The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. The Company makes certain statements in this section that are forward-looking statements within the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section in this report entitled "Forward-Looking Statements." Certain risk factors may cause actual results, performance or achievements to differ materially from those expressed or implied by the following discussion. For a discussion of such risk factors, see the section in this report entitled "Risk Factors."

Overview

The Company is an integrated self-storage real estate company, which means that it has in-house capabilities in the operation, design, development, leasing, and acquisition of self-storage facilities. The Company has elected to be taxed as a REIT for federal tax purposes. At June 30, 2008 and December 31, 2007, the Company owned 403 and 409 self-storage facilities, respectively, totaling approximately 25.9 million square feet and 26.1 million square feet, respectively.

The Company derives revenues principally from rents received from our customers who rent units at our self-storage facilities under month-to-month leases. Therefore, our operating results depend materially on our ability to retain our existing customers and lease our available self-storage units to new customers while maintaining and, where possible, increasing our pricing levels. In addition, our operating results are affected by the ability of our customers to make required rental payments to us. We believe that our decentralized approach to the management and operation of our facilities allows us to respond quickly and effectively to changes in local market conditions. Emphasis on local, market level oversight and control enhances our ability to optimize occupancy and pricing levels.

The Company experiences minor seasonal fluctuations in the occupancy levels of our facilities, which are generally slightly higher during the summer months due to increased activity in housing related moves.

The Company focuses on maximizing internal growth - selectively pursuing targeted acquisitions and developments of self-storage facilities. In addition, we intend to selectively dispose of self-storage facilities that no longer meet our operating criteria or that we deem to be in areas that are no longer strategically important to us. We also may pursue joint ventures to acquire and/or develop self-storage facilities. We intend to incur additional debt in connection with any such future acquisitions or developments.

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

The Company's self-storage facilities are located in major metropolitan areas as well as rural areas and have numerous tenants per facility. No single tenant represents 1% or more of our revenues. The facilities in Florida, California, Texas and Illinois provided approximately 19%, 15%, 8% and 7%, respectively, of total revenues during the quarter ended June 30, 2008. During the six months ended June 30, 2008, the facilities in Florida, California, Texas and Illinois provided approximately 19%, 15%, 8% and 7%, respectively, of total revenues.

Summary of Critical Accounting Policies and Estimates

Set forth below is a summary of the accounting policies and estimates that management believes are critical to an understanding of the unaudited condensed consolidated financial statements included in this report. These policies require the application of judgment and assumptions by management and, as a result, are subject to a degree of uncertainty. Due to this uncertainty, actual results could differ from estimates calculated and utilized by management.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include all of the accounts of the Company, the Operating Partnership and the wholly-owned subsidiaries of the Operating Partnership.

Self-Storage Facilities

The Company records self-storage facilities at cost less accumulated depreciation. Depreciation on the buildings and equipment is recorded on a straight-line basis over their estimated useful lives, which range from five to 39 years. Expenditures for significant renovations or improvements that extend the useful lives of assets are capitalized. Repairs and maintenance costs are expensed as incurred.

When facilities are acquired, the purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed based on estimated fair values. When a portfolio of facilities is acquired, the purchase price is allocated to the individual facilities based upon an income approach or a cash flow analysis using appropriate risk adjusted capitalization rates, which take into account the relative size, age and location of the individual facility along with current and projected occupancy and rental rate levels or appraised values, if available. Allocations to the individual assets and liabilities are based upon comparable market sales information for land, buildings and improvements and estimates of depreciated replacement cost of equipment.

In allocating the purchase price, the Company determines whether the acquisition includes intangible assets or liabilities. Substantially all of the leases in place at acquired facilities are at market rates, as the majority of the leases are month-to-month contracts. Accordingly, to date no portion of the purchase price has been allocated to above- or below-market lease intangibles. To date, no intangible asset has been recorded for the value of tenant relationships, because the Company does not have any concentrations of significant tenants and the average tenant turnover is fairly frequent. The Company recorded a $6.8 million intangible asset to recognize the value of in-place leases related to its acquisitions in 2007 and a $1.0 million intangible asset to recognize the value of in-place leases related to its acquisition of a self-storage facility during the first quarter of 2008.

Long-lived assets classified as "held for use" are reviewed for impairment when events and circumstances indicate that there may be an impairment. The carrying values of these long-lived assets are compared to the undiscounted future net operating cash flows attributable to the assets. An impairment loss is recorded if the net carrying value of the asset exceeds the fair value based on its undiscounted future net operating cash flows attributable to the asset and circumstances indicate that the carrying value of the real estate asset may not be recoverable. The impairment loss recognized equals the excess of net carrying value over the related fair value of the asset.

The Company considers long-lived assets to be "held for sale" upon satisfaction of the following criteria: (a) management commits to a plan to sell a facility (or group of facilities), (b) the facility is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such facilities, (c) an active program to locate a buyer and other actions required to complete the plan to sell the facility have been initiated,
(d) the sale of the facility is probable and transfer of the asset is expected to be completed within one year, (e) the facility is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and
(f) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Typically these criteria are all met when the relevant assets are under contract, significant non-refundable deposits have been made by the potential buyer, the assets are immediately available for transfer and there are no contingencies related to the sale that may prevent the transaction from closing. In most transactions, these contingencies are not satisfied until the actual closing of the transaction; and, accordingly, the facility is not identified as held for sale until the closing actually occurs. However, each potential transaction is evaluated based on its separate facts and circumstances.

Revenue Recognition

Management has determined that all of our leases with tenants are operating leases. Rental income is recognized in accordance with the terms of the lease agreements or contracts, which generally are month-to-month. Revenues from long-term operating leases are recognized on a straight-line basis over the term of the lease. The excess of rents recognized over amounts contractually due pursuant to the underlying leases is included in deferred revenue, and contractually due but unpaid rents are included in other assets.

Share-Based Payments

We apply the fair value method of accounting for contingently issued shares and share options issued under our incentive award plans. Accordingly, share compensation expense was recorded ratably over the vesting period relating to such contingently issued shares and options. The Company has elected to recognize compensation expense on a straight-line method over the requisite service

period. Compensation expense recorded for the three months ended June 30, 2008 and 2007 was approximately $0.9 million and $0.5 million, respectively, and $1.7 million and $0.8 million for the six months ended June 30, 2008 and 2007, respectively.

Minority Interests

Minority Interests include income allocated to holders of the Operating Partnership units. Income is allocated to the minority interests based on their ownership percentage of the Operating Partnership. This ownership percentage, as well as the total net assets of the Operating Partnership, changes when additional shares of our common stock or Operating Partnership units are issued. Such changes result in an allocation between shareholders' equity and Minority Interests in the Consolidated Balance Sheets.

Recent Accounting Pronouncements

In May 2008, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 162, "The Hierarchy of Generally Accepted Accounting Principles" (FAS 162). Under SFAS 162 , the GAAP hierarchy will now reside in the accounting literature established by the FASB. SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements in conformity with GAAP. SFAS 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section 411, "The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles." We believe that the adoption of this standard on its effective date will not have a material effect on our consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities - an Amendment of FASB Statement No. 133 ("SFAS 161"). SFAS 161 enhances required disclosures regarding derivatives and hedging activities, including enhanced disclosures regarding how an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under FASB Statement No. 133 and the impact of derivative instruments and related hedged items on an entity financial position, financial performance and cash flows. SFAS 161 is effective on January 1, 2009. We believe that the adoption of this standard on January 1, 2009 will not have a material effect on our consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combinations ("SFAS 141(R)"). SFAS 141(R) establishes principles and requirements for recognizing identifiable assets acquired, liabilities assumed, noncontrolling interest in the acquiree, goodwill acquired in the combination or the gain from a bargain purchase, and disclosure requirements. Under this revised statement, all costs incurred to effect an acquisition will be recognized separately from the acquisition. Also, restructuring costs that are expected but the acquirer is not obligated to incur will be recognized separately from the acquisition. SFAS 141(R) is effective for the Company beginning with its quarter ending March 31, 2009. The Company is currently assessing the potential impact on our consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements ("SFAS 160"). SFAS 160 requires that ownership interests in subsidiaries held by parties other than the parent are to be reported as equity. In addition, it requires that the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the income statement. SFAS 160 is effective for the Company beginning with its quarter ending March 31, 2009. The Company is currently assessing the potential impact on our consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities - including an amendment of FASB Statement No. 115 ("SFAS No. 159"). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value, with unrealized gains and losses related to these financial instruments reported in earnings at each subsequent reporting date. This statement was effective on January 1, 2008. We have not elected the fair value option for any of our existing financial instruments on the effective date and have not determined whether or not we will elect this option for any eligible financial instruments we acquire in the future.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements ("SFAS No. 157"). SFAS No. 157 provides guidance for using fair value to measure assets and liabilities. This statement clarifies the principle that fair value should be based on the assumptions that market participants would use when pricing the asset or liability. SFAS No. 157 establishes a fair value hierarchy, giving the highest priority to quoted prices in active markets and the lowest priority to unobservable data. SFAS No. 157 applies whenever other standards require assets or liabilities to be measured at fair value. This statement was effective in fiscal years beginning after November 15, 2007. The FASB has deferred the implementation of the provisions of SFAS No. 157 relating to certain

nonfinancial assets and liabilities until January 1, 2009. This standard did not materially affect how we determine fair value, but resulted in certain additional disclosures.

Results of Operations

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

Acquisition and Development Activities

The comparability of the Company's results of operations is affected by acquisition and disposition activities in 2008 and 2007. At June 30, 2008 and 2007, the Company owned 403 and 399 self-storage facilities and related assets, respectively.

The following table summarizes the acquisition and disposition activity that the Company completed during the period from January 1, 2007 to June 30, 2008:

                               Location                               Total
                           (state/district                          Number of      Purchase Price
Facility/Portfolio          abbreviation)       Acquisition Date    Facilities     (in thousands)

2007 Acquisitions
Sanford Portfolio                 TX              January 2007           1        $          6,300
Grand Central
Portfolio                         GA              January 2007           2                  13,200
Rising Tide Portfolio     FL, CA, MA, OH, GA     September 2007         14                 121,000
                                                                        17        $        140,500
2007 Dispositions
South Carolina Assets             SC                May 2007             3        $         12,750
Arizona Assets                    AZ             December 2007           2                   6,440
                                                                         5        $         19,190

2008 Acquisitions
Uptown Asset                      DC              January 2008           1        $         13,300

2008 Dispositions
Baton
Rouge/Prairieville
Assets                            LA               June 2008             2        $          5,400
Linden Asset                  Linden, NJ           June 2008             1                   2,825
Edicott Asset                 Union, NY             May 2008             1                   2,250
Lakeland Asset               Lakeland, FL          April 2008            1                   2,050
77th Street Asset             Miami, FL            March 2008            1                   2,200
Leesburg Asset               Leesburg, FL          March 2008            1                   2,400
                                                                         7        $         17,125

The acquisitions listed are included in the Company's results of operations from and after the acquisition date.

Comparison of Operating Results for the Three Months Ended June 30, 2008 and
June 30, 2007



A comparison of net loss for the three months ended June 30, 2008 and June 30,
2007 is as follows (in thousands):



                                                       Three Months Ended June 30,
                                                          2008              2007
REVENUES
Rental income                                        $       56,158    $       50,965
Other property related income                                 4,249             4,387
Other - related party                                             -               122
Total revenues                                               60,407            55,474
OPERATING EXPENSES
Property operating expenses                                  25,494            21,890
Property operating expenses - related party                       -                14
Depreciation                                                 20,251            16,562
General and administrative                                    6,469             5,648
General and administrative - related party                        -               118
Total operating expenses                                     52,214            44,232
OPERATING INCOME                                              8,193            11,242
OTHER INCOME (EXPENSE)
Interest:
Interest expense on loans                                   (12,965 )         (12,955 )
Loan procurement amortization expense                          (486 )            (445 )
Interest income                                                  32                91
Other                                                            71                 -
Total other expense                                         (13,348 )         (13,309 )
LOSS FROM CONTINUING OPERATIONS BEFORE MINORITY
INTERESTS                                                    (5,155 )          (2,067 )
MINORITY INTERESTS                                              407               168
LOSS FROM CONTINUING OPERATIONS                              (4,748 )          (1,899 )
DISCONTINUED OPERATIONS
Income from operations                                          145               267
Gain on disposition of discontinued operations                5,308             2,122
Minority interest attributable to discontinued
operations                                                     (442 )            (195 )
Income from discontinued operations                           5,011             2,194
NET INCOME                                           $          263    $          295

Total Revenues

Rental income increased from $51.0 million for the three months ended June 30, 2007 to $56.2 million for the three months ended June 30, 2008, an increase of $5.2 million, or 10%. This increase is attributable to additional rental income from the same-store properties of $2.8 million, as well as additional rental income from the 2007 and 2008 acquisitions.

Other property related income decreased from $4.4 million for the three months ended June 30, 2007 to $4.2 million for the three months ended June 30, 2008, a decrease of $0.2 million, or 5%. This decrease is primarily attributable to a $0.2 million decrease in administrative fees earned.

Other - related party decreased from $0.1 million for the three months ended June 30, 2007 to $0 for the three months ended June 30, 2008 due to a decrease in third party management fee income pursuant to the termination of the Rising Tide management agreement in September 2007.

Total Operating Expenses

Property operating expenses, including Property operating expenses - related party, increased from $21.9 million for the three months ended June 30, 2007 to $25.5 million for the three months ended June 30, 2008, an increase of $3.6 million, or 16%. This increase is primarily attributable to additional expense from the same-store assets of $0.7 million in marketing expense, $0.5 million of personnel expense and $0.3 million of real estate taxes, as well as additional operating expenses from the 2007 and 2008 acquisitions.

Depreciation increased from $16.6 million for the three months ended June 30, 2007 to $20.3 million for the three months ended June 30, 2008, an increase of $3.7 million or 22%. The increase is primarily attributable to additional depreciation expense related to the 2007 and 2008 acquisitions.

General and administrative expenses, including General and administrative - related party, increased from $5.8 million for the three months ended June 30, 2007 to $6.5 million for the three months ended June 30, 2008, an increase of $0.7 million, or 12%. The primary source of the increase is approximately $0.6 million of due diligence costs that were written off during the 2008 period.

Total Other Expenses

Additional debt incurred to finance certain 2007 and 2008 acquisitions resulted in additional interest expense during the 2008 period. However, lower interest rates on variable rate debt in 2008 resulted in no overall increase in interest expense.

Discontinued Operations

Gains on disposition of discontinued operations increased from $2.1 million for the three months ended June 30, 2007 to $5.3 million for the three months ended June 30, 2008 as a result of the sale of five assets during the 2008 period as compared to three asset sales during the 2007 period.

Comparison of Operating Results for the Six Months Ended June 30, 2008 and
June 30, 2007



A comparison of net loss for the six months ended June 30, 2008 and June 30,
2007 is as follows (in thousands):



                                                        Six Months Ended June 30,
                                                          2008              2007
REVENUES
Rental income                                        $      112,191    $      100,950
Other property related income                                 7,921             8,612
Other - related party                                             -               239
Total revenues                                              120,112           109,801
OPERATING EXPENSES
Property operating expenses                                  50,757            44,554
Property operating expenses - related party                       -                51
Depreciation                                                 40,153            33,088
General and administrative                                   11,964            11,563
General and administrative - related party                        -               219
Total operating expenses                                    102,874            89,475
OPERATING INCOME                                             17,238            20,326
OTHER INCOME (EXPENSE)
Interest:
Interest expense on loans                                   (26,791 )         (25,732 )
Loan procurement amortization expense                          (957 )            (889 )
Interest income                                                  91               204
Other                                                           139                (6 )
Total other expense                                         (27,518 )         (26,423 )
LOSS FROM CONTINUING OPERATIONS BEFORE MINORITY
INTERESTS                                                   (10,280 )          (6,097 )
MINORITY INTERESTS                                              821               500
LOSS FROM CONTINUING OPERATIONS                              (9,459 )          (5,597 )
DISCONTINUED OPERATIONS
Income from operations                                          366               631
Gain on disposition of discontinued operations                5,880             2,122
Minority interest attributable to discontinued
operations                                                     (506 )            (226 )
Income from discontinued operations                           5,740             2,527
NET LOSS                                             $       (3,719 )  $       (3,070 )

Total Revenues

Rental income increased from $101.0 million for the six months ended June 30, 2007 to $112.2 million for the six months ended June 30, 2008, an increase of $11.2 million, or 11%. This increase is attributable to additional rental income from the same-store properties of $6.0 million, as well as additional rental income from the 2007 and 2008 acquisitions.

Other property related income decreased from $8.6 million for the six months ended June 30, 2007 to $7.9 million for the six months ended June 30, 2008, a decrease of $0.7 million, or 8%. This decrease is primarily attributable to a $0.6 million decrease in administrative fees earned.

Other - related party decreased from $0.2 million for the three months ended June 30, 2007 to $0 for the three months ended June 30, 2008 due to a decrease in third party management fee income pursuant to the termination of the Rising Tide management agreement in September 2007.

Total Operating Expenses

Property operating expenses, including Property operating expenses - related party, increased from $44.6 million for the six months ended June 30, 2007 to $50.8 million for the six months ended June 30, 2008, an increase of . . .