Morgan Stanley

Morgan Stanley Real Estate's Prime Property Fund Forms Joint Venture with Safeguard Storage Properties LLC for Approximately $400 Million

Jun 1, 2005

New York —

Morgan Stanley Real Estate's Prime Property Fund® (PRIME) announced today that it has acquired an interest in Safeguard Storage Properties LLC (Safeguard) in a joint venture with Safeguard's existing management team. The joint venture also acquired one additional storage property bringing the total capitalization to more than $400 million. Senior professionals from both PRIME and Safeguard will comprise the company's management committee; Safeguard management will continue to manage day-to-day activities.

"Positive self-storage fundamentals include an increasingly mobile population and strong population and renter-household growth," said Dave Hardman, Managing Director and U.S. Head of Real Estate Investing at Morgan Stanley. "While these fundamentals are similar to multifamily, we believe that self-storage will deliver better yields in the nearterm. Additionally, Safeguard's focus on densely populated, underserved urban markets with high barriers to entry, which is not typical in the self-storage industry, makes it an excellent investment for PRIME."

Safeguard owns 56 self-storage stores totaling approximately 3.2 million square feet, comprised of both operating properties and stores under development. The properties are newly constructed, state-of-the-art facilities, including climate control, video surveillance and alarms, single point of entry and enhanced receiving capabilities. Additionally, a vertical orientation enables facilities to fit efficiently on small infill urban land parcels.

"We are enthusiastic to partner with Morgan Stanley Real Estate and PRIME to grow our self-storage business," said Bruce C. Roch, Jr. Chairman, Chief Executive Officer and founder of Safeguard. "The partnership will be integral to our ability to create value by expanding our presence in existing key markets and opening facilities in new markets."

Founded in 1989 and headquartered in New Orleans, Safeguard develops properties in regional clusters to realize economies of scale in its local markets, to increase customer awareness and to promote cross-selling opportunities. With a disciplined, research-driven market and site selection process, Safeguard is able to determine quality locations across the United States and within individual markets to develop new properties.

PRIME, a $3 billion core, discretionary and diversified real estate fund, is managed by Morgan Stanley Real Estate. PRIME's assets include office, industrial, retail and hotel properties and are located in major real estate markets throughout the United States. Morgan Stanley Real Estate is comprised of three major global businesses: Investing, Banking, and Lending. Since 1991, Morgan Stanley has acquired more than $58.4 billion of real estate assets worldwide and currently manages $32.5 billion in real estate assets on behalf of its clients. Using its own capital, Morgan Stanley also originates upwards of $7 billion in commercial mortgages annually. In addition, Morgan Stanley Real Estate provides a complete range of investment banking services including merger, acquisition and restructuring advisory and recapitalizations, as well as public and private debt and equity financing. Morgan Stanley established its real estate organization in 1969.

Morgan Stanley (NYSE: MWD) is a global financial services Firm and a market leader in securities, investment management, and credit services. With more than 600 offices in 28 countries, Morgan Stanley connects people, ideas and capital to help clients achieve their financial aspirations.