Macquarie Self Storage Pricing Survey

Please refer to the important disclosures and analyst certification on inside back cover of this document, or on our
website www.macquarie.com.au/disclosures.
UNITED STATES

Analyst(s)
Shahzeb Zakaria
+1 212 231 0647 shahzeb.zakaria@macquarie.com
Venkat Kommineni
+1212 231 8065 venkat.kommineni@macquarie.com

10 April 2014
Macquarie Capital (USA) Inc.

The Self Storage Spiderman
1Q14: EXR Leads on Pricing & Occupancy
QoQ Change:
Net rents: During 1Q14, EXR led the REITs with a +0.7% QoQ change in its avg.
net rent index, followed by CUBE (-0.3%), SSS (-1.0%) & PSA (-1.8%).
Occupancy: During 1Q14, EXR led the REITs with a +1.2% QoQ change in its
avg. occupancy index, followed by SSS (+0.9%), CUBE (+0.7%) and PSA (-0.9%)
(please read note regarding CUBEs occupancy index).
QoQ in Occupancy and Net Rent

Note: PSA sends out rent increase letters to existing customers between Feb and August
Source: Company data, Macquarie Capital (USA), April 2014
MoM Change:
Net rent: During Mar-14, EXR led the REITs with a +5.9% MoM change in its avg.
net rent index, followed by PSA (+3.7%), SSS (+3.3%) & CUBE (-0.0%).
Occupancy: During Mar-14, SSS led the REITs with a +2.3% MoM change in its
avg. occupancy, followed by PSA (+2.2%), EXR (+2.1%) and CUBE (+1.6%)
(please read note on page 3 regarding CUBEs occupancy index).
Current construction levels have minimal impact:
Given the strong MoM occupancy gains (across the board) in March, it appears
that the spring selling season is off to a solid start (post weather impacted months
of Dec/Jan that might have impacted MoM comparisons).
Over the last few months, the value of mini-storage construction (as reported by
U.S. Census Bureau) has invariably been revised downwards, following the
preliminary estimate.
Moreover, construction spending (on TTM basis) has been relatively flat over the
last 10 months.
We estimate that in the 1-yr ended Feb-14, self storage sqf stock grew by ~0.5%,
well below the ~1.6% avg. from July-97 to July-09 (our current estimate of 0.5% is
biased upwards; please read our construction monitor for details).
We think the level of new demand (driven by population growth in the age cohort 18+
along with general economic activity) is outpacing the current level of new supply.
Consequently, storage REIT fundamentals, as exhibited in pricing and occupancy
trends in Fig 8, remain robust. Our estimate and TP revisions (see Fig 16) are
primarily driven by more optimistic internal growth assumptions.
Fun fact: Most exp. storage unit in our survey is PSAs 60x60 uncovered parking
spot in Aurora, CO that rents (online) for $6,889/mo. (Promo: 1
st
mo. rent $1).
Tracked
Datapoints
Datapoints
Rented Out
% change in
Occupancy Net Rent Index
% change in
Net Rent
4Q13 1Q14 4Q13 1Q14
CUBE 7,119 4,628 4,677 0.7% 100.8 100.4 (0.3%)
EXR 22,967 12,445 12,721 1.2% 97.6 98.3 0.7%
PSA 28,569 12,480 12,223 (0.9%) 86.2 84.6 (1.8%)
SSS 12,224 6,731 6,842 0.9% 102.9 101.8 (1.0%)
Macquarie (USA) Research The Self Storage Spiderman
10 April 2014 2
Our survey over-estimated the sequential decline in occupancy for 4Q13 (vs 3Q13).
Fig 1 Our survey over-estimated the decline in occupancy

Our survey estimates the net rent change for new customers whereas the REITs report a combined
net rent figure for both new & existing customers. PSA discloses move-in rates for new customers but
the company reported the annual figure in the latest 10-K (vs the quarterly fig in the 10-Qs). Since the
customer turnover for PSA in 4Q is difficult to est., we refrain from using an implied 4Q13 move-in fig.
Fig 2 Surveys rent est. for NEW customers vs REIT reported fig for new & existing cust.

Note: CUBEs rent/occup. sqf figs are from 4Q13 supplemental; 3Q13 supp lists a diff figure (same store pool changed)
Using the between our survey & REIT reported figs, we have estimated the QoQ changes for 1Q14.
Fig 3 1Q14 versus 4Q13

Please note, these are sequential (QoQ) projections (using daily averages for rents and
occupancy) and will likely be much different from the YoY comparisons reported by the REITs.
Fig 4 Sequential change in rents & occupancy (adding the est. diff. from 4Q13 data)

Note: PSA sends out rent increase letters to existing
customers between Feb and August. As a result,
PSAs sequential increase in net rents is likely higher
than the fig in the left exhibit.
CUBE/EXR/SSS send out rent increase letters to
existing customers throughout the year (impacts
turnover of existing customers).
Please read note regarding CUBEs occupancy index
(on pg 3).

Tracked
Datapoints
Datapoints
Rented Out %
SS Avg Occupancy
(%) % Diff
Q3 Q4 Q3 Q4
CUBE 7,119 4,813 4,628 (2.6%) 90.0 88.9 (1.2%) 1.4%
EXR 22,967 13,281 12,445 (3.6%) 91.1 89.7 (1.5%) 2.1%
PSA 28,569 13,182 12,480 (2.5%) 94.4 93.0 (1.5%) 1.0%
SSS 12,224 7,203 6,731 (3.9%) 90.9 89.5 (1.5%) 2.3%
Macq. Net
Rent Index %
Rent / Occup. Sqf
(co. reported) % Diff
Turnover
in 4Q
Rent Increase to
Existing Customers
Q3 Q4 Q3 Q4 Period Increase
CUBE 102.5 100.8 (1.7%) 12.63 12.74 0.9% 2.6% ~23% 5-12-12 +8% to +9%
EXR 100.0 97.6 (2.5%) 14.33 14.39 0.4% 2.9% ~23% 5-9-9 +8% to +9%
PSA 91.3 86.2 (5.6%) 14.46 14.41 (0.3%) 5.3% < 23% Feb-Aug avg ~8.5%
SSS 104.6 102.9 (1.6%) 11.07 11.02 (0.5%) 1.2% ~23% ~8-12-12 avg ~9%
Tracked
Datapoints
Datapoints
Rented Out %
Diff from
4Q
Est.
Occup.
Q4 Q1
CUBE 7,119 4,628 4,677 0.7% 1.4% 2.1%
EXR 22,967 12,445 12,721 1.2% 2.1% 3.3%
PSA 28,569 12,480 12,223 (0.9%) 1.0% 0.1%
SSS 12,224 6,731 6,842 0.9% 2.3% 3.2%
Macq. Net Rent Index %
Diff from
4Q
Est. Net
Rent
4Q13 1Q14
CUBE 100.8 100.4 (0.3%) 2.6% 2.3%
EXR 97.6 98.3 0.7% 2.9% 3.6%
PSA 86.2 84.6 (1.8%) 5.3% 3.5%
SSS 102.9 101.8 (1.0%) 1.2% 0.2%
Est. Net
Rent
Est.
Occupancy
Total
Change
1Q14
CUBE 2.3% 2.1% 4.4%
EXR 3.6% 3.3% 7.0%
PSA 3.5% 0.1% 3.5%
SSS 0.2% 3.2% 3.4%
10 April 2014 3
4Q13 Scorecard
While we do not think our survey can predict same store revenue and occupancy figures, we
do expect our survey to be indicative of trends.
Fig 5 Macq Street Rate Index versus REIT reported rent / occupied sqf

The above table summarizes the changes in street rates (which only impact new customers) as
measured by our net rent index, along with the company reported rent / occupied sqf figures (for the
same store portfolios).
We also provide details around portfolio turnover (Macq. estimates) and rent increases to existing
customers (5-12-12 means the customer is eligible for a rent increase after 5 months of lease
commencement, followed by re-eligibility after every 12 months of the previous increase).
Noteworthy points:
CUBE Occupancy Index: CUBE removes (and adds back) units from its website, even though those
units are not rented out, as the company charges a higher rent to walk-in customers. As a result, in the
short term, CUBEs occupancy index is impacted by removal or addition of these units from the
website. However, over the long term, the occupancy index will be directionally correct.
Our occupancy index is based on unit changes at all facilities in our database (includes facilities
that are not part of the same store pool).
The occupancy index is based on changes in the number of unique datapoints available for rent.
Currently, the index does not represent a weighted average change in the # of available datapoints
(where a datapoint for a 10 x 10 unit has more weight than one for a 7 x 7 unit or a datapoint that is
likely to represent a smaller number of units (and revenue) at the facility).
Impact of Lease Structure on Vacate Pattern
Our occupancy indices for PSA and SSS, as presented in Fig 8, exhibit a cyclical pattern as those
companies structure their leases such that the anniversary date falls on the 1
st
calendar day of the
month. As a result, these companies experience a disproportionately large number of vacates towards
month end (relative to other times of the month). And since our web-spiders download pricing data at
around 6 am EST each morning, we end up reflecting occupancy and pricing changes for the last day
of the month on the 1
st
of the following month (explains the immediate dip in occupancy at the
beginning of the month).
EXR and CUBE structure their leases such that the anniversary date is 1 month from the lease start
date. Consequently, these companies do not experience the same vacate pattern towards month end
as experienced by PSA and SSS (visible in Fig 8 for EXR).

Macq. Net
Rent Index %
Rent / Occup. Sqf
(co. reported) % Diff
Turnover
in 4Q
Rent Increase to
Existing Customers
Q3 Q4 Q3 Q4 Period Increase
CUBE 102.5 100.8 (1.7%) 12.63 12.74 0.9% 2.6% ~23% 5-12-12 +8% to +9%
EXR 100.0 97.6 (2.5%) 14.33 14.39 0.4% 2.9% ~23% 5-9-9 +8% to +9%
PSA 91.3 86.2 (5.6%) 14.46 14.41 (0.3%) 5.3% < 23% Feb-Aug avg ~8.5%
SSS 104.6 102.9 (1.6%) 11.07 11.02 (0.5%) 1.2% ~23% ~8-12-12 avg ~9%
10 April 2014 4
Fig 6 Net Rent Index MoM Change Fig 7 Occupancy Index MoM Change

Please read note on pg3 regarding CUBEs occupancy index

Fig 8 Net Rent and Occupancy Indices - By Company



5.9%
3.7%
3.3%
(0.0%)
(1.0%)
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
EXR PSA SSS CUBE
Avg. Net Rent Index MoM (% change)
2.3%
2.2%
2.1%
1.6%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
SSS PSA EXR CUBE
Avg. Occupancy Index MoM (% change)
85.0
90.0
95.0
100.0
105.0
110.0
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CUBE - Net Rent Index CUBE - Occupancy Index
90.0
92.0
94.0
96.0
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110.0
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EXR - Net Rent Index EXR - Occupancy Index
70.0
75.0
80.0
85.0
90.0
95.0
100.0
105.0
110.0
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PSA - Net Rent Index PSA - Occupancy Index
80.0
85.0
90.0
95.0
100.0
105.0
110.0
6
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SSS - Net Rent Index SSS - Occupancy Index
10 April 2014 5
Fig 9 Net Rent Index Fig 10 Occupancy Index


Fig 11 Promotions offered on data points available for rent on website


75.0
80.0
85.0
90.0
95.0
100.0
105.0
110.0
115.0
6
/
3
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t

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n
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x
CUBE EXR PSA SSS
85.0
90.0
95.0
100.0
105.0
110.0
6
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CUBE EXR PSA SSS
First Month Half
Off
First Month Free
-
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
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CUBE
None First Month Half Off First Month Free
2 Months Half Off 3 Months Half Off 2 Months Free
First Month Half
Off
First Month
Free
-
10%
20%
30%
40%
50%
60%
70%
7
/
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EXR
Act fast: 1 unit left! Act fast: Limited units First Month Half Off
First Month Free 50% Off 1st 3 Months Two Months Free
None
-
10%
20%
30%
40%
50%
60%
70%
80%
90%
7
/
1
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PSA
$1 first month rent 50% off first month rent No Special
-
5%
10%
15%
20%
25%
30%
35%
40%
45%
7
/
1
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/
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0
3
/
2
4
SSS
One Left
Next Month
50% Off
Next Month
Free
None
10 April 2014 6
Initial revenue assumed to be 100 at 6/30/2013
Daily change in revenue:
If Occupancy index increases, the change is multiplied by the Net Rent Index from the previous
day.
If Occupancy decreases, the change is multiplied by 100 (in future, this will be switched to the net
rent index from 13 months ago avg length of customer stay).
Weighted daily change in revenue:
Daily change in revenue is multiplied by 0.25% (= 12 / (365*13) or the avg daily turnover). This is
done to normalize changes.
Current day revenue = Weighted daily change in revenue + Previous day revenue.
Total revenue for July indexed at 100 for all companies.
This methodology does not fully account for rent increases to existing customers.

Fig 12 Total Revenue Index


95.0
96.0
97.0
98.0
99.0
100.0
101.0
Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14
CUBE
95.0
96.0
97.0
98.0
99.0
100.0
101.0
EXR
95.0
96.0
97.0
98.0
99.0
100.0
101.0
PSA
95.0
96.0
97.0
98.0
99.0
100.0
101.0
SSS
10 April 2014 7
Fig 13 Distribution of Daily Net Rent Changes

Note: Stats for time period from 1/1/2014 to 3/31/2014

0%
0%
2%
37%
10%
10%
38%
2%
0%
0%
0% 5% 10% 15% 20% 25% 30% 35% 40%
> 35%
35%-to-25%
25%-to-15%
15%-to-5%
5%-to-0%
0%-to-(5%)
(5%)-to-(15%)
(15%)-to-(25%)
(25%)-to-(35%)
< (35%)
CUBE
Distribution of Daily Pricing Changes
0%
0%
8%
6%
41%
31%
8%
5%
0%
0%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
> 35%
35%-to-25%
25%-to-15%
15%-to-5%
5%-to-0%
0%-to-(5%)
(5%)-to-(15%)
(15%)-to-(25%)
(25%)-to-(35%)
< (35%)
EXR
0%
0%
3%
17%
30%
29%
18%
2%
0%
0%
0% 5% 10% 15% 20% 25% 30% 35%
> 35%
35%-to-25%
25%-to-15%
15%-to-5%
5%-to-0%
0%-to-(5%)
(5%)-to-(15%)
(15%)-to-(25%)
(25%)-to-(35%)
< (35%)
PSA
0%
0%
1%
8%
41%
39%
10%
0%
0%
0%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
> 35%
35%-to-25%
25%-to-15%
15%-to-5%
5%-to-0%
0%-to-(5%)
(5%)-to-(15%)
(15%)-to-(25%)
(25%)-to-(35%)
< (35%)
SSS
10 April 2014 8
Pricing by Geography
Fig 14 PSAs Net Rent Index by MSA (Top 10 MSAs)


Fig 15 PSAs Net Rent / sqf


Net Rent / sqf % Change
2014-2 2014-3
DENVER-AURORA-BROOMFIELD, CO 14.09 15.38 9.2%
SEATTLE-BELLEVUE-EVERETT, WA 14.40 15.22 5.7%
WASHINGTON-ARLINGTON-ALEXANDRIA, DC-VA-MD-WV 16.88 17.74 5.1%
ATLANTA-SANDY SPRINGS-MARIETTA, GA 10.24 10.70 4.4%
CHICAGO-JOLIET-NAPERVILLE, IL 11.87 12.32 3.8%
LOS ANGELES-LONG BEACH-GLENDALE, CA 17.79 18.35 3.2%
ORLANDO-KISSIMMEE-SANFORD, FL 10.39 10.63 2.3%
HOUSTON-SUGAR LAND-BAYTOWN, TX 11.80 11.91 0.9%
DALLAS-PLANO-IRVING, TX 11.79 11.87 0.7%
OAKLAND-FREMONT-HAYWARD, CA 17.68 17.68 0.0%
15.00
16.00
17.00
18.00
19.00
20.00
21.00
1/1 1/8 1/15 1/22 1/29 2/5 2/12 2/19 2/26 3/5 3/12 3/19 3/26
OAKLAND-FREMONT-HAYWARD, CA
MIAMI-MIAMI BEACH-KENDALL, FL
LOS ANGELES-LONG BEACH-GLENDALE, CA
SAN JOSE-SUNNYVALE-SANTA CLARA, CA
12.50
13.50
14.50
15.50
16.50
17.50
18.50
19.50
1/1 1/8 1/15 1/22 1/29 2/5 2/12 2/19 2/26 3/5 3/12 3/19 3/26
PORTLAND-VANCOUVER-HILLSBORO, OR-WA
SEATTLE-BELLEVUE-EVERETT, WA
SANTA ANA-ANAHEIM-IRVINE, CA
WASHINGTON-ARLINGTON-ALEXANDRIA, DC-VA-MD-WV
9.00
10.00
11.00
12.00
13.00
14.00
15.00
16.00
17.00
1/1 1/8 1/15 1/22 1/29 2/5 2/12 2/19 2/26 3/5 3/12 3/19 3/26
DALLAS-PLANO-IRVING, TX
CHICAGO-JOLIET-NAPERVILLE, IL
MINNEAPOLIS-ST. PAUL-BLOOMINGTON, MN-WI
DENVER-AURORA-BROOMFIELD, CO
9.00
9.50
10.00
10.50
11.00
11.50
12.00
12.50
1/1 1/8 1/15 1/22 1/29 2/5 2/12 2/19 2/26 3/5 3/12 3/19 3/26
ORLANDO-KISSIMMEE-SANFORD, FL
ATLANTA-SANDY SPRINGS-MARIETTA, GA
TAMPA-ST. PETERSBURG-CLEARWATER, FL
HOUSTON-SUGAR LAND-BAYTOWN, TX
10 April 2014 9
Our estimate revisions are primarily driven by more optimistic internal growth assumptions.
Fig 16 FFO/sh estimate and TP changes


FY2014 FY2015 FY2016 Target Price
New Old New Old New Old New Old
CUBE 1.04 1.03 1.15 1.14 1.27 1.26 18.50 18.25
EXR 2.50 2.45 2.85 2.76 3.12 3.03 52.50 51.00
PSA 8.21 8.17 8.83 8.73 9.51 9.36 183.00 179.00
SSS 4.20 4.19 4.67 4.67 5.07 5.06 78.00 77.00
10 April 2014 10
Important disclosures:
Recommendation definitions
Macquarie - Australia/New Zealand
Outperform return >3% in excess of benchmark return
Neutral return within 3% of benchmark return
Underperform return >3% below benchmark return

Benchmark return is determined by long term nominal
GDP growth plus 12 month forward market dividend yield
Macquarie Asia/Europe
Outperform expected return >+10%
Neutral expected return from -10% to +10%
Underperform expected return <-10%
Macquarie First South - South Africa
Outperform expected return >+10%
Neutral expected return from -10% to +10%
Underperform expected return <-10%
Macquarie - Canada
Outperform return >5% in excess of benchmark return
Neutral return within 5% of benchmark return
Underperform return >5% below benchmark return
Macquarie - USA
Outperform (Buy) return >5% in excess of Russell 3000
index return
Neutral (Hold) return within 5% of Russell 3000 index
return
Underperform (Sell) return >5% below Russell 3000
index return

Volatility index definition*
This is calculated from the volatility of historical price
movements.

Very highhighest risk Stock should be expected
to move up or down 60100% in a year investors
should be aware this stock is highly speculative.

High stock should be expected to move up or
down at least 4060% in a year investors should
be aware this stock could be speculative.

Medium stock should be expected to move up or
down at least 3040% in a year.

Lowmedium stock should be expected to move
up or down at least 2530% in a year.

Low stock should be expected to move up or
down at least 1525% in a year.
* Applicable to Asia/Australian/NZ/Canada stocks
only
Recommendations 12 months
Note: Quant recommendations may differ from
Fundamental Analyst recommendations
Financial definitions
All "Adjusted" data items have had the following
adjustments made:
Added back: goodwill amortisation, provision for
catastrophe reserves, IFRS derivatives & hedging, IFRS
impairments & IFRS interest expense
Excluded: non recurring items, asset revals, property
revals, appraisal value uplift, preference dividends &
minority interests

EPS = adjusted net profit / efpowa*
ROA = adjusted ebit / average total assets
ROA Banks/Insurance = adjusted net profit /average
total assets
ROE = adjusted net profit / average shareholders funds
Gross cashflow = adjusted net profit + depreciation
*equivalent fully paid ordinary weighted average number
of shares

All Reported numbers for Australian/NZ listed stocks are
modelled under IFRS (International Financial Reporting
Standards).

Recommendation proportions For quarter ending 31 March 2014
AU/NZ Asia RSA USA CA EUR
Outperform 51.32% 60.23% 41.25% 40.21% 58.52% 48.74% (for US coverage by MCUSA, 8.21% of stocks followed are investment banking clients)
Neutral 34.54% 24.97% 40.00% 53.19% 35.56% 32.77% (for US coverage by MCUSA, 6.67% of stocks followed are investment banking clients)
Underperform 14.14% 14.80% 18.75% 6.60% 5.92% 18.49% (for US coverage by MCUSA, 0.00% of stocks followed are investment banking clients)

CUBE US vs MSCI US REIT Index, & rec
history

(all figures in USD currency unless noted)

EXR US vs MSCI US REIT Index, & rec
history


SSS US vs MSCI US REIT Index, & rec
history


PSA US vs MSCI US REIT Index, & rec
history


Note: Recommendation timeline if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period.
Source: FactSet, Macquarie Capital (USA), April 2014
12-month target price methodology
CUBE US: US$18.50 based on a DCF methodology
EXR US: US$52.50 based on a DCF methodology
SSS US: US$78.00 based on a DCF methodology
PSA US: US$183.00 based on a DCF methodology

10 April 2014 11
Company-specific disclosures:

Important disclosure information regarding the subject companies covered in this report is available at www.macquarie.com/disclosures.

Target price risk disclosures:
CUBE US (US$17.79, Neutral): Risks include development focused in the NYC metro
EXR US: (US$48.24, OP): Risks include Google entering the storage space as an aggregator.
SSS US: (US$74.43, N): Risks include slower growth due to relatively weaker locational quality of assets and under-performance on Google's organic
search.
PSA US (US$170.13, OP): Risks include a Google algorithm change that would reduce PSA's advantage for the search term "Public Self Storage"
Analyst certification:
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compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The
analyst principally responsible for the preparation of this research receives compensation based on overall revenues of Macquarie Group Ltd ABN 94 122
169 279 (AFSL No. 318062) (MGL) and its related entities (the Macquarie Group) and has taken reasonable care to achieve and maintain independence
and objectivity in making any recommendations.
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10 April 2014 12
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