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 would 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 ability to comply with debt covenants, 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 JANUARY 1, 2009 THROUGH MARCH 31, 2009, COMPARED TO THE PERIOD JANUARY 1, 2008 THROUGH MARCH 31, 2008

We recorded rental revenues of $47.7 million for the three months ended March 31, 2009, a decrease of $0.4 million or 0.8% when compared to the three months ended March 31, 2008 rental revenues of $48.1 million. Of the decrease in rental revenue, $0.6 million resulted from a 1.3% decrease in rental revenues at the 357 core properties considered in same store sales (those properties included in the consolidated results of operations since January 1, 2008). The decrease in same store rental revenues was a result of a 150 basis point decrease in average square foot occupancy slightly offset by a 0.2% increase in rental rates. We believe general economic conditions have caused consumers to question the need for self-storage and the decline in housing sales has reduced demand for our product. The acquisition of three stores during 2008 resulted in a $0.2 million increase in rental income. Other income, which includes merchandise sales, insurance sales, truck rentals, management fees and acquisition fees, increased in 2009 primarily as a result of $0.3 million of management fees generated from our unconsolidated joint venture entered in May 2008, Sovran HHF Storage Holdings LLC.

Property operations and maintenance decreased $0.4 million in the three months ended March 31, 2009 compared to the same period in 2008. The decrease was achieved through various cost control measures that we put in place to mitigate the effect of the decline in revenue. Real estate taxes increased $0.4 million or 8.5%. The Company estimates a majority of its property tax expense throughout the year since invoices are not received until the third or fourth quarters. We expect same-store operating costs to be relatively flat for the remainder of 2009 with increases attributable to property taxes offset by decreases in most operating and maintenance expenses.

General and administrative expenses increased $0.3 million or 6.4% from the first quarter of 2008 to the same period in 2009. The increase primarily resulted from the costs associated with managing the 25 joint venture properties and from the three Company stores acquired in 2008.

Depreciation and amortization expense remained flat.

Interest expense increased from $9.0 million in 2008 to $10.0 million in 2009 as a result of additional borrowings under our line of credit and term notes to purchase three stores in 2008, 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 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 2008 operations of this facility are reported as discontinued operations.

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)

                                      Three months ended
(in thousands)                        March 31, 2009  March 31, 2008

Net income attributable to              $  7,635         $ 8,953
controlling interests
Net income attributable to                   485             636
noncontrolling interest
Depreciation of real estate and
amortization
 of intangible assets exclusive of         8,541           8,647
deferred
 financing fees
Depreciation and amortization from
 unconsolidated joint ventures               208              15
Funds from operations allocable to
 noncontrolling redeemable Operating        (309)           (339)
Partnership Units
Funds from operations allocable to
 noncontrolling interest in                 (340)           (462)
consolidated joint venture
FFO available to controlling            $ 16,220        $ 17,450
shareholders                              =======          ======

LIQUIDITY AND CAPITAL RESOURCES

Our line of credit and term notes require us to meet certain financial covenants measured on a quarterly basis, including prescribed leverage, fixed charge coverage, minimum net worth, limitations on additional indebtedness and limitations on dividend payouts. At March 31, 2009, we violated the leverage ratio covenant contained in our line of credit and term note agreements. This covenant limits our total consolidated liabilities to 55% of our gross asset value. At March 31, 2009, this ratio was 55.4%. The agreements define total consolidated liabilities to include the liabilities of the Company plus our share of liabilities of unconsolidated joint ventures. The agreement also defines a prescribed formula for determining gross asset value which incorporates the use of a 9.25% capitalization rate.

The Company has obtained a waiver of the violation as of March 31, 2009. Also, we believe that as of April 30, 2009, the leverage ratio is below the covenant limit. In the event that the Company violates debt covenants in the future, the amounts due under the agreements could be callable by the lenders. The Company is negotiating an amendment to the unsecured line of credit and term note agreements to revise the leverage ratio covenant, although there can be no assurances that we will be able to effectuate an amendment.

On May 6, 2009, we announced a planned reduction in our quarterly dividend for the remainder of 2009. We believe that this planned reduction in the quarterly dividend, in conjunction with the other alternatives we are exploring to raise capital and preserve liquidity, will be adequate to avoid future covenant violations under the current terms of our line of credit and term note agreements.

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 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. Future draws on our line of credit may be limited due to covenant restrictions.

Cash flows from operating activities were $14.5 million and $13.7 million for the three months ended March 31, 2009, and 2008, respectively. The increase in operating cash flows from 2008 to 2009 was primarily due to a decrease in accounts receivable and prepaid expenses, offset by a decrease in net income and accounts payable.

Cash used in investing activities was $6.7 million and $25.0 million for the three months ended March 31, 2009, and 2008, respectively. The decrease in cash used from 2008 to 2009 was attributable to reduced acquisition activity in 2009.

Cash used in financing activities was $4.9 million in the three months ended March 31, 2009 compared to cash provided by financing activities of $14.5 million for the same period in 2008. Our reduced acquisition activity in 2009 was the driver behind the decrease in cash provided from financing activities from 2008 to 2009.

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. At March 31, 2009, there was $102 million available on the unsecured line of credit, although covenant restrictions may limit borrowings pursuant to the revolving credit facility.

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-).

In addition to the unsecured financing mentioned above, our consolidated financial statements also include $108.8 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 $43.4 million, principal and interest paid monthly. The outstanding balance at March 31, 2009 on this mortgage was $28.9 million.
* 7.19% mortgage note due March 2012, secured by 27 self-storage facilities (Locke Sovran II) with an aggregate net book value of $80.9 million, principal and interest paid monthly. The outstanding balance at March 31, 2009 on this mortgage was $42.3 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 March 31, 2009 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 March 31, 2009 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 March 31, 2009 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 $34.7 million, interest only paid monthly. Estimated market rate at time of acquisition 6.44%. The outstanding balance at March 31, 2009 on this mortgage was $26.0 million.
* 7.50% mortgage notes due August 2011, secured by 3 self-storage facilities with an aggregate net book value of $14.2 million, principal and interest paid monthly. Estimated market rate at time of acquisition 6.42%. The outstanding balance at March 31, 2009 on this mortgage was $6.0 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.

During the first three months of 2009, we issued approximately 56,000 shares via our Dividend Reinvestment and Stock Purchase Plan and Employee Stock Option Plan. We received $1.3 million from the sale of such shares. We expect to issue shares when our share price and capital needs warrant such issuance.

During 2009 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 through March 31, 2009, 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.

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 AND DISPOSITION OF PROPERTIES

During the first three months of 2009 we did not purchase any properties and did not have any properties under contract for purchase. At March 31, 2009, we have two properties under contract for sale for approximately $7.4 million. The sale of these properties is subject to significant contingencies, and there is no assurance that the properties will be sold. We may seek to sell additional non-strategic properties in 2009.

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. We believe that acquisitions will be limited until the capital markets stabilize and/or prices for self-storage facilities become more attractive.

In addition, we have curtailed our program of expanding and enhancing our existing properties. In 2009, we expect to complete approximately $15 million on projects started in 2008. Funding of these improvements is expected to be provided primarily from cash from operating activities, 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 three months of 2009 we spent approximately $1.6 million on such improvements and we expect to spend approximately $8 million for the remainder of 2009.

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 2009, we expect our percentage of revenue from such sources will be approximately 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 March 31, 2009, 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 March 31, 2009, 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 March 31, 2009, $500 million of our $523 million of 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 March 31, 2009, a 100 basis point increase in interest rates would increase our interest expense $0.2 million 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 14 to the financial statements.