UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON,Washington, DC 20549

 

FORM 10-K

 

x

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

For the fiscal year ended

December 31, 20042007

OR

¨

OR

o

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

For the transition period from            to            

Commission file number 001-32324

 

Commission File Number 001-32324

U-STORE-IT TRUST

(Exact Name of Registrant as Specified in Its Charter)

 

Maryland

Maryland

20-1024732

(State of Incorporation)

(I.R.S. Employer

Identification No.)

(State or Other Jurisdiction of

(IRS Employer

6745 Engle Road

Incorporation or Organization)

Identification No.)

Suite 300

50 Public Square

Suite 2800

Cleveland, Ohio 44130

(440) 234-070044113

(Address of Principal Executive Offices)

(Registrant’s Telephone Number)Zip Code)

Registrant’s telephone number, including area code (216) 274-1340

 

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

 

Title of each class

Name of each exchange on which registered

Common Shares, $0.01 par value per share

New York Stock Exchange

 

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

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  YESxNOo

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  YESoNOx

 

Indicate by check mark whether the Registrantregistrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.YESþ    NO ¨xNOo

 

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer x           Accelerated Filer o          Non-Accelerated Filer o             Smaller Reporting Company o

 

Indicate by check mark whether the Registrantregistrant is an accelerated filera shell company (as defined in Rule 12b-2 of the Exchange Act Rule 12b-2)Act).YES¨oNO    NO  þx

 

As of June 30, 2004,2007, the last business day of the Registrant’sregistrant’s most recently completed second quarter, there was nothe aggregate market value of common shares held by non-affiliates of the Registrant. The Registrant completed its initial public offering on October 27, 2004.registrant was $942,351,737.

 

As of March 21, 2005,February 27, 2008, the number of common shares of the Registrantregistrant outstanding was 37,345,162.57,847,325.

 

Documents incorporated by reference: Portions of the Proxy Statement for the 20052008 Annual Meeting of Shareholders of the Registrant to be filed subsequently with the SEC are incorporated by reference into Part III of this report.

 


TABLE OF CONTENTS

PART I

Page

3

PART I

3

Item 1.

Business

Business

3

4

Item 1A.

Risk Factors

10

Item 1B.

Unresolved Staff Comments

21

Item 2.

Properties

Properties

21

24

Item 3.

Legal Proceedings

30

31

Item 4.

Submission of Matters to a Vote of Security Holders

31

30

PART II

32

30

Item 5.

Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

31

32

Item 6.

Selected Financial Data

33

34

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

36

38

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

49

48

Item 8.

Financial Statements and Supplementary Data

50

48

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

50

48

Item 9A.

Controls and Procedures

50

48

Item 9B.

Other Information

48

50

PART III

49

50

Item 10.

Directors and

Trustees, Executive Officers of the Registrantand Corporate Governance

51

49

Item 11.

Executive Compensation

51

49

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related ShareholdersShareholder Matters

51

49

Item 13.

Certain Relationships and Related Transactions, and Trustee Independence

51

50

Item 14.

Principal Accountant Fees and Services

50

51

PART IV

50

52

Item 15.

Exhibits and Financial Statement Schedules

50

52

 

2


PART I

 

Forward-Looking Statements

 

This Annual Report on Form 10-K, together with other statements and information publicly disseminated by U-Store-It Trust (“we,” “us,” “our” or the “Company”), contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.1934, as amended (the “Exchange Act”). Such statements are based on assumptions and expectations whichthat may not be realized and are inherently subject to risks, uncertainties and other factors, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Although we believe the expectations reflected in these forward-looking statements are based on reasonable assumptions, future events and actual results, performance, transactions or achievements, financial and otherwise, may differ materially from the results, performance, transactions or achievements expressed or implied by the forward-looking statements. Risks, uncertainties and other factors that might cause such differences, some of which could be material, include, but are not limited to:

 

·national and local economic, business, real estate and other market conditions;

 

·the competitive environment in which we operate;

 

·the execution of our business plan;

 

·financing risks;

risks including the risk of over-leverage and the corresponding risk of default on our mortgage and other debt;

 

·         increases in interest rates and operating costs;

·our ability to maintain our status as a real estate investment trust (“REIT”) for federal income tax purposes;

 

·acquisition and development risks;

 

·         changes in real estate and zoning laws or regulations;

·         risks related to natural disasters;

·potential environmental and other liabilities;

 

·other factors affecting the real estate industry generally or the self-storage industry in particular; and

 

·other risks identified in Item 1A of this Annual Report on Form 10-K and, from time to time, in other reports we file with the Securities and Exchange Commission (the “SEC”) or in other documents that we publicly disseminate.

 

We undertake no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.otherwise except as may be required in securities laws.

ITEM 1.BUSINESS

 

ITEM 1.  BUSINESS

Overview

 

We are a self-administered and self-managed real estate company focused primarily on the ownership, operation, acquisition and development of self-storage facilities in the United States.

 

As of December 31, 2004,2007, we owned and managed 201409 self-storage facilities located in 2126 states and aggregating approximately 13.026.1 million rentable square feet.  As of December 31, 2004, we also managed 14 additional facilities owned by Rising Tide Development, LLC (“Rising Tide Development”), a company owned and controlled by Robert J. Amsdell,2007, our Chairman and Chief Executive Officer, and Barry L. Amsdell, one of our trustees. As of December 31, 2004, our 201409 facilities were approximately 82.2%79.5% leased to a total of approximately 91,000180,000 tenants and no single customertenant accounted for more than 1% of our annual rent.rental revenue.

3


 

Our self-storage facilities are designed to offer affordable, easily-accessible and secure storage space for our residential and commercial customers. Our customers rent storage units for their exclusive use, typically on a month-to-month basis. Additionally, some of our facilities offer outside storage areas for vehicles and boats. Our facilities are specifically designed to accommodate both residential and commercial customers, with features such as security systems and wide aisles and load-bearing capabilities for large truck access. All of our facilities have an on-site manager during business hours, and 307, or approximately 75%, of our facilities have a manager who resides in an apartment at the facility. Our customers can access their storage units during business hours, and some of our facilities provide customers with 24-hour access through computer controlled access systems. Our goal is to provide customers with the highest standard of facilities and service in the industry. To that end, approximately 53% of our facilities include climate controlled units, compared to the national average of 39% reported by the 2007 Self-Storage Almanac.

 

We were formed in July 2004 to succeed to the self-storage operations owned directly and indirectly by Robert J. Amsdell, Barry L. Amsdell, Todd C. Amsdell, our Chief Operating Officer, and their affiliated entities and related family trusts (which entities and family trusts are referred to herein as the “Amsdell Entities”). We are organized as a REIT under Maryland real estate investment trust,law, and we believe that we qualify for taxation as a REIT for federal income tax purposes beginning with our short taxable year ended December 31, 2004. From our inception until October 2004, we did not have any operations. We commenced operations onas a publicly-traded REIT in October 21, 2004 after completing the mergers of certain Amsdell Partners, Inc. and High Tide LLCEntities with and into us, followed by our initial public offering (“IPO”), and the consummation of various other formation transactions whichthat occurred concurrently with, or shortly after, completion of theour IPO.

 

We conduct all of our business through U-Store-It, L.P., our operating partnership, U-Store-It, L.P., of which we serve as general partner, and its subsidiaries. As of December 31, 2004,2007, we held approximately 97%91.9% of the aggregate partnership interests in our operating partnership. Since its formation in 1996, our operating partnership has been engaged in virtually all aspects of the self-storage business, including the development, acquisition, ownership and operation of self-storage facilities.

 

Recent DevelopmentsAcquisition and Disposition Activity

As of December 31, 2007 and 2006, we owned 409 and 399 facilities, respectively, that contained an aggregate of 26.1 million    and 25.4 million rentable square feet with occupancy rates of 79.5% and 78.2%, respectively.  As of December 31, 2007 we had facilities in 26 states: Alabama, Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Utah, Virginia and Wisconsin.   A complete listing of, and certain information about, our facilities is included in Item 2 of this Annual Report on Form 10-K.  The following acquisitions occurred during the years ended December 31, 2007 and 2006:

4


 

 

 

 

Total Number of

 

Purchase / Sale Price (in

 

Facility/Portfolio

 

Transaction Date

 

Facilities

 

thousands)

 

 

 

 

 

 

 

 

 

2007 Acquisitions

 

 

 

 

 

 

 

Sanford Portfolio

 

January 2007

 

1

 

$

6,300

 

Grand Central Portfolio

 

January 2007

 

2

 

13,200

 

Rising Tide Portfolio

 

September 2007

 

14

 

121,000

 

 

 

 

 

17

 

$

140,500

 

 

 

 

 

 

 

 

 

2007 Dispositions

 

 

 

 

 

 

 

South Carolina Assets

 

May 2007

 

3

 

$

12,750

 

Arizona Assets

 

December 2007

 

2

 

6,440

 

 

 

 

 

5

 

$

19,190

 

 

 

 

 

 

 

 

 

2006 Acquisitions

 

 

 

 

 

 

 

Nashville, TN Portfolio

 

January 2006

 

2

 

$

13,100

 

Dallas, TX Portfolio

 

January 2006

 

2

 

11,500

 

U-Stor Self Storage Portfolio

 

February 2006

 

3

 

10,800

 

Sure Save Portfolio

 

February 2006

 

24

 

164,500

 

Texas Storage Portfolio

 

March 2006

 

4

 

22,500

 

Nickey Portfolio

 

April 2006

 

4

 

13,600

 

SecurCare Portfolio

 

May 2006

 

4

 

35,700

 

Texas Storage Portfolio

 

June 2006

 

1

 

6,500

 

Jernigan Portfolio

 

July 2006

 

9

 

45,300

 

U-Stor Self Storage Portfolio

 

August 2006

 

1

 

3,500

 

Bailes Portfolio

 

August 2006

 

3

 

15,600

 

In & Out Self Storage Portfolio

 

August 2006

 

1

 

7,600

 

Texas Storage Portfolio

 

September 2006

 

2

 

12,200

 

 

 

 

 

60

 

$

362,400

 

The following table summarizes the change in number of self-storage facilities from January 1, 2006 through December 31, 2007:

 

 

2007

 

2006

 

Balance - Beginning of year

 

399

 

339

 

Facilities acquired

 

17

 

60

 

Facilities consolidated

 

(2

)

—

 

Facilities sold

 

(5

)

—

 

Balance - End of year

 

409

 

399

 

Financing Activities

We entered into the following significant financings during the years ended December 31, 2007, 2006 and 2005:

 

·Completion of IPOLehman Brothers Fixed Rate Mortgage Loan.. On October 27, 2004, we completed our IPO, pursuant to which we sold an aggregate of 28,750,000 common shares (including 3,750,000 common shares pursuant to the exercise of the underwriters’ over-allotment option) at an offering price of $16.00 per share, for gross proceeds of $460.0 million. As part  In July 2005, one of our formation transactions, we acquired generalsubsidiaries entered into a fixed rate mortgage loan agreement with Lehman Brothers Bank, FSB in the principal amount of $80.0 million. The mortgage loan, which is secured by 24 of our self-storage facilities, bears interest at 5.13% and limited partner interestsmatures in August 2012.

5


·LaSalle Bank Fixed Rate Mortgage Loan.  In August 2005, one of our Operating Partnership from Robert J. Amsdell, Barry L. Amsdell, Todd C. Amsdellsubsidiaries entered into a fixed rate mortgage loan agreement with LaSalle Bank National Association in the principal amount of $80.0 million. The mortgage loan, which is secured by 29 of our self-storage facilities, bears interest at 4.96% and certain of the Amsdell Entitiesmatures in exchange for our common shares, and we also acquired U-Store-It Mini Warehouse Co., our management company, for cash. In addition, three additional facilities were contributed to our operating partnership by the Amsdell Entities in exchange for operating partnership units and the assumption of outstanding indebtedness on these facilities.September 2012.

 

·Revolving Credit Facility.AEGON USA Fixed Rate Mortgage Loan.On October 27, 2004, concurrently with the closing  In November 2005, one of our IPO, we and our operating partnershipsubsidiaries entered into a three-year,fixed rate mortgage loan with Transamerica Financial Life Insurance Company, a subsidiary of AEGON USA Realty Advisors, Inc., in the principal amount of $72.5 million. The mortgage loan, which is secured by 36 of our self-storage facilities, bears interest at 5.97% and matures in November 2015. We assumed the obligation to enter into this loan in connection with the National Self Storage acquisition.

·Repayment of Balance under Revolving CreditFacility.  We used a portion of the proceeds from our October 2005 public offering to pay down the outstanding balance under our then existing $150.0 million secured revolving credit facility with Lehman Brothers Inc. and Wachovia Capital Markets, LLC, as joint advisors, joint lead arrangers and joint bookrunners.

facility. The facility iswas scheduled to matureterminate on October 27, 2007, with the option for us to extend the maturitytermination date to October 27, 2008.  As described below, we replaced our secured revolving credit facility with a $250.0 million unsecured revolving credit facility in February 2006.  Borrowings under the facility bearbore interest at a variable rate based upon a basethe prime rate or a Eurodollar rate plus,LIBOR and in each case, a spread depending on our leverage ratio. The credit facility iswas secured by certain of our self-storage facilities and requiresrequired that we maintain a minimum “borrowing base” of properties. We intendAs of December 31, 2005, we had no outstanding balance under our revolving credit facility.

·Term Loan Agreement.  In February 2006, we and our operating partnership entered into a 60-day, unsecured $30 million term loan agreement with Wachovia Bank, National Association as the lender. The term loan bore interest at a variable rate of LIBOR plus 175 basis points. The loan proceeds were used to use thisfinance a portion of the Sure Save Portfolio. The loan was paid in full from proceeds obtained upon entering into a new revolving credit facility principallyin February 2006.

·Revolving Credit Facility.  In February 2006, we and our operating partnership entered into a three-year $250.0 million unsecured revolving credit facility with Wachovia Bank, National Association, replacing our $150.0 million secured revolving facility. The revolving credit facility was scheduled to terminate in February 2009, but we replaced it with a new revolving credit facility in November 2006 as described below.  The terms of the revolving credit facility allowed us to increase the amount that may be borrowed up to $350.0 million at a later date, if necessary. The facility required that we satisfy certain financial coverage ratios and operating covenants, including a maximum leverage ratio and a minimum interest coverage ratio. Borrowings under the facility bore interest, at the Company’s option, at either an alternate base rate or a Eurodollar rate, in each case plus an applicable margin. The alternative base interest rate was a fluctuating rate equal to the higher of the prime rate or the sum of the federal funds effective rate plus 50 basis points. The applicable margin for the alternative base rate varied from 0.15% to 0.60% depending on the Company’s leverage ratio. The Eurodollar rate was a periodic fixed rate equal to LIBOR. The applicable margin for the Eurodollar rate varied from 1.15% to 1.60% based on the Company’s leverage ratio.

·Term Loan Agreement.  In November 2006, we and our operating partnership entered into a 30-day, unsecured $50 million term loan agreement with Wachovia Bank, National Association as the lender. The term loan bears interest at a variable rate of LIBOR plus 115 basis points. The loan proceeds, along with borrowings under our revolving credit facility, were used to finance the future acquisition and developmentrepayment of self-storage facilities and for general working capital purposes.maturing secured loans. The loan was paid in full from proceeds obtained upon entering into a new revolving credit facility in November 2006.

 

·Fixed Rate Mortgage Loans.Revolving Credit Facility.Also on October 27, 2004,  In November 2006, we and concurrently with the closing of our IPO, three of our subsidiariesoperating partnership entered into a new three-year $450.0 million unsecured credit facility with Wachovia Capital Markets, LLC and Keybanc Capital Markets, replacing our existing $250.0 million unsecured revolving facility. The facility consists of a $200 million term loan and a $250 million revolving credit facility.  The new facility has a three-year term with a one-year extension option and scheduled termination in November 2009.  Borrowings under the credit facility bear interest, at our option, at either an alternative base rate or a Eurodollar rate, in each case, plus an applicable margin based on our leverage ratio or our credit rating.  The alternative base interest rate is a fluctuating rate equal to the higher of the prime rate or the sum of the federal funds effective rate plus 50 basis points.  The applicable margin for the alternative base rate will vary from 0.00% to 0.50% depending on our leverage ratio prior to achieving an investment grade rating, and will vary from 0.00% to 0.25% depending on our credit rating after achieving an investment grade rating.  The Eurodollar rate is a rate of interest that is fixed for interest periods of one, two, three separate fixedor six months based on the LIBOR rate mortgagedetermined two business days prior to the commencement of the applicable interest period.  The applicable margin for the Eurodollar rate will vary from 1.00% to 1.50% depending on our leverage ratio prior to achieving an investment grade rating, and will vary from

6


0.425% to 1.00% depending on our credit rating after achieving an investment grade rating.  At December 31, 2007, borrowings under the unsecured credit facility had a weighted average interest rate of 6.06%.

·Secured Term Loan.  In September 2007, we and our Operating Partnership entered into a secured term loan agreement that allows for term loans with anin the aggregate principal amount of approximately $270.0 million ($90.0 million each). Affiliatesup to $50 million. Each term loan matures on November 20, 2009, subject to extension in the sole discretion of Lehman Brothers served as the lenders under these mortgage loans.lenders. Each term loan bears interest at either an alternative base rate or a Eurodollar rate, at our option, in each case plus an applicable margin at terms identical to the unsecured revolving credit facility.  As of December 31, 2007, there was one term loan outstanding for $47.4 million.  The mortgage loans areoutstanding term loan is secured by certaina pledge by our Operating Partnership of ourall equity interests in YSI RT LLC, the wholly-owned subsidiary of the Operating Partnership that acquired eight self-storage facilities bearin September 2007.  At December 31, 2007, the outstanding term loan had an interest at 5.09%, 5.19% and 5.33%, and mature in November 2009, May 2010 and January 2011, respectively. These mortgage loans require usrate of 6.18%.

Capital Markets Activity

In October 2005, we completed a follow-on public offering, pursuant to establish reserves relatingwhich we sold an aggregate of 19,665,000 common shares (including 2,565,000 shares pursuant to the mortgaged facilities for real estate taxes, insurance and capital spending.

Post-IPO 2004 Acquisition Activities.In 2004, concurrently with, or shortly after, the completion of our IPO, we completed the acquisition of 46 self-storage facilities, all of which were pending at the timeexercise of the IPO:

•Metro Storage LLC. On October 27, 2004, we acquired the Metro Storage portfolio from Metro Storage LLC for a purchaseunderwriters’ option) at an offering price of $184.0 million. The portfolio consists of 42 self-storage facilities located in five states, Illinois, Indiana, Florida, Ohio and Wisconsin. These facilities contain an aggregate of approximately 2.6 million rentable square feet and were 77.9% occupied as of December 31, 2004. In addition to the $184.0 million purchase price, we anticipate an additional $2.2 million will be incurred for renovation and improvements to the acquired properties.

•Devon Facilities. On October 28, 2004, we acquired two self-storage facilities, one located in Bradenton, FL and one in West Palm Beach, FL, from Devon/Bradenton, L.P. and Devon/West Palm, L.P., respectively, for a total purchase price of $18.2 million. These facilities contain an aggregate of approximately 182,000 rentable square feet and were 92.5% occupied as of December 31, 2004.

•Self-Storage Zone Facility. On November 1, 2004, we acquired one self-storage facility, located in California, MD, from Bay Media Network Limited Partnership for a purchase price of approximately $5.7 million. This facility contains approximately 68,000 rentable square feet and was 91.1% occupied as of December 31, 2004.

•Federal Self-Storage Facility. On November 1, 2004, we acquired one self-storage facility, located in Dania Beach, FL, from Federal Self Storage for a purchase price of approximately $13.9 million. This facility contains approximately 264,000 rentable square feet and was 78.7% occupied as of December 31, 2004.

Quarterly Distribution.On November 16, 2004, our board of trustees declared a pro-rated quarterly distribution of $0.2009 per common share for the period commencing upon completion of our IPO on October 27, 2004 and ending December 31, 2004. The distribution was paid on January 24, 2005 to common shareholders of record on January 10, 2005. This initial pro-rated distribution was based on a distribution of $0.28$20.35 per share, for a full quarter.gross proceeds of $400.2 million. The offering resulted in net proceeds to the Company, after deducting underwriting discount and commissions and expenses of the offering, of approximately $378.7 million.

 

Subsequent 2005 Events.

•Consolidation of Vero Beach Facilities. As of January 1, 2005, we consolidated the operations of our two Vero Beach facilities into one facility.

•

Acquisition of Option Facility.On January 5, 2005, we exercised our option to purchase the San Bernardino VII, CA facility from Rising Tide Development for the purchase price of $7.3 million, consisting of $3.8 million in cash (which cash was used to pay off mortgage indebtedness secured by the

facility) and $3.5 million payable in units in our operating partnership. The facility contains approximately 83,000 rentable square feet and was 85.0% occupied as of December 31, 2004.

•Acquisition of Self-Storage Zone Facility. On January 14, 2005, we acquired one self-storage facility, located in Gaithersburg, MD, from Airpark Storage LLC for a purchase price of approximately $10.7 million, consisting of $4.3 million in cash and the assumption of $6.4 million of indebtedness. The facility contains approximately 87,000 rentable square feet.

•Acquisition of Ford Storage Facilities. On March 1, 2005, we acquired five self-storage facilities, located in central Connecticut, from Ford Storage for an aggregate purchase price of $15.5 million. These facilities contain an aggregate of approximately 237,000 rentable square feet.

•Acquisition of A-1 Self-Storage Facilities. On March 15, 2005, we acquired five self-storage properties, located in Connecticut, from A-1 Self Storage for an aggregate purchase price of $21.7 million. These facilities contain an aggregate of approximately 193,000 rentable square feet. Our plans are to operate two of these facilities as one facility.

•Acquisition of Option Facilities. On March 18, 2005, we exercised our option to purchase the Orlando II, FL and the Boynton Beach II, FL facilities from Rising Tide Development for the purchase price of $11.8 million, consisting of $6.7 million in cash (which cash was used to pay off mortgage indebtedness secured by the facilities) and $5.1 million payable in units in our operating partnership. The facilities contain an aggregate of approximately 129,000 rentable square feet.

•New Office Lease. On March 29, 2005, we entered into an office lease agreement with Amsdell and Amsdell, an entity owned by Robert J. Amsdell and Barry L. Amsdell, for office space of approximately 18,000 square feet at The Parkview Building, an approximately 40,000 square foot multi-tenant office building located at 6745 Engle Road, plus approximately 4,000 square feet of an 18,000 square foot office building located at 6751 Engle Road, which are both part of Airport Executive Park, a 50-acre office and flex development located in Cleveland, Ohio. Airport Executive Park is owned by Amsdell and Amsdell. The lease is effective as of January 1, 2005 and has a ten-year term, with one five-year extension option exercisable by us. The aggregate amount of rent payable under this lease in 2005 will be approximately $260,000. The independent trustees have determined that the amount of rent payable under the terms of this lease is reasonable.

Proposed Acquisitions.As of March 23, 2005, we had entered into definitive agreements to acquire 89 self-storage facilities, as discussed below, for a total purchase price of approximately $272.3 million.

The proposed acquisitions are comprised of the following unrelated transactions:

We have agreed to acquire 67 self-storage facilities from various partnerships and other entities affiliated with National Self Storage and The Schomac Group, Inc. for an aggregate purchase price of approximately $217.0 million. The facilities total approximately 3.6 million rentable square feet and are located in Arizona, California, Colorado, New Mexico, Tennessee, Texas and Utah. The transaction also includes the purchase of four office parks and one mobile home park. The purchase price includes the assumption of up to $118.0 million of indebtedness by our operating partnership upon closing and the issuance of approximately $63.0 million payable in Units in our operating partnership, with the balance to be paid in cash.

We have entered into a contract to acquire 18 self-storage facilities from Liberty Self-Stor Ltd., a subsidiary of Liberty Self-Stor, Inc., for an aggregate purchase price of $34.0 million. The facilities total approximately 863,000 rentable square feet and are located in Ohio and New York.

We have entered into an agreement to purchase one self-storage facility from A-1 Self Storage for $6.4 million. The facility totals approximately 48,000 rentable square feet and is located in New York.

We have also entered into two separate agreements to acquire three facilities from two parties for an aggregate purchase price of $14.9 million. The facilities total approximately 200,000 rentable square feet and are located in Texas (2 properties) and Florida (1 property).

We expect these acquisitions to close on or before June 30, 2005. The closings of the transactions are contingent upon the satisfaction of certain customary conditions. There are no assurances that the conditions will be met or that the transactions will be consummated.

Business Strategy

 

Our business strategy consists of several elements:

 

·Maximize cash flow from our facilities by increasing — Our operating strategy focuses on achieving the highest sustainable rent levels at each of our facilities while at the same time meeting and sustaining occupancy levels, increasing rents, controllingtargets. We utilize our operating expensessystems and expandingexperienced personnel to manage the balance between rental rates, discounts, and improvingphysical occupancy with an objective of maximizing our facilities;

rental revenue.

 

·Acquire facilities within our targeted markets;

markets — We will continue to selectively acquire facilities in markets that we believe have high barriers to entry, strong demographic fundamentals and existing supply at or below the demand in the market. We believe the self-storage industry will continue to provide us with opportunities for growth through acquisitions due to the highly fragmented composition of the industry. We intend to acquire facilities primarily in areas that we consider to be growth markets, such as Arizona, California, Florida and the Northeastern United States.

 

·Utilize our expertise in selective newdevelopments — We seek to use our development expertise and access to multiple financing sources to pursue new developments in selective new developments;

Focus on expandingareas where we have facilities and perceive there to be unmet demand. We expect to pursue our commercial customer base; and

development primarily in conjunction with joint venture partners.

Continue to grow ancillary revenues.

 

Investment and Market Selection Process.Process

 

We intend to focus on targeted investmentsmaintain a disciplined and focused process in the acquisition and development of self-storage facilities. Our investment committee, which consists of certain of our executive officers and is led by Steven G. Osgood,Dean Jernigan, our President and Chief FinancialExecutive Officer, will overseeoversees our investment process. Our investment process involves five stages—stages — identification, initial due diligence, economic assessment, investment committee approval (and when required, boardBoard approval) and final due diligence, and documentation. Through our investment committee, we intend to focus on the following criteria:

 

·Targeted Markets:markets — Our targeted markets include areas where we currently maintain management that can be extended to additional facilities, or where we believe that we can acquire a significant number of facilities efficiently and within a short period of time. We evaluate both the broader market and the immediate area, typically five miles around the facility, for their ability to support above-average demographic growth. We will seek to grow our presence primarily in areas that we consider to be growth markets, such as Arizona, California, Florida and the Northeastern United States and to enter new markets should suitable opportunities arise.

 

·Quality of Facility:facility — We focus on self-storage facilities that have good visibility and are located near retail centers, which typically provide high traffic corridors and are generally located near residential communities and commercial customers. In addition, we seek to acquire facilities with an on-site apartment for the manager, security cameras and gated access, accessibility for tractor trailers and good construction.

 

7


·Growth Potential:potential — We will target acquisitions that offer growth potential through increased operating efficiency and, in some cases, through additional leasing efforts, renovations or expansions. In addition to acquisitions ofacquiring single facilities, we will seek to invest in portfolio acquisitions, searching for situations where there is significant potential for increased operating efficiency and an ability to spread our fixed costs across a large base of facilities.

 

From the completion of our IPO through December 31, 2004,2007, we acquired 46269 facilities totaling approximately 3.116.9 million rentable square feet for an aggregate purchase priceconsideration of approximately $221.8 million.$1.3 billion. We believe that the self-storage industry will continue to provide us with opportunities for future growth through consolidation due to the highly fragmentedhighly-fragmented composition of the industry, the lack of skilled operators, the economies of scale available to a real estate company with a significant number of self-storage facilities, and the relative scarcity of capital available to the smaller operators. We intend to take advantage of these opportunities by utilizing our experience in identifying, evaluating and acquiring self-storage facilities. The experience of our

management team and our history of actively acquiring self-storage facilities give us an advantage in identifying attractive potential acquisitions, as we are well-known within the self-storage brokerage community and are often approached directly by principals interested in selling their facilities. Furthermore, we believe that our ability to offer our operating partnership units as a form of acquisition consideration will help us pursue acquisitions from tax-sensitive private sellers through tax-deferred transactions.industry.

 

Operating Segment

We have one reportable operating segment: we own, operate, develop, and acquire self-storage facilities.

Concentration

Our self-storage facilities are located in major metropolitan areas as well as rural areas and have numerous tenants per facility.  All our operations are within the United States and noNo single tenant represents 1% or more of our revenues. The facilities in Florida, IllinoisCalifornia, Texas and CaliforniaIllinois provided approximately 28.0%19%, 11.4%15%, 8% and 10.3%, respectively,7% of total revenues, respectively, for the period October 21, 2004 throughyear ended December 31, 2004.2007.  Florida, California, Illinois and New Jersey provided total revenues of approximately 19%, 16%, 7% and 6%, respectively, for the year ended December 31, 2006.

 

Seasonality

We experience minor seasonal fluctuations in the occupancy levels of our facilities, which are generally slightly higher during the summer months due to increased moving activity.

Financing Strategy

 

Although our organizational documents contain no limitation on the amount of debt we may incur, we maintain what we consider to be a conservative capital structure, characterized by the use of leverage in a manner that we believe is reasonable and prudent and that will enable us to have ample cash flow to cover interest expense.debt service and make distributions to our shareholders. As of December 31, 2004,2007, our debt to total capitalization ratio, determined by dividing the bookcarrying value of our total indebtedness by the sum of (a) the market value of our outstanding common shares and operating partnership units other than held by the Company and (b) the bookcarrying value of our total indebtedness, was approximately 36.3%64.1%. We expect to finance additional investments in self-storage facilities through the most attractive available source of capital at the time of the transaction, in a manner consistent with maintaining a strong financial position and future financial flexibility. These capital sources may include borrowings under our revolving credit facility, selling common or preferred shares or debt securities through public offerings or private placements, incurring additional secured indebtedness, issuing units in our operating partnership in exchange for contributed property, issuing preferred units in our operating partnership to institutional partners and forming joint ventures. We also may consider selling less productive self-storage facilities from time to time in order to reallocate proceeds from these sales into more productive facilities.

 

Competition

 

The continued development of new self-storage facilities has intensified the competition among self-storage operators in many market areas in which we operate. Self-storage facilities compete based on a number of factors, including location, rental rates, security, suitability of the facility’s design to prospective customers’ needs and the manner in which the facility is operated and marketed. In particular, the number of competing self-storage facilities in a particular market could have a material effect on our occupancy levels, rental rates and on the overall operating performance of our facilities. We believe that the primary competition for potential customers of any of our self-storage facilities comes from other self-storage facilities within a three-mile radius of that facility. We believe we have positioned our facilities within their respective markets as high-quality operators that emphasize customer convenience, security and professionalism.

 

Our key competitors include:include local and regional operators as well as the other public self-storage REITS, including Public Storage, Storage USA, Shurgard Storage Centers, U-Haul International, Sovran Self Storage and Extra Space Storage Inc. These companies, some of which operate significantly more facilities than we do and have greater resources than we do,have, and other entities may generally be able to accept more risk

8


than we determine is prudent, including risks with respect to the geographic proximity of facility investments and the payment of higher facility acquisition prices. This competition may generally reduce the number of suitable acquisition opportunities available to us, increase the price required to be able to consummate the acquisition of particular facilities and reduce the demand for self-storage space in certain areas where our facilities are located. Nevertheless, we believe that our experience in operating, acquiring, developing and obtaining financing for self-storage facilities particularly our customer-oriented approach toward managing our facilities, should enable us to compete effectively.

Government Regulation

 

We are subject to federal, state and local environmental regulations that apply generally to the ownership of real property and the operation of self-storage facilities.

 

Under various federal, state and local laws, ordinances and regulations, an owner or operator of real property may become liable for the costs of removal or remediation of hazardous substances released on or in its property. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances. The presence of hazardous substances, or the failure to properly remediate such substances, when released, may adversely affect the property owner’s ability to sell the real estate or to borrow using real estate as collateral, and may cause the property owner to incur substantial remediation costs. In addition to claims for cleanup costs, the presence of hazardous substances on a property could result in a claim by a private party for personal injury or a claim by an adjacent property owner or user for property damage. We may also become liable for the costs of removal or remediation of hazardous substances stored at the facilities by a customer even though storage of hazardous substances would be without our knowledge or approval and in violation of the customer’s storage lease agreement with us.

 

In order to assess the potential for cleanup liability, we obtained an environmental assessment of each of our facilities from a qualified and reputable environmental consulting firm (and intendOur practice is to conduct suchor obtain environmental assessments prior toin connection with the acquisition or development of additional facilities).facilities. Whenever the environmental assessment for one of our facilities indicatedindicates that thea facility wasis impacted by soil or groundwater contamination from prior owners/operators or other sources, we workedwill work with our environmental consultants and where appropriate, state governmental agencies, to ensure that the facility wasis either cleaned up, that no cleanup wasis necessary because the low level of contamination posedposes no significant risk to public health or the environment, or that the responsibility for cleanup restedrests with a third party. Therefore, we

We are not aware of any environmental cleanup liability that we believe will have a material adverse effect on us. We cannot assure you, however, that these environmental assessments and investigations have revealed or will reveal all potential environmental liabilities, that no prior owner created any material environmental condition not known to us or the independent consultant or that future events or changes in environmental laws will not result in the imposition of environmental liability on us.

 

We have not received notice from any governmental authority of any material noncompliance, claim or liability in connection with any of theour facilities, nor have we been notified of a claim for personal injury or property damage by a private party in connection with any of theour facilities in connection withrelating to environmental conditions.

 

We are not aware of any environmental condition with respect to any of theour facilities that could reasonably be expected to have a material adverse effect on our financial condition or results of operations, and we do not expect that the cost of compliance with environmental regulations will have a material adverse effect on our financial condition or results of operations. We cannot assure you, however, that this will continue to be the case.

 

Insurance

 

We believe that each of our facilities is covered by adequate fire, flood and property insurance provided by reputable companies and with commercially reasonable deductibles and limits. We maintaincarry comprehensive liability, all-risk propertyfire, extended coverage and rental loss insurance coverage with respect tocovering all of the facilities within our portfolio. We believe the policy specifications and insured limits are appropriate and deductibles customarily carriedadequate given the relative risk of loss, the cost of the coverage and industry practice. We do not carry insurance for losses such as loss from riots, war or acts of God, and, in our industry. We believe that allsome cases, flooding, because such coverage is not available or is not available at commercially reasonable rates. Some of our current title insurance policies, adequately insure fee titlesuch as those covering losses due to the facilities.terrorist activities, hurricanes, floods and earthquakes, are insured subject to limitations involving large deductibles or co-payments and policy limits that may not be sufficient to cover losses.

 

9


Offices

 

Our principal executive office is located at 6745 Engle Road,50 Public Square, Suite 300,2800, Cleveland, Ohio 44130.OH 44113. Our telephone number is (440) 234-0700.

(216) 274-1340. We believe that our current facilities are adequate for our present and future operations.

Employees

 

As of December 31, 2004,2007, we employed approximately 560989 employees, of whom approximately 80112 were corporate executive and administrative personnel and approximately 480877 were management and administrativeproperty level personnel. We believe that our relations with our employees are good. None of our employees are unionized.

 

Available Information

 

We file our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports with the Securities and Exchange Commission (the “SEC”). You may obtain copies of these documents by visiting the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, by calling the SEC at 1-800-SEC-0330 or by accessing the SEC’s website at www.sec.gov. Our internet website address iswww.u-store-it.com. www.ustoreit.com.  You also can obtain on our website, free of charge, a copy of our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file such reports or amendments with, or furnish them to, the SEC. Our internet website and the information contained therein or connected thereto are not intended to be incorporated by reference into this Annual Report on Form 10-K.

 

Also available on our website, free of charge, are copies of our Code of Business Conduct and Ethics, our Code of Ethics for Principal Executive Officer and Senior Financial Officers, our Corporate Governance Guidelines, and the charters for each of the committees of our boardBoard of trustees—Trustees — the Audit Committee, the Corporate Governance and Nominating Committee, and the Compensation Committee. Copies of our Codeeach of Business Conduct and Ethics, our Code of Ethics for Principal Executive Officer and Senior Financial Officers, our Corporate Governance Guidelines, and our committee chartersthese documents are also available in print free of charge, upon request by any shareholder. You can obtain such copies in printof these documents by contacting Investor Relations by mail at our corporate office.460 E. Swedesford Road, Suite 3000, Wayne, PA  19087.

 

Risk FactorsITEM 1A.  RISK FACTORS

Overview

 

Investors should carefully consider, among other factors, the risks set forth below. We have separated the risks into three groups:

risks related to our operations;

risks related to our organization and structure; and

tax risks.

These risks are not the only ones that we may face. Additional risks not presently known to us or that we currently consider immaterial may also impair our business operations and hinder our ability to make expected distributions to our shareholders.

 

Risks RelatedOur performance and the value of our self-storage facilities are subject to risks associated with our properties and with the real estate industry.

Our Operationsrental revenues and operating costs and the value of our real estate assets, and consequently the value of our securities, are subject to the risk that if our facilities do not generate revenues sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to pay distributions to our shareholders will be adversely affected.  Events or conditions beyond our control that may adversely affect our operations or the value of our facilities include:

·downturns in the national, regional and local economic climate;

 

Our rental revenues are significantly influenced by the economies and other conditions of the markets in which we operate, particularly in Florida, Illinois and California, where we have high concentrations of self-storage facilities.·

We are susceptible to adverse developments in the markets in which we operate, such as business layoffslocal or downsizing, industry slowdowns, relocations of businesses, changing demographics and other factors. Our facilities in Florida, Illinois and California accounted for approximately 24.8%, 11.7% and 10.4%, respectively, of our total rentable square feet as of December 31, 2004. As a result of this geographic concentration of our facilities, we are particularly susceptible to adverse market conditions in these particular areas. Any adverse economicregional oversupply, increased competition or real estate developments in these markets, or in any of the other markets in which we operate, or any decreasereduction in demand for self-storage space resultingspace;

·vacancies, changes in market rents for self-storage space;

·inability to collect rent from customers;

·increased operating costs, including maintenance, insurance premiums and real estate taxes;

·changes in interest rates and availability of financing;

10


·hurricanes, earthquakes and other natural disasters, civil disturbances, terrorist acts or acts of war that may result in uninsured or underinsured losses;

·significant expenditures associated with acquisitions and development projects, such as debt service payments, real estate taxes, insurance and maintenance costs which are generally not reduced when circumstances cause a reduction in revenues from a property;

·costs of complying with changes in laws and governmental regulations, including those governing usage, zoning, the local business climateenvironment and taxes; and

·the relative illiquidity of real estate investments.

In addition, prolonged periods of economic slowdown or recession, rising interest rates or declining demand for self-storage, or the public perception that any of these events may occur, could adversely affect ourresult in a general decline in rental revenues, which could impair our ability to satisfy our debt service obligations and payto make distributions to our shareholders.

Because we are primarily focused on the ownership, operation, acquisition and development of self-storage facilities, our rentalRental revenues are significantlyinfluenced by demand for self-storage space generally, and a decrease in such demandwould likely have a greater adverse effect on our rental revenues than if we owned a more diversified real estate portfolio.

 

Because our portfolio of facilities consists primarily of self-storage facilities, we are subject to risks inherent in investments in a single industry. A decrease in the demand for self-storage space would likely have a greater adverse effect on our rental revenues than if we owned a more diversified real estate portfolio. Demand for self-storage space has been and could be adversely affected by weakness in the national, regional and local economies, changes in supply of, or demand for, similar or competing self-storage facilities in an area and the excess amount of self-storage space in a particular market. To the extent that any of these conditions occur, they are likely to affect market rents for self-storage space, which could cause a decrease in our rental revenue. Any such decrease could impair our ability to satisfy debt service obligations and make distributions to our shareholders.

 

We face risks associated with actions taken by our competitors.

Actions by our competitors may decrease or prevent increases of the occupancy and rental rates of our properties.  We compete with other owners and operators of self-storage, some of which own properties similar to ours in the same submarkets in which our properties are located.  If our competitors offer space at rental rates below current market rates or below the rental rates we currently charge our tenants, we may lose potential tenants, and we may be pressured to reduce our rental rates below those we currently charge in order to retain tenants when our tenants’ leases expire.  As a result, our financial condition, cash flow, cash available for distribution, market price of our stock and ability to satisfy our debt service obligations could be materially adversely affected.

We face risks related to balloon payments.

Approximately 50% (or approximately $573.5 million) of our mortgage and revolving indebtedness is due on or before December 31, 2009.  Certain of our mortgages will have significant outstanding balances on their maturity dates, commonly known as “balloon payments.”  There can be no assurance that we will be able to refinance the debt on favorable terms or at all. To the extent we cannot refinance debt on favorable terms or at all, we may be forced to dispose of properties on disadvantageous terms or pay higher interest rates, either of which would have an adverse impact on our financial performance and ability to pay dividends to investors.

Rising operating expenses could reduce our cash flow and funds available for futuredistributions.

Our facilities and any other facilities we acquire or develop in the future are and will be subject to operating risks common to real estate in general, any or all of which may negatively affect us. Our facilities are subject to increases in operating expenses such as real estate and other taxes, utilities, insurance, administrative expenses and costs for repairs and maintenance. If operating expenses increase without a corresponding increase in revenues, our profitability could diminish and limit our ability to make distributions to our shareholders.

11


We face risks associated with facility acquisitions that could impede our growth.

We have in the past acquired, and intend in the future to acquire, individual and portfolios of self-storage facilities that would increase our size and potentially alter our capital structure.  Although we believe that the acquisitions that we expect to undertake in the future will enhance our future financial performance, the success of such transactions is subject to a number of factors, including the risk that:

·we may not be able to obtain financing for acquisitions on favorable terms;

·acquisitions may fail to perform as expected;

·the actual costs of repositioning or redeveloping acquired facilities may be higher than our estimates; and

·acquisitions may be located in new markets where we may have limited knowledge and understanding of the local economy, an absence of business relationships in the area or an unfamiliarity with local governmental and permitting procedures.

We also face significant competition for acquisitions and development opportunities.  Some of our competitors have greater financial resources than we do and a greater ability to borrow funds to acquire facilities.  These competitors may also be willing and/or able to accept more risk than we can prudently manage, including risks with respect to the geographic proximity of investments and the payment of higher facility acquisition prices.  This competition for investments may reduce the number of suitable investment opportunities available to us, may increase acquisition costs and may reduce demand for self-storage space in certain areas where our facilities are located and, as a result, adversely affect our operating results.

Financing our future growth plan or refinancing existing debt maturities could be impacted by negative capital market conditions.

Recently, domestic financial markets have experienced unusual volatility and uncertainty. While this condition has occurred most visibly within the “subprime” mortgage lending sector of the credit market, liquidity has tightened in overall domestic financial markets, including the investment grade debt and equity capital markets. Consequently, there is greater uncertainty regarding our ability to access the credit markets in order to attract financing on reasonable terms nor can there be any assurance we can issue common or preferred equity securities at a reasonable price. Our ability to finance new acquisitions as well as our ability to refinance debt maturities could be adversely affected by our inability to secure permanent financing on reasonable terms, if at all.

We may not be able to adapt our management and operation systems to respond to theintegration of additional facilities without disruption or expense.

From the completion of our IPO in October 2004 through December 31, 2007, we acquired 269 facilities, containing approximately 15.6 million rentable square feet for an aggregate cost of approximately $1.3 billion. In 2008 we acquired two additional self-storage facilities.  In addition, we expect to acquire additional self-storage facilities in the future. We cannot assure you that we will be able to adapt our management, administrative, accounting and operational systems or hire and retain sufficient operational staff to integrate these facilities into our portfolio and manage any future acquisition or development of additional facilities without operating disruptions or unanticipated costs. As we acquire or develop additional facilities, we will be subject to risks associated with managing new facilities, including customer retention and mortgage default risks. In addition, acquisitions or developments may cause disruptions in our operations and divert management’s attention away from day-to-day operations. Furthermore, our profitability may suffer because of acquisition-related costs or amortization costs for acquired goodwill and other intangible assets. Our failure to successfully integrate any future facilities into our portfolio could have an adverse effect on our operating costs and our ability to make distributions to our shareholders.

Acquired facilities may subject us to unknown liabilities.

Facilities that we have acquired or may acquire in the future may be subject to unknown liabilities for which we would have no recourse, or only limited recourse, to the former owners of such facilities.  As a result, if a liability were asserted against us based upon ownership of an acquired facility, we might be required to pay significant sums to settle it, which could adversely affect our financial results and cash flow.  Unknown liabilities relating to acquired facilities could include:

12


·liabilities for clean-up of undisclosed environmental contamination;

·claims by tenants, vendors or other persons arising on account of actions or omissions of the former owners of the facilities; and

·liabilities incurred in the ordinary course of business.

We face significant competition from other developers, owners and operators in the self-storage industry, which may impede our ability to retain customers or re-let space when existing customers vacate, or impede our ability to make, or increase the cost of, future acquisitions or developments.industry.

 

We compete with numerous developers, owners and operators in the self-storage industry, including other REITs, some of which own or may in the future own facilities similar to ours in the same markets in which our facilities are located, and some of which may have greater capital resources. In addition, due to the relatively low cost of each individual self-storage facility, other developers, owners and operators have the capability to build additional facilities that may compete with our facilities.

 

If our competitors build new facilities that compete with our facilities or offer space at rental rates below current market rates or below the rental rates we currently charge our customers, we may lose potential customers and we may be pressured to discount our rental rates below those we currently charge in order to retain customers. As a result, our rental revenues may decrease, which could impair our ability to satisfy our debt service obligations and to pay distributions to our shareholders. In addition, increased competition for customers may require us to make capital improvements to facilities that we would not have otherwise made. Any unbudgeted capital improvements we undertake may reduce cash available for distributions to our shareholders.

Our rental revenues and operating costs, as well as the value of our self-storage facilities, are subject to risks associated with real estate assets and with the real estate industry.

Our ability to make expected distributions to our shareholders depends onProperty ownership through joint ventures may limit our ability to generate substantial revenues fromact exclusively in our facilities. Events and conditions generally applicableinterest.

We may co-invest with third parties through joint ventures. In any such joint venture, we may not be in a position to owners and operatorsexercise sole decision-making authority regarding the facilities owned through joint ventures. Investments in joint ventures may, under certain circumstances, involve risks not present when a third party is not involved, including the possibility that joint venture partners might become bankrupt or fail to fund their share of real propertyrequired capital contributions. Joint venture partners may have business interests or goals that are beyondinconsistent with our business interests or goals and may be in a position to take actions contrary to our policies or objectives. Such investments also have the potential risk of impasse on strategic decisions, such as a sale, because neither we nor the joint venture partner would have full control over the joint venture. Any disputes that may decrease cash available for distributionarise between us and the value of our facilities. These events and conditions include:

changes in the national, regional and local economic climate;

local or regional oversupply, increased competition or reduction in demand for self-storage space;

inability to collect rent from customers;

inability to finance facility acquisitions, capital improvements and development on favorable terms;

increased operating costs, including maintenance, insurance premiums and real estate taxes;

costs of complying with changes in laws and governmental regulations, including those governing usage, zoning, the environment and taxes; and

the relative illiquidity of real estate investments.

In addition, prolonged periods of economic slowdown or recession, rising interest rates or declining demand for self-storage, or the public perception that any of these events may occur,joint venture partners could result in a general decline in rental revenues, whichlitigation or arbitration that could impairincrease our ability to satisfyexpenses and distract our debt service obligationsofficers and/or Trustees from focusing their time and to make distributions toeffort on our shareholders.

If we are unable to promptly re-let units within our facilities or if the rates upon such re-letting are significantly lower than expected, our rental revenues would be adversely affected and our growth may be impeded.

Virtually all of our leases are on a month-to-month basis. Delays in re-letting units as vacancies arise would reduce our revenues and could adversely affect our operating performance. In addition, lower than expected rental rates upon re-letting could adversely affect our rental revenues and impede our growth.

We may not be successful in identifying and completing suitable acquisitions or development projects that meet our criteria, which may impede our growth, and even if we are able to identify suitable projects, our future acquisitions and developments may not yield the returns we expect or may result in shareholder dilution.

Our business strategy involves expansion through acquisitions and development projects. These activities require us to identify suitable acquisition or development candidates or investment opportunities that meet our criteria and are compatible with our growth strategy. We may not be successful in identifying suitable self-storage facilities, that meet our acquisition or development criteria or in completing acquisitions, developments or investments on satisfactory terms. Similarly, although we currently have the option to purchase 15 self-storage facilities, consisting of 11 facilities owned by Rising Tide Development and four facilities which Rising Tide Development has the right to acquire from unaffiliated third parties, Rising Tide Development may not acquire one or more of the four option facilities it currently has under contract, which would reduce the number of facilities available to us pursuant to the option agreement. Failure to identify or complete acquisitions or developments or to purchase one or more of the four option facilities could slow our growth.

We also face significant competition for acquisitions and development opportunities. Some of our competitors have greater financial resources than we do and a greater ability to borrow funds to acquire facilities. These competitors may also be able to accept more risk than we can prudently manage, including risks with respect to the geographic proximity of investments and the payment of higher facility acquisition prices. This competition for investments may reduce the number of suitable investment opportunities available to us, may increase acquisition costs and may reduce demand for self-storage space in certain areas where our facilities are located and, as a result, adversely affect our operating results.

In addition, even if we are successful in identifying suitable acquisitions or development projects, newly acquired facilities may fail to perform as expected and our management may underestimate the costs associated with the integration of the acquired facilities. In addition, any developments we undertake in the future are subject to a number of risks, including, but not limited to, construction delays or cost overruns that may increase project costs, financing risks, the failure to meet anticipated occupancy or rent levels, failure to receive required zoning, occupancy, land use and other governmental permits and authorizations and changes in applicable zoning and land use laws. If any of these problems occur, development costs for a project will increase, and there may be significant costs incurred for projects that are not completed. In deciding whether to acquire or develop a particular facility, we make certain assumptions regarding the expected future performance of that facility. If our acquisition or development facilities fail to perform as expected or incur significant increases in projected costs, our rental revenues could be lower, and our operating expenses higher, than we expect. In addition, the issuance of equity securities for any acquisitions could be substantially dilutive to our shareholders.

We may not be able to adapt our management and operation systems to respond to the integration of additional facilities without disruption or expense.

Since completion of our IPO in October 2004, we have acquired 60 self-storage facilities, containing approximately 3.8 million rentable square feet for an aggregate cost of approximately $288.8 million, and we

currently have entered into agreements to acquire an additional 89 self-storage facilities.business. In addition, we expect to acquire additional self-storage facilitiesmight in certain circumstances be liable for the future. We cannot assure you that we will be able to adapt our management, administrative, accounting and operational systems or hire and retain sufficient operational staff to integrate these facilities into our portfolio and manage any future acquisition or development of additional facilities without operating disruptions or unanticipated costs. As we acquire or develop additional facilities, we will be subject to risks associated with managing new facilities, including customer retention and mortgage default. In addition, acquisitions or developments may cause disruptions in our operations and divert management’s attention away from day-to-day operations. Furthermore, our profitability may suffer because of acquisition-related costs or amortization costs for acquired goodwill and other intangible assets. Our failure to successfully integrate any future facilities into our portfolio could have an adverse effect on our operating costs and our ability to make distributions to our shareholders.

We depend on our on-site personnel to maximize customer satisfaction at eachactions of our facilities; any difficulties we encounter in hiring, training and retaining skilled field personnel may adversely affect our rental revenues.

As of December 31, 2004, we had approximately 480 field personnel involved in the management and operation of our facilities. The customer service, marketing skills and knowledge of local market demand and competitive dynamics of our facility managers are contributing factors to our ability to maximize our rental income and to achieve the highest sustainable rent levels at each of our facilities. If we are unable to successfully recruit, train and retain qualified field personnel, our rental revenues may be adversely affected, which could impair our ability to satisfy new debt obligations and make distributions to our shareholders.

We had approximately $380.5 million of indebtedness outstanding as of December 31, 2004, and this level of indebtedness will result in significant debt service obligations, impede our ability to incur additional indebtedness to fund our growth and expose us to refinancing risk.

We had approximately $380.5 million of outstanding indebtedness as of December 31, 2004. We also intend to incur additional debt in connection with the future acquisition and development of facilities. We also may incur or increase our mortgage debt by obtaining loans secured by some or all of the real estate facilities we acquire or develop. In addition, we may borrow funds if necessary to satisfy the requirement that we distribute to shareholders at least 90% of our annual REIT taxable income, or otherwise as is necessary or advisable, to ensure that we maintain our qualification as a REIT for federal income tax purposes or otherwise avoid paying taxes that can be eliminated through distributions to our shareholders.

Our substantial debt may harm our business and operating results by:

requiring us to use a substantial portion of our cash flow from operations to pay interest, which reduces the amount available for distributions;

making us more vulnerable to economic and industry downturns and reducing our flexibility in responding to changing business and economic conditions; and

limiting our ability to borrow more money for operating or capital needs or to finance acquisitions in the future.

In addition to the risks discussed above and those normally associated with debt financing, including the risk that our cash flow will be insufficient to meet required payments of principal and interest, we also are subject to the risk that we will not be able to refinance the existing indebtedness on our facilities (which, in most cases, will not have been fully amortized at maturity) and that the terms of any refinancing we could obtain would not be as favorable as the terms of our existing indebtedness. In particular, as of December 31, 2004, we had $106.1 million of indebtedness outstanding pursuant to two multi-facility mortgage loans with anticipated repayment dates in 2006. If we are not successful in refinancing debt when it becomes due, we may be forced to dispose of facilities on disadvantageous terms, which might adversely affect our ability to service other debt and to meet our other obligations.

Our mortgage indebtedness contains covenants that restrict our operating, acquisition and disposition activities.

Our mortgage indebtedness contains covenants, including limitations on our ability to incur secured and unsecured indebtedness, sell all or substantially all of our assets and engage in mergers and consolidations and various acquisitions. In addition, our mortgage indebtedness contains limitations on our ability to transfer or encumber the mortgaged facilities without lender consent. These provisions may restrict our ability to pursue business initiatives or acquisition transactions that may be in our best interests. They also may prevent us from selling facilities at times when, due to market conditions, it may be advantageous to do so. In addition, failure to meet any of the covenants could cause an event of default under and/or acceleration of some or all of our indebtedness, which would have an adverse effect on us.

Mortgage debt obligations expose us to the possibility of foreclosure, which could result in the loss of our investment in a facility or group of facilities subject to mortgage debt.

Most of the facilities we own are pledged as collateral for mortgage debt. If we are unable to meet mortgage payments, the lender could foreclose on the facilities or group of facilities, resulting in the loss of our investment. Any foreclosure on a mortgaged facility or group of facilities could adversely affect the overall value of our portfolio of self-storage facilities.

In the future, we could incur variable rate debt, and therefore increases in interest rates may increase our debt service obligations.

As of December 31, 2004, we did not have any variable rate debt outstanding. However, we intend to finance future acquisitions in part by borrowings under our revolving credit facility, which bears interest at a variable rate. The interest expense on our variable rate indebtedness will increase when interest rates increase. Interest rates are currently low relative to historical levels and may increase significantly in the future. A significant increase in interest expense could adversely affect our results of operations. We currently do not expect to utilize hedging arrangements or derivative instruments in connection with our revolving credit facility.

Our organizational documents contain no limitation on the amount of debt we may incur. As a result, we may become highly leveraged in the future.

Our organizational documents contain no limitations on the amount of indebtedness that we or our operating partnership may incur. We could alter the balance between our total outstanding indebtednessjoint venture partners, and the valueactivities of our assets at any time. If we become more highly leveraged, then the resulting increase in debt servicea joint venture could adversely affect our ability to make payments on our outstanding indebtedness and to pay our anticipated distributions and/orqualify as a REIT, even though we do not control the distributions required to maintain our REIT status, and could harm our financial condition.joint venture.

 

WeBecause real estate is illiquid, we may not be able to sell facilitiesproperties when appropriate or on favorable terms, which could significantly impede our ability to respond to economic or other market conditions or adverse changes in the performance of our facilities.appropriate.

Real estate property investments generally cannot be sold quickly. Also, the tax laws applicable to REITs require that we hold our facilities for investment, rather than sale in the ordinary course of business, which may cause us to forgo or defer sales of facilities that otherwise would be in our best interest. Therefore, we may not be able to dispose of facilities promptly, or on favorable terms, in response to economic or other market conditions, which may adversely affect our financial position.

 

We face system security risks as we depend upon automated processes and the Internet.

We are increasingly dependent upon automated information technology processes.  While we attempt to mitigate this risk through offsite backup procedures and contracted data centers that include, in some cases, redundant operations, we could still be severely impacted by a catastrophic occurrence, such as a natural disaster or a terrorist attack. In addition, an increasing portion of our business operations are conducted over the Internet, increasing the risk of viruses that could cause system failures and disruptions of operations despite our deployment of anti-virus measures. Experienced computer programmers may be able to penetrate our network security and misappropriate our confidential information, create system disruptions or cause shutdowns.

13


Potential losses may not be covered by insurance, which could result in the loss of our investment in a facility and the future cash flows from the facility.

We carry comprehensive liability, fire, extended coverage and rental loss insurance covering all of the facilities in our portfolio. We believe the policy specifications and insured limits are appropriate and adequate

given the relative risk of loss, the cost of the coverage and industry practice. We do not carry insurance for losses such as loss from riots, war or acts of God, and, in some cases, flooding, because such coverage is not available or is not available at commercially reasonable rates. Some of our policies, such as those covering losses due to terrorism, hurricanes, floods and earthquakes, are insured subject to limitations involving large deductibles or co-payments and policy limits that may not be sufficient to cover losses. If we experience a loss at a facility that is uninsured or that exceeds policy limits, we could lose the capital invested in that facility as well as the anticipated future cash flows from that facility. Inflation, changes in building codes and ordinances, environmental considerations, and other factors also might make it impractical or undesirable to use insurance proceeds to replace a facility after it has been damaged or destroyed. In addition, if the damaged facilities are subject to recourse indebtedness, we would continue to be liable for the indebtedness, even if these facilities were irreparably damaged.

 

Rising operating expensesTerrorist attacks and other acts of violence or war may adversely impact our performance and may affect the markets on which our securities are traded.

Terrorist attacks against our facilities, the United States or our interests, may negatively impact our operations and the value of our securities.  Attacks or armed conflicts could negatively impact the demand for self-storage facilities and increase the cost of insurance coverage for our facilities, which could reduce our profitability and cash flowflow.  Furthermore, any terrorist attacks or armed conflicts could result in increased volatility in or damage to the United States and funds availableworldwide financial markets and economy.

Potential liability for future distributions.environmental contamination could result in substantial costs.

Our facilities and any other facilities we acquire or develop in the future are and will be subject to operating risks common to real estate in general, any or all of which may negatively affect us. The facilities will be subject to increases in real estate and other tax rates, utility costs, operating expenses, insurance costs, repairs and maintenance and administrative expenses. If rents are being paid in an amount that is insufficient to cover operating expenses, then we could be required to expend funds for that facility’s operating expenses.

We could incur significant costs related to government regulation and environmental matters.

We are subject to federal, state and local environmental regulations that apply generally to the ownership of real property and the operation of self-storage facilities. If we fail to comply with those laws, we could be subject to significant fines or other governmental sanctions.

 

Under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances or petroleum product releases at a facility and may be held liable to a governmental entity or to third parties for property damage and for investigation and clean up costs incurred by such parties in connection with contamination. Such liability may be imposed whether or not the owner or operator knew of, or was responsible for, the presence of these hazardous or toxic substances. The cost of investigation, remediation or removal of such substances may be substantial, and the presence of such substances, or the failure to properly remediate such substances, may adversely affect the owner’s ability to sell or rent such facility or to borrow using such facility as collateral. In addition, in connection with the ownership, operation and management of real properties, we are potentially liable for property damage or injuries to persons and property.

 

In orderOur practice is to assess the potential for liabilities arising from the environmental condition of our facilities we obtainedconduct or obtain environmental assessments on allin connection with the acquisition or development of our existing facilitiesadditional facilities. We obtain or examine environmental assessments from qualified and reputable environmental consulting firms (and intend to conduct such assessments prior to the acquisition or development of additional facilities). TheseThe environmental assessments received to date have not revealed, nor are we aware of, any environmental liability that we believe will have a material adverse effect on us. However, we cannot assure you that any environmental assessments performed have identified or will identify all material environmental conditions, that any prior owner of any facility did not create a material environmental condition not known to us or that a material environmental condition does not otherwise exist with respect to any of our facilities.

 

We must comply with the Americans with Disabilities Act of 1990, whichcompliance may require unanticipated expenditures.

Under the Americans with Disabilities Act of 1990 (the “ADA”), all places of public accommodation are required to meet federal requirements related to physical access and use by disabled persons. A number of other U.S. federal, state and local laws may also impose access and other similar requirements at our facilities. A failure to comply with the ADA or similar state or local requirements could result in the governmental imposition

of fines or the award of damages to private litigants affected by the noncompliance. Although we believe that our facilities comply in all material respects with these requirements (or would be eligible for applicable exemptions from material requirements because of adaptive assistance provided), a

14


determination that one or more of our facilities is not in compliance with the ADA or similar state or local requirements would result in the incurrence of additional costs associated with bringing the facilities into compliance. If we are required to make substantial modifications to comply with the ADA or similar state or local requirements, we may be required to incur significant unanticipated expenditures.

 

We may become subject to litigation or threatened litigation which may divert management time and attention, require us to pay damages and expenses or restrict the operation of our business.

 

We may become subject to disputes with commercial parties with whom we maintain relationships or other parties with whom we do business. Any such dispute could result in litigation between us and the other parties. Whether or not any dispute actually proceeds to litigation, we may be required to devote significant management time and attention to its successful resolution (through litigation, settlement or otherwise), which would detract from our management’s ability to focus on our business. Any such resolution could involve the payment of damages or expenses by us, which may be significant. In addition, any such resolution could involve our agreement with terms that restrict the operation of our business.

 

One type of commercial dispute could involve our use of our brand name and other intellectual property (for example, logos, signage and other marks), for which we generally have common law rights but no federal trademark registration. There are other commercial parties, at both a local and national level, that may assert that our use of our brand names and other intellectual property conflict with their rights to use brand names and other intellectual property that they consider to be similar to ours. Any such commercial dispute and related resolution would involve all of the risks described above, including, in particular, our agreement to restrict the use of our brand name or other intellectual property.

If in the future we elect to make joint venture investments, we could be adversely affected by a lack of sole decision-making authority, reliance on joint venture partners’ financial conditionThe terms and any disputes that might arise between us and our joint venture partners.

Although we currently have no joint venture investments, we may in the future co-invest with third parties through joint ventures. In any such joint venture, we may not be in a position to exercise sole decision-making authority regarding the facilities owned through joint ventures. Investments in joint ventures may, under certain circumstances, involve risks not present when a third party is not involved, including the possibility that joint venture partners might become bankrupt or fail to fund their share of required capital contributions. Joint venture partners may have business interests or goals that are inconsistent with our business interests or goals and may be in a position to take actions contrarycovenants relating to our policies or objectives. Such investments also have the potential risk of impasse on strategic decisions,indebtedness could adversely impact our economic performance.

Like other real estate companies that incur debt, we are subject to risks associated with debt financing, such as a sale, because neither we nor the joint venture partner would have full control over the joint venture. Any disputes that may arise between us and our joint venture partners could result in litigation or arbitration that could increase our expenses and distract our officers and/or trustees from focusing their time and effort on our business. In addition, we might in certain circumstances be liable for the actionsinsufficiency of our joint venture partners,cash flow to meet required debt service payment obligations and the activities of a joint venture could adversely affectinability to refinance existing indebtedness.  If our ability to qualify as a REIT, even thoughdebt cannot be paid, refinanced or extended at maturity, we do not control the joint venture.

Risks Related to Our Organization and Structure

Our organizational documents contain provisions that may have an anti-takeover effect, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our shares or otherwise benefit our shareholders.

Our declaration of trust and bylaws contain provisions that may have the effect of delaying, deferring or preventing a change in control of our company or the removal of existing management and, as a result, could prevent our shareholders from being paid a premium for their common shares over the then-prevailing market price. These provisions include limitations on the ownership of our common shares, advance notice requirements for shareholder proposals, our board of trustees’ power to reclassify shares and issue additional common shares or preferred shares and the absence of cumulative voting rights.

Our charter documents prohibit any person (other than members of the Amsdell family and related family trusts and entities which, as a group, may own up to 29% of our common shares) from beneficially owning more than 5% of our common shares (or up to 9.8% in the case of certain designated investment entities, as defined in our declaration of trust).

There are ownership limits and restrictions on transferability in our declaration of trust. In order for us to qualify as a REIT, no more than 50% of the value of our outstanding shares may be owned, actually or constructively, by five or fewer individuals at any time during the last half of each taxable year. To make sure that we will not fail to satisfy this requirement and for anti-takeover reasons, subject to some exceptions, our declaration of trust generally prohibits any shareholder (other than an excepted holder or certain designated investment entities, as defined in our declaration of trust) from owning (actually, constructively or by attribution), more than 5% of the value or number of our outstanding shares. Our declaration of trust provides an excepted holder limit that allows members of the Amsdell family, certain trusts established for the benefit of members of the Amsdell family and related entities to own up to 29% of our common shares, subject to limitations contained in our declaration of trust. Entities that are defined as designated investment entities in our declaration of trust, which generally includes pension funds, mutual funds, and certain investment management companies, are permitted to own up to 9.8% of our outstanding common shares, so long as each beneficial owner of the shares owned by such designated investment entity would satisfy the 5% ownership limit if those beneficial owners owned directly their proportionate share of the common shares owned by the designated investment entity. Our board of trustees may, but is not required to, except a shareholder who is not an individual for tax purposes from the 5% ownership limit or the 9.8% designated investment entity limit if such shareholder provides information and makes representations to the board that are satisfactory to the board in its reasonable discretion demonstrating that exceeding the 5% ownership limit or the 9.8% designated investment entity limit as to such person would not jeopardize our qualification as a REIT.

These restrictions may:

discourage a tender offer or other transactions or a change in management or control that might involve a premium price for our shares or otherwise be in the best interests of our shareholders; or

•compel a shareholder who has acquired our shares in excess of these ownership limitations to dispose of the additional shares and, as a result, to forfeit the benefits of owning the additional shares. Any acquisition of our common shares in violation of these ownership restrictions will be voidab initioand will result in automatic transfers of our common shares to a charitable trust, which will be responsible for selling the common shares to permitted transferees and distributing at least a portion of the proceeds to the prohibited transferees.

Our declaration of trust permits our board of trustees to issue preferred shares with terms that may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our shares or otherwise benefit our shareholders.

Our declaration of trust permits our board of trustees to issue up to 40,000,000 preferred shares, having those preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications, or terms or conditions of redemption as determined by our board. Thus, our board could authorize, without shareholder approval, the issuance of preferred shares with terms and conditions that could have the effect of discouraging a takeover or other transaction in which holders of some or a majority of our shares might receive a premium for their shares over the then-prevailing market price of our shares. We currently do not expect that the board would require shareholder approval prior to such a preferred issuance. In addition, any preferred shares that we issue would rank senior to our common shares with respect to the payment of distributions, in which case we could not pay any distributions on our common shares until full distributions have been paid with respect to such preferred shares.

Our management has limited experience operating a REIT and a public company and therefore, may not be able to successfully operatemake distributions to shareholders at expected levels or at all and may not be able to acquire new properties.  Failure to make distributions to our company as a REIT and as a public company.

We have limited history operating as a REIT and as a public company. We completedshareholders could result in our initial public offering in October 2004 and believe that wefailure to qualify for taxation as a REIT for federal income tax purposes under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) beginning withpurposes.  Furthermore, an increase in our short taxable year ended December 31, 2004. Our board of trusteesinterest expense could adversely affect our cash flow and executive officersability to make distributions to shareholders.  If we do not meet our debt service obligations, any facilities securing such indebtedness could be foreclosed on, which would have overall responsibility for our management and, while certain of our officers and trustees have extensive experience in real estate marketing, development, management, finance and law, our executive officers have limited experience in operating a business in accordance with the Internal Revenue Code requirements for maintaining qualification as a REIT and in operating a public company. In addition, we are in the process of developing control systems and procedures required to operate as a public REIT, and this transition could place a significant strainmaterial adverse effect on our management systems, infrastructurecash flow and ability to make distributions and, depending on the number of facilities foreclosed on, could threaten our continued viability.

Our unsecured credit facility and unsecured term loan each contain (and any new or amended facility will likely contain) customary restrictions, requirements and other resources. We cannot assure youlimitations on our ability to incur indebtedness, including total debt to asset ratios, secured debt to total asset ratios, debt service coverage ratios and minimum ratios of unencumbered assets to unsecured debt which we must maintain.  Our ability to borrow under our credit facility is (and any new or amended facility will be) subject to compliance with such financial and other covenants.  In the event that our past experience will be sufficient to enable us to successfully operate our company as a REIT and as a public company. If we fail to qualify as a REIT,satisfy these covenants, we would be in default under the credit facility and are not able to avail ourselves of certain savings provisions set forth in the Internal Revenue Code, our distributions to shareholders will not be deductible for federal income tax purposes,term loan and therefore we willmay be required to pay corporate tax at applicablerepay such debt with capital from other sources.  Under such circumstances, other sources of debt or equity capital may not be available to us, or may be available only on unattractive terms.

Increases in interest rates on variable rate indebtedness would increase our taxable income,interest expense, which will substantially reducecould adversely affect our earningscash flow and ability to make distributions to shareholders.  Rising interest rates could also restrict our ability to refinance existing debt when it matures.  In addition, an increase in interest rates could decrease the amounts that third parties are willing to pay for our assets, thereby limiting our ability to alter our portfolio promptly in relation to economic or other conditions.  We have entered into and may, reducefrom time to time, enter into agreements such as interest rate hedges, swaps, floors, caps and other interest rate hedging contracts with respect to a portion of our variable rate debt.  Although these agreements may lessen the impact of rising interest rates on us, they also expose us to the risk that other parties to the agreements will not perform or that we cannot enforce the agreements.

Our organizational documents contain no limitation on the amount of debt we may incur.  As a result, we may become highly leveraged in the future.

15


Our organizational documents contain no limitations on the amount of indebtedness that we or our operating partnership may incur. We could alter the balance between our total outstanding indebtedness and the value of our common shares andassets at any time. If we become more highly leveraged, then the resulting increase in debt service could adversely affect our ability to raise additional capital. We would not be ablemake payments on our outstanding indebtedness and to electpay our anticipated distributions and/or the distributions required to be taxed as amaintain our REIT for four years followingstatus, and could harm our financial condition.

Our ability to make distributions is subject to various risks.

Historically, we have paid quarterly distributions to our shareholders.  Our ability to make distributions in the year we first failed to qualify unless the Internal Revenue Service (the “IRS”) were to grant us relief under certain statutory provisions.future will depend upon:

 

Certain provisions·the operational and financial performance of Maryland law could inhibit changes in control, which may discourage third parties from conductingour facilities;

·capital expenditures with respect to existing and newly acquired facilities;

·general and administrative costs associated with our operation as a tender offer or seekingpublicly-held REIT;

·the amount of, and the interest rates on, our debt; and

·the absence of significant expenditures relating to environmental and other change of control transactions that could involve a premium price for our shares or otherwise benefit our shareholders.regulatory matters.

 

Certain provisions of Maryland law may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of our common shares with the opportunity to realize a premium over the then-prevailing market price of those shares, including:

“business combination moratorium/fair price” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested shareholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof) for five years after the most recent date on which the shareholder becomes an interested shareholder, and thereafter imposes stringent fair price and super-majority shareholder voting requirements on these combinations; and

“control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated with other shares controlled by the shareholder, entitle the shareholder to exercise one of three increasing ranges of voting power in electing trustees) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares” from a party other than the issuer) have no voting rights except to the extent approved by our shareholders by the affirmative vote of at least two thirds of all the votes entitled to be cast on the matter, excluding all interested shares, and are subject to redemption in certain circumstances.

We have opted out of these provisions of Maryland law. However,matters are beyond our board of trustees may optcontrol and any significant difference between our expectations and actual results could have a material adverse effect on our cash flow and our ability to make these provisions applicabledistributions to us at any time.

Robert J. Amsdell, Barry L. Amsdell, Todd C. Amsdell and the Amsdell Entities collectively own an approximate 26% beneficial interest in our company and operating partnership and may have the ability to exercise significant influence on our company and any matter presented to our shareholders.

Robert J. Amsdell, Barry L. Amsdell, Todd C. Amsdell and the Amsdell Entities collectively own approximately 23% of our outstanding common shares, and an approximate 26% beneficial interest in our company and operating partnership. Consequently, these persons and entities may be able to significantly influence the outcome of matters submitted for shareholder action, including the election of our board of trustees and approval of significant corporate transactions, including business combinations, consolidations and mergers and the determination of our day-to-day business decisions and management policies. As a result, Robert J. Amsdell, Barry L. Amsdell and Todd C. Amsdell have substantial influence on us and could exercise their influence in a manner that conflicts with the interests of our other shareholders.

 

Robert J. Amsdell, our Chairman and Chief Executive Officer, and Barry L. Amsdell, one of our trustees, have interests, through their ownership of limited partner units in our operating partnership and their ownership, through Rising Tide Development, of the option facilities, that may conflict with the interests of our other shareholders.

Robert J. Amsdell, our Chairman and Chief Executive Officer, and Barry L. Amsdell, one of our trustees, own limited partner units in our operating partnership. These individuals may have personal interests that conflict with the interests of our shareholders with respect to business decisions affecting us and our operating partnership, such as interests in the timing and pricing of facility sales or refinancings in order to obtain favorable tax treatment. As a result, the effect of certain transactions on these unitholders may influence our decisions affecting these facilities.

In addition, Robert J. Amsdell and Barry L. Amsdell own all of the equity interests in Rising Tide Development, which currently owns 11 of the option facilities and has the right to acquire four option facilities from unaffiliated third parties. We have options to purchase these 15 option facilities from Rising Tide Development. As a result of their ownership interest in Rising Tide Development, Robert J. Amsdell and Barry L. Amsdell may have personal interests that conflict with the interests of our shareholders with respect to decisions affecting our exercise of our right to purchase any or all of the option facilities or our management of the option facilities. For example, it could be in the best interests of Rising Tide Development, at some time during the term of the option agreement, to seek our agreement to permit it to sell any or all of the option facilities to an outside third party rather than to our operating partnership. Under these circumstances, our interests would conflict with the fiduciary obligations of Robert J. Amsdell and Barry L. Amsdell as officers and directors of the entity that manages Rising Tide Development and their economic interests as the holders of the equity of Rising Tide Development. Although we expect that our decisions regarding our relationship with Rising Tide Development will be made by the independent members of our board of trustees, we cannot assure you that we will not be adversely affected by conflicts arising from Robert J. Amsdell and Barry L. Amsdell’s relationship with Rising Tide Development.

Our Chairman and Chief Executive Officer has outside business interests that could require time and attention and may interfere with his ability to devote time to our business and affairs.

Robert J. Amsdell, our Chairman and Chief Executive Officer, has outside business interests that are not being contributed to our company which could require time and attention. These interests include the ownership and operation of certain office and industrial properties and ownership of the entity that owns or in some cases has a right to purchase the option facilities. Mr. Amsdell’s employment agreement permits him to devote time to his outside business interests, so long as such activities do not materially or adversely interfere with his duties to us. In some cases, Mr. Amsdell may have fiduciary obligations associated with these business interests that interfere with his ability to devote time to our business and affairs and that could adversely affect our operations. In particular, Mr. Amsdell also serves as an officer or on the board of directors or comparable governing body of various entities owned and controlled by him and Barry L. Amsdell, which entities manage the office and industrial properties and own the option facilities referred to above. As a result of the customary requirement of a fiduciary to exercise the level of care a prudent person would exercise, Mr. Amsdell may be required, through his service as an officer and director of these various entities, to maintain significant familiarity with the businesses and operations of such entities. As well, Mr. Amsdell may be required from time to time to take action as an officer or director with respect to these entities. These activities could require significant time and attention of Mr. Amsdell.

Our business could be harmed if any of our key personnel, Robert J. Amsdell, Steven G. Osgood, Todd C. Amsdell and Tedd D. Towsley, all of whom have long-standing business relationships in the self-storage industry, terminated his employment with us.

Our continued success depends on the continued services of our Chairman and Chief Executive Officer and our other executive officers. Our top four executives, Robert J. Amsdell, Steven G. Osgood, Todd C. Amsdell and Tedd D. Towsley, have an average of approximately 22 years of real estate experience and have worked in the self-storage industry for an average of approximately 16 years. Although we have employment agreements with our Chairman and Chief Executive Officer and the other members of our senior management team, we cannot provide any assurance that any of them will remain in our employ. The loss of services of one or more members of our senior management team, particularly our Chairman and Chief Executive Officer, could adversely affect our operations and our future growth.

We depend on external sources of capital that are outside of our control; the unavailability of capital from external sources could adversely affect our ability to acquire or develop facilities, satisfy our debt obligations and/or make distributions to shareholders.

 

To continue to qualify as a REIT, we are required to distribute to our shareholders each year at least 90% of our REIT taxable income, excluding net capital gains.gains or pay applicable income taxes. In order to eliminate federal income tax, we will be required to distribute annually 100% of our net taxable income, including capital gains. Because of these distribution requirements, we likely will not be able to fund all future capital needs, including capital for acquisitions and facility development, with income from operations. We therefore will have to rely on third-party sources of capital, which may or may not be available on favorable terms, if at all. Our access to third-party sources of capital depends on a number of things, including the market’s perception of our growth potential and our current and potential future earnings and our ability to continue to qualify as a REIT for federal income tax purposes. If we are unable to obtain third-party sources of capital, we may not be able to acquire or develop facilities when strategic opportunities exist, satisfy our debt obligations or make distributions to shareholders that would permit us to qualify as a REIT or avoid paying tax on our REIT taxable income.

Our shareholders have limited control to prevent us from making any changes to our investment and financing policies that they believe could harm our business, prospects, operating results or share price.

 

Our board of trustees has adopted policies with respect to certain activities. These policies may be amended or revised from time to time at the discretion of our board of trustees without a vote of our shareholders. This means that our shareholders have limited control over changes in our policies. Such changes in our policies intended to improve, expand or diversify our business may not have the anticipated effects and consequently may adversely affect our business and prospects, results of operations and share price.

Our rights and the rights of our shareholders to take action against our trustees and officers are limited, and therefore our and our shareholders’ ability to recover damages from our trustees and officers is limited.

Maryland law provides that a director or officer has no liability in that capacity if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in our best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. Our declaration of trust and bylaws require us to indemnify our trustees and officers for actions taken by them in those capacities to the extent permitted by Maryland law. Accordingly, in the event that actions taken in good faith by any trustee or officer impede our performance, our and our shareholders’ ability to recover damages from that trustee or officer will be limited.

We may have assumed unknown liabilities in connection with our formation transactions and will not have recourse to Robert J. Amsdell, Barry L. Amsdell, Todd C. Amsdell and the Amsdell Entities for any of these liabilities.

As part of our formation transactions, we acquired certain entities and/or assets that are subject to existing liabilities, some of which may be unknown at the present time. Unknown liabilities might include liabilities for cleanup or remediation of undisclosed environmental conditions, claims by customers, vendors or other persons dealing with our predecessor entities (that have not been asserted or threatened to date), tax liabilities, and accrued but unpaid liabilities incurred in the ordinary course of business. While in some instances we may have the right to seek reimbursement against an insurer or another third party for certain of these liabilities, we will not have recourse to Robert J. Amsdell, Barry L. Amsdell, Todd C. Amsdell or any of the Amsdell Entities for any of these liabilities.

Our share price could be volatile and could decline, resulting in a substantial or complete loss on your investment.

At times the stock markets, including the New York Stock Exchange, on which our common shares are listed, have experienced significant price and volume fluctuations. As a result, the market price of our common shares could be similarly volatile, and investors in our common shares may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects.

The price of our common shares could fluctuate in response to a number of factors, including:

our operating performance and the performance of other similar companies;

actual or anticipated differences in our quarterly operating results;

changes in our revenues or earnings estimates or recommendations by securities analysts;

publication of research reports about us or our industry by securities analysts;

additions and departures of key personnel;

changes in market interest rates;

strategic decisions by us or our competitors, such as acquisitions, divestments, spin-offs, joint ventures, strategic investments or changes in business strategy;

the passage of legislation or other regulatory developments that adversely affect us or our industry;

speculation in the press or investment community;

actions by institutional shareholders;

changes in accounting principles;

terrorist acts; and

general market conditions, including factors unrelated to our performance.

In the past, securities class action litigation has been instituted against companies following periods of volatility in their stock price. If this type of litigation were to be initiated in respect of our shares, it could result in substantial costs and divert our management’s attention and resources.

A substantial number of our common shares will be eligible for sale in the near future, which could cause our common share price to decline significantly.

If our shareholders sell, or the market perceives that our shareholders intend to sell, substantial amounts of our common shares in the public market, the market price of our common shares could decline significantly. These sales also might make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate. As of December 31, 2004, we had outstanding approximately 37.3 million common shares. Of these shares, the approximately 28.8 million shares sold in our IPO are freely tradable, except for any shares held by our “affiliates,” as that term is defined by Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), and approximately 8.6 million additional common shares will be available for sale in the public market beginning in July 2005 following the expiration of lock-up agreements between our management and trustees, on the one hand, and the underwriters of our IPO, on the other hand. The representatives of the underwriters may release these shareholders from their lock-up agreements at any time and without notice, which would allow for earlier sale of shares in the public market. Robert J. Amsdell, Barry L. Amsdell, Todd C. Amsdell and the Amsdell Entities have been granted registration rights that will enable them to sell shares received in our formation transactions or upon redemption of operating partnership units in market transactions, subject to certain limitations. As restrictions on resale end, the market price of our common shares could drop significantly if the holders of restricted shares sell them or are perceived by the market as intending to sell them.

Tax Risks

If we fail to qualify as a REIT, our distributions to shareholders would not bedeductible for federal income tax purposes, and therefore we would be required to paycorporate income  tax at applicable rates on our taxable income, which would substantiallyreduce our earnings and may substantially reduce the value of our common shares andadversely affect our ability to raise additional capital.capital.

 

We have electedoperate our business to qualify to be taxed as a REIT for federal income tax purposes commencing with our taxable year ending December 31, 2004, and we plan to continue to operate so that we can meet the requirements for qualification and taxation as a REIT.purposes. We have not requested and do not plan to request a ruling from the IRS that we qualify as a REIT, and the statements in this Annual Report on Form 10-K are not binding on the IRS or any court. As a REIT, we generally will not be subject to federal income tax on ourthe income that we distribute currently to our shareholders. Many of the REIT requirements, however, are highly technical and complex. The determination that we are a REIT requires an analysis of various factual matters and circumstances that may not be totally within our control. For example, to qualify as a REIT, at least 95% of our gross income must come from specific passive sources, such as rent, that are itemized in the REIT tax laws. In addition, to qualify as a REIT, we cannot own specified amounts of debt and equity securities of some issuers. We also are required to distribute to our shareholders with respect to each year at least 90% of our REIT taxable income (excluding net

capital gains). The fact that we hold substantially all of our assets through the operating partnership and its subsidiaries further complicates the application of the REIT requirements for us. Even a technical or inadvertent mistake could jeopardize our REIT status and, given the highly complex nature of the rules governing REITs and the ongoing importance of factual determinations, we cannot provide any assurance that we will continue to qualify as a REIT. Furthermore, Congress and the IRS might make changes to the tax laws and regulations, and

16


the courts might issue new rulings, that make it more difficult, or impossible, for us to remain qualified as a REIT. If we fail to qualify as a REIT for federal income tax purposes and are able to avail ourselves of one or more of the statutory savings provisions in order to maintain our REIT status, we would nevertheless be required to pay penalty taxes of $50,000 or more for each such failure.

 

If we fail to qualify as a REIT for federal income tax purposes, and are unable to avail ourselves of certain savings provisions set forth in the Internal Revenue Code, we would be subject to federal income tax at regular corporate rates on all of our income. As a taxable corporation, we would not be allowed to take a deduction for distributions to shareholders in computing our taxable income or pass through long term capital gains to individual shareholders at favorable rates. We also could be subject to the federal alternative minimum tax and possibly increased state and local taxes. We would not be able to elect to be taxed as a REIT for four years following the year we first failed to qualify unless the IRS were to grant us relief under certain statutory provisions. If we failed to qualify as a REIT, we would have to pay significant income taxes, which would reduce our net earnings available for investment or distribution to our shareholders. This likely would have a significant adverse effect on our earnings and likely would adversely affect the value of our securities. In addition, we would no longer be required to pay any distributions to shareholders.

 

New legislation, enacted October 22, 2004, contained several provisions applicableAs a REIT, we are subject to REITs,certain distribution requirements, including provisionsthe requirement to distribute 90% of our REIT taxable income that could provide relief under specified circumstances in the event we violate a provision of the Internal Revenue Code that wouldmay result in our failurehaving to qualify as a REIT. If these relief provisions, which generally would applymake distributions at disadvantageous time or to us beginning January 1, 2005, are inapplicableborrow funds at unfavorable rates.  Compliance with this requirement may hinder our ability to a particular setoperate solely on the basis of circumstances, we would fail to qualify as a REIT. Even if those relief provisions apply, we would be subject to a penalty tax of at least $50,000 for each disqualifying event in most cases.maximizing profits.

 

We will pay some taxes even if we qualify as a REIT.

 

Even if we qualify as a REIT for federal income tax purposes, we will be required to pay certain federal, state and local taxes on our income and property. For example, we will be subject to income tax to the extent we distribute less than 100% of our REIT taxable income, including capital gains. Additionally, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which dividends paid by us in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years. Moreover, if we have net income from “prohibited transactions,” that income will be subject to a 100% penalty tax. In general, prohibited transactions are sales or other dispositions of property held primarily for sale to customers in the ordinary course of business. The determination as to whether a particular sale is a prohibited transaction depends on the facts and circumstances related to that sale. We cannot guarantee that sales of our properties would not be prohibited transactions unless we comply with certain statutory safe-harbor provisions. The need to avoid prohibited transactions could cause us to forego or defer sales of facilities that our predecessors otherwise would have sold or that might otherwise be in our best interest to sell.

 

In addition, any net taxable income earned directly by our taxable REIT subsidiaries, or through entities that are disregarded for federal income tax purposes as entities separate from our taxable REIT subsidiaries, will be subject to federal and possibly state corporate income tax. We have elected to treat U-Store-It Mini Warehouse Co. as a taxable REIT subsidiary, and we may elect to treat other subsidiaries as taxable REIT subsidiaries in the future. In this regard, several provisions of the laws applicable to REITs and their subsidiaries ensure that a taxable REIT subsidiary will be subject to an appropriate level of federal income taxation. For example, a taxable REIT subsidiary is limited in its ability to deduct certain interest payments made to an affiliated REIT. In addition, the REIT has to pay a 100% penalty tax on some payments that it receives or on some deductions taken by a taxable REIT subsidiary if the economic arrangements between the REIT, the REIT’s customers, and the taxable REIT subsidiary are not comparable to similar arrangements between unrelated parties. Finally, some state and local jurisdictions may tax some of our income even though as a REIT we are not subject to federal income tax on that income because not all states and localities follow the federal income tax treatment of REITs. To the extent that we and our affiliates are required to pay federal, state and local taxes, we will have less cash available for distributions to our shareholders.

ITEM 2.PROPERTIES

 

OverviewWe cannot assure you of our ability to pay dividends in the future.

We intend to pay quarterly dividends and to make distributions to our shareholders in amounts such that all or substantially all of our taxable income in each year, subject to certain adjustments, is distributed.  This, along with other factors, should enable us to qualify for the tax benefits accorded to a REIT under the Internal Revenue Code.  We have not established a minimum dividends payment level and our ability to pay dividends may be adversely affected by the risk factors described in this Annual Report on Form 10-K.  All distributions will be made at the discretion of our Board of Trustees and will depend on our earnings, our financial condition, maintenance of our REIT status and such other factors as our Board of Trustees may deem relevant from time to time.  We cannot assure you that we will be able to pay dividends in the future.

17


We are dependent upon our key personnel whose continued service is not guaranteed.

Our top executives, Dean Jernigan, Christopher Marr, Kathleen Weigand, Stephen Nichols and Timothy Martin, have extensive self-storage, real estate and public company experience.  Although we have employment agreements with all of the members of our senior management team, we cannot provide any assurance that any of them will remain in our employ.  The loss of services of one or more members of our senior management team, particularly Dean Jernigan, our President and Chief Executive Officer, could adversely affect our operations and our future growth.

We are dependent upon our on-site personnel to maximize customer satisfaction; any difficulties we encounter in hiring, training and retaining skilled field personnel may adversely affect our rental revenues.

 

As of December 31, 2004,2007, we had approximately 880 field personnel involved in the management and operation of our facilities. The customer service, marketing skills and knowledge of local market demand and competitive dynamics of our facility managers are contributing factors to our ability to maximize our rental income and to achieve the highest sustainable rent levels at each of our facilities. We compete with various other companies in attracting and retaining qualified and skilled personnel. Competitive pressures may require that we enhance our pay and benefits package to compete effectively for such personnel.  If there is an increase in these costs or if we fail to attract and retain qualified and skilled personnel, our business and operating results could be harmed.

Our insurance coverage may not comply fully with certain loan requirements.

We maintain comprehensive insurance on each of our self-storage facilities in amounts sufficient to permit replacement of the property, subject to applicable deductibles. Certain of our properties serve as collateral for our mortgage-backed debt, some of which was assumed in connection with our acquisition of facilities, that requires us to maintain insurance at levels and on terms that are not commercially reasonable in the current insurance environment. We may be unable to obtain required insurance coverage if the cost and/or availability make it impractical or impossible to comply with debt covenants. If we cannot comply with a lender’s requirements in any respect, the lender could declare a default that could affect our ability to obtain future financing and could have a material adverse effect on our results of operations and cash flows and our ability to obtain future financing. In addition, we may be required to self-insure against certain losses or the Company’s insurance costs may increase.

Certain provisions of Maryland law could inhibit changes in control, which maydiscourage third parties from conducting a tender offer or seeking other change ofcontrol transactions that could involve a premium price for our shares or otherwisebenefit our shareholders.

Certain provisions of Maryland law may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of our common shares with the opportunity to realize a premium over the then-prevailing market price of those shares, including:

·“business combination moratorium/fair price” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested shareholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof) for five years after the most recent date on which the shareholder becomes an interested shareholder, and thereafter imposes stringent fair price and super-majority shareholder voting requirements on these combinations; and

·“control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated with other shares controlled by the shareholder, entitle the shareholder to exercise one of three increasing ranges of voting power in electing Trustees) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares” from a party other than the issuer) have no voting rights except to the extent approved by our shareholders by the affirmative vote of at least two thirds of all the votes entitled to be cast on the matter, excluding all interested shares, and are subject to redemption in certain circumstances.

We have opted out of these provisions of Maryland law. However, our Board of Trustees may opt to make these provisions applicable to us at any time.

18


Robert J. Amsdell, our former Chairman and Chief Executive Officer; Barry L. Amsdell, a former Trustee; Todd C. Amsdell, our former Chief Operating Officer and former President of our development subsidiary; and the Amsdell Entities (collectively, “The Amsdell Family”)collectively own an approximate 23.3% beneficial interest in our company on a fullydiluted basis and therefore have the ability to exercise significant influence on any matter presented to our shareholders.

The Amsdell Family collectively owns approximately 21.3% of our outstanding common shares, and an approximate 23.3% beneficial interest in our company on a fully diluted basis. Consequently, the Amsdell Family may be able to significantly influence the outcome of matters submitted for shareholder action, including the election of our Board of Trustees and approval of significant corporate transactions, including business combinations, consolidations and mergers. As a result, Robert J. Amsdell, Barry L. Amsdell and Todd C. Amsdell have substantial influence on us and could exercise their influence in a manner that conflicts with the interests of our other shareholders.

Robert J. Amsdell and Barry L. Amsdell have interests, through their ownership of limited partner unitsin our operating partnership that may conflict with the interests of our othershareholders.

Robert J. Amsdell and Barry L. Amsdell own limited partner units in our operating partnership. These individuals may have personal interests that conflict with the interests of our shareholders with respect to business decisions affecting us and our operating partnership, such as interests in the timing and pricing of facility sales or refinancings in order to obtain favorable tax treatment.

Our shareholders have limited control to prevent us from making any changes to ourinvestment and financing policies.

Our Board of Trustees has adopted policies with respect to certain activities. These policies may be amended or revised from time to time at the discretion of our Board of Trustees without a vote of our shareholders. This means that our shareholders have limited control over changes in our policies. Such changes in our policies intended to improve, expand or diversify our business may not have the anticipated effects and consequently may adversely affect our business and prospects, results of operations and share price.

Our rights and the rights of our shareholders to take action against our Trustees andofficers are limited.

Maryland law provides that a trustee or officer has no liability in that capacity if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in our best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. Our declaration of trust and bylaws require us to indemnify our Trustees and officers for actions taken by them in those capacities to the extent permitted by Maryland law. Accordingly, in the event that actions taken in good faith by any Trustee or officer impede our performance, our and our shareholders’ ability to recover damages from that Trustee or officer will be limited.

Many factors could have an adverse effect on the market value of our securities.

A number of factors might adversely affect the price of our securities, many of which are beyond our control.  These factors include:

·increases in market interest rates, relative to the dividend yield on our shares.  If market interest rates go up, prospective purchasers of our securities may require a higher yield.  Higher market interest rates would not, however, result in more funds for us to distribute and, to the contrary, would likely increase our borrowing costs and potentially decrease funds available for distribution.  Thus, higher market interest rates could cause the market price of our common shares to go down;

·anticipated benefit of an investment in our securities as compared to investment in securities of companies in other industries (including benefits associated with tax treatment of dividends and distributions);

·perception by market professionals of REITs generally and REITs comparable to us in particular;

·level of institutional investor interest in our securities;

·relatively low trading volumes in securities of REITs;

19


·our results of operations and financial condition;

·investor confidence in the stock market generally; and

·additions and departures of key personnel.

The market value of our common shares is based primarily upon the market’s perception of our growth potential and our current and potential future earnings and cash distributions.  Consequently, our common shares may trade at prices that are higher or lower than our net asset value per common share.  If our future earnings or cash distributions are less than expected, it is likely that the market price of our common shares will diminish.

Additional issuances of equity securities may be dilutive to shareholders.

The interests of our shareholders could be diluted if we issue additional equity securities to finance future developments or acquisitions or to repay indebtedness.  Our Board of Trustees may authorize the issuance of additional equity securities without shareholder approval.  Our ability to execute our business strategy depends upon our access to an appropriate blend of debt financing, including unsecured lines of credit and other forms of secured and unsecured debt, and equity financing, including the issuance of common and preferred equity.

Our declaration of trust permits our Board of Trustees to issue preferred shares withterms that may discourage third parties from conducting a tender offer or seekingother change of control transactions that could involve a premium price for ourshares or otherwise benefit our shareholders.

Our declaration of trust permits our Board of Trustees to issue up to 40,000,000 preferred shares, having those preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications, or terms or conditions of redemption as determined by our Board. In addition, our Board may reclassify any unissued common shares into one or more classes or series of preferred shares. Thus, our Board could authorize, without shareholder approval, the issuance of preferred shares with terms and conditions that could have the effect of discouraging a takeover or other transaction in which holders of some or a majority of our shares might receive a premium for their shares over the then-prevailing market price of our shares. We currently do not expect that the Board would require shareholder approval prior to such a preferred issuance. In addition, any preferred shares that we issue would rank senior to our common shares with respect to the payment of distributions, in which case we could not pay any distributions on our common shares until full distributions have been paid with respect to such preferred shares.

The acquisition of new facilities that lack operating history with us will give rise to difficulties in predicting revenue potential.

We will continue to acquire additional facilities.  These acquisitions could fail to perform in accordance with expectations.  If we fail to accurately estimate occupancy levels, operating costs or costs of improvements to bring an acquired facility up to the standards established for our intended market position, the performance of the facility may be below expectations.  Acquired facilities may have characteristics or deficiencies affecting their valuation or revenue potential that we have not yet discovered.  We cannot assure you that the performance of facilities acquired by us will increase or be maintained under our management.

Our financial performance is dependent upon the economic and other conditions of the markets in which our facilities are located.

We are susceptible to adverse developments in the markets in which we operate, such as business layoffs or downsizing, industry slowdowns, relocations of businesses, changing demographics and other factors. Our facilities in Florida, California, Texas, Ohio, Tennessee, Illinois and Arizona accounted for approximately 16%, 16%, 10%, 8%, 7%, 6% and 5%, respectively, of our total rentable square feet as of December 31, 2007. As a result of this geographic concentration of our facilities, we are particularly susceptible to adverse market conditions in these areas. Any adverse economic or real estate developments in these markets, or in any of the other markets in which we operate, or any decrease in demand for self-storage space resulting from the local business climate could adversely affect our rental revenues, which could impair our ability to satisfy our debt service obligations and pay distributions to our shareholders.

Our business may be sensitive to economic conditions that impact consumer spending.

20


Our results of operations may be sensitive to changes in overall economic conditions that impact consumer spending, including discretionary spending.  Future economic conditions affecting disposable consumer income, such as employment levels, business conditions, interest rates, tax rates, fuel and energy costs, and other matters could reduce consumer spending or cause consumers to shift their spending to other products and services.  A general reduction in the level of discretionary spending or shifts in consumer discretionary spending could adversely affect our growth and profitability.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

None.

ITEM 2.  PROPERTIES

Overview

As of December 31, 2007, we owned 201409 self-storage facilities located in 2126 states and aggregating approximately 13.026.1 million rentable square feet. The following table sets forth certain summary information regarding our facilities by state as of December 31, 2004.2007.

 

State

  Number of
Facilities
  Number of
Units
  Total
Rentable
Square Feet
  % of Total
Rentable
Square Feet
  Occupancy(1)
 

Florida

  47  29,478  3,217,366  24.8% 86.1%

Illinois

  25  13,407  1,517,252  11.7% 77.1%

California

  25  11,434  1,353,227  10.4% 83.9%

Ohio

  19  8,908  1,121,327  8.6% 84.0%

New Jersey

  11  7,247  760,149  5.9% 84.3%

Indiana

  9  5,419  606,599  4.7% 74.9%

North Carolina

  8  4,743  555,779  4.3% 84.7%

Connecticut

  8  3,877  415,090  3.2% 71.5%

Tennessee

  7  3,070  374,271  2.9% 86.1%

Mississippi

  6  3,071  388,690  3.0% 75.1%

Louisiana

  6  2,329  334,324  2.6% 87.6%

Maryland

  4  3,299  418,638  3.2% 83.5%

Georgia

  5  3,635  431,387  3.3% 83.4%

Michigan

  4  1,787  272,911  2.1% 78.0%

Arizona

  4  2,223  242,030  1.9% 82.5%

Alabama

  3  1,655  234,631  1.8% 71.1%

South Carolina

  3  1,281  214,113  1.6% 80.8%

Pennsylvania

  2  1,585  177,411  1.4% 88.5%

New York

  2  1,563  168,444  1.3% 78.9%

Massachusetts

  2  1,134  115,541  0.9% 72.9%

Wisconsin

  1  489  58,713  0.4% 82.2%
   
  
  
  
   

Total

  201  111,634  12,977,893  100.0% 82.2%
(1)Represents total occupied square feet divided by total rentable square feet, as of December 31, 2004.

 

 

 

 

 

 

Total

 

% of Total

 

 

 

 

 

Number of

 

Number of

 

Rentable

 

Rentable

 

Occupied

 

State

 

Facilities

 

Units

 

Square Feet

 

Square Feet

 

Square Feet

 

 

 

 

 

 

 

 

 

 

 

 

 

California

 

60

 

37,018

 

4,133,441

 

15.8

%

69.7

%

Florida

 

59

 

39,973

 

4,173,724

 

16.0

%

80.2

%

Texas

 

43

 

21,003

 

2,627,795

 

10.1

%

81.1

%

Ohio

 

35

 

16,364

 

1,999,099

 

7.7

%

79.9

%

Illinois

 

27

 

14,020

 

1,610,610

 

6.2

%

79.9

%

Arizona

 

24

 

12,526

 

1,247,447

 

4.8

%

84.0

%

Tennessee

 

24

 

12,930

 

1,686,433

 

6.3

%

82.5

%

Colorado

 

20

 

10,389

 

1,200,834

 

4.6

%

87.9

%

Connecticut

 

17

 

7,255

 

845,781

 

3.2

%

76.5

%

New Jersey

 

15

 

10,266

 

1,003,586

 

3.8

%

75.0

%

Georgia

 

13

 

9,245

 

1,060,144

 

4.1

%

76.8

%

New Mexico

 

11

 

4,247

 

459,020

 

1.8

%

89.6

%

Indiana

 

9

 

5,302

 

599,457

 

2.3

%

80.4

%

North Carolina

 

8

 

4,810

 

557,459

 

2.1

%

86.5

%

Mississippi

 

6

 

2,824

 

353,431

 

1.4

%

82.5

%

New York

 

6

 

3,208

 

349,453

 

1.3

%

83.8

%

Louisiana

 

5

 

2,358

 

304,555

 

1.2

%

93.2

%

Maryland

 

5

 

4,232

 

517,895

 

2.0

%

86.5

%

Utah

 

5

 

2,336

 

241,823

 

0.9

%

93.8

%

Michigan

 

4

 

1,888

 

270,769

 

1.0

%

78.6

%

Alabama

 

3

 

1,632

 

237,583

 

0.9

%

81.5

%

Massachusetts

 

3

 

1,776

 

172,928

 

0.7

%

74.7

%

Nevada

 

2

 

940

 

99,882

 

0.4

%

83.0

%

Pennsylvania

 

2

 

1,609

 

176,577

 

0.7

%

79.0

%

Virginia

 

2

 

1,214

 

130,943

 

0.5

%

59.8

%

Wisconsin

 

1

 

486

 

58,515

 

0.2

%

84.1

%

Total/Weighted Average

 

409

 

229,851

 

26,119,184

 

100.0

%

79.5

%

21


Our Facilities

 

The following table sets forth certain additional information with respect to each of our facilities as of December 31, 2004 (unless otherwise indicated).2007. Our ownership of each facility consists of a fee interest in the facility held by U-Store-It, L.P., our operating partnership, or one of its subsidiaries, except for our Morris Township, NJ facility, where we have a ground lease. In addition, small parcels of land at five of our other facilities are subject to ground leases.

22


 

 

Year Acquired/

 

Year

 

Rentable

 

 

 

 

 

Manager

 

% Climate

 

Facility Location

 

Developed (1)

 

Built

 

Square Feet

 

Occupancy (2)

 

Units

 

Apartment (3)

 

Controlled (4)

 

Mobile I, AL

 

1997

 

1987

 

65,198

 

91.1

%

468

 

N

 

0.0

%

Mobile II, AL †

 

1997

 

1974/90

 

129,260

 

73.2

%

801

 

Y

 

1.1

%

Mobile III, AL

 

1998

 

1988/94

 

43,125

 

91.9

%

363

 

Y

 

34.5

%

Chandler, AZ

 

2005

 

1985

 

47,520

 

93.8

%

466

 

Y

 

6.9

%

Glendale, AZ

 

1998

 

1987

 

56,830

 

81.3

%

554

 

Y

 

0.0

%

Green Valley, AZ

 

2005

 

1985

 

25,200

 

67.8

%

277

 

N

 

7.9

%

Mesa I, AZ

 

2006

 

1985

 

52,375

 

91.1

%

535

 

N

 

0.0

%

Mesa II, AZ

 

2006

 

1981

 

45,295

 

85.4

%

420

 

Y

 

8.4

%

Mesa III, AZ

 

2006

 

1986

 

58,264

 

78.3

%

514

 

Y

 

4.1

%

Phoenix I, AZ

 

2006

 

1987

 

100,887

 

76.5

%

822

 

Y

 

8.8

%

Phoenix II, AZ

 

2006

 

1974

 

45,270

 

75.8

%

440

 

Y

 

0.0

%

Scottsdale, AZ

 

1998

 

1995

 

80,925

 

90.3

%

692

 

Y

 

9.5

%

Tempe, AZ

 

2005

 

1975

 

54,000

 

84.1

%

410

 

Y

 

14.0

%

Tucson I, AZ

 

1998

 

1974

 

59,350

 

87.7

%

505

 

Y

 

0.0

%

Tucson II, AZ

 

1998

 

1988

 

43,950

 

84.7

%

543

 

Y

 

100.0

%

Tucson III, AZ

 

2005

 

1979

 

49,822

 

78.2

%

535

 

N

 

0.0

%

Tucson IV, AZ

 

2005

 

1982

 

47,840

 

88.5

%

524

 

Y

 

3.7

%

Tucson IX, AZ

 

2005

 

1984

 

67,656

 

81.7

%

653

 

Y

 

2.0

%

Tucson V, AZ

 

2005

 

1982

 

45,160

 

82.8

%

452

 

Y

 

3.0

%

Tucson VI, AZ

 

2005

 

1982

 

40,778

 

89.3

%

451

 

Y

 

3.5

%

Tucson VII, AZ

 

2005

 

1982

 

52,738

 

85.4

%

637

 

Y

 

2.0

%

Tucson VIII, AZ

 

2005

 

1979

 

46,800

 

83.9

%

504

 

Y

 

0.0

%

Tucson X, AZ

 

2005

 

1981

 

46,350

 

84.6

%

491

 

N

 

0.0

%

Tucson XI, AZ

 

2005

 

1974

 

42,800

 

82.0

%

465

 

Y

 

0.0

%

Tucson XII, AZ

 

2005

 

1974

 

42,375

 

87.7

%

474

 

Y

 

4.8

%

Tucson XIII, AZ

 

2005

 

1974

 

45,792

 

90.0

%

583

 

Y

 

0.0

%

Tucson XIV, AZ

 

2005

 

1976

 

49,470

 

84.0

%

579

 

Y

 

8.8

%

Apple Valley I, CA

 

1997

 

1984

 

73,340

 

48.3

%

594

 

Y

 

0.0

%

Apple Valley II, CA

 

1997

 

1988

 

62,115

 

62.9

%

495

 

Y

 

7.0

%

Benicia, CA

 

2005

 

1988/93/05

 

74,920

 

82.9

%

762

 

Y

 

0.0

%

Bloomington I, CA

 

1997

 

1987

 

28,550

 

65.8

%

218

 

N

 

0.0

%

Bloomington II, CA †

 

1997

 

1987

 

25,860

 

97.1

%

20

 

N

 

0.0

%

Cathedral City, CA †

 

2006

 

1982/92

 

129,048

 

54.3

%

1029

 

Y

 

1.9

%

Citrus Heights, CA

 

2005

 

1987

 

75,620

 

62.0

%

693

 

Y

 

0.0

%

Diamond Bar, CA

 

2005

 

1988

 

103,228

 

81.7

%

918

 

Y

 

0.0

%

Escondido, CA

 

2007

 

2002

 

143,145

 

77.2

%

1296

 

Y

 

6.7

%

Fallbrook, CA

 

1997

 

1985/88

 

46,370

 

82.8

%

461

 

Y

 

0.0

%

Hemet, CA

 

1997

 

1989

 

66,040

 

76.1

%

445

 

Y

 

0.0

%

Highland I, CA

 

1997

 

1987

 

76,765

 

58.0

%

860

 

Y

 

0.0

%

Highland II, CA

 

2006

 

1982

 

62,257

 

70.1

%

536

 

Y

 

0.0

%

Lancaster, CA

 

2001

 

1987

 

61,275

 

53.1

%

414

 

Y

 

0.0

%

Long Beach, CA

 

2006

 

1974

 

125,213

 

76.5

%

1424

 

Y

 

0.0

%

Murrieta, CA

 

2005

 

1996

 

49,895

 

68.0

%

474

 

Y

 

3.3

%

North Highlands, CA

 

2005

 

1980

 

57,244

 

89.6

%

481

 

Y

 

0.0

%

Orangevale, CA

 

2005

 

1980

 

50,492

 

79.4

%

556

 

Y

 

0.0

%

Palm Springs I, CA

 

2006

 

1989

 

72,775

 

68.0

%

582

 

Y

 

8.6

%

Palm Springs II, CA †

 

2006

 

1982/89

 

122,745

 

57.8

%

634

 

Y

 

0.0

%

Pleasanton, CA

 

2005

 

2003

 

82,415

 

86.0

%

718

 

Y

 

0.0

%

Rancho Cordova, CA

 

2005

 

1979

 

53,928

 

79.0

%

484

 

Y

 

0.0

%

Redlands, CA

 

1997

 

1985

 

62,805

 

80.0

%

548

 

N

 

0.0

%

Rialto, CA

 

1997

 

1987

 

57,371

 

64.5

%

519

 

Y

 

0.0

%

Rialto II, CA

 

2006

 

1980

 

99,393

 

67.2

%

779

 

Y

 

0.0

%

Riverside I, CA

 

1997

 

1989

 

27,485

 

76.4

%

238

 

N

 

0.0

%

Riverside II, CA †

 

1997

 

1989

 

20,420

 

91.6

%

18

 

N

 

0.0

%

Riverside III, CA

 

1998

 

1989

 

46,809

 

70.9

%

442

 

Y

 

0.0

%

Riverside IV, CA

 

2006

 

1977

 

67,320

 

60.5

%

715

 

Y

 

4.0

%

Riverside V, CA

 

2006

 

1985

 

85,521

 

58.1

%

834

 

Y

 

12.7

%

Riverside VI, CA

 

2007

 

2004

 

74,900

 

67.6

%

466

 

Y

 

0.0

%

Roseville, CA

 

2005

 

1979

 

59,944

 

87.6

%

582

 

Y

 

0.0

%

Sacramento I, CA

 

2005

 

1979

 

50,764

 

88.0

%

536

 

Y

 

0.0

%

Sacramento II, CA

 

2005

 

1986

 

61,890

 

72.8

%

583

 

Y

 

4.7

%

San Bernardino I, CA

 

1997

 

1985

 

47,350

 

63.2

%

460

 

Y

 

2.0

%

San Bernardino II, CA

 

1997

 

1987

 

83,278

 

60.5

%

609

 

Y

 

0.0

%

San Bernardino III, CA

 

1997

 

1987

 

31,070

 

74.8

%

259

 

N

 

0.0

%

San Bernardino IV, CA

 

1997

 

1989

 

57,245

 

68.7

%

597

 

Y

 

0.0

%

San Bernardino IX, CA

 

2006

 

1975

 

117,928

 

44.8

%

1076

 

Y

 

0.0

%

San Bernardino V, CA

 

1997

 

1991

 

41,646

 

72.7

%

406

 

Y

 

0.0

%

San Bernardino VI, CA

 

1997

 

1985/92

 

35,671

 

76.0

%

405

 

N

 

11.8

%

San Bernardino VII, CA

 

2005

 

2002/04

 

83,507

 

77.9

%

776

 

Y

 

4.2

%

San Bernardino VIII, CA

 

2006

 

1974

 

56,820

 

56.9

%

507

 

Y

 

1.3

%

San Bernardino X, CA

 

2006

 

1978

 

78,839

 

66.1

%

669

 

Y

 

0.0

%

San Bernardino XI, CA

 

2006

 

1977

 

112,154

 

58.0

%

1037

 

Y

 

0.0

%

San Marcos, CA

 

2005

 

1979

 

37,430

 

91.8

%

247

 

Y

 

0.0

%

23


 

 

Year Acquired/

 

Year

 

Rentable

 

 

 

 

 

Manager

 

% Climate

 

Facility Location

 

Developed (1)

 

Built

 

Square Feet

 

Occupancy (2)

 

Units

 

Apartment (3)

 

Controlled (4)

 

Santa Ana, CA

 

2006

 

1984

 

65,528

 

72.5

%

742

 

Y

 

2.4

%

South Sacramento, CA

 

2005

 

1979

 

52,290

 

60.5

%

434

 

Y

 

0.0

%

South Palmetto, CA

 

1998

 

1982

 

80,505

 

70.1

%

820

 

Y

 

0.0

%

Spring Valley, CA

 

2006

 

1980

 

55,070

 

57.9

%

718

 

Y

 

0.0

%

Sun City, CA

 

1998

 

1989

 

38,435

 

70.1

%

383

 

N

 

0.0

%

Temecula I, CA

 

1998

 

1985/2003

 

81,740

 

80.0

%

716

 

Y

 

46.4

%

Temecula II, CA

 

2006

 

2003

 

84,580

 

42.0

%

723

 

Y

 

51.3

%

Thousand Palms, CA

 

2006

 

1988/01

 

76,336

 

52.0

%

896

 

Y

 

60.7

%

Vista I, CA

 

2001

 

1988

 

74,405

 

90.4

%

621

 

Y

 

0.0

%

Vista II, CA

 

2005

 

2001/02/03

 

147,721

 

78.4

%

1293

 

Y

 

2.3

%

Walnut, CA

 

2005

 

1987

 

50,708

 

85.6

%

539

 

Y

 

9.2

%

West Sacramento, CA

 

2005

 

1984

 

39,715

 

88.2

%

488

 

Y

 

0.0

%

Westminster, CA

 

2005

 

1983/98

 

68,048

 

93.2

%

572

 

Y

 

0.0

%

Yucaipa, CA

 

1997

 

1989

 

77,560

 

69.4

%

671

 

Y

 

0.0

%

Aurora I, CO

 

2005

 

1981

 

75,867

 

81.5

%

623

 

Y

 

0.0

%

Aurora II, CO

 

2005

 

1984

 

57,753

 

89.6

%

475

 

Y

 

5.3

%

Aurora III, CO

 

2005

 

1977

 

28,730

 

91.4

%

311

 

Y

 

0.0

%

Aurora IV, CO

 

2006

 

1998/99

 

49,700

 

87.3

%

352

 

Y

 

0.0

%

Avon, CO

 

2005

 

1989

 

28,227

 

91.5

%

387

 

Y

 

22.7

%

Boulder I, CO

 

2006

 

1972/75/77

 

47,296

 

88.8

%

531

 

Y

 

0.0

%

Boulder II, CO

 

2006

 

1983/84

 

101,245

 

90.9

%

1093

 

Y

 

0.0

%

Boulder III, CO

 

2006

 

1974/78

 

80,174

 

82.9

%

781

 

Y

 

0.0

%

Boulder IV, CO

 

2006

 

1983/98

 

95,148

 

94.0

%

715

 

Y

 

7.1

%

Colorado Springs, CO

 

2005

 

1986

 

47,975

 

87.3

%

474

 

Y

 

0.0

%

Colorado Springs II, CO

 

2006

 

2001

 

62,400

 

91.5

%

433

 

Y

 

0.0

%

Denver I, CO

 

2005

 

1987

 

58,050

 

79.1

%

431

 

Y

 

4.4

%

Denver II, CO

 

2006

 

1997

 

59,200

 

86.7

%

451

 

Y

 

0.0

%

Denver III, CO

 

2006

 

1999

 

63,700

 

81.9

%

454

 

Y

 

0.0

%

Englewood, CO

 

2005

 

1981

 

51,000

 

87.9

%

366

 

Y

 

0.0

%

Federal Heights, CO

 

2005

 

1980

 

54,770

 

88.2

%

554

 

Y

 

0.0

%

Golden, CO

 

2005

 

1985

 

87,832

 

90.7

%

645

 

Y

 

1.2

%

Littleton I , CO

 

2005

 

1987

 

53,490

 

89.0

%

452

 

Y

 

37.4

%

Littleton II, CO

 

2005

 

1982

 

46,175

 

90.4

%

363

 

Y

 

0.0

%

Northglenn, CO

 

2005

 

1980

 

52,102

 

87.4

%

498

 

Y

 

0.0

%

Bloomfield, CT

 

1997

 

1987/93/94

 

48,700

 

63.9

%

450

 

Y

 

6.6

%

Branford, CT

 

1995

 

1986

 

49,079

 

91.3

%

433

 

Y

 

2.2

%

Bristol, CT

 

2005

 

1989/99

 

47,825

 

83.4

%

479

 

N

 

22.6

%

East Windsor, CT

 

2005

 

1986/89

 

45,900

 

68.7

%

309

 

N

 

0.0

%

Enfield, CT

 

2001

 

1989

 

52,775

 

84.5

%

381

 

Y

 

0.0

%

Gales Ferry, CT

 

1995

 

1987/89

 

54,230

 

70.6

%

599

 

N

 

7.5

%

Manchester I, CT (6)

 

2002

 

1999/00/01

 

47,125

 

65.1

%

491

 

N

 

37.6

%

Manchester II, CT

 

2005

 

1984

 

52,725

 

72.5

%

411

 

N

 

0.0

%

Milford, CT

 

1994

 

1975

 

44,885

 

76.0

%

384

 

Y

 

4.0

%

Monroe, CT

 

2005

 

1996/03

 

58,500

 

87.7

%

405

 

N

 

0.0

%

Mystic, CT

 

1994

 

1975/86

 

50,800

 

67.0

%

538

 

Y

 

2.4

%

Newington I, CT †

 

2005

 

1978/97

 

42,620

 

75.1

%

258

 

N

 

0.0

%

Newington II, CT

 

2005

 

1979/81

 

35,810

 

88.1

%

213

 

N

 

0.0

%

Old Saybrook I, CT

 

2005

 

1982/88/00

 

87,700

 

76.5

%

723

 

N

 

6.3

%

Old Saybrook II, CT

 

2005

 

1988/02

 

26,425

 

84.4

%

257

 

N

 

55.3

%

South Windsor, CT

 

1994

 

1976

 

71,725

 

66.4

%

557

 

Y

 

1.1

%

Stamford, CT

 

2005

 

1997

 

28,957

 

95.1

%

367

 

N

 

32.8

%

Boca Raton, FL

 

2001

 

1998

 

37,958

 

90.9

%

605

 

N

 

68.2

%

Boynton Beach I, FL

 

2001

 

1999

 

62,013

 

87.4

%

812

 

Y

 

54.2

%

Boynton Beach II, FL

 

2005

 

2001

 

61,841

 

79.2

%

601

 

Y

 

81.3

%

Bradenton I, FL

 

2004

 

1979

 

68,502

 

53.8

%

659

 

N

 

2.8

%

Bradenton II, FL

 

2004

 

1996

 

87,760

 

80.4

%

881

 

Y

 

40.0

%

Cape Coral, FL

 

2000*

 

2000

 

76,592

 

83.8

%

883

 

Y

 

83.5

%

Dania, FL

 

1994

 

1988

 

58,270

 

98.4

%

498

 

Y

 

26.9

%

Dania Beach, FL (6)

 

2004

 

1984

 

183,393

 

82.5

%

2011

 

N

 

20.7

%

Davie, FL

 

2001*

 

2001

 

81,035

 

85.9

%

853

 

Y

 

55.7

%

Deerfield Beach, FL

 

1998*

 

1998

 

57,600

 

80.6

%

526

 

Y

 

39.2

%

DeLand, FL

 

1998

 

1987

 

37,552

 

87.1

%

401

 

Y

 

34.5

%

Delray Beach, FL

 

2001

 

1999

 

67,809

 

90.6

%

821

 

Y

 

39.3

%

Fernandina Beach, FL

 

1996

 

1986

 

111,030

 

74.7

%

897

 

Y

 

35.7

%

Ft. Lauderdale, FL

 

1999

 

1999

 

70,596

 

90.9

%

703

 

Y

 

46.5

%

Ft. Myers, FL

 

1998

 

1998

 

67,546

 

78.3

%

610

 

Y

 

67.0

%

Gulf Breeze, FL

 

2005

 

1982/04

 

79,449

 

91.8

%

700

 

N

 

62.7

%

Jacksonville I, FL

 

2005

 

2005

 

80,401

 

60.1

%

753

 

N

 

100.0

%

Jacksonville II, FL

 

2007

 

2004

 

65,020

 

86.0

%

688

 

N

 

100.0

%

Jacksonville III, FL

 

2007

 

2003

 

65,603

 

82.5

%

723

 

N

 

100.0

%

Jacksonville IV, FL

 

2007

 

2006

 

78,604

 

33.9

%

756

 

N

 

100.0

%

Jacksonville V, FL

 

2007

 

2004

 

81,860

 

73.1

%

753

 

N

 

82.3

%

Kendall, FL

 

2007

 

2003

 

75,395

 

84.7

%

710

 

N

 

71.0

%

24


 

 

Year Acquired/

 

Year

 

Rentable

 

 

 

 

 

Manager

 

% Climate

 

Facility Location

 

Developed (1)

 

Built

 

Square Feet

 

Occupancy (2)

 

Units

 

Apartment (3)

 

Controlled (4)

 

Lake Worth, FL †

 

1998

 

1998/02

 

163,683

 

82.0

%

1408

 

Y

 

36.4

%

Lakeland I, FL

 

1994

 

1988

 

48,911

 

82.2

%

484

 

Y

 

79.6

%

Lakeland II, FL

 

1996

 

1984

 

47,680

 

81.1

%

351

 

Y

 

19.0

%

Leesburg, FL

 

1997

 

1988

 

59,840

 

82.4

%

484

 

Y

 

17.7

%

Lutz I, FL

 

2004

 

2000

 

72,495

 

49.7

%

633

 

Y

 

34.1

%

Lutz II, FL

 

2004

 

1999

 

69,292

 

70.3

%

536

 

Y

 

20.6

%

Margate I, FL †

 

1994

 

1979/81

 

54,405

 

87.5

%

339

 

N

 

9.8

%

Margate II, FL †

 

1996

 

1985

 

65,168

 

87.3

%

437

 

Y

 

28.8

%

Merrit Island, FL

 

2000

 

2000

 

50,427

 

86.8

%

465

 

Y

 

56.8

%

Miami I, FL

 

1995

 

1995

 

46,925

 

89.7

%

565

 

Y

 

52.2

%

Miami II, FL

 

1994

 

1987

 

57,040

 

73.0

%

612

 

Y

 

0.0

%

Miami III, FL

 

1994

 

1989

 

67,060

 

85.2

%

571

 

Y

 

8.0

%

Miami IV, FL

 

1995

 

1987

 

58,315

 

86.1

%

614

 

Y

 

7.3

%

Miami V, FL

 

1995

 

1976

 

78,465

 

79.2

%

344

 

Y

 

4.0

%

Miami VI, FL

 

2005

 

1988/03

 

150,510

 

70.8

%

1518

 

N

 

86.8

%

Naples I, FL

 

1996

 

1996

 

48,050

 

81.1

%

351

 

Y

 

26.6

%

Naples II, FL

 

1997

 

1985

 

65,850

 

81.1

%

671

 

Y

 

44.6

%

Naples III, FL

 

1997

 

1981/83

 

81,145

 

67.2

%

876

 

Y

 

24.3

%

Naples IV, FL

 

1998

 

1990

 

40,975

 

67.8

%

458

 

N

 

43.4

%

Ocala, FL

 

1994

 

1988

 

41,891

 

86.5

%

375

 

Y

 

9.8

%

Ocoee, FL

 

2005

 

1997

 

76,250

 

87.7

%

652

 

Y

 

15.5

%

Orange City, FL

 

2004

 

2001

 

59,636

 

80.5

%

669

 

N

 

39.2

%

Orlando I, FL (6)

 

1997

 

1987

 

52,170

 

84.9

%

515

 

Y

 

4.9

%

Orlando II, FL

 

2005

 

2002/04

 

62,864

 

89.9

%

592

 

N

 

74.1

%

Orlando III, FL

 

2006

 

1988/90/96

 

104,165

 

77.3

%

796

 

Y

 

6.9

%

Oviedo, FL

 

2006

 

1988/1991

 

49,256

 

80.2

%

444

 

Y

 

3.2

%

Pembroke Pines, FL

 

1997

 

1997

 

67,337

 

88.8

%

718

 

Y

 

63.2

%

Royal Palm Beach I, FL †

 

1994

 

1988

 

98,961

 

67.7

%

692

 

Y

 

54.5

%

Royal Palm Beach II, FL †

 

2007

 

2004

 

81,515

 

73.5

%

817

 

N

 

82.3

%

Sanford, FL

 

2006

 

1988/2006

 

61,810

 

90.4

%

452

 

Y

 

28.6

%

Sarasota, FL

 

1998

 

1998

 

70,788

 

76.0

%

554

 

Y

 

42.3

%

St. Augustine, FL

 

1996

 

1985

 

59,670

 

78.7

%

734

 

Y

 

29.9

%

Stuart I, FL

 

1997

 

1986

 

41,324

 

78.7

%

542

 

Y

 

26.9

%

Stuart II, FL

 

1997

 

1995

 

86,924

 

77.8

%

1007

 

Y

 

51.4

%

SW Ranches, FL

 

2007

 

2004

 

64,955

 

80.1

%

650

 

N

 

85.3

%

Tampa I, FL

 

1994

 

1987

 

60,700

 

86.6

%

421

 

Y

 

0.0

%

Tampa II, FL

 

2001

 

1985

 

55,997

 

84.1

%

480

 

Y

 

17.1

%

Tampa III, FL

 

2007

 

2001/2002

 

83,788

 

77.7

%

807

 

N

 

28.4

%

Vero Beach, FL

 

1997

 

1986/1987

 

50,390

 

75.6

%

513

 

N

 

23.7

%

West Palm Beach I, FL

 

2001

 

1997

 

67,973

 

84.0

%

1025

 

Y

 

47.2

%

West Palm Beach II, FL

 

2004

 

1996

 

93,764

 

89.4

%

890

 

Y

 

74.4

%

Alpharetta, GA

 

2001

 

1996

 

90,485

 

76.5

%

678

 

Y

 

75.1

%

Austell , GA

 

2006

 

2000

 

83,615

 

74.2

%

676

 

Y

 

65.9

%

Decatur, GA

 

1998

 

1986

 

148,480

 

82.9

%

1356

 

Y

 

3.1

%

Norcross, GA

 

2001

 

1997

 

85,390

 

80.8

%

607

 

Y

 

55.3

%

Peachtree City, GA

 

2001

 

1997

 

49,845

 

83.5

%

453

 

N

 

75.6

%

Smyrna, GA

 

2001

 

2000

 

56,820

 

94.9

%

507

 

Y

 

100.0

%

Snellville, GA

 

2007

 

1996/1997

 

79,950

 

89.9

%

772

 

Y

 

27.1

%

Suwanee I, GA

 

2007

 

2000/2003

 

85,450

 

82.8

%

633

 

Y

 

28.6

%

Suwanee II, GA

 

2007

 

2005

 

79,640

 

62.8

%

630

 

N

 

60.8

%

Addison, IL

 

2004

 

1979

 

31,275

 

82.4

%

370

 

Y

 

0.0

%

Aurora, IL

 

2004

 

1996

 

73,845

 

67.7

%

563

 

Y

 

6.9

%

Bartlett, IL

 

2004

 

1987

 

51,525

 

81.6

%

414

 

Y

 

33.6

%

Bellwood, IL

 

2001

 

1999

 

86,575

 

83.3

%

747

 

Y

 

52.2

%

Des Plaines, IL (6)

 

2004

 

1978

 

74,600

 

79.4

%

644

 

N

 

0.0

%

Elk Grove Village, IL

 

2004

 

1987

 

64,304

 

87.8

%

648

 

Y

 

5.6

%

Glenview, IL

 

2004

 

1998

 

100,115

 

84.5

%

743

 

Y

 

100.0

%

Gurnee, IL

 

2004

 

1987

 

80,300

 

78.3

%

728

 

Y

 

34.1

%

Hanover, IL

 

2004

 

1987

 

41,174

 

92.7

%

419

 

Y

 

0.4

%

Harvey, IL

 

2004

 

1987

 

60,315

 

90.0

%

584

 

Y

 

2.9

%

Joliet, IL

 

2004

 

1993

 

74,350

 

52.6

%

480

 

Y

 

100.0

%

Kildeer, IL

 

2004

 

1988

 

46,475

 

85.8

%

429

 

Y

 

0.0

%

Lombard, IL

 

2004

 

1981

 

57,736

 

88.6

%

547

 

Y

 

9.9

%

Mount Prospect, IL

 

2004

 

1979

 

65,000

 

81.3

%

603

 

Y

 

12.7

%

Mundelein, IL

 

2004

 

1990

 

44,700

 

80.1

%

493

 

Y

 

8.9

%

North Chicago, IL

 

2004

 

1985

 

53,300

 

83.5

%

435

 

N

 

0.0

%

Plainfield I, IL

 

2004

 

1998

 

53,900

 

80.2

%

403

 

N

 

3.3

%

Plainfield II, IL

 

2005

 

2000

 

52,100

 

64.2

%

357

 

N

 

22.7

%

Schaumburg, IL

 

2004

 

1988

 

31,235

 

83.5

%

323

 

N

 

5.6

%

Streamwood, IL

 

2004

 

1982

 

64,305

 

74.9

%

572

 

N

 

4.4

%

Warrensville, IL

 

2005

 

1977/89

 

48,796

 

84.6

%

385

 

N

 

0.0

%

Waukegan, IL

 

2004

 

1977

 

79,750

 

77.7

%

703

 

Y

 

8.4

%

West Chicago, IL

 

2004

 

1979

 

48,475

 

80.6

%

435

 

Y

 

0.0

%

25


 

 

Year Acquired/

 

Year

 

Rentable

 

 

 

 

 

Manager

 

% Climate

 

Facility Location

 

Developed (1)

 

Built

 

Square Feet

 

Occupancy (2)

 

Units

 

Apartment (3)

 

Controlled (4)

 

Westmont, IL

 

2004

 

1979

 

53,700

 

89.0

%

402

 

Y

 

0.0

%

Wheeling I, IL

 

2004

 

1974

 

54,210

 

81.5

%

502

 

Y

 

0.0

%

Wheeling II, IL

 

2004

 

1979

 

67,825

 

68.2

%

619

 

Y

 

7.3

%

Woodridge, IL

 

2004

 

1987

 

50,725

 

91.3

%

472

 

Y

 

7.6

%

Indianapolis I, IN

 

2004

 

1987

 

43,600

 

91.5

%

327

 

N

 

0.0

%

Indianapolis II, IN

 

2004

 

1997

 

44,900

 

80.3

%

456

 

Y

 

15.6

%

Indianapolis III, IN

 

2004

 

1999

 

60,850

 

83.3

%

501

 

Y

 

32.8

%

Indianapolis IV, IN

 

2004

 

1976

 

68,250

 

77.8

%

615

 

Y

 

0.0

%

Indianapolis IX, IN

 

2004

 

1976

 

61,732

 

83.7

%

549

 

Y

 

0.0

%

Indianapolis V, IN

 

2004

 

1999

 

74,825

 

91.1

%

587

 

Y

 

33.6

%

Indianapolis VI, IN

 

2004

 

1976

 

73,353

 

74.1

%

728

 

Y

 

0.0

%

Indianapolis VII, IN

 

2004

 

1992

 

91,807

 

77.7

%

818

 

Y

 

6.4

%

Indianapolis VIII, IN

 

2004

 

1975

 

80,140

 

71.1

%

721

 

Y

 

0.0

%

Baton Rouge I, LA

 

1997

 

1980

 

55,474

 

92.2

%

464

 

Y

 

8.3

%

Baton Rouge II, LA

 

1997

 

1980/1995

 

80,452

 

94.1

%

585

 

Y

 

40.4

%

Baton Rouge III, LA

 

1997

 

1982

 

60,770

 

95.6

%

445

 

Y

 

10.3

%

Prairieville, LA

 

1998

 

1991

 

28,319

 

83.5

%

341

 

Y

 

6.3

%

Slidell, LA

 

2001

 

1998

 

79,540

 

94.5

%

523

 

Y

 

46.6

%

Boston, MA

 

2002

 

2001

 

60,270

 

76.7

%

619

 

Y

 

100.0

%

Leominster, MA

 

1998

 

1987/88/00

 

54,081

 

74.8

%

504

 

Y

 

38.5

%

Medford, MA

 

2007

 

2001

 

58,577

 

72.5

%

653

 

Y

 

96.0

%

Baltimore, MD

 

2001

 

1999/00

 

93,700

 

84.1

%

843

 

Y

 

45.5

%

California, MD

 

2004

 

1998

 

77,678

 

83.8

%

761

 

Y

 

38.9

%

Gaithersburg, MD

 

2005

 

1998

 

86,970

 

84.0

%

795

 

Y

 

41.7

%

Laurel, MD †

 

2001

 

1978/99/00

 

162,297

 

92.4

%

1018

 

Y

 

41.0

%

Temple Hills, MD

 

2001

 

2000

 

97,250

 

83.3

%

815

 

Y

 

68.8

%

Grand Rapids, MI

 

1996

 

1976

 

87,031

 

72.8

%

526

 

Y

 

0.0

%

Portage, MI (6)

 

1996

 

1980

 

50,280

 

82.3

%

387

 

N

 

0.0

%

Romulus, MI

 

1997

 

1997

 

42,175

 

81.6

%

340

 

Y

 

7.5

%

Wyoming, MI

 

1996

 

1987

 

91,283

 

80.5

%

635

 

N

 

0.0

%

Biloxi, MS

 

1997

 

1978/93

 

66,394

 

85.4

%

594

 

Y

 

12.2

%

Gautier, MS

 

1997

 

1981

 

35,925

 

83.5

%

305

 

Y

 

7.4

%

Gulfport I, MS

 

1997

 

1970

 

68,320

 

83.2

%

494

 

Y

 

11.0

%

Gulfport II, MS

 

1997

 

1986

 

64,445

 

92.6

%

448

 

Y

 

18.7

%

Gulfport III, MS

 

1997

 

1977/93

 

61,251

 

83.7

%

517

 

Y

 

33.5

%

Waveland, MS

 

1998

 

1982/83/84/93

 

57,096

 

64.8

%

466

 

Y

 

37.9

%

Belmont, NC

 

2001

 

1996/97/98

 

80,512

 

91.8

%

605

 

N

 

25.2

%

Burlington I, NC

 

2001

 

1990/91/93/94/98

 

109,545

 

73.2

%

966

 

N

 

0.7

%

Burlington II, NC

 

2001

 

1991

 

42,280

 

77.3

%

397

 

Y

 

12.1

%

Cary, NC

 

2001

 

1993/94/97

 

111,772

 

82.3

%

798

 

N

 

7.3

%

Charlotte, NC

 

1999

 

1999

 

69,000

 

95.5

%

738

 

Y

 

52.8

%

Fayetteville I, NC

 

1997

 

1981

 

41,450

 

97.9

%

347

 

N

 

0.0

%

Fayetteville II, NC

 

1997

 

1993/95

 

54,225

 

97.1

%

547

 

Y

 

11.9

%

Raleigh, NC

 

1998

 

1994/95

 

48,675

 

91.6

%

412

 

Y

 

8.2

%

Brick, NJ

 

1994

 

1981

 

52,740

 

73.5

%

452

 

N

 

0.0

%

Clifton, NJ

 

2005

 

2001

 

105,550

 

85.7

%

1015

 

Y

 

85.5

%

Cranford, NJ

 

1994

 

1987

 

91,250

 

82.4

%

846

 

Y

 

7.9

%

East Hanover, NJ

 

1994

 

1983

 

107,679

 

62.5

%

1013

 

N

 

1.6

%

Elizabeth, NJ

 

2005

 

1925/97

 

38,892

 

56.5

%

677

 

N

 

0.0

%

Fairview, NJ

 

1997

 

1989

 

27,676

 

87.3

%

449

 

N

 

100.0

%

Hamilton, NJ

 

2006

 

1990

 

70,550

 

58.9

%

622

 

Y

 

0.0

%

Hoboken, NJ

 

2005

 

1945/97

 

34,280

 

85.0

%

745

 

N

 

100.0

%

Jersey City, NJ

 

1994

 

1985

 

91,361

 

81.3

%

1093

 

Y

 

0.0

%

Linden I, NJ

 

1994

 

1983

 

95,575

 

73.6

%

1059

 

N

 

2.9

%

Linden II, NJ †

 

1994

 

1982

 

35,800

 

92.5

%

23

 

N

 

0.0

%

Morris Township, NJ (5)

 

1997

 

1972

 

75,576

 

69.9

%

595

 

Y

 

1.2

%

Parsippany, NJ

 

1997

 

1981

 

66,325

 

81.0

%

605

 

Y

 

6.9

%

Randolph, NJ

 

2002

 

1998/99

 

52,565

 

76.8

%

593

 

Y

 

81.5

%

Sewell, NJ

 

2001

 

1984/98

 

57,767

 

67.6

%

479

 

N

 

5.0

%

Albuquerque I, NM

 

2005

 

1985

 

65,927

 

86.7

%

607

 

Y

 

3.2

%

Albuquerque II, NM

 

2005

 

1985

 

58,834

 

89.2

%

547

 

Y

 

4.2

%

Albuquerque III, NM

 

2005

 

1978

 

41,016

 

93.6

%

455

 

N

 

4.3

%

Albuquerque IV, NM

 

2005

 

1986

 

57,536

 

87.4

%

535

 

Y

 

4.7

%

Albuquerque V, NM

 

2006

 

1994

 

52,217

 

91.0

%

424

 

Y

 

10.2

%

Carlsbad, NM

 

2005

 

1975

 

39,999

 

97.8

%

343

 

Y

 

0.0

%

Deming, NM

 

2005

 

1973/83

 

33,005

 

81.9

%

246

 

Y

 

0.0

%

Las Cruces, NM

 

2005

 

1984

 

43,850

 

85.7

%

401

 

Y

 

3.0

%

Lovington, NM

 

2005

 

1975

 

15,751

 

95.2

%

264

 

Y

 

0.0

%

Silver City, NM

 

2005

 

1972

 

26,875

 

91.8

%

255

 

Y

 

0.0

%

Truth or Consequences, NM

 

2005

 

1977/99/00

 

24,010

 

92.3

%

170

 

Y

 

0.0

%

Las Vegas I, NV †

 

2006

 

1986

 

50,882

 

80.6

%

402

 

Y

 

5.0

%

Las Vegas II, NV

 

2006

 

1997

 

49,000

 

85.4

%

538

 

Y

 

76.5

%

Endicott, NY

 

2005

 

1989

 

35,930

 

90.8

%

296

 

Y

 

0.0

%

26


 

 

Year Acquired/

 

Year

 

Rentable

 

 

 

 

 

Manager

 

% Climate

 

Facility Location

 

Developed (1)

 

Built

 

Square Feet

 

Occupancy (2)

 

Units

 

Apartment (3)

 

Controlled (4)

 

Jamaica, NY

 

2001

 

2000

 

89,455

 

75.7

%

924

 

Y

 

100.0

%

New Rochelle, NY †

 

2005

 

1998

 

48,431

 

94.2

%

407

 

N

 

15.0

%

North Babylon, NY

 

1998

 

1988/99

 

78,338

 

83.5

%

652

 

N

 

9.2

%

Riverhead, NY

 

2005

 

1985/86/99

 

38,690

 

91.0

%

341

 

N

 

0.0

%

Southold, NY †

 

2005

 

1989

 

58,609

 

79.0

%

588

 

N

 

3.1

%

Boardman, OH

 

1980

 

1980/89

 

65,495

 

70.5

%

532

 

Y

 

24.0

%

Brecksville, OH

 

1998

 

1970/89

 

58,452

 

88.5

%

448

 

Y

 

25.2

%

Canton I, OH

 

2005

 

1979/87

 

39,750

 

72.4

%

416

 

N

 

0.0

%

Canton II, OH

 

2005

 

1997

 

26,200

 

90.3

%

197

 

N

 

0.0

%

Centerville I, OH

 

2004

 

1976

 

86,390

 

73.2

%

640

 

Y

 

0.0

%

Centerville II, OH

 

2004

 

1976

 

43,400

 

66.1

%

308

 

N

 

0.0

%

Cleveland I, OH

 

2005

 

1997/99

 

45,950

 

86.9

%

341

 

Y

 

4.9

%

Cleveland II, OH

 

2005

 

2000

 

58,450

 

64.1

%

582

 

Y

 

0.0

%

Columbus, OH

 

2006

 

1999

 

66,875

 

71.9

%

600

 

Y

 

28.1

%

Dayton I, OH

 

2004

 

1978

 

43,100

 

78.0

%

345

 

N

 

0.0

%

Dayton II, OH

 

2005

 

1989/00

 

48,149

 

90.1

%

387

 

Y

 

1.7

%

Euclid I, OH

 

1988*

 

1988

 

46,910

 

83.6

%

438

 

Y

 

22.2

%

Euclid II, OH

 

1988*

 

1988

 

47,275

 

87.6

%

378

 

Y

 

0.0

%

Grove City, OH

 

2006

 

1997

 

89,290

 

80.5

%

776

 

Y

 

16.9

%

Hilliard, OH

 

2006

 

1995

 

89,715

 

67.1

%

780

 

Y

 

24.5

%

Hudson, OH †

 

1998

 

1987

 

65,240

 

82.7

%

393

 

N

 

9.3

%

Lakewood, OH

 

1989*

 

1989

 

39,267

 

82.3

%

467

 

Y

 

24.5

%

Louisville, OH

 

2005

 

1988/90

 

53,960

 

79.1

%

387

 

N

 

0.0

%

Marblehead, OH

 

2005

 

1988/98

 

52,300

 

75.9

%

386

 

Y

 

0.0

%

Mason, OH

 

1998

 

1981

 

33,900

 

90.0

%

283

 

Y

 

0.0

%

Mentor, OH

 

2005

 

1983/99

 

51,275

 

80.7

%

369

 

N

 

16.1

%

Miamisburg, OH

 

2004

 

1975

 

59,930

 

78.7

%

432

 

Y

 

0.0

%

Middleburg Heights, OH

 

1980*

 

1980

 

93,025

 

84.3

%

694

 

Y

 

3.8

%

North Canton I, OH

 

1979*

 

1979

 

45,400

 

83.5

%

321

 

Y

 

0.0

%

North Canton II, OH

 

1983*

 

1983

 

44,180

 

84.3

%

351

 

Y

 

15.8

%

North Olmsted I, OH

 

1979*

 

1979

 

48,665

 

89.1

%

442

 

Y

 

7.0

%

North Olmsted II, OH

 

1988*

 

1988

 

47,850

 

88.7

%

398

 

Y

 

14.2

%

North Randall, OH

 

1998*

 

1998/02

 

80,099

 

87.0

%

792

 

N

 

90.8

%

Perry, OH

 

2005

 

1992/97

 

63,850

 

79.1

%

425

 

Y

 

0.0

%

Reynoldsburg, OH

 

2006

 

1979

 

67,545

 

68.2

%

669

 

Y

 

0.0

%

Strongsville, OH

 

2007

 

1978

 

43,727

 

80.8

%

399

 

Y

 

100.0

%

Warrensville Heights, OH

 

1980*

 

1980/82/98

 

90,331

 

80.8

%

734

 

Y

 

0.0

%

Westlake, OH

 

2005

 

2001

 

62,750

 

89.8

%

455

 

Y

 

6.1

%

Willoughby, OH

 

2005

 

1997

 

34,454

 

79.5

%

269

 

Y

 

10.0

%

Youngstown, OH

 

1977*

 

1977

 

65,950

 

83.9

%

530

 

Y

 

1.2

%

Levittown, PA

 

2001

 

2000

 

76,230

 

81.0

%

667

 

Y

 

36.3

%

Philadelphia, PA

 

2001

 

1999

 

100,347

 

77.5

%

942

 

N

 

29.8

%

Alcoa, TN

 

2005

 

1986

 

42,325

 

86.7

%

364

 

Y

 

0.0

%

Antioch, TN

 

2005

 

1985/98

 

76,150

 

91.9

%

602

 

Y

 

8.2

%

Cordova I, TN

 

2005

 

1987

 

54,225

 

88.2

%

388

 

Y

 

0.0

%

Cordova II, TN

 

2006

 

1995

 

67,600

 

86.7

%

720

 

Y

 

7.2

%

Knoxville I, TN

 

1997

 

1984

 

29,377

 

89.3

%

296

 

Y

 

6.8

%

Knoxville II, TN

 

1997

 

1985

 

38,000

 

87.7

%

340

 

Y

 

6.9

%

Knoxville III, TN

 

1998

 

1991

 

45,736

 

85.3

%

452

 

Y

 

6.9

%

Knoxville IV, TN

 

1998

 

1983

 

58,852

 

82.2

%

440

 

N

 

1.1

%

Knoxville V, TN

 

1998

 

1977

 

42,790

 

94.8

%

372

 

N

 

0.0

%

Knoxville VI, TN

 

2005

 

1975

 

63,440

 

79.5

%

587

 

Y

 

0.0

%

Knoxville VII, TN

 

2005

 

1983

 

54,994

 

84.1

%

448

 

Y

 

0.0

%

Knoxville VIII, TN

 

2005

 

1978

 

96,518

 

79.1

%

771

 

Y

 

0.0

%

Memphis I, TN

 

2001

 

1999

 

91,300

 

92.6

%

700

 

N

 

51.3

%

Memphis II, TN

 

2001

 

2000

 

71,960

 

84.7

%

560

 

N

 

46.3

%

Memphis III, TN

 

2005

 

1983

 

41,137

 

87.3

%

356

 

Y

 

6.9

%

Memphis IV, TN

 

2005

 

1986

 

38,750

 

86.9

%

326

 

Y

 

7.9

%

Memphis V, TN

 

2005

 

1981

 

60,370

 

84.2

%

499

 

Y

 

0.0

%

Memphis VI, TN

 

2006

 

1985/93

 

109,317

 

79.4

%

873

 

Y

 

3.2

%

Memphis VII, TN

 

2006

 

1980/85

 

115,303

 

77.6

%

582

 

Y

 

0.0

%

Memphis VIII, TN †

 

2006

 

1990

 

96,060

 

70.3

%

562

 

Y

 

0.0

%

Nashville I, TN

 

2005

 

1984

 

106,930

 

65.8

%

700

 

Y

 

0.0

%

Nashville II, TN

 

2005

 

1986/00

 

83,274

 

86.5

%

633

 

Y

 

6.5

%

Nashville III, TN

 

2006

 

1985

 

99,600

 

75.0

%

638

 

Y

 

5.1

%

Nashville IV, TN

 

2006

 

1986/00

 

102,425

 

88.6

%

721

 

Y

 

7.0

%

Austin I, TX

 

2005

 

2001

 

59,520

 

70.3

%

547

 

Y

 

59.1

%

Austin II, TX

 

2006

 

2000/03

 

65,401

 

94.8

%

594

 

Y

 

38.8

%

Austin III, TX

 

2006

 

2004

 

71,030

 

79.7

%

581

 

Y

 

84.9

%

Baytown, TX

 

2005

 

1981

 

38,950

 

92.2

%

365

 

Y

 

0.0

%

Bryan, TX

 

2005

 

1994

 

60,450

 

78.9

%

495

 

Y

 

0.0

%

College Station, TX

 

2005

 

1993

 

26,550

 

88.7

%

346

 

N

 

0.0

%

Dallas, TX

 

2005

 

2000

 

58,707

 

79.2

%

552

 

Y

 

26.3

%

27


 

 

Year Acquired/

 

Year

 

Rentable

 

 

 

 

 

Manager

 

% Climate

 

Facility Location

 

Developed (1)

 

Built

 

Square Feet

 

Occupancy (2)

 

Units

 

Apartment (3)

 

Controlled (4)

 

Denton, TX

 

2006

 

1996

 

60,836

 

83.8

%

514

 

Y

 

3.9

%

El Paso I, TX

 

2005

 

1980

 

59,864

 

87.7

%

515

 

Y

 

0.9

%

El Paso II, TX

 

2005

 

1980

 

48,692

 

84.8

%

415

 

Y

 

0.0

%

El Paso III, TX

 

2005

 

1980

 

71,276

 

87.7

%

611

 

Y

 

2.0

%

El Paso IV, TX

 

2005

 

1983

 

48,962

 

78.0

%

383

 

Y

 

4.6

%

El Paso V, TX

 

2005

 

1982

 

62,825

 

85.4

%

395

 

Y

 

0.0

%

El Paso VI, TX

 

2005

 

1985

 

36,620

 

81.0

%

264

 

Y

 

0.0

%

El Paso VII, TX †

 

2005

 

1982

 

34,545

 

80.8

%

17

 

N

 

0.0

%

Fort Worth I, TX

 

2005

 

2000

 

49,778

 

72.7

%

405

 

Y

 

27.0

%

Fort Worth II, TX

 

2006

 

2003

 

72,925

 

75.7

%

668

 

Y

 

49.0

%

Frisco I, TX

 

2005

 

1996

 

50,854

 

89.8

%

443

 

Y

 

17.5

%

Frisco II, TX

 

2005

 

1998/02

 

71,339

 

78.1

%

519

 

Y

 

22.4

%

Frisco III, TX

 

2006

 

2004

 

72,275

 

66.5

%

594

 

Y

 

87.5

%

Garland I, TX

 

2006

 

1991

 

70,000

 

83.5

%

682

 

Y

 

4.6

%

Garland II, TX

 

2006

 

2004

 

68,475

 

69.1

%

476

 

Y

 

39.7

%

Greenville I, TX

 

2005

 

2001/04

 

59,385

 

90.7

%

452

 

Y

 

28.8

%

Greenville II, TX

 

2005

 

2001

 

44,900

 

71.8

%

318

 

N

 

36.3

%

Houston I, TX

 

2005

 

1981

 

101,350

 

93.9

%

635

 

Y

 

0.0

%

Houston II, TX

 

2005

 

1977

 

71,300

 

88.3

%

389

 

Y

 

0.0

%

Houston III, TX

 

2005

 

1984

 

60,820

 

88.0

%

479

 

Y

 

4.0

%

Houston IV, TX

 

2005

 

1987

 

43,775

 

94.7

%

378

 

Y

 

6.2

%

Houston V, TX †

 

2006

 

1980/1997

 

127,145

 

79.0

%

1016

 

Y

 

54.7

%

Keller, TX

 

2006

 

2000

 

61,885

 

96.9

%

488

 

Y

 

21.1

%

La Porte, TX

 

2005

 

1984

 

45,100

 

86.3

%

434

 

Y

 

18.6

%

Lewisville, TX

 

2006

 

1996

 

58,465

 

82.8

%

439

 

Y

 

19.3

%

Mansfield, TX

 

2006

 

2003

 

63,025

 

83.9

%

501

 

Y

 

38.4

%

McKinney I, TX

 

2005

 

1996

 

47,020

 

96.7

%

370

 

Y

 

9.2

%

McKinney II, TX

 

2006

 

1996

 

70,050

 

92.7

%

540

 

Y

 

46.3

%

North Richland Hills, TX

 

2005

 

2002

 

57,025

 

78.3

%

451

 

Y

 

47.4

%

Roanoke, TX

 

2005

 

1996/01

 

59,400

 

93.3

%

455

 

Y

 

30.1

%

San Antonio I, TX

 

2005

 

2005

 

75,270

 

39.4

%

584

 

Y

 

78.8

%

San Antonio II, TX

 

2006

 

2005

 

73,205

 

62.3

%

672

 

N

 

82.3

%

San Antonio III, TX

 

2007

 

2006

 

72,525

 

49.6

%

579

 

N

 

87.1

%

Sherman I, TX

 

2005

 

1998

 

55,050

 

85.5

%

514

 

Y

 

20.8

%

Sherman II, TX

 

2005

 

1996

 

48,425

 

85.2

%

392

 

Y

 

30.9

%

Spring, TX

 

2006

 

1980/86

 

72,801

 

88.2

%

536

 

Y

 

14.2

%

Murray I, UT

 

2005

 

1976

 

60,280

 

93.1

%

679

 

Y

 

0.0

%

Murray II, UT †

 

2005

 

1978

 

71,421

 

98.0

%

384

 

Y

 

2.6

%

Salt Lake City I, UT

 

2005

 

1976

 

56,446

 

88.5

%

763

 

Y

 

0.0

%

Salt Lake City II, UT

 

2005

 

1978

 

53,676

 

94.6

%

510

 

Y

 

0.0

%

Fredericksburg I, VA

 

2005

 

2001/04

 

69,450

 

62.6

%

634

 

N

 

21.5

%

Fredericksburg II, VA

 

2005

 

1998/01

 

61,493

 

56.7

%

580

 

N

 

100.0

%

Milwaukee, WI

 

2004

 

1988

 

58,515

 

84.1

%

486

 

Y

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total/Weighted Average (409 facilities)

 

 

 

26,119,184

 

79.5

%

229,851

 

 

 

 

 

* Denotes facilities developed by us.

† Denotes facilities that contain a significant amount of commercial rentable square footage.  All of this commercial space, which was developed in conjunction with the self-storage units, is located within or adjacent to our self-storage facilities and is managed by our self-storage facility managers.  As of December 31, 2007, there was an aggregate of approximately 753,000 rentable square feet of commercial space at these facilities.

(1) Represents the year acquired for those facilities acquired from a third party or the year developed for those facilities developed by us.

(2) Represents occupied square feet divided by total rentable square feet at December 31, 2007.

(3) Indicates whether a facility has an on-site apartment where a manager resides.

(4) Represents the percentage of rentable square feet in climate-controlled units.

(5) We do not own the land at this facility.  We leased the land pursuant to a ground lease.lease that expires in 2008, but have nine five-year renewal options.

 

Facility Location

  Year Acquired/
Developed(1)
  Year Built
  Rentable
Square Feet
  Occupancy(2)
  Units
  Manager
Apartment(3)
  % Climate
Controlled(4)
 

Mobile I, AL

  1997  1987  65,256  75.8% 490  N  7.4%

Mobile II, AL†

  1997  1974/90  126,050  64.2% 794  N  1.3%

Mobile III, AL

  1998  1988/94  43,325  84.2% 371  Y  33.8%

Glendale, AZ

  1998  1987  56,580  84.3% 575  Y  0.0%

Scottsdale, AZ

  1998  1995  81,300  83.4% 608  Y  10.9%

Tucson I, AZ

  1998  1974  60,000  82.7% 504  Y  0.0%

Tucson II, AZ

  1998  1988  44,150  78.1% 536  Y  100.0%

Apple Valley I, CA

  1997  1984  73,580  92.6% 620  Y  0.0%

Apple Valley II, CA

  1997  1988  62,325  85.5% 511  Y  5.3%

Bloomington I, CA

  1997  1987  31,246  70.7% 226  N  0.0%

Bloomington II, CA†

  1997  1987  26,060  100.0% 22  N  0.0%

Fallbrook, CA

  1997  1985/88  46,534  86.6% 430  Y  0.0%

Hemet, CA

  1997  1989  66,260  94.8% 454  Y  0.0%

Highland, CA

  1997  1987  74,951  84.5% 848  Y  0.0%

Lancaster, CA

  2001  1987  60,875  79.0% 416  Y  0.0%

Ontario, CA

  1998  1982  80,280  83.4% 840  Y  0.0%

Redlands, CA

  1997  1985  63,005  90.6% 563  N  0.0%

Rialto, CA

  1997  1987  100,083  86.4% 808  Y  0.0%

Riverside I, CA

  1997  1989  28,860  90.0% 249  N  0.0%

Riverside II, CA†

  1997  1989  21,880  91.2% 20  N  0.0%

Riverside III, CA

  1998  1989  46,920  88.7% 384  Y  0.0%

San Bernardino I, CA

  1997  1985  46,600  79.5% 453  Y  5.3%

San Bernardino II, CA

  1997  1987  83,418  79.8% 625  Y  2.0%

San Bernardino III, CA

  1997  1987  32,102  81.9% 246  N  0.0%

San Bernardino IV, CA

  1997  1989  57,400  87.2% 591  Y  0.0%

San Bernardino V, CA

  1997  1991  41,781  78.3% 408  Y  0.0%

San Bernardino VI, CA

  1997  1985/92  35,007  79.4% 413  N  0.0%

Sun City, CA

  1998  1989  38,635  83.6% 305  N  0.0%

Temecula I, CA

  1998  1985  39,725  85.7% 316  N  0.0%

Temecula II, CA

  2003* 2003  42,475  57.7% 392  Y  89.5%

Vista, CA

  2001  1988  74,781  90.3% 614  Y  0.0%

Yucaipa, CA

  1997  1989  78,444  69.7% 680  Y  0.0%

Bloomfield, CT

  1997  1987/93/94  48,900  68.2% 455  Y  6.6%

Branford, CT

  1995  1986  51,079  79.2% 438  Y  2.2%

Enfield, CT

  2001  1989  52,975  71.3% 384  Y  0.0%

Gales Ferry, CT

  1995  1987/89  51,780  63.7% 592  N  4.8%

Manchester, CT

  2002  1999/00/01  47,400  70.2% 519  N  37.0%

Milford, CT

  1994  1975  45,181  78.3% 388  N  3.1%

Mystic, CT

  1994  1975/86  50,250  76.8% 551  Y  2.4%

South Windsor, CT

  1994  1976  67,525  66.8% 550  Y  0.8%

Boca Raton, FL

  2001  1998  38,203  95.8% 605  N  67.9%

Boynton Beach, FL

  2001  1999  62,042  93.4% 800  Y  54.0%

Bradenton I, FL

  2004  1979  68,480  81.0% 676  N  2.8%

Bradenton II, FL

  2004  1996  88,103  87.4% 904  Y  40.2%

Cape Coral, FL

  2000* 2000  76,789  94.5% 902  Y  83.0%

Dania, FL

  1994  1988  58,319  96.5% 483  Y  26.9%

Dania Beach, FL

  2004  1984  264,375  53.4% 1,928  N  21.0%

Davie, FL

  2001* 2001  81,235  88.6% 839  Y  55.6%

Deerfield Beach, FL

  1998* 1998  57,770  96.6% 527  Y  39.2%

DeLand, FL

  1998  1987  38,577  96.1% 412  Y  0.0%

(6) We have ground leases for certain small parcels of land adjacent to these facilities that expire between 2008 and 2015.

Facility Location

  Year Acquired/
Developed(1)
  Year Built
  Rentable
Square Feet
  Occupancy(2)
  Units
  Manager
Apartment(3)
  % Climate
Controlled(4)
 

Delray Beach, FL

  2001  1999  68,531  97.4% 819  Y  39.0%

Fernandina Beach, FL

  1996  1986  91,480  96.2% 683  Y  21.7%

Fort Lauderdale, FL

  1999* 1999  70,544  96.9% 655  Y  46.0%

Fort Myers, FL

  1998* 1998  67,256  93.5% 611  Y  67.0%

Lake Worth, FL†

  1998  1998/02  167,946  88.0% 1,293  N  44.9%

Lakeland I, FL

  1994  1988  49,111  99.2% 463  Y  78.1%

Lakeland II, FL

  1996  1984  48,600  92.3% 356  Y  19.5%

Leesburg, FL

  1997  1988  51,995  93.9% 447  Y  5.1%

Lutz I, FL

  2004  2000  72,795  92.9% 658  Y  34.0%

Lutz II, FL

  2004  1999  69,378  92.7% 549  Y  20.4%

Margate I, FL†

  1994  1979/81  55,677  92.1% 343  N  10.5%

Margate II, FL†

  1996  1985  66,135  93.8% 317  Y  65.0%

Merrit Island, FL

  2000* 2000  50,523  94.2% 470  Y  56.4%

Miami I, FL

  1995* 1995  47,200  81.3% 556  Y  52.2%

Miami II, FL

  1994  1987  57,165  53.2% 598  Y  0.1%

Miami III, FL

  1994  1989  67,360  94.9% 573  Y  7.8%

Miami IV, FL

  1995  1987  58,298  80.9% 610  Y  7.0%

Miami V, FL

  1995  1976  77,825  62.9% 369  Y  4.0%

Naples I, FL

  1996  1996  48,150  92.4% 349  Y  26.6%

Naples II, FL

  1997  1985  65,994  81.8% 647  Y  43.9%

Naples III, FL

  1997  1981/83  80,709  72.4% 889  Y  24.0%

Naples IV, FL

  1998  1990  40,023  81.1% 444  N  41.4%

Ocala, FL

  1994  1988  42,086  91.8% 360  Y  9.7%

Orange City, FL

  2004  2001  59,781  78.8% 680  N  39.0%

Orlando, FL

  1997  1987  51,770  87.7% 453  Y  4.8%

Pembroke Pines, FL

  1997* 1997  67,505  92.7% 692  Y  73.1%

Royal Palm Beach, FL†

  1994  1988  98,851  90.8% 670  N  79.2%

Sarasota, FL

  1998* 1998  70,798  91.6% 532  Y  43.0%

St. Augustine, FL

  1996  1985  59,830  83.2% 581  Y  29.6%

Stuart I, FL

  1997  1986  41,694  96.6% 524  Y  27.0%

Stuart II, FL

  1997  1995  89,541  97.8% 896  Y  34.1%

Tampa I, FL

  1994  1987  60,150  77.9% 416  Y  0.0%

Tampa II, FL

  2001  1985  56,047  78.3% 476  Y  16.8%

Vero Beach I, FL

  1997  1986  24,260  97.9% 219  N  23.3%

Vero Beach II, FL

  1998  1987  26,255  96.7% 263  N  23.9%

West Palm Beach I, FL

  2001  1997  68,295  93.3% 1,028  Y  47.3%

West Palm Beach II, FL

  2004  1996  93,915  97.3% 913  Y  77.0%

Alpharetta, GA

  2001  1996  90,685  81.6% 670  Y  74.9%

Decatur, GA

  1998  1986  148,680  75.0% 1,409  Y  3.1%

Norcross, GA

  2001  1997  85,460  86.2% 598  Y  55.1%

Peachtree City, GA

  2001  1997  50,034  88.6% 449  N  74.6%

Smyrna, GA

  2001  2000  56,528  99.4% 509  Y  100.0%

Addison, IL

  2004  1979  31,775  83.5% 377  Y  0.0%

Aurora, IL

  2004  1996  74,440  68.7% 573  Y  6.9%

Bartlett I, IL

  2004  1987  41,394  86.7% 430  Y  0.5%

Bartlett II, IL

  2004  1987/01  51,725  86.9% 421  Y  33.5%

Bellwood, IL

  2001  1999  86,700  83.7% 724  Y  52.1%

Des Plaines, IL

  2004  1978  74,600  86.2% 643  Y  0.0%

Elk Grove Village, IL

  2004  1987  63,638  75.2% 655  Y  0.3%

Glenview, IL

  2004  1998  100,345  81.2% 764  Y  100.0%

Gurnee, IL

  2004  1987/95  80,500  73.6% 741  Y  34.0%

Harvey, IL

  2004  1987  59,816  80.6% 587  Y  3.0%

Joliet, IL

  2004  1993  74,750  68.9% 481  Y  23.3%

Lake Zurich, IL

  2004  1988  46,635  76.9% 450  Y  0.0%

Lombard, IL

  2004  1981  61,242  77.0% 520  Y  18.3%

Mount Prospect, IL

  2004  1979  65,200  74.0% 610  Y  12.6%

Mundelein, IL

  2004  1990  44,900  70.4% 509  Y  8.9%

North Chicago, IL

  2004  1985/90  53,500  79.0% 445  N  0.0%

Plainfield, IL

  2004  1998  54,375  77.6% 410  N  0.0%

Schaumburg, IL

  2004 ��1988  31,157  77.0% 325  N  0.8%

Facility Location

  Year Acquired/
Developed(1)
  Year Built
  Rentable
Square Feet
  Occupancy(2)
  Units
  Manager
Apartment(3)
  % Climate
Controlled(4)
 

Streamwood, IL

  2004  1982  64,565  71.6% 578  N  0.0%

Waukegan, IL

  2004  1977/79  79,950  73.9% 715  Y  8.4%

West Chicago, IL

  2004  1979  48,625  76.0% 440  Y  0.0%

Westmont, IL

  2004  1979  53,900  80.6% 403  Y  0.0%

Wheeling I, IL

  2004  1974  54,900  69.4% 505  Y  0.0%

Wheeling II, IL

  2004  1979  68,025  70.0% 624  Y  7.3%

Woodridge, IL

  2004  1987  50,595  85.2% 477  Y  0.0%

Indianapolis I, IN

  2004  1987/88  43,800  84.0% 332  N  0.0%

Indianapolis II, IN

  2004  1997  45,100  78.9% 460  Y  15.6%

Indianapolis III, IN

  2004  1999  61,325  77.6% 506  Y  32.6%

Indianapolis IV, IN

  2004  1976  68,494  68.4% 616  Y  0.0%

Indianapolis V, IN

  2004  1999  75,025  84.7% 596  Y  33.5%

Indianapolis VI, IN

  2004  1976  73,693  69.2% 730  Y  0.0%

Indianapolis VII, IN

  2004  1992  95,290  68.8% 884  Y  0.0%

Indianapolis VIII, IN

  2004  1975  81,676  74.2% 738  Y  0.0%

Indianapolis IX, IN

  2004  1976  62,196  75.5% 557  Y  0.0%

Baton Rouge I, LA

  1997  1980  55,984  84.9% 464  Y  9.7%

Baton Rouge II, LA

  1997  1980  72,082  83.2% 499  Y  33.7%

Baton Rouge III, LA

  1997  1982  61,078  93.5% 451  Y  10.2%

Baton Rouge IV, LA

  1998  1995  8,920  95.5% 84  N  100.0%

Prairieville, LA

  1998  1991  56,520  84.8% 306  Y  3.0%

Slidell, LA

  2001  1998  79,740  90.1% 525  Y  46.5%

Boston, MA

  2002  2001  61,360  69.7% 630  Y  100.0%

Leominster, MA

  1998* 1987/88/00  54,181  76.6% 504  Y  45.1%

Baltimore, MD

  2001  1999/00  93,750  78.2% 808  Y  45.5%

California, MD

  2004  1998  67,528  91.1% 722  Y  40.1%

Laurel, MD†

  2001  1978/99/00  161,530  82.5% 956  N  63.7%

Temple Hills, MD

  2001  2000  95,830  85.2% 813  Y  77.6%

Grand Rapids, MI

  1996  1976  87,295  71.1% 508  Y  0.0%

Portage, MI

  1996  1980  50,671  92.2% 340  N  0.0%

Romulus, MI

  1997* 1997  43,970  72.9% 318  Y  10.7%

Wyoming, MI

  1996  1987  90,975  79.1% 621  N  0.0%

Biloxi, MS

  1997  1978/93  66,188  78.9% 620  Y  7.4%

Gautier, MS

  1997  1981  35,775  68.1% 306  Y  3.2%

Gulfport I, MS

  1997  1970  73,460  64.2% 513  Y  0.0%

Gulfport II, MS

  1997  1986  64,745  66.0% 436  Y  18.8%

Gulfport III, MS

  1997  1977/93  61,451  87.9% 486  Y  33.2%

Waveland, MS

  1998  1982/83/84/93  87,071  82.1% 710  Y  23.7%

Belmont, NC

  2001  1996/97/98  81,215  80.3% 569  N  7.8%

Burlington I, NC

  2001  1990/91/93/94/98  110,502  81.2% 951  N  4.0%

Burlington II, NC

  2001  1991  39,802  86.6% 392  Y  11.9%

Cary, NC

  2001  1993/94/97  110,464  73.0% 751  N  8.5%

Charlotte, NC

  1999* 1999  69,246  92.0% 740  N  52.4%

Fayetteville I, NC

  1997  1981  41,600  97.3% 352  N  0.0%

Fayetteville II, NC

  1997  1993/95  54,425  98.9% 557  Y  11.9%

Raleigh, NC

  1998  1994/95  48,525  87.7% 431  Y  8.2%

Brick, NJ

  1994  1981  51,892  86.6% 456  Y  0.0%

Cranford, NJ

  1994  1987  91,450  87.6% 848  Y  7.9%

East Hanover, NJ

  1994  1983  107,874  79.6% 1,019  N  1.6%

Fairview, NJ

  1997  1989  28,021  87.9% 452  N  100.0%

Jersey City, NJ

  1994  1985  91,736  82.2% 1,095  Y  0.0%

Linden I, NJ

  1994  1983  100,625  80.4% 1,125  N  2.7%

Linden II, NJ†

  1994  1982  36,000  100.0% 26  N  0.0%

Morris Township, NJ (5)

  1997  1972  76,175  81.3% 573  Y  1.3%

Parsippany, NJ

  1997  1981  66,375  88.2% 613  Y  1.4%

Randolph, NJ

  2002  1998/99  52,232  85.1% 592  Y  82.5%

Sewell, NJ

  2001  1984/98  57,769  82.5% 448  N  4.4%

Jamaica, NY

  2001  2000  90,156  73.7% 928  Y  100.0%

North Babylon, NY

  1998* 1988/99  78,288  84.9% 635  Y  9.1%

Boardman, OH

  1980* 1980/89  66,187  83.0% 525  Y  16.1%
28


Facility Location

  Year Acquired/
Developed(1)
  Year Built
  Rentable
Square Feet
  Occupancy(2)
  Units
  Manager
Apartment(3)
  % Climate
Controlled(4)
 

Brecksville, OH

  1998  1970/89  64,764  86.5% 410  Y  34.2%

Centerville I, OH

  2004  1976  86,590  78.2% 654  Y  0.0%

Centerville II, OH

  2004  1976  43,600  83.0% 310  N  0.0%

Dayton, OH

  2004  1978  43,420  93.1% 351  N  0.0%

Euclid I, OH

  1988* 1988  47,260  72.6% 441  Y  21.9%

Euclid II, OH

  1988* 1988  48,058  79.4% 381  Y  0.0%

Hudson, OH†

  1998  1987  68,470  85.0% 421  N  13.9%

Lakewood, OH

  1989* 1989  39,523  88.1% 486  Y  24.5%

Mason, OH

  1998  1981  33,700  91.0% 282  Y  0.0%

Miamisburg, OH

  2004  1975  61,050  78.2% 432  Y  0.0%

Middleburg Heights, OH

  1980* 1980  94,150  81.1% 667  Y  0.0%

North Canton I, OH

  1979* 1979  45,532  93.5% 290  Y  0.0%

North Canton II, OH

  1983* 1983  44,380  83.3% 354  Y  15.8%

North Olmsted I, OH

  1979* 1979  48,910  83.6% 449  Y  1.2%

North Olmsted II, OH

  1988* 1988  48,050  83.0% 406  Y  14.1%

North Randall, OH

  1998* 1998/02  80,452  82.2% 803  N  90.3%

Warrensville Heights, OH

  1980* 1980/82/98  90,531  86.9% 746  Y  0.0%

Youngstown, OH

  1977* 1977  66,700  91.6% 500  Y  0.0%

Levittown, PA

  2001  2000  78,230  87.4% 671  Y  36.2%

Philadelphia, PA

  2001  1999  99,181  89.4% 914  N  91.6%

Hilton Head I, SC†

  1997  1981/84  116,766  75.2% 545  Y  5.4%

Hilton Head II, SC

  1997  1979/80  47,620  88.4% 297  Y  0.0%

Summerville, SC

  1998  1989  49,727  86.8% 439  Y  10.1%

Knoxville I, TN

  1997  1984  29,452  87.7% 297  Y  5.4%

Knoxville II, TN

  1997  1985  38,550  98.7% 350  Y  7.0%

Knoxville III, TN

  1998  1991  45,864  86.3% 425  Y  6.7%

Knoxville IV, TN

  1998  1983  59,070  78.0% 456  N  1.1%

Knoxville V, TN

  1998  1977  43,050  86.6% 376  N  0.0%

Memphis I, TN

  2001  1999  86,075  85.3% 622  N  51.3%

Memphis II, TN

  2001  2000  72,210  85.7% 544  N  46.2%

Milwaukee, WI

  2004  1988/92/96  58,713  82.8% 489  Y  0.0%
        ��
     
       

Total/Weighted Average
(201 Facilities)

        12,977,893  82.2% 111,634       

*Denotes facilities developed by us.
†Denotes facilities that contain a material amount of commercial rentable square footage. All of this commercial space, which was developed in conjunction with the self-storage units, is located within or adjacent to our self-storage facilities and is managed by our self-storage facility managers. As of December 31, 2004, there was a total of approximately 400,000 rentable square feet of commercial space at these facilities.
(1)Represents the year acquired, for those facilities acquired from a third party, or the year developed, for those facilities developed by us.
(2)Represents occupied square feet divided by total rentable square feet, as of December 31, 2004.
(3)Indicates whether a facility has an on-site apartment where a manager resides, as of December 31, 2004.
(4)Represents the percentage of rentable square feet in climate-controlled units, as of December 31, 2004.
(5)We do not own the land at this facility. We have leased the land pursuant to a ground lease that expires in 2008. We have nine five-year renewal options.

Our growth has been achieved by internal growth and by adding facilities to our portfolio each year through acquisitions and development. The tables set forth below show the average occupancy, and annual rent per occupied square foot, average occupied square feet and total revenues for our existing facilities owned as of December 31, 2007 for each of the last fivethree years, grouped by the year end during which we first owned or operated the facility.

 

ExistingOur Facilities by Year Acquired—Acquired - Average OccupancyOccupied Square Feet (2)

 

Year Acquired(1)

  Number of
Facilities
  Current Rentable
Square Feet
  Average Occupancy During the
Twelve Months Ended December 31,
 
      2000
  2001
  2002
  2003
  2004
 

1996 or earlier

  41  2,599,851  84.5% 83.2% 80.9% 81.2% 83.5%

1997

  46  2,672,957  83.1% 82.2% 81.0% 82.8% 84.1%

1998

  25  1,478,077  84.0% 82.1% 81.3% 84.2% 85.0%

1999

  2  138,054  45.6% 67.2% 81.3% 82.0% 88.0%

2000

  6  418,024  71.0% 76.0% 81.7% 85.5% 87.6%

2001

  27  2,107,610     73.6% 75.7% 80.6% 84.9%

2002

  7  405,966        83.3% 82.9% 83.9%

2003

  1  42,475           20.4% 48.7%

2004

  46  3,114,879              77.6%

All Existing Facilities

  201  12,977,893  83.0% 81.3% 79.9% 82.1% 84.0%
(1)For facilities developed by us, Year Acquired represents the year in which such facilities were acquired by us or our operating partnership from an affiliated entity, which in some cases is later than the year developed.

 

 

 

 

Rentable Square

 

 

 

 

 

 

 

Year Acquired (1)

 

# of Facilities

 

Feet

 

2005

 

2006

 

2007

 

2004 and earlier

 

195

 

12,606,750

 

82.8

%

81.4

%

80.6

%

2005

 

137

 

7,614,578

 

81.9

%

80.2

%

82.6

%

2006

 

60

 

4,578,622

 

 

 

75.6

%

75.2

%

2007

 

17

 

1,319,234

 

 

 

 

 

71.3

%

All Facilities Owned as of December 31, 2007

 

409

 

26,119,184

 

82.6

%

80.2

%

80.0

%

 

ExistingOur Facilities by Year Acquired—Acquired - Annual Rent Per Occupied Square Foot (2)

 

Year Acquired(1)

  Number of
Facilities
  Annual Rent Per Occupied Square Foot for the
Twelve Months Ended December 31,
    2000
  2001
  2002
  2003
  2004

1996 or earlier

  41  $10.26  $10.71  $10.79  $10.59  $10.66

1997

  46  $8.40  $8.81  $9.04  $9.21  $9.52

1998

  25  $8.54  $8.73  $8.82  $8.89  $9.34

1999

  2  $7.14  $7.10  $7.66  $8.25  $9.50

2000

  6  $7.66  $13.10  $13.33  $13.26  $13.29

2001

  27      $11.21  $10.88  $10.12  $10.56

2002

  7          $14.41  $13.31  $13.49

2003

  1              $8.75  $12.94

2004

  46                  $12.22

All Existing Facilities

  201  $9.13  $9.77  $10.13  $10.04  $10.44

Year Acquired (1)

 

# of Facilities

 

2005

 

2006

 

2007

 

2004 and earlier

 

195

 

$

10.80

 

$

11.38

 

$

11.57

 

2005

 

137

 

8.34

 

10.53

 

10.43

 

2006

 

60

 

 

 

10.22

 

10.26

 

2007

 

17

 

 

 

 

 

11.16

 

All Facilities Owned as of December 31, 2007

 

409

 

$

9.88

 

$

10.61

 

$

10.99

 

(1)

(1)  For facilities developed by us, “Year Acquired” represents the year in which such facilities were acquired by our operating partnership from an affiliated entity, which in some cases is later than the year developed.

(2)  Determined by dividing the aggregate rental revenue for each twelve-month period by the average of the month-end occupied square feet for the period. Rental revenue includes customer rental revenues, access, administrative and late fees and revenues from auctions, but does not include ancillary revenues generated at our facilities.

29


Facilities by Year Acquired represents the year in which such facilities were acquired by our operating partnership from an affiliated entity, which in some cases is later than the year developed.- Average Occupied Square Feet (2)

Year Acquired (1)

 

# of Facilities

 

2005

 

2006

 

2007

 

2004 and earlier

 

195

 

10,575,509

 

10,348,470

 

10,189,296

 

2005

 

137

 

6,256,685

 

6,238,827

 

6,299,831

 

2006

 

60

 

 

 

3,465,677

 

3,452,109

 

2007

 

17

 

 

 

 

 

934,799

 

All Facilities Owned as of December 31, 2007

 

409

 

16,832,194

 

20,052,974

 

20,876,035

 

Facilities by Year Acquired - Total Revenues (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Acquired (1)

 

# of Facilities

 

2005

 

2006

 

2007

 

2004 and earlier

 

195

 

117,248

 

122,022

 

124,466

 

2005

 

137

 

28,105

 

63,610

 

69,603

 

2006

 

60

 

 

 

26,659

 

37,837

 

2007

 

17

 

 

 

 

 

4,969

 

All Facilities Owned as of December 31, 2007 (4)

 

409

 

145,353

 

212,291

 

236,875

 

(1)  For facilities developed by us, “Year Acquired” represents the year in which such facilities were acquired by our operating partnership from an affiliated entity, which in some cases is later than the year developed.

The following tables set forth a reconciliation(2)  Represents the average of ourthe aggregate month-end occupied square feet for the twelve-month period for each group of facilities.

(3)  Represents the result obtained by multiplying annual rent per occupied square foot data toby the average occupied square feet for the twelve-month period for each group of facilities.

(4)  Represents total revenues as presented in our historical financial results for the periods presented.statements.

 

      Average Occupied Square Feet for the Twelve Months Ended
December 31,(2)

Year Acquired(1)

  Number of
Facilities
  2000
  2001
  2002
  2003
  2004

1996 or earlier

  41  2,194,358  2,162,101  2,101,927  2,112,101  2,170,825

1997

  46  2,218,478  2,189,309  2,162,901  2,212,059  2,247,471

1998

  25  1,183,996  1,176,562  1,187,768  1,244,593  1,257,058

1999

  2  63,455  93,479  113,112  114,052  121,776

2000

  6  21,681  277,770  296,103  321,549  366,338

2001

  27     410,084  1,544,456  1,701,143  1,790,554

2002

  7        153,790  339,036  340,977

2003

  1           3,606  20,694

2004

  46              402,889

All Existing Facilities

  201  5,681,968  6,309,305  7,560,057  8,048,139  8,718,582

      Total Revenues for the Twelve Months Ended
December 31,(3)

Year Acquired(1)

  Number of
Facilities
  2000
  2001
  2002
  2003
  2004

1996 or earlier

  41  $22,523  $23,165  $22,683  $22,372  $23,140

1997

  46   18,639   19,297   19,561   20,382   21,392

1998

  25   10,109   10,274   10,475   11,061   11,739

1999

  2   453   664   866   941   1,156

2000

  6   166   3,639   3,947   4,265   4,867

2001

  27       4,597   16,800   17,224   18,914

2002

  7           2,216   4,513   4,600

2003

  1               32   268

2004

  46                   4,925

All Existing Facilities—Before Adjustments

  201  $51,890  $61,636  $76,548  $80,790  $91,001

Plus:

                       

Revenues from Discontinued Operations(4)

      1,033   553   —     —     —  

Other Adjustments(5)

      167   87   37   24   607

Total Revenues(6)

     $53,090  $62,276  $76,585  $80,814  $91,608
(1)For facilities developed by us, Year Acquired represents the year in which such facilities were acquired by us or our operating partnership from an affiliated entity, which in some cases is later than the year developed.
(2)Represents the average of the aggregate month-end occupied square feet for the twelve month period for each group of facilities.
(3)Represents the result obtained by multiplying annual rent per occupied square foot by the average occupied square feet for the twelve month period for each group of facilities.
(4)Represents revenues generated by seven facilities sold between 2000 and 2001, which are included in the historical financial statements but excluded from the above analysis which accounts only for the 155 existing facilities.
(5)Represents interest and other income and ancillary revenues generated by three facilities contributed by certain Amsdell Entities to our operating partnership through October 20, 2004 and all ancillary income after that date, which are reflected in the financial statements but excluded from the above analysis which accounts only for rental revenues and other property related income.
(6)Represents total revenues as presented in the financial statements. `

Planned Renovations and Improvements

 

We recently undertookhave a capital improvementsimprovement and renovationsproperty renovation program involving our existing facilities. We spent a total of $5.7 million between 2000 and 2004 on this program. These renovations and improvements includedthat includes office upgrades, adding climate control at selected units, construction of parking areas, safety and security enhancements, and general facility upgrades.  WeFor 2008, we anticipate spending approximately an additional $8.2$7 million in 2005 in renovationsto $9 million associated with these capital expenditures and improvements forexpect to enhance the safety and improve the aesthetic appeal of our facilities that were owned at March 31, 2005. The bulk of this cost relates to facilities acquired since our IPO. These renovations and improvements will include re-signing and re-branding the facilities, adding climate control at selected facilities and implementing general facility upgrades. In connection with our pending acquisitions, we anticipate incurring additional costs for renovations and improvements.facilities.

 

Option FacilitiesITEM 3.  LEGAL PROCEEDINGS

In addition to our existing facilities, as of March 23, 2005, we also have options to purchase 15 self-storage facilities consisting of 11 facilities owned by Rising Tide Development and four facilities which Rising Tide Development has the right to acquire from unaffiliated third parties. In the event that Rising Tide Development does not acquire any of the four option facilities it currently has under contract, the number of facilities which we have the option to purchase would reduce accordingly. These 15 facilities either are currently under development or not yet fully stabilized. Any purchase of an option facility by us will be at a purchase price equal to the lower of (i) a price determined by multiplying in-place net operating income at the time of purchase by 12.5 and (ii) the fair market value of the option facility as determined by an appraisal process involving third party appraisers. The option will become exercisable with respect to each particular self-storage facility when that facility achieves an occupancy of 85.0% at the end of the month for three consecutive months, and will expire in October 2008. We expect that the purchase option will become exercisable with respect to a majority of the option facilities by October 2008. The determination to purchase any of the option facilities will be made by the independent members of our board of trustees. If the option is not exercised for any facility within the option period, Rising Tide Development will be required to move expeditiously to sell the facility to an unrelated third party. Rising Tide Development received no cash consideration for entering into the option agreement.

On January 5, 2005, we exercised our option to purchase the San Bernardino VII, CA facility from Rising Tide Development for a purchase price of $7.3 million, consisting of $3.8 million in cash (which cash was used to pay off mortgage indebtedness secured by the facility) and $3.5 million payable in units in our operating partnership. The facility contains approximately 83,000 rentable square feet and was 84.9% occupied as of December 31, 2004.

On March 18, 2005, we exercised our option to purchase the Orlando II, FL and the Boynton Beach II, FL facilities from Rising Tide Development for an aggregate purchase price of $11.8 million, consisting of $6.7 million in cash (which cash was used to pay off mortgage indebtedness secured by the facility) and $5.1 million payable in units in our operating partnership. The facilities contain an aggregate of approximately 129,000 rentable square feet and were 90.1% and 90.3% occupied, respectively, as of December 31, 2004.

ITEM 3.LEGAL PROCEEDINGS

 

We are not presently involved in any material litigation nor, to our knowledge, is any material litigation threatened against us or our properties. We are involved in routine litigation arising in the ordinary course of business, none of which we believe to be material.

 

ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

On October 19, 2004, our sole shareholder at the time authorized and approved, by unanimous written consent, our IPO transactions, our 2004 Equity Incentive Plan, and the issuanceNo matters were submitted to a vote of our common shares upon redemptionshareholders during the fourth quarter of units in our operating partnership.

2007.

30


PART II

ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

 

Our common shares began trading on the New York Stock Exchange under the symbol “YSI” on October 22, 2004. ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDERMATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

As of March 21, 2005,December 31, 2007, there were approximately 1929 registered record holders of our common shares. This figure does not include beneficial owners who hold shares in nominee name. The following table shows the high and low salesclosing prices per share for our common shares, as reported by the New York Stock Exchange, composite tape, and the cash distributionsdividends declared in the fourth quarter of 2004 for our commonwith respect to such shares:

 

2004

  High
  Low
  Cash
Distributions
Declared

Fourth quarter (October 22, 2004 to December 31, 2004)

  17.77  16.40  $0.2009

 

 

 

 

 

 

Cash Dividends

 

 

 

High

 

Low

 

Declared

 

2006

 

 

 

 

 

 

 

First quarter

 

$

22.28

 

$

19.94

 

$

0.29

 

Second quarter

 

19.75

 

16.05

 

0.29

 

Third quarter

 

21.94

 

18.51

 

0.29

 

Fourth quarter

 

22.66

 

20.35

 

0.29

 

2007

 

 

 

 

 

 

 

First quarter

 

23.20

 

19.57

 

0.29

 

Second quarter

 

20.11

 

16.14

 

0.29

 

Third quarter

 

16.61

 

12.15

 

0.29

 

Fourth quarter

 

14.31

 

9.16

 

0.18

 

 

On February 22, 2005,Since our board of trustees declaredinitial quarter as a publicly-traded REIT, we have made regular quarterly distribution of $0.28 per common share for the period ending March 31, 2005. The distribution is payable on April 25, 2005distributions to common shareholders of record on April 11, 2005. This quarterly distribution of $0.28 per common share is equivalent to $1.12 per common share on an annualized basis.

our shareholders.  Distributions to shareholders are usually taxable as ordinary income, although a portion of the distribution may be designated as capital gain or may constitute a tax-free return of capital. Annually, we provide each of our shareholders a statement detailing distributions paid during the preceding year and their characterization as ordinary income, capital gain or return of capital. The characterization of our dividends for 2007 was 29.42% ordinary income, 6.39% capital gain distribution and 64.19% return of capital.

 

We intend to continue to declare quarterly distributions. However, we cannot provide any assurance as to the amount or timing of future distributions. Under our new revolving credit facility, beginning in the fourth quarter of 2008 we are restricted from paying distributions on our common shares that would exceed an amount equal to the greater of (i) a certain percentage of our funds from operations, and (ii) such amount as may be necessary to maintain our REIT status.

 

Recent SalesTo the extent that we make distributions in excess of Unregistered Securities; Useour earnings and profits, as computed for federal income tax purposes, these distributions will represent a return of Proceeds from Registered Securities and Issuer Purchases of Equity Securities

(a) Upon our formation in July 2004, High Tide LLC was issued 100 common sharescapital, rather than a dividend, for total consideration of $1,500 in cash in order to provide our initial capitalization. In October 2004, High Tide LLC was reorganizedfederal income tax purposes. Distributions that are treated as a Maryland REIT throughreturn of capital for federal income tax purposes generally will not be taxable as a merger into us pursuantdividend to a reorganizationU.S. shareholder, but will reduce the shareholder’s basis in its shares (but not below zero) and merger agreement. Upon completiontherefore can result in the shareholder having a higher gain upon a subsequent sale of this merger, those shares were canceled and retired without paymentsuch shares. Return of any consideration therefor. The issuancecapital distributions in excess of a shareholder’s basis generally will be treated as gain from the sale of such shares was effected in reliance upon an exemption from registration provided by Section 4(2) under the Securities Act.for federal income tax purposes.

 

In connection withOctober 2005, we completed a follow-on public offering of our formation transactions, units of limited partnership in our operating partnership and common shares, were issued to certain persons transferring interests and other assets to us in consideration of the transfer of such interests and assets as follows:

Robert J. Amsdell, our Chairman and Chief Executive Officer, received approximately 151,000 shares (with a value of approximately $2.4 million) in connection with the merger of High Tide LLC and Amsdell Partners, Inc., which were existing partners of the operating partnership, into us;

The Robert J. Amsdell Family Irrevocable Trust, a trust formed for the benefit of the family of Robert J. Amsdell, received approximately 3.9 million shares (with a value of approximately $62.7 million) in connection with the merger of High Tide LLC and Amsdell Partners, Inc., which were existing partners of our operating partnership, into us;

Barry L. Amsdell, one of our trustees, received approximately 151,000 shares (with a value of approximately $2.4 million) in connection with the merger of High Tide LLC and Amsdell Partners, Inc., which were existing partners of our operating partnership, into us;

The Loretta Amsdell Family Irrevocable Trust, a trust formed for the benefit of the family of Barry L. Amsdell, received approximately 3.9 million shares (with a value of approximately $62.7 million) in connection with the merger of High Tide LLC and Amsdell Partners, Inc., which were existing partners of our operating partnership, into us;

Todd C. Amsdell, our Chief Operating Officer, received approximately 430,000 shares (with a value of approximately $6.9 million) in connection with the merger of High Tide LLC and Amsdell Partners, Inc., which were existing partners of our operating partnership, into us; and

Entities owned and controlled by Robert J. Amsdell and Barry L. Amsdell received approximately 1.1 million operating partnership units (with a value of approximately $18.1 million) as a result of the contribution of three facilities to our operating partnership and the reorganization of the operating partnership, and we assumed approximately $10.4 million of indebtedness of these entities.

The foregoing issuances occurred pursuant to agreements dated as of July 30, 2004. All of such persons irrevocably committed to the transfer of such interests and assets prior to the filing of our registration statement on Form S-11 relating to our IPO. The issuance of such units and shares was effected in reliance upon an exemption from registration provided by Section 4(2) under the Securities Act.

(b) The effective date of our registration statement filed on Form S-11 (File No. 333-117848) under the Securities Act relating to the IPO was October 21, 2004. An aggregate of 28,750,000 common shares were sold (including 3,750,000 common shares sold pursuant to the underwriters’ over-allotment option) at an offering price of $16.00 per share. Lehman Brothers Inc. acted as sole bookrunning manager of the IPO. Citigroup Global Markets, Inc., Wachovia Capital Markets, LLC, AG Edwards & Sons, Inc., Legg Mason Wood Walker, Incorporated and Raymond James & Associates, Inc. acted as co-managers of the IPO.

The IPO has been completed. The aggregate sales price for all of the shares sold in the IPO was $460.0 million. The underwriting discount and commissions and financial advisory fees were $32.2 million, none of which was paid to our affiliates. We receivedgenerating net proceeds of approximately $425.0$378.7 million, after deducting underwriting discount and commissions financial advisory fees and expenses of the IPO.

We utilized the netoffering. A portion of these proceeds from the IPOwas used to repay a portion of our existing term loan provided by an affiliate of Lehman Brothers ($135.1 million), to repay mortgagecertain outstanding indebtedness, secured by our facilities ($16.6including (i) $108.3 million plus $0.9 million to pay associated prepayment penalties), to fund the purchase of U-Store-It Mini Warehouse Co., our management company ($23.0 million, of which approximately $18.7 million was paid to us by Robert J. Amsdell and Barry L. Amsdell in repayment of loans), to repay the outstanding balance under our then existing revolving credit facility, and (ii) $39.8 million to repay outstanding mortgage loans secured by 37 of a loan madeour facilities. Net proceeds of approximately $110.2 million were used to us by Robert J. Amsdellfund the acquisition of 19 self-storage facilities. The remaining net proceeds of approximately $120.4 million were used for the acquisition and Barry L. Amsdell ($1.6 million)development of additional self-storage facilities, budgeted capital improvements and to acquire the 46 acquisition facilities ($221.8 million).general corporate purposes.

 

(c) We did not repurchase anyShare Performance Graph

The SEC requires us to present a chart comparing the cumulative total shareholder return on our common shares with the cumulative total shareholder return of (i) a broad equity index and (ii) a published industry or peer group index. The following chart compares the cumulative total shareholder return for our common shares with the cumulative shareholder return of companies on (i) the S&P 500 Index, (ii) the Russell 2000 and (iii) the NAREIT All Equity REIT Index as provided by NAREIT for the period beginning with October 22, 2004 (the first closing share price following the initial public offering of our common shares) and ending December 31, 2007.

31


 

 

Period Ending

 

Index

 

10/22/04

 

12/31/04

 

06/30/05

 

12/31/05

 

06/30/06

 

12/31/06

 

06/30/07

 

12/31/07

 

U-Store-It Trust

 

$

100.00

 

$

108.44

 

$

120.81

 

$

133.37

 

$

122.93

 

$

137.82

 

$

112.91

 

$

65.58

 

S&P 500

 

100.00

 

110.97

 

110.65

 

116.30

 

119.45

 

134.67

 

144.26

 

142.29

 

Russell 2000

 

100.00

 

115.08

 

113.64

 

120.32

 

130.20

 

142.42

 

151.60

 

140.19

 

NAREIT All Equity REIT Index

 

100.00

 

111.12

 

118.21

 

124.64

 

140.74

 

168.34

 

158.43

 

141.92

 

The following table provides information about repurchases of the Company’s common shares during the three-month period covered by this report.

ended December 31, 2007:

ITEM 6.

SELECTED FINANCIAL DATATotal Number of
Shares Purchased

Average Price Paid
Per Share

Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs

Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans
(1)

October

N/A

N/A

N/A

3,000,000

November

N/A

N/A

N/A

3,000,000

December

N/A

N/A

N/A

3,000,000

Total

N/A

N/A

3,000,000

(1)  On June 27, 2007, the Company announced that the Board of Trustees approved a share repurchase program for up to 3.0 million of the Company’s outstanding common shares.  Unless terminated earlier by resolution of the Board of Trustees, the program will expire when the number of authorized shares has been repurchased.  For the three-month period ended December 31, 2007, the Company made no repurchases under this program.

32


ITEM 6.  SELECTED FINANCIAL DATA

 

The following table sets forth selected consolidated financial and operating data on a historical consolidated basis for the Company, and on a combined historical basis for Acquiport/Amsdell (the “Predecessor”). The selected historical financial information as of December 31, 2007 and 2006 and for each of the periods indicated in the five-year period ended December 31, 2007 were derived from the Company’s and the Predecessor’s financial statements. Historical information for the Company has not been presented prior to October 21, 2004, the date on which the Company consummated the mergers of Amsdell Partners, Inc. and High Tide LLC with and into the Company, because during the period prior to the mergers, the Company did not have material corporate activity. At December 31, 2004, the Company owned 201 storage facilities.

 

The Predecessor’s combined historical financial information includes the following entities, which are the entities referred to collectively in this Form 10-K as Acquiport/Amsdell, for periods prior to October 21, 2004: the operating partnership (formerly known as Acquiport/Amsdell I Limited Partnership)Partnership, which is sometimes referred to herein as “Acquiport I”) and its consolidated subsidiaries, AcquiportAcquiport/Amsdell III, LLC (“Acquiport III”), Acquiport/Amsdell IV, LLC, AcquiportAcquiport/Amsdell V, LLC, AcquiportAcquiport/Amsdell VI, LLC, AcquiportAcquiport/Amsdell VII, LLC, and USI II, LLC. Acquiport/AmsdellThe Predecessor also includes three additional facilities,facilities: Lakewood, OH,OH; Lake Worth, FL,FL; and Vero Beach I, FL which were contributed to U-Store-It, L.P.our operating partnership in connection with the IPO. All intercompany balances and transactions are eliminated in consolidation and combination. At October 20, 2004, Acquiport/Amsdellthe Predecessor owned 155 storageself-storage facilities.

The owners of the Predecessor were entities owned by Robert J. Amsdell and Barry L. Amsdell and certain others who had minor ownership interests.

 

The following data should be read in conjunction with the audited financial statements and notes thereto of the Company and itsthe Predecessor and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this report.

THE COMPANY AND THE PREDECESSOR

 

  The Company
  The Predecessor(1)
 
  Period
October 21,
2004 through
December 31,
  Period
January 1,
2004 through
October 20,
  Year Ended December 31,
 
  2004
  2004
  2003
  2002
  2001
  2000
 
  (Dollars in thousands, except per share data) 

Statement of Operations Data:

                        

Revenues:

                        

Rental income

 $21,314  $65,631  $76,898  $72,719  $59,120  $49,992 

Other property related income

  1,452   3,211   3,916   3,866   3,156   3,098 
  
 
 
 
 
 

Total revenues

  22,766   68,842   80,814   76,585   62,276   53,090 
  
 
 
 
 
 

Operating expenses:

                        

Property operating expenses

  9,635   26,031   28,096   26,075   20,977   17,580 

Depreciation

  5,800   16,528   19,494   19,656   14,168   12,786 

General and administrative

  4,254   —     —     —     —     —   

Management fees—related party

  —     3,689   4,361   4,115   3,358   2,836 
  
 
 
 
 
 

Total operating expenses

  19,689   46,248   51,951   49,846   38,503   33,202 
  
 
 
 
 
 

Operating income

  3,077   22,594   28,863   26,739   23,773   19,888 

Interest expense

  (4,428)  (19,385)  (15,128)  (15,944)  (13,430)  (11,514)

Loan procurement amortization expense

  (240)  (5,727)  (1,015)  (1,079)  (1,182)  (898)

Early extinguishment of debt

  (7,012)  —     —     —     —     —   

Costs incurred to acquire management company

  (22,152)  —     —     —     —     —   

Gain (loss) on sale of storage facilities

  —     —     —     —     (2,459)  448 

Other

  (41)  69   12   —     —     —   
  
 
 
 
 
 

Income (loss) from continuing operations before minority interest

  (30,796)  (2,449)  12,732   9,716   6,702   7,924 
  
 
 
 
 
 

Minority interest

  898   —     —     —     —     —   

Discontinued operations:

                        

Income from operations

  —     —     171   312   194   326 

Gain on sale of storage facilities

  —     —     3,329   —     —     —   
  
 
 
 
 
 

Income from discontinued operations

  —     —     3,500   312   194   326 
  
 
 
 
 
 

Net income (loss)

 $(29,898) $(2,449) $16,232  $10,028  $6,896  $8,250 
  
 
 
 
 
 

Net loss per share (basic and diluted)

 $(0.80)                    
  
                    

Weighted average common shares outstanding (basic and diluted)

  37,477,920                     
  
                    

Distribution declared

 $

0.2009

 

 

                    
  
                    

33

(1)

 

 

The Company

 

The Predecessor (1)

 

 

 

Year Ended December 31,

 

Period
October 21,
through
December 31,

 

Period
January 1,
through
October 20,

 

Year Ended
December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2007

 

2006

 

2005

 

2004

 

2004

 

2003

 

 

 

 

 

 

 

(in thousands, except per share data)

 

Statement of Operations Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

211,974

 

$

195,331

 

$

135,169

 

$

21,410

 

$

65,722

 

$

76,898

 

Other property related income

 

16,828

 

14,816

 

10,001

 

1,452

 

3,211

 

3,916

 

Other - related party

 

365

 

457

 

405

 

71

 

—

 

—

 

Total revenues

 

229,167

 

210,604

 

145,575

 

22,933

 

68,933

 

80,814

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating expenses

 

96,802

 

85,415

 

54,793

 

9,767

 

26,170

 

28,089

 

Property operating expense -related party

 

59

 

69

 

43

 

—

 

—

 

—

 

Depreciation

 

70,192

 

64,079

 

39,479

 

5,800

 

16,528

 

19,494

 

Asset write-off

 

—

 

305

 

—

 

—

 

—

 

—

 

Lease abandonment charge

 

1,316

 

—

 

—

 

—

 

—

 

—

 

General and administrative

 

21,966

 

21,675

 

17,786

 

4,140

 

—

 

—

 

General and administrative -related party

 

337

 

613

 

736

 

114

 

—

 

—

 

Management fees — related party (2)

 

—

 

—

 

—

 

—

 

3,689

 

4,361

 

Total operating expenses

 

190,672

 

172,156

 

112,837

 

19,821

 

46,387

 

51,944

 

Operating income

 

38,495

 

38,448

 

32,738

 

3,112

 

22,546

 

28,870

 

Interest:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense on loans

 

(54,108

)

(45,628

)

(31,907

)

(4,428

)

(19,385

)

(15,128

)

Loan procurement amortization expense

 

(1,772

)

(1,972

)

(2,045

)

(286

)

(5,958

)

(1,296

)

Early extinguishment of debt

 

—

 

(1,907

)

(93

)

(7,012

)

—

 

—

 

Costs incurred to acquire management company —  related party

 

—

 

—

 

—

 

(22,152

)

—

 

—

 

Interest income

 

401

 

1,336

 

2,404

 

37

 

69

 

12

 

Other

 

118

 

191

 

(47

)

(78

)

—

 

—

 

Income (loss) from continuing operations before minority interest

 

(16,866

)

(9,532

)

1,050

 

(30,807

)

(2,728

)

12,458

 

Minority interest

 

1,385

 

790

 

(71

)

898

 

—

 

—

 

Income (loss) from continuing operations

 

(15,481

)

(8,742

)

979

 

(29,909

)

(2,728

)

12,458

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

102

 

208

 

452

 

—

 

—

 

171

 

Gain on sale of storage facilities

 

2,517

 

—

 

179

 

—

 

—

 

3,329

 

Minority interest attributable to discontinued operations

 

(215

)

(17

)

(42

)

—

 

—

 

—

 

Income from discontinued
operations

 

2,404

 

191

 

589

 

—

 

—

 

3,500

 

Net income (loss)

 

$

(13,077

)

$

(8,551

)

$

1,568

 

$

(29,909

)

$

(2,728

)

$

15,958

 

Basic and diluted earnings (loss) per share from continuing operations

 

$

(0.26

)

$

(0.15

)

$

0.02

 

$

(0.80

)

 

 

 

 

Basic and diluted earnings per share from discontinued operations

 

$

0.04

 

$

—

 

$

0.02

 

$

—

 

 

 

 

 

Basic and diluted earnings (loss) per share

 

$

(0.22

)

$

(0.15

)

$

0.04

 

$

(0.80

)

 

 

 

 

Weighted average basic common shares outstanding (3)

 

57,497

 

57,287

 

42,120

 

37,478

 

 

 

 

 

Weighted average diluted common shares outstanding (3)

 

57,497

 

57,287

 

42,203

 

37,478

 

 

 

 

 

Distribution declared (4)

 

$

1.05

 

$

1.16

 

$

1.13

 

$

0.20

 

 

 

 

 

34


 

 

The Company

 

The Predecessor (1)

 

 

 

Year Ended December 31,

 

Period
October 21,
through
December 31,

 

Period
January 1,
through
October 20,

 

Year Ended
December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2007

 

2006

 

2005

 

2004

 

2004

 

2003

 

 

 

(in thousands, except per share data)

 

Balance Sheet Data (as of end of period):

 

 

 

 

 

 

 

 

 

 

 

 

 

Storage facilities, net

 

$

1,647,118

 

$

1,566,815

 

$

1,246,295

 

$

729,155

 

 

 

$

395,599

 

Total assets

 

1,687,831

 

1,615,339

 

1,476,321

 

774,272

 

 

 

410,636

 

Revolving credit facility

 

219,000

 

90,500

 

—

 

—

 

 

 

—

 

Unsecured term loan

 

200,000

 

200,000

 

—

 

—

 

 

 

—

 

Secured term loan

 

47,444

 

—

 

—

 

—

 

 

 

—

 

Mortgage loans and notes payable

 

561,057

 

588,930

 

669,282

 

380,496

 

 

 

271,571

 

Total liabilities

 

1,083,230

 

930,948

 

714,157

 

406,243

 

 

 

280,743

 

Minority interest

 

48,982

 

56,898

 

63,695

 

10,804

 

 

 

—

 

Shareholders’/owners’ equity

 

555,619

 

627,493

 

698,469

 

357,225

 

 

 

129,893

 

Total liabilities and
shareholders’/owners’ equity

 

1,687,831

 

1,615,339

 

1,476,321

 

774,272

 

 

 

410,636

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of facilities (end of period)

 

409

 

399

 

339

 

201

 

155

 

155

 

Total rentable square feet (end of period)

 

26,119

 

25,436

 

20,828

 

12,978

 

9,683

 

9,863

 

Occupancy (end of period)

 

79.5

%

78.2

%

81.2

%

82.2

%

85.2

%

82.6

%

Cash dividends declared per share (4)

 

$

1.05

 

$

1.16

 

$

1.13

 

$

0.20

 

 

 

 

 

(1)Represents historical financial data of our operating partnership and its subsidiaries, including three additional facilities that were acquired by our operating partnership from certain of the Amsdell Entities in connection with the IPO. See Note 1 to the financial statements.

  The Company
  The Predecessor(1)
 
  

Period

October 21,

2004 through

December 31,

  

Period

January 1,

2004 through

October 20,

  Year Ended December 31,
 
  2004
  2004
  2003
  2002
  2001
  2000
 
  (Dollars in thousands, except per share data) 

Balance Sheet Data (as of end of period):

                        

Storage facilities, net of accumulated depreciation

 $729,155      $395,599  $411,232  $378,179  $255,911 

Total assets

  775,874       412,219   421,400   392,016   268,307 

Loans payable and capital lease obligations

  380,652       271,945   270,413   242,184   148,149 

Total liabilities

  405,432       280,470   278,987   249,854   155,309 

Minority interest

  11,062       —     —     —     —   

Shareholders’/owners’ equity

  359,380       131,749   142,413   142,162   112,999 

Total liabilities and shareholders’/owners’ equity

  775,874       412,219   421,400   392,016   268,307 

Cash Flow data:

                        

Net cash flow provided by (used in):

                        

Operating activities

 $9,415  $25,523  $34,227  $31,642  $23,570  $22,304 

Investing activities

  (229,075)  (5,114)  (2,507)  (33,212)  (127,683)  (654)

Financing activities

  246,078   (25,845)  (25,729)  (818)  105,049   (21,172)

Other data:

                        

Net operating income(2)

  13,131   42,811   52,718   50,510   41,299   35,510 

Funds from operations(3)

  (24,996)  14,079   32,604   29,885   23,812   20,717 

Number of facilities (end of period)

  201   155   155   159   152   130 

Total rentable square feet (end of period)

  12,977,893   9,683,014   9,863,014   10,050,274   9,520,547   7,647,052 

Occupancy (end of period)

  82.2%  85.2%  82.6%  79.2%  78.6%  80.9%

Reconciliation of Net Income to Funds from Operations(3):

                        

Net Income (Loss)

 $(29,898) $(2,449) $16,232  $10,028  $6,896  $8,250 

Plus:

                        

Depreciation

  5,800   16,528   19,494   19,656   14,168   12,786 

Depreciation included in discontinued operations

  —     —     207   201   289   129 

Loss on sale of storage facilities

  —     —     —     —     2,459   —   

Less:

                        

Minority interest

  (898)  —     —     —     —       

Gain on sale of storage facilities

  —     —     (3,329)  —     —     (448)
  
 
 
 
 
 

FFO for the operating partnership

 $(24,996) $14,079  $32,604  $29,885  $23,812  $20,717 
  
 
 
 
 
 

FFO allocable to minority interest

 $733                     
  
                    

FFO attributable to common shareholders

 $(24,263)                    
  
                    

Reconciliation of Net Income (Loss) to Net Operating Income (3):

                        

Net Income (Loss)

 $(29,898) $(2,449) $16,232  $10,028  $6,896  $8,250 

Plus:

                        

Management fees to related party/general and administrative(4)

  4,254   3,689   4,361   4,115   3,358   2,836 

Depreciation

  5,800   16,528   19,494   19,656   14,168   12,786 

Interest expense

  4,428   19,385   15,128   15,944   13,430   11,514 

Loan procurement amortization expense

  240   5,727   1,015   1,079   1,182   898 

(Gain) Loss from discontinued operations

  —     —     —     —     2,459   (448)

Early extinguishment of debt

  7,012   —     —     —           

Costs incurred to acquire management company

  22,152   —     —     —     —     —   

Other

  41   (69)  (12)  —     —     —   

Less:

                        

Income from discontinued operations

  —     —     (171)  (312)  (194)  (326)

Minority interest

  (898)  —     —     —     —     —   

Gain on sale of storage facilities

  —     —     (3,329)  —     —     —   
  
 
 
 
 
 

Net operating income

 $13,131  $42,811  $52,718  $50,510  $41,299  $35,510 
  
 
 
 
 
 

(2)We define net operating income, “NOI”, as total continuing revenues less continuing property operating expenses. NOI also can be calculated by adding back to net income: interest expense, loan procurement amortization expense, minority interest, loss on sale of storage facilities, depreciation and management fees to related party/general and administrative; and deducting from net income: income from discontinued operations and gains on sale of self-storage facilities. NOI is not a measure of performance calculated in accordance with GAAP.

We use NOI as a measure of operating performance at each of our facilities, and for all of our facilities in the aggregate. NOI should not be considered as a substitute for operating income, net income, cash flows provided by operating, investing and financing activities, or other income statement or cash flow statement data prepared in accordance with GAAP.

We believe NOI is useful to investors in evaluating our operating performance because:

it is one of the primary measures used by our management and our facility managers to evaluate the economic productivity of our facilities, including our ability to lease our facilities, increase pricing and occupancy and control our property operating expenses;

it is widely used in the real estate industry and the self-storage industry to measure the performance of real estate assets without regard to various items included in net income that do not relate to or are not indicative of operating performance, such as depreciation and amortization, which can vary depending upon accounting methods and book value of assets; and

we believe it helps investors to meaningfully compare the results of our operating performancepartnership, including three additional facilities acquired by our operating partnership from period to period by removing the impactcertain of the capital structure (primarily interest expense on our outstanding indebtedness) and depreciation of our basis in our assets from our operating results.

There are material limitations to using a measure such as NOI, including the difficulty associated with comparing results among more than one company and the inability to analyze certain significant items, including depreciation and interest expense, that directly affect our net income. We compensate for these limitations by considering the economic effect of the excluded expense items independently as well asAmsdell Entities in connection with its analysisthe IPO.

(2)          Prior to the IPO, management fees to related parties were paid to U-Store-It Mini Warehouse Co., the prior manager of net income. NOI shouldour self-storage facilities that was acquired at the time of our IPO.

(3)          Excludes 5,198,855 operating partnership units issued at our IPO and in connection with the acquisition of facilities subsequent to our IPO. Operating partnership units have been excluded from the earnings per share calculations as there would be considered in additionno effect on the earnings per share since, upon conversion, the minority interests’ share of income would also be added back to but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as total revenues, operating income and net income.

 

(3)Funds from operations, which is referred to as “FFO,” is a widely used performance measure for real estate companies and is provided here as a supplemental measure of operating performance. We calculate FFO in accordance with the best practices described in the April 2002 National Policy Bulletin of the National Association of Real Estate Investment Trusts (“NAREIT”), which is referred to as the “White Paper.” The White Paper defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization of operating real estate and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures, if any, are calculated to reflect FFO on the same basis.

Given the nature(4)          The Company announced a pro rata dividend of our business as$0.2009 per common share on November 24, 2004, full quarterly dividends of $0.28 per common share on March 2, 2005; May 31, 2005 and August 24, 2005 and dividends of $0.29 per common share on December 1, 2005; February 22, 2006; April 24, 2006; August 23, 2006; November 3, 2006; February 21, 2007; May 8, 2007; and August 14, 2007; and a real estate owner and operator, we believe that FFO is helpful to investors as a starting point in measuring our operational performance because it excludes various items included in net income that do not relate to or are not indicativedividend of our operating performance, such as gains (or losses) from sales of property and depreciation and amortization, which can make periodic and peer analyses of operating performance more difficult. FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indicator of our financial performance, is not an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, and is not indicative of funds available to fund our cash needs, including our ability to make distributions. Our computation of FFO may not be comparable to FFO reported by other REITs that do not define the term in accordance with the White Paper or that interpret the White Paper differently than we do.$0.18 per common share on December 13, 2007.

(4)Management fees to related party have historically been paid to U-Store-It Mini Warehouse Co., an entity that upon completion of the offering is part of the Company.

ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

(5)          For the period from October 21, 2004 through December 31, 2004, amount includes a one-time management contract termination charge of approximately $22.2 million related to the termination of our management contracts as a result of the purchase of U-Store-It Mini Warehouse Co. and approximately $7.0 million of expenses related to the early extinguishment of debt at the time of our IPO. Additionally, for the period from October 21, 2004 through December 31, 2004, general and administrative expense includes a one-time compensation charge of approximately $2.4 million for deferred shares granted to certain members of our senior management team in connection with our IPO.

35


ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS

The following discussion should be read in conjunction with the financial statementsand notes thereto appearing elsewhere in this report. Where appropriate, the following discussion includes analysis of the effects of the Company’s initial public offering (“IPO”), the formation transactions and related refinancing transactions and certain other transactions. The Company makes certainstatements in this section that are forward-looking statements within the meaning ofthe federal securities laws. For a complete discussion of forward-looking statements,see the section in this report entitled “Forward-Looking Statements”.Statements.” Certain riskfactors may cause actual results, performance or achievements to differ materiallyfrom those expressed or implied by the following discussion. For a discussion of suchrisk factors, see the section in this report entitled “Risk Factors.”

 

OVERVIEWOverview

 

On October 27, 2004, the Company completed its IPO, pursuant to which it sold an aggregate of 28,750,000 common shares (including 3,750,000 shares pursuant to the exercise of the underwriters’ over-allotment option) at an offering price of $16.00 per share. The IPO resulted in gross proceeds to the Company of $460.0 million. On October 7, 2005, the Company completed a follow-on public offering, pursuant to which it sold an aggregate of 19,665,000 common shares (including 2,565,000 shares pursuant to the exercise of the underwriters’ over-allotment option) at an offering price of $20.35 per share, for gross proceeds of approximately $460.0$400.2 million.

 

The Company is an integrated self-storage real estate company, which means that it has in–housein-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 the completion of the IPODecember 31, 2007 and its formation transactions,2006, the Company owned 201409 and 399 self-storage facilities, respectively, totaling approximately 13.026.1 and 25.4 million rentable square feet.feet, respectively.

 

The Company derives revenues principally from rents received from its customers who rent units at its 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 depend on 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, which places an emphasis on local, market level oversight and control, allows us to respond quickly and effectively to changes in local market conditions, where appropriate increasing rents while maintaining occupancy levels, or increasing occupancy levels while maintaining pricing levels.

 

We experienceThe Company experiences minor seasonal fluctuations in the occupancy levels of our facilities, which are generally slightly higher during the summer months due to increased moving activity.

 

In the future, we intendthe Company intends to focus on increasing our internal growth and selectively pursuing targeted acquisitions and developments of 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 and 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 for the year ended December 31, 2007.

Summary of Critical Accounting Policies and Estimates

 

Set forth below is a summary of the accounting policies that management believes are critical to the preparation of the consolidated and combined financial statements.statements included in this report. Certain of the accounting policies used in the preparation of these consolidated and combined financial statements are particularly important for an understanding of the financial position and results of operationoperations presented in the historical consolidated and combined financial statements included in this report. We have also provided aA summary of significant accounting policies is also provided in the notes to our consolidated and combined financial statements (See Note 2)2 to the consolidated financial statements). 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 materially from estimates calculated and utilized by management.

36


Basis of Presentation

 

The accompanying consolidated financial statements include all of the accounts of the Company, the operating partnership and the wholly-owned subsidiaries of ourthe operating partnership. The mergers of Amsdell Partners, Inc. and High Tide LLC with and intoFor analytical presentation, all percentages are calculated using the Company, andnumbers presented in the property interests contributed to the operating partnership by the Predecessor, have been accounted for as a reorganization of entities under common control and accordingly, were recorded at the Predecessor’s historical cost basis. Prior to the combination, the Company had no significant operations; therefore, the combined operations for the period prior to October 21, 2004, represent the operations of the Predecessor.financial statements contained in this Annual Report on Form 10-K.

 

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 40 years. Expenditures for significant renovations or improvements that extend the useful life 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 propertiesfacilities 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-orabove- or below-market lease intangibles.  The Company also considers whether the in-place, at market leases for any facility represent an intangible asset. Based upon the Company’s experience, leases of this nature generally re-let in less than 30 days and lease-up costs are minimal. Accordingly, to date no tangible asset has been recorded for in-place, at market leases. Additionally, toTo 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 (less than one year).frequent. While intangible assets for in-place leases have not historically been recorded, the Company recorded a $6.8 million intangible asset to recognize the value of in-place leases related to its acquisition of 14 self-storage facilities during the third quarter of 2007.

 

Long-lived assets are classified as held“held for useuse” are reviewed for impairment when events and circumstances indicate that there may be an impairment. The carrying valuevalues 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. NoThe Company recorded an asset impairment charge of $2.3 million for the year ended December 31, 2005 related to hurricane damage (See Note 17 to the Consolidated and Combined Financial Statements) and impairment charges have been recognized throughtotaling $0.4 million for the year ended December 31, 2004.2007, related to fire and flood damage.

 

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 asset is 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 transactiontransaction; 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 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

37


amounts contractually due pursuant to the underlying leases is included in rents received in advance,deferred revenue, and contractually due but unpaid rents are included in other assets.

 

Share OptionsBased Payments

 

We apply the fair value method of accounting for thecontingently issued shares and share options issued under our equity incentive award plan at the date of consummation of our IPO.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. Additionally, certain restricted share units awarded to our former Chief Executive Officer in 2005 were scheduled to vest immediately upon his retirement from the Company as he had reached the retirement age set forth in his award agreement. Accordingly, share compensation expense related to this issuance was expensed fully in 2005.

Minority Interests

As of September 30, 2005, the Company recorded the operating partnership units issued in connection with the National Self Storage transaction as conditionally redeemable as the result of a special redemption right (see Note 4 and Note 7 to the consolidated financial statements) for a discussion of the National Self Storage transaction). On October 25, 2005, the sellers in the National Self Storage transaction agreed to terminate the Special Redemption Right, effective as of July 15, 2005 (the first date on which National Self Storage facilities were acquired by the operating partnership under the purchase agreement). From the issuance date until October 25, 2005, the Company elected to accrete changes in the redemption value of the National Self Storage units issued over the period from the date of issuance to the earliest redemption date (one year from the date of initial issuance) on a pro rata basis. Upon termination of the Special Redemption Right, the Company classified these units in minority interest. The amount of accretion recorded through October 25, 2005 was approximately $3.0 million. Effective October 26, 2005, minority interest represents issued and outstanding operating partnership units.

 

Recent Accounting PronouncementsMinority 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 common shares or operating partnership units are issued. Such changes result in an allocation between shareholders’ equity and Minority Interests in the Consolidated Balance Sheets. Due to the number of such capital transactions that occur each period, we have presented a single net effect of all such allocations for the period as the “Adjustment for Minority Interest in Operating Partnership” in our Consolidated Statements of Shareholders’ Equity and Owners’ Equity (Deficit) (rather than separately allocating the minority interest for each individual capital transaction).

 

There have been no recent accounting pronouncementsRecent Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 141 (Revised 2007), Business Combinations (“FAS 141(R)”).  FAS 141(R) establishes principles and requirements for recognizing identifiable assets acquired, liabilities assumed, noncontrolling interest in the acquiree, goodwill acquired in the combination or interpretationsthe 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 haveare expected but the acquirer is not yet been implementedobligated to incur will be recognized separately from the acquisition.  FAS 141(R) is effective for the Company beginning with its quarter ending March 31, 2009.  The Company is currently assessing the potential impacts, if any, on its consolidated financial statements.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements (“FAS 160”).  FAS 160 requires that will have a materialownership interests in subsidiaries held by parties other than the parent are clearly identified.  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.  FAS 160 is effective for the Company beginning with its quarter ending March 31, 2009.  The Company is currently assessing the potential impacts, if any, on its 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.

38


This statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007.  The Company is in the process of evaluating the impact of SFAS No. 159 on ourits financial statements.

 

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 is effective in fiscal years beginning after November 15, 2007. The Company believes that the adoption of this standard on January 1, 2008 will not have a material effect on our consolidated financial statements.

In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 (“FIN 48”).  FIN 48 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.  FIN 48 also provides guidance on description, classification, interest and penalties, accounting in interim periods, disclosure and transition.  FIN 48 became effective for the Company on January 1, 2007.  The adoption of FIN 48 in 2007 did not have a material effect on the consolidated financial statements.

In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments — An Amendment of FASB Nos. 133 and 140.  The purpose of SFAS No. 155 is to simplify the accounting for certain hybrid financial instruments by permitting fair value re-measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation.  SFAS No. 155 also eliminates the restriction on passive derivative instruments that a qualifying special-purpose entity may hold.  SFAS No. 155 is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year beginning after September 15, 2006.  The adoption of SFAS No. 155 in 2007 did not have a material effect on the consolidated financial statements.

Results of Operations

 

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

 

Comparison of the Year Ended December 31, 2004 to the Year Ended December 31, 2003

For purposes of the following comparison of operating results for the years ended December 31, 2004 and December 31, 2003, we have combined the results of operations for the Company for the period from October 21, 2004 through December 31, 2004 and the Predecessor for the period from January 1, 2004 through October 20, 2004. Internally, the Company uses combined reporting to evaluate its operating performance and believes that this presentation will provide investors with additional insight into our financial results.

Acquisition and Development Activities

The comparability of the Company’s results of operation is significantly affected by development, redevelopment and acquisition activities in 2004 and 2003. At December 31, 2004 and 2003 the Company owned interests in 201 and 155 self-storage facilities and related assets, respectively.

In 2004, 46 self-storage facilities were acquired for approximately $221.8 million. All of these facilities were acquired concurrently with, or shortly after, the completion of the IPO.

In 2003, one self-storage facility was acquired for approximately $3.2 million and the Company completed and placed in service one expansion of an existing self-storage facility for approximately $2.5 million. During this same period four self-storage facilities and one commercial property were sold, which facilities and property have been accounted for as discontinued operations.

A comparison of income (loss) from continuing operations for the years ended December 31, 2004 and 2003 is as follows:

   ($ in thousands) 
   2004(1)
  2003
 

REVENUES:

         

Rental income

  $86,945  $76,898 

Other property related income

   4,663   3,916 
   
 

Total revenues

   91,608   80,814 
          

OPERATING EXPENSES:

         

Property operating expenses

   35,666   28,096 

Depreciation

   22,328   19,494 

General and administrative

   4,254   —   

Management fees - related party

   3,689   4,361 
   
 

Total operating expenses

   65,937   51,951 
          

OPERATING INCOME

   25,671   28,863 
          
OTHER INCOME (EXPENSE):         

Interest expense

   (23,813)  (15,128)

Loan procurement amortization expense

   (5,967)  (1,015)

Early extinguishment of debt

   (7,012)  —   

Cost incurred to acquire management company

   (22,152)  —   

Other

   28   12 
   
 

Total other expense

   (58,916)  (16,131)
          

INCOME (LOSS) FROM CONTINUING OPERATIONS

   (33,245)  12,732 
(1)The twelve months ended December 31, 2004 represents consolidated operating results for the Company from October 21, 2004 to December 31, 2004 and combined operating results for the Predecessor from January 1, 2004 to October 20, 2004. The operating results for the year ended December 31, 2004 are not comparable to future expected operating results of the Company since they include various IPO-related charges.

Comparison of Operating Results for the Years Ended December 31, 20042007 and 2003 (Not2006(not including discontinued operations)

 

Total Revenues

Rental income increased from $76.9 million in 2003 to $86.9 million in 2004, an increase of $10.0 million, or 13.0%. This increase is primarily attributable to (i) the acquisition of 46 facilities in 2004 and (ii) an increase in revenues from our pool of “same-store” facilities of approximately $4.7 million (see same-store discussion on page 44).

Other property related income increased from $3.9 million in 2003 to $4.7 million in 2004, an increase of $0.8 million, or 20.5%. This increase is primarily attributable to the acquisition of 46 facilities in 2004.

Total Operating Expenses

Property operating expenses increased from $28.1 million in 2003 to $35.7 million in 2004, an increase of $7.6 million, or 27.0%. This increase is primarily attributable to (i) the acquisition of 46 facilities in 2004 and (ii) an increase in operating expenses from our pool of “same-store” facilities of approximately $3.7 million (see same-store discussion on page 44).

Management fees decreased from $4.4 million in 2003 to $3.7 million in 2004, a decrease of $0.7 million, or 15.9%. This decrease is primarily attributable to the acquisition of our management company effective October 27, 2004 in connection with our IPO. Management fees with our wholly-owned subsidiaries were eliminated subsequent to October 27, 2004 and were replaced with management company expenses, which are recorded in general and administrative expenses.

General administrative costs began with the Company’s IPO in October 2004. Therefore, general and administrative expenses increased from $0.0 in 2003 to $4.3 million in 2004. Included in these costs is a charge of $2.4 million for deferred shares granted to certain members of our senior management team and $0.4 million of cash bonuses paid to these executives. The remaining $1.5 million includes expenses for our management company and other costs incurred in connection with being a public company.

Depreciation increased from $19.5 million in 2003 to $22.3 million in 2004, an increase of $2.8 million, or 14.4%. This increase is partially attributable to a “step up” in the carrying amount of fixed assets due to the purchase of outside partners’ interests in the Predecessor in May 2004, which was partially offset by lower depreciation on fully amortized equipment with lives significantly shorter than new buildings and improvements. The increase is also attributable to the acquisition of 46 additional facilities in 2004.

Interest expense increased from $15.1 million in 2003 to $23.8 million in 2004, an increase of $8.7 million, or 57.6%. The increase is attributable to a higher amount of outstanding debt and higher interest rates in 2004 primarily resulting from loans obtained in connection with our formation transactions.

Loan procurement amortization expense increased from $1.0 million in 2003 to $6.0 million in 2004, an increase of $5.0 million, or 500.0%. This increase is primarily attributable to deferred financing costs incurred in connection with obtaining a $424.5 million term loan in May 2004 that was used to purchase interests of outside partners in the Predecessor.

In the fourth quarter of 2004, the Company incurred a charge of $7.0 million for the early extinguishment of debt primarily due to the incurrence of approximately $0.9 million of prepayment penalties and the write-off of $6.1 million of unamortized loan costs.

Cost incurred to acquire the management company as part of our IPO transactions resulted in a one-time charge of $22.2 million in 2004.

Comparison of the Year End December 31, 2003 to the Year Ended December 31, 2002

Acquisition and Development Activities

 

The comparability of the Company’s results of operations is significantly affected by development, redevelopment, acquisition and disposition activities in 20032007 and 2002.2006 as listed below. At December 31, 20032007 and 20022006, the Company owned interests in 155409 and 159399 self-storage facilities and related assets, respectively.

 

·     In 2003, one2007, 17 self-storage facility was acquired for approximately $3.2 million, and the Company completed and placed in service one expansion of an existing self-storage facility for approximately $2.5 million. During this same period four self-storage facilities and one commercial property were sold, which have been accounted for as discontinued operations.

In 2002, three facilities were acquired for approximately $19.4$140.5 million and the Company completed and placed in service four significant development(the “2007 Acquisitions”).

·     In 2007, 5 self-storage facilities were sold for approximately $19.1$19.2 million and nine expansions of existing(the “2007 Dispositions”).

·     In 2006, 60 self-storage facilities were acquired for approximately $5.2 million.

$362.4 million (the “2006 Acquisitions”).

39


A comparison of net income from continuing operations(loss) for the years ended December 31, 20032007 and 20022006 is as follows:

 

 

 

For the year ended December 31,

 

 

 

2007

 

2006

 

REVENUES

 

(in thousands)

 

Rental income

 

$

211,974

 

$

195,331

 

Other property related income

 

16,828

 

14,816

 

Other - related party

 

365

 

457

 

Total revenues

 

229,167

 

210,604

 

OPERATING EXPENSES

 

 

 

 

 

Property operating expenses

 

96,802

 

85,415

 

Property operating expenses - related party

 

59

 

69

 

Depreciation

 

70,192

 

64,079

 

Asset write-off

 

—

 

305

 

Lease abandonment

 

1,316

 

—

 

General and administrative

 

21,966

 

21,675

 

General and administrative - related party

 

337

 

613

 

Total operating expenses

 

190,672

 

172,156

 

OPERATING INCOME

 

38,495

 

38,448

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

Interest:

 

 

 

 

 

Interest expense on loans

 

(54,108

)

(45,628

)

Loan procurement amortization expense

 

(1,772

)

(1,972

)

Write-off of loan procurement cost due to
early extinguishment of debt

 

—

 

(1,907

)

Interest income

 

401

 

1,336

 

Other

 

118

 

191

 

Total other expense

 

(55,361

)

(47,980

)

LOSS FROM CONTINUING OPERATIONS

 

$

(16,866

)

$

(9,532

)

 

   ($ in thousands) 
   2003
  2002
 

REVENUES:

         

Rental income

  $76,898  $72,719 

Other property related income

   3,916   3,866 
   
 

Total revenues

   80,814   76,585 
          

OPERATING EXPENSES:

         

Property operating expenses

   28,096   26,075 

Depreciation

   19,494   19,656 

Management fees - related party

   4,361   4,115 
   
 

Total operating expenses

   51,951   49,846 
          

OPERATING INCOME

   28,863   26,739 
          

OTHER INCOME (EXPENSE):

         

Interest expense

   (15,128)  (15,944)

Loan procurement amortization expense

   (1,015)  (1,079)

Other

   12   —   
   
 

Total other expense

   (16,131)  (17,023)
          

INCOME (LOSS) FROM CONTINUING OPERATIONS

   12,732   9,716 

Total Revenues

Rental income increased from $195.3 million in 2006 to $211.9 million in 2007, an increase of $16.6 million, or 8%. This increase is primarily attributable to (i) additional rental income from the 2007 Acquisitions, (ii) a full year contribution from the 2006 Acquisitions, and (iii) an increase in rental income from our pool of same-store facilities of approximately $3.0 million resulting from rate increases and an increase in average occupancy from 81.2% to 81.7%.

Other property related income, including Other – related party, increased from $15.3 million in 2006 to $17.2 million in 2007, an increase of $1.9 million, or 12%. This increase is primarily attributable to the other property income from the 2007 Acquisitions and a full year contribution from the 2006 Acquisitions.

Total Operating Expenses

Property operating expenses, including property operating expenses – related party, increased from $85.5 million in 2006 to $96.9 million in 2007, an increase of $11.4 million, or 13%. This increase is primarily attributable to (i) additional operating expenses from the 2007 Acquisitions, (ii) a full year of operating expenses from the 2006 Acquisitions, and (iii) an increase in repair and maintenance expenses of $1.2 million as part of the Company’s effort to address deferred maintenance items during 2007.

General and administrative expenses, including General and administrative expenses – related party, remained unchanged at $22.3 million.  The 2006 period includes approximately $2.7 million of severance costs related to a Company restructuring of certain management positions; the 2007 period includes approximately $1.2 million of non-recurring legal and professional costs associated with the litigation and related settlement with the Amsdells.

40


Depreciation increased from $64.1 million in 2006 to $70.1 million in 2007, an increase of $6.0 million, or 9%. The increase is primarily attributable to additional depreciation expense related to the 2007 Acquisitions and a full year of depreciation expense related to the 2006 Acquisitions.

 

Asset write-off of $0.3 million represents the disposal of the Company’s former point of sale system, which was replaced with CentershiftTM in the third quarter of 2006.

In August 2007, the Company abandoned certain office space in Cleveland, OH that was previously used for its corporate offices.  The related leases have expiration dates ranging from December 31, 2008 through December 31, 2014. Upon vacating the space, the Company entered into a sub-lease agreement with a sub-tenant to lease the majority of the space for the duration of the term.  As a result of this exit activity, the Company recognized a “Lease abandonment charge” of $1.3 million during 2007.

Total Other Expenses

Interest expense increased from $45.6 million in 2006 to $54.1 million in 2007, an increase of $8.5 million, or 19%. The increase is attributable to a higher amount of outstanding debt in 2007 primarily resulting from the financing of the 2007 Acquisitions, which was primarily funded through the revolving credit facility and secured term loan.  An additional source of the increase is a full year of interest expense related to debt assumed in conjunction with the 2006 Acquisitions.

Loan procurement amortization expense decreased from $2.0 million in 2006 to $1.8 million in 2007, a decrease of $0.2 million, or 10%.  The decrease is attributable to the repayment of five mortgages during 2007.

In conjunction with the two revolving credit facility financings during 2006, the Company incurred charges of $1.9 million relating to the write-off of unamortized loan procurement costs.

Interest income decreased to $0.4 million in 2007 from $1.3 million in 2006. This decrease is primarily attributable to the Company’s investment of excess proceeds from the 2005 follow-on public offering in interest bearing accounts and in short-term marketable securities until the excess proceeds were used to fund acquisitions or pay down existing debt during the first quarter of 2006.

Comparison of Operating Results for the Years Ended December 31, 20032006 and 2002 (Not2005(not including discontinued operations)

 

Acquisition and Development Activities

The comparability of the Company’s results of operations is significantly affected by acquisition activities in 2006 and 2005. At December 31, 2006 and 2005, the Company owned 399 and 339 self-storage facilities and related assets, respectively.

In 2006, 60 self-storage facilities were acquired for approximately $362.4 million (the “2006 Acquisitions”).

In 2005, 146 self-storage facilities were acquired for approximately $547.9 million. During 2005, four self-storage facilities were sold for approximately $6.2 million, and accordingly results of operations for these facilities have been accounted for as discontinued operations. The Company also reduced its reported number of facilities during 2005 by consolidating four facilities into existing adjacent facilities.  Based upon total acquisitions, dispositions and consolidations, the Company had a net increase of 138 facilities in 2005 (the “2005 Acquisitions”).

41


A comparison of net income (loss) for the years ended December 31, 2006 and 2005 is as follows:

 

 

For the year ended December 31,

 

 

 

2006

 

2005

 

REVENUES

 

(in thousands)

 

Rental income

 

$

195,331

 

$

135,169

 

Other property related income

 

14,816

 

10,001

 

Other - related party

 

457

 

405

 

Total revenues

 

210,604

 

145,575

 

OPERATING EXPENSES

 

 

 

 

 

Property operating expenses

 

85,415

 

54,793

 

Property operating expenses - related party

 

69

 

43

 

Depreciation

 

64,079

 

39,479

 

Asset write-off

 

305

 

—

 

General and administrative

 

21,675

 

17,786

 

General and administrative - related party

 

613

 

736

 

Total operating expenses

 

172,156

 

112,837

 

OPERATING INCOME

 

38,448

 

32,738

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

Interest:

 

 

 

 

 

Interest expense on loans

 

(45,628

)

(31,907

)

Loan procurement amortization expense

 

(1,972

)

(2,045

)

Write-off of loan procurement cost due to
early extinguishment of debt

 

(1,907

)

(93

)

Interest income

 

1,336

 

2,404

 

Other

 

191

 

(47

)

Total other expense

 

(47,980

)

(31,688

)

INCOME (LOSS) FROM CONTINUING OPERATIONS

 

$

(9,532

)

$

1,050

 

Total Revenues

 

Rental income increased from $72.7$135.2 million in 20022005 to $76.9$195.3 million in 2003,2006, an increase of $4.2$60.2 million, or 5.8%45%. $3.5 million of thisThis increase is primarily attributable to increased occupancy(i) additional rental income from the 2006 Acquisitions, (ii) a full year contribution from the 2005 Acquisitions, and $0.7 million(iii) an increase in rental income from our pool of this increase is attributable to increased rents.same-store facilities of approximately $4.6 million.

 

Other property related income, remained flat at $3.9including Other – related party, increased from $10.4 million in 2002 and 2003.

Total Operating Expenses

Property operating expenses increased from $26.12005 to $15.3 million in 2002 to $28.1 million in 2003,2006, an increase of $2.0$4.9 million, or 7.7%47%. Payroll expenses increased by approximately $0.6 million, attributable to higher incentive payments as a result of increased revenues and increased number of personnel. Property taxes and insurance increased by approximately $0.7 million. This increase is primarily attributable to the other property income from the 2006 Acquisitions and a full year contribution from the 2005 Acquisitions.

Total Operating Expenses

Property operating expenses, including Property operating expenses – related party, increased assessed values resultingfrom $54.8 million in higher real estate taxes. Other operating costs increased by approximately $1.0 million.2005 to $85.5 million in 2006, an increase of $30.6 million, or 56%. This increase is primarily attributable to significantly higher snow removal costs associated with(i) additional operating expenses from the unusually severe winter2006 Acquisitions, (ii) a full year of operating expenses from the 2005 Acquisitions, and (iii) an increase in 2003.operating expenses from our “same-store” facilities of approximately $5.7 million.

 

Management feesGeneral and administrative, including General and administrative – related party, expenses increased from $4.1$18.5 million in 20022005 to $4.4$22.3 million in 2003,2006, an increase of $3.8 million, or 7.3%20.5%.  ThisThe increase is primarily attributable to (i) approximately $2.7 million of severance costs during 2006, (ii) approximately $0.4 million related to the settlement of a claim made based on actions taken by the Predecessor Company prior to the initial public offering, and (iii) $0.2 million related to professional fees incurred in 2006 related to reorganization.

42


Depreciation increased from $39.5 million in 2005 to $64.1 million in 2006, an increase of $24.6 million, or 62%. The increase is primarily attributable to additional depreciation expense related to the 2006 Acquisitions and a full year of depreciation expense related to the 2005 Acquisitions.

Asset write-off in 2006 of $0.3 million represents the disposal of the Company’s former point of sale system, which was replaced with CentershiftTM in the fourth quarter of 2006.

Total Other Expenses

Interest expense increased from $31.9 million in 2005 to $45.6 million in 2006, an increase of $13.7 million, or 43%. The increase is attributable to a higher revenues, on which management fees are based. Mostamount of our management agreementsoutstanding debt in 2006 primarily resulting from the financing of certain of the 2006 Acquisitions with additional borrowings.

In conjunction with the two revolving credit facility financings during 2006, the periods presented provided that management fees were based on 5.35%Company incurred charges of total revenues collected.

$1.9 million relating to the write-off of unamortized loan procurement costs.

DepreciationInterest income decreased from $19.7to $1.3 million in 2002 to $19.52006 from $2.4 million in 2003, or 1.0%.2005. This decrease is primarily attributable to fully amortized equipment with lives significantly shorter than new buildingsthe Company’s 2005 follow-on public offering.  The Company invested excess proceeds from the follow-on offering in interest bearing accounts and improvements.in short-term marketable securities until the excess proceeds were used to fund acquisitions or pay down existing debt during the first quarter of 2006.

 

Interest expense decreased from $15.9 million in 2002 to $15.1 million in 2003, or 5.0%. The decrease is due to lower interest rates in 2003 on variable rate debt outstanding during both periods.Impact of Hurricanes

 

ImpactAs a result of 2004 Hurricaneshurricanes that occurred during the third quarter of 2005, the Company incurred damage at certain of its self-storage facilities located in Alabama, Louisiana and Mississippi. Under the provisions of SFAS No. 144, “Accounting for the Impairment of or Disposal of Long-Lived Assets” (“SFAS No. 144”), the Company determined that there were indicators of impairment and accordingly tested the assets for recoverability. After an assessment of the damage sustained at the Waveland, Mississippi facility, the Company determined that a charge for impairment of approximately $2.3 million was required because the estimated undiscounted future cash flows did not support the carrying value of the assets. The Company expected that insurance proceeds from its comprehensive insurance for property damage would cover the entire loss incurred, and in 2005 appropriately recorded the impairment charge and an offsetting insurance recovery of $2.3 million, of which $0.5 million was received in October 2005. The related insurance receivable was included in other assets as of December 31, 2005, and the asset impairment charge and related insurance recovery were presented net in operating expenses for the year ended December 31, 2005.  During 2006, insurance proceeds were sufficient to satisfy the insurance receivable and no balance remained as of December 31, 2007.

 

Hurricanes in late summer and early fall 2004 caused damage at five of the Company’s 47 facilities that are located in Florida. The Company estimates that uninsured damages resulting from the recent hurricanes will total approximately $0.3 million (primarily, insurance deductibles). These damages did not cause any material service interruption and all of the facilities are currently fully operational. The damages at these facilities did not result in an impairment of the facilities’ net carrying values at December 31, 2004.

Same-Store Facility Results

 

The Company considers its same-store portfolio to consist of only those facilities owned at the beginning and at the end of the applicable periods presented and that had an occupancy of at least 70% as of the first day of such periods.

presented. The following same-store presentation is considered to be useful to investors in evaluating our performance because it provides information relating to changes in facility-level operating performance without taking into account the effects of acquisitions, developments or dispositions. The following table sets forth operating data for our same-store portfolio for the periods presented.

 

   Three months
ended
December 31,
  Percent
Change
  Year Ended
December 31,
  Percent
Change
  Year Ended
December 31,
  Percent
Change
 
   2004
  2003
   2004
  2003
   2003
  2002
  
   ($ in thousands) 

Same-store revenues

  $20,663  $19,177  7.7% $79,403  $74,661  6.4% $60,958  $59,300  2.8%

Same-store property operating expenses

   7,914   6,749  17.3%  29,085   25,410  14.5%  20,657   19,589  5.5%

Non same-store revenues

   6,933   1,661      12,205   6,153      19,856   17,285    

Non same-store property operating expenses

   4,188   822      6,581   2,686      7,439   6,486    

Total revenues

   27,596   20,838      91,608   80,814      80,814   76,585    

Total property operating expenses

   12,102   7,571      35,666   28,096      28,096   26,075    

Number of facilities included in same-store analysis

   142          142          121        

43


 

Comparison of the Year Ended December 31, 20042007 to the Year Ended December 31, 20032006

The following table provides information pertaining to our Same-Store portfolio for 2007 and 2006:

 

 

 

 

 

 

 

 

 

 

Properties

 

Other/

 

 

 

 

 

 

 

 

 

 

 

Same Store Property Portfolio

 

Acquired

 

Eliminations

 

Total Portfolio

 

 

 

 

 

 

 

Increase/

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase/

 

 

 

 

 

2007

 

2006

 

(Decrease)

 

Change

 

2007

 

2006

 

2007

 

2006

 

2007

 

2006

 

(Decrease)

 

Change

 

REVENUES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

173,409

 

$

170,103

 

$

3,306

 

2%

 

$

38,564

 

$

25,181

 

$

1

 

$

47

 

$

211,974

 

$

195,331

 

$

16,643

 

9

%

Other property related income

 

13,301

 

12,653

 

648

 

5%

 

3,299

 

2,150

 

228

 

13

 

16,828

 

14,816

 

2,012

 

14

 %

Other — related party

 

—

 

—

 

—

 

—

 

—

 

—

 

365

 

457

 

365

 

457

 

(92

) 

-20

 %

Total revenues

 

186,710

 

182,756

 

3,954

 

2%

 

41,863

 

27,331

 

594

 

517

 

229,167

 

210,604

 

18,563

 

9

%

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating expenses

 

72,010

 

69,262

 

2,748

 

4%

 

17,753

 

10,384

 

7,039

 

5,769

 

96,802

 

85,415

 

11,387

 

13

%

Property operating expenses — related party

 

—

 

—

 

—

 

—

 

—

 

—

 

59

 

69

 

59

 

69

 

(10

)

-14

%

Subtotal

 

72,010

 

69,262

 

2,748

 

4%

 

17,753

 

10,384

 

7,098

 

5,838

 

96,861

 

85,484

 

11,377

 

13

%

NET OPERATING INCOME:

 

114,700

 

113,494

 

1,206

 

1%

 

24,110

 

16,947

 

(6,504

)

(5,321

)

132,306

 

125,120

 

7,186

 

6

%

Depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

70,192

 

64,079

 

6,113

 

10

%

Asset write-off

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

305

 

(305

)

-100

%

Lease bandonment charge

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,316

 

—

 

1,316

 

—

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21,966

 

21,675

 

291

 

1

%

General and administrative — related party

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

337

 

613

 

(276

)

-45

%

Subtotal

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

93,811

 

86,672

 

7,139

 

8

%

Operating income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38,495

 

38,448

 

47

 

0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense on loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(54,108

)

(45,628

)

(8,480

)

19

%

Loan procurement amortization expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,772

)

(1,972

)

200

 

-10

%

Write-off of loan procurement due to early extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

(1,907

)

(1907)

 

100

%

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

401

 

1,336

 

(935

)

-70

%

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

118

 

191

 

(73

)

-38

%

Total other expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(55,361

)

(47,980

)

(7,381

)

15

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS BEFORE MINORITY INTERESTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,866

)

(9,532

)

(7,334

)

77

%

MINORITY INTERESTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,385

 

790

 

595

 

75

%

LOSS FROM CONTINUING OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,481

)

(8,742

)

(6,739

)

77

%

DISCONTINUED OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

102

 

208

 

(106

)

-51

%

Net gain on disposition of discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,517

 

—

 

2,517

 

—

 

Minority interest attributable to discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(215

)

(17

)

(198

)

1165

%

Income from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,404

 

191

 

2,213

 

1159

%

NET INCOME (LOSS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(13,077

)

$

(8,551

)

$

(4,526

)

53

%

 

Same-store revenues increased from $74.7$182.8 million in 20032006 to $79.4$186.7 million in 2004,2007, an increase of $4.7$3.9 million, or 6.4%2%. Approximately $2.1 million of this increase was attributable to increased occupancy and $2.6 million of this increase was attributable to increased rents.

Same-store property operating expenses increased from $25.4$69.3 million in 20032006 to $29.1$72.0 million in 2004,2007, an increase of $3.7$2.7 million, or 14.5%4%. This increase was primarily attributable to increased payroll expenses causedslight increases in multiple expense line items.

Non-GAAP Financial Measures

NOI

We define net operating income, which we refer to as “NOI,” as total continuing revenues less continuing property operating expenses. NOI also can be calculated by an increaseadding back to net income: interest expense on loans, loan procurement amortization expense, early extinguishment of debt, minority interest, other, depreciation, general and administrative, general and administrative-related party and lease abandonment charge; and deducting from net income: income from discontinued operations, gains on sale of self-storage facilities and interest income. NOI is not a measure of performance calculated in accordance with GAAP.

We use NOI as a measure of operating performance at each of our facilities, and for all of our facilities in the numberaggregate. NOI should not be considered as a substitute for operating income, net income, cash flows provided by operating, investing and financing activities, or other income statement or cash flow statement data prepared in accordance with GAAP.

We believe NOI is useful to investors in evaluating our operating performance because:

44


·   It is one of personnelthe primary measures used by our management and related costs includingour facility managers higher compensation costs for performance incentives, district managers hired duringto evaluate the year to fill previously vacant job positions and lengthening the operating hours of someeconomic productivity of our facilities. Other same-storefacilities, including our ability to lease our facilities, increase pricing and occupancy and control our property operating costs also increased dueexpenses;

·   It is widely used in the real estate industry and the self-storage industry to costs incurredmeasure the performance and value of real estate assets without regard to various items included in net income that do not relate to or are not indicative of operating performance, such as depreciation and amortization, which can vary depending upon accounting methods and the book value of assets; and

·   We believe it helps our investors to meaningfully compare the results of our operating performance from period to period by removing the impact of our capital structure (primarily interest expense on our outstanding indebtedness) and depreciation of our basis in our assets from our operating results.

There are material limitations to using a measure such as NOI, including the difficulty associated with comparing results among more than one company and the inability to analyze certain significant items, including depreciation and interest expense, that directly affect our net income. We compensate for these limitations by considering the economic effect of the excluded expense items independently as well as in connection with changesour analysis of net income. NOI should be considered in the Company’s logo, higher computer costsaddition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as total revenues, operating income and bad debt expense.net income.

 

Cash Flows

Comparison of the Year Ended December 31, 20032007 to the Year Ended December 31, 20022006

 

Same-store revenues increasedA comparison of cash flow provided by operating, investing and financing activities for the years ended December 31, 2007 and 2006 is as follows:

 

 

Year Ended December 31,

 

 

 

 

 

2007

 

2006

 

Change

 

 

 

(in thousands)

 

 

 

Net cash flow provided by (used in):

 

 

 

 

 

 

 

Operating activities

 

$

62.9

 

$

64.6

 

$

(1.7

)

Investing activities

 

$

(153.6

)

$

(248.0

)

$

94.4

 

Financing activities

 

$

75.5

 

$

104.3

 

$

(28.8

)

Cash provided by operations decreased from $59.3$64.6 million in 20022006 to $61.0$62.9 million in 2003,2007, an increasedecrease of $1.7 million, or 2.8%3%. Approximately $0.2 million of this increase was attributable to increased occupancy and $1.5 million of this increase was attributable to increased rents.

Same-store property operating expenses increased from $19.6 million in 2002 to $20.7 million in 2003, an increase of $1.1 million, or 5.5%. This increase wasThe decrease is primarily attributable to increased payroll expenses, property taxes, and insurance.the increase in certain prepaid assets, which is a result of the timing of certain expenditures.

 

Cash Flowsused in investing activities decreased from $248.0 million in 2006 to $153.6 million in 2007, a decrease of $94.4 million, or 38%. The decrease in cash used in investing activities is primarily attributable to $349.8 million used in the 2006 Acquisitions offset by the $169.8 million used in the 2007 Acquisitions.  Additionally, the net proceeds from sales of marketable securities in 2006 resulted in $95.1 million while the property dispositions in 2007 provided $17.9 million.

Cash provided by financing activities decreased from $104.3 million in 2006 to $75.5 million in 2007, a decrease of $28.8 million, or 28%. This decrease is primarily attributable to the net additional borrowings during 2006 of $176.4 million as compared to the net additional borrowings during 2007 of $150.6 million.  This fluctuation is a result of the 2006 Acquisition activity.

Comparison of the Year Ended December 31, 2006 to the Year Ended December 31,2005

 

A comparison of cash flow operating, investing and financing activities for the years ended December 31, 20042006 and 20032005 is as follows:

 

   ($ in millions)  Increase
   2004
  2003
  $

Net cash flow provided by (used in):

           

Operating activities

  $34.9  $34.2  0.7

Investing activities

  $(234.2) $(2.5) 231.7

Financing activities

  $220.2  $(25.7) 245.9

45


 

Comparison of the Year Ended December 31, 2004 to the Year Ended December 31, 2003

 

 

Year Ended December 31,

 

 

 

 

 

2006

 

2005

 

Change

 

 

 

(in thousands)

 

 

 

Net cash flow provided by (used in):

 

 

 

 

 

 

 

Operating activities

 

$

64.6

 

$

46.1

 

$

18.5

 

Investing activities

 

$

(248.0

)

$

(489.1

)

$

241.1

 

Financing activities

 

$

104.3

 

$

516.5

 

$

(412.2

)

 

 

 

 

 

 

 

 

 

Cash provided by operations increased from $34.2$46.1 million in 20032005 to $34.9$64.6 million in 2004,2006, an increase of $0.7$18.5 million, or 2.0%40.1%. The increase is primarily attributable to an increase in the income from continuing operations.

Cash used in investing activities increased from $2.5 million in 2003 to $234.2 million in 2004, an increaseincremental impact of $231.7 million. The increase in primarily attributable to a much larger number ofthe 60 self-storage facilities acquired in 2004 versus 2003.

Cash provided by financing activities increased from $25.7 million in 2003 to $220.2 million in 2004, an increase of $245.9 million. This increase is primarily attributable to the proceeds from the IPO and new borrowings, partially offset by the repayment of certain existing loans in 2004.

A comparison of cash flow operating, investing and financing activities for the years ended December 31, 2003 and 2002 is as follows:

   ($ in millions)  

Increase

(decrease)

 
   2003
  2002
  $
 

Net cash flow provided by (used in):

            

Operating activities

  $34.2  $31.6  2.6 

Investing activities

  $(2.5) $(33.2) 30.7 

Financing activities

  $(25.7) $(0.8) (24.9)

Comparison of the Year Ended December 31, 2003 to the Year Ended December 31, 2002

Cash provided by operations increased from $31.6 million in 2002 to $34.2 million in 2003, an increase of $2.6 million, or 8.2%. This increase is primarily attributable to an increase in the income from continuing operations.2006.

 

Cash used in investing activities decreased from $33.2$489.1 million in 20022005 to $2.5$248.0 million in 2003,2006, a decrease of $30.7$241.1 million, or 92.5%49.3%. The decrease in cash used in investing activities is primarily attributable to cash used to acquire 146 self-storage facilities in 2005 of $381.1 million versus cash used to acquire 60 self-storage facilities in 2006 of $312.3 as well as the use of $125.0 million of cash in 2005 to invest in marketable securities.

Cash provided by financing activities decreased from $516.5 million in 2005 to $104.3 million in 2006, a decrease of $412.2 million, or 79.8%. This decrease is primarily attributable to a decreasethe proceeds from the follow-on offering in acquisitions2005, which generated approximately $378.7 million and improvements of self-storage facilitiesincreased distributions paid to shareholders and minority partners in 2003,2006 as compared to 2002.2005 of $22.1 million and $3.7 million, respectively.

 

Cash used in financing activities increased from $0.8 million in 2002 to $25.7 million in 2003, an increase of $24.9 million. This increase is primarily attributable to lower borrowings and partner contributions required as a result of the reduced level of acquisition activity of self-storage facilities in 2003 as compared to 2002.

Liquidity and Capital Resources

 

As a result of the IPO and related formation transactions, the Company has a substantially different capital structure than the Predecessor. As of December 31, 2004, the Company2007, we had total indebtedness outstanding of approximately $380.5$4.5 million as compared to the Predecessor whoin available cash and cash equivalents. We had $271.6approximately $31.0 million and $6.5 million of debt outstanding at December 31, 2003.

On October 27, 2004,available borrowings under our operating partnership entered into a $150 million revolving credit facility which was undrawn atas of December 31, 2004. The Company may use borrowings under the facility to satisfy a portion of its short-term2007 and long-term liquidity needs.

The Company has approximately $110.5 million of indebtedness outstanding pursuant to four existing mortgage loans secured by 53 of its facilities. These mortgage loans, which were incurred prior to the IPO, include:

a commercial mortgage-backed securities loan secured by 41 of the Company’s existing facilities, which currently has a principal balance of approximately $66.2 million, bears interest at a fixed rate of 8.16% and has an anticipated repayment date in November 2006;

a commercial mortgage-backed securities loan secured by ten of the Company’s existing facilities, which currently has a principal balance of approximately $39.9 million, bears interest at a fixed rate of 7.13% and has an anticipated repayment date in December 2006;

a mortgage loan secured by the West Palm Beach, FL facility, which currently has a principal balance of approximately $2.6 million, bears interest at a fixed rate of 7.71% and matures in December 2008; and

a mortgage loan secured by the Peachtree City, GA facility, which currently has a principal balance of approximately $1.8 million, bears interest at a fixed rate of 8.43% and matures in August 2009.

Each of these loans has customary restrictions on transfer or encumbrances of the mortgaged facilities.February 28, 2008, respectively.

 

In connection with the IPO, on October 27, 2004, three of the Company’s subsidiaries also entered into three separate fixed rate mortgage loans with an aggregate principal amount of approximately $270.0 million. The first mortgage loan is secured by 26 of the Company’s facilities, has an initial outstanding principal balance of $90.0 million, bears interest at 5.09% and matures in November 2009. The second mortgage loan is secured by 21 of the Company’s facilities, has an initial outstanding principal balance of $90.0 million, bears interest at 5.19% and matures in May 2010. The third mortgage loan is secured by 18 of the Company’s facilities, has an initial outstanding principal balance of $90.0 million, bears interest at 5.33% and matures in January 2011. Each of these loans has customary restrictions on transfer or encumbrance of the mortgaged facilities. The primary purpose of these three new mortgage loans was to repay the portion of the Company’s existing term loan that was not repaid from the proceeds of the IPO.

Also in connection with the IPO, on October 27, 2004, the operating partnershipFebruary 2006, our Operating Partnership entered into a three-year, $150.0$250.0 million unsecured revolving credit facility. The credit facility which was undrawnallowed us to increase the amount that could be borrowed up to $350.0 million at December 31, 2004.a later date. The facility iswas scheduled to mature on October 27, 2007,in February 2009, with the option to extend thefor a one-year extended maturity date to October 27, 2008.date. Borrowings under the facility bearbore interest, at a variable rate based upon aour option, at either an alternative base rate or a Eurodollar rate, plus, in each case, a spreadplus an applicable margin depending on the Company’sour leverage ratio. The alternative base interest rate is a fluctuating rate equal to the higher of the prime rate or the sum of the federal funds effective rate plus 50 basis points. The applicable margin for the alternative base rate ranged from 0.15% to 0.60%. The Eurodollar rate is a periodic fixed rate equal to LIBOR. The applicable margin for the Eurodollar rate ranged from 1.15% to 1.60%. We used the credit facility is secured by certain of the Company’s self-storage facilities and requires that the Company maintain a minimum “borrowing base” of properties. The primary purpose of the new credit facility isprincipally to fund the future acquisition andfinance acquisitions, development of self-storage facilities, debt repayments and for general working capital purposes (as noted above,purposes. Upon entering into this agreement, we utilized the Company may use itfacility to satisfy other shortrepay a $30.0 million 60-day term loan.  Amounts borrowed under this facility were repaid using proceeds from a new credit facility in November 2006.

 In November 2006, we and longour Operating Partnership entered into a 30-day, unsecured $50 million term liquidity needs).loan agreement with Wachovia Bank, National Association as the lender. The term loan bore interest at a variable rate of LIBOR plus 115 basis points. The loan proceeds, along with borrowings under our revolving credit facility, provideswere used to finance the repayment of certain maturing secured loans. The loan was paid in full from proceeds obtained upon entering into a new revolving credit facility in November 2006.

In November 2006, we and our Operating Partnership entered into a three-year, $450.0 million unsecured credit facility with Wachovia Capital Markets, LLC and Keybanc Capital Markets, replacing our existing $250.0 million unsecured revolving credit facility. The facility consists of a $200 million term loan and a $250 million revolving credit facility.  The new facility has a three-year term with a one-year extension option and scheduled termination in November 2009.  Borrowings under the credit facility bear interest, at our option, at either an alternative base rate or a Eurodollar rate, in each case, plus an applicable margin based on our leverage ratio or our credit rating.  The alternative base interest rate is a fluctuating rate equal to the higher of the prime rate or the sum of the federal funds effective rate plus 50 basis points.  The applicable margin for aggregate borrowingsthe alternative base rate will vary from 0.00% to 0.50% depending on our leverage ratio prior to achieving an investment grade rating, and will vary from 0.00% to 0.25% depending on our credit rating after achieving an investment grade rating.  The Eurodollar rate is a rate of upinterest that is fixed for interest periods of one, two, three or six

46


months based on the LIBOR rate determined two business days prior to $150.0 millionthe commencement of the applicable interest period.  The applicable margin for the Eurodollar rate will vary from 1.00% to 1.50% depending on our leverage ratio prior to achieving an investment grade rating, and containswill vary from 0.425% to 1.00% depending on our credit rating after achieving an investment grade rating.

Our ability to borrow under this credit facility will be subject to our ongoing compliance with the following financial covenants, among others:

 

Maximum

·         maximum total indebtedness to total asset value of 65%;

 

Minimum

·         minimum interest coverage ratio of 2.0:1;

1.0;

 

Minimum

·         minimum fixed charge coverage ratio of 1.7:1;1.6:1.0; and

 

Minimum

·         minimum tangible net worth of $400.0 million.

The revolving credit facility also has customary restrictions on transfer or encumbrances$673.2 million plus 75% of the facilities that secure the loan.net proceeds from future equity issuances.

 

In September 2007, we and our Operating Partnership entered into a secured term loan agreement which allows for term loans in the aggregate principal amount of up to $50 million. Each term loan matures in November 2009, subject to extension at the sole discretion of the lenders. Each term loan bears interest at either an alternative base rate or a Eurodollar rate, at our option, in each case plus an applicable margin at terms identical to the unsecured credit facility.  As of September 30, 2007, there was one term loan outstanding for $47.4 million.  The outstanding term loan is secured by a pledge by our Operating Partnership of all equity interests in YSI RT LLC, the wholly-owned subsidiary of our Operating Partnership that acquired eight self-storage facilities in September 2007.  At December 31, 2007, the outstanding term loan had an interest rate of 6.18%.  Financial covenants for the secured term loan are identical to the financial covenants for the unsecured credit facility described above.

During August and September 2007, the Company entered into interest rate swap agreements designated as cash flow hedges that are designed to reduce the impact of interest rate changes on its variable rate debt. At December 31, 2007, the Company had an interest rate swap agreements for notional principal amounts aggregating $75 million. The swap agreements effectively fix the 30-day LIBOR interest rate on $50 million of credit facility borrowings at 4.7725% per annum and on $25 million of credit facility borrowings at 4.716% per annum, in each case until November 2009.  The interest rate cap agreement effectively limits the interest rate on $40 million of credit facility borrowings at 5.50% through June 2008. The notional amount at December 31, 2007 provides an indication of the extent of the Company’s involvement in these instruments at that time, but does not represent exposure to credit, interest rate or market risks.

Our cash flow from operations has historically has been one itsof our primary sources of liquidity to fund debt service, distributions and capital expenditures. The Company derivesWe derive substantially all of itsour revenue from customers who lease space from us at itsour facilities. Therefore, the Company’sour ability to generate cash from operations is dependent on the rents that the Company iswe are able to charge and collect from itsour customers. While we believe that the

Company believes that facilities in which the Company invests—we invest — self-storage facilities—facilities — are less sensitive to near-term economic downturns, prolonged economic downturns will adversely affect its cash flow from operations.

 

As a REIT, the Company is now required to distribute at least 90% of its REIT taxable income, excluding capital gains, to its shareholders on an annual basis inIn order to qualify as a REIT for federal income tax purposes.

purposes, we are required to distribute at least 90% of our REIT taxable income, excluding capital gains, to our shareholders on an annual basis or pay federal income tax.  The nature of the Company’sour business, coupled with the requirement that the Companywe distribute a substantial portion of itsour income on an annual basis, will cause the Companyus to have substantial liquidity needs over both the short term and the long term. The Company’sOur short-term liquidity needs consist primarily of funds necessary to pay operating expenses associated with itsour facilities, refinancing of certain mortgage indebtedness, interest expense and scheduled principal payments on debt, expected distributions to limited partners and shareholders and recurring capital expenditures. These expenses, as well as the amount of recurring capital expenditures that the Company incurs,we incur, will vary from year to year, in some cases significantly. For 2005 the Company expects2008, we expect to incur approximately $8.2costs totaling $7 million of coststo $9 million for recurring capital expenditures. The Company expectsIn addition, our scheduled principal payments on debt over the balance of 2008 are approximately $11.5 million and scheduled principal payments in 2009 are approximately $94.4 million.  We expect to meet itsour short-term liquidity needs through cash generated from operations and, if necessary, from borrowings under itsour revolving credit facility.

 

The Company’sOur long-term liquidity needs consist primarily of funds necessary to pay for development of new facilities, redevelopment of operating facilities, non-recurring capital expenditures, acquisitions of facilities and repayment of indebtedness at maturity. In particular, the Company intendswe intend to actively pursue the acquisition of additional facilities, which will require additional capital. The Company doesWhile these capital investments are elective by their nature, we do not expect that itwe will have sufficient funds on hand to cover these long-term cash requirements. The Company

47


investments. We will have to satisfy these needs through either additional borrowings, including borrowings under itsour revolving credit facility, sales of common or preferred shares and/or cash generated through facility dispositions and joint venture transactions.

 

The Company believesWe believe that, as a publicly traded REIT, itwe will have access to multiple sources of capital to fund long-term liquidity requirements, including the incurrence of additional debt and the issuance of additional equity. However, as a new public company, the Companywe cannot assureprovide any assurance that this will be the case. The Company’sOur ability to incur additional debt will be dependent on a number of factors, including itsour degree of leverage, the value of itsour unencumbered assets and borrowing restrictions that may be imposed by lenders. The Company’sOur ability to access the equity capital markets will be dependent on a number of factors as well, including general market conditions for REITs and market perceptions about the Company.us.

 

Other Material Changes in Financial Position

 

 

December 31,

 

Increase

 

 

 

2007

 

2006

 

(decrease)

 

 

 

(in thousands)

 

Selected Assets

 

 

 

 

 

 

 

Storage facilities — net

 

$

1,647,118

 

$

1,566,815

 

$

80,303

 

Cash and cash equivalents

 

$

4,517

 

$

19,716

 

$

(15,199

)

Other assets

 

$

14,270

 

$

6,475

 

$

7,795

 

 

 

 

 

 

 

 

 

Selected Liabilities

 

 

 

 

 

 

 

Revolving credit facility

 

$

219,000

 

$

90,500

 

$

128,500

 

Secured term loan

 

$

47,444

 

$

-

 

$

47,444

 

Distributions payable

 

$

11,300

 

$

18,197

 

$

(6,897

)

Storage facilities increased $80.3 million, cash and cash equivalents decreased $15.2 million, our revolving credit facility increased $128.5 million and the secured term loan increased $47.4 million primarily as a result of the 2007 Acquisitions.  The change in other assets is primarily attributable to intangible assets assumed in conjunction with the 2007 acquisitions, which had a net carrying value of $4.6 million at December 31, 2007, as well as an increase in prepaid expenses, which is related to the timing of certain expenditures.  The change in the revolving credit facility and secured term loan is also attributable to the repayment of multiple mortgage notes during 2007.  Distributions payable decreased as a result of a board approved dividend decrease from $0.29 per share in the third quarter of 2007 to $0.18 per share in the fourth quarter of 2007.

48


Contractual Obligations

 

The following table summarizes our known contractual obligations as of December 31, 2004 (dollars in2007 (in thousands):

 

   Payments Due by Period

Contractual Obligations

  Total
  Less Than 1
Year
  1-3 Years
  3-5
Years
  More Than 5
Years

Loans Payable

  $380,496  $2,352  $114,116  $97,800  $166,228

Contractual Capital Lease Obligations

   156   85   71   —     —  

Ground Leases and Third Party Office Lease

   837   169   298   126   244

Related Party Office Lease

   3,359   262   632   663   1,802

Employment Contracts

   3,117   1,100   2,017   —     —  
   
  
  
  
  

Total

  $387,965  $3,968  $117,134  $98,589  $168,274
   
  
  
  
  

 

 

Total

 

2008

 

2009

 

2010

 

2011

 

2012

 

2013 and thereafter

 

Mortgage loans and notes payable (a)

 

$

559,916

 

$

11,541

 

$

94,425

 

$

112,497

 

$

88,180

 

$

162,347

 

$

90,926

 

Revolving credit facility, unsecured term loan and secured term loan

 

438,900

 

—

 

438,900

 

—

 

—

 

—

 

—

 

Interest payments (b)

 

169,148

 

59,044

 

50,727

 

22,620

 

14,547

 

10,838

 

11,372

 

Ground leases and third party office lease

 

2,625

 

537

 

434

 

428

 

428

 

387

 

411

 

Related party office leases

 

3,322

 

468

 

453

 

453

 

475

 

475

 

998

 

Software contracts

 

700

 

350

 

350

 

—

 

—

 

—

 

—

 

Employment contracts

 

1,363

 

775

 

588

 

—

 

—

 

—

 

—

 

 

 

$

1,175,974

 

$

72,715

 

$

585,877

 

$

135,998

 

$

103,630

 

$

174,047

 

$

103,707

 

(a) Amounts do not include unamortized discounts/premiums.

 

The Company expects(b) Interest on variable rate debt calculated using LIBOR of 5.03%.

We expect that the contractual obligations owed in 20052008 will be satisfied outby a combination of cash generated from operations and if necessary,from draws underon the Company’s line of credit.revolving credit facility.

 

The Company doesOff-Balance Sheet Arrangements

We do not currently have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on its financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.arrangements.

 

See Item 7A for a discussion of the impact of inflation on the Company.ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

The Company’s future income, cash flows and fair values relevant to financial instruments depend upon prevailing interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates.

 

Market Risk

Our investment policy relating to cash and cash equivalents is to preserve principal and liquidity while maximizing the return through investment of available funds.  We did not hold any auction rate securities at December 31, 2006 or December 31, 2007.

Effect of Changes in Interest Rates on our Outstanding Debt

 

The analysis below presents the sensitivity of the market value of our financial instruments to selected changes in market rates.  The range of changes chosen reflects our view of changes which are reasonably possible over a one—year period.  Market values are the present value of projected future cash flows based on the market rates chosen.

Our financial instruments consist of both fixed and variable rate debt.  As of December 31, 2004, the Company had approximately $380.52007, our consolidated debt consisted of $556.4 million ofin fixed rate loans payable and variable rate loans totaling $471.1 million, consisting of $219.0 million borrowings under our variable rate revolving credit facility, $200.0 million in a variable rate unsecured term loan and $52.1 million in a variable rate secured loans.  All financial instruments were entered into for other than trading purposes and the net market value of these financial instruments is referred to as the net financial position.  Changes in interest rates have different impacts on the fixed and variable rate portions of our debt outstanding.portfolio.  A change in the interest rates on the fixed rateportion of the debt generallyportfolio impacts the fair market value of our debtnet financial instrument position, but it has no impact on interest incurred or cash flow. To determineflows.  A

49


change in interest rates on the fair value, the fixed rate debt is discounted at a rate based on an estimate of current lending rates, assuming the debt is outstanding through maturity or projected refinancing dates. At December 31, 2004 the fair valuevariable portion of the debt is estimated to be $378.6 million. A 100 basis pointportfolio impacts the interest incurred and cash flows, but does not impact the net financial instrument position.

If market rates of interest on our variable rate debt increase by 1%, the increase in annual interest rates would result in a decrease in the fair value of this fixedexpense on our variable rate debt would decrease future earnings and cash flows by approximately $4.4 million a year.  If market rates of approximately $12.7 million at December 31, 2004. A 100 basis pointinterest on our variable rate debt decrease by 1%, the decrease in interest expense on our variable rate debt would increase future earnings and cash flows by approximately $4.4 million a year.

If market rates would result in anof interest increase inby 1%, the fair value of our fixed outstanding fixed—rate mortgage debt would decrease by approximately $18.2 million.  If market rates of approximately $13.3 million at December 31, 2004.

In connection withinterest decrease by 1%, the Company’s IPO and the formation transactions, the Company repaid all of its existing outstanding variable rate debt. As a result, allfair value of our outstanding fixed—rate mortgage debt was fixed rate debt at December 31, 2004.would increase by approximately $19.1 million.

 

ITEM 8.  InflationFINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Virtually all of the Company’s customers rent units in its facilities subject to short-term, typically month-to-month, leases, which provide the Company with the ability to increase rental rates as each lease expires, thereby enabling us to seek to mitigate exposure to increased costs and expenses resulting from inflation. However, there is no assurance that the market will accept rental increases.

ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

Financial statements required by this item appear with an Index to Financial Statements and Schedules, starting on page F-1F—1 of this report.

 

ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURE

 

None.

 

ITEM 9A.CONTROLS AND PROCEDURES

ITEM 9A.  CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

AnAs of the end of the period covered by this report, we carried out an evaluation, was performed under the supervision and with the participation of our management, including ourthe Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e)Rules 13a—15(e) and 15(d)—15(e) under the Securities and Exchange Act of 1934, as amended) as of the end of the period covered by this report.amended, (the “Exchange Act”)). Based on that evaluation, the Chief Executive OfficerCEO and Chief Financial Officerthe CFO have concluded that theseour disclosure controls and procedures wereare effective.

 

Changes in Internal ControlsControl Over Financial Reporting

 

During the fourth quarter, we completed the remediation of the material weaknesses in internal control relating to the requisite skills and competencies or appropriate depth of experience of our accounting department personnel to assure the preparation of accurate interim and annual financial statements on a timely basis in accordance with generally accepted accounting principles; inadequate monitoring controls and the appropriate personnel with the requisite skills and competencies to execute an adequate level of oversight to accurately account for the results of our operations, which adversely affected our ability to report our financial results in a timely and accurate manner; and our lack of robust risk assessment processes, including strategic plans, that clearly defined and communicated our goals and objectives throughout our organization identified as of December 31, 2006. There hashave been no changeother changes in our internal control over financial reportingcontrols during our most recentrecently completed fiscal quarter that hashave materially affected or isare reasonably likely to materially affect our internal control over financial reporting. However, we completed our IPOreporting or in October 2004 and, in connection with being a public company, we have begunother factors that could significantly affect internal controls subsequent to the processend of reviewing our policies and proceduresthe period covered by this report.

Management’s Report on Internal Control over Financial Reporting

Management’s report on internal control over financial reporting in anticipationis set forth on page F-2 of the requirement to comply with Section 404 of the Sarbanes-Oxley Act of 2002, for the year ending December 31, 2005.this Annual Report on Form 10-K, and is incorporated herein by reference.

 

ITEM 9B.OTHER INFORMATION

ITEM 9B.  OTHER INFORMATION

 

None.

Not applicable.

50


PART III

 

ITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

ITEM 10.  TRUSTEES AND EXECUTIVE OFFICERS

 

We have adopted a Code of Ethics, for Principal Executive Officer and Senior Financial Officers, which is available on our website atwww.u-store-it.com. www.u—store—it.com. We intend to disclose any amendment to, or a waiver from, a provision of our Code of Ethics for Principal Executive Officer and Senior Financial Officers on our website within four business days following the date of the amendment or waiver.

 

The remaining information required by this item regarding trustees, and executive officers and corporate governance is hereby incorporated by reference to the material appearing in the Proxy Statement for the Annual Shareholders Meeting to be held in 20052008 (the “Proxy Statement”) under the captions “Proposal 1: Election of Trustees,” “Executive Officers” and “Information Regarding Corporate Governance“Meetings and Committees of the Board and Committee Meetings.of Trustees.” The information required by this item regarding compliance with Section 16(a) of the Exchange Act is hereby incorporated by reference to the material appearing in the Proxy Statement under the caption “Other Matters—Matters — Section 16(a) Beneficial Ownership Reporting Compliance.”

 

ITEM 11.EXECUTIVE COMPENSATION

ITEM 11.  EXECUTIVE COMPENSATION

 

The information required by this item is hereby incorporated by reference to the material appearing in the Proxy Statement under the captions “Information Regarding Corporate Governance“Compensation Discussion and Board and Committee Meetings—Trustee Compensation,Analysis,” “Executive Compensation and Other Information,” and “Compensation Committee Interlocks and Insider Participation, Compensation Committee Report on Executive Compensation” and “Performance Graph.“Potential Payments Upon Termination or Change in Control,” “Trustee Compensation.”

 

ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDERS MATTERS

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTAND RELATED SHAREHOLDER MATTERS

 

The information regarding security ownership of certain beneficial owners and management required by this item is hereby incorporated by reference to the material appearing in the Proxy Statement under the caption “Principal Shareholders.“Security Ownership of Certain Beneficial Owners and Management.”

 

The following table sets forth certain information regarding our equity compensation plans as of December 31, 2004.2007.

 

Plan Category

  Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
  Weighted-average
exercise price of
outstanding options,
warrants and rights
  Number of securities
remaining available for
future issuance under equity
compensation plans
(excluding securities
reflected in column(a))

 

Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights

 

Weighted-average
exercise price of
outstanding options,
warrants and rights

 

Number of securities remaining
available for future issuance under
equity compensation plans
(excluding securities
reflected in column(a)

 

  (a)  (b)  (c)

 

(a)

 

(b)

 

(c)

 

Equity compensation plans approved by shareholders

  938,500  $16.00  1,905,810

 

1,916,771

(1)

$

18.95

(2)

4,318,445

 

Equity compensation plans not approved by shareholders

  —     —    —  

 

—

 

—

 

—

 

Total

  938,500  $16.00  1,905,810

 

1,916,771

 

$

18.95

 

4,318,445

 

ITEM 13.

(1)

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Excludes 172,814 shares subject to outstanding restricted share unit awards, 5,257 shares subject to outstanding deferred share unit awards, and 13,329 shares subject to deferred shares credited to the account of our Trustees in the U- Store-It Trust Deferred Trustees Plan.

(2)

This number reflects the weighted-average exercise price of outstanding options and has been calculated exclusive of outstanding restricted unit awards.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

The information required by this item is hereby incorporated by reference to the material appearing in the Proxy Statement under the caption “Certain Relationshipscaptions “Policies and Procedures Regarding Review, Approval or Ratification of Transactions With Related Transactions.Persons,” and “Transactions With Related Persons.”

 

ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

The information required by this item is hereby incorporated by reference to the material appearing in the Proxy Statement under the caption “Other Matters—Relationship withcaptions “Audit Committee Matters — Fees Paid to Our Independent Accountants.Auditor” and “Audit Committee Pre-Approval Policies and Procedures.”

 

51


PART IV

 

ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 

(a) Documents filed as part of this report:

 

1.Financial Statements.

1. Financial Statements.

 

Theresponse to this portion of Item 15 is submitted as a separate section of this report.

The response to this portion of Item 15 is submitted as a separate section of this report.

 

2.Financial Statement Schedules.

2. Financial Statement Schedules.

 

Theresponse to this portion of Item 15 is submitted as a separate section of this report.

The response to this portion of Item 15 is submitted as a separate section of this report.

 

3.Exhibits.

3. Exhibits.

 

The list of exhibits filed with this report is set forth in response to Item 15(b). The required exhibit index has been filed with the exhibits.

 

(b)Exhibits. The following documents are filed as exhibits to this report:

(b) Exhibits.  The following documents are filed as exhibits to this report:

 

Exhibit No.

  3.1

3.1*

*

Articles of Amendment and Restatement of Declaration of Trust of U-Store-It Trust, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

  3.2

3.2*

*

Amended and Restated Bylaws of U-Store-It Trust, incorporated by reference to Exhibit 3.2 to Amendment No. 23.1 to the Company’s Registration StatementCurrent Report on Form S-11, File No. 333-117848.8-K, filed on November 5, 2007.

  4.1

4.1*

*

Form of Common Share Certificate, incorporated by reference to Exhibit 4.1 to Amendment No. 3 to the Company’s Registration Statement on Form S-11, File No. 333-117848.

10.1

10.1*

*

Second Amended and Restated Agreement of Limited Partnership of U-Store-It, L.P. dated as of October 27, 2004, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

10.2

10.2*

*

Credit Agreement, dated as of September 14, 2007, by and among U-Store-It, L.P., as borrower, U-Store-It Trust, as parent, Wachovia Capital Markets, LLC, as lead arranger and book manager, Wachovia Bank, National Association as administrative agent and the financial institutions initially signatory thereto and their assignees, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on September 14, 2007.

10.3*

Form of Term Note with respect to the Credit Agreement, dated as of September 14, 2007, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on September 14, 2007.

10.4*

Form of Guaranty with respect to the Credit Agreement, dated as of September 14, 2007, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on September 14, 2007.

10.5*

Form of Pledge Agreement, with respect to the Credit Agreement, dated as of September 14, 2007, incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed on September 14, 2007.

52


10.6  *

First Amendment to Credit Agreement, dated as of June 12, 2007, by and among U-Store-It, L.P., as borrower, U-Store-It Trust, as parent, Wachovia Bank, National Association, as agent and each of the financial institutions party thereto, as lenders, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed on August 9, 2007.

10.7  *

Alternative Currency Note, dated as of June 12, 2007, executed on behalf of U-Store-It, L.P. , incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, filed on August 9, 2007.

10.8  *

Guarantor Acknowledgment, dated as of June 12, 2007, executed on behalf of U-Store-It, L.P., U-Store-It Mini Warehouse Co., and YSI Management LLC, as guarantors, incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q, filed on August 9, 2007.

10.9  *

Credit Agreement, dated as of November 21, 2006, by and among U-Store-It, L.P., as borrower, U-Store-It Trust, as parent, Wachovia Capital Markets, LLC and Keybanc Capital Markets, as joint lead arrangers, Wachovia Capital Markets, LLC, as book manager, Wachovia Bank, National Association, as administrative agent, Keybank National Association, as syndication agent, Bank of America, N.A., SunTrust Bank, and Wells Fargo Bank, National Association, each as documentation agent, and the financial institutions party thereto, as lenders, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on November 28, 2006.

10.10  *

Guaranty, dated as of November 21, 2006, executed on behalf of U-Store-It Trust, U-Store-It Mini Warehouse Co., and YSI Management LLC, as guarantors, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on November 28, 2006.

10.11  *

Form of Term Note, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on November 28, 2006.

10.12  *

Form of Revolving Note, incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on November 28, 2006.

10.13  *

Form of Swingline Note, incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed on November 28, 2006.

10.14  *

Credit Agreement, dated as of November 1, 2006, by and between U-Store-It, L.P. as borrower and Wachovia Bank, National Association as lender, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on November 7, 2006.

10.15  *

Note, dated as of November 1, 2006, executed on behalf of U-Store-It, L.P., incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on November 7, 2006.

10.16  *

Guaranty, dated as of November 1, 2006, executed on behalf of U-Store-It Trust, U- Store-It Mini Warehouse Co., and YSI Management LLC, as guarantors, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on November 7, 2006.

10.17  *

Form of Security Interest regarding fixed rate mortgage loan between YSI XX LP and TransAmerica Financial Life Insurance Company, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on November 4, 2005.

53


10.18  *

Secured Promissory Note, dated November 1, 2005 between YSI XX LP and Transamerica Financial Life Insurance Company, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on November 4, 2005.

10.19  *

Loan Agreement, dated August 4, 2005 by and between YASKY LLC and LaSalle Bank National Association, incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, filed on November 14, 2005.

10.20  *

Loan Agreement, dated July 19, 2005 by and between YSI VI LLC and Lehman Brothers Bank, FSB, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, filed on November 14, 2005.

10.21  *

Loan Agreement, dated as of October 27, 2004 by and between YSI I LLC and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, a division of Lehman Brothers Holdings Inc., incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

10.3

10.22  *

*

Loan Agreement, dated as of October 27, 2004 by and between YSI II LLC and Lehman Brothers Holdings Inc. d/b/a/Lehman Capital, a division of Lehman Brothers Holdings Inc., incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

Exhibit No.

10.23  *

10.4*

Loan Agreement, dated as of October 27, 2004 by and between YSI III LLC and Lehman Brothers Bank, FSB, incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

10.5*

10.24  *

Credit

Settlement Agreement dated as of October 27, 2004and Mutual Release, by and among U-Store-It Trust, U-Store-It, L.P., YSI Management LLC, U-Store-It Mini Warehouse Co., U-Store-It Development LLC, Dean Jernigan, Kathleen A. Weigand, Robert J. Amsdell, Barry L. Amsdell, Todd C. Amsdell, Kyle V. Amsdell, Rising Tide Development LLC, and Amsdell and Amsdell, dated August 6, 2007, incorporated by reference to Exhibit 10.1 to the several lenders from timeCompany’s Current Report on Form 8-K, filed on August 7, 2007.

10.25  *

Purchase and Sale Agreement, by and between U-Store-It, L.P. and Rising Tide Development LLC, dated August 6, 2007, incorporated by reference to time parties thereto, Lehman Brothers Inc., Wachovia Capital Markets, LLC, SunTrust Bank, LaSalle Bank National AssociationExhibit 10.2 to the Company’s Current Report on Form 8-K, filed on August 7, 2007.

10.26  *

Standstill Agreement, by and Lehman Commercial Paper Inc.,among, U-Store-It Trust, Robert J. Amsdell, Barry L. Amsdell and Todd C. Amsdell, dated August 6, 2007, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on August 7, 2007.

10.27  *

First Amendment to Lease, by and between U-Store-It, L.P. and Amsdell and Amsdell, dated August 6, 2007, amending Lease dated March 29, 2005, incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed on August 7, 2007.

10.28  *

First Amendment to Lease, by and between U-Store-It, L.P. and Amsdell and Amsdell, dated August 6, 2007, amending Lease dated December 5, 2005, incorporated by reference to Exhibit 10.5 to the Company’s Current Report on
Form 8-K, filed on November 2, 2004.August 7, 2007.

10.6*†

10.29  *

2004 Equity Incentive Plan of

First Amendment to Lease, by and between U-Store-It, Trust effective as of October 19, 2004,L.P. and Amsdell and Amsdell, dated August 6, 2007, amending Lease dated December 5, 2005, incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.August 7, 2007.

54


10.30  *

10.7*

Stock Purchase Agreement dated as of October 27, 2004

First Amendment to Lease, by and amongbetween U-Store-It, Trust, Robert J.L.P. and Amsdell Barry L.and Amsdell, Todd C. Amsdell, the Robert J. Amsdell Family Irrevocable Trust dated June 4, 1998 and the Loretta Amsdell Family Irrevocable TrustAugust 6, 2007, amending Lease dated June 4, 1998, relating to the purchase of U-Store-It Mini Warehouse Co.,December 5, 2005, incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.August 7, 2007.

10.8*

10.31  *

First Amendment to Lease, by and between U-Store-It, L.P. and Amsdell and Amsdell, dated August 6, 2007, amending Lease dated December 5, 2005, incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K, filed on August 7, 2007.

10.32  *

Option Termination Agreement, by and between U-Store-It, L.P. and Rising Tide Development LLC, dated August 6, 2007, incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K, filed on August 7, 2007.

10.33  *

Property Management Termination Agreement, by and among U-Store-It Trust, YSI Management LLC, and Rising Tide Development LLC, dated August 6, 2007, incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K, filed on August 7, 2007.

10.34  *

Marketing and Ancillary Services Termination Agreement, by and among U-Store-It Trust, U-Store-It Mini Warehouse Co., and Rising Tide Development LLC, dated August 6, 2007, incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K, filed on August 7, 2007.

10.35  *

Office Lease, dated March 29, 2005, by and between Amsdell and Amsdell and U-Store- it, L.P., incorporated by reference to Exhibit 10.41 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004, filed on March 31, 2005.

10.36  *

Lease, dated June 29, 2005 by and between Amsdell and Amsdell and U-Store-It, L.P., incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2005, filed on August 12, 2005.

10.37  *

Lease, dated June 29, 2005 by and between Amsdell and Amsdell and U-Store-It, L.P., incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2005, filed on August 12, 2005.

10.38  *

Non-Exclusive Aircraft Lease Agreement, dated July 1, 2005 by and between Aqua Sun Investments, L.L.C. and U-Store-It, L.P., incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2005, filed on August 12, 2005.

10.39  *

Marketing and Ancillary Services Agreement, dated as of October 27, 2004 by and between
U-Store-It Mini Warehouse Co. and Rising Tide Development, LLC incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K,8- K, filed on November 2, 2004.

10.9*

10.40  *

Property Management Agreement, dated as of October 27, 2004 by and between YSI Management LLC and Rising Tide Development, LLC, incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

10.10*

10.41  *

Option Agreement, dated as of October 27, 2004 by and between U-Store-It, L.P. and Rising Tide Development, LLC, incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

55


10.42  *

Agreement for Sale and Purchase dated as of April 3, 2006, by and among JPG 3595 Anderson Farm, LLC, JPG 1350 N. 1st Street, L.P., JPG 1236 Texas Street, L.P., JPG 201 N. I-35 L.P., JPG 6446 East Main, LLC, JPG 5411 West Broad, LLC, JPG 3300 Southwest LLC, JPG 5252 Nike Drive, LLC, JPG 43 Old Olden, LLC, and U-Store-It, L.P., incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed on April 24, 2006.

10.43  *†

Amended and Restated Employment Agreement, dated as of August 23, 2006, by and between U-Store-It Trust and Todd C. Amsdell, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on August 28, 2006.

10.44  *†

Amended and Restated Executive Employment Agreement, dated April 20, 2007, by and between U-Store-It Trust and Dean Jernigan, incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q, filed on May 10, 2007.

10.45  *†

Amended and Restated Executive Employment Agreement, dated April 20, 2007, by and between U-Store-It Trust and Christopher P. Marr, incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q, filed on May 10, 2007.

10.46  *†

Amended and Restated Executive Employment Agreement, dated April 20, 2007, by and between U-Store-It Trust and Timothy M. Martin, incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q, filed on May 10, 2007.

10.47  *†

Amended and Restated Executive Employment Agreement, dated April 20, 2007, by and between U-Store-It Trust and Stephen R. Nichols, incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q, filed on May 10, 2007.

10.48  *†

Amended and Restated Executive Employment Agreement, dated April 20, 2007, by and between U-Store-It Trust and Kathleen A. Weigand, incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q, filed on May 10, 2007.

10.49  †

Indemnification Agreement, dated as of January 25, 2008 by and among U-Store-It Trust, U-Store-It, L.P. and Daniel B. Hurwitz, filed herewith.

10.50  *†

Indemnification Agreement, dated as of March 22, 2007 by and among U-Store-It Trust, U-Store-It, L.P. and Marianne M. Keler, incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q, filed on May 10, 2007.

10.51  *†

Indemnification Agreement, dated as of December 11, 2006, by and among U-Store-It Trust, U-Store-It, L.P. and Timothy M. Martin, incorporated by reference to Exhibit 10.47 to the Company’s Annual Report on Form 10-K, filed on March 16, 2007.

10.52  *†

Indemnification Agreement, dated as of July 10, 2006, by and among U-Store-It Trust, U-Store-It, L.P. and Stephen R. Nichols, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on July 10, 2006.

10.53  *†

Indemnification Agreement, dated June 5, 2006 by and among U-Store-It Trust, U-Store- It, L.P. and Christopher P. Marr, incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, filed on August 8, 2006.

10.54  *†

Indemnification Agreement, dated as of April 24, 2006 by and among U-Store-It Trust, U-Store-It, L.P. and Dean Jernigan, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on April 24, 2006.

56


10.55  *†

Indemnification Agreement, dated as of February 24, 2006 by and among U-Store-It Trust, U-Store-It, L.P. and Kathleen A. Weigand, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on March 1, 2006.

10.11*

Registration Rights

10.56  *†

Indemnification Agreement, dated as of October 27, 2004 by and among U-Store-It Trust, Robert J. Amsdell, Barry L. Amsdell, Todd C. Amsdell, the Robert J. Amsdell Family Irrevocable Trust dated June 4, 1998, the Loretta Amsdell Family Irrevocable Trust dated June 4, 1998, Amsdell Holdings I, Inc., Amsdell and Amsdell and Robert J. Amsdell, Trustee, incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

10.12*†Indemnification Agreement dated as of October 27, 2004 by and among U-Store-It Trust,
U-Store-It, L.P. and Robert J. Amsdell, incorporated by reference to Exhibit 10.12 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

10.13*†

10.57  *†

Indemnification Agreement, dated as of October 27, 2004 by and among U-Store-It Trust,
U-Store-It, L.P. and Steven G. Osgood, incorporated by reference to Exhibit 10.13 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

10.14*†Indemnification Agreement dated as of October 27, 2004 by and among U-Store-It Trust,
U-Store-It, L.P. and Barry L. Amsdell, incorporated by reference to Exhibit 10.14 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

10.15*†

10.58  *†

Indemnification Agreement, dated as of October 27, 2004 by and among U-Store-It Trust,
U-Store-It, L.P. and Todd C. Amsdell, incorporated by reference to Exhibit 10.15 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

Exhibit No.

10.59  *†

10.16

*†

Indemnification Agreement, dated as of October 27, 2004 by and among U-Store-It Trust,
U-Store-It, L.P. and Tedd D. Towsley, incorporated by reference to Exhibit 10.16 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

10.17*†Indemnification Agreement dated as of October 27, 2004 by and among U-Store-It Trust,
U-Store-It, L.P. and John C. Dannemiller, incorporated by reference to Exhibit 10.17 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

10.18

10.60  *†

*†

Indemnification Agreement, dated as of October 27, 2004 by and among U-Store-It Trust,
U-Store-It, L.P. and Thomas AA. Commes, incorporated by reference to Exhibit 10.18 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

10.19

10.61  *†

*†

Indemnification Agreement, dated as of October 27, 2004 by and among U-Store-It  Trust,
U-Store-It, L.P. and David J. LaRue, incorporated by reference to Exhibit 10.19 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

10.20

10.62  *†

*†

Indemnification Agreement, dated as of October 27, 2004 by and among U-Store-It Trust,
U-Store-It, L.P. and Harold S. Haller, incorporated by reference to Exhibit 10.20 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

10.21

10.63  *†

*†

Indemnification Agreement, dated as of October 27, 2004 by and among U-Store-It Trust,
U-Store-It, L.P. and William M. Diefenderfer III, incorporated by reference to Exhibit 10.21 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

10.22

10.64  *†

*†

Modification of Noncompetition Agreement and Termination of Employment Agreement, by and between U-Store-It Trust and Robert J. Amsdell, dated August 6, 2007, incorporated by reference to Exhibit 10.12 to the Company’s Current Report on Form 8-K, filed on August 7, 2007.

10.65  *†

Modification of Noncompetition Agreement and Termination of Employment Agreement, by and between U-Store-It Trust and Todd C. Amsdell, dated August 6, 2007, incorporated by reference to Exhibit 10.13 to the Company’s Current Report on Form 8-K, filed on August 7, 2007.

10.66  *†

Modification of Noncompetition Agreement, by and between U-Store-It Trust and Barry L. Amsdell, dated August 6, 2007, incorporated by reference to Exhibit 10.14 to the Company’s Current Report on Form 8-K, filed on August 7, 2007.

10.67  *†

Noncompetition Agreement, dated as of December 11, 2006, by and between U-Store-It Trust and Timothy M. Martin, incorporated by reference to Exhibit 10.62 to the Company’s Annual Report on Form 10-K, filed on March 16, 2007.

57


10.68  *†

Noncompetition Agreement, dated as of July 10, 2006, by and between U-Store-It Trust and Stephen R. Nichols, incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed on July 10, 2006.

10.69  *†

Noncompetition Agreement, dated as of June 5, 2006, by and between U-Store-It Trust and Christopher P. Marr, incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q, filed on August 8, 2006.

10.70  *†

Noncompetition Agreement, dated as of April 24, 2006 by and between U-Store-It Trust and Dean Jernigan, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on April 24, 2006.

10.71  *†

Noncompetition Agreement, dated as of October 27, 2004 by and between U-Store-It Trust and Barry L. Amsdell, incorporated by reference to Exhibit 10.26 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

10.72  *†

Noncompetition Agreement, dated as of October 27, 2004 by and between U-Store-It Trust and Robert J. Amsdell, incorporated by reference to Exhibit 10.22 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

10.23

10.73  *†

*†

Noncompetition Agreement dated as of October 27, 2004 by and between U-Store-It Trust and Steven G. Osgood, incorporated by reference to Exhibit 10.23 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.24*†

Noncompetition Agreement, dated as of October 27, 2004 by and between U-Store-It Trust and Todd C. Amsdell, incorporated by reference to Exhibit 10.24 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

10.25

10.74  *†

*†

Noncompetition Agreement dated as

Schedule of October 27, 2004 by and betweenCompensation for Non-Employee Trustees of U-Store-It Trust, and Tedd D. Towsley,effective May 8, 2007 incorporated by reference to Exhibit 10.2510.11 to the Company’s Quarterly Report on Form 10-Q, filed on May 10, 2007.

10.75  *†

Schedule of 2008 Equity Awards for Executive Officers of U-Store-It Trust, incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.January 25, 2008.

10.26

10.76  *†

*†

Noncompetition Agreement dated as

Schedule of October 27, 2004 by2007 Annual Incentive Payouts and between2008 Base Salaries for Executive Officers of U-Store-It Trust, and Barry L. Amsdell, incorporated by reference to Exhibit 10.2699.1 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.January 25, 2008.

10.27

10.77  *†

*†

Employment Agreement dated as

Schedule of October 27, 2004 by and between2007 Equity Awards to Executive Officers of U-Store-It Trust, and Robert J. Amsdell, incorporated by reference to Exhibit 10.2799.2 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.March 28, 2007.

10.28

10.78  *†

*†

Schedule of 2007 Salaries Approved for Named Executive Officers, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed February 26, 2007.

Employment

10.79  *†

Deferred Share Agreement, dated as of October 27, 2004February 24, 2006, by and between U-Store-It Trust and Steven G. Osgood,Kathleen A. Weigand, incorporated by reference to Exhibit 10.2810.3 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.March 1, 2006.

10.29

10.80  *†

*†

Employment

Non-Qualified Share Option Agreement, dated as of October 27, 2004July 10, 2006, by and between U-Store-ItU- Store-It Trust and Todd C. Amsdell,Stephen R. Nichols, incorporated by reference to Exhibit 10.2910.5 to the Company’s Current Report on Form 8-K/A, filed on July 13, 2006.

10.81  *†

Non-Qualified Share Option Agreement, dated as of June 5, 2006, by and between U- Store-It Trust and Christopher P. Marr, incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q, filed on August 8, 2006.

58


10.82  *†

Non-Qualified Share Option Agreement, dated as of April 19, 2006, by and between U- Store-It Trust and Dean Jernigan, incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.April 24, 2006.

10.30

10.83  †

*†

Employment

Form of Restricted Share Agreement dated as of October 27, 2004 by and betweenfor Non-Employee Trustees under the U-Store-It Trust and Tedd D. Towsley,2007 Equity Incentive Plan, filed herewith.

10.84  *†

Form of Restricted Share Agreement for Non-Employee Trustees under the U-Store-It Trust 2004 Equity Incentive Plan, incorporated by reference to Exhibit 10.3010.12 to the Company’s CurrentQuarterly Report on Form 8-K,10-Q, filed on November 2, 2004.

May 10, 2007.

Exhibit No.

10.85  *†

10.31*

Purchase and Sale

Form of Nonqualified Share Option Agreement dated as of August 13, 2004 by and between Acquiport/Amsdell I Limited Partnership and Metro Storage LLC, incorporated by reference to Exhibit 10.17 to Amendment No. 1 to(Three-Year Vesting) under the Company’s Registration Statement on Form S-11, File No. 333-117848.

10.32*Amendment to Purchase and Sale Agreement dated as of September 8, 2004 by and between Acquiport/Amsdell I Limited Partnership and Metro Storage LLC, incorporated by reference to Exhibit 10.18 to Amendment No. 1 to the Company’s Registration Statement on Form S-11, File No. 333-117848.
10.33*Contribution Agreement dated as of July 30, 2004 by and between Acquiport/Amsdell I Limited Partnership and Robert J. Amsdell, as Trustee incorporated by reference to Exhibit 10.2 to Amendment No. 1 to the Company’s Registration Statement on Form S-11, File No. 333-117848.
10.34*Contribution Agreement dated as July 30, 2004 by and between Acquiport/Amsdell I Limited Partnership and Amsdell Holdings I, Inc. incorporated by reference to Exhibit 10.3 to Amendment No. 1 to the Company’s Registration Statement on Form S-11, File No. 333-117848.
10.35*Contribution Agreement dated as of July 30, 2004 by and between Acquiport/Amsdell I Limited Partnership and Amsdell and Amsdell incorporated by reference to Exhibit 10.4 to Amendment No. 1 to the Company’s Registration Statement on Form S-11, File No. 333-117848.
10.36*Agreement andU-Store-It Trust 2007 Equity Incentive Plan, of Merger and Reorganization dated as of July 30, 2004 by and between the Company and High Tide LLC incorporated by reference to Exhibit 10.5 to Amendment No. 1 to the Company’s Registration Statement on Form S-11, File No. 333-117848.
10.37*Agreement and Plan of Merger dated as of July 30, 2004 by and between the Company and Amsdell Partners, Inc. incorporated by reference to Exhibit 10.6 to Amendment No. 1 to the Company’s Registration Statement on Form S-11, File No. 333-117848.
10.38*Partnership Reorganization Agreement dated as of July 30, 2004 by and among High Tide LLC, Amsdell Partners, Inc., Amsdell Holdings I, Inc. and Acquiport/Amsdell I Limited Partnership incorporated by reference to Exhibit 10.7 to Amendment No. 1 to the Company’s Registration Statement on Form S-11, File No. 333-117848.
10.39*Purchase and Sale Agreement, dated as of March 1, 2005, by and between U-Store-It, L.P. and various partnerships and other entities affiliated with National Self Storage and The Schomac Group, Inc. named therein incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.January 25, 2008.

10.40†

10.86  *†

Form of NonQualified Share Option Agreement. (3 Year Vesting)

10.41Office Lease, dated March 29, 2005, by and between Amsdell and Amsdell and U-Store-It, L.P.
10.42Timesharing Agreement, dated October 22, 2004 by and between Amsdell Holdings I, Inc. and
U-Store-It Mini Warehouse Co.
10.43†Trustee Compensation Schedule.
10.44†Schedule of 2004 Bonuses for Named Executive Officers.
10.45†Form of NonQualifiedNon-Qualified Share Option Agreement (Deferred 3 Year Vesting).
10.46†Form of Trustee Restricted Share Agreement.
21.1*List of Subsidiaries,under the U-Store-It Trust 2004 Equity Incentive Plan, incorporated by reference to Exhibit 21.1 to Amendment No. 210.2 to the Company’s Registration StatementQuarterly Report on Form S-11, File No. 333-117848.10-Q, filed on May 10, 2007.

23.1

10.87  *†

Form of Performance-Vested Restricted Share Agreement under the U-Store-It Trust 2007 Equity Incentive Plan, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on January 25, 2008.

10.88  *†

Form of Performance-Vested Restricted Share Agreement under the U-Store-It Trust 2004 Equity Incentive Plan, incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q, filed on May 10, 2007.

10.89  *†

Form of Restricted Share Agreement under the U-Store-It Trust 2007 Equity Incentive Plan, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on January 25, 2008.

10.90  *†

Form of Restricted Share Agreement under the U-Store-It Trust 2004 Equity Incentive Plan, incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q, filed on May 10, 2007.

10.91  *†

Restricted Share Agreement, dated as of December 11, 2006, by and between U-Store-It Trust and Timothy M. Martin, incorporated by reference to Exhibit 10.88 to the Company’s Annual Report on Form 10-K, filed on March 16, 2007.

10.92  *†

Restricted Share Agreement, dated as of July 10, 2006, by and between U-Store-It Trust and Stephen R. Nichols, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed July 10, 2006.

10.93  *†

Restricted Share Agreement, dated as of June 5, 2006, by and between U-Store-It Trust and Christopher P. Marr, incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q, filed August 8, 2006.

10.94  *†

U-Store-It Trust Trustees Deferred Compensation Plan, amended and restated as of January 1, 2007, incorporated by reference to Exhibit 10.91 to the Company’s Annual Report on Form 10-K, filed March 16, 2007.

10.95  *†

U-Store-It Trust Executive Deferred Compensation Plan, amended and restated as of January 1, 2007, incorporated by reference to Exhibit 10.92 to the Company’s Annual Report on Form 10-K, filed March 16, 2007.

59


10.96  *†

U-Store-It Trust Deferred Trustees Plan, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on June 6, 2005.

10.97  *†

2007 Equity Incentive Plan of U-Store-It Trust effective as of May 8, 2007, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed on May 10, 2007.

10.98  *†

2004 Equity Incentive Plan of U-Store-It Trust effective as of October 19, 2004, incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8- K, filed on November 2, 2004.

21.1

List of Subsidiaries.

23.1

Consent of Deloitte & Touche LLP.Independent Registered Public Accounting Firm.

31.1

Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit No.

32.1

32.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*

Incorporated herein by reference as above indicated.

†

†

Denotes a management contract or compensatory plan, contract or arrangement.

 

60


(c)Financial Statement Schedules. The following documents are filed as a part of this report:SIGNATURES

 

The responsePursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this portionreport to be signed on its behalf by the undersigned, thereunto duly authorized.

U-STORE-IT TRUST

By:

/s/  Christopher P. Marr

Christopher P. Marr

Chief Financial Officer

Date: February 29, 2008

Pursuant to the requirements of Item 15 is submitted as a separate sectionthe Securities Exchange Act of 1934, this report.

report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature

Title

Date

/s/ William M. Diefenderfer III

Chairman of the Board of Trustees

February 29, 2008

William M. Diefenderfer III

/s/ Dean Jernigan

Chief Executive Officer

February 29, 2008

Dean Jernigan

(Principal Executive Officer)

/s/ Christopher P. Marr

Chief Financial Officer

February 29, 2008

Christopher P. Marr

(Principal Financial Officer)

/s/ Timothy M. Martin

Chief Accounting Officer

February 29, 2008

Timothy M. Martin

(Principal Accounting Officer)

/s/ Thomas A. Commes

Trustee

February 29, 2008

Thomas A. Commes

/s/ John C. Dannemiller

Trustee

February 29, 2008

John C. Dannemiller

/s/ Harold S. Haller

Trustee

February 29, 2008

Harold S. Haller

/s/ Daniel B. Hurwitz

Trustee

February 29, 2008

Daniel B. Hurwitz

/s/ Marianne M. Keler

Trustee

February 29, 2008

Marianne M. Keler

/s/ David J. LaRue

Trustee

February 29, 2008

David J. LaRue

61


FINANCIAL STATEMENTS
INDEX TO THE CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

 

Page No.

Consolidated and Combined Financial Statements of U-Store-It Trust (“The Company”) and Subsidiaries and Acquiport/Amsdell (“The Predecessor”(The “Company”)

Management’s Report on Internal Control Over Financial Reporting

F-2

Report of Independent Registered Public Accounting Firm

F-2

F-3

Report of Independent Registered Public Accounting Firm

F-4

Consolidated Balance Sheet for U-Store-It Trust and SubsidiariesSheets as of December 31, 20042007 and the Consolidated and Combined Balance Sheet for Acquiport/Amsdell as of December 31, 20032006

F-3

F-5

Consolidated Statement of Operations for U-Store-It Trust and Subsidiaries for the period from October 21, 2004 through December 31, 2004, and the Consolidated and Combined Statements of Operations for Acquiport/Amsdell for the period from January 1, 2004 through October 20, 2004 and for the years ended December 31, 20032007, 2006, and 20022005

F-4

F-6

Consolidated StatementStatements of Shareholders’ Equity for U-Store-It Trust and Subsidiaries for the period from October 21, 2004 through December 31, 2004, and the Consolidated and Combined Statements of Owners’ Equity (Deficit) for Acquiport/Amsdell for the period from January 1, 2004 through October 20, 2004 and for the years ended December 31, 20032007, 2006, and 20022005

F-5

F-7

Consolidated Statement of Cash Flows for U-Store-It Trust and Subsidiaries for the period October 21, 2004 through December 31, 2004 and the Consolidated and Combined Statements of Cash Flows for the Acquiport/Amsdell for the period from January 1, 2004 through October 20, 2004 and for the years ended December 31, 20032007, 2006, and 20022005

F-6

F-8

Notes to Consolidated and Combined Financial Statements

F-8

F-9

F-1


MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Under Section 404 of the Sarbanes-Oxley Act of 2002, the Company’s management is required to assess the effectiveness of the Company’s internal control over financial reporting as of the end of each fiscal year, and report on the basis of that assessment whether the Company’s internal control over financial reporting is effective.

The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that:

·                  pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and the disposition of the assets of the Company;

·                  provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that the receipts and expenditures of the Company are being made only in accordance with the authorization of the Company’s management and its Board of Trustees; and

·                  provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

There are inherent limitations in the effectiveness of any system of internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even an effective internal control system can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of an internal control system may vary over time.

Under the supervision, and with the participation, of the Company’s management, including the principal executive officer and principal financial officer, we conducted a review, evaluation and assessment of the effectiveness of our internal control over financial reporting as of December 31, 2007, based upon the Committee of Sponsoring Organizations of the Treadway Commission (COSO) criteria. In performing its assessment of the effectiveness of internal control over financial reporting, management has concluded that, as of December 31, 2007, our internal control over financial reporting was effective based on the COSO framework.

The effectiveness of our internal control over financial reporting as of December 31, 2007, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report that appears herein.

February 29, 2008

F-2


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Trustees and Shareholders of


U-Store-It Trust
Cleveland, Ohio

We have audited the internal control over financial reporting of U-Store-It Trust and subsidiaries (the “Company”), as of December 31, 2007 based on criteria established in InternalControl — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management’s report of internal control over financial reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on the criteria established in InternalControl — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2007, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the year ended December 31, 2007, and the financial statement schedule as of and for the year ended December 31, 2007 of the Company and our report dated February 29, 2008 expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/ DELOITTE & TOUCHE LLP

Cleveland, Ohio

February 29, 2008

F-3


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of
U-Store-It Trust
Cleveland, Ohio

 

We have audited the accompanying consolidated balance sheetsheets of U-Store-It Trust and subsidiaries (the “Company”) as of December 31, 20042007 and the consolidated and combined balance sheet of Acquiport/Amsdell (the “Predecessor”), as defined in Note 1, as of December 31, 2003, respectively,2006 and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the Company forthree years in the period from October 21, 2004 (commencement of operations) through December 31, 2004, and the related consolidated and combined statements of operations, owners’ equity (deficit), and cash flows of the Predecessor for the period from January 1, 2004 through October 20, 2004, and for the years ended December 31, 2003 and 2002.2007. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on thethese financial statements and financial statement schedule based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Neither the Company nor the Predecessor are required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company’s or the Predecessor’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the CompanyU-Store-It Trust and subsidiaries as of December 31, 20042007 and the consolidated and combined financial position of the Predecessor as of December 31, 2003, the results of the Company’s operations and cash flows for the period from October 21, 2004 (commencement of operations) through December 31, 2004,2006 and the results of the Predecessor’stheir operations and their cash flows for each of the three years in the period from January 1, 2004 through October 20, 2004 and for the years ended December 31, 2003 and 2002,2007, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.herein.

 

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2007, based on the criteria established in /s/ DELOITTE & TOUCHE LLPInternal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 29, 2008 expressed an unqualified opinion on the Company’s internal control over financial reporting.

 

/s/ DELOITTE & TOUCHE LLP

Cleveland, Ohio

February 29, 2008

March 30, 2005F-4


U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

CONSOLIDATED AND COMBINED BALANCE SHEETS

($ in thousands)

   THE COMPANY
December 31, 2004
  THE PREDECESSOR
December 31, 2003

ASSETS

        

Storage facilities—net

  $729,155  $395,599

Cash

   28,485   7,503

Restricted cash

   7,211   3,772

Loan procurement costs—net of amortization

   7,624   2,461

Other assets

   3,399   2,884
   
 

TOTAL ASSETS

  $775,874  $412,219
   
 

LIABILITIES AND SHAREHOLDERS’/OWNERS’ EQUITY

        

LIABILITIES

        

Loans payable

  $380,496  $271,571

Capital lease obligations

   156   374

Accounts payable and accrued expenses

   10,958   3,218

Distributions payable

   7,532   —  

Accrued management fees—related parties

   —     370

Rents received in advance

   5,835   4,552

Security deposits

   455   385
   
 

Total Liabilities

   405,432   280,470

COMMITMENTS AND CONTINGENCIES

   —     —  

MINORITY INTEREST

   11,062   —  

SHAREHOLDERS’/OWNERS’ EQUITY

        

Common shares, $.01 par value, 200,000,000 shares authorized, 37,345,162 issued and outstanding

   373   —  

Additional paid in capital

   396,662   —  

Retained deficit

   (37,430)  —  

Unearned share grant compensation

   (225)  —  

Owners’ equity

   —     131,749
   
 

Total shareholders’/owners’ equity

   359,380   131,749
   
 

TOTAL LIABILITIES AND SHAREHOLDERS’/OWNERS’ EQUITY

  $775,874  $412,219
   
 

 

 

December 31,

 

December 31,

 

 

 

2007

 

2006

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Storage facilities

 

$

1,916,396

 

$

1,771,864

 

Accumulated depreciation

 

(269,278

)

(205,049

)

 

 

1,647,118

 

1,566,815

 

Cash and cash equivalents

 

4,517

 

19,716

 

Restricted cash

 

15,818

 

14,126

 

Loan procurement costs - net of amortization

 

6,108

 

7,575

 

Other assets

 

14,270

 

6,475

 

Due from related parties

 

—

 

632

 

Total assets

 

$

1,687,831

 

$

1,615,339

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Revolving credit facility

 

$

219,000

 

$

90,500

 

Unsecured term loan

 

200,000

 

200,000

 

Secured term loan

 

47,444

 

—

 

Mortgage loans and notes payable

 

561,057

 

588,930

 

Accounts payable and accrued expenses

 

33,623

 

22,590

 

Due to related parties

 

110

 

336

 

Distributions payable

 

11,300

 

18,197

 

Deferred revenue

 

10,148

 

9,740

 

Security deposits

 

548

 

655

 

Total liabilities

 

1,083,230

 

930,948

 

 

 

 

 

 

 

Minority interests

 

48,982

 

56,898

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ Equity

 

 

 

 

 

Common shares $.01 par value, 200,000,000 shares authorized, 57,577,232 and 57,335,490 shares issued and outstanding at December 31, 2007 and December 31, 2006, respectively

 

576

 

573

 

Additional paid in capital

 

797,940

 

794,632

 

Accumulated other comprehensive loss

 

(1,664

)

—

 

Accumulated deficit

 

(241,233

)

(167,712

)

Total shareholders’ equity

 

555,619

 

627,493

 

Total liabilities and shareholders’ equity

 

$

1,687,831

 

$

1,615,339

 

 

See accompanying notes to the consolidated and combined financial statements.

F-5


U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)CONSOLIDATED STATEMENTS OF

OPERATIONS

 

CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS

($ in thousands, except per share data)

 

For the Year ended December 31,

 

  THE
COMPANY
 THE PREDECESSOR
 

 

2007

 

2006

 

2005

 

  For the Period
October 21, 2004
to December 31,
2004
 For the Period
January 1, 2004
to October 20,
2004
 Year ended
December 31,
2003
 Year ended
December 31,
2002
 

 

(Dollars and shares in thousands, except per share data)

 

REVENUES:

   

REVENUES

 

 

 

 

 

 

 

Rental income

  $21,314  $65,631  $76,898  $72,719 

 

$

211,974

 

$

195,331

 

$

135,169

 

Other property related income

   1,452   3,211   3,916   3,866 

 

16,828

 

14,816

 

10,001

 

  
 
 
 

Other - related party

 

365

 

457

 

405

 

Total revenues

   22,766   68,842   80,814   76,585 

 

229,167

 

210,604

 

145,575

 

OPERATING EXPENSES:

   

OPERATING EXPENSES

 

 

 

 

 

 

 

Property operating expenses

   9,635   26,031   28,096   26,075 

 

96,802

 

85,415

 

54,793

 

Property operating expenses - related party

 

59

 

69

 

43

 

Depreciation

   5,800   16,528   19,494   19,656 

 

70,192

 

64,079

 

39,479

 

Asset write-off

 

—

 

305

 

—

 

Lease abandonment

 

1,316

 

—

 

—

 

General and administrative

   4,254   —     —     —   

 

21,966

 

21,675

 

17,786

 

Management fees—Related party

   —     3,689   4,361   4,115 
  
 
 
 

General and administrative - related party

 

337

 

613

 

736

 

Total operating expenses

   19,689   46,248   51,951   49,846 

 

190,672

 

172,156

 

112,837

 

OPERATING INCOME

   3,077   22,594   28,863   26,739 

 

38,495

 

38,448

 

32,738

 

OTHER INCOME (EXPENSE):

   

Interest expense

   (4,428)  (19,385)  (15,128)  (15,944)

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

Interest:

 

 

 

 

 

 

 

Interest expense on loans

 

(54,108

)

(45,628

)

(31,907

)

Loan procurement amortization expense

   (240)  (5,727)  (1,015)  (1,079)

 

(1,772

)

(1,972

)

(2,045

)

Early extinguishment of debt

   (7,012)  —     —     —   

Costs incurred to acquire management company

   (22,152)  —     —     —   

Write-off of loan procurement cost due to early extinguishment of debt

 

—

 

(1,907

)

(93

)

Interest income

 

401

 

1,336

 

2,404

 

Other

   (41)  69   12   —   

 

118

 

191

 

(47

)

  
 
 
 

Total other expense

   (33,873)  (25,043)  (16,131)  (17,023)

 

(55,361

)

(47,980

)

(31,688

)

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST

   (30,796)  (2,449)  12,732   9,716 

MINORITY INTEREST

   898   —     —     —   
  
 
 
 

NET INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS

   (29,898)  (2,449)  12,732   9,716 

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE MINORITY INTERESTS

 

(16,866

)

(9,532

)

1,050

 

MINORITY INTERESTS

 

1,385

 

790

 

(71

)

INCOME (LOSS) FROM CONTINUING OPERATIONS

 

(15,481

)

(8,742

)

979

 

DISCONTINUED OPERATIONS

   

 

 

 

 

 

 

 

Income from operations

   —     —     171   312 

 

102

 

208

 

452

 

Gain on sale of storage facilities

   —     —     3,329   —   
  
 
 
 

Gain on disposition of discontinued operations

 

2,517

 

—

 

179

 

Minority interest attributable to discontinued operations

 

(215

)

(17

)

(42

)

Income from discontinued operations

   —     —     3,500   312 

 

2,404

 

191

 

589

 

NET INCOME (LOSS)

  $(29,898) $(2,449) $16,232  $10,028 

 

$

(13,077

)

$

(8,551

)

$

1,568

 

Basic and diluted earnings (loss) per share from continuing operations

 

$

(0.26

)

$

(0.15

)

$

0.02

 

Basic and diluted earnings (loss) per share from discontinued operations

 

$

0.04

 

$

—

 

$

0.02

 

Basic and diluted earnings (loss) per share

 

$

(0.22

)

$

(0.15

)

$

0.04

 

Weighted-average basic shares outstanding

 

57,497

 

57,287

 

42,120

 

Weighted-average diluted shares outstanding

 

57,497

 

57,287

 

42,203

 

  
 
 
 

 

 

 

 

 

 

 

Basic and diluted loss per share

  $(0.80) 
  
 

Weighted-average common shares outstanding— basic and fully diluted

   37,477,920  
  
 

Distributions declared per common share and unit

 

$

1.05

 

$

1.16

 

$

1.13

 

 

See accompanying notes to the consolidated and combined financial statements.

F-6


U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)

CONSOLIDATED AND COMBINED STATEMENTS OF SHAREHOLDERS’ EQUITY AND OWNERS’ EQUITY (DEFICIT)

(in thousands)

 

   Common Shares
  Additional
Paid in
Capital
  Unearned
Grant Shares
Compensation
  Retained
Deficit
  Owners’
Equity (Deficit)
  Total
 
   Number
  Amount
      

The Predecessor

                            

Balance at January 1, 2002

  —    $—    $—    $—    $—    $142,162  $142,162 

Net income

  —     —     —     —     —     10,028   10,028 

Cash contributions

  —     —     —     —     —     16,666   16,666 

Cash distributions

  —     —     —     —     —     (26,443)  (26,443)
   
  
  
 
 
 
 

Balance at December 31, 2002

  —     —     —     —     —     142,413   142,413 

Net income

  —     —     —     —     —     16,232   16,232 

Cash contributions

  —     —     —     —     —     1,788   1,788 

Cash distributions

  —     —     —     —     —     (28,684)  (28,684)
   
  
  
 
 
 
 

Balance at December 31, 2003

  —     —     —     —     —     131,749   131,749 

Net loss

  —     —     —     —     —     (2,449)  (2,449)

Contributions

  —     —     —     —     —     128,724   128,724 

Cash distributions

  —     —     —     —     —     (18,297)  (18,297)

Issuance of note receivable from owner

  —     —     —     —     —     (277,152)  (277,152)
   
  
  
 
 
 
 

Balance at October 20, 2004

  —     —     —     —     —     (37,425)  (37,425)

The Company

                            

Reclassify Predecessor owners’ deficit

  —     —     (37,961)  —     —     37,961   —   

Reclassify Predecessor owners’ deficit relative to contribution of facilities at historic cost for partnership units

  —     —     536   —     —     (536)  —   

Net proceeds from sale of common shares

  28,750   287   424,702   —     —     —     424,989 

Grant of restricted shares

  —     —     2,675   (2,675)  —     —     —   

Amortization of restricted shares

  —     —     —     2,450   —     —     2,450 

Issuance of restricted shares

  20   —     —     —     —     —     —   

Issuance of shares to former owners, property contributions

  7,409   74   (74)  —     —     —     —   

Issuance of shares to former owners, management company acquisition

  1,166   12   18,648               18,660 

Share compensation expense

  —     —     96   —     —     —     96 

Record minority interests for former owners’ continuing interests

  —     —     (11,960)  —     —     —     (11,960)

Net loss

  —     —     —     —     (29,898)  —     (29,898)

Distributions

  —     —     —     —     (7,532)  —     (7,532)
   
  
  
 
 
 
 
   37,345  $373  $396,662  $(225) $(37,430) $—    $359,380 
   
  
  
 
 
 
 

 

 

 

 

 

 

Additional

 

Accumulated

 

 

 

 

 

 

 

Common Shares

 

Paid in

 

Other Comprehensive

 

Accumulated

 

 

 

 

 

Number

 

Amount

 

Capital

 

Loss

 

Deficit

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2004

 

37,345

 

$

373

 

$

394,293

 

$

—

 

$

(37,441

) 

$

357,225

 

Net proceeds from sale of common shares

 

19,665

 

197

 

378,550

 

 

 

 

 

378,747

 

Issuance of trustee deferred shares

 

 

 

 

 

82

 

 

 

 

 

82

 

Amortization of restricted shares

 

 

 

 

 

1,734

 

 

 

 

 

1,734

 

Share compensation expense

 

 

 

 

 

510

 

 

 

 

 

510

 

Adjustment for minority interest in operating partnership

 

 

 

 

 

15,203

 

 

 

 

 

15,203

 

Net income

 

 

 

 

 

 

 

 

 

1,568

 

1,568

 

Accretion of operating partnership units

 

 

 

 

 

 

 

 

 

(2,976

) 

(2,976

)

Distributions

 

 

 

 

 

 

 

 

 

(53,624

) 

(53,624

)

Balance at December 31, 2005

 

57,010

 

$

570

 

$

790,372

 

$

—

 

$

(92,473

) 

$

698,469

 

Issuance of restricted shares

 

139

 

1

 

 

 

 

 

 

 

1

 

Proceeds from option exercise

 

186

 

2

 

2,985

 

 

 

 

 

2,987

 

Amortization of restricted shares

 

 

 

 

 

649

 

 

 

 

 

649

 

Share compensation expense

 

 

 

 

 

444

 

 

 

 

 

444

 

Issuance of trustee deferred shares

 

 

 

 

 

176

 

 

 

 

 

176

 

Adjustment for minority interest in operating partnership

 

 

 

 

 

6

 

 

 

 

 

6

 

Net loss

 

 

 

 

 

 

 

 

 

(8,551

) 

(8,551

)

Distributions

 

 

 

 

 

 

 

 

 

(66,688

) 

(66,688

)

Balance at December 31, 2006

 

57,335

 

$

573

 

$

794,632

 

$

—

 

$

(167,712

) 

$

627,493

 

Issuance of restricted shares

 

123

 

2

 

 

 

 

 

 

 

2

 

Conversion from units to shares

 

119

 

1

 

 

 

 

 

 

 

1

 

Amortization of restricted shares

 

 

 

 

 

972

 

 

 

 

 

972

 

Share compensation expense

 

 

 

 

 

867

 

 

 

 

 

867

 

Adjustment for minority interest in operating partnership

 

 

 

 

 

1,469

 

 

 

 

 

1,469

 

Comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

(13,077

) 

(13,077

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on interest rate swap

 

 

 

 

 

 

 

(1,545

)

 

 

(1,545

)

Unrealized loss on foreign currency translation

 

 

 

 

 

 

 

(119

)

 

 

(119

)

Total comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(14,741

)

Distributions

 

 

 

 

 

 

 

 

 

(60,444

) 

(60,444

)

Balance at December 31, 2007

 

57,577

 

$

576

 

$

797,940

 

$

(1,664

)

$

(241,233

) 

$

555,619

 

 

See accompanying notes to the consolidated and combined financial statements.

F-7


U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)

CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

($ in thousands)

  THE COMPANY
  THE PREDECESSOR
 
  For the Period
October 21, 2004 to
December 31, 2004
  For the Period
January 1, 2004 to
October 20, 2004
  Year ended
December 31, 2003
  Year ended
December 31, 2002
 

CASH FLOWS FROM OPERATING ACTIVITIES:

                

Net income (loss)

 $(29,898) $(2,449) $16,232  $10,028 

Adjustments to reconcile net income (loss) to net cash provided by operating activities

                

Depreciation and amortization

  6,040   22,255   20,716   20,936 

Early extinguishment of debt

  7,012   —     —     —   

Share compensation expense

  2,546   —     —     —   

Costs incurred to acquire management company

  22,152   —     —     —   

Minority interest in net loss of subsidiaries

  (898)  —     —     —   

Gain on sales of storage facilities

  —     —     (3,329)  —   

Changes in other operating accounts:

                

Other assets

  3,021   118   657   (33)

Accounts payable and accrued expenses

  (1,978)  5,664   (205)  602 

Other liabilities

  1,418   (65)  156   109 
  
 
 
 

Net cash provided by operating activities

  9,415   25,523   34,227   31,642 

CASH FLOWS FROM INVESTING ACTIVITIES:

                

Additions and improvements to storage facilities

  (224,976)  (2,865)  (8,808)  (33,319)

Acquisition of management company, net

  (3,492)  —     —     —   

Disposals of storage facilities

  —     583   —     —   

Net proceeds from sales of storage facilities

  —     —     8,068   —   

Increase in restricted cash

  (607)  (2,832)  (1,767)  107 
  
 
 
 

Net cash used in investing activities

  (229,075)  (5,114)  (2,507)  (33,212)

CASH FLOWS FROM FINANCING ACTIVITIES:

                

Proceeds from sale of common shares

  424,989   —     —     —   

Proceeds from:

                

Loans payable

  270,000   424,500   3,934   30,392 

Notes payable—related parties

  —     3,961   —     —   

Principal payments on:

                

Loans payable

  (437,849)  (147,725)  (2,093)  (21,040)

Notes payable—related parties

  (1,600)  (2,361)  —     —   

Capital lease obligations

  (21)  (197)  (309)  (233)

Cash contributions from owners

  —     108   1,788   16,666 

Loan made to owners

  —     (277,152)  —     —   

Cash distributions to owners

  —     (18,297)  (28,684)  (26,443)

Pre-payment penalty on debt extinguishment

  (887)  —     —     —   

Loan procurement costs

  (8,554)  (8,682)  (365)  (160)
  
 
 
 

Net cash provided by (used in) financing activities

  246,078   (25,845)  (25,729)  (818)
  
 
 
 

NET INCREASE (DECREASE) IN CASH

  26,418   (5,436)  5,991   (2,388)

CASH—Beginning of period

  2,067   7,503   1,512   3,900 
  
 
 
 

CASH—End of period

 $28,485  $2,067  $7,503  $1,512 
  
 
 
 

CASH PAID FOR INTEREST

 $9,032  $15,080  $15,648  $15,386 
  
 
 
 

CASH PAID FOR TAXES

 $25  $—    $—    $—   
  
 
 
 

(Continued)

 

 

For the year ended December 31,

 

 

 

2007

 

2006

 

2005

 

Operating Activities

 

 

 

 

 

 

 

Net income (loss)

 

$

(13,077

)

$

(8,551

)

$

1,568

 

Adjustments to reconcile net income (loss) to cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

72,218

 

66,727

 

42,174

 

Asset write-off

 

—

 

305

 

—

 

Lease abandonment charge

 

1,316

 

—

 

—

 

Gain on disposition of discontinued operations

 

(2,311

)

—

 

—

 

Equity compensation expense

 

1,840

 

1,272

 

2,244

 

Accretion of fair market value of debt

 

(367

)

(692

)

(378

)

Early extinguishment of debt

 

—

 

1,907

 

93

 

Minority interests

 

(995

)

(773

)

113

 

Gain on sale of assets

 

—

 

—

 

(179

)

Changes in other operating accounts:

 

 

 

 

 

 

 

Other assets

 

(2,756

)

(350

)

(2,674

)

Accounts payable and accrued expenses

 

6,660

 

5,733

 

3,187

 

Other liabilities

 

346

 

(1,011

)

(42

)

Net cash provided by operating activities

 

$

62,874

 

$

64,567

 

$

46,106

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

Acquisitions, additions and improvements to storage facilities

 

(48,014

)

(312,352

)

(381,083

)

Acquisitions, additions and improvements to storage facilities - related party

 

(121,805

)

(37,414

)

(10,889

)

Proceeds from sales of properties

 

17,935

 

42

 

6,203

 

Proceeds from sales of marketable securities

 

—

 

114,170

 

29,825

 

Investment in marketable securities

 

—

 

(19,000

)

(124,995

)

Insurance settlements

 

—

 

1,712

 

500

 

Decrease (increase) in restricted cash

 

(1,692

)

4,795

 

(8,624

)

Net cash used in investing activities

 

$

(153,576

)

$

(248,047

)

$

(489,063

)

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

Net proceeds from sale of common shares

 

—

 

—

 

378,747

 

Proceeds from:

 

 

 

 

 

 

 

Revolving credit facility

 

156,500

 

331,000

 

—

 

Unsecured Term Loan

 

—

 

200,000

 

—

 

Secured term loan

 

47,444

 

—

 

—

 

Mortgage loans and notes payable

 

4,651

 

—

 

409,257

 

Short-term financing

 

—

 

80,000

 

—

 

Principal payments on:

 

 

 

 

 

 

 

Revolving credit facility

 

(28,000

)

(240,500

)

—

 

Mortgage loans and notes payable

 

(32,157

)

(114,111

)

(219,875

)

Short term financing

 

—

 

(80,000

)

—

 

Capital lease obligations

 

—

 

(39

)

(100

)

Distributions paid to shareholders

 

(66,816

)

(66,623

)

(44,532

)

Distributions paid to minority partners

 

(5,975

)

(6,017

)

(2,349

)

Loan procurement costs

 

(144

)

(2,398

)

(4,691

)

Proceeds from exercise of stock options

 

—

 

2,985

 

—

 

Net cash from (used in) financing activities

 

$

75,503

 

$

104,297

 

$

516,547

 

 

 

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

(15,199

)

(79,183

)

73,500

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of year

 

19,716

 

98,899

 

25,399

 

Cash and cash equivalents at end of year

 

$

4,517

 

19,716

 

$

98,899

 

 

 

 

 

 

 

 

 

Supplemental Cash Flow Information

 

 

 

 

 

 

 

Cash paid for interest, net of interest capitalized

 

$

53,952

 

$

45,461

 

$

33,893

 

Supplemental disclosure of noncash activities:

 

 

 

 

 

 

 

Acquisations of facilities:

 

 

 

 

 

 

 

Issuance of OP units

 

—

 

—

 

(68,594

)

Mortgage loans

 

—

 

(34,451

)

(99,782

)

Other, net

 

—

 

(2,032

)

(1,660

)

 

See accompanying notes to the consolidated and combined financial statements.

F-8


U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)

CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS—(Continued)

($ in thousands)

  THE COMPANY
  THE PREDECESSOR
 
  For the Period
October 21, 2004 to
December 31, 2004
  For the Period
January 1, 2004 to
October 20, 2004
  Year ended
December 31, 2003
 Year ended
December 31, 2002
 

Supplemental disclosure of noncash activities:

               

Contribution of facilities from prior owners for operating partnership units:

               

Investment in real estate

 $10,762  $—    $—   $—   

Mortgage loans

  (10,365)  —     —    —   

Other, net

  139   —     —    —   
  
 
 
 

Net assets acquired

  536   —     —    —   
  
 
 
 

Acquisition of management company from prior owners:

               

Assets acquired (excluding cash of $730)

  659   —     —    —   

Liabilities assumed

  (536)  —     —    —   
  
 
 
 

Net assets acquired

  123   —     —    —   
  
 
 
 

Acquisition of 46 facilities:

               

Investment in real estate

  223,437   —     —    —   

Mortgage loans

  (90,000)  —     —    —   

Other, net

  (4,526)  —     —    —   
  
 
 
 

Net assets acquired

  128,911   —     —    —   
  
 
 
 

Acquisition of three facilities:

               

Investment in real estate

  —     —     —    19,497 

Other, net

  —     —     —    (70)
  
 
 
 

Net assets acquired

  —     —     —    19,427 
  
 
 
 

Acquisition of four facilities:

               

Investment in real estate, from related party

  —     —     —    19,110 

Mortgage loans, assumed

  —     —     —    (19,110)
  
 
 
 

Net assets acquired

  —     —     —    —   
  
 
 
 

Acquisition of partnership interests:

               

Investment in real estate

  —     128,672   —    —   

Contribution related to step-up in basis

  —     (128,672)  —    —   
  
 
 
 

Acquisition of minority interest:

               

Investment in real estate

  —     —     —    577 

Elimination of receivable

  —     —     —    (125)
  
 
 
 

Cash paid to acquire the facilities

  —     —     —    452 
  
 
 
 

Reclassification of owners’ deficit to additional paid in capital

  37,961   —     —    —   

Accrual for transfer of deferred financing fee assumed at merger date

  (2,547)  2,547   —    —   

Record minority interest for limited partnership units in the operating partnership by reclassifying from additional paid in capital

  11,960   —     —    —   

Items capitalized for funds yet to be disbursed

  (427)  —     —    —   

Accrual for offering costs (reclassified to shareholders equity)

  (3,668)  3,668   —    —   

Accrual for distributions

  7,532   —     —    —   

Grant of deferred share units and restricted shares to management executives and trustees

  2,675   —     —    —   
  
 
 
 

See accompanying notes to the consolidated and combined financial statements.

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

 

1.  ORGANIZATION AND NATURE OF OPERATIONS

 

U-Store-It Trust, (“we”a Maryland real estate investment trust (collectively with its subsidiaries, “we” or the “Company”), is a self-administered and self-managed real estate investment trust, or REIT, active in acquiring, developing and operating self-storage properties for business and personal use under month-to-month leases.  As of December 31, 2007, the Company owned 409 self-storage facilities (collectively, the “Properties”) containing an aggregate of approximately 26.1 million rentable square feet.  The Properties are located in 26 states throughout the United States. All references to building square footage, occupancy percentage, and the number of buildings are unaudited.

The Company owns substantially all of its assets through U-Store-It, L.P., a Delaware limited partnership (the “Operating Partnership”).  The Company is the sole general partner of the Operating Partnership and, as of December 31, 2007, owned a 91.9% interest in the Operating Partnership.  The Company manages its assets through YSI Management, LLC (the “Management Company”), a wholly owned subsidiary of the Operating Partnership.  In addition to managing the Properties, the Management Company managed approximately 1.1 million rentable square feet related to facilities owned by related partiesp as of December 31, 2007. The Company owns 100% of U-Store-It Mini Warehouse Co. (the “TRS”), which it has elected to treat as a taxable REIT subsidiary. In general, a taxable REIT subsidiary may perform non-customary services for tenants, hold assets that the Company cannot hold directly and generally may engage in any real estate or non-real estate related business.

The Company was formed in July 2004 to succeed the self-storage operations owned directly and indirectly by Robert J. Amsdell, Barry L. Amsdell, Todd C. Amsdell and their affiliated entities and related family trusts (which entities and trusts are referred to herein as the(the “Amsdell Entities”). The Company commenced operations on October 21, 2004, after completing the mergers of Amsdell Partners, Inc. and High Tide LLC with and into the Company. The Company subsequently completed an initial public offering (“IPO”) of its common shares on October 27, 2004 concurrently with the consummation of various formation transactions. The IPO consisted of the sale of an aggregate of 28,750,000 common shares (including 3,750,000 shares pursuant to the exercise of the underwriters’ over-allotment option) at an offering price of $16.00 per share, generating gross proceeds of $460.0 million. The IPO resulted in net proceeds to the Company, after deducting underwriting discount and commission,commissions, financial advisory fees and expenses of the IPO, of approximately $425.0 million. As

In October 2005, the Company completed a resultfollow-on public offering, pursuant to which it sold an aggregate of 19,665,000 common shares (including 2,565,000 shares pursuant to the exercise of the mergers, the IPO and the formation transactions, the Company owns the sole general partner interestunderwriters’ option) at an offering price of $20.35 per share, for gross proceeds of $400.2 million. The offering resulted in U-Store-It, L.P., a Delaware limited partnership that was formed in July 1996 under the name Acquiport/Amsdell I Limited Partnership and was renamed U-Store-It, L.P. upon the completion of the IPO (the “Operating Partnership”), and approximately 97% of the aggregate partnership interests in the Operating Partnership at December 31, 2004. The Company is a real estate company engaged in the business of owning, acquiring, developing and operating self-storage properties for business and personal use under month-to-month leases and is operated as a real estate investment trust (“REIT”), for federal income tax purposes. All of the Company’s assets are held by, and operations are conducted through, the Operating Partnership and its subsidiaries.

The financial statements covered in this report represent the results of operations and financial condition of Acquiport/Amsdell (the “Predecessor”) priornet proceeds to the IPO and the formation transactions and of the Company, after October 21, 2004. The Predecessor was not a legal entity but rather a combination of certain real estate entitiesdeducting underwriting discount and operations as described below. Concurrent with the consummationcommissions and expenses of the IPO, the Company and the Operating Partnership, together with the partners and membersoffering, of affiliated partnerships and limited liability companies of the Predecessor and other parties which held direct or indirect ownership interests in the properties (the “Participants”), completed certain formation transactions (the “Formation Transactions”). The Formation Transactions were designed to (i) continue the operations of the Operating Partnership, (ii) acquire the management rights with respect to the Predecessor’s existing facilities and three facilities contributed by entities owned by Robert J. Amsdell and Barry L. Amsdell; (iii) enable the Company to raise necessary capital for the Operating Partnership to repay a portion of the existing term loan provided by an affiliate of Lehman Brothers and other indebtedness related to the three facilities acquired by the Operating Partnership from entities owned by Robert J. Amsdell and Barry L. Amsdell and on four of the other existing facilities; (iv) enable the Company to qualify as a REIT for federal income tax purposes commencing the day prior to the closing of the IPO; and (v) permit such entities owned by Robert J. Amsdell and Barry L. Amsdell to defer the recognition of gain related to the three facilities that were contributed to the Operating Partnership. These formation transactions are described in detail in the Company’s Registration Statement on Form S-11 filed with the Securities and Exchange Commission (the “SEC”) in connection with the IPO.

The Predecessor was comprised of the following entities: the Operating Partnership (formerly known as Acquiport/Amsdell I Limited Partnership, which is sometimes referred to herein as “Acquiport I”) and its consolidated subsidiaries, Acquiport/Amsdell III, LLC (“Acquiport III”), Acquiport IV, LLC, Acquiport V, LLC, Acquiport VI, LLC, Acquiport VII, LLC, and USI II, LLC (“USI II”). The Predecessor also included three additional facilities, Lakewood, OH, Lake Worth, FL, and Vero Beach I, FL, which were contributed to the Operating Partnership in connection with the IPO. All intercompany balances and transactions are eliminated in

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)

consolidation and combination. At December 31, 2004 and 2003, the Company and the Predecessor owned 201 and 155 self-storage facilities, respectively.

In connection with the IPO, Amsdell Partners, Inc., the prior corporate general partner of the Operating Partnership, and High Tide LLC, which previously owned substantially all of the limited partner interests in the Operating Partnership, merged with and into the Company, with the Participants receiving approximately 8.6 million common shares of the Company. Additionally, the Participants exchanged their interests in U-Store-It Mini Warehouse Co. (the prior manager of the self-storage facilities), for approximately $23.0 million. Concurrently with the purchase of U-Store-It Mini Warehouse Co., the Company contributed its ownership interest in U-Store-It Mini Warehouse Co. and its membership interests in YSI Management LLC to the Operating Partnership for units. The mergers of Amsdell Partners, Inc. and High Tide LLC with and into the Company were accounted for as mergers of entities under common control and accordingly, were recorded by the Company at the transferors’ historical cost basis. The purchase of the management company has been determined to not represent the purchase of a “business” for purposes of applying Financial Accounting Standards Board Statement (“FASB”) No. 141, “Business Combinations” and is recorded as a contract termination charge, net of assets and liabilities assumed of $0.8$378.7 million.

 

In May 2004, an entity (High Tide LLC) controlled by members of the Amsdell family acquired the only outside partnership interests in Acquiport I, which were held by partners that were not affiliated with the Amsdell family. High Tide LLC obtained an approximate $277.0 million loan from Acquiport I (the “High Tide Note”) to fund its purchase of approximately 71.8% of these partnership interests. As discussed in the following paragraph, this loan was funded with proceeds of the term loan. For financial statement purposes, the Acquiport I loan receivable from High Tide LLC was presented as a component of equity. In addition, Acquiport I applied push down accounting relating to this change in ownership, resulting in a step-up in basis of partnership assets of approximately $129.0 million, which is recorded to storage facilities. This step-up in basis was recorded in accordance with the Predecessor’s policy relating to purchase price allocations. The High Tide Note was settled upon completion of the Company’s IPO.

One of the partners’ limited partnership interests purchased by High Tide LLC was purchased from an institutional investment fund and the other was purchased from an entity controlled by an officer of Acquiport/Amsdell (Square Foot Companies, LLC, which owned a 0.61% interest in Acquiport I). Acquiport I provided funding for the acquisition to High Tide LLC utilizing proceeds of a $424.5 million term loan that Acquiport I obtained from an affiliate of Lehman Brothers. The remaining proceeds of this term loan were used to pay off Acquiport I’s revolving line of credit of approximately $142.0 million and to pay financing costs. The loan was repaid in full on October 27, 2004 with a portion of the proceeds from the IPO. As a result of this purchase, the Amsdell family ownership of Acquiport I increased from approximately 28% to 100%, leaving no unaffiliated partners.

Through the Operating Partnership, the Company owns and manages 201 storage facilities as of December 31, 2004.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Consolidation and Combination—

The accompanying consolidated financial statements include all of the accounts of the Company, the Operating Partnership and wholly ownedits majority-owned and/or controlled subsidiaries.  The mergersportion of Amsdell Partners, Inc. and High Tide LLC with and intothese entities not owned by the Company is presented as minority interest as of and during the property interests contributed to the Operating Partnership by the Predecessor have been accounted for as a reorganization of entities under common control and accordingly were recorded at the Predecessor’s historical cost basis. Prior to the combination, the Company had no significant operations; therefore, the combined operations for the period

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)

prior to October 21, 2004 represent the operations of the Predecessor. The combination did not require any material adjustments to conform the accounting policies of the separate entities.periods consolidated.  All significant intercompany balancesaccounts and transactions have been eliminated in the consolidated and combinedconsolidation.

Estimates

The preparation of financial statements. The real estate entities includedstatements in conformity with accounting principles generally accepted in the accompanying consolidatedUnited States of America requires management to make estimates and combinedassumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the Predecessor have been consolidated and combined on the basis that, for the periods presented, such entities were under common management.reporting period. Actual results could differ from those estimates.

 

Operating Segment—The Company has one reportable operating segment; it owns, operates, develops, and manages storage facilities. The storage facilities are located in major metropolitan areas and have numerous tenants per facility. No single tenant represents 10% or more of our revenues. The facilities in Florida, Illinois and California provided 28.0%, 11.4% and 10.3%, respectively, of total revenues for the period from October 21, 2004 through December 31, 2004. The Company uses net operating income as a measure of operating performance at each of the facilities and for all of its facilities in the aggregate.

Storage Facilities—

Storage facilities are recordedcarried at historical cost less accumulated depreciation. Depreciation ondepreciation and impairment losses.  The cost of storage facilities reflects their purchase price or development cost.  Costs incurred for the buildingsacquisition and equipment is recorded onrenovation of a straight-line basisstorage facility are capitalized to the Company’s investment in that property.  Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives, which range from five to forty years. Expenditures for significant renovations or improvements that extend the useful life of assets are capitalized. Repairs and maintenance costs are expensed as incurred.lives.

 

Upon acquisition of a facility, we have allocatedF-9


Purchase Price Allocation

When facilities are acquired, the purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed based on estimated fair values. Acquisitions of portfoliosWhen a portfolio of facilities areis 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, buildingbuildings and improvements and estimates of depreciated replacement cost of equipment.

In allocating the purchase price, the Company determines whether the acquisitions includeacquisition includes intangible assets or liabilities. Substantially all of the leases in place at acquired propertiesfacilities 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 aboveabove- or below marketbelow-market lease intangibles.  The Company also considers whether in-place, at market leases represent an intangible asset. Based on the Company’s experience, leases of this nature generally re-let in less than 30 days and lease-up costs are minimal. Accordingly, to date no intangible asset for in-place, at market leases has been recorded. Additionally, toTo 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 (less than one year).frequent. The Company recorded a $6.8 million intangible asset to recognize the value of in-place leases related to its acquisitions in 2007.

 

Depreciation and Amortization

The costs of self-storage facilities and improvements are depreciated using the straight-line method based on useful lives ranging from five to 40 years.

Impairment of Long-Lived Assets

We evaluate long-lived assets which are held for use for impairment when events and circumstances indicate that there may be an impairment. We compare theThe carrying value of these long-lived assets is 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.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. NoApproximately $2.3 million and $0.4 million of impairment charges have been recognized in the periods reported herein.were recorded during 2005 and 2007, respectively.

 

Long-Lived Assets Held for Sale

We consider 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 in 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.

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)

 

Typically these criteria are all met when the relevant asset is 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 conditions or criteria are not satisfied until the actual closing of the transactiontransaction; 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.

 

During 2003,2007, the PredecessorCompany sold five of itsthree storage facilities in South Carolina and two additional facilities in Arizona. No facilities were sold during 2006 while four storage facilities located throughout the United States.in Ohio were sold during 2005. These sales have been accounted for as discontinued operations and, accordingly, the accompanying financial statements and notes reflect the results of operations of the storage facilities sold as discontinued operations (see Note 8)10). It is our policy to allocate interest expense to facilities disposed of by sale based on the principal amount of the debt that will or could be paid off upon sale.

 

Cash and Cash Equivalents

Cash and cash equivalents are highly-liquid investments with original maturities of three months or less.  The Company maintains cash equivalents in financial institutions in excess of insured limits, but believes this risk is mitigated by only investing in or through major financial institutions.

Restricted Cash—

Restricted cash consists of purchase deposits and cash deposits required for debt service requirements, capital replacement, purchase deposits, and expense reserves in connection with the requirements of our loan agreements.

 

F-10


Loan Procurement Costs—

Loan procurement costs related to borrowings consist of $8.4$10.3 million and $6.1$10.1 million at December 31, 20042007 and 2003, respectively. These amounts2006, respectively and are reported net of accumulated amortization of $0.8$4.2 million and $3.6$2.5 million as of December 31, 20042007 and 2003,2006, respectively. The costs are amortized over the life of the related debt using the effective interest rate method and reported as loan procurement amortization expense.

Marketable Securities

The Company accounts for its investments in debt and equity securities according to the provisions of SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, which requires securities classified as “available-for-sale” to be stated at fair value. Adjustments to fair value of available-for-sale securities are recorded as a component of other comprehensive income (loss).  A decline in the market value of equity securities below cost, that is deemed to be other than temporary, results in a reduction in the carrying amount to fair value.  The impairment is charged to earnings and a new cost basis for the security is established.  At December 31, 2005, we had $95.2 million in auction rate securities (“ARS”) and variable rate demand notes classified as available-for-sale securities that were all sold in 2006.  We had no realized or unrealized gains or losses related to these securities during the years ended December 31, 2007 and 2006. All income related to these investments was recorded as interest income.

 

Other Assets—

Other assets consist primarily of accounts receivable, prepaid expenses and prepaid expenses.intangible assets. Accounts receivable were $2.6 million and $3.7 million as of December 31, 2007 and 2006, respectively. The Company has recorded an allowance of approximately $0.5 million and $1.0 million, respectively, related to accounts receivable as of December 31, 2007and 2006.  The net carrying value of intangible assets as of December 31, 2007 and 2006 was $4.6 million and $0.0, respectively.

 

Environmental Costs—

Our policypractice is to accrue remediation costs and other environmental expenses when it is probable that remediation and other similar activities will be required and the related costs can be reasonably estimated. All of our storage facilities have been the subject of independent Phase Iconduct or obtain environmental assessments and our policy is to have such assessments conducted on all new storage facility acquisitions. Although there can be no assurance that there is noin connection with the acquisition or development of additional facilities. Whenever the environmental contamination at our facilities, management is not aware of any contamination at anyassessment for one of our facilities indicates that individuallya facility is impacted by soil or ingroundwater contamination from prior owners/operators or other sources, we will work with our environmental consultants and where appropriate, state governmental agencies, to ensure that the aggregate would be materialfacility is either cleaned up, that no cleanup is necessary because the low level of contamination poses no significant risk to our business operations,public health or financial statements.the environment, or that the responsibility for cleanup rests with a third party.

 

Revenue Recognition—

Management has determined that all of our leases are operating leases. Rental income is receivedrecognized in accordance with the terms of the leases, which generally are month-to-month. Revenues from long-term operating leases are recognized on a straight-line basis over the term of the respective lease. The excess of rents received over amounts contractually due pursuant to the underlying leases is included in rents received in advancedeferred revenue in the accompanying consolidated and combined balance sheets and contractually due but unpaid rents are included in other assets.

 

Costs Associated with Exit or Disposal Activities

In October 2006, the Company committed to a plan to relocate its accounting, finance and information technology functions to the Philadelphia, Pennsylvania area.  As part of the relocation of these functions, the Company provided severance arrangements for certain existing employees related to those functions.  At the time the severance arrangements were entered into, the Company estimated a total expense of $470,000, of which $45,000 was paid in 2006 and the remainder was paid in 2007.

In August 2007, the Company abandoned certain office space in Cleveland, OH that was previously used for its corporate offices.  The related leases have expiration dates ranging from December 31, 2008 through December 31, 2014. Upon vacating the space, the Company entered into a sub-lease agreement with a sub-tenant to lease the majority of the space for the duration of the term.

As a result of this exit activity, the Company recognized a “Lease abandonment charge” of $1.3 million.  The charge is comprised of approximately $0.8 million of costs that represent the present value of the net cash flows associated with leases and the sub-lease agreement (“Contract Termination Costs”) and approximately $0.5 million of costs associated with the write-off of certain assets related to the abandoned space (“Other Associated Costs”).  The Contract Termination Costs of $0.8 million are presented as “Accounts payable and accrued rent” and the Other Associated Costs of $0.5 million were

F-11


accounted for as a reduction of “Storage facilities.”  The Company will amortize the Contract Termination Costs against rental expense over the remaining life of the respective leases.

Advertising Costs

The Company incurs advertising costs primarily attributable to print advertisements in telephone books. The Company recognizes the costs when the related telephone book is first published. The Company recognized $4.3 million, $4.4 million and $3.6 million in advertising expenses for the years ended 2007, 2006 and 2005, respectively.

Equity IPOOffering Costs—

Underwriting discount and commissions, financial advisory fees and IPOoffering costs are reflected as a reduction to additional paid-in capital.

 

Other Property Related Income—

Other property related income consists primarily of late fees, and administrative charges, prior to October 27, 2004. Revenues from sales of storage supplies and other ancillary revenues andrevenues.

Capitalized Interest

The Company capitalizes interest incurred that is directly associated with construction activities until the asset is placed into service. Interest is capitalized to the related costs were earned by U-Store-It Mini Warehouse Co. (the “Property Manager”) prior to October 27, 2004 and are not included in the operationsassets using a weighted-average rate of the Predecessor. Effective October 27, 2004, upon acquisition of the Property Manager, these ancillary revenuesCompany’s outstanding debt. The Company capitalized $0.1 million during 2007, $0.1 million during 2006 and costs are included in our operations, and YSI Management, LLC, a wholly owned subsidiary of the Operating Partnership, became the new property manager of the facilities.

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)did not capitalize any interest during 2005.

 

Derivative Financial Instruments—

We carry all derivatives on the balance sheet at fair value. We determineddetermine the fair value of derivatives by reference to quoted market prices. The accounting for changes in the fair value of a derivative instrument depends on whether the derivative has been designated and qualifies as part of a hedging relationship and, if so, the reason for holding it. Our use of derivative instruments has been limited to cash flow hedges of certain interest rate risks. At December 31, 2004,2007 the Company had interest rate swap agreements for notional principal amounts aggregating $75 million.  The Company had no outstanding derivative contracts.contracts at December 31, 2006.

 

Income Taxes—

The Company has elected to be taxed as a REITreal estate investment trust under Sections 856-860 of the Internal Revenue Code beginning with the period from October 21, 2004 (commencement of 1986, as amended (the “Code”), commencing with its taxable year endedoperations) through December 31, 2004.  The CompanyIn management’s opinion, the requirements to maintain these elections are being met.  Accordingly, no provision for federal income taxes has been organizedreflected in the consolidated financial statements other than for operations conducted through our taxable REIT subsidiaries.

Earnings and has operatedprofits, which determine the taxability of distributions to shareholders, differ from net income reported for financial reporting purposes due to differences in a manner that it believes has allowed itcost basis, the estimated useful lives used to qualifycompute depreciation, and the allocation of net income and loss for taxationfinancial versus tax reporting purposes.  The tax basis in the Company’s assets was $1.5 billion as a REIT under the Code commencing with the taxable year endedof December 31, 2004,2007 and the Company intends to continue to be organized and operate in this manner. As a REIT, the Company is not required to pay federal corporate income taxes on its taxable income to the extent it is currently distributed to our shareholders.

However, qualification and taxation$1.4 billion as a REIT depends upon the Company’s ability to meet the various qualification tests imposed under the Code related to annual operating results, asset diversification, distribution levels and diversity of stock ownership. Accordingly, no assurance can be given that the Company will continue to be organized or continue to operate in a manner so as to remain qualified as a REIT. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to federal income tax (including any applicable alternative minimum tax) on the Company’s taxable income at regular corporate tax rates.December 31, 2006.

 

The Company has elected to treat U-Store-It Mini Warehouse Co. as a taxable REIT subsidiary (a “TRS”). In general, a TRS may perform non-customary services for tenants, hold assets that the Company cannot hold directly and generally may engage in any real estate or non-real estate related business. A TRS is subject to corporatea 4% federal excise tax if sufficient taxable income is not distributed within prescribed time limits.  The excise tax equals 4% of the annual amount, if any, by which the sum of (a) 85% of the Company’s ordinary income and (b) 95% of the Company’s net capital gain exceeds cash distributions and certain taxes paid by the Company.  No excise tax was incurred in 2007, 2006, or 2005.

TRS’s are subject to federal and state income taxes on its taxable income at regular statutory tax rates.taxes.  The Company has provided for $0.1 million of income taxes for the period from October 27, 2004 through December 31, 2004 and is included in “other” income, andTRS recorded a net deferred tax asset of $0.1$0.5 million is included in other assets atand $0.3 million as of December 31, 2004.2007 and 2006, respectively, related to expenses which are deductible for tax purposes in future periods.

 

Each memberMinority Interests

Minority Interests include income allocated to holders of the PredecessorOperating Partnership Units (the “OP Minority Interests”). Income is treated as a partnership for federal and state income tax purposes, soallocated to the tax effectsOP Minority Interests based on their ownership percentage of the Predecessor’s operations areOperating Partnership. This ownership percentage, as well as the responsibilitytotal net assets of the partnersOperating 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 members of these entities. Accordingly, the Predecessor does not record any provision for income taxesMinority Interests in the consolidated and combined financial statements.Consolidated Balance Sheets. Due to the number of such capital transactions that occur each period, we have presented a single net effect of all such allocations for the period as the “Adjustment for Minority Interest in

 

F-12


Operating Partnership” in our Consolidated Statements of Shareholders’ Equity and Owners’ Equity (Deficit) (rather than separately allocating the minority interest for each individual capital transaction). Additionally, the Company accounts for its minority interests subject to redemption provisions under the “Disclosure Only” approach and accordingly has not adjusted the carrying value of the Company’s minority interests for changes in the fair value of the related redemption provisions.

Earnings per Share—Earnings

Basic earnings per share is calculated based on the weighted average number of shares of our common shares and deferredrestricted shares outstanding and/or vested during the period. Diluted earnings per share unitsis calculated by further adjusting for the dilutive impact of share options, unvested restricted shares and contingently issuable shares outstanding during the period. The assumed exercise of outstanding share options and the effect of the vesting of unvested restricted shares that has been granted or has been committed to be granted, allperiod using the treasury stock method, are notmethod.  The total dilutive forimpact of these items totaled approximately 22,000, 121,000 and 83,000 in 2007, 2006 and 2005, respectively, and was included in the period from October 21, 2004 through December 31, 2004.calculation of diluted earnings per share, unless the inclusion would be anti-dilutive.

 

Share Options—Based Payments

We apply the fair value method of accounting for thecontingently issued shares and share options issued under our incentive award plan at the date of consummation of our IPO.plan. 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. Additionally, certain restricted shares awarded to Robert J. Amsdell, our former Chairman and Chief Executive Officer, vested immediately upon his retirement from the Company by their terms.  Since he reached the retirement age set forth in his award during 2005, share compensation expense related to this issuance was expensed fully in 2005.

 

Estimates—Foreign Currency

The preparation of financial statements in conformity with accounting principles generally accepted inof foreign subsidiaries are translated to U.S. Dollars using the United States of America requires management to make estimates and assumptions that affect the

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)

reported amounts ofperiod-end exchange rate for assets and liabilities and an average exchange rate for each period for revenues, expenses, and capital expenditures.  The local currency is the functional currency for the Company’s foreign subsidiaries.  Translation adjustments for foreign subsidiaries are recorded as a component of accumulated other comprehensive loss in shareholders’ equity.  The Company recognizes transaction gains and losses arising from fluctuations in currency exchange rates on transactions denominated in currencies other than the functional currency in earnings as incurred.

Recent Accounting Pronouncements

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (Revised 2007), Business Combinations (“FAS 141(R)”).  FAS 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.  FAS 141(R) is effective for the Company beginning with its quarter ending March 31, 2009.  The Company is currently assessing the potential impacts, if any, on its consolidated financial statements.

In December 2007, the FASB issued Statement of contingentFinancial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements (“FAS 160”).  FAS 160 requires that ownership interests in subsidiaries held by parties other than the parent are clearly identified.  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.  FAS 160 is effective for the Company beginning with its quarter ending March 31, 2009.  The Company is currently assessing the potential impacts, if any, on its 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 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007.  The Company is in the process of evaluating the impact of SFAS No. 159 on its financial statements.

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

F-13


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 is effective in fiscal years beginning after November 15, 2007. The Company believes that the dateadoption of this standard on January 1, 2008 will not have a material effect on our consolidated financial statements.

In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 (“FIN 48”).  FIN 48 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements and prescribes a recognition threshold and measurement attribute for the reported amountsfinancial statement recognition and measurement of revenuesa tax position taken or expected to be taken in a tax return.  FIN 48 also provides guidance on description, classification, interest and expenses duringpenalties, accounting in interim periods, disclosure and transition.  FIN 48 became effective for the reporting period. Actual results could differ from those estimates.

Reclassifications—Certain prior year amounts have been reclassified to conform to current year presentation.Company on January 1, 2007.

 

Recent Accounting Pronouncements—In December, 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS No. 123-R”), which is a revision of SFAS No. 123, “Accounting for Stock-Based Compensation.” SFAS No. 123-R supersedes Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and amends SFAS No. 95, “Statement of Cash Flows.” SFAS No. 123-R requires the fair value of all share-based payments to employees to be recognized in the consolidated statement of operations. Operating Segment

The Company early adopted SFAS No. 123-Rhas one reportable operating segment; it owns, operates, develops, and has included $2.5 million of compensation expense relating to outstanding deferred shares, restricted shares and options in its 2004 statement of operations.manages storage facilities.

 

Concentration of Credit Risk

The storage facilities are located in major metropolitan and rural areas and have numerous tenants per facility. No single tenant represents 1% or more of the Company’s revenues. The facilities in Florida, California, Texas and Illinois provided total revenues of approximately 19%, 15%, 8% and 7%, respectively, for the year ended December 31, 2007.  The facilities in Florida, California, Illinois and New Jersey provided total revenues of approximately 19%, 16%, 7% and 6%, respectively for the year ended December 31, 2006.

3.  STORAGE FACILITIES

 

The following summarizes the real estate assets of the Company as of December 31, 2007 and the Predecessor as of:December 31, 2006:

 

 

December 31,

 

December 31,

 

  The Company
 The Predecessor
 

 

2007

 

2006

 

Description

  December 31,
2004
 December 31,
2003
 
  ($ in thousands) 

 

(in thousands)

 

Land

  $136,168  $51,449 

 

$

393,715

 

$

370,196

 

Buildings and improvements

   635,718   388,410 

 

1,324,168

 

1,226,690

 

Equipment

   79,742   55,322 

 

193,031

 

173,496

 

  
 

Construction in progress

 

5,482

 

1,482

 

Total

   851,628   495,181 

 

1,916,396

 

1,771,864

 

Less accumulated depreciation

   (122,473)  (99,582)

 

(269,278

)

(205,049

)

  
 

Storage facilities—net

  $729,155  $395,599 
  
 

Storage facilities — net

 

$

1,647,118

 

$

1,566,815

 

 

The carrying value of storage facilities has increased from December 31, 2003,2006 to December 31, 2007, primarily as a result of the application17 acquisitions in 2007. These acquisitions have been allocated to the various asset classes and intangibles disclosed in Note 4 based upon preliminary data and are expected to be finalized during the first half of push down accounting relating to2008 once the Company completes its analysis of tangible and intangible values.

F-14


The Company completed the following acquisitions, dispositions and consolidations for the years ended December 31, 2006 and 2007:

 

 

 

 

Total Number of

 

Purchase / Sale Price (in

 

Facility/Portfolio

 

Transaction Date

 

Facilities

 

thousands)

 

 

 

 

 

 

 

 

 

2007 Acquisitions

 

 

 

 

 

 

 

Sanford Portfolio

 

January 2007

 

1

 

$

6,300

 

Grand Central Portfolio

 

January 2007

 

2

 

13,200

 

Rising Tide Portfolio

 

September 2007

 

14

 

121,000

 

 

 

 

 

17

 

$

140,500

 

 

 

 

 

 

 

 

 

2007 Dispositions

 

 

 

 

 

 

 

South Carolina Assets

 

May 2007

 

3

 

$

12,750

 

Arizona Assets

 

December 2007

 

2

 

6,440

 

 

 

 

 

5

 

$

19,190

 

 

 

 

 

 

 

 

 

2006 Acquisitions

 

 

 

 

 

 

 

Nashville, TN Portfolio

 

January 2006

 

2

 

$

13,100

 

Dallas, TX Portfolio

 

January 2006

 

2

 

11,500

 

U-Stor Self Storage Portfolio

 

February 2006

 

3

 

10,800

 

Sure Save Portfolio

 

February 2006

 

24

 

164,500

 

Texas Storage Portfolio

 

March 2006

 

4

 

22,500

 

Nickey Portfolio

 

April 2006

 

4

 

13,600

 

SecurCare Portfolio

 

May 2006

 

4

 

35,700

 

Texas Storage Portfolio

 

June 2006

 

1

 

6,500

 

Jernigan Portfolio

 

July 2006

 

9

 

45,300

 

U-Stor Self Storage Portfolio

 

August 2006

 

1

 

3,500

 

Bailes Portfolio

 

August 2006

 

3

 

15,600

 

In & Out Self Storage Portfolio

 

August 2006

 

1

 

7,600

 

Texas Storage Portfolio

 

September 2006

 

2

 

12,200

 

 

 

 

 

60

 

$

362,400

 

The following table summarizes the change in ownershipnumber of self-storage facilities from January 1, 2006 through December 31, 2007:

 

 

2007

 

2006

 

Balance - Beginning of year

 

399

 

339

 

Facilities acquired

 

17

 

60

 

Facilities consolidated

 

(2

)

—

 

Facilities sold

 

(5

)

—

 

Balance - End of year

 

409

 

399

 

4.  INTANGIBLE ASSETS

In conjunction with the Company’s 2007 acquisitions, the Company has allocated a portion of the purchase price to finite-lived intangible assets related to the value of in-place leases, valued at approximately $6.8 million.  The Company recognized approximately $2.2 million of amortization expense during 2007.  The amortization period of these assets is 12 months and the estimated remaining amortization expense that will be recognized during 2008 is $4.6 million.

F-15


5.  REVOLVING CREDIT FACILITY AND UNSECURED TERM LOAN

As of December 31, 2007, the Company and its operating partnership had in place a three-year $450 million unsecured credit facility, which was entered into in November 2006, including $200 million in an unsecured term loan and $250 million in unsecured revolving loans. The outstanding balance on the Company’s credit facility was $419 million and was comprised of $200 million of term loan borrowings and $219 million of unsecured revolving loans.  As of December 31, 2007, approximately $31 million was available under the Company’s credit facility.  Borrowings under the credit facility bear interest, at our option, at either an alternative base rate or a Eurodollar rate, in each case, plus an applicable margin based on our leverage ratio or our credit rating.  The alternative base interest rate is a fluctuating rate equal to the higher of the prime rate or the sum of the federal funds effective rate plus 50 basis points.  The applicable margin for the alternative base rate will vary from 0.00% to 0.50% depending on our leverage ratio prior to achieving an investment grade rating, and will vary from 0.00% to 0.25% depending on our credit rating after achieving an investment grade rating.  The Eurodollar rate is a rate of interest that is fixed for interest periods of one, two, three or six months based on the LIBOR rate determined two business days prior to the commencement of the applicable interest period.  The applicable margin for the Eurodollar rate will vary from 1.00% to 1.50% depending on our leverage ratio prior to achieving an investment grate rating, and will vary from 0.425% to 1.00% depending on our credit rating after achieving an investment grade rating.  This credit facility is scheduled to terminate on November 20, 2009, with an option for the Company to extend the termination date to November 20, 2010. At December 31, 2007, borrowings under the unsecured credit facility had a weighted average interest rate of 6.06%.

On September 14, 2007, the Company and its Operating Partnership entered into a secured term loan agreement that allows for term loans in the aggregate principal amount of up to $50 million. Each term loan matures on November 20, 2009, subject to extension in the sole discretion of the lenders. Each term loan bears interest at either an alternative base rate or a Eurodollar rate, at our option, in each case plus an applicable margin at terms identical to the unsecured revolving credit facility.  As of December 31, 2007, there was one term loan outstanding for $47.4 million.  The outstanding term loan is secured by a pledge by our Operating Partnership of all equity interests in YSI RT LLC, the wholly-owned subsidiary of the Operating Partnership that acquired eight self-storage facilities in May 2004, discussed in Note 1, andSeptember 2007, that had a net book value of approximately $62.1 million at December 31, 2007.  At December 31, 2007, the acquisitionoutstanding term loan had an interest rate of 46 storage facilities acquired at, or shortly after, the closing of the IPO.

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)6.18%.

 

4. LOANS PAYABLEThe November 2006 credit facility effectively replaced the former $250 million unsecured revolving credit facility that was established in February 2006 and a $50 million term loan that was entered into and terminated during November 2006.  The former credit facility had a balance of $240.5 million and was scheduled to terminate in February 2009 prior to being replaced.

 

A summary ofThe February 2006 unsecured revolving credit facility replaced the Company’s existing $150.0 million facility, which had no outstanding indebtednessbalance as of December 31, 20042005 and 2003 is as follows ($was scheduled to terminate in thousands):October 2007.

 

   The
Company
  The
Predecessor

Description

  December 31,
2004
  December 31,
2003
The $90,000 loan from Lehman Brothers Holdings, Inc. (“Lehman Capital”) to YSI I LLC requires interest only payments until November 2005 and monthly debt service payments of $517 per month from November 2005 through May 2010. Interest is paid at the fixed rate of 5.19% through May 2010. The loan is collateralized by first mortgage liens against 21 storage facilities of YSI I LLC, which had a net book value of $96,529 at December 31, 2004.  $90,000  $—  
The $90,000 loan from Lehman Capital to YSI II LLC requires interest only payments until November 2005 and monthly debt service payments of $524 per month from November 2005 through January 2011. Interest is paid at the fixed rate of 5.325% through January 2011. The loan is collateralized by first mortgage liens against 18 storage facilities of YSI II LLC, which had a net book value of $98,059 at December 31, 2004.   90,000   —  
The $90,000 loan from Lehman Brothers Bank, FSB (“Lehman Brothers Bank”) to YSI III LLC, requires interest only payments until November 2005 and monthly debt service payments of $511 per month from November 2005 through November 2009. Interest is paid at the fixed rate of 5.085% through November 2009. The loan is collateralized by first mortgage liens against 26 storage facilities of YSI III LLC, which had a net book value of $130,152 at December 31, 2004.   90,000   —  
The $70,000 loan from Lehman Capital to Acquiport III requires payments of $548 per month which includes interest payable monthly at 8.16% per annum through November 1, 2006, which is referred to in the loan agreement as the “anticipated repayment date.” The Company intends to repay the loan on or before the anticipated repayment date. After October 31, 2006, the loan requires interest at the greater of 13.16% and a defined Treasury rate plus 5%, additional monthly principal payments based on defined net cash flow and final repayment by November 1, 2025. The loan is collateralized by first mortgage liens against 41 storage facilities of Acquiport III, which had a net book value of $113,191, and restricted cash of $1,319 at December 31, 2004.   66,217   67,162
The $42,000 mortgage loan from Lehman Brothers Bank to USI II requires principal payments of $300 per month and interest at 7.13% per annum through December 11, 2006, which is referred to in the loan agreement as the “anticipated repayment date.” The Company intends to repay the loan on or before the anticipated repayment date. After December 10, 2006, the loan requires interest at the greater of 12.13% and a defined Treasury rate plus 5%, additional monthly principal payments based on defined net cash flow and final repayment by December 11, 2025. The loan is collateralized by first mortgage liens against all 10 storage facilities of USI II, which had a net book value of $41,239 at December 31, 2004.   39,878   40,564

F-16

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)


 

   The
Company
  The
Predecessor

Description

  December 31,
2004
  December 31,
2003
The other loans payable assumed in conjunction with the acquisition of facilities require interest payable monthly at fixed rates ranging from 7.71% to 8.43% per annum and a weighted average of 8.01% at December 31, 2004 and 7.38% to 8.43% per annum and a weighted average of 7.74% at December 31, 2003. These loans require monthly payments of principal and interest, are due from 2008 to 2009, contain covenants with respect to net worth and are collateralized by first mortgage liens against two facilities at December 31, 2004 with a net book value of $7,488.  4,401  9,648
The $180,000 unsecured revolving line of credit from First Union Securities, Inc. (“First Union”) to Acquiport I required interest only payments at the base rate (defined as the higher of prime rate and the Federal funds rate plus 0.5%) or the adjusted LIBOR rate as defined by the line of credit agreement as selected by the borrower from time to time. At December 31, 2003, the outstanding balance required interest at 3.57% pursuant to the LIBOR contract entered into under the terms of the credit agreement. This loan was paid in full on May 4, 2004.  —    142,462
The $6,183 mortgage loan from Wachovia to Lake Worth, FL required interest payable monthly at a variable rate of LIBOR plus 200 basis points. For time periods prior to August 16, 2004, the Company fixed the interest rate at 6.85% through an executed interest rate swap agreement. The loan was collateralized by a first mortgage lien against the facility, which had a net book value of $9,543, at December 31, 2003. This loan was paid off as part of the IPO and the Formation Transactions.  —    5,816
The $2,200 mortgage loan from Charter One Bank to Lakewood, OH required interest payable monthly at 2.50% plus the Current Index (defined as the weekly average yield on the United States Treasury Securities adjusted to a constant maturity of one year as made available by the Federal Reserve Board). The rate of interest changes every 12 months but shall never exceeded 13.00% per annum or be less than 7.00% per annum. The loan required monthly payments for principal and interest. The loan was collateralized by a first mortgage lien against the property, which had a net book value of $1,120, at December 31, 2003. Interest at December 31, 2003 was 7.00%. This loan was paid off as part of the IPO and the Formation Transactions.  —    2,033
The $2,000 construction loan from Wachovia to Lake Worth, FL required interest payable monthly at LIBOR. The terms of the construction loan required completion within 24 months of the loan agreement at which time the loan converted to a permanent loan. Interest only payments were required through the construction phase. Conversion to a permanent loan was effective on December 20, 2003 with a maturity date of December 19, 2004. At December 31, 2003, the outstanding balance required monthly payments of principal and interest at 3.15% per annum, and the loan was collateralized by a second mortgage lien against the facility, which had a net book value of $9,543 at December 31, 2003. This loan was paid off as part of the IPO and the Formation Transactions.  —    2,000

U-STORE-IT TRUST6.  MORTGAGE LOANS AND SUBSIDIARIES (“THE COMPANY”) ANDNOTES PAYABLE

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)

   The
Company
  The
Predecessor

Description

  December 31,
2004
  December 31,
2003
The $1,287 mortgage loan from First Security—State to Acquiport I required interest only payments payable monthly at a fixed rate of 9.35% per annum through April 1, 2006. The loan was collateralized by a first mortgage lien against one storage facility which had a net book value of $1,412 at December 31, 2003. This loan was paid off as part of the IPO and the Formation Transactions.   —     1,153
The Vero Beach I, FL facility participated with other non-combined entities in a $10,000 revolving credit facility with Huntington National Bank. Interest was payable monthly at 2.50% per annum plus the thirty day LIBOR rate. The credit facility had a maturity date of December 12, 2006. The amount of allocated debt associated with specific draws related to the Vero Beach I, FL facility was $733. A first mortgage lien against the storage facility had been pledged as collateral for the credit facility, which had a net book value of $918 at December 31, 2003. Interest at December 31, 2003 was 3.71%. This loan was paid off as part of the IPO and the Formation Transactions.   —     733
The Operating Partnership has a $150,000 secured revolving credit facility with a group of banks led by Lehman Brothers, Inc. and Wachovia Capital Markets, LLC. The credit facility bears interest at a variable rate based upon a base rate or a Eurodollar rate plus, in each case, a spread depending on our leverage ratio. No amounts were outstanding under this facility at December 31, 2004. This credit facility is scheduled to mature in October 2007, with an option to extend the term for one year at the Company’s option.   —     —  
In April 2004, Acquiport I entered into a loan agreement with Lehman Brothers Bank for $424,500. A portion of the proceeds was used to pay off the $180,000 unsecured revolving line of credit from First Union. The remaining proceeds were used to pay costs and expenses incurred in connection with the closing of the loan, including, without limitation, loaning a portion of the proceeds to High Tide LLC pursuant to the High Tide Note (Note 1), or for other general corporate purposes. The loan required an initial escrow deposit of $610 for taxes, insurance and to establish a replacement reserve. This loan was paid off as part of the IPO and the Formation Transactions.   —     —  
   
  

Total

  $380,496  $271,571
   
  

 

The annualCompany’s mortgage loans and notes payable are summarized as follows:

 

 

 

 

 

 

Effective Interest

 

 

 

 

 

Carrying Value as of:

 

Rate on

 

 

 

 

 

December 31,

 

December 31,

 

December 31,

 

Maturity

 

Mortgage Loan

 

2007

 

2006

 

2007

 

Date

 

 

 

(in thousands )

 

 

 

 

 

YSI XXIII

 

$

—

 

$

1,322

 

5.00

%

Jul-07

 

YSI XVI

 

—

 

14,261

 

6.49

%

Nov-07

 

YSI XXII

 

—

 

993

 

5.00

%

Nov-07

 

YSI XXIX

 

—

 

4,374

 

5.00

%

Jan-08

 

YSI XXI

 

—

 

1,217

 

5.00

%

Apr-08

 

Acq IV

 

2,359

 

2,425

 

7.71

%

Dec-08

 

Acq VI

 

1,746

 

1,787

 

8.43

%

Aug-09

 

YSI III

 

86,712

 

88,332

 

5.09

%

Nov-09

 

YSI I

 

86,770

 

88,362

 

5.19

%

May-10

 

YSI IV

 

6,227

 

6,299

 

5.25

%

Jul-10

 

YSI XXV

 

8,201

 

8,304

 

5.00

%

Oct-10

 

YSI XXVI

 

9,956

 

10,176

 

5.00

%

Oct-10

 

Promissory Notes

 

92

 

132

 

5.97

%

Nov-10

 

YSI II

 

86,843

 

88,400

 

5.33

%

Jan-11

 

YSI XII

 

1,599

 

1,634

 

5.97

%

Sep-11

 

YSI XIII

 

1,374

 

1,404

 

5.97

%

Sep-11

 

YSI VI

 

79,645

 

80,000

 

5.13

%

Aug-12

 

YASKY

 

80,000

 

80,000

 

4.96

%

Sep-12

 

USIFB

 

4,651

 

—

 

7.10

%

Oct-12

 

YSI XIV

 

1,909

 

1,952

 

5.97

%

Jan-13

 

YSI VII

 

3,280

 

3,334

 

6.50

%

Jun-13

 

YSI VIII

 

1,874

 

1,905

 

6.50

%

Jun-13

 

YSI IX

 

2,062

 

2,096

 

6.50

%

Jun-13

 

YSI XVII

 

4,477

 

4,583

 

6.32

%

Jul-13

 

YSI XXVII

 

547

 

561

 

5.59

%

Nov-13

 

YSI XXX

 

8,024

 

8,233

 

5.59

%

Nov-13

 

YSI XI

 

2,605

 

2,660

 

5.87

%

Dec-13

 

YSI V

 

3,440

 

3,513

 

5.25

%

Jan-14

 

YSI XXVIII

 

1,676

 

1,712

 

5.59

%

Feb-14

 

YSI X

 

4,303

 

4,367

 

5.87

%

Jan-15

 

YSI XV

 

1,999

 

2,035

 

6.41

%

Jan-15

 

YSI XX

 

67,545

 

71,050

 

5.97

%

Nov-15

 

Unamortized premiums

 

1,141

 

1,507

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total mortgage loans and notes payable

 

$

561,057

 

$

588,930

 

 

 

 

 

As of December 31, 2007 and 2006, the Company’s mortgage loans payable were collateralized by certain of its self-storage facilities with net book values of approximately $725 million $795 million, respectively.

F-17


The following table presented below represents the future principal payment requirements on the outstanding mortgage loans and notes payable as ofat December 31, 2004 are ($ in thousands):2007:

 

Year

  Amount

2005

  $2,352

2006

   109,037

2007

   5,079

2008

   7,641

2009

   90,159

2010 and Thereafter

   166,228
   

Total

  $380,496
   

2008

 

$

11,541

 

2009

 

94,425

 

2010

 

112,497

 

2011

 

88,180

 

2012

 

162,347

 

2013 and thereafter

 

90,926

 

Total mortgage payments

 

559,916

 

Plus: Unamortized debt premiums

 

1,141

 

Total mortgage indebtedness

 

$

561,057

 

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND7.  MINORITY INTERESTS

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)

 

5. MINORITY INTERESTS

MinorityOperating partnership minority interests relate to the interests in the Operating Partnershipoperating partnership that are not owned by the Company, which, at December 31, 2004,2007, 2006 and 2005, amounted to approximately 2.9%. 8.1%, 8.3% and 8.4%, respectively.  These minority interests were issued in the form of Operating Partnership units and were a component of the consideration the Company paid to acquire certain self-storage facilities. Limited partners who acquired Operating Partnership units have the right to require the Operating Partnership to redeem part or all of their Operating Partnership units for, at the Company’s option, an equivalent number of common shares of the Company or cash based upon the fair market value of an equivalent number of common shares of the Company. The market value of the Company’s common shares for this purpose will be equal to the average of the closing trading price of the Company’s common shares on the New York Stock Exchange for the 10 trading days before the date the Company received the redemption notice.  As of December 31, 2007, the calculated aggregate redemption value of outstanding Operating Partnership units based upon the Company’s stock price was approximately $49.4 million.

Number of limited

partnership units

As of December 31, 2006

5,198,855

Units issued

—

Units redeemed, May 2007

(15,000

)

Units redeemed, June 2007

(60,000

)

Units redeemed, August 2007

(43,927

)

As of December 31, 2007

5,079,928

In conjunction with the formation of the Company, certain former owners contributed propertiesfacilities to the Operating Partnershipoperating partnership and received units in the Operating Partnership (“Units”)operating partnership concurrently with the closing of the IPO. Limited partners who acquired Unitsoperating partnership units in the Formation Transactions have the right, beginning oneffective October 27, 2005, to require the Operating Partnershipoperating partnership to redeem part or all of their Unitsoperating partnership units for cash or, at the Company’s option, common shares, based upon the fair market value of an equivalent number of common shares for which the Unitsoperating partnership units would have been redeemed if the Company had assumed and satisfied the Operating Partnership’soperating partnership’s obligation by paying common shares. The market value of the Company’s common shares for this purpose will be equal to the average of the closing trading price of the Company’s common shares on the New York Stock Exchange for the ten10 trading days before the day on which the Company received the redemption notice. Upon consummation of the IPO, the carrying value of the net assets of the Operating Partnershipoperating partnership was allocated to minority interests. Pursuant to three contribution agreements and three option exercises in 2005, entities owned by the Company’s former Chief Executive Officer and one of its trusteesformer Trustees received an aggregate of 1,129,515 Units1,524,358 operating partnership units for three propertiessix facilities with a net historical basis of $0.5$7.3 million.

 

In conjunction with the National Self Storage acquisition, National Self Storage received 3,674,497 operating partnership units. As provided in the partnership agreement of the operating partnership, these units are redeemable by the unitholders for cash or, at the Company’s option, common shares, beginning one year after the date of issuance (i.e., effective July 2006), on a one-for-one basis. The National Self Storage acquisition purchase agreement also included a provision which granted the

F-18


sellers a special redemption right permitting the sellers, under certain circumstances, beginning one year after issuance of the units, to redeem a portion of their units by requiring the Company to purchase, and simultaneously transfer to them, real estate properties to be identified by them at a price equal to the fair value of units redeemed (the “Special Redemption Right”).

6.The units issued to National Self Storage were considered conditionally redeemable because they were redeemable at the option of the holder with no specified or determinable redemption date. The units had no preference to the Company’s other outstanding operating partnership units. Under the provisions of the Emerging Issues Task Force (“EITF”) Classification and Measurement of Redeemable Securities, D-98R (“EITF D-98R”), the Company classified these units as a separate minority interest line item (“Conditionally Redeemable Operating Partnership Units”) and elected the accretion method under EITF D-98R to record increases or decreases in the redemption value of such units (as of September 30, 2005) as an adjustment to retained earnings over the period from the date of issuance to the earliest redemption date. On October 25, 2005, the sellers in the National Self Storage transaction agreed to terminate the Special Redemption Right, effective as of July 15, 2005 (the first date on which National Self Storage facilities were acquired by the operating partnership under the purchase agreement). Upon termination of the Special Redemption Right, the Company classified these units in minority interest. The amount of accretion recorded through October 25, 2005 was approximately $3.0 million.

8.  RELATED PARTY TRANSACTIONS

 

AsRobert J. Amsdell, former Chief Executive Officer and Chairman of December 31, 2004,the Board of Trustees, retired from the Board effective as of February 13, 2007.  Barry L. Amsdell submitted his letter of resignation from the Board on February 20, 2007.  Effective as of February 19, 2007, Todd C. Amsdell, President of U-Store-It Development LLC, a subsidiary of the Company, had entered into option agreements withresigned.

Amsdell Settlement/Rising Tide Acquisition

On September 14, 2007, the Company settled all pending state and federal court litigation involving the Company and the interests of Robert J. Amsdell, Barry L. Amsdell, Todd C. Amsdell and Kyle Amsdell, son of Robert and brother of Todd Amsdell (collectively, the “Amsdells”), and Rising Tide Development LLC, (“Rising Tide Development”), a company owned and controlled by Robert J. Amsdell the Company’s Chairman and Chief Executive Officer, and Barry L. Amsdell one(“Rising Tide”).  The Board of Trustees of the Company, along with the Corporate Governance and Nominating Committee, approved the terms of the settlement.

In addition, on September 14, 2007, the Operating Partnership purchased 14 self-storage facilities from Rising Tide (the “Rising Tide Properties”) for an aggregate purchase price of $121 million pursuant to a purchase and sale agreement.  In connection with the settlement agreement and acquisition of the 14 self storage facilities, the Company considered the provisions of EITF 04-01, Accounting for Pre-existing relationships between the Parties to a Business Combination, and determined that all consideration paid was allocable to the purchase of the storage facilities.

Pursuant to a Settlement Agreement and Mutual Release, dated August 6, 2007, (the “Settlement Agreement”) which was conditioned upon the acquisition of the 14 self-storage facilities from Rising Tide for $121 million, each of the parties to the agreement executed various agreements.  A summary of the various agreements follows:

·Standstill Agreement.  Robert J. Amsdell, Barry L. Amsdell and Todd C. Amsdell agreed that through June 30, 2008, they would not commence or participate in any proxy solicitation or initiate any shareholder proposal; take any action to convene a meeting of shareholders; or take any actions, including making any public or private proposal or announcement, that could result in an extraordinary corporate transaction relating to the Company.

·First Amendment to Lease.  The Operating Partnership and Amsdell and Amsdell, an entity owned by Robert and Barry Amsdell, entered into a First Amendment to Lease which modified certain terms of all of the lease agreements the Operating Partnership has with Amsdell and Amsdell for office space in Cleveland, Ohio.  The First Amendment provided the Operating Partnership the ability to assign or sublease the office space previously used for its corporate office and certain operations.  Separately, Amsdell and Amsdell consented to the Operating Partnership’s proposed sublease to an unrelated party of approximately 22,000 square feet of office space covered by the aforementioned leases.

·Termination of Option Agreement.  The Operating Partnership and Rising Tide entered into an Option Termination Agreement that terminated an Option Agreement dated October 27, 2004, by and between the Operating Partnership and Rising Tide.  The Option Agreement provided the Operating Partnership with an option to acquire

F-19


Rising Tide’s right, title and interest to 18 properties, including:  the 14 Rising Tide Properties discussed above; three properties that the Operating Partnership acquired in 2005 pursuant to exercise of its trustees, to acquire 18 self-storage facilities, consisting of 14 facilities owned byoption; and one undeveloped property that Rising Tide Development and four facilities which Rising Tide Development has the right to acquire from unaffiliated third parties. The option agreements become exercisable with respect to each particular self-storage facility if and when that facility achieves an occupancy level of 85% at the end of the month for three consecutive months. The purchase price will be equal to the lower of (i) a price determined by multiplying in-place net operating income at the time of purchase by 12.5 and (ii) the fair market value of the option facility as determined by an appraisal process involving third party appraisers. The Company’s option to acquire these facilities will expire on October 27, 2008. The determination to purchase anyand that was not acquired as a part of the option facilities will be made by the independent memberspurchase and sale agreement.

·Termination of Property Management Agreement, and Marketing and Ancillary Services Agreement.  Certain of the Company’s board of trustees. Refer to Note 15 relating to the exercise of the option to purchase three of these facilities subsequent to December 31, 2004.

The Predecessor’s self-storage facilities were operated by the Property Manager, which was affiliated through common ownership with Amsdell Partners, Inc., Highsubsidiaries and Rising Tide Limited Partnership, and Amsdell Holdings I, Inc. Pursuant to the relevant property management agreements, Acquiport I and Acquiport III paid the Property Manager monthly management fees of 5.35% of monthly gross rents (as defined in the related management agreements); USI paid the Property Manager a monthly management fee of 5.35% of USI’s monthly effective gross income (as defined); and the owners of the Lake Worth, FL, Lakewood, OH, and Vero Beach I, FL facilities paid the Property Manager monthly management fees of 6% of monthly gross receipts through October 21, 2004, and 5.35% thereafter (as defined). Effective October 27, 2004 upon acquisition of the Property Manager, management fees relating to our wholly-owned subsidiaries are eliminated in consolidation. Effective October 27, 2004, YSI Management LLC, a wholly owned subsidiary of the Operating Partnership, entered into a management contract with Rising Tide Development to provideProperty Management Termination Agreement and a Marketing and Ancillary Services Termination Agreement. Under the Property Management Agreement, the Company provided property management services tofor the option facilitiesRising Tide Properties for a fee equal to the greater of 5.35% of the gross revenues of each facilityproperty or $1,500 per facilityproperty per month.  Under the Marketing and Ancillary Services Agreement, the Company provided limited marketing and other miscellaneous services for the Rising Tide properties.  Management fees earned by YSI Management LLC, from Rising Tide Development, were approximately $71,000$0.4 million, $0.5 million and $0.4 million for the period October 21, 2004 throughyears ended December 31, 2004.2007, 2006 and 2005, respectively, and are included in other related party revenues. Accounts receivable from Rising Tide Development at December 31, 2004 was2006 and 2005 were approximately $271,000.$0.6 million and $0.4 million, respectively, and are included in due from related parties. No amounts were outstanding as of December 31, 2007.  These amounts represent expenses paid on behalf of Rising Tide Development by YSI Management LLC and proceeds from the sale of ancillary items that were reimbursed under standard business terms.  In connection with the termination of the Property Management Agreement, expenses relating to property management will be prorated.

 

During 2003,·Amendment of Employment and Non-Compete Agreements.  As part of the Predecessor purchasedSettlement Agreement, the Company entered into a Modification of Noncompetition Agreement and Termination of Employment Agreement (each a “Modification of Noncompetition Agreement and Termination of Employment Agreement”) with each of Robert J. Amsdell and Todd C. Amsdell, and a Modification of Noncompetition Agreement (“Modification of Noncompetition Agreement”) with Barry L. Amsdell, which terminates and modifies specific provisions of the noncompetition agreement the Company has with each of them, dated October 27, 2004 (the “Original Noncompetition Agreements”).  The Original Noncompetition Agreements restrict the ability of Robert J., Barry L. and Todd C. Amsdell to compete with the Company for one year and their ability to solicit employees of the Company for two storage facilitiesyears from an affiliated entitythe date of their termination of employment or resignation from service as a Trustee.  Pursuant to these modification agreements, Todd C. Amsdell will be able to compete with the Company, and Robert J. and Barry L. Amsdell will be able to (a) develop the one Rising Tide property that the Company did not acquire under the purchase and sale agreement and (b) compete with respect to any property identified as part of a Section 1031 “like-kind exchange” referenced in the purchase and sale agreement.  Further, each Original Noncompetition Agreement was modified to allow each of them to hire, for $5.7 million.

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)any purpose, any employee or independent contractor who was terminated, has resigned or otherwise left the employment or other service of the Company or any of its affiliates on or prior to June 1, 2007.

 

The Modification and Noncompetition Agreement and Termination of Employment Agreement with each of Robert J. Amsdell and Todd C. Amsdell also terminates the employment agreements the Company engages,had with each of them, effective as of February 13, 2007 with respect to Robert J. Amsdell and February 19, 2007 with respect to Todd C. Amsdell.

Additional Acquisitions of Facilities

The Company, in accordance with a contract signed on April 3, 2006, acquired nine self-storage facilities from Jernigan Property Group on July 27, 2006 for consideration of approximately $45.3 million. Our President and Chief Executive Officer, Dean Jernigan, served as President of Jernigan Property Group. Mr. Jernigan has agreed that he will not expand his interest, ownership or activity in the self-storage business. Given Mr. Jernigan’s appointment as a Trustee and the PredecessorPresident and Chief Executive Officer of the Company on April 24, 2006, this transaction was subject to review and final approval by a majority of the independent members of the Company’s Board of Trustees.

Construction Services

Historically, the Company engaged Amsdell Construction, a company owned by Robert J. Amsdell the Company’s Chief Executive Officer and Barry L. Amsdell, a trustee of the Company to maintain and improve its self-storage facilities.  The total payments incurred by the Company to Amsdell Construction for the period from October 21, 2004 throughyears ended December 31, 2004 was2006 and 2005 were approximately $0.5 million.$42,000 and $304,000, respectively.  The Company did not engage Amsdell Construction during 2007.

F-20


Corporate Office Leases

Pursuant to lease agreements that the Operating Partnership entered into with Amsdell and Amsdell during 2005 and 2006, we rented office space from Amsdell and Amsdell at The Parkview Building, a multi-tenant office building of approximately 40,000 square feet located at 6745 Engle Road, an office building of approximately 18,000 square feet located at 6751 Engle Road, and an office building of approximately 28,000 square feet located at 6779 Engle Road.  Each of these properties is part of Airport Executive Park, a 50-acre office and flex development located in Cleveland, Ohio, which is owned by Amsdell and Amsdell. Our independent Trustees approved the terms of, and entry into, each of the office lease agreements by the Operating Partnership.  The table below shows the office space subject to these lease agreements and certain key provisions, including the term of each lease agreement, the period for which the Operating Partnership may extend the term of each lease agreement, and the minimum and maximum rents payable per month during the term.

Office Space

 

Approximate
 Square Footage

 

Term

 

Period of
Extension Option (1)

 

Fixed Minimum
Rent Per Month

 

Fixed
Maximum Rent
Per Month

 

The Parkview Building — 6745
Engle Road; and 6751 Engle Road

 

21,900

 

12/31/2014

 

Five-year

 

$

25,673

 

$

31,205

 

6745 Engle Road — Suite 100

 

2,212

 

12/31/2014

 

Five-year

 

$

3,051

 

$

3,709

 

6745 Engle Road — Suite 110

 

1,731

 

12/31/2014

 

Five-year

 

$

2,387

 

$

2,901

 

6751 Engle Road — Suites C and D

 

3,000

 

12/31/2014

 

Five-year

 

$

3,137

 

$

3,771

 

6779 Engle Road — Suites G and H

 

3,500

 

12/31/2008

 

Five-year

 

$

3,079

 

$

3,347

 

6745 Engle Road — Suite 120

 

1,600

 

4/30/2007

 

Three-year

 

$

1,800

 

$

1,900

 

6779 Engle Road — Suites I and J

 

3,500

 

(2)

 

N/A

 

$

3,700

 

N/A

 

(1)Our operating partnership may extend the lease agreement beyond the termination date by the period set forth in this column at prevailing market rates upon the same terms and conditions contained in each of the lease agreements.

(2)In June 2007, the Operating Partnership terminated this lease agreement which had a month-to-month term.

In addition to monthly rent, the office lease agreements provide that our Operating Partnership reimburse Amsdell and Amsdell for certain maintenance and improvements to the leased office space.  The total amountamounts of lease payments incurred byunder the Predecessor to Amsdell Construction for the period from January 1, 2004 through October 20, 2004 andsix office leases during the years ended December 31, 20032007 and 2002December 31, 2006 were $2.2 million, $2.6approximately $0.4 million and $6.1$0.5 million, respectively.

The Company’s principal office, which is located in Cleveland, Ohio and is approximately 19,000 square feet, is leased from a partnership owned by Robert J. Amsdell and Barry L. Amsdell. The total amount of lease payments incurred under this lease by the Company for the period from October 21, 2004 through December 31, 2004 was approximately $40,000. Effective January 1, 2005 this lease agreement was modified and replaced with a new lease agreement dated March 29, 2005 (see Note 15).

 

Total future minimum rental payments under the new related party lease agreementagreements entered into as of December 31, 20042007 are as follows:

 

($ in thousands)
   Related Party
Amount

2005

  $262

2006

   308

2007

   324

2008

   324

2009

   339

2010 and Thereafter

   1,802
   

Total

  $3,359
   

 

 

Related Party

 

 

 

Amount

 

 

 

(in thousands)

 

 

 

 

 

2008

 

$

468

 

2009

 

453

 

2010

 

453

 

2011

 

475

 

2012

 

475

 

2013 and thereafter

 

998

 

 

 

$

3,322

 

 

Aircraft Lease

The Company charterschartered an aircraft from Aqua Sun Investments, LLC,L.L.C. (“Aqua Sun”), a company owned by Robert J. Amsdell and Barry L. Amsdell. The Company iswas under contract pursuant to a timesharing agreement to reimburse Aqua Sun Investments, LLC at the rate of $1,250 for each hour of use of the aircraft and the payment of actualcertain expenses associated with the use of the aircraft. As described in the paragraph below, effective June 30, 2005 the timesharing agreement was terminated by

F-21


mutual agreement of the parties thereto and was replaced on July 1, 2005 with a non-exclusive aircraft lease agreement with Aqua Sun (the “Aircraft Lease”). The Company’s disinterested Trustees approved the terms of, and the entry into, the non-exclusive aircraft lease agreement by the operating partnership.

The Operating Partnership was able to lease for corporate use from time to time an airplane owned by Aqua Sun at an hourly rate of $1,450 per flight hour. Aqua Sun was responsible for various costs associated with operation of the airplane, including insurance, storage and maintenance and repair, but the Operating Partnership was responsible for fuel costs and the costs of pilots and other cabin personnel required for its use of the airplane. The Aircraft Lease, which was effective as of July 1, 2005, had a one-year term and was terminated on June 30, 2006. The total amountamounts incurred for such aircraft charters described above by the Company for 2006 and 2005 was approximately $0.1 million and $0.4 million, respectively. No amounts were incurred after June 30, 2006 when the period from October 21, 2004 throughlease was terminated.

Other

During 2006 and 2007, the Company engaged a consultant to assist us in establishing certain development protocols and processes. In connection with that assignment, our outside consultant utilized the services of Dean Jernigan’s son-in-law. Our payments for his son-in-law’s services totaled approximately $149,000 in 2007 and $4,750 in 2006.

The Company engaged Dunlevy Building Systems Inc., a company owned by John Dunlevy, a brother-in-law of Robert J. Amsdell and Barry L. Amsdell, for construction, zoning consultant and general contractor services at certain of its self-storage facilities. The total payments incurred by the Company to Dunlevy Building Systems Inc. for the years ended December 31, 20042006 and 2005 were approximately $19,000 and $40,000, respectively.  No amounts were incurred subsequent to June 30, 2006.

The Company engaged Deborah Dunlevy Designs, a company owned by Deborah Dunlevy, a sister of Robert J. Amsdell and Barry L. Amsdell, for interior design services at certain of its self-storage facilities and offices. Total payments incurred by the Company to Deborah Dunlevy Designs for the year ended December 31, 2005 was approximately $74,000.$56,000.  No amounts were incurred subsequent to December 31, 2005.

 

Registration Rights

Robert J. Amsdell, Barry L. Amsdell, Todd C. Amsdell and the Amsdell Entities who“Amsdell Entities” that acquired common shares or operating partnershipOperating Partnership units in the formation transactions which took place at the time of the IPO received certain registration rights. An aggregate of approximately 9.7 million common shares acquired in the formation transactions were subject to a registration rights agreement (including approximately 1.1 million shares issuable upon redemption of approximately 1.1 million Operating Partnership units issued in the formation transactions).

In addition, Rising Tide Development received registration rights. Beginning as early as October 27, 2005, they will be entitledrights with respect to require us to register theirthe Operating Partnership units it received in connection with the Company’s acquisition of three option facilities. An aggregate of approximately 0.4 million common shares for public sale(which shares are issuable upon redemption of approximately 0.4 million Operating Partnership units issued in connection with the Company’s option exercises) were subject to certain exceptions, limitations and conditions precedent.a registration rights agreement.

 

Todd C. Amsdell, our Chief Operating Officer, earned approximately $0.2 millionIn March 2007, the Company filed a Registration Statement on Form S-3 to satisfy all of a bonus for the period October 21, 2004 through December 31, 2004, in addition to the deferred share units earned and valued at $1.0 million, discussed in Note 11.abovementioned registration rights.

 

Additional related party disclosures are discussed in Notes 1, 5, 9, 11 and 15.

7.9.  FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The fair value of financial instruments, including cash and cash equivalents, marketable securities, accounts receivable and accounts payable approximates their respective book values at December 31, 20042007 and 2003.2006. The Company has fixed interest rate loans with a carrying value of $380.5$556.4 million and $588.9 million at December 31, 20042007 and 2006, respectively.  The estimated fair values of these fixed rate loans were $533.2 and $569.6 million at December 31, 2007 and 2006, respectively. The Company has variable interest rate loans with a carrying value of $271.9$471.1 million and $290.5 million at December 31, 2003.2007 and 2006, respectively. The estimated fair valuevalues of these fixed andthe variable rate loans were $378.6$452.7 million and $279.2$290.5 million at December 31, 20042007 and 2003,2006, respectively. This estimate isThese estimates are based on discounted cash flow analyses assuming market interest rates for comparable obligations at December 31, 20042007 and 2003.

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)2006.

 

F-22


8.10.  DISCONTINUED OPERATIONS

 

During 2005, the year ended December 31, 2003, the PredecessorCompany sold fivefour of its storage facilities located in Ohio that were acquired as part of the Liberty Self-Stor Portfolio acquisition for net proceeds of $8.1$6.2 million.  No facilities were sold in 2006.  In accordance with2007 the terms of the Defeasance Agreements, approximately $1.4Company sold three properties in South Carolina for $12.8 million of the net proceeds related to the sale of the Indio Property storage facility was placedand two properties in a restricted cash account.Arizona for $6.4 million.

 

The results of operations of the storage facilities through the sale date have been presented in the following table. Interest expense and related amortization of loan procurement costs have been attributed to the sold storage facilities as applicable based upon the transaction and included in discontinued operations.

 

The results of operations of the fivenine storage facilities sold in 2003during 2005 and 2007 were as follows:

 

   

Year ended

December 31,

 

Description

  2003
  2002
 
   ($ in thousands) 

Revenues

  $1,015  $1,199 

Property operating expenses

   (399)  (440)

Depreciation

   (207)  (201)

Management fees to related party

   (52)  (64)

Interest expense

   (186)  (182)
   
 

Income from operations

   171   312 

Gain on sale of storage facilities

   3,329   —   
   
 

Income from discontinued operations

  $3,500  $312 
   
 

 

 

For the year ended December 31,

 

 

 

2007

 

2006

 

2005

 

REVENUES

 

 

 

 

 

 

 

Rental income

 

$

1,507

 

$

2,425

 

$

2,579

 

Other property related income

 

58

 

86

 

—

 

Total revenues

 

1,565

 

2,511

 

2,579

 

OPERATING EXPENSES

 

 

 

 

 

 

 

Property operating expenses

 

835

 

1,132

 

943

 

Depreciation

 

441

 

650

 

638

 

Total operating expenses

 

1,276

 

1,782

 

1,581

 

OPERATING INCOME

 

289

 

729

 

998

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

Interest:

 

 

 

 

 

 

 

Interest expense on loans

 

(189

)

(497

)

(535

)

Loan procurement amortization expense

 

(3

)

(26

)

(12

)

Interest income

 

5

 

5

 

1

 

Other

 

—

 

(3

)

—

 

Total other expense

 

(187

)

(521

)

(546

)

Income from discontinued operations

 

102

 

208

 

452

 

Net gain on disposition of discontinued operations

 

2,517

 

—

 

179

 

Minority interest attributable to discontinued

 

 

 

 

 

 

 

operations

 

(215

)

(17

)

(42

)

Income from discontinued operations

 

$

2,404

 

$

191

 

$

589

 

 

9.11.  COMMITMENTS AND CONTINGENCIES

 

The Company has capital lease obligations for security camera systems with a cost of $2.6 million. These systems are included in equipment in the accompanying balance sheet and are being depreciated over five years.

 

Future minimum lease payments at December 31, 2004 are:

   Amount
   ($ in thousands)

2005

  $115

2006

   49

2007

   22
   

Total future minimum lease payments

   186

Less—imputed interest at 8%

   30
   

Present value of lease payments

  $156
   

The Company currently owns six storageone self-storage facility subject to a ground lease and five self-storage facilities having small parcels of land that are subject to ground leases. The Company recorded rent expense of $24approximately $0.2 million for the period from October 21, 2004 through December 31, 2004. The Predecessor recorded rent expenseeach of $76 for the period from January 1, 2004 through October 20, 2004. The Predecessor also recorded rent expense of $46 and $73 related to these leases in the years ended December 31, 20032007, 2006 and 2002, respectively, all of which related to minimum lease payments.

2005, respectively.

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)F-23


 

Total future minimum rental payments under noncancelablenon-cancelable ground leases and a related party office leaseleases in effect as of December 31, 20042007 are as follows:

 

   Third Party
Amount
  Related Party
Amount
   ($ in thousands)

2005

  $169  $262

2006

   152   308

2007

   146   324

2008

   76   324

2009

   50   339

2010 and Thereafter

   244   1,802
   
  

Total

  $837  $3,359
   
  

 

 

Third Party 
Amount

 

Related Party
Amount

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

2008

 

$

76

 

$

468

 

2009

 

50

 

453

 

2010

 

44

 

453

 

2011

 

44

 

475

 

2012 and thereafter

 

155

 

1,473

 

 

 

$

369

 

$

3,322

 

 

Each of theThe Company and the Predecessor has been named as a defendant in a number of lawsuits in the ordinary course of business. In most instances, these claims are covered by the Company’s liability insurance coverage. Management believes that the ultimate settlement of the suits will not have a material adverse effect on the Company’s financial statements.

 

10.12.  RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS

 

InThe Company’s use of derivative instruments is limited to the normal courseutilization of its business, the Company encounters economic risks. There are three main components of economic risk:interest rate agreements or other instruments to manage interest rate risk credit riskexposures and market risk.not for speculative purposes. The principal objective of such arrangements is to minimize the risks and/or costs associated with the Company’s operating and financial structure, as well as to hedge specific transactions. The counterparties to these arrangements are major financial institutions with which the Company and its subsidiaries may also have other financial relationships. The Company is subjectpotentially exposed to credit loss in the event of non-performance by these counterparties. However, because of the high credit ratings of the counterparties, the Company does not anticipate that any of the counterparties will fail to meet these obligations as they come due. The Company does not hedge credit or property value market risks.

The Company has entered into interest rate riskswap agreements that qualify and are designated as cash flow hedges designed to reduce the impact of interest rate changes on its interest-bearing liabilities. Credit risk isvariable rate debt.   Therefore, the risk of inability or unwillingness of tenants to make required rent and other payments. Market risk is the risk of declines in the value of properties due to changes in rental rates, occupancy, interest rates or other market factors affecting the valuation of properties held by the Company.

Interest rate swaps are used to reducerecorded in the portion of total debt that is subject to variable interest rates. An interest rate swap requires the Company to pay an amount equal to a specific fixed rate of interest times a notional principal amount and entitles the Company to receive in return an amount equal to a variable rate of interest times the same notional amount. No other cash payments are made unless the contract is terminated prior to its maturity, in which case the contract would likely be settled for an amount equal to its fair value. The Company enters into contracts of this nature with major financial institutions to minimize counterparty credit risk.

The Predecessor had an interest rate swap that was undesignated and did not qualify for hedge accounting treatment; therefore, the swap was recordedconsolidated balance sheet at fair value and the related gains or losses were recordedare deferred in shareholders’ equity as Accumulated Other Comprehensive Loss.  These deferred gains and losses are amortized into interest expense during the period or periods in which the related interest payments affect earnings.  However, to the extent that the interest rate swaps are not perfectly effective in offsetting the change in value of the interest payments being hedged, the ineffective portion of these contracts is recognized in earnings immediately.  Ineffectiveness was immaterial for all periods presented.

The Company formally assesses, both at inception of the hedge and on an on-going basis, whether each derivative is highly-effective in offsetting changes in cash flows of the hedged item. If management determines that a derivative is highly-effective as a hedge, it accounts for the derivative using hedge accounting, pursuant to which gains or losses inherent in the derivative do not impact the Company’s results of operations.  If management determines that a derivative is not highly-effective as a hedge or if a derivative ceases to be a highly-effective hedge, the Company will discontinue hedge accounting prospectively and will reflect in its statement of operations.operations realized and unrealized gains and losses in respect of the derivative.

At December 31, 2007, the Company had interest rate swap agreements for notional principal amounts aggregating $75 million. The notional amount outstanding forswap agreements effectively fix the swap was approximately $5.830-day LIBOR interest rate on $50 million of credit facility borrowings at 4.7725% per annum and on $25 million of credit facility borrowings at 4.716% per annum, in each case until November 2009.  The interest rate cap agreement effectively limits the interest rate on $40 million of credit facility borrowings at 5.50% per annum until June 2008.

The following table summarizes the terms and fair values of the Company’s derivative financial instruments at December 31, 2003. The approximate fair value of the swap was a liability of $0.1 million at December 31, 2003, and is included in accounts payable and accrued expenses in the consolidated and combined balance sheets. The amount recognized as a reduction to interest expense due to changes in fair value was approximately $0.1 million and $0.2 million during the years ended December 31, 2004 and 2003, respectively. The swap matured on August 16, 2004.

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)2007 (in thousands):

 

F-24


 

 

 

 

Notional

 

 

 

 

 

Fair

 

Hedge Product

 

Hedge Type

 

Amount

 

Strike

 

Maturity

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

Cap

 

Cash flow

 

$

40,000

 

5.5000

%

6/23/2008

 

 

 

Swap

 

Cash flow

 

$

50,000

 

4.7725

%

11/20/2009

 

$

(1,038

)

Swap

 

Cash flow

 

$

25,000

 

4.7160

%

11/20/2009

 

$

(493

)

11.13.  SHARE-BASED EMPLOYEE COMPENSATION PLANS

 

On May 9, 2007, the Company’s shareholders approved an equity-based employee compensation plan, the 2007 Equity Incentive Plan (the “2007 Plan”). On October 19, 2004, the Company’s sole shareholder approved a share-based employee compensation plan, the 2004 Equity Incentive Plan (the “Plan”“2004 Plan” and collectively with the 2007 Plan, the “Plans”). The purpose of the Plan isPlans are to attract and retain highly qualified executive officers, trusteesTrustees and key-employeeskey employees and other persons and to motivate such officers, trustees, key-employeeskey employees and other persons to serve the Company and its affiliates to expend maximum effort to improve the business results and earnings of the Company, by providing to such persons an opportunity to acquire or increase a direct proprietary interest in the operations and future success of the Company. To this end, the Plan providesPlans provide for the grant of share options, share appreciation rights, restricted shares, share units, unrestricted shares, dividend equivalent rights and cash awards. Any of these awards may, but need not, be made as performance incentives to reward attainment of annual or long-term performance goals. Share options granted under the PlanPlans may be non-qualified share options or incentive share options.

 

The Plan isPlans are administered by the Compensation Committee of the Company’s Board of Trustees (the “Compensation Committee”), which is appointed by the Board of Trustees. The Compensation Committee interprets the PlanPlans and determines the terms and provisions of option grants and share awards. A total of 3,900,000 and 3,000,000 common shares are reserved for issuance under the Plan.2007 Plan and 2004 Plan, respectively. The maximum number of common shares subjectunderlying equity awards that may be granted to an individual participant under the 2004 Plan during any calendar year is 400,000 for options or share appreciation rights and 100,000 for restricted shares or time-vested restricted share units, and 500,000 for options or share appreciation rights and 100,000 for restricted shares or restricted share units under the 2007 Plan. The maximum number of common shares that can be awarded under the Plan to any person, is 500,000 per calendar year. The maximum number or common shares that can be awarded under the Plan other than pursuant to an option, share appreciation rights or time-vested restricted shares, that can be awarded to any person is 250,000 per calendar year.year under the 2004 Plan.  In addition, under the 2007 Plan, the maximum number of performance awards that may be granted to an executive officer is 100,000 and the maximum amount of performance shares that can be settled in cash and that can be granted in any year is $1.5 million. To the extent that options expire unexercised or are terminated, surrendered or canceled, the options and share awards become available for future grants under the Plan,Plans, unless the Plan hasPlans have been terminated.

Under the Plan,Plans, the Compensation Committee determines the vesting schedule of each share award and option. Members of the Board of Trustees have been granted restricted share awards pursuant to the Plan as payment of their board fees. In each case, the number of restricted shares granted to trustees was equal to the dollar value of the fee divided by the fair market value of a common share on the date the fee would have been paid. Concurrently with the closing of the IPO, the Company also granted options under the Plan to certain of its employees and executive officers to purchase an aggregate of 950,000 common shares. The options granted to executive officers vest ratably over a three year period, one-third per year on each of the first three anniversaries of the grant date. The options granted to other employees of the Company vest evenly over a three year period, one-third per year on each of the third, fourth and fifth anniversaries of the grant date. The exercise price for options is equivalent to the fair market value of the underlying common shares at the grant date. The Compensation Committee also determines the term of each option, which shall not exceed 10 years from the grant date.

 

Share Options

The fair valuevalues for options granted in 2004, was2006 and 2007 were estimated at the time the options were granted using the Black-Scholes option-pricing model applying the following weighted average assumptions:

 

Assumptions:  2004
 

 

2006

 

2007

 

Risk-free interest rate

   4.38%

 

5.0

%

4.7

%

Expected dividend yield

   7.0%

 

6.3

%

5.9

%

Volatility

   26.25%

 

20.3

%

21.2

%

Weighted average expected life of the options

   10 years 

 

7.5 years

 

9.4 years

 

Weighted average fair value of options granted

  $1.90 

Weighted average fair value of options granted per share

 

$

2.10

 

$

2.40

 

 

The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option-pricing models require the input of highly subjective

F-25


assumptions, including the expected stock price volatility.

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”) Volatility for the 2006 and 2007 grants was based on the trading history of the Company’s shares.

 

In 2004,2007, 2006 and 2005, the Company recognized compensation expense related to deferred shares, restricted shares and options issued to employees and trusteesexecutives of $2.5 million. Includedapproximately $0.9 million, $0.4 million and $0.5 million, respectively, which was recorded in General and administrative expense. As of December 31, 2007, the Company had approximately $2.9 million of unrecognized compensation expense is approximately $2.4 million which representcost related to unvested stock options that will be recorded over the fair value of the deferred shares granted of 146,875 at $16.00 per deferred share to certain members of the Company’s management team at consummation of the IPO. These shares did not have any vesting or forfeiture requirements.next five years.

 

The table below summarizes the option activity under the Plan for the period from October 21, 2004 throughyears ended December 31, 2004:2007, 2006 and 2005:

 

 

 

 

 

 

Weighted Average

 

  Common Shares
Subject to Options
  Weighted Average
Exercise Price
Per Option

 

Number of Shares

 

Weighted Average

 

Remaining

 

 

Under Option

 

Exercise Price

 

Contractual Term

 

Balance at December 31, 2004

 

938,500

 

$

16.00

 

9.83

 

Options granted

  950,000  $16.00

 

—

 

—

 

—

 

Options canceled

  11,500  $16.00

 

(39,500

)

16.00

 

—

 

Options exercised

  —     —  

 

—

 

—

 

—

 

Balance at December 31, 2004

  938,500  $16.00

Balance at December 31, 2005

 

899,000

 

$

16.00

 

8.83

 

Options granted

 

867,500

 

18.38

 

10.00

 

Options canceled

 

(301,333

)

16.00

 

—

 

Options exercised

 

(186,667

)

16.00

 

8.36

 

Balance at December 31, 2006

 

1,278,500

 

$

17.62

 

8.92

 

Options granted

 

960,271

 

19.82

 

9.24

 

Options canceled

 

(322,000

)

16.21

 

—

 

Options exercised

 

—

 

—

 

—

 

Balance at December 31, 2007

 

1,916,771

 

$

18.95

 

8.74

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vested or expected to vest at December 31, 2007

 

1,916,771

 

18.95

 

8.74

 

Exercisable at December 31, 2007

 

208,164

 

17.98

 

8.17

 

At December 31, 2007, the aggregate intrinsic value of options outstanding, of options that vested or expected to vest and of options that were exercisable was $0.0 million.

Restricted Shares

 

The following table summarizes information regarding options outstandingCompany applies the fair value method of accounting for contingently issued shares.  As such, each grant is recognized ratably over the related vesting period.  Approximately 124,000 restricted shares were issued during 2007 for which the fair value of the restricted shares at their respective grant dates was approximately $1.9 million.  During 2006, approximately 74,000 restricted shares were issued for which the fair value of the restricted shares at their respective grant dates was approximately $1.3 million.  As of December 31, 2004:2007 the Company had approximately $1.3 million of remaining unrecognized compensation costs related to 2007 restricted share issuances that will be recognized over the next five years.

 

  Options Outstanding
 Options Not Exercisable
Exercise Prices
 Options
 Weighted-
Average
remaining
Contractual life
In years
 Weighted
average
exercise
price
 Options
 Weighted
average
exercise
price
$16.00 500,000 2.8 $16.00 500,000 $16.00
$16.00 438,500 4.8 $16.00 438,500 $16.00

On December 22, 2005, 163,677 restricted share units were granted to certain executives.  The restricted share units were granted in the form of deferred share units, entitling the holders thereof to receive common shares at a future date. Holders of the deferred share units are not entitled to any of the rights of a shareholder with respect to the deferred share units unless and until the common shares relating to the deferred share unit award have been delivered to such holder. However, the holders of the deferred share units are entitled to receive dividend equivalent payments, upon the Company’s payment of a cash dividend on outstanding common shares.

 

Restricted SharesThe shares were equally divided between time-vesting shares and market-based shares with values of $20.62 and $13.82 per share, respectively.   The fair value of the restricted share units at grant date was approximately $3.0 million.  The Company used a Monte Carlo simulation analysis to estimate the fair value of the market-based shares. The time-vesting

F-26


shares vest ratably over a five-year period, one-fifth per year on each of the first five anniversaries of the grant date. The market-based shares vest ratably over a five-year period, one-fifth per year on each of the first five anniversaries of the grant date if the average annual total shareholder return for the Company equals or exceeds ten percent. Additionally, any market-based shares that do not vest on a previous anniversary will vest on a subsequent anniversary date if the average annual total shareholder return from grant date equals or exceeds ten percent. Certain restricted share units awarded to the former Chief Executive Officer vest upon his retirement from the Company and since he reached the retirement age set forth in his award agreement prior to December 31, 2005, Robert J. Amsdell’s 72,745 restricted shares, valued at approximately $1.5 million, were recognized as share compensation expense in 2005.  During 2006, certain unvested shares vested early related to the termination of several executives under the terms of their respective employment agreements.  Accordingly, the Company recognized the related compensation expense in 2006.  As of December 31, 2006 the Company had no remaining unrecognized compensation cost related to the December 22, 2005 restricted share units.

The fair value for restricted share units granted in 2005 and 2007 were estimated at the time the units were granted. Awards that contain a market feature were valued using a Monte Carlo-pricing model applying the following weighted average assumptions:

Assumptions:

 

2005

 

2007

 

Risk-free interest rate

 

4.69

%

4.50

%

Volatility of total annual return

 

19.0

%

19.0

%

Weighted average expected life of the units

 

5 years

 

3 years

 

Weighted average fair value of units granted

 

$

18.73

 

$

11.70

 

In May 2005, the Company implemented the Deferred Trustees Plan, a component of the Plan, upon the approval of the Company’s Board of Trustees. Pursuant to the terms of the Deferred Trustees Plan, each non-employee member of the Board of Trustees may elect to receive all of his annual cash retainers and meeting fees payable for service on the Board of Trustees or any committee of the Board of Trustees in the form of either all common shares or all deferred share units.

Pursuant to the terms of the Deferred Trustees Plan, under the equity incentive plan, certain Trustees elected to receive their Board of Trustee fees in 2005 and 2006 in the form of deferred share units. On December 31, 2006 an aggregate of 8,564 deferred share units were granted to those Trustees and were valued at $20.55 per share and on December 31, 2005 and aggregate of 3,876 deferred share units were granted and were valued at $21.05 per share.

 

During 2004, there were an aggregate of 20,315 restricted shares granted to our trustees.Trustees. The restricted shares were granted on October 27, 2004 and were valued at a price of $16.00 per share. The value of the restricted shares iswas recognized as compensation expense over the vesting or service period.period during 2004 and 2005.

 

In 2007, 2006 and 2005, the Company recognized compensation expense related to restricted shares and restricted share units issued to employees and Trustees of approximately $1.1 million, $0.7 million and $1.7 million, respectively; these amounts were recorded in General and administrative expense. Included in compensation expense for 2005 is approximately $1.5 million which represents the vested portion of the fair value of the restricted share units granted of 163,677 at a range of $13.82 to $20.62 per restricted share units to certain members of the Company’s management team. The following table presents non-vested restricted share activity during 2007:

Number of Non-

Vested Restricted

Shares

Non-Vested at January 1, 2007

104,854

Granted

124,121

Vested

(18,820

)

Forfeited

(32,084

)

Non-Vested at December 31, 2007

178,071

F-27


12.14.  EARNINGS PER SHARE AND SHAREHOLDER’SSHAREHOLDERS’ EQUITY

 

The following is a summary of the elements used in calculating basic and diluted earnings per share ($ in thousands except per share amounts):share:

 

   

For the Period October 21,
2004 through

December 31, 2004

 

Net loss attributable to common shares

  $(29,898)

Weighted average common shares outstanding—basic

   37,477,920 

Potentially dilutive common shares(1):

     

Share options

   —   

Restricted shares

   —   

Adjusted weighted average common shares outstanding—diluted

   37,477,920 

Net loss per share—basic and diluted

  $(0.80)

 

 

For the year ended December 31,

 

 

 

2007

 

2006

 

2005

 

 

 

(Dollars and shares in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

(15,481

)

$

(8,742

)

$

979

 

Income from discontinued operations

 

2,404

 

191

 

589

 

Net income (loss) attributable to common

 

 

 

 

 

 

 

shares

 

$

(13,077

)

$

(8,551

)

$

1,568

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding

 

57,497

 

57,287

 

42,120

 

Share options and restricted share units (1)

 

—

 

—

 

83

 

 

 

57,497

 

57,287

 

42,203

 

 

 

 

 

 

 

 

 

Income (loss) per Common Share:

 

 

 

 

 

 

 

Continuing operations

 

$

(0.26

)

$

(0.15

)

$

0.02

 

Discontinued operations

 

0.04

 

—

 

0.02

 

 

 

$

(0.22

)

$

(0.15

)

$

0.04

 

(1)For the period October 21, 2004 through December 31, 2004 the potentially dilutive shares of 65,748

(1) For the years ended December 31, 2007 and 2006 the potentially dilutive shares of approximately 22,000 and 121,000, respectively, were not included in the earnings per share calculation as their effect is antidilutive.

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)

 

The Unitsoperating partnership units and common shares have essentially the same economic characteristics as they share equally in the total net income or loss and distributions of the Operating Partnership. A Unitoperating partnership. An operating partnership unit may be redeemed for cash, or at the Company’s option, common shares on a one-for-one basis beginning on October 27, 2005.basis. Outstanding minority interest Unitsunits in the Operating Partnershipoperating partnership were 1,129,5155,079,928 as of December 31, 2004.2007. There were 37,345,16257,577,232 common shares outstanding as of December 31, 2004.2007.

15.  INCOME TAXES

Deferred income taxes are established for temporary differences between financial reporting basis and tax basis of assets and liabilities at the enacted tax rates expected to be in effect when the temporary differences reverse. A valuation allowance for deferred tax assets is provided if the Company believes that it is more likely than not that all or some portion of the deferred tax asset will not be realized. No valuation allowance was recorded at December 31, 2007 or 2006. The outstanding common sharesCompany had net deferred tax assets of $0.5 million and $0.3 million, which are included in other assets, as of December 31, 2004, exclude 146,875 of deferred shares granted to certain members of2007 and 2006, respectively. The Company believes it is more likely than not the Company’s management team (Note 11) which are treated as outstanding basic shares for computational purposes of earnings per share.tax assets will be realized.

 

On November 16, 2004, the board of trustees declared a distribution to common shareholders of record and the Operating Partnership declared a distribution to unitholders of record, in each case as of January 10, 2005, of $0.2009 per common share and Unit, for the period commencing upon completion of the IPO and ending December 31, 2004. This distribution was paid on January 24, 2005. This initial pro-rated distribution was based on a distribution of $0.28 per share for a full quarter.F-28


 

 

For the year ended December 31,

 

 

 

2007

 

2006

 

2005

 

Income tax provision

 

 

 

 

 

 

 

Current:

 

 

 

 

 

 

 

U.S. Federal

 

$

—

 

$

—

 

$

—

 

 

 

 

 

 

 

 

 

Deferred:

 

 

 

 

 

 

 

U.S. Federal

 

(0.1

)

(0.2

)

—

 

 

 

 

 

 

 

 

 

Income tax provision

 

$

(0.1

)

$

(0.2

)

$

—

 

 

 

 

 

 

 

 

 

Effective income tax rate

 

 

 

 

 

 

 

Statutory federal income tax rate

 

34.0

%

34.0

%

34

%

State and local income taxes

 

4.0

%

2.6

%

9

%

Effective income tax rate

 

38.0

%

36.6

%

43

%

 

 

As of December 31,

 

 

 

2007

 

2006

 

2005

 

 

 

Assets

 

Liabilities

 

Assets

 

Liabilities

 

Assets

 

Liabilities

 

Deferred taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

Share based compensation

 

$

0.7

 

$

0.6

 

$

0.8

 

$

0.8

 

$

1.6

 

$

1.6

 

Other

 

0.4

 

—

 

0.3

 

—

 

0.1

 

—

 

Deferred taxes

 

$

1.1

 

$

0.6

 

$

1.1

 

$

0.8

 

$

1.7

 

$

1.6

 

 

Concurrently with the closing of the IPO, the Company granted Steven G. Osgood, Todd C. Amsdell and Tedd D. Towsley options to purchase 200,000 shares, 200,000 shares and 100,000 shares, respectively. The options have an exercise price equal to the market value of the underlying common shares on the date of the grant ($16.00), and they become exercisable in three equal annual installments on October 27, 2005, 2006 and 2007.

Share-based compensation cost of $0.1 million has been recorded for options outstanding for the period October 21, 2004 through December 31, 2004, using the fair value of the options calculated using the Black-Scholes method.

13.16.  PRO FORMA FINANCIAL INFORMATION (UNAUDITED)

 

In May 2004,During 2006, the Predecessor entered into a $424.5 million term loan agreement in order to acquire the outside partnership interests in Acquiport I, which were held by partners that were not affiliated with the Amsdell family, and to pay down the amounts outstanding under Acquiport I’s revolving credit facilityCompany acquired 60 self-storage facilities for an aggregate purchase price of approximately $142.0$362.4 million.  During 2007, the Company acquired 17 self-storage facilities for an aggregate purchase price of approximately $140.5 million and sold three properties for an aggregate purchase price of approximately $19.1 million.

The unaudited condensed consolidated pro forma financial information set forth below reflects adjustments to paythe Company’s historical financial data to give effect to each of the acquisitions, dispositions and related financing costs. The $424.5 million term loan andactivity (including the acquisitionissuance of the outside partnership interests in Acquiport I are discussed in Notecommon shares) that occurred subsequent to January 1, above. This loan was paid off upon completion2006 as if each had occurred on January 1 of the IPO.

Concurrently with, or shortly after, completion of the IPO, the Company completed the acquisition of 46 self-storage facilities:

•Metro Storage LLC.    On October 27, 2004, we acquired the Metro Storage portfolio from Metro Storage LLC for a purchase price of $184.0 million. The portfolio consists of 42 self-storage facilities located in five states, Illinois, Indiana, Florida, Ohio and Wisconsin.

•Devon Facilities.    On October 28, 2004, we acquired two self-storage facilities, one located in Bradenton, FL and one in West Palm Beach, FL, from Devon/Bradenton, L.P. and Devon/West Palm, L.P., respectively, for a total purchase price of $18.2 million.

•Self-Storage Zone Facility.    On November 1, 2004, we acquired one self-storage facility, located in California, MD, from Bay Media Network Limited Partnership for a purchase price of approximately $5.7 million.

•Federal Self-Storage Facility.    On November 1, 2004, we acquired one self-storage facility, located in Dania Beach, FL, from Federal Self Storage for a purchase price of approximately $13.9 million.

each respective year.  The unaudited pro forma information includedpresented below is presented as ifdoes not purport to represent what the acquisitionCompany’s actual results of the 46 facilities discussed above, the IPO transactions and related financing transactions, and the pay-off of the $424.5 million term loan had all occurred as of the first day ofoperations would have been for the periods presented.

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)

The pro forma information excludes $2.5 million of compensation expense relatedindicated, nor does it purport to the IPO, $7.0 million of losses on early extinguishment of debt, $4.5 million of loan procurement amortization expense, $22.2 million for the costs incurred to acquire U-Store-It Mini Warehouse Co., a reduction of $11.4 million of interest expense related to the buyout of former partners, an increase in $11.7 for additional interest expense and loan amortization expense as the result of the incurrence of new senior mortgage debt and the payoff of other related debt, all of which were incurred during the year ended December 31, 2004. Additionally, we have included an estimate for annualized general and administrative expenses primarily relating to executive employment agreements and other costs as a result of being a public company. The pro forma information is based on the assumption thatrepresent the Company’s common shares and loans payable had been outstanding asfuture results of the beginning of the period presented.operations.

 

The following table summarizes, on a pro forma basis, our consolidated results of operations for the years ended December 31, 20042007 and 20032006 based on the assumptions described above ($ in thousands, except per share data):above:

 

   2004
  2003
   (unaudited)

Pro forma revenues

  $117,371  $108,181

Pro forma net income

  $6,236  $6,363

Pro forma earnings per common share—basic

  $0.17  $0.17

Pro forma earnings per common share—diluted

  $0.17  $0.17

 

 

2007

 

2006

 

 

 

(unaudited)

 

 

 

(in thousands, except per share data)

 

 

 

 

 

 

 

Pro forma revenue

 

$

235,642

 

$

229,186

 

Pro forma loss from continuing operations

 

$

(24,915

)

$

(27,054

)

Loss per common share from continuing operations

 

 

 

 

 

Basic and diluted — as reported

 

$

(0.26

)

$

(0.15

)

Basic and diluted — as pro forma

 

$

(0.43

)

$

(0.47

)

 

F-29


14.17.  ASSET IMPAIRMENT AND INSURANCE RECOVERIES

As a result of hurricanes that occurred during the third quarter of 2005, the Company incurred damage at certain of its self-storage facilities located in Alabama, Louisiana and Mississippi. Under the provisions of SFAS No. 144, “Accounting for the Impairment of or Disposal of Long-Lived Assets” (“SFAS No. 144”), the Company determined that there were indicators of impairment and accordingly tested the assets for recoverability. After an assessment of the damage sustained at the Waveland, Mississippi facility, the Company determined that a charge for impairment of approximately $2.3 million was required because the estimated undiscounted future cash flows did not support the carrying value of the assets. The Company expected that insurance proceeds from its comprehensive insurance for property damage would satisfy the entire loss incurred, and in 2005 appropriately recorded the impairment charge and an offsetting insurance recovery of $2.3 million, of which $0.5 million was received in October 2005. The related insurance receivable was included in other assets as of December 31, 2005, and the asset impairment charge and related insurance recovery were presented net in operating expenses for the year ended December 31, 2005.  During 2006, insurance proceeds were sufficient to cover the insurance receivable and there is no balance remaining as of December 31, 2006. During 2007 the Company recorded $0.4 million of impairment charges related to property damage incurred at six properties as a result of either a fire or flood.

18.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

 

The following is a summary of selected quarterly financial information for the Company and the Predecessor for years ended December 31, 20042007 and 2003:2006 (in thousands, except per share data):

 

   Consolidated and Combined Quarter Ended
 

Year

  March 31,
  June 30,
  September 30,
  December 31,(1)
  Year Ended
December 31,
 
   ($ in thousands, except per share data) 

2004

                     

Revenues

  $20,524  $21,207  $22,281  $27,596  $91,608 

Income (loss) before minority interests

   3,084   (1,223)  (2,271)  (32,835)  (33,245)

Net income (loss)

   3,084   (1,223)  (2,271)  (31,937)  (32,347)

Net loss per share—basic and diluted

   —     —     —     (0.80)  (0.80)

2003

                     

Revenues

  $19,391  $19,904  $20,681  $20,838  $80,814 

Gain on sale of storage facilities

   —     293   1,288   1,748   3,329 

Net income

   2,135   3,909   4,918   5,270   16,232 
(1)The three months ended December 31, 2004 represents consolidated operating results for the Company from October 21, 2004 to December 31, 2004 and combined operating results for the Predecessor from October 1, 2004 to October 20, 2004. The operating results for the quarter ended December 31, 2004 are not comparable to future expected operating results of the Company since they include various IPO-related charges.

 

 

Three months ended

 

 

 

March 31,

 

June 30,

 

September 30,

 

December 31,

 

 

 

2007

 

2007

 

2007

 

2007

 

Total revenues

 

$

54,907

 

$

56,077

 

$

58,073

 

$

60,110

 

Total operating expenses

 

$

45,597

 

$

44,594

 

$

48,621

 

$

51,860

 

Net income (loss)

 

$

(3,358

)

$

295

 

$

(4,130

)

$

(5,884

)

Basic and diluted earnings (loss) per share

 

$

(0.06

)

$

—

 

$

(0.07

)

$

(0.10

)

 

 

Three months ended

 

 

 

March 31,

 

June 30,

 

September 30,

 

December 31,

 

 

 

2006

 

2006

 

2006

 

2006

 

Total revenues

 

$

47,613

 

$

52,776

 

$

55,798

 

$

54,462

 

Total operating expenses

 

$

38,741

 

$

40,729

 

$

45,645

 

$

47,041

 

Net income (loss)

 

$

(1,625

)

$

724

 

$

(1,962

)

$

(5,688

)

Basic and diluted earnings (loss) per share

 

$

(0.03

)

$

0.01

 

$

(0.03

)

$

(0.10

)

 

15. SUBSEQUENT EVENTS19.  LEASE ABANDONMENT CHARGE

The Company completed the following acquisitions subsequent to December 31, 2004:

•

Acquisition of Option Facility.    On January 5, 2005, the Company exercised its option to purchase the San Bernardino VII, CA facility from Rising Tide Development (a related party—see Note 6) for the purchase price of $7.3 million, consisting of $3.8 million in cash (which cash was used to pay off

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)

mortgage indebtedness secured by the facility) and $3.5 million payable in units in the Operating Partnership. The facility contains approximately 83,000 rentable square feet and was 84.9% occupied as of December 31, 2004.

•Acquisition of Self-Storage Zone Facility.    On January 14, 2005, the Company acquired one self-storage facility from Airpark Storage LLC in Gaithersburg, Maryland for the purchase price of $10.7 million, consisting of $4.3 million cash and $6.4 million of indebtedness. The facility contains approximately 87,000 rentable square feet.

•Acquisition of Ford Storage Facilities.    On March 1, 2005, the Company acquired five self-storage facilities, located in central Connecticut, from Ford Storage for an aggregate purchase price of $15.5 million. These facilities contain an aggregate of approximately 237,000 rentable square feet.

•Acquisition of A-1 Self-Storage Facilities.    On March 15, 2005, the Company acquired five self-storage properties, located in Connecticut, from A-1 Self Storage for an aggregate purchase price of $21.7 million in cash. These facilities contain an aggregate of approximately 193,000 rentable square feet.The Company plans to operate two of these facilities as one facility.

•Acquisition of Option Facilities.    On March 18, 2005, the Company exercised its option to purchase the Orlando II, Florida and the Boynton Beach II, Florida facilities from Rising Tide Development (a related party—see Note 6) for the purchase price of $11.8 million, consisting of $6.7 million in cash (which cash was used to pay off mortgage indebtedness secured by the facilities) and $5.1 million in units of the Operating Partnership. The facilities contain approximately 129,000 rentable square feet and were 90.1% and 90.3% occupied as of December 31, 2004.

 

In addition,August 2007, the Company has entered into definitive agreements to acquire an additional 89 self-storage facilities, as discussed below,abandoned certain office space in Cleveland, OH that was previously used for a total purchase price of $272.3 million.

its corporate offices.  The acquisitions are comprised ofrelated leases have expiration dates ranging from December 31, 2008 through December 31, 2014. Upon vacating the following unrelated transactions:

The Company has agreed to acquire 67 self-storage facilities from various partnerships and other entities affiliated with National Self Storage and The Schomac Group, Inc. for an aggregate purchase price of approximately $217.0 million. The facilities total approximately 3.6 million rentable square feet and are located in Arizona, California, Colorado, New Mexico, Tennessee, Texas and Utah. The transaction also includesspace, the purchase of four office parks and one mobile home park. The purchase price includes the assumption of up to $118.0 million of indebtedness by our Operating Partnership upon closing and the issuance of approximately $63.0 million payable in Units in our Operating Partnership, with the balance to be paid in cash.

The Company entered into a contractsub-lease agreement with a sub-tenant to acquire 18 self-storage facilities from Liberty Self-Stor Ltd., a subsidiary of Liberty Self-Stor, Inc., for an aggregate price of $34.0 million, The facilities total approximately 863,000 rentable square feet and are located in Ohio and New York.

The Company has entered into an agreement to purchase one self-storage facility from A-1 Self Storage for $6.4 million. The facility totals approximately 48,000 rentable square feet and is located in New York.

The Company has also entered into two separate agreements to acquire three facilities from two parties for an aggregate purchase price of $14.9 million. The facilities total approximately 200,000 rentable square feet and are located in Texas (2 properties) and Florida (1 property).

The Company expects these acquisitions to close on or before June 30, 2005. The closingslease the majority of the transactions are contingent uponspace for the satisfactionduration of certain customary conditions. There are no assurances that the conditions will be met or that the transactions will be consummated.

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)term.

 

On March 29, 2005,As a result of this exit activity, the Company entered into an office lease agreement with Amsdell and Amsdell, an entity owned by Robert J. Amsdell and Barry L. Amsdell, for office spacerecognized a “Lease abandonment charge” of $1.3 million during 2007.  The charge is comprised of approximately 18,000 square feet at$0.8 million of costs that represent the present value of the net cash flows associated with leases and the sub-lease agreement (“Contract Termination Costs”) and approximately $0.5 million of costs associated with the write-off of certain assets related to the abandoned space (“Other Associated Costs”).  The Parkview Building, an approximately 40,000 square foot multi-tenant office building located at 6745 Engle Road, plus approximately 4,000 square feetContract Termination Costs of an approximately 18,000 square foot office building located at 6751 Engle Road, which$0.8 million are both partpresented as “Accounts payable and accrued rent” and the Other Associated Costs of Airport Executive Park,$0.5 million were accounted for as a 50-acre office and flex development located in Cleveland, Ohio. Airport Executive Park is owned by Amsdell and Amsdell.reduction of “Storage facilities.”  The lease is effective asCompany will amortize the Contract Termination Costs against rental expense over the remaining life of January 1, 2005 and has a ten-year term, with one five-year extension option exercisable by us. The aggregate amount of rent payable under this lease in 2005 will be approximately $260,000.

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)the respective leases.

 

F-30


U-STORE-IT

SCHEDULE III

REAL ESTATE AND RELATED DEPRECIATION

DECEMBER 31, 20042007

(Dollars in thousands)

 

      Initial Cost
     

Gross Carrying Amount

at December 31, 2004

      
Description  Encum-
brances
  Land
  Building
and
Improve-
ments
  Costs Sub-
sequent to
Acqui-
sition
  Land
  Building
and
Improve-
ments
  Total
  Accum-
ulated
Deprecia-
tion (G)
  Year
Acquired/
Developed

Mobile I, AL

  (F) $149  $1,429  $744  $225  $2,097  $2,322  $635  1997

Mobile II, AL

  (F)  226   2,524   729   301   3,178   3,479   929  1997

Mobile III, AL

  (A)  167   1,849   459   237   2,238   2,475   603  1998

Glendale, AZ

  (A)  201   2,265   1,038   418   3,086   3,504   719  1998

Scottsdale, AZ

  (A)  443   4,879   2,040   883   6,479   7,362   1,486  1998

Tucson I, AZ

  (A)  188   2,078   947   384   2,829   3,213   658  1998

Tucson II, AZ

  (A)  188   2,078   1,021   391   2,896   3,287   655  1998

Apple Valley I, CA

  (D)  140   1,570   1,590   476   2,824   3,300   599  1997

Apple Valley II, CA

  (F)  160   1,787   1,331   431   2,847   3,278   656  1997

Bloomington I, CA

  (F)  42   463   434   100   839   939   214  1997

Bloomington II, CA

  (F)  54   604   443   144   957   1,101   211  1997

Fallbrook, CA

  (C)  133   1,492   1,527   432   2,720   3,152   539  1997

Hemet, CA

  (D)  125   1,396   1,375   417   2,479   2,896   510  1997

Highland, CA

  (D)  215   2,407   1,998   582   4,038   4,620   894  1997

Lancaster, CA

  (F)  390   2,247   780   556   2,861   3,417   382  2001

Ontario, CA

  (A)  292   3,289   1,926   688   4,819   5,507   1,026  1998

Redlands, CA

  (C)  196   2,192   1,228   449   3,167   3,616   806  1997

Rialto, CA

  (A)  277   3,098   1,865   672   4,568   5,240   1,095  1997

Riverside I, CA

  (F)  42   465   552   141   918   1,059   207  1997

Riverside II, CA

  (F)  42   423   379   114   730   844   163  1997

Riverside III, CA

  (A)  91   1,035   1,089   310   1,905   2,215   395  1998

San Bernardino I, CA

  (F)  67   748   867   217   1,465   1,682   297  1997

San Bernardino II, CA

  (C)  152   1,704   1,424   450   2,830   3,280   607  1997

San Bernardino III, CA

  (F)  51   572   976   182   1,417   1,599   261  1997

San Bernardino IV, CA

  (C)  152   1,695   1,397   444   2,800   3,244   601  1997

San Bernardino V, CA

  (F)  112   1,251   949   306   2,006   2,312   463  1997

San Bernardino VI, CA

  (F)  98   1,093   802   242   1,751   1,993   421  1997

Sun City, CA

  (A)  140   1,579   930   324   2,325   2,649   522  1998

Temecula I, CA

  (A)  184   2,038   1,241   435   3,028   3,463   654  1998

Temecula II, CA

  (F)  476   2,697   6   476   2,703   3,179   155  2003

Vista, CA

  (D)  711   4,076   1,899   1,118   5,568   6,686   636  2001

Yucaipa, CA

  (C)  198   2,221   1,583   525   3,477   4,002   798  1997

Bloomfield, CT

  (A)  78   880   2,181   360   2,779   3,139   443  1997

Branford, CT

  (A)  217   2,433   1,417   504   3,563   4,067   1,059  1995

Enfield, CT

  (D)  424   2,424   265   473   2,640   3,113   609  2001

Gales Ferry, CT

  (A)  240   2,697   1,277   489   3,725   4,214   971  1995

Manchester, CT

  (D)  540   3,096   208   563   3,281   3,844   598  2002

Milford, CT

  (B)  87   1,050   1,024   274   1,887   2,161   427  1994

Mystic, CT

  (B)  136   1,645   1,678   410   3,049   3,459   662  1994

South Windsor, CT

  (B)  90   1,127   950   272   1,895   2,167   368  1994

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)

 

 

 

 

 

 

 

 

 

 

Gross Carrying Amount

 

 

 

 

 

 

 

 

 

 

Initial Cost

 

Costs Sub-

 

at December 31, 2007

 

 

 

 

Description

 

Square Footage

 

Encum-
brances

 

Land

 

Building and
Improvements

 

sequent to
Acquisition

 

Land

 

Building and
Improvements

 

Total

 

Accumulated
Depreciation (L)

 

Year Acquired /
Developed

Mobile I, AL

 

65,198

 

 

 

$

149

 

$

1,429

 

$

636

 

$

225

 

$

1,989

 

$

2,214

 

$

636

 

1997

Mobile II, AL

 

129,260

 

(A)

 

226

 

2,524

 

1,165

 

301

 

3,583

 

3,883

 

1,238

 

1997

Mobile III, AL

 

43,125

 

 

 

167

 

1,849

 

320

 

237

 

2,100

 

2,336

 

591

 

1998

Chandler, AZ

 

47,520

 

 

 

327

 

1,257

 

235

 

327

 

1,492

 

1,819

 

201

 

2005

Glendale, AZ

 

56,830

 

 

 

201

 

2,265

 

864

 

418

 

2,911

 

3,330

 

735

 

1998

Green Valley, AZ

 

25,200

 

(B)

 

298

 

1,153

 

89

 

298

 

1,242

 

1,540

 

167

 

2005

Mesa I, AZ

 

52,375

 

 

 

920

 

2,739

 

103

 

921

 

2,841

 

3,762

 

324

 

2006

Mesa II, AZ

 

45,295

 

 

 

731

 

2,176

 

127

 

731

 

2,303

 

3,034

 

265

 

2006

Mesa III, AZ

 

58,264

 

 

 

706

 

2,101

 

128

 

706

 

2,210

 

2,935

 

256

 

2006

Phoenix I, AZ

 

100,887

 

 

 

1,134

 

3,376

 

188

 

1,135

 

3,512

 

4,699

 

403

 

2006

Phoenix II, AZ

 

45,270

 

 

 

756

 

2,251

 

128

 

756

 

2,379

 

3,136

 

273

 

2006

Scottsdale, AZ

 

80,925

 

 

 

443

 

4,879

 

1,558

 

883

 

5,998

 

6,880

 

1,504

 

1998

Tempe, AZ

 

54,000

 

(A)

 

749

 

2,159

 

118

 

749

 

2,277

 

3,027

 

290

 

2005

Tucson I, AZ

 

59,350

 

 

 

188

 

2,078

 

820

 

384

 

2,703

 

3,086

 

667

 

1998

Tucson II, AZ

 

43,950

 

 

 

188

 

2,078

 

833

 

391

 

2,708

 

3,099

 

666

 

1998

Tucson III, AZ

 

49,822

 

(C)

 

532

 

2,048

 

105

 

533

 

2,153

 

2,686

 

291

 

2005

Tucson IV, AZ

 

47,840

 

(C)

 

674

 

2,595

 

144

 

675

 

2,739

 

3,413

 

369

 

2005

Tucson V, AZ

 

45,160

 

(C)

 

515

 

1,980

 

160

 

515

 

2,140

 

2,655

 

286

 

2005

Tucson VI, AZ

 

40,778

 

(C)

 

440

 

1,692

 

127

 

440

 

1,819

 

2,259

 

250

 

2005

Tucson VII, AZ

 

52,738

 

(C)

 

670

 

2,576

 

197

 

670

 

2,772

 

3,442

 

365

 

2005

Tucson VIII, AZ

 

46,800

 

(C)

 

589

 

2,265

 

90

 

589

 

2,354

 

2,943

 

317

 

2005

Tucson IX, AZ

 

67,656

 

(C)

 

724

 

2,786

 

223

 

725

 

3,009

 

3,734

 

392

 

2005

Tucson X, AZ

 

46,350

 

(C)

 

424

 

1,633

 

72

 

425

 

1,705

 

2,129

 

233

 

2005

Tucson XI, AZ

 

42,800

 

(C)

 

439

 

1,689

 

131

 

439

 

1,820

 

2,259

 

243

 

2005

Tucson XII, AZ

 

42,375

 

(C)

 

671

 

2,582

 

134

 

672

 

2,716

 

3,387

 

364

 

2005

Tucson XIII, AZ

 

45,792

 

(C)

 

587

 

2,258

 

95

 

587

 

2,352

 

2,940

 

317

 

2005

Tucson XIV, AZ

 

49,470

 

 

 

707

 

2,721

 

112

 

708

 

2,833

 

3,540

 

379

 

2005

Apple Valley I, CA

 

73,340

 

(D)

 

140

 

1,570

 

1,500

 

476

 

2,733

 

3,210

 

645

 

1997

Apple Valley II, CA

 

62,115

 

(E)

 

160

 

1,787

 

1,165

 

431

 

2,681

 

3,112

 

678

 

1997

Benicia, CA

 

74,920

 

 

 

2,392

 

7,028

 

118

 

2,392

 

7,146

 

9,538

 

850

 

2005

Bloomington I, CA

 

28,550

 

 

 

42

 

463

 

422

 

100

 

827

 

927

 

228

 

1997

Bloomington II, CA

 

25,860

 

 

 

54

 

604

 

414

 

144

 

928

 

1,072

 

236

 

1997

Cathedral City, CA

 

129,048

 

 

 

2,194

 

10,046

 

100

 

2,195

 

10,145

 

12,340

 

1,044

 

2006

Citrus Heights, CA

 

75,620

 

(C)

 

1,633

 

4,793

 

89

 

1,634

 

4,882

 

6,516

 

671

 

2005

Diamond Bar, CA

 

103,228

 

 

 

2,522

 

7,404

 

142

 

2,524

 

7,541

 

10,068

 

1,043

 

2005

Escondido, CA

 

143,145

 

 

 

3,040

 

11,804

 

(781

)

3,040

 

10,238

 

14,063

 

198

 

2007

Fallbrook, CA

 

46,370

 

(F)

 

133

 

1,492

 

1,455

 

432

 

2,648

 

3,080

 

609

 

1997

Hemet, CA

 

66,040

 

(D)

 

125

 

1,396

 

1,262

 

417

 

2,367

 

2,783

 

567

 

1997

Highland I, CA

 

76,765

 

(D)

 

215

 

2,407

 

1,893

 

582

 

3,933

 

4,515

 

981

 

1997

Highland II, CA

 

62,257

 

 

 

1,277

 

5,847

 

134

 

1,277

 

5,981

 

7,258

 

611

 

2006

Lancaster, CA

 

61,275

 

(E)

 

390

 

2,247

 

890

 

556

 

2,971

 

3,527

 

726

 

2001

Long Beach, CA

 

125,213

 

 

 

3,138

 

14,368

 

189

 

3,138

 

14,557

 

17,696

 

1,500

 

2006

Murrieta, CA

 

49,895

 

 

 

1,883

 

5,532

 

151

 

1,903

 

5,663

 

7,566

 

678

 

2005

North Highlands, CA

 

57,244

 

(C)

 

868

 

2,546

 

185

 

868

 

2,731

 

3,598

 

363

 

2005

Orangevale, CA

 

50,492

 

(C)

 

1,423

 

4,175

 

117

 

1,423

 

4,291

 

5,714

 

587

 

2005

Palm Springs I, CA

 

72,775

 

 

 

1,565

 

7,164

 

100

 

1,566

 

7,263

 

8,829

 

750

 

2006

Palm Springs II, CA

 

122,745

 

 

 

2,131

 

9,758

 

152

 

2,132

 

9,909

 

12,041

 

1,020

 

2006

Pleasanton, CA

 

82,415

 

 

 

2,799

 

8,222

 

42

 

2,799

 

8,264

 

11,063

 

984

 

2005

Rancho Cordova, CA

 

53,928

 

(C)

 

1,094

 

3,212

 

162

 

1,095

 

3,374

 

4,469

 

457

 

2005

Redlands, CA

 

62,805

 

(F)

 

196

 

2,192

 

1,123

 

449

 

3,063

 

3,511

 

853

 

1997

Rialto, CA

 

57,371

 

 

 

899

 

4,118

 

86

 

899

 

4,204

 

5,103

 

434

 

2006

Rialto II, CA

 

99,393

 

 

 

277

 

3,098

 

1,589

 

672

 

4,293

 

4,964

 

1,161

 

1997

Riverside I, CA

 

27,485

 

 

 

42

 

465

 

474

 

141

 

841

 

981

 

222

 

1997

Riverside II, CA

 

20,420

 

 

 

42

 

423

 

336

 

114

 

687

 

801

 

177

 

1997

Riverside III, CA

 

46,809

 

 

 

91

 

1,035

 

964

 

310

 

1,780

 

2,090

 

402

 

1998

Riverside IV, CA

 

67,320

 

 

 

1,351

 

6,183

 

74

 

1,351

 

6,257

 

7,608

 

646

 

2006

Riverside V, CA

 

85,521

 

 

 

1,170

 

5,359

 

144

 

1,170

 

5,502

 

6,673

 

566

 

2006

Riverside VI, CA

 

74,900

 

(K)

 

1,040

 

4,119

 

(190

)

1,040

 

3,738

 

4,969

 

70

 

2007

Roseville, CA

 

59,944

 

(C)

 

1,284

 

3,767

 

180

 

1,284

 

3,947

 

5,231

 

528

 

2005

Sacramento I, CA

 

50,764

 

(C)

 

1,152

 

3,380

 

136

 

1,152

 

3,514

 

4,668

 

480

 

2005

Sacramento II, CA

 

61,890

 

(C)

 

1,406

 

4,128

 

77

 

1,407

 

4,205

 

5,612

 

579

 

2005

San Bernardino I, CA

 

47,350

 

 

 

67

 

748

 

826

 

217

 

1,424

 

1,641

 

334

 

1997

San Bernardino II, CA

 

83,278

 

(F)

 

152

 

1,704

 

1,298

 

450

 

2,703

 

3,154

 

688

 

1997

San Bernardino III, CA

 

31,070

 

(A)

 

51

 

572

 

1,037

 

182

 

1,478

 

1,660

 

391

 

1997

San Bernardino IV, CA

 

57,245

 

(F)

 

152

 

1,695

 

1,604

 

444

 

3,007

 

3,451

 

881

 

1997

San Bernardino V, CA

 

41,646

 

(A)

 

112

 

1,251

 

1,077

 

306

 

2,135

 

2,440

 

644

 

1997

San Bernardino VI, CA

 

35,671

 

(A)

 

98

 

1,093

 

884

 

242

 

1,813

 

2,075

 

575

 

1997

 

      Initial Cost
     

Gross Carrying Amount

at December 31, 2004

      
Description  Encum-
brances
  Land
  Building
and
Improve-
ments
  Costs Sub-
sequent to
Acqui-
sition
  Land
  Building
and
Improve-
ments
  Total
  Accum-
ulated
Deprecia-
tion (G)
  Year
Acquired/
Developed

Boca Raton, FL

  (C) 529  3,054  1,369  812  4,140  4,952  724  2001

Boynton Beach, FL

  (F) 667  3,796  1,466  958  4,971  5,929  914  2001

Bradenton, FL

  (F) 1,931  5,561  3  1,931  5,564  7,495  48  2004

Bradenton, FL

  (F) 1,180  3,324  8  1,180  3,332  4,512  28  2004

Cape Coral, FL

  (C) 472  2,769  2,159  830  4,570  5,400  887  2000

Dania, FL

  (F) 205  2,068  1,442  481  3,234  3,715  834  1994

Dania Beach, FL

  (F) 3,584  10,324  3  3,584  10,327  13,911  88  2004

Davie, FL

  (D) 1,268  7,183  525  1,373  7,603  8,976  1,074  2001

Deerfield Beach, FL

  (F) 946  2,999  1,746  1,311  4,380  5,691  525  1998

DeLand, FL

  (A) 113  1,258  848  286  1,933  2,219  413  1998

Delray Beach, FL

  (F) 798  4,539  485  883  4,939  5,822  1,069  2001

Fernandina Beach, FL

  (A) 189  2,111  3,463  523  5,240  5,763  1,149  1996

Ft. Lauderdale, FL

  (D) 937  3,646  2,126  1,384  5,325  6,709  681  1999

Ft. Myers, FL

  (F) 303  3,329  236  328  3,540  3,868  901  1998

Lake Worth, FL

  (C) 183  6,597  4,785  183  11,382  11,565  2,539  1998

Lakeland I, FL

  (F) 81  896  882  256  1,603  1,859  447  1994

Lakeland II, FL

  (F) 49  551  409  103  906  1,009  248  1996

Leesburg, FL

  (A) 96  1,079  705  214  1,666  1,880  410  1997

Lutz, FL

  (F) 992  2,868  4  992  2,872  3,864  25  2004

Lutz, FL

  (F) 901  2,478  7  901  2,485  3,386  21  2004

Margate I, FL

  (F) 161  1,763  1,318  399  2,843  3,242  563  1994

Margate II, FL

  (A) 132  1,473  1,747  383  2,969  3,352  666  1996

Merrit Island, FL

  (F) 716  2,983  373  796  3,276  4,072  422  2000

Miami I, FL

  (D) 179  1,999  1,513  484  3,207  3,691  705  1995

Miami II, FL

  (F) 188  2,052  567  286  2,521  2,807  628  1994

Miami III, FL

  (F) 253  2,544  1,520  561  3,756  4,317  1,008  1994

Miami IV, FL

  (F) 193  2,174  1,640  516  3,491  4,007  834  1995

Miami V, FL

  (A) 193  2,165  1,085  364  3,079  3,443  858  1995

Naples I, FL

  (F) 90  1,010  2,231  270  3,061  3,331  592  1996

Naples II, FL

  (F) 148  1,652  4,288  558  5,530  6,088  1,035  1997

Naples III, FL

  (F) 139  1,561  3,483  598  4,585  5,183  1,177  1997

Ocala, FL

  (F) 55  558  548  155  1,006  1,161  259  1994

Orange City, FL

  (F) 1,191  3,209  3  1,191  3,212  4,403  27  2004

Orlando, FL

  (A) 187  2,088  423  240  2,458  2,698  755  1997

Pembroke Pines, FL

  (D) 337  3,772  2,897  953  6,053  7,006  1,336  1997

Royal Palm Beach, FL

  (C) 205  2,148  2,745  741  4,357  5,098  1,379  1994

Sarasota, FL

  (F) 333  3,656  989  529  4,449  4,978  1,017  1998

St. Augustine, FL

  (A) 135  1,515  3,165  383  4,432  4,815  949  1996

Stuart I, FL

  (A) 154  1,726  1,060  319  2,621  2,940  673  1997

Stuart II, FL

  (F) 324  3,625  2,651  685  5,915  6,600  1,365  1997

Naples IV, FL

  (A) 262  2,980  721  407  3,556  3,963  955  1998

Tampa I, FL

  (F) 124  1,252  543  220  1,699  1,919  536  1994

Tampa II, FL

  (F) 330  1,887  410  330  2,297  2,627  436  2001

Vero Beach I, FL

  (F) 71  774  223  171  897  1,068  178  1997

Vero Beach II, FL

  (F) 88  1,009  227  88  1,236  1,324  363  1998

West Palm Beach, FL

  2,542  719  3,420  1,367  835  4,671  5,506  964  2001

West Palm Beach, FL

  (F) 2,129  8,671  8  2,129  8,679  10,808  86  2004

Alpharetta, GA

  (C) 806  4,720  745  967  5,304  6,271  1,082  2001

F-31

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)


 

      Initial Cost
     

Gross Carrying Amount

at December 31, 2004

      
Description  Encum-
brances
  Land
  Building
and
Improve-
ments
  Costs Sub-
sequent to
Acqui-
sition
  Land
  Building
and
Improve-
ments
  Total
  Accum-
ulated
Deprecia-
tion (G)
  Year
Acquired/
Developed

Decatur, GA

  (A) 616  6,776  328  616  7,104  7,720  2,080  1998

Norcross, GA

  (D) 514  2,930  590  632  3,402  4,034  541  2001

Peachtree City, GA

  1,859  435  2,532  460  529  2,898  3,427  482  2001

Smyrna, GA

  (C) 750  4,271  42  750  4,313  5,063  870  2001

Addison, IL

  (E) 428  3,531  6  428  3,537  3,965  30  2004

Aurora, IL

  (F) 644  3,652  3  644  3,655  4,299  31  2004

Bartlett, IL

  (F) 1,126  2,197  3  1,126  2,200  3,326  19  2004

Bartlett, IL

  (F) 931  2,493  6  931  2,499  3,430  21  2004

Bellwood, IL

  (F) 1,012  5,768  443  1,012  6,211  7,223  1,144  2001

Des Plaines, IL

  (E) 1,564  4,327  5  1,564  4,332  5,896  37  2004

Elk Grove Village, IL

  (E) 1,446  3,535  3  1,446  3,538  4,984  30  2004

Glenview, IL

  (E) 3,740  10,367  2  3,740  10,369  14,109  89  2004

Gurnee, IL

  (E) 1,521  5,440  2  1,521  5,442  6,963  47  2004

Harvey, IL

  (E) 869  3,635  6  869  3,641  4,510  31  2004

Joliet, IL

  (E) 547  4,704  2  547  4,706  5,253  40  2004

Lake Zurich, IL

  (E) 2,102  2,187  2  2,102  2,189  4,291  19  2004

Lombard, IL

  (E) 1,305  3,938  3  1,305  3,941  5,246  34  2004

Mount Prospect, IL

  (E) 1,701  3,114  4  1,701  3,118  4,819  27  2004

Mundelein, IL

  (E) 1,498  2,782  2  1,498  2,784  4,282  24  2004

North Chicago, IL

  (E) 1,073  3,006  2  1,073  3,008  4,081  26  2004

Plainfield, IL

  (F) 1,770  1,715  2  1,770  1,717  3,487  15  2004

Schaumburg, IL

  (F) 538  645  2  538  647  1,185  6  2004

Streamwood, IL

  (F) 1,447  1,662  2  1,447  1,664  3,111  14  2004

Waukegan, IL

  (E) 1,198  4,363  2  1,198  4,365  5,563  37  2004

West Chicago, IL

  (F) 1,071  2,249  2  1,071  2,251  3,322  19  2004

Westmont, IL

  (E) 1,155  3,873  1  1,155  3,874  5,029  33  2004

Wheeling, IL

  (F) 857  3,213  2  857  3,215  4,072  28  2004

Wheeling, IL

  (E) 793  3,816  2  793  3,818  4,611  33  2004

Woodridge, IL

  (E) 943  3,397  2  943  3,399  4,342  29  2004

Indianapolis, IN

  (E) 1,229  2,834  3  1,229  2,837  4,066  24  2004

Indianapolis, IN

  (F) 641  3,154  2  641  3,156  3,797  27  2004

Indianapolis, IN

  (E) 2,138  3,633  2  2,138  3,635  5,773  31  2004

Indianapolis, IN

  (F) 406  3,496  2  406  3,498  3,904  30  2004

Indianapolis, IN

  (E) 908  4,755  2  908  4,757  5,665  41  2004

Indianapolis, IN

  (E) 1,133  4,103  3  1,133  4,106  5,239  35  2004

Indianapolis, IN

  (E) 887  3,548  3  887  3,551  4,438  30  2004

Indianapolis, IN

  (E) 1,871  1,230  2  1,871  1,232  3,103  11  2004

Indianapolis, IN

  (E) 669  2,434  2  669  2,436  3,105  21  2004

Baton Rouge I, LA

  (F) 112  1,248  621  208  1,773  1,981  481  1997

Baton Rouge II, LA

  (F) 118  1,181  1,055  267  2,087  2,354  508  1997

Baton Rouge III, LA

  (F) 133  1,487  763  271  2,112  2,383  566  1997

Baton Rouge IV, LA

  (A) 32  377  156  64  501  565  126  1998

Prairieville, LA

  (A) 90  1,004  235  90  1,239  1,329  343  1998

Slidell, LA

  (D) 188  3,175  1,513  802  4,074  4,876  592  2001

Boston, MA

  (C) 1,516  8,628  115  1,516  8,743  10,259  1,341  2002

Leominster, MA

  (D) 90  1,519  2,248  338  3,519  3,857  592  1998

Baltimore, MD

  (F) 1,050  5,997  705  1,159  6,593  7,752  1,173  2001

California, MD

  (F) 1,486  4,280  5  1,486  4,285  5,771  37  2004

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)

 

 

 

 

 

 

 

 

 

 

Gross Carrying Amount

 

 

 

 

 

 

 

 

 

 

Initial Cost

 

Costs Sub-

 

at December 31, 2007

 

 

 

 

Description

 

Square Footage

 

Encum-
brances

 

Land

 

Building and
Improvements

 

sequent to
Acquisition

 

Land

 

Building and
Improvements

 

Total

 

Accumulated
Depreciation (L)

 

Year Acquired /
Developed

San Bernardino VII, CA

 

83,507

 

(E)

 

$

1,872

 

$

5,391

 

$

34

 

$

1,872

 

$

5,426

 

$

7,297

 

$

835

 

2005

San Bernardino VIII, CA

 

56,820

 

 

 

783

 

3,583

 

138

 

783

 

3,721

 

4,504

 

382

 

2006

San Bernardino IX, CA

 

117,928

 

 

 

1,205

 

5,518

 

119

 

1,205

 

5,636

 

6,841

 

581

 

2006

San Bernardino X, CA

 

78,839

 

 

 

1,475

 

6,753

 

185

 

1,476

 

6,937

 

8,413

 

711

 

2006

San Bernardino XI, CA

 

112,154

 

 

 

1,691

 

7,741

 

165

 

1,692

 

7,905

 

9,597

 

814

 

2006

San Marcos, CA

 

37,430

 

(G

 

775

 

2,288

 

48

 

776

 

2,335

 

3,111

 

322

 

2005

Santa Ana, CA

 

65,528

 

 

 

1,223

 

5,600

 

144

 

1,223

 

5,744

 

6,967

 

588

 

2006

South Palmetto, CA

 

80,505

 

 

 

292

 

3,289

 

1,818

 

688

 

4,711

 

5,399

 

1,076

 

1998

South Sacramento, CA

 

52,290

 

(C)

 

790

 

2,319

 

109

 

791

 

2,428

 

3,219

 

334

 

2005

Spring Valley, CA

 

55,070

 

 

 

1,178

 

5,394

 

285

 

1,178

 

5,679

 

6,857

 

577

 

2006

Sun City, CA

 

38,435

 

 

 

140

 

1,579

 

894

 

324

 

2,289

 

2,613

 

554

 

1998

Temecula I, CA

 

81,740

 

 

 

660

 

4,735

 

1,104

 

911

 

5,588

 

6,499

 

1,252

 

1998

Temecula II, CA

 

84,580

 

(K)

 

3,080

 

5,839

 

(103

)

3,080

 

5,626

 

8,815

 

104

 

2007

Thousand Palms, CA

 

76,336

 

 

 

1,493

 

6,835

 

263

 

1,493

 

7,098

 

8,591

 

728

 

2006

Vista I, CA

 

74,405

 

(D)

 

711

 

4,076

 

2,032

 

1,118

 

5,701

 

6,819

 

1,298

 

2001

Vista II, CA

 

147,721

 

 

 

4,629

 

13,599

 

54

 

4,629

 

13,653

 

18,282

 

1,624

 

2005

Walnut, CA

 

50,708

 

 

 

1,578

 

4,635

 

173

 

1,595

 

4,792

 

6,386

 

568

 

2005

West Sacramento, CA

 

39,715

 

 

 

1,222

 

3,590

 

81

 

1,222

 

3,671

 

4,893

 

433

 

2005

Westminster, CA

 

68,048

 

(G)

 

1,740

 

5,142

 

111

 

1,743

 

5,250

 

6,993

 

727

 

2005

Yucaipa, CA

 

77,560

 

(F)

 

198

 

2,221

 

1,454

 

525

 

3,348

 

3,873

 

860

 

1997

Aurora I, CO

 

75,867

 

(C)

 

1,343

 

2,986

 

181

 

1,343

 

3,167

 

4,510

 

446

 

2005

Aurora II, CO

 

57,753

 

 

 

736

 

1,637

 

254

 

736

 

1,891

 

2,627

 

244

 

2005

Aurora III, CO

 

28,730

 

 

 

352

 

783

 

159

 

352

 

942

 

1,294

 

122

 

2005

Aurora IV, CO

 

49,700

 

 

 

752

 

3,066

 

108

 

753

 

3,173

 

3,927

 

356

 

2006

Boulder I, CO

 

47,296

 

 

 

1,005

 

4,095

 

209

 

1,005

 

4,304

 

5,309

 

421

 

2006

Boulder II, CO

 

101,245

 

 

 

2,556

 

10,416

 

180

 

2,556

 

10,596

 

13,152

 

1,029

 

2006

Boulder III, CO

 

80,174

 

 

 

1,370

 

5,581

 

149

 

1,370

 

5,730

 

7,100

 

558

 

2006

Boulder IV, CO

 

95,148

 

 

 

2,102

 

8,563

 

135

 

2,102

 

8,699

 

10,800

 

845

 

2006

Colorado Springs I, CO

 

47,975

 

 

 

771

 

1,717

 

160

 

771

 

1,877

 

2,648

 

242

 

2005

Colorado Springs II, CO

 

62,400

 

1,999

 

657

 

2,674

 

162

 

656

 

2,837

 

3,493

 

233

 

2006

Denver I, CO

 

58,050

 

 

 

1,105

 

2,459

 

109

 

1,105

 

2,568

 

3,673

 

334

 

2005

Denver II, CO

 

59,200

 

 

 

673

 

2,741

 

104

 

674

 

2,845

 

3,518

 

322

 

2006

Denver III, CO

 

63,700

 

 

 

732

 

2,982

 

127

 

733

 

3,108

 

3,841

 

352

 

2006

Englewood, CO

 

51,000

 

 

 

981

 

2,183

 

115

 

981

 

2,298

 

3,278

 

305

 

2005

Federal Heights, CO

 

54,770

 

(C)

 

878

 

1,953

 

80

 

879

 

2,032

 

2,911

 

291

 

2005

Golden, CO

 

87,832

 

(C)

 

1,683

 

3,744

 

205

 

1,684

 

3,948

 

5,632

 

551

 

2005

Littleton I , CO

 

53,490

 

(C)

 

1,268

 

2,820

 

118

 

1,268

 

2,938

 

4,206

 

411

 

2005

Littleton II, CO

 

46,175

 

 

 

1,121

 

2,495

 

127

 

1,121

 

2,622

 

3,743

 

346

 

2005

Northglenn, CO

 

52,102

 

(C)

 

862

 

1,917

 

103

 

862

 

2,020

 

2,882

 

288

 

2005

Bloomfield, CT

 

48,700

 

 

 

78

 

880

 

2,193

 

360

 

2,791

 

3,151

 

675

 

1997

Branford, CT

 

49,079

 

 

 

217

 

2,433

 

1,021

 

504

 

3,166

 

3,671

 

1,043

 

1995

Bristol, CT

 

47,825

 

(E)

 

1,819

 

3,161

 

53

 

1,819

 

3,213

 

5,033

 

529

 

2005

East Windsor, CT

 

45,900

 

(A)

 

744

 

1,294

 

239

 

744

 

1,519

 

2,278

 

236

 

2005

Enfield, CT

 

52,775

 

(D)

 

424

 

2,424

 

282

 

473

 

2,657

 

3,130

 

923

 

2001

Gales Ferry, CT

 

54,230

 

 

 

240

 

2,697

 

1,312

 

489

 

3,760

 

4,249

 

1,247

 

1995

Manchester I, CT

 

47,125

 

(D)

 

540

 

3,096

 

292

 

563

 

3,365

 

3,928

 

1,120

 

2002

Manchester II, CT

 

52,725

 

(E)

 

996

 

1,730

 

83

 

996

 

1,811

 

2,809

 

293

 

2005

Milford, CT

 

44,885

 

 

 

87

 

1,050

 

1,049

 

274

 

1,912

 

2,186

 

529

 

1994

Monroe, CT

 

58,500

 

(E)

 

2,004

 

3,483

 

439

 

2,004

 

3,837

 

5,926

 

605

 

2005

Mystic, CT

 

50,800

 

 

 

136

 

1,645

 

1,692

 

410

 

3,030

 

3,473

 

854

 

1994

Newington I, CT

 

42,620

 

(E)

 

1,059

 

1,840

 

64

 

1,059

 

1,904

 

2,962

 

312

 

2005

Newington II, CT

 

35,810

 

(E)

 

911

 

1,584

 

60

 

911

 

1,644

 

2,555

 

272

 

2005

Old Saybrook I, CT

 

87,700

 

(E)

 

3,092

 

5,374

 

218

 

3,092

 

5,592

 

8,684

 

918

 

2005

Old Saybrook II, CT

 

26,425

 

(E)

 

1,135

 

1,973

 

110

 

1,135

 

2,083

 

3,218

 

343

 

2005

South Windsor, CT

 

71,725

 

 

 

90

 

1,127

 

1,041

 

272

 

1,985

 

2,258

 

538

 

1994

Stamford, CT

 

28,957

 

(E)

 

1,941

 

3,374

 

52

 

1,941

 

3,426

 

5,367

 

565

 

2005

Boca Raton, FL

 

37,958

 

(F)

 

529

 

3,054

 

1,456

 

813

 

4,226

 

5,039

 

1,196

 

2001

Boynton Beach I, FL

 

62,013

 

(E)

 

667

 

3,796

 

1,581

 

958

 

5,086

 

6,044

 

1,478

 

2001

Boynton Beach II, FL

 

61,841

 

(A)

 

1,030

 

2,968

 

192

 

1,030

 

3,160

 

4,190

 

440

 

2005

Bradenton I, FL

 

68,502

 

 

 

1,180

 

3,324

 

115

 

1,180

 

3,439

 

4,619

 

558

 

2004

Bradenton II, FL

 

87,760

 

 

 

1,931

 

5,561

 

239

 

1,931

 

5,801

 

7,731

 

938

 

2004

Cape Coral, FL

 

76,592

 

(F)

 

472

 

2,769

 

2,261

 

830

 

4,672

 

5,502

 

1,341

 

2000

Dania Beach, FL

 

183,393

 

 

 

3,584

 

10,324

 

369

 

3,584

 

10,685

 

14,277

 

1,747

 

2004

Dania, FL

 

58,270

 

 

 

205

 

2,068

 

1,302

 

481

 

3,094

 

3,575

 

872

 

1994

Davie, FL

 

81,035

 

(D)

 

1,268

 

7,183

 

603

 

1,373

 

7,682

 

9,054

 

2,452

 

2001

Deerfield Beach, FL

 

57,600

 

(A)

 

946

 

2,999

 

1,799

 

1,311

 

4,433

 

5,744

 

902

 

1998

DeLand, FL

 

37,552

 

 

 

113

 

1,258

 

734

 

286

 

1,819

 

2,105

 

427

 

1998

Delray Beach, FL

 

67,809

 

(A)

 

798

 

4,539

 

562

 

883

 

5,017

 

5,899

 

1,644

 

2001

Fernandina Beach, FL

 

111,030

 

 

 

189

 

2,111

 

3,346

 

523

 

3,871

 

5,646

 

1,314

 

1996

Ft. Lauderdale, FL

 

70,596

 

(D)

 

937

 

3,646

 

2,202

 

1,384

 

5,401

 

6,785

 

1,134

 

1999

Ft. Myers, FL

 

67,546

 

(A)

 

303

 

3,329

 

334

 

328

 

3,637

 

3,966

 

1,213

 

1998

Gulf Breeze, FL

 

79,449

 

 

 

2,035

 

5,863

 

76

 

2,035

 

5,940

 

7,975

 

686

 

2005

Jacksonville I, FL

 

80,401

 

 

 

1,862

 

5,362

 

31

 

1,862

 

5,392

 

7,255

 

602

 

2005

Jacksonville II, FL

 

65,020

 

 

 

950

 

7,004

 

(666

)

950

 

5,671

 

7,288

 

114

 

2007

Jacksonville III, FL

 

65,603

 

 

 

860

 

7,409

 

(571

)

860

 

6,267

 

7,699

 

123

 

2007

Jacksonville IV, FL

 

78,604

 

(K)

 

870

 

8,049

 

(40

)

870

 

7,965

 

8,878

 

145

 

2007

Jacksonville V, FL

 

81,860

 

 

 

1,220

 

8,210

 

(533

)

1,220

 

7,141

 

8,897

 

138

 

2007

Lake Worth, FL

 

163,683

 

(F)

 

183

 

6,597

 

5,149

 

183

 

11,746

 

11,929

 

3,926

 

1998

Lakeland I, FL

 

48,911

 

(A)

 

81

 

896

 

940

 

256

 

1,661

 

1,917

 

606

 

1994

Lakeland II, FL

 

47,680

 

 

 

49

 

551

 

487

 

103

 

983

 

1,087

 

307

 

1996

 

      Initial Cost
     

Gross Carrying Amount

at December 31, 2004

      
Description  Encum-
brances
  Land
  Building
and
Improve-
ments
  Costs Sub-
sequent to
Acqui-
sition
  Land
  Building
and
Improve-
ments
  Total
  Accum-
ulated
Deprecia-
tion (G)
  Year
Acquired/
Developed

Laurel, MD

  (C) 1,409  8,035  2,958  1,928  10,474  12,402  1,517  2001

Temple Hills, MD

  (D) 1,541  8,788  1,878  1,800  10,407  12,207  1,570  2001

Grand Rapids, MI

  (F) 185  1,821  1,167  325  2,848  3,173  766  1996

Portage, MI

  (F) 104  1,160  699  237  1,726  1,963  431  1996

Romulus, MI

  (F)��308  1,743  520  418  2,153  2,571  259  1997

Wyoming, MI

  (F) 191  2,135  917  354  2,889  3,243  776  1996

Biloxi, MS

  (F) 148  1,652  670  279  2,191  2,470  578  1997

Gautier, MS

  (F) 93  1,040  120  93  1,160  1,253  387  1997

Gulfport I, MS

  (F) 128  1,438  563  156  1,973  2,129  662  1997

Gulfport II, MS

  (F) 117  1,306  492  179  1,736  1,915  530  1997

Gulfport III, MS

  (F) 172  1,928  864  338  2,626  2,964  693  1997

Waveland, MS

  (A) 215  2,481  1,040  392  3,344  3,736  866  1998

Belmont, NC

  (F) 385  2,196  364  451  2,494  2,945  499  2001

Burlington I, NC

  (F) 498  2,837  84  498  2,921  3,419  641  2001

Burlington II, NC

  (F) 320  1,829  126  340  1,935  2,275  362  2001

Cary, NC

  (F) 543  3,097  111  543  3,208  3,751  474  2001

Charlotte, NC

  (C) 782  4,429  1,294  1,068  5,437  6,505  629  1999

Fayetteville I, NC

  (F) 156  1,747  773  301  2,375  2,676  582  1997

Fayetteville II, NC

  (C) 213  2,301  872  399  2,987  3,386  769  1997

Raleigh, NC

  (A) 209  2,398  421  296  2,732  3,028  720  1998

Brick, NJ

  (B) 234  2,762  1,289  485  3,800  4,285  957  1994

Cranford, NJ

  (B) 290  3,493  2,357  779  5,361  6,140  1,351  1994

East Hanover, NJ

  (B) 504  5,763  4,016  1,315  8,968  10,283  2,277  1994

Fairview, NJ

  (F) 246  2,759  438  246  3,197  3,443  953  1997

Jersey City, NJ

  (B) 397  4,507  2,922  1,010  6,816  7,826  1,771  1994

Linden I, NJ

  (B) 517  6,008  3,452  1,170  8,807  9,977  1,728  1994

Linden II, NJ

  (B) 0  2  854  189  667  856  14  1994

Morris Township, NJ

  (D) 500  5,602  2,915  1,072  7,945  9,017  1,924  1997

Parsippany, NJ

  (A) 475  5,322  2,359  909  7,247  8,156  1,825  1997

Randolph, NJ

  (D) 855  4,872  1,163  1,108  5,782  6,890  932  2002

Sewell, NJ

  (C) 484  2,766  1,073  706  3,617  4,323  693  2001

Jamaica, NY

  (D) 2,043  11,658  241  2,043  11,899  13,942  2,186  2001

North Babylon, NY

  (C) 225  2,514  3,809  568  5,980  6,548  1,147  1998

Boardman, OH

  (C) 64  745  2,067  287  2,589  2,876  1,005  1980

Brecksville, OH

  (A) 228  2,545  1,199  442  3,530  3,972  834  1998

Centerville, OH

  (E) 471  3,705  4  471  3,709  4,180  32  2004

Centerville, OH

  (F) 332  1,757  2  332  1,759  2,091  15  2004

Dayton, OH

  (F) 323  2,070  2  323  2,072  2,395  18  2004

Euclid I, OH

  (A) 200  1,053  1,793  317  2,729  3,046  1,117  1988

Euclid II, OH

  (A) 359  0  1,559  461  1,457  1,918  229  1988

Hudson, OH

  (A) 195  2,198  556  274  2,675  2,949  710  1998

Lakewood, OH

  (F) 405  854  398  405  1,252  1,657  573  1989

Mason, OH

  (A) 127  1,419  184  149  1,581  1,730  467  1998

Miamisburg, OH

  (E) 375  2,410  2  375  2,412  2,787  21  2004

Middleburg Heights, OH

  (A) 63  704  1,691  332  2,126  2,458  474  1980

North Canton I, OH

  (F) 209  846  729  304  1,480  1,784  887  1979

North Canton II, OH

  (F) 70  1,226  1,196  239  2,253  2,492  1,364  1983

North Olmsted I, OH

  (A) 63  704  1,204  214  1,757  1,971  460  1979

F-32

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)


 

     Initial Cost
   

Gross Carrying Amount

at December 31, 2004

    
Description Encum-
brances
  Land
 Building
and
Improve-
ments
 Costs Sub-
sequent to
Acqui-
sition
 Land
 Building
and
Improve-
ments
 Total
 Accum-
ulated
Deprecia-
tion (G)
 Year
Acquired/
Developed

North Olmsted II, OH

 (C)  290  1,129  1,007  469  1,957  2,426  709 1988

North Randall, OH

 (C)  515  2,323  2,712  898  4,652  5,550  688 1998

Warrensville Heights, OH

 (B)  525  766  2,876  935  3,232  4,167  527 1980

Youngstown, OH

 (F)  67  0  1,582  204  1,445  1,649  699 1977

Levittown, PA

 (C)  926  5,296  749  926  6,045  6,971  1,035 2001

Philadelphia, PA

 (D)  1,461  8,334  417  1,461  8,751  10,212  2,058 2001

Hilton Head I, SC

 (A)  129  1,446  6,357  798  7,134  7,932  1,649 1997

Hilton Head II, SC

 (A)  150  1,767  996  315  2,598  2,913  681 1997

Summerville, SC

 (A)  143  1,643  710  313  2,183  2,496  549 1998

Knoxville I, TN

 (F)  99  1,113  221  102  1,331  1,433  421 1997

Knoxville II, TN

 (F)  117  1,308  259  129  1,555  1,684  431 1997

Knoxville III, TN

 (A)  182  2,053  772  331  2,676  3,007  673 1998

Knoxville IV, TN

 (A)  158  1,771  771  310  2,390  2,700  562 1998

Knoxville V, TN

 (A)  134  1,493  482  235  1,874  2,109  478 1998

Memphis I, TN

 (F)  677  3,880  781  677  4,661  5,338  811 2001

Memphis II, TN

 (F)  395  2,276  74  395  2,350  2,745  452 2001

Milwaukee, WI

 (E)  375  4,333  3  375  4,336  4,711  37 2004

Corporate Office, OH

     0  0  1,400  0  1,400  1,400  686 1977
     
 
 
 
 
 
 
  
     $105,785 $553,169 $192,674 $136,168 $715,460 $851,628 $122,473  
     
 
 
 
 
 
 
  

 

 

 

 

 

 

 

 

 

 

Gross Carrying Amount

 

 

 

 

 

 

 

 

 

 

Initial Cost

 

Costs Sub-

 

at December 31, 2007

 

 

 

 

Description

 

Square Footage

 

Encum-
brances

 

Land

 

Building and
Improvements

 

sequent to
Acquisition

 

Land

 

Building and
Improvements

 

Total

 

Accumulated
Depreciation (L)

 

Year Acquired /
Developed

Leesburg, FL

 

59,840

 

 

 

$

96

 

$

1,079

 

$

786

 

$

214

 

$

1,257

 

$

1,961

 

$

542

 

1997

Kendall, FL

 

75,395

 

(K)

 

2,350

 

8,106

 

(765

)

2,350

 

6,573

 

9,691

 

133

 

2007

Lutz I, FL

 

72,495

 

 

 

901

 

2,478

 

78

 

901

 

2,556

 

3,457

 

419

 

2004

Lutz II, FL

 

69,292

 

 

 

992

 

2,868

 

115

 

992

 

2,983

 

3,975

 

482

 

2004

Margate I, FL

 

54,405

 

(A)

 

161

 

1,763

 

1,551

 

399

 

3,076

 

3,475

 

869

 

1994

Margate II, FL

 

65,168

 

 

 

132

 

1,473

 

1,667

 

383

 

2,889

 

3,272

 

731

 

1996

Merrit Island, FL

 

50,427

 

(A)

 

716

 

2,983

 

433

 

796

 

3,336

 

4,132

 

963

 

2000

Miami I, FL

 

46,925

 

(D)

 

179

 

1,999

 

1,566

 

484

 

3,261

 

3,744

 

1,007

 

1995

Miami II, FL

 

57,040

 

 

 

188

 

2,052

 

656

 

286

 

2,609

 

2,896

 

873

 

1994

Miami III, FL

 

67,060

 

(E)

 

253

 

2,544

 

1,339

 

561

 

3,575

 

4,136

 

1,039

 

1994

Miami IV, FL

 

58,315

 

 

 

193

 

2,174

 

1,786

 

516

 

3,638

 

4,153

 

1,107

 

1995

Miami V, FL

 

78,465

 

 

 

193

 

2,165

 

981

 

364

 

2,974

 

3,339

 

881

 

1995

Miami VI, FL

 

150,510

 

 

 

4,577

 

13,185

 

148

 

4,577

 

13,333

 

17,910

 

1,540

 

2005

Naples I, FL

 

48,050

 

 

 

90

 

1,010

 

2,238

 

270

 

3,067

 

3,338

 

848

 

1996

Naples II, FL

 

65,850

 

(E)

 

148

 

1,652

 

4,119

 

558

 

5,361

 

5,919

 

1,292

 

1997

Naples III, FL

 

81,145

 

(A)

 

139

 

1,561

 

3,632

 

598

 

4,734

 

5,332

 

1,608

 

1997

Naples IV, FL

 

40,975

 

 

 

262

 

2,980

 

442

 

407

 

3,277

 

3,684

 

900

 

1998

Ocala, FL

 

41,891

 

 

 

55

 

558

 

526

 

155

 

985

 

1,139

 

279

 

1994

Ocoee, FL

 

76,250

 

 

 

1,286

 

3,705

 

78

 

1,286

 

3,783

 

5,069

 

523

 

2005

Orange City, FL

 

59,636

 

 

 

1,191

 

3,209

 

60

 

1,191

 

3,269

 

4,460

 

538

 

2004

Orlando I, FL

 

52,170

 

 

 

187

 

2,088

 

450

 

240

 

2,485

 

2,725

 

943

 

1997

Orlando II, FL

 

62,864

 

(E)

 

1,589

 

4,576

 

35

 

1,589

 

4,610

 

6,199

 

650

 

2005

Orlando III, FL

 

104,165

 

 

 

1,209

 

7,768

 

124

 

1,209

 

7,892

 

9,102

 

645

 

2006

Oviedo, FL

 

49,256

 

 

 

440

 

2,824

 

127

 

440

 

2,844

 

3,391

 

241

 

2006

Pembroke Pines, FL

 

67,337

 

(D)

 

337

 

3,772

 

2,555

 

953

 

5,711

 

6,664

 

1,403

 

1997

Royal Palm Beach I, FL

 

98,961

 

(F)

 

205

 

2,148

 

2,620

 

741

 

4,232

 

4,973

 

1,196

 

1994

Royal Palm Beach II, FL

 

81,515

 

(K)

 

1,640

 

8,607

 

(511

)

1,640

 

7,582

 

9,736

 

146

 

2007

Sanford, FL

 

61,810

 

 

 

453

 

2,911

 

77

 

453

 

2,989

 

3,442

 

245

 

2006

Sarasota, FL

 

70,788

 

(A)

 

333

 

3,656

 

1,068

 

529

 

4,528

 

5,057

 

1,407

 

1998

St. Augustine, FL

 

59,670

 

 

 

135

 

1,515

 

3,042

 

383

 

4,308

 

4,692

 

1,114

 

1996

Stuart I, FL

 

41,324

 

 

 

154

 

1,726

 

1,154

 

319

 

2,704

 

3,034

 

893

 

1997

Stuart II, FL

 

86,924

 

(E)

 

324

 

3,625

 

2,365

 

685

 

5,629

 

6,314

 

1,433

 

1997

SW Ranches, FL

 

64,955

 

 

 

1,390

 

7,598

 

(889

)

1,390

 

5,818

 

8,099

 

121

 

2007

Tampa I, FL

 

60,700

 

 

 

124

 

1,252

 

453

 

220

 

1,610

 

1,829

 

513

 

1994

Tampa II, FL

 

55,997

 

 

 

330

 

1,887

 

475

 

330

 

2,350

 

2,692

 

728

 

2001

Tampa III, FL

 

83,788

 

 

 

2,670

 

6,249

 

(532

)

2,670

 

5,182

 

8,387

 

103

 

2007

Vero Beach, FL

 

50,390

 

 

 

159

 

1,783

 

404

 

259

 

2,087

 

2,346

 

349

 

1998/1997

West Palm Beach I, FL

 

67,973

 

2,359

 

719

 

3,420

 

1,436

 

835

 

4,740

 

5,575

 

1,518

 

2001

West Palm Beach II, FL

 

93,764

 

 

 

2,129

 

8,671

 

188

 

2,129

 

8,859

 

10,988

 

1,665

 

2004

Alpharetta, GA

 

90,485

 

(F)

 

806

 

4,720

 

867

 

967

 

5,426

 

6,393

 

1,968

 

2001

Austell , GA

 

83,615

 

 

 

1,635

 

4,711

 

135

 

1,643

 

4,838

 

6,481

 

353

 

2006

Decatur, GA

 

148,480

 

 

 

616

 

6,776

 

(99

)

616

 

6,677

 

7,293

 

1,900

 

1998

Norcross, GA

 

85,390

 

(D)

 

514

 

2,930

 

659

 

632

 

3,470

 

4,103

 

1,019

 

2001

Peachtree City, GA

 

49,845

 

1,746

 

435

 

2,532

 

519

 

529

 

2,957

 

3,486

 

885

 

2001

Smyrna, GA

 

56,820

 

(F)

 

750

 

4,271

 

113

 

750

 

4,384

 

5,134

 

1,496

 

2001

Snellville, GA

 

79,950

 

 

 

1,660

 

4,781

 

91

 

1,660

 

4,872

 

6,532

 

251

 

2007

Suwanee I, GA

 

85,450

 

 

 

1,737

 

5,010

 

86

 

1,737

 

5,096

 

6,832

 

261

 

2007

Suwanee II, GA

 

79,640

 

(K)

 

800

 

6,942

 

(336

)

800

 

6,268

 

7,406

 

119

 

2007

Addison, IL

 

31,275

 

(I)

 

428

 

3,531

 

167

 

428

 

3,698

 

4,126

 

590

 

2004

Aurora, IL

 

73,845

 

 

 

644

 

3,652

 

41

 

644

 

3,693

 

4,337

 

608

 

2004

Bartlett, IL

 

51,525

 

 

 

931

 

2,493

 

67

 

931

 

2,560

 

3,491

 

419

 

2004

Hanover, IL

 

41,174

 

(E)

 

1,126

 

2,197

 

71

 

1,126

 

2,268

 

3,394

 

373

 

2004

Bellwood, IL

 

86,575

 

(E)

 

1,012

 

5,768

 

519

 

1,012

 

6,287

 

7,299

 

2,087

 

2001

Des Plaines, IL

 

74,600

 

(I)

 

1,564

 

4,327

 

157

 

1,564

 

4,484

 

6,048

 

727

 

2004

Elk Grove Village, IL

 

64,304

 

(I)

 

1,446

 

3,535

 

201

 

1,446

 

3,736

 

5,182

 

615

 

2004

Glenview, IL

 

100,115

 

(I)

 

3,740

 

10,367

 

100

 

3,740

 

10,467

 

14,207

 

1,713

 

2004

Gurnee, IL

 

80,300

 

(I)

 

1,521

 

5,440

 

183

 

1,521

 

5,623

 

7,144

 

915

 

2004

Harvey, IL

 

60,315

 

(I)

 

869

 

3,635

 

46

 

869

 

3,681

 

4,550

 

606

 

2004

Joliet, IL

 

74,350

 

(I)

 

547

 

4,704

 

59

 

547

 

4,763

 

5,310

 

782

 

2004

Kildeer, IL

 

46,475

 

(I)

 

2,102

 

2,187

 

82

 

2,102

 

2,269

 

4,371

 

368

 

2004

Lombard, IL

 

57,736

 

(I)

 

1,305

 

3,938

 

488

 

1,305

 

4,426

 

5,731

 

696

 

2004

Mount Prospect, IL

 

65,000

 

(I)

 

1,701

 

3,114

 

79

 

1,701

 

3,193

 

4,894

 

520

 

2004

Mundelein, IL

 

44,700

 

(I)

 

1,498

 

2,782

 

74

 

1,498

 

2,856

 

4,354

 

471

 

2004

North Chicago, IL

 

53,300

 

(I)

 

1,073

 

3,006

 

161

 

1,073

 

3,167

 

4,240

 

510

 

2004

Plainfield I, IL

 

53,900

 

 

 

1,770

 

1,715

 

133

 

1,770

 

1,848

 

3,618

 

304

 

2004

Plainfield II, IL

 

52,100

 

 

 

694

 

2,000

 

103

 

694

 

2,103

 

2,797

 

294

 

2005

Schaumburg, IL

 

31,235

 

 

 

538

 

645

 

94

 

538

 

739

 

1,277

 

127

 

2004

Streamwood, IL

 

64,305

 

(A)

 

1,447

 

1,662

 

152

 

1,447

 

1,814

 

3,261

 

300

 

2004

Warrensville, IL

 

48,796

 

(A)

 

1,066

 

3,072

 

89

 

1,066

 

3,161

 

4,228

 

428

 

2005

Waukegan, IL

 

79,750

 

(I)

 

1,198

 

4,363

 

94

 

1,198

 

4,457

 

5,655

 

732

 

2004

West Chicago, IL

 

48,475

 

(E)

 

1,071

 

2,249

 

125

 

1,071

 

2,374

 

3,445

 

385

 

2004

Westmont, IL

 

53,700

 

(I

 

1,155

 

3,873

 

41

 

1,155

 

3,914

 

5,069

 

643

 

2004

Wheeling I, IL

 

54,210

 

(A)

 

857

 

3,213

 

137

 

857

 

3,350

 

4,207

 

551

 

2004

Wheeling II, IL

 

67,825

 

(I)

 

793

 

3,816

 

175

 

793

 

3,991

 

4,784

 

650

 

2004

Woodridge, IL

 

50,725

 

(I)

 

943

 

3,397

 

50

 

943

 

3,447

 

4,390

 

568

 

2004

Indianapolis I, IN

 

43,600

 

(I)

 

1,871

 

1,230

 

65

 

1,871

 

1,295

 

3,166

 

220

 

2004

Indianapolis II, IN

 

44,900

 

(I)

 

669

 

2,434

 

68

 

669

 

2,502

 

3,171

 

423

 

2004

Indianapolis III, IN

 

60,850

 

(I)

 

1,229

 

2,834

 

40

 

1,229

 

2,874

 

4,103

 

473

 

2004

F-33


 

 

 

 

 

 

 

 

 

 

Gross Carrying Amount

 

 

 

 

 

 

 

 

 

 

Initial Cost

 

 

 

at December 31, 2007

 

 

 

 

Description

 

Square Footage

 

Encum-
brances

 

Land

 

Building and
Improvements

 

Costs Sub-sequent
to Acquisition

 

Land

 

Building and
Improvements

 

Total

 

Accumulated
Depreciation (L)

 

Year Acquired /
Developed

Indianapolis IV, IN

 

68,250

 

 

 

$

641

 

$

3,154

 

$

4

 

$

552

 

$

3,247

 

$

3,799

 

$

533

 

2004

Indianapolis V, IN

 

74,825

 

(I)

 

2,138

 

3,633

 

131

 

2,138

 

3,764

 

5,902

 

610

 

2004

Indianapolis VI, IN

 

73,353

 

(A)

 

406

 

3,496

 

151

 

406

 

3,647

 

4,053

 

589

 

2004

Indianapolis VII, IN

 

91,807

 

(I)

 

908

 

4,755

 

348

 

908

 

5,103

 

6,011

 

820

 

2004

Indianapolis VIII, IN

 

80,140

 

(I)

 

887

 

3,548

 

101

 

887

 

3,649

 

4,536

 

599

 

2004

Indianapolis IX, IN

 

61,732

 

(I)

 

1,133

 

4,103

 

150

 

1,133

 

4,253

 

5,386

 

689

 

2004

Baton Rouge I, LA

 

55,474

 

 

 

112

 

1,248

 

497

 

208

 

1,649

 

1,857

 

487

 

1997

Baton Rouge II, LA

 

80,452

 

(A)

 

150

 

1,558

 

1,272

 

331

 

2,649

 

2,980

 

840

 

1997

Baton Rouge III, LA

 

60,770

 

 

 

133

 

1,487

 

625

 

271

 

1,974

 

2,245

 

561

 

1997

Prairieville, LA

 

28,319

 

 

 

90

 

1,004

 

170

 

90

 

1,174

 

1,264

 

356

 

1998

Slidell, LA

 

79,540

 

(D)

 

188

 

3,175

 

1,581

 

802

 

4,142

 

4,944

 

1,142

 

2001

Boston, MA

 

60,270

 

(F)

 

1,516

 

8,628

 

186

 

1,516

 

8,814

 

10,330

 

2,882

 

2002

Leominster, MA

 

54,081

 

(D)

 

90

 

1,519

 

2,319

 

338

 

3,591

 

3,928

 

905

 

1998

Medford, MA

 

58,577

 

(K)

 

1,330

 

7,165

 

(565

)

1,330

 

6,033

 

7,930

 

119

 

2007

Baltimore, MD

 

93,700

 

(E)

 

1,050

 

5,997

 

889

 

1,173

 

6,763

 

7,936

 

2,177

 

2001

California, MD

 

77,678

 

 

 

1,486

 

4,280

 

62

 

1,486

 

4,342

 

5,828

 

709

 

2004

Gaithersburg, MD

 

86,970

 

6,227

 

3,124

 

9,000

 

96

 

3,124

 

9,096

 

12,220

 

1,405

 

2005

Laurel, MD

 

162,297

 

(F)

 

1,409

 

8,035

 

3,309

 

1,928

 

10,825

 

12,753

 

2,919

 

2001

Temple Hills, MD

 

97,250

 

(D)

 

1,541

 

8,788

 

1,975

 

1,800

 

10,504

 

12,304

 

2,955

 

2001

Grand Rapids, MI

 

87,031

 

(A)

 

185

 

1,821

 

1,345

 

325

 

3,027

 

3,351

 

1,064

 

1996

Portage, MI

 

50,280

 

 

 

104

 

1,160

 

784

 

237

 

1,810

 

2,048

 

613

 

1996

Romulus, MI

 

42,175

 

(A)

 

308

 

1,743

 

581

 

418

 

2,214

 

2,632

 

622

 

1997

Wyoming, MI

 

91,283

 

(A)

 

191

 

2,135

 

956

 

354

 

2,928

 

3,282

 

1,074

 

1996

Biloxi, MS

 

66,394

 

 

 

148

 

1,652

 

719

 

279

 

2,240

 

2,519

 

600

 

1997

Gautier, MS

 

35,925

 

 

 

93

 

1,040

 

40

 

93

 

1,080

 

1,173

 

367

 

1997

Gulfport I, MS

 

68,320

 

 

 

128

 

1,438

 

851

 

156

 

2,261

 

2,417

 

676

 

1997

Gulfport II, MS

 

64,445

 

 

 

117

 

1,306

 

552

 

179

 

1,797

 

1,975

 

549

 

1997

Gulfport III, MS

 

61,251

 

(E)

 

172

 

1,928

 

845

 

338

 

2,607

 

2,945

 

723

 

1997

Waveland, MS

 

57,096

 

 

 

215

 

2,481

 

(445

)

392

 

1,859

 

2,251

 

155

 

1998

Belmont, NC

 

80,512

 

 

 

385

 

2,196

 

502

 

451

 

2,632

 

3,083

 

843

 

2001

Burlington I, NC

 

109,545

 

(A)

 

498

 

2,837

 

316

 

498

 

3,153

 

3,651

 

1,015

 

2001

Burlington II, NC

 

42,280

 

 

 

320

 

1,829

 

228

 

340

 

2,037

 

2,377

 

641

 

2001

Cary, NC

 

111,772

 

(A)

 

543

 

3,097

 

259

 

543

 

3,357

 

3,899

 

835

 

2001

Charlotte, NC

 

69,000

 

(F)

 

782

 

4,429

 

1,354

 

1,068

 

5,497

 

6,565

 

1,466

 

1999

Fayetteville I, NC

 

41,450

 

 

 

156

 

1,747

 

744

 

301

 

2,346

 

2,647

 

730

 

1997

Fayetteville II, NC

 

54,225

 

(F)

 

213

 

2,301

 

699

 

399

 

2,813

 

3,213

 

772

 

1997

Raleigh, NC

 

48,675

 

 

 

209

 

2,398

 

204

 

296

 

2,516

 

2,811

 

687

 

1998

Brick, NJ

 

52,740

 

 

 

234

 

2,762

 

1,273

 

485

 

3,784

 

4,269

 

1,146

 

1994

Clifton, NJ

 

105,550

 

(A)

 

4,346

 

12,520

 

109

 

4,346

 

12,629

 

16,975

 

1,621

 

2005

Cranford, NJ

 

91,250

 

 

 

290

 

3,493

 

1,984

 

779

 

4,988

 

5,767

 

1,426

 

1994

East Hanover, NJ

 

107,679

 

 

 

504

 

5,763

 

3,447

 

1,315

 

8,399

 

9,714

 

2,396

 

1994

Elizabeth, NJ

 

38,892

 

 

 

751

 

2,164

 

202

 

751

 

2,366

 

3,117

 

289

 

2005

Fairview, NJ

 

27,676

 

 

 

246

 

2,759

 

231

 

246

 

2,990

 

3,236

 

954

 

1997

Hamilton, NJ

 

70,550

 

 

 

1,885

 

5,430

 

132

 

1,893

 

5,554

 

7,446

 

402

 

2006

Hoboken, NJ

 

34,280

 

 

 

1,370

 

3,947

 

407

 

1,370

 

4,354

 

5,724

 

530

 

2005

Jersey City, NJ

 

91,361

 

 

 

397

 

4,507

 

2,530

 

1,010

 

6,424

 

7,434

 

1,840

 

1994

Linden I, NJ

 

95,575

 

 

 

517

 

6,008

 

2,864

 

1,170

 

8,219

 

9,389

 

2,365

 

1994

Linden II, NJ

 

35,800

 

 

 

—

 

2

 

873

 

189

 

686

 

875

 

70

 

1994

Morris Township, NJ

 

75,576

 

(D)

 

500

 

5,602

 

2,480

 

1,072

 

7,510

 

8,582

 

2,045

 

1997

Parsippany, NJ

 

66,325

 

 

 

475

 

5,322

 

1,903

 

909

 

6,790

 

7,700

 

1,924

 

1997

Randolph, NJ

 

52,565

 

(D)

 

855

 

4,872

 

1,229

 

1,108

 

5,848

 

6,956

 

1,781

 

2002

Sewell, NJ

 

57,767

 

(F)

 

484

 

2,766

 

1,135

 

706

 

3,678

 

4,385

 

1,118

 

2001

Albuquerque I, NM

 

65,927

 

(C)

 

1,039

 

3,395

 

167

 

1,039

 

3,562

 

4,601

 

515

 

2005

Albuquerque II, NM

 

58,834

 

(C)

 

1,163

 

3,801

 

141

 

1,163

 

3,942

 

5,105

 

565

 

2005

Albuquerque III, NM

 

41,016

 

 

 

519

 

1,697

 

174

 

519

 

1,870

 

2,390

 

267

 

2005

Albuquerque IV, NM

 

57,536

 

(C)

 

664

 

2,171

 

156

 

664

 

2,327

 

2,991

 

335

 

2005

Albuquerque V, NM

 

52,217

 

 

 

915

 

2,996

 

144

 

915

 

3,141

 

4,056

 

357

 

2006

Carlsbad, NM

 

39,999

 

(B)

 

490

 

1,613

 

77

 

491

 

1,689

 

2,180

 

243

 

2005

Deming, NM

 

33,005

 

(B)

 

338

 

1,114

 

78

 

339

 

1,192

 

1,531

 

173

 

2005

Las Cruces, NM

 

43,850

 

(B)

 

611

 

2,012

 

98

 

612

 

2,109

 

2,721

 

304

 

2005

Lovington, NM

 

15,751

 

(B)

 

222

 

740

 

(189

)

169

 

603

 

773

 

87

 

2005

Silver City, NM

 

26,875

 

(B)

 

153

 

504

 

67

 

153

 

571

 

724

 

85

 

2005

Truth or Consequences, NM

 

24,010

 

(B)

 

10

 

34

 

65

 

11

 

98

 

109

 

19

 

2005

Las Vegas I, NV

 

50,882

 

 

 

1,851

 

2,986

 

161

 

1,851

 

3,147

 

4,998

 

314

 

2006

Las Vegas II, NV

 

49,000

 

 

 

3,354

 

5,411

 

83

 

3,355

 

5,493

 

8,848

 

551

 

2006

Endicott, NY

 

35,930

 

 

 

779

 

838

 

77

 

779

 

915

 

1,694

 

151

 

2005

Jamaica, NY

 

89,455

 

(D)

 

2,043

 

11,658

 

346

 

2,043

 

12,004

 

14,047

 

3,931

 

2001

New Rochelle, NY

 

48,431

 

(A)

 

1,673

 

4,827

 

83

 

1,673

 

4,910

 

6,583

 

681

 

2005

North Babylon, NY

 

78,338

 

(F)

 

225

 

2,514

 

3,921

 

568

 

6,092

 

6,660

 

1,680

 

1998

Riverhead, NY

 

38,690

 

 

 

1,068

 

1,149

 

97

 

1,068

 

1,246

 

2,314

 

207

 

2005

Southold, NY

 

58,609

 

 

 

2,079

 

2,238

 

188

 

2,079

 

2,426

 

4,505

 

391

 

2005

Avon, CO

 

28,227

 

 

 

1,012

 

2,252

 

88

 

1,012

 

2,340

 

3,351

 

308

 

2005

Boardman, OH

 

65,495

 

(F)

 

64

 

745

 

2,095

 

287

 

2,617

 

2,904

 

1,292

 

1980

Brecksville, OH

 

58,452

 

 

 

228

 

2,545

 

954

 

442

 

3,286

 

3,727

 

878

 

1998

F-34


 

 

 

 

 

 

 

 

 

 

Gross Carrying Amount

 

 

 

 

 

 

 

 

 

 

Initial Cost

 

Costs Sub-

 

at December 31, 2007

 

 

 

 

Description

 

Square Footage

 

Encum-
brances

 

Land

 

Building and
Improvements

 

sequent to
Acquisition

 

Land

 

Building and
Improvements

 

Total

 

Accumulated
Depreciation (L)

 

Year Acquired /
Developed

Canton I, OH

 

39,750

 

 

 

$

138

 

$

679

 

$

178

 

$

137

 

$

857

 

$

995

 

$

122

 

2005

Canton II, OH

 

26,200

 

 

 

122

 

595

 

109

 

120

 

706

 

826

 

103

 

2005

Centerville I, OH

 

86,390

 

(I)

 

471

 

3,705

 

110

 

471

 

3,815

 

4,286

 

617

 

2004

Centerville II, OH

 

43,400

 

(E)

 

332

 

1,757

 

144

 

332

 

1,901

 

2,233

 

299

 

2004

Cleveland I, OH

 

45,950

 

 

 

525

 

2,592

 

114

 

524

 

2,707

 

3,231

 

403

 

2005

Cleveland II, OH

 

58,450

 

 

 

290

 

1,427

 

149

 

289

 

1,578

 

1,866

 

241

 

2005

Columbus , OH

 

66,875

 

 

 

1,234

 

3,151

 

(19

)

1,239

 

3,127

 

4,366

 

256

 

2006

Dayton I, OH

 

43,100

 

(E)

 

323

 

2,070

 

80

 

323

 

2,150

 

2,473

 

351

 

2004

Dayton II, OH

 

48,149

 

 

 

441

 

2,176

 

122

 

440

 

2,298

 

2,739

 

339

 

2005

Euclid I, OH

 

46,910

 

 

 

200

 

1,053

 

1,880

 

317

 

2,816

 

3,133

 

1,404

 

1988

Euclid II, OH

 

47,275

 

 

 

359

 

—

 

1,630

 

461

 

1,528

 

1,989

 

348

 

1988

Grove City, OH

 

89,290

 

 

 

1,756

 

4,485

 

82

 

1,761

 

4,562

 

6,324

 

358

 

2006

Hilliard, OH

 

89,715

 

 

 

1,361

 

3,476

 

88

 

1,366

 

3,558

 

4,924

 

278

 

2006

Hudson, OH

 

65,240

 

 

 

195

 

2,198

 

470

 

274

 

2,588

 

2,863

 

736

 

1998

Lakewood, OH

 

39,267

 

 

 

405

 

854

 

441

 

405

 

1,295

 

1,700

 

678

 

1989

Louisville, OH

 

53,960

 

 

 

257

 

1,260

 

110

 

255

 

1,372

 

1,627

 

204

 

2005

Marblehead, OH

 

52,300

 

 

 

374

 

1,843

 

146

 

373

 

1,991

 

2,363

 

291

 

2005

Mason, OH

 

33,900

 

 

 

127

 

1,419

 

56

 

149

 

1,452

 

1,602

 

447

 

1998

Mentor, OH

 

51,275

 

 

 

206

 

1,011

 

1,385

 

204

 

2,398

 

2,602

 

211

 

2005

Miamisburg, OH

 

59,930

 

(I)

 

375

 

2,410

 

101

 

375

 

2,511

 

2,886

 

413

 

2004

Middleburg Heights, OH

 

93,025

 

 

 

63

 

704

 

1,864

 

332

 

2,299

 

2,631

 

601

 

1980

North Canton I, OH

 

45,400

 

 

 

209

 

846

 

500

 

299

 

1,255

 

1,555

 

807

 

1979

North Canton II, OH

 

44,180

 

 

 

70

 

1,226

 

1

 

239

 

1,058

 

1,297

 

226

 

1983

North Olmsted I, OH

 

48,665

 

 

 

63

 

704

 

1,134

 

214

 

1,687

 

1,901

 

516

 

1979

North Olmsted II, OH

 

47,850

 

(F)

 

290

 

1,129

 

1,016

 

469

 

1,964

 

2,435

 

896

 

1988

North Randall, OH

 

80,099

 

(F)

 

515

 

2,323

 

2,778

 

898

 

4,718

 

5,616

 

1,246

 

1998

Perry, OH

 

63,850

 

 

 

290

 

1,427

 

106

 

288

 

1,535

 

1,823

 

231

 

2005

Reynoldsburg, OH

 

67,545

 

 

 

1,290

 

3,295

 

84

 

1,295

 

3,375

 

4,670

 

264

 

2006

Strongsville, OH

 

43,727

 

(K)

 

570

 

3,486

 

(315

)

570

 

2,855

 

3,741

 

57

 

2007

Warrensville Heights, OH

 

90,331

 

 

 

525

 

766

 

2,839

 

935

 

3,195

 

4,130

 

722

 

1980

Westlake, OH

 

62,750

 

 

 

509

 

2,508

 

123

 

508

 

2,632

 

3,140

 

397

 

2005

Willoughby, OH

 

34,454

 

 

 

239

 

1,178

 

127

 

238

 

1,306

 

1,544

 

195

 

2005

Youngstown, OH

 

65,950

 

(A)

 

67

 

—

 

1,687

 

204

 

1,550

 

1,754

 

809

 

1977

Levittown, PA

 

76,230

 

(F)

 

926

 

5,296

 

788

 

926

 

6,084

 

7,010

 

1,907

 

2001

Philadelphia, PA

 

100,347

 

(D)

 

1,461

 

8,334

 

718

 

1,461

 

9,052

 

10,513

 

3,642

 

2001

Alcoa, TN

 

42,325

 

(J)

 

254

 

2,113

 

61

 

254

 

2,173

 

2,428

 

294

 

2005

Antioch, TN

 

76,150

 

 

 

588

 

4,906

 

99

 

588

 

5,005

 

5,593

 

564

 

2005

Cordova I, TN

 

54,225

 

(G)

 

296

 

2,482

 

142

 

297

 

2,624

 

2,920

 

358

 

2005

Cordova II, TN

 

67,600

 

 

 

429

 

3,580

 

125

 

429

 

3,704

 

4,134

 

341

 

2006

Knoxville I, TN

 

29,377

 

 

 

99

 

1,113

 

99

 

102

 

1,209

 

1,311

 

382

 

1997

Knoxville II, TN

 

38,000

 

 

 

117

 

1,308

 

169

 

129

 

1,466

 

1,594

 

439

 

1997

Knoxville III, TN

 

45,736

 

 

 

182

 

2,053

 

564

 

331

 

2,469

 

2,799

 

655

 

1998

Knoxville IV, TN

 

58,852

 

 

 

158

 

1,771

 

592

 

310

 

2,211

 

2,521

 

553

 

1998

Knoxville V, TN

 

42,790

 

 

 

134

 

1,493

 

392

 

235

 

1,784

 

2,019

 

514

 

1998

Knoxville VI, TN

 

63,440

 

(J)

 

439

 

3,653

 

79

 

440

 

3,731

 

4,171

 

503

 

2005

Knoxville VII, TN

 

54,994

 

(J)

 

312

 

2,594

 

83

 

312

 

2,677

 

2,989

 

362

 

2005

Knoxville VIII, TN

 

96,518

 

(J)

 

585

 

4,869

 

107

 

586

 

4,975

 

5,561

 

670

 

2005

Memphis I, TN

 

91,300

 

(E)

 

677

 

3,880

 

1,066

 

677

 

4,945

 

5,623

 

1,506

 

2001

Memphis II, TN

 

71,960

 

 

 

395

 

2,276

 

160

 

395

 

2,436

 

2,831

 

830

 

2001

Memphis III, TN

 

41,137

 

(G)

 

212

 

1,779

 

131

 

213

 

1,909

 

2,122

 

265

 

2005

Memphis IV, TN

 

38,750

 

(G)

 

160

 

1,342

 

112

 

160

 

1,453

 

1,614

 

202

 

2005

Memphis V, TN

 

60,370

 

(G)

 

209

 

1,753

 

398

 

210

 

2,150

 

2,360

 

263

 

2005

Memphis VI, TN

 

109,317

 

 

 

462

 

3,851

 

235

 

462

 

4,086

 

4,548

 

375

 

2006

Memphis VII, TN

 

115,303

 

 

 

215

 

1,792

 

289

 

215

 

2,081

 

2,296

 

188

 

2006

Memphis VIII, TN

 

96,060

 

 

 

355

 

2,959

 

222

 

355

 

3,181

 

3,536

 

290

 

2006

Nashville I, TN

 

106,930

 

 

 

405

 

3,379

 

193

 

405

 

3,572

 

3,977

 

400

 

2005

Nashville II, TN

 

83,274

 

 

 

593

 

4,950

 

190

 

593

 

5,140

 

5,733

 

564

 

2005

Nashville III, TN

 

99,600

 

 

 

416

 

3,469

 

137

 

416

 

3,607

 

4,023

 

388

 

2006

Nashville IV, TN

 

102,425

 

 

 

992

 

8,274

 

126

 

992

 

8,400

 

9,392

 

897

 

2006

Austin I, TX

 

59,520

 

 

 

2,239

 

2,038

 

62

 

2,239

 

2,100

 

4,338

 

258

 

2005

Austin II, TX

 

65,401

 

 

 

734

 

3,894

 

120

 

738

 

4,009

 

4,748

 

369

 

2006

Austin III, TX

 

71,030

 

 

 

1,030

 

5,468

 

119

 

1,035

 

5,582

 

6,617

 

418

 

2006

Baytown, TX

 

38,950

 

 

 

946

 

863

 

59

 

948

 

921

 

1,868

 

127

 

2005

Bryan, TX

 

60,450

 

 

 

1,394

 

1,268

 

77

 

1,396

 

1,343

 

2,739

 

184

 

2005

College Station, TX

 

26,550

 

(H)

 

812

 

740

 

32

 

813

 

771

 

1,584

 

105

 

2005

Dallas, TX

 

58,707

 

 

 

2,475

 

2,253

 

115

 

2,475

 

2,367

 

4,842

 

291

 

2005

Denton, TX

 

60,836

 

2,062

 

553

 

2,936

 

75

 

569

 

2,995

 

3,564

 

215

 

2006

El Paso I, TX

 

59,864

 

(C)

 

1,983

 

1,805

 

113

 

1,984

 

1,918

 

3,901

 

255

 

2005

El Paso II, TX

 

48,692

 

(C)

 

1,319

 

1,201

 

74

 

1,320

 

1,274

 

2,594

 

169

 

2005

El Paso III, TX

 

71,276

 

(C)

 

2,408

 

2,192

 

98

 

2,409

 

2,289

 

4,698

 

303

 

2005

El Paso IV, TX

 

48,962

 

(C)

 

2,073

 

1,888

 

(271

)

2,074

 

1,616

 

3,690

 

265

 

2005

El Paso V, TX

 

62,825

 

(B)

 

1,758

 

1,617

 

79

 

1,761

 

1,693

 

3,454

 

219

 

2005

El Paso VI, TX

 

36,620

 

(B)

 

660

 

607

 

72

 

662

 

677

 

1,339

 

90

 

2005

El Paso VII, TX

 

34,545

 

(B)

 

563

 

517

 

55

 

565

 

571

 

1,136

 

76

 

2005

Fort Worth I, TX

 

49,778

 

 

 

1,253

 

1,141

 

68

 

1,253

 

1,208

 

2,462

 

149

 

2005

Fort Worth II, TX

 

72,925

 

 

 

868

 

4,607

 

76

 

874

 

4,676

 

5,551

 

430

 

2006

Frisco I, TX

 

50,854

 

(A)

 

1,093

 

3,148

 

33

 

1,093

 

3,181

 

4,274

 

439

 

2005

Frisco II, TX

 

71,339

 

3,440

 

1,564

 

4,507

 

57

 

1,564

 

4,564

 

6,128

 

628

 

2005

F-35


 

 

 

 

 

 

 

 

 

 

Gross Carrying Amount

 

 

 

 

 

 

 

 

 

 

Initial Cost

 

 

 

at December 31, 2007

 

 

 

 

Description

 

Square Footage

 

Encum-
brances

 

Land

 

Building and
Improvements

 

Costs Sub-sequent
to Acquisition

 

Land

 

Building and
Improvements

 

Total

 

Accumulated
Depreciation (L)

 

Year Acquired /
Developed

Frisco III, TX

 

72,275

 

 

 

$

1,147

 

$

6,088

 

$

69

 

$

1,154

 

$

6,151

 

$

7,305

 

$

567

 

2006

 

Garland I, TX

 

70,000

 

3,280

 

751

 

3,984

 

231

 

767

 

4,199

 

4,966

 

293

 

2006

 

Garland II, TX

 

68,475

 

 

 

862

 

4,578

 

41

 

862

 

4,619

 

5,481

 

290

 

2006

 

Greenville I, TX

 

59,385

 

 

 

1,848

 

1,682

 

43

 

1,848

 

1,725

 

3,573

 

215

 

2005

 

Greenville II, TX

 

44,900

 

 

 

1,337

 

1,217

 

45

 

1,337

 

1,262

 

2,599

 

157

 

2005

 

Houston I, TX

 

101,350

 

 

 

1,420

 

1,296

 

89

 

1,422

 

1,383

 

2,805

 

191

 

2005

 

Houston II, TX

 

71,300

 

 

 

1,510

 

1,377

 

76

 

1,512

 

1,450

 

2,962

 

207

 

2005

 

Houston III, TX

 

60,820

 

547

 

575

 

524

 

175

 

576

 

698

 

1,274

 

85

 

2005

 

Houston IV, TX

 

43,775

 

(H)

 

960

 

875

 

67

 

961

 

941

 

1,902

 

126

 

2005

 

Houston V, TX

 

127,145

 

4,477

 

1,153

 

6,122

 

193

 

1,156

 

6,312

 

7,468

 

421

 

2006

 

Keller, TX

 

61,885

 

2,605

 

890

 

4,727

 

40

 

890

 

4,766

 

5,657

 

457

 

2006

 

La Porte, TX

 

45,100

 

 

 

842

 

761

 

101

 

843

 

861

 

1,704

 

119

 

2005

 

Lewisville, TX

 

58,465

 

1,874

 

476

 

2,525

 

99

 

492

 

2,608

 

3,100

 

186

 

2006

 

Mansfield, TX

 

63,025

 

 

 

837

 

4,443

 

60

 

843

 

4,496

 

5,339

 

415

 

2006

 

McKinney I, TX

 

47,020

 

1,374

 

1,632

 

1,486

 

62

 

1,634

 

1,546

 

3,180

 

186

 

2005

 

McKinney II, TX

 

70,050

 

4,303

 

855

 

5,076

 

45

 

857

 

5,119

 

5,976

 

493

 

2006

 

North Richland Hills, TX

 

57,025

 

 

 

2,252

 

2,049

 

56

 

2,252

 

2,105

 

4,357

 

259

 

2005

 

Roanoke, TX

 

59,400

 

 

 

1,337

 

1,217

 

46

 

1,337

 

1,263

 

2,600

 

159

 

2005

 

San Antonio I, TX

 

75,270

 

 

 

2,895

 

2,635

 

26

 

2,895

 

2,661

 

5,556

 

316

 

2005

 

San Antonio II, TX

 

73,205

 

 

 

1,047

 

5,558

 

46

 

1,052

 

5,600

 

6,652

 

351

 

2006

 

San Antonio III, TX

 

72,525

 

 

 

996

 

5,286

 

13

 

996

 

5,298

 

6,294

 

265

 

2007

 

Sherman I, TX

 

55,050

 

1,599

 

1,904

 

1,733

 

53

 

1,906

 

1,785

 

3,690

 

215

 

2005

 

Sherman II, TX

 

48,425

 

1,909

 

1,337

 

1,217

 

50

 

1,337

 

1,268

 

2,604

 

153

 

2005

 

Spring, TX

 

72,801

 

 

 

580

 

3,081

 

38

 

580

 

3,119

 

3,700

 

299

 

2006

 

Murray I, UT

 

60,280

 

(C)

 

3,847

 

1,017

 

122

 

3,848

 

1,137

 

4,985

 

157

 

2005

 

Murray II, UT

 

71,421

 

(C)

 

2,147

 

567

 

189

 

2,148

 

755

 

2,903

 

98

 

2005

 

Salt Lake City I, UT

 

56,446

 

(C)

 

2,695

 

712

 

144

 

2,696

 

855

 

3,552

 

120

 

2005

 

Salt Lake City II, UT

 

53,676

 

(C)

 

2,074

 

548

 

119

 

2,075

 

666

 

2,741

 

93

 

2005

 

Fredericksburg I, VA

 

69,450

 

 

 

1,680

 

4,840

 

224

 

1,680

 

5,063

 

6,744

 

514

 

2005

 

Fredericksburg II, VA

 

61,493

 

 

 

1,757

 

5,062

 

283

 

1,758

 

5,344

 

7,102

 

532

 

2005

 

Milwaukee, WI

 

58,515

 

(I)

 

375

 

4,333

 

113

 

375

 

4,446

 

4,821

 

731

 

2004

 

USIFB

 

25,032

 

 

 

—

 

7,057

 

—

 

—

 

7,057

 

7,057

 

—

 

2007

 

Corporate Office

 

—

 

 

 

—

 

—

 

—

 

—

 

6,202

 

6,316

 

2,542

 

1977

 

Construction in Progress

 

—

 

 

 

—

 

—

 

—

 

—

 

5,482

 

5,482

 

—

 

 

 

 

 

26,144,216

 

 

 

$

364,263

 

$

1,339,432

 

$

200,935

 

$

393,715

 

$

1,513,651

 

$

1,916,396

 

$

269,278

 

 

 

(A)

This facility is part of Yasky Loan portfolio, with a balance of $80,000 as of December 31, 2007.

(B)

This facility is part of the 41 storage facilities pool which secures the $70.0 million loan from Lehman Capital.YSI XXV Loan portfolio, with a balance of $8,201 as of December 31, 2007.

(B)

(C)

This facility is part of the 10 storage facilities pool which secures the $42.0 million loan from Lehman Brothers Bank.YSI XX Loan portfolio, with a balance of $67,545 as of December 31, 2007.

(C)

(D)

This facility is part of the 21 storage facilities pool which secures the $90.0 million loan from Lehman Capital.YSI II Loan portfolio, with a balance of $86,843 as of December 31, 2007.

(D)

(E)

This facility is part of the 18 storage facilities pool which secures the $90.0 million loan from Lehman Capital.YSI VI Loan portfolio, with a balance of $79,645 as of December 31, 2007.

(E)

(F)

This facility is part of the 26 storage facilities pool which secures the $90.0 million loan from Lehman Brothers Bank.YSI I Loan portfolio, with a balance of $86,770 as of December 31, 2007.

(F)

(G)

This facility participates inis part of the $150.0 million revolving lineYSI XXVI Loan portfolio, with a balance of credit from Lehman Brothers , Inc. and Wachovia Capital Markets, LLC.$9,956 as of December 31, 2007.

(G)

(H)

This facility is part of the YSI XXVIII Loan portfolio, with a balance of $1,676 as of December 31, 2007.

(I)

This facility is part of the YSI III Loan portfolio, with a balance of $86,712 as of December 31, 2007.

(J)

This facility is part of the YSI XXX Loan portfolio, with a balance of $8,024 as of December 31, 2007.

(K)

This facility is part of the YSI RT Secured Term Loan portfolio, with a balance of $47,444 as of December 31, 2007.

(L)

Depreciation on the buildings and improvements is recorded on a straight-line basis over their estimated useful lives, which range from five to forty39 years.

U-STORE-IT TRUST AND SUBSIDIARIES (“THE COMPANY”) AND

ACQUIPORT/AMSDELL (THE “PREDECESSOR”)

 

Activity in real estate facilities during 2004, 20032007, 2006, and 20022005 was as follows:follows (in thousands):

 

   2004(1)
  2003
  2002

Storage Facilities

            

Balance of beginning of year

  $495,181  $492,067  $439,358

Acquisitions & Improvements

   228,500   8,808   52,709

Dispositions and other

   (725)  (5,694)  —  

Step up adjustment

   128,672   —     —  
   
 
 

Balance at end of year

  $851,628  $495,181  $492,067
   
 
 

Accumulated Depreciation

            

Balance at beginning of year

   99,582   80,835   61,179

Depreciation expense

   22,328   19,494   19,656

Disposition and other

   563   (747)  —  
   
 
 

Balance at end of year

   122,473   99,582   80,835
   
 
 

Net storage facility assets

  $729,155  $395,599  $411,232
   
 
 

 

 

2007

 

2006

 

2005

 

Storage facilities

 

 

 

 

 

 

 

Balance at beginning of year

 

$

1,771,864

 

$

1,386,786

 

$

851,628

 

Acquisitions & improvements

 

160,256

 

384,130

 

564,305

 

Dispositions and other

 

(21,206

)

(534

)

(30,530

)

Contstruction in progress

 

5,482

 

1,482

 

1,383

 

Balance at end of year

 

$

1,916,396

 

$

1,771,864

 

$

1,386,786

 

Accumulated depreciation

 

 

 

 

 

 

 

Balance at beginning of year

 

$

205,049

 

$

140,491

 

$

122,473

 

Depreciation expense

 

68,355

 

64,728

 

39,949

 

Dispositions and other

 

(4,126

)

(170

)

(21,931

)

Balance at end of year

 

$

269,278

 

$

205,049

 

$

140,491

 

 

 

 

 

 

 

 

 

Net Storage facility assets

 

$

1,647,118

 

$

1,566,815

 

$

1,246,295

 

 

The unaudited aggregate costs of storage facility assets for U.S. federal income tax purposes as of December 31, 2004 is approximately $739.7 million.

(1)The twelve months ended December 31, 2004 represents consolidated operating results for the Company from October 21, 2004 to December 31, 2004 and combined operating results for the Predecessor for January 1, 2004 to October 20, 2004.

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

F-36

U-STORE-IT TRUST
By:/S/ STEVEN G. OSGOOD

Steven G. Osgood, President and

Chief Financial Officer

Date: March 30, 2005

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature

Title

Date

By:

/S/ ROBERT J. AMSDELL

Robert J. Amsdell

Chairman of the Board of Trustees and Chief Executive Officer (Principal Executive Officer)

March 30, 2005

By:

/S/ STEVEN G. OSGOOD

Steven G. Osgood

President and Chief Financial Officer (Principal Financial Officer)

March 30, 2005

By:

/S/ TEDD D. TOWSLEY

Tedd D. Towsley

Vice President and Treasurer (Principal Accounting Officer)

March 30, 2005

By:

/S/ BARRY L. AMSDELL

Barry L. Amsdell

Trustee

March 30, 2005

By:

/S/ THOMAS A. COMMES

Thomas A. Commes

Trustee

March 30, 2005

By:

/S/ JOHN C. DANNEMILLER

John C. Dannemiller

Trustee

March 30, 2005

By:

/S/ WILLIAM M. DIEFENDERFER III

William M. Diefenderfer III

Trustee

March 30, 2005

By:

/S/ HAROLD S. HALLER

Harold S. Haller

Trustee

March 30, 2005

By:

/S/ DAVID J. LARUE

David J. LaRue

Trustee

March 30, 2005

EXHIBIT INDEX

Exhibit No.
  3.1*Articles of Amendment and Restatement of Declaration of Trust of U-Store-It Trust, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
  3.2*Bylaws of U-Store-It Trust, incorporated by reference to Exhibit 3.2 to Amendment No. 2 to the Company’s Registration Statement on Form S-11, File No. 333-117848.
  4.1*Form of Common Share Certificate, incorporated by reference to Exhibit 4.1 to Amendment No. 3 to the Company’s Registration Statement on Form S-11, File No. 333-117848.
10.1*Second Amended and Restated Agreement of Limited Partnership of U-Store-It, L.P. dated as of October 27, 2004, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.2*Loan Agreement dated as of October 27, 2004 by and between YSI I LLC and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, a division of Lehman Brothers Holdings Inc., incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.3*Loan Agreement dated as of October 27, 2004 by and between YSI II LLC and Lehman Brothers Holdings Inc. d/b/a/ Lehman Capital, a division of Lehman Brothers Holdings Inc., incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.4*Loan Agreement dated as of October 27, 2004 by and between YSI III LLC and Lehman Brothers Bank, FSB, incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.5*Credit Agreement dated as of October 27, 2004 by and among U-Store-It Trust, U-Store-It, L.P., the several lenders from time to time parties thereto, Lehman Brothers Inc., Wachovia Capital Markets, LLC, SunTrust Bank, LaSalle Bank National Association and Lehman Commercial Paper Inc., incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.6*†2004 Equity Incentive Plan of U-Store-It Trust effective as of October 19, 2004, incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.7*Stock Purchase Agreement dated as of October 27, 2004 by and among U-Store-It Trust, Robert J. Amsdell, Barry L. Amsdell, Todd C. Amsdell, the Robert J. Amsdell Family Irrevocable Trust dated June 4, 1998 and the Loretta Amsdell Family Irrevocable Trust dated June 4, 1998, relating to the purchase of U-Store-It Mini Warehouse Co., incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.8*Marketing and Ancillary Services Agreement dated as of October 27, 2004 by and between U-Store-It Mini Warehouse Co. and Rising Tide Development, LLC incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.9*Property Management Agreement dated as of October 27, 2004 by and between YSI Management LLC and Rising Tide Development, LLC, incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.10*Option Agreement dated as of October 27, 2004 by and between U-Store-It, L.P. and Rising Tide Development, LLC, incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

Exhibit No.
10.11*Registration Rights Agreement dated as of October 27, 2004 by and among U-Store-It Trust, Robert J. Amsdell, Barry L. Amsdell, Todd C. Amsdell, the Robert J. Amsdell Family Irrevocable Trust dated June 4, 1998, the Loretta Amsdell Family Irrevocable Trust dated June 4, 1998, Amsdell Holdings I, Inc., Amsdell and Amsdell and Robert J. Amsdell, Trustee, incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.12*†Indemnification Agreement dated as of October 27, 2004 by and among U-Store-It Trust, U-Store-It, L.P. and Robert J. Amsdell, incorporated by reference to Exhibit 10.12 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.13*†Indemnification Agreement dated as of October 27, 2004 by and among U-Store-It Trust, U-Store-It, L.P. and Steven G. Osgood, incorporated by reference to Exhibit 10.13 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.14*†Indemnification Agreement dated as of October 27, 2004 by and among U-Store-It Trust, U-Store-It, L.P. and Barry L. Amsdell, incorporated by reference to Exhibit 10.14 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.15*†Indemnification Agreement dated as of October 27, 2004 by and among U-Store-It Trust, U-Store-It, L.P. and Todd C. Amsdell, incorporated by reference to Exhibit 10.15 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.16*†Indemnification Agreement dated as of October 27, 2004 by and among U-Store-It Trust, U-Store-It, L.P. and Tedd D. Towsley, incorporated by reference to Exhibit 10.16 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.17*†Indemnification Agreement dated as of October 27, 2004 by and among U-Store-It Trust, U-Store-It, L.P. and John C. Dannemiller, incorporated by reference to Exhibit 10.17 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.18*†Indemnification Agreement dated as of October 27, 2004 by and among U-Store-It Trust, U-Store-It, L.P. and Thomas A Commes, incorporated by reference to Exhibit 10.18 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.19*†Indemnification Agreement dated as of October 27, 2004 by and among U-Store-It Trust, U-Store-It, L.P. and David J. LaRue, incorporated by reference to Exhibit 10.19 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.20*†Indemnification Agreement dated as of October 27, 2004 by and among U-Store-It Trust, U-Store-It, L.P. and Harold S. Haller, incorporated by reference to Exhibit 10.20 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.21*†Indemnification Agreement dated as of October 27, 2004 by and among U-Store-It Trust, U-Store-It, L.P. and William M. Diefenderfer III, incorporated by reference to Exhibit 10.21 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.22*†Noncompetition Agreement dated as of October 27, 2004 by and between U-Store-It Trust and Robert J. Amsdell, incorporated by reference to Exhibit 10.22 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.23*†Noncompetition Agreement dated as of October 27, 2004 by and between U-Store-It Trust and Steven G. Osgood, incorporated by reference to Exhibit 10.23 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.24*†Noncompetition Agreement dated as of October 27, 2004 by and between U-Store-It Trust and Todd C. Amsdell, incorporated by reference to Exhibit 10.24 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.

Exhibit No.
10.25*†Noncompetition Agreement dated as of October 27, 2004 by and between U-Store-It Trust and Tedd D. Towsley, incorporated by reference to Exhibit 10.25 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.26*†Noncompetition Agreement dated as of October 27, 2004 by and between U-Store-It Trust and Barry L. Amsdell, incorporated by reference to Exhibit 10.26 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.27*†Employment Agreement dated as of October 27, 2004 by and between U-Store-It Trust and Robert J. Amsdell, incorporated by reference to Exhibit 10.27 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.28*†Employment Agreement dated as of October 27, 2004 by and between U-Store-It Trust and Steven G. Osgood, incorporated by reference to Exhibit 10.28 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.29*†Employment Agreement dated as of October 27, 2004 by and between U-Store-It Trust and Todd C. Amsdell, incorporated by reference to Exhibit 10.29 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.30*†Employment Agreement dated as of October 27, 2004 by and between U-Store-It Trust and Tedd D. Towsley, incorporated by reference to Exhibit 10.30 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.31*Purchase and Sale Agreement dated as of August 13, 2004 by and between Acquiport/Amsdell I Limited Partnership and Metro Storage LLC, incorporated by reference to Exhibit 10.17 to Amendment No. 1 to the Company’s Registration Statement on Form S-11, File No. 333-117848.
10.32*Amendment to Purchase and Sale Agreement dated as of September 8, 2004 by and between Acquiport/Amsdell I Limited Partnership and Metro Storage LLC, incorporated by reference to Exhibit 10.18 to Amendment No. 1 to the Company’s Registration Statement on Form S-11, File No. 333-117848.
10.33*Contribution Agreement dated as of July 30, 2004 by and between Acquiport/Amsdell I Limited Partnership and Robert J. Amsdell, as Trustee incorporated by reference to Exhibit 10.2 to Amendment No. 1 to the Company’s Registration Statement on Form S-11, File No. 333-117848.
10.34*Contribution Agreement dated as July 30, 2004 by and between Acquiport/Amsdell I Limited Partnership and Amsdell Holdings I, Inc. incorporated by reference to Exhibit 10.3 to Amendment No. 1 to the Company’s Registration Statement on Form S-11, File No. 333-117848.
10.35*Contribution Agreement dated as of July 30, 2004 by and between Acquiport/Amsdell I Limited Partnership and Amsdell and Amsdell incorporated by reference to Exhibit 10.4 to Amendment No. 1 to the Company’s Registration Statement on Form S-11, File No. 333-117848.
10.36*Agreement and Plan of Merger and Reorganization dated as of July 30, 2004 by and between the Company and High Tide LLC incorporated by reference to Exhibit 10.5 to Amendment No. 1 to the Company’s Registration Statement on Form S-11, File No. 333-117848.
10.37*Agreement and Plan of Merger dated as of July 30, 2004 by and between the Company and Amsdell Partners, Inc. incorporated by reference to Exhibit 10.6 to Amendment No. 1 to the Company’s Registration Statement on Form S-11, File No. 333-117848.
10.38*Partnership Reorganization Agreement dated as of July 30, 2004 by and among High Tide LLC, Amsdell Partners, Inc., Amsdell Holdings I, Inc. and Acquiport/Amsdell I Limited Partnership incorporated by reference to Exhibit 10.7 to Amendment No. 1 to the Company’s Registration Statement on Form S-11, File No. 333-117848.

Exhibit No.
10.39*Purchase and Sale Agreement, dated as of March 1, 2005, by and between U-Store-It, L.P. and various partnerships and other entities affiliated with National Self Storage and The Schomac Group, Inc. named therein incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on November 2, 2004.
10.40†Form of NonQualified Share Option Agreement (3 Year Vesting).
10.41Office Lease, dated March 29, 2005, by and between Amsdell and Amsdell and U-Store-It, L.P.
10.42Timesharing Agreement, dated October 22, 2004 by and between Amsdell Holdings I, Inc. and U-Store-It Mini Warehouse Co.
10.43†Trustee Compensation Schedule.
10.44†Schedule of 2004 Bonuses for Named Executive Officers.
10.45†Form of NonQualified Share Option Agreement (Deferred 3 Year Vesting).
10.46†Form of Trustee Restricted Share Agreement.
21.1*List of Subsidiaries, incorporated by reference to Exhibit 21.1 to Amendment No. 2 to the Company’s Registration Statement on Form S-11, File No. 333-117848.
23.1Consent of Deloitte & Touche LLP.
31.1Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*Incorporated herein by reference as above indicated.
†Denotes a management contract or compensatory plan, contract or arrangement.