The following discussion and analysis of the Operating Partnership's consolidated financial condition and results of operations should be read in conjunction with the unaudited 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 distributions; and tax law changes that may change the taxability of future income.

RESULTS OF OPERATIONS

FOR THE PERIOD JULY 1, 2009 THROUGH SEPTEMBER 30, 2009, COMPARED TO THE PERIOD JULY 1, 2008 THROUGH SEPTEMBER 30, 2008

We recorded rental revenues of $47.7 million for the three months ended September 30, 2009, a decrease of $1.6 million or 3.3% when compared to the three months ended September 30, 2008 rental revenues of $49.4 million. Of the decrease in rental revenue, $1.8 million resulted from a 3.6% decrease in rental revenues at the 356 core properties considered in same store sales (those properties included in the consolidated results of operations since July 1, 2008). The decrease in same store rental revenues was the result of a decrease in average square foot occupancy from 83.4% to 82.4% and a decrease in rental rates of 3.1%. We believe general economic conditions have caused consumers to be more price-sensitive and have led to us offering more upfront concessions resulting in the decrease in our rental rates. The acquisition of one store subsequent to July 1, 2008, resulted in a $0.1 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 $0.6 million of management fees generated from our unconsolidated joint venture entered in May 2008, Sovran HHF Storage Holdings LLC.

Property operations and maintenance decreased $1.3 million in the three months ended September 30, 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 $0.3 million or 7.2%. The Operating Partnership 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 slightly lower 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 7.1% from the third 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 Operating Partnership stores acquired in 2008.

Depreciation and amortization expense for the third quarter of 2009 was consistent with the amounts reflected in the third quarter of 2008.

Interest expense in the third quarter increased from $10.0 million in 2008 to $10.9 million in 2009 due to an increase in interest rates as a result of our debt refinancing in June 2008. In addition, a credit ratings downgrade by Fitch Ratings in May 2009 on our unsecured floating rate notes triggered a 1.75% increase in the interest rate on our $150 million term notes and a 0.375% increase in the interest rate on our $250 million term notes.

During the three months ended September 30, 2009, we sold a parcel of land to the State of Georgia Department of Transportation for their use as part of a road widening project for net cash proceeds of $1.1 million resulting in a gain on sale of $1.1 million.

As described in Note 5 to the financial statements, during the third quarter of 2009 the Operating Partnership sold three non-strategic storage facilities for net cash proceeds of $10.9 million resulting in a loss of $1.0 million. The 2009 and 2008 operations of these facilities and the loss/gain associated with the disposal are reported in income from discontinued operations for all periods presented.

FOR THE PERIOD JANUARY 1, 2009 THROUGH SEPTEMBER 30, 2009, COMPARED TO THE PERIOD JANUARY 1, 2008 THROUGH SEPTEMBER 30, 2008

We recorded rental revenues of $141.2 million for the nine months ended September 30, 2009, a decrease of $3.8 million or 2.6% when compared to the nine months ended September 30, 2008 rental revenues of $145.0 million. Of the decrease in rental revenue, $4.3 million resulted from a 3.0% decrease in rental revenues at the 354 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 decrease in average square foot occupancy and a decrease in rental rates. The acquisition of three stores subsequent to January 1, 2008, resulted in a $0.5 million increase in rental income. Other income, which includes merchandise sales, insurance sales, truck rentals, management fees and acquisition fees, was slightly higher in 2009 primarily as a result of insurance sales. In 2009 we generated $0.9 million of management fees from our unconsolidated joint venture entered in May 2008, Sovran HHF Storage Holdings LLC. For the nine months ended September 30, 2008, in addition to the management fees earned of $0.2 million, we also earned an acquisition fee of $0.7 million.

Property operations and maintenance decreased $2.5 million in the nine months ended September 30, 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 $1.1 million or 7.5%, as a result of expected increases in these taxes.

General and administrative expenses increased $0.8 million or 6.4% from the first nine months 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 Operating Partnership stores acquired in 2008.

Depreciation and amortization expense for the nine months ended September 30, 2009 was consistent with the amounts reflected in the same period in 2008.

Interest expense for the nine months increased from $28.0 million in 2008 to $32.6 million in 2009 due to an increase in interest rates as a result of our debt refinancing in June 2008, as well as the $1.0 million in fees paid to obtain the waiver of the debt covenant violation in May 2009. In addition, as previously discussed, a credit ratings downgrade by Fitch Ratings in May 2009 on our unsecured floating rate notes triggered an increase in the interest rates on certain of our notes.

During the nine months ended September 30, 2009, we sold a parcel of land to the State of Georgia Department of Transportation for their use as part of a road widening project for net cash proceeds of $1.1 million resulting in a gain on sale of $1.1 million.

As described in Note 5 to the financial statements, during the nine months ended September 30, 2009 the Operating Partnership sold three non-strategic storage facilities for net cash proceeds of $10.9 million resulting in a loss of $1.0 million. During 2008 the Operating Partnership sold one non-strategic storage facility for net cash proceeds of $7.0 million resulting in a gain of $0.7 million. The 2009 and 2008 operations of these facilities and the loss/gain associated with the disposal are reported in income from discontinued operations for all periods presented.

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 30, 2009  September 30,
                                                                 2008

Net income attributable to                 $  21,814      $ 29,583
controlling interests
Net income attributable to                     1,020         1,224
noncontrolling interest
Depreciation of real estate and
amortization
 of intangible assets exclusive of            25,471        25,795
deferred
 financing fees
Depreciation and amortization from
 unconsolidated joint ventures                   620           262
Gain on sale of real estate                     (118)         (716)
Funds from operations allocable to
 noncontrolling redeemable Operating            (868)       (1,042)
Partnership Units
Funds from operations allocable to
 noncontrolling interest in                   (1,020)       (1,224)
consolidated joint venture
FFO available to controlling                $ 46,919      $ 53,882
unitholders                                   =======        ======

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 distribution payouts. At September 30, 2009, the Operating Partnership was in compliance with all debt covenants. The most sensitive covenant is 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 September 30, 2009, our leverage ratio as defined in the agreements was approximately 53.1%. The agreements define total consolidated liabilities to include the liabilities of the Operating Partnership plus our share of liabilities of unconsolidated joint ventures. The agreements also define a prescribed formula for determining gross asset value which incorporates the use of a 9.25% capitalization rate applied to annualized earnings before interest, taxes, depreciation and amortization ("EBITDA") as defined in the agreements. At March 31, 2009, the Operating Partnership had violated the leverage ratio covenant contained in the line of credit and term note agreements. In May 2009, the Operating Partnership obtained a waiver of the violation as of March 31, 2009. The fees paid to obtain the waiver were approximately $1 million and are included in interest expense for the nine months ended September 30, 2009. In the event that the Operating Partnership violates debt covenants in the future, the amounts due under the agreements could be callable by the lenders.

On May 6, 2009, we announced a reduction in our quarterly distribution for the remainder of 2009 from $0.64 per quarter to $0.45 per quarter. In addition to the reduction in the distribution, we changed our policy of declaring the distribution from the last week in the quarter to the first week following the quarter end. As a result of this date change, no distribution was declared in the three months ended June 30, 2009, but a distribution was declared on July 1, 2009 and paid on July 27, 2009. The distribution paid amounted to $10.7 million. We expect to continue to pay four distributions in a calendar year.

We believe that the steps the Operating Partnership has taken, including but not limited to the equity raised from our common stock offering of approximately $113.8 million, the pay down of $100 million of our term notes, and the reduction in the quarterly distribution, will be adequate to avoid future covenant violations under the current terms of our line of credit and term note agreements.

On October 5, 2009, the Company completed the public offering of 4,025,000 shares of its common stock at $29.75 per share. Net proceeds to the Operating Partnership after deducting underwriting discounts and commissions and estimated offering expenses were approximately $113.8 million. The Operating Partnership used the net proceeds from the offering to repay $100 million of the Operating Partnership's unsecured term note due June 2012 and to terminate two interest rate swaps relating to the debt repaid at a cost of $8.4 million. The Operating Partnership intends to use the remaining proceeds for general business purposes.

Our ability to retain cash flow is limited because the Company operates as a REIT. In order to maintain its REIT status, a substantial portion of the Company's operating cash flow must be used to pay distributions to our unitholders. We believe that our internally generated net cash provided by operating activities will be sufficient to fund ongoing operations, capital improvements, distributions 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 $52.4 million and $60.3 million for the nine months ended September 30, 2009, and 2008, respectively. The decrease in operating cash flows from 2008 to 2009 was primarily due to a decrease in net income.

Cash used in investing activities was $3.9 million and $61.1 million for the nine months ended September 30, 2009, and 2008, respectively. The decrease in cash used from the 2008 to 2009 period was attributable to reduced acquisition and property improvement activity in 2009, as well as the reduced investment in the unconsolidated joint venture, Sovran HHF Storage Holdings, LLC.

Cash used in financing activities was $23.8 million in the nine months ended September 30, 2009 compared to cash provided by financing activities of $9.0 million for the same period in 2008. Our reduced appetite for acquisitions in 2009 was the driver behind the decrease in cash provided from financing activities from 2008 to 2009. Cash flows provided by financing activities in the 2008 period were also partially the result of the June 2008 refinancing, discussed further below.

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 2.0% (based on our September 30, 2009 credit ratings). The proceeds from this term note were used to repay the Operating Partnership's previous line of credit that was to mature in September 2008, the Operating Partnership's term note that was to mature in September 2009, the term note maturing in July 2008, and to provide for working capital. As previously discussed, in October 2009, the Operating Partnership repaid $100 million of this term note with the proceeds of our common stock offering. The new agreements also provide for a $125 million (expandable to $175 million) revolving line of credit maturing June 2011 bearing interest at a variable rate equal to LIBOR plus 1.75% (based on our September 30, 2009 credit rating), and requires a 0.25% facility fee. The revolving line of credit maturity can be extended at our option until June 2012. At September 30, 2009, there was $125 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 8.13% (based on our September 30, 2009 credit ratings).

Prior to our October 2009 common stock offering, the line of credit facility and term notes had an investment grade rating from Standard and Poor's (BBB-). Due to our debt covenant violation and operating trends, Fitch Ratings downgraded the Company's rating on its revolving credit facility and term notes to non-investment grade (BB+) in May 2009. As a result of our common stock offering in October 2009 and the use of proceeds to repay $100 million of term notes, Fitch Ratings upgraded our rating on our line of credit and term notes again to investment grade (BBB-). Combined, this credit rating upgrade, the repayment of $100 million of term notes and the termination of the interest rate swaps related to these term notes are expected to reduce our annualized interest by approximately $9.8 million.

In addition to the unsecured financing mentioned above, our consolidated financial statements also include $107.8 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 $42.9 million, principal and interest paid monthly. The outstanding balance at September 30, 2009 on this mortgage was $28.6 million.
* 7.19% mortgage note due March 2012, secured by 27 self-storage facilities (Locke Sovran II) with an aggregate net book value of $80.0 million, principal and interest paid monthly. The outstanding balance at September 30, 2009 on this mortgage was $41.8 million.
* 7.25% mortgage note due December 2011, secured by 1 self-storage facility with an aggregate net book value of $5.7 million, principal and interest paid monthly. Estimated market rate at time of acquisition 5.40%. The outstanding balance at September 30, 2009 on this mortgage was $3.4 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, 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 $3.7 million, principal and interest paid monthly. The outstanding balance at September 30, 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 $34.3 million, interest only paid monthly. Estimated market rate at time of acquisition 6.44%. The outstanding balance at September 30, 2009 on this mortgage was $26.1 million.
* 7.50% mortgage notes due August 2011, secured by 3 self-storage facilities with an aggregate net book value of $14.1 million, principal and interest paid monthly. Estimated market rate at time of acquisition 6.42%. The outstanding balance at September 30, 2009 on this mortgage was $5.9 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 Operating Partnership 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 nine months of 2009, the Company issued approximately 59,000 shares of common stock pursuant to its Employee Stock Option Plan. In addition, during such nine month period the Company issued approximately 1,386,000 shares of common stock pursuant to the direct stock purchase portion of its Dividend Reinvestment and Stock Purchase Plan, for which the Company received proceeds of approximately $31.4 million, and approximately 17,000 shares of common stock pursuant to the dividend reinvestment portion of such Plan, for which the Company received aggregate consideration of approximately $0.4 million. The Company will be suspending the Plan prior to the end of November 2009. The Company anticipates re-activating the Plan or adopting a new Plan prior to the end of the second quarter 2010.

During 2009 the Company did not acquire any shares of its common stock via the Share Repurchase Program authorized by the Board of Directors. From the inception of the Share Repurchase Program through September 30, 2009, the Company has reacquired a total of 1,171,886 shares pursuant to this program. From time to time, subject to market price and certain loan covenants, the Company 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 or 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 nine months of 2009 we did not purchase any properties and did not have any properties under contract for purchase. In August and September of 2009 the Operating Partnership sold three non-strategic storage facilities located in Massachusetts and North Carolina for net proceeds of $10.9 million resulting in a net loss on disposal of $1.0 million. In October 2009, the Operating Partnership entered into contracts for the sale of three non-strategic properties in Pennsylvania and Virginia for approximately $8.0 million. The sales of these properties are subject to significant contingencies and there is no assurance that the properties will be sold. Should the sales occur, the Operating Partnership would recognize an aggregate gain of approximately $0.2 million. 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 and borrowings under our line of credit.

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 2009 we spent approximately $4.3 million on such improvements and we expect to spend approximately $4 million for the remainder of 2009.

DISTRIBUTION REQUIREMENTS OF THE COMPANY AND IMPACT ON THE OPERATING PARTNERSHIP

As a REIT, the Company is not required to pay federal income tax on income that it distributes to its shareholders, provided that the amount distributed is equal to at least 90% of its taxable income. These distributions must be made in the year to which they relate, or in the following year if declared before the Company files its federal income tax return, and if it is paid before the first regular dividend of the following year. The Company's source of funds for such distributions is solely and directly from the Operating Partnership.

Although the Company currently intends 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 its Board of Directors to revoke its REIT election.

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, 2009, we had five outstanding interest rate swap agreements as summarized below:

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

$20 Million             9/4/05          9/4/13   4.4350%  6 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

. . .