Marcus & Millichap's Mele Storage Group Responds to Wall Street Journal Article

TAMPA, FL – June 6, 2007 – The Wall Street Journal published an article last month that got the full attention of the self-storage industry. The article, entitled "Self-Storage REITs Lose Heat" chronicled the rise and fall of what it called a "tiny niche of real estate investment trusts in the self-storage sector."

"A recent Wall Street Journal article reported that self-storage REITs are showing some softness. Same-store growth in net operating income declined a few percentage points, " said Michael A. Mele, Senior Investment Associate at Marcus & Millichap’s Mele Storage Group. "That may be true, but that doesn’t mean that there aren't still solid investments in the market. It just means investors of all sizes need to be more cautious about their acquisitions."

The Journal cited numbers from BMO Capital Markets that noted the success of the big four public self-storage REITs in recent years. Specifically, shareholder returns of 26.7% during 2005 outperformed the REIT industry overall. But during the first quarter of 2007, the Journal reported, most of the REITs reported declines. According to BMO Capital Markets, same-store growth in net operating income for the four publicly traded storage REITs declined to 3.7% during the first quarter of 2007 from 6.6% in the year-ago period.

After interviewing various players in the industry, the Wall Street Journal reporter concluded that no one is quite sure why this is happening. Sovran, for one, attributed part of its dropping occupancy levels to a housing market slow down. It's also possible, Mele noted, that would-be self-storage tenants are reevaluating their spending in light of higher gas prices, higher taxes and higher insurance rates in some parts of the country.

The way Mele sees it, however, location is still king. Although same-store growth in net operating income declined for the REITs, these publicly traded investment trusts make up only 11.6% of the self-storage industry's facilities, as the Journal rightly reported. Well-located properties are still performing well, especially in strategic markets like Florida, Mele noted.

"We have seen slowdowns in Florida before, but the market always bounces back as growth catches up. High-growth states like Florida, therefore, remain strong long-term prospects for self-storage investors," said Mele, who is also president of the Florida Self Storage Association. "Still, investors should look for conditions to get worse before they get better because there is a backlog of new development in the self-storage development pipeline. Now, more than ever, you need a competent broker to depend on when buying and selling."

About The Mele Storage Group
Led by East Coast Self Storage Specialist Michael A. Mele, The Mele Storage Group has sold over 70 self-storage properties totaling over $300 million in sales. Mele has over $150 million in Active and Under Contract listings and a database of approximately 5,000 buyers seeking to expand their self-storage portfolios on the East Coast. Mele closed more than $86 million in self-storage sales in 2006 alone. Each member of the group is a specialist in the fields of financial analysis, market research, contract management and marketing.

About Marcus & Millichap
With more than 1,100 investment professionals in offices nationwide, Encino, Calif.-based Marcus & Millichap is the largest commercial real estate brokerage in the nation focusing exclusively on real estate investments. In 2006, the firm closed more than $22 billion in transactions. Founded in 1971, the firm has perfected a powerful system for marketing properties that combines product specialization; local market expertise; the industry's most comprehensive research and analysis capabilities; state-of-the-art technology; and established relationships with the largest pool of qualified investors nationally.

PR Contacts:

Self Storage Promotions
Jennifer LeClaire
1913 S. Ocean Drive, Suite 237
Hallandale Beach, Fla. 33009
jennifer@selfstoragepromotions.com
954.454.0072

Mele Storage Group
Darlina Conto
7650 Courtney Campbell Cswy., Suite 920
Tampa, FL 33607
Dconto@marcusmillichap.com
813.287.9777, ext. 187