National Overview
Over the past five years the Self Storage industry has begun to garner the attention of Wall St. investors due to its excellent cash flow, diversified tenants and the lowest default rate amongst all types of commercial properties. In 2005, Self Storage outpaced all other commercial real estate sectors with returns averaging 24.3% followed by industrial/office at 10.8% and retail at 10.2%. Cap rates for Class A facilities are in the 6.5 % to 7.5% range. Class B are trading in the 7.5% to 8.5% range and Class C 8% to 9% range. This information coupled with strong job growth and fragmentation of the self storage market present a ripe opportunity for the Fund to generate significant returns for its investors.

Southwest Region
Strong job growth coupled with increased migration and the recent housing boom have continued to fuel the growth in this region. This region boasts the second-highest occupancy rate in the nation at 88.3%, a 280 basis point improvement over the previous year according to industry expert Marcus and Millichap. The Las Vegas and Phoenix areas are leading the nation with an occupancy rate of 90%. One concern is that increased housing has turned renters into buyers resulting in reduced demand for self storage. This trend is expected to reverse within the next year as construction cools and interest rates continue to rise while continued migration and strong job growth occur. For the reasons mentioned above in addition to the strong presence our affiliate EBS, Inc. already has in these areas, management believes Pilot Equity Value Added Fund assets should be well served in these markets.

Mid/South
Despite the likes Hurricane Katrina and other natural disasters this region has seen the median price of self storage facilities rise 10.5% to $45.58 per square foot over the past year. Texas has been the catalyst in this recovery with Austin, TX leading the way by having the highest job growth in the state. In the region Pilot Equity I will be focused on the Texas market, more specifically Austin, Dallas and Tyler.

Southeast
Growth states such as Florida, Georgia, North Carolina and South Carolina will garner a significant share of the Fund’s attention. Population growth is on the rise and occupancy rates throughout the region are hovering at 88.5%. Construction is expected to ease with 4.1 million square feet being added compared to 4.5 million a year ago. Florida will continue to be a concern due to insurance problems related to hurricanes and tropical storms but the other states are poised for continued growth moving forward.