The following discussion and analysis of the Company's consolidated financial condition and results of operations should be read in conjunction with the financial statements and notes thereto included elsewhere in this report.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

When used in this discussion and elsewhere in this document, the words "intends," "believes," "expects," "anticipates," 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 and in Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the effect of competition from new self-storage facilities, which could cause rents and occupancy rates to decline; our ability to evaluate, finance and integrate acquired businesses into our existing business and operations; our ability to effectively compete in the industry in which we do business; our existing indebtedness may mature in an unfavorable credit environment, preventing refinancing or forcing refinancing of the indebtedness on terms that are not as favorable as the existing terms; interest rates may fluctuate, impacting costs associated with our outstanding floating rate debt; our reliance on our call center; our cash flow may be insufficient to meet required payments of principal, interest and dividends; and tax law changes that may change the taxability of future income.

RESULTS OF OPERATIONS

FOR THE PERIOD JULY 1, 2008 THROUGH SEPTEMBER 30, 2008, COMPARED TO THE PERIOD JULY 1, 2007 THROUGH SEPTEMBER 30, 2007

We recorded rental revenues of $49.8 million for the three months ended September 30, 2008, an increase of $0.8 million or 1.7% when compared to the three months ended September 30, 2007 rental revenues of $49.0 million. Of the increase in rental revenue, $0.1 million resulted from a 0.2% increase in rental revenues at the 353 core properties considered in same store sales (those properties included in the consolidated results of operations since July 1, 2007). The increase in same store rental revenues was achieved primarily through rate increases on select units averaging 0.9%, offset by a decrease in occupancy of 170 basis points, which we believe resulted from general economic conditions, in particular the housing sector, and the return to normalcy in Florida after the 2005 hurricanes. The remaining $0.7 million increase in rental revenues resulted from the acquisition of two stores during 2008 and from having the four stores acquired in the 4th quarter of 2007 included for a full quarter of operations. Other income, which includes merchandise sales, insurance sales, truck rentals, management fees and acquisition fees, increased in 2008 primarily as a result of $0.9 million of management and acquisition fees generated from the unconsolidated joint venture (Sovran HHF Storage Holdings LLC).

Property operating and real estate tax expense increased $1.5 million, or 8.1%, in the quarter ended September 30, 2008 compared to the same period in 2007. Of the increase, $0.3 million resulted from expenses incurred by the facilities acquired in 2008 and from having expenses from the 2007 acquisitions included for a full quarter of operations. Same store expenses for the period increased 4.9% or $0.9 million as a result of increased utilities, maintenance, and property taxes. We also incurred $0.3 million of uninsured damages from Hurricane Ike during the three months ended September 30, 2008. We expect same-store operating costs to increase only moderately in the remainder of 2008 with increases primarily attributable to maintenance, utilities and property taxes.

General and administrative expenses increased $0.3 million or 7.5% from the third quarter of 2007 to the same period in 2008. The increase primarily resulted from the costs associated with operating the properties acquired in 2008 and 2007, and from managing the joint venture properties.

Depreciation and amortization expense increased to $8.6 million in the third quarter of 2008 from $8.3 million in same period of 2007, primarily as a result of a full quarter of depreciation on prior year acquisitions.

Income from operations decreased from $20.4 million for the three months ended September 30, 2007 to $20.0 million for the three months ended September 30, 2008 as a result of the net effect of the aforementioned items.

Interest expense increased from $9.1 million in 2007 to $10.0 million in 2008 as a result of additional borrowings under our line of credit and term notes to purchase two stores in 2008 and four stores in the fourth quarter of 2007, as well as an increase in interest rates as a result of our debt refinancing in June 2008.

As described in Note 5 to the financial statements, during the nine months ended September 30, 2008, the Company sold one non-strategic storage facility located in Michigan for net cash proceeds of $7.0 million resulting in a gain of $0.7 million. The 2007 operations of this facility are reported as discontinued operations.

FOR THE PERIOD JANUARY 1, 2008 THROUGH SEPTEMBER 30, 2008, COMPARED TO THE PERIOD JANUARY 1, 2007 THROUGH SEPTEMBER 30, 2007

We recorded rental revenues of $146.3 million for the nine months ended September 30, 2008, an increase of $8.0 million or 5.8% when compared to the nine months ended September 30, 2007 rental revenues of $138.3 million. Of the increase in rental revenue, $1.5 million resulted from a 1.1% increase in rental revenues at the 326 core properties considered in same store sales (those properties included in the consolidated results of operations since January 1, 2007). The increase in same store rental revenues was achieved primarily through rate increases on select units, offset by a decrease in occupancy, which we believe resulted from general economic conditions, in particular the housing sector, and the return to normalcy in Florida after the 2005 hurricanes. The remaining $6.5 million increase in rental revenues resulted from the acquisition of two stores during 2008 and from having the 31 stores acquired in 2007 included for a full nine months of operations. Other income increased as a result of the management and acquisition

fees generated from the unconsolidated joint venture (Sovran HHF Storage Holdings LLC) and the merchandise sales, insurance sales, and the additional incidental revenue generated by truck rentals at the stores acquired in 2008 and 2007.

Property operating and real estate tax expense increased $4.0 million, or 7.6%, in the nine months ended September 30, 2008 compared to the same period in 2007. Of this increase, $2.5 million were expenses incurred by the facilities acquired in 2008 and from having expenses from the 2007 acquisitions included for a full nine months of operations. $1.2 million of the increase was due to increased maintenance, utilities, and property taxes at the 326 core properties considered same stores. We also incurred $0.3 million of uninsured damages from Hurricane Ike.

General and administrative expenses increased $1.3 million or 11.3% from the first nine months of 2007 to the same period in 2008. The increase primarily resulted from the costs associated with operating the properties acquired in 2008 and 2007, and from managing the joint venture properties.

Depreciation and amortization expense remained relatively flat for the first nine months of 2008 as compared to 2007 as a result of increased depreciation on acquisitions offset by a reduction in amortization of in-place customer leases.

Income from operations increased from $54.1 million for the nine months ended September 30, 2007 to $57.7 million for the nine months ended September 30, 2008 as a result of the net effect of the aforementioned items.

Interest expense increased from $24.9 million in 2007 to $28.0 million in 2008 as a result of additional borrowings under our line of credit and term notes to purchase two stores in 2008 and 31 stores in 2007.

The decrease in preferred stock dividends from 2007 to 2008 was a result of the conversion of all remaining 1,200,000 shares of our Series C Preferred Stock into 920,244 shares of common stock in July 2007.

FUNDS FROM OPERATIONS

We believe that Funds from Operations ("FFO") provides relevant and meaningful information about our operating performance that is necessary, along with net earnings and cash flows, for an understanding of our operating results. FFO adds back historical cost depreciation, which assumes the value of real estate assets diminishes predictably in the future. In fact, real estate asset values increase or decrease with market conditions. Consequently, we believe FFO is a useful supplemental measure in evaluating our operating performance by disregarding (or adding back) historical cost depreciation.

FFO is defined by the National Association of Real Estate Investment Trusts, Inc. ("NAREIT") as net income computed in accordance with generally accepted accounting principles ("GAAP"), excluding gains or losses on sales of properties, plus depreciation and amortization and after adjustments to record unconsolidated partnerships and joint ventures on the same basis. We believe that to further understand our performance, FFO should be compared with our reported net income and cash flows in accordance with GAAP, as presented in our consolidated financial statements.

Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current NAREIT definition or that
interpret the current NAREIT definition differently. FFO does not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, as an alternative to net cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, or as an indicator of our ability to make cash distributions.

Reconciliation of Net Income to Funds From Operations (unaudited)

                                           Nine months ended
(in thousands)                            September September 30, 2007
                                           30, 2008

Net income                             $ 29,022           $ 28,476
Minority interest in income               1,785              1,967
Depreciation of real estate and
amortization
 of intangible assets exclusive of       25,795             25,547
deferred
 financing fees
Depreciation and amortization from
 unconsolidated joint ventures              262                 44
Gain on sale of real estate                (716)                 -
Preferred stock dividends                     -             (1,256)
Funds from operations allocable to
 minority interest in Operating          (1,042)            (1,069)
Partnership
Funds from operations allocable to
 minority interest in consolidated       (1,224)            (1,386)
joint ventures
FFO available to common shareholders   $ 53,882           $ 52,323
                                         =======             ======

LIQUIDITY AND CAPITAL RESOURCES

Our ability to retain cash flow is limited because we operate as a REIT. In order to maintain our REIT status, a substantial portion of our operating cash flow must be used to pay dividends to our shareholders. We believe that our internally generated net cash provided by operating activities will continue to be sufficient to fund ongoing operations, capital improvements, dividends and debt service requirements through June 2011, at which time our revolving line of credit matures.

Cash flows from operating activities were $60.1 million and $63.8 million for the nine months ended September 30, 2008, and 2007, respectively. The decrease was primarily attributable to prepaid insurance premiums and a decrease in accounts payable related to property taxes and interest paid in 2008.

Cash used in investing activities was $61.1 million and $161.5 million for the nine months ended September 30, 2008, and 2007 respectively. The decrease in cash used from 2007 to 2008 was attributable to reduced acquisition activity in 2008.

Cash provided by financing activities was $9.2 million in the first nine months of 2008 compared to $58.4 million in the same period of 2007. The decrease in cash provided by financing activities was primarily due to reduced borrowings for acquisitions in 2008 versus the higher activity in 2007. The decrease was also the result of reduced proceeds from the sale of common stock and increases in dividends paid.

On June 25, 2008, we entered into agreements relating to new unsecured credit arrangements, and received funds under those arrangements. As part of the agreements, we entered into a $250 million unsecured term note maturing in June 2012 bearing interest at LIBOR plus 1.625%. The proceeds from this term note were used to repay the Company's previous line of credit that was to mature in September 2008, the Company's term note that was to mature in September 2009, the term note maturing in July 2008, and to provide for working capital. The new agreements also provide for a $125 million (expandable to $150 million) revolving line of credit maturing June 2011 bearing interest at a variable rate equal to LIBOR plus 1.375%, and requires a 0.25% facility fee. The revolving line of credit maturity can be extended at our option until June 2012.

We also maintain a $80 million term note maturing September 2013 bearing interest at a fixed rate of 6.26%, a $20 million term note maturing September 2013 bearing interest at a variable rate equal to LIBOR plus 1.50%, and a $150 million unsecured term note maturing in April 2016 bearing interest at 6.38%.

The line of credit facility and term notes currently have investment grade ratings from Standard and Poor's (BBB-) and Fitch (BBB-).

Our line of credit and term notes require us to meet certain financial covenants, including prescribed leverage, fixed charge coverage, minimum net worth, limitations on additional indebtedness and limitations on dividend payouts. As of September 30, 2008, we were in compliance with all covenants.

In addition to the unsecured financing mentioned above, our consolidated financial statements also include $109.7 million of mortgages payable as detailed below:

* 7.80% mortgage note due December 2011, secured by 11 self-storage facilities (Locke Sovran I) with an aggregate net book value of $43.8 million, principal and interest paid monthly. The outstanding balance at September 30, 2008 on this mortgage was $29.2 million.
* 7.19% mortgage note due March 2012, secured by 27 self-storage facilities (Locke Sovran II) with an aggregate net book value of $81.0 million, principal and interest paid monthly. The outstanding balance at September 30, 2008 on this mortgage was $42.9 million.

* 7.25% mortgage note due December 2011, secured by 1 self-storage facility with an aggregate net book value of $5.8 million, principal and interest paid monthly. Estimated market rate at time of acquisition 5.40%. The outstanding balance at September 30, 2008 on this mortgage was $3.5 million.
* 6.76% mortgage note due September 2013, secured by 1 self-storage facility with an aggregate net book value of $2.0 million, principal and interest paid monthly. The outstanding balance at September 30, 2008 on this mortgage was $1.0 million.
* 6.35% mortgage note due March 2014, secured by 1 self-storage facility with an aggregate net book value of $3.8 million, principal and interest paid monthly. The outstanding balance at September 30, 2008 on this mortgage was $1.1 million.
* 5.55% mortgage notes due November 2009, secured by 8 self-storage facilities with an aggregate net book value of $35.1 million, interest only paid monthly. Estimated market rate at time of acquisition 6.44%. The outstanding balance at September 30, 2008 on this mortgage was $25.9 million.
* 7.50% mortgage notes due August 2011, secured by 3 self-storage facilities with an aggregate net book value of $14.3 million, principal and interest paid monthly. Estimated market rate at time of acquisition 6.42%. The outstanding balance at September 30, 2008 on this mortgage was $6.1 million.

The 7.80% and 7.19% mortgages were incurred in 2001 and 2002 respectively as part of the financing of the consolidated joint ventures. The Company assumed the 7.25%, 6.76%, 6.35%, 5.55% and 7.50% mortgage notes in connection with the acquisitions of storage facilities in 2005 and 2006.

On July 7, 2007, we issued 920,244 shares of our common stock to the holder of our 8.375% Series C Preferred Stock upon the holder's election to convert the remaining 1,200,000 shares of Series C Preferred Stock into common stock. As a result of the 2007 conversion, $26.6 million recorded in shareholders' equity as 8.375% Series C Convertible Cumulative Preferred Stock was reclassified to additional paid-in capital in July 2007.

During the first nine months of 2008, we did not acquire any shares of our common stock via the Share Repurchase Program authorized by the Board of Directors. From the inception of the Share Repurchase Program in 1998 through September 30, 2008, we have reacquired a total of 1,171,886 shares pursuant to this program. From time to time, subject to market price and certain loan covenants, we may reacquire additional shares.

During the first nine months of 2008, we issued approximately 245,000 shares via our Dividend Reinvestment and Stock Purchase Plan and Employee Stock Option Plan. We received $9.4 million from the sale of such shares. We expect to issue shares when our share price and capital needs warrant such issuance.

Future acquisitions, our expansion and enhancement program, and share repurchases are expected to be funded with draws on our line of credit, sale of properties and private placement solicitation of joint venture equity. Current capital market conditions may prevent us from accessing other traditional sources of capital including the issuance of common and preferred stock and the issuance of unsecured term notes. Should these capital market conditions persist, we may have to curtail acquisitions, our expansion and enhancement program, and share repurchases as we approach June 2011, when our line of credit matures.

ACQUISITION OF PROPERTIES

During the first nine months of 2008, we have used operating cash flow, borrowings pursuant to a bank term note, and proceeds from our Dividend Reinvestment and Stock Purchase Plan to acquire two properties in Mississippi comprising 0.2 million square feet from unaffiliated storage operators for approximately $14.3 million.

FUTURE ACQUISITION AND DEVELOPMENT PLANS

Our external growth strategy is to increase the number of facilities we own by acquiring suitable facilities in markets in which we already have operations, or to expand in new markets by acquiring several facilities at once in those new markets. In conjunction with the joint venture agreement entered in June 2008 (see Note 12 to the financial statements), potential acquisition opportunities over the first nine months of the agreement will be offered to the joint venture. The Company's acquisitions over this period will therefore be limited to facilities that do not fit the joint venture's investment objectives, but do meet ours. In July 2008, the Company's joint venture (Sovran HHF Storage Holdings LLC) acquired 21 properties for approximately $144 million. The Company's equity contribution to the joint venture for these purchases was approximately $15.5 million, which was financed through draws on our line of credit.

In addition, we are continuing with our program of expanding and enhancing our existing properties. In 2008, we expect to add as much as 700,000 square feet of climate and/or humidity controlled space, and acquire several parcels of land contiguous to our existing stores. The projected cost of these revenue enhancing improvements is estimated at approximately $50 million. During the first nine months of 2008 we completed approximately $16.5 million of such revenue enhancing improvements. Funding of these and the above-mentioned improvements is expected to be provided primarily from borrowings under our line of credit, and issuance of common shares through our Dividend Reinvestment and Stock Purchase Plan.

We also expect to continue making capital expenditures on our properties. This includes repainting, paving, and remodeling of the office buildings. For the first nine months of 2008 we spent approximately $14.4 million on such improvements and we expect to spend approximately $5 million for the remainder of 2008.

CONTRACTUAL OBLIGATIONS

Refer to Notes 6 and 7 of the financial statements for changes in the contractual obligations relative to our unsecured line of credit and term notes. Our other contractual obligations have not changed materially from the disclosures in our 2007 Form 10-K.

REIT QUALIFICATION AND DISTRIBUTION REQUIREMENTS

As a REIT, we are not required to pay federal income tax on income that we distribute to our shareholders, provided that the amount distributed is equal to at least 90% of our taxable income. These distributions must be made in the year to which they relate, or in the following year if declared before we file our federal income tax return, and if it is paid before the first regular dividend of the following year.

As a REIT, we must derive at least 95% of our total gross income from income related to real property, interest and dividends. In 2008, our percentage of revenue from such sources exceeded 98%, thereby passing the 95% test, and no special measures are expected to be required to enable us to maintain our REIT designation. Although we currently intend to operate in a manner designed to qualify as a REIT, it is possible that future economic, market, legal, tax or other considerations may cause our Board of Directors to revoke our REIT election.

UMBRELLA PARTNERSHIP REIT

We were formed as an Umbrella Partnership Real Estate Investment Trust
("UPREIT") and, as such, have the ability to issue Operating Partnership ("OP")
Units in exchange for properties sold by independent owners. By utilizing such OP Units as currency in facility acquisitions, we may obtain more favorable pricing or terms due to the seller's ability to partially defer their income tax liability. As of September 30, 2008, 419,952 Units are outstanding that were issued in exchange for self-storage properties at the request of the sellers.

INTEREST RATE RISK

We have entered into interest rate swap agreements in order to mitigate the effects of fluctuations in interest rates on our floating rate debt. At September 30, 2008, we have seven outstanding interest rate swap agreements as summarized below:

                                                   Fixed   Floating Rate
Notional Amount   Effective Date Expiration Date Rate Paid    Received

$50 Million…………..       11/14/05          9/1/09   4.3900%  1 month LIBOR
$20 Million…………..         9/4/05          9/4/13   4.4350%  6 month LIBOR
$50 Million…………..       10/10/06          9/1/09   4.4800%  1 month LIBOR
$50 Million…………..         7/1/08         6/25/12   4.2825%  1 month LIBOR
$100 Million…………          7/1/08         6/22/12   4.2965%  1 month LIBOR
$75 Million…………..         9/1/09         6/22/12   4.7100%  1 month LIBOR
$25 Million…………..         9/1/09         6/22/12   4.2875%  1 month LIBOR

The fixed rate amounts presented in the above table represent the rates paid under the swaps only and do not include the additional interest rate spread related to the outstanding term notes described in Note 6 of our financial statements.

Upon renewal or replacement of the credit facility, our total interest may change dependent on the terms we negotiate with the lenders; however, the LIBOR base rates have been contractually fixed on $270 million of our debt through the interest rate swap termination dates.

At September 30, 2008, all of our unsecured debt is on a fixed rate basis after taking into account the interest rate swaps noted above. Based on our outstanding unsecured debt at September 30, 2008, a 1% increase in interest rates would have a $0.1 million effect on our interest expense annually.

INFLATION

We do not believe that inflation has had or will have a direct effect on our operations. Substantially all of the leases at the facilities are on a month-to-month basis which provides us with the opportunity to increase rental rates as each lease matures.

SEASONALITY

Our revenues typically have been higher in the third and fourth quarters, primarily because we increase rental rates on most of our storage units at the beginning of May and because self-storage facilities tend to experience greater occupancy during the late spring, summer and early fall months due to the greater incidence of residential moves during these periods. However, we believe that our customer mix, diverse geographic locations, rental structure and expense structure provide adequate protection against undue fluctuations in cash flows and net revenues during off-peak seasons. Thus, we do not expect seasonality to materially affect distributions to shareholders.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 15 to the financial statements.