 million that were included in a deferred tax asset before valuation allowance of $9.4 million, primarily resulting from our history of losses on STG. We have assessed the recoverability of those assets and
concluded that the positive evidence that we will be able to use those NOLs, based on expected income from our insurance program, does not overcome the negative evidence associated with losses incurred since inception of the TRS. As a result, we
have recognized a full allowance against our deferred tax asset of $9.4 million and $8.4 million in 2003 and 2002, respectively.



FUNDS FROM OPERATIONS



FFO, pursuant to the National Association of Real Estate Investment Trusts (NAREIT) October 1999, White Paper on Funds from Operations, as amended
in April 2002, is defined as net income, calculated in accordance with generally accepted accounting principles (GAAP) including non-recurring events, except for those defined as extraordinary items under GAAP and gains and losses from
sales of depreciable operating property, plus depreciation of real estate assets and amortization of real estate related intangible assets exclusive of deferred financing costs less dividends paid to preferred shareholders. Contributions to FFO from
unconsolidated entities in which the reporting entity holds an active interest are to be reflected in FFO on the same basis. We believe that because amortization of participation rights discount reflect our partners increasing interests in
unrecognized gains on depreciable operating properties (represented by the difference between the expected option price and our partners contributions), it is theoretically consistent with the NAREIT White Paper to add it back to net income,
and we have done so in previous filings. However, given the recent rule release by the Securities and Exchange Commission regarding the use of non-GAAP information, we have decided to adjust GAAP net income for only those items specifically outlined
by NAREIT in its White Paper and related implementation guidance. As such our presentation of prior periods has been adjusted to reflect only



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those specific adjustments. Additionally, NAREIT changed the definition of FFO and of FFO attributable to common shareholders and as a result we no longer
add back impairment losses on operating real estate and we now deduct the issuance cost of redeemed preferred stock. Prior periods have been adjusted to reflect the current definition. We believe FFO is a meaningful disclosure as a supplement to net
income because net income implicitly assumes that the value of assets diminish predictably over time while we believe that real estate values have historically risen or fallen with market conditions. FFO is not a substitute for net cash provided by
operating activities or net income computed in accordance with GAAP, nor should it be considered an alternative indication of our operating performance or liquidity. In addition, FFO is not comparable to funds from operations reported by
other REITs that do not define funds from operations in accordance with the NAREIT definition. The following table sets forth the calculation of FFO in accordance with the NAREIT definition, and shows the differences from net income, the most
directly comparable GAAP measure for such periods.



|                                                                                  |  |                                 |         |   |                   |   |         |                   |  |   |         |  
|--------------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ----------------- | - | ------- | ----------------- |  | - | ------- | -
|                                                                                  |  | For the year ended December 31, |        
|                                                                                  |  | 2003                            |         |   | 2002(as restated) |   |         | 2001(as restated) | 
|                                                                                  |  | (in thousands)                  |        
|Net income                                                                        |  | $                               | 37,638  |   |                   | $ | 48,059  |                   |  | $ | 22,787  |  
|Depreciation and amortization (1)                                                 |  |                                 | 52,715  |   |                   |   | 48,266  |                   |  |   | 43,335  |  
|Depreciation and amortization from unconsolidated joint ventures and subsidiaries |  |                                 | 12,150  |   |                   |   | 1,077   |                   |  |   | 1,088   |  
|Gain on sale of operating properties                                              |  |                                 | (2,238  | ) |                   |   | (983    | )                 |  |   | (2,044  | )
|                                                                                  |  |                                 |         |   |                   |   |         |                   |  |   |         |  
|FFO                                                                               |  |                                 | 100,265 |   |                   |   | 96,419  |                   |  |   | 65,166  |  
|Preferred distribution                                                            |  |                                 | (11,896 | ) |                   |   | (14,695 | )                 |  |   | (15,098 | )
|Preferred stock redemption issue costs                                            |  |                                 |        |   |                   |   | (1,944  | )                 |  |   |        |  
|                                                                                  |  |                                 |         |   |                   |   |         |                   |  |   |         |  
|FFO attributable to common shareholders                                           |  | $                               | 88,369  |   |                   | $ | 79,780  |                   |  | $ | 50,068  |  
|                                                                                  |  |                                 |         |   |                   |   |         |                   |  |   |         |  

---

|(1) |  | Excludes depreciation related to non-real estate assets, and our minority partners share of depreciation and amortization of our consolidated joint ventures.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



FFO attributable to common shareholders for 2003
increased $8.6 million over 2002 FFO, which had increased $29.7 million over 2001. As previously discussed, this growth reflects the improved revenue performance of the Same Store portfolio of properties, as well as the addition of properties over
the prior year through acquisitions and developments, decreased participation rights amortization and decreased unrealized loss on financial instruments, offset by increased expenses in personnel and other expenses.



INVESTING TRANSACTIONS



2003 activity



In 2003, we invested $84.1 million in domestic development and expansion projects and $13.4 million in capital improvements to our existing portfolio and
other corporate capital expenditures.



In addition, in 2003 we
invested $309.1 million through several transactions to increase our direct and indirect ownership in Shurgard Europe from 7.57% to 85.47% (see Note F to the Consolidated Financial Statements). As consideration for one of the transactions, we issued
395,000 shares of our Class A Common Stock.



On June 30, 2003,
we acquired five entities owning a total of 19 self storage centers located in Minnesota and operated under the name of Minnesota Mini-Storage. We entered into this transaction to gain a market presence in Minnesota. As consideration in the
transaction, we issued 3,050,000 shares of our Common Stock at closing and have agreed to issue an additional 50,000 shares if the properties meet certain revenue targets prior to the end of 2005. The acquisition was accounted for as a purchase
transaction. The aggregate purchase price was $89.5 million, including $20 million in notes receivable from shareholders, recorded as a reduction of equity that



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secured $20 million in mortgage debt assumed in the transaction. The notes from shareholders were secured by a pledge of the shareholders Shurgard
stock. The notes receivable and the assumed mortgage debt were paid in full in October 2003.



2002 activity



In 2002,
we invested $130.5 million in domestic development and expansion projects and $5.7 million in capital improvements to our existing portfolio and other corporate capital expenditures. The $4.4 million increase in other real estate investments
reflects the amount invested in joint ventures.



In addition,
on June 26, 2002, we purchased for $62.1 million, net of $1.7 million of cash received as part of the properties assets, a 74% interest in Morningstar which owns and operates 40 storage centers in North Carolina and South Carolina that consist of
3.1 million net rentable square feet. The 40 existing storage centers included seven sites with pre-identified expansion opportunities and nine sites with continued development potential.



In May 2002, we entered into a subscription agreement to purchase up to $50 million of three year 9.75% payment-in-kind
cumulative preferred bonds to be issued at the option of Shurgard Europe (See RELATED PARTY TRANSACTIONS). As of December 31, 2002, we had subscribed to $49.3 million of these bonds.



2001 activity



In 2001, we invested $31.8 million in the acquisition of eight storage
centers, $73.2 million in domestic development and expansion projects, and $7.9 million in capital improvements to our existing portfolio and other corporate capital expenditures.



During 2001, we exercised our option to purchase five properties in which we had participating mortgages and in December
2001, we purchased four of the five properties at a cost of $13.8 million, including $10.3 million outstanding under the participating mortgage. We purchased the fifth property in February 2002 for $808,000. Operating results for the five properties
are included in Same Store results for 2000 through 2002.



CAPITAL
EXPENDITURES



In addition to continued investments in
acquisitions and developments, we invest in improving our current portfolio of real estate. Investments in existing storage properties include primarily expansions, conversions (i.e., size of units or climate control) and certain recurring
improvements to roofs, pavement, sealant and other items such as security upgrades that we believe are necessary to maintain our quality standards and our ability to generate premium returns.



During 2003, we spent $13.0 million on capital improvements including, $5.4
million on roof pavement and sealant representing approximately $0.18 per net rentable square foot. Of the $6.3 million in capital improvements expended during 2002, $2.7 million was for roofs, pavement and sealant, representing approximately $0.09
per net rentable square foot. During 2001, $6.6 million in capital improvements were expended of which $2.4 million was for roofs, pavement and sealant, representing approximately $0.08 per net rentable square foot. Specifically identified capital
improvements expected for 2004 total $12.5 million, of which $3.3 million represents roofs, pavement and sealant.



FINANCING TRANSACTIONS



Lines of Credit



The balance on our domestic lines of credit decreased from $267.6 million at December 31, 2002 to $263.2 million at December 31, 2003. Draws on the lines
were used to fund acquisition and development activity and general corporate purposes, and payments were made primarily from the proceeds of stock and the issuance of



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senior notes payable. At December 31, 2003, we had an unsecured domestic line of credit to borrow up to $360 million at 125 basis points over LIBOR or prime
rate at our option, maturing February 2005. Availability under this line of credit is limited based on various financial covenants. However, as of December 31, 2003 we had exercised our option to purchase all properties that were under our tax
retention operating leases and there were no outstanding guarantees. At December 31, 2003, the current available amount was $96.8 million, of which $263.2 million was outstanding with a weighted average interest rate of 2.37%.



We exercised the option to purchase six properties on April 1, 2003 and the
remaining 30 properties on June 2, 2003 that were previously leased to our TROL, but that are included in our Consolidated Financial Statements. Development of those properties since 2001 were financed under the line of credit of the Storage Centers
Trust and had an outstanding balance as of December 31, 2002 and 2001 of $154.1 million and $55.6 million, respectively. Upon exercise of our option to purchase the properties, the proceeds were used by the Storage Centers Trust to repay borrowing
on this line of credit. As of December 31, 2003 there are no more properties developed under the TROL.



In April 2004, we entered into a new unsecured credit agreement to borrow up to $100 million at a variable interest rate of 125 basis points over LIBOR or
at the prime rate at our option. The facility was provided by a sub-group of our existing bank group and was fully underwritten by our agent bank. The facility matures in February 2005 and contains various covenants that are consistent with our $360
million revolving credit facility.



Long-term Financing



2003 activity



On March 19, 2003, we issued $200 million (net proceeds of $197.9 million)
in senior unsecured notes that are ten-year notes bearing interest at 5.875% and are due in 2013. The notes require semi-annual interest payments due March 15 and September 15. Proceeds from the bond offering were used to pay down the line of
credit.



On June 30, 2003, we completed the acquisition of five
entities owning a total of 19 self storage centers located in Minnesota and operated under the name of Minnesota Mini-Storage. As consideration in the transaction, we issued 3,050,000 shares of our Common Stock at closing and have agreed to issue an
additional 50,000 shares if the properties meet certain revenue targets prior to the end of 2005. The acquisition was accounted for as a purchase transaction.



On July 11, 2003, we raised $186.9 million (approximately $178.2 million of net proceeds) through the sale of 5.75 million shares of Class A Common
Stock. We used approximately $101.6 million of the proceeds to fund the acquisition of an additional 19.7% ownership interest in Shurgard Europe. Additional proceeds were used to repay a portion of the indebtedness under our line of credit.



2002 activity



On June 28, 2002, we raised $86.25 million (approximately $82.3 million net
proceeds) through the sale of 2.5 million shares of Class A Common Stock. On August 19, 2002, we used approximately $50 million of the proceeds to redeem in full our 8.80% Series B Cumulative Redeemable Preferred Stock issued on April 16, 1997.
Prior to the closing of the offering, we borrowed under our revolving credit facility to fund the balance of the $62 million purchase of the 74% interest in Morningstar. We repaid a portion of this borrowing with proceeds from the offering. In
connection with the purchase of our interest in Morningstar, we acquired notes payable of $58.4 million with an aggregate fair value of $61.3 million and recorded a premium on these notes of $2.1 million (representing 74% of the difference between
face value and fair value). These notes have various interest rates ranging from 3.74% to 9.05% per annum and mature between 2005 and 2012.



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On July 24, 2002, we paid $1.2 million to pay off a mortgage note payable. In connection with the early
extinguishment of this debt, we recorded prepayment penalties of $164,000.



On June 27, 2002, we paid $12.5 million to pay off a participating mortgage including $7.3 million in mortgage debt, $5.0 million in participation rights and $200,000 in prepayment penalties. In connection with the
early extinguishment of this debt, we recorded a gain, net of prepayment penalties, of $1.2 million.



Shurgard-Resco L.L.C., a consolidated entity, borrowed $14.7 million in May 2002. The note matures June 1, 2012, is secured by three properties owned by
Shurgard-Resco L.L.C., and has a fixed interest rate of 7.10% per annum.



During 2002, we entered into, and terminated, a fixed to variable rate swap for $50 million of the senior notes payable due in 2004. This hedge was designated as a fair value hedge. The gain or loss on the swap and
the bonds are recognized in earnings and the carrying value of the bonds is adjusted accordingly. On August 20, 2002, we terminated these swaps at a gain of $2 million. This gain is being amortized to interest expense as an adjustment to the
carrying value of the notes over the remaining life of the notes using the effective interest method. During 2003 and 2002, the carrying value of the notes was increased by $384,000 and $1.6 million, respectively. The Company repaid these bonds in
April 2004.



2001 activity



In February 2001, we issued $200 million in senior unsecured notes
(approximately $198.4 million in net proceeds) that bear interest at 7.75% and are due 2011. The notes require semi-annual interest payments due February 22 and August 22. Additionally, in February 2001, we raised $86.25 million (approximately $83.1
million in net proceeds) through the sale of 3.45 million shares of Series D Cumulative Redeemable Preferred Stock. These preferred shares require quarterly distributions of 8.75% per year and are callable at our option after five years, at a
redemption price of $25 per share. In 2001, we raised net proceeds after offering costs of $76.0 million through the sale of 2.7 million shares of Common Stock. Proceeds from these issuances were used to repay balances outstanding under our line of
credit, to purchase the partnership interests noted above and to pay off our $122.6 million note payable prior to its maturity in June 2001. In connection with the payoff of the $122.6 million note payable, we incurred approximately $1 million in
expense related to the early extinguishment of this debt.



SHORT-TERM AND
LONG-TERM LIQUIDITY



We believe that our cash provided by
operating activities will continue to be sufficient to enable us to meet our projected operating expenses, recurring capital improvements, debt service requirements, and distributions to our shareholders for the foreseeable future.



In 2004 and future years, we anticipate our primary cash needs will consist
of: (i) development, re-development, and acquisition of self storage properties and other real estate investments, (ii) distributions to our shareholders in accordance with REIT federal income tax requirements, and (iii) repayment of debt that is
scheduled to mature. We expect to fund these cash needs in 2004 and future years with cash from the following sources: (i) property operations, (ii) proceeds from the disposition of non-strategic assets, (iii) issuance of long-term debt, (iv)
utilization of our unsecured revolving credit facility, and (v) proceeds from the sale of public and private equity securities.



We anticipate that in 2004, we will invest approximately $50 million to $60 million in development and re-development projects in the U.S. As of December
31, 2003 we had nine properties either under construction or awaiting permits to begin construction, for which we had already incurred $32.8 million in expenditures. Future commitments for these projects totaled $21.9 million. We may invest
approximately $15 million in Shurgard Europe.



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As a REIT, our ability to retain cash flow for reinvestment is restricted. In order for us to qualify as
a REIT for federal income tax purposes, we are required to, among other things, make distributions to our shareholders of at least 90% of our REIT taxable income. For the years ended December 31, 2003, 2002 and 2001 the Company distributed $99.3
million, $87.5 million and $78.5 million, respectively to its shareholders. We expect to use our cash flow from operating activities for distributions to shareholders and we intend to invest amounts accumulated for these distributions in short-term
investments.



One of our principal short and long-term
liquidity needs is the repayment of our debt maturities at the time that such debt matures. For our unsecured notes, we anticipate that no significant portion of the principal of these notes will be repaid prior to maturity. If we do not have funds
on hand sufficient to repay our indebtedness as it becomes due, it will be necessary for us to refinance the debt. This refinancing may be accomplished by public debt offerings, debt financing that is collateralized by mortgages on individual self
storage properties, selling of non-strategic assets, draws under our unsecured revolving credit facility, or by additional equity offerings. We also anticipate having some retained cash flow available in each year so that when a debt obligation
matures, a portion of each maturity may be satisfied from this retained cash. Although we believe we will have the capacity to meet these liquidity needs, we cannot assure you that additional debt financing or debt or equity offerings will be
available or, if available, that they will be on terms we consider satisfactory.



In April 2004, $50 million in unsecured notes with an annual interest rate of 7.5% matured. We repaid these notes with proceeds under our line of credit. In addition we have $73.2 million of secured mortgage debt that
matures in 2004, including $66.3 million for which we have a one year extension option.



Additionally in 2004, we entered into a new interest rate cap on approximately $66.3 million of our variable rate mortgage debt. The interest rate on this obligation has been capped at an interest rate of 4.75% and
matures in December 2004.



Cash provided by operating
activities for the years ended December 31, 2003, 2002, and 2001 was $123.0 million, $112.7 million and $106.2 million, respectively. We believe cash provided by operating activities will continue to be sufficient to meet our distributions in
accordance with REIT requirements, and to fund a portion of our other cash requirements. Our operating cash flow is subject to certain risks and uncertainties that may affect our ability to meet these obligations, such as risks related to the
implementation of our business plan, competition from new self storage facilities, and increases in operating and construction cost.



Cash and cash equivalents decreased from $13.0 million at December 31, 2002 to $11.7 million at December 31, 2003 primarily due to use of cash for
acquisitions, increase of our ownership interest in Shurgard Europe and payment of notes payable.



The following table summarizes certain information regarding our liquidity and capital resources:



|                                            |  |                       |       |   |                   |   |       |                   |  |   |       |  
|------------------------------------------- |  | --------------------- | ----- | - | ----------------- | - | ----- | ----------------- |  | - | ----- | -
|                                            |  | As of December 31,    |      
|                                            |  | 2003                  |       |   | 2002(as restated) |   |       | 2001(as restated) | 
|                                            |  | (dollars in millions) |      
|Total market capitalization (1)             |  | $                     | 2,881 |   |                   | $ | 2,093 |                   |  | $ | 1,828 |  
|Debt to total market capitalization (1) (2) |  |                       | 35    | % |                   |   | 39    | %                 |  |   | 32    | %
|Weighted average interest rate (3)          |  |                       | 5.93  | % |                   |   | 6.30  | %                 |  |   | 7.49  | %

---

|(1) |  | Total market capitalization is based on the closing market price as of December 31, 2003, of the Class A Common Stock, Series B Preferred Stock, Series C Preferred Stock and the
Series D Preferred Stock multiplied by their respective total number of outstanding shares plus total debt.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Debt includes notes payable and lines of credit and participation rights.
|--- |  | -------------------------------------------------------------------------

|(3) |  | Represents weighted average interest rate on our outstanding domestic lines of credit and notes payable.
|--- |  | --------------------------------------------------------------------------------------------------------



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Our consolidated indebtedness at December 31, 2003 totaled $974 million and was comprised of $263 million
outstanding under our unsecured credit facility, $500 million of senior unsecured notes and approximately $211 million of mortgage indebtedness. Our weighted average interest rate on our consolidated indebtedness was 5.93% as of December 31, 2003.
Based on our total capitalization of approximately $2.9 billion at December 31, 2003 (calculated based on the sum of: (i) the market value of our common stock, (ii) the liquidation preference of our preferred stock, and (iii) the outstanding
principal amount of our debt) our debt represented 35% of our total market capitalization. Without the consent of holders of our senior unsecured debt securities we may not incur additional indebtedness that would result in a ratio of Debt to Total
Assets of 60%.



We believe our lines of credit provide us with
the necessary liquidity and financial flexibility to fund our short term borrowing needs, respond to market opportunities and execute our 2004 business plan. We periodically repay borrowings under our lines of credit through the proceeds from the
issuance of longer-term debt, retained cash flow, the sale of non-strategic properties and the issuance of equity securities.



COMMITMENTS AND CONTINGENCIES



The following tables summarize our contractual obligations and our off-balance sheet commitments as of December 31, 2003.



|                                                      |  |                                            |         |      |   |           |  |           |        |                |   |        |  |   |        
|----------------------------------------------------- |  | ------------------------------------------ | ------- | ---- | - | --------- |  | --------- | ------ | -------------- | - | ------ |  | - | -------
|                                                      |  | Payments due by Period                    
|                                                      |  | Total                                      |         | 2004 |   | 2005-2006 |  | 2007-2008 |        | 2009 andbeyond
|                                                      |  | (in thousands)                            
|Contractual Obligations                               |  |                                            |         |      |   |           |  |           |        |                |   |        |  |   |        
|Long-term debt                                        |  | $                                          | 709,889 |      | $ | 123,242   |  | $         | 26,384 |                | $ | 74,259 |  | $ | 486,004
|Operating lease obligations                           |  |                                            | 75,994  |      |   | 5,881     |  |           | 11,801 |                |   | 8,293  |  |   | 50,019 
|Participation rights liability (1)                    |  |                                            | 40,623  |      |   | 40,623    |  |           |       |                |   |       |  |   |       
|                                                      |  |                                            |         |      |   |           |  |           |        |                |   |        |  |   |        
|Totals                                                |  | $                                          | 826,506 |      | $ | 169,746   |  | $         | 38,185 |                | $ | 82,552 |  | $ | 536,023
|                                                      |  |                                            |         |      |   |           |  |           |        |                |   |        |  |   |        
|                                                      | 
|                                                      |  | Amount of Commitment Expiration per Period
|                                                      |  | Totalamountscommitted                      |         | 2004 |   | 2005-2006 |  | 2007-2008 |        | 2009 andbeyond
|                                                      |  | (in thousands)                            
|Other Commercial Commitments & Contingent Liabilities |  |                                            |         |      |   |           |  |           |        |                |   |        |  |   |        
|Development contract commitments                      |  | $                                          | 13,565  |      | $ | 13,565    |  | $         |       |                | $ |       |  | $ |       
|Development loan Commitments                          |  |                                            | 4,449   |      |   | 4,449     |  |           |       |                |   |       |  |   |       
|Loan commitments (3)                                  |  |                                            | 20,000  |      |   |          |  |           |       |                |   | 20,000 |  |   |       
|Affiliated developer guarantee (2)                    |  |                                            | 14,048  |      |   | 14,048    |  |           |       |                |   |       |  |   |       
|                                                      |  |                                            |         |      |   |           |  |           |        |                |   |        |  |   |        
|Totals                                                |  | $                                          | 52,062  |      | $ | 32,062    |  | $         |       |                | $ | 20,000 |  | $ |       
|                                                      |  |                                            |         |      |   |           |  |           |        |                |   |        |  |   |        

---

|(1) |  | Estimate of amount and timing of cash flows. See Development Financing Joint Ventures under OWNERSHIP AND LEASING ARRANGEMENTS.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------

|(2) |  | See Unconsolidated Joint Ventures under OWNERSHIP AND LEASING ARRANGEMENTS.
|--- |  | ---------------------------------------------------------------------------

|(3) |  | See RELATED PARTY TRANSACTIONS.
|--- |  | -------------------------------



RELATED PARTY TRANSACTIONS



In June 2001, we acquired 26,250 shares of Class A Common Stock of STG, a previously unconsolidated entity, for approximately $60,000. The acquired Class
A Common Stock was owned by ten current and former employees and officers of Shurgard. The purchase price for the stock was established by independent members of



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the Board of Directors, giving consideration to a valuation report prepared by a third party, after consultation with independent counsel. This transaction
increased our ownership interest in STG to 100%. After the purchase we owned all of the Class A Common Stock of Shurgard STG, and the entity was thereafter consolidated.



On May 27, 2002, we entered into a subscription agreement to purchase up to $50 million of three year 9.75% payment-in-kind
cumulative preferred bonds to be issued at the option of Shurgard Europe, of which we own 85.47% as of December 31, 2003. Pursuant to the subscription agreement, Shurgard Europe may issue up to $50 million of these preferred bonds to us during the
first two years of the three-year commitment term. Shurgard Europe has the option of increasing our total notional subscription to $55 million with an additional $20 million that can be drawn by First Shurgard only in the event of a default of the
five year debt facility between First Shurgard and a group of commercial banks. Interest is payable on the bonds at the end of each quarter in cash or through an issuance of additional bonds. The bonds issued to pay interest can be issued above the
commitment amount. Shurgard Europe has two one-year options to extend the three year redemption date of the bonds. Shurgard Europe must redeem the bonds on the redemption date, or may redeem at any time prior to the redemption date, by paying us
115% of the face value of the outstanding bonds plus accrued and unpaid interest. The subscription agreement with Shurgard Europe entitles us to a commitment fee of 0.5% and a structuring fee of 1.5% of the initial commitment of $50 million, as well
as an unused fee equal to 1% of the undrawn amount payable in arrears on an annual basis. The subscription agreement with First Shurgard for the additional $20 million entitles us to a commitment fee of 2% of the $20 million. These fees are being
recognized in income using the effective interest method over the extended term of the bonds. We have an option to put 80% of the bonds issued by First Shurgard to Crescent Euro Self Storage Investments SARL (Crescent), Shurgard Europes
partner in the joint venture. As of December 31, 2003, $55.3 million of U.S. dollar denominated bonds had been issued to us under this commitment including $6.0 million in additional bonds issued for accrued interest. The terms of the bonds provide
that the parties will treat the bonds as an equity investment in Shurgard Europe for federal income tax purposes. The bonds and the related accrued interest are included on our Consolidated Balance Sheets in notes receivable affiliate and the
related income and fees are included in our Consolidated Statements of income in Interest income other, net. Shurgard Europes interest expense and fees related to this subscription agreement are also included in equity in losses of other real
estate investments, net and therefore the impact of interest is eliminated in the Consolidated Statements of Income. In addition to interest expense, Shurgard Europe incurred a foreign exchange gain on the U.S. dollar denominated bonds. Our pro-rata
portion of foreign exchange gain is $5.1 million and is included in equity in losses of other real estate investments, net for the year ended December 31, 2003.



In May 2003, Shurgard Europe entered into an agreement with Crescent to create First Shurgard in which Shurgard Europe has a 20% interest. Shurgard
Europe has transferred ten properties, which were under development, into this joint venture. First Shurgard has equity commitments of 20.0 million ($25.1 million at December 31, 2003) from Shurgard Europe and 80 million ($100.4 million
at December 31, 2003) from Crescent, of which 16.0 million ($20.1 million at December 31, 2003) remains to be drawn, and has obtained a non-recourse five-year debt facility for 140 million ($175.7 million at December 31, 2003) from a
group of commercial banks. As part of a joint venture agreement with First Shurgard, Shurgard Europe receives development fees equal to 7% of the cost of newly developed storage centers and management fees equal to 7% of revenues. Also, Shurgard
Europe received from First Shurgard a cost of interest for the period that it owns properties prior to contributing them to the joint venture. For the year ended December 31, 2003, our equity method loss from Shurgard Europe includes revenue of $7.2
million for development and initial fees from First Shurgard, $325,000 in management fees and $433,000 in interest income for cost of interest.



Recom, a consolidated subsidiary as of June 28, 2003, made a subordinated loan to Shurgard Europe in 1999. In September 2003, Recom and other Shurgard
Europe warrant holders exercised their warrants to purchase additional equity interests in Shurgard Europe. The majority of the warrants were held by Recom who upon exercise, exchanged $139.6 million of the subordinated loan payable, an amount equal
to the exercise price of the warrants. Cash proceeds from the exercise of the remaining warrants and other borrowings by Shurgard Europe were used to repay the remaining $7.5 million balance of the subordinated loan payable.



During the second quarter of 2003, we acquired the general partner interests
in Shurgard Partners LP II (Shurgard Partners II), the general partner of Shurgard Institutional Fund LP II (Institutional II), a consolidated entity, for $1.6



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million. The acquired Shurgard Partners II general partner interests were owned by an unaffiliated third party and an officer of the Company. The acquisition
was, in part, in response to the Board of Directors stated objective of eliminating existing historical arrangements involving related parties. The purchase price payable for the acquired Shurgard Partners II general partner interests was governed
by the terms of the partnership agreements for Shurgard Partners II and Institutional II, and was based upon the fair market value of the property owned by Institutional II as determined by a third party appraisal. This transaction increased our
ownership of Institutional II from 99% to 100%. Of the $1.6 million total purchase price, $784,000 was paid to an officer of the Company to acquire his partnership interest in Shurgard Partners II. Subsequent to the end of the third quarter 2003, we
identified an error in the calculation of the purchase price paid for the Shurgard Partners II general partner interests. This error resulted in an overpayment to the general partners of Shurgard Partners II of approximately $1.4 million. The
partners reimbursed us for this overpayment. Of this approximately $1.4 million, approximately $700,000 was repaid by the officer of Shurgard.



On June 30, 2003, we issued $20 million in Shurgard Common Stock in exchange for notes receivable from shareholders. The shares were initially recorded as
a reduction of shareholders equity, that secured $20 million in mortgage debt assumed in the purchase of Minnesota Mini Storage (see Note E). The notes from shareholders were collateralized by a pledge of the shareholders Shurgard common
stock and were paid in full in October 2003 and the $20 million were reclassified to shareholders equity.



On July 8, 2003, we loaned 1.9 million (approximately $2,151,940 based on exchange rates as of July 8, 2003, which rates were applied in all the
amounts listed below) to E-Parco, a Belgian company which is owned by certain employees of Shurgard Europe. E-Parco has an indirect ownership interest in Shurgard Europe through Recom, a Belgian company and Shurgard subsidiary. The proceeds of this
loan were used by E-Parco to repurchase its shares from Mr. Grant, an officer of the Company, and certain former employees of Shurgard Europe. Mr. Grant received 1.2 million (approximately $1,359,120) for his shares and 0.7 million
(approximately $792,820) was paid to the former employees. The purchase price for the E-Parco shares was based on recent third party sales transactions for interests in Shurgard Europe. As partial consideration for the loan, E-Parco granted Shurgard
an option to purchase its 377 Recom shares for 4.3 million (approximately $4,870,180) plus forgiveness of the loan including accrued interest. Acquiring E-Parcos shares would make us the sole shareholder of Recom. The loan is due and the
option expires in July 2004.



In April 2004 the Board of
Directors of Shurgard approved the exercise of our option to purchase the remaining shares of Recom owned by E-Parco on the terms and conditions described above. The transaction is expected to be completed by July 2004.



OFF BALANCE SHEET TRANSACTIONS



Notwithstanding the fact that we have increased our ownership interest in
Shurgard Europe from 7.57% to 85.47% in 2003, we have continued to account for our investment under the equity method, because our remaining partner maintains substantive and important approval rights relating to certain significant operating
decisions. We performed an analysis of each of our relationships to determine proper accounting treatment under FIN 46R Consolidation of Variable Interest Entities. Based on this analysis, we determined that Shurgard Europe qualifies as
a Variable Interest Entity (VIE) of which we would be the primary beneficiary. Shurgard Europe qualifies as a VIE because (i) we have disproportionately fewer votes, due to joint control, than rights and obligations to the expected losses and the
expected returns of the entity and (ii) substantially all of the activities of Shurgard Europe either involve or are conducted on our behalf. We are obligated to absorb the majority of Shurgard Europes expected losses and expected residual
returns and therefore we are considered the primary beneficiary under FIN46R. As a result, Shurgard Europe will be consolidated in our financial statements beginning in the quarter ended March 31, 2004. In accordance with FIN 46Rs transition
requirements we will reflect Shurgard Europes assets, liabilities and non-controlling interests based on their carrying amounts as of June 30, 2003, the date we became the primary beneficiary. As of December 31, 2003, Shurgard Europe had total
assets of $624.5 million and total liabilities of $486.9 million. Our maximum exposure to loss is of the net book



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value of our investment which was $319.3 million at December 31, 2003. (See the consolidated financial information of that subsidiary in Note F of our
Consolidated Financial Statements).



Shurgard Europe has a
non-consolidated subsidiary, First Shurgard, in which it holds a 20% ownership interest. We have determined that First Shurgard is a VIE, and that Shurgard Europe is the primary beneficiary. Accordingly, First Shurgard will be consolidated in our
financial statements beginning in the quarter ended March 31, 2004. At December 31, 2003 First Shurgard had total assets of $175.0 million and total liabilities of $74.2 million. In addition, First Shurgard recognized a net loss of $5.3 million for
the period from its inception through December 31, 2003. Our maximum exposure is limited to the amount of our equity commitment which was $22.6 million at December 31, 2003, as well as our share of the $20 million subscription to bonds issued by
First Shurgard as described under RELATED PARTY TRANSACTIONS. Our equity includes our pro-rata ownership interest in Shurgard Europes net investment balance of $19.2 million and an outstanding equity commitment of $3.4 million to First
Shurgard.



CRITICAL ACCOUNTING POLICIES AND ESTIMATES



Consolidated and Unconsolidated Joint Ventures:  We
consolidate all wholly-owned subsidiaries. Partially-owned subsidiaries and joint ventures are consolidated when we control the entity, which could result from (i) the ability to elect a majority of the management committee, board of partners or
similar authority, (ii) our being named as the managing investor of the entity, or (iii) our providing substantially all of the equity. In assessing the consolidation treatment of partially-owned entities, we also consider the nature of veto rights,
if any, held by minority investors. To the extent that a minority investor has substantive veto rights over major decisions, the entity will generally not be consolidated. Entities not consolidated are generally accounted for under the equity
method, as we typically have significant influence over unconsolidated subsidiaries and joint ventures. Under the equity method, we recognize our proportionate share of earnings or losses based on our ownership interest and the profit allocation
provisions of the entity.



Revenue
Recognition:  We recognize rental revenue from the majority of our customers at the contracted rate for each month occupied because they are under month-to-month lease agreements. Revenue related to customers who sign longer period
leases is recognized ratably over the term of the lease. If customers fail to make contractual lease payments that are greater than our allowance for doubtful accounts, security deposits and letters of credit, then we may have to recognize
additional doubtful account charges in future periods. We monitor the liquidity and creditworthiness of our customers on an on-going basis. Each period we review our outstanding accounts receivable for doubtful accounts and provide allowances as
needed.



Storage Centers:  Storage centers are
recorded at cost unless circumstances indicate that cost cannot be recovered, in which case, the carrying value of the property is reduced to estimated fair value. In a business combination we also assess the value of in-place lease intangibles
which are amortized to expense over the expected life of the leases. Using our best estimates based on reasonable and supportable assumptions and projections, we review storage centers for impairment whenever events or changes in circumstances
indicate that the carrying amount of our assets might not be recoverable. The estimation of expected future net cash flows is inherently uncertain and relies on assumptions regarding current and future market conditions. If impairment analysis
assumption change, then an adjustment to the carrying amount of our long-lived assets could occur in the future period in which the assumptions change.



Goodwill:  We test goodwill for impairment annually and whenever events or circumstances make it more likely than not that impairment may
have occurred, such as a significant adverse change in the business climate. To determine if there is impairment we compare the carrying value of goodwill and our storage centers assets to the estimated fair market value of our Same Store portfolio.
We use common industry methods to assess the value of our portfolio and we estimate future cash flows based on the stores net operating income and current market capitalization rates.



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Derivatives:  Gains or losses resulting from changes in the fair value of derivatives
are recognized in earnings or recorded in other comprehensive income, and subsequently recognized in the statement of earnings when the hedged item affects earnings, depending on the purpose of the derivatives and whether they qualify for hedge
accounting treatment. Changes in the fair value of derivative instruments not designated as hedging instruments are recognized in earnings. We evaluate the effectiveness of designated hedges at inception and on a quarterly basis. Our main objective
in using derivatives is to add stability to interest expense and to manage our exposure to interest rate movements or other identified risks. To accomplish this objective, we primarily use interest rate swaps as part of our cash flow hedging
strategy. We assess the effectiveness of each hedging relationship by comparing the changes in fair value or cash flows of the derivative hedging instrument with the changes in fair value or cash flows of the designated hedged item or transaction.
The changes in the fair value of derivative instruments may materially affect net income.



Dispositions and Financing Arrangements:  We account for sales of certain storage centers in which we have continuing involvement as financing arrangements. We use the effective interest method based
on estimated future cash flows in determining the amortization of participation rights. This estimate is evaluated each period and is sensitive to both amount and timing of cash flows, and projected purchase price. Estimated amount and timing of
distributions is based on projected property operating cash flows. Estimated amount and timing of purchase price is based on projected stabilized net operating income and our estimate of when each property will reach stabilization. We periodically
re-evaluate our estimate of the option price, the projected timing of our joint venture partners exercise of their put option and the related expected cash flows. Changes are accounted for as a change in estimate, affecting gross participation
rights and subsequent amortization of participation rights.



Real Estate Investment Trust:  As a real estate investment trust, we generally will not be subject to corporate level federal income taxes if minimum distribution, income, asset and shareholder tests are met. However, not
all of our underlying entities are qualified REIT subsidiaries and may be subject to federal and state taxes, when applicable. In addition, foreign entities may also be subject to taxes of the host country. An income tax allocation is required to be
estimated on our taxable income arising from our taxable REIT subsidiaries and foreign entities. A deferred tax component could arise based upon the differences in GAAP versus tax income for items such as depreciation and gain recognition.



Deferred Tax Asset:  We have deferred tax
assets arising primarily from cumulative net operating losses arising in certain taxable subsidiaries. We evaluate both the positive and negative evidence that we believe is relevant in assessing whether the deferred tax assets will be realized.
When we determine that it is more likely than not that we will not realize the tax asset either in part or in whole, a valuation allowance is provided. One significant factor representing negative evidence in the evaluation of whether deferred tax
assets arising from cumulative net operating losses will be realized is historical taxable income or loss of the entity. In cases where a taxable entity has not demonstrated a history of achieving taxable income, this represents significant negative
evidence in assessing whether the amounts will be realized and generally requires that a valuation allowance is provided.



RECENT ACCOUNTING PRONOUNCEMENTS



In December 2003, the FASB issued FIN 46R, Consolidation of Variable Interest Entities, a revision to FIN 46, which was issued in January
2003. Under FIN 46R, a variable interest entity must be consolidated by a company if that company is subject to a majority of the entitys expected losses or entitled to receive a majority of the entitys expected residual returns or both.
FIN 46R requires disclosures about variable interest entities that a company is not required to consolidate, but in which it has a significant variable interest. The consolidation requirements apply to existing entities in the first reporting period
that ends after March 15, 2004. We will adopt the consolidation requirements of FIN 46R in the first quarter of 2004.



We have assessed Shurgard Europe under the provisions of FIN 46R and have concluded that it meets the definition of a variable interest entity. We have
also concluded that we are the primary beneficiary. As a result,



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Shurgard Europe will be consolidated in our financial statements beginning in the first quarter of 2004. The consolidation of Shurgard Europe will have a
significant effect on our balance sheet, cash flows and presentation of our results of operations (see separate Consolidated Financial Statements of Shurgard Europe included in Item 8    Financial Statements and
Supplementary Data).



Shurgard Europe has a 20% interest in
First Shurgard, an unconsolidated joint venture. First Shurgard Sprl was formed in January 2003. We have determined that First Shurgard is a VIE, and that Shurgard Europe is the primary beneficiary. Accordingly, First Shurgard will be consolidated
in our financial statements beginning in the quarter ended March 31, 2004. At December 31, 2003 First Shurgard had total assets of $175.0 million and total liabilities of $74.2 million. In addition, First Shurgard recognized a net loss of $5.3
million for the period from its inception through December 31, 2003.



Item
7AQualitative and quantitative disclosures about market risk



Interest Rate and Foreign Currency Exchange Rate Risk



We are exposed to changes in interest rates primarily from our floating rate debt arrangements. We have implemented a policy to protect against interest rate and foreign exchange risk. Our interest rate risk management objective is to limit
the impact of interest rate changes on earnings and cash flow and to lower our overall borrowing costs. To achieve these objectives we issue long-term notes payable, primarily at fixed interest rates, and may selectively enter into derivative
financial instruments, such as interest rate lock agreements, interest rate swaps and caps in order to mitigate our interest rate risk on a related financial instrument. Our investment policy prohibits us from entering into any such contract solely
to secure profit by speculating on the direction of currency exchange or interest rates if unrelated to capital borrowed lent or invested by us.



We have foreign currency exposures related to our investment in the construction, acquisition, and operation of storage centers in countries outside the
U.S. to the extent such activities are financed with financial instruments or equity denominated in non-functional currencies. Since all foreign debt is denominated in the corresponding functional currency, our currency exposure is limited to our
equity investment in those countries. Countries in which we have exposure to foreign currency fluctuations include Belgium, France, the Netherlands, Sweden, Denmark, Germany and the United Kingdom. Our gross investment in these foreign operations at
December 31, 2003 was $319.3 million. We consolidate one entity that has some operations denominated in Euros and account for all other foreign investments under the equity method.



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The table below summarizes our debt obligations and interest rate derivatives at December 31, 2003. If
interest rates increase or decrease by 100 basis points, our debt obligations with a variable rate structure would result in an increase or decrease over the rest of the year of our annual interest expense of approximately $3.5 million. For debt
obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates. For interest rate swaps, the table presents notional amounts and weighted average interest rates by contractual maturity
dates. Notional amounts are used to calculate the contractual payments to be exchanged under the contract.



|                               |  |                        |        |   |      |   |         |      |  |   |       |   |                     |      |        |   |            |   |        |       |  |            |         |   |  |   |         |  |   |         |   |  |   |        |  
|------------------------------ |  | ---------------------- | ------ | - | ---- | - | ------- | ---- |  | - | ----- | - | ------------------- | ---- | ------ | - | ---------- | - | ------ | ----- |  | ---------- | ------- | - |  | - | ------- |  | - | ------- | - |  | - | ------ | -
|                               |  | Expected maturity date |        |   |      |   |         |      |  |   |       |   | 2003InterestExpense |     
|                               |  | 2004                   |        |   | 2005 |   |         | 2006 |  |   | 2007  |   |                     | 2008 |        |   | Thereafter |   |        | Total |  | Fair Value |         |  
|Liabilities                    |  |                        |        |   |      |   |         |      |  |   |       |   |                     |      |        |   |            |   |        |       |  |            |         |   |  |   |         |  |   |         |   |  |   |        |  
|                               |  |                        |        |   |      |   |         |      | 
|Lines of credit                |  |                        |        |   |      |   |         |      |  |   |       |   |                     |      |        |   |            |   |        |       |  |            |         |   |  |   |         |  |   |         |   |  |   |        |  
|Variable rate                  |  | $                      |       |   |      | $ | 263,220 |      |  |   |       |   |                     |      |        |   |            |   |        |       |  |            |         |   |  | $ | 263,220 |  | $ | 263,220 |   |  | $ | 4,071  |  
|Interest rate                  |  |                        | 2.28   | % |      |   | 2.93    | %    |  |   |       |   |                     |      |        |   |            |   |        |       |  |            |         |   |  |   |         |  |   |         |   |  |   |        |  
|                               |  |                        |        |   |      |   |         |      | 
|Notes payable                  |  |                        |        |   |      |   |         |      |  |   |       |   |                     |      |        |   |            |   |        |       |  |            |         |   |  |   |         |  |   |         |   |  |   |        |  
|Fixed rate                     |  | $                      | 52,193 |   |      | $ | 9,966   |      |  | $ | 6,268 |   |                     | $    | 52,299 |   |            | $ | 20,560 |       |  | $          | 486,004 |   |  | $ | 627,290 |  | $ | 685,533 |   |  | $ | 41,972 |  
|Interest rate                  |  |                        | 6.93   | % |      |   | 6.88    | %    |  |   | 6.84  | % |                     |      | 6.83   | % |            |   | 6.76   | %     |  |            | 6.75    | % |  |   |         |  |   |         |   |  |   |        |  
|Variable rate                  |  | $                      | 71,049 |   |      | $ | 8,621   |      |  | $ | 1,529 |   |                     | $    | 1,400  |   |            |   |        |       |  |            |         |   |  | $ | 82,599  |  | $ | 82,599  |   |  | $ | 474    |  
|Interest rate (LIBOR Based)    |  |                        | 4.11   | % |      |   | 5.22    | %    |  |   | 7.07  | % |                     |      | 7.62   | % |            |   |        |       |  |            |         |   |  |   |         |  |   |         |   |  |   |        |  
|                               |  |                        |        |   |      |   |         |      | 
|Interest rate derivatives      |  |                        |        |   |      |   |         |      |  |   |       |   |                     |      |        |   |            |   |        |       |  |            |         |   |  |   |         |  |   |         |   |  |   |        |  
|Interest rate swaps            |  |                        |        |   |      |   |         |      |  |   |       |   |                     |      |        |   |            |   |        |       |  |            |         |   |  |   |         |  | $ | (14,795 | ) |  |   |        |  
|                               |  |                        |        |   |      |   |         |      | 
|Participation rights liability |  | $                      | 40,623 |   |      |   |         |      |  |   |       |   |                     |      |        |   |            |   |        |       |  |            |         |   |  | $ | 40,623  |  | $ | 40,623  |   |  | $ | (5,529 | )



As of December 31,
2003, and 2002, variable rate debt comprised 35.6% and 36.9%, respectively, of our outstanding debt. Variable rate debt was $345.8 million and $287.7 million, respectively, as of December 31, 2003 and 2002. Fixed rate debt at December 31, 2003
totaled $627.3 million and the related fair value was $685.5 million. At December 31, 2002 fixed rate debt was $491.4 million and the fair value was $544.1 million. The fair value of our interest rate derivatives was a loss of $14.8 million at
December 31, 2003 and $12.5 million at December 31, 2002. We expect a portion of our variable rate debt may be replaced with fixed rate debt in 2004.



62



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##### Table of Contents

Item 8Financial Statements and Supplementary Data



|                                                                                                                                                   |  |    
|-------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---
|CONSOLIDATED FINANCIAL STATEMENTSShurgard Storage Centers, Inc.                                                                                   |  | No.
|Report of Independent Auditors                                                                                                                     |  | 64 
|Consolidated Balance Sheets as of December 31, 2003 and December 31, 2002 (restated)                                                               |  | 65 
|Consolidated Statements of Income for the years ended December 31, 2003, 2002 (restated) and 2001 (restated)                                       |  | 66 
|Consolidated Statements of Shareholders Equity for the years ended December 31, 2003, 2002 (restated) and 2001 (restated)                         |  | 67 
|Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 (restated) and 2001 (restated)                                   |  | 68 
|Notes to Consolidated Financial Statements                                                                                                         |  | 70 
|Report of Independent Auditors on Financial Statement Schedule                                                                                     |  | 110
|Schedule IIIReal Estate and Accumulated Depreciation                                                                                              |  | 111
|                                                                                                                                                   | 
|SIGNIFICANT SUBSIDIARY FINANCIAL STATEMENTSShurgard Self Storage SCA                                                                              |  |    
|Independent Auditors Report                                                                                                                       |  | 125
|Consolidated Balance Sheets as of December 31, 2003 and December 31, 2002 (restated) and 2001 (restated)                                           |  | 126
|Consolidated Statements of Operations for the years ended December 31, 2003, 2002 (restated) and 2001 (restated)                                   |  | 127
|Consolidated Statement of Cash Flows for the years ended December 31, 2003, 2002 (restated) and 2001 (restated)                                    |  | 128
|Consolidated Statement of Shareholders Equity and Comprehensive Income for the years ended December 31, 2003, 2002 (restated) and 2001 (restated) |  | 129
|Notes to Consolidated Financial Statements                                                                                                         |  | 130



63



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##### Table of Contents

Report of Independent Auditors



To the Board of
Directors and Shareholders

of Shurgard Storage Centers, Inc.



In our opinion, based on our audits and the report of other auditors, the accompanying consolidated balance sheets and the
related consolidated statements of income, of shareholders equity and of cash flows present fairly, in all material respects, the financial position of Shurgard Storage Centers, Inc. and its subsidiaries at December 31, 2003 and 2002, and the
results of their operations and their cash flows for each of the three years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the
responsibility of the Companys management; our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of Shurgard Self Storage, SCA, a partially owned subsidiary
accounted for under the equity method, which statements reflect total assets of $624,469,000 and $505,173,000 as of December 31, 2003 and 2002, respectively, and total revenues of $78,694,000, $43,512,000 and $26,526,000 for each of the three years
in the period ended December 31, 2003. Those statements were audited by other auditors whose report thereon has been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included for Shurgard Self Storage, SCA, is
based solely on the report of the other auditors. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.



As further described in Note B to the consolidated financial statements, the
Company has restated its 2002 and 2001 consolidated financial statements (which were previously audited by other independent auditors).



As further described in Note C to the consolidated financial statements, the Company changed its method of accounting for extinguishment of debt in 2003
and its method of accounting for goodwill in 2002. In addition, the Company restated its net income available to common shareholders for purposes of calculating earnings per share for the year ended December 31, 2002.



/s/ PricewaterhouseCoopers LLP

Seattle, Washington

May 14, 2004



64



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##### Table of Contents

CONSOLIDATED BALANCE SHEETS

(In thousands except per share data)



|                                                                                                                                                                              |  |                  |           |   |                                |   |           |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | --------- | - | ------------------------------ | - | --------- | -
|                                                                                                                                                                              |  | December 31,2003 |           |   | December 31,2002 (as restated) |  
|                                                                                                                                                                              |  |                 
|ASSETS:                                                                                                                                                                       |  |                  |           |   |                                |   |           |  
|Storage centers:                                                                                                                                                              |  |                  |           |   |                                |   |           |  
|Land                                                                                                                                                                          |  | $                | 376,832   |   |                                | $ | 338,379   |  
|Buildings and equipment, net                                                                                                                                                  |  |                  | 1,203,799 |   |                                |   | 1,115,823 |  
|Construction in progress                                                                                                                                                      |  |                  | 38,867    |   |                                |   | 46,679    |  
|                                                                                                                                                                              |  |                  |           |   |                                |   |           |  
|Total storage centers                                                                                                                                                         |  |                  | 1,619,498 |   |                                |   | 1,500,881 |  
|                                                                                                                                                                              |  |                  |           |   |                                |   |           |  
|Investment in Shurgard Europe                                                                                                                                                 |  |                  | 319,267   |   |                                |   |          |  
|Cash and cash equivalents                                                                                                                                                     |  |                  | 11,670    |   |                                |   | 12,968    |  
|Restricted cash                                                                                                                                                               |  |                  | 1,585     |   |                                |   | 1,230     |  
|Notes receivable affiliate                                                                                                                                                    |  |                  | 56,543    |   |                                |   | 49,453    |  
|Goodwill                                                                                                                                                                      |  |                  | 24,206    |   |                                |   | 24,697    |  
|Other assets                                                                                                                                                                  |  |                  | 34,322    |   |                                |   | 31,098    |  
|                                                                                                                                                                              |  |                  |           |   |                                |   |           |  
|Total assets                                                                                                                                                                  |  | $                | 2,067,091 |   |                                | $ | 1,620,327 |  
|                                                                                                                                                                              |  |                  |           |   |                                |   |           |  
|LIABILITIES AND SHAREHOLDERS EQUITY:                                                                                                                                         |  |                  |           |   |                                |   |           |  
|Accounts payable and other liabilities                                                                                                                                        |  | $                | 76,862    |   |                                | $ | 66,484    |  
|Lines of credit                                                                                                                                                               |  |                  | 263,220   |   |                                |   | 267,639   |  
|Notes payable                                                                                                                                                                 |  |                  | 711,026   |   |                                |   | 511,312   |  
|Participation rights liability, net of discount of $4,053 and $2,370, respectively                                                                                            |  |                  | 40,623    |   |                                |   | 47,472    |  
|                                                                                                                                                                              |  |                  |           |   |                                |   |           |  
|Total liabilities                                                                                                                                                             |  |                  | 1,091,731 |   |                                |   | 892,907   |  
|                                                                                                                                                                              |  |                  |           |   |                                |   |           |  
|Minority interest                                                                                                                                                             |  |                  | 20,940    |   |                                |   | 20,164    |  
|Commitments and contingencies (Notes E, I, P and X)                                                                                                                           |  |                  |           |   |                                |   |           |  
|Shareholders equity:                                                                                                                                                         |  |                  |           |   |                                |   |           |  
|Series C Cumulative Redeemable Preferred Stock; $0.001 par value: 2,000,000 shares authorized; 2,000,000 shares issued and outstanding;
liquidation preference of $50,000,000 |  |                  | 48,115    |   |                                |   | 48,115    |  
|Series D Cumulative Redeemable Preferred Stock; $0.001 par value: 3,450,000 shares authorized; 3,450,000 shares issued and outstanding;
liquidation preference of $86,250,000 |  |                  | 83,068    |   |                                |   | 83,068    |  
|Class A Common Stock, $0.001 par value; 120,000,000 authorized; 45,747,751 and 35,934,249 shares issued and outstanding,
respectively                                         |  |                  | 46        |   |                                |   | 36        |  
|Additional paid-in capital                                                                                                                                                    |  |                  | 1,100,949 |   |                                |   | 804,582   |  
|Accumulated net income less distributions                                                                                                                                     |  |                  | (287,516  | ) |                                |   | (225,811  | )
|Accumulated other comprehensive income (loss)                                                                                                                                 |  |                  | 9,758     |   |                                |   | (2,734    | )
|                                                                                                                                                                              |  |                  |           |   |                                |   |           |  
|Total shareholders equity                                                                                                                                                    |  |                  | 954,420   |   |                                |   | 707,256   |  
|                                                                                                                                                                              |  |                  |           |   |                                |   |           |  
|Total liabilities and shareholders equity                                                                                                                                    |  | $                | 2,067,091 |   |                                | $ | 1,620,327 |  
|                                                                                                                                                                              |  |                  |           |   |                                |   |           |  



See Notes to
Consolidated Financial Statements



65



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##### Table of Contents

CONSOLIDATED STATEMENTS OF INCOME

(In thousands except per share data)



|                                                       |  |                                 |         |   |                    |   |         |                    |  |   |         |  
|------------------------------------------------------ |  | ------------------------------- | ------- | - | ------------------ | - | ------- | ------------------ |  | - | ------- | -
|                                                       |  | For the year ended December 31, |        
|                                                       |  | 2003                            |         |   | 2002 (as restated) |   |         | 2001 (as restated) | 
|Revenue                                                |  |                                 |         |   |                    |   |         |                    |  |   |         |  
|Storage center operations                              |  | $                               | 297,034 |   |                    | $ | 267,855 |                    |  | $ | 239,056 |  
|Other                                                  |  |                                 | 5,280   |   |                    |   | 4,962   |                    |  |   | 3,235   |  
|                                                       |  |                                 |         |   |                    |   |         |                    |  |   |         |  
|Total revenue                                          |  |                                 | 302,314 |   |                    |   | 272,817 |                    |  |   | 242,291 |  
|                                                       |  |                                 |         |   |                    |   |         |                    |  |   |         |  
|Expenses                                               |  |                                 |         |   |                    |   |         |                    |  |   |         |  
|Operating                                              |  |                                 | 100,216 |   |                    |   | 84,731  |                    |  |   | 74,257  |  
|Depreciation and amortization                          |  |                                 | 56,380  |   |                    |   | 51,250  |                    |  |   | 47,185  |  
|Real estate taxes                                      |  |                                 | 28,089  |   |                    |   | 25,663  |                    |  |   | 21,561  |  
|Impairment of long-lived assets and goodwill           |  |                                 | 12,671  |   |                    |   | 1,626   |                    |  |   | 2,298   |  
|General, administrative and other                      |  |                                 | 18,013  |   |                    |   | 9,881   |                    |  |   | 11,373  |  
|                                                       |  |                                 |         |   |                    |   |         |                    |  |   |         |  
|Total expenses                                         |  |                                 | 215,369 |   |                    |   | 173,151 |                    |  |   | 156,674 |  
|                                                       |  |                                 |         |   |                    |   |         |                    |  |   |         |  
|Income from storage center operations                  |  |                                 | 86,945  |   |                    |   | 99,666  |                    |  |   | 85,617  |  
|                                                       |  |                                 |         |   |                    |   |         |                    |  |   |         |  
|Other Income (Expense)                                 |  |                                 |         |   |                    |   |         |                    |  |   |         |  
|Equity in losses of other real estate investments, net |  |                                 | (3,099  | ) |                    |   | (1,178  | )                  |  |   | (3,694  | )
|Interest:                                              |  |                                 |         |   |                    |   |         |                    |  |   |         |  
|Interest on loans                                      |  |                                 | (51,182 | ) |                    |   | (40,051 | )                  |  |   | (43,272 | )
|Amortization of participation rights discount          |  |                                 | 5,529   |   |                    |   | (4,824  | )                  |  |   | (16,876 | )
|Unrealized loss on financial instruments               |  |                                 | (2,194  | ) |                    |   | (10,999 | )                  |  |   | (1,602  | )
|Interest income and other, net                         |  |                                 | 4,456   |   |                    |   | 6,311   |                    |  |   | 3,259   |  
|                                                       |  |                                 |         |   |                    |   |         |                    |  |   |         |  
|Other expense, net                                     |  |                                 | (46,490 | ) |                    |   | (50,741 | )                  |  |   | (62,185 | )
|                                                       |  |                                 |         |   |                    |   |         |                    |  |   |         |  
|Minority interest                                      |  |                                 | (1,206  | ) |                    |   | (866    | )                  |  |   | (645    | )
|                                                       |  |                                 |         |   |                    |   |         |                    |  |   |         |  
|Income before income taxes                             |  |                                 | 39,249  |   |                    |   | 48,059  |                    |  |   | 22,787  |  
|Income tax expense                                     |  |                                 | (1,611  | ) |                    |   |        |                    |  |   |        |  
|                                                       |  |                                 |         |   |                    |   |         |                    |  |   |         |  
|Net Income                                             |  |                                 | 37,638  |   |                    |   | 48,059  |                    |  |   | 22,787  |  
|                                                       |  |                                 |        
|Net Income Allocation                                  |  |                                 |         |   |                    |   |         |                    |  |   |         |  
|Preferred stock dividends and redemption costs         |  |                                 | (11,896 | ) |                    |   | (16,639 | )                  |  |   | (15,098 | )
|                                                       |  |                                 |         |   |                    |   |         |                    |  |   |         |  
|Net income available to common shareholders            |  | $                               | 25,742  |   |                    | $ | 31,420  |                    |  | $ | 7,689   |  
|                                                       |  |                                 |         |   |                    |   |         |                    |  |   |         |  
|Net Income per Common Share                            |  |                                 |         |   |                    |   |         |                    |  |   |         |  
|Basic earnings per share                               |  | $                               | 0.64    |   |                    | $ | 0.91    |                    |  | $ | 0.25    |  
|                                                       |  |                                 |         |   |                    |   |         |                    |  |   |         |  
|Diluted earnings per share                             |  | $                               | 0.62    |   |                    | $ | 0.90    |                    |  | $ | 0.25    |  
|                                                       |  |                                 |         |   |                    |   |         |                    |  |   |         |  
|Distributions per common share                         |  | $                               | 2.15    |   |                    | $ | 2.11    |                    |  | $ | 2.07    |  
|                                                       |  |                                 |         |   |                    |   |         |                    |  |   |         |  



See Notes to
Consolidated Financial Statements



66



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##### Table of Contents

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY



|                                        |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   |          |   |  |   |        |   |  |   |         |  
|--------------------------------------- |  | --------------- | - |  | ------------------- | ------- | ------------------- | ------ | --------------------------- | ------ | - | ------------------------ |  | -------------------------------------- | ------ |  | ------------------------------------------ | - |  | ----- | ------ | - |  | - | --------- |  | - | -------- | - |  | - | ------ | - |  | - | ------- | -
|                                        |  | Preferred Stock |   |  | Class ACommon Stock |         | Class BCommon Stock |        | Loans toClass BShareholders |        |   | AdditionalPaid-inCapital |  | AccumulatedNet IncomeLessDistributions |        |  | AccumulatedOtherComprehensiveIncome (Loss) |   |  | Total |       
|                                        |  | Shares          |   |  | Amount              |         |                     | Shares |                             | Amount |   | Shares                   |  |                                        | Amount |  |                                            |   |  |      
|                                        |  | (in thousands)  |  
|Balance, (as restated)January 1, 2001   |  | 4,000           |   |  | $                   | 96,171  |                     |        | 29,620                      |        | $ | 30                       |  | 155                                    |        |  | $                                          |  |  | $     | (3,676 | ) |  | $ | 627,350   |  | $ | (130,736 | ) |  | $ |       |   |  | $ | 589,139 |  
|Comprehensive income:                   |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   |          |   |  |   |        |   |  |   |         |  
|Net income                              |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   | 22,787   |   |  |   |        |   |  |   | 22,787  |  
|Other comprehensive loss                |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   |          |   |  |   | (824   | ) |  |   | (824    | )
|                                        |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   |          |   |  |   |        |   |  |   |         |  
|Total comprehensive income              |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   |          |   |  |   |        |   |  |   | 21,963  |  
|Issuance of common & preferred stock    |  | 3,450           |   |  |                     | 85,012  |                     |        | 3,035                       |        |   | 3                        |  |                                        |        |  |                                            |   |  |       |        |   |  |   | 80,261    |  |   |          |   |  |   |        |   |  |   | 165,276 |  
|Payment on loan to shareholder          |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       | 904    |   |  |   |           |  |   |          |   |  |   |        |   |  |   | 904     |  
|Distributions:                          |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   |          |   |  |   |        |   |  |   |         |  
|Preferred                               |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   | (15,098  | ) |  |   |        |   |  |   | (15,098 | )
|Common                                  |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   | (63,355  | ) |  |   |        |   |  |   | (63,355 | )
|                                        |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   |          |   |  |   |        |   |  |   |         |  
|Balance, (as restated)December 31, 2001 |  | 7,450           |   |  |                     | 181,183 |                     |        | 32,655                      |        |   | 33                       |  | 155                                    |        |  |                                            |  |  |       | (2,772 | ) |  |   | 707,611   |  |   | (186,402 | ) |  |   | (824   | ) |  |   | 698,829 |  
|Comprehensive income:                   |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   |          |   |  |   |        |   |  |   |         |  
|Net income                              |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   | 48,059   |   |  |   |        |   |  |   | 48,059  |  
|Other comprehensive loss                |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   |          |   |  |   | (1,910 | ) |  |   | (1,910  | )
|                                        |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   |          |   |  |   |        |   |  |   |         |  
|Total comprehensive income              |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   |          |   |  |   |        |   |  |   | 46,149  |  
|Issuance of common stock                |  |                 |   |  |                     |         |                     |        | 3,279                       |        |   | 3                        |  | (155                                   | )      |  |                                            |   |  |       |        |   |  |   | 96,971    |  |   |          |   |  |   |        |   |  |   | 96,974  |  
|Redemption of preferred stock           |  | (2,000          | ) |  |                     | (50,000 | )                   |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   |          |   |  |   |        |   |  |   | (50,000 | )
|Payment on loan to shareholder          |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       | 2,772  |   |  |   |           |  |   |          |   |  |   |        |   |  |   | 2,772   |  
|Distributions:                          |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   |          |   |  |   |        |   |  |   |         |  
|Preferred                               |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   | (14,695  | ) |  |   |        |   |  |   | (14,695 | )
|Common                                  |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   | (72,773  | ) |  |   |        |   |  |   | (72,773 | )
|                                        |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   |          |   |  |   |        |   |  |   |         |  
|Balance, (as restated)December 31, 2002 |  | 5,450           |   |  |                     | 131,183 |                     |        | 35,934                      |        |   | 36                       |  |                                        |        |  |                                            |   |  |       |        |   |  |   | 804,582   |  |   | (225,811 | ) |  |   | (2,734 | ) |  |   | 707,256 |  
|Comprehensive income:                   |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   |          |   |  |   |        |   |  |   |         |  
|Net income                              |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   | 37,638   |   |  |   |        |   |  |   | 37,638  |  
|Other comprehensive income              |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   |          |   |  |   | 12,492 |   |  |   | 12,492  |  
|                                        |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   |          |   |  |   |        |   |  |   |         |  
|Total comprehensive income              |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   |          |   |  |   |        |   |  |   | 50,130  |  
|Issuance of common stock                |  |                 |   |  |                     |         |                     |        | 9,814                       |        |   | 10                       |  |                                        |        |  |                                            |   |  |       |        |   |  |   | 296,367   |  |   |          |   |  |   |        |   |  |   | 296,377 |  
|Distributions:                          |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   |          |   |  |   |        |   |  |   |         |  
|Preferred                               |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   | (11,896  | ) |  |   |        |   |  |   | (11,896 | )
|Common                                  |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   | (87,447  | ) |  |   |        |   |  |   | (87,447 | )
|                                        |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   |          |   |  |   |        |   |  |   |         |  
|Balance, December 31, 2003              |  | 5,450           |   |  | $                   | 131,183 |                     |        | 45,748                      |        | $ | 46                       |  |                                       |        |  | $                                          |  |  | $     |       |   |  | $ | 1,100,949 |  | $ | (287,516 | ) |  | $ | 9,758  |   |  | $ | 954,420 |  
|                                        |  |                 |   |  |                     |         |                     |        |                             |        |   |                          |  |                                        |        |  |                                            |   |  |       |        |   |  |   |           |  |   |          |   |  |   |        |   |  |   |         |  



See Notes to
Consolidated Financial Statements



67



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CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



|                                                                                 |  |                                 |          |   |                   |   |          |                   |  |   |          |  
|-------------------------------------------------------------------------------- |  | ------------------------------- | -------- | - | ----------------- | - | -------- | ----------------- |  | - | -------- | -
|                                                                                 |  | For the year ended December 31, |         
|                                                                                 |  | 2003                            |          |   | 2002(as restated) |   |          | 2001(as restated) | 
|Operating activities:                                                            |  |                                 |          |   |                   |   |          |                   |  |   |          |  
|Net income                                                                       |  | $                               | 37,638   |   |                   | $ | 48,059   |                   |  | $ | 22,787   |  
|Adjustment to reconcile net income to net cash provided by operating activities: |  |                                 |          |   |                   |   |          |                   |  |   |          |  
|Early extinguishment of debt                                                     |  |                                 |         |   |                   |   | (1,724   | )                 |  |   | 1,445    |  
|Gain on sale of assets                                                           |  |                                 | (2,489   | ) |                   |   | (916     | )                 |  |   | (1,854   | )
|Depreciation and amortization                                                    |  |                                 | 56,380   |   |                   |   | 51,250   |                   |  |   | 47,185   |  
|Amortization of participation rights discount                                    |  |                                 | (5,529   | ) |                   |   | 4,824    |                   |  |   | 16,876   |  
|Unrealized loss on financial instruments                                         |  |                                 | 2,194    |   |                   |   | 10,999   |                   |  |   | 1,602    |  
|Equity in losses of other real estate investments, net                           |  |                                 | 3,099    |   |                   |   | 1,178    |                   |  |   | 3,694    |  
|Impairment of long-lived assets and goodwill                                     |  |                                 | 12,671   |   |                   |   | 1,626    |                   |  |   | 2,298    |  
|Stock-based compensation expense                                                 |  |                                 | 1,150    |   |                   |   | 578      |                   |  |   | 186      |  
|Other non-cash income                                                            |  |                                 | 121      |   |                   |   |         |                   |  |   |         |  
|Foreign currency exchange loss                                                   |  |                                 | 440      |   |                   |   |         |                   |  |   |         |  
|Minority interest                                                                |  |                                 | 1,206    |   |                   |   | 866      |                   |  |   | 645      |  
|Changes in operating accounts, net of effect of acquisitions                     |  |                                 |          |   |                   |   |          |                   |  |   |          |  
|Other assets                                                                     |  |                                 | 5,092    |   |                   |   | (1,957   | )                 |  |   | 1,214    |  
|Accounts payable and other liabilities                                           |  |                                 | 11,405   |   |                   |   | (2,045   | )                 |  |   | 2,024    |  
|Restricted cash                                                                  |  |                                 | (355     | ) |                   |   | (52      | )                 |  |   | 8,049    |  
|                                                                                 |  |                                 |          |   |                   |   |          |                   |  |   |          |  
|Net cash provided by operating activities                                        |  |                                 | 123,023  |   |                   |   | 112,686  |                   |  |   | 106,151  |  
|                                                                                 |  |                                 |          |   |                   |   |          |                   |  |   |          |  
|Investing activities:                                                            |  |                                 |          |   |                   |   |          |                   |  |   |          |  
|Construction, acquisition and improvements to storage centers                    |  |                                 | (97,482  | ) |                   |   | (136,167 | )                 |  |   | (112,901 | )
|Proceeds from sale of assets                                                     |  |                                 | 5,725    |   |                   |   | 2,443    |                   |  |   | 4,548    |  
|Purchase of other real estate investments                                        |  |                                 |         |   |                   |   | (375     | )                 |  |   | (429     | )
|Purchase of non-competition agreements                                           |  |                                 | (390     | ) |                   |   | (1,010   | )                 |  |   | (694     | )
|Increase in bond receivable from Shurgard Europe                                 |  |                                 | (59      | ) |                   |   | (48,004  | )                 |  |   |         |  
|(Increase) decrease in notes receivable affiliate                                |  |                                 | (6,242   | ) |                   |   | 2,381    |                   |  |   | 1,030    |  
|Increase in cash due to consolidation of containerized storage operations        |  |                                 |         |   |                   |   |         |                   |  |   | 200      |  
|Purchase of additional interest in affiliated partnership                        |  |                                 | (245     | ) |                   |   |         |                   |  |   | (1,296   | )
|Purchase of interest in Morningstar Storage Centers, LLC, net of cash acquired   |  |                                 |         |   |                   |   | (60,343  | )                 |  |   |         |  
|Increase in cash due to purchase of Minnesota Mini Storage                       |  |                                 | 317      |   |                   |   |         |                   |  |   |         |  
|Purchase of additional interest in European affiliates                           |  |                                 | (309,068 | ) |                   |   |         |                   |  |   |         |  
|                                                                                 |  |                                 |          |   |                   |   |          |                   |  |   |          |  
|Net cash used in investing activities                                            |  |                                 | (407,444 | ) |                   |   | (241,075 | )                 |  |   | (109,542 | )
|                                                                                 |  |                                 |          |   |                   |   |          |                   |  |   |          |  
|Financing activities:                                                            |  |                                 |          |   |                   |   |          |                   |  |   |          |  
|Proceeds from notes payable                                                      |  |                                 | 237,047  |   |                   |   | 30,316   |                   |  |   | 217,003  |  
|Payments on notes payable                                                        |  |                                 | (55,789  | ) |                   |   | (18,749  | )                 |  |   | (247,428 | )
|Proceeds from lines of credit                                                    |  |                                 | 589,695  |   |                   |   | 454,639  |                   |  |   | 52,772   |  
|Payments on lines of credit                                                      |  |                                 | (594,114 | ) |                   |   | (290,399 | )                 |  |   | (42,130  | )
|Payment of loan costs                                                            |  |                                 | (1,276   | ) |                   |   | (880     | )                 |  |   | (3,878   | )
|Payments on participation rights                                                 |  |                                 | (1,320   | ) |                   |   | (4,369   | )                 |  |   | (69,704  | )
|Proceeds from financing arrangements                                             |  |                                 |         |   |                   |   | 1,376    |                   |  |   | 732      |  
|Proceeds from issuance of common stock, net                                      |  |                                 | 178,236  |   |                   |   | 82,255   |                   |  |   | 76,018   |  
|Proceeds from preferred stock offering, net                                      |  |                                 |         |   |                   |   |         |                   |  |   | 83,068   |  
|Proceeds from payments on loans to shareholders                                  |  |                                 | 20,000   |   |                   |   | 2,772    |                   |  |   | 904      |  
|Proceeds from participating mortgages                                            |  |                                 |         |   |                   |   | 2,530    |                   |  |   | 10,416   |  
|Distributions paid                                                               |  |                                 | (99,343  | ) |                   |   | (87,468  | )                 |  |   | (78,453  | )
|Payment for redemption of preferred stock                                        |  |                                 |         |   |                   |   | (50,000  | )                 |  |   |         |  
|Proceeds from exercise of stock options and dividend reinvestment plan           |  |                                 | 12,858   |   |                   |   | 14,141   |                   |  |   | 6,003    |  
|Contributions received from minority partners                                    |  |                                 | 226      |   |                   |   | 533      |                   |  |   | 260      |  
|Distributions paid to minority partners                                          |  |                                 | (3,097   | ) |                   |   | (4,438   | )                 |  |   | (2,691   | )
|                                                                                 |  |                                 |          |   |                   |   |          |                   |  |   |          |  
|Net cash provided by financing activities                                        |  |                                 | 283,123  |   |                   |   | 132,259  |                   |  |   | 2,892    |  
|                                                                                 |  |                                 |          |   |                   |   |          |                   |  |   |          |  
|(Decrease) increase in cash and cash equivalents                                 |  |                                 | (1,298   | ) |                   |   | 3,870    |                   |  |   | (499     | )
|Cash and cash equivalents at beginning of period                                 |  |                                 | 12,968   |   |                   |   | 9,098    |                   |  |   | 9,597    |  
|                                                                                 |  |                                 |          |   |                   |   |          |                   |  |   |          |  
|Cash and cash equivalents at end of period                                       |  | $                               | 11,670   |   |                   | $ | 12,968   |                   |  | $ | 9,098    |  
|                                                                                 |  |                                 |          |   |                   |   |          |                   |  |   |          |  



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CONSOLIDATED STATEMENTS OF CASH FLOWS(Continued)

(in thousands)

|                                                                     |  |                                 |        |                   |   |         |                   |  |   |        |  
|-------------------------------------------------------------------- |  | ------------------------------- | ------ | ----------------- | - | ------- | ----------------- |  | - | ------ | -
|                                                                     | 
|                                                                     |  | For the year ended December 31, |       
|                                                                     |  | 2003                            |        | 2002(as restated) |   |         | 2001(as restated) | 
|Supplemental schedule of cash flow information:                      |  |                                 |        |                   |   |         |                   |  |   |        |  
|Cash paid for interest on loans                                      |  | $                               | 47,272 |                   | $ | 40,056  |                   |  | $ | 37,162 |  
|                                                                     |  |                                 |        |                   |   |         |                   |  |   |        |  
|Cash paid for participation rights                                   |  | $                               | 1,320  |                   | $ |        |                   |  | $ | 1,303  |  
|                                                                     |  |                                 |        |                   |   |         |                   |  |   |        |  
|Cash paid for income taxes                                           |  | $                               | 3,358  |                   | $ |        |                   |  | $ |       |  
|                                                                     |  |                                 |        |                   |   |         |                   |  |   |        |  
|Supplemental schedule of noncash investing and financing activities: |  |                                 |        |                   |   |         |                   |  |   |        |  
|Fair value adjustments of derivatives                                |  | $                               | 136    |                   | $ | (11,912 | )                 |  | $ | (2,563 | )
|                                                                     |  |                                 |        |                   |   |         |                   |  |   |        |  
|Common stock issued as consideration for acquisitions                |  | $                               | 84,134 |                   | $ |        |                   |  | $ |       |  
|                                                                     |  |                                 |        |                   |   |         |                   |  |   |        |  
|Conversion of note receivable to equity investment in STG            |  | $                               |       |                   | $ |        |                   |  | $ | 16,238 |  
|                                                                     |  |                                 |        |                   |   |         |                   |  |   |        |  
|Non-cash contributions from minority interest partners               |  | $                               | 2,336  |                   | $ | 3,127   |                   |  | $ | 1,120  |  
|                                                                     |  |                                 |        |                   |   |         |                   |  |   |        |  



See Notes to
Consolidated Financial Statements



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##### Table of Contents

SHURGARD STORAGE CENTERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note
AOrganization



Shurgard Storage Centers, Inc. (We,
our, the Company or Shurgard), a Washington corporation, was organized on July 23, 1993. The Company serves as a vehicle for investments in, and ownership of, a professionally managed, internationally diverse real estate portfolio consisting
primarily of self-service storage properties that provides month-to-month leases for business and personal use primarily in the United States and Europe. We intend to qualify as a real estate investment trust (REIT) as defined in Section 856 of the
Internal Revenue Code.



Note BRestatements



We have restated our previously issued financial statements for the years
ended December 31, 2002 and 2001, as well as for the quarters ended March 31, June 30 and September 30, 2003 and 2002 and the quarter ended December 31, 2002 (see Note W) for the items described below.



Consolidation of domestic joint ventures



We have determined that certain partially-owned U.S. entities historically
accounted for using the equity method should have been consolidated from inception of each entity. This restatement affects 26 entities and ventures in which we maintain ownership interests ranging from 50% to 90%, and which hold a total of 30
storage centers. At December 31, 2003 and 2002, total consolidated assets for these entities and ventures amounted to $95.6 million and $95.3 million, respectively, and total liabilities amounted to $72.9 million and $65.6 million, respectively.
There was no impact on net income for the prior periods as a result of this restatement.



Tax retention operating leases



We have determined that our tax retention operating lease entity (collectively referred to as the TROL), which owns properties that historically were accounted for off-balance sheet as operating leases, should have been included in our
Consolidated Balance Sheets from inception. As of December 31, 2002 and 2001, there were 36 and 22 properties, respectively, in the TROL. In 2003, no new properties were added to the TROL. As of June 2003, we had exercised our right to purchase all
the TROL properties and accordingly, these properties and the related debt were included in our Consolidated Balance Sheets from that point forward. At December 31, 2002 and 2001, total assets of the TROL amounted to $146.4 million and $63.1
million, respectively, and total liabilities amounted to $156.1 million and $65.0 million, respectively. The restatement includes adjustments to reflect the assets, liabilities and operations of the TROL in our consolidated financial statements. The
aggregate effect of this restatement is to reduce net income compared to previously reported amounts by $6.8 million ($0.19 per diluted share) and $1.7 million ($0.05 per diluted share) for the years ended December 31, 2002 and 2001, respectively.



Valuation of deferred tax assets



In prior years, we recognized deferred tax assets primarily attributable to
net operating loss carryforwards from Shurgard Storage- To- Go, LLC (STG), which is operated within our taxable REIT subsidiary (TRS). We have re-evaluated both the negative and positive evidence that we believe is relevant in assessing whether
these deferred tax assets will be realized. As a result, we have concluded that under the provisions of Statement of Financial Accounting Standard (SFAS) No.109 Accounting for Income Taxes, it is not appropriate to recognize the
potential future benefit of these deferred tax assets until such time as it becomes more likely than not, based on objective evidence, the related net operating losses will be utilized. This conclusion is based largely



70



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SHURGARD STORAGE CENTERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



on the fact that the TRS has not demonstrated any history of achieving taxable income and continuing losses are expected in 2004. Because the facts
considered have been present since inception of the TRS, we have determined that a valuation allowance should have been recorded for net deferred tax assets recognized in prior periods. The restatement to reflect a full valuation allowance for
deferred tax assets resulted in a reduction of income tax benefit compared to previously reported amounts of $314,000 and $2.4 million for the years ended December 31, 2002 and 2001, respectively. The related tax loss carryforward amounts expire
between 2012 and 2022.



A deferred tax asset was accumulated by
STG prior to our acquiring a controlling interest in STG and our pro rata share was recognized as a component of our equity in earnings of STG. We have determined that this amount was not recoverable and that a valuation allowance should have been
recorded by STG, prior to us acquiring a controlling interest in STG. We adjusted our equity in losses from STG for the period prior to our acquiring a controlling interest and started to consolidate STG in June 2001, to reflect the correction. The
restatement to adjust our equity in losses from STG resulted in a reduction of retained earnings of $5.2 million compared to the previously reported amount at December 31, 2000 and a reduction in net income of $68,000 for the year ended December 31,
2001.



We also have re-evaluated the appropriateness of
deferred tax assets recognized by Shurgard Self Storage, SCA (Shurgard Europe), which is accounted for using the equity method. Based on the fact that Shurgard Europe has not demonstrated a history of taxable income in any jurisdiction since
inception, we have concluded that it is not appropriate to recognize the potential future benefit of these deferred tax assets until such time as it becomes more likely than not, based on objective evidence, the related net operating losses will be
utilized. Consequently, in accordance with SFAS No.109, a full valuation allowance is necessary. Similar to the situation discussed above, the facts considered have been present since inception, and as a result, we have determined that a full
valuation allowance should have been recorded for net deferred tax assets recognized by Shurgard Europe in all prior periods. We reflected the impact of restating the income tax benefit previously recognized by this unconsolidated subsidiary as an
increase in our share of losses incurred by Shurgard Europe for each period. This restatement resulted in an increase in Equity in losses of other real estate investments, net, compared to previously reported amounts of $556,000 and $628,000 for the
years ended December 31, 2002 and 2001, respectively. The related tax loss carryforward amounts can be carried forward indefinitely and applied to reduce future taxable income.



These restatements result in the Company recording a full valuation allowance against its deferred tax assets on the balance
sheet and eliminating approximately $870,000 ($0.03 per diluted share) and $3.1 million ($0.10 per diluted share) previously recognized as a part of our net income for the years ended December 31, 2002 and 2001, respectively.



Other restatement items



We also have restated our consolidated financial statements for the effects
of the following items:



| |  |  | We corrected the accounting for certain accrued liabilities to recognize the expenses in the appropriate periods. These accruals primarily consisted of compensation and related
payroll costs, workers compensation costs and lease accruals.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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SHURGARD STORAGE CENTERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



| |  |  | We corrected for certain items that impacted the computation of depreciation expense and capitalization of overhead and interest.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | We reversed amortization of amounts that should have been recognized as a gain in connection with the sale of certain storage centers in prior years.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We corrected the accounting for advertising costs related to print advertisements in telephone books to recognize the expenses when the related telephone book is first published.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We corrected the 2002 calculation of weighted average shares outstanding for both basic and diluted shares. Weighted average basic shares outstanding decreased from 34,836,000 to
34,454,000 and diluted shares outstanding decreased from 35,401,000 to 34,963,000. The impact of this correction resulted in an increase in net income per common share of $0.02 for both basic and diluted earnings per share.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Summary



The aggregate impact of all restatement items including the restatement for
preferred stock issuance costs discussed in Note C, resulted in a decrease in net income available to common shareholders compared to previously reported amounts of $10.5 million ($0.28 per diluted share) and $10.5 million ($0.34 per diluted share)
for the years ended December 31, 2002 and 2001, respectively.



The effects of the restatement items described above on our net income available to common shareholders and earnings per share are as follows:



|                                                                 |  |                                      |        |   |                              |   |       |         |  |   |                    |   |  |       |        |   |         |   |       |   |  |   |       |  
|---------------------------------------------------------------- |  | ------------------------------------ | ------ | - | ---------------------------- | - | ----- | ------- |  | - | ------------------ | - |  | ----- | ------ | - | ------- | - | ----- | - |  | - | ----- | -
|                                                                 |  | Year Ended December 31, 2002         |        |   | Year Ended December 31, 2001 |  
|                                                                 |  |                                      |        |   | Earnings per share           |   |       |         |  |   | Earnings per share |  
|                                                                 |  |                                      |        |   | Basic                        |   |       | Diluted |  |   |                    |   |  | Basic |        |   | Diluted |  
|                                                                 |  | (In thousands except per share data) |       
|As previously reported                                           |  | $                                    | 41,938 |   |                              | $ | 1.20  |         |  | $ | 1.18               |   |  | $     | 18,214 |   |         | $ | 0.59  |   |  | $ | 0.59  |  
|Impact of adjustments for:                                       |  |                                      |        |   |                              |   |       |         |  |   |                    |   |  |       |        |   |         |   |       |   |  |   |       |  
|Consolidation of domestic joint ventures                         |  |                                      |       |   |                              |   |      |         |  |   |                   |   |  |       |       |   |         |   |      |   |  |   |      |  
|Valuation of Deferred tax assets                                 |  |                                      | (870   | ) |                              |   | (0.03 | )       |  |   | (0.03              | ) |  |       | (3,132 | ) |         |   | (0.10 | ) |  |   | (0.10 | )
|Tax Retention Operating Leases                                   |  |                                      | (6,787 | ) |                              |   | (0.20 | )       |  |   | (0.19              | ) |  |       | (1,701 | ) |         |   | (0.05 | ) |  |   | (0.05 | )
|Period end accruals                                              |  |                                      | (474   | ) |                              |   | (0.01 | )       |  |   | (0.01              | ) |  |       | (2,172 | ) |         |   | (0.07 | ) |  |   | (0.07 | )
|Depreciation expense and capitalization of overhead and interest |  |                                      | 380    |   |                              |   | 0.01  |         |  |   | 0.01               |   |  |       | (1,557 | ) |         |   | (0.05 | ) |  |   | (0.05 | )
|Gain on sale of storage centers                                  |  |                                      | (500   | ) |                              |   | (0.01 | )       |  |   | (0.01              | ) |  |       | (500   | ) |         |   | (0.02 | ) |  |   | (0.02 | )
|Advertising costs                                                |  |                                      | (465   | ) |                              |   | (0.01 | )       |  |   | (0.01              | ) |  |       | (341   | ) |         |   | (0.01 | ) |  |   | (0.01 | )
|Weighted average shares outstanding                              |  |                                      |       |   |                              |   | 0.02  |         |  |   | 0.02               |   |  |       |       |   |         |   |      |   |  |   |      |  
|Other                                                            |  |                                      | 142    |   |                              |   |      |         |  |   |                   |   |  |       | (1,122 | ) |         |   | (0.04 | ) |  |   | (0.04 | )
|EITF Topic D-42 (1)                                              |  |                                      | (1,944 | ) |                              |   | (0.06 | )       |  |   | (0.06              | ) |  |       |       |   |         |   |      |   |  |   |      |  
|                                                                 |  |                                      |        |   |                              |   |       |         |  |   |                    |   |  |       |        |   |         |   |       |   |  |   |       |  
|As restated                                                      |  | $                                    | 31,420 |   |                              | $ | 0.91  |         |  | $ | 0.90               |   |  | $     | 7,689  |   |         | $ | 0.25  |   |  | $ | 0.25  |  
|                                                                 |  |                                      |        |   |                              |   |       |         |  |   |                    |   |  |       |        |   |         |   |       |   |  |   |       |  

---

|(1) |  | Restated for the application of EITF Topic D-42 (see Note C).
|--- |  | -------------------------------------------------------------



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The cumulative impact of all restatements described above on our retained earnings as of December 31,
2000 is a reduction of $7.5 million to the previously reported amount. The aggregate impact of these restatements on the Consolidated Balance Sheets as of December 31, 2002 and the related Consolidated Statements of Income for the two years in the
period ended December 31, 2002 is as follows (in thousands):



|                                                |  |                       |           |             |   |          
|----------------------------------------------- |  | --------------------- | --------- | ----------- | - | ---------
|                                                |  | At December 31, 2002 
|                                                |  | As previouslyreported |           | As restated
|                                                |  | (in thousands)       
|Assets:                                         |  |                       |           |             |   |          
|Total Storage centers                           |  | $                     | 1,263,155 |             | $ | 1,500,881
|Investment in Shurgard Europe                   |  |                       |          |             |   |         
|Other real estate investments (1)               |  |                       | 29,403    |             |   | 789      
|Cash and cash equivalents                       |  |                       | 11,662    |             |   | 12,968   
|Restricted cash                                 |  |                       | 1,098     |             |   | 1,230    
|Notes receivable affiliate                      |  |                       | 49,453    |             |   | 49,453   
|Goodwill                                        |  |                       | 24,506    |             |   | 24,697   
|Other assets                                    |  |                       | 40,899    |             |   | 30,309   
|                                                |  |                       |           |             |   |          
|Total Assets                                    |  | $                     | 1,420,176 |             | $ | 1,620,327
|                                                |  |                       |           |             |   |          
|Liabilities and Shareholders Equity            |  |                       |           |             |   |          
|Accounts Payable and Other Liabilities          |  | $                     | 62,257    |             | $ | 66,484   
|Lines of Credit                                 |  |                       | 113,525   |             |   | 267,639  
|Notes Payable                                   |  |                       | 446,837   |             |   | 511,312  
|Participation rights liability, net of discount |  |                       | 47,472    |             |   | 47,472   
|                                                |  |                       |           |             |   |          
|Total Liabilities                               |  |                       | 670,091   |             |   | 892,907  
|Minority Interest                               |  |                       | 15,374    |             |   | 20,164   
|Shareholders equity                            |  |                       | 734,711   |             |   | 707,256  
|                                                |  |                       |           |             |   |          
|Total Liabilities and Shareholders Equity      |  | $                     | 1,420,176 |             | $ | 1,620,327
|                                                |  |                       |           |             |   |          

---

|(1) |  | The other real estate investments balance as restated is not significant and therefore is included in other assets in our Consolidated Balance Sheets.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



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|                                                       |  |                                 |         |   |             |   |         |                       |  |   |             |   |  |   |         |  
|------------------------------------------------------ |  | ------------------------------- | ------- | - | ----------- | - | ------- | --------------------- |  | - | ----------- | - |  | - | ------- | -
|                                                       |  | For The Year Ended December 31, |        
|                                                       |  | 2002                            |         |   | 2001        |  
|                                                       |  | As previouslyreported           |         |   | As restated |   |         | As previouslyreported |  |   | As restated |  
|Revenue                                                |  |                                 |         |   |             |   |         |                       |  |   |             |   |  |   |         |  
|Storage center operations                              |  | $                               | 252,938 |   |             | $ | 267,855 |                       |  | $ | 226,362     |   |  | $ | 239,056 |  
|Other                                                  |  |                                 | 11,175  |   |             |   | 4,962   |                       |  |   | 6,228       |   |  |   | 3,235   |  
|                                                       |  |                                 |         |   |             |   |         |                       |  |   |             |   |  |   |         |  
|Total revenue                                          |  |                                 | 264,113 |   |             |   | 272,817 |                       |  |   | 232,590     |   |  |   | 242,291 |  
|                                                       |  |                                 |         |   |             |   |         |                       |  |   |             |   |  |   |         |  
|Expenses                                               |  |                                 |         |   |             |   |         |                       |  |   |             |   |  |   |         |  
|Operating                                              |  |                                 | 82,111  |   |             |   | 84,731  |                       |  |   | 68,890      |   |  |   | 74,257  |  
|Depreciation and amortization                          |  |                                 | 46,426  |   |             |   | 51,250  |                       |  |   | 43,042      |   |  |   | 47,185  |  
|Real estate taxes                                      |  |                                 | 24,268  |   |             |   | 25,663  |                       |  |   | 20,148      |   |  |   | 21,561  |  
|Impairment of long-lived assets and goodwill           |  |                                 | 1,909   |   |             |   | 1,626   |                       |  |   | 1,731       |   |  |   | 2,298   |  
|General, administrative and other                      |  |                                 | 9,286   |   |             |   | 9,881   |                       |  |   | 10,039      |   |  |   | 11,373  |  
|                                                       |  |                                 |         |   |             |   |         |                       |  |   |             |   |  |   |         |  
|Total expenses                                         |  |                                 | 164,000 |   |             |   | 173,151 |                       |  |   | 143,850     |   |  |   | 156,674 |  
|                                                       |  |                                 |         |   |             |   |         |                       |  |   |             |   |  |   |         |  
|Income from storage center operations                  |  |                                 | 100,113 |   |             |   | 99,666  |                       |  |   | 88,740      |   |  |   | 85,617  |  
|                                                       |  |                                 |         |   |             |   |         |                       |  |   |             |   |  |   |         |  
|Other Income (Expense)                                 |  |                                 |         |   |             |   |         |                       |  |   |             |   |  |   |         |  
|Equity in losses of other real estate investments, net |  |                                 | 53      |   |             |   | (1,178  | )                     |  |   | (3,271      | ) |  |   | (3,694  | )
|Interest:                                              |  |                                 |         |   |             |   |         |                       |  |   |             |   |  |   |         |  
|Interest on loans                                      |  |                                 | (33,562 | ) |             |   | (40,051 | )                     |  |   | (38,754     | ) |  |   | (43,272 | )
|Amortization of participation rights discount          |  |                                 | (4,824  | ) |             |   | (4,824  | )                     |  |   | (16,876     | ) |  |   | (16,876 | )
|Unrealized loss on financial instruments               |  |                                 | (10,999 | ) |             |   | (10,999 | )                     |  |   | (1,602      | ) |  |   | (1,602  | )
|Interest income and other, net                         |  |                                 | 6,175   |   |             |   | 6,311   |                       |  |   | 4,338       |   |  |   | 3,259   |  
|                                                       |  |                                 |         |   |             |   |         |                       |  |   |             |   |  |   |         |  
|Other expense, net                                     |  |                                 | (43,157 | ) |             |   | (50,741 | )                     |  |   | (56,165     | ) |  |   | (62,185 | )
|                                                       |  |                                 |         |   |             |   |         |                       |  |   |             |   |  |   |         |  
|Minority interest                                      |  |                                 | (637    | ) |             |   | (866    | )                     |  |   | (808        | ) |  |   | (645    | )
|                                                       |  |                                 |         |   |             |   |         |                       |  |   |             |   |  |   |         |  
|Income before income taxes                             |  |                                 | 56,319  |   |             |   | 48,059  |                       |  |   | 31,767      |   |  |   | 22,787  |  
|Income tax benefit                                     |  |                                 | 314     |   |             |   |        |                       |  |   | 1,545       |   |  |   |        |  
|                                                       |  |                                 |         |   |             |   |         |                       |  |   |             |   |  |   |         |  
|Net Income                                             |  |                                 | 56,633  |   |             |   | 48,059  |                       |  |   | 33,312      |   |  |   | 22,787  |  
|                                                       |  |                                 |         |  
|Net Income Allocation                                  |  |                                 |         |   |             |   |         |                       |  |   |             |   |  |   |         |  
|Preferred stock dividends and redemption costs         |  |                                 | (14,695 | ) |             |   | (16,639 | )                     |  |   | (15,098     | ) |  |   | (15,098 | )
|                                                       |  |                                 |         |   |             |   |         |                       |  |   |             |   |  |   |         |  
|Net income available to common shareholders            |  | $                               | 41,938  |   |             | $ | 31,420  |                       |  | $ | 18,214      |   |  | $ | 7,689   |  
|                                                       |  |                                 |         |   |             |   |         |                       |  |   |             |   |  |   |         |  
|Net Income per Common Share                            |  |                                 |         |   |             |   |         |                       |  |   |             |   |  |   |         |  
|Basic earnings per share                               |  | $                               | 1.20    |   |             | $ | 0.91    |                       |  | $ | 0.59        |   |  | $ | 0.25    |  
|                                                       |  |                                 |         |   |             |   |         |                       |  |   |             |   |  |   |         |  
|Diluted earnings per share                             |  | $                               | 1.18    |   |             | $ | 0.90    |                       |  | $ | 0.59        |   |  | $ | 0.25    |  
|                                                       |  |                                 |         |   |             |   |         |                       |  |   |             |   |  |   |         |  
|Distributions per common share                         |  | $                               | 2.11    |   |             | $ | 2.11    |                       |  | $ | 2.07        |   |  | $ | 2.07    |  
|                                                       |  |                                 |         |   |             |   |         |                       |  |   |             |   |  |   |         |  



Note CSummary of Significant
Accounting Policies



Basis of
presentation:  The consolidated financial statements are presented on an accrual basis in accordance with accounting principles generally accepted in the United States of America and include the accounts of Shurgard and our
consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Consolidated and Unconsolidated subsidiaries:    We consolidate all
wholly-owned subsidiaries. Partially-owned subsidiaries and joint ventures are consolidated when we control the entity. We evaluate partially-owned subsidiaries and joint-ventures held in partnership form in accordance with the provisions of
Statement of Positions (SOP) 78-9, Accounting for Investments in Real Estate Ventures, to determine whether the rights held by other investors constitute important rights as defined therein. For partially-owned subsidiaries
or joint ventures held in corporate form (including limited liability companies with governance provisions that are the functional equivalent of regular corporations), we consider the guidance of SFAS No. 94 Consolidation of All Majority-Owned
Subsidiaries and Emerging Issues Task Force (EITF) 96-16, Investors Accounting for an Investee When the Investor has a Majority of the Voting Interest but the Minority Shareholder or Shareholders Have Certain Approval or Veto
Rights and, in particular, whether rights held by other investors would be viewed as participating rights as defined therein. To the extent that any minority investor has important rights in a partnership or participating rights in
a corporation, including substantive veto rights, the related entity will generally not be consolidated.



Unconsolidated subsidiaries and joint ventures over which we have significant influence are accounted for using the equity method. In applying the equity
method, our proportionate share of inter-company profits are eliminated as a component of equity in earnings of unconsolidated entities.



Use of estimates:  The preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates.



Storage centers:  Storage centers are recorded at cost. Depreciation on buildings and equipment is recorded on a straight-line basis over
their estimated useful lives. Building assets are depreciated on average over 30 years, and equipment and leasehold improvements over 5 years. We capitalize costs related to development and construction of storage centers. We capitalize interest
incurred during the construction period of storage centers, using a weighted-average interest rate of our line of credit and senior notes payable. Repair and maintenance costs are recognized in expense as incurred, unless the costs are incurred for
the replacement of existing building infrastructures. Gains and losses on assets sold or retired are reflected in earnings. Using our best estimates based on reasonable and supportable assumptions and projections, we review storage centers and other
long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of our assets might not be recoverable.



Financing arrangements:  We accounted for sales of certain storage centers in which we have continuing involvement, as defined in SFAS
No. 66, Accounting for Sales of Real Estate, as financing arrangements (See Note I). The related liability is recorded as participation rights liability on the Consolidated Balance Sheets.



Cash and cash equivalents:  Cash equivalents consist of
money market instruments and securities with original maturities of 90 days or less.



Restricted cash:  Restricted cash consists of cash deposits and represents expense reserves required by lenders and escrow deposits on pending real estate transactions.



Other assets:  Other assets include financing costs and
non-competition agreements. Financing costs are amortized using the effective interest method over the life of the related debt and the related expense is included in interest expense. Non-competition agreements are amortized over their estimated
useful lives, which range



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



from three to five years. We classify land held for sale in other assets when, among other criteria, a plan to dispose of the assets has been approved and we
anticipate selling the properties within one year.



Self
insurance:  We are self-insured for a portion of the risk associated with medical, dental and workers compensation. We recognize a liability for unpaid claims and claims adjustment expenses that represent our best estimate of the
ultimate obligations for reported claims plus those incurred but not reported (IBNR) and the related estimated claim settlement expenses for all claims incurred through December 31 of each year. IBNR reserves are determined using generally accepted
actuarial reserving methods that take into account historical loss experience data and, as appropriate, certain qualitative factors.



Federal income taxes:  To qualify as a REIT, we must distribute annually at least 90% of our taxable income and meet certain other
requirements. As a REIT, we will not be subject to federal income taxes to the extent of distributions. We were not required to pay any federal income tax in 2002 or 2001 and we intend to make elections regarding distributions such that we will not
pay federal taxes for 2003. As a result, no provision for federal income taxes for the REIT has been made in our financial statements. We are subject to certain international and state income taxes as well as certain franchise taxes.



We have deferred tax assets arising primarily from cumulative net operating
losses arising in certain taxable subsidiaries. We evaluate both the positive and negative evidence that we believe is relevant in assessing whether the deferred tax assets will be realized. When we determine that it is more likely than not that we
will not realize the tax asset either in part or in whole, a valuation allowance is provided. One significant factor representing negative evidence in the evaluation of whether deferred tax assets arising from cumulative net operating losses will be
realized is historical taxable income or loss of the entity. In cases where a taxable entity has not demonstrated a history of achieving taxable income, this represents significant negative evidence in assessing whether the amounts will be realized
and generally requires that a valuation allowance is provided.



Recom & Co., SNC (Recom) is a Belgian partnership which holds a portion of our interest in Shurgard Europe. Recom has been consolidated in our financial statements since we increased our ownership to 89.6% through the acquisition of
third party interests in June 2003 and assumed responsibility for management of that entity. Recom is subject to Belgian income tax for which a provision has been made in our financial statements.



Revenue recognition:  The majority of our customers rent
under month-to-month lease agreements and revenue is recognized at the contracted rate for each month occupied. Revenue related to customers who sign longer period leases is recognized ratably over the term of the lease. Management fee revenue is
recognized each month for which services are rendered; these contracts are generally cancelable by either party on specified advanced notice.



We recognize revenue related to profit sharing contracts related to our tenant insurance referral program based on the excess of premiums over claims and
administrative costs.



Advertising costs:  We
incur advertising costs primarily attributable to print advertisements in telephone books. We recognize the costs when the related telephone book is first published. We recognized $6.0 million, $5.5 million and $4.8 million in advertising expenses
for the years ended December 31, 2003, 2002 and 2001, respectively.



Goodwill:  We test goodwill for impairment annually and whenever events or circumstances make it more likely than not that an impairment may have occurred, such as a significant adverse change in the business climate. To
determine if there is an impairment we compare the carrying value of goodwill and our storage



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centers assets to the estimated fair market value of our Same Store portfolio. We use common industry methods to assess the value of our portfolio and we
estimate future cash flows based upon the stores net operating income and current market capitalization rates.



Derivative financial instruments:  We use derivative instruments to manage exposures to interest rate and credit risks. Our objectives
for holding derivatives include reducing, eliminating, and efficiently managing the impact of these exposures as effectively as possible. SFAS No. 133 Accounting for Derivative Instruments and Hedging Activities, as amended, requires
that all derivatives be recognized in the balance sheet and measured at fair value. Gains or losses resulting from changes in the fair value of derivatives are recognized in earnings or recorded in other comprehensive income, and recognized in the
statements of income when the hedged item affects earnings, depending on the purpose of the derivatives and whether they qualify for hedge accounting treatment. Changes in the fair value of derivative instruments that do not qualify for hedge
accounting under SFAS No. 133 are recognized in earnings. To qualify for hedge accounting, the details of the hedging relationship must be formally documented at inception of the arrangement, including the risk management objective, hedging
strategy, hedged item, specific risks that are being hedged, the derivative instrument and how effectiveness is being assessed. The derivative must be highly effective in offsetting either changes in fair value or cash flows, as appropriate, for the
risk being hedged. Effectiveness is evaluated on a retrospective and prospective basis based on quantitative measures of correlation. When it is determined that a derivative is not (or has ceased to be) highly effective as a hedge, we discontinue
hedge accounting prospectively, as discussed below.



We
discontinue hedge accounting prospectively when (1) we determine that the derivative is no longer effective in offsetting changes in the fair value or cash flows of a hedged item (including hedged items such as firm commitments or forecasted
transactions); (2) the derivative expires or is sold, terminated, or exercised; (3) it is no longer probable that the forecasted transaction will occur; (4) a hedged firm commitment no longer meets the definition of a firm commitment; or (5) we
determine that designating the derivative as a hedging instrument is no longer appropriate.



When hedge accounting is discontinued due to our determination that the derivative no longer qualifies as an effective fair-value hedge, we will continue to carry the derivative on the balance sheet at its fair value
but cease to adjust the hedged asset or liability for changes in fair value. When hedge accounting is discontinued because the hedged item no longer meets the definition of a firm commitment, we will continue to carry the derivative on the balance
sheet at its fair value, removing from the balance sheet any asset or liability that was recorded to recognize the firm commitment and recording it as a gain or loss in current-period earnings. When we discontinue hedge accounting because it is no
longer probable that the forecasted transaction will occur in the originally expected period, the gain or loss on the derivative remains in accumulated other comprehensive income and is reclassified into earnings when the forecasted transaction
affects earnings. However, if it is probable that a forecasted transaction will not occur by the end of the originally specified time period or within an additional two-month period of time thereafter, the gains and losses that were accumulated in
other comprehensive income will be recognized immediately in earnings. In all situations in which hedge accounting is discontinued and the derivative remains outstanding, we will carry the derivative at its fair value on the balance sheet,
recognizing changes in the fair value in current-period earnings.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following tables summarize components of other comprehensive income (in thousands):



|                                        |  |                                 |        |                   |   |        |                   |  |   |        |  
|--------------------------------------- |  | ------------------------------- | ------ | ----------------- | - | ------ | ----------------- |  | - | ------ | -
|                                        |  | For the year ended December 31, |       
|                                        |  | 2003                            |        | 2002(as restated) |   |        | 2001(as restated) | 
|Net income:                             |  | $                               | 37,638 |                   | $ | 48,059 |                   |  | $ | 22,787 |  
|Other comprehensive income, net of tax: |  |                                 |        |                   |   |        |                   |  |   |        |  
|Derivatives qualifying as hedges        |  |                                 | 2,058  |                   |   | (913   | )                 |  |   | (961   | )
|Currency translation adjustment         |  |                                 | 10,434 |                   |   | (997   | )                 |  |   | 137    |  
|                                        |  |                                 |        |                   |   |        |                   |  |   |        |  
|Total other comprehensive income        |  |                                 | 12,492 |                   |   | (1,910 | )                 |  |   | (824   | )
|                                        |  |                                 |        |                   |   |        |                   |  |   |        |  
|Total comprehensive income              |  | $                               | 50,130 |                   | $ | 46,149 |                   |  | $ | 21,963 |  
|                                        |  |                                 |        |                   |   |        |                   |  |   |        |  



We recognized our
pro-rata share of Shurgard Europes currency translation gain of $10.4 million in 2003 and $137,000 in 2001, respectively, and a currency translation loss of $997,000 in 2002.



Financial instruments:  The carrying values reflected on the balance sheet at December 31, 2003 and 2002,
reasonably approximate the fair value of cash and cash equivalents, other assets, accounts payable and other liabilities, lines of credit and variable rate debt. Based on the borrowing rates currently available to us for bank loans with similar
terms and average maturities, we estimate the fair value of fixed rate long-term debt is $685.5 million compared to a book value of $627.3 million. We have subscribed to fixed rate bonds issued by Shurgard Europe (see Note L). We estimate the fair
value of those bonds including the related redemption fee (see Note L) is $61.2 million compared to a carrying value of $57.3 million which is included in Notes receivable from affiliate.



Recent accounting pronouncements:



In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 142, Goodwill and Other Intangible
Assets. SFAS No. 142 changes the accounting for goodwill from an amortization method to an impairment-only approach. Amortization of goodwill, including goodwill recorded in past business combinations, ceased on adoption of this statement. We
implemented SFAS No. 142 on January 1, 2002. In connection with the adoption of this statement and our annual evaluation, we evaluated our goodwill and determined that goodwill remaining on the books as of December 31, 2002 was not impaired (See
Note O).



In June 2001, the FASB, issued SFAS No. 143,
Accounting for Asset Retirement Obligations, which provides the accounting requirements for retirement obligations associated with tangible long-lived assets. SFAS No. 143 requires entities to record the fair value of a liability for an
asset retirement obligation in the period in which it is incurred. SFAS No. 143 is effective for 2003 and we adopted SFAS No. 143 on January 1, 2003. The adoption of SFAS No. 143 did not have an impact on our financial position, operating results or
cash flows.



In April 2002, the FASB issued SFAS No. 145,
Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections. The rescission of SFAS No. 4, Reporting Gains and Losses from Extinguishment of Debt, and SFAS No. 64,
Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements, which amended SFAS No. 4, affects income statement classification of gains and losses from extinguishment of debt. SFAS No. 4 requires that gains and losses from
extinguishment of debt be classified as an extraordinary item, if material. Under SFAS No. 145, extinguishment of debt is now considered a risk management strategy by the reporting enterprise and the FASB does not believe it should be considered
extraordinary, unless the debt extinguishment is both unusual in nature and infrequently occurring under the criteria in Accounting Principles Board (APB) Opinion No. 30. We adopted SFAS No. 145 on January 1, 2003.



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SHURGARD STORAGE CENTERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Income from early extinguishment of debt of $1.7 million and loss from early extinguishment of debt of $1.4 million from 2002 and 2001, respectively, have
been reclassified from extraordinary to Interest income and other, net.



In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 requires recognition of costs associated with exit or disposal activities when the liability is incurred
rather than at the date of a commitment to an exit or disposal plan and associated liabilities to be recognized at fair value. We adopted SFAS No. 146 on January 1, 2003 and costs associated with exit or disposal activities are recognized as the
liability is incurred.



In December 2002, the FASB issued SFAS
No. 148, Accounting for Stock-Based CompensationTransition and Disclosure, which amended SFAS No. 123 Accounting for Stock-Based Compensation. SFAS No. 148 provides alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based compensation and amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting
for stock-based employee compensation and the effect of the method used on reported results. On December 31, 2002, we adopted the disclosure provisions of SFAS No. 148 and continue to account for stock-based compensation under APB Opinion No. 25
Accounting for Stock Issued to Employees. Therefore, the adoption of SFAS No. 148 did not have any effect on our financial position, operating results or cash flows.



The following table reflects pro forma net income as if we had recognized stock-based compensation expense using the fair
value method in accordance with SFAS No. 123.



|                                                                          |  |                                      |        |   |                   |   |        |                   |  |   |        |  
|------------------------------------------------------------------------- |  | ------------------------------------ | ------ | - | ----------------- | - | ------ | ----------------- |  | - | ------ | -
|                                                                          |  | For the year ended December 31,      |       
|                                                                          |  | 2003                                 |        |   | 2002(as restated) |   |        | 2001(as restated) | 
|                                                                          |  | (in thousands except per share data) |       
|Net income:                                                               |  |                                      |        |   |                   |   |        |                   |  |   |        |  
|As reported                                                               |  | $                                    | 37,638 |   |                   | $ | 48,059 |                   |  | $ | 22,787 |  
|Add: Compensation expense recorded for options granted below market value |  |                                      | 202    |   |                   |   | 162    |                   |  |   | 11     |  
|Less: Pro forma compensation expense                                      |  |                                      | (1,184 | ) |                   |   | (1,662 | )                 |  |   | (1,907 | )
|                                                                          |  |                                      |        |   |                   |   |        |                   |  |   |        |  
|Pro forma                                                                 |  | $                                    | 36,656 |   |                   | $ | 46,559 |                   |  | $ | 20,891 |  
|                                                                          |  |                                      |        |   |                   |   |        |                   |  |   |        |  
|Basic net income per share:                                               |  |                                      |        |   |                   |   |        |                   |  |   |        |  
|As reported                                                               |  | $                                    | 0.64   |   |                   | $ | 0.91   |                   |  | $ | 0.25   |  
|Pro forma                                                                 |  | $                                    | 0.61   |   |                   | $ | 0.87   |                   |  | $ | 0.19   |  
|Diluted net income per share:                                             |  |                                      |        |   |                   |   |        |                   |  |   |        |  
|As reported                                                               |  | $                                    | 0.62   |   |                   | $ | 0.90   |                   |  | $ | 0.25   |  
|Pro forma                                                                 |  | $                                    | 0.60   |   |                   | $ | 0.85   |                   |  | $ | 0.19   |  



In November 2002, the
FASB issued FASB Interpretation No. (FIN) 45 Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, which elaborates on the disclosures to be made by a guarantor
in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the
obligation undertaken in issuing the guarantee. The initial recognition and initial measurement provisions of this Interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the
guarantors fiscal year-end. We have not entered into any new guarantees or modified any existing guarantees subsequent to December 31,



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2002; therefore, adoption of this statement has had no effect on our financial position, operating results or cash flows.



In December 2003, the FASB issued FIN 46R, Consolidation of Variable
Interest Entities, a revision to FIN 46, which was issued in January 2003. Under FIN 46R, a variable interest entity (VIE) must be consolidated by a company if that company is subject to a majority of the risk of loss from the variable
interest entitys activities or entitled to receive a majority of the entitys residual returns or both. FIN 46R requires disclosures about variable interest entities that a company is not required to consolidate, but in which it has a
significant variable interest. The consolidation requirements apply to existing entities in the first reporting period that ends after March 15, 2004. We will adopt the consolidation requirements of FIN 46R in the first quarter of 2004. In addition,
we recognized net profits on intercompany transactions with Shurgard Europe totaling approximately $3.7 million, $1.3 million, and $0 for the years ended December 31, 2003, 2002 and 2001 that would have been eliminated if Shurgard Europe were
included in our consolidated financial statements under the provisions of FIN 46R for the respective periods.



We have assessed Shurgard Europe under the provisions of FIN 46R and have concluded that it meets the definition of a variable interest entity. We have
also concluded that we are the primary beneficiary. As a result, Shurgard Europe will be consolidated in our financial statements beginning in the first quarter of 2004. The consolidation of Shurgard Europe will have a significant effect on our
financial position, or cash flows and the presentation of our operating results (see summarized financial information at Note F).



Shurgard Europe has a 20% interest in First Shurgard, SPRL (First Shurgard) an unconsolidated joint venture that was formed in January 2003. We have
determined that First Shurgard is a VIE, and that Shurgard Europe is the primary beneficiary. Accordingly, First Shurgard will be consolidated in our financial statements beginning in the quarter ended March 31, 2004. At December 31, 2003 First
Shurgard had total assets of $175.0 million and total liabilities of $74.2 million. In addition, First Shurgard recognized a net loss of $5.3 million for the period from its inception through December 31, 2003. During 2003, we recognized equity in
earnings of Shurgard Europe that included profit on intercompany transactions with First Shurgard totaling approximately $240,000 that would have been eliminated if First Shurgard were consolidated in the financial statements of Shurgard Europe and
Shurgard Europe were included in our consolidated financial statements under the provisions of FIN 46R for that period.



We do not believe that any of our other subsidiaries are variable interest entities under the provisions of FIN 46R.



In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity. This statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). SFAS No. 150 was effective beginning in the third quarter of 2003, however, the FASB indefinitely deferred the
implementation of SFAS No. 150 as it applies to certain minority interests in finite-lived entities. The Statement improves the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity. The new
statement requires that those instruments be classified as liabilities in statements of financial position. The disclosure requirements for certain minority interests in finite-lived entities still apply. We adopted the requirements of SFAS No. 150
in the third quarter of 2003, and considering the aforementioned deferral, there was no impact on our financial position, operating results or cash flows. However, the minority interests associated with certain of our consolidated joint ventures,
that have finite lives under the terms of the partnership agreements, represent mandatorily redeemable interests as defined in SFAS No. 150. As of December 31, 2003, the aggregate book value of these minority interests in our Consolidated Balance
Sheet was $10.1 million and we believe that the estimated aggregate settlement value of these interests was approximately $20.6 million. This amount is based on the estimated liquidation values of the assets and liabilities and the resulting
proceeds that we



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



would distribute to our joint venture partners assuming dissolution as of December 31, 2003. As required under the terms of the respective partnership
agreements, subsequent changes to the estimated fair value of the assets and liabilities of the consolidated joint ventures will affect our estimate of the aggregate settlement value. The partnership agreements do not limit the amount that the
minority partners would be entitled to in the event of liquidation of the assets and liabilities and dissolution of the respective partnerships.



Emerging Issues Task Force (EITF) Topic D-42, The Effect on the Calculation of Earnings per Share for the Redemption or Induced Conversion of
Preferred Stock provides, among other things, that any excess of (1) the fair value of the consideration transferred to the holders of preferred stock redeemed over (2) the carrying amount of the preferred stock should be subtracted from net
earnings to determine net earnings available to common stockholders in the calculation of earnings per share. At the July 31, 2003 meeting of the EITF, the Securities and Exchange Commission Observer proposed a clarification that for the purposes of
applying EITF Topic D-42, the carrying amount of the preferred stock should be reduced by the issuance costs of the preferred stock, regardless of where in the stockholders equity section those costs were initially classified on issuance, to
be applied through retroactive restatement in accordance with APB Opinion No. 20. In August 2002, we redeemed $50 million of preferred stock. Related issuance costs of $1.9 million, included in Additional Paid-in Capital, were not considered as a
reduction to the carrying value of the preferred stock at the time of redemption. Adoption of EITF Topic D-42 resulted in a decrease in basic and diluted earnings per share by $0.06 in 2002. Earnings per share have been restated to reflect this
change.



Note DStorage Centers



The following table summarizes our storage centers assets per asset
category:



|                               |  |                    |           |   |                   |   |           |  
|------------------------------ |  | ------------------ | --------- | - | ----------------- | - | --------- | -
|                               |  | As of December 31, |          
|                               |  | 2003               |           |   | 2002(as restated) |  
|                               |  | (in thousands)     |          
|Land                           |  | $                  | 376,832   |   |                   | $ | 338,379   |  
|Building                       |  |                    | 1,468,725 |   |                   |   | 1,333,402 |  
|Equipment & Other              |  |                    | 57,079    |   |                   |   | 56,855    |  
|                               |  |                    |           |   |                   |   |           |  
|                               |  |                    | 1,902,636 |   |                   |   | 1,728,636 |  
|Less: Accumulated Depreciation |  |                    | (322,005  | ) |                   |   | (274,434  | )
|                               |  |                    |           |   |                   |   |           |  
|                               |  |                    | 1,580,631 |   |                   |   | 1,454,202 |  
|Construction in progress       |  |                    | 38,867    |   |                   |   | 46,679    |  
|                               |  |                    |           |   |                   |   |           |  
|                               |  | $                  | 1,619,498 |   |                   | $ | 1,500,881 |  
|                               |  |                    |           |   |                   |   |           |  



We determined that
certain real estate assets were impaired. Using the expected cash flow method, we determined that the net book value of these properties exceeded their fair value less costs to sell. The total impairment loss for these properties was $9.9 million,
$1.6 million and $158,000 for the years ended December 31, 2003, 2002 and 2001, respectively.



Additionally, the closure of warehouses of our containerized storage operations (see Note M) caused us to evaluate the assets associated with these warehouses. We recognized equipment impairment losses related to
these warehouses of $652,000 in 2003 and $269,000 in 2001.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note EAcquisitions



Minnesota Mini-Storage



On June 30, 2003, we completed the acquisition of five entities owning a total of 19 self storage centers located in
Minnesota and operated under the name of Minnesota Mini-Storage. The results of Minnesota Mini- Storage, have been included in our Consolidated Financial Statements since that date. We entered into this transaction to gain a market presence in
Minnesota. As consideration in the transaction, we issued 3,050,000 shares of our common stock at closing and have agreed to issue an additional 50,000 shares if the properties meet certain revenue targets prior to the end of 2005. The acquisition
was accounted for as a purchase transaction. If these earnings measures are met, we would record the additional amount as storage center.



The aggregate purchase price was $89.5 million, including $20 million in notes receivable from shareholders, recorded as a reduction of equity that
secured $20 million in mortgage debt assumed in the transaction. The notes from shareholders were secured by a pledge of the shareholders Shurgard stock. The notes receivable and the assumed mortgage debt were paid in full in October 2003. The
value of the Common Shares issued was determined based on the average market price of Shurgards Common Stock over the three days before and after the terms of the acquisition were agreed to and announced.



Due to the contingent shares issuable, the purchase price is not yet
finalized; thus, the allocation of the purchase price is subject to refinement. As of December 31, 2003, we had recorded a liability of $1.8 million included in Accounts payable and other liabilities in the Consolidated Balance Sheet.



The following table summarizes the estimated fair values of the assets
acquired and liabilities assumed at the date of acquisition (in thousands):



|                                       |  |   |         |  
|-------------------------------------- |  | - | ------- | -
|Receivables and other assets (1)       |  | $ | 1,037   |  
|Notes receivable from shareholder      |  |   | 20,000  |  
|Storage centers                        |  |   | 91,735  |  
|                                       |  |   |         |  
|Total assets acquired                  |  |   | 112,772 |  
|                                       |  |   |         |  
|Accounts payable and other liabilities |  |   | (1,492  | )
|Contingent purchase price liability    |  |   | (1,760  | )
|Mortgage notes payable                 |  |   | (20,000 | )
|                                       |  |   |         |  
|Total liabilities assumed              |  |   | (23,252 | )
|                                       |  |   |         |  
|Net assets acquired                    |  | $ | 89,520  |  
|                                       |  |   |         |  

---

|(1) |  | Receivables and other assets include customer related intangibles of $420,000 that were amortized over their expected useful lives of six months.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------



Morningstar Storage Centers, LLC



On June 26, 2002 we acquired a 74% member interest in Morningstar Storage
Centers, LLC (Morningstar) for $62.1 million, net of $1.7 million of cash received as part of the properties assets. The results of Morningstars operations have been included in our consolidated financial statements since that date.
Morningstar operates and owns, directly or indirectly, 40 existing self storage properties in North and South Carolina, including seven sites with pre-identified expansion opportunities and one site with continued development potential. In addition,
we have entered into an agreement with certain of the members of Morningstar to form one or more joint ventures for the purpose of developing and operating high quality self



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storage properties in North and South Carolina. The properties owned by Morningstar and the properties to be developed in the joint ventures will be managed
by the other members of Morningstar through an affiliated entity.



This acquisition was accounted for as a purchase transaction. Assets and liabilities were recorded at fair value for the interest we acquired (74%) and at predecessor basis for the remaining minority interest (26%). The following table
summarizes the purchase price allocation reflected in our consolidated financial statements:



|                                       |  |                |         |  
|-------------------------------------- |  | -------------- | ------- | -
|                                       |  | (in thousands) |        
|Receivables and other assets (1)       |  | $              | 3,153   |  
|Storage centers                        |  |                | 133,934 |  
|Goodwill                               |  |                | 191     |  
|                                       |  |                |         |  
|Total assets acquired                  |  |                | 137,278 |  
|                                       |  |                |         |  
|Accounts payable and other liabilities |  |                | (2,255  | )
|Long-term debt                         |  |                | (60,537 | )
|Minority interest                      |  |                | (1,775  | )
|                                       |  |                |         |  
|Total liabilities assumed              |  |                | (64,567 | )
|                                       |  |                |         |  
|Net assets acquired                    |  |                | 72,711  |  
|Fair value of minority interest        |  |                | (10,624 | )
|                                       |  |                |         |  
|Purchase price                         |  | $              | 62,087  |  
|                                       |  |                |         |  

---

|(1) |  | Receivables and other assets include customer related intangibles of $123,000 that were amortized over their expected useful lives of six months.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------



The following table summarizes unaudited pro forma results of operations for
the years ended December 31, 2003, 2002 and 2001 as if the acquisitions of Minnesota Mini-Storage and Morningstar had taken place at the beginning of those periods.



|                           |  |                                  |         |                             |   |                             |  |           |         |             |   |           |  |   |         |  |   |        
|-------------------------- |  | -------------------------------- | ------- | --------------------------- | - | --------------------------- |  | --------- | ------- | ----------- | - | --------- |  | - | ------- |  | - | -------
|                           |  | Pro Forma Results of Operations 
|                           |  | Year endedDecember 31, 2003      |         | Year endedDecember 31, 2002 |   | Year endedDecember 31, 2001
|                           |  | As reported                      |         | Pro forma                   |   | As restated                 |  | Pro forma |         | As restated |   | Pro forma
|                           |  | (in thousands except share data)
|Revenue                    |  | $                                | 302,314 |                             | $ | 308,896                     |  | $         | 272,817 |             | $ | 293,977   |  | $ | 242,291 |  | $ | 271,643
|Net Income                 |  | $                                | 37,638  |                             | $ | 40,753                      |  | $         | 48,059  |             | $ | 56,513    |  | $ | 22,787  |  | $ | 31,053 
|Basic earnings per share   |  | $                                | 0.64    |                             | $ | 0.69                        |  | $         | 0.91    |             | $ | 1.06      |  | $ | 0.25    |  | $ | 0.47   
|Diluted earnings per share |  | $                                | 0.62    |                             | $ | 0.68                        |  | $         | 0.90    |             | $ | 1.05      |  | $ | 0.25    |  | $ | 0.47   



Other acquisitions



We have an agreement with a California developer under
which it purchases sites in southern California and constructs storage centers on them according to our specifications. On completion of the rent-up period, the storage centers are purchased by a joint venture that we consolidate. Prior to such
purchase, we have no ownership in the properties and accordingly, they are not included in any discussions in our operating results. The developers interest in the joint venture is based on a predetermined formula based on the fair value of
the property at contribution. As of December 31, 2003, we had purchased five properties from that developer for a total cost of $33.6 million and had contributed six properties into the joint venture, including one property that we previously held
under our tax retention operating lease. During the year ended December 31, 2003, we purchased one of the completed storage centers for $6.3 million.



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SHURGARD STORAGE CENTERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



At December 31, 2003, we had guaranteed $14.0 million in outstanding debt for three properties
related to this agreement. In addition, during 2003 we agreed to lend up to $6.2 million to this developer to fund the construction of one property. As of December 31, 2003, $1.7 million had been drawn on this collateralized note, which is included
in other assets.



Note FInvestment in Shurgard Europe



In 2001, 2002 and through April 2003 our ownership interest in Shurgard
Europe was 7.57%. During the period from April 2003 through December 31, 2003, we entered several transactions which resulted in an additional 47.15% indirect ownership in Shurgard Europe and 30.75 % direct ownership interest. Our combined direct
and indirect ownership in Shurgard Europe at December 31, 2003 totaled 85.47% and we had an investment of $319.3 million. Our investment in Shurgard Europe at December 31, 2002 was negative $8.3 million and was included in Accounts payable and other
liabilities on the Consolidated Balance Sheet. The difference between our investment in Shurgard Europe and our proportionate share of the underlying equity is primarily a result of the fact that we paid more than book value for the ownership
interests in Shurgard Europe acquired from our former investment partners. This difference is attributed to the underlying buildings and land owned by Shurgard Europe and, accordingly, the amount attributed to buildings is being amortized to equity
in earnings over a period of 30 years. Our investment activity is summarized as follows:



Shurgard Europe:  We increased our direct ownership in Shurgard Europe through the following transactions: (i) On April 30, 2003 we acquired an additional 10.64% ownership for $49.7 million and (ii)
on July 18, 2003, we acquired an additional 19.86% ownership interest for approximately $101.6 million.



Recom & Co., SNC:  Recom is a Belgian partnership that holds an investment in Shurgard Europe. We increased our indirect ownership in
Shurgard Europe through the following transactions: (i) On June 28, 2003, we purchased additional Recom shares representing 79.0% of Recoms capital stock for a price of $856,000, increasing our ownership interest in Recom from 9.1% to 88.1%.
(ii) and on December 31, 2003 we increased our ownership in Recom by 0.5% by converting $24.9 million of outstanding bonds to equity.



(iii) On October 6, 2003 we purchased from our European operating partners an additional 8.2% interest in Recom and an additional 0.25% in Shurgard Europe
for 395,000 shares of our Class A Common Stock with an approximate value of $14.3 million and the forgiveness of certain promissory notes totaling $1.7 million.



We also purchased $153.0 million of bonds issued by Recom on June 19, 2003. These bonds are eliminated in our Consolidated Financial Statements upon
consolidation of Recom.



Through December 31, 2003, we have
accounted for Shurgard Europe under the equity method because our partners have maintained substantive veto rights that limit our ability to control the entity. As discussed in Note C, upon the adoption of FIN 46R in the first quarter of 2004 we
will consolidate Shurgard Europe.



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Below is summarized financial information for Shurgard Europe. Shurgard Europes functional
currency is the Euro. This financial information has been translated from Euro for reporting purposes. Non-monetary assets and liabilities are converted at historical exchange rates, monetary assets and liabilities are remeasured at the exchange
rate in effect as of the end of each period and income statement accounts are remeasured at the average exchange rate for each period.



Shurgard Self Storage S.C.A.

Consolidated Balance Sheets



|                                              |  |                    |         |                   |   |        
|--------------------------------------------- |  | ------------------ | ------- | ----------------- | - | -------
|                                              |  | As of December 31,
|                                              |  | 2003               |         | 2002(as restated)
|                                              |  | (in thousands)    
|ASSETS                                        |  |                    |         |                   |   |        
|Storage centers:                              |  |                    |         |                   |   |        
|Land                                          |  | $                  | 137,615 |                   | $ | 83,297 
|Buildings and equipment, net                  |  |                    | 400,397 |                   |   | 279,570
|Construction in progress                      |  |                    | 12,766  |                   |   | 87,225 
|                                              |  |                    |         |                   |   |        
|Total storage centers                         |  |                    | 550,778 |                   |   | 450,092
|Investment in and receivables from affiliates |  |                    | 29,824  |                   |   |       
|Cash and cash equivalents                     |  |                    | 11,965  |                   |   | 24,978 
|Other assets                                  |  |                    | 31,902  |                   |   | 30,103 
|                                              |  |                    |         |                   |   |        
|Total assets                                  |  | $                  | 624,469 |                   | $ | 505,173
|                                              |  |                    |         |                   |   |        
|LIABILITIES AND SHAREHOLDERS EQUITY          |  |                    |         |                   |   |        
|Accounts payable and other liabilities        |  | $                  | 41,637  |                   | $ | 35,617 
|Liabilities under capital leases              |  |                    | 11,391  |                   |   | 9,469  
|Bonds payable to Shurgard                     |  |                    | 57,287  |                   |   | 49,623 
|Line of credit                                |  |                    | 376,553 |                   |   | 270,936
|Subordinated loan payable                     |  |                    |        |                   |   | 127,620
|                                              |  |                    |         |                   |   |        
|Total liabilities                             |  |                    | 486,868 |                   |   | 493,265
|Shareholders equity                          |  |                    |         |                   |   |        
|Shareholders equity                          |  |                    | 137,601 |                   |   | 11,908 
|                                              |  |                    |         |                   |   |        
|Total liabilities and shareholders equity    |  | $                  | 624,469 |                   | $ | 505,173
|                                              |  |                    |         |                   |   |        



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Shurgard Self Storage S.C.A.

Consolidated Statements of Operations



|                                                         |  |                                       |         |   |                    |   |         |                    |  |   |         |  
|-------------------------------------------------------- |  | ------------------------------------- | ------- | - | ------------------ | - | ------- | ------------------ |  | - | ------- | -
|                                                         |  | For the year ended as of December 31, |        
|                                                         |  | 2003                                  |         |   | 2002 (as restated) |   |         | 2001 (as restated) | 
|                                                         |  | (in thousands)                        |        
|Revenue                                                  |  |                                       |         |   |                    |   |         |                    |  |   |         |  
|Storage center operations                                |  | $                                     | 67,318  |   |                    | $ | 43,512  |                    |  | $ | 26,526  |  
|Other revenue                                            |  |                                       | 11,376  |   |                    |   |        |                    |  |   |        |  
|                                                         |  |                                       |         |   |                    |   |         |                    |  |   |         |  
|Total revenue                                            |  |                                       | 78,694  |   |                    |   | 43,512  |                    |  |   | 26,526  |  
|                                                         |  |                                       |         |   |                    |   |         |                    |  |   |         |  
|Expenses                                                 |  |                                       |         |   |                    |   |         |                    |  |   |         |  
|Operating                                                |  |                                       | 54,383  |   |                    |   | 32,236  |                    |  |   | 24,296  |  
|Real estate taxes                                        |  |                                       | 3,540   |   |                    |   | 2,193   |                    |  |   | 1,777   |  
|Depreciation and amortization                            |  |                                       | 19,433  |   |                    |   | 12,959  |                    |  |   | 9,044   |  
|General, administrative and other                        |  |                                       | 6,181   |   |                    |   | 4,798   |                    |  |   | 3,425   |  
|                                                         |  |                                       |         |   |                    |   |         |                    |  |   |         |  
|Total expenses                                           |  |                                       | 83,537  |   |                    |   | 52,186  |                    |  |   | 38,542  |  
|                                                         |  |                                       |         |   |                    |   |         |                    |  |   |         |  
|Net loss from operations                                 |  |                                       | (4,843  | ) |                    |   | (8,674  | )                  |  |   | (12,016 | )
|                                                         |  |                                       |         |   |                    |   |         |                    |  |   |         |  
|Other Income (Expense)                                   |  |                                       |         |   |                    |   |         |                    |  |   |         |  
|Interest income and other                                |  |                                       | 1,520   |   |                    |   | 620     |                    |  |   | 482     |  
|Interest and other charges                               |  |                                       | (21,508 | ) |                    |   | (13,863 | )                  |  |   | (9,206  | )
|Interest expense on bonds payable to Shurgard            |  |                                       | (6,889  | ) |                    |   | (1,403  | )                  |  |   |        |  
|Interest expense on subordinated loan to a related party |  |                                       | (7,774  | ) |                    |   | (8,881  | )                  |  |   | (7,750  | )
|Foreign currency translation gain on bonds payable       |  |                                       | 9,830   |   |                    |   | 2,357   |                    |  |   |        |  
|                                                         |  |                                       |         |   |                    |   |         |                    |  |   |         |  
|Loss before income tax (expense) benefit                 |  |                                       | (29,664 | ) |                    |   | (29,844 | )                  |  |   | (28,490 | )
|Income tax (expense) benefit                             |  |                                       | (202    | ) |                    |   | 13      |                    |  |   |        |  
|                                                         |  |                                       |         |   |                    |   |         |                    |  |   |         |  
|Net loss before cumulative effect of accounting change   |  | $                                     | (29,866 | ) |                    | $ | (29,831 | )                  |  | $ | (28,490 | )
|Cumulative effect of a change in accounting principle    |  |                                       |        |   |                    |   |        |                    |  |   | (1,106  | )
|                                                         |  |                                       |         |   |                    |   |         |                    |  |   |         |  
|Net loss                                                 |  | $                                     | (29,866 | ) |                    | $ | (29,831 | )                  |  | $ | (29,596 | )
|                                                         |  |                                       |         |   |                    |   |         |                    |  |   |         |  



We have eliminated in
consolidation interest income related to the preferred bonds of Shurgard Europe (see Note L) of $6.9 million and $1.4 million for the years ended December 31, 2003 and 2002, respectively.



Note GLines of Credit



As of December 31, 2003, we had an unsecured domestic line of credit to borrow $360 million. This facility matures in February 2005 and requires monthly
interest payments at 125 basis points over LIBOR (London Interbank Offering Rate) or the prime rate at our option. Availability under this line of credit is limited based on various financial covenants. At December 31, 2003, the available amount was
$96.8 million. At December 31, 2003 and 2002, amounts totaling $263.2 million and $113.5 million, respectively were outstanding and the weighted average interest rate was 2.37% and 2.75%, respectively. In April 2004, the terms of our line of credit
were amended such that certain subsidiaries of Shurgard became guarantors under the line of credit and to accommodate certain modifications in our current financial statement presentation.



At December 31, 2002, $154.1 million was drawn under the line of credit of
Storage Center Trust (SCT) for the financing of the properties under our tax retention operating leases. Upon exercising our right to purchase the remaining properties under our tax operating leases, in June 2003, the trust repaid all borrowings
under this line. This line of credit matures on February 2005.



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In April 2004, we entered into a new unsecured credit agreement to borrow an additional $100 million
at an interest rate of 125 basis points over LIBOR or the prime rate at our option. The facility was provided by a sub-group of our existing bank group and was fully underwritten by our agent bank. The facility contains various covenants that are
consistent with our $360 million revolving credit facility and matures in February 2005.



Note HNotes Payable



The following table summarizes our notes payable:



|                                  |  |                    |         |   |                   |   |        
|--------------------------------- |  | ------------------ | ------- | - | ----------------- | - | -------
|                                  |  | As of December 31,
|                                  |  | 2003               |         |   | 2002(as restated)
|                                  |  | (in thousands)    
|Senior notes payable              |  | $                  | 500,000 |   |                   | $ | 300,000
|Mortgage notes payable            |  |                    | 209,889 |   |                   |   | 207,792
|                                  |  |                    |         |   |                   |   |        
|                                  |  |                    | 709,889 |   |                   |   | 507,792
|Premium on senior notes payable   |  |                    | 381     |   |                   |   | 1,601  
|Discount on senior notes payable  |  |                    | (780    | ) |                   |   |       
|Premium on mortgage notes payable |  |                    | 1,536   |   |                   |   | 1,919  
|                                  |  |                    |         |   |                   |   |        
|                                  |  | $                  | 711,026 |   |                   | $ | 511,312
|                                  |  |                    |         |   |                   |   |        



Senior Notes
Payable



On March 19, 2003, we issued $200 million (net
proceeds of $197.9 million) in senior unsecured notes bearing interest at 5.875%, due 2013. The notes require semi-annual interest payments due March 15 and September 15.



On February 22, 2001, we issued $200 million in senior unsecured notes bearing interest at 7.75% and due 2011. The notes
require semi-annual interest payments due February 22 and August 22 of each year.



In April 1997, we issued $100 million in senior unsecured notes, $50 million of which are seven year notes due April 2004 bearing interest at 7.5% and $50 million of which are ten year notes due April 2007 bearing
interest at 7.625%. The notes require semi-annual interest due April 25 and October 25. We repaid $50 million of these notes in April 2004. During 2002 we entered into, and later terminated, a fixed to variable rate swap for $50 million of the
senior notes payable due in 2004. This hedge was designated as a fair value hedge. As a result of this hedge, the carrying value of the bonds was increased by $382,000 during 2003 and $1.6 million during 2002 (see Note Q).



Each of these notes contains covenants that require us to submit financial
information to the trustee and maintain certain financial ratios. As of December 31, 2003, we were in compliance with all debt covenants. One of the covenants requires that we provide audited consolidated financial statements to our bondholders. We
were not in compliance with this covenant as of April 15, 2004 and are eligible to receive a notice of default under these notes from the trustee. No such notice of default has been received. Under the terms of the agreements, we have an automatic
60 days to cure this default from the date notice is received from our bond trustee. A default, once notified, is fully cured upon providing these consolidated financial statements within the 60 day cure period.



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Mortgage Notes Payable



Our mortgage notes payable consist of the following:



|                                                                                                                                                                                       |  |                    |         |                   |   |        
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | ----------------- | - | -------
|                                                                                                                                                                                       |  | As of December 31,
|                                                                                                                                                                                       |  | 2003               |         | 2002(as restated)
|                                                                                                                                                                                       |  | (in thousands)    
|Fixed rate mortgages of consolidated entities, interest rates from 5.29% to 9.03% at December 31, 2003, maturity dates ranging from 2005 to
2013, collateralized by properties         |  | $                  | 127,290 |                   | $ | 125,124
|Variable rate mortgages of consolidated entities, interest rates range from 3.3% to 4.0% at December 31, 2003, maturity dates ranging from
2004 to 2007, collateralized by properties. |  |                    | 82,599  |                   |   | 82,668 
|                                                                                                                                                                                       |  |                    |         |                   |   |        
|                                                                                                                                                                                       |  | $                  | 209,889 |                   | $ | 207,792
|                                                                                                                                                                                       |  |                    |         |                   |   |        



As of December 31,
2003 and 2002, the mortgage note payable is collateralized by storage centers with a net book value of $269.5 million and $284.8 million, respectively.



At December 31, 2003 and 2002, $66.3 million of a mortgage note payable was collateralized by 21 properties, owned by a joint venture accounted for as a
financing arrangement (see Note I) and is a non-recourse credit facility that requires payments of interest only. In December 2003, we exercised the first of two one year extension options which extended the maturity date of the loan to December 31,
2004.



On July 24, 2002, we paid $1.2 million to retire a
mortgage note payable incurring prepayment penalties of $164,000 which are included in interest expense in the Consolidated Statements of Income.



On June 27, 2002, we paid $12.5 million to pay off a participating mortgage including $7.3 million in mortgage debt, $5.0 million in participation rights
and $0.2 million in prepayment penalties. In connection with the early extinguishment of this debt, we recorded a gain, of $1.2 million, net of prepayment penalties, that has been reclassified from income from extraordinary item to interest income
and other, net.



At December 31, 2003, scheduled amortization
and maturities of all notes payable for the next five years and thereafter are as follows (in thousands):



|           |  |        |        
|---------- |  | ------ | -------
|Year       |  | Amount
|2004       |  | $      | 123,242
|2005       |  |        | 18,587 
|2006       |  |        | 7,797  
|2007       |  |        | 53,699 
|2008       |  |        | 20,560 
|Thereafter |  |        | 486,004
|           |  |        |        
|           |  | $      | 709,889
|           |  |        |        



Note IParticipation Rights



During the past several years we formed four joint
ventures with participation rights: SFPI in May 1998 with Fremont Storage Partners I, SFPII in March 1999 with Fremont Storage Partners II, Shurgard/K&S I, LLC



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in October 1999 with K&S Storage, LLC and CCP/Shurgard Venture, LLC (CCP/Shurgard) in December 2000 with an affiliate of JP Morgan Partners. Under these
joint venture agreements, we constructed storage centers financed through the use of cash flows provided by operations and our line of credit and, on completion, contributed those storage centers to the joint ventures. At the time of contribution,
we were reimbursed to the extent our historical cost plus negative cash flow prior to the transfer exceeded our pro rata portion of required equity (calculated as total required funding less amounts provided from financial institutions multiplied by
our ownership percentage). Our partner had the right to cause the joint venture to put those storage centers to us. The purchase price for the put is calculated as the greater of (a) that amount necessary to provide a specified return on the
partners contributed capital (12% in the case of CCP/Shurgard) or (b) annualized NOI (See Note V) divided by 9.25%, plus assumption or payoff of the allocated mortgage debt. We have continuing involvement with these joint ventures and do not
recognize the contribution of the storage centers as a transfer in ownership for financial reporting purposes. We account for these joint ventures as financing arrangements and, as such, recognize all activities related to those properties in our
financial statements. Additionally, we recognize a participation rights liability and a related discount on the underlying liability for the estimated fair value of our joint venture partners share of the estimated option purchase price based
on the best evidence available to us. The discount is amortized as a component of interest expense over the estimated term of the related agreements. Changes in the estimated fair value of the participation rights and related discount are recognized
prospectively over the remaining term of the agreements. The storage centers, mortgage notes payable, and other related assets and liabilities of the joint ventures are included in our Consolidated Balance Sheets, and the related revenue and
expenses of these properties are included in our Consolidated Statements of Income.



During 2001, we exercised our option to acquire our joint venture partners interest in SFP I, SFP II and Shurgard/K&S I for a total of $69.5 million. These acquisitions were accounted for as a reduction in
participation rights liability. During 2002, we re-evaluated our estimate of the option price, the projected timing of our joint venture partners exercise of their put option and the related expected cash flows. These changes were accounted
for as a change in estimate, reduced gross participation rights and subsequent amortization of participation rights. The effect of this change in estimate on the 2002 financial statements decreased gross participation rights by $6.4 million and
increased net income by $3.4 million and increased diluted earnings per share by $0.10.



On June 27, 2002, we paid off the participating mortgage for one storage center. The lenders were to receive 90% of the propertys appreciation. As a result this mortgage was accounted for in the same manner as
described above. We paid off this participating mortgage for $12.5 million including $7.3 million in mortgage debt and $0.2 million in prepayment penalties. The remaining $5.0 million payment was accounted for as reduction in participation rights.
In connection with the early extinguishment of this debt, we recognized a gain of $1.2 million, net of prepayment penalties, that has been reclassified from income from extraordinary item to interest income and other, net.



In September 2003, CCPRE-Storage, LLC exercised its right to have the joint
venture put to us five properties. In March 2004 we gave notice of our intention to acquire one of the properties subject to the offer for $4.4 million and declined to purchase the remaining four properties at the put price. The properties that we
did not agree to purchase under the put may be sold on the open market at the discretion of our joint venture partner. The decision not to purchase these four properties resulted in a $6.9 million reduction of our net participation rights liability
at December 31, 2003, representing the accrued participation liability recorded for these properties through September 30, 2003, and a corresponding increase in income was recorded in interest income and other, net. An impairment loss of $7.5
million was recorded at December 31, 2003 to reflect the anticipated decline in value to be recovered by us upon disposition of the related properties in 2004.



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The following table summarizes the estimated liability for participation rights and the related
discount:



|                                                |  |                         |        |   |      |   |        |  
|----------------------------------------------- |  | ----------------------- | ------ | - | ---- | - | ------ | -
|                                                |  | Year ended December 31, |       
|                                                |  | 2003                    |        |   | 2002 |  
|                                                |  | (in thousands)          |       
|Gross participation rights                      |  | $                       | 44,676 |   |      | $ | 49,842 |  
|Participation rights discount                   |  |                         | (4,053 | ) |      |   | (2,370 | )
|                                                |  |                         |        |   |      |   |        |  
|Participation rights liability, net of discount |  | $                       | 40,623 |   |      | $ | 47,472 |  
|                                                |  |                         |        |   |      |   |        |  



Note JLease Obligations



We lease certain parcels of land and buildings and
equipment under operating leases with terms up to 50 years. The future minimum rental payments required under these leases are as follows (in thousands):



|           |  |   |       
|---------- |  | - | ------
|2004       |  | $ | 5,881 
|2005       |  |   | 5,975 
|2006       |  |   | 5,826 
|2007       |  |   | 4,835 
|2008       |  |   | 3,458 
|Thereafter |  |   | 50,019
|           |  |   |       
|           |  | $ | 75,994
|           |  |   |       



Expense under these
leases was approximately $5.6 million, $5.8 million and $5.2 million for the years ended December 31, 2003, 2002 and 2001, respectively. Certain of our land leases include escalation clauses, and related lease expenses are recognized on a
straight-line basis.



Note KOther Assets



The following table summarizes other assets per category:



|                                                                                     |  |                         |        |                    |   |       
|------------------------------------------------------------------------------------ |  | ----------------------- | ------ | ------------------ | - | ------
|                                                                                     |  | Year ended December 31,
|                                                                                     |  | 2003                    |        | 2002 (as restated)
|                                                                                     |  | (in thousands)         
|Non-competition agreements, net of amortization of $7,979 in 2003 and $7,377 in 2002 |  | $                       | 660    |                    | $ | 1,263 
|Financing costs, net of amortization of $7,928 in 2003 and $5,425 in 2002            |  |                         | 6,217  |                    |   | 6,330 
|Land held for sale                                                                   |  |                         | 1,530  |                    |   | 1,916 
|Notes receivable                                                                     |  |                         | 5,330  |                    |   | 2,523 
|Receivables and prepaid assets                                                       |  |                         | 12,621 |                    |   | 12,765
|Other Assets, net of amortization of $930 in 2003 and $440 in 2002                   |  |                         | 7,964  |                    |   | 6,301 
|                                                                                     |  |                         |        |                    |   |       
|Total other assets                                                                   |  | $                       | 34,322 |                    | $ | 31,098
|                                                                                     |  |                         |        |                    |   |       



Note LRelated Party
Transactions



In June 2001, we acquired 26,250 shares of
Class A Common Stock of STG, a previously unconsolidated entity, for approximately $60,000. The acquired Class A Common Stock was owned by ten current and former



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employees and officers of Shurgard. The purchase price for the stock was established by independent members of the Board of Directors, giving consideration
to a valuation report prepared by a third party, after consultation with independent counsel. This transaction increased our ownership interest in STG to 100%. After the purchase we owned all of the Class A Common Stock of Shurgard STG, and the
entity was thereafter consolidated.



On May 27, 2002, we
entered into a subscription agreement to purchase up to $50 million of three year 9.75% payment-in-kind cumulative preferred bonds to be issued at the option of Shurgard Europe, of which we own 85.47% as of December 31, 2003. Pursuant to the
subscription agreement, Shurgard Europe may issue up to $50 million of these preferred bonds to us during the first two years of the three-year commitment term. Shurgard Europe has the option of increasing our total notional subscription to $55
million with an additional $20 million that can be drawn by First Shurgard only in the event of a default of the five year debt facility between First Shurgard and a group of commercial banks. Interest is payable on the bonds at the end of each
quarter in cash or through an issuance of additional bonds. The bonds issued to pay interest can be issued above the commitment amount. Shurgard Europe has two one-year options to extend the three year redemption date of the bonds. Shurgard Europe
must redeem the bonds on the redemption date, or may redeem at any time prior to the redemption date, by paying us 115% of the face value of the outstanding bonds plus accrued and unpaid interest. The subscription agreement with Shurgard Europe
entitles us to a commitment fee of 0.5% and a structuring fee of 1.5% of the initial commitment of $50 million, as well as an unused fee equal to 1% of the undrawn amount payable in arrears on an annual basis. The subscription agreement with First
Shurgard for the additional $20 million entitles us to a commitment fee of 2% of the $20 million. These fees are being recognized in income using the effective interest method over the extended term of the bonds. We have an option to put 80% of the
bonds issued by First Shurgard to Crescent Euro Self Storage Investments SARL (Crescent), Shurgard Europes partner in the joint venture. As of December 31, 2003, $55.3 million of U.S. dollar denominated bonds had been issued to us under this
commitment including $6.0 million in additional bonds issued for accrued interest. The terms of the bonds provide that the parties will treat the bonds as an equity investment in Shurgard Europe for federal income tax purposes. The bonds and the
related accrued interest are included on our Consolidated Balance Sheets in notes receivable affiliate and the related income and fees are included in our Consolidated Statements of income in Interest income other, net. Shurgard Europes
interest expense and fees related to this subscription agreement are also included in equity in losses of other real estate investments, net and therefore the impact of interest is eliminated in the Consolidated Statements of Income. In addition to
interest expense, Shurgard Europe incurred a foreign exchange gain on the U.S. dollar denominated bonds. Our pro-rata portion of foreign exchange gain is $5.1 million and is included in equity in losses of other real estate investments, net for the
year ended December 31, 2003.



In May 2003, Shurgard Europe
entered into an agreement with Crescent to create First Shurgard in which Shurgard Europe has a 20% interest. Shurgard Europe has transferred ten properties, which were under development, into this joint venture. First Shurgard has equity
commitments of 20.0 million ($25.1 million at December 31, 2003) from Shurgard Europe and 80 million ($100.4 million at December 31, 2003) from Crescent, of which 16.0 million ($20.1 million at December 31, 2003) remains to be
drawn, and has obtained a non-recourse five-year debt facility for 140 million ($175.7 million at December 31, 2003) from a group of commercial banks. As part of a joint venture agreement with First Shurgard, Shurgard Europe receives
development fees equal to 7% of the cost of newly developed storage centers and management fees equal to 7% of revenues. Also, Shurgard Europe received from First Shurgard a cost of interest for the period that it owns properties prior to
contributing them to the joint venture. For the year ended December 31, 2003, our equity method loss from Shurgard Europe includes revenue of $7.2 million for development and initial fees from First Shurgard, $325,000 in management fees and $433,000
in interest income for cost of interest.



Recom, a consolidated
subsidiary as of June 28, 2003, made a subordinated loan to Shurgard Europe in 1999. In September 2003, Recom and other Shurgard Europe warrant holders exercised their warrants to



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purchase additional equity interests in Shurgard Europe. The majority of the warrants were held by Recom who upon exercise, exchanged $139.6 million of the
subordinated loan payable, an amount equal to the exercise price of the warrants. Cash proceeds from the exercise of the remaining warrants and other borrowings by Shurgard Europe were used to repay the remaining $7.5 million balance of the
subordinated loan payable.



During the second quarter of 2003,
we acquired the general partner interests in Shurgard Partners LP II (Shurgard Partners II), the general partner of Shurgard Institutional Fund LP II (Institutional II), a consolidated entity, for $1.6 million. The acquired Shurgard Partners II
general partner interests were owned by an unaffiliated third party and an officer of the Company. The acquisition was, in part, in response to the Board of Directors stated objective of eliminating existing historical arrangements involving related
parties. The purchase price payable for the acquired Shurgard Partners II general partner interests was governed by the terms of the partnership agreements for Shurgard Partners II and Institutional II, and was based upon the fair market value of
the property owned by Institutional II as determined by a third party appraisal. This transaction increased our ownership of Institutional II from 99% to 100%. Of the $1.6 million total purchase price, $784,000 was paid to an officer of the Company
to acquire his partnership interest in Shurgard Partners II. Subsequent to the end of the third quarter 2003, we identified an error in the calculation of the purchase price paid for the Shurgard Partners II general partner interests. This error
resulted in an overpayment to the general partners of Shurgard Partners II of approximately $1.4 million. The partners reimbursed us for this overpayment. Of this approximately $1.4 million, approximately $700,000 was repaid by the officer of
Shurgard.



On June 30, 2003, we issued $20 million in Shurgard
Common Stock in exchange for notes receivable from shareholders. The shares were initially recorded as a reduction of shareholders equity, that secured $20 million in mortgage debt assumed in the purchase of Minnesota Mini Storage (see Note
E). The notes from shareholders were collateralized by a pledge of the shareholders Shurgard common stock and were paid in full in October 2003 and the $20 million were reclassified to shareholders equity.



On July 8, 2003, we loaned 1.9 million (approximately $2,151,940 based
on exchange rates as of July 8, 2003, which rates were applied in all the amounts listed below) to E-Parco, a Belgian company which is owned by certain employees of Shurgard Europe. E-Parco has an indirect ownership interest in Shurgard Europe
through Recom, a Belgian company and Shurgard subsidiary. The proceeds of this loan were used by E-Parco to repurchase its shares from Mr. Grant, an officer of the Company, and certain former employees of Shurgard Europe. Mr. Grant received
1.2 million (approximately $1,359,120) for his shares and 0.7 million (approximately $792,820) was paid to the former employees. The purchase price for the E-Parco shares was based on recent third party sales transactions for interests
in Shurgard Europe. As partial consideration for the loan, E-Parco granted Shurgard an option to purchase its 377 Recom shares for 4.3 million (approximately $4,870,180) plus forgiveness of the loan including accrued interest. Acquiring
E-Parcos shares would make us the sole shareholder of Recom. The loan is due and the option expires in July 2004.



In April 2004, the Board of Directors of Shurgard approved the exercise of our option to purchase the remaining shares of Recom owned by E-Parco on the
terms and conditions described above. The transaction is expected to be completed by July 2004.



Note MExit Costs



In December 2001, the Board of Directors approved a plan to exit the operations of STG in the Atlanta and Southern California markets. In connection with this decision, we accrued incremental costs that we expected to incur during the
closing of the warehouses. These costs consisted primarily of lease termination fees for warehouses and equipment, and estimated losses on sale of containers during closing of $2.8 million that are



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included in General and administrative expenses on the Consolidated statement of income. In addition, impairment losses on certain assets and goodwill of
$2.1 million were recorded in impairment expenses. The costs charged to this accrual during 2002 consisted primarily of lease termination fees. As of December 31, 2003 the remaining accrued exit costs consisted entirely of lease costs.



|                                                 |  |                |        |  
|------------------------------------------------ |  | -------------- | ------ | -
|                                                 |  | (in thousands) |       
|Total accrued exit costs as of January 1, 2002   |  | $              | 2,790  |  
|Payments made                                    |  |                | (1,771 | )
|                                                 |  |                |        |  
|Total accrued exit costs as of December 31, 2002 |  |                | 1,019  |  
|Payments made                                    |  |                | (507   | )
|                                                 |  |                |        |  
|Total accrued exit costs as of December 31, 2003 |  | $              | 512    |  
|                                                 |  |                |        |  



In December 2003, the
Board of Directors approved an exit plan to close the remaining STG warehouses in the Northern California, Oregon and Washington markets and the operations of Shurgard Preferred Partners. This decision caused us to evaluate the assets associated
with these operations. Using the discounted cash flow method for determining the fair value of assets associated with the warehouses, we determined that the remaining net book value of assets of our containerized storage operations of $843,000, and
the $491,000 goodwill associated with the Northern California and Washington warehouses were impaired. In addition, the value of certain equipment assets of Shurgard Preferred Partners was impaired.



By the end of the first quarter of 2004, we had ceased to use all of our
containerized facilities. As of December 31, 2003, we had operating lease obligations through 2008 for all the warehouses and certain equipment of $10.3 million. As of May 2004, we had entered in subleasing agreements for two warehouses and we were
still examining sub-leasing possibilities for one warehouse. In the first quarter 2004, we recognized at its fair value, a liability of $1.8 million for the remaining lease rentals reduced by estimated sublease rentals. Also, in the first quarter of
2004 we incurred termination benefits, contract termination costs and costs associated with the relocation of customers of approximately $385,000.



Note NIncome Taxes



We elected to be taxed as a real estate investment trust (REIT) under the Internal Revenue Code, commencing with our taxable year ended December 31, 1994.
To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we currently distribute at least 90% of our adjusted taxable income to our shareholders. It is our current intention to adhere
to these requirements and maintain our REIT status. As a REIT, we generally will not be subject to corporate level federal income tax on taxable income we distribute currently to our shareholders. If we fail to qualify as a REIT in any taxable year,
we will be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not qualify as a REIT for four subsequent years. Even if we qualify for taxation as a REIT, we are subject to certain
state and local taxes on income and property, and to federal income and excise taxes on undistributed taxable income. In addition, taxable income from non-REIT activities managed through our taxable REIT subsidiaries is subject to federal, state and
local income taxes. As of December 31, 2003 we believe we were in compliance with REIT requirements.



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For income tax purposes, distributions paid to common shareholders consist of ordinary income,
capital gains, return of capital or a combination thereof. For the years ended December 31, 2003, 2002 and 2001 distributions paid per share were taxable as follows:



|                  |  |                         |      |            |       |   |        |      |            |  |       |        |  |            |      |  |       |  
|----------------- |  | ----------------------- | ---- | ---------- | ----- | - | ------ | ---- | ---------- |  | ----- | ------ |  | ---------- | ---- |  | ----- | -
|                  |  | Year ended December 31, |     
|                  |  | 2003                    |      |            | 2002  |   |        | 2001 |           
|                  |  | Amount                  |      | Percentage |       |   | Amount |      | Percentage |  |       | Amount |  | Percentage |     
|                  |  | (in thousands)          |     
|Ordinary income   |  | $                       | 1.67 |            | 77.7  | % |        | $    | 1.92       |  | 90.8  | %      |  | $          | 1.74 |  | 84.1  | %
|Capital gains     |  |                         | 0.06 |            | 2.8   | % |        |      | 0.08       |  | 3.8   | %      |  |            | 0.07 |  | 3.4   | %
|Return of capital |  |                         | 0.42 |            | 19.5  | % |        |      | 0.11       |  | 5.4   | %      |  |            | 0.26 |  | 12.5  | %
|                  |  |                         |      |            |       |   |        |      |            |  |       |        |  |            |      |  |       |  
|                  |  | $                       | 2.15 |            | 100.0 | % |        | $    | 2.11       |  | 100.0 | %      |  | $          | 2.07 |  | 100.0 | %
|                  |  |                         |      |            |       |   |        |      |            |  |       |        |  |            |      |  |       |  



In June 2001, we
purchased the remaining shares of STG, a taxable REIT subsidiary, and began consolidating the assets and liabilities of STG as of that date. In addition, we began operations for Shurgard TRS, Inc., a taxable REIT subsidiary, in 2002, which includes
Shurgard Preferred Partners, Storage Line Management and SS Income Plan. STG has also been merged into Storage To Go, LLC, a wholly-owned subsidiary of Shurgard TRS in 2002.



On June 28, 2003 we started consolidating Recom, a Belgian subsidiary that is subject to foreign income taxes. For the year
ended December 31, 2003, we recognized a $1.6 million income tax expense for Recom. As of December 31, 2003 we had a tax liability of $1.8 million for Recom which represents the outstanding tax liability for the 2003 tax year.



The components of deferred tax assets (liabilities) for Shurgard TRS at
December 31, 2003 are included in the table below. As of December 31, 2003 and 2002 we had established a valuation allowance for the value of our deferred tax assets. Given the history of losses of our TRS we have concluded there is insufficient
evidence at this point to justify recognition of the benefits of these deferred tax assets on our books. We had net operating loss carryforwards of $24.4 million, $24.5 million and $21.0 million as of December 31, 2003, 2002 and 2001, respectively,
that will expire starting in 2012.



|                                |  |                         |        |   |                   |   |        |  
|------------------------------- |  | ----------------------- | ------ | - | ----------------- | - | ------ | -
|                                |  | Year ended December 31, |       
|                                |  | 2003                    |        |   | 2002 (asrestated) |  
|                                |  | (in thousands)          |       
|Net operating loss carryforward |  | $                       | 8,291  |   |                   | $ | 8,322  |  
|Losses on assets recognition    |  |                         | 757    |   |                   |   |        |  
|Other                           |  |                         | 362    |   |                   |   | 81     |  
|                                |  |                         |        |   |                   |   |        |  
|Net deferred tax asset          |  |                         | 9,410  |   |                   |   | 8,403  |  
|                                |  |                         |        |   |                   |   |        |  
|Valuation allowance             |  |                         | (9,410 | ) |                   | $ | (8,403 | )
|                                |  |                         |        |   |                   |   |        |  
|Net Deferred tax asset          |  | $                       |       |   |                   | $ |       |  
|                                |  |                         |        |   |                   |   |        |  



We increased our
valuation allowance for deferred tax assets by $1.0 million, $456,000 and $7.9 million in 2003, 2002 and 2001, respectively.



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SHURGARD STORAGE CENTERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note OGoodwill and Other Assets



On January 1, 2002 we adopted SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 142 changes the
accounting for goodwill from an amortization method to an impairment-only approach. The following table summarizes our net income for the year ended 2001, excluding goodwill amortization prior to adoption of SFAS No. 142.



|                                              |  |                                     |       |  |   |        
|--------------------------------------------- |  | ----------------------------------- | ----- |  | - | -------
|                                              |  | For the year endedDecember 31, 2001
|                                              |  | (in thousands except pershare data)
|Net income (as restated)                      |  |                                     |       |  | $ | 22,787 
|Add back: Goodwill and trademark amortization |  |                                     |       |  |   | 1,073  
|                                              |  |                                     |       |  |   |        
|Adjusted net income                           |  |                                     |       |  | $ | 23,860 
|                                              |  |                                     |       |  |   |        
|                                              |  |                                    
|Earnings per share:                           |  |                                     | Basic |  |   | Diluted
|Net income (as restated)                      |  | $                                   | 0.25  |  | $ | 0.25   
|Add back: Goodwill                            |  |                                     | 0.01  |  |   | 0.01   
|                                              |  |                                     |       |  |   |        
|Adjusted net income                           |  | $                                   | 0.26  |  | $ | 0.26   
|                                              |  |                                     |       |  |   |        



At December 31, 2003
we determined that the remaining goodwill on STG was fully impaired due to the closure of containerized storage operations. As a result, we recorded an impairment loss of $491,000. The following table summarizes our expected amortization of
intangible assets, as included in Other assets, net in our Consolidated Balance Sheets, over the next five years (in thousands):



|     |  |   |      
|---- |  | - | -----
|2004 |  | $ | 417  
|2005 |  |   | 368  
|2006 |  |   | 128  
|2007 |  |   | 70   
|2008 |  |   | 31   
|     |  |   |      
|     |  | $ | 1,014
|     |  |   |      



Note PShareholders
Equity



Shurgard has 40 million shares of preferred stock
authorized, of which 2.8 million shares have been designated as Series A Junior Participating Preferred Stock (none were issued or outstanding at December 31, 2003), 2 million shares have been designated as Series B Cumulative Redeemable Preferred
Stock (none of which are issued or outstanding at December 31, 2003, as discussed below), 2 million shares have been designated as Series C Cumulative Redeemable Preferred Stock (2 million shares of which were issued and outstanding at December 31,
2003, as discussed below), and 3.45 million shares have been designated as Series D Cumulative Redeemable Preferred Stock (3.45 million shares of which were issued and outstanding at December 31, 2003, as discussed below). The Board of Directors is
authorized to determine the rights, preferences and privileges of the preferred stock including the number of shares constituting any such series and the designation thereof.



Series C Cumulative Redeemable Preferred Stock requires quarterly distribution payments totaling 8.7% per year and became
callable at our option in December 2003, at a redemption price of $25 per share.



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SHURGARD STORAGE CENTERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



In February 2001, we raised $86.25 million (approximately $83.1 million in net proceeds) through the
sale of 3.45 million shares of Series D Cumulative Redeemable Preferred Stock. These preferred shares require quarterly distributions of 8.75% per year and are callable at our option in February 2006, at a redemption price of $25 per share.



In 2001, we raised net proceeds after offering costs of $76.0
million through the sale of 2.7 million shares of Class A Common Stock.



On June 28, 2002, we raised $86.25 million (approximately $82.3 million net proceeds) through the sale of 2.5 million shares of Class A Common Stock. We used approximately $50 million of the proceeds to redeem in full our 8.80% Series B
Cumulative Redeemable Preferred Stock, issued on April 16, 1997. In July 2003, we de-registered the 2.3 million shares that were designated as Series B Cumulative Redeemable Preferred Stock. Additional proceeds were used to repay a portion of the
indebtedness under our revolving credit facility.



On July 11,
2003, we raised $186.9 million (approximately $178.2 million of net proceeds) through the sale to the public of 5.75 million shares of Class A Common Stock. We used approximately $101.6 million of the proceeds to fund the acquisition of an
additional 19.7% ownership interest in Shurgard Europe (see Note F). Additional proceeds were used to repay a portion of the indebtedness under our line of credit, which includes amounts we borrowed to purchase the 36 properties that we previously
operated under our tax retention operating leases and to fund our additional investment in Recom.



In June 2003, we issued 3,050,000 shares of Class A Common Stock in connection with our purchase of Minnesota Mini Storage (see Note E).



In October 2003, we issued 395,000 shares of Class A Common Stock in
connection with our purchase of our European operating partners interest in Recom and Shurgard Europe (see note F).



Note QDerivative Financial Instruments



We use derivative instruments to manage exposures to interest rate, and credit risks. Our objectives for holding derivatives include reducing,
eliminating, and efficiently managing the impact of these exposures as effectively as possible.



The adoption of SFAS No. 133 on January 1, 2001 resulted in a cumulative reduction in Other Comprehensive Income (OCI) of $218,000. The reduction in OCI
was attributable to losses on cash flow hedges. These cash flow hedges were all settled in 2001, and upon settlement we reversed the residual other comprehensive income balance that related to those hedges. There was no net gain or loss recognized
in earnings for the years ended December 2003, 2002 and 2001 due to hedge ineffectiveness.



Interest rate risk:



During 2001, we entered into three interest rate swaps to mitigate the risk of interest rate fluctuations related to our purchase options under our TROL. These derivative instruments do not qualify for hedge accounting treatment under SFAS
No. 133. They are recorded on the Consolidated Balance Sheet at estimated fair value and adjusted each period through earnings. As of December 31, 2003, our liability under the derivative instruments is $14.8 million. We recorded $2.2 million, $11.0
million and $1.6 million in unrealized loss for these financial instruments for the years ended December 31, 2003, 2002 and 2001, respectively. Additionally, for the year ended December 31, 2001, we recognized $1.2 million in interest income and
other, net related to the termination



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SHURGARD STORAGE CENTERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



of swap agreements for SFPI and SFPII in connection with paying off the debt. We entered into a new interest rate cap in January 2004.



During 2000, we entered into an interest rate cap on the non-recourse credit
facility of CCP/Shurgard to borrow up to $67.7 million, of which $66.3 million was outstanding at December 31, 2003. In addition, we had an interest rate swap in effect which fixes the interest rate at 6.93%. The assessment of hedge effectiveness is
based on the cumulative dollar offset approach and involves a comparison of the cumulative change in fair value of the actual swap designated as the hedging instrument to the cumulative change in fair value of a hypothetical swap, with terms that
identically match the critical terms of the item being hedged. The combined interest rate cap and swap qualified for hedging accounting and we did not record any gain or loss due to ineffectiveness through income. Changes in the time value of the
interest rate cap have been excluded from the assessment of hedge effectiveness are reported in Interest income and other, net on the Consolidated Statements of Income and were $5,000, $17,000 and $126,000 for the years ended December 31, 2003, 2002
and 2001, respectively. The interest cap and swap expired as of December 31, 2003.



Credit risk:



By using derivative instruments,
we expose ourselves to credit and market risk. If a counterparty fails to fulfill its performance obligations under a derivative contract, our credit risk will equal the fair-value gain in a derivative. Generally, when the fair value of a derivative
contract is positive, this indicates that the counterparty owes us, thus creating a repayment risk for us. When the fair value of a derivative contract is negative, we owe the counterparty and, therefore, assume no repayment risk. We minimize the
credit (or repayment) risk in derivative instruments by entering into transactions with high-quality counterparties that are reviewed periodically by our senior management team in our Finance and Treasury department. Further, when the circumstances
are deemed appropriate, we may request that collateral be provided by the counterparty.



Market risk is the adverse effect that a change in interest rates might have on the value of a financial instrument. We manage the market risk associated with interest rates by establishing and monitoring limits for
the types and degree of risk that may be undertaken. We also employ the use of a third party advisor to provide assistance in advising on the type of financial instruments that should be employed relative to meeting our objectives for each financial
transaction.



In March 2002, we entered into a fixed to
variable interest rate swap for $50 million of the senior notes payable due in 2004. This hedge was designated as a fair value hedge. The gain or loss on the swap and the bonds were recognized in earnings and the carrying value of the bonds is
adjusted accordingly. On August 20, 2002, we terminated these swaps at a gain of $2 million. This gain is being amortized to interest expense as an adjustment to the carrying value of the bonds over the remaining life of the bonds using the
effective interest method. For the years ended December 31, 2003 and 2002, interest expense was reduced by $1.2 million and $452,000, respectively, for amortization of the gain. The carrying value of the bonds was increased by $382,000 and $1.6
million during 2003 and 2002, respectively.



We had financial
instrument liabilities of $14.8 million and $14.7 million as of December 31, 2003 and 2002, respectively, which are included in accounts payable and other liabilities on our Consolidated Balance Sheets.



Note RForeign operations



Recom, a consolidated foreign entity with a U.S. dollar functional currency,
has transactions that are denominated in other than U.S. dollars. In such cases, non-monetary assets and liabilities are converted at



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SHURGARD STORAGE CENTERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



historical exchange rates, monetary assets and liabilities are re-measured at the exchange rate in effect as of the end of the period and income statement
accounts are re-measured at the average exchange rate for the period. Gains and losses from such re-measurements are generally included in results of operations. A $645,000 foreign exchange loss was recorded in 2003.



We translate our share of the earnings or losses in Shurgard Europe at the
average exchange rate for the period. Shurgard Europe incurred a foreign exchange gain on the U.S. dollar denominated bonds (see note L).



The functional currency for our unconsolidated investees in Europe is the local currency of the country in which the entity is located (Euro for members
of the European Union that have adopted the Euro, Krona for Sweden, Pound Sterling for the United Kingdom, Krone for Denmark).



We hold certain notes receivables that are denominated in Euro. We recognized a $213,000 foreign exchange gain in 2003 on those notes upon settlement or
re-measurement at the exchange rates in effect at the end of the year.



Note
SStock Compensation and Benefit Plans



The 1993
Stock Option Plan (the 1993 Plan) provides for the granting of options for up to 3% of our outstanding shares of Class A Common Stock at the end of each year, limited in the aggregate to 5,000,000 shares. In general, the options vest ratably over
five years and must be exercised within ten years from the date of grant. The exercise price for qualified incentive options under the 1993 Plan must be at least equal to the fair market value at the date of grant. The 1993 Plan expired in 2003. The
remaining outstanding options under the 1993 Plan expire in 2005.



In 1993, we also established the Stock Option Plan for Non-employee Directors as amended during 1995 (the Directors Plan) for the purpose of attracting and retaining the services of experienced and knowledgeable outside directors. Options
under this plan vest on the date of our next annual meeting so long as such director continues to serve as a director until such date. In 1998 the Directors Plan was amended and restated to provide for discretionary grants. The exercise price
for options granted under the Directors Plan are equal to the fair market value on the day before the date of grant. The Directors plan expired in July 2003 and no options were granted under that plan in 2003.



The 1995 Long-Term Incentive Compensation Plan (the 1995 Plan) provided for
the granting of options for up to 2% of the adjusted average shares of our Class A Common Stock outstanding during the preceding calendar year, as well as stock appreciation rights, stock awards (including restricted stock), performance awards,
other stock-based awards and distribution equivalent rights. The 1995 Plan required mandatory acceleration of vesting in the event of certain mergers and consolidations or a sale of substantially all the assets or a liquidation of Shurgard, except
where such awards were assumed or replaced in the transaction. The 1995 Plan permitted the plan administrator to authorize loans, loan guarantees or installment payments to assist award recipients in acquiring shares pursuant to awards and contains
certain limitations imposed by tax legislation. The 1995 Plan allowed for grants to consultants and agents, as well as our officers and key employees. The 1995 Plan expired in July 2000. The remaining outstanding options under the 1995 Plan expire
in 2010.



The 2000 Long-Term Incentive Compensation Plan (the
2000 Plan) provides for the granting of options for up to 2.8 million shares of our Class A Common Stock, as well as stock appreciation rights, stock awards (including restricted stock), performance awards, other stock-based awards and distribution
equivalent rights. The 2000 Plan requires mandatory acceleration of vesting in the event of certain mergers and consolidations or a



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SHURGARD STORAGE CENTERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



sale of substantially all the assets or a liquidation of Shurgard, except where such awards are assumed or replaced in the transaction. The 2000 Plan permits
the plan administrator to authorize loans, loan guarantees or installment payments to assist award recipients in acquiring shares pursuant to awards and contains certain limitations imposed by tax legislation. The 2000 Plan allows for grants to
consultants and agents, as well as our officers, directors and key employees. In 2003, all grants of stock options were made under the 2000 Plan. There were 546,348 shares authorized for grant under this plan at December 31, 2003. We granted
101,650, 38,005 and 34,289 shares of restricted Class A Common Stock to officers and key employees for the years ended December 31, 2003, 2002 and 2001, respectively, and recorded approximately $948,000, $416,000 and $175,000 in compensation
expense, respectively. The shares granted entitle the grantee to all shareholder rights: however, the shares generally vest ratably over 5 years. In December 2003, we granted a special restricted stock award to an officer, with accelerated vesting,
for 38,889 of the 56,473 shares granted, through June 2004. The remaining shares vest in equal 25% increments over four years commencing in December 2003. In 2003 we recorded approximately $270,000 in compensation expense for this award. If a
grantees employment is terminated prior to the end of the five-year period, the unvested shares will be forfeited. In 2003, 3,651 shares were forfeited due to employee terminations. We granted 142,358 shares of discounted options to officers
and key employees in December 2001 and an additional 9,718 in 2002. During 2003 we recognized $202,000 in expense related to these options.



In April 2004, the Board of Directors approved the 2004 Long-Term Incentive Compensation Plan (the 2004 Plan), subject to shareholders approval. The
2004 Plan is the successor to our existing 2000 Plan. The 2004 Plan provides for grants of stock options, stock awards (including restricted stock), performance awards, and other stock-based awards. The purpose of the 2004 Plan is to enhance the
long-term profitability and shareholder value of the Company by offering incentives and rewards to those employees, officers, directors, consultants and agents of Shurgard and its subsidiaries who are key to our growth and success, and to encourage
them to remain in the service of Shurgard and its subsidiaries and to acquire and maintain stock ownership in the Company. The 2004 Plan will be submitted for approval at the 2004 Annual Meeting of Shareholders.



The fair value of options granted under our stock option plans during 2003,
2002 and 2001 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used: dividend yield of 7.97%, 8.20% and 8.41%; expected volatility of 23%, 20% and 19%; risk free interest
rate of 2.94%, 2.76% and 5.07%; and expected life of 5.6 years, 5.2 years and 6.5 years, respectively. The weighted-average fair value of options at the date of grant was $3.12 for options granted in 2003.



The weighted average remaining contractual life of options outstanding at
December 31, 2003 was 7.2 years and option exercise prices ranged from $20.75 to $37.60 per share.



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SHURGARD STORAGE CENTERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following table summarizes information about stock options outstanding and exercisable at
December 31, 2003:



|                               |  |                 |   |  |                               |      
|------------------------------ |  | --------------- | - |  | ----------------------------- | -----
|                               |  | Number ofShares |   |  | WeightedAverageExercise Price
|Outstanding, January 1, 2001   |  | 2,989,639       |   |  | $                             | 23.98
|Granted                        |  | 545,418         |   |  |                               | 28.77
|Forfeited                      |  | (201,809        | ) |  |                               | 24.71
|Exercised                      |  | (240,064        | ) |  |                               | 22.82
|                               |  |                 |   |  |                               |      
|Outstanding, December 31, 2001 |  | 3,093,184       |   |  |                               | 24.86
|Granted                        |  | 495,939         |   |  |                               | 31.38
|Forfeited                      |  | (157,335        | ) |  |                               | 24.95
|Exercised                      |  | (535,327        | ) |  |                               | 23.78
|                               |  |                 |   |  |                               |      
|Outstanding, December 31, 2002 |  | 2,896,461       |   |  |                               | 26.17
|Granted                        |  | 492,350         |   |  |                               | 36.43
|Forfeited                      |  | (72,283         | ) |  |                               | 23.67
|Exercised                      |  | (429,234        | ) |  |                               | 29.46
|                               |  |                 |   |  |                               |      
|Outstanding, December 31, 2003 |  | 2,887,294       |   |  |                               | 28.21
|                               |  |                 |   |  |                               |      
|Exercisable, December 31, 2001 |  | 1,517,840       |   |  |                               | 24.69
|                               |  |                 |   |  |                               |      
|Exercisable, December 31, 2002 |  | 1,819,232       |   |  |                               | 24.78
|                               |  |                 |   |  |                               |      
|Exercisable, December 31, 2003 |  | 1,982,611       |   |  |                               | 25.67
|                               |  |                 |   |  |                               |      



|                        |  |                                              |  |                                          |  |                                             
|----------------------- |  | -------------------------------------------- |  | ---------------------------------------- |  | --------------------------------------------
|Range ofExercise Prices |  | Number ofOptionsOutstandingDecember 31, 2003 |  | WeightedAverageRemainingContractual Life |  | Number ofOptionsExercisableDecember 31, 2003
|$20.75 to $23.31        |  | 978,889                                      |  | 6.4 years                                |  | 978,889                                     
|24.56 to   29.15        |  | 750,913                                      |  | 5.3 years                                |  | 653,790                                     
|29.97 to   33.30        |  | 738,222                                      |  | 8.6 years                                |  | 338,264                                     
|33.45 to   37.60        |  | 419,270                                      |  | 9.9 years                                |  | 11,668                                      
|                        |  |                                              |  |                                          |  |                                             
|                        |  | 2,887,294                                    |  |                                          |  | 1,982,611                                   
|                        |  |                                              |  |                                          |  |                                             



In 1996, we
established an Employee Stock Purchase Plan under which employees can elect to purchase Shurgard stock through regular periodic payroll deductions without paying broker commissions. This plan provides for potential price discounts of up to 15%.
Since January 2000, a 10% discount has been offered to employees under this plan.



We have an employee incentive savings and stock ownership plan, in which substantially all employees are eligible to participate. Each year, employees may contribute an amount up to 15% of their annual compensation
not to exceed the maximum allowable by law. Employee contributions may be invested in one or more of ten mutual fund investment options administered by a third party. We match a portion of employee contributions in cash and may make annual
discretionary contributions in the form of Shurgard stock. Our expense for contributions to this plan was approximately $1.2 million, $1.1 million and $718,000 for 2003, 2002 and 2001, respectively. Employee contributions are not directly invested
in Shurgard stock. We do not offer post-employment or post-retirement benefits.



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SHURGARD STORAGE CENTERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note TShareholder Rights Plan



In March 1994, we adopted a Rights Agreement and declared a distribution of one Right for each outstanding share of our
Common Stock. Under certain conditions, each Right may be exercised to purchase one one-hundredth of a share of Series A Junior Participating Preferred Stock at a purchase price of $65, subject to adjustment. The Rights will be exercisable only if a
person or group has acquired 10% or more of the outstanding shares of common stock, or following the commencement of a tender or exchange offer for 10% or more of such outstanding shares of common stock. If a person or group acquires more than 10%
of the then outstanding shares of common stock, each Right will entitle its holder to receive, on exercise, common stock (or, in certain circumstances, cash, property or other securities of Shurgard) having a value equal to two times the exercise
price of the Right. In addition, if Shurgard is acquired in a merger or other business combination transaction, each Right will entitle its holder to purchase that number of the acquiring companys common shares having a market value of twice
the Rights exercise price. We will be entitled to redeem the Rights at $0.0001 per Right at any time prior to the earlier of the expiration of the Rights in March 2004 or the time that a person has acquired a 10% position. The Rights do not
have voting or distribution rights, and until they become exercisable, have no dilutive effect on our earnings. In March 2004, the Board of Directors approved an amended and restated Rights Agreement, which extended the expiration date of the Rights
from March 2004 to March 2014 and adjusted the purchase price from $65 to $110. The other terms of the Rights Agreement remained unchanged.



Note UNet Income Per Common Share



The following summarizes the computation of basic and diluted net income per share:



|                                            |  |                                      |         |   |                           |        |                     |   |       |  
|------------------------------------------- |  | ------------------------------------ | ------- | - | ------------------------- | ------ | ------------------- | - | ----- | -
|                                            |  | Net income                           |         |   | WeightedAverageShares (1) |        | Net IncomePer Share |  
|                                            |  | (in thousands except per share data) |        
|For the year ended                          |  |                                      |         |   |                           |        |                     |   |       |  
|December 31, 2003                           |  |                                      |         |   |                           |        |                     |   |       |  
|Net income                                  |  | $                                    | 37,638  |   |                           |        |                     |   |       |  
|Less: preferred distributions               |  |                                      | (11,896 | ) |                           |        |                     |   |       |  
|                                            |  |                                      |         |   |                           |        |                     |   |       |  
|Basic net income                            |  |                                      | 25,742  |   |                           | 40,399 |                     | $ | 0.64  |  
|Effect of dilutive stock options            |  |                                      |        |   |                           | 810    |                     |   | (0.02 | )
|                                            |  |                                      |         |   |                           |        |                     |   |       |  
|Diluted net income                          |  | $                                    | 25,742  |   |                           | 41,209 |                     | $ | 0.62  |  
|                                            |  |                                      |         |   |                           |        |                     |   |       |  
|For the year ended                          |  |                                      |         |   |                           |        |                     |   |       |  
|December 31, 2002                           |  |                                      |         |   |                           |        |                     |   |       |  
|Net income (as restated)                    |  | $                                    | 48,059  |   |                           |        |                     |   |       |  
|Less: preferred distributions               |  |                                      | (14,695 | ) |                           |        |                     |   |       |  
|Less: preferred stock redemption issue cost |  |                                      | (1,944  | ) |                           |        |                     |   |       |  
|                                            |  |                                      |         |   |                           |        |                     |   |       |  
|Basic net income                            |  |                                      | 31,420  |   |                           | 34,454 |                     | $ | 0.91  |  
|Effect of dilutive stock options            |  |                                      |        |   |                           | 571    |                     |   | (0.01 | )
|                                            |  |                                      |         |   |                           |        |                     |   |       |  
|Diluted net income                          |  | $                                    | 31,420  |   |                           | 35,025 |                     | $ | 0.90  |  
|                                            |  |                                      |         |   |                           |        |                     |   |       |  
|For the year ended                          |  |                                      |         |   |                           |        |                     |   |       |  
|December 31, 2001                           |  |                                      |         |   |                           |        |                     |   |       |  
|Net income (as restated)                    |  | $                                    | 22,787  |   |                           |        |                     |   |       |  
|Less: preferred distributions               |  |                                      | (15,098 | ) |                           |        |                     |   |       |  
|                                            |  |                                      |         |   |                           |        |                     |   |       |  
|Basic net income                            |  |                                      | 7,689   |   |                           | 30,692 |                     | $ | 0.25  |  
|Effect of dilutive stock options            |  |                                      |        |   |                           | 396    |                     |   |      |  
|                                            |  |                                      |         |   |                           |        |                     |   |       |  
|Diluted net income                          |  | $                                    | 7,689   |   |                           | 31,088 |                     | $ | 0.25  |  
|                                            |  |                                      |         |   |                           |        |                     |   |       |  

---

|(1) |  | Restated for 2002, as discussed in Note B.
|--- |  | ------------------------------------------



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SHURGARD STORAGE CENTERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note VSegment Reporting



Shurgard currently has two reportable segments: Same Store and New Store. Our definition of Same Store includes existing
domestic stores acquired prior to January 1 of the previous year as well as developed properties that have been operating for a full two years as of January 1 of the current year. We project that newly developed domestic properties will reach
stabilization in an average of approximately 24-48 months. New Store includes existing domestic facilities that had not been acquired as of January 1 of the previous year as well as domestic developed properties that have not been operating a full
two years as of January 1 of the current year.



These
reportable segments allow us to focus on improving results from our existing domestic real estate assets and renting up our new domestic facilities. We evaluate each segments performance based on net operating income (NOI) and NOI after
indirect and leasehold expenses. NOI is defined as storage center operations revenue less direct operating expenses and real estate taxes, but does not include any allocation of indirect operating expenses. Indirect and leasehold expenses include
land or building lease expense and certain shared property costs such as bank fees, district and corporate management, purchasing, national contracts personnel and marketing, as well as certain overhead costs allocated to property operations such as
business information technology, legal services, human resources and accounting. Indirect operating expenses are allocated to stores based on number of months in operation during the period and does not include containerized storage operations,
internal real estate acquisition costs or abandoned development expenses.



The accounting policies of the segments are the same as those described in the summary of significant accounting policies. There are no inter-segment sales and transfers. We do not allocate development and acquisition
expense, depreciation and amortization, general, administrative and other, impairment, interest expense, interest income and other, net and minority interest to the segments.



102



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SHURGARD STORAGE CENTERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Using the definition of Same Store and New Store described above, the portfolio of assets reported in
these segments changes from year to year. Assets transition from New Store to Same Store over time. The entirety of goodwill balance is allocated to Same Store. The following table illustrates the results using the 2003 Same Store and New Store base
for reportable segments as of and for the years ended December 31, 2003 and 2002. Same stores include all stores acquired prior to January 1, 2002, and domestic developments opened prior to January 1, 2001. New stores represent all stores acquired
after January 1, 2002, and domestic developments opened after January 1, 2001. Disposed stores represent properties sold during 2003:



|                                                          |  |                              |           |   |                        |   |                       |  |   |                    |   |  |   |           |  
|--------------------------------------------------------- |  | ---------------------------- | --------- | - | ---------------------- | - | --------------------- |  | - | ------------------ | - |  | - | --------- | -
|                                                          |  | Year ended December 31, 2003 |          
|                                                          |  | Same Store                   |           |   | New Store              |   | Disposed              |  |   | Total              |  
|                                                          |  | (in thousands)               |          
|Storage center operations revenue                         |  | $                            | 255,138   |   |                        | $ | 40,970                |  | $ | 1,156              |   |  | $ | 297,264   |  
|Less unconsolidated joint ventures                        |  |                              |          |   |                        |   |                      |  |   | (230               | ) |  |   | (230      | )
|                                                          |  |                              |           |   |                        |   |                       |  |   |                    |   |  |   |           |  
|Consolidated revenue                                      |  |                              | 255,138   |   |                        |   | 40,970                |  |   | 926                |   |  |   | 297,034   |  
|Direct operating and real estate tax expense              |  |                              | 82,125    |   |                        |   | 20,610                |  |   | 547                |   |  |   | 103,282   |  
|Less unconsolidated joint ventures                        |  |                              |          |   |                        |   |                      |  |   | (131               | ) |  |   | (131      | )
|                                                          |  |                              |           |   |                        |   |                       |  |   |                    |   |  |   |           |  
|Consolidated direct operating and real estate tax expense |  |                              | 82,125    |   |                        |   | 20,610                |  |   | 416                |   |  |   | 103,151   |  
|                                                          |  |                              |           |   |                        |   |                       |  |   |                    |   |  |   |           |  
|Consolidated NOI                                          |  |                              | 173,013   |   |                        |   | 20,360                |  |   | 510                |   |  |   | 193,883   |  
|Indirect expense                                          |  |                              | 11,829    |   |                        |   | 3,567                 |  |   |                   |   |  |   | 15,396    |  
|Leasehold expense                                         |  |                              | 3,240     |   |                        |   | 445                   |  |   |                   |   |  |   | 3,685     |  
|Less unconsolidated joint ventures                        |  |                              |          |   |                        |   |                      |  |   | (12                | ) |  |   | (12       | )
|                                                          |  |                              |           |   |                        |   |                       |  |   |                    |   |  |   |           |  
|Consolidated indirect and leasehold expense               |  |                              | 15,069    |   |                        |   | 4,012                 |  |   | (12                | ) |  |   | 19,069    |  
|                                                          |  |                              |           |   |                        |   |                       |  |   |                    |   |  |   |           |  
|Consolidated NOI after indirect and leasehold expense     |  | $                            | 157,944   |   |                        | $ | 16,348                |  | $ | 522                |   |  | $ | 174,814   |  
|                                                          |  |                              |           |   |                        |   |                       |  |   |                    |   |  |   |           |  
|Total assets                                              |  | $                            | 1,082,090 |   |                        | $ | 409,981               |  | $ |                   |   |  | $ | 1,492,071 |  
|                                                          |  |                              |           |   |                        |   |                       |  |   |                    |   |  |   |           |  
|Total Storage center additions                            |  | $                            | 18,906    |   |                        | $ | 165,017               |  | $ | (7,524             | ) |  | $ | 175,769   |  
|                                                          |  |                              |           |   |                        |   |                       |  |   |                    |   |  |   |           |  
|                                                          | 
|                                                          |  | Year ended December 31, 2002 |          
|                                                          |  | Same Store(as restated)      |           |   | New Store(as restated) |   | Disposed(as restated) |  |   | Total(as restated) |  
|                                                          |  | (in thousands)               |          
|Storage center operations revenue                         |  | $                            | 250,661   |   |                        | $ | 15,794                |  | $ | 1,766              |   |  | $ | 268,221   |  
|Less unconsolidated joint ventures                        |  |                              | (117      | ) |                        |   |                      |  |   | (249               | ) |  |   | (366      | )
|                                                          |  |                              |           |   |                        |   |                       |  |   |                    |   |  |   |           |  
|Consolidated revenue                                      |  |                              | 250,544   |   |                        |   | 15,794                |  |   | 1,517              |   |  |   | 267,855   |  
|Direct operating and real estate tax expense              |  |                              | 79,484    |   |                        |   | 8,960                 |  |   | 796                |   |  |   | 89,240    |  
|Less unconsolidated joint ventures                        |  |                              | (32       | ) |                        |   |                      |  |   | (155               | ) |  |   | (187      | )
|                                                          |  |                              |           |   |                        |   |                       |  |   |                    |   |  |   |           |  
|Consolidated direct operating and real estate tax expense |  |                              | 79,452    |   |                        |   | 8,960                 |  |   | 641                |   |  |   | 89,053    |  
|                                                          |  |                              |           |   |                        |   |                       |  |   |                    |   |  |   |           |  
|Consolidated NOI                                          |  |                              | 171,092   |   |                        |   | 6,834                 |  |   | 876                |   |  |   | 178,802   |  
|Indirect expense                                          |  |                              | 10,312    |   |                        |   | 1,685                 |  |   |                   |   |  |   | 11,997    |  
|Leasehold expense                                         |  |                              | 3,201     |   |                        |   | 26                    |  |   |                   |   |  |   | 3,227     |  
|Less unconsolidated joint ventures                        |  |                              | (7        | ) |                        |   |                      |  |   | (13                | ) |  |   | (20       | )
|                                                          |  |                              |           |   |                        |   |                       |  |   |                    |   |  |   |           |  
|Consolidated indirect and leasehold expense               |  |                              | 13,506    |   |                        |   | 1,711                 |  |   | (13                | ) |  |   | 15,204    |  
|                                                          |  |                              |           |   |                        |   |                       |  |   |                    |   |  |   |           |  
|Consolidated NOI after indirect and leasehold expense     |  | $                            | 157,586   |   |                        | $ | 5,123                 |  | $ | 889                |   |  | $ | 163,598   |  
|                                                          |  |                              |           |   |                        |   |                       |  |   |                    |   |  |   |           |  
|Total assets                                              |  | $                            | 1,121,520 |   |                        | $ | 270,901               |  | $ | 10,408             |   |  | $ | 1,402,829 |  
|                                                          |  |                              |           |   |                        |   |                       |  |   |                    |   |  |   |           |  
|Total Storage center additions                            |  | $                            | 24,693    |   |                        | $ | 233,687               |  | $ | (2,004             | ) |  | $ | 257,005   |  
|                                                          |  |                              |           |   |                        |   |                       |  |   |                    |   |  |   |           |  



103



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SHURGARD STORAGE CENTERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following table illustrates the results using the 2002 Same Store and New Store base for
reportable segments as of and for the years ended December 31, 2002 and 2001. Same Store include all stores acquired prior to January 1, 2001, and all domestic developments opened prior to January 1, 2000. New Store represent all stores acquired
after January 1, 2001 and domestic developments opened after January 1, 2000:



|                                                          |  |                              |         |   |                        |   |         |                       |  |   |                    |   |  |   |           |  
|--------------------------------------------------------- |  | ---------------------------- | ------- | - | ---------------------- | - | ------- | --------------------- |  | - | ------------------ | - |  | - | --------- | -
|                                                          |  | Year ended December 31, 2002 |        
|                                                          |  | Same Store(as restated)      |         |   | New Store(as restated) |   |         | Disposed(as restated) |  |   | Total(as restated) |  
|                                                          |  | (in thousands)               |        
|Storage center operations revenue                         |  | $                            | 231,921 |   |                        | $ | 36,098  |                       |  | $ | 202                |   |  | $ | 268,221   |  
|Less unconsolidated joint ventures                        |  |                              | (117    | ) |                        |   | (249    | )                     |  |   |                   |   |  |   | (366      | )
|                                                          |  |                              |         |   |                        |   |         |                       |  |   |                    |   |  |   |           |  
|Consolidated revenue                                      |  |                              | 231,804 |   |                        |   | 35,849  |                       |  |   | 202                |   |  |   | 267,855   |  
|Direct operating and real estate tax expense              |  |                              | 70,917  |   |                        |   | 18,198  |                       |  |   | 125                |   |  |   | 89,240    |  
|Less unconsolidated joint ventures                        |  |                              | (32     | ) |                        |   | (155    | )                     |  |   |                   |   |  |   | (187      | )
|                                                          |  |                              |         |   |                        |   |         |                       |  |   |                    |   |  |   |           |  
|Consolidated direct operating and real estate tax expense |  |                              | 70,885  |   |                        |   | 18,043  |                       |  |   | 125                |   |  |   | 89,053    |  
|                                                          |  |                              |         |   |                        |   |         |                       |  |   |                    |   |  |   |           |  
|Consolidated NOI                                          |  |                              | 160,919 |   |                        |   | 17,806  |                       |  |   | 77                 |   |  |   | 178,802   |  
|Indirect expense                                          |  |                              | 9,340   |   |                        |   | 2,657   |                       |  |   |                   |   |  |   | 11,997    |  
|Leasehold expense                                         |  |                              | 1,225   |   |                        |   | 2,002   |                       |  |   |                   |   |  |   | 3,227     |  
|Less unconsolidated joint ventures                        |  |                              | (7      | ) |                        |   | (13     | )                     |  |   |                   |   |  |   | (20       | )
|                                                          |  |                              |         |   |                        |   |         |                       |  |   |                    |   |  |   |           |  
|Consolidated indirect and leasehold expense               |  |                              | 10,558  |   |                        |   | 4,646   |                       |  |   |                   |   |  |   | 15,204    |  
|                                                          |  |                              |         |   |                        |   |         |                       |  |   |                    |   |  |   |           |  
|Consolidated NOI after indirect and leasehold expense     |  | $                            | 150,361 |   |                        | $ | 13,160  |                       |  | $ | 77                 |   |  | $ | 163,598   |  
|                                                          |  |                              |         |   |                        |   |         |                       |  |   |                    |   |  |   |           |  
|Total assets                                              |  | $                            | 962,058 |   |                        | $ | 440,771 |                       |  | $ |                   |   |  | $ | 1,402,829 |  
|                                                          |  |                              |         |   |                        |   |         |                       |  |   |                    |   |  |   |           |  
|Total Storage center additions                            |  | $                            | 12,983  |   |                        | $ | 246,065 |                       |  | $ | (2,043             | ) |  | $ | 257,005   |  
|                                                          |  |                              |         |   |                        |   |         |                       |  |   |                    |   |  |   |           |  
|                                                          | 
|                                                          |  | Year ended December 31, 2001 |        
|                                                          |  | Same Store(as restated)      |         |   | New Store(as restated) |   |         | Disposed(as restated) |  |   | Total(as restated) |  
|                                                          |  | (in thousands)               |        
|Storage center operations revenue                         |  | $                            | 228,355 |   |                        | $ | 13,270  |                       |  | $ | 763                |   |  | $ | 242,388   |  
|Less unconsolidated joint ventures                        |  |                              | (3,278  | ) |                        |   | (54     | )                     |  |   |                   |   |  |   | (3,332    | )
|                                                          |  |                              |         |   |                        |   |         |                       |  |   |                    |   |  |   |           |  
|Consolidated revenue                                      |  |                              | 225,077 |   |                        |   | 13,216  |                       |  |   | 763                |   |  |   | 239,056   |  
|Direct operating and real estate tax expense              |  |                              | 68,451  |   |                        |   | 7,791   |                       |  |   | 377                |   |  |   | 76,619    |  
|Less unconsolidated joint ventures                        |  |                              | (787    | ) |                        |   | (92     | )                     |  |   |                   |   |  |   | (879      | )
|                                                          |  |                              |         |   |                        |   |         |                       |  |   |                    |   |  |   |           |  
|Consolidated direct operating and real estate tax expense |  |                              | 67,664  |   |                        |   | 7,699   |                       |  |   | 377                |   |  |   | 75,740    |  
|                                                          |  |                              |         |   |                        |   |         |                       |  |   |                    |   |  |   |           |  
|Consolidated NOI                                          |  |                              | 157,413 |   |                        |   | 5,517   |                       |  |   | 386                |   |  |   | 163,316   |  
|Indirect expense                                          |  |                              | 12,326  |   |                        |   | 1,217   |                       |  |   |                   |   |  |   | 13,543    |  
|Leasehold expense                                         |  |                              | 1,122   |   |                        |   | 1,760   |                       |  |   |                   |   |  |   | 2,882     |  
|Less unconsolidated joint ventures                        |  |                              | (93     | ) |                        |   | (8      | )                     |  |   |                   |   |  |   | (101      | )
|                                                          |  |                              |         |   |                        |   |         |                       |  |   |                    |   |  |   |           |  
|Consolidated indirect and leasehold expense               |  |                              | 13,355  |   |                        |   | 2,969   |                       |  |   |                   |   |  |   | 16,324    |  
|                                                          |  |                              |         |   |                        |   |         |                       |  |   |                    |   |  |   |           |  
|Consolidated NOI after indirect and leasehold expense     |  | $                            | 144,058 |   |                        | $ | 2,548   |                       |  | $ | 386                |   |  | $ | 146,992   |  
|                                                          |  |                              |         |   |                        |   |         |                       |  |   |                    |   |  |   |           |  
|Total assets                                              |  | $                            | 986,199 |   |                        | $ | 246,079 |                       |  | $ | 2,645              |   |  | $ | 1,234,923 |  
|                                                          |  |                              |         |   |                        |   |         |                       |  |   |                    |   |  |   |           |  
|Total Storage center additions                            |  | $                            | 20,577  |   |                        | $ | 101,739 |                       |  | $ | (2,235             | ) |  | $ | 120,081   |  
|                                                          |  |                              |         |   |                        |   |         |                       |  |   |                    |   |  |   |           |  



104



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SHURGARD STORAGE CENTERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following table reconciles the reportable segments revenue per the table above to
consolidated total revenue for the years ended December 31, 2003, 2002 and 2001:



|                                       |  |                         |         |                    |   |                    |  |   |        
|-------------------------------------- |  | ----------------------- | ------- | ------------------ | - | ------------------ |  | - | -------
|                                       |  | Year ended December 31,
|                                       |  | 2003                    |         | 2002 (as restated) |   | 2001 (as restated)
|                                       |  | (in thousands)         
|Consolidated Storage center operations |  | $                       | 297,034 |                    | $ | 267,855            |  | $ | 239,056
|Other                                  |  |                         | 5,280   |                    |   | 4,962              |  |   | 3,235  
|                                       |  |                         |         |                    |   |                    |  |   |        
|Total revenue                          |  | $                       | 302,314 |                    | $ | 272,817            |  | $ | 242,291
|                                       |  |                         |         |                    |   |                    |  |   |        



The following table
reconciles the reportable segments direct and indirect operating expense to consolidated operating expense and real estate taxes for the years ended December 31, 2003, 2002 and 2001:



|                                                          |  |                         |         |                    |   |                    |  |   |       
|--------------------------------------------------------- |  | ----------------------- | ------- | ------------------ | - | ------------------ |  | - | ------
|                                                          |  | Year ended December 31,
|                                                          |  | 2003                    |         | 2002 (as restated) |   | 2001 (as restated)
|                                                          |  | (in thousands)         
|Consolidated direct operating and real estate tax expense |  | $                       | 103,151 |                    | $ | 89,053             |  | $ | 75,740
|Consolidated indirect operating and leasehold expense     |  |                         | 19,069  |                    |   | 15,204             |  |   | 16,324
|Other operating expense                                   |  |                         | 6,085   |                    |   | 6,137              |  |   | 3,754 
|                                                          |  |                         |         |                    |   |                    |  |   |       
|Consolidated operating and real estate tax expense        |  | $                       | 128,305 |                    | $ | 110,394            |  | $ | 95,818
|                                                          |  |                         |         |                    |   |                    |  |   |       



The following table
reconciles the reportable segments NOI per the table above to consolidated net income for the years ended December 31, 2003, 2002 and 2001:



|                                                         |  |                         |         |   |                    |   |         |                    |  |   |         |  
|-------------------------------------------------------- |  | ----------------------- | ------- | - | ------------------ | - | ------- | ------------------ |  | - | ------- | -
|                                                         |  | Year ended December 31, |        
|                                                         |  | 2003                    |         |   | 2002 (as restated) |   |         | 2001 (as restated) | 
|                                                         |  | (in thousands)          |        
|Consolidated NOI after indirect and leasehold expense    |  | $                       | 174,814 |   |                    | $ | 163,598 |                    |  | $ | 146,992 |  
|Equity in losses from other real estate investments, net |  |                         | (3,099  | ) |                    |   | (1,178  | )                  |  |   | (3,694  | )
|Other revenue                                            |  |                         | 5,280   |   |                    |   | 4,962   |                    |  |   | 3,235   |  
|Other operating expense                                  |  |                         | (6,085  | ) |                    |   | (6,137  | )                  |  |   | (3,754  | )
|Depreciation and amortization                            |  |                         | (56,380 | ) |                    |   | (51,250 | )                  |  |   | (47,185 | )
|Impairment expense                                       |  |                         | (12,671 | ) |                    |   | (1,626  | )                  |  |   | (2,298  | )
|Interest on loans                                        |  |                         | (51,182 | ) |                    |   | (40,051 | )                  |  |   | (43,272 | )
|General, administrative and other                        |  |                         | (18,013 | ) |                    |   | (9,881  | )                  |  |   | (11,373 | )
|Interest income and other, net                           |  |                         | 4,456   |   |                    |   | 6,311   |                    |  |   | 3,259   |  
|Unrealized loss on financial instruments                 |  |                         | (2,194  | ) |                    |   | (10,999 | )                  |  |   | (1,602  | )
|Amortization of participation rights discount            |  |                         | 5,529   |   |                    |   | (4,824  | )                  |  |   | (16,876 | )
|Minority interest                                        |  |                         | (1,206  | ) |                    |   | (866    | )                  |  |   | (645    | )
|Income tax expense                                       |  |                         | (1,611  | ) |                    |   |        |                    |  |   |        |  
|                                                         |  |                         |         |   |                    |   |         |                    |  |   |         |  
|Net income                                               |  | $                       | 37,638  |   |                    | $ | 48,059  |                    |  | $ | 22,787  |  
|                                                         |  |                         |         |   |                    |   |         |                    |  |   |         |  



105



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SHURGARD STORAGE CENTERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following table reconciles the reportable segments assets to consolidated assets as of
December 31, 2003, 2002, and 2001:



|                              |  |                    |           |   |                    |   |           |                    |  |   |           |  
|----------------------------- |  | ------------------ | --------- | - | ------------------ | - | --------- | ------------------ |  | - | --------- | -
|                              |  | As of December 31, |          
|                              |  | 2003               |           |   | 2002 (as restated) |   |           | 2001 (as restated) | 
|                              |  | (in thousands)     |          
|Segment Assets                |  | $                  | 1,492,071 |   |                    | $ | 1,402,829 |                    |  | $ | 1,234,923 |  
|Unconsolidated joint ventures |  |                    | (2,310    | ) |                    |   | (2,418    | )                  |  |   | (4,845    | )
|Investment in Shurgard Europe |  |                    | 319,267   |   |                    |   |          |                    |  |   |          |  
|Corporate Assets              |  |                    | 258,063   |   |                    |   | 219,916   |                    |  |   | 123,218   |  
|                              |  |                    |           |   |                    |   |           |                    |  |   |           |  
|Consolidated Assets           |  | $                  | 2,067,091 |   |                    | $ | 1,620,327 |                    |  | $ | 1,353,296 |  
|                              |  |                    |           |   |                    |   |           |                    |  |   |           |  



Note WSupplemental Quarterly
Financial Data (Unaudited)



We have reassessed the
propriety of certain accounting policies applied historically to the items described below and concluded that these items have been accounted for incorrectly. In addition, we have identified certain other accounting errors impacting prior periods.
As a result, we have made the appropriate adjustments to our previously issued financial statements for the quarters ended March 31, June 30 and September 30, 2003 and 2002 and for the quarter ended December 31, 2002 (see Note B).

|                             |  |                                       |        |               |   |                      |  |                   |        |                      |   |            |  |   |        |  |   |        |  |   |       
|---------------------------- |  | ------------------------------------- | ------ | ------------- | - | -------------------- |  | ----------------- | ------ | -------------------- | - | ---------- |  | - | ------ |  | - | ------ |  | - | ------
|                             | 
|                             |  | Three months Ended                   
|                             |  | March 31, 2003                        |        | June 30, 2003 |   | September 30, 2003   |  | December 31, 2003
|                             |  | Aspreviouslyreported                  |        | Asrestated    |   | Aspreviouslyreported |  | Asrestated        |        | Aspreviouslyreported |   | Asrestated |  |  
|                             |  | (in thousands, except per share data)
|Revenue                      |  | $                                     | 66,804 |               | $ | 70,584               |  | $                 | 69,601 |                      | $ | 73,565     |  | $ | 76,242 |  | $ | 80,353 |  | $ | 77,812
|Income from operations       |  |                                       | 23,447 |               |   | 24,343               |  |                   | 22,070 |                      |   | 23,346     |  |   | 27,615 |  |   | 29,356 |  |   | 9,900 
|Net income                   |  |                                       | 14,013 |               |   | 13,254               |  |                   | 10,538 |                      |   | 8,910      |  |   | 15,649 |  |   | 12,466 |  |   | 3,008 
|Net income per common share: |  |                                       |        |               |   |                      |  |                   |        |                      |   |            |  |   |        |  |   |        |  |   |       
|Basic                        |  | $                                     | 0.31   |               | $ | 0.29                 |  | $                 | 0.21   |                      | $ | 0.17       |  | $ | 0.29   |  | $ | 0.22   |  | $ | 0.00  
|Diluted                      |  | $                                     | 0.30   |               | $ | 0.28                 |  | $                 | 0.21   |                      | $ | 0.16       |  | $ | 0.28   |  | $ | 0.21   |  | $ | 0.00  

|                             |  |                                       |        |               |   |                      |  |                   |        |                      |   |            |  |                      |        |            |   |        |  |   |        |  |   |       
|---------------------------- |  | ------------------------------------- | ------ | ------------- | - | -------------------- |  | ----------------- | ------ | -------------------- | - | ---------- |  | -------------------- | ------ | ---------- | - | ------ |  | - | ------ |  | - | ------
|                             | 
|                             |  | Three months Ended                   
|                             |  | March 31, 2002                        |        | June 30, 2002 |   | September 30, 2002   |  | December 31, 2002
|                             |  | Aspreviouslyreported                  |        | Asrestated    |   | Aspreviouslyreported |  | Asrestated        |        | Aspreviouslyreported |   | Asrestated |  | Aspreviouslyreported |        | Asrestated
|                             |  | (in thousands, except per share data)
|Revenue                      |  | $                                     | 60,616 |               | $ | 62,738               |  | $                 | 64,013 |                      | $ | 66,286     |  | $                    | 69,400 |            | $ | 72,604 |  | $ | 70,084 |  | $ | 71,189
|Income from operations       |  |                                       | 23,099 |               |   | 23,416               |  |                   | 24,952 |                      |   | 25,212     |  |                      | 27,681 |            |   | 29,405 |  |   | 24,381 |  |   | 21,633
|Net income                   |  |                                       | 13,389 |               |   | 12,126               |  |                   | 14,083 |                      |   | 12,477     |  |                      | 13,390 |            |   | 12,632 |  |   | 15,771 |  |   | 10,824
|Net income per common share: |  |                                       |        |               |   |                      |  |                   |        |                      |   |            |  |                      |        |            |   |        |  |   |        |  |   |       
|Basic                        |  | $                                     | 0.28   |               | $ | 0.24                 |  | $                 | 0.30   |                      | $ | 0.25       |  | $                    | 0.22   |            | $ | 0.20   |  | $ | 0.36   |  | $ | 0.22  
|Diluted                      |  | $                                     | 0.28   |               | $ | 0.24                 |  | $                 | 0.29   |                      | $ | 0.25       |  | $                    | 0.22   |            | $ | 0.20   |  | $ | 0.35   |  | $ | 0.22  



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SHURGARD STORAGE CENTERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note XContingent Liabilities and Commitments



The following tables summarize our contractual obligations and our
off-balance sheet commitments as of December 31, 2003.



|                                                      |  |                                            |         |      |   |           |  |           |        |                |   |        |  |   |        
|----------------------------------------------------- |  | ------------------------------------------ | ------- | ---- | - | --------- |  | --------- | ------ | -------------- | - | ------ |  | - | -------
|                                                      |  | Payments due by Period                    
|                                                      |  | Total                                      |         | 2004 |   | 2005-2006 |  | 2007-2008 |        | 2009 andbeyond
|                                                      |  | (in thousands)                            
|Contractual Obligations                               |  |                                            |         |      |   |           |  |           |        |                |   |        |  |   |        
|Long-term debt                                        |  | $                                          | 709,889 |      | $ | 123,242   |  | $         | 26,384 |                | $ | 74,259 |  | $ | 486,004
|Operating lease obligations                           |  |                                            | 75,994  |      |   | 5,881     |  |           | 11,801 |                |   | 8,293  |  |   | 50,019 
|Participation rights liability                        |  |                                            | 40,623  |      |   | 40,623    |  |           |       |                |   |       |  |   |       
|                                                      |  |                                            |         |      |   |           |  |           |        |                |   |        |  |   |        
|Totals                                                |  | $                                          | 826,506 |      | $ | 169,746   |  | $         | 38,185 |                | $ | 82,552 |  | $ | 536,023
|                                                      |  |                                            |         |      |   |           |  |           |        |                |   |        |  |   |        
|                                                      | 
|                                                      |  | Amount of Commitment Expiration per Period
|                                                      |  | Totalamountscommitted                      |         | 2004 |   | 2005-2006 |  | 2007-2008 |        | 2009 andbeyond
|                                                      |  | (in thousands)                            
|Other Commercial Commitments & Contingent Liabilities |  |                                            |         |      |   |           |  |           |        |                |   |        |  |   |        
|Development contract commitments                      |  | $                                          | 13,565  |      | $ | 13,565    |  | $         |       |                | $ |       |  | $ |       
|Development loan Commitments                          |  |                                            | 4,449   |      |   | 4,449     |  |           |       |                |   |       |  |   |       
|Loan commitments (see Note L)                         |  |                                            | 20,000  |      |   |          |  |           |       |                |   | 20,000 |  |   |       
|Affiliated developer guarantee                        |  |                                            | 14,048  |      |   | 14,048    |  |           |       |                |   |       |  |   |       
|                                                      |  |                                            |         |      |   |           |  |           |        |                |   |        |  |   |        
|Totals                                                |  | $                                          | 52,062  |      | $ | 32,062    |  | $         |       |                | $ | 20,000 |  | $ |       
|                                                      |  |                                            |         |      |   |           |  |           |        |                |   |        |  |   |        



We are a defendant in
litigation filed on September 17, 2002, in the Superior Court of California for Orange County styled as Gary Drake v. Shurgard Storage Centers, Inc. et al (Case No. 02CC00152). The complaint alleges that we misrepresented the size of our storage
units, seeks class action status and seeks damages, injunctive relief and declaratory relief against us under California statutory and common law relating to consumer protection, unfair competition, fraud and deceit and negligent misrepresentation.
The Court recently ruled that the class of potential members in this lawsuit is limited to California customers of the Company. No class has yet been certified. We do not currently believe that the outcome of this litigation will have a material
adverse effect on our financial position, operating results or cash flows. However, we cannot presently determine the potential total damages, if any, or the ultimate outcome of the litigation. We are vigorously defending this action.



We are a defendant in litigation filed on October 30, 2002, in the United
States District Court for the Northern District of California styled as Patricia Scura et al. v. Shurgard Storage Centers, Inc. (Case No. C 02-5246-WDB). The complaint alleges that we required our hourly store employees to perform work before and
after their scheduled work times and failed to pay overtime compensation for work performed before and after hours and during meal periods. The lawsuit seeks class action status and seeks damages, injunctive relief and a declaratory judgment against
us under the federal Fair Labor Standards Act and California statutory wage and hour laws and laws relating to unlawful and unfair business practices. We do not currently believe that the outcome of this litigation will have a material adverse
effect on our financial position, operating results or cash flows. However, we cannot presently determine the potential total damages, if any, or the ultimate outcome of the litigation. We are vigorously defending this action.



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SHURGARD STORAGE CENTERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



In addition, from time to time we are subject to various legal proceedings that arise in the ordinary
course of business. Although we cannot predict the outcomes of these proceedings with certainty, we do not believe that the disposition of these matters and the matters discussed above will have a material adverse effect on our financial position,
operating results or cash flows.



Environmental assessments
and/or remediation costs are accrued when it is probable that such efforts will be required and the related costs can be reasonably estimated. The majority of our real estate facilities have undergone independent environmental investigations and our
policy is to have such investigations conducted on all new real estate acquired. Although there can be no assurance that there is not environmental contamination at our facilities, we are not aware of any such contamination at any of our facilities
that individually or in aggregate would be material to our business, financial position, operating results or cash flows.



The New York Stock Exchange (NYSE) requires that its listed companies distribute annual reports to shareholders not later than 120 days after the close of
each fiscal year. On April 2, 2004, we received a letter from the NYSE that we would be included in a list of late filers posted on our Company and market data pages on the NYSEs website. The late filer designation is a LF added to
our trading symbol. Failure to mail the annual report to the shareholders on a timely basis could subject us to potential delisting of our securities on the NYSE. As of the date of filing our annual report on Form 10-K, we have not received a notice
from the NYSE that it intends to delist our stock. We believe that the LF designation will be removed from our trading symbol on the business day following receipt of this report by the NYSE.



Note YSubsequent Events



In September 2003, CCPRE-Storage, LLC exercised its right to have the joint
venture put to us five properties. In March 2004, we gave notice of our intention to acquire one of the properties subject to the offer for $4.4 million and declined to purchase the remaining four properties at the put price. The properties that we
did not purchase out of the joint venture may be sold on the open market at the discretion of our joint venture partner. Our partner in CCP notified us in April 2004 that they consider us to be in default under the joint venture agreement, in part
because we did not include a financing commitment for the properties we are purchasing. We notified them in return that we do not agree with their determination that we are in default, and have deposited funds in escrow necessary to purchase the one
property. As of the date of filing our annual report on Form 10-K, our partner CCP has taken no action to market the properties or exercise default remedies under the agreement.



As of February 27, 2004 we acquired the remaining limited partners interests in Shurgard Institutional Fund L.P.
(Institutional I) for $2.5 million. The calculation of the purchase price payable for the acquired limited partners interests was governed by the terms of the partnership agreement of Institutional I, and was based upon the fair market value
of the properties owned by Institutional I as determined by a third party appraisal.



In April 2004, the terms of our $360 million revolving line of credit were amended such that certain subsidiaries of Shurgard became guarantors under the line of credit and to accommodate certain modifications in our
financial statement presentation. Also we entered into a new unsecured credit agreement to borrow up to $100 million at a variable interest rate of 125 basis points over LIBOR, or at the prime rate at our option. The facility was provided by a
sub-group of our existing bank group and was fully underwritten by our agent bank. The facility contains various covenants that are consistent with our $360 million revolving credit facility and matures in February 2005.



By the end of the first quarter of 2004, we had ceased to use all of our
containerized facilities. As of May 2004, we had entered in subleasing agreements for two warehouses and we were still examining sub-leasing



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SHURGARD STORAGE CENTERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



possibilities for one warehouse. In the first quarter of 2004 we recognized at its fair value a liability for the remaining lease rentals reduced by
estimated sublease rentals of $1.8 million. Also, in the first quarter of 2004 we incurred termination benefits, contract termination costs, costs associated with the relocation of customers of approximately $385,000.



On May 11, 2004, Shurgard Europe entered into its second development joint
venture with Crescent (First Shurgard-II). Similar to the First Shurgard joint venture, this new joint venture will develop as many as 35 self-storage properties in Europe. The joint venture will be capitalized with up to 100 million of equity
and 140 million of debt. Shurgard Europe will provide 20% of the equity with the balance being provided by Crescent. The joint venture has also entered into a term sheet with a commercial bank which will arrange the debt for the joint venture.



In May the Board of Directors declared a first quarter
dividend of $0.55 per share. The dividend is payable on May 25, 2004, to shareholders of record as of May 13, 2004.



On May 11, 2004 we filed a notification of late filing pursuant to Rule 12b-25 for our quarterly report on Form 10-Q for the quarter ended March 31, 2004.
We have not filed the Form 10-Q within the extension period provided by Rule 12b-25 as of the date of filing of this report.



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Report of Independent Auditors on

Financial Statement Schedule



To the Board of Directors and Shareholders

of Shurgard Storage Centers, Inc.



Our audits of the consolidated financial statements referred to in our report dated May 14, 2004, appearing on page 64 in this Annual Report on Form 10-K
also included an audit of the financial statement schedule listed in Item 8 of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.



/s/    PricewaterhouseCoopers LLP

Seattle, Washington

May 14, 2004



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Schedule IIIReal Estate and Accumulated Depreciation



|                            |  |               |  |       |      |               |                        |              |                     |                              |  |                                       |       |                          |   |                       |             |   |            |  |                    |       |  |   |       |  |   |       |  |   |        |   |  |         |  |         |  |    
|--------------------------- |  | ------------- |  | ----- | ---- | ------------- | ---------------------- | ------------ | ------------------- | ---------------------------- |  | ------------------------------------- | ----- | ------------------------ | - | --------------------- | ----------- | - | ---------- |  | ------------------ | ----- |  | - | ----- |  | - | ----- |  | - | ------ | - |  | ------- |  | ------- |  | ---
|                            |  | Location      |  | State |      | Encum-brances |                        | INITIAL COST |                     | CostsSubsequenttoAcquisition |  | Gross Amounts as of December 31, 2003 |       | Accum. Depr.             |   |                       | Owned Since |   | Year Built |  | Depr. Life in mos.
|Property Name               |  |               |  |       | Land |               | Building,Equip.& Other |              | GrossStorageCenters |                              |  | Land                                  |       | Building, Equip. & Other |   | Gross Storage Centers |             |   |            | 
|Ahwatukee                   |  | Phoenix       |  | AZ    |      | $             |                       |              | $                   | 721                          |  | $                                     | 2,469 |                          | $ | 3,190                 |             | $ | 1          |  | $                  | 721   |  | $ | 2,470 |  | $ | 3,191 |  | $ | (507   | ) |  | 1998    |  | 1998    |  | 360
|Arrowhead                   |  | Glendale      |  | AZ    |      |               |                       |              |                     | 569                          |  |                                       | 2,600 |                          |   | 3,169                 |             |   | 10         |  |                    | 569   |  |   | 2,610 |  |   | 3,179 |  |   | (556   | ) |  | 1997    |  | 1997    |  | 360
|Chandler                    |  | Chandler      |  | AZ    |      |               |                       |              |                     | 652                          |  |                                       | 2,608 |                          |   | 3,260                 |             |   | 582        |  |                    | 652   |  |   | 3,190 |  |   | 3,842 |  |   | (1,059 | ) |  | 1986    |  | 1986    |  | 360
|Collonade Mall              |  | Phoenix       |  | AZ    |      |               |                       |              |                     |                             |  |                                       | 1,146 |                          |   | 1,146                 |             |   | 1          |  |                    |      |  |   | 1,147 |  |   | 1,147 |  |   | (258   | ) |  | 1998    |  | 1997    |  | 360
|Cooper Road                 |  | Gilbert       |  | AZ    |      |               |                       |              |                     | 376                          |  |                                       | 2,471 |                          |   | 2,847                 |             |   | 8          |  |                    | 376   |  |   | 2,479 |  |   | 2,855 |  |   | (237   | ) |  | 2001    |  | 2001    |  | 360
|Desert Sky                  |  | Phoenix       |  | AZ    |      |               |                       |              |                     | 536                          |  |                                       | 2,903 |                          |   | 3,439                 |             |   |           |  |                    | 536   |  |   | 2,903 |  |   | 3,439 |  |   | (230   | ) |  | 2001    |  | 2001    |  | 360
|Dobson Ranch                |  | Mesa          |  | AZ    |      |               |                       |              |                     | 499                          |  |                                       | 1,996 |                          |   | 2,495                 |             |   | 211        |  |                    | 499   |  |   | 2,207 |  |   | 2,706 |  |   | (579   | ) |  | 1996    |  | 1978    |  | 360
|Houghton                    |  | Tucson        |  | AZ    |      |               | 2,261                  |              |                     | 607                          |  |                                       | 2,536 |                          |   | 3,143                 |             |   | 252        |  |                    | 607   |  |   | 2,788 |  |   | 3,395 |  |   | (358   | ) |  | 1999    |  | 2000    |  | 360
|Mesa                        |  | Mesa          |  | AZ    |      |               |                       |              |                     | 352                          |  |                                       | 1,829 |                          |   | 2,181                 |             |   | 543        |  |                    | 355   |  |   | 2,369 |  |   | 2,724 |  |   | (852   | ) |  | 1987    |  | 1985    |  | 360
|Mill Avenue                 |  | Tempe         |  | AZ    |      |               |                       |              |                     | 147                          |  |                                       | 1,799 |                          |   | 1,946                 |             |   | 52         |  |                    | 431   |  |   | 1,567 |  |   | 1,998 |  |   | (273   | ) |  | 1999    |  | 1998    |  | 360
|Oro Valley                  |  | Tucson        |  | AZ    |      |               |                       |              |                     | 564                          |  |                                       | 2,908 |                          |   | 3,472                 |             |   |           |  |                    | 564   |  |   | 2,908 |  |   | 3,472 |  |   | (74    | ) |  | 2003    |  | 2003    |  | 360
|Phoenix                     |  | Phoenix       |  | AZ    |      |               |                       |              |                     | 670                          |  |                                       | 2,697 |                          |   | 3,367                 |             |   | 157        |  |                    | 656   |  |   | 2,868 |  |   | 3,524 |  |   | (1,021 | ) |  | 1985    |  | 1984    |  | 360
|Phoenix East                |  | Phoenix       |  | AZ    |      |               |                       |              |                     | 543                          |  |                                       | 2,189 |                          |   | 2,732                 |             |   | 334        |  |                    | 543   |  |   | 2,523 |  |   | 3,066 |  |   | (872   | ) |  | 1987    |  | 1984    |  | 360
|Scottsdale Air Park         |  | Scottsdale    |  | AZ    |      |               |                       |              |                     | 880                          |  |                                       | 3,694 |                          |   | 4,574                 |             |   | 13         |  |                    | 880   |  |   | 3,707 |  |   | 4,587 |  |   | (869   | ) |  | 1997    |  | 1997    |  | 360
|Scottsdale North            |  | Scottsdale    |  | AZ    |      |               |                       |              |                     | 1,093                        |  |                                       | 4,811 |                          |   | 5,904                 |             |   | 168        |  |                    | 1,093 |  |   | 4,979 |  |   | 6,072 |  |   | (1,685 | ) |  | 1985/87 |  | 1985    |  | 360
|Scottsdale South            |  | Scottsdale    |  | AZ    |      |               |                       |              |                     | 410                          |  |                                       | 1,743 |                          |   | 2,153                 |             |   | 210        |  |                    | 410   |  |   | 1,953 |  |   | 2,363 |  |   | (713   | ) |  | 1985    |  | 1976/85 |  | 360
|Shea                        |  | Scottsdale    |  | AZ    |      |               |                       |              |                     | 786                          |  |                                       | 3,165 |                          |   | 3,951                 |             |   | 163        |  |                    | 807   |  |   | 3,307 |  |   | 4,114 |  |   | (729   | ) |  | 1997    |  | 1996    |  | 360
|Speedway                    |  | Tucson        |  | AZ    |      |               |                       |              |                     | 744                          |  |                                       | 2,304 |                          |   | 3,048                 |             |   | 716        |  |                    | 773   |  |   | 2,991 |  |   | 3,764 |  |   | (546   | ) |  | 1998    |  | 1998    |  | 360
|Tanque Verde                |  | Tucson        |  | AZ    |      |               |                       |              |                     | 581                          |  |                                       | 2,658 |                          |   | 3,239                 |             |   |           |  |                    | 581   |  |   | 2,658 |  |   | 3,239 |  |   | (178   | ) |  | 2002    |  | 2002    |  | 360
|Tempe                       |  | Tempe         |  | AZ    |      |               |                       |              |                     | 273                          |  |                                       | 1,110 |                          |   | 1,383                 |             |   | 243        |  |                    | 273   |  |   | 1,353 |  |   | 1,626 |  |   | (480   | ) |  | 1984    |  | 1976    |  | 360
|Union Hills                 |  | Phoenix       |  | AZ    |      |               |                       |              |                     | 615                          |  |                                       | 2,475 |                          |   | 3,090                 |             |   | 153        |  |                    | 617   |  |   | 2,626 |  |   | 3,243 |  |   | (516   | ) |  | 1998    |  | 1998    |  | 360
|Val Vista                   |  | Gilbert       |  | AZ    |      |               |                       |              |                     | 682                          |  |                                       | 2,805 |                          |   | 3,487                 |             |   | 540        |  |                    | 778   |  |   | 3,249 |  |   | 4,027 |  |   | (480   | ) |  | 1999    |  | 1999    |  | 360
|Warner                      |  | Tempe         |  | AZ    |      |               |                       |              |                     | 313                          |  |                                       | 1,352 |                          |   | 1,665                 |             |   | 219        |  |                    | 313   |  |   | 1,571 |  |   | 1,884 |  |   | (665   | ) |  | 1995    |  | 1985    |  | 360
|Alicia Parkway              |  | Laguna Hills  |  | CA    |      |               |                       |              |                     | 1,729                        |  |                                       | 7,027 |                          |   | 8,756                 |             |   | 282        |  |                    | 1,729 |  |   | 7,309 |  |   | 9,038 |  |   | (1,337 | ) |  | 1998    |  | 1991    |  | 360
|Aliso Viejo                 |  | Aliso Viejo   |  | CA    |      |               |                       |              |                     | 2,218                        |  |                                       | 3,628 |                          |   | 5,846                 |             |   | 806        |  |                    | 2,218 |  |   | 4,434 |  |   | 6,652 |  |   | (1,157 | ) |  | 1996    |  | 1996    |  | 360
|Antioch                     |  | Antioch       |  | CA    |      |               | 3,851                  |              |                     | 638                          |  |                                       | 4,366 |                          |   | 5,004                 |             |   | 779        |  |                    | 678   |  |   | 5,105 |  |   | 5,783 |  |   | (663   | ) |  | 1999    |  | 1999    |  | 360
|Bloomington                 |  | Bloomington   |  | CA    |      |               |                       |              |                     | 237                          |  |                                       | 1,027 |                          |   | 1,264                 |             |   | 91         |  |                    | 237   |  |   | 1,118 |  |   | 1,355 |  |   | (307   | ) |  | 1997    |  | 1983    |  | 360
|Blossom Valley              |  | San Jose      |  | CA    |      |               |                       |              |                     | 1,204                        |  |                                       | 4,128 |                          |   | 5,332                 |             |   | 539        |  |                    | 1,212 |  |   | 4,659 |  |   | 5,871 |  |   | (847   | ) |  | 1998    |  | 1998    |  | 360
|Cabot Road-Resco LLC        |  | Laguna Niguel |  | CA    |      |               | 4,343                  |              |                     | 1,300                        |  |                                       | 6,129 |                          |   | 7,429                 |             |   | 13         |  |                    | 1,300 |  |   | 6,142 |  |   | 7,442 |  |   | (486   | ) |  | 2001    |  | 2001    |  | 360
|Capitol Expressway          |  | San Jose      |  | CA    |      |               |                       |              |                     | 973                          |  |                                       | 6,181 |                          |   | 7,154                 |             |   | 334        |  |                    | 995   |  |   | 6,493 |  |   | 7,488 |  |   | (698   | ) |  | 2000    |  | 2000    |  | 360
|Castro Valley               |  | Castro Valley |  | CA    |      |               |                       |              |                     | 810                          |  |                                       | 4,010 |                          |   | 4,820                 |             |   | 51         |  |                    | 907   |  |   | 3,964 |  |   | 4,871 |  |   | (1,120 | ) |  | 1996    |  | 1975    |  | 360
|Castro Valley Business Park |  | Castro Valley |  | CA    |      |               |                       |              |                     | 97                           |  |                                       | 390   |                          |   | 487                   |             |   | 26         |  |                    | 97    |  |   | 416   |  |   | 513   |  |   | (114   | ) |  | 1996    |  | 1975    |  | 360
|Colton                      |  | Colton        |  | CA    |      |               |                       |              |                     | 283                          |  |                                       | 1,142 |                          |   | 1,425                 |             |   | 145        |  |                    | 283   |  |   | 1,287 |  |   | 1,570 |  |   | (456   | ) |  | 1985    |  | 1984    |  | 360
|Costa MesaResco LLC        |  | Costa Mesa    |  | CA    |      |               | 2,463                  |              |                     | 1,057                        |  |                                       | 2,956 |                          |   | 4,013                 |             |   | 208        |  |                    | 882   |  |   | 3,339 |  |   | 4,221 |  |   | (497   | ) |  | 1999    |  | 1998    |  | 360
|Culver City                 |  | Culver City   |  | CA    |      |               |                       |              |                     | 1,039                        |  |                                       | 4,146 |                          |   | 5,185                 |             |   | 222        |  |                    | 1,039 |  |   | 4,368 |  |   | 5,407 |  |   | (1,494 | ) |  | 1988    |  | 1989    |  | 360
|Daly City                   |  | Daly City     |  | CA    |      |               |                       |              |                     | 1,846                        |  |                                       | 5,438 |                          |   | 7,284                 |             |   | 808        |  |                    | 1,846 |  |   | 6,246 |  |   | 8,092 |  |   | (2,120 | ) |  | 1995    |  | 1989    |  | 360



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|                           |  |                    |  |       |      |               |                        |              |                     |                              |  |        |                                       |                          |              |                       |       |             |        |            |        |                    |        |   |  |      |  |           |  |    
|-------------------------- |  | ------------------ |  | ----- | ---- | ------------- | ---------------------- | ------------ | ------------------- | ---------------------------- |  | ------ | ------------------------------------- | ------------------------ | ------------ | --------------------- | ----- | ----------- | ------ | ---------- | ------ | ------------------ | ------ | - |  | ---- |  | --------- |  | ---
|                           |  | Location           |  | State |      | Encum-brances |                        | INITIAL COST |                     | CostsSubsequenttoAcquisition |  |        | Gross Amounts as of December 31, 2003 |                          | Accum. Depr. |                       |       | Owned Since |        | Year Built |        | Depr. Life in mos.
|Property Name              |  |                    |  |       | Land |               | Building,Equip.& Other |              | GrossStorageCenters |                              |  | Land   |                                       | Building, Equip. & Other |              | Gross Storage Centers |       |             |        |           
|El Cajon                   |  | El Cajon           |  | CA    |      |              |                        | 1,013        |                     | 4,113                        |  | 5,126  |                                       | 680                      |              |                       | 1,013 |             | 4,793  |            | 5,806  |                    | (1,671 | ) |  | 1986 |  | 1977      |  | 360
|El Cerito                  |  | Richmond           |  | CA    |      |              |                        | 765          |                     | 3,055                        |  | 3,820  |                                       | 242                      |              |                       | 765   |             | 3,297  |            | 4,062  |                    | (1,094 | ) |  | 1986 |  | 1987      |  | 360
|FontanaSierra             |  | Fontana            |  | CA    |      |              |                        | 391          |                     | 1,572                        |  | 1,963  |                                       | 764                      |              |                       | 589   |             | 2,138  |            | 2,727  |                    | (674   | ) |  | 1987 |  | 1980/85   |  | 360
|Hayward                    |  | Hayward            |  | CA    |      |              |                        | 322          |                     | 1,322                        |  | 1,644  |                                       | 297                      |              |                       | 322   |             | 1,619  |            | 1,941  |                    | (596   | ) |  | 1985 |  | 1983      |  | 360
|Huntington Beach           |  | Huntington Beach   |  | CA    |      |              |                        | 949          |                     | 3,794                        |  | 4,743  |                                       | 420                      |              |                       | 949   |             | 4,214  |            | 5,163  |                    | (1,401 | ) |  | 1988 |  | 1986      |  | 360
|KearneyBalboa             |  | San Diego          |  | CA    |      |              |                        | 830          |                     | 3,333                        |  | 4,163  |                                       | 320                      |              |                       | 830   |             | 3,653  |            | 4,483  |                    | (1,334 | ) |  | 1986 |  | 1984      |  | 360
|La Habra                   |  | La Habra           |  | CA    |      |              |                        | 715          |                     | 2,886                        |  | 3,601  |                                       | 388                      |              |                       | 715   |             | 3,274  |            | 3,989  |                    | (1,140 | ) |  | 1986 |  | 1979/91   |  | 360
|Livermore                  |  | Livermore          |  | CA    |      |              |                        | 1,190        |                     | 4,697                        |  | 5,887  |                                       |                         |              |                       | 1,190 |             | 4,697  |            | 5,887  |                    | (324   | ) |  | 2002 |  | 2002      |  | 360
|Martinez                   |  | Martinez           |  | CA    |      |              |                        | 1,012        |                     | 2,215                        |  | 3,227  |                                       | 3,062                    |              |                       | 1,748 |             | 4,541  |            | 6,289  |                    | (1,120 | ) |  | 1995 |  | 1987      |  | 360
|Monterey                   |  | Sand City          |  | CA    |      |              |                        | 1,277        |                     | 6,147                        |  | 7,424  |                                       |                         |              |                       | 1,277 |             | 6,147  |            | 7,424  |                    | (294   | ) |  | 2002 |  | 2002      |  | 360
|Mountain View              |  | Mountain View      |  | CA    |      |              |                        | 439          |                     | 1,757                        |  | 2,196  |                                       | 241                      |              |                       | 439   |             | 1,998  |            | 2,437  |                    | (676   | ) |  | 1987 |  | 1986      |  | 360
|Natomas                    |  | Sacramento         |  | CA    |      |              |                        | 1,308        |                     | 4,018                        |  | 5,326  |                                       |                         |              |                       | 1,308 |             | 4,018  |            | 5,326  |                    | (12    | ) |  | 2003 |  | 2003      |  | 360
|Newark                     |  | Newark             |  | CA    |      |              |                        | 855          |                     | 3,421                        |  | 4,276  |                                       | 180                      |              |                       | 855   |             | 3,601  |            | 4,456  |                    | (888   | ) |  | 1996 |  | 1991      |  | 360
|Oakley                     |  | Oakley             |  | CA    |      |              |                        | 1,597        |                     | 4,688                        |  | 6,285  |                                       |                         |              |                       | 1,597 |             | 4,688  |            | 6,285  |                    | (347   | ) |  | 2001 |  | 2001      |  | 360
|Ontario                    |  | Ontario            |  | CA    |      |              |                        | 512          |                     | 2,058                        |  | 2,570  |                                       | 52                       |              |                       | 512   |             | 2,110  |            | 2,622  |                    | (538   | ) |  | 1996 |  | 1984      |  | 360
|Orange                     |  | Orange             |  | CA    |      |              |                        | 1,144        |                     | 4,580                        |  | 5,724  |                                       | 96                       |              |                       | 1,144 |             | 4,676  |            | 5,820  |                    | (1,172 | ) |  | 1996 |  | 1985      |  | 360
|PalmsRESCO LLC            |  | Los Angeles        |  | CA    |      |              |                        | 1,598        |                     | 5,265                        |  | 6,863  |                                       |                         |              |                       | 1,598 |             | 5,265  |            | 6,863  |                    |       |   |  | 2003 |  | 2001      |  | 360
|Palo Alto                  |  | Palo Alto          |  | CA    |      |              |                        | 701          |                     | 2,805                        |  | 3,506  |                                       | 271                      |              |                       | 705   |             | 3,072  |            | 3,777  |                    | (1,044 | ) |  | 1986 |  | 1987      |  | 360
|Pinole                     |  | Pinole             |  | CA    |      |              |                        | 614          |                     | 1,023                        |  | 1,637  |                                       | 2,132                    |              |                       | 1,140 |             | 2,629  |            | 3,769  |                    | (560   | ) |  | 1995 |  | 1988      |  | 360
|Rancho San Diego-RESCO LLC |  | Rancho San Diego   |  | CA    |      |              |                        | 1,312        |                     | 4,884                        |  | 6,196  |                                       |                         |              |                       | 1,312 |             | 4,884  |            | 6,196  |                    | (169   | ) |  | 2003 |  | 2002      |  | 360
|Rohnert Park               |  | Rohnert Park       |  | CA    |      |              |                        | 1,218        |                     | 4,296                        |  | 5,514  |                                       | (70                      | )            |                       | 1,000 |             | 4,444  |            | 5,444  |                    | (343   | ) |  | 2001 |  | 2001      |  | 360
|Sacramento                 |  | Sacramento         |  | CA    |      |              |                        | 680          |                     | 2,723                        |  | 3,403  |                                       | 119                      |              |                       | 680   |             | 2,842  |            | 3,522  |                    | (692   | ) |  | 1996 |  | 1991      |  | 360
|San Juan Creek-Resco LLC   |  | San Juan Capistran |  | CA    |      |              |                        | 1,450        |                     | 5,526                        |  | 6,976  |                                       | 1,345                    |              |                       | 1,450 |             | 6,871  |            | 8,321  |                    | (452   | ) |  | 2001 |  | 2001      |  | 360
|San Leandro                |  | San Leandro        |  | CA    |      |              |                        | 776          |                     | 3,105                        |  | 3,881  |                                       | 147                      |              |                       | 776   |             | 3,252  |            | 4,028  |                    | (827   | ) |  | 1996 |  | 1991      |  | 360
|San Lorenzo                |  | San Lorenzo        |  | CA    |      |              |                        | 611          |                     | 2,447                        |  | 3,058  |                                       | 199                      |              |                       | 611   |             | 2,646  |            | 3,257  |                    | (679   | ) |  | 1996 |  | 1990      |  | 360
|Santa Ana                  |  | Santa Ana          |  | CA    |      |              |                        | 1,467        |                     | 5,920                        |  | 7,387  |                                       | 500                      |              |                       | 1,467 |             | 6,420  |            | 7,887  |                    | (2,200 | ) |  | 1986 |  | 1975/86   |  | 360
|SF-Evans                   |  | San Francisco      |  | CA    |      |              |                        | 2,078        |                     | 11,106                       |  | 13,184 |                                       |                         |              |                       | 2,078 |             | 11,106 |            | 13,184 |                    | (417   | ) |  | 2002 |  | 2002      |  | 360
|Solana Beach               |  | Solana Beach       |  | CA    |      |              |                        |             |                     | 6,837                        |  | 6,837  |                                       | 413                      |              |                       |      |             | 7,250  |            | 7,250  |                    | (2,515 | ) |  | 1987 |  | 1984      |  | 360
|South San Francisco        |  | San Francisco      |  | CA    |      |              |                        | 721          |                     | 2,897                        |  | 3,618  |                                       | 291                      |              |                       | 721   |             | 3,188  |            | 3,909  |                    | (1,105 | ) |  | 1987 |  | 1985      |  | 360
|Sunnyvale                  |  | Sunnyvale          |  | CA    |      |              |                        | 1,697        |                     | 6,541                        |  | 8,238  |                                       | 5,216                    |              |                       | 1,697 |             | 11,757 |            | 13,454 |                    | (3,155 | ) |  | 1986 |  | 1974/75   |  | 360
|Tracy                      |  | Tracy              |  | CA    |      |              |                        | 732          |                     | 2,928                        |  | 3,660  |                                       | 129                      |              |                       | 732   |             | 3,057  |            | 3,789  |                    | (776   | ) |  | 1996 |  | 1986      |  | 360
|Tracy II                   |  | Tracy              |  | CA    |      |              |                        | 840          |                     | 3,746                        |  | 4,586  |                                       | (837                     | )            |                       | 839   |             | 2,910  |            | 3,749  |                    | (173   | ) |  | 2002 |  | 2000      |  | 360
|Union City                 |  | Hayward            |  | CA    |      |              |                        | 287          |                     | 1,208                        |  | 1,495  |                                       | 197                      |              |                       | 287   |             | 1,405  |            | 1,692  |                    | (497   | ) |  | 1985 |  | 1985      |  | 360
|Van Ness                   |  | San Francisco      |  | CA    |      |              |                        | 5,289        |                     | 9,001                        |  | 14,290 |                                       | 355                      |              |                       | 5,289 |             | 9,356  |            | 14,645 |                    | (1,195 | ) |  | 1999 |  | 1999/1934 |  | 360
|Vista Park-Land Lease      |  | San Jose           |  | CA    |      |              |                        |             |                     | 93                           |  | 93     |                                       |                         |              |                       |      |             | 93     |            | 93     |                    | (35    | ) |  | 2001 |  | 2000      |  | 360
|Walnut                     |  | Walnut             |  | CA    |      |              |                        | 751          |                     | 3,006                        |  | 3,757  |                                       | (226                     | )            |                       | 747   |             | 2,784  |            | 3,531  |                    | (854   | ) |  | 1996 |  | 1986      |  | 360
|Walnut Creek               |  | Walnut Creek       |  | CA    |      | 4,205         |                        | 630          |                     | 4,512                        |  | 5,142  |                                       | 1,173                    |              |                       | 630   |             | 5,685  |            | 6,315  |                    | (590   | ) |  | 1999 |  | 1987      |  | 360
|Westpark                   |  | Irvine             |  | CA    |      | 7,638         |                        | 690          |                     | 7,478                        |  | 8,168  |                                       | 4,921                    |              |                       | 4,190 |             | 8,899  |            | 13,089 |                    | (1,190 | ) |  | 2000 |  | 1999      |  | 360



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|                         |  |                   |  |       |      |               |                        |              |                     |                              |  |        |                                       |                          |              |                       |       |             |        |            |        |                    |        |   |  |      |  |         |  |    
|------------------------ |  | ----------------- |  | ----- | ---- | ------------- | ---------------------- | ------------ | ------------------- | ---------------------------- |  | ------ | ------------------------------------- | ------------------------ | ------------ | --------------------- | ----- | ----------- | ------ | ---------- | ------ | ------------------ | ------ | - |  | ---- |  | ------- |  | ---
|                         |  | Location          |  | State |      | Encum-brances |                        | INITIAL COST |                     | CostsSubsequenttoAcquisition |  |        | Gross Amounts as of December 31, 2003 |                          | Accum. Depr. |                       |       | Owned Since |        | Year Built |        | Depr. Life in mos.
|Property Name            |  |                   |  |       | Land |               | Building,Equip.& Other |              | GrossStorageCenters |                              |  | Land   |                                       | Building, Equip. & Other |              | Gross Storage Centers |       |             |        |           
|Westwood                 |  | Los Angeles       |  | CA    |      |              |                        | 951          |                     | 3,797                        |  | 4,748  |                                       | 4,225                    |              |                       | 951   |             | 8,022  |            | 8,973  |                    | (2,197 | ) |  | 1986 |  | 1988    |  | 360
|Long Beach               |  | Long Beach        |  | CA    |      |              |                        | 1,189        |                     | 6,585                        |  | 7,774  |                                       |                         |              |                       | 1,189 |             | 6,585  |            | 7,774  |                    | (96    | ) |  | 2003 |  | 2003    |  | 360
|Denver Tech Center (DTC) |  | Greenwood Village |  | CO    |      |              |                        | 848          |                     | 3,103                        |  | 3,951  |                                       |                         |              |                       | 848   |             | 3,103  |            | 3,951  |                    | (26    | ) |  | 2003 |  | 2003    |  | 360
|Kipling & Hampden        |  | Lakewood          |  | CO    |      |              |                        | 332          |                     | 2,483                        |  | 2,815  |                                       |                         |              |                       | 332   |             | 2,483  |            | 2,815  |                    | (202   | ) |  | 2002 |  | 2002    |  | 360
|Lakewood                 |  | Golden            |  | CO    |      |              |                        | 528          |                     | 2,108                        |  | 2,636  |                                       | 120                      |              |                       | 528   |             | 2,228  |            | 2,756  |                    | (746   | ) |  | 1986 |  | 1985    |  | 360
|Northglenn               |  | Northglenn        |  | CO    |      |              |                        | 531          |                     | 2,152                        |  | 2,683  |                                       | 654                      |              |                       | 531   |             | 2,806  |            | 3,337  |                    | (868   | ) |  | 1987 |  | 1979    |  | 360
|Tamarac                  |  | Denver            |  | CO    |      |              |                        | 194          |                     | 776                          |  | 970    |                                       | 211                      |              |                       | 194   |             | 987    |            | 1,181  |                    | (382   | ) |  | 1984 |  | 1977    |  | 360
|Thornton                 |  | Denver            |  | CO    |      |              |                        | 237          |                     | 956                          |  | 1,193  |                                       | 172                      |              |                       | 235   |             | 1,130  |            | 1,365  |                    | (402   | ) |  | 1984 |  | 1984    |  | 360
|Windermere               |  | Littleton         |  | CO    |      |              |                        | 653          |                     | 2,690                        |  | 3,343  |                                       | 294                      |              |                       | 653   |             | 2,984  |            | 3,637  |                    | (1,107 | ) |  | 1984 |  | 1977/79 |  | 360
|Alafaya JV               |  | Orlando           |  | FL    |      | 2,864         |                        | 1,984        |                     | 3,234                        |  | 5,218  |                                       |                         |              |                       | 1,984 |             | 3,234  |            | 5,218  |                    | (233   | ) |  | 2002 |  | 2002    |  | 360
|Blue Heron               |  | West Palm Beach   |  | FL    |      |              |                        | 1,327        |                     | 5,490                        |  | 6,817  |                                       | 947                      |              |                       | 1,327 |             | 6,437  |            | 7,764  |                    | (2,129 | ) |  | 1987 |  | 1975    |  | 360
|Brandon                  |  | Brandon           |  | FL    |      | 3,081         |                        | 973          |                     | 3,423                        |  | 4,396  |                                       | 69                       |              |                       | 989   |             | 3,476  |            | 4,465  |                    | (587   | ) |  | 1999 |  | 1999    |  | 360
|Carrollwood              |  | Tampa             |  | FL    |      | 1,521         |                        | 884          |                     | 2,705                        |  | 3,589  |                                       | 534                      |              |                       | 911   |             | 3,212  |            | 4,123  |                    | (438   | ) |  | 2000 |  | 2000    |  | 360
|Colonial Town            |  | Orlando           |  | FL    |      | 3,252         |                        | 1,320        |                     | 3,439                        |  | 4,759  |                                       | (126                     | )            |                       | 1,040 |             | 3,593  |            | 4,633  |                    | (311   | ) |  | 2001 |  | 2001    |  | 360
|Davie                    |  | Davie             |  | FL    |      |              |                        | 1,890        |                     | 3,021                        |  | 4,911  |                                       | 4,656                    |              |                       | 2,754 |             | 6,813  |            | 9,567  |                    | (2,042 | ) |  | 1996 |  | 1990    |  | 360
|Daytona Beach            |  | Daytona Beach     |  | FL    |      | 2,982         |                        | 1,620        |                     | 3,165                        |  | 4,785  |                                       | 105                      |              |                       | 1,651 |             | 3,239  |            | 4,890  |                    | (505   | ) |  | 1999 |  | 1999    |  | 360
|Delray Beach             |  | Delray Beach      |  | FL    |      |              |                        | 748          |                     | 2,993                        |  | 3,741  |                                       | 298                      |              |                       | 748   |             | 3,291  |            | 4,039  |                    | (882   | ) |  | 1996 |  | 1986    |  | 360
|Eau Gallie               |  | Melbourne         |  | FL    |      | 2,678         |                        | 629          |                     | 2,718                        |  | 3,347  |                                       | 80                       |              |                       | 649   |             | 2,778  |            | 3,427  |                    | (450   | ) |  | 1999 |  | 1999    |  | 360
|Fairbanks                |  | Winter Park       |  | FL    |      |              |                        | 1,104        |                     | 3,493                        |  | 4,597  |                                       | (165                     | )            |                       | 1,104 |             | 3,328  |            | 4,432  |                    | (164   | ) |  | 2002 |  | 2002    |  | 360
|Hunt Club                |  | Apopka            |  | FL    |      |              |                        | 802          |                     | 3,278                        |  | 4,080  |                                       |                         |              |                       | 802   |             | 3,278  |            | 4,080  |                    | (59    | ) |  | 2003 |  | 2003    |  | 360
|Hyde Park                |  | Tampa             |  | FL    |      | 2,987         |                        | 1,237        |                     | 2,773                        |  | 4,010  |                                       | 938                      |              |                       | 1,243 |             | 3,705  |            | 4,948  |                    | (502   | ) |  | 2000 |  | 2000    |  | 360
|Lauderhill               |  | Lauderhill        |  | FL    |      |              |                        | 761          |                     | 3,164                        |  | 3,925  |                                       | 341                      |              |                       | 761   |             | 3,505  |            | 4,266  |                    | (811   | ) |  | 1997 |  | 1986    |  | 360
|Maitland                 |  | Maitland          |  | FL    |      | 4,665         |                        | 74           |                     | 4,985                        |  | 5,059  |                                       | 507                      |              |                       | 106   |             | 5,460  |            | 5,566  |                    | (1,213 | ) |  | 1997 |  | 1997    |  | 360
|Margate                  |  | Margate           |  | FL    |      |              |                        | 906          |                     | 3,623                        |  | 4,529  |                                       | 272                      |              |                       | 906   |             | 3,895  |            | 4,801  |                    | (985   | ) |  | 1996 |  | 1984    |  | 360
|McCoy-Wells Fargo NW     |  | Orlando           |  | FL    |      |              |                        | 807          |                     | 3,682                        |  | 4,489  |                                       |                         |              |                       | 807   |             | 3,682  |            | 4,489  |                    | (291   | ) |  | 2001 |  | 2001    |  | 360
|Military Trail           |  | West Palm Beach   |  | FL    |      |              |                        | 1,140        |                     | 4,564                        |  | 5,704  |                                       | 579                      |              |                       | 1,140 |             | 5,143  |            | 6,283  |                    | (1,701 | ) |  | 1987 |  | 1981    |  | 360
|Oakland Park             |  | FT Lauderdale     |  | FL    |      |              |                        | 2,443        |                     | 9,878                        |  | 12,321 |                                       | 770                      |              |                       | 2,443 |             | 10,648 |            | 13,091 |                    | (3,611 | ) |  | 1985 |  | 1974/78 |  | 360
|Oldsmar                  |  | Oldsmar           |  | FL    |      | 2,336         |                        | 606          |                     | 2,787                        |  | 3,393  |                                       | 102                      |              |                       | 628   |             | 2,867  |            | 3,495  |                    | (316   | ) |  | 2000 |  | 2000    |  | 360
|Ormond Beach             |  | Ormond Beach      |  | FL    |      | 2,991         |                        | 761          |                     | 3,202                        |  | 3,963  |                                       | 160                      |              |                       | 792   |             | 3,331  |            | 4,123  |                    | (505   | ) |  | 1999 |  | 1999    |  | 360
|Oviedo                   |  | Oviedo            |  | FL    |      | 2,892         |                        | 527          |                     | 2,716                        |  | 3,243  |                                       | 229                      |              |                       | 535   |             | 2,937  |            | 3,472  |                    | (687   | ) |  | 1997 |  | 1997    |  | 360
|Red Bug                  |  | Wintersprings     |  | FL    |      | 2,614         |                        | 856          |                     | 2,951                        |  | 3,807  |                                       | 130                      |              |                       | 825   |             | 3,112  |            | 3,937  |                    | (641   | ) |  | 1998 |  | 1998    |  | 360
|Seminole                 |  | Seminole          |  | FL    |      |              |                        | 336          |                     | 1,344                        |  | 1,680  |                                       | 177                      |              |                       | 336   |             | 1,521  |            | 1,857  |                    | (525   | ) |  | 1986 |  | 1984/85 |  | 360
|South Orange             |  | Orlando           |  | FL    |      | 3,196         |                        | 715          |                     | 2,709                        |  | 3,424  |                                       | 259                      |              |                       | 741   |             | 2,942  |            | 3,683  |                    | (681   | ) |  | 1997 |  | 1997    |  | 360
|South Semoran            |  | Orlando           |  | FL    |      | 2,847         |                        | 933          |                     | 3,184                        |  | 4,117  |                                       | 774                      |              |                       | 965   |             | 3,926  |            | 4,891  |                    | (759   | ) |  | 1997 |  | 1997    |  | 360
|University               |  | Orlando           |  | FL    |      |              |                        | 1,184        |                     | 4,365                        |  | 5,549  |                                       |                         |              |                       | 1,184 |             | 4,365  |            | 5,549  |                    | (285   | ) |  | 2002 |  | 2002    |  | 360
|Vineland                 |  | Orlando           |  | FL    |      | 1,948         |                        | 1,752        |                     | 1,165                        |  | 2,917  |                                       | (3                       | )            |                       | 638   |             | 2,276  |            | 2,914  |                    | (364   | ) |  | 1999 |  | 1999    |  | 360
|West Town                |  | Altamonte Springs |  | FL    |      | 2,227         |                        | 657          |                     | 3,070                        |  | 3,727  |                                       | 261                      |              |                       | 687   |             | 3,301  |            | 3,988  |                    | (592   | ) |  | 1998 |  | 1998    |  | 360
|West Waters              |  | Tampa             |  | FL    |      | 2,796         |                        | 950          |                     | 3,569                        |  | 4,519  |                                       | 248                      |              |                       | 991   |             | 3,776  |            | 4,767  |                    | (408   | ) |  | 2001 |  | 2001    |  | 360
|Ansley Park              |  | Atlanta           |  | GA    |      |              |                        | 804          |                     | 3,255                        |  | 4,059  |                                       | 4,129                    |              |                       | 1,527 |             | 6,661  |            | 8,188  |                    | (2,202 | ) |  | 1995 |  | 1991    |  | 360



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|                   |  |                    |  |       |      |               |                        |              |                     |                              |  |        |                                       |                          |              |                       |       |             |       |            |        |                    |        |   |  |      |  |         |  |    
|------------------ |  | ------------------ |  | ----- | ---- | ------------- | ---------------------- | ------------ | ------------------- | ---------------------------- |  | ------ | ------------------------------------- | ------------------------ | ------------ | --------------------- | ----- | ----------- | ----- | ---------- | ------ | ------------------ | ------ | - |  | ---- |  | ------- |  | ---
|                   |  | Location           |  | State |      | Encum-brances |                        | INITIAL COST |                     | CostsSubsequenttoAcquisition |  |        | Gross Amounts as of December 31, 2003 |                          | Accum. Depr. |                       |       | Owned Since |       | Year Built |        | Depr. Life in mos.
|Property Name      |  |                    |  |       | Land |               | Building,Equip.& Other |              | GrossStorageCenters |                              |  | Land   |                                       | Building, Equip. & Other |              | Gross Storage Centers |       |             |       |           
|Brookhaven         |  | Atlanta            |  | GA    |      |              |                        | 1,082        |                     | 2,223                        |  | 3,305  |                                       | 2,773                    |              |                       | 1,616 |             | 4,462 |            | 6,078  |                    | (1,478 | ) |  | 1995 |  | 1992    |  | 360
|Clairmont Road     |  | Atlanta            |  | GA    |      |              |                        | 470          |                     | 1,907                        |  | 2,377  |                                       | 269                      |              |                       | 470   |             | 2,176 |            | 2,646  |                    | (570   | ) |  | 1996 |  | 1990    |  | 360
|Decatur            |  | Decatur            |  | GA    |      |              |                        | 644          |                     | 2,719                        |  | 3,363  |                                       | 2,730                    |              |                       | 1,144 |             | 4,949 |            | 6,093  |                    | (1,689 | ) |  | 1995 |  | 1992    |  | 360
|Forest Park        |  | Forest Park        |  | GA    |      |              |                        | 573          |                     | 2,293                        |  | 2,866  |                                       | 185                      |              |                       | 573   |             | 2,478 |            | 3,051  |                    | (656   | ) |  | 1996 |  | 1980    |  | 360
|Gwinnett Place     |  | Lawrenceville      |  | GA    |      |              |                        | 820          |                     | 2,324                        |  | 3,144  |                                       | 502                      |              |                       | 820   |             | 2,826 |            | 3,646  |                    | (752   | ) |  | 1996 |  | 1996    |  | 360
|Holcomb Bridge     |  | Roswell            |  | GA    |      | 2,604         |                        | 917          |                     | 2,991                        |  | 3,908  |                                       | 2                        |              |                       | 920   |             | 2,990 |            | 3,910  |                    | (359   | ) |  | 1999 |  | 2000    |  | 360
|Jones Bridge       |  | Alpharetta         |  | GA    |      |              |                        | 676          |                     | 3,930                        |  | 4,606  |                                       | (43                      | )            |                       | 676   |             | 3,887 |            | 4,563  |                    | (770   | ) |  | 1997 |  | 1997    |  | 360
|Lawrenceville      |  | Lawrenceville      |  | GA    |      |              |                        | 858          |                     | 3,064                        |  | 3,922  |                                       | 146                      |              |                       | 858   |             | 3,210 |            | 4,068  |                    | (657   | ) |  | 1997 |  | 1997    |  | 360
|Morgan Falls       |  | Atlanta            |  | GA    |      |              |                        | 1,429        |                     | 5,718                        |  | 7,147  |                                       | 276                      |              |                       | 1,429 |             | 5,994 |            | 7,423  |                    | (1,534 | ) |  | 1996 |  | 1990    |  | 360
|Norcross           |  | Norcross           |  | GA    |      |              |                        | 562          |                     | 2,248                        |  | 2,810  |                                       | 176                      |              |                       | 562   |             | 2,424 |            | 2,986  |                    | (639   | ) |  | 1996 |  | 1984    |  | 360
|Peachtree          |  | Duluth             |  | GA    |      |              |                        | 1,144        |                     | 4,784                        |  | 5,928  |                                       | 154                      |              |                       | 1,144 |             | 4,938 |            | 6,082  |                    | (1,210 | ) |  | 1997 |  | 1996    |  | 360
|Perimeter Center   |  | Atlanta            |  | GA    |      |              |                        | 1,458        |                     | 2,715                        |  | 4,173  |                                       | 231                      |              |                       | 1,458 |             | 2,946 |            | 4,404  |                    | (830   | ) |  | 1996 |  | 1996    |  | 360
|Roswell            |  | Roswell            |  | GA    |      |              |                        | 435          |                     | 1,743                        |  | 2,178  |                                       | 207                      |              |                       | 435   |             | 1,950 |            | 2,385  |                    | (649   | ) |  | 1986 |  | 1986    |  | 360
|Sandy Plains       |  | Marietta           |  | GA    |      |              |                        | 1,012        |                     | 4,066                        |  | 5,078  |                                       | 171                      |              |                       | 1,012 |             | 4,237 |            | 5,249  |                    | (744   | ) |  | 1998 |  | 1998    |  | 360
|Satellite Blvd     |  | Atlanta            |  | GA    |      |              |                        | 670          |                     | 2,831                        |  | 3,501  |                                       | 49                       |              |                       | 670   |             | 2,880 |            | 3,550  |                    | (698   | ) |  | 1997 |  | 1994    |  | 360
|Stone Mountain     |  | Stone Mountain     |  | GA    |      |              |                        | 656          |                     | 2,637                        |  | 3,293  |                                       | 199                      |              |                       | 656   |             | 2,836 |            | 3,492  |                    | (728   | ) |  | 1996 |  | 1985    |  | 360
|Tucker             |  | Tucker             |  | GA    |      |              |                        | 241          |                     | 656                          |  | 897    |                                       | 401                      |              |                       | 179   |             | 1,119 |            | 1,298  |                    | (288   | ) |  | 1996 |  | 1987    |  | 360
|Alsip              |  | Alsip              |  | IL    |      |              |                        | 250          |                     | 1,001                        |  | 1,251  |                                       | 1,309                    |              |                       | 250   |             | 2,310 |            | 2,560  |                    | (662   | ) |  | 1982 |  | 1980    |  | 360
|Berwyn             |  | Berwyn             |  | IL    |      |              |                        | 961          |                     | 5,356                        |  | 6,317  |                                       |                         |              |                       | 961   |             | 5,356 |            | 6,317  |                    | (275   | ) |  | 2002 |  | 2002    |  | 360
|Bolingbrook        |  | Bolingbrook        |  | IL    |      |              |                        | 641          |                     | 2,631                        |  | 3,272  |                                       | 237                      |              |                       | 641   |             | 2,868 |            | 3,509  |                    | (604   | ) |  | 1997 |  | 1997    |  | 360
|Bridgeview         |  | Bridgeview         |  | IL    |      |              |                        | 479          |                     | 1,917                        |  | 2,396  |                                       | 187                      |              |                       | 479   |             | 2,104 |            | 2,583  |                    | (724   | ) |  | 1985 |  | 1983    |  | 360
|Chicago Heights    |  | Chicago Heights    |  | IL    |      |              |                        | 1,550        |                     | 3,620                        |  | 5,170  |                                       |                         |              |                       | 1,550 |             | 3,620 |            | 5,170  |                    | (160   | ) |  | 2002 |  | 2002    |  | 360
|Country Club Hills |  | Country Club Hills |  | IL    |      |              |                        | 777          |                     | 3,109                        |  | 3,886  |                                       | 450                      |              |                       | 781   |             | 3,555 |            | 4,336  |                    | (512   | ) |  | 1999 |  | 1999    |  | 360
|Dolton             |  | Calumet City       |  | IL    |      |              |                        | 344          |                     | 1,489                        |  | 1,833  |                                       | 1,220                    |              |                       | 344   |             | 2,709 |            | 3,053  |                    | (812   | ) |  | 1982 |  | 1979    |  | 360
|Fox Valley         |  | Aurora             |  | IL    |      |              |                        | 927          |                     | 2,986                        |  | 3,913  |                                       | 15                       |              |                       | 932   |             | 2,996 |            | 3,928  |                    | (610   | ) |  | 1998 |  | 1998    |  | 360
|Fullerton          |  | Chicago            |  | IL    |      |              |                        | 3,984        |                     | 6,720                        |  | 10,704 |                                       |                         |              |                       | 3,984 |             | 6,720 |            | 10,704 |                    | (91    | ) |  | 2003 |  | 2003    |  | 360
|Glenview West      |  | Glenview           |  | IL    |      |              |                        | 2,512        |                     | 2,287                        |  | 4,799  |                                       |                         |              |                       | 2,512 |             | 2,287 |            | 4,799  |                    | (44    | ) |  | 2003 |  | 2003    |  | 360
|Hillside           |  | Hillside           |  | IL    |      |              |                        | 261          |                     | 1,043                        |  | 1,304  |                                       | 125                      |              |                       | 261   |             | 1,168 |            | 1,429  |                    | (417   | ) |  | 1988 |  | 1988    |  | 360
|Lincolnwood        |  | Lincolnwood        |  | IL    |      |              |                        | 825          |                     | 4,442                        |  | 5,267  |                                       |                         |              |                       | 825   |             | 4,442 |            | 5,267  |                    | (331   | ) |  | 2001 |  | 2001    |  | 360
|Lisle              |  | Lisle              |  | IL    |      |              |                        | 575          |                     | 2,335                        |  | 2,910  |                                       | 260                      |              |                       | 576   |             | 2,594 |            | 3,170  |                    | (884   | ) |  | 1986 |  | 1976/86 |  | 360
|Lombard            |  | Lombard            |  | IL    |      |              |                        | 392          |                     | 1,566                        |  | 1,958  |                                       | 297                      |              |                       | 392   |             | 1,863 |            | 2,255  |                    | (703   | ) |  | 1982 |  | 1980    |  | 360
|Niles              |  | Niles              |  | IL    |      |              |                        | 1,457        |                     | 3,984                        |  | 5,441  |                                       |                         |              |                       | 1,457 |             | 3,984 |            | 5,441  |                    | (161   | ) |  | 2002 |  | 2002    |  | 360
|Oak Forest         |  | Orland Park        |  | IL    |      |              |                        | 704          |                     | 1,869                        |  | 2,573  |                                       | 1,384                    |              |                       | 704   |             | 3,253 |            | 3,957  |                    | (975   | ) |  | 1995 |  | 1991    |  | 360
|Palatine           |  | Palatine           |  | IL    |      | 2,316         |                        | 413          |                     | 2,213                        |  | 2,626  |                                       | 852                      |              |                       | 453   |             | 3,025 |            | 3,478  |                    | (360   | ) |  | 2000 |  | 2000    |  | 360
|River West         |  | Chicago            |  | IL    |      |              |                        | 1,172        |                     | 4,872                        |  | 6,044  |                                       |                         |              |                       | 1,172 |             | 4,872 |            | 6,044  |                    | (57    | ) |  | 2003 |  | 2003    |  | 360
|Rolling Meadows    |  | Rolling Meadows    |  | IL    |      |              |                        | 384          |                     | 1,587                        |  | 1,971  |                                       | 458                      |              |                       | 384   |             | 2,045 |            | 2,429  |                    | (651   | ) |  | 1982 |  | 1980    |  | 360
|Schaumburg         |  | Schaumburg         |  | IL    |      |              |                        | 443          |                     | 1,808                        |  | 2,251  |                                       | 371                      |              |                       | 429   |             | 2,193 |            | 2,622  |                    | (724   | ) |  | 1982 |  | 1980    |  | 360
|Schaumburg South   |  | Schaumburg         |  | IL    |      |              |                        | 490          |                     | 3,231                        |  | 3,721  |                                       | 847                      |              |                       | 512   |             | 4,056 |            | 4,568  |                    | (542   | ) |  | 1999 |  | 1999    |  | 360
|Wheaton            |  | Wheaton            |  | IL    |      |              |                        | 283          |                     | 4,943                        |  | 5,226  |                                       | (736                     | )            |                       | 283   |             | 4,207 |            | 4,490  |                    | (401   | ) |  | 2002 |  | 2001    |  | 360
|Willowbrook        |  | Willowbrook        |  | IL    |      |              |                        | 412          |                     | 1,650                        |  | 2,062  |                                       | 279                      |              |                       | 412   |             | 1,929 |            | 2,341  |                    | (673   | ) |  | 1986 |  | 1979/82 |  | 360



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|                      |  |                  |  |       |      |               |                        |              |                     |                              |  |       |                                       |                          |              |                       |       |             |       |            |       |                    |        |   |  |      |  |         |  |    
|--------------------- |  | ---------------- |  | ----- | ---- | ------------- | ---------------------- | ------------ | ------------------- | ---------------------------- |  | ----- | ------------------------------------- | ------------------------ | ------------ | --------------------- | ----- | ----------- | ----- | ---------- | ----- | ------------------ | ------ | - |  | ---- |  | ------- |  | ---
|                      |  | Location         |  | State |      | Encum-brances |                        | INITIAL COST |                     | CostsSubsequenttoAcquisition |  |       | Gross Amounts as of December 31, 2003 |                          | Accum. Depr. |                       |       | Owned Since |       | Year Built |       | Depr. Life in mos.
|Property Name         |  |                  |  |       | Land |               | Building,Equip.& Other |              | GrossStorageCenters |                              |  | Land  |                                       | Building, Equip. & Other |              | Gross Storage Centers |       |             |       |           
|Carmel                |  | Carmel           |  | IN    |      |              |                        | 404          |                     | 2,560                        |  | 2,964 |                                       | 16                       |              |                       | 404   |             | 2,576 |            | 2,980 |                    | (726   | ) |  | 1996 |  | 1996    |  | 360
|Castleton             |  | Indianapolis     |  | IN    |      |              |                        | 494          |                     | 1,969                        |  | 2,463 |                                       | 170                      |              |                       | 522   |             | 2,111 |            | 2,633 |                    | (445   | ) |  | 1998 |  | 1988    |  | 360
|College Park          |  | Indianapolis     |  | IN    |      |              |                        | 694          |                     | 2,777                        |  | 3,471 |                                       | 249                      |              |                       | 694   |             | 3,026 |            | 3,720 |                    | (1,091 | ) |  | 1986 |  | 1984    |  | 360
|Downtown Indianapolis |  | Indianapolis     |  | IN    |      | 2,078         |                        | 947          |                     | 3,393                        |  | 4,340 |                                       | (1,220                   | )            |                       | 986   |             | 2,134 |            | 3,120 |                    | (441   | ) |  | 1999 |  | 1999    |  | 360
|Eagle Creek           |  | Indianapolis     |  | IN    |      |              |                        | 802          |                     | 2,646                        |  | 3,448 |                                       | 30                       |              |                       | 802   |             | 2,676 |            | 3,478 |                    | (543   | ) |  | 1998 |  | 1998    |  | 360
|East 62nd Street      |  | Indianapolis     |  | IN    |      |              |                        | 376          |                     | 1,629                        |  | 2,005 |                                       |                         |              |                       | 376   |             | 1,629 |            | 2,005 |                    | (106   | ) |  | 2002 |  | 1999    |  | 360
|East Washington St.   |  | Indianapolis     |  | IN    |      | 1,996         |                        | 399          |                     | 2,583                        |  | 2,982 |                                       | 15                       |              |                       | 412   |             | 2,585 |            | 2,997 |                    | (319   | ) |  | 1999 |  | 1999    |  | 360
|Fishers               |  | Fishers          |  | IN    |      |              |                        | 827          |                     | 3,394                        |  | 4,221 |                                       | 363                      |              |                       | 827   |             | 3,757 |            | 4,584 |                    | (822   | ) |  | 1997 |  | 1987    |  | 360
|Geist                 |  | Fishers          |  | IN    |      |              |                        | 547          |                     | 2,356                        |  | 2,903 |                                       |                         |              |                       | 547   |             | 2,356 |            | 2,903 |                    | (160   | ) |  | 2002 |  | 1999    |  | 360
|Georgetown            |  | Indianapolis     |  | IN    |      |              |                        | 461          |                     | 2,143                        |  | 2,604 |                                       | 284                      |              |                       | 461   |             | 2,427 |            | 2,888 |                    | (619   | ) |  | 1996 |  | 1996    |  | 360
|Glendale              |  | Indianapolis     |  | IN    |      |              |                        | 520          |                     | 2,077                        |  | 2,597 |                                       | 150                      |              |                       | 520   |             | 2,227 |            | 2,747 |                    | (755   | ) |  | 1986 |  | 1985    |  | 360
|North Greenwood       |  | Indianapolis     |  | IN    |      |              |                        |             |                     | 2,600                        |  | 2,600 |                                       | 41                       |              |                       |      |             | 2,641 |            | 2,641 |                    | (503   | ) |  | 1998 |  | 1998    |  | 360
|SpeedwayIN           |  | Indianapolis     |  | IN    |      |              |                        | 744          |                     | 2,304                        |  | 3,048 |                                       | (289                     | )            |                       | 487   |             | 2,272 |            | 2,759 |                    | (135   | ) |  | 2002 |  | 2002    |  | 360
|Annapolis             |  | Annapolis        |  | MD    |      |              |                        |             |                     | 3,432                        |  | 3,432 |                                       | 92                       |              |                       |      |             | 3,524 |            | 3,524 |                    | (682   | ) |  | 1998 |  | 1998    |  | 360
|Briggs Chaney         |  | Silver Springs   |  | MD    |      |              |                        | 430          |                     | 1,727                        |  | 2,157 |                                       | 110                      |              |                       | 430   |             | 1,837 |            | 2,267 |                    | (628   | ) |  | 1994 |  | 1987    |  | 360
|Clinton               |  | Clinton          |  | MD    |      |              |                        | 303          |                     | 1,213                        |  | 1,516 |                                       | 1,906                    |              |                       | 650   |             | 2,772 |            | 3,422 |                    | (760   | ) |  | 1986 |  | 1985    |  | 360
|Crofton               |  | Gambrills        |  | MD    |      |              |                        | 376          |                     | 1,516                        |  | 1,892 |                                       | 141                      |              |                       | 376   |             | 1,657 |            | 2,033 |                    | (552   | ) |  | 1988 |  | 1985    |  | 360
|Frederick Road        |  | Frederick        |  | MD    |      |              |                        | 206          |                     | 826                          |  | 1,032 |                                       | 132                      |              |                       | 206   |             | 958   |            | 1,164 |                    | (337   | ) |  | 1994 |  | 1987    |  | 360
|Gaithersburg          |  | Gaithersburg     |  | MD    |      |              |                        | 614          |                     | 2,465                        |  | 3,079 |                                       | 1,577                    |              |                       | 614   |             | 4,042 |            | 4,656 |                    | (1,195 | ) |  | 1994 |  | 1986    |  | 360
|Germantown            |  | Germantown       |  | MD    |      |              |                        | 552          |                     | 2,218                        |  | 2,770 |                                       | 123                      |              |                       | 552   |             | 2,341 |            | 2,893 |                    | (771   | ) |  | 1994 |  | 1988    |  | 360
|Laurel                |  | Laurel           |  | MD    |      |              |                        | 391          |                     | 1,570                        |  | 1,961 |                                       | 199                      |              |                       | 391   |             | 1,769 |            | 2,160 |                    | (592   | ) |  | 1988 |  | 1984    |  | 360
|Oxon Hill             |  | FT Washington    |  | MD    |      |              |                        | 349          |                     | 1,401                        |  | 1,750 |                                       | 76                       |              |                       | 349   |             | 1,477 |            | 1,826 |                    | (495   | ) |  | 1994 |  | 1987    |  | 360
|Reisterstown          |  | Owing Mills      |  | MD    |      |              |                        | 586          |                     | 1,177                        |  | 1,763 |                                       | 12                       |              |                       | 586   |             | 1,189 |            | 1,775 |                    | (78    | ) |  | 2002 |  | 1992    |  | 360
|Suitland              |  | Suitland         |  | MD    |      |              |                        | 660          |                     | 2,638                        |  | 3,298 |                                       | 134                      |              |                       | 660   |             | 2,772 |            | 3,432 |                    | (962   | ) |  | 1987 |  | 1985    |  | 360
|Ann Arbor             |  | Ann Arbor        |  | MI    |      |              |                        | 424          |                     | 1,695                        |  | 2,119 |                                       | 234                      |              |                       | 424   |             | 1,929 |            | 2,353 |                    | (708   | ) |  | 1988 |  | 1977    |  | 360
|Auburn Hills          |  | Auburn Hills     |  | MI    |      |              |                        | 565          |                     | 3,104                        |  | 3,669 |                                       | (289                     | )            |                       | 571   |             | 2,809 |            | 3,380 |                    | (226   | ) |  | 2002 |  | 2001    |  | 360
|Canton                |  | Canton           |  | MI    |      |              |                        | 433          |                     | 1,797                        |  | 2,230 |                                       | 445                      |              |                       | 433   |             | 2,242 |            | 2,675 |                    | (633   | ) |  | 1988 |  | 1986    |  | 360
|Canton South          |  | Canton           |  | MI    |      | 2,593         |                        | 842          |                     | 2,308                        |  | 3,150 |                                       | 744                      |              |                       | 852   |             | 3,042 |            | 3,894 |                    | (315   | ) |  | 2000 |  | 2000    |  | 360
|Clinton Township      |  | Clinton Township |  | MI    |      |              |                        | 754          |                     | 3,195                        |  | 3,949 |                                       | 421                      |              |                       | 772   |             | 3,598 |            | 4,370 |                    | (523   | ) |  | 1999 |  | 1999    |  | 360
|Dearborn              |  | Dearborn         |  | MI    |      |              |                        | 1,802        |                     | 2,650                        |  | 4,452 |                                       |                         |              |                       | 1,802 |             | 2,650 |            | 4,452 |                    | (45    | ) |  | 2003 |  | 2003    |  | 360
|Flint South           |  | Flint            |  | MI    |      |              |                        | 615          |                     | 1,738                        |  | 2,353 |                                       | 178                      |              |                       | 615   |             | 1,916 |            | 2,531 |                    | (131   | ) |  | 2001 |  | 1983    |  | 360
|Fraser                |  | Fraser           |  | MI    |      |              |                        | 627          |                     | 2,599                        |  | 3,226 |                                       | 73                       |              |                       | 627   |             | 2,672 |            | 3,299 |                    | (667   | ) |  | 1988 |  | 1985    |  | 360
|Jackson               |  | Jackson          |  | MI    |      |              |                        | 317          |                     | 1,282                        |  | 1,599 |                                       | 13                       |              |                       | 309   |             | 1,303 |            | 1,612 |                    | (295   | ) |  | 1997 |  | 1978    |  | 360
|Lansing               |  | Lansing          |  | MI    |      |              |                        | 124          |                     | 500                          |  | 624   |                                       | 82                       |              |                       | 124   |             | 582   |            | 706   |                    | (226   | ) |  | 1983 |  | 1978/79 |  | 360
|Livonia               |  | Livonia          |  | MI    |      |              |                        | 636          |                     | 2,634                        |  | 3,270 |                                       | 118                      |              |                       | 636   |             | 2,752 |            | 3,388 |                    | (711   | ) |  | 1988 |  | 1985    |  | 360
|Madison Heights       |  | Madison Height   |  | MI    |      |              |                        | 487          |                     | 2,099                        |  | 2,586 |                                       | 576                      |              |                       | 487   |             | 2,675 |            | 3,162 |                    | (751   | ) |  | 1995 |  | 1977    |  | 360
|Mt. Clemens           |  | Mt. Clemens      |  | MI    |      | 1,921         |                        | 935          |                     | 2,614                        |  | 3,549 |                                       | (182                     | )            |                       | 935   |             | 2,432 |            | 3,367 |                    | (203   | ) |  | 2001 |  | 2001    |  | 360
|Plymouth              |  | Canton Township  |  | MI    |      |              |                        | 348          |                     | 1,436                        |  | 1,784 |                                       | 1,234                    |              |                       | 348   |             | 2,670 |            | 3,018 |                    | (768   | ) |  | 1985 |  | 1979    |  | 360
|Rochester             |  | Shelby Township  |  | MI    |      |              |                        | 610          |                     | 2,445                        |  | 3,055 |                                       | 201                      |              |                       | 610   |             | 2,646 |            | 3,256 |                    | (649   | ) |  | 1996 |  | 1989    |  | 360
|Rochester Hills       |  | Rochester Hills  |  | MI    |      |              |                        | 970          |                     | 3,929                        |  | 4,899 |                                       | 156                      |              |                       | 980   |             | 4,075 |            | 5,055 |                    | (315   | ) |  | 2001 |  | 2001    |  | 360
|Roseville             |  | Roseville        |  | MI    |      |              |                        | 2,019        |                     | 2,818                        |  | 4,837 |                                       |                         |              |                       | 2,019 |             | 2,818 |            | 4,837 |                    |       |   |  | 2003 |  | 2003    |  | 360



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|                        |  |                  |  |       |      |               |                        |              |                     |                              |  |       |                                       |                          |              |                       |       |             |       |            |       |                    |        |   |  |         |  |           |  |    
|----------------------- |  | ---------------- |  | ----- | ---- | ------------- | ---------------------- | ------------ | ------------------- | ---------------------------- |  | ----- | ------------------------------------- | ------------------------ | ------------ | --------------------- | ----- | ----------- | ----- | ---------- | ----- | ------------------ | ------ | - |  | ------- |  | --------- |  | ---
|                        |  | Location         |  | State |      | Encum-brances |                        | INITIAL COST |                     | CostsSubsequenttoAcquisition |  |       | Gross Amounts as of December 31, 2003 |                          | Accum. Depr. |                       |       | Owned Since |       | Year Built |       | Depr. Life in mos.
|Property Name           |  |                  |  |       | Land |               | Building,Equip.& Other |              | GrossStorageCenters |                              |  | Land  |                                       | Building, Equip. & Other |              | Gross Storage Centers |       |             |       |           
|Southfield              |  | Southfield       |  | MI    |      |              |                        | 702          |                     | 2,824                        |  | 3,526 |                                       | 627                      |              |                       | 702   |             | 3,451 |            | 4,153 |                    | (1,077 | ) |  | 1983    |  | 1976      |  | 360
|Southfield at Telegraph |  | Southfield       |  | MI    |      |              |                        | 702          |                     | 2,824                        |  | 3,526 |                                       | 2,489                    |              |                       | 1,371 |             | 4,644 |            | 6,015 |                    | (224   | ) |  | 2002    |  | 2002      |  | 360
|Sterling Heights        |  | Sterling Heights |  | MI    |      |              |                        | 919          |                     | 3,692                        |  | 4,611 |                                       | 168                      |              |                       | 919   |             | 3,860 |            | 4,779 |                    | (980   | ) |  | 1996    |  | 1986      |  | 360
|Taylor                  |  | Taylor           |  | MI    |      |              |                        | 632          |                     | 2,094                        |  | 2,726 |                                       | 1,467                    |              |                       | 632   |             | 3,561 |            | 4,193 |                    | (1,055 | ) |  | 1995    |  | 1980      |  | 360
|TroyMaple              |  | Troy             |  | MI    |      |              |                        | 556          |                     | 2,243                        |  | 2,799 |                                       | 2,924                    |              |                       | 1,987 |             | 3,736 |            | 5,723 |                    | (1,162 | ) |  | 1981    |  | 1975/77   |  | 360
|TroyOakland Mall       |  | Troy             |  | MI    |      |              |                        | 642          |                     | 2,604                        |  | 3,246 |                                       | 500                      |              |                       | 642   |             | 3,104 |            | 3,746 |                    | (1,040 | ) |  | 1983    |  | 1979      |  | 360
|Walled Lake             |  | Walled Lake      |  | MI    |      |              |                        | 359          |                     | 1,437                        |  | 1,796 |                                       | 462                      |              |                       | 359   |             | 1,899 |            | 2,258 |                    | (641   | ) |  | 1985/89 |  | 1984      |  | 360
|Warren                  |  | Warren           |  | MI    |      |              |                        | 683          |                     | 2,831                        |  | 3,514 |                                       | 1,226                    |              |                       | 815   |             | 3,925 |            | 4,740 |                    | (818   | ) |  | 1988    |  | 1985      |  | 360
|Westland                |  | Westland         |  | MI    |      |              |                        | 653          |                     | 3,596                        |  | 4,249 |                                       |                         |              |                       | 653   |             | 3,596 |            | 4,249 |                    | (94    | ) |  | 2003    |  | 2003      |  | 360
|Anoka                   |  | Anoka            |  | MN    |      |              |                        | 365          |                     | 1,695                        |  | 2,060 |                                       |                         |              |                       | 365   |             | 1,695 |            | 2,060 |                    | (29    | ) |  | 2003    |  | 1986      |  | 360
|Apple Valley            |  | Apple Valley     |  | MN    |      |              |                        | 629          |                     | 3,081                        |  | 3,710 |                                       |                         |              |                       | 629   |             | 3,081 |            | 3,710 |                    | (52    | ) |  | 2003    |  | 2001      |  | 360
|Brooklyn Park           |  | Brooklyn Park    |  | MN    |      |              |                        | 1,222        |                     | 3,097                        |  | 4,319 |                                       |                         |              |                       | 1,222 |             | 3,097 |            | 4,319 |                    | (53    | ) |  | 2003    |  | 1986      |  | 360
|Burnsville              |  | Burnsville       |  | MN    |      |              |                        | 657          |                     | 2,975                        |  | 3,632 |                                       |                         |              |                       | 657   |             | 2,975 |            | 3,632 |                    | (53    | ) |  | 2003    |  | 1999      |  | 360
|Chanhassen              |  | Chanhassen       |  | MN    |      |              |                        | 770          |                     | 4,317                        |  | 5,087 |                                       |                         |              |                       | 770   |             | 4,317 |            | 5,087 |                    | (74    | ) |  | 2003    |  | 1988/2000 |  | 360
|Coon Rapids             |  | Coon Rapids      |  | MN    |      |              |                        | 966          |                     | 4,127                        |  | 5,093 |                                       |                         |              |                       | 966   |             | 4,127 |            | 5,093 |                    | (70    | ) |  | 2003    |  | 1986/1997 |  | 360
|Eden Prairie East       |  | Eden Prairie     |  | MN    |      |              |                        | 1,176        |                     | 4,741                        |  | 5,917 |                                       |                         |              |                       | 1,176 |             | 4,741 |            | 5,917 |                    | (80    | ) |  | 2003    |  | 1978/1992 |  | 360
|Eden Prairie West       |  | Eden Prairie     |  | MN    |      |              |                        | 1,297        |                     | 4,996                        |  | 6,293 |                                       |                         |              |                       | 1,297 |             | 4,996 |            | 6,293 |                    | (81    | ) |  | 2003    |  | 1988/1997 |  | 360
|Edina                   |  | Edina            |  | MN    |      |              |                        | 1,311        |                     | 5,538                        |  | 6,849 |                                       |                         |              |                       | 1,311 |             | 5,538 |            | 6,849 |                    | (93    | ) |  | 2003    |  | 1998      |  | 360
|Hopkins                 |  | Hopkins          |  | MN    |      |              |                        | 826          |                     | 2,443                        |  | 3,269 |                                       |                         |              |                       | 826   |             | 2,443 |            | 3,269 |                    | (42    | ) |  | 2003    |  | 1989/1995 |  | 360
|Little Canada           |  | Little Canada    |  | MN    |      |              |                        | 1,225        |                     | 8,116                        |  | 9,341 |                                       |                         |              |                       | 1,225 |             | 8,116 |            | 9,341 |                    | (137   | ) |  | 2003    |  | 1982/1997 |  | 360
|Maple Grove             |  | Maple Grove      |  | MN    |      |              |                        | 649          |                     | 2,181                        |  | 2,830 |                                       |                         |              |                       | 649   |             | 2,181 |            | 2,830 |                    | (37    | ) |  | 2003    |  | 1996      |  | 360
|Minnetonka              |  | Minnetonka       |  | MN    |      |              |                        | 628          |                     | 2,979                        |  | 3,607 |                                       |                         |              |                       | 628   |             | 2,979 |            | 3,607 |                    | (50    | ) |  | 2003    |  | 1994      |  | 360
|Plymouth 169            |  | Plymouth         |  | MN    |      |              |                        | 532          |                     | 1,137                        |  | 1,669 |                                       |                         |              |                       | 532   |             | 1,137 |            | 1,669 |                    | (19    | ) |  | 2003    |  | 1972      |  | 360
|Plymouth 494            |  | Plymouth         |  | MN    |      |              |                        | 1,359        |                     | 3,977                        |  | 5,336 |                                       |                         |              |                       | 1,359 |             | 3,977 |            | 5,336 |                    | (66    | ) |  | 2003    |  | 1978      |  | 360
|Plymouth West           |  | Plymouth         |  | MN    |      |              |                        | 809          |                     | 3,274                        |  | 4,083 |                                       |                         |              |                       | 809   |             | 3,274 |            | 4,083 |                    | (55    | ) |  | 2003    |  | 2001      |  | 360
|Richfield               |  | Richfield        |  | MN    |      |              |                        | 1,293        |                     | 5,385                        |  | 6,678 |                                       |                         |              |                       | 1,293 |             | 5,385 |            | 6,678 |                    | (95    | ) |  | 2003    |  | 1983      |  | 360
|Shorewood               |  | Shorewood        |  | MN    |      |              |                        | 1,033        |                     | 5,722                        |  | 6,755 |                                       |                         |              |                       | 1,033 |             | 5,722 |            | 6,755 |                    | (97    | ) |  | 2003    |  | 1984/1998 |  | 360
|Woodbury                |  | Woodbury         |  | MN    |      |              |                        | 1,092        |                     | 4,330                        |  | 5,422 |                                       |                         |              |                       | 1,092 |             | 4,330 |            | 5,422 |                    | (76    | ) |  | 2003    |  | 2000      |  | 360
|Southhaven              |  | Hornlake         |  | MS    |      | 940           |                        | 814          |                     | 1,863                        |  | 2,677 |                                       | (81                      | )            |                       | 676   |             | 1,920 |            | 2,596 |                    | (428   | ) |  | 1998    |  | 1998      |  | 360
|Albermarle              |  | Charlotte        |  | NC    |      | 3,443         |                        | 788          |                     | 4,567                        |  | 5,355 |                                       | (365                     | )            |                       | 787   |             | 4,203 |            | 4,990 |                    | (234   | ) |  | 2002    |  | 1984      |  | 360
|Amity Ct                |  | Charlotte        |  | NC    |      | 1,901         |                        | 433          |                     | 2,314                        |  | 2,747 |                                       | (260                     | )            |                       | 433   |             | 2,054 |            | 2,487 |                    | (145   | ) |  | 2002    |  | 1993      |  | 360
|Arrowood                |  | Charlotte        |  | NC    |      | 2,681         |                        | 1,155        |                     | 3,151                        |  | 4,306 |                                       | (541                     | )            |                       | 1,155 |             | 2,610 |            | 3,765 |                    | (174   | ) |  | 2002    |  | 1992      |  | 360
|Capital Boulevard       |  | Raleigh          |  | NC    |      |              |                        | 342          |                     | 1,376                        |  | 1,718 |                                       | 1,308                    |              |                       | 339   |             | 2,687 |            | 3,026 |                    | (620   | ) |  | 1994    |  | 1984      |  | 360
|Cary                    |  | Cary             |  | NC    |      |              |                        | 714          |                     | 2,860                        |  | 3,574 |                                       | 231                      |              |                       | 714   |             | 3,091 |            | 3,805 |                    | (1,016 | ) |  | 1994    |  | 1984      |  | 360
|Clayton                 |  | Clayton          |  | NC    |      |              |                        | 764          |                     | 2,495                        |  | 3,259 |                                       | 203                      |              |                       | 764   |             | 2,698 |            | 3,462 |                    | (144   | ) |  | 2002    |  | 1999      |  | 360
|Concord                 |  | Concord          |  | NC    |      |              |                        | 665          |                     | 2,403                        |  | 3,068 |                                       | (220                     | )            |                       | 665   |             | 2,183 |            | 2,848 |                    | (233   | ) |  | 2002    |  | 1995      |  | 360
|Cone Blvd               |  | Greensboro       |  | NC    |      | 1,080         |                        | 599          |                     | 3,106                        |  | 3,705 |                                       | 719                      |              |                       | 599   |             | 3,825 |            | 4,424 |                    | (189   | ) |  | 2002    |  | 2000      |  | 360
|COTT                    |  | Matthews         |  | NC    |      | 786           |                        | 237          |                     | 1,471                        |  | 1,708 |                                       | (199                     | )            |                       | 237   |             | 1,272 |            | 1,509 |                    | (75    | ) |  | 2002    |  | 1989      |  | 360
|Country Club            |  | Winston Salem    |  | NC    |      |              |                        | 757          |                     | 3,462                        |  | 4,219 |                                       | 332                      |              |                       | 757   |             | 3,794 |            | 4,551 |                    | (202   | ) |  | 2002    |  | 2000      |  | 360
|Creedmoor               |  | Raleigh          |  | NC    |      |              |                        | 807          |                     | 3,178                        |  | 3,985 |                                       | 8                        |              |                       | 807   |             | 3,186 |            | 3,993 |                    | (647   | ) |  | 1997    |  | 1997      |  | 360
|Eastland                |  | Charlotte        |  | NC    |      | 1,747         |                        | 590          |                     | 3,743                        |  | 4,333 |                                       | (352                     | )            |                       | 590   |             | 3,391 |            | 3,981 |                    | (180   | ) |  | 2002    |  | 1983      |  | 360



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|                   |  |               |  |       |      |               |                        |              |                     |                              |  |       |                                       |                          |              |                       |       |             |       |            |        |                    |        |   |  |      |  |      |  |    
|------------------ |  | ------------- |  | ----- | ---- | ------------- | ---------------------- | ------------ | ------------------- | ---------------------------- |  | ----- | ------------------------------------- | ------------------------ | ------------ | --------------------- | ----- | ----------- | ----- | ---------- | ------ | ------------------ | ------ | - |  | ---- |  | ---- |  | ---
|                   |  | Location      |  | State |      | Encum-brances |                        | INITIAL COST |                     | CostsSubsequenttoAcquisition |  |       | Gross Amounts as of December 31, 2003 |                          | Accum. Depr. |                       |       | Owned Since |       | Year Built |        | Depr. Life in mos.
|Property Name      |  |               |  |       | Land |               | Building,Equip.& Other |              | GrossStorageCenters |                              |  | Land  |                                       | Building, Equip. & Other |              | Gross Storage Centers |       |             |       |           
|English Rd         |  | High Point    |  | NC    |      |              |                        | 602          |                     | 2,100                        |  | 2,702 |                                       | 453                      |              |                       | 602   |             | 2,553 |            | 3,155  |                    | (129   | ) |  | 2002 |  | 2000 |  | 360
|Garner             |  | Garner        |  | NC    |      |              |                        | 204          |                     | 818                          |  | 1,022 |                                       | 85                       |              |                       | 204   |             | 903   |            | 1,107  |                    | (317   | ) |  | 1994 |  | 1987 |  | 360
|Glenwood           |  | Raleigh       |  | NC    |      |              |                        | 266          |                     | 1,066                        |  | 1,332 |                                       | 139                      |              |                       | 266   |             | 1,205 |            | 1,471  |                    | (414   | ) |  | 1994 |  | 1983 |  | 360
|Hickory            |  | Hickory       |  | NC    |      | 1,918         |                        | 892          |                     | 3,826                        |  | 4,718 |                                       | (411                     | )            |                       | 892   |             | 3,415 |            | 4,307  |                    | (341   | ) |  | 2002 |  | 1986 |  | 360
|Lexington NC       |  | Lexington     |  | NC    |      | 749           |                        | 430          |                     | 1,625                        |  | 2,055 |                                       | (373                     | )            |                       | 430   |             | 1,252 |            | 1,682  |                    | 59     |   |  | 2002 |  | 1987 |  | 360
|Matthews           |  | Matthews      |  | NC    |      | 1,812         |                        | 775          |                     | 5,617                        |  | 6,392 |                                       | (595                     | )            |                       | 775   |             | 5,022 |            | 5,797  |                    | (276   | ) |  | 2002 |  | 1981 |  | 360
|Monroe             |  | Monroe        |  | NC    |      | 2,193         |                        | 556          |                     | 3,239                        |  | 3,795 |                                       | (547                     | )            |                       | 556   |             | 2,692 |            | 3,248  |                    | (184   | ) |  | 2002 |  | 1985 |  | 360
|Morrisville        |  | Morrisville   |  | NC    |      |              |                        | 409          |                     | 1,640                        |  | 2,049 |                                       | 137                      |              |                       | 409   |             | 1,777 |            | 2,186  |                    | (588   | ) |  | 1994 |  | 1988 |  | 360
|N. Tryon           |  | Charlotte     |  | NC    |      | 2,037         |                        | 927          |                     | 2,723                        |  | 3,650 |                                       | (424                     | )            |                       | 927   |             | 2,299 |            | 3,226  |                    | (152   | ) |  | 2002 |  | 1987 |  | 360
|Park Rd            |  | Charlotte     |  | NC    |      |              |                        | 1,488        |                     | 6,754                        |  | 8,242 |                                       | (621                     | )            |                       | 1,488 |             | 6,133 |            | 7,621  |                    | 66     |   |  | 2002 |  | 1998 |  | 360
|Pavilion           |  | Charlotte     |  | NC    |      | 1,535         |                        | 1,320        |                     | 2,251                        |  | 3,571 |                                       | (210                     | )            |                       | 1,320 |             | 2,041 |            | 3,361  |                    | (120   | ) |  | 2002 |  | 1997 |  | 360
|Pineville          |  | Pineville     |  | NC    |      | 9,541         |                        | 2,688        |                     | 5,916                        |  | 8,604 |                                       | (950                     | )            |                       | 2,688 |             | 4,966 |            | 7,654  |                    | (686   | ) |  | 2002 |  | 1983 |  | 360
|Randleman          |  | Greensboro    |  | NC    |      | 2,013         |                        | 1,113        |                     | 2,600                        |  | 3,713 |                                       | (216                     | )            |                       | 1,113 |             | 2,384 |            | 3,497  |                    | (138   | ) |  | 2002 |  | 1998 |  | 360
|Rockingham         |  | Rockingham    |  | NC    |      | 799           |                        | 178          |                     | 1,870                        |  | 2,048 |                                       | (216                     | )            |                       | 178   |             | 1,654 |            | 1,832  |                    | (97    | ) |  | 2002 |  | 1996 |  | 360
|Salisbury          |  | Salisbury     |  | NC    |      | 3,290         |                        | 237          |                     | 5,296                        |  | 5,533 |                                       | (431                     | )            |                       | 237   |             | 4,865 |            | 5,102  |                    | (264   | ) |  | 2002 |  | 1986 |  | 360
|Silas Creek        |  | Winston Salem |  | NC    |      |              |                        | 1,640        |                     | 2,457                        |  | 4,097 |                                       | 683                      |              |                       | 1,640 |             | 3,140 |            | 4,780  |                    | (174   | ) |  | 2002 |  | 2000 |  | 360
|Stallings          |  | Matthews      |  | NC    |      | 7,992         |                        | 747          |                     | 2,075                        |  | 2,822 |                                       | 69                       |              |                       | 747   |             | 2,144 |            | 2,891  |                    | (174   | ) |  | 2002 |  | 1995 |  | 360
|Wake Forest        |  | Wake Forest   |  | NC    |      | 720           |                        | 851          |                     | 1,547                        |  | 2,398 |                                       | 787                      |              |                       | 855   |             | 2,330 |            | 3,185  |                    | (116   | ) |  | 2002 |  | 1998 |  | 360
|Weddington         |  | Waxhaw        |  | NC    |      |              |                        | 642          |                     | 2,520                        |  | 3,162 |                                       | (104                     | )            |                       | 642   |             | 2,416 |            | 3,058  |                    | (129   | ) |  | 2002 |  | 1999 |  | 360
|Wilkinson          |  | Charlotte     |  | NC    |      | 1,559         |                        | 575          |                     | 3,270                        |  | 3,845 |                                       | (344                     | )            |                       | 575   |             | 2,926 |            | 3,501  |                    | (172   | ) |  | 2002 |  | 1986 |  | 360
|Winston            |  | Winston Salem |  | NC    |      | 853           |                        | 354          |                     | 1,930                        |  | 2,284 |                                       | (368                     | )            |                       | 354   |             | 1,562 |            | 1,916  |                    | (106   | ) |  | 2002 |  | 1985 |  | 360
|Bricktown          |  | Bricktown     |  | NJ    |      | 2,814         |                        | 1,398        |                     | 2,640                        |  | 4,038 |                                       | 188                      |              |                       | 1,397 |             | 2,829 |            | 4,226  |                    | (476   | ) |  | 1999 |  | 2000 |  | 360
|Marlboro           |  | Morganville   |  | NJ    |      |              |                        | 1,320        |                     | 4,963                        |  | 6,283 |                                       | 81                       |              |                       | 1,320 |             | 5,044 |            | 6,364  |                    | (448   | ) |  | 2000 |  | 2000 |  | 360
|Marlton            |  | Marlton       |  | NJ    |      |              |                        | 870          |                     | 4,639                        |  | 5,509 |                                       |                         |              |                       | 870   |             | 4,639 |            | 5,509  |                    | (75    | ) |  | 2003 |  | 2003 |  | 360
|Old Bridge         |  | Matawan       |  | NJ    |      |              |                        | 767          |                     | 2,301                        |  | 3,068 |                                       | 2,112                    |              |                       | 767   |             | 4,413 |            | 5,180  |                    | (1,154 | ) |  | 1987 |  | 1987 |  | 360
|Rockaway (dover)   |  | Dover         |  | NJ    |      |              |                        | 2,083        |                     | 3,983                        |  | 6,066 |                                       |                         |              |                       | 2,083 |             | 3,983 |            | 6,066  |                    | (102   | ) |  | 2003 |  | 2003 |  | 360
|Voorhees           |  | Voorhees      |  | NJ    |      |              |                        | 1,121        |                     | 4,268                        |  | 5,389 |                                       | 35                       |              |                       | 1,121 |             | 4,303 |            | 5,424  |                    | (374   | ) |  | 2001 |  | 2001 |  | 360
|Bethpage           |  | Bethpage      |  | NY    |      | 4,801         |                        | 2,370        |                     | 6,209                        |  | 8,579 |                                       | (1,369                   | )            |                       | 2,434 |             | 4,776 |            | 7,210  |                    | (761   | ) |  | 2000 |  | 2000 |  | 360
|Commack            |  | Commack       |  | NY    |      | 6,875         |                        | 3,461        |                     | 6,203                        |  | 9,664 |                                       | 660                      |              |                       | 3,940 |             | 6,384 |            | 10,324 |                    | (974   | ) |  | 1999 |  | 1999 |  | 360
|Gold Street        |  | Brooklyn      |  | NY    |      |              |                        | 1,194        |                     | 4,821                        |  | 6,015 |                                       | 980                      |              |                       | 1,194 |             | 5,801 |            | 6,995  |                    | (2,095 | ) |  | 1986 |  | 1940 |  | 360
|Great Neck         |  | Great Neck    |  | NY    |      | 2,252         |                        | 436          |                     | 2,632                        |  | 3,068 |                                       | 314                      |              |                       | 438   |             | 2,944 |            | 3,382  |                    | (359   | ) |  | 1999 |  | 1929 |  | 360
|Hempstead          |  | Hempstead     |  | NY    |      | 3,416         |                        | 1,902        |                     | 4,572                        |  | 6,474 |                                       | (1,345                   | )            |                       | 1,914 |             | 3,215 |            | 5,129  |                    | (652   | ) |  | 1999 |  | 1999 |  | 360
|Melville           |  | Melville      |  | NY    |      |              |                        | 1,099        |                     | 3,897                        |  | 4,996 |                                       | 3,683                    |              |                       | 1,099 |             | 7,580 |            | 8,679  |                    | (1,078 | ) |  | 1998 |  | 1998 |  | 360
|Nesconset          |  | Nesconset     |  | NY    |      | 3,057         |                        | 1,072        |                     | 2,919                        |  | 3,991 |                                       | 600                      |              |                       | 1,074 |             | 3,517 |            | 4,591  |                    | (416   | ) |  | 2000 |  | 2000 |  | 360
|Northern Boulevard |  | Long Island   |  | NY    |      |              |                        | 1,244        |                     | 5,039                        |  | 6,283 |                                       | 641                      |              |                       | 1,244 |             | 5,680 |            | 6,924  |                    | (2,042 | ) |  | 1987 |  | 1940 |  | 360
|Utica Avenue       |  | Brooklyn      |  | NY    |      |              |                        | 830          |                     | 3,556                        |  | 4,386 |                                       | 333                      |              |                       | 830   |             | 3,889 |            | 4,719  |                    | (1,463 | ) |  | 1986 |  | 1964 |  | 360
|Van Dam Street     |  | Long Island   |  | NY    |      |              |                        | 760          |                     | 3,189                        |  | 3,949 |                                       | 429                      |              |                       | 760   |             | 3,618 |            | 4,378  |                    | (1,366 | ) |  | 1986 |  | 1925 |  | 360
|Yonkers            |  | Yonkers       |  | NY    |      |              |                        | 913          |                     | 3,936                        |  | 4,849 |                                       | 354                      |              |                       | 913   |             | 4,290 |            | 5,203  |                    | (1,670 | ) |  | 1986 |  | 1928 |  | 360
|16th & Sandy       |  | Portland      |  | OR    |      |              |                        | 231          |                     | 938                          |  | 1,169 |                                       | 1,651                    |              |                       | 587   |             | 2,233 |            | 2,820  |                    | (579   | ) |  | 1995 |  | 1973 |  | 360
|Allen Boulevard    |  | Beaverton     |  | OR    |      |              |                        | 525          |                     | 2,101                        |  | 2,626 |                                       | 90                       |              |                       | 525   |             | 2,191 |            | 2,716  |                    | (576   | ) |  | 1996 |  | 1973 |  | 360



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|                          |  |                |  |       |      |               |                        |              |                     |                              |  |       |                                       |                          |              |                       |       |             |       |            |       |                    |        |   |  |      |  |         |  |    
|------------------------- |  | -------------- |  | ----- | ---- | ------------- | ---------------------- | ------------ | ------------------- | ---------------------------- |  | ----- | ------------------------------------- | ------------------------ | ------------ | --------------------- | ----- | ----------- | ----- | ---------- | ----- | ------------------ | ------ | - |  | ---- |  | ------- |  | ---
|                          |  | Location       |  | State |      | Encum-brances |                        | INITIAL COST |                     | CostsSubsequenttoAcquisition |  |       | Gross Amounts as of December 31, 2003 |                          | Accum. Depr. |                       |       | Owned Since |       | Year Built |       | Depr. Life in mos.
|Property Name             |  |                |  |       | Land |               | Building,Equip.& Other |              | GrossStorageCenters |                              |  | Land  |                                       | Building, Equip. & Other |              | Gross Storage Centers |       |             |       |           
|Barbur Boulevard          |  | Portland       |  | OR    |      |              |                        | 337          |                     | 3,411                        |  | 3,748 |                                       | 2,365                    |              |                       | 741   |             | 5,372 |            | 6,113 |                    | (1,732 | ) |  | 1995 |  | 1993    |  | 360
|Beaverton                 |  | Beaverton      |  | OR    |      |              |                        | 216          |                     | 863                          |  | 1,079 |                                       | 126                      |              |                       | 216   |             | 989   |            | 1,205 |                    | (389   | ) |  | 1985 |  | 1974    |  | 360
|Denney Road               |  | Beaverton      |  | OR    |      |              |                        | 593          |                     | 2,380                        |  | 2,973 |                                       | 180                      |              |                       | 593   |             | 2,560 |            | 3,153 |                    | (861   | ) |  | 1989 |  | 1988    |  | 360
|Division                  |  | Portland       |  | OR    |      |              |                        | 352          |                     | 1,395                        |  | 1,747 |                                       | 1,858                    |              |                       | 661   |             | 2,944 |            | 3,605 |                    | (1,011 | ) |  | 1996 |  | 1992    |  | 360
|Gresham                   |  | Gresham        |  | OR    |      |              |                        | 744          |                     | 2,442                        |  | 3,186 |                                       | 89                       |              |                       | 744   |             | 2,531 |            | 3,275 |                    | (692   | ) |  | 1996 |  | 1996    |  | 360
|Hillsboro                 |  | Hillsboro      |  | OR    |      |              |                        | 720          |                     | 2,992                        |  | 3,712 |                                       | 146                      |              |                       | 720   |             | 3,138 |            | 3,858 |                    | (823   | ) |  | 1996 |  | 1996    |  | 360
|King City / Tigard        |  | Tigard         |  | OR    |      |              |                        | 511          |                     | 2,051                        |  | 2,562 |                                       | 158                      |              |                       | 511   |             | 2,209 |            | 2,720 |                    | (735   | ) |  | 1987 |  | 1986    |  | 360
|Liberty Road              |  | Salem          |  | OR    |      |              |                        | 524          |                     | 1,280                        |  | 1,804 |                                       | 1,461                    |              |                       | 749   |             | 2,516 |            | 3,265 |                    | (847   | ) |  | 1995 |  | 1993    |  | 360
|Milwaukie                 |  | Milwaukie      |  | OR    |      |              |                        | 583          |                     | 2,005                        |  | 2,588 |                                       | 2,407                    |              |                       | 999   |             | 3,996 |            | 4,995 |                    | (1,276 | ) |  | 1996 |  | 1990    |  | 360
|Oregon City               |  | Oregon City    |  | OR    |      |              |                        | 321          |                     | 1,613                        |  | 1,934 |                                       | 1,379                    |              |                       | 571   |             | 2,742 |            | 3,313 |                    | (964   | ) |  | 1995 |  | 1992    |  | 360
|Portland                  |  | Portland       |  | OR    |      |              |                        | 382          |                     | 1,530                        |  | 1,912 |                                       | 109                      |              |                       | 382   |             | 1,639 |            | 2,021 |                    | (554   | ) |  | 1988 |  | 1988    |  | 360
|Salem                     |  | Salem          |  | OR    |      |              |                        | 574          |                     | 2,294                        |  | 2,868 |                                       | 409                      |              |                       | 574   |             | 2,703 |            | 3,277 |                    | (949   | ) |  | 1983 |  | 1979/81 |  | 360
|Airport                   |  | Philadelphia   |  | PA    |      |              |                        | 799          |                     | 3,194                        |  | 3,993 |                                       | 366                      |              |                       | 799   |             | 3,560 |            | 4,359 |                    | (1,235 | ) |  | 1986 |  | 1985    |  | 360
|Edgemont                  |  | Newton Square  |  | PA    |      |              |                        | 497          |                     | 3,070                        |  | 3,567 |                                       | 2,767                    |              |                       | 975   |             | 5,359 |            | 6,334 |                    | (1,733 | ) |  | 1995 |  | 1992    |  | 360
|Oxford Valley             |  | Fairless Hills |  | PA    |      |              |                        | 1,214        |                     | 4,206                        |  | 5,420 |                                       |                         |              |                       | 1,214 |             | 4,206 |            | 5,420 |                    | (254   | ) |  | 2002 |  | 2002    |  | 360
|Painters Crossing         |  | Glen Mills     |  | PA    |      |              |                        | 513          |                     | 2,868                        |  | 3,381 |                                       | 7                        |              |                       | 511   |             | 2,877 |            | 3,388 |                    | (575   | ) |  | 1998 |  | 1998    |  | 360
|Valley Forge              |  | Berwyn         |  | PA    |      |              |                        | 331          |                     | 2,816                        |  | 3,147 |                                       | 567                      |              |                       | 332   |             | 3,382 |            | 3,714 |                    | (119   | ) |  | 2002 |  | 2002    |  | 360
|Westchester               |  | West Chester   |  | PA    |      |              |                        |             |                     | 4,197                        |  | 4,197 |                                       | 412                      |              |                       |      |             | 4,609 |            | 4,609 |                    | (1,557 | ) |  | 1986 |  | 1980    |  | 360
|Ashley River              |  | Charleston     |  | SC    |      |              |                        | 851          |                     | 4,239                        |  | 5,090 |                                       | (101                     | )            |                       | 851   |             | 4,138 |            | 4,989 |                    | (223   | ) |  | 2002 |  | 1999    |  | 360
|Ballantyne                |  | Fort Mill      |  | SC    |      |              |                        | 640          |                     | 2,153                        |  | 2,793 |                                       | 50                       |              |                       | 640   |             | 2,203 |            | 2,843 |                    | (117   | ) |  | 2002 |  | 1998    |  | 360
|Charleston                |  | Ladson         |  | SC    |      | 2,231         |                        | 403          |                     | 3,453                        |  | 3,856 |                                       | (204                     | )            |                       | 403   |             | 3,249 |            | 3,652 |                    | (306   | ) |  | 2002 |  | 1999    |  | 360
|Dave Lyle                 |  | Rock Hill      |  | SC    |      |              |                        | 487          |                     | 2,595                        |  | 3,082 |                                       | 291                      |              |                       | 487   |             | 2,886 |            | 3,373 |                    | (153   | ) |  | 2002 |  | 2000    |  | 360
|Florence                  |  | Florence       |  | SC    |      | 2,076         |                        | 636          |                     | 4,441                        |  | 5,077 |                                       | (416                     | )            |                       | 636   |             | 4,025 |            | 4,661 |                    | (282   | ) |  | 2002 |  | 1985    |  | 360
|Garners Ferry             |  | Columbia       |  | SC    |      | 2,413         |                        | 1,071        |                     | 2,809                        |  | 3,880 |                                       | (420                     | )            |                       | 1,071 |             | 2,389 |            | 3,460 |                    | (137   | ) |  | 2002 |  | 1988    |  | 360
|Greenville                |  | Greenville     |  | SC    |      | 1,852         |                        | 989          |                     | 2,162                        |  | 3,151 |                                       | (544                     | )            |                       | 989   |             | 1,618 |            | 2,607 |                    | (123   | ) |  | 2002 |  | 1987    |  | 360
|James Island (Folly Road) |  | Charleston     |  | SC    |      |              |                        | 553          |                     | 2,330                        |  | 2,883 |                                       |                         |              |                       | 553   |             | 2,330 |            | 2,883 |                    | (14    | ) |  | 2003 |  | 2003    |  | 360
|Rock Hill                 |  | Rock Hill      |  | SC    |      | 1,580         |                        | 415          |                     | 2,063                        |  | 2,478 |                                       | 108                      |              |                       | 415   |             | 2,171 |            | 2,586 |                    | 10     |   |  | 2002 |  | 1998    |  | 360
|Shriners                  |  | Greenville     |  | SC    |      |              |                        | 431          |                     | 2,564                        |  | 2,995 |                                       | (278                     | )            |                       | 431   |             | 2,286 |            | 2,717 |                    | (28    | ) |  | 2002 |  | 1998    |  | 360
|Spartanburg               |  | Spartanburg    |  | SC    |      | 487           |                        | 268          |                     | 1,466                        |  | 1,734 |                                       | (359                     | )            |                       | 268   |             | 1,107 |            | 1,375 |                    | (62    | ) |  | 2002 |  | 1986    |  | 360
|Sumter                    |  | Sumter         |  | SC    |      | 891           |                        | 268          |                     | 2,020                        |  | 2,288 |                                       | (288                     | )            |                       | 268   |             | 1,732 |            | 2,000 |                    | (9     | ) |  | 2002 |  | 1986    |  | 360
|Sunset                    |  | Lexington      |  | SC    |      |              |                        | 535          |                     | 2,423                        |  | 2,958 |                                       | 68                       |              |                       | 363   |             | 2,663 |            | 3,026 |                    | (146   | ) |  | 2002 |  | 1999    |  | 360
|Woodruff                  |  | Greenville     |  | SC    |      |              |                        | 1,082        |                     | 1,693                        |  | 2,775 |                                       | (262                     | )            |                       | 1,082 |             | 1,431 |            | 2,513 |                    | (55    | ) |  | 2002 |  | 1996    |  | 360
|Franklin                  |  | Franklin       |  | TN    |      | 2,337         |                        | 569          |                     | 2,057                        |  | 2,626 |                                       | 115                      |              |                       | 584   |             | 2,157 |            | 2,741 |                    | (637   | ) |  | 1995 |  | 1995    |  | 360
|Hermitage                 |  | Hermitage      |  | TN    |      | 2,369         |                        | 157          |                     | 2,445                        |  | 2,602 |                                       | 415                      |              |                       | 182   |             | 2,835 |            | 3,017 |                    | (1,126 | ) |  | 1995 |  | 1995    |  | 360
|Hickory Hollow            |  | Antioch        |  | TN    |      | 1,758         |                        | 743          |                     | 2,337                        |  | 3,080 |                                       | 328                      |              |                       | 778   |             | 2,630 |            | 3,408 |                    | (613   | ) |  | 1997 |  | 1997    |  | 360
|Medical CenterTN         |  | Nashville      |  | TN    |      | 1,822         |                        | 236          |                     | 2,251                        |  | 2,487 |                                       | 98                       |              |                       | 246   |             | 2,339 |            | 2,585 |                    | (743   | ) |  | 1995 |  | 1995    |  | 360
|Rivergate                 |  | Madison        |  | TN    |      | 3,038         |                        | 760          |                     | 1,958                        |  | 2,718 |                                       | 845                      |              |                       | 776   |             | 2,787 |            | 3,563 |                    | (654   | ) |  | 1996 |  | 1996    |  | 360
|South Main                |  | Memphis        |  | TN    |      | 805           |                        | 465          |                     | 1,480                        |  | 1,945 |                                       | 102                      |              |                       | 477   |             | 1,570 |            | 2,047 |                    | (223   | ) |  | 2000 |  | 2000    |  | 360
|Stones River              |  | Murfreesboro   |  | TN    |      | 1,400         |                        | 373          |                     | 1,879                        |  | 2,252 |                                       | 552                      |              |                       | 399   |             | 2,405 |            | 2,804 |                    | (495   | ) |  | 1998 |  | 1998    |  | 360
|Sycamore View             |  | Memphis        |  | TN    |      | 1,216         |                        | 340          |                     | 1,460                        |  | 1,800 |                                       | 1,301                    |              |                       | 364   |             | 2,737 |            | 3,101 |                    | (522   | ) |  | 1998 |  | 1998    |  | 360



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|                     |  |               |  |       |      |               |                        |              |                     |                              |  |       |                                       |                          |              |                       |       |             |       |            |       |                    |        |   |  |      |  |         |  |    
|-------------------- |  | ------------- |  | ----- | ---- | ------------- | ---------------------- | ------------ | ------------------- | ---------------------------- |  | ----- | ------------------------------------- | ------------------------ | ------------ | --------------------- | ----- | ----------- | ----- | ---------- | ----- | ------------------ | ------ | - |  | ---- |  | ------- |  | ---
|                     |  | Location      |  | State |      | Encum-brances |                        | INITIAL COST |                     | CostsSubsequenttoAcquisition |  |       | Gross Amounts as of December 31, 2003 |                          | Accum. Depr. |                       |       | Owned Since |       | Year Built |       | Depr. Life in mos.
|Property Name        |  |               |  |       | Land |               | Building,Equip.& Other |              | GrossStorageCenters |                              |  | Land  |                                       | Building, Equip. & Other |              | Gross Storage Centers |       |             |       |           
|Winchester           |  | Memphis       |  | TN    |      | 1,989         |                        | 620          |                     | 2,655                        |  | 3,275 |                                       | 223                      |              |                       | 642   |             | 2,856 |            | 3,498 |                    | (590   | ) |  | 1998 |  | 1998    |  | 360
|Wolfchase            |  | Memphis       |  | TN    |      | 1,529         |                        | 760          |                     | 1,881                        |  | 2,641 |                                       | 595                      |              |                       | 781   |             | 2,455 |            | 3,236 |                    | (581   | ) |  | 1997 |  | 1997    |  | 360
|Audelia II           |  | Richardson    |  | TX    |      |              |                        | 708          |                     | 2,352                        |  | 3,060 |                                       |                         |              |                       | 708   |             | 2,352 |            | 3,060 |                    | (161   | ) |  | 2002 |  | 2002    |  | 360
|Bandera Road         |  | San Antonio   |  | TX    |      |              |                        | 468          |                     | 1,873                        |  | 2,341 |                                       | 150                      |              |                       | 468   |             | 2,023 |            | 2,491 |                    | (716   | ) |  | 1988 |  | 1981    |  | 360
|Bedford              |  | Bedford       |  | TX    |      |              |                        | 408          |                     | 1,678                        |  | 2,086 |                                       | 89                       |              |                       | 408   |             | 1,767 |            | 2,175 |                    | (640   | ) |  | 1985 |  | 1984    |  | 360
|Bee Caves Road       |  | Austin        |  | TX    |      |              |                        | 608          |                     | 3,609                        |  | 4,217 |                                       | 918                      |              |                       | 626   |             | 4,509 |            | 5,135 |                    | (645   | ) |  | 1999 |  | 1999    |  | 360
|Beltline             |  | Irving        |  | TX    |      |              |                        | 414          |                     | 1,671                        |  | 2,085 |                                       | 459                      |              |                       | 414   |             | 2,130 |            | 2,544 |                    | (768   | ) |  | 1989 |  | 1985/86 |  | 360
|Blanco Road          |  | San Antonio   |  | TX    |      |              |                        | 801          |                     | 3,235                        |  | 4,036 |                                       | 137                      |              |                       | 801   |             | 3,372 |            | 4,173 |                    | (1,200 | ) |  | 1988 |  | 1989/91 |  | 360
|Champions            |  | Houston       |  | TX    |      |              |                        | 515          |                     | 2,775                        |  | 3,290 |                                       | 66                       |              |                       | 484   |             | 2,872 |            | 3,356 |                    | (548   | ) |  | 1998 |  | 1998    |  | 360
|Cinco Ranch          |  | Katy          |  | TX    |      |              |                        | 1,751        |                     | 1,336                        |  | 3,087 |                                       | 32                       |              |                       | 523   |             | 2,596 |            | 3,119 |                    | (441   | ) |  | 1999 |  | 1998    |  | 360
|City Place           |  | Dallas        |  | TX    |      |              |                        | 1,045        |                     | 3,314                        |  | 4,359 |                                       | 285                      |              |                       | 1,118 |             | 3,526 |            | 4,644 |                    | (565   | ) |  | 1999 |  | 1999    |  | 360
|East Lamar           |  | Arlington     |  | TX    |      |              |                        | 742          |                     | 1,863                        |  | 2,605 |                                       | 259                      |              |                       | 742   |             | 2,122 |            | 2,864 |                    | (599   | ) |  | 1996 |  | 1996    |  | 360
|Federal Road         |  | Houston       |  | TX    |      |              |                        | 552          |                     | 2,223                        |  | 2,775 |                                       | 172                      |              |                       | 552   |             | 2,395 |            | 2,947 |                    | (847   | ) |  | 1988 |  | 1988    |  | 360
|First Colony         |  | Missouri City |  | TX    |      |              |                        | 447          |                     | 2,175                        |  | 2,622 |                                       | (15                      | )            |                       | 427   |             | 2,180 |            | 2,607 |                    | (265   | ) |  | 2000 |  | 1994    |  | 360
|Forum 303            |  | Arlington     |  | TX    |      |              |                        | 273          |                     | 1,100                        |  | 1,373 |                                       | 162                      |              |                       | 273   |             | 1,262 |            | 1,535 |                    | (466   | ) |  | 1986 |  | 1984    |  | 360
|Fredericksburg Road  |  | San Antonio   |  | TX    |      |              |                        | 645          |                     | 2,596                        |  | 3,241 |                                       | 314                      |              |                       | 645   |             | 2,910 |            | 3,555 |                    | (1,034 | ) |  | 1987 |  | 1978/82 |  | 360
|Georgetown           |  | Georgetown    |  | TX    |      |              |                        | 403          |                     | 1,711                        |  | 2,114 |                                       | 94                       |              |                       | 403   |             | 1,805 |            | 2,208 |                    | (452   | ) |  | 1997 |  | 1996    |  | 360
|Greenville Avenue    |  | Dallas        |  | TX    |      |              |                        | 768          |                     | 3,200                        |  | 3,968 |                                       | 32                       |              |                       | 768   |             | 3,232 |            | 4,000 |                    | (691   | ) |  | 1998 |  | 1998    |  | 360
|Helotes              |  | Helotes       |  | TX    |      | 1,849         |                        | 481          |                     | 2,277                        |  | 2,758 |                                       | 18                       |              |                       | 493   |             | 2,283 |            | 2,776 |                    | (282   | ) |  | 2000 |  | 2000    |  | 360
|Henderson Pass       |  | San Antonio   |  | TX    |      |              |                        | 562          |                     | 2,348                        |  | 2,910 |                                       | 924                      |              |                       | 1,386 |             | 2,448 |            | 3,834 |                    | (489   | ) |  | 1998 |  | 1995    |  | 360
|Henderson Street     |  | Fort Worth    |  | TX    |      |              |                        | 318          |                     | 3,137                        |  | 3,455 |                                       | 815                      |              |                       | 338   |             | 3,932 |            | 4,270 |                    | (551   | ) |  | 1999 |  | 1999    |  | 360
|Highway 26           |  | Hurst         |  | TX    |      |              |                        | 517          |                     | 2,761                        |  | 3,278 |                                       | 66                       |              |                       | 527   |             | 2,817 |            | 3,344 |                    | (259   | ) |  | 2001 |  | 2001    |  | 360
|Highway 78           |  | San Antonio   |  | TX    |      |              |                        | 392          |                     | 1,550                        |  | 1,942 |                                       | 142                      |              |                       | 392   |             | 1,692 |            | 2,084 |                    | (339   | ) |  | 1998 |  | 1997    |  | 360
|Hill Country Village |  | San Antonio   |  | TX    |      |              |                        | 679          |                     | 2,731                        |  | 3,410 |                                       | 183                      |              |                       | 679   |             | 2,914 |            | 3,593 |                    | (1,020 | ) |  | 1985 |  | 1982    |  | 360
|Hillcroft            |  | Houston       |  | TX    |      |              |                        |             |                     | 3,712                        |  | 3,712 |                                       | (73                      | )            |                       |      |             | 3,639 |            | 3,639 |                    | (1,295 | ) |  | 1991 |  | 1988    |  | 360
|Hurst                |  | Hurst         |  | TX    |      |              |                        | 363          |                     | 1,492                        |  | 1,855 |                                       | 88                       |              |                       | 363   |             | 1,580 |            | 1,943 |                    | (553   | ) |  | 1987 |  | 1974    |  | 360
|Imperial Valley      |  | Houston       |  | TX    |      |              |                        | 461          |                     | 1,856                        |  | 2,317 |                                       | 169                      |              |                       | 461   |             | 2,025 |            | 2,486 |                    | (725   | ) |  | 1988 |  | 1987    |  | 360
|Irving               |  | Irving        |  | TX    |      |              |                        | 180          |                     | 734                          |  | 914   |                                       | 796                      |              |                       | 314   |             | 1,396 |            | 1,710 |                    | (468   | ) |  | 1985 |  | 1975/84 |  | 360
|Kingwood             |  | Kingwood      |  | TX    |      |              |                        | 525          |                     | 2,097                        |  | 2,622 |                                       | 745                      |              |                       | 511   |             | 2,856 |            | 3,367 |                    | (911   | ) |  | 1988 |  | 1988    |  | 360
|Lakeline             |  | Austin        |  | TX    |      |              |                        | 737          |                     | 3,412                        |  | 4,149 |                                       | 37                       |              |                       | 748   |             | 3,438 |            | 4,186 |                    | (337   | ) |  | 2001 |  | 2001    |  | 360
|Las Colinas          |  | Irving        |  | TX    |      | 2,418         |                        | 478          |                     | 2,717                        |  | 3,195 |                                       | 436                      |              |                       | 491   |             | 3,140 |            | 3,631 |                    | (355   | ) |  | 2000 |  | 2000    |  | 360
|Lewisville           |  | Lewisville    |  | TX    |      |              |                        | 434          |                     | 2,521                        |  | 2,955 |                                       | (11                      | )            |                       | 434   |             | 2,510 |            | 2,944 |                    | (656   | ) |  | 1997 |  | 1997    |  | 360
|MacArthur            |  | Irving        |  | TX    |      |              |                        | 180          |                     | 734                          |  | 914   |                                       | 933                      |              |                       | 359   |             | 1,488 |            | 1,847 |                    | (605   | ) |  | 1985 |  | 1975/84 |  | 360
|Macarthur Crossing   |  | Irving        |  | TX    |      |              |                        | 746          |                     | 2,577                        |  | 3,323 |                                       | 634                      |              |                       | 746   |             | 3,211 |            | 3,957 |                    | (872   | ) |  | 1996 |  | 1996    |  | 360
|Medical Center (TX)  |  | Houston       |  | TX    |      |              |                        | 737          |                     | 2,950                        |  | 3,687 |                                       | 315                      |              |                       | 737   |             | 3,265 |            | 4,002 |                    | (1,276 | ) |  | 1989 |  | 1989    |  | 360
|Medical Center SA    |  | San Antonio   |  | TX    |      | 2,308         |                        | 660          |                     | 2,683                        |  | 3,343 |                                       | 123                      |              |                       | 667   |             | 2,799 |            | 3,466 |                    | (323   | ) |  | 1998 |  | 1999    |  | 360
|Mission Bend         |  | Houston       |  | TX    |      |              |                        | 653          |                     | 2,218                        |  | 2,871 |                                       | 540                      |              |                       | 653   |             | 2,758 |            | 3,411 |                    | (737   | ) |  | 1995 |  | 1995    |  | 360
|Nacogdoches          |  | San Antonio   |  | TX    |      |              |                        | 363          |                     | 1,565                        |  | 1,928 |                                       | 1,435                    |              |                       | 381   |             | 2,982 |            | 3,363 |                    | (553   | ) |  | 1998 |  | 1996    |  | 360
|North Carrollton     |  | Carrollton    |  | TX    |      |              |                        | 627          |                     | 2,739                        |  | 3,366 |                                       | 10                       |              |                       | 627   |             | 2,749 |            | 3,376 |                    | (378   | ) |  | 2000 |  | 1999    |  | 360
|North Park           |  | Kingwood      |  | TX    |      |              |                        | 570          |                     | 2,163                        |  | 2,733 |                                       | 10                       |              |                       | 549   |             | 2,194 |            | 2,743 |                    | (268   | ) |  | 2000 |  | 1996    |  | 360
|Oak Farms            |  | Houston       |  | TX    |      |              |                        | 2,603        |                     | 2,730                        |  | 5,333 |                                       | 733                      |              |                       | 2,652 |             | 3,414 |            | 6,066 |                    | (518   | ) |  | 1999 |  | 1999    |  | 360



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|                      |  |                 |  |       |      |               |                        |              |                     |                              |  |       |                                       |                          |              |                       |       |             |       |            |       |                    |        |   |  |      |  |      |  |    
|--------------------- |  | --------------- |  | ----- | ---- | ------------- | ---------------------- | ------------ | ------------------- | ---------------------------- |  | ----- | ------------------------------------- | ------------------------ | ------------ | --------------------- | ----- | ----------- | ----- | ---------- | ----- | ------------------ | ------ | - |  | ---- |  | ---- |  | ---
|                      |  | Location        |  | State |      | Encum-brances |                        | INITIAL COST |                     | CostsSubsequenttoAcquisition |  |       | Gross Amounts as of December 31, 2003 |                          | Accum. Depr. |                       |       | Owned Since |       | Year Built |       | Depr. Life in mos.
|Property Name         |  |                 |  |       | Land |               | Building,Equip.& Other |              | GrossStorageCenters |                              |  | Land  |                                       | Building, Equip. & Other |              | Gross Storage Centers |       |             |       |           
|Oak Hills             |  | Austin          |  | TX    |      | 2,473         |                        | 149          |                     | 3,568                        |  | 3,717 |                                       | (3                       | )            |                       | 149   |             | 3,565 |            | 3,714 |                    | (544   | ) |  | 1999 |  | 1999 |  | 360
|Oltorf                |  | Austin          |  | TX    |      |              |                        | 640          |                     | 4,435                        |  | 5,075 |                                       |                         |              |                       | 640   |             | 4,435 |            | 5,075 |                    | (280   | ) |  | 2002 |  | 2002 |  | 360
|Olympia               |  | Missouri City   |  | TX    |      | 2,266         |                        | 489          |                     | 2,912                        |  | 3,401 |                                       | 2                        |              |                       | 498   |             | 2,905 |            | 3,403 |                    | (328   | ) |  | 1998 |  | 1999 |  | 360
|Park Cities East      |  | Dallas          |  | TX    |      |              |                        | 1,017        |                     | 2,686                        |  | 3,703 |                                       | 228                      |              |                       | 1,017 |             | 2,914 |            | 3,931 |                    | (841   | ) |  | 1995 |  | 1995 |  | 360
|Parker Road           |  | Plano           |  | TX    |      |              |                        | 809          |                     | 2,211                        |  | 3,020 |                                       | 252                      |              |                       | 809   |             | 2,463 |            | 3,272 |                    | (690   | ) |  | 1995 |  | 1995 |  | 360
|Preston Road          |  | Dallas          |  | TX    |      |              |                        | 703          |                     | 2,903                        |  | 3,606 |                                       | (84                      | )            |                       | 703   |             | 2,819 |            | 3,522 |                    | (711   | ) |  | 1997 |  | 1997 |  | 360
|River Oaks            |  | Houston         |  | TX    |      |              |                        | 987          |                     | 2,565                        |  | 3,552 |                                       | 6,262                    |              |                       | 2,055 |             | 7,759 |            | 9,814 |                    | (2,429 | ) |  | 1996 |  | 1989 |  | 360
|Round Rock            |  | Round Rock      |  | TX    |      |              |                        | 386          |                     | 1,641                        |  | 2,027 |                                       | 145                      |              |                       | 386   |             | 1,786 |            | 2,172 |                    | (455   | ) |  | 1997 |  | 1995 |  | 360
|San Antonio NE        |  | San Antonio     |  | TX    |      |              |                        | 406          |                     | 1,630                        |  | 2,036 |                                       | 134                      |              |                       | 406   |             | 1,764 |            | 2,170 |                    | (633   | ) |  | 1985 |  | 1982 |  | 360
|Shavano Park          |  | San Antonio     |  | TX    |      |              |                        | 587          |                     | 2,925                        |  | 3,512 |                                       |                         |              |                       | 587   |             | 2,925 |            | 3,512 |                    | (219   | ) |  | 2001 |  | 2001 |  | 360
|Slaughter Lane        |  | Austin          |  | TX    |      |              |                        | 592          |                     | 2,428                        |  | 3,020 |                                       | 265                      |              |                       | 592   |             | 2,693 |            | 3,285 |                    | (650   | ) |  | 1997 |  | 1994 |  | 360
|South Cooper          |  | Arlington       |  | TX    |      |              |                        | 632          |                     | 2,305                        |  | 2,937 |                                       | 273                      |              |                       | 632   |             | 2,578 |            | 3,210 |                    | (695   | ) |  | 1996 |  | 1996 |  | 360
|South MainTX         |  | Houston         |  | TX    |      |              |                        | 404          |                     | 1,039                        |  | 1,443 |                                       | 130                      |              |                       | 392   |             | 1,181 |            | 1,573 |                    | (154   | ) |  | 2000 |  | 1999 |  | 360
|Southlake             |  | Southlake       |  | TX    |      |              |                        | 670          |                     | 2,738                        |  | 3,408 |                                       | 271                      |              |                       | 670   |             | 3,009 |            | 3,679 |                    | (555   | ) |  | 1998 |  | 1998 |  | 360
|Sugarland             |  | Sugarland       |  | TX    |      |              |                        | 761          |                     | 2,991                        |  | 3,752 |                                       | 123                      |              |                       | 761   |             | 3,114 |            | 3,875 |                    | (1,075 | ) |  | 1988 |  | 1987 |  | 360
|T.C. Jester           |  | Houston         |  | TX    |      |              |                        | 903          |                     | 3,613                        |  | 4,516 |                                       | 435                      |              |                       | 903   |             | 4,048 |            | 4,951 |                    | (1,023 | ) |  | 1996 |  | 1990 |  | 360
|The Quarry            |  | San Antonio     |  | TX    |      |              |                        | 1,316        |                     | 2,817                        |  | 4,133 |                                       | 56                       |              |                       | 488   |             | 3,701 |            | 4,189 |                    | (662   | ) |  | 1999 |  | 1999 |  | 360
|Thousand Oaks         |  | San Antonio     |  | TX    |      |              |                        | 421          |                     | 1,683                        |  | 2,104 |                                       | 95                       |              |                       | 421   |             | 1,778 |            | 2,199 |                    | (640   | ) |  | 1986 |  | 1987 |  | 360
|Universal City        |  | Universal City  |  | TX    |      |              |                        | 169          |                     | 593                          |  | 762   |                                       | 1,075                    |              |                       | 169   |             | 1,668 |            | 1,837 |                    | (556   | ) |  | 1995 |  | 1985 |  | 360
|Valley Ranch          |  | Coppell         |  | TX    |      |              |                        | 791          |                     | 3,210                        |  | 4,001 |                                       | 216                      |              |                       | 791   |             | 3,426 |            | 4,217 |                    | (828   | ) |  | 1997 |  | 1995 |  | 360
|West University       |  | Houston         |  | TX    |      |              |                        | 1,121        |                     | 4,484                        |  | 5,605 |                                       | 176                      |              |                       | 1,121 |             | 4,660 |            | 5,781 |                    | (1,603 | ) |  | 1989 |  | 1988 |  | 360
|Westchase             |  | Houston         |  | TX    |      |              |                        | 250          |                     | 2,756                        |  | 3,006 |                                       | (21                      | )            |                       | 351   |             | 2,634 |            | 2,985 |                    | (320   | ) |  | 2000 |  | 1998 |  | 360
|Westheimer            |  | Houston         |  | TX    |      |              |                        | 611          |                     | 2,470                        |  | 3,081 |                                       | 71                       |              |                       | 611   |             | 2,541 |            | 3,152 |                    | (866   | ) |  | 1986 |  | 1977 |  | 360
|Windcrest             |  | San Antonio     |  | TX    |      |              |                        | 626          |                     | 2,535                        |  | 3,161 |                                       | 469                      |              |                       | 626   |             | 3,004 |            | 3,630 |                    | (734   | ) |  | 1996 |  | 1975 |  | 360
|Woodforest            |  | Houston         |  | TX    |      |              |                        | 538          |                     | 1,870                        |  | 2,408 |                                       | 353                      |              |                       | 538   |             | 2,223 |            | 2,761 |                    | (583   | ) |  | 1996 |  | 1996 |  | 360
|Woodlands             |  | Spring          |  | TX    |      |              |                        | 737          |                     | 2,948                        |  | 3,685 |                                       | 346                      |              |                       | 737   |             | 3,294 |            | 4,031 |                    | (1,144 | ) |  | 1988 |  | 1988 |  | 360
|Bayside               |  | Virginia Beach  |  | VA    |      |              |                        | 236          |                     | 943                          |  | 1,179 |                                       | 320                      |              |                       | 236   |             | 1,263 |            | 1,499 |                    | (409   | ) |  | 1988 |  | 1984 |  | 360
|Burke                 |  | Fairfax         |  | VA    |      |              |                        | 634          |                     | 2,539                        |  | 3,173 |                                       | 171                      |              |                       | 634   |             | 2,710 |            | 3,344 |                    | (688   | ) |  | 1996 |  | 1984 |  | 360
|Burke Centre          |  | Burke           |  | VA    |      |              |                        | 716          |                     | 3,304                        |  | 4,020 |                                       | 1,803                    |              |                       | 1,035 |             | 4,788 |            | 5,823 |                    | (338   | ) |  | 2001 |  | 1983 |  | 360
|Burke Centre Bus Park |  | Burke           |  | VA    |      |              |                        | 319          |                     | 1,474                        |  | 1,793 |                                       | (1,782                   | )            |                       |      |             | 11    |            | 11    |                    | (1     | ) |  | 2001 |  | 1983 |  | 360
|Cedar Road            |  | Chesapeake      |  | VA    |      |              |                        | 295          |                     | 1,184                        |  | 1,479 |                                       | 137                      |              |                       | 295   |             | 1,321 |            | 1,616 |                    | (438   | ) |  | 1994 |  | 1989 |  | 360
|Charlottesville       |  | Charlottesville |  | VA    |      |              |                        | 305          |                     | 1,225                        |  | 1,530 |                                       | 139                      |              |                       | 305   |             | 1,364 |            | 1,669 |                    | (481   | ) |  | 1994 |  | 1984 |  | 360
|Chesapeake            |  | Chesapeake      |  | VA    |      |              |                        | 454          |                     | 1,821                        |  | 2,275 |                                       | 79                       |              |                       | 454   |             | 1,900 |            | 2,354 |                    | (500   | ) |  | 1996 |  | 1986 |  | 360
|Crater Road           |  | Petersburg      |  | VA    |      |              |                        | 224          |                     | 898                          |  | 1,122 |                                       | 103                      |              |                       | 224   |             | 1,001 |            | 1,225 |                    | (342   | ) |  | 1994 |  | 1987 |  | 360
|Dale City             |  | Dale City       |  | VA    |      |              |                        | 346          |                     | 1,388                        |  | 1,734 |                                       | 445                      |              |                       | 346   |             | 1,833 |            | 2,179 |                    | (567   | ) |  | 1994 |  | 1986 |  | 360
|Fairfax               |  | Fairfax         |  | VA    |      |              |                        | 1,136        |                     | 4,555                        |  | 5,691 |                                       | 2,419                    |              |                       | 1,414 |             | 6,696 |            | 8,110 |                    | (2,171 | ) |  | 1986 |  | 1980 |  | 360
|Falls Church          |  | Falls Church    |  | VA    |      |              |                        | 1,413        |                     | 5,661                        |  | 7,074 |                                       | 702                      |              |                       | 1,413 |             | 6,363 |            | 7,776 |                    | (2,024 | ) |  | 1987 |  | 1988 |  | 360
|Fordson               |  | Alexandria      |  | VA    |      |              |                        | 324          |                     | 3,114                        |  | 3,438 |                                       | 8                        |              |                       | 324   |             | 3,122 |            | 3,446 |                    | (211   | ) |  | 2002 |  | 1984 |  | 360
|Fullerton             |  | Springfield     |  | VA    |      |              |                        | 1,139        |                     | 4,346                        |  | 5,485 |                                       | 74                       |              |                       | 1,139 |             | 4,420 |            | 5,559 |                    | (315   | ) |  | 2001 |  | 1983 |  | 360
|Gainesville           |  | Gainesville     |  | VA    |      |              |                        | 245          |                     | 983                          |  | 1,228 |                                       | 150                      |              |                       | 245   |             | 1,133 |            | 1,378 |                    | (389   | ) |  | 1994 |  | 1988 |  | 360
|Herndon               |  | Herndon         |  | VA    |      |              |                        | 582          |                     | 2,334                        |  | 2,916 |                                       | 395                      |              |                       | 582   |             | 2,729 |            | 3,311 |                    | (949   | ) |  | 1988 |  | 1985 |  | 360



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|                       |  |                |  |       |      |               |                        |              |                     |                              |  |                                       |  |                          |  |                       |             |        |            |        |                    |        |   |  |         |  |         |  |    
|---------------------- |  | -------------- |  | ----- | ---- | ------------- | ---------------------- | ------------ | ------------------- | ---------------------------- |  | ------------------------------------- |  | ------------------------ |  | --------------------- | ----------- | ------ | ---------- | ------ | ------------------ | ------ | - |  | ------- |  | ------- |  | ---
|                       |  | Location       |  | State |      | Encum-brances |                        | INITIAL COST |                     | CostsSubsequenttoAcquisition |  | Gross Amounts as of December 31, 2003 |  | Accum. Depr.             |  |                       | Owned Since |        | Year Built |        | Depr. Life in mos.
|Property Name          |  |                |  |       | Land |               | Building,Equip.& Other |              | GrossStorageCenters |                              |  | Land                                  |  | Building, Equip. & Other |  | Gross Storage Centers |             |        |            |       
|Holland Road           |  | Virginia Beach |  | VA    |      |              |                        | 204          |                     | 818                          |  | 1,022                                 |  | 153                      |  | 204                   |             | 971    |            | 1,175  |                    | (366   | ) |  | 1994    |  | 1985    |  | 360
|Jefferson Davis Hwy    |  | Richmond       |  | VA    |      |              |                        | 306          |                     | 1,226                        |  | 1,532                                 |  | 109                      |  | 306                   |             | 1,335  |            | 1,641  |                    | (450   | ) |  | 1994    |  | 1990    |  | 360
|Kempsville             |  | Virginia Beach |  | VA    |      |              |                        | 279          |                     | 1,116                        |  | 1,395                                 |  | 151                      |  | 279                   |             | 1,267  |            | 1,546  |                    | (415   | ) |  | 1989    |  | 1985    |  | 360
|Laskin Road            |  | Virginia Beach |  | VA    |      |              |                        | 305          |                     | 1,225                        |  | 1,530                                 |  | 161                      |  | 305                   |             | 1,386  |            | 1,691  |                    | (475   | ) |  | 1994    |  | 1984    |  | 360
|Leesburg               |  | Leesburg       |  | VA    |      |              |                        | 541          |                     | 2,174                        |  | 2,715                                 |  | 75                       |  | 541                   |             | 2,249  |            | 2,790  |                    | (581   | ) |  | 1996    |  | 1986    |  | 360
|Manassas West/East     |  | Manassas       |  | VA    |      |              |                        | 654          |                     | 2,627                        |  | 3,281                                 |  | 501                      |  | 654                   |             | 3,128  |            | 3,782  |                    | (1,108 | ) |  | 1988    |  | 1984    |  | 360
|McLean                 |  | McLean         |  | VA    |      |              |                        |             |                     | 1,839                        |  | 1,839                                 |  | 1,799                    |  |                      |             | 3,638  |            | 3,638  |                    | (842   | ) |  | 1997    |  | 1997    |  | 360
|Merrifield             |  | Fairfax        |  | VA    |      |              |                        | 3,184        |                     | 3,966                        |  | 7,150                                 |  | 1,320                    |  | 3,192                 |             | 5,278  |            | 8,470  |                    | (721   | ) |  | 1999    |  | 1999    |  | 360
|Midlothian Turnpike    |  | Richmond       |  | VA    |      |              |                        | 646          |                     | 2,591                        |  | 3,237                                 |  | 107                      |  | 646                   |             | 2,698  |            | 3,344  |                    | (705   | ) |  | 1996    |  | 1984    |  | 360
|Newport News North     |  | Newport News   |  | VA    |      |              |                        | 574          |                     | 2,301                        |  | 2,875                                 |  | 281                      |  | 574                   |             | 2,582  |            | 3,156  |                    | (661   | ) |  | 1996    |  | 1986    |  | 360
|Newport News South     |  | Newport News   |  | VA    |      |              |                        | 496          |                     | 2,014                        |  | 2,510                                 |  | 348                      |  | 496                   |             | 2,362  |            | 2,858  |                    | (798   | ) |  | 1985/92 |  | 1985    |  | 360
|North Richmond         |  | Richmond       |  | VA    |      |              |                        | 344          |                     | 1,375                        |  | 1,719                                 |  | 186                      |  | 344                   |             | 1,561  |            | 1,905  |                    | (543   | ) |  | 1988    |  | 1984    |  | 360
|Old Towne              |  | Alexandria     |  | VA    |      | 6,272         |                        | 2,036        |                     | 7,210                        |  | 9,246                                 |  | 173                      |  | 2,036                 |             | 7,383  |            | 9,419  |                    | (1,029 | ) |  | 1999    |  | 1999    |  | 360
|Potomac Mills          |  | Woodbridge     |  | VA    |      |              |                        | 1,114        |                     | 3,440                        |  | 4,554                                 |  | 9                        |  | 1,122                 |             | 3,441  |            | 4,563  |                    | (703   | ) |  | 1997    |  | 1997    |  | 360
|Princess Anne Road     |  | Virginia Beach |  | VA    |      |              |                        | 305          |                     | 1,225                        |  | 1,530                                 |  | 92                       |  | 305                   |             | 1,317  |            | 1,622  |                    | (437   | ) |  | 1994    |  | 1985    |  | 360
|South Military Highway |  | Virginia Beach |  | VA    |      |              |                        | 289          |                     | 1,161                        |  | 1,450                                 |  | 307                      |  | 289                   |             | 1,468  |            | 1,757  |                    | (396   | ) |  | 1996    |  | 1984    |  | 360
|Sterling (Cascades)    |  | Sterling       |  | VA    |      |              |                        | 2,292        |                     | 3,639                        |  | 5,931                                 |  | 67                       |  | 2,292                 |             | 3,706  |            | 5,998  |                    | (692   | ) |  | 1998    |  | 1998    |  | 360
|Telegraph              |  | Lorton         |  | VA    |      |              |                        | 441          |                     | 2,036                        |  | 2,477                                 |  | 25                       |  | 441                   |             | 2,061  |            | 2,502  |                    | (147   | ) |  | 2001    |  | 2001    |  | 360
|Temple                 |  | Prince George  |  | VA    |      |              |                        | 297          |                     | 1,193                        |  | 1,490                                 |  | 154                      |  | 297                   |             | 1,347  |            | 1,644  |                    | (460   | ) |  | 1994    |  | 1989    |  | 360
|Virginia Beach Blvd.   |  | Virginia Beach |  | VA    |      |              |                        | 502          |                     | 1,832                        |  | 2,334                                 |  | 481                      |  | 502                   |             | 2,313  |            | 2,815  |                    | (786   | ) |  | 1989    |  | 1985    |  | 360
|Auburn                 |  | Auburn         |  | WA    |      |              |                        | 760          |                     | 2,773                        |  | 3,533                                 |  | 147                      |  | 760                   |             | 2,920  |            | 3,680  |                    | (836   | ) |  | 1996    |  | 1996    |  | 360
|Bellefield             |  | Bellevue       |  | WA    |      |              |                        | 957          |                     | 3,830                        |  | 4,787                                 |  | 249                      |  | 957                   |             | 4,079  |            | 5,036  |                    | (1,032 | ) |  | 1996    |  | 1978    |  | 360
|Bellevue               |  | Bellevue       |  | WA    |      |              |                        | 1,860        |                     | 7,483                        |  | 9,343                                 |  | 5,157                    |  | 2,385                 |             | 12,115 |            | 14,500 |                    | (3,322 | ) |  | 1984    |  | 1975    |  | 360
|Bellingham             |  | Bellingham     |  | WA    |      |              |                        | 601          |                     | 2,400                        |  | 3,001                                 |  | 313                      |  | 601                   |             | 2,713  |            | 3,314  |                    | (892   | ) |  | 1981    |  | 1981    |  | 360
|Bremerton              |  | Bremerton      |  | WA    |      |              |                        | 563          |                     | 2,297                        |  | 2,860                                 |  | 73                       |  | 563                   |             | 2,370  |            | 2,933  |                    | (525   | ) |  | 1997    |  | 1976    |  | 360
|Burien                 |  | Burien         |  | WA    |      |              |                        | 646          |                     | 2,622                        |  | 3,268                                 |  | 491                      |  | 646                   |             | 3,113  |            | 3,759  |                    | (1,028 | ) |  | 1985    |  | 1974    |  | 360
|Burien II              |  | Seatac         |  | WA    |      |              |                        | 388          |                     | 1,553                        |  | 1,941                                 |  | 278                      |  | 388                   |             | 1,831  |            | 2,219  |                    | (634   | ) |  | 1985    |  | 1979    |  | 360
|Canyon Park            |  | Bothell        |  | WA    |      |              |                        | 1,023        |                     | 2,949                        |  | 3,972                                 |  | 266                      |  | 1,023                 |             | 3,215  |            | 4,238  |                    | (1,331 | ) |  | 1996    |  | 1990    |  | 360
|Canyon Road Puyallup   |  | Puyallup       |  | WA    |      |              |                        | 234          |                     | 937                          |  | 1,171                                 |  | 144                      |  | 234                   |             | 1,081  |            | 1,315  |                    | (276   | ) |  | 1996    |  | 1986    |  | 360
|Capitol Hill           |  | Seattle        |  | WA    |      |              |                        | 764          |                     | 4,516                        |  | 5,280                                 |  | 954                      |  | 839                   |             | 5,395  |            | 6,234  |                    | (2,749 | ) |  | 1987    |  | 1988    |  | 360
|East Bremerton         |  | Bremerton      |  | WA    |      |              |                        | 576          |                     | 2,312                        |  | 2,888                                 |  | 208                      |  | 576                   |             | 2,520  |            | 3,096  |                    | (644   | ) |  | 1996    |  | 1985    |  | 360
|East Lynnwood          |  | Lynnwood       |  | WA    |      |              |                        | 482          |                     | 1,933                        |  | 2,415                                 |  | 514                      |  | 482                   |             | 2,447  |            | 2,929  |                    | (792   | ) |  | 1986    |  | 1978    |  | 360
|Edmonds                |  | Edmonds        |  | WA    |      |              |                        | 1,190        |                     | 4,806                        |  | 5,996                                 |  | 636                      |  | 1,190                 |             | 5,442  |            | 6,632  |                    | (1,728 | ) |  | 1984    |  | 1974/75 |  | 360
|Everett                |  | Everett        |  | WA    |      |              |                        | 512          |                     | 2,045                        |  | 2,557                                 |  | 731                      |  | 512                   |             | 2,776  |            | 3,288  |                    | (894   | ) |  | 1981    |  | 1978    |  | 360
|Factoria               |  | Bellevue       |  | WA    |      |              |                        | 590          |                     | 2,362                        |  | 2,952                                 |  | 47                       |  | 580                   |             | 2,419  |            | 2,999  |                    | (829   | ) |  | 1984    |  | 1984    |  | 360
|Factoria Square        |  | Bellevue       |  | WA    |      |              |                        | 1,226        |                     | 4,909                        |  | 6,135                                 |  | 126                      |  | 1,226                 |             | 5,035  |            | 6,261  |                    | (1,283 | ) |  | 1996    |  | 1989    |  | 360
|Federal Way            |  | Federal Way    |  | WA    |      |              |                        | 862          |                     | 3,414                        |  | 4,276                                 |  | 268                      |  | 862                   |             | 3,682  |            | 4,544  |                    | (1,278 | ) |  | 1984    |  | 1975    |  | 360
|Gig Harbor             |  | Gig Harbor     |  | WA    |      |              |                        | 1,119        |                     | 769                          |  | 1,888                                 |  | 47                       |  | 1,059                 |             | 876    |            | 1,935  |                    | (161   | ) |  | 1999    |  | 1980    |  | 360
|Hazel Dell             |  | Vancover       |  | WA    |      |              |                        | 728          |                     | 1,506                        |  | 2,234                                 |  | 1,813                    |  | 1,046                 |             | 3,001  |            | 4,047  |                    | (965   | ) |  | 1996    |  | 1989    |  | 360
|Highland Hills         |  | Tacoma         |  | WA    |      |              |                        | 592          |                     | 2,362                        |  | 2,954                                 |  | 229                      |  | 592                   |             | 2,591  |            | 3,183  |                    | (851   | ) |  | 1981    |  | 1982    |  | 360
|Issaquah               |  | Issaquah       |  | WA    |      |              |                        | 615          |                     | 2,460                        |  | 3,075                                 |  | 163                      |  | 615                   |             | 2,623  |            | 3,238  |                    | (953   | ) |  | 1985    |  | 1986    |  | 360



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|                                     |  |              |  |       |      |               |                        |              |                     |                              |  |        |                                       |                          |              |                       |       |             |        |            |        |                    |         |   |  |          |  |         |  |    
|------------------------------------ |  | ------------ |  | ----- | ---- | ------------- | ---------------------- | ------------ | ------------------- | ---------------------------- |  | ------ | ------------------------------------- | ------------------------ | ------------ | --------------------- | ----- | ----------- | ------ | ---------- | ------ | ------------------ | ------- | - |  | -------- |  | ------- |  | ---
|                                     |  | Location     |  | State |      | Encum-brances |                        | INITIAL COST |                     | CostsSubsequenttoAcquisition |  |        | Gross Amounts as of December 31, 2003 |                          | Accum. Depr. |                       |       | Owned Since |        | Year Built |        | Depr. Life in mos.
|Property Name                        |  |              |  |       | Land |               | Building,Equip.& Other |              | GrossStorageCenters |                              |  | Land   |                                       | Building, Equip. & Other |              | Gross Storage Centers |       |             |        |           
|Juanita                              |  | Kirkland     |  | WA    |      | 3,560         |                        | 877          |                     | 4,523                        |  | 5,400  |                                       | (54                      | )            |                       | 877   |             | 4,469  |            | 5,346  |                    | (552    | ) |  | 1998     |  | 1999    |  | 360
|Kennydale                            |  | Renton       |  | WA    |      |              |                        | 816          |                     | 3,267                        |  | 4,083  |                                       | 197                      |              |                       | 816   |             | 3,464  |            | 4,280  |                    | (855    | ) |  | 1996     |  | 1991    |  | 360
|Kent                                 |  | Kent         |  | WA    |      |              |                        | 557          |                     | 2,297                        |  | 2,854  |                                       | 5                        |              |                       | 543   |             | 2,316  |            | 2,859  |                    | (530    | ) |  | 1997     |  | 1977    |  | 360
|Lacey                                |  | Lacey        |  | WA    |      |              |                        | 251          |                     | 1,014                        |  | 1,265  |                                       | 98                       |              |                       | 185   |             | 1,178  |            | 1,363  |                    | (253    | ) |  | 1997     |  | 1977    |  | 360
|Lake City                            |  | Seattle      |  | WA    |      |              |                        | 572          |                     | 2,421                        |  | 2,993  |                                       | 260                      |              |                       | 572   |             | 2,681  |            | 3,253  |                    | (999    | ) |  | 1995     |  | 1987    |  | 360
|Lake Union                           |  | Seattle      |  | WA    |      |              |                        | 1,580        |                     | 7,440                        |  | 9,020  |                                       | 22                       |              |                       | 2,956 |             | 6,086  |            | 9,042  |                    | (2,255  | ) |  | 1998     |  | 1998    |  | 360
|Lakewood 512                         |  | Tacoma       |  | WA    |      |              |                        | 920          |                     | 3,676                        |  | 4,596  |                                       | 466                      |              |                       | 920   |             | 4,142  |            | 5,062  |                    | (1,309  | ) |  | 87/88/91 |  | 1979/81 |  | 360
|Lynnwood                             |  | Lynnwood     |  | WA    |      |              |                        | 775          |                     | 3,186                        |  | 3,961  |                                       | 101                      |              |                       | 757   |             | 3,305  |            | 4,062  |                    | (744    | ) |  | 1997     |  | 1979    |  | 360
|Mill Creek                           |  | Everett      |  | WA    |      |              |                        | 627          |                     | 3,760                        |  | 4,387  |                                       | 579                      |              |                       | 627   |             | 4,339  |            | 4,966  |                    | (737    | ) |  | 1998     |  | 1998    |  | 360
|North Spokane                        |  | Spokane      |  | WA    |      |              |                        | 581          |                     | 2,328                        |  | 2,909  |                                       | 1,322                    |              |                       | 581   |             | 3,650  |            | 4,231  |                    | (999    | ) |  | 1984     |  | 1976    |  | 360
|Parkland                             |  | Tacoma       |  | WA    |      |              |                        | 400          |                     | 1,634                        |  | 2,034  |                                       | 61                       |              |                       | 391   |             | 1,704  |            | 2,095  |                    | (397    | ) |  | 1997     |  | 1980    |  | 360
|Pier 57                              |  | Seattle      |  | WA    |      |              |                        | 872          |                     | 4,558                        |  | 5,430  |                                       | 252                      |              |                       | 872   |             | 4,810  |            | 5,682  |                    | (837    | ) |  | 1986     |  | 1912    |  | 360
|Port Orchard                         |  | Port Orchard |  | WA    |      |              |                        | 483          |                     | 2,013                        |  | 2,496  |                                       | 66                       |              |                       | 483   |             | 2,079  |            | 2,562  |                    | (539    | ) |  | 1997     |  | 1991    |  | 360
|Queen Anne/Magnolia                  |  | Seattle      |  | WA    |      |              |                        | 952          |                     | 3,777                        |  | 4,729  |                                       | 234                      |              |                       | 952   |             | 4,011  |            | 4,963  |                    | (1,384  | ) |  | 1987     |  | 1988    |  | 360
|Redmond                              |  | Redmond      |  | WA    |      |              |                        | 537          |                     | 5,503                        |  | 6,040  |                                       | 121                      |              |                       | 529   |             | 5,632  |            | 6,161  |                    | (1,019  | ) |  | 1998     |  | 1998    |  | 360
|Renton                               |  | Renton       |  | WA    |      |              |                        | 625          |                     | 2,557                        |  | 3,182  |                                       | 260                      |              |                       | 625   |             | 2,817  |            | 3,442  |                    | (1,000  | ) |  | 1984     |  | 1979/89 |  | 360
|Salmon Creek                         |  | Vancouver    |  | WA    |      |              |                        | 759          |                     | 3,327                        |  | 4,086  |                                       | 49                       |              |                       | 759   |             | 3,376  |            | 4,135  |                    | (822    | ) |  | 1997     |  | 1997    |  | 360
|Sammamish Plateau                    |  | Sammamish    |  | WA    |      |              |                        | 963          |                     | 3,854                        |  | 4,817  |                                       | 49                       |              |                       | 963   |             | 3,903  |            | 4,866  |                    | (722    | ) |  | 1998     |  | 1998    |  | 360
|Shoreline/Aurora North               |  | Shoreline    |  | WA    |      |              |                        | 1,495        |                     | 6,006                        |  | 7,501  |                                       | 735                      |              |                       | 1,495 |             | 6,741  |            | 8,236  |                    | (2,191  | ) |  | 1986     |  | 1978    |  | 360
|Smokey Point                         |  | Arlington    |  | WA    |      |              |                        | 232          |                     | 929                          |  | 1,161  |                                       | 148                      |              |                       | 232   |             | 1,077  |            | 1,309  |                    | (375    | ) |  | 1987     |  | 1984/87 |  | 360
|South Hill                           |  | Puyallup     |  | WA    |      |              |                        | 300          |                     | 1,247                        |  | 1,547  |                                       | 162                      |              |                       | 300   |             | 1,409  |            | 1,709  |                    | (466    | ) |  | 1995     |  | 1980    |  | 360
|Southcenter                          |  | Renton       |  | WA    |      |              |                        | 425          |                     | 1,783                        |  | 2,208  |                                       | 232                      |              |                       | 425   |             | 2,015  |            | 2,440  |                    | (732    | ) |  | 1985     |  | 1979    |  | 360
|Spokane                              |  | Spokane      |  | WA    |      |              |                        | 232          |                     | 952                          |  | 1,184  |                                       | 96                       |              |                       | 227   |             | 1,053  |            | 1,280  |                    | (272    | ) |  | 1997     |  | 1976    |  | 360
|Sprague                              |  | Tacoma       |  | WA    |      |              |                        | 717          |                     | 1,431                        |  | 2,148  |                                       | 2,230                    |              |                       | 1,118 |             | 3,260  |            | 4,378  |                    | (1,098  | ) |  | 1996     |  | 1950/89 |  | 360
|Tacoma South                         |  | Tacoma       |  | WA    |      |              |                        | 315          |                     | 1,263                        |  | 1,578  |                                       | 197                      |              |                       | 315   |             | 1,460  |            | 1,775  |                    | (475    | ) |  | 1987     |  | 1975    |  | 360
|Totem Lake                           |  | Kirkland     |  | WA    |      |              |                        | 660          |                     | 2,668                        |  | 3,328  |                                       | 229                      |              |                       | 660   |             | 2,897  |            | 3,557  |                    | (1,002  | ) |  | 1984     |  | 1978    |  | 360
|Vancouver Mall                       |  | Vancouver    |  | WA    |      |              |                        | 364          |                     | 1,457                        |  | 1,821  |                                       | 246                      |              |                       | 364   |             | 1,703  |            | 2,067  |                    | (658    | ) |  | 1980     |  | 1982    |  | 360
|W. Olympia                           |  | Olympia      |  | WA    |      |              |                        | 359          |                     | 1,446                        |  | 1,805  |                                       | 68                       |              |                       | 351   |             | 1,522  |            | 1,873  |                    | (335    | ) |  | 1997     |  | 1978    |  | 360
|West Seattle                         |  | Seattle      |  | WA    |      |              |                        | 698          |                     | 4,202                        |  | 4,900  |                                       | 56                       |              |                       | 698   |             | 4,258  |            | 4,956  |                    | (1,001  | ) |  | 1997     |  | 1997    |  | 360
|White Center(aka West Seattle)       |  | Seattle      |  | WA    |      |              |                        | 559          |                     | 2,284                        |  | 2,843  |                                       | 143                      |              |                       | 559   |             | 2,427  |            | 2,986  |                    | (838    | ) |  | 1980     |  | 1981    |  | 360
|Woodinville                          |  | Woodinville  |  | WA    |      |              |                        | 674          |                     | 2,693                        |  | 3,367  |                                       | 253                      |              |                       | 674   |             | 2,946  |            | 3,620  |                    | (958    | ) |  | 1984     |  | 1982/84 |  | 360
|Corporate Office                     |  | Seattle      |  | WA    |      |              |                        | 3,947        |                     | 7,096                        |  | 11,043 |                                       | 9,688                    |              |                       | 4,209 |             | 16,516 |            | 20,731 |                    | (13,128 | ) |  | 1998     |  | 1998    |  | 360
|Monocacy (Land with no Building)     |  | Frederick    |  | MD    |      |              |                        | 62           |                     |                             |  | 62     |                                       |                         |              |                       | 62    |             |       |            | 62     |                    |        |   |  | 2002     |  | N/A     |  | 360
|Olive Interbelt (Non-Shurgard Store) |  | St. Louis    |  | MO    |      |              |                        | 818          |                     | 3,705                        |  | 4,523  |                                       | 89                       |              |                       | 818   |             | 3,794  |            | 4,612  |                    | (1,278  | ) |  | 1994     |  | 1994    |  | 360
|St. Peters (Land with no Building)   |  | St. Peters   |  | MO    |      |              |                        | 989          |                     |                             |  | 989    |                                       |                         |              |                       | 989   |             |       |            | 989    |                    |        |   |  | 1999     |  | N/A     |  | 360



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|                                     |  |          |  |       |      |               |                         |              |                     |                              |  |      |                                       |                          |              |                       |  |             |         |            |  |                    |         |  |   |           |  |   |           |  |   |          |   |  |      |  |      |  |    
|------------------------------------ |  | -------- |  | ----- | ---- | ------------- | ----------------------- | ------------ | ------------------- | ---------------------------- |  | ---- | ------------------------------------- | ------------------------ | ------------ | --------------------- |  | ----------- | ------- | ---------- |  | ------------------ | ------- |  | - | --------- |  | - | --------- |  | - | -------- | - |  | ---- |  | ---- |  | ---
|                                     |  | Location |  | State |      | Encum-brances |                         | INITIAL COST |                     | CostsSubsequenttoAcquisition |  |      | Gross Amounts as of December 31, 2003 |                          | Accum. Depr. |                       |  | Owned Since |         | Year Built |  | Depr. Life in mos.
|Property Name                        |  |          |  |       | Land |               | Building,Equip. & Other |              | GrossStorageCenters |                              |  | Land |                                       | Building, Equip. & Other |              | Gross Storage Centers |  |             |         |           
|Rosewood (opened in January 2004)    |  | Columbia |  | SC    |      |               |                        |              |                     | 317                          |  |      |                                      |                          |              | 317                   |  |             |        |            |  |                    | 317     |  |   |          |  |   | 317       |  |   |         |   |  | 2002 |  | 2004 |  | 360
|North Austin (Store being remodeled) |  | Austin   |  | TX    |      |               |                        |              |                     | 609                          |  |      | 2,436                                 |                          |              | 3,045                 |  |             | (2,436  | )          |  |                    | 609     |  |   |          |  |   | 609       |  |   |         |   |  | 1986 |  | 1982 |  | 360
|Containerized Storage                |  |          |  |       |      |               |                        |              |                     |                             |  |      | 4,889                                 |                          |              | 4,889                 |  |             | (4,790  | )          |  |                    |        |  |   | 99        |  |   | 99        |  |   |         |   |  |      |  |      |  |    
|                                     |  |          |  |       |      |               |                         |              |                     |                              |  |      |                                       |                          |              |                       |  |             |         |            |  |                    |         |  |   |           |  |   |           |  |   |          |   |  |      |  |      |  |    
|Total                                |  |          |  |       |      | $             | 209,889                 |              | $                   | 361,389                      |  | $    | 1,370,019                             |                          | $            | 1,731,408             |  | $           | 171,234 |            |  | $                  | 376,832 |  | $ | 1,525,804 |  | $ | 1,902,636 |  | $ | (322,005 | ) |  |      |  |      |  |    
|                                     |  |          |  |       |      |               |                         |              |                     |                              |  |      |                                       |                          |              |                       |  |             |         |            |  |                    |         |  |   |           |  |   |           |  |   |          |   |  |      |  |      |  |    



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The following tables reconcile the changes in land, building, equipment and other, as well as accumulated
depreciation over the last three years.



|                                           |  |                |         |  |   |           |  
|------------------------------------------ |  | -------------- | ------- |  | - | --------- | -
|                                           |  | (in thousands) |        
|Land, Building, Equipment and Other        |  |                |         |  |   |           |  
|Balance at January 1, 2001 (as restated)   |  |                |         |  | $ | 1,347,442 |  
|Consolidation of Storage to Go             |  |                |         |  |   | 5,207     |  
|Additions during the period                |  |                |         |  |   |           |  
|Acquisitions                               |  | $              | 40,860  |  |   |           |  
|Developments                               |  |                | 78,248  |  |   |           |  
|Improvements and Other                     |  |                | 7,132   |  |   |           |  
|                                           |  |                |         |  |   |           |  
|                                           |  |                |         |  |   | 126,240   |  
|Land Held for Sale                         |  |                |         |  |   |          |  
|Cost of Real Estate Sold or Disposed       |  |                |         |  |   | (2,083    | )
|                                           |  |                |         |  |   |           |  
|Balance at December 31, 2001 (as restated) |  |                |         |  |   | 1,476,806 |  
|Additions during the period                |  |                |         |  |   |           |  
|Acquisitions                               |  | $              | 127,090 |  |   |           |  
|Developments                               |  |                | 112,869 |  |   |           |  
|Improvements and Other                     |  |                | 13,172  |  |   |           |  
|                                           |  |                |         |  |   |           |  
|                                           |  |                |         |  |   | 253,131   |  
|Land Held for Sale                         |  |                |         |  |   | 2,212     |  
|Cost of Real Estate Sold or Disposed       |  |                |         |  |   | (3,513    | )
|                                           |  |                |         |  |   |           |  
|Balance at December 31, 2002 (as restated) |  |                |         |  |   | 1,728,636 |  
|Additions during the period                |  |                |         |  |   |           |  
|Acquisitions                               |  | $              | 123,234 |  |   |           |  
|Developments                               |  |                | 41,219  |  |   |           |  
|Improvements and Other                     |  |                | 21,294  |  |   |           |  
|                                           |  |                |         |  |   |           |  
|                                           |  |                |         |  |   | 185,747   |  
|Land Held for Sale                         |  |                |         |  |   | 1,988     |  
|Cost of Real Estate Sold or Disposed       |  |                |         |  |   | (13,735   | )
|                                           |  |                |         |  |   |           |  
|Balance at December 31, 2003               |  |                |         |  | $ | 1,902,636 |  
|                                           |  |                |         |  |   |           |  
|Accumulated Depreciation                   |  |                |         |  |   |           |  
|Balance at January 1, 2001 (as restated)   |  |                |         |  | $ | 176,892   |  
|Consolidation of Storage to Go             |  |                |         |  |   | 2,865     |  
|Depreciation expense                       |  |                |         |  |   | 45,066    |  
|Disposal                                   |  |                |         |  |   | (716      | )
|                                           |  |                |         |  |   |           |  
|Balance at December 31, 2001 (as restated) |  |                |         |  |   | 224,107   |  
|Depreciation expense                       |  |                |         |  |   | 50,671    |  
|Disposal                                   |  |                |         |  |   | (343      | )
|                                           |  |                |         |  |   |           |  
|Balance at December 31, 2002 (as restated) |  |                |         |  |   | 274,435   |  
|Depreciation expense                       |  |                |         |  |   | 55,095    |  
|Disposal                                   |  |                |         |  |   | (7,525    | )
|                                           |  |                |         |  |   |           |  
|Balance at December 31, 2003               |  |                |         |  | $ | 322,005   |  
|                                           |  |                |         |  |   |           |  



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INDEPENDENT AUDITORS REPORT



To the
Shareholders of

Shurgard Self Storage SCA,

Brussels, Belgium



We have audited the accompanying consolidated balance sheets
of Shurgard Self Storage, SCA. and subsidiaries (collectively the Company) as of December 31, 2003, 2002, and 2001 and the related consolidated statements of operations, shareholders equity and comprehensive income, and cash flows
for each of three years in the period ended December 31, 2003. These financial statements are the responsibility of the Companys management.



We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of the Company as of December 31, 2003, 2002, and 2001 and the results of its operations and cash flows for each of the three years in the period ended December 31, 2003 in conformity with
accounting principles generally accepted in the United States of America.



As discussed in Note E, the accompanying 2002 and 2001 consolidated financial statements have been restated.



DELOITTE & TOUCHE

Reviseurs dEntreprises SC s.f.d. SCRL

Represented by Daniel Kroes

/s/    Daniel
Kroes



April 23, 2004



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CONSOLIDATED BALANCE SHEETS

(in thousands)

(in US dollars)



|                                                                     |  |      |  |                    |          |   |               |   |          |               |  |   |         |  
|-------------------------------------------------------------------- |  | ---- |  | ------------------ | -------- | - | ------------- | - | -------- | ------------- |  | - | ------- | -
|                                                                     |  |      |  | As of December 31, |         
|                                                                     |  |      |  |                    |          |   | 2002          |   |          | 2001          | 
|                                                                     |  | Note |  | 2003               |          |   | (as restated) |   |          | (as restated) | 
|ASSETS                                                               |  |      |  |                    |          |   |               |   |          |               |  |   |         |  
|Storage Centres:                                                     |  |      |  |                    |          |   |               |   |          |               |  |   |         |  
|Land                                                                 |  |      |  | $                  | 137,615  |   |               | $ | 83,297   |               |  | $ | 53,623  |  
|Buildings & equipment, net                                           |  |      |  |                    | 400,397  |   |               |   | 279,570  |               |  |   | 171,321 |  
|Construction in progress                                             |  |      |  |                    | 12,766   |   |               |   | 87,225   |               |  |   | 68,839  |  
|                                                                     |  |      |  |                    |          |   |               |   |          |               |  |   |         |  
|Total Storage Centres                                                |  | C    |  |                    | 550,778  |   |               |   | 450,092  |               |  |   | 293,783 |  
|Investment in and receivables from affiliates                        |  | D    |  |                    | 29,824   |   |               |   |         |               |  |   |        |  
|Cash & cash equivalents                                              |  |      |  |                    | 11,965   |   |               |   | 24,978   |               |  |   | 15,324  |  
|Deferred taxation                                                    |  | E    |  |                    |         |   |               |   |         |               |  |   |        |  
|Other assets                                                         |  | F    |  |                    | 31,902   |   |               |   | 30,103   |               |  |   | 20,059  |  
|                                                                     |  |      |  |                    |          |   |               |   |          |               |  |   |         |  
|Total Assets                                                         |  |      |  | $                  | 624,469  |   |               | $ | 505,173  |               |  | $ | 329,166 |  
|                                                                     |  |      |  |                    |          |   |               |   |          |               |  |   |         |  
|LIABILITIES & SHAREHOLDERS EQUITY                                   |  |      |  |                    |          |   |               |   |          |               |  |   |         |  
|Accounts payable and other liabilities                               |  |      |  | $                  | 41,637   |   |               | $ | 35,617   |               |  | $ | 24,676  |  
|Liabilities under capital leases                                     |  | G    |  |                    | 11,391   |   |               |   | 9,469    |               |  |   | 7,838   |  
|Bonds payable to an affiliated company                               |  | H    |  |                    | 57,287   |   |               |   | 49,623   |               |  |   |         |  
|Line of credit                                                       |  | I    |  |                    | 376,553  |   |               |   | 270,936  |               |  |   | 174,506 |  
|Subordinated loan payable to related party                           |  | K    |  |                    |         |   |               |   | 127,620  |               |  |   | 99,534  |  
|                                                                     |  |      |  |                    |          |   |               |   |          |               |  |   |         |  
|Total Liabilities                                                    |  |      |  |                    | 486,868  |   |               |   | 493,265  |               |  |   | 306,554 |  
|                                                                     |  |      |  |                    |          |   |               |   |          |               |  |   |         |  
|Commitments and contingencies                                        |  | N    |  |                    |          |   |               |   |          |               |  |   |         |  
|Shareholders equity                                                 |  | L    |  |                    |          |   |               |   |          |               |  |   |         |  
|General Partner Interest                                             |  |      |  |                    |          |   |               |   |          |               |  |   |         |  
|160.50 par value; 56 shares issued and outstanding in 2003 and 2002 |  |      |  |                    | 10       |   |               |   | 10       |               |  |   | 10      |  
|Class A Limited Liability Partner Interest                           |  |      |  |                    |          |   |               |   |          |               |  |   |         |  
|160.50 par value; 233,844 shares (2002:                             |  |      |  |                    |          |   |               |   |          |               |  |   |         |  
|97,733) issued and outstanding                                       |  |      |  |                    | 40,948   |   |               |   | 17,769   |               |  |   | 17,769  |  
|Additional paid in capital                                           |  |      |  |                    | 118,653  |   |               |   | 30       |               |  |   | 30      |  
|Profit Certificates: 219,234 (2002:219,234) issued                   |  |      |  |                    | 139,754  |   |               |   | 139,754  |               |  |   | 139,754 |  
|Less: uncalled Profit Certificates                                   |  |      |  |                    | (26,089  | ) |               |   | (26,089  | )             |  |   | (47,718 | )
|                                                                     |  |      |  |                    |          |   |               |   |          |               |  |   |         |  
|Total shareholders interest                                         |  |      |  |                    | 273,276  |   |               |   | 131,474  |               |  |   | 109,845 |  
|Accumulated loss                                                     |  |      |  |                    | (140,287 | ) |               |   | (110,421 | )             |  |   | (80,590 | )
|Accumulated other comprehensive loss                                 |  |      |  |                    | 4,612    |   |               |   | (9,145   | )             |  |   | (6,643  | )
|                                                                     |  |      |  |                    |          |   |               |   |          |               |  |   |         |  
|Total shareholders equity                                           |  |      |  |                    | 137,601  |   |               |   | 11,908   |               |  |   | 22,612  |  
|                                                                     |  |      |  |                    |          |   |               |   |          |               |  |   |         |  
|Total liabilities & shareholders equity                             |  |      |  | $                  | 624,469  |   |               | $ | 505,173  |               |  | $ | 329,166 |  
|                                                                     |  |      |  |                    |          |   |               |   |          |               |  |   |         |  



See Notes to
Consolidated Financial Statements



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CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

(in US dollars)



|                                                                      |  |                                 |         |   |               |   |         |               |  |   |         |  
|--------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------- | - | ------- | ------------- |  | - | ------- | -
|                                                                      |  | For the year ended December 31, |        
|                                                                      |  |                                 |         |   | 2002          |   |         | 2001          | 
|                                                                      |  | 2003                            |         |   | (as restated) |   |         | (as restated) | 
|Revenue                                                               |  |                                 |         |   |               |   |         |               |  |   |         |  
|Real estate operations                                                |  | $                               | 67,318  |   |               | $ | 43,512  |               |  | $ | 26,526  |  
|Other revenue                                                         |  |                                 | 11,376  |   |               |   |        |               |  |   |        |  
|                                                                      |  |                                 |         |   |               |   |         |               |  |   |         |  
|Total revenue                                                         |  |                                 | 78,694  |   |               |   | 43,512  |               |  |   | 26,526  |  
|Expenses                                                              |  |                                 |         |   |               |   |         |               |  |   |         |  
|Operating expenses                                                    |  |                                 | 54,383  |   |               |   | 32,236  |               |  |   | 24,296  |  
|Real estate taxes                                                     |  |                                 | 3,540   |   |               |   | 2,193   |               |  |   | 1,777   |  
|Depreciation and amortisation                                         |  |                                 | 19,433  |   |               |   | 12,959  |               |  |   | 9,044   |  
|General, administrative and other expenses                            |  |                                 | 6,181   |   |               |   | 4,798   |               |  |   | 3,425   |  
|                                                                      |  |                                 |         |   |               |   |         |               |  |   |         |  
|Total expenses                                                        |  |                                 | 83,537  |   |               |   | 52,186  |               |  |   | 38,542  |  
|                                                                      |  |                                 |         |   |               |   |         |               |  |   |         |  
|Net loss arising from operations                                      |  |                                 | (4,843  | ) |               |   | (8,674  | )             |  |   | (12,016 | )
|                                                                      |  |                                 |         |   |               |   |         |               |  |   |         |  
|Other Income (Expense)                                                |  |                                 |         |   |               |   |         |               |  |   |         |  
|Interest income and other                                             |  |                                 | 1,520   |   |               |   | 620     |               |  |   | 482     |  
|Interest and other charges                                            |  |                                 | (21,508 | ) |               |   | (13,863 | )             |  |   | (9,206  | )
|Interest expense on bonds payable to an affiliated company            |  |                                 | (6,889  | ) |               |   | (1,403  | )             |  |   |        |  
|Interest expense on subordinated loan payable to related party        |  |                                 | (7,774  | ) |               |   | (8,881  | )             |  |   | (7,750  | )
|Exchange translation gain on bonds payable to an affiliated company   |  |                                 | 9,830   |   |               |   | 2,357   |               |  |   |        |  
|                                                                      |  |                                 |         |   |               |   |         |               |  |   |         |  
|Net loss before taxation                                              |  |                                 | (29,664 | ) |               |   | (29,844 | )             |  |   | (28,490 | )
|Income tax (charge) benefit                                           |  |                                 | (202    | ) |               |   | 13      |               |  |   |        |  
|                                                                      |  |                                 |         |   |               |   |         |               |  |   |         |  
|Net loss before cumulative effect of a change in accounting principle |  |                                 | (29,866 | ) |               |   | (29,831 | )             |  |   | (28,490 | )
|Cumulative effect of a change in accounting principle                 |  |                                 |        |   |               |   |        |               |  |   | (1,106  | )
|                                                                      |  |                                 |         |   |               |   |         |               |  |   |         |  
|Net loss                                                              |  | $                               | (29,866 | ) |               | $ | (29,831 | )             |  | $ | (29,596 | )
|                                                                      |  |                                 |         |   |               |   |         |               |  |   |         |  







See Notes to Consolidated Financial Statements



127



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##### Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(in US dollars)



|                                                                                                |  |      |  |                                 |         |   |               |   |          |               |  |   |          |  
|----------------------------------------------------------------------------------------------- |  | ---- |  | ------------------------------- | ------- | - | ------------- | - | -------- | ------------- |  | - | -------- | -
|                                                                                                |  |      |  | For the year ended December 31, |        
|                                                                                                |  |      |  |                                 |         |   | 2002          |   |          | 2001          | 
|                                                                                                |  | Note |  | 2003                            |         |   | (as restated) |   |          | (as restated) | 
|Operating activities:                                                                           |  |      |  |                                 |         |   |               |   |          |               |  |   |          |  
|Net loss                                                                                        |  |      |  | $                               | (29,866 | ) |               | $ | (29,831  | )             |  | $ | (29,596  | )
|Adjustments to reconcile earnings to net cash used in operating activities                      |  |      |  |                                 |         |   |               |   |          |               |  |   |          |  
|Income tax charge (benefit)                                                                     |  |      |  |                                 | 202     |   |               |   | (13      | )             |  |   |          |  
|Share of loss of affiliate                                                                      |  |      |  |                                 | 1,135   |   |               |   |         |               |  |   |         |  
|(Gains) on disposal of property                                                                 |  |      |  |                                 |        |   |               |   | (257     | )             |  |   | (20      | )
|Cumulative effect of a change in accounting principle                                           |  |      |  |                                 |         |   |               |   |          |               |  |   | 1,106    |  
|Derivative expense                                                                              |  |      |  |                                 | 192     |   |               |   |         |               |  |   |         |  
|Depreciation and amortisation                                                                   |  |      |  |                                 | 19,433  |   |               |   | 12,959   |               |  |   | 9,044    |  
|Amortisation of financing costs as interest expense                                             |  |      |  |                                 | 4,651   |   |               |   | 3,268    |               |  |   | 2,706    |  
|Exchange translation gain on bonds payable to an affiliated company                             |  |      |  |                                 | (9,830  | ) |               |   | (2,357   | )             |  |   |         |  
|Interest and redemption premium accrued on bonds payable to an affiliated company               |  |      |  |                                 | 6,889   |   |               |   | 539      |               |  |   |         |  
|Subordinated loan payable to related party                                                      |  | K    |  |                                 | 7,774   |   |               |   | 8,893    |               |  |   | 7,735    |  
|Changes in operating accounts:                                                                  |  |      |  |                                 |         |   |               |   |          |               |  |   |          |  
|Receivables from affiliate                                                                      |  | D    |  |                                 | (6,307  | ) |               |   |         |               |  |   |         |  
|Other assets                                                                                    |  |      |  |                                 | 2,202   |   |               |   | (5,742   | )             |  |   | (1,016   | )
|Accounts payable and other liabilities                                                          |  |      |  |                                 | 1,630   |   |               |   | 4,608    |               |  |   | 7,429    |  
|                                                                                                |  |      |  |                                 |         |   |               |   |          |               |  |   |          |  
|Net cash used in operating activities                                                           |  |      |  |                                 | (1,895  | ) |               |   | (7,933   | )             |  |   | (2,612   | )
|                                                                                                |  |      |  |                                 |         |   |               |   |          |               |  |   |          |  
|Investing activities:                                                                           |  |      |  |                                 |         |   |               |   |          |               |  |   |          |  
|Payments for site acquisition and construction                                                  |  |      |  |                                 | (79,459 | ) |               |   | (114,634 | )             |  |   | (104,889 | )
|Transfer of assets to affiliate                                                                 |  | D    |  |                                 | 44,139  |   |               |   |         |               |  |   |         |  
|Proceeds of derivative contract                                                                 |  |      |  |                                 | 2,283   |   |               |   |         |               |  |   |         |  
|Investment in affiliate                                                                         |  | D    |  |                                 | (22,357 | ) |               |   |         |               |  |   |         |  
|Proceeds of disposal of property                                                                |  |      |  |                                 |        |   |               |   | 4,216    |               |  |   | 43       |  
|Payments for other intangible assets                                                            |  |      |  |                                 | (768    | ) |               |   | (666     | )             |  |   | (470     | )
|                                                                                                |  |      |  |                                 |         |   |               |   |          |               |  |   |          |  
|Net cash used in investing activities                                                           |  |      |  |                                 | (56,162 | ) |               |   | (111,084 | )             |  |   | (105,316 | )
|                                                                                                |  |      |  |                                 |         |   |               |   |          |               |  |   |          |  
|Financing activities:                                                                           |  |      |  |                                 |         |   |               |   |          |               |  |   |          |  
|Proceeds from issue of Profit Certificates                                                      |  | L    |  |                                 |        |   |               |   | 21,837   |               |  |   | 38,339   |  
|Proceeds from issue of Partner Interests                                                        |  | L    |  |                                 | 7,316   |   |               |   |         |               |  |   |         |  
|Proceeds from lines of credit                                                                   |  |      |  |                                 | 45,494  |   |               |   | 57,188   |               |  |   | 76,678   |  
|Proceeds from bonds payable to an affiliated company                                            |  |      |  |                                 |        |   |               |   | 49,317   |               |  |   |         |  
|Repayment of subordinated loan payable to related party                                         |  | K    |  |                                 | (7,344  | ) |               |   |         |               |  |   |         |  
|Increase in liabilities under capital leases                                                    |  |      |  |                                 | 44      |   |               |   | 177      |               |  |   | (54      | )
|Payment of financing and related costs                                                          |  |      |  |                                 | (4,134  | ) |               |   | (3,207   | )             |  |   | (4,809   | )
|                                                                                                |  |      |  |                                 |         |   |               |   |          |               |  |   |          |  
|Net cash provided by financing activities                                                       |  |      |  |                                 | 41,376  |   |               |   | 125,312  |               |  |   | 110,154  |  
|                                                                                                |  |      |  |                                 |         |   |               |   |          |               |  |   |          |  
|Net effect of translation on cash                                                               |  |      |  |                                 | 3,668   |   |               |   | 3,359    |               |  |   | (664     | )
|                                                                                                |  |      |  |                                 |         |   |               |   |          |               |  |   |          |  
|(Decrease) increase in cash and cash equivalents                                                |  |      |  |                                 | (13,013 | ) |               |   | 9,654    |               |  |   | 1,562    |  
|Cash and cash equivalents at start of year                                                      |  |      |  |                                 | 24,978  |   |               |   | 15,324   |               |  |   | 13,762   |  
|                                                                                                |  |      |  |                                 |         |   |               |   |          |               |  |   |          |  
|Cash and cash equivalents at end of year                                                        |  |      |  | $                               | 11,965  |   |               | $ | 24,978   |               |  | $ | 15,324   |  
|                                                                                                |  |      |  |                                 |         |   |               |   |          |               |  |   |          |  
|Supplemental schedule of cash flow information:                                                 |  |      |  |                                 |         |   |               |   |          |               |  |   |          |  
|Interest paid net of capitalization                                                             |  |      |  | $                               | 10,114  |   |               | $ | 9,055    |               |  | $ | 6,315    |  
|                                                                                                |  |      |  |                                 |         |   |               |   |          |               |  |   |          |  
|Capital lease obligation incurred on site acquisition                                           |  |      |  | $                               |        |   |               | $ |         |               |  | $ | 5,989    |  
|                                                                                                |  |      |  |                                 |         |   |               |   |          |               |  |   |          |  
|Partner Interests issued for contribution in kind of subordinated loan payable to related party |  |      |  | $                               | 135,548 |   |               | $ |         |               |  | $ |         |  
|                                                                                                |  |      |  |                                 |         |   |               |   |          |               |  |   |          |  
|Total amount of corporate income taxes paid                                                     |  |      |  | $                               | 202     |   |               | $ | (13      | )             |  | $ |         |  
|                                                                                                |  |      |  |                                 |         |   |               |   |          |               |  |   |          |  



See Notes to
Consolidated Financial Statements



128



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##### Table of Contents

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

AND COMPREHENSIVE INCOME

(in thousands)

(in US dollars)



|                                            |  |                        |    |                                              |   |                          |  |                 |         |  |                                   |          |   |                          |   |        |   |  |   |         |  
|------------------------------------------- |  | ---------------------- | -- | -------------------------------------------- | - | ------------------------ |  | --------------- | ------- |  | --------------------------------- | -------- | - | ------------------------ | - | ------ | - |  | - | ------- | -
|                                            |  | GeneralPartnerInterest |    | LimitedPartnerInterest andprofitcertificates |   | Additionalpaid-incapital |  | Accumulatedloss |         |  | Accumulatedothercomprehensiveloss |          |   | Totalshareholdersequity |  
|Balance January 1, 2001 (as restated)       |  | $                      | 10 |                                              | $ | 71,902                   |  | $               | 30      |  | $                                 | (50,994  | ) |                          | $ | (6,392 | ) |  | $ | 14,556  |  
|Increase in shareholders interest          |  |                        |    |                                              |   | 37,903                   |  |                 |         |  |                                   |          |   |                          |   |        |   |  |   | 37,903  |  
|Comprehensive loss:                         |  |                        |    |                                              |   |                          |  |                 |         |  |                                   |          |   |                          |   |        |   |  |   |         |  
|Net loss                                    |  |                        |    |                                              |   |                          |  |                 |         |  |                                   | (29,596  | ) |                          |   |        |   |  |   | (29,596 | )
|Other Comprehensive Income (loss):          |  |                        |    |                                              |   |                          |  |                 |         |  |                                   |          |   |                          |   |        |   |  |   |         |  
|Gain on derivative instruments              |  |                        |    |                                              |   |                          |  |                 |         |  |                                   |          |   |                          |   | 900    |   |  |   | 900     |  
|Foreign currency translation                |  |                        |    |                                              |   |                          |  |                 |         |  |                                   |         |   |                          |   | (1,151 | ) |  |   | (1,151  | )
|                                            |  |                        |    |                                              |   |                          |  |                 |         |  |                                   |          |   |                          |   |        |   |  |   |         |  
|Total Comprehensive Loss:                   |  |                        |   |                                              |   |                         |  |                 |        |  |                                   | (29,596  | ) |                          |   | (251   | ) |  |   | (29,847 | )
|                                            |  |                        |    |                                              |   |                          |  |                 |         |  |                                   |          |   |                          |   |        |   |  |   |         |  
|Balance January 1, 2002 (as restated)       |  |                        | 10 |                                              |   | 109,805                  |  |                 | 30      |  |                                   | (80,590  | ) |                          |   | (6,643 | ) |  |   | 22,612  |  
|Increase in shareholders interest          |  |                        |    |                                              |   | 21,629                   |  |                 |         |  |                                   |          |   |                          |   |        |   |  |   | 21,629  |  
|Comprehensive loss:                         |  |                        |    |                                              |   |                          |  |                 |         |  |                                   |          |   |                          |   |        |   |  |   |         |  
|Net loss                                    |  |                        |    |                                              |   |                          |  |                 |         |  |                                   | (29,831  | ) |                          |   |        |   |  |   | (29,831 | )
|Other Comprehensive Income (loss):          |  |                        |    |                                              |   |                          |  |                 |         |  |                                   |          |   |                          |   |        |   |  |   |         |  
|Loss on derivative instruments              |  |                        |    |                                              |   |                          |  |                 |         |  |                                   |          |   |                          |   | (2,483 | ) |  |   | (2,483  | )
|Foreign currency translation                |  |                        |    |                                              |   |                          |  |                 |         |  |                                   |         |   |                          |   | (19    | ) |  |   | (19     | )
|                                            |  |                        |    |                                              |   |                          |  |                 |         |  |                                   |          |   |                          |   |        |   |  |   |         |  
|Total Comprehensive Loss:                   |  |                        |   |                                              |   |                         |  |                 |        |  |                                   | (29,831  | ) |                          |   | (2,502 | ) |  |   | (32,333 | )
|                                            |  |                        |    |                                              |   |                          |  |                 |         |  |                                   |          |   |                          |   |        |   |  |   |         |  
|Balance January 1, 2003 (as restated)       |  |                        | 10 |                                              |   | 131,434                  |  |                 | 30      |  |                                   | (110,421 | ) |                          |   | (9,145 | ) |  |   | 11,908  |  
|Increase in shareholders interest cash     |  |                        |    |                                              |   | 1,204                    |  |                 | 6.074   |  |                                   |          |   |                          |   |        |   |  |   | 7,278   |  
|Increase in shareholders interest non cash |  |                        |    |                                              |   | 21,975                   |  |                 | 112,549 |  |                                   |          |   |                          |   |        |   |  |   | 134,524 |  
|Comprehensive loss:                         |  |                        |    |                                              |   |                          |  |                 |         |  |                                   |          |   |                          |   |        |   |  |   |         |  
|Net Loss                                    |  |                        |    |                                              |   |                          |  |                 |         |  |                                   | (29,866  | ) |                          |   |        |   |  |   | (29,866 | )
|Other Comprehensive Income (loss):          |  |                        |    |                                              |   |                          |  |                 |         |  |                                   |          |   |                          |   |        |   |  |   |         |  
|Gain on derivative instruments              |  |                        |    |                                              |   |                          |  |                 |         |  |                                   |          |   |                          |   | 1,795  |   |  |   | 1,795   |  
|Foreign currency translation                |  |                        |    |                                              |   |                          |  |                 |         |  |                                   |         |   |                          |   | 11,962 |   |  |   | 11,962  |  
|                                            |  |                        |    |                                              |   |                          |  |                 |         |  |                                   |          |   |                          |   |        |   |  |   |         |  
|Total Comprehensive Loss:                   |  |                        |   |                                              |   |                         |  |                 |        |  |                                   | (29,866  | ) |                          |   | 13,757 |   |  |   | (16,109 | )
|                                            |  |                        |    |                                              |   |                          |  |                 |         |  |                                   |          |   |                          |   |        |   |  |   |         |  
|Balance December 31, 2003                   |  | $                      | 10 |                                              | $ | 154,613                  |  | $               | 118,653 |  | $                                 | (140,287 | ) |                          | $ | 4,612  |   |  | $ | 137,601 |  
|                                            |  |                        |    |                                              |   |                          |  |                 |         |  |                                   |          |   |                          |   |        |   |  |   |         |  







See Notes to Consolidated Financial Statements.



129



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##### Table of Contents

SHURGARD SELF STORAGE S.C.A.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note AOrganization



Shurgard Self Storage S.C.A. (the Company) was incorporated under Belgian Law as a Société en
Commandite Simple on December 8, 1994 and reorganized as a Société en Commandite par Actions on September 28, 1999. The Company invests directly or through wholly owned subsidiaries in Belgium, the Netherlands, France, Sweden, Denmark,
the United Kingdom and Germany (Collectively the Group) in the development and operation of self-service storage properties providing month-to-month leases for business and personal use.



Note BSummary of Significant Accounting Policies



Basis of presentation:  These consolidated financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America on the basis described below.



Consolidation:  The consolidated financial statements include the accounts of the Company and all of its domestic and foreign
subsidiaries and joint ventures in which the Company have effective control as evidenced by, among other factors, holding a majority interest in the investment and having the ability to cause a sale of assets. All investments in joint ventures that
do not qualify for consolidation, but in which the Company exercise significant influence, are accounted for under the equity method (See Note D). All inter-company balances and transactions have been eliminated upon consolidation.



Use of estimates:  The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America requires the Group to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.



New accounting principles:  In November 2002, the FASB issued FASB Interpretation (FIN) 45,
Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, which elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements
about its obligations under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee.
The initial recognition and initial measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantors fiscal year-end. The Group have not entered
into any guarantees or modified any existing guarantees subsequent to December 31, 2002 and therefore adoption of this statement has had no effect on its financial position, results of operations or cash flows.



In December 2002, the FASB issued SFAS 148, Accounting for Stock-Based
CompensationTransition and Disclosure, which amended SFAS No. 123, Accounting for Stock-Based Compensation. SFAS 148 provides alternative methods of transition for a voluntary change to the fair value based method of
accounting for stock-based compensation and amends the disclosure requirements of SFAS 123 to require prominent disclosures of the method of accounting for stock-based employee compensation and the effect of the method used on reported results. On
December 31, 2002, the Group adopted the disclosure provisions of SFAS 148 and continues to account for stock-based compensation under APB Opinion No. 25 Accounting for Stock Issued to Employees. Therefore, the adoption of SFAS 148 did
not have any effect on its financial position or results of operations. The following table reflects pro forma net income as if the Group had recognized stock-based compensation expense using the fair value method in accordance with SFAS 123. As the
Group is a non-public entity, the fair value of options issued in 2003 and 2002 was calculated at their minimum value of $99 (2002:



130



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SHURGARD SELF STORAGE S.C.A.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



$78) per option granted, applying a risk free interest rate of 2.75% and 2.74%, respectively. All grants of options were made at fair market value and no
compensation expense has been recorded in Net Loss for the year ended December 31, 2003, 2002, and 2001.



|                                   |  |                         |  |        |  |       
|---------------------------------- |  | ----------------------- |  | ------ |  | ------
|                                   |  | Year ended December 31,
|                                   |  | 2003                    |  | 2002   |  | 2001  
|                                   |  | (in thousands)         
|Net loss as reported               |  | 29,866                  |  | 29,831 |  | 29,596
|Add: proforma compensation expense |  | 49                      |  | 12     |  |      
|                                   |  |                         |  |        |  |       
|Proforma net loss                  |  | 29,915                  |  | 29,843 |  | 29,596
|                                   |  |                         |  |        |  |       



In January 2003, the
FASB issued FIN 46, Consolidation of Variable Interest Entities, which clarifies the application of Accounting Research Bulletin 51, Consolidated Financial Statements, for entities in which equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46, as revised by FIN 46R in December
2003, becomes effective for variable interest entities for periods ending after March 15, 2004. The Group is in the process of determining whether First Shurgard SPRL, an entity newly formed in May 2003 (Note D), meets the definition of a Variable
Interest Entity under the conditions outlined in FIN 46R.



In
April 2003, the FASB issued SFAS 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities which amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. In May 2003, the FASB issued SFAS 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity which requires that certain
financial instruments previously accounted for as equity should be classified as liabilities in statements of financial position. In December 2003, the FASB issued a revised SFAS 132, Employers Disclosures about Pensions and Other
Postretirement Benefitsan amendment of FASB Statements 87, 88 and 106. Adoption of these statements has no effect on the Groups financial position, results of operations or cash flows.



Accounting for Derivative Instruments and Hedging
Activities:  The Group has adopted the requirements of SFAS 133, Accounting for Derivative Instruments and Hedging Activities, as amended and interpreted, which establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other contracts and for hedging activities. Under SFAS 133, certain contracts that were not formerly considered derivatives may now meet the definition of a derivative. SFAS 133
requires that all derivatives, whether designated in hedging relationships or not, be recorded on the balance sheet at fair value. The accounting for changes in fair value depends upon the purpose of the derivative instrument and whether it is
designated and qualifies for hedge accounting. To the extent derivative instruments qualify and are designated as cash flow hedges, the effective portion of the gain or loss on such derivative instruments will generally be reported in Other
Comprehensive Income (OCI) and the ineffective portion, if any, will be reported in net income. Such amounts recorded in accumulated OCI will be reclassified into net income when the hedged item affects earnings. To the extent derivative instruments
qualify and are designated as hedges of changes in the fair value of an existing asset, liability or firm commitment, the gain or loss on the hedging instrument will be recognized currently in earnings along with the changes in fair value of the
hedged asset, liability or firm commitment attributable to the hedged risk.



Foreign exchange:  The consolidated financial statements are initially prepared in euro, the primary functional currency of the Group. Assets and liabilities of certain subsidiaries outside the euro
zone, whose



131



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SHURGARD SELF STORAGE S.C.A.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



functional currencies are the local currencies of the countries in which they are located, are translated in accordance with SFAS 52, Foreign Currency
Translation. In accordance with SFAS 52, assets and liabilities of such subsidiaries denominated in local currencies are translated into euro at the exchange rates in effect at the balance sheet date and revenue and expenses are translated at
average rates of exchange rate prevailing during the year. Gains or losses arising from such translation, together with gains or losses on translation of intercompany loans to such subsidiaries that are of a long-term nature, are accumulated in OCI
as a separate component of shareholders equity.



For
presentation, these financial statements have been translated into US dollars. For this purpose, the consolidated balance sheet has been converted at the exchange rate in effect at the balance sheet date and the consolidated statement of operations
has been translated at average rates of exchange. Gains or losses arising from this translation are also accumulated in OCI.



The Company has entered into contracts for the hedging of that proportion of investments made in currencies outside the euro through the forward sale of
such currencies. In accordance with SFAS 133, the Company records such contracts on the balance sheet at market value. Changes in market values are recorded in OCI in the same manner as for the exchange translation of the related intercompany loans
as above.



Gains or losses from transactions denominated in
other currencies are included in the determination of net loss.



Storage Centers:  Storage centers are recorded at cost. Depreciation on buildings is recorded on a straight-line basis over their estimated useful lives, on average over 30 years and equipment and leasehold improvements are
depreciated over 5 years. Repair and maintenance costs are recognized in expense as incurred, unless the costs are incurred for the replacement of existing building infrastructures.



Valuation of long-lived assets:  Whenever events or changes in circumstances indicate that the carrying
amounts of storage centers or other long lived assets might not be recoverable, the Group reviews the related assets for impairment using best estimates based upon reasonable and supportable assumptions and projections. The Group uses the expected
cash flow method to determine if the net book value of the properties exceeds fair value less costs to sell. As at December 31, 2003, no such assets had been written down.



Cash and cash equivalents:  Cash equivalents consist of money market instruments and securities with
original maturities of 90 days or less.



Financing
costs:  Financing costs are amortized on the effective interest method over the life of the related debt (See Note I). The related expense is included in interest expense.



Revenue recognition:  The majority of the Groups customers rent under month-to-month lease agreements
and revenue is recognized at the contracted rate for each month occupied. Revenue related to customers who sign longer period leases is recognized ratably over the term of the lease. Revenue from development fees in respect of stores developed on
behalf of First Shurgard SPRL (See Note D) is recognized as earned to the extent of development costs incurred and stores opened, calculated on the basis set out in the joint venture agreements. Revenue from management fees in respect of the
operation of those stores is recognized based upon the revenue of those stores.



Financial instruments:  The carrying values reflected on the balance sheet at December 31, 2003 reasonably approximate the fair value of cash and cash equivalents, other assets, accounts payable,
lines of credit and other liabilities.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Income taxes:  The Group accounts for income taxes under the provisions of SFAS 109,
Accounting for Income Taxes. SFAS 109 requires companies to account for deferred income taxes using the asset and liability method. Deferred taxation liabilities or assets are recognized for the estimated future tax effects, based upon
enacted tax law, attributable to temporary differences in the timing of recognition of transactions for reporting and tax purposes. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that, based upon
available evidence, are not expected to be realized.



Comprehensive income:  The Group follows SFAS 130, Reporting of Comprehensive Income. SFAS 130 establishes rules for the reporting of comprehensive income and its components. Comprehensive income comprises net
income, foreign currency translation adjustments and adjustments to market value of certain derivative instruments and is presented in the consolidated statements of shareholders equity and comprehensive income.



Segment information:  The Group has adopted SFAS 131,
Disclosures About Segments of an Enterprise and Related Information, which establishes annual and interim reporting standards for an enterprises business segments and related disclosures about products, services, geographic areas
and customers. The segments adopted by the Group and related financial information are set out in Note O.



Environmental costs:  Group policy is to accrue environmental assessments and/or remediation costs when it is probable that such efforts
will be required and the related costs can be reasonably estimated. The majority of Group real estate facilities have undergone independent environmental investigations and Group policy is to have such investigations conducted on all new real estate
acquired. Although there can be no assurance that there is no environmental contamination, the Group is not aware of any such contamination which individually or in aggregate would be material to its business, financial condition or results of
operations.



Note CStorage Centers



|                                                                       |  |                |   |  |         |   |  |         |  
|---------------------------------------------------------------------- |  | -------------- | - |  | ------- | - |  | ------- | -
|                                                                       |  | 2003           |   |  | 2002    |   |  | 2001    |  
|                                                                       |  | (in thousands) |  
|Land                                                                   |  | 137,615        |   |  | 83,297  |   |  | 53,623  |  
|Buildings                                                              |  | 437,094        |   |  | 299,857 |   |  | 177,551 |  
|Properties under capital lease                                         |  | 12,040         |   |  | 5,640   |   |  | 5,297   |  
|Equipment and other                                                    |  | 16,089         |   |  | 11,249  |   |  | 8,675   |  
|                                                                       |  |                |   |  |         |   |  |         |  
|Total property, plant & equipment                                      |  | 602,838        |   |  | 400,043 |   |  | 245,146 |  
|Less: accumulated depreciation (Including $1,393,000 on leased assets) |  | (64,826        | ) |  | (37,176 | ) |  | (20,202 | )
|                                                                       |  |                |   |  |         |   |  |         |  
|                                                                       |  | 538,012        |   |  | 362,867 |   |  | 224,944 |  
|Construction in progress                                               |  | 12,766         |   |  | 87,225  |   |  | 68,839  |  
|                                                                       |  |                |   |  |         |   |  |         |  
|Net book value                                                         |  | 550,778        |   |  | 450,092 |   |  | 293,783 |  
|                                                                       |  |                |   |  |         |   |  |         |  



As at December 31,
2003, the Group had outstanding commitments under contracts for the acquisition and construction of new storage centers totaling $43,777,000. This amount includes the value of certain contracts for the acquisition of new properties, the completion
of which are subject to conditions such as the achievement of planning consents. In 2003, 2002 and 2001, interest of $948,000, $2,149,000 and $1,927,000 respectively relating to the development of storage centers was capitalized



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note DInvestment in and Receivables from Real Estate Affiliate



This comprises:



|                                    |  |                   |  
|----------------------------------- |  | ----------------- | -
|                                    |  | December 31, 2003 |  
|                                    |  | (in thousands)    |  
|Investment in affiliates            |  | 23,615            |  
|Amounts receivable from affiliates  |  | 7,344             |  
|Less: share of losses of affiliates |  | (1,135            | )
|                                    |  |                   |  
|                                    |  | 29,824            |  
|                                    |  |                   |  



The investment
comprises an investment in a 20% interest in the registered capital of First Shurgard SPRL (First Shurgard), a Belgian entity formed in May 2003, together with a 5.2% direct interest in one of its subsidiaries, First Shurgard Deutschland
GmBH. These entities were formed under a joint venture agreement with Crescent Euro Self Storage Investments SARL (Crescent) for the development of up to 38 storage centers in the Groups European markets. During the year, the Group
transferred ten properties under development into the joint venture at their cost of $44,139,000 plus reimbursement of interest carry cost of $1,283,000, included in Interest Income in the consolidated statements of operations.



First Shurgard has equity commitments of 20,000,000 (Equivalent to
$25,104,000 at December 31, 2003) from the Group and 80,000,000 (Equivalent to $100,414,000 at December 31, 2003) from Crescent, of which 15,981,000 (equivalent to $20,059,000 at December 31, 2003) remains to be drawn, and has obtained a
non-recourse five year debt facility for 140,000,000 (equivalent to $175,725,000 at December 31, 2003) from a group of commercial banks. Under the terms of this debt facility, a subsidiary of First Shurgard entered into a Subscription
Agreement with Shurgard Storage Centers, Inc. (Shurgard) under which Shurgard irrevocably agreed to subscribe to subordinated and unsecured registered bonds in the aggregate principal amount of up to $20,000,000. This commitment may be
reduced if certain financial covenants are met and otherwise terminates not later than July 25, 2009. These bonds may generally only be drawn down either to avoid an imminent default or in the event of a default and so applied to repay amounts due
under the credit agreement.



Under the joint venture agreement,
the Group is responsible for the acquisition and construction of sites on behalf of First Shurgard for which First Shurgard pays development fees equal to 7% of the cost of developed storage centers, together with reimbursement of certain
out-of-pocket costs and certain other initial fees in connection with capital raising. In addition, the Group has entered into a 20-year management agreement for the operation of First Shurgard stores, for which the Group receives management fees
equal to 7% of revenues subject to a minimum of 50,000 (equivalent to $63,000 at December 31, 2003) per year per store, together with certain other fixed fees. In the year ended December 31, 2003, the Group received a total of $12,108,000 in
development and initial fees and $403,000 in management fees from First Shurgard, which amounts are included in Other Revenue in the consolidated statement of operations, net of the Groups share of losses of those affiliates of $1,135,000.



Store personnel of First Shurgard stores are employed either
directly by the Group or under joint employment contracts between the Group and First Shurgard. First Shurgard reimburses to the Group the personnel costs of these employees, amounting in total to $801,000 in the year ended December 31, 2003.



The joint venture agreement also provides that, in addition to
its initial 20% ownership interest, the Group will receive an additional 20% of First Shurgards income and cash flow after each of the investors has received an internal rate of return of 12% on its equity investment. First Shurgard owns the
developed storage centers



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



subject to the management agreements. Although the Group has no obligation to purchase the properties, if they are put up for sale, it has a right of first
offer at fair market value.



Below is summarized financial
information for First Shurgard and its subsidiary companies:



First Shurgard

Unaudited Consolidated Balance Sheet



|                                           |  |                  
|------------------------------------------ |  | -----------------
|                                           |  | 31, December 2003
|                                           |  | ($000)           
|ASSETS                                     |  |                  
|Storage centers:                           |  |                  
|Land                                       |  | 38,201           
|Buildings and equipment, net               |  | 79,887           
|Construction in progress                   |  | 13,952           
|                                           |  |                  
|Total storage centers                      |  | 132,040          
|Cash and cash equivalents                  |  | 20,951           
|Other assets                               |  | 21,998           
|                                           |  |                  
|Total assets                               |  | 174,989          
|                                           |  |                  
|                                           | 
|LIABILITIES AND SHAREHOLDERS EQUITY       |  |                  
|Accounts payable and other liabilities     |  | 11,618           
|Amounts payable to Shurgard Europe         |  | 7,344            
|Line of credit                             |  | 55,228           
|                                           |  |                  
|Total liabilities                          |  | 74,190           
|                                           |  |                  
|Minority interest                          |  | 948              
|                                           |  |                  
|Shareholders equity                       |  | 99,851           
|                                           |  |                  
|Total liabilities and shareholders equity |  | 174,989          
|                                           |  |                  



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



First Shurgard

Unaudited Consolidated Statement of Operations



|                                  |  |                  |  
|--------------------------------- |  | ---------------- | -
|                                  |  | 31 December,2003 |  
|                                  |  | $000            |  
|Revenue                           |  |                  |  
|Rental revenue                    |  | 596              |  
|                                  |  |                  |  
|Total revenue                     |  | 596              |  
|                                  |  |                  |  
|Expenses                          |  |                  |  
|Operating                         |  | 3,647            |  
|Real estate taxes                 |  | 66               |  
|Depreciation and amortization     |  | 660              |  
|General, administrative and other |  | 1,416            |  
|                                  |  |                  |  
|Total expenses                    |  | 5,789            |  
|                                  |  |                  |  
|Loss from operations              |  | (5,193           | )
|Interest expense                  |  | (177             | )
|Minority interest                 |  | 63               |  
|                                  |  |                  |  
|Net loss                          |  | (5,307           | )
|                                  |  |                  |  



Note EIncome Taxation



The Income tax (charge) benefit comprises:



|                               |  |       |   |  |       |  |      
|------------------------------ |  | ----- | - |  | ----- |  | -----
|                               |  | 2003  |   |  | 2002  |  | 2001 
|                               |  | $000 |   |  | $000 |  | $000
|Corporate income taxes payable |  | (202  | ) |  | 13    |  |     
|                               |  |       |   |  |       |  |      
|                               |  | (202  | ) |  | 13    |  |     
|                               |  |       |   |  |       |  |      



The net deferred tax
asset is made up as follows:



|                                                    |  |         |   |  |         |   |  |         |  
|--------------------------------------------------- |  | ------- | - |  | ------- | - |  | ------- | -
|                                                    |  | 2003    |   |  | 2002    |   |  | 2001    |  
|                                                    |  | $000   |   |  | $000   |   |  | $000   |  
|Net loss before taxation                            |  | 29,664  |   |  | 29,844  |   |  | 28,490  |  
|                                                    |  |         |   |  |         |   |  |         |  
|Deferred tax assets:                                |  |         |   |  |         |   |  |         |  
|Tax loss carried forward                            |  | 64,269  |   |  | 44,676  |   |  | 28,560  |  
|Other timing assets                                 |  | 2,985   |   |  | 2,430   |   |  | 909     |  
|Deferred tax liabilities:                           |  |         |   |  |         |   |  |         |  
|Accelerated depreciation allowances                 |  | (2,569  | ) |  | (2,791  | ) |  | (2,067  | )
|Exchange translation on bond payable                |  | (4,664  | ) |  | (850    | ) |  |         |  
|Other timing liabilities                            |  | (5,383  | ) |  | (3,102  | ) |  | (1,654  | )
|                                                    |  |         |   |  |         |   |  |         |  
|Net deferred tax asset (Before valuation allowance) |  | 54,638  |   |  | 40,363  |   |  | 25,748  |  
|Valuation allowance                                 |  | (54,638 | ) |  | (40,363 | ) |  | (25,748 | )
|                                                    |  |         |   |  |         |   |  |         |  
|Net deferred tax asset                              |  |        |   |  |        |   |  |        |  
|                                                    |  |         |   |  |         |   |  |         |  



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The Group has re-evaluated the appropriateness of its deferred tax assets. Based on the fact that it
has not demonstrated a history of taxable income in any jurisdiction since inception, the Group has concluded that it is not appropriate to recognize the potential future benefit of these deferred tax assets until such time as it actually begins to
realize them. Consequently, in accordance with SFAS 109, a full valuation allowance is necessary. The facts considered have been present since 2001, and as a result, the Group has determined that a full valuation allowance should have been recorded
for net deferred tax assets recognized in prior periods. As a result, the accompanying consolidated financial statements for the years ended December 31, 2002 and December 31, 2001 have been restated.



A summary of the significant effects of the restatement is as follows:



|                       |  |                            |   |  |                      |   |  |                            |   |  |                  |  
|---------------------- |  | -------------------------- | - |  | -------------------- | - |  | -------------------------- | - |  | ---------------- | -
|                       |  | At December 31, 2002       |   |  | At December 31, 2001 |  
|                       |  | As previouslyreported$000 |   |  | As restated$000     |   |  | As previouslyreported$000 |   |  | As restated$000 |  
|Net deferred tax asset |  | 36,428                     |   |  |                     |   |  | 24,005                     |   |  |                 |  
|Shareholders Equity   |  | 48,336                     |   |  | 11,908               |   |  | 46,617                     |   |  | 22,612           |  
|                       |  |                           
|                       |  | 2002                       |   |  | 2001                 |  
|                       |  | As previouslyreported$000 |   |  | As restated$000     |   |  | As previouslyreported$000 |   |  | As restated$000 |  
|Net loss               |  | (22,501                    | ) |  | (29,831              | ) |  | (21,292                    | ) |  | (29,596          | )



Net operating losses
carried forward at the end of 2003 amounted to $181,085,000 and they may be carried forward indefinitely in all jurisdictions.



In 2002 and 2001, net operating losses carried forward amounted to $125,860,000 and $90,167,000 respectively.



Note FOther Assets



Other assets are comprised of:



|                                                                |  |                |  |        |  |       
|--------------------------------------------------------------- |  | -------------- |  | ------ |  | ------
|                                                                |  | 2003           |  | 2002   |  | 2001  
|                                                                |  | (in thousands)
|Accounts receivable, net of allowances                          |  | 8,710          |  | 5,187  |  | 2,490 
|Prepayments and deposits                                        |  | 8,216          |  | 10,003 |  | 1,810 
|Value Added Taxes recoverable                                   |  | 4,776          |  | 5,234  |  | 6,393 
|Financing costs, net of amortization                            |  | 7,418          |  | 7,553  |  | 6,327 
|Software development and other intangibles, net of amortization |  | 1,472          |  | 1,116  |  | 953   
|Other assets                                                    |  | 1,310          |  | 1,010  |  | 2,086 
|                                                                |  |                |  |        |  |       
|                                                                |  | 31,902         |  | 30,103 |  | 20,059
|                                                                |  |                |  |        |  |       



The risk on our
accounts receivable is limited due to the nature of the business which is characterized by a large number of customers and low transaction values per customer.



Note GLiabilities Under Leases



The Group has a number of operating lease commitments, including ground leases with terms up to 95 years. Under these lease agreements, the Group expensed
$2,149,000, $1,416,000 and $1,209,000 in the years



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



ended December 31, 2003, 2002 and 2001, respectively. The Group also leases five properties in Belgium and the Netherlands under capital leases with purchase
options on the Belgian properties exercisable in 2011 and 2022 respectively. The liability under these leases was $11,391,000, $9,469,000 and $7,838,000 at December 31, 2003, 2002 and 2001 respectively.



The future minimum payments required under these leases are as follows (in
thousands):



|                |  |                                |  |                             
|--------------- |  | ------------------------------ |  | ----------------------------
|Year            |  | Futurepayments Operatingleases |  | Futurepayments Capitalleases
|2004            |  | 2,557                          |  | 879                         
|2005            |  | 1,840                          |  | 884                         
|2006            |  | 2,109                          |  | 886                         
|2007            |  | 2,070                          |  | 889                         
|2008            |  | 2,105                          |  | 892                         
|Following years |  | 32,584                         |  | 32,036                      



Note HBonds payable



In May 2002, the Company entered into a Subscription
Agreement with Shurgard under which Shurgard irrevocably agreed to subscribe to registered bonds in the aggregate principal amount of up to $55,000,000 (reduced from $75,000,000 under amendments to the Subscription Agreement dated May and December
2003) to be issued by the Company from time to time in order to meet its development and working capital requirements. These subscription commitments automatically terminate two years following the date of the agreement.



The bonds are unsecured and subordinated to all creditors including other
unsecured creditors, although they are senior to all equity distributions or distribution rights of any kind. They bear annual interest at 9.75% with an unused fee of 1% per annum on the undrawn amount. The Company has the option to pay interest in
either cash or by the issue of additional bonds that are not taken into account in computing the maximum principal amount of bonds that may be issued as above. As at December 31, 2003, the aggregate face value of bonds issued under the Agreement was
$55,274,000, including $6,249,000 in respect of accrued interest. In the year ended December 31, 2002, the Company also paid to Shurgard a commitment fee of 0.5% and a structuring fee of 1.5% of the initial commitment of $50,000,000.



The bonds will be redeemed on December 31, 2004 at 115% of the principal
amount of the issued bonds together with accrued interest. The Company has two one year options to extend the redemption date, subject to certain conditions, and may also redeem all or any part of the outstanding bonds at any time. Any bonds so
redeemed will be cancelled and may not be re-issued. The Company is accruing the redemption premium payable on the effective interest method assuming the bond will be redeemed on December 31, 2006, taking into account the options to extend the
redemption date.



Under the Subscription Agreement, subject to
the condition, inter alia, that the Company has already launched an Initial Public Offering on a regulated stock market, Shurgard has undertaken, if so requested, to subscribe to any capital increase in the Company prior to the redemption date to be
effected by a contribution in kind of receivables arising from the outstanding bonds held by Shurgard at a price equal to 80% of the trading price of the shares at the time.





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SHURGARD SELF STORAGE S.C.A.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note ILine of Credit



This comprises:



|                                 |  |                   |             |              |   |                                 |  |     |  
|-------------------------------- |  | ----------------- | ----------- | ------------ | - | ------------------------------- |  | --- | -
|                                 |  | Amount offacility |             | Amount drawn |   | Interestrate atDecember 31,2003 | 
|Bridge credit agreement end 2003 |  |                  | 310,000,000 |              |   | $376,553,000                    |  | 3.8 | %
|Bridge credit agreement end 2002 |  |                  | 300,000,000 |              | $ | 270,936,000                     |  | 4.8 | %
|                                 |  |                   |             |              |   |                                 |  |     |  



This facility, which
was drawn down on 29 December 2003 in order to refinance the Groups existing revolving credit agreement, bears interest at a margin over EURIBOR +2%, is secured by mortgages and other charges on substantially all of the storage centers and
certain other assets of group companies. It is subject to customary banking covenants and is repayable on December 31, 2004. The Group is examining proposals for longer term financing.



Note JDerivative instruments and hedging activities



The Group has used interest rate swaps and caps to manage its variable rate debt and forward contracts for the sale of
foreign currencies in order to manage its foreign currency investments as described below. These transactions have been accounted for in accordance with SFAS 133 as described in Note B.



Foreign currency risk



In order to minimize the risk of changes in the fair value of assets attributable to fluctuating exchange rates, the Company
entered into contracts for the hedging of that proportion of investments made in currencies outside the euro zone and financed by euro denominated debt, through the forward sale of such currencies as at December 31, 2003, the maturity date of the
related financing (See note I). Credit risk was minimized through the placing of such contracts only with highly rated banks in major European financial markets. In accordance with SFAS 133, at maturity of the contracts at December 31, 2003, the
Company received proceeds of $2,283,000 in respect of the market value of the contracts at that date (2002: liability of $37,000; 2001: liability of $990,000), which was recorded by a credit of $2,327,000 (2002: credit of $1,135,000; 2001: charge of
$990,000) to Foreign Currency Translation in OCI.



Interest rate risk



In 2001, the
Company entered into an interest rate cap agreement at 6.75% for a notional amount of 64,000,000 ($80,331,000 at December 31, 2003) and an interest rate swap fixing the interest rate at 5.24% for a notional amount of 191,000,000
($239,739,000 at December 31, 2003), both contracts maturing on December 31, 2003. During 2002, the Company purchased two further interest rate caps at 6.75% for notional amounts of 25,000,000 ($31,379,000 at December 31, 2003) and
20,000,000 ($25,104,000 at December 31, 2003) respectively maturing also on December 31, 2003, for a total cost of 36,000 ($45,000 at December 31, 2003). Although these transactions were designated as cash flow hedges of the interest
rate risk attributable to changes in the variable rate interest on the Groups Line of Credit (Note I), the terms differed from the underlying debt in that, at December 31, 2002, the notional value of the contracts exceeded the amount drawn
under the Line of Credit by 41,500,000 ($43,496,000 at December 31, 2002) (2001: 58,000,000; $51,377,000 at December 31, 2001). Accordingly, in the years ended December 31, 2001 and 2002, the Company used the hypothetical derivative
method to test hedge effectiveness as well as the amount of ineffectiveness to be recorded in earnings. This method compares changes in the value of a hypothetical at market swap for a notional amount matching



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



the hedged debt to changes in value of the actual swap. Amounts are recorded in net interest expense (see below) to the extent changes in value of the actual
swap exceed changes in the value of the hypothetically perfect swap.



The Group adopted SFAS 133 on January 1, 2001 and initially recorded a charge of $1,106,000 in respect of a cumulative effect of a change in accounting principle relating to the adjustment from its book value of $1,421,000 to market value
of $315,000 of the Companys interest rate cap at that date. As the above contracts matured at December 31, 2003, their fair market value was reduced to $Nil at that date (2002: A liability of $1,524,000; 2001: An asset of $996,000) by a credit
to OCI of $2,017,000 (2002: debit of $2,739,000; 2001: credit of $891,000) and a debit to interest expense of $192,000 (2002: credit of $950; 2001: debit of $761,000).



Note KSubordinated Loan Payable



At December 31, 2002, the Company had drawn 121,763,000, including accrued interest at annual rate of 8.25%, under a 206,000,000 ($258,567,000
at December 31, 2003) Loan Facility Agreement with Recom & Co SNC (Recom), a Belgian holding company with a partnership interest then of 53.83% in the Company. The outstanding loan of 128,766,000 ($142,892,000 at September 8,
2003), including accrued interest, was repaid in full on September 8, 2003 by payment of cash of 6,618,000 ($7,344,000 at September 8, 2003) together with the contribution in kind by Recom of the balance of 122,148,000 ($135,548,000 at 8
September 2003) in consideration for its subscription for shares issued under certain warrants (See Note L).



Note LShareholders Equity



The registered capital of the Company amounts to 15,695,000 (equivalent to $17,779,000 at historical rates) which is represented by 97,789 Partner Interests, each representing an equal part of the capital. The
participants comprise General Partners, who commit themselves with unlimited liability, jointly and severally, to the obligations of the Company and Classes A, B and C Limited Liability Partners, whose liability is limited up to the amount of their
contribution, provided that they do not engage in the management of the Company. No Class B or C Partner Interests have yet been issued. The three classes of Partner Interests have in certain circumstances (i) varying preference rights with respect
to distributions made by the Company to its partners and (ii) varying rights to give effect to a transfer or sale of their interest.



On October 8, 1999, the Company entered into a Joint Venture Agreement with new partners in order to provide capital to finance the ongoing development of
the Groups business. Under this Agreement, the partners subscribed to additional General Partner Interests in the Company for a total amount of $8,500. In addition to the partner interests representing the registered capital of the Company,
the Company also issued to the new partners 178,306 Profit Certificates against a commitment to contribute in cash an amount of 684.13 (equivalent to $859 at December 31, 2003) per certificate. At December 31, 2003 and 2002, the Profit
Certificates were fully subscribed, amounting in total to 121,984,000 ($113,665,000 at historical rates). Each Profit Certificate entitles its holder to certain voting rights as set out in the Joint Venture Agreement and otherwise to the same
rights and obligations as a limited liability partner interest. Each Profit Certificate may be converted into one Class B limited liability partner interest at any time provided that it has been paid up in accordance with the terms of the Joint
Venture Agreement.



The Company also issued free of charge to
certain of its partners, a total of 136,111 warrants, each to acquire one Class A limited liability partner interest through a capital increase at a predetermined price. These warrants were exercised on September 8, 2003 for a total consideration of
128,740,000 ($142,863,000 at September 8, 2003) of which 6,592,000 ($7,315,000 at September 8, 2003) was paid in cash and 122,148,000 ($135,548,000 at September 8, 2003) was settled by way of contribution in kind of the
Subordinated Loan



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SHURGARD SELF STORAGE S.C.A.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Payable (Note K). This contribution in kind has not been recorded in the Consolidated Statement of Cash Flow as it represents a non cash transaction.



On February 27, 2001, as part of arrangements for additional
financing, the Company and its partners entered into a further agreement under which the partners agreed to subscribe for a further 40,928 New Profit Certificates at 684.13 (equivalent to $859 at December 31, 2003) per New Profit Certificate,
amounting in total to 28,000,000 ($35,145,000 at December 31, 2003). Subsequent to December 31, 2002, the partners are only required at the discretion of the Company to pay up the New Profit Certificates in the event the Company defaults (or
threatens to default) on the terms of any material indebtedness or in the event of bankruptcy, insolvency or liquidation, irrespective of other conditions. When it is fully paid, each New Profit Certificate may be converted into one Class C limited
liability partner interest at any time.



Note MCompensation and
Benefit Plans



On 6 December 2001, the Group adopted the
Shurgard Self Storage SCA European Share Plan that provides for the granting of options to eligible employees of Group companies to acquire limited liability Class A Partner Interests in the Company up to a maximum of 7% of the issued ordinary share
capital. The options vest after three years. Under the Plan, option holders irrevocably grant to Shurgard a call option with right of first refusal to purchase shares and Shurgard grants option holders a put option to sell to Shurgard any shares
acquired under the Plan at a price based upon an independent valuation of the Group. The following table summarizes the number of options issued, none of which are yet exercisable:



|                                 |  |                  |   |  |                                |       |                               |   |      
|-------------------------------- |  | ---------------- | - |  | ------------------------------ | ----- | ----------------------------- | - | -----
|                                 |  | Number ofoptions |   |  | Weighted averageexercise price |       | $ equivalentas at Dec 31,2003
|Granted in 2002                  |  | 1,836            |   |  |                               | 950   |                               | $ | 1,192
|Forfeit or refused               |  | (78              | ) |  |                               | 950   |                               | $ | 1,192
|                                 |  |                  |   |  |                                |       |                               |   |      
|Outstanding at December 31, 2002 |  | 1,758            |   |  |                               | 950   |                               | $ | 1,192
|Granted in 2003                  |  | 955              |   |  |                               | 1,010 |                               | $ | 1,268
|Forfeit or refused               |  | (430             | ) |  |                               | 991   |                               | $ | 1,244
|                                 |  |                  |   |  |                                |       |                               |   |      
|Outstanding at December 31, 2003 |  | 2,283            |   |  |                               | 967   |                               | $ | 1,214
|                                 |  |                  |   |  |                                |       |                               |   |      



|               |  |                                        |  |                                
|-------------- |  | -------------------------------------- |  | -------------------------------
|Exercise price |  | Options outstandingat December 31,2003 |  | Weighted average remaining life
|950           |  | 1,624                                  |  | 1.9 years                      
|1,010         |  | 659                                    |  | 2.9 years                      
|               |  |                                        |  |                                
|               |  | 2,283                                  |  |                                
|               |  |                                        |  |                                



In 1999, the Group
established a Phantom Share Incentive Plan in which certain employees are eligible to participate. Under this Plan, annual awards are made to eligible employees of rights to receive a compensation benefit calculated according to a predetermined
formula based upon the increase in value of the business of the Group between the date of the award and the date of exercise of the rights. Under the terms of the Plan, rights generally vest on the third anniversary of the date of grant only if the
employee has remained with the Group and may only be exercised thereafter either (i) on the date of an initial public offering, (ii) if any participant ceases to be an employee or (iii) otherwise on December 31, 2005. In the year ended December 31,
2003, payments of $27,000 were made under the Plan. A provision was recorded for the estimated cost of the benefit payable under



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SHURGARD SELF STORAGE S.C.A.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



the Plan for awards granted prior to the balance sheet date based upon the estimated increase in value of the business up to that date, calculated according
to the predetermined formula, on the assumption that all awards that have not otherwise lapsed will vest in due course. This provision amounted to $768,000 and $419,000 as at December 31, 2003 and 2002 respectively.



Certain group companies make defined contributions to pension plans according
to local employment law and practice. The cost of contributions to such plans, which is expensed as incurred, was $750,000, $450,000 and $335,000 in the years ended December 31, 2003, 2002 and 2001 respectively.



Note NCommitments and Contingent liabilities



There are no material contingencies or litigation known to the Group.
Commitments are disclosed in Notes C and G.



Note OSegment Reporting



The Group has adopted two reportable segments:
Same and New Stores. The definition of Same Stores includes existing stores acquired prior to January 1stof the previous year as well as developed properties that have been operating for a full two years as of January 1stof the current year. All other facilities are defined as New Stores.



The performance of properties is evaluated based upon Net Operating Income (NOI), which is defined as rental revenue less direct operating expenses and real estate taxes. These segments allow management to
focus separately on increasing NOI from existing properties and renting up new facilities. The accounting policies applicable to segments are as described in Note B above. There are no inter-segment sales and transfers. Depreciation and
amortization, other operating expenses and net interest expense are not allocated to segments.



The following table illustrates the results for these segments for the years ended December 31, 2003 and 2002 using the Same Store and New Store data for the 47 stores meeting the above criteria as at December 31,
2003.



|                                  |  |                |   |  |            |   |  |         |  
|--------------------------------- |  | -------------- | - |  | ---------- | - |  | ------- | -
|                                  |  | Same Stores    |   |  | New Stores |   |  | TOTAL   |  
|                                  |  | (in thousands) |  
|Year ended December 31, 2003      |  |                |   |  |            |   |  |         |  
|Rental revenue                    |  | 42,930         |   |  | 24,388     |   |  | 67,318  |  
|Direct store operating expenses1  |  | (15,747        | ) |  | (17,563    | ) |  | (33,310 | )
|                                  |  |                |   |  |            |   |  |         |  
|NOI                               |  | 27,183         |   |  | 6,825      |   |  | 34,008  |  
|                                  |  |                |   |  |            |   |  |         |  
|Total land, buildings & equipment |  | 216,745        |   |  | 318,374    |   |  | 535,119 |  
|                                  |  |                |   |  |            |   |  |         |  
|Year ended December 31, 2002      |  |                |   |  |            |   |  |         |  
|Rental revenue                    |  | 34,372         |   |  | 9,140      |   |  | 43,512  |  
|Direct store operating expenses1  |  | (12,525        | ) |  | (9,730     | ) |  | (22,255 | )
|                                  |  |                |   |  |            |   |  |         |  
|NOI                               |  | 21,847         |   |  | (590       | ) |  | 21,257  |  
|                                  |  |                |   |  |            |   |  |         |  
|Total land, buildings & equipment |  | 192,179        |   |  | 168,363    |   |  | 360,542 |  
|                                  |  |                |   |  |            |   |  |         |  



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SHURGARD SELF STORAGE S.C.A.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following table illustrates the results for these segments for the years ended December 31, 2002
and 2001 using the Same Store and New Store data for the 28 stores meeting the above criteria as at December 31, 2002.



|                                  |  |                |   |  |           |   |  |         |  
|--------------------------------- |  | -------------- | - |  | --------- | - |  | ------- | -
|                                  |  | SameStores     |   |  | NewStores |   |  | TOTAL   |  
|                                  |  | (in thousands) |  
|Year ended December 31, 2002      |  |                |   |  |           |   |  |         |  
|Rental revenue                    |  | 23,153         |   |  | 20,359    |   |  | 43,512  |  
|Direct store operating expenses1  |  | (7,734         | ) |  | (14,521   | ) |  | (22,255 | )
|                                  |  |                |   |  |           |   |  |         |  
|NOI                               |  | 15,419         |   |  | 5,838     |   |  | 21,257  |  
|                                  |  |                |   |  |           |   |  |         |  
|Total land, buildings & equipment |  | 105,161        |   |  | 255,381   |   |  | 360,542 |  
|                                  |  |                |   |  |           |   |  |         |  
|Year ended December 31, 2001      |  |                |   |  |           |   |  |         |  
|Rental revenue                    |  | 17,849         |   |  | 8,677     |   |  | 26,526  |  
|                                  |  |                |   |  |           |   |  |         |  
|Direct store operating expenses1  |  | (7,012         | ) |  | (8,466    | ) |  | (15,478 | )
|                                  |  |                |   |  |           |   |  |         |  
|NOI                               |  | 10,837         |   |  | 211       |   |  | 11,048  |  
|                                  |  |                |   |  |           |   |  |         |  
|Total land, buildings & equipment |  | 92,957         |   |  | 130,503   |   |  | 223,460 |  
|                                  |  |                |   |  |           |   |  |         |  

---

|1 |  | Including real estate taxes and leasehold expense
|- |  | -------------------------------------------------



The following table reconciles the reported segments revenue to
consolidated total revenue for the years ended December 31, 2003, 2002 and 2001:



|                      |  |                |  |        |  |       
|--------------------- |  | -------------- |  | ------ |  | ------
|                      |  | 2003           |  | 2002   |  | 2001  
|                      |  | (in thousands)
|Total segment revenue |  | 67,318         |  | 43,512 |  | 26,526
|Other income          |  | 11,376         |  |        |  |       
|                      |  |                |  |        |  |       
|Total revenue         |  | 78,694         |  | 43,512 |  | 26,526
|                      |  |                |  |        |  |       



Of the total segment
revenue, $10,829,000 (2002: $8,550,000) was attributed to Belgium and $56,489,000 (2002: $34,962,000) to other European markets.



The following table reconciles the reported segments NOI to consolidated net loss for the years ended December 31, 2003, 2002 and 2001:



|                                         |  |                |   |  |         |   |  |         |  
|---------------------------------------- |  | -------------- | - |  | ------- | - |  | ------- | -
|                                         |  | 2003           |   |  | 2002    |   |  | 2001    |  
|                                         |  | (in thousands) |  
|Total segment NOI                        |  | 34,008         |   |  | 21,251  |   |  | 11,048  |  
|Other income                             |  | 11,376         |   |  |         |   |  |         |  
|Depreciation and amortization            |  | (19,433        | ) |  | (12,959 | ) |  | (9,044  | )
|Other operating expenses                 |  | (30,794        | ) |  | (16,966 | ) |  | (14,020 | )
|Effect of change in accounting principle |  |               |   |  |        |   |  | (1,106  | )
|Net financial expense                    |  | (34,651        | ) |  | (23,527 | ) |  | (16,474 | )
|Exch. transl. gain on bonds payable      |  | 9,830          |   |  | 2,357   |   |  |         |  
|Provision for taxes                      |  | (202           | ) |  | 13      |   |  |         |  
|                                         |  |                |   |  |         |   |  |         |  
|Net loss                                 |  | (29,866        | ) |  | (29,831 | ) |  | (29,596 | )
|                                         |  |                |   |  |         |   |  |         |  



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SHURGARD SELF STORAGE S.C.A.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following table reconciles the reported segments assets to consolidated assets as at
December 31, 2003, 2002 and 2001:



|                          |  |                |  |         |  |        
|------------------------- |  | -------------- |  | ------- |  | -------
|                          |  | 2003           |  | 2002    |  | 2001   
|                          |  | (in thousands)
|Total segment assets      |  | 535,119        |  | 360,542 |  | 223,460
|Construction in progress  |  | 12,766         |  | 87,225  |  | 68,839 
|Other fixed assets        |  | 2,893          |  | 2,325   |  | 1,485  
|Other assets              |  | 73,691         |  | 91,509  |  | 59,387 
|                          |  |                |  |         |  |        
|Consolidated total assets |  | 624,469        |  | 541,601 |  | 353,171
|                          |  |                |  |         |  |        



Of the total segment
assets, $68,409,000 (2002: $55,822,000) was attributed to Belgium and $466,710,000 (2002: $304,720,000) to other European markets.



Note PRelated Party Transactions



Related Party Transactions are disclosed in Notes D, H and K. Additionally (i) on October 8, 1999, the Company entered into a license agreement with
Shurgard whereby the Company was granted an exclusive license for the use of proprietary marks and know-how for establishing, owning and operating self-storage facilities in countries within Western Europe. As from October 8, 1999, the Company pays
the costs in connection with registering proprietary marks within its territory, and (ii) the Group also reimburses Shurgard and two partners for the services of certain key executives. These charges amounted to $838,000, $1,293,000 and $1,064,000
in the years ended December 31, 2003, 2002 and 2001 respectively. Finally, (iii), in Other Revenue, the amount of $11.4 million in 2003 is comprised of development fees, management fees and other initial financing fees invoiced to First Shurgard
less our share of losses in the joint venture of $1.1 million.



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Item 9Changes in and Disagreements with Accountants on Accounting and Financial Disclosure



On November 13, 2003, Deloitte & Touche LLP (Deloitte), our previous
independent auditor, notified the Company of its resignation.



Deloittes reports on our consolidated financial statements for 2002 and 2001 did not contain an adverse opinion or disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope or accounting
principles.



During the fiscal years ended December 31, 2002
and 2001 and the subsequent interim period through the date of Deloittes resignation, Deloitte did not advise us that information had come to Deloittes attention that led it to no longer be able to rely on managements
representations, except as follows:



In resigning as our
auditor, Deloitte advised us that its resignation arose from Deloittes conclusion that it was no longer willing to rely on managements representations due to concerns about our communications with Deloitte regarding an overpayment of
approximately $1.4 million to Charles K. Barbo, our Chairman and Chief Executive Officer, and another individual no longer affiliated with Shurgard. Shurgard made the overpayment in connection with the liquidation of an affiliated limited
partnership formed in 1990.



The transaction involving the
liquidation payments was approved by our independent directors in January 2003, consummated in April 2003, and disclosed in our quarterly reports on Form 10-Q for the quarters ended March 31, 2003 and June 30, 2003, as filed with the SEC.



We first discovered the possibility that an overpayment may
have occurred on October 24, 2003. Over the next two weeks, we had discussions with Mr. Barbo to confirm the occurrence and amount of the overpayment, during which time Mr. Barbo indicated he would reimburse any overpayment made to him as soon as
the overpayment had been confirmed. Following a meeting of the Audit Committee on November 7, 2003, Deloitte inquired about the original liquidation transaction in connection with its review of the disclosure of the transaction in the footnotes of
our third quarter financial statements. During these conversations, we advised Deloitte of the overpayment and the expected reimbursement and discussed with them the potential impact of the reimbursement on the pending quarterly filing. On November
8, 2003, we and Deloitte had several additional conversations regarding the transaction, the overpayment and the expected impact of the overpayment and reimbursement on our financial statements. On that same day, we notified the Chairman of the
Audit Committee of the overpayment and expected reimbursement.



On November 10, 2003, Deloitte met with the Chairman of the Audit Committee to express its concerns regarding managements communications with Deloitte surrounding the overpayment, including the timing of and inconsistencies in those
communications. In particular, Deloitte expressed concern that the overpayment was brought to its attention after the Audit Committee had, in its November 7, 2003 meeting, approved third quarter financial statements presented at that meeting which
did not include corrections relating to the overpayment. In addition, Deloitte expressed concerns that it received conflicting statements regarding the date the error was initially discovered. Following the November 10 meeting with Deloitte, the
Chairman of the Audit Committee interviewed Shurgard management and personnel to review the facts relating to the discovery and correction of the overpayment and our communications with Deloitte regarding the overpayment.



On November 12, 2003, the Audit Committee convened a meeting attended by
Deloitte. At that meeting, the Chairman of the Audit Committee presented a summary of his conclusions from these interviews. The Chairman reported that management had explained that they had not reported the overpayment sooner because it was
immaterial to the financial statements and management had not conclusively determined with the general partners that an overpayment had been made. The Chairman advised Deloitte that based on these interviews and managements explanation, he did
not believe there had been any intentional misrepresentation by management and that, in his opinion, the facts surrounding the initial liquidation payment, the discovery of the overpayment



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and the communication with Deloitte about overpayment did not call into question the reliability of managements representations. Deloitte indicated
that it would be discussing the matter internally and would report back to the Chairman of the Audit Committee.



On November 13, 2003, Deloitte orally informed our President and the Chairman of the Audit Committee, in separate conversations, that, having considered
all of the facts surrounding the disclosure and communication of the overpayment, Deloitte had concluded that it was no longer willing to rely on representations of management, and as a result was resigning as our auditor without completing its
review of the financial statements for the three and nine month periods ended September 30, 2003. On that same day, the Chairman of the Audit Committee and our outside counsel asked Deloitte for further clarification of the facts leading to the
resignation and whether the facts warranted Deloittes conclusion. Deloitte agreed to respond by the following day. On November 14, 2003, we received a letter of resignation from Deloitte, dated November 13, 2003. The letter stated, This
will confirm that the client-auditor relationship between Shurgard Storage Centers, Inc. (Commission File No. 0-11455) and Deloitte & Touche LLP has ceased. Later that day, in a telephone call between Deloitte, the Chairman of the Audit
Committee and outside counsel, Deloitte indicated that its conclusion was based on the totality of the facts surrounding managements communications to Deloitte regarding the overpayment. Deloitte further indicated that the events surrounding
managements communications to Deloitte regarding the overpayment were the sole basis for its conclusion.



During the fiscal years ended December 31, 2002 and 2001 and the subsequent interim period through the date of Deloittes resignation, there have
been no disagreements on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Deloitte, would have caused it to make reference to
the subject matter of the disagreements in connection with its reports, except the following:



In a letter to the Audit Committee dated March 12, 2002, Deloitte noted that there had been a disagreement regarding our accounting of our interests in certain joint venture arrangements that we had entered into from
1998 to 2000. We had consulted the SECs Office of the Chief Accountant and another accounting firm prior to concluding to restate our financial statements for the years ended December 31, 1998, 1999, and 2000, and subsequent interim periods.
Our restatements occurred in December 2001. Deloitte indicated in its March 12, 2002 letter that as a result of the restatement this disagreement had been satisfactorily resolved.



During the fiscal years ended December 31, 2002 and 2001 and the subsequent interim period through the date of
Deloittes resignation, Deloitte did not advise us that the internal controls necessary for us to develop reliable financial statements did not exist, except as follows:



In connection with its audit of our financial statements for the year ended December 31, 2001, Deloitte advised us of a
reportable condition involving our internal control. Deloitte advised us that our procedures for the preparation and review of financial information, and its presentation in our communications (including periodic reports and annual reports to
shareholders) lacked processes that provide for and document review by personnel with adequate knowledge to prevent errors in preparation and presentation. Deloitte indicated that it did not believe the reportable condition was a material weakness.
Deloitte advised Shurgard management to review and revamp these procedures as appropriate to ensure clarity of accountability and responsibility in the financial reporting process. In response, management proposed and implemented certain process
improvements to address these concerns. Management reviewed the proposed process improvements with the Audit Committee and Deloitte.



We provided Deloitte a copy of the foregoing disclosures and filed with our current report on Form 8-K regarding this matter (initially filed with the SEC
on November 20, 2003) a letter from Deloitte (dated November 25, 2003) addressed to the SEC that states its agreement with such statements.



On January 8, 2004, the Audit Committee approved the engagement of PricewaterhouseCoopers LLP (PwC) as Shurgards independent auditors to
audit Shurgards financial statements for the fiscal year ended



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December 31, 2003. Because Deloitte advised Shurgard that it would not consent to the use of any of its prior audit reports in the Companys future SEC
filings, the Audit Committee also engaged PwC to reaudit the Companys financial statements for the fiscal years ended December 31, 2002 and 2001.



During the fiscal years ended December 31, 2002 and 2003 and the subsequent interim periods to the date hereof, the Company did not consult with PwC
regarding any of the matters or events set forth in Item 304(a)(2) of Regulation S-K.



Item 9AControls and Procedures



The
Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act), designed to provide reasonable assurance of achieving the objective
that information in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified and pursuant to the requirements of the SECs rules and forms. Disclosure controls and procedures include controls
and procedures designed to ensure that information required to be disclosed by the Company in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and interim
Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the
objectives of the system are met.



During 2004, management and
our recently appointed independent auditors reported to our Audit Committee certain matters involving internal controls that our independent auditors considered to be reportable conditions under standards established by the American Institute of
Certified Public Accountants. A number of financial statement adjustments were identified by our new independent auditors during the 2001 and 2002 reaudits and the 2003 audits that they believe indicate a lack of effective monitoring and oversight
of the accounting and reporting functions. The financial statement adjustments identified by our new independent auditors during their audits included the restatement of prior period financial statements for errors related to, among other things,
the application of generally accepted accounting principles in the consolidation of certain joint ventures, the accounting for certain properties in tax retention operating leases and the recognition of deferred tax assets; however, the adjustments
are not the result of the discovery by the Company of any new facts or information relating to the transactions affected, but rather due to the discovery of accounting errors and the reassessment of the proper application of generally accepted
accounting principles.



Our independent auditors concluded that
the circumstances described above reflected deficiencies in the internal control structure of the Company, which, in the aggregate, they considered to be a material weakness under current accounting standards established by the American Institute of
Certified Public Accountants.



The Companys management,
including the Chief Executive Officer and interim Chief Financial Officer, carried out an evaluation of the effectiveness of the Companys disclosure controls and procedures as of December 31, 2003. Based on that evaluation, the Companys
Chief Executive Officer and Interim Chief Financial Officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of December 31, 2003. Consequently, additional review, evaluation and oversight
were required on the part of Company management, during the course of the audits to ensure such internal control deficiencies were adequately compensated for. However, we believe actions described below, that were initiated in both 2003 and 2004,
will rectify the internal control weaknesses.



The deficiencies
in the internal control structure have been discussed among management, our independent auditors and our Audit Committee. We assigned the highest priority to the correction of these deficiencies and have taken actions to correct them, including the
following:



| |  |  | appointing an interim Chief Financial Officer in January 2004 and re-assigning the former CFO to other finance responsibilities;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



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| |  |  | appointing an interim Chief Accounting Officer in January 2004 with substantial public company finance and accounting experience;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | hiring a Chief Information Officer in January 2004;
| | - |  | ---------------------------------------------------



| |  |  | appointing to the Board and the Audit Committee in January 2004 an additional financial expert who has more than 25 years of audit experience with a nationally recognized auditing
firm;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | engaging in mid-2003, a management consulting firm specializing in internal control documentation and testing, to review the Companys financial controls and compliance
policies;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | engaging additional accounting staff beginning in mid-2003 and continuing into January of 2004, which individuals have experience in financial reporting;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | increasing training of our corporate and accounting staff to heighten awareness among corporate and accounting personnel of generally accepted accounting principles;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | hiring a Director of Internal Audit in May 2004, and
| | - |  | ----------------------------------------------------



| |  |  | engaging a nationally recognized law firm to conduct a review of our corporate governance, including our compliance with recent regulations arising out of the Sarbanes-Oxley Act of
2002.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



While we believe that our system of
internal controls and procedures will be adequate to provide reasonable assurance that the objectives of these control systems have been and will be met, we intend to further improve these controls, through the following actions during 2004:



| |  |  | hiring of a permanent Chief Financial Officer;
| | - |  | ----------------------------------------------



| |  |  | establishing policies and procedures, including documentation, designed to enhance coordination and reporting procedures between our management and accounting staff;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | evaluating potential improvements to the Companys accounting and management information systems;
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | increasing the training of our accounting staff to ensure proper documentation of transactions, accounting issues, judgments made in evaluating applicable authoritative guidance,
and completion of necessary review procedures;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | continuing to add additional qualified staff in our accounting and financial reporting functions; and
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | Except as noted above, we have made no significant changes in internal control over financial reporting during the last fiscal quarter that materially affected or are reasonably
likely to materially affect our internal control over financial reporting.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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PART III



Item 10Directors and Executive Officers of the Registrant



Our Board of Directors has eight directors and the following standing committees: (1) Audit, (2) Compensation, (3) Nominating and Corporate Governance,
and (4) Technology. A Finance Committee was formed in January 2004 as a subcommittee of the Audit Committee. Our Corporate Governance Guidelines, director independence criteria, committee charters, Codes of Business Conduct and Ethics, and other
documents setting forth our corporate governance practices can be accessed in the Corporate Governance section of our web site at http://investorrelations.shurgard.com or by writing to Shurgards Investor Relations department
at our address.



|                   |  |       |   |  |         |   |  |              |   |  |                                    |   |  |            |  
|------------------ |  | ----- | - |  | ------- | - |  | ------------ | - |  | ---------------------------------- | - |  | ---------- | -
|Name of Director   |  | Audit |   |  | Finance |   |  | Compensation |   |  | Nominating andCorporate Governance |   |  | Technology |  
|Charles K. Barbo   |  |       |   |  |         |   |  |              |   |  |                                    |   |  |            |  
|Harrell L. Beck    |  |       |   |  |         |   |  |              |   |  |                                    |   |  |            |  
|Anna Karin Andrews |  |       |   |  |         |   |  |              |   |  | X                                  |   |  | X          | *
|Howard P. Behar    |  |       |   |  |         |   |  | X            | * |  | X                                  |   |  |            |  
|Richard P. Fox     |  | X     |   |  | X       |   |  | X            |   |  |                                    |   |  |            |  
|Raymond A. Johnson |  |       |   |  |         |   |  | X            |   |  | X                                  |   |  |            |  
|W. Thomas Porter   |  | X     | * |  | X       | * |  |              |   |  | X                                  | * |  | X          |  
|Wendell J. Smith   |  | X     |   |  | X       |   |  | X            |   |  |                                    |   |  |            |  

---

|* |  | Chair
|- |  | -----



As a result of the adoption of the Sarbanes-Oxley Act of 2002, the Board of Directors is required to determine whether Shurgard has an audit committee financial expert on the Audit Committee. An
audit committee financial expert is defined as a person who has the following attributes: (i) An understanding of generally accepted accounting principles and financial statements; (ii) the ability to assess the general application of
such principles in connection with the accounting for estimates, accruals and reserves; (iii) experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are
generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the registrants financial statements, or experience actively supervising one or more persons engaged in such activities; (iv) an
understanding of internal controls and procedures for financial reporting; and (v) an understanding of audit committee functions. Based on its review of the experience and qualifications of the Audit Committee members, the Board of Directors
determined at its meeting held in April 2004 that the following members of the Audit Committee are qualified as audit committee financial experts: W. Thomas Porter and Richard P. Fox.



The Board of Directors and employees of Shurgard wish to acknowledge the
valuable contributions made to the Board of Directors and to Shurgard by George P. Hutchinson, who died in January 2004 and was a member of our Board from 1997 until his death. During 2003, Mr. Hutchinson served on the Audit, Compensation,
Technology and European Investment Committees.



For Mr. Barbo
and Mr. Becks biographies, see Part I, Item 1 Executive Officers of the Registrant.



Anna Karin Annika Andrews(age 33) was appointed to the Board of Directors in August 2002. Ms. Andrews is Vice President, Business
Development with Northwest Hospital in Seattle, Washington. Prior to her current position, Ms. Andrews served as Chief Information Officer from 1999 to 2001 and served in various other technology and project management capacities with Northwest
Hospital. Ms. Andrews received her B.A. in Economics from Princeton University in 1993.



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Howard P. Behar(age 59) was appointed to the Board of Directors in December 2002 and began his
term in January 2003. Mr. Behar has been a director of Starbucks Coffee Company (NASDAQ: SBUX) since January 1996. Mr. Behar served as President of Starbucks Coffee International, Inc. from June 1994 until his retirement in late 1999. He rejoined
Starbucks in September 2001 as President, North American Operations and retired from that position in late 2002. Mr. Behar also served as the Executive Vice President, Sales and Operations from February 1993 to June 1994, and held various other
senior operations and management positions with that company beginning in 1989. Mr. Behar is a director of Gap, Inc. (NYSE: GPS) (since 2003), where he is a member of the Compensation and Management Development Committee and the Governance,
Nominating and Social Responsibility Committee.



Richard P.
Fox (age 56) was appointed to the Companys Board of Directors in January 2004. Since October 2001, Mr. Fox has been a Partner in RavenFire LLC, which provides consulting services to entrepreneurs and the financial services industry. From
April 2000 to September 2001, he was an officer of CyberSafe, an Information Technology security company, serving as President and Chief Operating Officer. From April 1998 to February 2000, Mr. Fox was Vice President, Chief Financial Officer and a
director at Wall Data, an international enterprise software company. Mr. Fox spent 28 years with Ernst & Young, last serving as managing partner of the Seattle office. He has a BBA from Ohio University and is a CPA in Washington State. He also
serves on the advisory committee of Northwest Venture Associates, a local venture capital fund, on the Board of Trustees of the Seattle Foundation, on the Board of Visitors of the Fuqua School of Business, Duke University, and on the Board of
Directors of Premera Blue Cross, a managed healthcare company; aQuantive (NASDAQ: AQNT), an Internet marketing company; and Flow International (NASDAQ:FLOW), a machine tool manufacturer.



Raymond A. Johnson (age 62) has served as a director of Shurgard since his appointment in September 1997. He retired
from Nordstrom, Inc. (NYSE: JWN) as its Co-Chairman and a member of its Board of Directors in 1996. In June 2002, Mr. Johnson returned to Nordstrom, Inc. to head that companys catalog and Internet division. He is currently a principal in RAJ
LLC, a consulting firm whose primary client is Nordstrom, Inc. Prior to his retirement from Nordstrom, Inc., Mr. Johnson was that companys Co-President, and held a variety of other executive and managerial positions at Nordstrom, Inc. in
Washington and California, dating back to 1969. He attended Western Washington University.



W. Thomas Porter (age 70) has served as a director of Shurgard since his appointment in March 1999. He retired as an Executive Vice President and member of the senior management committee of Seafirst Bank in
March 1999, after 15 years in numerous leadership positions with Rainier Bank, Security Pacific Bank, and Seafirst Bank (a unit of Bank of America). Prior to his career in banking, for 15 years he was with Touche Ross & Co. in New York and
Seattle and was National Partner for Professional Development and Planning. He also was the National Partner in charge of Executive Financial Counseling. He was a Professor of Management Control at the University of Washington for 9 years and for
one year at the North Europe Management Institute in Oslo, Norway. Mr. Porter has a Bachelor of Science degree from Rutgers University, a Master of Business Administration degree from the University of Washington, and a Doctor of Philosophy degree
from Columbia University. Mr. Porter is an officer of Coldstream Holdings, Inc., a registered investment company.



Wendell J. Smith (age 71) has served as a director of Shurgard since March 1994 and as a director of Shurgards wholly-owned subsidiary, SSC
Property Holdings, Inc., since August 1994. He has previously served on the Western and National Advisory Boards for Federal National Mortgage Association and the Advisory Board of the Center for Real Estate Research at the University of California.
He retired in 1991 from the State of California Public Employees Retirement System (CalPERS) after 27 years of employment, the last 21 of which he was in charge of all real estate equities and mortgage acquisitions for CalPERS. During
those 21 years, CalPERS invested over $8 billion in real estate equity and $13 billion in mortgages. In 1991, Mr. Smith established W.J.S. & Associates, which provides advisory and consulting services for pension funds and pension fund advisors.



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Section 16(a) Beneficial Ownership Reporting Compliance



Section 16(a) of the Securities Exchange Act of 1934, as amended (the
Exchange Act), requires Shurgards officers and directors, and persons who own more than 10% of a registered class of Shurgards equity securities, to file reports of ownership and changes in ownership with the SEC. Officers,
directors and greater than 10% beneficial owners are required by SEC regulations to furnish Shurgard with copies of all Section 16(a) forms they file.



Based solely on its review of the copies of such forms received by it or on written representations from certain reporting persons required for those
persons, Shurgard believes that during the 2003 fiscal year all filing requirements applicable to its officers and directors were substantially complied with by such persons, with the exception of one late Form 4 filing for Mr. Grant, which was
filed late due to a clerical error.



Code of Ethics



The Board of Directors has adopted a Code of Ethics that applies to our
Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Controller and persons performing similar functions. The Code of Ethics is included in our Code of Business Conduct posted on our web site,
http://investorrelations.shurgard.com. We intend to satisfy the disclosure requirements under Item 10 of Form 8-K regarding any amendment to or waiver of the Code of Ethics with respect to the covered persons by posting such information on
our web site.



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Item 11Executive Compensation



The following table sets forth the compensation for services rendered during the fiscal years ended December 31, 2003, 2002,
and 2001, by Mr. Barbo, our Chief Executive Officer, and for the four other most highly compensated executive officers of Shurgard at the end of 2003.



Summary Compensation Table



|                                                                                           |  |              |  |                       |  |                               |  |                               |     |  |                                                  |  |                            |     
|------------------------------------------------------------------------------------------ |  | ------------ |  | --------------------- |  | ----------------------------- |  | ----------------------------- | --- |  | ------------------------------------------------ |  | -------------------------- | ----
|                                                                                           |  |              |  | ANNUALCOMPENSATION    |  | LONG-TERM COMPENSATION AWARDS |  |                               |    
|NAME AND PRINCIPAL POSITION                                                                |  | YEAR         |  | SALARY($)             |  | BONUS($)(1)                   |  | RESTRICTEDSTOCK AWARDS ($)(2) |     |  | SHARES UNDERLYING OPTIONS/STOCKOPTION AWARDS (#) |  | ALL OTHER COMPENSATION ($) |     
|Charles K. Barbo Chairman of the Board and Chief Executive Officer                         |  | 200320022001 |  | 350,000300,000300,000 |  | 136,140-0-55,500              |  | 382,279365,760389,418         | (3) |  | 76,091104,47789,376                              |  | 4,5904,0003,400            | (8) 
|                                                                                           |  |              |  |                       |  |                              
|David K. Grant President, Chief Operating Officer, and Interim Chief Financial Officer     |  | 200320022001 |  | 325,000300,000300,000 |  | 98,25075,00090,000            |  | 2,467,086-0--0-               | (4) |  | 77,228-0--0-                                     |  | 38,19622,17120,141         | (9) 
|                                                                                           |  |              |  |                       |  |                              
|Harrell L. Beck Director, Executive Vice President, Chief Investment Officer and Treasurer |  | 200320022001 |  | 220,000200,000190,000 |  | 86,30038,500104,825           |  | 143,594135,871121,708         | (5) |  | 28,58638,80635,350                               |  | 53,44425,34522,545         | (10)
|                                                                                           |  |              |  |                       |  |                              
|Steven K. Tyler Senior Vice President, Retail Services                                     |  | 200320022001 |  | 235,000200,000190,000 |  | 93,30034,85058,854            |  | 120,132120,19697,354          | (6) |  | 23,91034,32822,344                               |  | 12,46512,32811,851         | (11)
|                                                                                           |  |              |  |                       |  |                              
|Christine M. McKay Senior Vice President, Secretary and General Counsel                    |  | 200320022001 |  | 175,000165,000150,000 |  | 62,59534,65046,375            |  | 112,80083,61073,031           | (7) |  | 20,00023,88119,861                               |  | 12,75010,54410,279         | (12)

---

|(1) |  | Represents bonus awards pursuant to the terms of incentive compensation, discretionary bonus and profit-sharing arrangements.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------



|(2) |  | The listed dollar values of restricted shares shown in the table for the 2003 grants are based on the per share closing price of the Common Stock on the date of grant (December 17,
2003) of $37.60, except with respect to Mr. Grant, who also received a grant of 2,090 shares on July 24, 2003, on which date the per share closing price of the Common Stock was $33.30. The listed dollar values of restricted shares shown in the table
for the 2002 grants are based on the per share closing price of the Common Stock on the date of grant (December 11, 2002) of $31.35. The listed dollar values of restricted shares shown in the table for the 2001 grants are based on the per share
closing price of the Common Stock on the date of grant (December 12, 2001) of $30.75. For more information on the restricted shares, see Long-Term Incentives below.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) |  | As of December 31, 2003, Mr. Barbo held 50,498 restricted shares with an aggregate 2003 fiscal year end value of $1,901,250 based on the per share closing price of the Common Stock
on that date of $37.65.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) |  | As of December 31, 2003, Mr. Grant held 65,853 restricted shares with an aggregate 2003 fiscal year end value of $2,479,365 based on the per share closing price of the Common Stock
on that date of $37.65.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) |  | As of December 31, 2003, Mr. Beck held 17,111 restricted shares with an aggregate 2003 fiscal year end value of $644,229 based on the per share closing price of the Common Stock on
that date of $37.65.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(6) |  | As of December 31, 2003, Mr. Tyler held 14,195 restricted shares with an aggregate 2003 fiscal year end value of $534,442 based on the per share closing price of the Common Stock on
that date of $37.65.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(7) |  | As of December 31, 2003, Ms. McKay held 11,042 restricted shares with an aggregate 2003 fiscal year end value of $415,731 based on the per share closing price of the Common Stock on
that date of $37.65.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(8) |  | Represents $4,590 contributed by Shurgard under the ESOP.
|--- |  | ---------------------------------------------------------



|(9) |  | Represents $4,590 contributed by Shurgard under the ESOP, $3,583 of employer-matching contributions made by Shurgard under its Employee Retirement Savings 401(k) Plan (the
401(k) Plan), and a payment of $30,023 relating to interests in cash distributions from certain partnerships.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(10) |  | Represents $4,590 contributed by Shurgard under the ESOP, $3,580 of employer-matching contributions made by Shurgard under the 401(k) Plan, $7,354 of payments toward annual
insurance premiums for an executive disability plan, and a payment of $37,920 relating to interests in cash distributions from certain partnerships.
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(11) |  | Represents $4,590 contributed by Shurgard under the ESOP, $3,006 of employer-matching contributions made by Shurgard under the 401(k) Plan, and $4,869 of payments toward annual
insurance premiums for an executive disability plan.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(12) |  | Represents $4,590 contributed by Shurgard under the ESOP, $3,998 of employer-matching contributions made by Shurgard under the 401(k) Plan, and $4,162 of payments toward annual
insurance premiums for an executive disability plan.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Option
Grants



The following table sets forth certain information
regarding options to purchase shares of Common Stock granted to Shurgards executive officers for whom compensation information is reported in this Statement during the fiscal year ended December 31, 2003.



OPTION GRANTS



OPTION GRANTS IN LAST FISCAL YEAR



|                   |  |                                                |  |                                                                 |    |  |                             |  |                 |  |                                
|------------------ |  | ---------------------------------------------- |  | --------------------------------------------------------------- | -- |  | --------------------------- |  | --------------- |  | -------------------------------
|NAME               |  | NUMBER OF SHARES UNDERLYING OPTIONS GRANTED(1) |  | PERCENT OF TOTAL OPTIONS GRANTED TO EMPLOYEES IN FISCAL YEAR(2) |    |  | EXERCISE PRICE ($/SHARE)(3) |  | EXPIRATION DATE |  | GRANT DATE PRESENT VALUE ($)(4)
|Charles K. Barbo   |  | 76,091                                         |  | 17                                                              | %  |  | 37.60                       |  | 12/17/13        |  | 254,745                        
|                   |  |                                                |  |                                                                 |   
|David K. Grant     |  | 22,65454,574                                   |  | 5.112.2                                                         | %% |  | 33.3037.60                  |  | 7/24/1312/17/13 |  | 59,154182,708                  
|                   |  |                                                |  |                                                                 |   
|Harrell L. Beck    |  | 28,586                                         |  | 6.4                                                             | %  |  | 37.60                       |  | 12/17/13        |  | 95,703                         
|                   |  |                                                |  |                                                                 |   
|Steven K. Tyler    |  | 23,910                                         |  | 5.4                                                             | %  |  | 37.60                       |  | 12/17/13        |  | 80,048                         
|                   |  |                                                |  |                                                                 |   
|Christine M. McKay |  | 20,000                                         |  | 4.5                                                             | %  |  | 37.60                       |  | 12/17/13        |  | 66,958                         

---

|(1) |  | Unless otherwise noted, the options vest in annual installments of 33.33% commencing on the first anniversary of the date of grant. In the event of certain business combinations,
the vesting of outstanding options will be accelerated. All grants were made under the 2000 Plan, as amended. (See Long-Term Incentives below.)
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) |  | Based on options to purchase a total of 446,350 shares of Common Stock granted to employees during fiscal year 2003.
|--- |  | --------------------------------------------------------------------------------------------------------------------



|(3) |  | Exercise price is equal to the fair market value of the Common Stock on the date of grant.
|--- |  | ------------------------------------------------------------------------------------------



|(4) |  | The fair value of options granted during 2003 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used:
dividend yield of 7.97%; expected volatility of 23%; risk free interest rate of 2.94%; and expected life of 5.6. The weighted-average fair value of options at date of grant was $3.12 for options granted in 2003. Shurgard does not necessarily
advocate or agree that the Black-Scholes method can properly determine the value of a stock option.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Option Exercises in Last Fiscal Year and Year-End Option Values



The following table sets forth certain information regarding options
exercised during the last fiscal year and the value of unexercised options held as of December 31, 2003 for each of Shurgards executive officers for whom compensation information is reported in this proxy statement.



AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR

AND YEAR-END OPTION VALUES



|                   |  |                           |  |                      |         |               |                                                                         |             |                                                                    |               |  |   |           |  |   |        
|------------------ |  | ------------------------- |  | -------------------- | ------- | ------------- | ----------------------------------------------------------------------- | ----------- | ------------------------------------------------------------------ | ------------- |  | - | --------- |  | - | -------
|                   |  | SHARESACQUIREDON EXERCISE |  | VALUEREALIZED ($)(1) |         |               | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS FISCAL YEAR-END
(#) |             | VALUE OF UNEXERCISEDIN-THE-MONEY OPTIONS AT FISCAL YEAR-END ($)(2)
|Name               |  |                           |  | Exercisable          |         | Unexercisable |                                                                         | Exercisable |                                                                    | Unexercisable
|Charles K. Barbo   |  | 40,000                    |  | $                    | 418,200 |               |                                                                         | 704,918     |                                                                    | 175,534       |  | $ | 8,382,719 |  | $ | 713,227
|David K. Grant     |  | 13,740                    |  | $                    | 209,579 | (1)           |                                                                         | 0           |                                                                    | 77,228        |  |   | 0         |  |   | 101,274
|Harrell L. Beck    |  | 0                         |  |                      | N/A     |               |                                                                         | 323,996     |                                                                    | 58,713        |  |   | 4,157,394 |  |   | 223,875
|Steven K. Tyler    |  | 93,112                    |  | $                    | 883,329 |               |                                                                         | 41,339      |                                                                    | 54,243        |  |   | 422,501   |  |   | 213,026
|Christine M. McKay |  | 0                         |  |                      | N/A     |               |                                                                         | 81,524      |                                                                    | 42,540        |  |   | 1,054,180 |  |   | 161,431

---

|(1) |  | The value realized is the difference between the fair market value (closing price of the Common Stock) of the underlying Common Stock at the time of exercise and the exercise price,
except that for Mr. Grant, the amount also includes dividend equivalents of $14.54 per share paid to Mr. Grant on exercise of the option to purchase 2,740 shares.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) |  | This amount is the aggregate number of outstanding options with exercise prices below $37.65 (per share closing price of Common Stock on December 31, 2003), multiplied by the
difference between $37.65 and the exercise price of those options. There is no guarantee that, if and when these options are exercised, they will have this value.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Compensation of Directors



The Compensation Committee retains a nationally recognized independent compensation consultant each year to assess the level of compensation of the
non-employee directors as compared to their peers on other REIT and similarly sized company boards. In addition, the consultant reports to the Compensation Committee: trends in non-employee director compensation among public companies of similar
size in light of general industry practices, Sarbanes-Oxley, compensation philosophy, and best practices. Recommendations were made to the Compensation Committee concerning the amount of cash compensation, the use of stock options and restricted
stock grants, and establishment of stock ownership guidelines for non-employee directors. See Report of Compensation Committee on Executive Compensation below.



Fees.    Directors who are employees of Shurgard are not paid any fees for their services as
directors. Non-employee directors were paid an annual retainer in 2003 of $20,000 for serving on the Board of Directors, $1,500 annually for each committee they served on, $1,200 for each committee meeting attended, and $3,000 for each chair
appointment, with the exception of the chair of the Audit Committee who received $5,000. In addition, non-employee directors who served on the European Investment Committee received an annual retainer of $20,000 per year for their service on that
committee. Upon the recommendation of the outside compensation consultant following a review of market data and other considerations, in January 2004, the Compensation Committee approved an increase in fees for the Chair of the Audit Committee to
$10,000 and for the other committee chairs to $4,000. Shurgard reimburses each non-employee director for travel expenses incurred in connection with activities on behalf of Shurgard.



Options and Restricted Stock.    On January 30, 2003, the Board granted options for 10,000 shares
to Mr. Behar, options for 12,000 shares to Mr. Hutchinson, and options for 6,000 shares each to Messrs. Johnson, Porter and Smith, and Ms. Andrews, exercisable at fair market value on the grant date ($29.15 per share), under



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the 2000 Long-Term Incentive Plan (2000 Plan). These options vest on the day of the Annual Meeting. On January 30, 2003, the Board granted 1,400
shares of restricted stock to Mr. Hutchinson and 700 shares of restricted stock to each of the other non-employee directors, with a market value of $29.15 based on the closing price of the date of grant. The restrictions lapse on the day of the
Annual Meeting. On January 29, 2004, the Board granted options for 10,000 shares to Mr. Fox and options for 6,000 shares each to Messrs. Behar, Johnson, Porter and Smith, and Ms. Andrews exercisable at fair market value on the date of grant ($37.50
per share) under the 2000 Plan. These options vest on the day of the 2005 annual meeting of shareholders. On January 29, 2004, the Board granted under the 2000 Plan to each of the directors 700 shares of restricted stock with a market value of
$37.50 per share based on the closing price of the date of grant. The restrictions lapse on the day of the 2005 annual meeting of shareholders.



Stock Ownership Guidelines.    At its January 2004 meeting, the Compensation Committee adopted stock ownership guidelines for
directors. These guidelines require directors to accumulate shares of Shurgard stock equal in value to three times their annual cash retainer over a period of three years.



1993 Plan.    The 1993 Plan provides that, on the occurrence of certain transactions, including
certain mergers and other business combinations involving Shurgard, outstanding options will become fully exercisable. Such options, if not exercised, will terminate on consummation of such transactions. In the alternative, at the discretion of
Shurgard and the corporation(s) participating in such transactions, such options may be assumed by the acquiring or surviving corporation.



1995 Plan.    In the event of certain mergers or consolidations involving Shurgard, a sale, lease, exchange, or other transfer
of all or substantially all of Shurgards assets, or a liquidation or dissolution of Shurgard, outstanding options, stock appreciation rights and restricted stock under the 1995 Plan will become fully exercisable, subject to certain exceptions.
In addition, the Compensation Committee may take such further action as it deems necessary or advisable, and fair to participants, with respect to outstanding awards under the 1995 Plan.



2000 Plan.    In the event of certain mergers or consolidations or a sale of substantially all
the assets or a liquidation of Shurgard, each option, stock appreciation right, or stock award that is at the time outstanding will automatically accelerate so that each such award shall, immediately prior to such corporate transaction, become 100%
vested, except that such award will not so accelerate if, and to the extent, (a) such award is, in connection with the corporate transaction, either to be assumed by the successor corporation or parent thereof or to be replaced with a comparable
award for the purchase of shares of the capital stock of the successor corporation or its parent corporation, or (b) such award is to be replaced with a cash incentive program of the successor corporation that preserves the spread existing at the
time of the corporate transaction and provides for subsequent payout in accordance with the same vesting schedule applicable to such award. Any such awards that are assumed or replaced in the corporate transaction and do not otherwise accelerate at
that time shall be accelerated in the event the holders employment or services should subsequently terminate within two years following such corporate transaction, unless such employment or services are terminated by Shurgard for cause or by
the holder voluntarily without good reason.



Senior
Management Employment Agreements.    Shurgard has entered into an agreement with each of its executive officers that provides for payments in the event that the employees employment is terminated by Shurgard other than
for cause, or by the employee for good reason, within two years after certain business combination transactions, including, but not limited to, changes of control. The agreements provide for the continuation of benefits and continued employment or
pay for two and one-half years of annual salary and average bonus, and, in the event of certain taxation of payments made under these agreements, additional payments necessary for the officers to receive the benefits contemplated by the agreements.



Service Agreement.    For the first
half of 2003, until his assumption of the office of President of Shurgard, the terms of employment between Mr. Grant and Shurgard Europe were covered by a Service Agreement in lieu



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of the standard business combination agreement. Mr. Grants salary and benefits were paid by Shurgard and reimbursed by Shurgard Europe. Under the
Service Agreement, Mr. Grant was entitled to certain payments including a maximum of two and one-half years of annual salary and average bonus as well as benefits from Shurgard in the event that Shurgard had not offered him a suitable position in
the United States. Mr. Grant and Shurgard entered into a Senior Management Employment Agreement on the terms described above in December 2003.



Vision 2003 Bonus Plan.    In 1999, the Board approved a bonus plan known as Vision 2003. Under the terms of the Plan,
employees of Shurgard would have shared a potential one time bonus payment of $50 million. The bonus was an all or nothing bonus, earned on achievement of the equivalent of $5.00 funds from operations (FFO) per share annually. The $5.00
FFO threshold was measured by annualizing any single quarter FFO; e.g. a fiscal quarter FFO of $1.25 was equivalent to $5.00 FFO annually and would have resulted in payment of the bonus. This goal had to have been achieved by December 31, 2003, and
since it was not, no such bonus was paid.



Compensation Committee Interlocks
and Insider Participation



Shurgards Compensation
Committee is now, and was for all of 2003, composed entirely of the outside directors named as signatories to the Compensation Committee Report above (and Mr. Hutchinson until his death). Compensation Committee members do not have any professional,
familial or financial relationship with the CEO or other executive officers of Shurgard which would require separate disclosure in our SEC filings, other than their directorship.



REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION



Shurgards compensation system is structured to attract and retain
executives who are entrepreneurial and agree to be compensated, in significant part, by creating value for shareholders. The Compensation Committee, which is composed of non-employee directors, all of whom are independent under NYSE listing
standards), reviews and approves all compensation actions for our Chief Executive Officer and approximately the top 15 executives of Shurgard. The Committee also reviews and recommends the compensation arrangements for the Board of Directors,
including compensation for committee membership and attendance at meetings. The Committee evaluates and establishes Shurgards compensation strategy annually, including the apportionment of pay between fixed compensation elements and incentive
compensation, and the design of incentive compensation programs. Pursuant to the Committees sole discretion to retain and terminate compensation consultants, the Committee, from time to time, engages a consultant to conduct comprehensive
analyses of Shurgards programs for executives and non-employee directors, including assessments based on competitive practices. This information was provided in December 2002, updated in December 2003, and most recently, a survey of
competitive compensation practices for non-employee directors was presented to the Committee in January 2004. Mr. Fox joined the Committee in January 2004 and participated in the review and approval of discretionary bonus compensation for executive
officers earned in 2003.



The objectives of Shurgards
executive compensation program are to:



| |  |  | Align the financial interests of the Companys executives with those of its shareholders, both in the short and long term;
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | Provide incentives for achieving and exceeding the Companys short-term and long-term goals; and
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | Retain and attract highly competent executives by providing total compensation that is competitive with compensation at other well-managed companies in the self storage and REIT
industries.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Committee compares total
compensation levels with a 15-company REIT peer group, including companies with which Shurgard competes for attraction and retention of executives. In addition the Committee looks at the compensation practices for a group of similarly sized non-REIT
companies. Shurgards



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compensation policies are designed to deliver fixed compensation elements, including salary, incentive compensation, benefits, and perquisites, at or around
the fiftieth (50th) percentile of the peer group. The Committee also uses enterprise-wide performance measures, such
as net operating income or funds from operations (FFO), a common metric used in comparing REIT performance, in reviewing and establishing compensation levels for the coming year. For a detailed definition of FFO please see Item
6Funds From Operations.



There are three major components
of Shurgards compensation program: salary, bonus, and long-term incentives:



Salary.    The Committee reviews and sets individual salaries for senior executives annually. In determining individual salaries, the Committee considers the scope of job responsibilities,
individual contributions, business performance, labor market conditions, the Companys salary budget guidelines, and current compensation as compared to market practice.



Bonus.    Shurgards bonus program is based on both Company and individual performance
goals. These goals and objectives may include financial metrics such as FFO growth, same store net operating income (NOI) growth, special goals for achievement of new initiatives, performance as compared to peer companies, or other
measures of financial or strategic achievement at the individual, department or total Company level. At the beginning of each year, a target annual incentive amount is set for each participating executive as part of an annual bonus program approved
by the Board, which sets specific financial performance measures for the Company as a whole and separately for various departments. At the end of the year, actual results are compared with each performance goal and incentive awards are calculated.
By the terms of the bonus plan, extraordinary events such as major restructuring and accounting changes are excluded. If maximum performance goals are achieved or exceeded the maximum bonus is approximately 200% of the target bonus.



In fiscal 2003, the objective financial performance measure selected by the
Committee for the Company performance component of the target bonus was NOI growth. For senior executives, these measures determined 50% of each executives annual incentive, with the exception of the CEO, for whom this component was 60%.
Individual performance goals, which determined 50% of each executives incentive, were based upon the executives performance in fulfilling job responsibilities, achieving specific individual goals such as adhering to their
departments budgets, and contributing to the Companys success. Actual incentive payments could vary from zero to 200% of the target incentive amount based on individual, department, and total Company performance. At the beginning of
2004, results were evaluated for each performance goal set for fiscal 2003. Bonus payments for executive officers for fiscal 2003 ranged from 86.3% to 100% of target amounts with an average of 91%.



Long-Term Incentives.    For the past few years,
Shurgard has used two long-term incentive programs for its executives, a stock option program and a restricted stock award program. The value intended to be delivered through each program is approximately 50% of total competitive long-term incentive
value. In fiscal 2003, Shurgard awarded stock option grants and restricted stock to approximately 18 executives and key employees under the 2000 Plan. Approximately another 70 middle management employees received stock option grants in
December 2003. Grants and awards are typically made in December of each year except for grants made in connection with new hires and promotions. For 2004, the Compensation Committee has voted to adopt performance standards for restricted stock
awards to the five most highly compensated executives. Under this program, a pool of restricted shares will be authorized by the Company each year, with the number of shares adjusted by the Committee based on an overall assessment of Company
performance and such other factors as the Committee deems relevant. These factors may include performance against financial goals of the annual business plan, quality of plan execution, the need to retain executives, or other factors. After the
total restricted share pool is authorized by the Committee, awards to individuals are based on leadership skills, sustained performance, and business impact. The total value of the restricted share pool, before adjustments by the Committee, is
intended to represent 50% of competitive long-term incentive value delivered to the participating executives.



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For the annual stock option program, the Committee sets option guidelines based on current competitive
practice and scope of responsibility of each level of eligible participants. In determining the number of options awarded to each executive, the Committee considers the guideline for the executives position, achievement of individual and
company performance targets, sustained contribution to Shurgard, and future leadership potential. The exercise price of stock options is the fair market value on the grant date and options may not be repriced. Options have a 10-year term and become
exercisable over the first four years following the grant date.



Additional Awards and Programs.    The Committee may grant additional short-term or long-term awards to recognize increased responsibilities or special contributions, to attract new hires to the Company, to retain
executives, or to recognize other special circumstances. Shurgard also offers its executives and other employees the opportunity to participate in a 401(k) Plan and Employee Stock Ownership Plan (ESOP) known as the Shurgard Employee
Retirement Savings Plan and Trust, through which Shurgard may make discretionary matching contributions. The salary deferral component of this plan provides for participants to direct their contributions to one or more of eight mutual fund
investment options administered by Fidelity Investments. In addition, Shurgard has an Employee Stock Purchase Plan under which employees may purchase Shurgard common stock through payroll deduction at a discounted share price of not less than 85% of
the fair market value on any offering date. Shurgard provides its executive officers and key managers with life and medical insurance, perquisites, and other benefits that are reasonable and competitive with market practices.



Executive Officer Stock Ownership.    Commencing
in 2004, seven senior executives including the CEO are required to achieve an ownership stake in the Company of at least three times their annual salary in the case of Messrs. Barbo and Grant, and one times their annual salary in the case of the
five other individuals. Until the ownership level is achieved, executives must retain at least half of the after-tax value of each equity award (vesting of restricted stock or exercise of options). There are additional limitations on the amount of
shares that may be sold by executive officers of the Company in a twelve-month period. Executives may count toward these requirements (i) their personal stock holdings, (ii) non-performance based restricted shares, and (iii) shares which are fully
vested in Shurgards ESOP. Shares underlying unexercised stock options are not counted in calculating ownership.



Compensation and Evaluation of the CEO.    In late 2002, the Committee set Mr. Barbos annual salary for 2003 at $350,000,
representing an increase of $50,000 in annual salary over 2002, after considering Mr. Barbos years of experience in and knowledge of the self storage industry, his leadership in infusing Shurgard with strong corporate values and a common
mission, and the continued improvement of operating results from Shurgards properties. Mr. Barbos bonus earned in fiscal 2003 was $136,140, 90% of his target bonus. This bonus was awarded by the Committee based on its assessment of Mr.
Barbos performance using a CEO report card evaluation process. The evaluation process consisted of the following steps: (i) preparation by Mr. Barbo of a written self evaluation, (ii) information gathered on Shurgards
financial performance, industry performance, results of any surveys conducted, and published commentary with respect to Shurgards performance, (iii) a meeting of the Committee to independently review Mr. Barbos self-evaluation and for
each member to conduct its own evaluation, and (iv) presentation of the evaluation to Mr. Barbo with a discussion and written feedback. Mr. Barbos performance goals and objectives for 2003 included achievement of strategic planning
initiatives, financial performance goals as discussed above under Bonus, and management of direct reports and communication of vision and business strategy to employees.



Special Award to Mr. Grant.    In December 2003, Mr. Grant received a special award to compensate
him for his outstanding performance as President of Shurgard Europe and to replace equity and long-term incentive compensation he would have received had he remained President of Shurgard Europe. When Mr. Grant assumed the office of President of
Shurgard, he was required to surrender any stock options he had in Shurgard Europe and he sold his shares in E-Parco, an entity in which Shurgard Europe employees participate, to the remaining shareholders, at a value determined based on the prices
paid to third party shareholders for their investments in Shurgard Europe. Mr. Grant received 56,472 restricted shares, 38,889 of which will no longer be subject to restrictions in June 2004. The restrictions on the remaining 17,583 shares lapse in
equal 25% increments over four years commencing December 2003.



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Policy with Respect to Section 162(m) Limitations.    Section 162(m) of the
Internal Revenue Code limits the tax deduction available to public companies for compensation paid to the CEO and the four other most highly compensated executive officers to $1 million in any taxable year, unless certain performance, disclosure,
and shareholder approval requirements are met. The compensation disclosed in this Proxy Statement does not exceed the $1 million limit with the exception of the special award to Mr. Grant. Executive compensation for 2004 is expected to qualify for
deductibility. The proposed 2004 Long-Term Incentive Plan is designed to permit the grant of options, performance awards and performance-based restricted stock and restricted stock units that qualify for deductibility under Section 162(m). To the
extent there is no adverse effect on this performance-related approach or on Shurgards ability to provide competitive compensation, it is the Committees policy to minimize executive compensation expense that is non-deductible by Shurgard
for tax purposes.



Respectfully submitted,



Compensation Committee



Howard P. Behar, Chair

Richard P. Fox

Raymond A. Johnson

W.J. Smith



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##### Table of Contents

STOCK PRICE PERFORMANCE



Set forth below are line graphs comparing the cumulative total return on the Common Stock during the period beginning on
December 31, 1998, and ending on December 31, 2003, the last day of Shurgards 2003 fiscal year, with the cumulative total return on the Standard & Poors 500 Index and the Equity REIT Index prepared by NAREIT. The comparison assumes
$100 was invested on January 1, 1998 and assumes reinvestment of dividends. The stock price performance shown on the graphs is not necessarily indicative of future price performance.



LOGO



160



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##### Table of Contents

Item 12Security Ownership of Certain Beneficial Owners and Management



The following table sets forth, as of April 30, 2004 certain information
with respect to the beneficial ownership of Common Stock by each director, our five most highly compensated executive officers, including our Chief Executive Officer, and our directors and executive officers as a group. It also sets forth, as of the
dates noted, certain information with respect to shareholders who beneficially own more than 5% of the shares of our Common Stock. Based on such information furnished by such owners, and except as otherwise noted, Shurgard believes that the
beneficial owners of the shares of Common Stock listed below have sole voting and investment power with respect to such Common Stock.



|                                                                 |  |                      |  |                                           |      |  |                 |  
|---------------------------------------------------------------- |  | -------------------- |  | ----------------------------------------- | ---- |  | --------------- | -
|NAME AND ADDRESS OF BENEFICIAL OWNER                             |  | TITLE OF CLASS       |  | AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP |      |  | PERCENT OFCLASS |  
|Charles K. Barbo 1155 Valley Street, Suite 400 Seattle, WA 98109 |  | Class A Common Stock |  | 1,921,837                                 | (1)  |  | 4               | %
|                                                                 |  |                      | 
|Morgan Stanley 1585 Broadway New York, NY 10036                  |  | Class A Common Stock |  | 3,208,659                                 | (2)  |  | 7               | %
|                                                                 |  |                      | 
|David K. Grant                                                   |  | Class A Common Stock |  | 161,686                                   | (3)  |  | *               |  
|                                                                 |  |                      | 
|Harrell L. Beck                                                  |  | Class A Common Stock |  | 370,878                                   | (4)  |  | *               |  
|                                                                 |  |                      | 
|Steven K. Tyler                                                  |  | Class A Common Stock |  | 99,132                                    | (5)  |  | *               |  
|                                                                 |  |                      | 
|Christine M. McKay                                               |  | Class A Common Stock |  | 94,556                                    | (6)  |  | *               |  
|                                                                 |  |                      | 
|Anna K. Andrews                                                  |  | Class A Common Stock |  | 21,567                                    | (7)  |  | *               |  
|                                                                 |  |                      | 
|Howard P. Behar                                                  |  | Class A Common Stock |  | 12,800                                    | (8)  |  | *               |  
|                                                                 |  |                      | 
|Richard P. Fox                                                   |  | Class A Common Stock |  | 700                                       | (9)  |  | *               |  
|                                                                 |  |                      | 
|Raymond A. Johnson                                               |  | Class A Common Stock |  | 42,400                                    | (10) |  | *               |  
|                                                                 |  |                      | 
|W. Thomas Porter                                                 |  | Class A Common Stock |  | 42,536                                    | (11) |  | *               |  
|                                                                 |  |                      | 
|Wendell J. Smith                                                 |  | Class A Common Stock |  | 48,677                                    | (12) |  | *               |  
|                                                                 |  |                      | 
|All directors and executive officers as a group (11 persons)     |  | Class A Common Stock |  | 2,816,769                                 | (13) |  | 6               | %

---

|* |  | Less than 1%.
|- |  | -------------



|(1) |  | Includes 704,918 shares issuable on exercise of stock options currently exercisable or exercisable within 60 days, 9,870 shares held for Mr. Barbos individual account under
the Employee Stock Ownership portion of Shurgards Employee Retirement Savings Plan and Trust (the ESOP), 2,000 shares held by trusts of which Mr. Barbo is a trustee, and 410 shares owned by a corporation controlled by Mr. Barbo.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) |  | All information with respect to Morgan Stanley is based solely on Schedule 13G dated February 15, 2004, filed by Morgan Stanley. Morgan Stanley has shared voting power and shared
dispositive power over 2,416,809 shares (or approximately 5.27% of the total outstanding shares). Of the 3,208,659 shares, 2,263,650 (4.93% of the total outstanding shares) are owned by accounts managed on a discretionary basis by Morgan Stanley
Investment Management Inc., a wholly owned subsidiary of Morgan Stanley that has shared voting power and shared dispositive power.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) |  | Includes no shares issuable on exercise of stock options currently exercisable or exercisable within 60 days, 200 shares held directly by Mr. Grants child, and 7,869 shares
held for Mr. Grants individual account under the ESOP.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(4) |  | Includes 323,996 shares issuable on exercise of stock options currently exercisable or exercisable within 60 days and 7,251 shares held for Mr. Becks individual account under
the ESOP.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) |  | Includes 36,339 shares issuable on exercise of stock options currently exercisable or exercisable within 60 days and 1,393 shares held for Mr. Tylers individual account under
the ESOP.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(6) |  | Includes 81,524 shares issuable on exercise of stock options currently exercisable or exercisable within 60 days and 888 shares held for Ms. McKays individual account under
the ESOP.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(7) |  | Includes 17,000 shares issuable on exercise of stock options currently exercisable or exercisable within 60 days.
|--- |  | -----------------------------------------------------------------------------------------------------------------



|(8) |  | Includes 10,000 shares issuable on exercise of stock options currently exercisable or exercisable within 60 days.
|--- |  | -----------------------------------------------------------------------------------------------------------------



|(9) |  | Includes no shares issuable on exercise of stock options currently exercisable or exercisable within 60 days.
|--- |  | -------------------------------------------------------------------------------------------------------------



|(10) |  | Includes 38,500 shares issuable on exercise of stock options currently exercisable or exercisable within 60 days.
|---- |  | -----------------------------------------------------------------------------------------------------------------



|(11) |  | Includes 32,000 shares issuable on exercise of stock options currently exercisable or exercisable within 60 days.
|---- |  | -----------------------------------------------------------------------------------------------------------------



|(12) |  | Includes 500 shares held in a family trust, and 40,760 shares in that trust which are issuable on exercise of stock options currently exercisable or exercisable within 60 days.
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(13) |  | Includes an aggregate of 1,286,037 shares issuable on exercise of stock options currently exercisable or exercisable within 60 days.
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------



EQUITY COMPENSATION PLAN INFORMATION



The following table provides information, as of December 31, 2003, regarding
outstanding options and shares available for issuance under the Companys existing equity compensation plans:



|                                                           |  |                                                                                            |     |  |                                                                            |       |     |                                                                                                                                           |         |    
|---------------------------------------------------------- |  | ------------------------------------------------------------------------------------------ | --- |  | -------------------------------------------------------------------------- | ----- | --- | ----------------------------------------------------------------------------------------------------------------------------------------- | ------- | ---
|PLAN CATEGORY                                              |  | NUMBER OFSECURITIES TO BEISSUED UPON EXERCISEOF OUTSTANDINGOPTIONS, WARRANTSAND RIGHTS (A) |     |  | WEIGHTED-AVERAGE EXERCISEPRICE OFOUTSTANDINGOPTIONS,WARRANTS
ANDRIGHTS (B) |       |     | NUMBER OF SECURITIESREMAINING AVAILABLE FORFUTURE ISSUANCE UNDEREQUITY
COMPENSATIONPLANS (EXCLUDINGSECURITIES REFLECTED INCOLUMN (A)) (C) |        
|Equity compensation plans approved by security holders     |  | 2,871,794                                                                                  | (1) |  | $                                                                          | 28.25 |     |                                                                                                                                           | 792,238 | (2)
|Equity compensation plans not approved by security holders |  | 0                                                                                          | (3) |  |                                                                            | 0     | (3) |                                                                                                                                           | 0       |    
|Total                                                      |  | 2,871,794                                                                                  |     |  | $                                                                          | 28.25 |     |                                                                                                                                           | 792,238 |    

---

|(1) |  | Represents options outstanding under the 1993 Stock Option Plan, the 1995 Long-Term Incentive Plan, the 2000 Long-Term Incentive Plan, and the Amended and Restated Stock Incentive
Plan for Nonemployee Directors.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) |  | Represents shares remaining available for future issuance of the 2000 Long-Term Incentive Plan (537,110), and the 1996 Employee Stock Purchase Plan (255,128). If the 2004 Long-Term
Incentive Plan is not approved by shareholders at the Annual Meeting, Shurgard will continue to make awards under the 2000 Long-Term Incentive Plan. The 2000 Long-Term Incentive Plan provides for the grant of restricted stock, performance awards,
other stock-based awards (such as restricted stock units) and dividend equivalent rights, in addition to stock options.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(3) |  | Does not include options for the purchase of 15,500 shares of the Common Stock outstanding as of December 31, 2003 that were assumed in connection with Shurgards acquisition
of Shurgard Incorporated. The assumed options have a weighted-average exercise price of $21.55 per share. In the event that any assumed option is not exercised, no further option to purchase shares of Common Stock will be issued in place of such
unexercised option.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Item 13Certain Relationships and
Related Transactions



Purchase of Institutional Fund Partnership
Interests



During the second quarter of 2003, we
acquired the general partner interests in Shurgard Partners LP II (Shurgard Partners II), the general partner of Shurgard Institutional Fund LP II (Institutional II), a consolidated entity, for $1.6 million. The acquired Shurgard Partners II general
partner interests were owned by an unaffiliated third party and an officer of the Company. The acquisition was, in part, in response to the Board of Directors stated objective of eliminating existing historical arrangements involving related
parties. The purchase price payable for the acquired Shurgard Partners II general partner interests was governed by the terms of the partnership agreements for Shurgard Partners II and Institutional II, and was based upon the fair market value of
the property owned by Institutional II as determined by a third party appraisal. This transaction increased our ownership of Institutional II from 99% to 100%. Of the $1.6 million total purchase price, $784,000 was paid to an officer of the Company
to acquire his partnership interest in Shurgard Partners II. Subsequent to the end of the third quarter 2003, we identified an error in the calculation of the purchase price paid for the Shurgard Partners II general partner interests. This error
resulted in an overpayment to the general partners of Shurgard Partners II of approximately $1.4 million. The partners reimbursed us for this overpayment. Of this approximately $1.4 million, approximately $700,000 was repaid by the officer of
Shurgard.



On July 8, 2003, we loaned 1.9 million
(approximately $2,151,940 based on exchange rates as of July 8, 2003, which rates were applied in all the amounts listed below) to E-Parco, a Belgian company which is owned by certain employees of Shurgard Europe. E-Parco has an indirect ownership
interest in Shurgard Europe through Recom, a Belgian company and Shurgard subsidiary. The proceeds of this loan were used by E-Parco to repurchase its shares from Mr. Grant, an officer of the Company, and certain former employees of Shurgard Europe.
Mr. Grant received 1.2 million (approximately $1,359,120) for his shares and 0.7 million (approximately $792,820) was paid to the former employees. The purchase price for the E-Parco shares was based on recent third party sales
transactions for interests in Shurgard Europe. As partial consideration for the loan, E-Parco granted Shurgard an option to purchase its 377 Recom shares for 4.3 million (approximately $4,870,180) plus forgiveness of the loan including accrued
interest. Acquiring E-Parcos shares would make us the sole shareholder of Recom. The loan is due and the option expires in July 2004.



Subsequent to the end of the fiscal year, in April 2004 the Board of Directors of Shurgard approved the exercise of our option to purchase the remaining
shares of Recom owned by E-Parco on the terms and conditions described above. The transaction is expected to be completed by July 2004.



Audit Committee Pre-Approval Policy



The Audit Committee has adopted a policy for the pre-approval of all audit and non-audit services provided by our independent auditor. The policy is
designed to ensure that the provision of these services does not impair the auditors independence. Under the policy, any services provided by the independent auditor, including audit, audit-related, tax and other services, must be specifically
pre-approved by the Audit Committee. The Audit Committee may delegate pre-approval authority to one or more of its members. The member or members to whom such authority is delegated shall report any pre-approval decisions to the Audit Committee at
its next scheduled meeting. The Audit Committee does not delegate responsibilities to pre-approve services performed by the independent auditor to management. For 2003, all non-audit services were pre-approved.



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Item 14Principal Accountant Fees and Services



The following table shows the fees paid or accrued by Shurgard for the audit and other services for the years 2003 and 2002.



|                      |  |      |           |          |   |      |  |      |         |  |   |        
|--------------------- |  | ---- | --------- | -------- | - | ---- |  | ---- | ------- |  | - | -------
|                      |  | PwC  |           | Deloitte
|                      |  | 2003 |           | 2002     |   | 2003 |  | 2002
|Audit Fees(1)         |  | $    | 4,808,000 |          |   | 0    |  | $    | 513,574 |  | $ | 137,318
|Audit-Related Fees(2) |  |      | 0         |          |   | 0    |  |      | 18,250  |  |   | 49,989 
|Tax Fees(3)           |  |      | 0         |          |   | 0    |  |      | 57,980  |  |   | 311,973
|All Other Fees(4)     |  |      | 0         |          |   | 0    |  |      | 0       |  |   | 5,075  
|                      |  |      |           |          |   |      |  |      |         |  |   |        
|Total                 |  | $    | 4,808,000 |          | $ | 0    |  | $    | 589,804 |  | $ | 504,355
|                      |  |      |           |          |   |      |  |      |         |  |   |        

---

|(1) |  | Audit fees represent fees for professional services provided in connection with the audit of our financial statements and review of our quarterly financial statements and audit
services provided in connection with other statutory or regulatory filings. The fees billed by PwC include fees for professional services rendered for the audit of Shurgards annual financial statements for the years ended December 31, 2001,
2002 and 2003, and for the reviews of interim financial statements for the periods ended March 31, 2003, June 30, 2003 and September 30, 2003. The audit fees for Deloitte do not include fees related to the 2002 and 2003 audits of Shurgard Self
Storage SCA of approximately $500,000 for each year.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) |  | Audit-related fees consisted primarily of accounting consultations, employee benefit plan audits, services related to acquisitions and other attestation services.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) |  | For the years 2003 and 2002, respectively, tax fees principally included fees for tax compliance, tax advice and tax planning.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------



|(4) |  | All other fees principally include fees incurred for inquiries related to prior tax years.
|--- |  | ------------------------------------------------------------------------------------------



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PART IV



Item 15Exhibits, Financial Statement
Schedules and Reports on Form 8-K



| | 1. |  | Financial Statement Schedules
| | -- |  | -----------------------------



Schedule IIIReal Estate and Accumulated Depreciation for the years ended December 31, 2003, 2002 and 2001 has been included as noted above.



All other schedules have been omitted because of the absence
of the conditions under which they are required or because of the information required is included in the financial statements or notes thereto.



| | 2. |  | Exhibits
| | -- |  | --------



| | (a) |  | See exhibit index on page
| | --- |  | -------------------------



| | (b) |  | Reports on Form 8-K:
| | --- |  | --------------------



On November 13, 2003, we filed a current report on Form 8-K announcing operating results for the third quarter 2003.



On November 20, 2003, we filed a current report on Form 8-K to announce the
resignation of Deloitte & Touche LLP, our independent auditor on November 14, 2003.



On November 26, 2003, we filed an amendment to a current report on Form 8-K/A to incorporate Deloittes response to the current report on Form 8-K filed on November 20, 2003.



|            |  |                                                                                                                                            
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                
|            | 
|3.1         |  | Articles of Incorporation of the Registrant (Exhibit 3.1)(1)                                                                               
|            | 
|3.2         |  | Restated Bylaws of the Registrant (Exhibit 3.7)(1)                                                                                         
|            | 
|3.3         |  | Designation of Rights and Preferences of Series A Junior Participating Preferred Stock (Exhibit 3.2)(1)                                    
|            | 
|3.4         |  | Designation of Rights and Preferences of 8.7% Series C Cumulative Redeemable Preferred Stock (Exhibit 3.3)(2)                              
|            | 
|3.5         |  | Designation of Rights and Preferences of 8.75% Series D Cumulative Redeemable Preferred Stock (Exhibit 3.8)(1)                             
|            | 
|3.6         |  | Articles of Merger of SSC Acquisitions, Inc. and Shurgard Storage Centers, Inc. (Exhibit 3.5)(1)                                           
|            | 
|4.1         |  | Amended and Restated Rights Agreement between the Registrant and American Stock Transfer & Trust Corporation dated as of March 12, 2004(24)
|            | 
|4.2         |  | Indenture between the Registrant and LaSalle National Bank, as Trustee, dated April 25, 1997 (Exhibit 10)(3)                               
|            | 
|4.3         |  | Supplemental Indenture dated July 11, 1997 (Exhibit 4.4)(4)                                                                                
|            | 
|4.4         |  | Form of 71/2% Notes due 2004 (Exhibit 4.1)(5)                                                                                              
|            | 
|4.5         |  | Form of 75/8% Notes due 2007 (Exhibit 4.2)(5)                                                                                              
|            | 
|4.6         |  | Form of 73/4% Notes due 2011 (Exhibit 4.4)(6)                                                                                              
|            | 
|4.7         |  | Form of 5.875% Notes due 2013 (Exhibit 4.1)(7)                                                                                             



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|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            | 
|4.8         |  | Registration Rights Agreement between Shurgard Storage Centers, Inc., Gerald A. Schwalbach, as Trustee of the Revocable Trust of Gerald A. Schwalbach, Patrick L. Stotesbery, as Trustee of the
Revocable Trust of Patrick L. Stotesbery, NDLC Limited Partnership, and NBS Associates Limited Partnership                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | 
|4.9         |  | Registration Rights Agreement between Shurgard Storage Centers, Inc, and Grana International SA, Restructuring Competence SA, European Self Storage SA, Ake Fogelberg, and Patrick
Metdepenninghen, dated September 2003, and Amendment No. 1 thereto, dated as of December 1, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|            | 
|10.1        |  | Agreement and Plan of Merger between the Registrant and Shurgard Incorporated dated as of December 19, 1994 (Exhibit 10.7)(8)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|            | 
|10.2        |  | Amended and Restated 1993 Stock Option Plan (Exhibit 10.7)(4)*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|            | 
|10.3        |  | Amended and Restated Stock Incentive Plan for Non-employee Directors (Exhibit 10.7)(9)*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|            | 
|10.4        |  | 1995 Long-Term Incentive Compensation Plan (10)*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            | 
|10.5        |  | 2000 Long-Term Incentive Compensation Plan (11)*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            | 
|10.6        |  | Amendment dated January 30, 2001 to 1996 Employee Stock Purchase Plan (12)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | 
|10.7        |  | Amended and restated Class A Common Stock Dividend Reinvestment Plan, dated January 30, 2001 (12)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            | 
|10.8        |  | Form of Business Combination Agreement, together with schedule of actual agreements (13)*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|            | 
|10.9        |  | Partnership Agreement, dated April 28, 1998, between Shurgard Development I, Inc. and Fremont Storage Partners I, L.P. forming Shurgard/Fremont Partners I (Exhibit 1.1)(14)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            | 
|10.10       |  | Partnership Agreement, dated March 17, 1999, between Shurgard Development II, Inc. and Fremont Storage Partners II, L.L.C, forming Shurgard/Fremont Partners II (Exhibit
10.1)(15)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|            | 
|10.11       |  | First Amendment to Partnership Agreement between Shurgard Development II, Inc. and Fremont Storage Partners II, L.L.C, forming Shurgard/Fremont Partners II as of April 27, 1999 (Exhibit
10.2)(15)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|            | 
|10.12       |  | Joint-Venture Agreement with respect to SSC Benelux & Co. S.C.A. dated October 8, 1999, between Shurgard Storage Centers, Inc., SSC Benelux, Inc., Shurope Storage S.A., Recom & Co,
S.N.C., E-Parco S.A.R.L., European Self Storage S.A., Restructuring Competence S.A., Grana International S.A., as Existing Partners, and REIB Europe Operator Limited, REIB International Holdings Limited, Fremont SE (G.P.) Ventures, L.L.C., Fremont
SE (L.P.) Ventures, L.L.C., SSC General Partner (Guernsey) Limited, SSC Partner (Guernsey) Limited, AIG Self Storage GP, LLC, AIG Self Storage LP, LLC, as Investors, and Deutsche Bank Aktiengesellschaft, London, Fremont Investors, Inc., Credit
Suisse First Boston (International) AG, AIG Global Real Estate Investment Corp., Credit Suisse First Boston (Europe) Limited, and SSC Benelux & Co. S.C.A., as amended (Exhibit 10.42)(19)
|            | 
|10.13       |  | Revolving Credit Agreement dated October 11, 1999 Relating to the Development of Self Storage Centers by SSC Benelux & Co. SCA Group, between SSC Benelux & Co. SCA as Borrower,
Arranged by Credit Suisse First Boston (Europe) Limited, as amended                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            | 
|10.14       |  | Facility Agreement dated June 21, 2000 between Recom & Co. S.N.C. as Borrower, Deutsche Bank AG, Bank of America International Limited, as Arrangers, Bank of America International Limited
as Agent, and Banks listed in Schedule 1 (Exhibit 10.43) (19)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|            | 
|10.15       |  | Service Agreement between Shurgard Storage Centers, Inc., David K. Grant, and SSC Benelux & Co., SCA dated June 7, 2000 (Exhibit 10.1) (17)*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               



166



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|            | 
|10.16       |  | Limited Liability Company Agreement between Shurgard Development IV, Inc. and Chase Capital Partners Real Estate Storage, LLC forming CCP/Shurgard Venture, LLC, dated May 12, 2000 (Exhibit
10.2)(17)                                                                                                                                                                                                                                                                                                        
|            | 
|10.17       |  | Form of Senior Management Employment Agreement dated July 27, 2000, together with schedule of actual agreements (Exhibit 10.1)(18)*                                                                                                                                                                                                                                                                                                                                                                           
|            | 
|10.18       |  | Amended and Restated Limited Liability Company Agreement of CCP/Shurgard Venture, LLC, between Shurgard Development IV, Inc. and CCPRE-Storage, LLC, dated December 26, 2000 (Exhibit
10.34)(11)                                                                                                                                                                                                                                                                                                              
|            | 
|10.19       |  | Loan Agreement between CCP/Shurgard Venture, LLC and General Electric Capital Corporation, dated December 28, 2000 (Exhibit 10.35)(11)                                                                                                                                                                                                                                                                                                                                                                        
|            | 
|10.20       |  | Contribution Agreement between Shurgard Development IV, Inc., Shurgard Storage Centers, Inc., Shurgard Texas L.P., SSC Evergreen, CCPRE-Storage, LLC, and CCP/Shurgard Venture, LLC, dated
December 28, 2000 (Exhibit 10.36) (11)                                                                                                                                                                                                                                                                             
|            | 
|10.21       |  | Third Amended and Restated Loan Agreement among Shurgard Storage Centers, Inc., and Bank of America, N.A., Bank One, N.A. Commerzbank AG, New York and Grand Cayman Branches and U.S. Bank,
N.A. dated February 26, 2001 (Exhibit 10.37) (12)                                                                                                                                                                                                                                                                 
|            | 
|10.22       |  | First Amendment to Third Amended and Restated Loan Agreement among Shurgard Storage Centers, Inc., and Bank of America, N.A., Bank One, N.A. Commerzbank AG, New York and Grand Cayman Branches
and U.S. Bank, N.A. dated November 27, 2001 (Exhibit 10.41) (19)                                                                                                                                                                                                                                              
|            | 
|10.23       |  | Amended and Restated Agreement and Plan of Merger by and among Shurgard Storage Centers, Inc. SSCI Minnesota Corporation (Merger Subsidiary) and Two S Properties, Inc., Three S
Properties, Inc., Superior Storage I, LLC, Superior Storage II, LLC, Superior Woodbury, LLC (collectively, the Companies) and the revocable Trust of Gerald A. Schwalbach, the revocable Trust of Patrick L. Stotesbery (collectively, the
Trusts), Gerald A. Schwalbach, and Patrick L. Stotesbery dated June 30, 2003
|            | 
|10.24       |  | Securities Purchase Agreement dated March 10, 2003, between SSC Benelux Inc. as Buyer, SSC General Partner (Guernsey) Limited and SSC Partner (Guernsey) Limited as Seller, and Credit Suisse
First Boston Europe (Limited) dated March 10, 2003 (Exhibit 10.43) (20)                                                                                                                                                                                                                                         
|            | 
|10.25       |  | Joint Venture Agreement with respect to First Shurgard Between Shurgard Self Storage SCA and Crescent Euro Self Storage Investments SARL, dated December 20, 2002 (Exhibit 10.13)
(21)                                                                                                                                                                                                                                                                                                                        
|            | 
|10.26       |  | Securities Purchase Agreement dated June 11, 2003 between, SSC Benelux Inc. as Buyer, REIB Europe Operator Limited and REIB International Holdings Limited as Seller                                                                                                                                                                                                                                                                                                                                          
|            | 
|10.27       |  | Variation Agreement dated June 24, 2003 between SSC Benelux Inc. as Buyer, REIB Europe Operator Limited and REIB International Holdings Limited as Sellers                                                                                                                                                                                                                                                                                                                                                    
|            | 
|10.28       |  | Securities Purchase Agreement dated June 11, 2003, between SSC Benelux Inc. as Buyer, AIG Self Storage GP, LLC, AIG Self Storage LP, LLC and AIRE Investments, Sarl, as
Sellers                                                                                                                                                                                                                                                                                                                               
|            | 
|10.29       |  | Securities Purchase Agreement dated September 2003, between SSC Benelux Inc. as Buyer, Grana International SA, Restructuring Competence SA, European Self Storage SA, Ake Fogelberg, and
Patrick Metdepenninghen as Sellers                                                                                                                                                                                                                                                                                   
|            | 
|10.30       |  | Supplemental Agreement dated as of December 18, 2003 between Shurgard Self Storage SCA as Borrower, and Citibank N.A., London Branch, as Agent, Credit Suisse First Boston, as Security
Trustee, and Citibank International plc, Belgium Branch, as the Bank, to the Credit Agreement dated 11 October 1999 (as amended and restated) between Shurgard Self Storage SCA as Borrower, Credit Suisse First Boston, as Agent and Security Trustee,
and certain Financial Institutions, as the Banks              



167



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            | 
|10.31       |  | Subscription Agreement dated May 27, 2002 between Shurgard Storage Centers, Inc. and Shurgard Self Storage SCA (Exhibit 10.4)(22)                                                                                                                                                                                                                                                                                                                                                                         
|            | 
|10.32       |  | Amendment No.1 dated May 26, 2003 to the Subscription Agreement dated May 27, 2002 between Shurgard Storage Centers, Inc. and Shurgard Self Storage SCA                                                                                                                                                                                                                                                                                                                                                   
|            | 
|10.33       |  | Addendum No. 3 to Joint Venture Agreement of 8 October 1999 dated September, 2003 between Shurgard Storage Centers, Inc., SSC Benelux, Inc., Shurope Storage S.A., Recom & Co, S.N.C.,
E-Parco S.A.R.L., European Self Storage S.A., Restructuring Competence S.A., Grana International S.A., Fremont SE (G.P.) Ventures, L.L.C., Fremont SE (L.P.) Ventures, L.L.C., Fremont SE (G.P.) II Ventures, L.L.C., Fremont SE (L.P.) II Ventures,
L.L.C., Fremont Investors, Inc., and Shurgard Self Storage SCA
|            | 
|10.34       |  | Amendment No. 2 dated December 3, 2003 to the Subscription Agreement dated May 27, 2002 between Shurgard Storage Centers, Inc. and Shurgard Self Storage SCA                                                                                                                                                                                                                                                                                                                                              
|            | 
|10.35       |  | Senior Management Employment Agreement dated December 17, 2003 between Shurgard Storage Centers, Inc. and David Grant*                                                                                                                                                                                                                                                                                                                                                                                    
|            | 
|10.36       |  | Term Loan Agreement dated April 15, 2004 (Exhibit 10.51) (25)                                                                                                                                                                                                                                                                                                                                                                                                                                             
|            | 
|10.37       |  | Second Amendment to Third Amended and Restated Loan Agreement dated April 12, 2004 (Exhibit 10.52) (25)                                                                                                                                                                                                                                                                                                                                                                                                   
|            | 
|16.1        |  | Letter dated November 25, 2003 from Deloitte & Touche LLP to the Securities and Exchange Commission (23)                                                                                                                                                                                                                                                                                                                                                                                                  
|            | 
|21.1        |  | Subsidiaries of the Registrant                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|            | 
|23.1        |  | Consent of Independent Auditors (PricewaterhouseCoopers LLP)                                                                                                                                                                                                                                                                                                                                                                                                                                              
|            | 
|23.2        |  | Consent of Independent Auditors Deloitte & Touche (Reviseurs dEntreprises SC s.f.d SCRL)                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | 
|23.3        |  | Independent Auditors report (Deloitte and Touche Reviseurs dEntreprises SC s.f.d. SCRL) (located on page 125)                                                                                                                                                                                                                                                                                                                                                                                           
|            | 
|31.1        |  | CEO 302 Certification of Periodic Report dated May 14, 2004                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            | 
|31.2        |  | CFO 302 Certification of Periodic Report dated May 14, 2004                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            | 
|32.1        |  | CEO 906 Certification of Periodic Report dated May 14, 2004                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            | 
|32.2        |  | CFO 906 Certification of Periodic Report dated May 14, 2004                                                                                                                                                                                                                                                                                                                                                                                                                                               

---

|(1) |  | Incorporated by reference to designated exhibit filed with the Registrants Current Report on Form 8-A12B dated February 23, 2001.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Incorporated by reference to designated exhibit filed with Registrants Registration Statement on Form 8-K dated December 3, 1998.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Incorporated by reference to designated exhibit filed with the Registrants Form 10-Q for the quarter ended March 31, 1997.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------

|(4) |  | Incorporated by reference to designated exhibit filed with the Registrants Annual Report on Form 10-K for the year ended December 31, 1997.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------

|(5) |  | Incorporated by reference to designated exhibit filed with the Registrants Current Reports on Form 8-K dated April 22, 1997.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------

|(6) |  | Incorporated by reference to designated exhibit filed with the Registrants Registration Statement on Form S-4, filed on June 20, 2001.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------

|(7) |  | Incorporated by reference to designated exhibit filed with the Registrants Current Reports on Form 8-K dated March 20, 2003.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------

|(8) |  | Incorporated by reference to Appendix I filed as part of the Registrants definitive Proxy Statement/ Prospectus dated February 15, 1995.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------



168



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##### Table of Contents

|(9) |  | Incorporated by reference to designated exhibit filed with the Registrants Annual Report on Form 10-K filed on March 31, 1995.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------



|(10) |  | Incorporated by reference to Appendix B filed as part of the Registrants definitive Proxy Statement dated June 8, 1995.
|---- |  | ------------------------------------------------------------------------------------------------------------------------



|(11) |  | Incorporated by reference to designated exhibit filed with the Registrants Form 10-K for the year ended December 31, 2000.
|---- |  | ---------------------------------------------------------------------------------------------------------------------------



|(12) |  | Incorporated by reference to designated exhibit filed with the Registrants Form 10-Q for the quarter ended March 31, 2001.
|---- |  | ---------------------------------------------------------------------------------------------------------------------------



|(13) |  | Incorporated by reference to designated exhibit filed with the Registrants Form 10-Q for the quarter ended September 30, 2000.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------



|(14) |  | Incorporated by reference to designated exhibit filed with the Registrants Current Reports on Form 8-K dated May 29, 1998.
|---- |  | ---------------------------------------------------------------------------------------------------------------------------



|(15) |  | Incorporated by reference to designated exhibit filed with the Registrants Form 10-Q for the quarter ended March 31, 1999.
|---- |  | ---------------------------------------------------------------------------------------------------------------------------



|(16) |  | Incorporated by reference to designated exhibit filed with the Registrants Annual Report on Form 10-K filed March 14, 2000.
|---- |  | ----------------------------------------------------------------------------------------------------------------------------



|(17) |  | Incorporated by reference to designated exhibit filed with the Registrants Form 10-Q for the quarter ended June 30, 2000.
|---- |  | --------------------------------------------------------------------------------------------------------------------------



|(18) |  | Incorporated by reference to designated exhibit filed with the Registrants Form 10-Q for the quarter ended September 30, 2000.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------



|(19) |  | Incorporated by reference to designated exhibit filed with the Registrants Form 10-K for the year ended December 31, 2001.
|---- |  | ---------------------------------------------------------------------------------------------------------------------------



|(20) |  | Incorporated by reference to designated exhibit filed with the Registrants Form 10-K for the year ended December 31, 2002.
|---- |  | ---------------------------------------------------------------------------------------------------------------------------



|(21) |  | Incorporated by reference to designated exhibit filed with the Registrants Form 10-K for the year ended December 31, 2002.
|---- |  | ---------------------------------------------------------------------------------------------------------------------------



|(21) |  | Incorporated by reference to designated exhibit filed with the Registrants Current Report on Form 8-K dated June 6, 2003.
|---- |  | --------------------------------------------------------------------------------------------------------------------------



|(22) |  | Incorporated by reference to designated exhibit filed with the Registrants Current Report on Form 8-K dated June 21, 2002.
|---- |  | ---------------------------------------------------------------------------------------------------------------------------



|(23) |  | Incorporated by reference to designated exhibit filed with the Registrants Current Report on Form 8-K/A dated November 26, 2003.
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------



|(24) |  | Incorporated by reference to designated exhibit filed with the Registrants Registration Statement on Form 8-A/A dated March 15, 2004.
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------



|(25) |  | Incorporated by reference to designated Exhibit filed with the Registrants Current Report on Form 8-K dated April 12, 2004.
|---- |  | ----------------------------------------------------------------------------------------------------------------------------



|* |  | Compensatory plan or arrangement.
|- |  | ---------------------------------



169



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##### Table of Contents

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



SHURGARD STORAGE CENTERS, INC. (Registrant)By:

/S/    CHARLES K.
BARBOCharles K. Barbo Chairman and Chief Executive Officer




Pursuant to the
requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



|                                            |  |                                                                            |  |             
|------------------------------------------- |  | -------------------------------------------------------------------------- |  | ------------
|Signature                                   |  | Title                                                                      |  | Date        
|                                            |  |                                                                           
|/s/    CHARLES K.
BARBOCharles K.
Barbo     |  | Chairman of the Board, Chief Executive Officer                             |  | May 14, 2004
|                                            |  |                                                                           
|/s/    DAVID K.
GRANTDavid K.
Grant         |  | President, Chief Operating Officer and Interim Chief Financial Officer     |  | May 14, 2004
|                                            |  |                                                                           
|/s/    HARRELL L.
BECKHarrell L.
Beck       |  | Director, Executive Vice President, Chief Investment Officer and Treasurer |  | May 14, 2004
|                                            |  |                                                                           
|/s/    ANNA KARIN
ANDREWSAnna Karin
Andrews |  | Director                                                                   |  | May 14, 2004
|                                            |  |                                                                           
|/s/    HOWARD P.
BEHARHoward P.
Behar       |  | Director                                                                   |  | May 14, 2004
|                                            |  |                                                                           
|/s/    RICHARD P.
FOXRichard P. Fox         |  | Director                                                                   |  | May 14, 2004
|                                            |  |                                                                           
|/s/    RAYMOND A.
JOHNSONRaymond A.
Johnson |  | Director                                                                   |  | May 14, 2004
|                                            |  |                                                                           
|/s/    W. THOMAS
PORTERW. Thomas
Porter     |  | Director                                                                   |  | May 14, 2004
|                                            |  |                                                                           
|/s/    WENDELL J.
SMITHWendell J.
Smith     |  | Director                                                                   |  | May 14, 2004



170



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##### Table of Contents

INDEX TO EXHIBITS



|            |  |                                                                                                                                                                                                                                                                                                           
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                               
|            | 
|3.1         |  | Articles of Incorporation of the Registrant (Exhibit 3.1)(1)                                                                                                                                                                                                                                              
|            | 
|3.2         |  | Restated Bylaws of the Registrant (Exhibit 3.7)(1)                                                                                                                                                                                                                                                        
|            | 
|3.3         |  | Designation of Rights and Preferences of Series A Junior Participating Preferred Stock (Exhibit 3.2)(1)                                                                                                                                                                                                   
|            | 
|3.4         |  | Designation of Rights and Preferences of 8.7% Series C Cumulative Redeemable Preferred Stock (Exhibit 3.3)(2)                                                                                                                                                                                             
|            | 
|3.5         |  | Designation of Rights and Preferences of 8.75% Series D Cumulative Redeemable Preferred Stock (Exhibit 3.8)(1)                                                                                                                                                                                            
|            | 
|3.6         |  | Articles of Merger of SSC Acquisitions, Inc. and Shurgard Storage Centers, Inc. (Exhibit 3.5)(1)                                                                                                                                                                                                          
|            | 
|4.1         |  | Amended and Restated Rights Agreement between the Registrant and American Stock Transfer & Trust Corporation dated as of March 12, 2004(24)                                                                                                                                                               
|            | 
|4.2         |  | Indenture between the Registrant and LaSalle National Bank, as Trustee, dated April 25, 1997 (Exhibit 10)(3)                                                                                                                                                                                              
|            | 
|4.3         |  | Supplemental Indenture dated July 11, 1997 (Exhibit 4.4)(4)                                                                                                                                                                                                                                               
|            | 
|4.4         |  | Form of 71/2% Notes due 2004 (Exhibit 4.1)(5)                                                                                                                                                                                                                                                             
|            | 
|4.5         |  | Form of 75/8% Notes due 2007 (Exhibit 4.2)(5)                                                                                                                                                                                                                                                             
|            | 
|4.6         |  | Form of 73/4% Notes due 2011 (Exhibit 4.4)(6)                                                                                                                                                                                                                                                             
|            | 
|4.7         |  | Form of 5.875% Notes due 2013 (Exhibit 4.1)(7)                                                                                                                                                                                                                                                            
|            | 
|4.8         |  | Registration Rights Agreement between Shurgard Storage Centers, Inc., Gerald A. Schwalbach, as Trustee of the Revocable Trust of Gerald A. Schwalbach, Patrick L. Stotesbery, as Trustee of the
Revocable Trust of Patrick L. Stotesbery, NDLC Limited Partnership, and NBS Associates Limited Partnership
|            | 
|4.9         |  | Registration Rights Agreement between Shurgard Storage Centers, Inc, and Grana International SA, Restructuring Competence SA, European Self Storage SA, Ake Fogelberg, and Patrick
Metdepenninghen, dated September 2003, and Amendment No. 1 thereto, dated as of December 1, 2003                       
|            | 
|10.1        |  | Agreement and Plan of Merger between the Registrant and Shurgard Incorporated dated as of December 19, 1994 (Exhibit 10.7)(8)                                                                                                                                                                             
|            | 
|10.2        |  | Amended and Restated 1993 Stock Option Plan (Exhibit 10.7)(4)*                                                                                                                                                                                                                                            
|            | 
|10.3        |  | Amended and Restated Stock Incentive Plan for Non-employee Directors (Exhibit 10.7)(9)*                                                                                                                                                                                                                   
|            | 
|10.4        |  | 1995 Long-Term Incentive Compensation Plan (10)*                                                                                                                                                                                                                                                          
|            | 
|10.5        |  | 2000 Long-Term Incentive Compensation Plan (11)*                                                                                                                                                                                                                                                          
|            | 
|10.6        |  | Amendment dated January 30, 2001 to 1996 Employee Stock Purchase Plan (12)                                                                                                                                                                                                                                
|            | 
|10.7        |  | Amended and restated Class A Common Stock Dividend Reinvestment Plan, dated January 30, 2001 (12)                                                                                                                                                                                                         
|            | 
|10.8        |  | Form of Business Combination Agreement, together with schedule of actual agreements (13)*                                                                                                                                                                                                                 
|            | 
|10.9        |  | Partnership Agreement, dated April 28, 1998, between Shurgard Development I, Inc. and Fremont Storage Partners I, L.P. forming Shurgard/Fremont Partners I (Exhibit 1.1)(14)                                                                                                                              
|            | 
|10.10       |  | Partnership Agreement, dated March 17, 1999, between Shurgard Development II, Inc. and Fremont Storage Partners II, L.L.C, forming Shurgard/Fremont Partners II (Exhibit
10.1)(15)                                                                                                                        



---

##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            | 
|10.11       |  | First Amendment to Partnership Agreement between Shurgard Development II, Inc. and Fremont Storage Partners II, L.L.C, forming Shurgard/Fremont Partners II as of April 27, 1999 (Exhibit
10.2)(15)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|            | 
|10.12       |  | Joint-Venture Agreement with respect to SSC Benelux & Co. S.C.A. dated October 8, 1999, between Shurgard Storage Centers, Inc., SSC Benelux, Inc., Shurope Storage S.A., Recom & Co,
S.N.C., E-Parco S.A.R.L., European Self Storage S.A., Restructuring Competence S.A., Grana International S.A., as Existing Partners, and REIB Europe Operator Limited, REIB International Holdings Limited, Fremont SE (G.P.) Ventures, L.L.C., Fremont
SE (L.P.) Ventures, L.L.C., SSC General Partner (Guernsey) Limited, SSC Partner (Guernsey) Limited, AIG Self Storage GP, LLC, AIG Self Storage LP, LLC, as Investors, and Deutsche Bank Aktiengesellschaft, London, Fremont Investors, Inc., Credit
Suisse First Boston (International) AG, AIG Global Real Estate Investment Corp., Credit Suisse First Boston (Europe) Limited, and SSC Benelux & Co. S.C.A., as amended (Exhibit 10.42)(19)
|            | 
|10.13       |  | Revolving Credit Agreement dated October 11, 1999 Relating to the Development of Self Storage Centers by SSC Benelux & Co. SCA Group, between SSC Benelux & Co. SCA as Borrower,
Arranged by Credit Suisse First Boston (Europe) Limited, as amended                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            | 
|10.14       |  | Facility Agreement dated June 21, 2000 between Recom & Co. S.N.C. as Borrower, Deutsche Bank AG, Bank of America International Limited, as Arrangers, Bank of America International Limited
as Agent, and Banks listed in Schedule 1 (Exhibit 10.43) (19)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|            | 
|10.15       |  | Service Agreement between Shurgard Storage Centers, Inc., David K. Grant, and SSC Benelux & Co., SCA dated June 7, 2000 (Exhibit 10.1) (17)*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            | 
|10.16       |  | Limited Liability Company Agreement between Shurgard Development IV, Inc. and Chase Capital Partners Real Estate Storage, LLC forming CCP/Shurgard Venture, LLC, dated May 12, 2000 (Exhibit
10.2)(17)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|            | 
|10.17       |  | Form of Senior Management Employment Agreement dated July 27, 2000, together with schedule of actual agreements (Exhibit 10.1)(18)*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|            | 
|10.18       |  | Amended and Restated Limited Liability Company Agreement of CCP/Shurgard Venture, LLC, between Shurgard Development IV, Inc. and CCPRE-Storage, LLC, dated December 26, 2000 (Exhibit
10.34)(11)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            | 
|10.19       |  | Loan Agreement between CCP/Shurgard Venture, LLC and General Electric Capital Corporation, dated December 28, 2000 (Exhibit 10.35)(11)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|            | 
|10.20       |  | Contribution Agreement between Shurgard Development IV, Inc., Shurgard Storage Centers, Inc., Shurgard Texas L.P., SSC Evergreen, CCPRE-Storage, LLC, and CCP/Shurgard Venture, LLC, dated
December 28, 2000 (Exhibit 10.36) (11)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            | 
|10.21       |  | Third Amended and Restated Loan Agreement among Shurgard Storage Centers, Inc., and Bank of America, N.A., Bank One, N.A. Commerzbank AG, New York and Grand Cayman Branches and U.S. Bank,
N.A. dated February 26, 2001 (Exhibit 10.37) (12)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|            | 
|10.22       |  | First Amendment to Third Amended and Restated Loan Agreement among Shurgard Storage Centers, Inc., and Bank of America, N.A., Bank One, N.A. Commerzbank AG, New York and Grand Cayman Branches
and U.S. Bank, N.A. dated November 27, 2001 (Exhibit 10.41) (19)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            | 
|10.23       |  | Amended and Restated Agreement and Plan of Merger by and among Shurgard Storage Centers, Inc. SSCI Minnesota Corporation (Merger Subsidiary) and Two S Properties, Inc., Three S
Properties, Inc., Superior Storage I, LLC, Superior Storage II, LLC, Superior Woodbury, LLC (collectively, the Companies) and the revocable Trust of Gerald A. Schwalbach, the revocable Trust of Patrick L. Stotesbery (collectively, the
Trusts), Gerald A. Schwalbach, and Patrick L. Stotesbery dated June 30, 2003                                                                                                                                                                                                                                                                                                                                                                             



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            | 
|10.24       |  | Securities Purchase Agreement dated March 10, 2003, between SSC Benelux Inc. as Buyer, SSC General Partner (Guernsey) Limited and SSC Partner (Guernsey) Limited as Seller, and Credit Suisse
First Boston Europe (Limited) dated March 10, 2003 (Exhibit 10.43) (20)                                                                                                                                                                                                                                     
|            | 
|10.25       |  | Joint Venture Agreement with respect to First Shurgard Between Shurgard Self Storage SCA and Crescent Euro Self Storage Investments SARL, dated December 20, 2002 (Exhibit 10.13)
(21)                                                                                                                                                                                                                                                                                                                    
|            | 
|10.26       |  | Securities Purchase Agreement dated June 11, 2003 between, SSC Benelux Inc. as Buyer, REIB Europe Operator Limited and REIB International Holdings Limited as Seller                                                                                                                                                                                                                                                                                                                                      
|            | 
|10.27       |  | Variation Agreement dated June 24, 2003 between SSC Benelux Inc. as Buyer, REIB Europe Operator Limited and REIB International Holdings Limited as Sellers                                                                                                                                                                                                                                                                                                                                                
|            | 
|10.28       |  | Securities Purchase Agreement dated June 11, 2003, between SSC Benelux Inc. as Buyer, AIG Self Storage GP, LLC, AIG Self Storage LP, LLC and AIRE Investments, Sarl, as
Sellers                                                                                                                                                                                                                                                                                                                           
|            | 
|10.29       |  | Securities Purchase Agreement dated September 2003, between SSC Benelux Inc. as Buyer, Grana International SA, Restructuring Competence SA, European Self Storage SA, Ake Fogelberg, and
Patrick Metdepenninghen as Sellers                                                                                                                                                                                                                                                                               
|            | 
|10.30       |  | Supplemental Agreement dated as of December 18, 2003 between Shurgard Self Storage SCA as Borrower, and Citibank N.A., London Branch, as Agent, Credit Suisse First Boston, as Security
Trustee, and Citibank International plc, Belgium Branch, as the Bank, to the Credit Agreement dated 11 October 1999 (as amended and restated) between Shurgard Self Storage SCA as Borrower, Credit Suisse First Boston, as Agent and Security Trustee,
and certain Financial Institutions, as the Banks          
|            | 
|10.31       |  | Subscription Agreement dated May 27, 2002 between Shurgard Storage Centers, Inc. and Shurgard Self Storage SCA (Exhibit 10.4)(22)                                                                                                                                                                                                                                                                                                                                                                         
|            | 
|10.32       |  | Amendment No.1 dated May 26, 2003 to the Subscription Agreement dated May 27, 2002 between Shurgard Storage Centers, Inc. and Shurgard Self Storage SCA                                                                                                                                                                                                                                                                                                                                                   
|            | 
|10.33       |  | Addendum No. 3 to Joint Venture Agreement of 8 October 1999 dated September, 2003 between Shurgard Storage Centers, Inc., SSC Benelux, Inc., Shurope Storage S.A., Recom & Co, S.N.C.,
E-Parco S.A.R.L., European Self Storage S.A., Restructuring Competence S.A., Grana International S.A., Fremont SE (G.P.) Ventures, L.L.C., Fremont SE (L.P.) Ventures, L.L.C., Fremont SE (G.P.) II Ventures, L.L.C., Fremont SE (L.P.) II Ventures,
L.L.C., Fremont Investors, Inc., and Shurgard Self Storage SCA
|            | 
|10.34       |  | Amendment No. 2 dated December 3, 2003 to the Subscription Agreement dated May 27, 2002 between Shurgard Storage Centers, Inc. and Shurgard Self Storage SCA                                                                                                                                                                                                                                                                                                                                              
|            | 
|10.35       |  | Senior Management Employment Agreement dated December 17, 2003 between Shurgard Storage Centers, Inc. and David Grant*                                                                                                                                                                                                                                                                                                                                                                                    
|            | 
|10.36       |  | Term Loan Agreement dated April 15, 2004 (Exhibit 10.51) (25)                                                                                                                                                                                                                                                                                                                                                                                                                                             
|            | 
|10.37       |  | Second Amendment to Third Amended and Restated Loan Agreement dated April 12, 2004 (Exhibit 10.52) (25)                                                                                                                                                                                                                                                                                                                                                                                                   
|            | 
|16.1        |  | Letter dated November 25, 2003 from Deloitte & Touche LLP to the Securities and Exchange Commission (23)                                                                                                                                                                                                                                                                                                                                                                                                  
|            | 
|21.1        |  | Subsidiaries of the Registrant                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|            | 
|23.1        |  | Consent of Independent Auditors (PricewaterhouseCoopers LLP)                                                                                                                                                                                                                                                                                                                                                                                                                                              
|            | 
|23.2        |  | Consent of Independent Auditors Deloitte & Touche (Reviseurs dEntreprises SC s.f.d SCRL)                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | 
|23.3        |  | Independent Auditors report (Deloitte and Touche Reviseurs dEntreprises SC s.f.d. SCRL) (located on page 125)                                                                                                                                                                                                                                                                                                                                                                                           
|            | 
|31.1        |  | CEO 302 Certification of Periodic Report dated May 14, 2004                                                                                                                                                                                                                                                                                                                                                                                                                                               



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##### Table of Contents

|            |  |                                                            
|----------- |  | -----------------------------------------------------------
|Exhibit No. |  | Description                                                
|            | 
|31.2        |  | CFO 302 Certification of Periodic Report dated May 14, 2004
|            | 
|32.1        |  | CEO 906 Certification of Periodic Report dated May 14, 2004
|            | 
|32.2        |  | CFO 906 Certification of Periodic Report dated May 14, 2004

---

|(1) | Incorporated by reference to designated exhibit filed with the Registrants Current Report on Form 8-A12B dated February 23, 2001.
|--- | ----------------------------------------------------------------------------------------------------------------------------------



|(2) | Incorporated by reference to designated exhibit filed with Registrants Registration Statement on Form 8-K dated December 3, 1998.
|--- | ----------------------------------------------------------------------------------------------------------------------------------



|(3) | Incorporated by reference to designated exhibit filed with the Registrants Form 10-Q for the quarter ended March 31, 1997.
|--- | ---------------------------------------------------------------------------------------------------------------------------



|(4) | Incorporated by reference to designated exhibit filed with the Registrants Annual Report on Form 10-K for the year ended December 31, 1997.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------



|(5) | Incorporated by reference to designated exhibit filed with the Registrants Current Reports on Form 8-K dated April 22, 1997.
|--- | -----------------------------------------------------------------------------------------------------------------------------



|(6) | Incorporated by reference to designated exhibit filed with the Registrants Registration Statement on Form S-4, filed on June 20, 2001.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------



|(7) | Incorporated by reference to designated exhibit filed with the Registrants Current Reports on Form 8-K dated March 20, 2003.
|--- | -----------------------------------------------------------------------------------------------------------------------------



|(8) | Incorporated by reference to Appendix I filed as part of the Registrants definitive Proxy Statement/ Prospectus dated February 15, 1995.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------



|(9) | Incorporated by reference to designated exhibit filed with the Registrants Annual Report on Form 10-K filed on March 31, 1995.
|--- | -------------------------------------------------------------------------------------------------------------------------------



|(10) | Incorporated by reference to Appendix B filed as part of the Registrants definitive Proxy Statement dated June 8, 1995.
|---- | ------------------------------------------------------------------------------------------------------------------------



|(11) | Incorporated by reference to designated exhibit filed with the Registrants Form 10-K for the year ended December 31, 2000.
|---- | ---------------------------------------------------------------------------------------------------------------------------



|(12) | Incorporated by reference to designated exhibit filed with the Registrants Form 10-Q for the quarter ended March 31, 2001.
|---- | ---------------------------------------------------------------------------------------------------------------------------



|(13) | Incorporated by reference to designated exhibit filed with the Registrants Form 10-Q for the quarter ended September 30, 2000.
|---- | -------------------------------------------------------------------------------------------------------------------------------



|(14) | Incorporated by reference to designated exhibit filed with the Registrants Current Reports on Form 8-K dated May 29, 1998.
|---- | ---------------------------------------------------------------------------------------------------------------------------



|(15) | Incorporated by reference to designated exhibit filed with the Registrants Form 10-Q for the quarter ended March 31, 1999.
|---- | ---------------------------------------------------------------------------------------------------------------------------



|(16) | Incorporated by reference to designated exhibit filed with the Registrants Annual Report on Form 10-K filed March 14, 2000.
|---- | ----------------------------------------------------------------------------------------------------------------------------



|(17) | Incorporated by reference to designated exhibit filed with the Registrants Form 10-Q for the quarter ended June 30, 2000.
|---- | --------------------------------------------------------------------------------------------------------------------------



|(18) | Incorporated by reference to designated exhibit filed with the Registrants Form 10-Q for the quarter ended September 30, 2000.
|---- | -------------------------------------------------------------------------------------------------------------------------------



|(19) | Incorporated by reference to designated exhibit filed with the Registrants Form 10-K for the year ended December 31, 2001.
|---- | ---------------------------------------------------------------------------------------------------------------------------



|(20) | Incorporated by reference to designated exhibit filed with the Registrants Form 10-K for the year ended December 31, 2002.
|---- | ---------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|(21) | Incorporated by reference to designated exhibit filed with the Registrants Form 10-K for the year ended December 31, 2002.
|---- | ---------------------------------------------------------------------------------------------------------------------------



|(21) | Incorporated by reference to designated exhibit filed with the Registrants Current Report on Form 8-K dated June 6, 2003.
|---- | --------------------------------------------------------------------------------------------------------------------------



|(22) | Incorporated by reference to designated exhibit filed with the Registrants Current Report on Form 8-K dated June 21, 2002.
|---- | ---------------------------------------------------------------------------------------------------------------------------



|(23) | Incorporated by reference to designated exhibit filed with the Registrants Current Report on Form 8-K/A dated November 26, 2003.
|---- | ---------------------------------------------------------------------------------------------------------------------------------



|(24) | Incorporated by reference to designated exhibit filed with the Registrants Registration Statement on Form 8-A/A dated March 15, 2004.
|---- | --------------------------------------------------------------------------------------------------------------------------------------



|(25) | Incorporated by reference to designated Exhibit filed with the Registrants Current Report on Form 8-K dated April 12, 2004.
|---- | ----------------------------------------------------------------------------------------------------------------------------



|* | Compensatory plan or arrangement.
|- | ---------------------------------