# CubeSmart: Form 10-K for the period ended Dec 31, 2014

- Company: [CubeSmart](/companies/cube.md) (CIK 1298675)
- Form: 10-K
- Filed: 2015-02-27
- Accepted by EDGAR: Feb 27, 2015, 16:05 ET
- Period: 2014-12-31
- Accession: 0001104659-15-015158
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1298675/000110465915015158/a14-26755_110k.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1298675/000110465915015158/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2014-12-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Cost of revenue | 12 months, 2014-01-01 to 2014-12-31 | $132.7m | us-gaap:CostOfRevenue |
| Operating income | 12 months, 2014-01-01 to 2014-12-31 | $81.5m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2014-10-01 to 2014-12-31 | $5.5m | us-gaap:NetIncomeLoss |
| Net income | 12 months, 2014-01-01 to 2014-12-31 | $26.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 12 months, 2014-01-01 to 2014-12-31 | $0.14 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 12 months, 2014-01-01 to 2014-12-31 | $0.14 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 12 months, 2014-01-01 to 2014-12-31 | 150,863,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 12 months, 2014-01-01 to 2014-12-31 | $166.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Dividends paid | 12 months, 2014-01-01 to 2014-12-31 | $75.8m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2014-12-31 | $2.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2014-12-31 | $2.79bn | us-gaap:Assets |
| Total liabilities | at 2014-12-31 | $1.29bn | us-gaap:Liabilities |
| Shareholders' equity | at 2014-12-31 | $1.45bn | us-gaap:StockholdersEquity |

## Business

As filed, 29,842 characters.

### Overview

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

As of December 31, 2014, we owned 421 self-storage facilities located in 22 states and in the District of Columbia containing an aggregate of approximately 28.6 million rentable square feet. As of December 31, 2014, approximately 89.1% of the rentable square footage at our owned facilities was leased to approximately 228,000 customers, and no single customer represented a significant concentration of our revenues. As of December 31, 2014 we owned facilities in the District of Columbia and the following 22 states: Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Maryland, Massachusetts, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Tennessee, Texas, Utah and Virginia. In addition, as of December 31, 2014, we managed 174 facilities for third parties (including 35 facilities containing an aggregate of approximately 2.4 million rentable square feet as part of an unconsolidated real estate venture in which we own a 50% interest) bringing the total number of facilities we owned and/or managed to 595. As of December 31, 2014, we managed facilities in the following 21 states: Alabama, Arizona, California, Colorado, Florida, Georgia, Illinois, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, and Virginia.

Our self-storage facilities are designed to offer affordable and easily-accessible storage space for our residential and commercial customers. Our customers rent storage cubes 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 designed to accommodate both residential and commercial customers, with features such as wide aisles and load-bearing capabilities for large truck access. All of our facilities have an on-site manager during business hours, and 246, or approximately 58.4%, of our owned facilities have a manager who resides in an apartment at the facility. Our customers can access their storage cubes 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 345, or approximately 81.9%, of our owned facilities include climate controlled cubes.

The Parent Company was formed in July 2004 as a Maryland REIT. The Parent Company owns its assets and conducts its business through its operating partnership, CubeSmart, L.P. (our “Operating Partnership”), and its subsidiaries. The Parent Company controls the Operating Partnership as its sole general partner and, as of December 31, 2014, owned an approximately 98.6% interest in the Operating Partnership. The Operating Partnership has been engaged in virtually all aspects of the self-storage business, including the development, acquisition, management, ownership and operation of self-storage facilities.

### Acquisition and Disposition Activity

As of December 31, 2014 and 2013, we owned 421 and 366 facilities, respectively, that contained an aggregate of 28.6 million and 24.7 million rentable square feet with occupancy rates of 89.1% and 88.3%, respectively.

A complete listing of, and additional information about, our facilities is included in Item 2 of this Report. The following is a summary of our 2014, 2013 and 2012 acquisition and disposition activity:

| Asset/Portfolio 2014 Acquisitions: | Market | Transaction Date | Number of Facilities | Purchase / Sale Price (in thousands) |
| --- | --- | --- | ---: | ---: |
| Connecticut Asset | Connecticut | January 2014 | 1 | $4,950 |
| Florida Asset | Miami / Ft. Lauderdale | January 2014 | 1 | 14,000 |
| Florida Assets | Florida Markets - Other | January 2014 | 2 | 14,450 |
| California Asset | Other West | January 2014 | 1 | 8,300 |
| Maryland Asset | Baltimore / DC | February 2014 | 1 | 15,800 |
| Maryland Asset | Baltimore / DC | February 2014 | 1 | 15,500 |
| Arizona Asset | Arizona / Las Vegas | March 2014 | 1 | 14,750 |
| Pennsylvania Asset | Philadelphia / Southern NJ | March 2014 | 1 | 7,350 |
| Texas Asset | Texas Markets - Major | March 2014 | 1 | 8,225 |
| Texas Asset | Texas Markets - Major | April 2014 | 1 | 6,450 |
| New York Assets | New York / Northern NJ | April 2014 | 2 | 55,000 |
| Florida Asset | Florida Markets - Other | April 2014 | 1 | 11,406 |
| Massachusetts Asset | Other Northeast | April 2014 | 1 | 11,100 |
| Indiana Asset | Other Midwest | May 2014 | 1 | 8,400 |
| Florida Assets | Florida Markets - Other | June 2014 | 3 | 35,000 |
| Florida Assets | Florida Markets - Other | July 2014 | 2 | 15,800 |
| Massachusetts Asset | Boston | September 2014 | 1 | 23,100 |
| Texas Asset | Texas Markets - Major | October 2014 | 1 | 7,700 |
| Texas Asset | Texas Markets - Major | October 2014 | 1 | 8,500 |
| Texas Asset | Texas Markets - Major | October 2014 | 1 | 7,750 |
| HSRE Assets | Various (see note 4) | November 2014 | 22 | 195,500 |
| Texas Asset | Texas Markets - Major | December 2014 | 1 | 18,650 |
| Florida Assets | Florida Markets - Other | December 2014 | 3 | 18,200 |
| New York Asset | New York / Northern NJ | December 2014 | 1 | 38,000 |
| Texas Asset | Texas Markets - Major | December 2014 | 1 | 4,345 |
|  |  |  | 53 | $568,226 |
| 2013 Acquisitions: |  |  |  |  |
| Arizona Asset | Arizona / Las Vegas | March 2013 | 1 | $6,900 |
| Illinois Asset | Chicago | May 2013 | 1 | 8,300 |
| Florida Asset | Florida Markets - Other | May 2013 | 1 | 7,150 |
| Florida Asset | Miami / Ft. Lauderdale | June 2013 | 1 | 9,000 |
| Massachusetts Asset | Boston | June 2013 | 1 | 10,600 |
| Maryland / New Jersey Assets | Baltimore / DC and New York / Northern NJ | June 2013 | 5 | 52,400 |
| New York Asset | New York / Northern NJ | July 2013 | 1 | 13,000 |
| Texas Asset | Texas Markets - Major | August 2013 | 1 | 10,975 |
| Arizona Asset | Arizona / Las Vegas | September 2013 | 1 | 10,500 |
| Arizona Asset | Arizona / Las Vegas | September 2013 | 1 | 4,300 |
| Maryland Asset | Baltimore / DC | November 2013 | 1 | 15,375 |
| Texas Asset | Texas Markets - Major | November 2013 | 1 | 9,700 |
| Texas Asset | Texas Markets - Major | December 2013 | 1 | 10,497 |
| Texas Asset | Texas Markets - Major | December 2013 | 1 | 6,925 |
| Maryland Asset | Baltimore / DC | December 2013 | 1 | 8,200 |
| Florida Asset | Miami / Ft. Lauderdale | December 2013 | 1 | 6,000 |
|  |  |  | 20 | $189,822 |

6

| Asset/Portfolio 2013 Dispositions: | Market | Transaction Date | Number of Facilities | Purchase / Sale Price (in thousands) |
| --- | --- | --- | ---: | ---: |
| Texas/Indiana Assets | Texas Markets - Major and Other Midwest | March 2013 | 5 | $11,400 |
| Tennessee Assets | Tennessee | August 2013 | 8 | 25,000 |
| California/Ohio/Tennessee/Texas/ Wisconsin Assets | Inland Empire, Ohio, Other Midwest, Tennessee and Texas Markets - Major | October/November 2013 | 22 | 90,000 |
|  |  |  | 35 | $126,400 |
| 2012 Acquisitions: |  |  |  |  |
| Texas Asset | Texas Markets - Major | February 2012 | 1 | $5,100 |
| Georgia Asset | Atlanta | February 2012 | 1 | 6,900 |
| Texas Asset | Texas Markets - Major | June 2012 | 1 | 4,970 |
| Texas Assets | Texas Markets - Major | July 2012 | 4 | 18,150 |
| Texas Asset | Texas Markets - Major | July 2012 | 1 | 5,130 |
| Connecticut Asset | Connecticut | July 2012 | 1 | 5,000 |
| Storage Deluxe Assets | New York / Northern NJ and Connecticut | February/April/August 2012 | 6 | 201,910 |
| Virginia Asset | Baltimore / DC | August 2012 | 1 | 19,750 |
| New Jersey Assets | Philadelphia / Southern NJ | August 2012 | 2 | 10,750 |
| Georgia/Florida Assets | Atlanta and Miami / Ft. Lauderdale | August 2012 | 3 | 13,370 |
| Georgia Asset | Atlanta | August 2012 | 1 | 3,100 |
| HSREV Assets | Various (see note 4) | September 2012 | 9 | 102,000 |
| Colorado Asset | Colorado / Utah | September 2012 | 1 | 10,600 |
| Florida Assets | Florida Markets - Other | November 2012 | 2 | 13,010 |
| Pennsylvania/New Jersey Assets | Philadelphia / Southern NJ | December 2012 | 2 | 7,800 |
| Texas Asset | Texas Markets - Major | December 2012 | 1 | 4,800 |
|  |  |  | 37 | $432,340 |
| 2012 Dispositions: |  |  |  |  |
| Michigan Assets | Other Midwest | June 2012 | 3 | $6,362 |
| Alabama/Louisiana/Mississippi Assets | Other Southeast | June 2012 | 5 | 16,800 |
| New Mexico Assets | Other West | August 2012 | 6 | 7,500 |
| California Asset | Inland Empire | August 2012 | 1 | 5,000 |
| Florida/ Tennessee Assets | Florida Markets - Other and Tennessee | November 2012 | 3 | 6,550 |
| Ohio Assets | Ohio | November 2012 | 8 | 17,750 |
|  |  |  | 26 | $59,962 |

7

The comparability of our results of operations is affected by the timing of acquisition and disposition activities during the periods reported. At December 31, 2014, 2013, and 2012, we owned 421, 366, and 381 self-storage facilities and related assets, respectively. The following table summarizes the change in number of owned self-storage facilities from January 1, 2012 through December 31, 2014:

|  | 2014 | 2013 | 2012 |
| --- | ---: | ---: | ---: |
| Balance - January 1 | 366 | 381 | 370 |
| Facilities acquired | 10 | 1 | 6 |
| Facilities developed | 2 | — | — |
| Facilities sold | — | (5) | — |
| Balance - March 31 | 378 | 377 | 376 |
| Facilities acquired | 9 | 9 | 2 |
| Facilities sold | — | — | (8) |
| Balance - June 30 | 387 | 386 | 370 |
| Facilities acquired | 3 | 4 | 24 |
| Facilities sold | — | (8) | (7) |
| Balance - September 30 | 390 | 382 | 387 |
| Facilities acquired | 31 | 6 | 5 |
| Facilities sold | — | (22) | (11) |
| Balance - December 31 | 421 | 366 | 381 |

### Financing and Investing Activities

The following summarizes certain financing and investing activities during the year ended December 31, 2014:

- *Facility Acquisitions.* During 2014, we acquired 53 self-storage facilities located throughout the United States for an aggregate purchase price of approximately $568.2 million. In connection with these acquisitions, we allocated a portion of the purchase price to the intangible value of in-place leases which aggregated to $38.3 million. In addition, we opened for operation two new self-storage facilities, one in New York and a mixed-use property in Pennsylvania that contains CubeSmart’s corporate headquarters, for a total cost of $42.3 million.
- *Joint Venture Development.* During 2014, we entered into contracts under newly-formed joint ventures for the construction of two self-storage facilities in New York. As of December 31, 2014, we had invested $32.1 million in five joint venture development facilities under construction. We anticipate investing a total of $111.9 million related to these projects. Construction for all projects is expected to be completed by the first quarter of 2016.
- *Development Commitments.* During 2014, we entered into contracts to purchase two facilities in New York and two facilities in Texas after the completion of construction and the issuance of a certificate of occupancy. On December 2, 2014, we purchased one of the facilities in New York for an aggregate purchase price of $38.0 million. As of December 31, 2014, we had four facilities under contract, including one facility that went under contract in 2013, for a total acquisition price of $85.2 million. These four facility acquisitions are subject to due diligence and other customary closing conditions and no assurance can be provided that these acquisitions will be completed on the terms described, or at all.
- *Facility Disposition.* On June 30, 2014, we sold one asset in London, England owned by USIFB, LLP, a consolidated real estate joint venture in which we own a 97% interest, for an aggregate sales price of £4.1 million (approximately $7.0 million). We received net proceeds of $7.0 million and recorded a gain of $0.5 million as a result of the transaction.
- *Term Loan Amendment.* On August 5, 2014, we amended our $100 million term loan agreement resulting in lower borrowing spreads and a maturity extension. As a result of the amendment, our borrowing rate was reduced to LIBOR + 1.4% from LIBOR + 2.0%, at our existing credit ratings, and the maturity was extended to January 31, 2020 from June 18, 2018.
- *Joint Venture Financing.* On May 1, 2014, HHF, an unconsolidated joint venture formed in December 2013, obtained a $100 million loan secured by the 34 self-storage facilities owned by the venture. There is no recourse to the Company. The Company and its partner each own a 50% interest in the joint venture. The loan bears interest at 3.59% per annum and matures on April 30, 2021. This financing completed the planned capital structure of HHF and the proceeds after closing costs were distributed proportionately to the partners.
- *At-The-Market Equity Program.* During 2014, under our at-the-market equity program, we sold a total of 15.2 million common shares at an average sales price of $18.22 per share, resulting in net proceeds under the program of $273.0 million, after deducting offering costs. At December 31, 2014, 9.2 million common shares remained available for sale under the program. The proceeds from the sales conducted during the year ended December 31, 2014 were used to fund acquisitions of self-storage facilities and for general corporate purposes.
- *Equity Offering.* On October 20, 2014, we completed a public offering of 7,475,000 common shares at a public offering price of $19.33, inclusive of the full exercise by the underwriters of their option to purchase 975,000 shares to cover over-allotments. We received approximately $143.0 million in net proceeds from the offering after deducting the underwriting discount and other offering expenses. The proceeds were used for general corporate purposes including funding a portion of our investment activity.

### Business Strategy

Our business strategy consists of several elements:

- **Maximize cash flow from our facilities —** Our operating strategy focuses on maximizing sustainable rents at our facilities while achieving and sustaining occupancy targets. We utilize our operating systems and experienced personnel to manage the balance between rental rates, discounts, and physical occupancy with an objective of maximizing our rental revenue.
- **Acquire facilities within targeted markets —** During 2015, we intend to pursue selective acquisitions in markets that we believe have high barriers to entry, strong demographic fundamentals and demand for storage in excess of storage capacity. We believe the self-storage industry will continue to afford us opportunities for growth through acquisitions due to the highly fragmented composition of the industry. In the past, we have formed joint ventures with unaffiliated third parties, and in the future we may form additional joint ventures to facilitate the funding of future developments or acquisitions.
- **Dispose of facilities —** During 2015, we intend to continue to opportunistically reduce exposure in slower growth, lower barrier-to-entry markets. We intend to use proceeds from these transactions to fund acquisitions within target markets.
- **Grow our third-party management business —** We intend to pursue additional third-party management opportunities. We intend to leverage our current platform to take advantage of consolidation in the industry. We plan to utilize our relationships with third-party owners to help source future acquisitions.

### Investment and Market Selection Process

We maintain a disciplined and focused process in the acquisition and development of self-storage facilities. Our investment committee, comprised of five senior officers and led by Christopher P. Marr, our Chief Executive Officer, oversees our investment process. Our investment process involves six stages — identification, initial due diligence, economic assessment, investment committee approval (and when required, Board approval), final due diligence, and documentation. Through our investment committee, we intend to focus on the following criteria:

- **Targeted 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 three miles around the facility, for its ability to support above-average demographic growth. We seek to increase our presence primarily in areas that we expect will experience growth, including the Northeastern and Mid-Atlantic areas of the United States and areas within Georgia, Florida, Texas, Illinois and California and to enter additional markets should suitable opportunities arise.
- **Quality of 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.
- **Growth potential —** We target acquisitions that offer growth potential through increased operating efficiencies and, in some cases, through additional leasing efforts, renovations or expansions. In addition to acquiring single facilities, we seek to invest in portfolio acquisitions, including those offering significant potential for increased operating efficiency and the ability to spread our fixed costs across a large base of facilities.

### Segment

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

### Concentration

Our self-storage facilities are located in major metropolitan areas as well as suburban areas and have numerous customers per facility. No single customer represented a significant concentration of our 2014 revenues. Our facilities in Florida, New York, Texas and California provided approximately 17%, 17%, 10% and 8%, respectively, of our total 2014 revenues. Our facilities in New York, Florida, Texas and California provided approximately 17%, 15%, 10% and 9%, respectively, of our total 2013 revenues.

### Seasonality

We typically experience seasonal fluctuations in occupancy levels at our facilities, with the levels generally slightly higher during the summer months due to increased moving activity.

### Financing Strategy

We maintain a capital structure that we believe is reasonable and prudent and that will enable us to have ample cash flow to cover debt service and make distributions to our shareholders. As of December 31, 2014, our debt to total capitalization ratio (determined by dividing the carrying value of our total indebtedness by the sum of (a) the market value of the Parent Company’s outstanding common shares, preferred shares and units of the Operating Partnership held by third parties and (b) the carrying value of our total indebtedness) was approximately 23.9% compared to approximately 32.8% as of December 31, 2013. Our ratio of debt to the undepreciated cost of our total assets as of December 31, 2014 was approximately 35.8% compared to approximately 41.3% as of December 31, 2013. We expect to finance additional investments in self-storage facilities through the most attractive sources of capital available at the time of the transaction, in a manner consistent with maintaining a strong financial position and future financial flexibility, subject to limitations on incurrence of indebtedness in our unsecured credit facilities and the indenture that governs our unsecured notes. These capital sources may include borrowings under the revolving portion of our Credit Facility, additional secured or unsecured financings, sales of common or preferred shares of the Parent Company in public offerings or private placements, additional issuances of debt securities and issuances of common or preferred units in our Operating Partnership in exchange for contributed facilities or cash and formations of joint ventures. We also may sell facilities that we no longer view as core assets and reallocate the sales proceeds to fund other acquisitions.

### Competition

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 our facilities are well-positioned within their respective markets and we emphasize customer service, convenience, security and professionalism.

Our key competitors include local and regional operators as well as the other public self-storage REITS, including Public Storage, Sovran Self Storage, Inc. and Extra Space Storage Inc. These companies, some of which operate significantly more facilities than we do and have greater resources than we have, and other entities may be able to accept more risk than we determine is prudent for us, including risks with respect to the geographic proximity of facility investments and the payment of higher facility acquisition prices. This competition may reduce the number of suitable acquisition opportunities available to us, increase the price required to acquire the particular facilities and reduce the demand for self-storage space at our facilities. Nevertheless, we believe that our experience in operating, managing, acquiring, developing and obtaining financing for self-storage facilities should enable us to compete effectively.

### Government Regulation

We are subject to various laws, ordinances and regulations, including regulations relating to lien sale rights and procedures and various federal, state and local regulations that apply generally to the ownership of real property and the operation of self-storage facilities.

Under the Americans with Disabilities Act of 1990 and applicable state accessibility act laws (collectively, 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 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 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.

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 the 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.

Our practice is to conduct or obtain environmental assessments in connection with the acquisition or development of facilities. Whenever the environmental assessment for one of our facilities indicates that a facility is impacted by soil or groundwater contamination from prior owners/operators or other sources, we work with our environmental consultants and, where appropriate, state governmental agencies, to ensure that the facility is either cleaned up, that no cleanup is necessary because the low level of contamination poses no significant risk to public health or the environment, or that the responsibility for cleanup rests with a third party. In certain cases, we have purchased environmental liability insurance coverage to indemnify us against claims for contamination or other adverse environmental conditions that may affect a property.

We are not aware of any environmental cleanup liability that we believe will have a material adverse effect on us. We cannot assure, 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 our facilities, nor have we been notified of a claim for personal injury or property damage by a private party in connection with any of our facilities relating to environmental conditions.

We are not aware of any environmental condition with respect to any of our 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, however, that this will continue to be the case.

### Insurance

We carry comprehensive liability, fire, extended coverage and rental loss insurance covering all of the facilities in our portfolio. We carry environmental insurance coverage on certain 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, environmental hazards, 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 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. We also carry liability insurance to insure against personal injuries that might be sustained at our facilities and director and officer liability insurance.

### Offices

Our principal executive offices are located at 5 Old Lancaster Road, Malvern, PA 19355. Our telephone number is (610) 535-5000.

### Employees

As of December 31, 2014, we employed 1,640 employees, of whom 192 were corporate executive and administrative personnel and 1,448 were property-level personnel. We believe that our relations with our employees are good. Our employees are not unionized.

### Available Information

We file registration statements, proxy statements, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, with 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 is www.cubesmart.com. You also can obtain on our website, free of charge, a copy of our annual report on Form 10-K, the Operating Partnership’s registration statement on Form 10, 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 Report.

Also available on our website, free of charge, are copies of our Code of Business Conduct and Ethics, our Corporate Governance Guidelines, and the charters for each of the committees of our Board of Trustees — the Audit Committee, the Corporate Governance and Nominating Committee, and the Compensation Committee. Copies of each of these documents are also available in print free of charge, upon request by any shareholder. You can obtain copies of these documents by contacting Investor Relations by mail at 5 Old Lancaster Road, Malvern, PA 19355.

## Risk factors

As filed, 56,336 characters.

### Overview

An investment in our securities involves various risks. Investors should carefully consider the risks set forth below together with other information contained in this Report. 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, financial condition, operating results and ability to make distributions to our shareholders.

### Risks Related to our Business and Operations

***Adverse macroeconomic and business conditions may significantly and negatively affect our rental rates, occupancy levels and therefore our results of operations.***

We are susceptible to the effects of adverse macro-economic events that can result in higher unemployment, shrinking demand for products, large-scale business failures and tight credit markets. Our results of operations are sensitive to changes in overall economic conditions that impact consumer spending, including discretionary spending, as well as to increased bad debts due to recessionary pressures. Adverse economic conditions affecting disposable consumer income, such as employment levels, business conditions, interest rates, tax rates, fuel and energy costs, 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.

It is difficult to determine the breadth and duration of the economic and financial market problems and the many ways in which they may affect our customers and our business in general. Nonetheless, continuation or further worsening of these difficult financial and macroeconomic conditions could have a significant adverse effect on our sales, profitability and results of operations.

***Many states and local jurisdictions are facing severe budgetary problems which may have an adverse impact on our business and financial results.***

Many states and jurisdictions are facing severe budgetary problems. Action that may be taken in response to these problems, such as increases in property taxes on commercial facilities, changes to sales taxes or other governmental efforts, including mandating medical insurance for employees, could adversely impact our business and results of operations.

***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, New York, Texas and California accounted for approximately 17%, 17%, 10% and 8%, respectively, of our total 2014 revenues. 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.

### We face risks associated with facility acquisitions.

We intend to continue to acquire individual and portfolios of self-storage facilities. The purchase agreements that we enter into in connection with facility acquisitions typically contain closing conditions that need to be satisfied before the acquisitions can be consummated. The satisfaction of many of these conditions is outside of our control, and we therefore cannot assure you that any of our pending or future acquisitions will be consummated. These conditions include, among other things, satisfactory examination of the title to the facilities, the ability to obtain title insurance and customary closing conditions. Moreover, in the event we are unable to complete pending or future acquisitions, we may have incurred significant legal, accounting and other transaction costs in connection with such acquisitions without realizing the expected benefits.

Those acquisitions that we do consummate would increase our size and may potentially alter our capital structure. Although we believe that future acquisitions that we complete will enhance our financial performance, the success of acquisitions is subject to the risks that:

- acquisitions may fail to perform as expected;
- the actual costs of repositioning or redeveloping acquired facilities may be higher than our estimates;
- we may be unable to obtain acquisition financing on favorable terms;
- 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;
- there is only limited recourse, or no recourse, to the former owners of newly acquired facilities for unknown or undisclosed liabilities such as the clean-up of undisclosed environmental contamination; claims by customers, vendors or other persons arising on account of actions or omissions of the former owners of the facilities; and claims by local governments, adjoining facility owners, facility owner associations, and easement holders for fees, assessments, taxes on other facility-related changes. 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.

In addition, we do not always obtain third-party appraisals of acquired facilities (and instead rely on value determinations by our senior management) and the consideration we pay in exchange for those facilities may exceed the value determined by third-party appraisals.

***We will incur costs and will face integration challenges when we acquire additional facilities.***

As we acquire or develop additional self-storage facilities, we will be subject to risks associated with integrating and managing new facilities, including customer retention and mortgage default risks. In the case of a large portfolio purchase, we could experience strains in our existing information management capacity. In addition, acquisitions or developments may cause disruptions in our operations and divert management’s attention away from day-to-day operations. Furthermore, our income may decline because we will be required to expense acquisition-related costs and amortize in future periods costs for acquired goodwill and other intangible assets. Our failure to successfully integrate any future acquisitions into our portfolio could have an adverse effect on our operating costs and our ability to make distributions to our shareholders.

***The acquisition of new facilities that lack operating history with us will make it more difficult to predict revenue potential.***

We intend to continue to acquire additional facilities. These acquisitions could fail to perform in accordance with expectations. If we fail to accurately estimate occupancy levels, rental rates, 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 that the performance of facilities acquired by us will increase or be maintained under our management.

***Our development activities may be more costly or difficult to complete than we anticipate.***

We intend to continue to develop self-storage facilities where market conditions warrant such investment. Once made, these investments may not produce results in accordance with our expectations. Risks associated with development and construction activities include:

- the unavailability of favorable financing sources in the debt and equity markets;
- construction cost overruns, including on account of rising interest rates, diminished availability of materials and labor, and increases in the costs of materials and labor;
- construction delays and failure to achieve target occupancy levels and rental rates, resulting in a lower than projected return on our investment; and
- complications (including building moratoriums and anti-growth legislation) in obtaining necessary zoning, occupancy and other governmental permits.

***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.***

We depend on external sources of capital to fund acquisitions and facility development, to satisfy our debt obligations and to make distributions to our shareholders required to maintain our status as a REIT, and these sources of capital may not be available on favorable terms, if at all. Our access to external sources of capital depends on a number of factors, 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 external 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.

***Rising operating expenses could reduce our cash flow and funds available for future distributions.***

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, personnel costs including the cost of providing specific medical coverage to our employees, 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.

### We cannot assure our ability to pay dividends in the future.

Historically, we have paid quarterly distributions to our shareholders, and we intend to continue 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 continue 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 all future distributions will be made at the discretion of our Board of Trustees. Our ability to pay dividends will depend upon, among other factors:

- the operational and financial performance of our facilities;
- capital expenditures with respect to existing and newly acquired facilities;
- general and administrative costs associated with our operation as a publicly-held REIT;
- maintenance of our REIT status;
- the amount of, and the interest rates on, our debt;
- the absence of significant expenditures relating to environmental and other regulatory matters; and
- other risk factors described in this Report.

Certain of these matters are beyond our control 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 distributions to shareholders.

***If we are unable to promptly re-let our cubes or if the rates upon such re-letting are significantly lower than expected, then our business and results of operations would be adversely affected.***

We derive revenues principally from rents received from customers who rent cubes at our self-storage facilities under month-to-month leases. Any delay in re-letting cubes as vacancies arise would reduce our revenues and harm our operating results. In addition, lower than expected rental rates upon re-letting could adversely affect our revenues and impede our growth.

***Facility ownership through joint ventures may limit our ability to act exclusively in our interest.***

We have in the past co-invested with, and we may continue to 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 contrary to our policies or objectives. Such investments also have the potential risk of impasse on strategic decisions, such as a sale, in cases where neither we nor the joint venture partner would have full control over the joint venture. In other circumstances, joint venture partners may have the ability without our agreement to make certain major decisions, including decisions about sales, capital expenditures and/or financing. 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 actions of our joint venture partners, and the activities of a joint venture could adversely affect our ability to qualify as a REIT, even though we do not control the joint venture.

***We face significant competition for customers and acquisition and development opportunities.***

Actions by our competitors may decrease or prevent increases of the occupancy and rental rates of our facilities. We compete with numerous developers, owners and operators of self-storage facilities, including other REITs, some of which own or may in the future own facilities similar to ours in the same submarkets 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 the rental rates we currently charge our customers, we may lose potential customers, and we may be pressured to reduce our rental rates below those we currently charge in order to retain customers when our customers’ leases expire. As a result, our financial condition, cash flow, cash available for distribution, market price of our shares and ability to satisfy our debt service obligations could be materially adversely affected. In addition, increased competition for customers may require us to make capital improvements to our facilities that we would not have otherwise made. Any unbudgeted capital improvements we undertake may reduce cash available for distributions to our shareholders.

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 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.

***We may become subject to litigation or threatened litigation which may divert management’s 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.

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.

We also could be sued for personal injuries and/or property damage occurring on our facilities. We maintain liability insurance with limits that we believe adequate to provide for the defense and/or payment of any damages arising from such lawsuits. There can be no assurance that such coverage will cover all costs and expenses from such suits.

***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 and environmental hazards, 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.

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

Certain of our facilities serve as collateral for our mortgage-backed debt, some of which we assumed in connection with our acquisition of facilities and 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, the lender could declare a default, which could affect our ability to obtain future financing and 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 our insurance costs may increase.

***Potential liability for environmental contamination could result in substantial costs.***

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 our 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 facilities, we are potentially liable for property damage or injuries to persons and property.

Our practice is to conduct or obtain environmental assessments in connection with the acquisition or development of additional facilities. We carry environmental insurance coverage on certain facilities in our portfolio. 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). The environmental assessments received to date have not revealed, nor do we have actual knowledge of, any environmental liability that we believe will have a material adverse effect on us. However, we cannot assure that our environmental assessments have identified or will identify all material environmental conditions, that any prior owner of any facility did not create a material environmental condition not actually known to us or that a material environmental condition does not otherwise exist with respect to any of our facilities.

***Americans with Disabilities Act and applicable state accessibility act compliance may require unanticipated expenditures.***

Under 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 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 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, which could have an adverse effect on our operating costs and our ability to make distributions to our shareholders.

### Privacy concerns could result in regulatory changes that may harm our business.

Personal privacy has become a significant issue in the jurisdictions in which we operate. Many jurisdictions in which we operate have imposed restrictions and requirements on the use of personal information by those collecting such information. Changes to law or regulations affecting privacy, if applicable to our business, could impose additional costs and liability on us and could limit our use and disclosure of such information.

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

We are increasingly dependent upon automated information technology processes and Internet commerce, and many of our new customers come from the telephone or over the Internet. Moreover, the nature of our business involves the receipt and retention of personal information about our customers. We also rely extensively on third-party vendors to retain data, process transactions and provide other systems services. These systems, and our systems, are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses and other destructive or disruptive security breaches and catastrophic events, such as a natural disaster or a terrorist event or cyber-attack. In addition, experienced computer programmers may be able to penetrate our network security and misappropriate our confidential information, create system disruptions or cause shutdowns. Such data security breaches as well as system disruptions and shutdowns could result in additional costs to repair or replace such networks or information systems and possible legal liability, including government enforcement actions and private litigation. In addition, our customers could lose confidence in our ability to protect their personal information, which could cause them to discontinue leasing our self-storage facilities. Such events could lead to lost future revenues and adversely affect our results of operations.

***Terrorist 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 flow. Furthermore, any terrorist attacks or armed conflicts could result in increased volatility in or damage to the United States and worldwide financial markets and economy.

### Risks Related to the Real Estate Industry

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

Our rental 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 but are not limited to:

- downturns in the national, regional and local economic climate;
- local or regional oversupply, increased competition or reduction in demand for self-storage space;
- vacancies or 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;
- 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 facility;
- 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, could result in a general decline in rental revenues, which could impair our ability to satisfy our debt service obligations and to make distributions to our shareholders.

***Rental revenues are significantly influenced by demand for self-storage space generally, and a decrease in such demand would 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 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 ongoing 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.

***Because real estate is illiquid, we may not be able to sell facilities when 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 for 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.

### Risks Related to our Qualification and Operation as a REIT

***Failure to qualify as a REIT would subject us to U.S. federal income tax which would reduce the cash available for distribution to our shareholders.***

We operate our business to qualify to be taxed as a REIT for federal income tax 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 Report are not binding on the IRS or any court. As a REIT, we generally will not be subject to federal income tax on the 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 and joint ventures 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 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.

***Failure of the Operating Partnership (or a subsidiary partnership or joint venture) to be treated as a partnership would have serious adverse consequences to our shareholders.***

If the IRS were to successfully challenge the tax status of the Operating Partnership or any of its subsidiary partnerships or joint ventures for federal income tax purposes, the Operating Partnership or the affected subsidiary partnership or joint venture would be taxable as a corporation. In such event we would cease to qualify as a REIT and the imposition of a corporate tax on the Operating Partnership, a subsidiary partnership or joint venture would reduce the amount of cash available for distribution from the Operating Partnership to us and ultimately to our shareholders.

***To maintain our REIT status, we may be forced to borrow funds on a short-term basis during unfavorable market conditions.***

As a REIT, we are subject to certain distribution requirements, including the requirement to distribute 90% of our REIT taxable income, excluding net capital gains, which may result in our having to make distributions at a disadvantageous time or to borrow funds at unfavorable rates. Compliance with this requirement may hinder our ability to operate solely on the basis of maximizing profits.

***We will pay some taxes even if we qualify as a REIT, which will reduce the cash available for distribution to our shareholders.***

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 facilities would not be prohibited transactions unless we comply with certain statutory safe-harbor provisions.

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 some of our subsidiaries as taxable REIT subsidiaries, 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.

### We face possible federal, state and local tax audits.

Because we are organized and qualify as a REIT, we are generally not subject to federal income taxes, but are subject to certain state and local taxes. Certain entities through which we own real estate either have undergone, or are currently undergoing, tax audits. Although we believe that we have substantial arguments in favor of our positions in the ongoing audits, in some instances there is no controlling precedent or interpretive guidance on the specific point at issue. Collectively, tax deficiency notices received to date from the jurisdictions conducting the ongoing audits have not been material. However, there can be no assurance that future audits will not occur with increased frequency or that the ultimate result of such audits will not have a material adverse effect on our results of operations.

### Risks Related to our Debt Financings

### We face risks related to current debt maturities, including refinancing risk.

Certain of our mortgages, bank loans, and unsecured debt (including our senior notes) will have significant outstanding balances on their maturity dates, commonly known as “balloon payments.” We may not have the cash resources available to repay those amounts, and we may have to raise funds for such repayment either through the issuance of equity or debt securities, additional bank borrowings (which may include extension of maturity dates), joint ventures or asset sales. Furthermore, we are restricted from incurring certain additional indebtedness and making certain other changes to our capital and debt structure under the terms of the senior notes and the indenture governing the senior notes.

There can be no assurance that we will be able to refinance our 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 facilities 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

***As a result of our interest rate hedges, swap agreements and other, similar arrangements, we face counterparty risks.***

We may be exposed to the potential risk of counterparty default or non-payment with respect to interest rate hedges, swap agreements, floors, caps and other interest rate hedging contracts that we may enter into from time to time, in which event we could suffer a material loss on the value of those agreements. 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. There is no assurance that our potential counterparties on these agreements will perform their obligations under such agreements.

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

Recently, domestic financial markets have experienced extreme volatility and uncertainty. At times in recent years liquidity has tightened in the domestic financial markets, including the investment grade debt and equity capital markets for which we historically sought financing. Consequently, there is greater uncertainty regarding our ability to access the credit markets in order to attract financing on reasonable terms; there can be no assurance that we will be able to continue to issue common or preferred equity securities at a reasonable price. Our ability to finance new acquisitions and refinance future debt maturities could be adversely impacted by our inability to secure permanent financing on reasonable terms, if at all.

***The terms and covenants relating to our 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 the insufficiency of cash flow to meet required debt service payment obligations and the inability to refinance outstanding indebtedness at maturity. If our debt cannot be paid, refinanced or extended at maturity, we may not be able to make distributions to shareholders at expected levels or at all and may not be able to acquire new facilities. Failure to make distributions to our shareholders could result in our failure to qualify as a REIT for federal income tax purposes. Furthermore, an increase in our interest expense could adversely affect our cash flow and ability 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 a material adverse effect on our cash flow and ability to make distributions and, depending on the number of facilities foreclosed on, could threaten our continued viability.

Our Credit Facility contains (and any new or amended facility we may enter into from time to time will likely contain) customary affirmative and negative covenants, including financial covenants that, among other things, require us to comply with certain liquidity and net worth tests. Our ability to borrow under the Credit Facility is (and any new or amended facility we may enter into from time to time will be) subject to compliance with such financial and other covenants. In the event that we fail to satisfy these covenants, we would be in default under the Credit Facility and may be required to repay 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. Moreover, the presence of such covenants in our credit agreements could cause us to operate our business with a view toward compliance with such covenants, which might not produce optimal returns for shareholders. Similarly, the indenture under which we have issued unsecured senior notes contains customary financial covenants, including limitations on incurrence of additional indebtedness.

Increases in interest rates on variable rate indebtedness would increase our interest expense, which could adversely affect our cash 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.

***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 do not limit the amount of indebtedness that we may incur. We could alter the balance between our total outstanding indebtedness and the value of our assets at any time. If we become more highly leveraged, then the resulting increase in debt service could adversely affect our ability to make payments on our outstanding indebtedness and to pay our anticipated distributions and/or the distributions required to maintain our REIT status, and could harm our financial condition.

### Risks Related to our Organization and Structure

***We are dependent upon our senior management team whose continued service is not guaranteed.***

Our executive team, including our named executive officers, has extensive self-storage, real estate and public company experience. Although we have employment agreements with members of our senior management team, we cannot provide any assurance that any of them will remain in our employment. The loss of services of one or more members of our senior management team 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, 2014, we had 1,448 property-level 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.

***Certain provisions of Maryland law could inhibit changes in control, 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.***

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 without shareholder approval.

Our Trustees also have the discretion, granted in our bylaws and Maryland law, without shareholder approval to, among other things (1) create a staggered Board of Trustees, and (2) amend our bylaws or repeal individual bylaws in a manner that provides the Board of Trustees with greater authority. Any such action could inhibit or impede a third party from making a proposal to acquire us at a price that could be beneficial to our shareholders.

***Our shareholders have limited control to prevent us from making any changes to our investment 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 and officers 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 on our behalf, 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 shareholders’ ability to recover damages from that Trustee or officer will be limited.

***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, of which 3,100,000 shares have already been issued, 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.

### Risks Related to our Securities

### 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 acquisitions or developments or to repay indebtedness. Our Board of Trustees may authorize the issuance of additional equity securities, including preferred shares, 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 common and preferred equity.

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

***The market price of our common shares has been, and may continue to be, particularly volatile, and our shareholders may be unable to resell their shares at a profit.***

The market price of our common shares has been subject to significant fluctuation and may continue to fluctuate or decline. Between January 1, 2012 and December 31, 2014, the price of our common shares has ranged from a high of $22.92 (on December 22, 2014) to a low of $10.30 (on January 4, 2012). In the past several years, REIT securities have experienced high levels of volatility and significant increases in value from their historic lows.

In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. If our share price is volatile, we may become the target of securities litigation. Securities litigation could result in substantial costs and divert our management’s attention and resources from our business.

## Properties

As filed, 40,821 characters.

### Overview

As of December 31, 2014, we owned 421 self-storage facilities that contain approximately 28.6 million rentable square feet and are located in 22 states and the District of Columbia. The following table sets forth summary information regarding our facilities by state as of December 31, 2014.

| State | Number of Facilities | Number of Units | Total Rentable Square Feet | % of Total Rentable Square Feet | Period-end Occupancy |
| --- | ---: | ---: | ---: | ---: | ---: |
| Florida | 73 | 52,517 | 5,473,764 | 19.1% | 91.0% |
| Texas | 56 | 29,630 | 3,645,115 | 12.7% | 88.4% |
| California | 40 | 25,323 | 2,829,387 | 9.9% | 90.3% |
| New York | 36 | 41,373 | 2,517,430 | 8.8% | 85.4% |
| Illinois | 33 | 18,867 | 2,099,658 | 7.3% | 89.5% |
| Arizona | 28 | 14,845 | 1,582,025 | 5.5% | 87.5% |
| New Jersey | 23 | 15,151 | 1,552,183 | 5.4% | 91.4% |
| Connecticut | 21 | 9,697 | 1,101,249 | 3.8% | 88.8% |
| Ohio | 20 | 11,047 | 1,282,254 | 4.5% | 86.9% |
| Georgia | 16 | 9,723 | 1,184,826 | 4.1% | 90.5% |
| Maryland | 13 | 10,202 | 1,074,100 | 3.8% | 87.9% |
| Virginia | 9 | 6,707 | 691,580 | 2.4% | 87.2% |
| Pennsylvania | 9 | 5,935 | 603,792 | 2.1% | 88.9% |
| Colorado | 9 | 4,765 | 567,899 | 2.0% | 88.7% |
| Massachusetts | 7 | 4,809 | 437,391 | 1.5% | 87.7% |
| North Carolina | 6 | 3,906 | 463,488 | 1.6% | 90.9% |
| Tennessee | 5 | 3,267 | 467,439 | 1.6% | 89.7% |
| Utah | 4 | 2,214 | 239,623 | 0.8% | 90.6% |
| Rhode Island | 4 | 1,973 | 240,599 | 0.8% | 87.7% |
| New Mexico | 3 | 1,611 | 182,261 | 0.6% | 90.5% |
| Nevada | 3 | 1,414 | 172,332 | 0.6% | 82.3% |
| Washington DC | 2 | 1,798 | 146,067 | 0.5% | 89.8% |
| Indiana | 1 | 562 | 67,280 | 0.2% | 90.5% |
| **Total/Weighted Average** | **421** | **277,336** | **28,621,742** | **100.0%** | **89.1%** |

25

### Our Facilities

The following table sets forth additional information with respect to each of our owned facilities as of December 31, 2014. Our ownership of each facility consists of a fee interest in the facility held by our Operating Partnership, or one of its subsidiaries, except for six of our facilities, which are subject to ground leases. In addition, small parcels of land at four of our other facilities are subject to ground leases.

| Facility Location | Year Acquired / Developed (1) | Year Built | Rentable Square Feet | Occupancy (2) | Cubes | Manager Apartment (3) | % Climate Controlled (4) |
| --- | --- | --- | ---: | ---: | ---: | --- | ---: |
| **Chandler I, AZ** | 2005 | 1985 | 47,520 | 88.3% | 447 | Y | 11.4% |
| **Chandler II, AZ** | 2013 | 2008 | 83,819 | 83.4% | 1,179 | N | 77.0% |
| **Gilbert, AZ** | 2013 | 2010 | 57,380 | 83.7% | 449 | Y | 83.8% |
| **Glendale, AZ** | 1998 | 1987 | 56,807 | 90.5% | 516 | Y | 0.0% |
| **Green Valley, AZ** | 2005 | 1985 | 25,050 | 88.1% | 263 | N | 8.7% |
| **Mesa I, AZ** | 2006 | 1985 | 52,575 | 91.1% | 489 | N | 0.0% |
| **Mesa II, AZ** | 2006 | 1981 | 45,511 | 92.9% | 395 | Y | 16.9% |
| **Mesa III, AZ** | 2006 | 1986 | 58,264 | 88.3% | 501 | Y | 16.5% |
| **Phoenix I, AZ** | 2006 | 1987 | 100,775 | 91.8% | 746 | Y | 21.5% |
| **Phoenix II, AZ** | 2006 | 1974 | 83,160 | 93.5% | 807 | Y | 6.7% |
| **Phoenix III, AZ** | 2014 | 2009 | 121,761 | 84.4% | 845 | N | 73.0% |
| **Scottsdale, AZ** | 1998 | 1995 | 79,525 | 86.1% | 653 | Y | 20.5% |
| **Tempe I, AZ** | 2005 | 1975 | 53,890 | 93.3% | 405 | Y | 18.9% |
| **Tempe II, AZ** | 2013 | 2007 | 35,125 | 84.8% | 391 | N | 77.9% |
| **Tucson I, AZ** | 1998 | 1974 | 59,800 | 91.6% | 488 | Y | 0.0% |
| **Tucson II, AZ** | 1998 | 1988 | 43,950 | 88.8% | 535 | Y | 100.0% |
| **Tucson III, AZ** | 2005 | 1979 | 49,832 | 83.2% | 488 | N | 0.0% |
| **Tucson IV, AZ** | 2005 | 1982 | 48,040 | 88.1% | 496 | Y | 13.7% |
| **Tucson V, AZ** | 2005 | 1982 | 45,134 | 82.8% | 416 | Y | 11.5% |
| **Tucson VI, AZ** | 2005 | 1982 | 40,814 | 85.4% | 409 | Y | 13.4% |
| **Tucson VII, AZ** | 2005 | 1982 | 52,688 | 90.8% | 594 | Y | 6.9% |
| **Tucson VIII, AZ** | 2005 | 1979 | 46,650 | 84.1% | 437 | Y | 0.0% |
| **Tucson IX, AZ** | 2005 | 1984 | 67,545 | 86.6% | 599 | Y | 6.2% |
| **Tucson X, AZ** | 2005 | 1981 | 46,350 | 81.4% | 413 | N | 0.0% |
| **Tucson XI, AZ** | 2005 | 1974 | 42,940 | 89.9% | 404 | Y | 0.0% |
| **Tucson XII, AZ** | 2005 | 1974 | 42,225 | 86.0% | 429 | Y | 3.9% |
| **Tucson XIII, AZ** | 2005 | 1974 | 45,800 | 82.0% | 493 | Y | 0.0% |
| **Tucson XIV, AZ** | 2005 | 1976 | 49,095 | 85.9% | 558 | Y | 17.9% |
| **Benicia, CA** | 2005 | 1988/93/05 | 74,770 | 90.3% | 728 | Y | 0.0% |
| **Citrus Heights, CA** | 2005 | 1987 | 75,620 | 89.5% | 681 | Y | 0.0% |
| **Corona, CA** | 2014 | 2014 | 95,125 | 90.9% | 974 | N | 6.9% |
| **Diamond Bar, CA** | 2005 | 1988 | 102,984 | 91.0% | 900 | Y | 0.0% |
| **Escondido, CA** | 2007 | 2002 | 142,895 | 92.2% | 1,227 | Y | 11.6% |
| **Fallbrook, CA** | 1997 | 1985/88 | 46,401 | 84.7% | 444 | Y | 0.0% |
| **Fremont, CA** | 2014 | 1987 | 51,243 | 96.1% | 526 | N | 0.6% |
| **Lancaster, CA** | 2001 | 1987 | 60,675 | 91.4% | 340 | Y | 0.0% |
| **Long Beach, CA** | 2006 | 1974 | 124,571 | 95.3% | 1,348 | Y | 0.0% |
| **Murrieta, CA** | 2005 | 1996 | 49,795 | 91.4% | 436 | Y | 5.0% |
| **North Highlands, CA** | 2005 | 1980 | 57,169 | 86.8% | 473 | Y | 0.0% |
| **Ontario, CA** | 2014 | 1986 | 93,590 | 87.4% | 850 | N | 0.0% |
| **Orangevale, CA** | 2005 | 1980 | 50,542 | 92.5% | 527 | Y | 0.0% |

26

| Facility Location | Year Acquired / Developed (1) | Year Built | Rentable Square Feet | Occupancy (2) | Cubes | Manager Apartment (3) | % Climate Controlled (4) |
| --- | --- | --- | ---: | ---: | ---: | --- | ---: |
| **Pleasanton, CA** | 2005 | 2003 | 85,045 | 89.6% | 702 | Y | 0.0% |
| **Rancho Cordova, CA** | 2005 | 1979 | 53,978 | 90.8% | 457 | Y | 0.0% |
| **Rialto I, CA** | 2006 | 1987 | 57,391 | 93.5% | 437 | Y | 0.0% |
| **Rialto II, CA** | 1997 | 1980 | 99,783 | 94.0% | 714 | Y | 0.0% |
| **Riverside I, CA** | 2006 | 1977 | 67,120 | 90.5% | 641 | Y | 0.0% |
| **Riverside II, CA** | 2006 | 1985 | 85,076 | 89.6% | 813 | Y | 5.5% |
| **Roseville, CA** | 2005 | 1979 | 59,944 | 88.1% | 550 | Y | 0.0% |
| **Sacramento I, CA** | 2005 | 1979 | 50,714 | 91.4% | 551 | Y | 0.0% |
| **Sacramento II, CA** | 2005 | 1986 | 62,088 | 90.4% | 551 | Y | 0.0% |
| **San Bernardino I, CA** | 1997 | 1987 | 31,070 | 95.7% | 236 | N | 0.0% |
| **San Bernardino II, CA** | 1997 | 1991 | 41,546 | 91.2% | 373 | Y | 0.0% |
| **San Bernardino III, CA** | 1997 | 1985/92 | 35,416 | 83.9% | 371 | N | 0.0% |
| **San Bernardino IV, CA** | 2005 | 2002/04 | 83,307 | 88.0% | 688 | Y | 12.6% |
| **San Bernardino V, CA** | 2006 | 1974 | 57,595 | 89.9% | 469 | Y | 7.0% |
| **San Bernardino VII, CA** | 2006 | 1978 | 78,753 | 93.0% | 604 | Y | 2.5% |
| **San Bernardino VIII, CA** | 2006 | 1977 | 99,004 | 83.3% | 809 | Y | 0.0% |
| **San Marcos, CA** | 2005 | 1979 | 37,430 | 93.9% | 242 | Y | 0.0% |
| **Santa Ana, CA** | 2006 | 1984 | 64,071 | 88.8% | 720 | Y | 4.0% |
| **South Sacramento, CA** | 2005 | 1979 | 52,490 | 87.4% | 414 | Y | 0.0% |
| **Spring Valley, CA** | 2006 | 1980 | 55,045 | 92.1% | 713 | Y | 0.0% |
| **Temecula I, CA** | 1998 | 1985/03 | 81,320 | 86.5% | 696 | Y | 45.7% |
| **Temecula II, CA** | 2007 | 2003 | 84,318 | 88.7% | 639 | Y | 54.6% |
| **Vista I, CA** | 2001 | 1988 | 74,481 | 88.7% | 623 | Y | 0.0% |
| **Vista II, CA** | 2005 | 2001/02/03 | 147,871 | 90.8% | 1,280 | Y | 3.7% |
| **Walnut, CA** | 2005 | 1987 | 50,708 | 89.9% | 537 | Y | 15.8% |
| **West Sacramento, CA** | 2005 | 1984 | 40,015 | 91.9% | 478 | Y | 0.0% |
| **Westminster, CA** | 2005 | 1983/98 | 68,428 | 91.5% | 561 | Y | 0.0% |
| **Aurora, CO** | 2005 | 1981 | 75,867 | 92.7% | 617 | Y | 0.0% |
| **Colorado Springs I, CO** | 2005 | 1986 | 47,975 | 83.1% | 463 | Y | 0.0% |
| **Colorado Springs II, CO** | 2006 | 2001 | 62,400 | 78.9% | 433 | Y | 0.0% |
| **Denver I, CO** | 2006 | 1997 | 59,200 | 89.1% | 449 | Y | 0.0% |
| **Denver II, CO** | 2012 | 2007 | 74,295 | 92.2% | 676 | N | 94.8% |
| **Federal Heights, CO** | 2005 | 1980 | 54,770 | 90.1% | 547 | Y | 0.0% |
| **Golden, CO** | 2005 | 1985 | 87,800 | 90.0% | 641 | Y | 1.6% |
| **Littleton, CO** | 2005 | 1987 | 53,490 | 89.7% | 442 | Y | 64.2% |
| **Northglenn, CO** | 2005 | 1980 | 52,102 | 89.8% | 497 | Y | 0.0% |
| **Bloomfield, CT** | 1997 | 1987/93/94 | 48,700 | 89.4% | 443 | Y | 8.5% |
| **Branford, CT** | 1995 | 1986 | 50,679 | 88.8% | 431 | Y | 3.5% |
| **Bristol, CT** | 2005 | 1989/99 | 47,725 | 88.3% | 469 | N | 31.8% |
| **East Windsor, CT** | 2005 | 1986/89 | 46,016 | 86.4% | 303 | N | 0.3% |
| **Enfield, CT** | 2001 | 1989 | 52,875 | 89.0% | 369 | Y | 0.0% |
| **Gales Ferry, CT** | 1995 | 1987/89 | 54,805 | 88.7% | 609 | N | 9.0% |
| **Manchester I, CT (6)** | 2002 | 1999/00/01 | 46,925 | 87.3% | 458 | N | 42.8% |
| **Manchester II, CT** | 2005 | 1984 | 52,725 | 90.8% | 399 | N | 0.0% |
| **Manchester III, CT** | 2014 | 2009 | 60,113 | 89.0% | 583 | N | 87.0% |

27

| Facility Location | Year Acquired / Developed (1) | Year Built | Rentable Square Feet | Occupancy (2) | Cubes | Manager Apartment (3) | % Climate Controlled (4) |
| --- | --- | --- | ---: | ---: | ---: | --- | ---: |
| **Milford, CT** | 1996 | 1975 | 44,885 | 85.3% | 372 | Y | 7.0% |
| **Monroe, CT** | 2005 | 1996/03 | 58,500 | 90.6% | 397 | N | 0.0% |
| **Mystic, CT** | 1996 | 1975/86 | 50,825 | 92.5% | 561 | Y | 4.6% |
| **Newington I, CT** | 2005 | 1978/97 | 42,620 | 87.5% | 246 | N | 0.0% |
| **Newington II, CT** | 2005 | 1979/81 | 36,140 | 85.6% | 194 | N | 0.0% |
| **Norwalk, CT** | 2012 | 2009 | 30,414 | 92.8% | 349 | N | 100.0% |
| **Old Saybrook I, CT** | 2005 | 1982/88/00 | 86,950 | 90.3% | 720 | N | 10.8% |
| **Old Saybrook II, CT** | 2005 | 1988/02 | 26,425 | 85.3% | 254 | N | 71.5% |
| **Shelton, CT** | 2011 | 2007 | 78,430 | 88.2% | 856 | Y | 93.9% |
| **South Windsor, CT** | 1996 | 1976 | 72,075 | 89.0% | 553 | Y | 1.6% |
| **Stamford, CT** | 2005 | 1997 | 28,907 | 95.3% | 363 | N | 38.6% |
| **Wilton, CT** | 2012 | 1966 | 84,515 | 86.1% | 768 | Y | 66.9% |
| **Washington I, DC** | 2008 | 2002 | 63,085 | 90.1% | 755 | Y | 97.1% |
| **Washington II, DC** | 2011 | 1929/98 | 82,982 | 89.7% | 1,043 | N | 99.5% |
| **Boca Raton, FL** | 2001 | 1998 | 37,958 | 90.1% | 605 | N | 70.3% |
| **Boynton Beach I, FL** | 2001 | 1999 | 61,749 | 93.7% | 755 | Y | 61.8% |
| **Boynton Beach II, FL** | 2005 | 2001 | 61,579 | 95.5% | 573 | Y | 88.5% |
| **Boynton Beach III, FL** | 2014 | 2001 | 67,393 | 91.2% | 720 | N | 100.0% |
| **Bradenton I, FL** | 2004 | 1979 | 68,441 | 92.4% | 581 | N | 7.2% |
| **Bradenton II, FL** | 2004 | 1996 | 87,958 | 90.9% | 826 | Y | 47.0% |
| **Cape Coral I, FL** | 2000\* | 2000 | 76,842 | 94.9% | 856 | Y | 90.2% |
| **Cape Coral II, FL** | 2014 | 2007 | 67,955 | 89.9% | 609 | N | 71.0% |
| **Coconut Creek I, FL** | 2012 | 2001 | 78,883 | 94.9% | 757 | Y | 53.0% |
| **Coconut Creek II, FL** | 2014 | 1999 | 90,400 | 90.9% | 817 | N | 79.1% |
| **Dania Beach, FL (6)** | 2004 | 1984 | 168,724 | 92.1% | 1,813 | N | 26.4% |
| **Dania, FL** | 1996 | 1988 | 58,145 | 97.4% | 493 | Y | 53.7% |
| **Davie, FL** | 2001\* | 2001 | 81,235 | 96.8% | 834 | Y | 68.2% |
| **Deerfield Beach, FL** | 1998\* | 1998 | 57,230 | 95.3% | 517 | Y | 54.9% |
| **Delray Beach I, FL** | 2001 | 1999 | 67,833 | 91.4% | 815 | Y | 45.5% |
| **Delray Beach II, FL** | 2013 | 1987 | 75,712 | 92.5% | 1,176 | N | 95.3% |
| **Delray Beach III, FL** | 2014 | 2006 | 94,495 | 91.2% | 904 | N | 99.6% |
| **Fernandina Beach, FL** | 1996 | 1986 | 121,083 | 87.2% | 876 | Y | 47.0% |
| **Ft. Lauderdale I, FL** | 1999 | 1999 | 70,063 | 91.4% | 696 | Y | 54.6% |
| **Ft. Lauderdale II, FL** | 2013 | 2007 | 49,507 | 82.6% | 860 | N | 100.0% |
| **Ft. Myers I, FL** | 1999 | 1998 | 67,546 | 92.4% | 591 | Y | 84.3% |
| **Ft. Myers II, FL** | 2014 | 2001 | 83,125 | 89.5% | 842 | N | 62.7% |
| **Ft. Myers III, FL** | 2014 | 2002 | 81,554 | 76.6% | 876 | N | 89.3% |
| **Jacksonville I, FL** | 2005 | 2005 | 80,215 | 88.3% | 709 | N | 100.0% |
| **Jacksonville II, FL** | 2007 | 2004 | 65,070 | 88.1% | 657 | N | 100.0% |
| **Jacksonville III, FL** | 2007 | 2003 | 65,590 | 91.7% | 677 | N | 100.0% |
| **Jacksonville IV, FL** | 2007 | 2006 | 77,535 | 89.8% | 707 | N | 100.0% |
| **Jacksonville V, FL** | 2007 | 2004 | 82,235 | 87.0% | 702 | N | 80.1% |
| **Jacksonville VI, FL** | 2014 | 2006 | 74,425 | 81.7% | 523 | N | 70.7% |
| **Kendall, FL** | 2007 | 2003 | 75,495 | 94.5% | 703 | N | 79.4% |
| **Lake Worth I, FL †** | 1998 | 1998/02 | 160,949 | 92.3% | 1,287 | Y | 72.7% |
| **Lake Worth II, FL** | 2014 | 2004/08 | 87,050 | 95.0% | 755 | N | 85.9% |
| **Lakeland, FL** | 1994 | 1988 | 49,095 | 87.9% | 489 | Y | 82.9% |
| **Leisure City, FL** | 2012 | 2005 | 56,042 | 89.7% | 615 | N | 69.4% |

28

| Facility Location | Year Acquired / Developed (1) | Year Built | Rentable Square Feet | Occupancy (2) | Cubes | Manager Apartment (3) | % Climate Controlled (4) |
| --- | --- | --- | ---: | ---: | ---: | --- | ---: |
| **Lutz I, FL** | 2004 | 2000 | 66,795 | 92.8% | 601 | Y | 43.6% |
| **Lutz II, FL** | 2004 | 1999 | 69,232 | 86.7% | 533 | Y | 29.5% |
| **Margate I, FL †** | 1996 | 1979/81 | 53,660 | 86.9% | 370 | N | 27.7% |
| **Margate II, FL †** | 1996 | 1985 | 65,180 | 91.6% | 416 | Y | 61.5% |
| **Merritt Island, FL** | 2002 | 2000 | 50,281 | 89.3% | 465 | Y | 66.4% |
| **Miami I, FL** | 1996 | 1995 | 46,500 | 90.0% | 557 | Y | 68.9% |
| **Miami II, FL** | 1996 | 1989 | 66,960 | 89.4% | 569 | Y | 18.9% |
| **Miami III, FL** | 2005 | 1988/03 | 150,425 | 92.5% | 1,513 | N | 91.2% |
| **Miami IV, FL** | 2011 | 2007 | 76,337 | 92.3% | 923 | N | 100.0% |
| **Miramar, FL** | 2013 | 2009 | 75,530 | 92.7% | 744 | N | 97.1% |
| **Naples I, FL** | 1996 | 1996 | 48,150 | 94.3% | 317 | Y | 46.1% |
| **Naples II, FL** | 1997 | 1985 | 65,850 | 90.4% | 628 | Y | 56.0% |
| **Naples III, FL** | 1997 | 1981/83 | 80,021 | 90.2% | 793 | Y | 49.2% |
| **Naples IV, FL** | 1998 | 1990 | 40,550 | 94.4% | 430 | N | 63.9% |
| **New Smyrna Beach, FL** | 2014 | 2001 | 81,454 | 97.5% | 600 | N | 60.1% |
| **Ocoee, FL** | 2005 | 1997 | 76,250 | 94.0% | 614 | Y | 22.1% |
| **Orange City, FL** | 2004 | 2001 | 59,580 | 88.7% | 643 | N | 52.6% |
| **Orlando II, FL** | 2005 | 2002/04 | 63,084 | 90.1% | 583 | N | 81.5% |
| **Orlando III, FL** | 2006 | 1988/90/96 | 101,330 | 93.8% | 825 | Y | 22.0% |
| **Orlando IV, FL** | 2010 | 2009 | 76,565 | 89.4% | 635 | N | 68.6% |
| **Orlando V, FL** | 2012 | 2008 | 75,358 | 91.6% | 632 | N | 90.9% |
| **Orlando VI, FL** | 2014 | 2006 | 71,475 | 81.8% | 570 | N | 34.8% |
| **Oviedo, FL** | 2006 | 1988/91 | 49,276 | 90.7% | 427 | Y | 3.7% |
| **Palm Coast I, FL** | 2014 | 2001 | 47,400 | 87.8% | 423 | N | 52.0% |
| **Palm Coast II, FL** | 2014 | 1998/04 | 122,490 | 91.8% | 1,167 | N | 42.5% |
| **Pembroke Pines, FL** | 1997 | 1997 | 67,321 | 91.9% | 694 | Y | 77.9% |
| **Royal Palm Beach II, FL** | 2007 | 2004 | 81,394 | 93.5% | 754 | N | 89.9% |
| **Sanford I, FL** | 2006 | 1988/06 | 61,810 | 86.3% | 442 | Y | 35.4% |
| **Sanford II, FL** | 2014 | 2000 | 70,054 | 75.1% | 668 | N | 62.1% |
| **Sarasota, FL** | 1999 | 1998 | 71,152 | 89.7% | 527 | Y | 60.5% |
| **St. Augustine, FL** | 1996 | 1985 | 59,725 | 93.3% | 700 | Y | 26.5% |
| **Stuart, FL** | 1997 | 1995 | 87,176 | 88.9% | 944 | Y | 62.5% |
| **SW Ranches, FL** | 2007 | 2004 | 64,955 | 91.4% | 647 | N | 88.8% |
| **Tampa, FL** | 2007 | 2001/02 | 83,913 | 92.9% | 770 | N | 33.8% |
| **West Palm Beach I, FL** | 2001 | 1997 | 68,061 | 90.0% | 972 | Y | 52.4% |
| **West Palm Beach II, FL** | 2004 | 1996 | 94,428 | 95.0% | 834 | Y | 76.6% |
| **West Palm Beach III, FL** | 2012 | 2008 | 77,664 | 96.2% | 890 | Y | 89.8% |
| **West Palm Beach IV, FL** | 2014 | 2004 | 102,912 | 92.9% | 948 | N | 85.5% |
| **Winter Park, FL** | 2014 | 2005 | 54,356 | 85.4% | 533 | N | 58.7% |
| **Alpharetta, GA** | 2001 | 1996 | 90,501 | 90.4% | 663 | Y | 80.3% |
| **Atlanta, GA** | 2012 | 2008 | 66,675 | 90.9% | 606 | N | 100.0% |
| **Austell, GA** | 2006 | 2000 | 83,675 | 92.3% | 663 | Y | 64.2% |
| **Decatur, GA** | 1998 | 1986 | 145,280 | 90.0% | 1,246 | Y | 2.5% |
| **Duluth, GA** | 2011 | 2009 | 70,885 | 89.5% | 586 | N | 100.0% |
| **Lawrenceville, GA** | 2011 | 1999 | 73,615 | 88.0% | 603 | Y | 27.4% |

29

| Facility Location | Year Acquired / Developed (1) | Year Built | Rentable Square Feet | Occupancy (2) | Cubes | Manager Apartment (3) | % Climate Controlled (4) |
| --- | --- | --- | ---: | ---: | ---: | --- | ---: |
| **Norcross I, GA** | 2001 | 1997 | 85,420 | 92.0% | 590 | Y | 65.7% |
| **Norcross II, GA** | 2011 | 1996 | 52,545 | 88.8% | 399 | Y | 62.1% |
| **Norcross III, GA** | 2012 | 2007 | 47,220 | 88.1% | 491 | N | 100.0% |
| **Norcross IV, GA** | 2012 | 2005 | 57,505 | 92.1% | 508 | Y | 88.6% |
| **Peachtree City I, GA** | 2001 | 1997 | 49,875 | 93.5% | 446 | N | 75.7% |
| **Peachtree City II, GA** | 2012 | 2005 | 59,950 | 91.1% | 431 | N | 43.0% |
| **Smyrna, GA** | 2001 | 2000 | 57,015 | 85.7% | 495 | Y | 98.8% |
| **Snellville, GA** | 2007 | 1996/97 | 79,950 | 92.0% | 754 | Y | 21.8% |
| **Suwanee I, GA** | 2007 | 2000/03 | 85,125 | 89.3% | 671 | Y | 28.2% |
| **Suwanee II, GA** | 2007 | 2005 | 79,590 | 93.4% | 571 | N | 65.6% |
| **Addison, IL** | 2004 | 1979 | 31,325 | 89.9% | 367 | Y | 0.0% |
| **Aurora, IL** | 2004 | 1996 | 73,985 | 88.8% | 554 | Y | 8.6% |
| **Bartlett, IL** | 2004 | 1987 | 51,425 | 89.0% | 408 | Y | 32.2% |
| **Bellwood, IL** | 2001 | 1999 | 86,550 | 90.6% | 737 | Y | 50.7% |
| **Bolingbrook, IL** | 2014 | 2004 | 80,070 | 89.6% | 724 | N | 77.1% |
| **Chicago I, IL** | 2014 | 1935 | 95,715 | 81.1% | 1,068 | N | 96.5% |
| **Chicago II, IL** | 2014 | 1953 | 78,980 | 73.6% | 759 | N | 85.4% |
| **Chicago III, IL** | 2014 | 1959 | 84,964 | 87.5% | 1,098 | N | 97.5% |
| **Countryside, IL** | 2014 | 2002 | 99,931 | 88.5% | 900 | N | 98.7% |
| **Des Plaines, IL (6)** | 2004 | 1978 | 69,600 | 93.6% | 582 | N | 0.0% |
| **Elk Grove Village, IL** | 2004 | 1987 | 64,104 | 95.4% | 621 | Y | 7.2% |
| **Evanston, IL** | 2013 | 2009 | 58,050 | 92.1% | 593 | N | 100.0% |
| **Glenview, IL** | 2004 | 1998 | 100,085 | 91.5% | 738 | Y | 100.0% |
| **Gurnee, IL** | 2004 | 1987 | 80,300 | 92.4% | 709 | Y | 37.0% |
| **Hanover, IL** | 2004 | 1987 | 41,190 | 89.0% | 416 | Y | 2.2% |
| **Harvey, IL** | 2004 | 1987 | 60,090 | 87.6% | 575 | Y | 2.8% |
| **Joliet, IL** | 2004 | 1993 | 72,865 | 94.5% | 533 | Y | 93.6% |
| **Kildeer, IL** | 2004 | 1988 | 46,485 | 91.1% | 420 | Y | 0.0% |
| **Lombard, IL** | 2004 | 1981 | 57,691 | 89.0% | 536 | Y | 26.0% |
| **Mount Prospect, IL** | 2004 | 1979 | 65,000 | 96.3% | 578 | Y | 10.3% |
| **Mundelein, IL** | 2004 | 1990 | 44,700 | 90.4% | 485 | Y | 12.3% |
| **North Chicago, IL** | 2004 | 1985 | 53,400 | 93.0% | 425 | N | 0.0% |
| **Plainfield I, IL** | 2004 | 1998 | 53,900 | 83.3% | 402 | N | 8.7% |
| **Plainfield II, IL** | 2005 | 2000 | 51,900 | 92.2% | 355 | N | 32.5% |
| **Schaumburg, IL** | 2004 | 1988 | 31,160 | 87.4% | 319 | N | 5.3% |
| **Streamwood, IL** | 2004 | 1982 | 64,305 | 88.5% | 550 | N | 7.6% |
| **Warrenville, IL** | 2005 | 1977/89 | 48,796 | 88.9% | 378 | N | 0.0% |
| **Waukegan, IL** | 2004 | 1977 | 79,500 | 91.8% | 671 | Y | 8.0% |
| **West Chicago, IL** | 2004 | 1979 | 48,175 | 86.3% | 432 | Y | 0.0% |
| **Westmont, IL** | 2004 | 1979 | 53,150 | 91.6% | 377 | Y | 0.0% |
| **Wheeling I, IL** | 2004 | 1974 | 54,210 | 89.4% | 492 | N | 0.0% |
| **Wheeling II, IL** | 2004 | 1979 | 67,825 | 95.0% | 601 | Y | 9.8% |
| **Woodridge, IL** | 2004 | 1987 | 50,232 | 89.2% | 464 | Y | 17.2% |
| **Schererville, IN** | 2014 | 2005 | 67,280 | 90.5% | 562 | N | 39.2% |
| **Boston I, MA** | 2010 | 1950 | 33,286 | 79.1% | 584 | N | 99.8% |
| **Boston II, MA** | 2002 | 2001 | 60,420 | 86.7% | 626 | N | 98.7% |
| **Boston III, MA** | 2014 | 1960 | 108,205 | 86.1% | 1,098 | N | 25.1% |

30

| Facility Location | Year Acquired / Developed (1) | Year Built | Rentable Square Feet | Occupancy (2) | Cubes | Manager Apartment (3) | % Climate Controlled (4) |
| --- | --- | --- | ---: | ---: | ---: | --- | ---: |
| **Leominster, MA** | 1998 | 1987/88/00 | 54,023 | 88.3% | 506 | Y | 50.8% |
| **Medford, MA** | 2007 | 2001 | 58,725 | 92.6% | 657 | Y | 97.1% |
| **Stoneham, MA** | 2013 | 2009/11 | 60,900 | 90.5% | 588 | N | 99.8% |
| **Tewksbury, MA** | 2014 | 2007 | 61,832 | 88.1% | 750 | N | 100.0% |
| **Baltimore, MD** | 2001 | 1999/00 | 93,550 | 88.6% | 805 | Y | 48.6% |
| **Beltsville, MD** | 2013 | 2006 | 63,707 | 86.0% | 648 | Y | 9.7% |
| **California, MD** | 2004 | 1998 | 77,840 | 85.6% | 720 | Y | 41.3% |
| **Clinton, MD** | 2013 | 2008/10 | 84,225 | 89.1% | 903 | Y | 51.3% |
| **District Heights, MD** | 2011 | 2007 | 78,490 | 87.5% | 956 | Y | 96.1% |
| **Elkridge, MD** | 2013 | 1999 | 63,525 | 88.5% | 602 | Y | 91.2% |
| **Gaithersburg, MD** | 2005 | 1998 | 87,045 | 87.8% | 789 | Y | 45.3% |
| **Hyattsville, MD** | 2013 | 2006 | 52,765 | 81.4% | 602 | Y | 9.3% |
| **Laurel, MD †** | 2001 | 1978/99/00 | 162,696 | 88.9% | 1,009 | N | 64.2% |
| **Temple Hills I, MD** | 2001 | 2000 | 97,150 | 86.7% | 825 | Y | 70.5% |
| **Temple Hills II, MD** | 2014 | 2010 | 84,100 | 84.8% | 1,018 | N | 99.3% |
| **Timonium, MD** | 2014 | 1965/98 | 66,717 | 87.4% | 664 | N | 96.1% |
| **Upper Marlboro, MD** | 2013 | 2006 | 62,290 | 88.2% | 661 | Y | 5.4% |
| **Belmont, NC** | 2001 | 1996/97/98 | 81,850 | 95.2% | 595 | N | 21.6% |
| **Burlington I, NC** | 2001 | 1990/91/93/94/98 | 109,396 | 88.9% | 952 | N | 8.4% |
| **Burlington II, NC** | 2001 | 1991 | 42,165 | 87.9% | 394 | Y | 16.4% |
| **Cary, NC** | 2001 | 1993/94/97 | 112,402 | 89.3% | 798 | N | 11.9% |
| **Charlotte, NC** | 2002 | 1999 | 69,000 | 91.3% | 746 | Y | 44.3% |
| **Raleigh, NC** | 1998 | 1994/95 | 48,675 | 93.7% | 421 | Y | 11.6% |
| **Bordentown, NJ** | 2012 | 2006 | 50,600 | 91.9% | 383 | N | 27.0% |
| **Brick, NJ** | 1996 | 1981 | 51,725 | 92.0% | 436 | N | 0.0% |
| **Cherry Hill I, NJ** | 2010 | 2004 | 51,500 | 92.6% | 371 | Y | 0.0% |
| **Cherry Hill II, NJ** | 2012 | 2004 | 64,825 | 90.2% | 610 | N | 94.4% |
| **Clifton, NJ** | 2005 | 2001 | 105,550 | 90.1% | 1,010 | Y | 92.7% |
| **Cranford, NJ** | 1996 | 1987 | 91,280 | 91.5% | 854 | Y | 7.8% |
| **East Hanover, NJ** | 1996 | 1983 | 107,679 | 92.8% | 969 | N | 3.4% |
| **Egg Harbor I, NJ** | 2010 | 2005 | 35,825 | 96.0% | 285 | N | 14.3% |
| **Egg Harbor II, NJ** | 2010 | 2002 | 70,400 | 92.3% | 684 | N | 19.8% |
| **Elizabeth, NJ** | 2005 | 1925/97 | 38,830 | 92.2% | 674 | N | 0.0% |
| **Fairview, NJ** | 1997 | 1989 | 27,876 | 88.9% | 446 | N | 98.4% |
| **Freehold, NJ** | 2012 | 2002 | 81,420 | 93.2% | 748 | Y | 65.6% |
| **Hamilton, NJ** | 2006 | 1990 | 70,450 | 92.8% | 612 | Y | 0.0% |
| **Hoboken, NJ** | 2005 | 1945/97 | 34,180 | 90.6% | 743 | N | 99.2% |
| **Linden, NJ** | 1996 | 1983 | 100,425 | 92.6% | 1,118 | N | 5.3% |
| **Lumberton, NJ** | 2012 | 2004 | 96,025 | 87.5% | 772 | Y | 32.4% |
| **Morris Township, NJ (6)** | 1997 | 1972 | 71,976 | 88.1% | 562 | Y | 5.7% |
| **Parsippany, NJ** | 1997 | 1981 | 58,550 | 92.2% | 447 | N | 17.3% |
| **Rahway, NJ** | 2013 | 2006 | 83,121 | 93.4% | 982 | Y | 92.2% |
| **Randolph, NJ** | 2002 | 1998/99 | 52,565 | 91.3% | 541 | N | 91.2% |
| **Sewell, NJ** | 2001 | 1984/98 | 57,826 | 91.1% | 454 | N | 9.4% |
| **Somerset, NJ** | 2012 | 2000 | 57,485 | 89.2% | 512 | N | 82.7% |
| **Whippany, NJ** | 2013 | 2007 | 92,070 | 91.0% | 938 | Y | 85.9% |
| **Albuquerque I, NM** | 2005 | 1985 | 65,927 | 91.7% | 603 | Y | 13.7% |
| **Albuquerque II, NM** | 2005 | 1985 | 58,798 | 88.1% | 518 | Y | 15.0% |

31

| Facility Location | Year Acquired / Developed (1) | Year Built | Rentable Square Feet | Occupancy (2) | Cubes | Manager Apartment (3) | % Climate Controlled (4) |
| --- | --- | --- | ---: | ---: | ---: | --- | ---: |
| **Albuquerque III, NM** | 2005 | 1986 | 57,536 | 91.8% | 490 | Y | 11.8% |
| **Henderson, NV** | 2014 | 2005 | 75,150 | 73.6% | 530 | N | 75.6% |
| **Las Vegas I, NV †** | 2006 | 1986 | 48,332 | 83.8% | 361 | Y | 13.6% |
| **Las Vegas II, NV** | 2006 | 1997 | 48,850 | 91.5% | 523 | Y | 65.3% |
| **Bronx I, NY** | 2010 | 1931/04 | 69,308 | 87.9% | 1,322 | N | 97.4% |
| **Bronx II, NY (5)** | 2011 | 2006 | 90,170 | 91.5% | 827 | N | 99.2% |
| **Bronx III, NY** | 2011 | 2007 | 106,065 | 87.5% | 2,034 | N | 99.1% |
| **Bronx IV, NY (5)** | 2011 | 2007 | 75,030 | 88.0% | 1,310 | N | 99.2% |
| **Bronx V, NY (5)** | 2011 | 2007 | 54,733 | 84.1% | 1,100 | N | 99.5% |
| **Bronx VI, NY (5)** | 2011 | 2011 | 46,020 | 84.7% | 1,135 | N | 94.1% |
| **Bronx VII, NY (5)** | 2012 | 2005 | 78,625 | 88.2% | 1,524 | N | 100.0% |
| **Bronx VIII, NY** | 2012 | 1928 | 30,550 | 91.4% | 544 | N | 100.0% |
| **Bronx IX, NY** | 2012 | 1973 | 147,720 | 87.7% | 2,999 | Y | 99.6% |
| **Bronx X, NY** | 2012 | 2001 | 159,780 | 84.6% | 2,665 | Y | 74.7% |
| **Bronx XI, NY (5) \*** | 2014 | 2014 | 46,902 | 50.1% | 1,110 | N | 98.7% |
| **Brooklyn I, NY** | 2010 | 1917/04 | 57,500 | 87.4% | 1,050 | N | 99.9% |
| **Brooklyn II, NY** | 2010 | 1962/03 | 60,920 | 90.7% | 1,145 | N | 18.8% |
| **Brooklyn III, NY** | 2011 | 2006 | 41,585 | 89.2% | 849 | N | 100.0% |
| **Brooklyn IV, NY** | 2011 | 2006 | 37,467 | 88.7% | 793 | N | 99.9% |
| **Brooklyn V, NY** | 2011 | 2007 | 47,010 | 88.5% | 885 | N | 100.0% |
| **Brooklyn VI, NY** | 2011 | 2007 | 75,640 | 90.6% | 1,414 | N | 97.7% |
| **Brooklyn VII, NY** | 2011 | 2006 | 72,685 | 91.2% | 1,399 | N | 99.9% |
| **Brooklyn VIII, NY** | 2014 | 2010 | 61,075 | 94.8% | 1,192 | N | 91.9% |
| **Brooklyn IX, NY** | 2014 | 2013 | 46,980 | 92.6% | 1,258 | N | 100.0% |
| **Jamaica I, NY** | 2001 | 2000 | 88,385 | 91.3% | 920 | Y | 21.4% |
| **Jamaica II, NY** | 2011 | 2010 | 91,245 | 91.1% | 1,472 | N | 99.9% |
| **Long Island City, NY \*** | 2014 | 2014 | 89,125 | 6.5% | 1,954 | N | 100.0% |
| **New Rochelle I, NY** | 2005 | 1998 | 46,037 | 86.8% | 477 | N | 39.5% |
| **New Rochelle II, NY** | 2012 | 1917 | 63,145 | 86.4% | 1,023 | Y | 93.9% |
| **North Babylon, NY** | 1998 | 1988/99 | 78,341 | 93.0% | 643 | N | 11.8% |
| **Patchogue, NY** | 2014 | 1982 | 47,739 | 83.1% | 467 | N | 0.0% |
| **Riverhead, NY** | 2005 | 1985/86/99 | 38,340 | 93.5% | 328 | N | 0.0% |
| **Southold, NY** | 2005 | 1989 | 59,595 | 93.6% | 608 | N | 4.8% |
| **Staten Island, NY** | 2013 | 1900/11 | 96,623 | 93.2% | 913 | N | 100.0% |
| **Tuckahoe, NY** | 2011 | 2007 | 51,343 | 87.0% | 759 | N | 99.9% |
| **West Hempstead, NY** | 2012 | 2002 | 84,457 | 87.5% | 902 | Y | 35.2% |
| **White Plains, NY** | 2011 | 1938 | 86,465 | 88.2% | 1,507 | N | 77.9% |
| **Woodhaven, NY** | 2011 | 2008 | 50,665 | 91.8% | 1,029 | N | 99.9% |
| **Wyckoff, NY** | 2010 | 1910/07 | 61,565 | 91.3% | 1,042 | N | 96.2% |
| **Yorktown, NY** | 2011 | 2006 | 78,595 | 86.8% | 774 | Y | 79.1% |
| **Cleveland I, OH** | 2005 | 1997/99 | 46,000 | 85.0% | 342 | Y | 7.3% |
| **Cleveland II, OH** | 2005 | 2000 | 58,325 | 89.1% | 573 | Y | 0.0% |
| **Columbus I, OH** | 2006 | 1999 | 71,905 | 91.4% | 604 | Y | 26.1% |
| **Columbus II, OH** | 2014 | 1999 | 36,844 | 77.5% | 359 | N | 48.5% |
| **Columbus III, OH** | 2014 | 1998/05 | 51,400 | 85.1% | 401 | N | 0.0% |
| **Columbus IV, OH** | 2014 | 2006 | 60,575 | 85.6% | 473 | N | 19.2% |
| **Columbus V, OH** | 2014 | 2006 | 60,925 | 77.9% | 583 | N | 16.6% |
| **Columbus VI, OH** | 2014 | 2002 | 63,725 | 82.7% | 547 | N | 0.0% |

32

| Facility Location | Year Acquired / Developed (1) | Year Built | Rentable Square Feet | Occupancy (2) | Cubes | Manager Apartment (3) | % Climate Controlled (4) |
| --- | --- | --- | ---: | ---: | ---: | --- | ---: |
| **Grove City, OH** | 2006 | 1997 | 89,290 | 88.8% | 779 | Y | 15.0% |
| **Hilliard, OH** | 2006 | 1995 | 89,190 | 92.2% | 777 | Y | 24.9% |
| **Lakewood, OH** | 1989\* | 1989 | 39,332 | 91.4% | 456 | Y | 37.8% |
| **Lewis Center, OH** | 2014 | 1985/05 | 80,830 | 73.2% | 576 | N | 32.0% |
| **Middleburg Heights, OH** | 1980\* | 1980 | 93,200 | 86.4% | 693 | Y | 5.0% |
| **North Olmsted I, OH** | 1979\* | 1979 | 48,665 | 89.3% | 444 | Y | 10.5% |
| **North Olmsted II, OH** | 1988\* | 1988 | 47,850 | 88.8% | 398 | Y | 24.0% |
| **North Randall, OH** | 1998\* | 1998/02 | 80,239 | 86.2% | 804 | N | 92.2% |
| **Reynoldsburg, OH** | 2006 | 1979 | 67,245 | 92.9% | 665 | Y | 0.0% |
| **Strongsville, OH** | 2007 | 1978 | 43,683 | 86.0% | 402 | Y | 100.0% |
| **Warrensville Heights, OH** | 1980\* | 1980/82/98 | 90,281 | 90.6% | 718 | Y | 0.0% |
| **Westlake, OH** | 2005 | 2001 | 62,750 | 93.4% | 453 | Y | 8.6% |
| **Conshohocken, PA** | 2012 | 2003 | 81,255 | 87.5% | 732 | Y | 39.5% |
| **Exton, PA** | 2012 | 2006 | 57,750 | 92.9% | 544 | N | 96.2% |
| **Langhorne, PA** | 2012 | 2001 | 65,050 | 85.4% | 665 | Y | 58.8% |
| **Levittown, PA** | 2001 | 2000 | 76,180 | 89.7% | 653 | Y | 34.8% |
| **Malvern, PA \*** | 2013 | 2013 | 18,848 | 94.8% | 232 | N | 100.0% |
| **Montgomeryville, PA** | 2012 | 2003 | 84,145 | 89.8% | 777 | Y | 50.4% |
| **Norristown, PA** | 2011 | 2005 | 54,911 | 89.3% | 518 | N | 99.8% |
| **Philadelphia I, PA** | 2001 | 1999 | 97,414 | 87.3% | 959 | N | 45.4% |
| **Philadelphia II, PA** | 2014 | 2005 | 68,239 | 88.3% | 855 | N | 58.1% |
| **Exeter, RI** | 2014 | 1968/90 | 41,275 | 90.3% | 409 | N | 21.7% |
| **Johnston, RI** | 2014 | 2000 | 80,725 | 90.0% | 575 | N | 0.0% |
| **Wakefield, RI** | 2014 | 1956 | 45,895 | 83.4% | 386 | N | 39.2% |
| **Woonsocket, RI** | 2014 | 2004 | 72,704 | 86.2% | 603 | N | 11.4% |
| **Antioch, TN** | 2005 | 1985/98 | 76,190 | 86.4% | 617 | Y | 7.6% |
| **Nashville I, TN** | 2005 | 1984 | 103,840 | 89.1% | 697 | Y | 0.0% |
| **Nashville II, TN** | 2005 | 1986/00 | 83,384 | 89.7% | 626 | Y | 12.6% |
| **Nashville III, TN** | 2006 | 1985 | 101,575 | 89.0% | 599 | Y | 8.5% |
| **Nashville IV, TN** | 2006 | 1986/00 | 102,450 | 93.4% | 728 | Y | 10.1% |
| **Allen, TX** | 2012 | 2003 | 62,870 | 88.0% | 501 | Y | 56.9% |
| **Austin I, TX** | 2005 | 2001 | 59,620 | 89.4% | 537 | Y | 63.3% |
| **Austin II, TX** | 2006 | 2000/03 | 65,151 | 91.7% | 593 | Y | 45.9% |
| **Austin III, TX** | 2006 | 2004 | 70,560 | 89.0% | 571 | Y | 92.7% |
| **Austin IV, TX** | 2014 | 2004 | 65,370 | 97.1% | 628 | N | 18.7% |
| **Austin V, TX** | 2014 | 1999 | 67,850 | 92.9% | 616 | N | 35.4% |
| **Austin VI, TX** | 2014 | 2004 | 62,770 | 93.4% | 751 | N | 55.2% |
| **Bryan, TX** | 2005 | 1994 | 60,400 | 82.5% | 495 | Y | 0.0% |
| **Carrollton, TX** | 2012 | 2002 | 77,140 | 92.4% | 538 | Y | 39.6% |
| **College Station, TX** | 2005 | 1993 | 26,550 | 93.6% | 346 | N | 0.0% |
| **Cypress, TX** | 2012 | 1998 | 58,181 | 94.0% | 446 | Y | 46.0% |
| **Dallas I, TX** | 2005 | 2000 | 58,582 | 86.8% | 532 | Y | 37.8% |
| **Dallas II, TX** | 2013 | 1996 | 79,123 | 93.3% | 601 | Y | 27.7% |
| **Dallas III, TX** | 2014 | 1964/76 | 69,589 | 90.6% | 887 | N | 91.3% |
| **Denton, TX** | 2006 | 1996 | 60,846 | 87.9% | 457 | Y | 3.3% |
| **El Paso I, TX** | 2005 | 1980 | 59,852 | 92.7% | 514 | Y | 6.2% |

33

| Facility Location | Year Acquired / Developed (1) | Year Built | Rentable Square Feet | Occupancy (2) | Cubes | Manager Apartment (3) | % Climate Controlled (4) |
| --- | --- | --- | ---: | ---: | ---: | --- | ---: |
| **El Paso II, TX** | 2005 | 1980 | 48,800 | 87.1% | 419 | Y | 0.0% |
| **El Paso III, TX** | 2005 | 1980 | 71,102 | 87.1% | 582 | Y | 5.3% |
| **El Paso IV, TX** | 2005 | 1983 | 66,906 | 87.6% | 518 | Y | 2.9% |
| **El Paso V, TX** | 2005 | 1982 | 62,290 | 91.7% | 409 | Y | 0.0% |
| **El Paso VI, TX** | 2005 | 1985 | 36,620 | 90.4% | 254 | Y | 0.0% |
| **El Paso VII, TX** | 2005 | 1982 | 34,423 | 57.2% | 14 | N | 0.0% |
| **Fort Worth I, TX** | 2005 | 2000 | 50,246 | 91.3% | 403 | Y | 38.8% |
| **Fort Worth II, TX** | 2006 | 2003 | 72,900 | 85.7% | 650 | Y | 68.4% |
| **Frisco I, TX** | 2005 | 1996 | 50,754 | 88.4% | 428 | Y | 25.6% |
| **Frisco II, TX** | 2005 | 1998/02 | 71,399 | 90.2% | 520 | Y | 28.5% |
| **Frisco III, TX** | 2006 | 2004 | 74,765 | 87.5% | 622 | Y | 92.5% |
| **Frisco IV, TX †** | 2010 | 2007 | 75,035 | 91.7% | 509 | Y | 21.4% |
| **Frisco V, TX** | 2014 | 2002 | 74,490 | 87.6% | 552 | N | 59.6% |
| **Frisco VI, TX** | 2014 | 2004 | 68,926 | 83.0% | 539 | N | 54.7% |
| **Garland I, TX** | 2006 | 1991 | 70,100 | 91.5% | 680 | Y | 4.3% |
| **Garland II, TX** | 2006 | 2004 | 68,425 | 89.0% | 469 | Y | 53.9% |
| **Houston III, TX** | 2005 | 1984 | 60,820 | 96.8% | 459 | Y | 9.1% |
| **Houston IV, TX** | 2005 | 1987 | 43,750 | 94.9% | 380 | Y | 10.2% |
| **Houston V, TX †** | 2006 | 1980/97 | 125,135 | 90.8% | 1,007 | Y | 61.7% |
| **Houston VI, TX** | 2011 | 2002 | 54,680 | 93.2% | 593 | Y | 99.0% |
| **Houston VII, TX** | 2012 | 2004 | 47,102 | 90.4% | 522 | N | 100.0% |
| **Houston VIII, TX** | 2012 | 1989 | 54,241 | 90.7% | 499 | N | 78.2% |
| **Houston IX, TX** | 2012 | 1992 | 51,218 | 92.5% | 432 | Y | 47.9% |
| **Katy, TX** | 2013 | 2009 | 71,308 | 84.5% | 576 | Y | 88.6% |
| **Keller, TX** | 2006 | 2000 | 61,885 | 91.0% | 486 | Y | 23.2% |
| **Lewisville I, TX** | 2006 | 1996 | 58,140 | 90.3% | 429 | Y | 22.3% |
| **Lewisville II, TX** | 2013 | 2003 | 127,609 | 90.3% | 1,193 | Y | 29.0% |
| **Mansfield I, TX** | 2006 | 2003 | 63,025 | 89.8% | 480 | Y | 43.4% |
| **Mansfield II, TX** | 2012 | 2002 | 57,775 | 93.7% | 483 | Y | 68.2% |
| **McKinney I, TX** | 2005 | 1996 | 47,020 | 88.7% | 356 | Y | 12.0% |
| **McKinney II, TX** | 2006 | 1996 | 70,050 | 88.7% | 537 | Y | 47.3% |
| **McKinney III, TX** | 2014 | 2014 | 67,468 | 11.5% | 392 | N | 37.6% |
| **North Richland Hills, TX** | 2005 | 2002 | 57,200 | 91.4% | 431 | Y | 60.3% |
| **Pearland, TX** | 2012 | 1985 | 72,050 | 92.2% | 466 | Y | 45.9% |
| **Richmond, TX** | 2013 | 1998 | 102,278 | 92.6% | 538 | Y | 29.8% |
| **Roanoke, TX** | 2005 | 1996/01 | 59,660 | 90.4% | 445 | Y | 30.9% |
| **San Antonio I, TX** | 2005 | 2005 | 73,309 | 86.6% | 575 | Y | 89.4% |
| **San Antonio II, TX** | 2006 | 2005 | 73,230 | 90.5% | 670 | N | 91.5% |
| **San Antonio III, TX** | 2007 | 2006 | 71,775 | 88.9% | 566 | N | 93.7% |
| **Spring, TX** | 2006 | 1980/86 | 72,751 | 93.2% | 534 | Y | 26.7% |
| **Murray I, UT** | 2005 | 1976 | 60,280 | 85.0% | 622 | Y | 0.0% |
| **Murray II, UT †** | 2005 | 1978 | 71,221 | 91.1% | 373 | Y | 5.4% |
| **Salt Lake City I, UT** | 2005 | 1976 | 56,446 | 91.1% | 726 | Y | 0.0% |
| **Salt Lake City II, UT** | 2005 | 1978 | 51,676 | 91.7% | 493 | Y | 0.0% |
| **Alexandria, VA** | 2012 | 2000 | 114,150 | 87.9% | 1,150 | Y | 97.2% |
| **Burke Lake, VA** | 2011 | 2003 | 91,667 | 87.9% | 898 | Y | 81.6% |
| **Fairfax, VA** | 2012 | 1999 | 73,325 | 88.3% | 676 | N | 88.3% |

34

| Facility Location | Year Acquired / Developed (1) | Year Built | Rentable Square Feet | Occupancy (2) | Cubes | Manager Apartment (3) | % Climate Controlled (4) |
| --- | --- | --- | ---: | ---: | ---: | --- | ---: |
| **Fredericksburg I, VA** | 2005 | 2001/04 | 69,475 | 89.1% | 611 | N | 22.0% |
| **Fredericksburg II, VA** | 2005 | 1998/01 | 61,057 | 84.2% | 561 | N | 87.0% |
| **Leesburg, VA** | 2011 | 2001/04 | 85,503 | 87.2% | 890 | Y | 83.9% |
| **Manassas, VA** | 2010 | 1998 | 72,745 | 84.8% | 638 | Y | 64.7% |
| **McLearen, VA** | 2010 | 2002 | 68,960 | 87.0% | 722 | Y | 90.9% |
| **Vienna, VA** | 2012 | 2000 | 54,698 | 87.7% | 561 | Y | 97.2% |
| **Total/Weighted Average (421 facilities)** |  |  | **28,621,742** | **89.1%** | **277,336** |  |  |

\* Denotes facilities developed by us or acquired at development completion.

† Denotes facilities that contain commercial rentable square footage. All of this commercial space, which was developed in conjunction with the self-storage cubes, is located within or adjacent to our self-storage facilities and is managed by our self-storage facility managers. As of December 31, 2014, facilities in our owned portfolio included an aggregate of approximately 271,000 rentable square feet of commercial space.

(1) Represents the year acquired for those facilities we acquired from a third party or the year of completion for those facilities we developed.

(2) Represents occupied square feet at December 31, 2014 divided by total rentable square feet.

(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 cubes.

(5) We do not own the land at these facilities. We lease the land pursuant to ground leases that expire between 2052 and 2061, subject to renewal options.

(6) We have ground leases for certain small parcels of land adjacent to these facilities that expire between 2015 and 2019.

We have grown by adding facilities to our portfolio through acquisitions and development. The tables set forth below show the average occupancy, annual rent per occupied square foot, average occupied square feet and total revenues for our facilities owned as of December 31, 2014, and for each of the previous three years, grouped by the year during which we first owned or operated the facility.

### Facilities by Year Acquired - Average Occupancy

| Year Acquired (1) | # of Facilities | Rentable Square Feet | Average Occupancy 2014 | 2013 | 2012 |
| --- | ---: | ---: | ---: | ---: | ---: |
| 2011 and earlier | 309 | 20,541,389 | 90.9% | 88.3% | 82.7% |
| 2012 | 37 | 2,634,103 | 90.7% | 87.6% | 83.8% |
| 2013 | 20 | 1,474,667 | 87.2% | 80.6% | — |
| 2014 | 55 | 3,971,583 | 85.6% | — | — |
| All Facilities Owned as of December 31, 2014 | 421 | 28,621,742 | 90.3% | 88.0% | 82.8% |

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

| Year Acquired (1) | # of Facilities | Rent per Square Foot 2014 | 2013 | 2012 |
| --- | ---: | ---: | ---: | ---: |
| 2011 and earlier | 309 | $13.94 | $13.49 | $13.43 |
| 2012 | 37 | 18.86 | 18.15 | 15.55 |
| 2013 | 20 | 14.70 | 12.44 | — |
| 2014 | 55 | 14.61 | — | — |
| All Facilities Owned as of December 31, 2014 | 421 | $14.52 | $13.93 | $13.67 |

### Facilities by Year Acquired - Average Occupied Square Feet (3)

| Year Acquired (1) | # of Facilities | Average Occupied Square Feet 2014 | 2013 | 2012 |
| --- | ---: | ---: | ---: | ---: |
| 2011 and earlier | 309 | 18,654,548 | 18,078,248 | 16,994,512 |
| 2012 | 37 | 2,389,049 | 2,309,401 | 2,199,295 |
| 2013 | 20 | 1,287,062 | 1,191,148 | — |
| 2014 | 55 | 3,269,341 | — | — |
| All Facilities Owned as of December 31, 2014 | 421 | 25,600,000 | 21,578,797 | 19,193,807 |

### Facilities by Year Acquired - Total Revenues (dollars in thousands)

| Year Acquired (1) | # of Facilities | Total Revenues 2014 | 2013 | 2012 |
| --- | ---: | ---: | ---: | ---: |
| 2011 and earlier | 309 | $276,405 | $257,919 | $239,331 |
| 2012 | 37 | 47,429 | 43,926 | 19,028 |
| 2013 | 20 | 20,070 | 7,048 | — |
| 2014 | 55 | 21,611 | — | — |
| All Facilities Owned as of December 31, 2014 | 421 | $365,515 | $308,893 | $258,359 |

(1) Represents the year acquired for those facilities we acquired from a third party or the year developed for those facilities we 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 the impact of promotional discounts, which reduce rental income over the promotional period, of $15.7 million, $15.7 million and $15.0 million, for the periods ended December 31, 2014, 2013 and 2012.

(3) Represents the average of the aggregate month-end occupied square feet for the twelve-month period for each group of facilities.

### Unconsolidated Real Estate Venture

On December 10, 2013, we acquired a 50% ownership interest in an unconsolidated real estate venture, which we refer to as HHF, that owns 35 self-storage facilities located in Texas (34) and North Carolina (1). These facilities contain an aggregate of 2.4 million rentable square feet. The joint venture paid $315.7 million for these facilities. We and our joint venture partner each contributed 50% of the equity capital to fund the acquisition. On May 1, 2014, HHF obtained a $100 million loan secured by the 34 self-storage facilities located in Texas. The loan bears interest at 3.59% per annum and matures on April 30, 2021. This financing completed the planned capital structure of HHF and proceeds (net of closing costs) of $99.2 million were distributed proportionately to the partners. We account for our investment in the HHF joint venture using the equity method. See note 5 to the consolidated financial statements.

### Planned Renovations and Improvements

We have a capital improvement program that includes office upgrades, adding climate control to selected cubes, construction of parking areas and other facility upgrades. For 2015, we anticipate spending approximately $7 million to $11 million associated with these capital expenditures.

## Legal proceedings

As filed, 620 characters.

We are involved in claims from time to time, which arise in the ordinary course of business. In the opinion of management, we have made adequate provisions for potential liabilities, if any, arising from any such matters. However, litigation is inherently unpredictable, and the costs and other effects of pending or future litigation, governmental investigations, legal and administrative cases and proceedings (whether civil or criminal), settlements, judgments and investigations, claims and changes in any such matters, could have a material adverse effect on our business, financial condition and operating results.

## Management's discussion and analysis

As filed, 68,456 characters.

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

### Overview

We are an integrated self-storage real estate company, and as such we have in-house capabilities in the operation, design, development, leasing, management and acquisition of self-storage facilities. The Parent Company’s operations are conducted solely through the Operating Partnership and its subsidiaries. The Parent Company has elected to be taxed as a REIT for U.S. federal income tax purposes. As of December 31, 2014 and December 31, 2013, we owned 421 and 366 self-storage facilities, respectively, totaling approximately 28.6 million and 24.7 million rentable square feet, respectively. As of December 31, 2014, we owned facilities in the District of Columbia and the following 22 states: Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Maryland, Massachusetts, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Tennessee, Texas, Utah and Virginia. In addition, as of December 31, 2014, we managed 174 facilities for third parties (including 35 facilities containing an aggregate of approximately 2.4 million rentable square feet as part of an unconsolidated real estate venture) bringing the total number of facilities we owned and/or managed to 595. As of December 31, 2014, we managed facilities for third parties in the following 21 states: Alabama, Arizona, California, Colorado, Florida, Georgia, Illinois, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas and Virginia.

We derive revenues principally from rents received from customers who rent cubes at our self-storage facilities under month-to-month leases. Therefore, our operating results depend materially on our ability to retain our existing customers and lease our available self-storage cubes 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. Our approach to the management and operation of our facilities combines centralized marketing, revenue management and other operational support with local operations teams that provide market-level oversight and control. We believe this approach allows us to respond quickly and effectively to changes in local market conditions, and to maximize revenues by managing rental rates and occupancy levels.

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

Our results of operations may be sensitive to changes in overall economic conditions that impact consumer spending, including discretionary spending, as well as to increased bad debts due to recessionary pressures. Adverse 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.

We continue our focus on maximizing internal growth opportunities and selectively pursuing targeted acquisitions and developments of self-storage facilities.

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

Our self-storage facilities are located in major metropolitan and suburban areas and have numerous customers per facility. No single customer represents a significant concentration of our revenues. Our facilities in Florida, New York, Texas, and California provided approximately 17%, 17%, 10% and 8%, respectively, of total revenues for the year ended December 31, 2014.

### Summary of Critical Accounting Policies and Estimates

Set forth below is a summary of the accounting policies and estimates that management believes are critical to the preparation of the consolidated financial statements included in this Report. Certain of the accounting policies used in the preparation of these consolidated financial statements are particularly important for an understanding of the financial position and results of operations presented in the historical consolidated financial statements included in this Report. A summary of significant accounting policies is also provided in the notes to our consolidated financial statements (see note 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.

### Basis of Presentation

The accompanying consolidated financial statements include all of the accounts of the Company, and its majority-owned and/or controlled subsidiaries. The portion of these entities not owned by the Company is presented as noncontrolling interests as of and during the periods presented. All significant intercompany accounts and transactions have been eliminated in consolidation.

When the Company obtains an economic interest in an entity, the Company evaluates the entity to determine if the entity is deemed a variable interest entity (“VIE”), and if the Company is deemed to be the primary beneficiary, in accordance with authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) on the consolidation of VIEs. When an entity is not deemed to be a VIE, the Company considers the provisions of additional FASB guidance to determine whether a general partner, or the general partners as a group, controls a limited partnership or similar entity when the limited partners have certain rights. The Company consolidates (i) entities that are VIEs and of which the Company is deemed to be the primary beneficiary and (ii) entities that are non-VIEs which the Company controls and in which the limited partners do not have substantive participating rights, or the ability to dissolve the entity or remove the Company without cause.

### Self-Storage Facilities

The Company records self-storage facilities at cost less accumulated depreciation. Depreciation on the buildings and equipment is recorded on a straight-line basis over their estimated useful lives, which range from five to 39 years. Expenditures for significant renovations or improvements that extend the useful 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 for an acquisition, the Company determines whether the acquisition includes intangible assets or liabilities. The Company allocates a portion of the purchase price to an intangible asset attributable to the value of in-place leases. This intangible asset is generally amortized to expense over the expected remaining term of the respective leases. Substantially all of the leases in place at acquired facilities are at market rates, as the majority of the leases are month-to-month contracts. Accordingly, to date no portion of the purchase price has been allocated to above- or below-market lease intangibles. To date, no intangible asset has been recorded for the value of customer relationships, because the Company does not have any concentrations of significant customers and the average customer turnover is fairly frequent.

Long-lived assets classified as “held for use” are reviewed for impairment when events and circumstances such as declines in occupancy and operating results indicate that there may be an impairment. The carrying value of these long-lived assets is compared to the undiscounted future net operating cash flows, plus a terminal value, attributable to the assets to determine if the facility’s basis is recoverable. If a facility’s basis is not considered recoverable, an impairment loss is recorded to the extent the net carrying value of the asset exceeds the fair value. The impairment loss recognized equals the excess of net carrying value over the related fair value of the asset. There were no impairment losses recognized in accordance with these procedures during the years ended December 31, 2014, 2013 and 2012.

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. However, each potential transaction is evaluated based on its separate facts and circumstances. Facilities classified as held for sale are reported at the lesser of carrying value or fair value less estimated costs to sell.

### Revenue Recognition

Management has determined that all our leases with customers are operating leases. Rental income is recognized in accordance with the terms of the lease agreements or contracts, which generally are month-to-month.

The Company recognizes gains from disposition of facilities only upon closing in accordance with the guidance on sales of real estate. Payments received from purchasers prior to closing are recorded as deposits. Profit on real estate sold is recognized using the full accrual method upon closing when the collectability of the sales price is reasonably assured and the Company is not obligated to perform significant activities after the sale. Profit may be deferred in whole or part until the sale meets the requirements of profit recognition on sales under this guidance.

### Share-Based Payments

We apply the fair value method of accounting for contingently issued shares and share options issued under our equity incentive plans. The share compensation expense is 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.

### Noncontrolling Interests

Noncontrolling interests are the portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. The ownership interests in the subsidiary that are held by owners other than the parent are noncontrolling interests. In accordance with authoritative guidance issued on noncontrolling interests in consolidated financial statements, such noncontrolling interests are reported on the consolidated balance sheets within equity/capital, separately from the Parent Company’s equity/capital. The guidance also requires that noncontrolling interests are adjusted each period so that the carrying value equals the greater of its carrying value based on the accumulation of historical cost or its redemption value. On the consolidated statements of operations, revenues, expenses and net income or loss from less-than-wholly-owned subsidiaries are reported at the consolidated amounts, including both the amounts attributable to the Parent Company and noncontrolling interests. Presentation of consolidated equity/capital activity is included for both quarterly and annual financial statements, including beginning balances, activity for the period and ending balances for shareholders’ equity/capital, noncontrolling interests and total equity/capital.

### Investments in Unconsolidated Real Estate Ventures

The Company accounts for its investments in unconsolidated real estate ventures under the equity method of accounting. Under the equity method, investments in unconsolidated joint ventures are recorded initially at cost, as investments in real estate entities, and subsequently adjusted for equity in earnings (losses), cash contributions, less distributions and impairments. On a periodic basis, management also assesses whether there are any indicators that the carrying value of the Company’s investments in unconsolidated real estate entities may be other than temporarily impaired. An investment is impaired only if the fair value of the investment, as estimated by management, is less than the carrying value of the investment and the decline is other than temporary. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the fair value of the investment, as estimated by management. The determination as to whether impairment exists requires significant management judgment about the fair value of its ownership interest. Fair value is determined through various valuation techniques, including but not limited to, discounted cash flow models, quoted market values and third party appraisals.

### Income Taxes

The Parent Company elected to be taxed as a real estate investment trust under Sections 856-860 of the Internal Revenue Code beginning with the period from October 21, 2004 (commencement of operations) through December 31, 2004. In management’s opinion, the requirements to maintain these elections are being met. Accordingly, no provision for federal income taxes has been reflected in the consolidated financial statements other than for operations conducted through our taxable REIT subsidiaries.

Earnings and profits, which determine the taxability of distributions to shareholders, differ from net income reported for financial reporting purposes due to differences in cost basis, the estimated useful lives used to compute depreciation, and the allocation of net income and loss for financial versus tax reporting purposes.

The Parent Company is subject to a 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 Parent Company’s ordinary income, (b) 95% of the Parent Company’s net capital gains, and (c) 100% of prior year taxable income exceeds cash distributions and certain taxes paid by the Parent Company.

### Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP (“GAAP”) when it becomes effective. The new standard is effective for the Company on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company has not yet selected a transition method nor has it determined the effect of the standard on its financial statements and related disclosures.

In April 2014, the FASB issued an update to the accounting standard for the reporting of discontinued operations. The update redefines discontinued operations, changing the criteria for determining which disposals can be presented as discontinued operations and modifies related disclosure requirements. This amendment becomes effective for annual periods beginning on or after December 15, 2014, and interim periods beginning on or after December 15, 2015; however, early adoption is permitted. The Company elected to adopt this guidance in 2014 and such adoption did not have a material impact on the Company’s consolidated financial position or results of operations. The Company disposed of one asset during the year ended December 31, 2014; however, the disposal did not meet the criteria for discontinued operations under the new guidance.

### Results of Operations

The following discussion of our results of operations should be read in conjunction with the consolidated financial statements and the accompanying notes thereto. Historical results set forth in the consolidated statements of operations reflect only the existing facilities and should not be taken as indicative of future operations. We consider our same-store portfolio to consist of only those facilities owned and operated on a stabilized basis at the beginning and at the end of the applicable years presented. We consider a facility to be stabilized once it has achieved an occupancy rate that we believe, based on our assessment of market-specific data, is representative of similar self-storage assets in the applicable market for a full year measured as of the most recent January 1 and has not been significantly damaged by natural disaster or undergone significant renovation. We believe that same-store results are useful to investors in evaluating our performance because they provide information relating to changes in facility-level operating performance without taking into account the effects of acquisitions, developments or dispositions. At December 31, 2014, we owned 346 same-store facilities and 75 non-same-store facilities. All of the non-same-store facilities were 2013 and 2014 acquisitions or developed facilities. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this Report.

The comparability of our results of operations is affected by the timing of acquisition and disposition activities during the periods reported. At December 31, 2014, 2013 and 2012, we owned 421, 366 and 381 self-storage facilities and related assets, respectively.

The following table summarizes the change in number of owned self-storage facilities from January 1, 2012 through December 31, 2014:

|  | 2014 | 2013 | 2012 |
| --- | ---: | ---: | ---: |
| Balance - January 1 | 366 | 381 | 370 |
| Facilities acquired | 10 | 1 | 6 |
| Facilities developed | 2 | — | — |
| Facilities sold | — | (5) | — |
| Balance - March 31 | 378 | 377 | 376 |
| Facilities acquired | 9 | 9 | 2 |
| Facilities sold | — | — | (8) |
| Balance - June 30 | 387 | 386 | 370 |
| Facilities acquired | 3 | 4 | 24 |
| Facilities sold | — | (8) | (7) |
| Balance - September 30 | 390 | 382 | 387 |
| Facilities acquired | 31 | 6 | 5 |
| Facilities sold | — | (22) | (11) |
| Balance - December 31 | 421 | 366 | 381 |

49

### Comparison of the Year Ended December 31, 2014 to the Year Ended December 31, 2013 (dollars in thousands)

| REVENUES: | Same-Store Property Portfolio 2014 | 2013 | Increase/% (Decrease) | Change | Non Same-Store Properties 2014 | 2013 | Other/ Eliminations 2014 | 2013 | Total Portfolio 2014 | 2013 | Increase/% (Decrease) | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Rental income | $291,767 | $273,105 | $18,662 | 6.8% | $39,131 | $8,145 | $— | $— | $330,898 | $281,250 | $49,648 | 17.7% |
| Other property related income | 32,111 | 28,977 | 3,134 | 10.8% | 5,098 | 796 | 2,856 | 2,592 | 40,065 | 32,365 | 7,700 | 23.8% |
| Property management fee income | — | — | — | — | — | — | 6,000 | 4,780 | 6,000 | 4,780 | 1,220 | 25.5% |
| Total revenues | 323,878 | 302,082 | 21,796 | 7.2% | 44,229 | 8,941 | 8,856 | 7,372 | 376,963 | 318,395 | 58,568 | 18.4% |
| OPERATING EXPENSES: |  |  |  |  |  |  |  |  |  |  |  |  |
| Property operating expenses | 102,142 | 99,681 | 2,461 | 2.5% | 15,243 | 4,237 | 15,316 | 14,304 | 132,701 | 118,222 | 14,479 | 12.2% |
| NET OPERATING INCOME: | 221,736 | 202,401 | 19,335 | 9.6% | 28,986 | 4,704 | (6,460) | (6,932) | 244,262 | 200,173 | 44,089 | 22.0% |
| Property count | 346 | 346 |  |  | 75 | 20 |  |  | 421 | 366 |  |  |
| Total square footage | 23,175 | 23,175 |  |  | 5,447 | 1,475 |  |  | 28,622 | 24,650 |  |  |
| Period End Occupancy (1) | 90.0% | 88.8% |  |  | 85.1% | 80.7% |  |  | 89.1% | 88.3% |  |  |
| Period Average Occupancy (2) | 90.8% | 88.2% |  |  |  |  |  |  |  |  |  |  |
| Realized annual rent per occupied sq ft (3) | $13.86 | $13.35 |  |  |  |  |  |  |  |  |  |  |
| Depreciation and amortization |  |  |  |  |  |  |  |  | 126,813 | 112,313 | 14,500 | 12.9% |
| General and administrative |  |  |  |  |  |  |  |  | 28,422 | 29,563 | (1,141) | -3.9% |
| Acquisition related costs |  |  |  |  |  |  |  |  | 7,484 | 3,849 | 3,635 | 94.4% |
| Subtotal |  |  |  |  |  |  |  |  | 162,719 | 145,725 | 16,994 | 11.7% |
| OPERATING INCOME |  |  |  |  |  |  |  |  | 81,543 | 54,448 | 27,095 | 49.8% |
| OTHER (EXPENSE) INCOME |  |  |  |  |  |  |  |  |  |  |  |  |
| Interest: |  |  |  |  |  |  |  |  |  |  |  |  |
| Interest expense on loans |  |  |  |  |  |  |  |  | (46,802) | (40,424) | (6,378) | -15.8% |
| Loan procurement amortization expense |  |  |  |  |  |  |  |  | (2,190) | (2,058) | (132) | -6.4% |
| Loan procurement amortization expense - early repayment of debt |  |  |  |  |  |  |  |  | — | (414) | 414 | 100.0% |
| Equity in losses of real estate ventures |  |  |  |  |  |  |  |  | (6,255) | (1,151) | (5,104) | -443.4% |
| Gain from sale of real estate |  |  |  |  |  |  |  |  | 475 | — | 475 | 100.0% |
| Other |  |  |  |  |  |  |  |  | (405) | 8 | (413) | -5162.5% |
| Total other expense |  |  |  |  |  |  |  |  | (55,177) | (44,039) | (11,138) | -25.3% |
| INCOME FROM CONTINUING OPERATIONS |  |  |  |  |  |  |  |  | 26,366 | 10,409 | 15,957 | 153.3% |
| DISCONTINUED OPERATIONS |  |  |  |  |  |  |  |  |  |  |  |  |
| Income from discontinued operations |  |  |  |  |  |  |  |  | 336 | 4,145 | (3,809) | -91.9% |
| Gain from disposition of discontinued operations |  |  |  |  |  |  |  |  | — | 27,440 | (27,440) | -100.0% |
| Total discontinued operations |  |  |  |  |  |  |  |  | 336 | 31,585 | (31,249) | -98.9% |
| NET INCOME |  |  |  |  |  |  |  |  | 26,702 | 41,994 | (15,292) | -36.4% |
| NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS |  |  |  |  |  |  |  |  |  |  |  |  |
| Noncontrolling interests in the Operating Partnership |  |  |  |  |  |  |  |  | (307) | (588) | 281 | 47.8% |
| Noncontrolling interests in subsidiaries |  |  |  |  |  |  |  |  | (16) | 42 | (58) | -138.1% |
| NET INCOME ATTRIBUTABLE TO THE COMPANY |  |  |  |  |  |  |  |  | $26,379 | $41,448 | $(15,069) | -36.4% |
| Distribution to preferred shareholders |  |  |  |  |  |  |  |  | (6,008) | (6,008) | — | 0.0% |
| NET INCOME ATTRIBUTABLE TO THE COMPANY’S COMMON SHAREHOLDERS |  |  |  |  |  |  |  |  | $20,371 | $35,440 | $(15,069) | -42.5% |

(1) Represents occupancy at December 31 of the respective year.

(2) Represents the weighted average occupancy for the period.

(3) Realized annual rent per occupied square foot is computed by dividing rental income by the weighted average occupied square feet for the period.

#### Revenues

Rental income increased from $281.3 million in 2013 to $330.9 million in 2014, an increase of $49.6 million, or 17.7%. This increase is primarily attributable to $31.0 million of additional income from the facilities acquired in 2013 and 2014 and increases in net rental rates and average occupancy on the same-store portfolio which provided an $18.7 million increase in rental income during 2014 as compared to 2013.

Other property related income consists of late fees, administrative charges, customer insurance commissions, sales of storage supplies and other ancillary revenues. Other property related income increased from $32.4 million in 2013 to $40.1 million in 2014, an increase of $7.7 million, or 23.8%. This increase is primarily attributable to increased fee revenue and insurance commissions of $4.3 million on the facilities acquired in 2013 and 2014 and a $3.1 million increase in same-store property related income mainly attributable to increased insurance penetration and higher average occupancy.

Property management fee income increased to $6.0 million in 2014 from $4.8 million during 2013, an increase of $1.2 million, or 25.5%. This increase is attributable to an increase in management fees related to the third-party management business (174 facilities as of December 31, 2014 compared to 160 facilities as of December 31, 2013).

#### Operating Expenses

Property operating expenses increased from $118.2 million in 2013 to $132.7 million in 2014, an increase of $14.5 million, or 12.2%. This increase is primarily attributable to $11.0 million of increased expenses associated with newly acquired facilities in 2014 and 2013. Additionally, property operating expenses on the same-store portfolio increased $2.5 million due to an increase of $1.5 million in property taxes, $0.5 million in snow removal costs and $0.5 million in utilities.

Depreciation and amortization increased from $112.3 million in 2013 to $126.8 million in 2014, an increase of $14.5 million, or 12.9%. This increase is primarily attributable to depreciation and amortization expense related to the 2013 and 2014 acquisitions.

General and administrative expenses decreased from $29.6 million for the year ending December 31, 2013 to $28.4 million for the year ending December 31, 2014, a decrease of $1.2 million, or 3.9%. The decrease is primarily attributable to $2.0 million of decreased share-based compensation expense.

Acquisition related costs increased from $3.8 million during 2013 to $7.5 million during 2014 as a result of the acquisition of 53 self-storage facilities in 2014 compared to 20 acquisitions during 2013, and $2.6 million in contingent consideration related to recent acquisitions.

#### Other (expense) income

Interest expense increased from $40.4 million during the year ended December 31, 2013 to $46.8 million during the year ended December 31, 2014, an increase of $6.4 million. The increase is attributable to a higher weighted average interest rate and a higher amount of outstanding debt in 2014. The weighted average effective interest rate of our outstanding debt increased from 3.93% for the year ended December 31, 2013 to 4.02% for the year ended December 31, 2014 as a result of the issuance of $250 million in aggregate principal amount of 4.375% unsecured senior notes during the fourth quarter of 2013. The average outstanding debt balance increased $136 million to $1.2 billion for the year ended December 31, 2104 as the result of the increase in acquisition activity from the prior year.

Equity in losses of real estate venture increased from $1.2 million during the year ended December 31, 2013 to $6.3 million during the year ended December 31, 2014, an increase of $5.1 million. This expense is related to our share of the losses attributable to HHF, a partnership in which we own a 50% interest. The increase is driven by results of operations for a full year during 2014 compared to one month in 2013.

#### Discontinued Operations

Income from discontinued operations decreased from $4.1 million for the year ended December 31, 2013 to $0.3 million for the year ended December 31, 2014. The income during the 2013 period represents the results of operations during the year for the 35 assets sold during 2013 for the period the assets were owned by us. The income during the 2014 period represents real estate tax refunds received as a result of appeals of previous tax assessments on six self-storage facilities that we sold in prior years.

Gains from disposition of discontinued operations were $27.4 million for the year ended December 31, 2013, with no comparable gains during 2014. These gains are determined on a transactional basis and accordingly are not comparable across reporting periods.

### Comparison of the Year Ended December 31, 2013 to the Year Ended December 31, 2012 (dollars in thousands)

| Same-Store Property Portfolio Increase/% 2013 2012 (Decrease) Change REVENUES: | Non Same-Store Properties 2013 | 2012 | Other/ Eliminations 2013 | 2012 | Total Portfolio 2013 | 2012 | Increase/% (Decrease) | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Rental income $221,015 $207,416 $13,599 6.6% | $60,235 | $28,744 | $— | $— | $281,250 | $236,160 | $45,090 | 19.1% |
| Other property related income 23,780 20,575 3,205 15.6% | 5,993 | 3,274 | 2,592 | 1,972 | 32,365 | 25,821 | 6,544 | 25.3% |
| Property management fee income — — — 0.0% | — | — | 4,780 | 4,341 | 4,780 | 4,341 | 439 | 10.1% |
| Total revenues 244,795 227,991 16,804 7.4% | 66,228 | 32,018 | 7,372 | 6,313 | 318,395 | 266,322 | 52,073 | 19.6% |
| OPERATING EXPENSES: |  |  |  |  |  |  |  |  |
| Property operating expenses 80,903 78,045 2,858 3.7% | 23,015 | 11,599 | 14,304 | 13,844 | 118,222 | 103,488 | 14,734 | 14.2% |
| NET OPERATING INCOME: 163,892 149,946 13,946 9.3% | 43,213 | 20,419 | (6,932) | (7,531) | 200,173 | 162,834 | 37,339 | 22.9% |
| Property count 298 298 | 68 | 48 |  |  | 366 | 346 |  |  |
| Total square footage 19,801 19,801 | 4,861 | 3,365 |  |  | 24,662 | 23,166 |  |  |
| Period End Occupancy (1) 88.9% 85.1% | 85.6% | 82.4% |  |  | 88.3% | 84.7% |  |  |
| Period Average Occupancy (2) 88.4% 83.1% |  |  |  |  |  |  |  |  |
| Realized annual rent per occupied sq ft (3) $12.62 $12.61 |  |  |  |  |  |  |  |  |
| Depreciation and amortization |  |  |  |  | 112,313 | 109,830 | 2,483 | 2.3% |
| General and administrative |  |  |  |  | 29,563 | 26,131 | 3,432 | 13.1% |
| Acquisition related costs |  |  |  |  | 3,849 | 3,086 | 763 | 24.7% |
| Subtotal |  |  |  |  | 145,725 | 139,047 | 6,678 | 4.8% |
| OPERATING INCOME |  |  |  |  | 54,448 | 23,787 | 30,661 | 128.9% |
| OTHER (EXPENSE) INCOME |  |  |  |  |  |  |  |  |
| Interest: |  |  |  |  |  |  |  |  |
| Interest expense on loans |  |  |  |  | (40,424) | (40,318) | (106) | -0.3% |
| Loan procurement amortization expense |  |  |  |  | (2,058) | (3,279) | 1,221 | 37.2% |
| Loan procurement amortization expense - early repayment of debt |  |  |  |  | (414) | — | (414) | -100.0% |
| Equity in losses of real estate ventures |  |  |  |  | (1,151) | (745) | (406) | -54.5% |
| Gain from remeasurement of investment in real estate venture |  |  |  |  | — | 7,023 | (7,023) | -100.0% |
| Other |  |  |  |  | 8 | 256 | (248) | -96.9% |
| Total other expense |  |  |  |  | (44,039) | (37,063) | (6,976) | -18.8% |
| INCOME (LOSS) FROM CONTINUING OPERATIONS |  |  |  |  | 10,409 | (13,276) | 23,685 | 178.4% |
| DISCONTINUED OPERATIONS |  |  |  |  |  |  |  |  |
| Income from discontinued operations |  |  |  |  | 4,145 | 7,093 | (2,948) | -41.6% |
| Gain from disposition of discontinued operations |  |  |  |  | 27,440 | 9,811 | 17,629 | 179.7% |
| Total discontinued operations |  |  |  |  | 31,585 | 16,904 | 14,681 | 86.8% |
| NET INCOME |  |  |  |  | 41,994 | 3,628 | 38,366 | 1057.5% |
| NET (INCOME) LOSS ATTRIBUTABLE TO |  |  |  |  |  |  |  |  |
| NONCONTROLLING INTERESTS |  |  |  |  |  |  |  |  |
| Noncontrolling interests in the Operating Partnership |  |  |  |  | (588) | 107 | (695) | -649.5% |
| Noncontrolling interests in subsidiaries |  |  |  |  | 42 | (1,918) | 1,960 | 102.2% |
| NET INCOME ATTRIBUTABLE TO THE COMPANY |  |  |  |  | $41,448 | $1,817 | $39,631 | 2181.1% |
| Distribution to preferred shareholders |  |  |  |  | (6,008) | (6,008) | — | 0.0% |
| NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY’S COMMON SHAREHOLDERS |  |  |  |  | $35,440 | $(4,191) | $39,631 | -945.6% |

(1) Represents occupancy at December 31 of the respective year.

(2) Represents the weighted average occupancy for the period.

(3) Realized annual rent per occupied square foot is computed by dividing rental income by the weighted average occupied square feet for the period.

#### Revenues

Rental income increased from $236.2 million in 2012 to $281.3 million in 2013, an increase of $45.1 million, or 19.1%. This increase is primarily attributable to $31.5 million of additional income from the facilities acquired in 2012 and 2013 and an increase in average occupancy on the same-store portfolio which contributed to the $13.6 million increase in rental income during 2013 as compared to 2012.

Other property related income consists of late fees, administrative charges, customer insurance commissions, sales of storage supplies and other ancillary revenues. Other property related income increased from $25.8 million in 2012 to $32.4 million in 2013, an increase of $6.6 million, or 25.3%. This increase is primarily attributable to increased fee revenue and insurance commissions of $6.5 million during the year ended December 31, 2013 as compared to the year ended December 31, 2012, driven by a $3.2 million increase in same-store property related income mainly attributable to increased insurance penetration and higher commission percentages. Additionally, the 2012 and 2013 acquisitions contributed $2.7 million to the increase in other property related income.

#### Operating Expenses

Property operating expenses increased from $103.5 million in 2012 to $118.2 million in 2013, an increase of $14.7 million, or 14.2%. This increase is primarily attributable to $11.4 million of increased expenses associated with newly acquired facilities in 2013 and 2012. Additionally, property operating expenses on the same-store portfolio increased $2.9 million primarily due to an increase of $1.9 million in property taxes and $1.1 million in payroll related expenses.

Depreciation and amortization increased from $109.8 million in 2012 to $112.3 million in 2013, an increase of $2.5 million, or 2.3%. This increase is primarily attributable to depreciation and amortization expense related to the 2012 and 2013 acquisitions.

General and administrative expenses increased from $26.1 million for the year ending December 31, 2012 to $29.6 million for the year ending December 31, 2013, an increase of $3.5 million, or 13.1%. The increase in primarily attributable to $1.5 million in additional share-based compensation expense and $1.1 million in additional payroll expenses.

#### Other (expense) income

Interest expense increased from $40.3 million during the year ended December 31, 2012 to $40.4 million during the year ended December 31, 2013, an increase of $0.1 million. The increase is attributable to higher amounts of debt outstanding in 2013 offset by a lower weighted average interest rate. The weighted average effective interest rate of our outstanding debt decreased from 4.31% for the year ended December 31, 2012 to 3.93% for the year ended December 31, 2013 as a result of the repayment of certain secured indebtedness and amendments to our Term Loan Facility and Credit Facility that reduced our borrowing costs.

Loan procurement amortization expense decreased from $3.3 million during 2012 to $2.1 million during 2013, a decrease of $1.2 million, or 37.2%. This decrease is the result of lower amortization expense on loan procurement costs related to several fixed-rate mortgages that were repaid during 2012 and 2013.

Gain from remeasurement of investment in real estate venture was $7.0 million for the year ended December 31, 2012, with no comparable gains during 2013. In 2012, we purchased the remaining 50% ownership in a consolidated joint venture. As a result of the transaction, we remeasured our original 50% interest and recorded a gain of approximately $7.0 million, which is reflected in Gain from remeasurement of investment in real estate venture.

#### Discontinued Operations

Income from discontinued operations decreased from $7.1 million for the year ended December 31, 2012 to $4.1 million for the year ended December 31, 2013. The income during the 2013 period represents the results of operations during the year for the 35 assets sold during 2013 for the period the assets were owned by us. Income during the 2012 period represents the results of operations during the year for the 35 assets sold during 2013 and the 26 assets sold during 2012 for the period the assets were owned by us.

Gains from disposition of discontinued operations increased from $9.8 million during 2012 to $27.4 million during 2013. These gains are determined on a transactional basis and accordingly are not comparable across reporting periods.

### 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 adding back to net income (loss): interest expense on loans, loan procurement amortization expense, loan procurement amortization expense — early repayment of debt, acquisition related costs, equity in losses of real estate ventures, other expense, depreciation and amortization expense, general and administrative expense, and deducting from net income (loss): income from discontinued operations, gains from disposition of discontinued operations, other income, gains from remeasurement of investments in real estate ventures 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 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 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 our analysis of net income. NOI should be considered in addition 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.

### FFO

Funds from operations (“FFO”) is a widely used performance measure for real estate companies and is provided here as a supplemental measure of operating performance. The April 2002 National Policy Bulletin of the National Association of Real Estate Investment Trusts (the “White Paper”), as amended, defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of real estate and related impairment charges, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.

Management uses FFO as a key performance indicator in evaluating the operations of our facilities. Given the nature of our business as a real estate owner and operator, we consider FFO a key measure of our operating performance that is not specifically defined by accounting principles generally accepted in the United States. We believe that FFO is useful to management and investors as a starting point in measuring our operational performance because FFO excludes various items included in net income that do not relate to or are not indicative of our operating performance such as gains (or losses) from sales of real estate, gains from remeasurement of investments in real estate ventures, impairments of depreciable assets, and depreciation, which can make periodic and peer analyses of operating performance more difficult. Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies.

FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance. FFO does not represent cash generated from operating activities determined in accordance with GAAP and is not a measure of liquidity or an indicator of our ability to make cash distributions. We believe that to further understand our performance, FFO should be compared with our reported net income and considered in addition to cash flows computed in accordance with GAAP, as presented in our Consolidated Financial Statements.

### FFO, as adjusted

FFO, as adjusted represents FFO as defined above, excluding the effects of acquisition related costs, gains or losses from early extinguishment of debt, and non-recurring items, which we believe are not indicative of the Company’s operating results. We present FFO, as adjusted because we believe it is a helpful measure in understanding our results of operations insofar as we believe that the items noted above that are included in FFO, but excluded from FFO, as adjusted are not indicative of our ongoing operating results. We also believe that the analyst community considers our FFO, as adjusted (or similar measures using different terminology) when evaluating us. Because other REITs or real estate companies may not compute FFO, as adjusted in the same manner as we do, and may use different terminology, our computation of FFO, as adjusted may not be comparable to FFO, as adjusted reported by other REITs or real estate companies.

The following table presents a reconciliation of net income to FFO and FFO, as adjusted, for the years ended December 31, 2014 and 2013 (in thousands):

|  | For the Year Ended December 31, 2014 | 2013 |
| --- | ---: | ---: |
| **Net income attributable to the Company’s common shareholders** | $20,371 | $35,440 |
| Add (deduct): |  |  |
| Real estate depreciation and amortization: |  |  |
| Real property - continuing operations | 125,136 | 110,157 |
| Real property - discontinued operations | — | 2,703 |
| Company’s share of unconsolidated real estate ventures | 12,543 | 1,080 |
| Gains from sale of real estate | (475) | (27,440) |
| Noncontrolling interests in the Operating Partnership | 307 | 588 |
| **FFO** | $157,882 | $122,528 |
| Add: |  |  |
| Loan procurement amortization expense - early repayment of debt | — | 414 |
| Acquisition related costs (1) | 7,484 | 4,170 |
| **FFO, as adjusted** | $165,366 | $127,112 |
| Weighted-average diluted shares and units outstanding | 153,125 | 140,051 |

(1) Acquisition related costs for the year ended December 31, 2013 include $0.3 million of acquisition related costs that are included in the Company’s share of equity in losses of real estate ventures.

### Cash Flows

### Comparison of the Year Ended December 31, 2014 to the Year Ended December 31, 2013

A comparison of cash flow related to operating, investing and financing activities for the years ended December 31, 2014 and 2013 is as follows:

*(in thousands)*

| Net cash provided by (used in): | Year Ended December 31, 2014 | 2013 | Change |
| --- | ---: | ---: | ---: |
| Operating activities | $166,032 | $142,862 | $23,170 |
| Investing activities | $(522,699) | $(282,924) | $(239,775) |
| Financing activities | $356,392 | $138,743 | $217,649 |

Cash provided by operating activities for the years ended December 31, 2014 and 2013 was $166.0 million and $142.9 million, respectively, an increase of $23.1 million. Our increased cash flow from operating activities is primarily attributable to our 2013 and 2014 acquisitions and increased net operating income levels on the same-store portfolio in the 2014 period as compared to the 2013 period.

Cash used in investing activities was $522.7 million in 2014 and $282.9 million in 2013, an increase of $239.8 million driven by an increase in cash used for acquisitions of self-storage facilities. Cash used in 2014 relates to the acquisition of 53 facilities for an aggregate purchase price of $568.2 million, net of $27.5 million of assumed debt, while cash used in investing activities in 2013 relates to the acquisition of 20 facilities for an aggregate purchase price of $189.8 million, net of $8.9 million of assumed debt. In 2013, cash used in investing activities was offset by $123.8 million in net cash proceeds from the disposition of 35 facilities compared to net cash proceeds received of only $13.5 million from the sale of one asset and a parcel of land in 2014. Additionally, cash used in investing activities in 2013 also reflects our $157.5 million investment in the HHF joint venture, with no similar transaction in 2014. This overall increase in net investment activity from 2013 to 2014 was offset by cash used for development activities of $54.0 million in 2013, compared to $23.6 million in 2014 as well as distributions of capital of $56.9 million from the HHF joint venture in 2014.

Cash provided by financing activities was $356.4 million in 2014 and $138.7 million in 2013, an increase of $217.7 million. Proceeds from the issuance of common shares were $416.0 in 2014, compared to $100.3 in 2013 and net proceeds from the revolving portion of the Credit Facility were $39.4 million in 2014 compared to net payments of $6.4 million in 2013. In 2013, we received proceeds of $247.5 million from our issuance of unsecured senior notes, with no similar transaction in 2014. Cash provided by financing activities was offset by principal payments on the unsecured term loans and mortgages that totaled $30.1 million in 2014 compared to $136.5 million in 2013, with the 2013 payments including a $100 million repayment of a term loan scheduled to mature in 2014, and an increase in distributions during 2014 of $16.8 million.

### Comparison of the Year Ended December 31, 2013 to the Year Ended December 31, 2012

A comparison of cash flow related to operating, investing and financing activities for the years ended December 31, 2013 and 2012 is as follows:

*(in thousands)*

| Net cash provided by (used in): | Year Ended December 31, 2013 | 2012 | Change |
| --- | ---: | ---: | ---: |
| Operating activities | $142,862 | $118,428 | $24,434 |
| Investing activities | $(282,924) | $(271,936) | $(10,988) |
| Financing activities | $138,743 | $148,934 | $(10,191) |

56

Cash provided by operating activities for the years ended December 31, 2013 and 2012 was $142.9 million and $118.4 million, respectively, an increase of $24.5 million. Our increased cash flow from operating activities was primarily attributable to our 2012 and 2013 acquisitions and increased net operating income levels on the same-store portfolio in the 2013 period as compared to the 2012 period.

Cash used in investing activities was $282.9 million in 2013 and $271.9 million in 2012. Cash used in 2013 relates to the acquisition of 20 facilities in 2013 for an aggregate purchase price of $189.8 million, net of $8.9 million of assumed debt. Cash used to fund these 2013 acquisitions was offset by $123.8 million in net cash proceeds from the disposition of 35 facilities during the year. Cash used in investing activities in 2013 also reflects our $157.5 million investment in the HHF joint venture, with no similar transaction in 2012. Cash used in investing activities in 2012 relates to our acquisition of 28 facilities in 2012 for an aggregate purchase price of $330.3 million, net of $107.0 million of assumed debt and to our acquisition of nine facilities through our purchase of the equity interest of our partner in an unconsolidated real estate venture known as HSREV. Cash used to fund these acquisitions was offset by $52.6 million in net cash proceeds from our disposition of 26 facilities during the year. This decrease in net investment activity from 2012 to 2013 was offset by cash used for development activities of $54.0 million in 2013, compared to $4.2 million used for development activities in 2012.

Cash provided by financing activities decreased to $138.7 million in 2013 from $148.9 million in 2012, a decrease of $10.2 million. Proceeds from the revolving portion of the Credit Facility and unsecured term loans were $636.2 million in 2013 compared to $503.0 million during 2012. This increase in cash proceeds was offset by principal payments on the revolving portion of the Credit Facility, unsecured term loans and mortgages that totaled $779.1 million in 2013 compared to $594.3 million in 2012 (with the 2013 payments including a $100 million repayment of a term loan scheduled to mature in 2014). We also received proceeds of $247.5 million and $249.6 million from our issuance of unsecured senior notes in 2013 and 2012, respectively.

### Liquidity and Capital Resources

### Liquidity Overview

Our cash flow from operations has historically been one of our primary sources of liquidity used to fund debt service, distributions and capital expenditures. We derive substantially all of our revenue from customers who lease space from us at our facilities and fees earned from managing facilities. Therefore, our ability to generate cash from operations is dependent on the rents that we are able to charge and collect from our customers. We believe that the facilities in which we invest, self-storage facilities, are less sensitive than other real estate product types to near-term economic downturns. However, prolonged economic downturns will adversely affect our cash flows from operations.

In order to qualify as a REIT for federal income tax purposes, the Parent Company is required to distribute at least 90% of REIT taxable income, excluding capital gains, to its shareholders on an annual basis or pay federal income tax. The nature of our business, coupled with the requirement that we distribute a substantial portion of our income on an annual basis, will cause us to have substantial liquidity needs over both the short term and the long term.

Our short-term liquidity needs consist primarily of funds necessary to pay operating expenses associated with our facilities, refinancing of certain mortgage indebtedness, interest expense and scheduled principal payments on debt, expected distributions to limited partners and shareholders, capital expenditures and the development of new facilities. These funding requirements will vary from year to year, in some cases significantly. In the 2015 fiscal year, we expect recurring capital expenditures to be approximately $10 million to $15 million, planned capital improvements and facility upgrades to be approximately $7 million to $11 million and costs associated with the development of new facilities to be approximately $40 million to $45 million. Our currently scheduled principal payments on debt, including borrowings outstanding on the Credit Facility and Term Loan Facility, are approximately $84.9 million in 2015.

Our most restrictive financial covenants limit the amount of additional leverage we can add; however, we believe cash flows from operations, access to equity financing, including through our “at-the-market” equity program, and available borrowings under our Credit Facility provide adequate sources of liquidity to enable us to execute our current business plan and remain in compliance with our covenants.

Our liquidity needs beyond 2015 consist primarily of contractual obligations which include repayments of indebtedness at maturity, as well as potential discretionary expenditures such as (i) non-recurring capital expenditures; (ii) redevelopment of operating facilities; (iii) acquisitions of additional facilities; and (iv) development of new facilities. We will have to satisfy the portion of our needs not covered by cash flow from operations through additional borrowings, including borrowings under our Credit Facility, sales of common or preferred shares of the Parent Company and common or preferred units of the Operating Partnership and/or cash generated through facility dispositions and joint venture transactions.

We believe that, as a publicly traded REIT, we will have access to multiple sources of capital to fund our long-term liquidity requirements, including the incurrence of additional debt and the issuance of additional equity. However, we cannot provide any assurance that this will be the case. Our ability to incur additional debt will be dependent on a number of factors, including our degree of leverage, the value of our unencumbered assets and borrowing restrictions that may be imposed by lenders. In addition, dislocation in the United States debt markets may significantly reduce the availability and increase the cost of long-term debt capital, including conventional mortgage financing and commercial mortgage-backed securities financing. There can be no assurance that such capital will be readily available in the future. Our 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 us.

As of December 31, 2014, we had approximately $2.9 million in available cash and cash equivalents. In addition, we had approximately $222.0 million of availability for borrowings under our Credit Facility.

### Unsecured Senior Notes

On December 17, 2013, the Operating Partnership issued $250 million in aggregate principal amount of 4.375% unsecured senior notes due December 15, 2023 (the “2023 Senior Notes”). On June 26, 2012, the Operating Partnership issued $250 million in aggregate principal amount of 4.80% unsecured senior notes due July 15, 2022 (the “2022 Senior Notes”). The 2023 Senior Notes along with the 2022 Senior Notes are collectively referred to as the “Senior Notes.” The indenture under which the Senior Notes were issued restricts the ability of the Operating Partnership and its subsidiaries to incur debt unless the Operating Partnership and its consolidated subsidiaries comply with a leverage ratio not to exceed 60% and an interest coverage ratio of more than 1.5:1 after giving effect to the incurrence of the debt. The indenture also restricts the ability of the Operating Partnership and its subsidiaries to incur secured debt unless the Operating Partnership and its consolidated subsidiaries comply with a secured debt leverage ratio not to exceed 40% after giving effect to the incurrence of the debt. The indenture also contains other financial and customary covenants, including a covenant not to own unencumbered assets with a value less than 150% of the unsecured indebtedness of the Operating Partnership and its consolidated subsidiaries. As of and for the year ended December 31, 2014, the Operating Partnership was in compliance with all of the financial covenants under the Senior Notes.

### Revolving Credit Facility and Unsecured Term Loans

On June 20, 2011, we entered into an unsecured term loan agreement (the “Term Loan Facility”) which consisted of a $100 million term loan with a five-year maturity (“Term Loan A”) and a $100 million term loan with a seven-year maturity (“Term Loan B”). On December 9, 2011, we entered into a credit facility (the “Credit Facility”) comprised of a $100 million unsecured term loan maturing in December 2014 (“Term Loan C”); a $200 million unsecured term loan maturing in March 2017 (“Term Loan D”); and a $300 million unsecured revolving facility maturing in December 2015 (“Revolver”).

On June 18, 2013, we amended both the Term Loan Facility and Credit Facility. With respect to the Term Loan Facility, among other things, the amendment extended the maturity and decreased the pricing of Term Loan A, while Term Loan B remained unchanged by the amendment. On August 5, 2014, we further amended the Term Loan Facility (collectively with the amendment on June 18, 2013, the “Amendments”) to extend the maturity and decrease the pricing of Term Loan B. On December 17, 2013, we repaid the $100 million balance under Term Loan C that was scheduled to mature in December 2014.

Pricing on the Term Loan Facility depends on our unsecured debt credit ratings. On September 25, 2014, our unsecured debt credit rating was upgraded to Baa2 from Baa3 by Moody’s Investors Service with a stable outlook. As a result, the LIBOR spreads applicable to our borrowing under the Term Loan Facility were reduced, effective October 1, 2014. In addition, on November 3, 2014, our unsecured bonds and issuer ratings were upgraded to BBB from BBB- by Standard and Poor’s Ratings Services with a stable outlook. At our current Baa2/BBB level, amounts drawn under Term Loan A are priced at 1.30% over LIBOR, with no LIBOR floor, while amounts drawn under Term Loan B are priced at 1.15% over LIBOR, with no LIBOR floor.

|  | Amount | Term Loan Facility Prior to Amendments Maturity Date | LIBOR Spread Baa3/BBB- | Baa2/BBB | Term Loan Facility As Amended Maturity Date | LIBOR Spread Baa3/BBB- | Baa2/BBB |
| --- | --- | --- | ---: | ---: | --- | ---: | ---: |
| Term Loan A | $100 million | June 2016 | 1.85% | 1.65% | June 2018 | 1.50% | 1.30% |
| Term Loan B | $100 million | June 2018 | 2.00% | 1.80% | January 2020 | 1.40% | 1.15% |

With respect to the Credit Facility, among other things, the Amendments extended the maturities of the Revolver and Term Loan D and decreased the pricing of the Revolver, Term Loan C and Term Loan D. Pricing on the Credit Facility depends on our unsecured debt credit ratings. At our current Baa2/BBB level, amounts drawn under the Revolver are priced at 1.30% over LIBOR, inclusive of a facility fee of 0.20%, with no LIBOR floor, while amounts drawn under Term Loan C and Term Loan D are priced at 1.30% over LIBOR, with no LIBOR floor.

|  | Amount | Credit Facility Prior to Amendments Maturity Date | LIBOR Spread Baa3/BBB- | Baa2/BBB | Credit Facility As Amended Maturity Date | LIBOR Spread Baa3/BBB- | Baa2/BBB |
| --- | --- | --- | ---: | ---: | --- | ---: | ---: |
| Revolver | $300 million | December 2015 | 1.80% | 1.50% | June 2017 | 1.60% | 1.30% |
| Term Loan C (1) | $100 million | December 2014 | 1.75% | 1.45% | December 2014 | 1.50% | 1.30% |
| Term Loan D | $200 million | March 2017 | 1.75% | 1.45% | January 2019 | 1.50% | 1.30% |

(1) On December 17, 2013, we repaid the $100 million balance under Term Loan C that was scheduled to mature in December 2014.

We incurred costs of $2.1 million in 2013 and $0.2 million in 2014 in connection with the Amendments and capitalized such costs as a component of loan procurement costs, net of amortization on the consolidated balance sheets. Unamortized costs, along with costs incurred in connection with the amendments, are amortized as an adjustment to interest expense over the remaining term of the modified facilities. In connection with the repayment of Term Loan C, we recognized $0.4 million related to the write-off of unamortized loan procurement costs associated with that term loan.

As of December 31, 2014, $200 million of unsecured term loan borrowings were outstanding under the Term Loan Facility, $200 million of unsecured term loan borrowings were outstanding under the Credit Facility, $78.0 million of unsecured revolving credit facility borrowings were outstanding under the Credit Facility and $222.0 million was available for borrowing on the unsecured revolving portion of the Credit Facility. The available balance under the unsecured revolving portion of the Credit Facility is reduced by an outstanding letter of credit of $30 thousand. In connection with a portion of the unsecured borrowings, we had interest rate swaps as of December 31, 2014 that fix 30-day LIBOR (see note 10 to the consolidated financial statements). As of December 31, 2014, borrowings under the Credit Facility and Term Loan Facility, as amended and after giving effect to the interest rate swaps, had an effective weighted average interest rate of 2.95%.

The Term Loan Facility and the term loan under the Credit Facility were fully drawn at December 31, 2014 and no further borrowings may be made under the term loans. Our ability to borrow under the revolving portion of the Credit Facility is subject to ongoing compliance with certain financial covenants which include:

- Maximum total indebtedness to total asset value of 60.0% at any time;
- Minimum fixed charge coverage ratio of 1.50:1.00; and
- Minimum tangible net worth of $821,211,200 plus 75% of net proceeds from equity issuances after June 30, 2010.

Further, under the Credit Facility and Term Loan Facility, we are restricted from paying distributions on the Parent Company’s common shares in excess of the greater of (i) 95% of funds from operations, and (ii) such amount as may be necessary to maintain the Parent Company’s REIT status.

As of December 31, 2014, we were in compliance with all of our financial covenants and anticipate being in compliance with all of our financial covenants through the terms of the Credit Facility and Term Loan Facility.

### Issuance of Common Shares

Pursuant to a previous sales agreement, we had an “at-the-market” equity program that enabled us to sell common shares through a sales agent. On May 7, 2013, we terminated the previous sales agreement with our previous sales agent and entered into separate equity distribution agreements (the “Equity Distribution Agreements”) with each of Wells Fargo Securities LLC; BMO Capital Markets Corp.; Jefferies LLC; Merrill Lynch, Pierce, Fenner & Smith Incorporated; and RBC Capital Markets, LLC (collectively, the “Sales Agents”). The Equity Distribution Agreements replaced the previous sale agreement and were amended on May 5, 2014 and October 2, 2014 to increase the number of common shares authorized for sale through “at-the-market” equity offerings. Pursuant to the Equity Distribution Agreements, as amended, we may sell, from time to time, up to 30 million common shares of beneficial interest through the Sales Agents.

During 2014, we sold a total of 15.2 million common shares under the agreements at an average sales price of $18.22 per share, resulting in net proceeds of $273.0 million after deducting offering costs. The proceeds from the sales conducted during the year ended December 31, 2014 were used to fund acquisitions of self-storage facilities and for general corporate purposes. As of December 31, 2014, 9.2 million common shares remained available for issuance under the Equity Distribution Agreements.

During 2013, we sold a total of 5.7 million common shares under the previous sales agreement and the Equity Distribution Agreements at an average sales price of $17.92 per share, resulting in net proceeds of $100.3 million after deducting offering costs. The proceeds from the sales conducted during the year ended December 31, 2013 were used to fund acquisitions of self-storage facilities and for general corporate purposes.

On October 20, 2014, the Parent Company completed its public offering of 7,475,000 common shares at a public offering price of $19.33, inclusive of the full exercise by the underwriters of their option to purchase 975,000 shares to cover over-allotments. We received approximately $143.0 million in net proceeds from the offering after deducting the underwriting discount and other offering expenses. The proceeds combined with the proceeds raised from the program were used for general corporate purposes including funding a portion of our investment activity.

### Other Material Changes in Financial Position

*(in thousands)*

| Selected Assets | December 31, 2014 | 2013 | Change |
| --- | ---: | ---: | ---: |
| Storage facilities, net | $2,625,129 | $2,155,170 | $469,959 |
| Investment in real estate venture, at equity | $95,709 | $156,310 | $(60,601) |
| Selected Liabilities |  |  |  |
| Revolving credit facility | $78,000 | $38,600 | $39,400 |

Storage facilities, net of accumulated depreciation, increased $470.0 million primarily as a result of the acquisition of 53 facilities, fixed asset additions and development during the year. Investment in real estate venture, at equity decreased by $60.6 million on account of the HHF joint venture obtaining a $100 million loan secured by the 34 self-storage facilities located in Texas and distributing the net proceeds proportionately to the partners as well as net losses during the year that reduced the carrying value of our investment.

The outstanding borrowings under the revolving portion of the Credit Facility increased $39.4 million as a result of additional borrowings made to fund a portion of the 2014 acquisitions and the repayment of multiple mortgages during the year.

### Contractual Obligations

The following table summarizes our known contractual obligations as of December 31, 2014 (in thousands):

|  | Payments Due by Period Total | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 and thereafter |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Mortgage loans and notes payable (a) | $192,367 | $84,874 | $36,837 | $1,784 | $1,886 | $10,852 | $56,134 |
| Revolving credit facility and unsecured term loans | 478,000 | — | — | 78,000 | 100,000 | 200,000 | 100,000 |
| Unsecured senior notes | 500,000 | — | — | — | — | — | 500,000 |
| Interest payments | 261,979 | 46,443 | 40,705 | 35,982 | 32,802 | 27,925 | 78,122 |
| Ground leases | 95,253 | 1,443 | 1,649 | 1,649 | 1,562 | 1,557 | 87,393 |
| Software and service contracts | 3,216 | 2,116 | 969 | 131 |  |  |  |
| Construction commitments | 50,294 | 42,800 | 7,494 | — | — | — | — |
|  | $1,581,109 | $177,676 | $87,654 | $117,546 | $136,250 | $240,334 | $821,649 |

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

We expect to satisfy contractual obligations owed in 2015 through a combination of cash generated from operations and from draws on the revolving portion of our Credit Facility.

### Off-Balance Sheet Arrangements

We do not have off-balance sheet arrangements, financings, or other relationships with other unconsolidated entities (other than our co-investment partnerships) or other persons, also known as variable interest entities not previously discussed.

## Market risk

As filed, 2,983 characters.

Our future income, cash flows and fair values relevant to financial instruments depend upon prevailing market 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.

### Effect of Changes in Interest Rates on our Outstanding Debt

Our interest rate risk objectives are to limit the impact of interest rate fluctuations on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, we manage our exposure to fluctuations in market interest rates for a portion of our borrowings through the use of derivative financial instruments such as interest rate swaps or caps to mitigate our interest rate risk on a related financial instrument or to effectively lock the interest rate on a portion of our variable rate debt. The analysis below presents the sensitivity of the market value of our financial instruments to selected changes in market interest 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 interest rates chosen.

As of December 31, 2014 our consolidated debt consisted of $1.1 billion of outstanding mortgages, unsecured senior notes and unsecured term loans that are subject to fixed rates, including variable rate debt that is effectively fixed through our use of interest rate swaps. There was also $78.0 million of outstanding credit facility borrowings subject to floating rates. Changes in market interest rates have different impacts on the fixed and variable rate portions of our debt portfolio. A change in market interest rates on the fixed portion of the debt portfolio impacts the net financial instrument position, but has no impact on interest incurred or cash flows. A change in market interest rates on the variable portion of the debt portfolio impacts the interest incurred and cash flows, but does not impact the net financial instrument position.

If market interest rates on our variable rate debt increase by 100 basis points, the increase in annual interest expense on our variable rate debt would decrease future earnings and cash flows by approximately $0.8 million a year. If market interest rates on our variable rate debt decrease by 100 basis points, the decrease in interest expense on our variable rate debt would increase future earnings and cash flows by approximately $0.8 million a year.

If market interest rates increase by 100 basis points, the fair value of our outstanding fixed-rate mortgage debt, unsecured senior notes and unsecured term loans would decrease by approximately $56.1 million. If market interest rates decrease by 100 basis points, the fair value of our outstanding fixed-rate mortgage debt, unsecured senior notes and unsecured term loans would increase by approximately $61.9 million.

## Controls and procedures

As filed, 4,256 characters.

### Controls and Procedures (Parent Company)

### Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Report, the Parent Company carried out an evaluation, under the supervision and with the participation of its management, including its chief executive officer and chief financial officer, of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) under the Exchange Act.

Based on that evaluation, the Parent Company’s chief executive officer and chief financial officer have concluded that the Parent Company’s disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information required to be disclosed by the Parent Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to the Parent Company’s management, including its chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

### Changes in Internal Control Over Financial Reporting

There has been no change in the Parent Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during its most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

### Management’s Report on Internal Control Over Financial Reporting

Management’s report on internal control over financial reporting of the Parent Company is set forth on page F-2 of this Report, and is incorporated herein by reference. The effectiveness of the Parent Company’s internal control over financial reporting as of December 31, 2014 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in its report which is included herein.

### Controls and Procedures (Operating Partnership)

### Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Report, the Operating Partnership carried out an evaluation, under the supervision and with the participation of its management, including the Operating Partnership’s chief executive officer and chief financial officer, of the effectiveness of the design and operation of the Operating Partnership’s disclosure controls and procedures (as defined in Rules 13a-15(e) under the Exchange Act).

Based on that evaluation, the Operating Partnership’s chief executive officer and chief financial officer have concluded that the Operating Partnership’s disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information required to be disclosed by the Operating Partnership in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to the Operating Partnership’s management, including the Operating Partnership’s chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

### Changes in Internal Control Over Financial Reporting

There has been no change in the Operating Partnership’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.

### Management’s Report on Internal Control Over Financial Reporting

Management’s report on internal control over financial reporting of the Operating Partnership is set forth on page F-3 of this Report, and is incorporated herein by reference. The effectiveness of the Operating Partnership’s internal control over financial reporting as of December 31, 2014 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in its report which is included herein.

Filed Feb 27, 2015.
Source: SEC EDGAR, the filing index for accession 0001104659-15-015158. Last ingested by Listed: Nov 7, 2026, 12:41 ET. No prices; not investment advice.