Released on = June 7, 2007, 7:08 am

Press Release Author = Self Storage Promotions

Industry = Real Estate

Press Release Summary = CMBS lenders are seeing some of their aggressively
underwritten loans being kicked out of loan pools. What does this mean for
self-storage?

Press Release Body = TAMPA, FL - June 6, 2007 - Marcus & Millichap\'s Mele Storage
Group is warning investors that the commercial mortgage-backed securities, or CMBS
market is experiencing a minor setback. Problems in the sub-prime residential
mortgage market are adversely impacting the commercial mortgage market. CMBS
lenders are even seeing some of their aggressively underwritten loans being kicked
out of loan pools as the spread requirements of the bond investors are increasing,
according to a recent report from BridgePointe Advisors, a real estate investment
banking boutique based in Alphretta, Ga.

CMBS are securitizations of mortgage loans backed by commercial real estate. That
makes CMBS similar to Mortgage Backed Securities (MBS), which are mortgage loans
backed by residential loans. CMBS are not exactly a new financing phenomenon - it
was created in the late 1980s - but this method has gained notable momentum in the
self-storage industry. Essentially, CMBS are a means for investors to participate in
the ownership of commercial mortgages. Apartment buildings, shopping or strip malls,
office buildings, hotels, industrial buildings and self-storage, among other
commercial property types, secure loans that serve as CMBS collateral.

\"Some are calling the subprime problem the \'elephant in the room\' and many investors
are getting nervous about aggressive underwriting practices,\" said Michael A. Mele,
Senior Investment Associate at Marcus & Millichap\'s Mele Storage Group. \"This could
be a blow to self-storage investors because the spreads had narrowed and CMBS was
becoming an attractive long-term financing alternative.\"

A late February meltdown of the subprime market may have caused those
once-attractive spreads to increase across fixed-income markets, according to
BridgePointe. Current market conditions are likely to lead to more stringent loan
underwriting requirements in the future. AAA investors who did not typically
scrutinize the collateral of CMBS deals are now beginning to do so, and low-quality
loans are being removed from the pool. The weakened quality of loan underwriting has
restricted the percentage of CMBS bonds that qualify for the low-cost AAA ratings.
The demand for credit-default swaps is rising, and, at the same time, the market is
cooling to interest only loans.

\"Call it a perfect storm,\" said Mele, who is also president of the Florida Self
Storage Association. \"Market conditions mean CMBS lenders could be looking at lower
profits or even losses on their current loans. That requires an adjustment, but the
good news is the CMBS market is not falling apart. News headlines tell of many big
deals being done. Savvy investors will consider market conditions, though, when
approaching new deals.\"

BridgePointe cites several implications for owners, sellers and investors. With the
public market exposure of the commercial real estate market, for example, it is
vital for owners and investors to monitor supply and demand factors in the overall
capital markets arena because any disruptions will filter through to real estate
participants.

\"Lenders will be more conservative in loan underwriting, focusing less on projected
income, increasing amortizations, and requiring more equity. As a result, borrowing
costs will increase and available loan proceeds will decrease. As a seller, it is
important to understand which lender your buyer is currently working with and the
potential for a loan retrade,\" said Gary T. Sakaly, managing partner of BridgePointe
Advisors, in his advisory.

Sakaly also noted that not all lenders are the same. The CBMS lending market is
bifurcated. Some CMBS lenders are in better shape than others and less likely to
increase spends, whereas others have significant exposure and will have to increase
spends. Sellers, he added, should question investors whose pricing is dependent on
an interest only structure.

\"At the Mele Storage Group, we understand the lending markets and how they impact
deals,\" Mele said. \"Just as it\'s important to work with the right investment banker,
it\'s important to work with the right self-storage real estate broker as the lending
and self-storage markets simultaneously adjust to current market conditions.\"

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



Web Site = http://www.melestoragegroup.com

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