Shurgard Europe Forms a 240 Million Euro Development Joint Venture

Shurgard Europe Announces Major Self-Storage Development Joint Venture

Shurgard’s European subsidiary, closed a development joint venture with Crescent Euro Self Storage Investments II SARL, an investment vehicle sponsored by First Islamic Investment Bank, E.C., based in Manama, Bahrain (Crescent).

The joint venture, known as Second Shurgard SPRL (Second Shurgard) is expected to develop approximately 37 self storage properties in Europe through early 2006. Total capitalization of the joint venture is anticipated to be approximately Euro 240 million.

Second Shurgard will initially be funded with equity contributions of Euro 12.5 million from Shurgard Europe and Euro 50 million from Crescent, with the possibility to increase the commitment with additional equity of Euro 7.5 million from Shurgard and Euro 30 million from Crescent. The joint venture has obtained debt financing of Euro 140 million provided by Royal Bank of Scotland and a syndicate of banks, Euro 52 million of which is contingent upon the additional equity commitment. The debt financing is a non-recourse five-year term facility.

Pursuant to the terms of the joint venture agreement, the joint venture will invest in stores developed or to be developed in six European countries: Denmark, France, Germany, the Netherlands, Sweden, and the United Kingdom. Shurgard Europe has the exclusive right to manage these stores for a term of 20 years. Shurgard Europe will receive development and management fees from the joint venture during the investment period, in addition to various arrangement fees at closing. Shurgard Europe will also receive performance related fees based on the achievement of minimum levels of return, which shall be paid at the end of the life of the joint venture. Under the terms of the Agreement, on or before the fifth anniversary of the formation of the joint venture, the partners can either form another joint venture to hold the stabilized assets long-term, sell the assets to Shurgard Europe, or sell the assets to a third party subject to Shurgard’s long-term management contract. The sales price for the assets under each of the scenarios is their fair market value as determined by either mutual agreement or appraisal.