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SPOKANE-Shurgard Storage Centers has agreed to hand over $102.6 million worth of common stock to further increase its stake in Shurgard Europe. Upon completion of the transaction (slated for July 31), the Spokane-based publicly traded company will own an 80.6% interest in Shurgard Europe.

The acquisition involves the equity interests of AIG Self Storage GP LLC, AIG Self Storage LP LLC, AIRE Investments SARL, REIB Europe Operator Limited and REIB International Holdings Limited. Shurgard has agreed to pay the four AIG-related entities $36.6 million in common stock for its 7.0% interest in Shurgard Europe. The REIB (Deutsche Bank) entities will receive $66 million in common stock for its 12.8% stake.

Shurgard says it intends to pay for the acquired interests with the proceeds from its previously announced public offering of approximately four million shares of the Company’s class A common stock. The transaction is contingent upon the successful completion of the offering. The transactions are expected to result in a reduction of 2003 funds from operation per share of approximately $.08 to $.10 and a reduction of earnings per share of $.12 to $.14, which includes approximately $.04 per share for depreciation.

Citigroup Global Markets Inc. and Banc of America Securities LLC advised Shurgard in the latest transaction. The AIG and Deutsche Bank entities are two of the remaining three institutional joint venture partners that purchased a 43.25% interest in Shurgard Europe in 1999. Earlier this month, Shurgard paid $153 million to boost its stake in Shurgard Europe from 43% to 61%.

In May, Shurgard President/CEO Charles Barbo told analysts he is “bullish” on Shurgard Europe. Shurgard Self Storage SCA, the entity that develops, operates, and owns Shurgard Europe, reported a first quarter same store revenue increase of 10.5% over first quarter 2002. The revenue increases were a result of 2% increase in occupancy and a 7.5% increase in realized rental rates.

Also in May, Shurgard Europe Chairman Dave Grant told analysts the company has entered into a joint venture agreement wherein the joint venture partner will provide 80%, and Shurgard Europe will provide the remaining 20%, of the equity necessary to develop approximately 30 new stores in Europe through 2004. As of March 31, Shurgard Europe had 11 stores under construction: one each in Belgium, Denmark, Sweden, and the United Kingdom, two in the Netherlands and Germany, and three in France.

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