cfa global champion powerpoint

CFA Institute Research Challenge Atlanta, GA - Americas Competition

Canisius CollegeBuffalo, NY

Matthew CoadCarl Larsson

Stephen MillerKevin Monheim

Ryan Zimmer

Company OverviewIndustry &

Competitive Positioning

Financial Analysis Valuation Risk Analysis Conclusion

Executive Summary

Main Features 4th largest Self-Storage Company in the U.S. 92% of Revenue is derived from Rental Income Strong Management Platform Over 500 Properties in Portfolio

SSS $96.00

SSS $93.95

1

Market ProfileClosing Price (04/02/2015) $93.9552-Week High / Low $97.76 / $72.88Average Volume (3M) 247,279Diluted Shares Out. 34,217,717Market Cap $3.18BDividend Yield 3.20%Beta 0.87EV / Revenue 14.5xEV / EBITDA 23.3xP / FFO Share 23.5xInstitutional Holdings 96.85%Insider Holdings 2.60%




Competitive Advantage

Revenue Management

Program

Web-based Marketing

Call Center

2

Location and Convenience: 24/7 Security System; keyboard

controlled access

Web Marketing: 70% of sales driven by internet contact

with customers

Call Center: 31,000 Rental Inquiries a Month

Revenue Management System: Uses 10-year historical information




State% of 2013

# Of Prop.

% of 2014

# Of Prop.

Texas 26.1% 117 25.1% 133Florida 13.9% 68 14.3% 72New York 6.7% 34 8.4% 35New Jersey 7.7% 21 7.6% 29Georgia 5.6% 30 5.5% 30Ohio 4.4% 23 4.0% 23Alabama 4.2% 22 3.4% 22Virginia 3.9% 19 3.3% 19Louisiana 3.7% 16 2.6% 17Mississippi 2.9% 15 2.6% 15Remaining 15 20.9% 113 23.2% 123

Total 100% 478 100% 518

Properties

3

Company Overview Financial Analysis Valuation Risk Analysis ConclusionIndustry &


Industry Overview

LEGEND0 No threat to Sovran1 Insignificant threat to Sovran2 Low threat to Sovran3 Moderate threat to Sovran4 Significant threat to Sovran5 High Threat to Sovran

Porter’s Five Forces

Bargaining Power of Customers – MODERATE

Intensity of Competitive Rivalry – MODERATE

Bargaining Power of Suppliers – LOW

Threat of Substitutes – LOW

Barriers to Entry – MODERATE

4



Competitive Postioning SSS CUBE EXR PSAMarket Cap $3.12B $3.82B $7.71B $34.03B3rd Party ManagementStore Locator on HomepageInteractive Facility Location MapList of Alternative Storage LocationsVan or Truck Rental OptionsClimate-Controlled UnitsVehicle StoragePacking SuppliesPromotions for New Customers24-Hour Call Center

Industry Overview

Economies of Scale vs Smaller Competitors

Increasing Ancillary Revenue Segment

Diverse Service Offerings

5



Demand Drivers

2015 2016 2017 2018 2019 2020320,000322,000324,000326,000328,000330,000332,000334,000336,000

14.5%

15.0%

15.5%

16.0%

16.5%

17.0%

Aging and Growing U.S. Population

Population 65 Years and Above

U.S. Economic Growth

Improving Job Market

Encouraging Demographic Trends

(In T

hous

ands

)(In

Tho

usan

ds)

Aug-13Oct-13

Dec-13Feb-14

Apr-14Jun-14

Aug-14Oct-14

2500

3000

3500

4000

4500Job Openings vs Job Separations

Total Job Openings Total Job Separations

20202018

20162014

20122010

30.0%31.0%32.0%33.0%34.0%35.0%36.0%37.0%38.0%39.0%40.0% U.S Rental Rates

6



Acquisitions

UPREIT Structure Increasing Cost per Acquired Sq. Ft. Increasing Acquisition Expenditures

7



Revenue Analysis

Occupancy Rates

8



Profitability

9

YearNet Profit

Margin2008 19.8%2009 10.9%2010 23.2%2011 16.3%2012 25.2%2013 29.0%2014 27.3%

2015E 28.8%2016E 29.2%2017E 29.7%2018E 30.0%2019E 30.2%



Debt Analysis

Increasing Capacity to Maintain BBB- Credit Rating

Financing through Equity-Debt Ratio of 70%-30%

10



DCF Analysis50%

Valuation Methods

EV/EBITDA Multiple25%

11

Discounted Cash Flow (DCF) Net Operating

Income (NOI) Monte Carlo

Simulation

Relative Multiple Valuation EV / EBITDA Price / FFOPrice / FFO Multiple

25%



Revenue Growth Breakdown 2015E 2016E 2017E 2018E 2019EIncrease in Occupancy Rates 1.0% 0.5% 0.5% 0.3% 0.3%Increase in Sales per Square Ft. 6.0% 5.4% 3.8% 1.5% 1.0%Increase in Total Square Ft. 5.8% 6.0% 4.5% 3.5% 3.0%

Rental Revenue Growth 12.8% 11.9% 8.8% 5.3% 4.3%Ancilliary Revenue Growth 20.0% 15.0% 15.0% 12.5% 12.5%

Total Revenue Growth 13.3% 12.2% 9.3% 6.0% 5.1%

DCF Assumptions - Revenue

12



DCF Assumptions - WACC

13

Cost of Equity 2015-16 2017-19Risk Free Rate (1) 2.25% 3.00%Adjusted Beta 0.913 0.913Market Risk Premium 7.75% 7.00%

Cost of Equity 9.33% 9.39%(1) Expected 10-Year U.S. Treasury

Cost of Debt 2015-16 2017-19Risk Free Rate (1) 2.25% 3.00%BBB Options Spread 2.08% 2.24%

Cost of Debt 4.33% 5.24%(1) Expected 10-Year U.S. Treasury

(2) Option-Adj Spread (OAS) of the BofA MLUS Corporate BBB Index

Cap Rate 6.00%

2015-16 2017-198.33% 8.77%

WACC



DCF Output - Monte Carlo Simulation

Inputs to Simulation Occupancy Rate Asking Rate Per Square Foot

Acquisition Rate WACC Cap Rate

14

4.0% 87.4% 8.6%

Simulation DataMean 94.84$ SD 9.60$ 5th Percentile 80.20$ Median 94.26$ 95th Percentile 111.80$

`

SELL HOLD BUY



CompanyEnt. Val.

(M)EV /

EBITDA P / FFOEV / Rev

SSS $3,957.4 23.3x 23.5x 14.5xCUBE $5,077.5 25.1x 22.9x 13.7xEXR $10,266.4 25.4x 26.3x 15.6xPSA $38,284.7 23.9x 24.5x 16.8x

Mean 24.4x 24.3x 15.1xMedian 24.5x 24.0x 15.0x

Relative Valuation

15

Current Price Price / FFO

$93.95 $98.81

EV / EBITDA

$97.13

Valuation Metrics



DCF Analysis50%

Price Target

EV/EBITDA Multiple25%

16

Price / FFO Multiple25%

$94.84

$96.00

$98.81 $97.13



Main Risks

RR1 = Regulatory Risk – REIT

Classification

OR2 = Operational Risks – Loss Credit

Rating

MR1 = Market Risk – Rise in Interest Rates

ER1 = Economic Risks – Easing of Loan

Requirements

17



18

Concentration Risk (MR3)

Time Oil Price / Barrel# Oil Rigs in

TexasSep-14 $94.51 905Apr-15 $51.91 455

% Change -45.1% -49.7%

46

20-30

10-19

< 10

Number of Facilities



18

Corporate Governance (OR1)

Disclosure and Transparency

Executive Management

Board of DirectorsRights and Obligations of Shareholders

Takeover Defense

0

1

2

3

4

5

KEY1 Insignificant threat to Shareholders 2 Low threat to Shareholders3 Moderate threat to Shareholders4 Significant threat to Shareholders5 High Threat to Shareholders

Rating Methodology

Disclosure and Transparency – INSIGNIFICANT Executive Management – INSIGNIFICANT Board of Directors – SIGNIFICANT Takeover Defense – LOW Rights and Obligations of Shareholders – LOW



Potential Loss of BBB- Credit Rating (OR2)

Increase in Cost of Debt due to downgrade to Junk Bond Status is roughly 175 basis points

Mitigations: Maintain 70E – 30D Financing Structure Management Guidance

DescriptionPrincipal Due (thousands)

Coupon Rate

Increase in Coupon Rate if Credit Rate Downgraded

2016 Term Note $150,000 6.38% 8.13%2020 Term Note $100,000 5.54% 7.29%2024 Term Note $175,000 4.53% 6.27%

19



1 Year CorrelationRMZ and SSS 0.97RMZ and 10 Yr -0.93SSS and 10 Yr -0.94

Interest Rates and Cap Rates Spread (MR1)

20

3.6%

`



Conclusion

Current Price Upside

SSS $93.95 SSS $96.00

Target Price

2.2%

Merits• Experienced

Management• Technology

Platforms• Macroeconomic

Tailwinds• Improving

Financial Position• Limited Supply

HOLD

Concerns• Maturing

Occupancy Rates• Increasing Price

of Acquisitions• Concentration

Risk• Interest Rate

Uncertainty

21

Conclusion

Presentation

Executive Summary

Industry Overview

Properties

Competitive Advantage

Porter’s 5 Forces

Demand Drivers

NPM and Payout Ratio

Revenue & Occupancy Rates

Debt Analysis

Acquisitions

Valuation Methods

WACC

Monte Carlo

Relative Multiples

Price Target

Revenue Assumptions

Concentration Risk

Loss of Credit Rating Interest Rat

es

Main Risks

Conclusion

Appendix


UPREIT Structure

Ownership Structure

SWOT

Interest Rates

Cap Rate - Bond

Spread

Dot Plot

Debt Schedule

Revenue Growth

LT Risk-Free Rate

Assumed Cap Rate

Monte Carlo

Buy Scenario

Buy Scenario Statistics

Cap Rate Assumptions

Relative Valuation

Multiples

FFO Calcs

Premium

Business Description

Balance Sheet

Income Statement

Financial Condition

Lack of Independen

ce

Insider Holdings

Management

State Saturation

Levels

Self-Storage Growth

Beta Analysis

Treasury Stock

Method

EVA

Properties

Marriage Stats

Conclusion

Historical Balance Sheet Appendix($ in Millions) Historical Balance Sheet Projected Balance SheetAs of December 31, 2009 2010 2011 2012 2013 2014ASSETSGross Property, Plant & Equipment $1,364.5 $1,420.0 $1,538.6 $1,742.4 $1,864.6 $2,178.0Accumulated Depreciation (239.00) (271.80) (292.70) (325.00) (366.50) (411.70)Total Real Estate Assets 1,125.48 1,148.16 1,245.87 1,417.39 1,498.17 1,766.30

% Growth 2.0% 8.5% 13.8% 5.7% 16.2%

Cash And Equivalents 10.71 5.77 7.32 7.26 9.52 8.50Accounts Receivable 2.35 2.38 2.94 3.44 5.12 5.80Other Receivables 0.17 0.25 0.59 0.86 0.88 0.60 Other Intangibles - 0.55 2.52 2.89 1.09 2.20 Loans Receivable Current - 2.80 - - - -Other Current Assets 21.13 4.41 47.64 14.44 5.98 6.50 Trading Asset Securities - - - - 0.79 -Deferred Charges, LT 2.50 1.50 4.40 3.60 4.30 6.30Other Long-Term Assets 22.76 19.73 32.39 34.44 36.02 58.60Investments in Joint Ventures - - - - - -Total Assets 1,185.1 1,185.5 1,343.7 1,484.3 1,561.9 1,854.8

% Growth 0.0% 13.3% 10.5% 5.2% 15.9%

LIABILITIESCurr. Port. of LT Debt - 36.69 - 100.00 5.59 5.60Long-Term Debt 492.74 462.79 636.17 599.96 628.18 799.00Accounts Payable 21.82 23.39 30.61 35.06 36.34 41.80Curr. Income Taxes Payable - - 0.20 - - -Def. Tax Liability, Curr. - - 0.10 1.00 0.90 1.30 Other Current Liabilities 0.50 0.60 0.50 0.50 0.50 0.50 Unearned Revenue, Non-Current 4.98 4.93 6.08 6.39 6.71 7.30Other Non-Current Liabilities - - - - - -Total Liabilities 520.04 528.40 673.67 742.91 678.23 855.50

% Growth 1.6% 27.5% 10.3% -8.7% 22.5%

Common Stock 0.29 0.29 0.30 0.32 0.34 0.40 Additional Paid In Capital 814.99 816.99 862.47 943.60 1,066.40 1,183.40 Retained Earnings - - - - - -Distributions In Excess Of Earnings (139.90) (148.30) (169.80) (172.80) (162.50) (167.70)Treasury Stock (27.20) (27.20) (27.20) (27.20) (27.20) (27.20)Comprehensive Inc. and Other (11.30) (10.30) (10.30) (15.20) (6.40) (13.00)Total Common Equity 636.97 631.58 655.54 728.73 870.71 975.90

% Growth -0.8% 3.8% 11.2% 19.5% 11.9%

Minority Interest 28.09 25.56 14.47 12.67 12.94 13.60

Total Equity 665.06 657.14 670.01 741.40 883.65 989.50% Growth -1.2% 2.0% 10.7% 19.2% 11.8%

Total Liabilities And Equity 1,185.1 1,185.5 1,343.7 1,484.3 1,561.9 1,845.0% Growth 0.0% 13.3% 10.5% 5.2% 15.9%

Conclusion

Historical Balance Sheet – Common Size Appendix

($ in Millions) Historical Balance Sheet Common Size Analysis Historical Income StatementAs of December 31, 2009 2010 2011 2012 2013 2014ASSETS 191 192 201 234 274 326Gross Property, Plant & Equipment 714.2% 739.3% 766.0% 744.3% 681.8% 668.0%Accumulated Depreciation -17.5% -19.1% -19.0% -18.7% -19.7% -18.9%Total Real Estate Assets 589.1% 597.8% 620.3% 605.5% 547.8% 541.7%

Cash And Equivalents 5.6% 3.0% 3.6% 3.1% 3.5% 2.6%Accounts Receivable 1.2% 1.2% 1.5% 1.5% 1.9% 1.8%Other Receivables 0.1% 0.1% 0.3% 0.4% 0.3% 0.2%Other Intangibles - 0.3% 1.3% 1.2% 0.4% 0.7%Loans Receivable Current - 1.5% - - - -Other Current Assets 11.1% 2.3% 23.7% 6.2% 2.2% 2.0%Trading Asset Securities - - - - 0.3% -Deferred Charges, LT 1.3% 0.8% 2.2% 1.5% 1.6% 1.9%Other Long-Term Assets 11.9% 10.3% 16.1% 14.7% 13.2% 18.0%Investments in Joint Ventures - - - - - -Total Assets 620.3% 617.2% 669.0% 634.1% 571.1% 568.8%

LIABILITIESCurr. Port. of LT Debt - 19.1% 42.7% 2.0% 1.7%Long-Term Debt 257.9% 240.9% 316.7% 256.3% 229.7% 245.0%Accounts Payable 11.4% 12.2% 15.2% 15.0% 13.3% 12.8%Curr. Income Taxes Payable - - 0.1% - - -Def. Tax Liability, Curr. - - 0.0% 0.4% 0.3% 0.4%Other Current Liabilities 0.3% 0.3% 0.2% 0.2% 0.2% 0.2%Unearned Revenue, Non-Current 2.6% 2.6% 3.0% 2.7% 2.5% 2.2%Other Non-Current Liabilities - - - - - -Total Liabilities 272.2% 275.1% 335.4% 317.4% 248.0% 262.4%

Common Stock 0.2% 0.1% 0.1% 0.1% 0.1% 0.1%Additional Paid In Capital 426.6% 425.4% 429.4% 403.1% 389.9% 362.9%Retained Earnings - - - - - -Distributions In Excess Of Earnings -73.2% -77.2% -84.5% -73.8% -59.4% -51.4%Treasury Stock -14.2% -14.2% -13.5% -11.6% -9.9% -8.3%Comprehensive Inc. and Other -5.9% -5.4% -5.1% -6.5% -2.3% -4.0%Total Common Equity 333.4% 328.8% 326.4% 311.3% 318.3% 299.3%

Minority Interest 14.7% 13.3% 7.2% 5.4% 4.7% 4.2%

Total Equity 348.1% 342.1% 333.6% 316.7% 323.1% 303.5%

Total Liabilities And Equity 620.3% 617.2% 669.0% 634.1% 571.1% 565.8%

Conclusion

Projected Balance Sheet AppendixProjected Balance Sheet

2015E 2016E 2017E 2018E 2019E

$2,460.5 $2,779.9 $3,041.0 $3,259.8 $3,457.9(465.09) (525.48) (574.84) (616.20) (653.63)

1,995.38 2,254.44 2,466.21 2,643.65 2,804.2613.0% 13.0% 9.4% 7.2% 6.1%

11.32 12.70 13.87 14.70 15.446.31 7.07 7.73 8.19 8.601.07 1.21 1.32 1.40 1.47 2.84 2.23 3.27 3.14 3.41

- - - - -12.75 14.30 15.62 16.55 17.39

- - - - -6.21 6.97 7.61 8.07 8.47

56.49 63.36 69.23 73.35 77.05- - - - -

2,092.4 2,362.3 2,584.9 2,769.0 2,936.112.8% 12.9% 9.4% 7.1% 6.0%

- 150.00 - - -824.24 759.57 977.41 1,032.55 1,081.47

50.62 56.77 62.03 65.72 69.04- - - - -

1.42 1.60 1.74 1.85 1.94 0.68 0.76 0.83 0.88 0.92

9.14 10.25 11.20 11.87 12.47- - - - -

886.10 978.96 1,053.22 1,112.87 1,165.843.6% 10.5% 7.6% 5.7% 4.8%

0.47 0.53 0.58 0.61 0.64 1,394.98 1,568.64 1,714.31 1,838.58 1,954.93

- - - - -(163.82) (158.57) (151.42) (143.76) (135.47)

(27.20) (27.20) (27.20) (27.20) (27.20)(15.79) (17.72) (19.36) (20.51) (21.54)

1,188.64 1,365.68 1,516.92 1,647.73 1,771.36 21.8% 14.9% 11.1% 8.6% 7.5%

17.64 19.78 21.61 22.90 24.05

1,206.27 1,385.46 1,538.53 1,670.63 1,795.4121.9% 14.9% 11.0% 8.6% 7.5%

2,092.4 2,364.4 2,591.8 2,783.5 2,961.313.4% 13.0% 9.6% 7.4% 6.4%

($ in Millions)As of December 31,ASSETSGross Property, Plant & EquipmentAccumulated DepreciationTotal Real Estate Assets

% Growth

Cash And EquivalentsAccounts ReceivableOther ReceivablesOther IntangiblesLoans Receivable CurrentOther Current AssetsTrading Asset SecuritiesDeferred Charges, LTOther Long-Term AssetsInvestments in Joint VenturesTotal Assets

% Growth

LIABILITIESCurr. Port. of LT DebtLong-Term DebtAccounts PayableCurr. Income Taxes PayableDef. Tax Liability, Curr.Other Current LiabilitiesUnearned Revenue, Non-CurrentOther Non-Current LiabilitiesTotal Liabilities

% Growth

Common StockAdditional Paid In CapitalRetained EarningsDistributions In Excess Of EarningsTreasury StockComprehensive Inc. and OtherTotal Common Equity

% Growth

Minority Interest

Total Equity% Growth

Total Liabilities And Equity% Growth

Conclusion

Projected Balance Sheet – Common Size Appendix

Historical Income Statement2015E 2016E 2017E 2018E 2019E370 415 453 480 504665.7% 670.6% 671.4% 679.3% 685.9%-18.9% -18.9% -18.9% -18.9% -18.9%

539.9% 543.8% 544.5% 550.9% 556.3%

3.1% 3.1% 3.1% 3.1% 3.1%1.7% 1.7% 1.7% 1.7% 1.7%0.3% 0.3% 0.3% 0.3% 0.3%0.8% 0.5% 0.7% 0.7% 0.7%

- - - - -3.4% 3.4% 3.4% 3.4% 3.4%

- - - - -1.7% 1.7% 1.7% 1.7% 1.7%

15.3% 15.3% 15.3% 15.3% 15.3%- - - - -

566.1% 569.8% 570.7% 577.0% 582.4%

243.7% 228.7% 213.7% 198.7% 183.7%13.7% 13.7% 13.7% 13.7% 13.7%

- - - - -0.4% 0.4% 0.4% 0.4% 0.4%0.2% 0.2% 0.2% 0.2% 0.2%2.5% 2.5% 2.5% 2.5% 2.5%

- - - - -239.8% 236.1% 232.5% 231.9% 231.3%

0.1% 0.1% 0.1% 0.1% 0.1%400.3% 415.3% 430.3% 445.3% 460.3%

- - - - --61.6% -61.6% -61.6% -61.6% -61.6%

-7.4% -6.6% -6.0% -5.7% -5.4%-4.3% -4.3% -4.3% -4.3% -4.3%

321.6% 329.4% 334.9% 343.4% 351.4%

4.8% 4.8% 4.8% 4.8% 4.8%

326.4% 334.2% 339.7% 348.1% 356.2%

566.1% 570.4% 572.2% 580.0% 587.4%

($ in Millions)As of December 31,ASSETSGross Property, Plant & EquipmentAccumulated DepreciationTotal Real Estate Assets

Cash And EquivalentsAccounts ReceivableOther ReceivablesOther IntangiblesLoans Receivable CurrentOther Current AssetsTrading Asset SecuritiesDeferred Charges, LTOther Long-Term AssetsInvestments in Joint VenturesTotal Assets

LIABILITIESCurr. Port. of LT DebtLong-Term DebtAccounts PayableCurr. Income Taxes PayableDef. Tax Liability, Curr.Other Current LiabilitiesUnearned Revenue, Non-CurrentOther Non-Current LiabilitiesTotal Liabilities

Common StockAdditional Paid In CapitalRetained EarningsDistributions In Excess Of EarningsTreasury StockComprehensive Inc. and OtherTotal Common Equity

Minority Interest

Total Equity

Total Liabilities And Equity

Conclusion

Historical Income Statement AppendixHistorical Income Statement Projected Income Statement

($ in Millions) 2009 2010 2011 2012 2013 2014RevenueRental Income $183.1 $182.9 $188.4 $217.9 $253.4 $302.0 Ancilliary Income $8.0 $9.2 $12.5 $16.2 $20.1 $24.0

Total Revenue $191.0 $192.1 $200.9 $234.1 $273.5 $326.1% Growth 0.5% 4.6% 16.5% 16.8% 13.1%

ExpensesProperty Expenses $70.1 $70.9 $75.3 $81.6 $92.3 $117.3SGA $18.6 $21.9 $26.0 $32.3 $34.9 $40.8Depr & Amort $32.7 $32.9 $34.8 $40.5 $45.2 $51.7

Operating Expenses $121.5 $125.7 $136.1 $154.4 $172.4 $209.8% Growth 3.5% 8.3% 13.4% 11.7% 15.5%

Operating Income $69.6 $66.4 $64.7 $79.7 $101.1 $116.3% Growth -4.6% -2.5% 23.1% 26.9% 9.0%% Margin 36.4% 34.6% 32.2% 34.0% 37.0% 35.7%

Interest Income (Expense) ($50.0) ($31.6) ($38.5) ($33.2) ($32.0) ($34.5)Income from JV $0.2 $0.2 ($0.3) $0.9 $1.9 $2.0

Income from Continuing Ops $19.8 $35.0 $25.8 $47.4 $71.0 $83.8Income from Disc Ops $1.1 $7.6 $5.7 $8.2 $3.1 $5.2

NI $20.9 $42.5 $31.6 $55.6 $74.1 $89.0% Growth 103.4% -25.8% 76.3% 33.2% 9.3%% Margin 10.9% 22.1% 15.7% 23.8% 27.1% 27.3%

Noncontrolling Interest ($1.7) ($1.9) ($0.9) ($0.5) ($0.5) ($0.5)NI to common shareholders $19.2 $40.6 $30.6 $55.1 $73.7 $88.4

% Growth 111.9% -24.6% 80.0% 33.6% 9.4%% Margin 10.0% 21.2% 15.2% 23.5% 26.9% 27.1%

NOI $102.3 $99.3 $99.6 $120.2 $146.3 $168.0% Growth -2.9% 0.3% 20.7% 21.7% 12.3%% Margin 53.6% 51.7% 49.6% 51.4% 53.5% 51.5%

FFO $54.5 $67.3 $67.4 $92.5 $117.2 $135.5% Growth 23.6% 0.1% 37.2% 26.7% 12.3%% Margin 28.5% 35.0% 33.6% 39.5% 42.9% 41.5%

Conclusion

Projected Income Statement AppendixProjected Income Statement Historical Income Statement

2015E 2016E 2017E 2018E 2019E

$340.7 $381.4 $414.8 $437.0 $455.8 $28.8 $33.2 $38.1 $42.9 $48.3

$369.6 $414.6 $452.9 $479.9 $504.113.3% 12.2% 9.3% 5.9% 5.0%

$132.96 $147.96 $160.39 $168.57 $175.66$46.2 $51.5 $55.8 $58.6 $61.1$58.4 $66.0 $72.2 $77.4 $82.1

$237.6 $265.4 $288.3 $304.6 $318.813.3% 11.7% 8.6% 5.6% 4.7%

$132.0 $149.1 $164.6 $175.3 $185.313.5% 13.0% 10.4% 6.5% 5.7%35.7% 36.0% 36.3% 36.5% 36.8%

($35.3) ($39.0) ($41.9) ($44.3) ($46.4)$2.1 $2.4 $2.6 $2.8 $2.9

$98.8 $112.5 $125.3 $133.8 $141.8$7.7 $8.6 $9.4 $10.0 $10.5

$106.5 $121.2 $134.7 $143.8 $152.319.7% 13.8% 11.2% 6.7% 5.9%28.8% 29.2% 29.7% 30.0% 30.2%

($0.68) ($0.76) ($0.83) ($0.88) ($0.93)$105.8 $120.4 $133.9 $142.9 $151.419.6% 13.8% 11.2% 6.7% 5.9%28.6% 29.0% 29.6% 29.8% 30.0%

$190.4 $215.1 $236.8 $252.7 $267.413.3% 13.0% 10.1% 6.7% 5.8%51.5% 51.9% 52.3% 52.7% 53.0%

$157.2 $178.5 $197.5 $211.2 $223.916.0% 13.6% 10.6% 6.9% 6.0%42.5% 43.1% 43.6% 44.0% 44.4%

Historical Income Statement($ in Millions)RevenueRental IncomeAncilliary Income

Total Revenue% Growth

ExpensesProperty ExpensesSGADepr & Amort

Operating Expenses% Growth

Operating Income% Growth% Margin

Interest Income (Expense)Income from JV

Income from Continuing OpsIncome from Disc Ops

NI% Growth% Margin

Noncontrolling InterestNI to common shareholders

% Growth% Margin

NOI% Growth% Margin

FFO% Growth% Margin

Conclusion

Income Statement – Common Size AppendixHistorical Income Statement Forecasted Income Statement Common Size Analysis

($ in Millions) 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019ERevenueRental Income 95.8% 95.2% 93.8% 93.1% 92.6% 92.6% 92.2% 92.0% 91.6% 91.1% 90.4%Ancilliary Income 4.1% 4.8% 6.2% 6.9% 7.4% 7.4% 7.8% 8.0% 8.4% 8.9% 9.6%

Total Revenue 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

ExpensesProperty Expenses 36.7% 36.9% 37.5% 34.8% 33.7% 36.0% 36.0% 35.7% 35.4% 35.1% 34.8%SGA 9.8% 11.4% 12.9% 13.8% 12.8% 12.5% 12.5% 12.4% 12.3% 12.2% 12.1%Depr & Amort 17.1% 17.1% 17.3% 17.3% 16.5% 15.9% 15.8% 15.9% 15.9% 16.1% 16.3%

Operating Expenses 63.6% 65.4% 67.8% 66.0% 63.0% 64.3% 64.3% 64.0% 63.7% 63.5% 63.2%

Operating Income 36.4% 34.6% 32.2% 34.0% 37.0% 35.7% 35.7% 36.0% 36.3% 36.5% 36.8%

Interest Income (Expense) -26.2% -16.5% -19.2% -14.2% -11.7% -10.6% -9.6% -9.4% -9.3% -9.2% -9.2%Income from JV 0.1% 0.1% -0.2% 0.4% 0.7% 0.6% 0.6% 0.6% 0.6% 0.6% 0.6%

Income from Continuing Ops 10.4% 18.2% 12.9% 20.3% 26.0% 25.7%Income from Disc Ops 0.6% 3.9% 2.8% 3.5% 1.1% 1.6% 2.1% 2.1% 2.1% 2.1% 2.1%

NI 10.9% 22.1% 15.7% 23.8% 27.1% 27.3% 28.8% 29.2% 29.7% 30.0% 30.2%

Noncontrolling Interest -0.9% -1.0% -0.5% -0.2% -0.2% -0.2% -0.2% -0.2% -0.2% -0.2% -0.2%NI to common shareholders 10.0% 21.2% 15.2% 23.5% 26.9% 27.1% 28.6% 29.0% 29.6% 29.8% 30.0%

NOI 53.6% 51.7% 49.6% 51.4% 53.5% 51.5% 51.5% 51.9% 52.3% 52.7% 53.0%

FFO 28.5% 35.0% 33.6% 39.5% 42.9% 41.5% 42.5% 43.1% 43.6% 44.0% 44.4%

Conclusion

Financial Condition Appendix

Key Financials and Ratios 2012 2013 2014 2015E 2016E 2017E 2018E 2019ETotal Revenue (1) $234.1 $273.5 $326.1 $369.6 $414.6 $452.9 $479.9 $504.1Net Operating Income (1) 120.2 146.3 168.0 190.4 215.1 236.8 252.7 267.4Net Profit Margin 23.8% 27.1% 27.3% 28.8% 29.2% 29.7% 30.0% 30.2%Operating Margin 34.0% 37.0% 35.7% 35.7% 36.0% 36.3% 36.5% 36.8%NOI Margin 51.4% 53.5% 51.5% 51.5% 51.9% 52.3% 52.7% 53.0%Interest Coverage 2.40x 3.16x 3.37x 3.73x 3.82x 3.93x 3.96x 4.00xLT Debt to Assets 0.49x 0.42x 0.45x 0.41x 0.40x 0.39x 0.38x 0.38xFFO / Share $3.14 $3.72 $3.96 $4.36 $4.67 $4.95 $5.12 $5.27Return on Equity 7.6% 8.5% 9.1% 9.0% 8.9% 8.9% 8.7% 8.6%(1) In USD 000,000s

Conclusion

Financial Condition Cont. Appendix

Financial Condition 2012 2013 2014 2015E 2016E 2017E 2018E 2019EProfitability

NOI Margin 51.4% 53.5% 51.5% 51.5% 51.9% 52.3% 52.7% 53.0%Operating Profit Margin 34.0% 37.0% 35.7% 35.7% 36.0% 36.3% 36.5% 36.8%Net Profit Margin 23.8% 27.1% 27.3% 28.8% 29.2% 29.7% 30.0% 30.2%Return on Assets 3.7% 4.7% 4.8% 5.1% 5.1% 5.2% 5.2% 5.2%Return on Equity 7.6% 8.5% 9.1% 9.0% 8.9% 8.9% 8.7% 8.6%

LiquidityCurrent Ratio 0.73x 0.58x 0.51x 0.61x 0.61x 0.61x 0.61x 0.61xCash Ratio 0.05x 0.22x 0.18x 0.22x 0.06x 0.22x 0.22x 0.22x

ActivityAccounts Receivable Turnover (2) 68.11 53.43 56.22 58.61 58.61 58.61 58.61 58.61Total Asset Turnover 0.16x 0.18x 0.18x 0.18x 0.18x 0.18x 0.17x 0.17xFixed Asset Turnover 0.17x 0.18x 0.18x 0.19x 0.18x 0.18x 0.18x 0.18x

Financial LeverageLong-term Debt to Assets 0.49x 0.42x 0.45x 0.41x 0.40x 0.39x 0.38x 0.38xLong-term Debt to Equity 0.96x 0.73x 0.82x 0.69x 0.67x 0.64x 0.63x 0.61xFinancial Leverage 2.04x 1.79x 1.90x 1.76x 1.73x 1.70x 1.68x 1.66xInterest Coverage 2.40x 3.16x 3.37x 3.73x 3.82x 3.93x 3.96x 4.00xDebt Service Coverage (3) 3.62x 4.57x 4.87x 5.39x 5.52x 5.65x 5.71x 5.77x

Shareholder RatiosFFO per Share $3.14 $3.72 $3.96 $4.36 $4.67 $4.95 $5.12 $5.27Dividend Payout Ratio (1) 57.3% 54.0% 67.1% 64.8% 64.5% 64.2% 64.0% 63.9%

(1) Payout Ratio against Funds from Operations

(2) Total Revenue / Accounts Receivable

(3) NOI / Interest Expense




Business Description1982

Founded

1985 Establishment of Uncle

Bob’s Self Storage

1995IPO on NYSE as a REIT

2014 Sovran Acquires 500th Property

1999Flex-a-Space System

Introduced

2011Introduced Solar Panel to Self-Storage Units

Appendix



Lack of Independence on Board

Board Member Career Background

Principal of Stampeed Capital LLC. Provides Real Estate Consulting Support

Arthur L. Havener

Mark G. Barberio Principal of Markapital, LLC, an M&A Consulting Firm

Independent Directors Appointed on January 21, 2015

Board Member Independent Tenure (Yrs)Robert J. Atta No 20Kenneth F Myszka No 20Anthony P. Gammie (1) Yes 20Charles E. Lannon (1) Yes 20Stephen R. Rusmisel Yes 3(1) Limited Independence

Appendix



Competitive Positioning Appendix

Competiting Positioning SSS EXR CUBE PSAMarket Capitalization $3.12B $7.71B $3.82B $34.03BNumber of Properties 521 1088 595 2,250Number of Square Feet 35,500,000 80,400,000 40,420,000 146,000,000Occupancy Rates 88.50% 90.50% 89.10% 93.50%Number of Acquisitions 33 51 52 44Third Party Management Parnerships 23 260 140 42Number of Joint Ventures 55 271 34 187Revenue $326.1M $657.1M $370.7M $2283.7MNOI $168.0M $404.1M $202.1M $1601.0MAs of December 31, 2014

Conclusion

Management

Executive Title Career with SovranRobert J. Atta, 72 Director, Chairman and Co-Founder 33 yrs.David L. Rogers, 58 CEO and Co-Founder 33 yrs.Kenneth F. Myszka, 65 President, COO and Co-Founder 33 yrs.Andrew J. Gregoire, 46 CFO and Secretary 17 yrs.Edward F. Killeen, 50 Executive VP: Real Estate Mgmt. 18 yrs.Paul T. Powell, 58 Executive VP: Real Estate Inv. 18 yrs.

Appendix

Experienced Management Team averaging more than 25 years experience

Successful navigation through multiple economic cycles

Conclusion

Insider HoldingsAppendix

Name PositionMarket Value (02/10/2015)

% of Shares

Robert J. Attea 231,029 21,788,345$ 0.68%Kenneth F. Myszka 223,476 21,076,022$ 0.66%David L. Rogers 149,676 14,115,944$ 0.46%Charles E. Lannon 114,239 10,773,880$ 0.34%Andrew J. Gregoire 42,061 3,966,773$ 0.12%Paul T. Powell 40,984 3,865,201$ 0.12%Edward F. Killeen 34,632 3,266,144$ 0.10%Anthony P. Gammie 18,953 1,787,457$ 0.06%Stephen R. Rusmisel 2,027 191,166$ 0.01%

Total 857,077 80,830,932$ 2.55%

Conclusion

UPREIT Structure Appendix

Transaction can be completed on a tax differed basis – receives units in the operating partnership

Enables the property owner to convert an interest in one or more specific properties into an interest in a larger and more balanced portfolio of properties held by the UPREIT

Conclusion

Sovran Ownership StructureAppendix

Conclusion

SWOTAppendix

Strengths: Brand Awareness Management Economies of Scale

Weaknesses: 40% of earnings driven from 2 states

Threats: Threat to pricing power through easier

information aggregation

Opportunities: Fragmented Markets Ancillary Revenue Expansion

Conclusion

Interest RatesAppendix

Conclusion

Cap Rates and BBB Corp. Bond Yield Spread HistoryAppendix

Conclusion

FED Dot Plot – March 2015 Appendix

Conclusion

Saturation Levels by State Appendix

State Number of

FacilitiesArea in Square

Feet2012

PopulationRentable Square

Footage Per PersonAlabama 1,042 49,807,600 4,842,196 10.29Alaska 135 6,453,000 732,814 8.81Arizona 883 42,207,400 6,523,478 6.47Arkansas 821 39,243,800 2,960,196 13.26California 4,013 191,821,400 37,707,477 5.09Colorado 986 47,130,800 5,160,251 9.13Connecticut 333 15,917,400 3,583,388 4.44Delaware 128 6,118,400 910,061 6.72District of Columbia 18 860,400 617,405 1.39Florida 2,721 130,063,800 19,016,069 6.84Georgia 1,633 78,057,400 9,858,142 7.92Hawaii 101 4,827,800 1,376,600 3.51Idaho 454 21,701,200 1,605,314 13.52Illinois 1,592 76,097,600 12,931,174 5.88Indiana 1,178 56,308,400 6,539,197 8.61Iowa 548 26,194,400 3,085,316 8.49Kansas 653 31,213,400 2,889,867 10.8Kentucky 632 30,209,600 4,390,111 6.88Louisiana 954 45,601,200 4,628,363 9.85Maine 309 14,770,200 1,339,870 11.02Maryland 528 25,238,400 5,838,730 4.32Massachusetts 554 26,481,200 6,606,895 4.01Michigan 1611 77,005,800 9,887,588 7.79Minnesota 861 41,155,800 5,371,280 7.66Mississippi 648 30,974,400 3,002,948 10.31Missouri 1,311 62,665,800 6,054,543 10.35Montana 443 21,175,400 1,009,397 20.98Nebraska 368 17,590,400 1,856,412 9.48

State Number of

FacilitiesArea in Square

Feet2012

PopulationRentable Square

Footage Per PersonNevada 450 21,510,000 2,757,217 7.8New Hampshire 257 12,284,600 1,326,680 9.26New Jersey 714 34,129,200 8,830,455 3.86New Mexico 509 24,330,200 2,104,755 11.56New York 1403 67,063,400 19,532,811 3.43North Carolina 1890 90,342,000 9,759,332 9.26North Dakota 138 6,596,400 692,887 9.52Ohio 1853 88,573,400 11,590,198 7.64Oklahoma 971 46,413,800 3,811,191 12.18Oregon 777 37,140,600 3,899,159 9.53Pennsylvania 1,629 77,866,200 12,807,296 6.08Rhode Island 102 4,875,600 1,049,634 4.65South Carolina 852 40,725,600 4,739,840 8.59South Dakota 204 9,751,200 834,517 11.68Tennessee 1,295 61,901,000 6,451,693 9.59Texas 4735 226,333,000 25,906,038 8.74Utah 560 26,768,000 2,855,070 9.38Vermont 165 7,887,000 632,877 12.46Virginia 1086 51,910,800 8,142,122 6.38Washington 1339 64,004,200 6,878,781 9.3West Virginia 335 16,013,000 1,875,033 8.54Wisconsin 1220 58,316,000 5,745,625 10.15Wyoming 209 9,990,200 580,724 17.2 Total: 48151 2,301,617,800 313,129,017 7.35

Conclusion

Self Storage Facility Growth Appendix

Year FacilitiesAnnual Growth Annual %

2015E 52,754 678 1.30%2014E 52,076 668 1.30%2013E 51,408 684 1.35%2012 50,724 676 1.35%2011 50,048 692 1.40%2010 49,356 635 1.30%2009 48,721 1,207 2.54%2008 47,514 2,540 5.65%2007 44,974 2,007 4.67%2006 42,967 1,845 4.49%2005 41,122 2,305 5.94%

Conclusion

Beta Analysis

Beta Analysis SSS CUBE EXR PSA5Y Monthly Beta S&P 0.84 1.07 0.95 0.77

R-Squared 0.24 0.31 0.32 0.32Standard Error 0.194 0.211 0.182 0.148

5Y Monthly Beta RMZ 0.98 1.19 1.03 0.92R-Squared 0.57 0.64 0.63 0.77Standard Error 0.113 0.117 0.104 0.067

3Y Weekly Beta S&P 0.90 0.87 0.88 0.75R-Squared 0.25 0.25 0.27 0.27Standard Error 0.125 0.124 0.117 0.099

3Y Weekly Beta RMZ 1.00 0.89 1.00 0.89R-Squared 0.53 0.43 0.59 0.65Standard Error 0.076 0.082 0.067 0.053

Average of S&P 500 5Y & 3Y Betas 0.87 0.97 0.92 0.76Average of RMZ 5Y & 3Y Betas 0.99 1.04 1.01 0.91

Appendix

Conclusion

Treasury Stock Method Diluted Shares Out.Appendix

Diluted Shares Outstanding - Treasury Stock MethodAssumptionsCurrent Share Price (04/02/2015) $93.95Basic Shares Outstanding (As of 10/31/2014 via Q3 2014 10-Q) 34,105,955In-the-Money Options (As of 12/31/2014)

2005 Award and Option Plan 82,6062009 Outside Directors' Stock Option and Award Plan 29,0001995 Outside Directors' Stock Option Plan 4,000Stock Based Compensation Stock Options Oustanding 115,606

Weighted Average Exercise Price2005 Award and Option Plan $45.752009 Outside Directors' Stock Option and Award Plan $56.311995 Outside Directors' Stock Option Plan $49.65Stock Based Compensation Stock Options Oustanding $48.54

Options Proceeds2005 Award and Option Plan $3,779,2252009 Outside Directors' Stock Option and Award Plan $1,632,9901995 Outside Directors' Stock Option Plan $198,600Stock Based Compensation Stock Options Oustanding $5,611,515

Total Options Proceeds $11,222,330Shares Repurchased from Options Proceeds 119,450

Shares from In-the-Money Options 231,212Less: Shares Repurchased from Options Proceeds (119,450)Net New shares from Options 111,762

Plus: Basic Shares Outstanding 34,105,955Fully Diluted Shares Outstanding 34,217,717

Conclusion

Economic Value Added

Economic Value AddedEVA=NOI-Opportunity Cost; Opportunity Cost=WACC*Capital; ROI=NOI/Capital

FYE 2009 2010 2011 2012 2013NOI $121.20 $115.77 $126.28 $153.48 $183.16WACC (1) 8.42% 8.42% 8.42% 8.42% 8.42%Total Capital 1,129.70 1,131.06 1,291.71 1,428.69 1,504.49Opportunity Cost $95.12 $95.24 $108.76 $120.30 $126.68

EVA $26.08 $20.53 $17.51 $33.18 $56.48

ROI 10.73% 10.24% 9.78% 10.74% 12.17%Total Capital

Total IBD 492.70 499.48 636.17 699.96 633.78Total SE 637.00 631.58 655.54 728.73 870.71

Total $1,129.7 $1,131.1 $1,291.7 $1,428.7 $1,504.5(1) Derived from first two years of SSS's two-tired WACC calculation

Appendix

Conclusion

State 2011 2012 2013 2014Texas 112 114 117 133Florida 59 67 68 72New York 28 28 34 35Georgia 24 29 30 30New Jersey 22 22 21 29Ohio 23 24 23 23Alabama 25 24 22 22North Carolina 18 20 25 20Virginia 19 20 19 19Louisiana 14 15 16 17Mississippi 14 15 15 15Missouri 8 8 8 15Illinois 0 10 10 13Massachusetts 12 12 13 13Arizona 9 10 10 10Pennsylvania 7 7 7 9Connecticut 5 5 8 8South Carolina 8 8 8 8Colorado 4 4 5 5Tennessee 4 4 4 5Maine 2 2 2 4New Hampshire 4 4 4 4Rhode Island 4 4 4 4Maryland 4 3 3 3Kentucky 2 2 2 2Michigan 4 0 0 0

Totals 435 461 478 518

Properties Appendix

State 2014Texas 16New Jersey 8Missouri 7Florida 4Illinois 3Pennsylvania 2Maine 2Louisiana 1Tennessee 1New York 1

Totals (1) 45(1) Divested 5 North Carolina

Poperties in 2014

Conclusion

Industry OverviewAppendix

20032004

20052006

20072008

20092010

20112012

201323.0

24.0

25.0

26.0

27.0

28.0

29.0

30.0

First Marriage by Age

MenWomen

Conclusion

Debt Schedule and SWAPS

2020 Term Note Fixed by Following SWAP AgreementsAmount Effective Date Expiration Date Fixed Rate

125,000,000$ Sept. - 1 - 2011 Aug. - 1 -2018 2.3700%100,000,000$ Dec - 30 - 2011 Dec. 29 - 2017 1.6125%100,000,000$ Sept. - 4 - 2013 Sept. - 4 - 2018 1.3710%

125,000,000$ Dec. 29 - 2017 Nov. - 29 - 2019 3.9680%100,000,000$ Aug. - 1 -2018 Jun. - 1 - 2020 4.1930%

Appendix

Description Principal Due (USD)

Coupon/Base Rate Floating Rate Maturity Secured Other

2016 Term Note 150,000,000$ 6.38% - Apr -13-2016 NoInterest Rate Increases to 8.13% if Credit Rating Downgraded.

*2020 Term Note 325,000,000$ - LIBOR + 1.4 Jun - 4 - 2020 No Facility Fee of 0.20

2021 Term Note 100,000,000$ 5.54% - Aug - 5- 2021 NoInterest Rate Increases to 7.29% if Credit Rating Downgraded

2024 Term Note 175,000,000$ 4.53% - Apr - 8 - 2014 No

Interest Rate Increases to 6.268% if Credit Rating Downgraded

Mortgage Notes 2,160,000$ 5.99% - May - 1 - 2026 Yes

Revolving Line of Credit

$49,000 Outstanding as of Q4 $251,000,000 Available on Line - LIBOR + 1.3 Dec - 10 - 2019 No Facility Fee of 0.20

*NOTE: 2020 term not fixed via Interst Rate SWAPS

Conclusion

Revenue Growth BreakdownAppendix

The majority of revenue growth will be fueled by acquisitions

Average annual occupancy rates will peak at 91%

Ancillary Revenue will account for 10.6% of revenue in 2019.

Revenue Growth Breakdown 2015E 2016E 2017E 2018E 2019EIncrease in Occupancy Rates 1.0% 0.5% 0.5% 0.3% 0.3%Increase in Sales per Square Ft. 6.0% 5.4% 3.8% 1.5% 1.0%Increase in Total Square Ft. 5.8% 6.0% 4.5% 3.5% 3.0%

Rental Revenue Growth 12.8% 11.9% 8.8% 5.3% 4.3%Ancilliary Revenue Growth 20.0% 15.0% 15.0% 12.5% 12.5%

Total Revenue Growth 13.3% 12.2% 9.3% 6.0% 5.1%

Conclusion

Long-Term Risk Free RateAppendix

The risk free rate and intrinsic value are negatively correlated As a main factor in both the Cost of Equity and Cost of Debt, the

model is sensitive to changes in the Long-Term Risk Free Rate Changes in this rate do not affect our HOLD recommendation

UST 10 Year normalized

Percentage change in rate

Weighted Average Intrinsic

Precentage change in value Recommendation

Return from Stock

2.50% 28.57% $ 99.92 -5.36% Hold 6.35%3.00% 14.29% $ 97.41 -2.71% Hold 3.68%3.50% 0.00% $ 94.84 0.00% Hold 0.95%4.00% -14.29% $ 92.57 2.39% Hold -1.47%4.50% -28.57% $ 90.29 4.80% Hold -3.90%

Conclusion

Assumed Cap Rate Appendix

Although this demonstrates sensitivity, our recommendation remains constant for the majority of possible outcomes

A significant drop in cap rate will cause property values to rise, changing our recommendation to a BUY

Our cap rate of 5.25% was calculated using definitions from published industry research, company guidance, and historical trend analysis

Terminal Cap Rate

Percentage change in rate

Weighted Average Intrinsic

Precentage change in value Recommendation

Return from Stock

5.50% -8.33% $ 103.12 -8.73% Hold 9.76%5.75% -4.17% $ 98.84 -4.22% Hold 5.20%6.00% 0.00% $ 94.84 0.00% Hold 0.95%6.25% 4.17% $ 91.22 3.82% Hold -2.91%6.50% 8.33% $ 87.95 7.26% Hold -6.39%

Conclusion

Monte Carlo Factors Appendix

Factor The Factor Effects Parameters Explanation2015 x: 89.0% s: 1.63%2016 x: 89.5% s: 1.63%2017 x: 90.0% s: 1.63%2018 x: 90.2% s: 1.63%2019 x: 90.5% s: 1.63%2015 x: $10.2 s: $0.622016 x: $10.7 s: $0.622017 x: $11.1 s: $0.622018 x: $11.3 s: $0.622019 x: $11.4 s: $0.622015 x: 5.7% s: 2.0%2016 x: 6.0% s: 2.0%2017 x: 4.5% s: 2.0%2018 x: 3.5% s: 2.0%2019 x: 3.0% s: 2.0%x: 8.32%s: 1.15%x: 8.48%

s: 1.15%

x: 6.00%

s: 0.46%

This accounts for sensitivity of shifts in industry characteristics, the largest average occupancy rate considered is

93%

Occupancy Rate Total Revenue

This allows for sensitivity in changes of industry supply and demand

characteristics affecting SSS’s pricing power

Sales per square foot Total Revenue

Net Growth Rate in square feet

Total RevenueThis increases the sensitivity of the model by allowing year-over-year

expected total square foot changes

Terminal Capitalization Rate Terminal Value

We are 95% confident that the terminal cap rate will be between 5.08% and 6.92%

1st Tier WACC Cost of Capital This increases sensitivity to short term changes in interest rates

2nd Tier WACC Cost of CapitalThis increases sensitivity to the forecasted long-term normalized value of interest rates

Conclusion

Monte Carlo Buy ScenarioAppendix

53.4%46.5%.1%

Simulation DataMean 110.06$ SD 10.60$ 5th Percentile 93.87$ 95th Percentile 128.82$

Conclusion

Monte Carlo Factors (Buy Scenario)Appendix

Factor The Factor Effects Parameters Explanation2015 x: 89.0% s: 1.63%2016 x: 90.0% s: 1.63%2017 x: 91.0% s: 1.63%2018 x: 91.5% s: 1.63%2019 x: 92.0% s: 1.63%2015 x: $10.4 s: $0.62

2016 x: $10.9 s: $0.62

2017 x: $11.4 s: $0.622018 x: $11.9 s: $0.622019 x: $12.2 s: $0.622015 x: 7.0% s: 2.0%2016 x: 6.5% s: 2.0%2017 x: 5.5% s: 2.0%2018 x: 4.5% s: 2.0%2019 x: 3.5% s: 2.0%x: 8.32%s: 1.15%x: 8.48%s: 1.15%x: 5.75%s: 0.46%

This accounts for sensitivity of shifts in industry characteristics, the largest average occupancy

rate considered is 93%

Sales per square foot Total RevenueThis allows for sensitivity in changes of

industry supply and demand characteristics affecting SSS’s pricing power

Net Growth Rate in square feet

Total RevenueThis increases the sensitivity of the model by allowing year-over-year expected total square

foot changes

Occupancy Rate Total Revenue

Terminal Capitalization Rate

Terminal Value We are 95% confident that the terminal cap rate will be between 5.08% and 6.92%

1st Tier WACC Cost of Capital This increases sensitivity to short term changes in interest rates

2nd Tier WACC Cost of Capital This increases sensitivity to the forecasted long-term normalized value of interest rates

Conclusion

Cap Rate Assumptions Appendix

Date Cap Rate 10 Year SpreadOct-98 10.1% 4.75% 5.4%Oct-99 10.0% 6.0% 4.0%Oct-00 10.1% 5.8% 4.3%Oct-01 9.3% 4.3% 5.0%Oct-02 9.1% 3.7% 5.4%Oct-03 7.8% 4.1% 3.7%Oct-04 7.0% 4.2% 2.8%Oct-05 6.6% 4.5% 2.1%Oct-06 5.75% 4.8% 1.0%Oct-07 6.1% 4.7% 1.4%Oct-08 7.0% 4.1% 2.9%Oct-09 7.6% 3.5% 4.1%Oct-10 6.7% 2.6% 4.1%Oct-11 6.9% 2.2% 4.7%Oct-12 6.2% 1.9% 4.3%Oct-13 6.2% 2.7% 3.5%Oct-14 6.1% 2.6% 3.5%Dec-14 5.7% 2.1% 3.6%

Historical Spread Less Outliers3.7%2.8%2.1%4.1%4.1%4.7%4.3%3.5%3.5%

Avg 3.0%Terminal 10 Yr - 3.0% 6.0%



Relative Valuation Appendix

EV to EBITDA Valuation ($ in Millions)Mean EV / EBITDA Multiple 24.4xLTM EBITDA $170.2

Enterprise Value $4,156.7Less: Debt $762.6Less: Minority Interest $12.9

Equity Value $3,381.1Fully Diluted Shares Outstanding 34.2M

Intrinsic Value per Share $98.81

Current Trading Price (04-02-2015) $93.95Premium (Discount) to Valuation 5.2%

Price to FFO / Share Valuation ($ in Millions)Mean P / FFO Figure 24.3xLTM FFO / Share $4.0

Equity Value $97.13

Current Trading Price (04-02-2015) $93.95Premium (Discount) to Valuation 3.4%



MultiplesAppendix

CompanyEnt. Val.

(M)EV /

EBITDA P / FFOEV / Rev

Debt / EBITDA

Price / NOI

P / Tang BV

Dividend Yield

SSS $3,957.4 23.3x 23.5x 14.5x 4.8x 22.1x 3.3x 3.3%CUBE $5,077.5 25.1x 22.9x 13.7x 5.8x 21.6x 3.0x 2.7%EXR $10,266.4 25.4x 26.3x 15.6x 5.9x 24.0x 4.4x 3.0%PSA $38,284.7 23.9x 24.5x 16.8x 2.7x 25.0x 7.1x 2.8%

Mean 24.4x 24.3x 15.1x 4.8x 23.2x 4.5x 3.0%Median 24.5x 24.0x 15.0x 5.3x 23.0x 3.9x 2.9%

Conclusion

Company FFO Calculations

SOVRAN Calculation of FFO Nine Months Ended9/30/2014

Net Income attributable to common shareholders 62,838$ Net Income attributable to noncontrolling interest 381 Depreciation of realestate and amortization of intangible assets 37,097 Depreciation of realestate included in discontinued operations - Depreciation and amortization from unconsolidated joint ventures 1,166 (Gain) on sale of realestate (1,777)

Funds from Operations allocable to noncontrolling redeemable Operating Partnership Units (601) FFO available to common shareholders 99,104$

SSS and EXR use NAREIT definition of FFO

PSA does not include operating partnership units in calculation. Prefers using their own “Core FFO” Calculation

CUBE does not use NAREIT Definition

Appendix

Conclusion

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SSS CUBE EXRStandard Deviation 2 Years Ago 19.24% 20.32% 18.35%Standard Deviation Last Full Year 15.59% 17.07% 15.45%

PSA GSPC RMZStandard Deviation 2 Years Ago 15.29% 11.59% 18.50%Standard Deviation Last Full Year 12.89% 11.60% 20.68%

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