SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K


[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 [Fee Required]

For the fiscal year ended December 31, 1995
                          ----------------- 

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required].

For the transition period from           to 
                               ----------   ----------.

Commission File Number: 1-8389
                        ------

                              PUBLIC STORAGE, INC.
                              --------------------
             (Exact name of registrant as specified in its charter)

     California                                                 95-3551121
---------------------                                  -------------------------
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                           Identification Number)

600 North Brand Blvd., Glendale, California                   91203-1241
-------------------------------------------                   ----------
(Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code: (818) 244-8080.
                                                    ---------------

Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
                                                                                              Name of each exchange
Title of each class                                                                            on which registered
-------------------                                                                           ---------------------
<S>                                                                                         <C>
10% Cumulative Preferred Stock, Series A, $.01 par value                                    New York Stock Exchange
9.20% Cumulative Preferred Stock, Series B, $.01 par value                                  New York Stock Exchange
Adjustable Rate Cumulative Preferred Stock, Series C, $.01 par value                        New York Stock Exchange
9.50% Cumulative Preferred Stock, Series D, $.01 par value                                  New York Stock Exchange
10% Cumulative Preferred Stock, Series E, $.01 par value                                    New York Stock Exchange
9.50% Cumulative Preferred Stock, Series F, $.01 par value                                  New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 8-7/8% Cumulative
  Preferred Stock, Series G, $.01 par value                                                 New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 8.45% Cumulative
  Preferred Stock, Series H, $.01 par value                                                 New York Stock Exchange
8.25% Convertible Preferred Stock, $.01 par value                                           New York Stock Exchange
Common Stock, $.10 par value                                                                New York Stock Exchange

</TABLE>
Securities registered pursuant to Section 12(g) of the Act:

                                      None
                -------------------------------------------------
                                (Title of class)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.
                                [ X ] Yes [ ] No
<PAGE>
Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. [ ]

The  aggregate  market value of the voting stock held by non-  affiliates of the
registrant as of March 15, 1996:

Common Stock,  $.10 Par Value -  $685,325,000  (computed on the basis of $20-7/8
per share which was the  reported  closing  sale price of the  Company's  Common
Stock on the New York Stock Exchange on March 15, 1996).

The number of shares outstanding of the registrant's  classes of common stock as
of March 15, 1996:

Common Stock, $.10 Par Value - 71,581,165 shares
------------------------------------------------

Class B Common Stock, $.10 Par Value - 7,000,000 shares
-------------------------------------------------------


                       DOCUMENTS INCORPORATED BY REFERENCE

Information  required by Part III will be included in an  amendment to this Form
10-K under cover of a Form 10-K/A filed within 120 days of the Registrant's 1995
fiscal year, which information is incorporated by reference into Part III.
<PAGE>
                                     PART I
                                     ------


ITEM 1.  BUSINESS
         --------
GENERAL
-------
     Public Storage,  Inc. (the  "Company") is an equity real estate  investment
trust ("REIT")  organized as a corporation  under the laws of California on July
10, 1980. The Company is a fully integrated,  self-administered and self-managed
real estate investment trust ("REIT") that acquires, develops, owns and operates
self-service  mini-warehouse  facilities.  The Company is the largest  owner and
operator of mini-warehouses in the United States with direct and indirect equity
investments  in 1,016  mini-warehouses  containing  approximately  59.6  million
square feet of space at December 31, 1995.

     The Company  has elected to be subject to tax as a REIT under the  Internal
Revenue Code of 1986,  as amended.  To the extent that the Company  continues to
qualify  as a  REIT,  it  will  not be  subject  to tax,  with  certain  limited
exceptions, on the taxable income that is distributed to its shareholders.

     On November  16,  1995,  the Company  completed a merger  transaction  with
Public   Storage   Management,   Inc.   ("PSMI")   whereby  the  Company  became
self-administered and self-managed and acquired  substantially all of the United
States real estate  operations  of PSMI.  In addition,  the  Company's  name was
changed  from  Storage  Equities,  Inc. to Public  Storage,  Inc.  See "THE PSMI
MERGER."

     The  Company's  five  senior   officers  have  been   responsible  for  the
acquisition of more than 350  mini-warehouses,  the development of more than 650
mini-warehouses  and the  management of more than 1,000  mini-warehouses  during
their average 17 years of experience  with the Public Storage  organization.  In
addition,  the Company's senior management has a significant  ownership position
in the Company with executive  officers,  directors and their affiliates  owning
approximately  38.75 million shares or 54.1% of the Common Stock as of March 15,
1996.

THE PSMI MERGER
---------------
     Prior to November 16, 1995, the Company's operations were managed, pursuant
to contractual  arrangements,  by Public Storage Advisers, Inc. (the "Adviser"),
the Company's investment advisor, by PSMI, its mini-warehouse  property operator
and by Public Storage Commercial Properties Group, Inc., ("PSCP") its commercial
property operator.

     Since the  Company's  organization,  the  Adviser,  pursuant to an advisory
contract,  had administered the day-to-day  investment operations of the Company
and had advised and consulted with the Board of Directors in connection with the
acquisition and disposition of investments.  However, the Board of Directors had
the duty of overall  supervision  of the Company's  operations.  The Amended and
Restated Advisory  Contract (the "Advisory  Contract") with the Adviser provided
for the monthly  payment of advisory  fees equal to the sum of (i) 12.75% of the
Company's Adjusted Income (as defined) per share of Common Stock based on Common
Stock outstanding at September 30, 1991 (14,989,454  shares) plus (ii) 6% of the
Company's  Adjusted Income per share on shares in excess of 14,989,454 shares of
Common Stock. During 1995 (through November 16, 1995), the Company paid advisory
fees of  approximately  $6.4  million to the Advisor  pursuant  to the  Advisory
Contract.

     Since the Company's  organization,  PSMI,  which was organized in 1973, had
provided property operation services to the Company under a Management Agreement
between the Company and PSMI (as amended, the "Management Agreement").  Pursuant
to the  Management  Agreement,  PSMI or PSCP operated all of the assets in which
the Company has invested for a fee which is equal to 6% of the gross revenues of
the  mini-warehouse  spaces managed and 5% of the gross revenues of the business
park facilities  operated.  During 1995 (through November 16, 1995), the Company
paid property management fees of approximately $9.4 million and $906,000 to PSMI
and PSCP, respectively.

     On November 16, 1995, in a series of mergers among PSMI and its affiliates,
culminating in the November 16, 1995 merger of PSMI into the Company (the ''PSMI
Merger''),  the Company became  self-administered  and self-managed and acquired
substantially all of the United States real estate operations of PSMI.

     The aggregate  consideration paid by the Company  (including  expenses) was
approximately $549.3 million, consisting of the issuance of 29,449,513 shares of
Common Stock with a market value of $473.8 million and 7,000,000 shares of Class
B Common Stock with a value of $73.5 million.

     The real estate  operations  acquired in the PSMI Merger  included  (1) the
''Public  Storage''  name, (2) general and limited  partnership  interests in 47
limited partnerships owning an aggregate of 286  mini-warehouses,  (3) shares of
common
                                       3
<PAGE>
stock in 16 REITs  owning an aggregate  of 218  mini-warehouses  and 14 business
park properties,  (4) seven wholly owned properties,  (5) all-inclusive deeds of
trust  secured  by  ten  mini-warehouses,  (6)  property  management  contracts,
exclusive of facilities owned by the Company,  for 563  mini-warehouses  (522 of
which  collectively  were owned by entities  affiliated with PSMI) and,  through
ownership  of  a  95%  economic  interest  in a  subsidiary,  24  business  park
properties  and (7) a 95%  economic  interest in another  subsidiary  that sells
locks and boxes in mini-warehouses operated by the Company.

     The PSMI  Merger was  intended to result in the  following  benefits to the
Company and its shareholders:

     -    The Company became a  fully-integrated,  self-advised and self-managed
          commercial   real  estate   company  with   management   expertise  in
          development,   construction,   acquisition,   operation   and  leasing
          services.

     -    The Company  significantly  increased its ownership of  mini-warehouse
          facilities,  providing it with increased geographical  diversification
          and economies of scale in its operations.

     -    The PSMI  Merger  increased  the  Company's  capital  base  and,  as a
          self-advised  and  self-managed  REIT,  should make the  Company  more
          attractive to institutional and other investors.

     -    Soon after the  consummation of the PSMI Merger,  the Company's credit
          rating improved,  reducing the Company's cost of capital and enhancing
          its ability to raise capital.

     -    The Company acquired the "Public Storage" name and goodwill associated
          with that name in the United States.

     -    The Company  will be able to expand its  property  holdings  without a
          proportionate increase in advisory and property management fees, which
          would have resulted had its current  advisory  contract and management
          agreements remained in effect.

     -    Conflicts of interest  between the Company and its executive  officers
          and directors  who were also  affiliated  with PSMI were reduced.  The
          real estate operations acquired represent interests in properties that
          compete with the Company's properties.


INVESTMENT OBJECTIVES
---------------------
     The Company's  primary  objective is to maximize  shareholder value through
internal  growth (by  increasing  funds from  operations  and cash available for
distributions)  and  acquisitions  of additional  real estate  investments.  The
Company  believes  that its access to capital,  geographic  diversification  and
operating  efficiencies  resulting  from its size will  enhance  its  ability to
achieve these objectives.

COMPETITION
-----------
     Competition  in  the  market  areas  in  which  the  Company   operates  is
significant  and  affects  the  occupancy  levels,  rental  rates and  operating
expenses of certain of the Company's  facilities.  The Company believes that its
operating results have benefited from favorable industry trends and conditions.

     In  seeking  investments,  the  Company  competes  with a wide  variety  of
institutions and other  investors.  An increase in the amount of funds available
for real estate investments may increase  competition for ownership of interests
in facilities and may reduce yields. In addition,  recent increases in plans for
development  of  mini-warehouses  is expected to further  intensify  competition
among mini-warehouse operators in certain market areas.

     The  Company   believes  that  the  significant   operating  and  financial
experience of its executive officers and directors,  combined with the Company's
capital structure, national investment scope, geographic diversity, economies of
scale and the ''Public  Storage'' name, should enable the Company to continue to
compete effectively with other entities.

     In recent years consolidation has occurred in the fragmented mini-warehouse
industry.  In addition to the Company,  there are three other national firms and
numerous  regional  and  local  operators.  The  Company  believes  that  it  is
well-positioned   to  capitalize  on  this   consolidation   trend  due  to  its
demonstrated access to capital and national presence.

GROWTH STRATEGIES
-----------------
     The  Company's   growth   strategies   focus  on  improving  the  operating
performance  of its  existing  properties  and on  increasing  its  ownership of
mini-warehouses  through  additional   investments.   Major  elements  of  these
strategies are as follows:

     INCREASE  NET  CASH  FLOW OF  EXISTING  PROPERTIES.  The  Company  seeks to
increase  the  net  cash  flow  generated  by  its  existing  properties  by (i)
increasing  average occupancy rates and (ii) achieving higher levels of realized
monthly rents per 
                                       4
<PAGE>
occupied  square  foot.  Average  occupancy  at the  Public  Storage  Same-Store
mini-warehouses  (a pool of  mini-warehouse  951  facilities  operated under the
"Public  Storage" name since December 31, 1992) has increased from 87.0% in 1993
to 90.1% in 1995.  Similarly,  realized  monthly rents per occupied  square foot
have increased  approximately  9.4% during this same period.  These factors have
resulted  in growth in net  operating  income at the Public  Storage  Same-Store
mini-warehouses of approximately  9.5% and 5.7% in 1994 and 1995,  respectively,
over the prior period.

     ACQUIRE PROPERTIES OPERATED AND PARTIALLY OWNED BY THE COMPANY. In addition
to 267 wholly owned mini-warehouse  facilities,  the Company operates, on behalf
of approximately 82 ownership entities,  747 mini-warehouses  under the ''Public
Storage''  name in which it has a partial  equity  interest.  From time to time,
some of these  mini-warehouses  or interests in them are available for purchase,
providing the Company with a source of additional acquisition opportunities. The
Company  believes these  properties  include some of the better located,  better
constructed  mini-warehouses  in the  industry.  Because  these  properties  are
partially  owned  by  the  Company,  it  is  provided  with  reliable  operating
information prior to acquisition and these properties are easily integrated into
the  Company's  portfolio.  From  January  1, 1992  through  December  31,  1995
(exclusive of properties  acquired in the PSMI Merger),  the Company  acquired a
total of 181  mini-warehouses  which were operated under the ''Public  Storage''
name (10.4 million square feet of space at an aggregate purchase price of $471.4
million).

     ACQUIRE  PROPERTIES  OWNED OR OPERATED BY OTHERS.  The Company believes its
presence  in and  knowledge  of  substantially  all of the major  markets in the
United  States   enhances  its  ability  to  identify   attractive   acquisition
opportunities and capitalize on the overall  fragmentation in the mini-warehouse
industry. The Company maintains local market information on rates, occupancy and
competition in each of the markets in which it operates. Of the more than 20,000
mini-warehouses  in the United States, the Company believes that the ten largest
operators manage less than 15% of the total space.  From January 1, 1992 through
December  31,  1995,  the Company  acquired a total of 57  mini-warehouses  (3.3
million square feet of space at an aggregate  purchase price of $145.9  million)
operated by other operators.

     DEVELOP PROPERTIES IN SELECTED MARKETS.  During 1995, the Company commenced
construction of three mini-warehouse facilities, two located in Atlanta, Georgia
and one located in Denver, Colorado. One of the Atlanta properties was completed
in 1995 and the other Atlanta  property was completed in March 1996. In addition
to the Denver  property,  the Company is currently  developing  another property
located  in  Atlanta.   The  Company's  Board  of  Directors  has  approved  the
development  of  11  additional   mini-warehouses  with  7,195  estimated  units
containing  652,000  square feet of space at an estimated cost  (including  land
costs) of  $49,000,000.  The Company is also  expanding  two  properties  in Los
Angeles,  California to include commercial space at an aggregate cost (including
land  costs) of  $4,600,000.  Development  of these  properties  is  subject  to
contingencies. All are scheduled to open at various dates between March 1996 and
early 1997. The Company is evaluating the  feasibility of developing  additional
mini-warehouses  in selected markets in which there are few, if any,  facilities
to acquire at  attractive  prices and where the  scarcity  of other  undeveloped
parcels  of land or  other  impediments  to  development  make it  difficult  to
construct additional competing facilities.

     ACCESS  TO  ACQUISITION  CAPITAL.  The  Company  believes  that its  strong
financial  position  enables it to access  capital  for  growth.  The  Company's
long-term debt, as a percentage of shareholders'  equity, has decreased from 60%
at  December  31,  1990 to 9.8% at  December  31,  1995,  thereby  significantly
reducing  refinancing  risks.  The Company  has created  leverage in its capital
structure  for  the  benefit  of its  common  shareholders  through  the  use of
preferred  stock.  Since 1993,  the Company has  publicly  issued  approximately
$606.4 million of preferred stock,  (including  $163.2 million issued in January
1996).  The Company  targets a 40% leverage ratio.  The Company  currently has a
$125.0  unsecured  million credit  facility with a bank group led by Wells Fargo
Bank, which the Company uses as a temporary source of acquisition financing. The
Company seeks to ultimately  finance all acquisitions  with permanent sources of
capital and eliminate  refinancing  and interest rate risk. From January 1, 1993
through December 31, 1995, the Company has issued  approximately  $388.1 million
of perpetual  preferred and $190.2 million of common equity in public  offerings
to finance such acquisitions. See ''Borrowings'' and ''Limitations on Debt.''

     CONSERVATIVE  DISTRIBUTION  POLICY. The Company seeks to retain significant
funds (after funding its distributions and capital  improvements) for additional
investments  and debt  reduction.  During the year ended  December 31, 1995, the
Company  distributed 52.2% of its funds from operations and ("FFO") allocable to
Common Stock and retained $26.5 million.  On a pro-forma basis, giving effect to
the PSMI Merger,  as if it occurred at January 1, 1995,  the Company  would have
retained  approximately $65 million in 1995. See  ''Management's  Discussion and
Analysis of Financial Condition and Results of Operations-Liquidity  and Capital
Resources.''
                                       5
<PAGE>
OPERATING STRATEGIES
--------------------
     The Company operates its mini-warehouses under the ''Public Storage'' name,
the most recognized name in the mini-warehouse  industry.  The major elements of
the Company's operating strategies are as follows:

     CAPITALIZE ON PUBLIC STORAGE NAME RECOGNITION.  The Company,  together with
its  predecessor,  has  more  than  20  years  of  operating  experience  in the
mini-warehouse  business,  and is the largest operator of mini-warehouses in the
United   States.   As  of  December  31,  1995,   the  Company   operated  1,075
mini-warehouses  aggregating  approximately  63.0  million  square feet of space
located in 37 states. In the past eight years, in excess of $56 million has been
expended  promoting the ''Public  Storage'' name. The Company  believes that its
marketing  and  advertising  programs  improve its  competitive  position in the
market.  The  Company  believes  that  it is the  only  mini-warehouse  operator
regularly  using  television  advertising  in several major  markets  around the
country,  and its in-house Yellow Pages staff designs and places  advertisements
in approximately  700 directories.  In addition,  the Company offers a toll-free
referral system,  800-44-STORE,  which services  approximately 100,000 calls per
year  from  potential  customers  inquiring  as to the  nearest  Public  Storage
mini-warehouse.

     MAINTAIN HIGH  OCCUPANCY  LEVELS AND INCREASE  REALIZED  RENTS.  Subject to
market  conditions,  the Company  generally seeks to achieve  average  occupancy
levels in excess of 90% and to eliminate  promotions prior to increasing  rental
rates.  Average  occupancy  for the Public  Storage  Same-Store  mini-warehouses
increased from 87.0% in 1993 to 90.1% in 1995. Realized monthly rents per square
foot  increased  from $0.64 in 1993 to $0.70 in 1995.  The Company has increased
rental rates in many markets  where it has achieved  high  occupancy  levels and
eliminated or minimized promotions.

     CONCENTRATE  PROPERTIES IN MAJOR MARKETS.  The Company is focused on owning
and acquiring mini-warehouses located principally in the 54 largest metropolitan
areas (those with  populations  in excess of 1,000,000)  throughout the country.
The Company believes that the events  resulting in the rental of  mini-warehouse
space occur with greater frequency in the larger metropolitan areas than in less
populous  areas.  By  concentrating  its facilities  within these  markets,  the
Company can also achieve economies of scale with respect to property  operations
and advertising.

     FOCUS ON HIGH QUALITY  PROPERTIES IN PRIME LOCATIONS.  The Company seeks to
own high quality properties located on prime land with high traffic counts, high
visibility  and a dense  population  within a three  to five  mile  radius.  The
Company  believes that facilities  located on prime land are less susceptible to
the threat of competition via new development and, as a result, have more stable
cash flows. The Company is also committed to investing the capital  necessary to
maintain the high quality of its  facilities  and to upgrade them when warranted
by market conditions.

     SYSTEMS AND  CONTROLS.  The Company has an  organizational  structure and a
property  management  system,   ''CHAMP''   (Computerized  Help  and  Management
Program),  which  links its  corporate  office  with each  mini-warehouse.  This
enables the Company to obtain daily information from each  mini-warehouse and to
achieve  efficiencies in operations and maintain  control over space  inventory,
rental rates,  promotional  discounts and  delinquencies.  Expense management is
achieved  through  centralized  payroll  and  accounts  payable  systems  and  a
comprehensive property tax appeals department,  and the Company has an extensive
internal audit program designed to ensure proper handling of cash collections.

     PROFESSIONAL  PROPERTY OPERATION.  In addition to approximately 120 support
personnel at the Company's  corporate  offices,  there are  approximately  2,700
on-site  personnel who manage the day-to-day  operations of the  mini-warehouses
operated by the Company.  These on-site personnel are supervised by 107 district
managers, 14 regional managers and three divisional managers (with an average of
12 years  experience in the  mini-warehouse  industry) who report to the head of
mini-warehouse  property  operations  (who has 11 years of  experience  with the
Company).  The Company carefully selects and extensively  trains the operational
and  support  personnel  and offers  them a  progressive  career  path.  On-site
personnel are furnished with detailed operating procedures.
                                       6
<PAGE>

INVESTMENTS IN REAL ESTATE FACILITIES
-------------------------------------
     The Company has invested directly and indirectly in mini-warehouses, and to
a much smaller  extent in existing  business  parks  containing  commercial  and
industrial rental space, principally through (i) the acquisition of wholly-owned
properties, (ii) the acquisition of limited and general partnership interests in
real estate partnerships owning mini-warehouses and/or business parks, and (iii)
the  acquisition  of common stock of other REITs owning  mini-warehouses  and/or
business parks. The following table outlines the Company's ownership interest in
mini-warehouse ("Mini") and business park ("BP") facilities:
<TABLE>
<CAPTION>

                                                      At December 31, 1995 
                             ---------------------------------------------------------------------
                                                                          Net Rentable Square Feet
                             Number of Real Estate Facilities                   (in thousands)
                             --------------------------------             ------------------------
                                Mini                  BP                   Mini             BP
                             ---------            ---------             ---------       ---------
<S>                           <C>                   <C>                  <C>             <C>   
Consolidated facilities:
  Wholly-owned                  267                    6                  15,970             462
  Joint Venture and other       253                   14                  14,808           1,542
                                ---                   --                  ------           -----
                                520                   20                  30,778           2,004
                                ---                   --                  ------           -----

Unconsolidated facilities:
  Institutional partnerships    182                    -                  10,815               -
  Foreign partnerships           45                    -                   2,607               -
  Other partnerships             51                    -                   2,730               -
  REITs                         218                   14                  13,789           1,078
                                ---                   --                  ------           -----
                                496                   14                  29,941           1,078
                                ---                   --                  ------           -----
     Totals                   1,016                   34                  60,719           3,082
                              =====                   ==                  ======           =====
</TABLE>
     WHOLLY-OWNED  FACILITIES:  As of December 31, 1995, the Company had a total
of  273  wholly-owned  real  estate  facilities  compared  to  147  wholly-owned
facilities  at December  31, 1994.  The  increase in the number of  wholly-owned
facilities  was due to the  mergers  of two  affiliated  REITs (68  facilities),
acquisition  of other  affiliated  properties  (39  facilities),  acquisition of
facilities  from third  parties  (18  facilities)  and the  construction  of one
facility during 1995.

     On February  28, 1995 and June 30,  1995,  the Company  completed  separate
merger transactions with Public Storage Properties VI, Inc. ("Properties 6") and
Public Storage Properties VII, Inc. ("Properties 7"), respectively,  whereby the
Company  acquired all the outstanding  stock of Properties 6 and Properties 7 in
exchange for cash and common stock of the Company. Properties 6 and Properties 7
were real estate investment trusts and affiliates of the Adviser.

     Properties  6 owned  and  operated  22  mini-warehouse  facilities  and one
combination   mini-warehouse/business  park  facility  (approximately  1,453,000
aggregate  rentable square feet).  Pursuant to the merger,  the Company acquired
all of the outstanding stock of Properties 6 at a cost of $65,342,000 consisting
of the  issuance of  3,147,015  shares of the  Company's  common  stock (with an
aggregate value of $43,915,000) and $21,427,000 in cash.

     Properties  7  owned  and  operated  34  mini-warehouse  facilities,  three
business  parks,  and  one  combination  mini-warehouse/business  park  facility
(approximately  2,014,000  aggregate  rentable  square  feet).  Pursuant  to the
merger,  the Company acquired all of the outstanding  stock of Properties 7 at a
cost of  $70,064,000  consisting  of the  issuance  of  3,517,272  shares of the
Company's  common stock (with an aggregate value of $56,057,000) and $14,007,000
in cash.

     JOINT VENTURE AND OTHER FACILITIES: From 1983 through 1987, the Company and
a series of eight public limited  partnerships (the "PSP Partnerships")  jointly
invested  in  an  aggregate  of  211  real  estate  facilities  through  general
partnerships  (the "Joint  Ventures").  The Company's  joint  venture  interests
ranges from 10% to 70%,  but is  generally  50% or less.  In  addition,  the PSP
Partnerships have a total of 29 real estate facilities which are wholly-owned by
the  partnerships.  The  Company has an  indirect  interest in these  facilities
through its ownership of both limited and general partnership  interests in each
of the PSP Partnerships.

     The Company,  through its direct ownership  interests in the Joint Ventures
combined with its limited and general  partnership  interests owns a significant
economic interest in each of the PSP Partnerships.  In addition,  the Company is
able to exercise  significant control over the PSP Partnerships  through its (i)
position  as  a  co-general  partner,  (ii)  ownership  of  significant  limited
partnership  interests  and (iii)  ability to compel the sale of the  properties
held in the joint  ventures  after seven years after the property was  acquired.
Accordingly,  the Company consolidates the assets,  liabilities,  and results of
operations of these eight partnerships in the Company's financial statements.
                                       7
<PAGE>
     The Company also has significant ownership interests in and control both as
limited partner and general partner of twelve other limited  partnerships  which
own in  aggregate  27  mini-warehouse  facilities.  The accounts of these twelve
limited partnerships are also included in the Company's  consolidated  financial
statements.

UNCONSOLIDATED REAL ESTATE ENTITIES
-----------------------------------
     The  Company  has  made a  significant  investment  in  mini-warehouse  and
business park facilities which are owned by  unconsolidated  entities  including
affiliated  partnerships  in which the  Company  owns a limited  and/or  general
partnership  interests in or  affiliated  REITs in which the Company owns common
stock.  The  Company  reflects  those   investments  on  the  equity  method  of
accounting.

     As  of  December  31,  1995,  the  Company  is  a  general  partner  of  23
institutional partnerships that own 182 properties, 18 partnerships with foreign
investors  that  own 45  properties  and  six  other  partnerships  that  own 51
properties.  The Company also owns limited partnership interests in six of these
partnerships,  representing from 1% to 36% of the limited partnership  interests
in these  partnerships.  As of December 31, 1995, B. Wayne Hughes, the Company's
Chairman and Chief Executive Officer  ("Hughes"),  is a general partner in 45 of
these 47  partnerships  and also owns limited  partnership  interests in four of
them, representing from 11% to 30% of the limited partnership interests in these
partnerships There is a third general partner unaffiliated with PSI or Hughes in
17 of the 18 partnerships with foreign investors.

     The  principal   characteristics  of  these  47  partnerships  include  the
following:

     -    Low overall leverage. 41 of these partnerships that own 235 properties
          are debt-free.  Five of the remaining six partnerships  financed their
          properties to make special distributions to their partners.

     -    Geographic   diversification.   The  facilities   are   geographically
          diversified, being located in over 30 different states.

     -    New  construction.  All of the  facilities  were built by the Company,
          with over two-thirds of them constructed in 1988 or later.

     INSTITUTIONAL  PARTNERSHIPS.  Under  the  partnership  agreements  for  the
institutional partnerships, the general partners are generally entitled to 8% of
"cash flow from  operations"  (as defined in the partnership  agreements)  until
distributions  to the  limited  partners  from all  sources  equal 100% of their
investment  ("cross-over");  after cross-over, the general partners are entitled
to 25% of cash flow from  operations  and of sale and  financing  proceeds.  The
partnership  agreements  define cash flow from operations as cash funds provided
from operations of the partnerships,  without  deduction for  depreciation,  but
after  deducting  cash funds used to pay or  establish  a reserve  for all other
expenses,  debt payments,  capital  improvements and  replacements.  The general
partners are also entitled to 1% of the limited partnership  interest in respect
of their capital investment.

     PARTNERSHIPS WITH FOREIGN INVESTORS.  Under the partnership  agreements for
the  partnerships  with foreign  investors,  the general  partners are generally
entitled to 8% of "cash flow from operations" until distributions to the limited
partners  equal  105%  to  115%  of  their  investment   ("cross-over");   after
cross-over,  the  general  partners  are  entitled  to 28%  of  cash  flow  from
operations  (including  3% to a third  general  partner  unaffiliated  with  the
Company).  Limited  partners  generally  receive  all of the sale and  financing
proceeds  until  such  proceeds  from a  property  equal  105%  to  115%  of the
investment  in the  property;  the general  partners are entitled to receive the
next sale or financing  proceeds from that property up to an amount equal to 40%
of the sale or financing  proceeds  previously  distributed to limited  partners
from that property;  and any additional sale or financing  proceeds generated by
the same  property are  distributed  72% to the limited  partners and 28% to the
general  partners  (including  3% to the third  general  partner).  The  general
partners are also entitled to 1% of the limited partnership  interest in respect
of their capital investment.

     OTHER  PARTNERSHIPS.  The  sharing  arrangements  between  the  general and
limited  partners in five of the six other  partnerships  are the same as in the
institutional  partnerships.  In the sixth  partnership  (PS Carolinas  Balanced
Fund), the general  partners are entitled to a partnership  management fee of 8%
of cash flow from  operations  until  payments to investors  (consisting of both
limited  partners and  noteholders)  equal 100% of their  collective  investment
("cross-over");  after  cross-over,  the  general  partners  are  entitled  to a
partnership  management fee of 8% of sale proceeds.  After principal and accrued
interest has been paid to the noteholders,  the general partners are entitled to
an additional 17% of cash flow from operations and sales proceeds.
                                       8
<PAGE>
     REIT  INVESTMENTS:  The Company and Hughes own shares of common stock in 16
REITs that own 232  properties,  15 of which were  organized  by the  Company in
1990-91  to  succeed  to  the  business  of  Public  Storage-sponsored   limited
partnerships.

     Like the partnerships  described above,  the principal  characteristics  of
these 16 REITs include the following:

     -    Low overall  leverage.  At December  31,  1995,  these REITs had total
          assets of $567.4  million  compared  with  $18.2  million  of  working
          capital loans.

     -    Geographic   diversification.   The  facilities   are   geographically
          diversified, being located in over 30 different states.

     -    New  construction.  Approximately  75% of the facilities were built by
          the Company and have an average age of nine years.

     The capital structure of 12 of the 16 REITs (Public Storage Properties IX -
XX and PS Business Parks, Inc.) consists of series A, B and C shares. The series
A shares are generally  analogous to the limited partnership  interest,  and the
series B and C shares are analogous to the general partnership  interest, in the
predecessor partnerships.

     The series B shares (representing 8% of the original outstanding shares) of
each of these 12 REITs do not participate in  distributions of sale or financing
proceeds,  but participate in  distributions of cash flow from operations on the
same basis as the series A shares. The series C shares do not participate in any
distributions.  The  series B and C  shares  (representing  together  25% of the
original  outstanding  shares) of a REIT  convert  automatically  into  series A
shares  on a  share-for-share  basis  when  (A) the  sum of  (1) all  cumulative
distributions  from  all  sources  paid  with  respect  to the  series  A shares
(including liquidating  distributions) and (2) the cumulative distributions from
all sources to limited partners of such REIT's  predecessor  partnership  equals
(B) the  product  of $20  (the  pro  rata  original  investment  in  the  REITs)
multiplied by the number of then-outstanding series A shares in such REIT.

     The capital  structure of three of these REITs (Partners  Preferred  Yield,
Inc.,  Partners Preferred Yield II, Inc. and Partners Preferred Yield III, Inc.)
consists  of series  A, B, C and D shares.  The  series A shares  are  generally
analogous to the limited partnership interest,  and the series B, C and D shares
are  analogous  to  the  general  partnership   interest,   in  the  predecessor
partnerships.

     The  series A shares  of each of these  three  REITs  are  entitled  to all
distributions of cash flow from operations and sale or financing  proceeds until
"Participation,"  which occurs when "Investor  Distributions" (as defined below)
equal "Remaining Investors' Capital" (as defined below) minus 50% of the limited
partners'  investment  in such REIT.  After  Participation,  the series A shares
participate  ratably with the series B shares  (representing 10% of the original
series A and B shares) in distributions  of cash flow from  operations,  and the
series  A  shares  continue  to be  entitled  to all  distributions  of  sale or
financing proceeds.  The series B and C shares (representing together 25% of the
original series A, B and C shares) convert automatically into series A shares on
a  share-for-share   basis  upon   "Conversion,"   which  occurs  when  Investor
Distributions equal Remaining Investors' Capital. In addition,  upon Conversion,
the series D shares  (representing 3% of the original  outstanding shares) begin
to  participate  in  distributions  of sale  or  financing  proceeds.  "Investor
Distributions"  means  the sum of  (1) all  cumulative  distributions  from  all
sources  paid with  respect to the series A shares  distributed  to the  limited
partners   (including   liquidating   distributions)   and  (2) the   cumulative
distributions  from all sources from such REIT's  predecessor  partnership  with
respect to its limited  partners'  investment.  "Remaining  Investors'  Capital"
means the product of (1) $20 (the pro rata  investment in the REITs)  multiplied
by (2) the number of the then-outstanding  series A shares issued to the limited
partners in such REIT's predecessor partnership.

     The  series A shares  of each of the 16 REITs are  traded  on the  American
Stock Exchange ("AMEX").

OPTION TO ACQUIRE HUGHES' INTEREST IN PARTNERSHIPS AND REITS
------------------------------------------------------------
     In connection with the PSMI Merger, Hughes granted to the Company an option
to acquire the general and limited  partner  interests and common stock owned by
him in the  partnerships  and REITs  described  above.  The  option  expires  on
November 16, 1998,  and is  exercisable  for all (but not part) of the interests
subject to the option.  The exercise price of the option is $65 million (subject
to  adjustment  under  certain  circumstances)  and is  payable in shares of the
Company's  Common  Stock  valued at the higher of (i) $16.00 per share or (ii) a
stock price necessary to cause the  acquisition to be non-dilutive  based on the
Company's  funds  from  operations  per share of  Common  Stock  (calculated  in
accordance  with the agreement  evidencing the option) for the four  consecutive
quarters preceding the exercise of the option.  Hughes has agreed not to
                                       9

<PAGE>
dispose of any  interests  subject  to the option  during the term of the option
without the Company's  consent.  The Company holds an irrevocable  proxy to vote
the securities subject to the option.

PROHIBITED INVESTMENTS AND ACTIVITIES
-------------------------------------
     The Company's  Bylaws  prohibit the Company from  purchasing  properties in
which the  Company's  officers or directors  have an  interest,  or from selling
properties to such persons,  unless the  transactions are approved by a majority
of the independent directors and are fair to the Company based on an independent
appraisal.  This Bylaw  provision may be changed only upon a vote of the holders
of a majority of the shares of (i) Common Stock and Convertible Preferred Stock,
voting  together  and (ii) each of the  series of Senior  Preferred  Stock.  See
''Limitations on Debt'' for other restrictions in the Bylaws.


PROPERTY MANAGEMENT OPERATIONS
------------------------------
     OPERATING  STRATEGY:  The Company's  general strategy is to increase rental
revenues and net  operating  income of the  self-storage  facilities it operates
through  monitoring of rental rates,  occupancy levels and expense control.  The
Company  will  generally  consider an increase  in rental  rates when  occupancy
levels reach sustainable levels,  usually 90% or greater. The Company intends to
utilize  mass-marketing  tools (i.e., TV, radio,  etc.) as necessary to increase
market share in specific regions.

     The  Company  operates  and  manages,  pursuant to  management  agreements,
mini-warehouse   facilities  and,  through  a  95%  subsidiary,   business  park
facilities.  At  December  31,  1995 the  Company  operated  and  managed  1,075
mini-warehouse  facilities and 50 business park facilities  constituting all the
United States  mini-warehouse  facilities  and business parks  facilities  doing
business under the "Public  Storage" name and all those in which the Company has
an interest.  The property management agreements for mini-warehouse and business
park  facilities  generally  provide  for  compensation  equal  to 6%  and  5% ,
respectively, of the gross revenues of the facilities managed.

     Under  the  supervision  of the  owners,  the  Company  coordinates  rental
policies, rent collections,  marketing activities, the purchase of equipment and
supplies,  maintenance  activity,  and the selection and  engagement of vendors,
suppliers  and  independent  contractors.  The  Company  assists and advises the
property owners in establishing policies for the hire, discharge and supervision
of employees for the operation of their facilities, including resident managers,
assistant managers and billing and maintenance personnel.

     Generally,  mini-warehouse  spaces  are  rented  for one to twelve  months.
Payments  are  generally  made  on a  month-to-month  basis  or can be  prepaid.
Payments for  mini-warehouse  spaces are payable either cash, check. The Company
typically does not mail bills to customers.

     Renters enter their storage unit without  charge on an  unrestricted  basis
during  business  hours,  which are generally  from 7:30 a.m. to 7:30 p.m. seven
days a week.  Office hours are typically 9:30 a.m. to 6:00 p.m.,  Monday through
Friday and 9:30 a.m. to 5:00 p.m. on weekends. Renters have exclusive use of the
space and provide their own lock and key which may be purchased at the facility.
The  facilities  generally  consist of three to seven  buildings  containing  an
aggregate of 350 to 750 storage  spaces.  Most buildings  contain between 40,000
and 100,000 square feet of floor space and an interior  height of  approximately
ten to twelve feet.  Individual  storage spaces typically range in size from 5x5
to 20x30 with monthly rents ranging from $25 to more than $300. Facility grounds
are generally fenced and well-lighted with electronic gates to control access.

     Centralized systems and procedures have been implemented to manage cash and
track delinquent  rents.  Rents are due and payable at the first of the month. A
customer is notified of  delinquency  if the Company has not received the rental
payment by the tenth of the month.  Upon  notification of  delinquency,  in most
states the owners have the right to place a lien on the  contents of the storage
unit and to perfect  that lien  outside the court  system  (timing  depends upon
individual  state  statutes);  in most states the owners  may, at their  option,
conduct a blind public auction if the  delinquency is not resolved  within 90 to
120 days.  Proceeds  recovered from the auction are applied first to state sales
taxes and then to  delinquent  rent.  Any  remainder  is then  forwarded  to the
customer.  Delinquencies are not significant in relation to total revenues, with
those over 90 days being generally less than 0.1% of rents.

     In the  purchasing of services  such as  advertising  (including  broadcast
media  advertising) and insurance,  the Company attempts to achieve economies by
combining  the  resources  of  the  various  properties  it  operates.   See  "-
Insurance".

     Mini-warehouses  generally  experience  minor seasonal  fluctuations in the
occupancy  with  occupancies  higher in the  summer  months  than in the  winter
months.  The  Company  believes  that  these  fluctuations  result  in part from
increased moving activity during the summer.
                                       10

<PAGE>
     As with most other types of real estate,  the conversion of mini-warehouses
to  alternative  uses  in  connection  with  a sale  or  otherwise  may  require
substantial  capital  expenditures.  However,  the  Company  does not  intend to
convert its  mini-warehouses to other uses and believes that self-storage may be
the highest and best use for the properties.

     OPERATION  INFORMATION  SYSTEMS:  The  Company has a  nationwide  automated
property  operation system - Computerized Help and Management Program ("CHAMP").
The Company believes that (i) the program maintains and enhances its position as
the leader in the  competitive  self-storage  industry,  (ii) in  general,  this
automation  program is  designed to provide  properties  operated by the Company
with more efficient property operation, and (iii) some of the potential benefits
of this system include:

     -    Rental unit  control  which allows the managers to know what units are
          available for rent.

     -    Improved cash flow through increased  delinquency  control.  Automated
          delinquent   tenant   processing,   i.e.,   delinquent   notices   are
          automatically sent out.

     -    Increased collection of late fees. Late fees are charged automatically
          when due.

     -    Improved cash management  control by monitoring daily  collections and
          concentrating  funds  for  investment  to  increase  earnings  on cash
          balances.

     -    Heightened professional image at the property's office.

     -    Increased  and more  flexible  marketing  capabilities.  The system is
          designed  to enable  management  to  respond  promptly  to  changes in
          specific market conditions.

     -    Improved  operations due to the ability of the office  headquarters to
          retrieve activity information nightly for analysis.

     -    Increased control of property operations enabling the Company to react
          to a changing and  competitive  environment and to evaluate the impact
          of pricing  changes,  marketing  programs,  and  operation  and policy
          changes at the properties as required.

     MARKETING:  The goal of the  Company's  marketing  program  is to  increase
awareness,  improve  name  recognition  and  increase  occupancy  levels.  Costs
associated with advertising and promotional rental discounts may reduce revenues
initially.  However,  the Company  seeks to increase  demand and/or rental rates
over time to offset the initial  costs and to increase  revenue and cash flow in
the long term.  These  expenses are  allocated to  individual  properties in the
targeted market area based on scheduled rents and rental activity.

     The Company places  considerable  emphasis on both market-wide  advertising
and local  marketing.  This  strategy  is designed to meet the needs of specific
facilities and broaden market awareness.

     The Company  uses a variety of media in its  marketing  program,  including
television  and radio  advertising,  Yellow Pages,  newspapers,  direct mail and
promotional incentives.

     Of these  various  forms,  the most  significant  in terms of its potential
impact on consumers and their awareness is television and radio advertising. The
Company  believes it is the only industry  operator  capable of using television
advertising  in markets  throughout the country.  The Company  believes that the
costs associated with television advertising are a significant barrier to entry.
The  Company  is able to  distribute  the  cost of  advertising  among  multiple
facilities.

     The Company has a dedicated  in-house  Yellow Pages  agency,  whose primary
responsibility is to utilize Yellow Pages advertising in over 700 directories in
80 markets.  According to consumer  research,  PSMI estimates that approximately
one-third of its renter base finds its facilities through the Yellow Pages.

     The Company has also established a toll-free referral system (800-44-STORE)
which in 1995 serviced in excess of 100,000 inquiries.

     The Company's  newspaper,  direct mail and on-site  advertising efforts are
used  primarily  to  disseminate  promotional  ads  and  incentives.   They  are
distributed  in  specific   neighborhoods   and  are  used  to  market  specific
facilities.

BORROWINGS 
-----------
     The Company has an unsecured $125.0 million credit facility with a group of
commercial banks which expires on April 30, 1998. The facility bears interest at
rates ranging from LIBOR plus .75% to LIBOR plus 1.5%,  depending  upon interest
coverage  ratios.  Under covenants of the Credit  Agreement,  the Company is (i)
required to maintain minimum net
                                       11
<PAGE>

worth (as defined), (ii) required to maintain a ratio of total debt to net worth
(as  defined) not greater than .30 to 1.0,  (iii)  required to maintain  certain
cash flow and interest  coverage ratios (as defined) of not less than 1.0 to 1.0
and  5.0 to  1.0,  respectively,  and  (iv)  limited  in its  ability  to  incur
additional  borrowings and acquire or sell assets. The Company was in compliance
with the covenants of the Credit  Agreement at December 31, 1995.  There were no
borrowings outstanding under the credit facility at December 31, 1995.

     As of  December  31,  1995,  the  Company  had  outstanding  borrowings  of
approximately  $158.1  million of which  approximately  $36.4 million was repaid
early in January 1996. The following table  summarizes the Company's  borrowings
at December  31,  1995,  as adjusted  to give effect to the  repayments  made in
January 1996:

                                          Balance at December
                                               31, 1995
                                             (as adjusted)
                                          --------------------
                                             (in thousands)

        Unsecured debt:
             7.08% Senior notes........         $65,500

        Mortgage debt:
             10.55% Fixed rate.........          33,699
             Other Fixed rate..........          21,638
             Variable rate.............             821
                                               --------

                Total..................        $121,658
                                               ========


     The unsecured senior notes are owed to a group of insurance companies.  The
financing   bears  interest  at  7.08%  per  year,   provides  for   semi-annual
installments  of principal  and interest and matures on November 22, 2003.  This
debt has been rated "A-" by Duff & Phelps.

     The 10.55% fixed rate  borrowings  of $33.7  million is due to an insurance
company,  provides for monthly payments of principal and interest and matures on
August 1, 2004.

     The  variable  rate  mortgage  note  provides  for the  payment  of monthly
interest at a rate equal to the one year LIBOR rate plus 2.0% (7.64% at December
31, 1995) adjusted monthly.  Principal and interest payments are payable monthly
with final maturity in January 1997.

     Subject to a limitation on unsecured  borrowings  in the  Company's  Bylaws
(described  below), the Company has broad powers to borrow in furtherance of the
Company's objectives. The Company has incurred in the past, and may incur in the
future,  both  short-term  and  long-term  indebtedness  to  increase  its funds
available for investment in real estate, capital expenditures and distributions.

LIMITATIONS ON DEBT 
--------------------
     The Bylaws  provide  that the Board of  Directors  shall not  authorize  or
permit the  incurrence  of any  obligation  by the Company which would cause the
Company's ''Asset  Coverage'' of its unsecured  indebtedness to become less than
300%.  Asset  Coverage  is defined in the  Bylaws as the ratio  (expressed  as a
percentage) by which the value of the total assets (as defined in the Bylaws) of
the Company less the Company's  liabilities  (except  liabilities  for unsecured
borrowings)  bears to the aggregate  amount of all  unsecured  borrowings of the
Company.  This Bylaw provision may be changed only upon a vote of the holders of
a majority of the shares of (i) Common  Stock and  Convertible  Preferred  Stock
voting together and (ii) each of the series of Senior Preferred Stock.

     The Company's Bylaws prohibit the Company from issuing debt securities in a
public offering unless the Company's ''cash flow'' (which for this purpose means
net income,  exclusive of extraordinary  items, plus  depreciation) for the most
recent 12 months for which financial statements are available,  adjusted to give
effect to the  anticipated  use of the proceeds  from the proposed  sale of debt
securities,  would be  sufficient to pay the interest on such  securities.  This
Bylaw  provision may be changed only upon a vote of the holders of a majority of
the shares of (i) Common Stock and  Convertible  Preferred Stock voting together
and (ii) each of the series of Senior Preferred Stock.

     Without  the  consent of the holders of a majority of each of the series of
Senior  Preferred  Stock, the Company will not take any action that would result
in a ratio of ''Debt'' to ''Assets''  (the ''Debt  Ratio'') in excess of 50%. As
of December 31, 
                                       12
<PAGE>
1995, the Debt Ratio was  approximately  8.2%.  ''Debt''  means the  liabilities
(other than ''accrued and other  liabilities''  and ''minority  interest'') that
should,  in  accordance  with  generally  accepted  accounting  principles,   be
reflected  on  the  Company's   consolidated   balance  sheet  at  the  time  of
determination.  ''Assets''  means the  Company's  total assets that  should,  in
accordance with generally accepted  accounting  principles,  be reflected on the
Company's consolidated balance sheet at the time of determination.

     The Company's bank and senior  unsecured debt  agreements  contain  various
financial covenants,  including  limitations on the level of indebtedness of 30%
of total  capitalization,  as  defined,  and the  prohibition  of the payment of
dividends upon the occurrence of an event of default, as defined.

OTHER BUSINESS ACTIVITIES
-------------------------
     A  corporation  owned by Hughes  and  members of his  family  (the  "Hughes
Family")  reinsures  policies  against  losses to goods stored by tenants in the
Company's  mini-warehouses.  The  Company  believes  that  the  availability  of
insurance  reduces the potential  liability of the Company to tenants for losses
to their goods from theft or destruction.  The corporation receives the premiums
and bears the risks associated with the insurance.

     The  Company,  through a 95%  owned  subsidiary,  sells  locks and boxes to
tenants to be used in securing  their spaces and moving their goods and believes
that the availability of locks and boxes for sale promotes the rental of spaces.

EMPLOYEES 
----------
     There are approximately  3,000 persons who render services on behalf of the
Company, primarily personnel engaged in property operation, substantially all of
whom are employed by a clearing company that provides certain administrative and
cost-sharing  services to the Company and other owners of properties operated by
the Company.

FEDERAL INCOME TAX
------------------
     The  Company  believes  that it has  operated,  and  intends to continue to
operate,  in such a manner as to qualify as a REIT  under the  Internal  Revenue
Code of  1986,  but no  assurance  can be  given  that it will at all  times  so
qualify.  To the extent that the Company continues to qualify as a REIT, it will
not be taxed,  with certain  limited  exceptions,  on the taxable income that is
distributed to its shareholders.

     In addition to certain  asset tests,  the Company must meet several  annual
gross income tests to retain its REIT qualification.  Under the 95% gross income
test,  the  Company  must  derive at least 95% of its total  gross  income  from
specified  classes of income  related to real property,  dividends,  interest or
gains from the sale or other  distribution of stock or other  securities that do
not  constitute  "dealer  property."  If the Company  fails to meet the 95% test
during any taxable  year,  its REIT  status  would  terminate  for that year and
future years unless it qualifies for the "good cause" exception.  Generally,  if
the Company  fails the 95% test but still  retains its  qualification  as a REIT
under the "good  cause"  exception,  it would be subject to a 100% excise tax on
the amount of the excess  nonqualifying  income  multiplied  by a fraction,  the
numerator of which would be the Company's  taxable income (computed  without its
distribution  deduction)  and the  denominator  of which would be the  Company's
gross income from all sources.  This excise tax would have the general effect of
causing  the  Company  to  pay  all  net  profits  generated  from  this  excess
nonqualifying income to the Internal Revenue Service.

     Subsequent  to the PSMI  Merger,  the  Company  assumed  and is  performing
property management  activities for the various  partnerships and REITs in which
the Company has an interest.  The Company receives property management fees from
such  partnerships,  REITs and other owners in exchange for the  performance  of
such management activities.  The gross income received by the Company from these
property  management  activities  with respect to the facilities  owned by third
party entities and REITs in which the Company has an ownership  interest will be
treated  as income  not  qualifying  under the 95% test.  A portion of the gross
income  (representing a pro rata amount  allocated to partnership  interests not
owed by the Company) received by the Company from property management activities
with respect to the facilities owned by partnerships in which the Company has an
ownership  interest will also be treated as income not qualifying  under the 95%
test.

     At the time of the PSMI Merger, if there were no change in current revenues
of the  Company  and  PSMI  and  the  Company  took  no  action  to  reduce  its
nonqualifying  income,  the Company estimated it would not satisfy the 95% gross
income test for 1996.  However,  the percentage of  nonqualifying  income may be
reduced in a variety of ways:  (i) through the  prepayment of  management  fees,
(ii)  through  increase in overall  gross  income that result from  increases in
qualifying rents that will reduce the percentage of  nonqualifying  income (i.e.
the acquisition of additional real estate investments which generate  qualifying
rents), and (iii) through the acquisition of properties currently managed by the
Company,  thereby the management  fees received by the Company would cease to be
nonqualifying income.
                                       13
<PAGE>
     In order to reduce the amount of  nonqualifying  income the  Company  would
earn in 1996,  certain  entities prepaid during 1995 to the Company a portion of
the  management  fees that the  Company  otherwise  would have  received in 1996
discounted for early payment.  The amount prepaid during 1995 was  approximately
$4.5 million.  In addition,  subsequent to the PSMI Merger, the Company publicly
issued  preferred stock raising net offering  proceeds of  approximately  $330.1
million.  The net proceeds  have been used to repay debt and acquire  additional
real  estate  investments  including  interests  in  properties  managed  by the
Company.  The Company  believes that the prepayment of management  fees combined
with the acquisition of additional real estate  investments,  it will be able to
meet the 95% test for 1996 and subsequent years.

INSURANCE
---------
     The Company believes that its properties are adequately insured. Facilities
operated by the  Company  have  historically  carried  comprehensive  insurance,
including  fire,  earthquake,  liability and extended  coverage from  nationally
recognized carriers.


PROPOSED MERGERS
----------------
     On March 19, 1996, the  shareholders  of each of Public Storage  Properties
IX, Inc.  ("Properties  9") and PS Business Parks,  Inc.  ("PSBP")  approved the
mergers of the respective  corporations into the Company and it is expected that
the mergers will be completed during March 1996. In the mergers, it is estimated
that the Company will issue an  aggregate of 1.5 million  shares of Common Stock
and pay an  additional  $11.5  million  in cash (the  shares of common  stock of
Properties  9 and PSBP that are owned by the  Company  will be  canceled  in the
merger).  Properties  9 owns and  operates  15  properties:  14  mini-warehouses
(881,000 square feet) and one business park (72,000 square feet).  PSBP owns and
operates a single business park (173,000 square feet).

     In March 1996 the Company and Storage Properties,  Inc. ("SPI"), a publicly
traded  equity  real  estate   investment  trust  agreed,   subject  to  certain
conditions,  to merge.  Upon the merger,  each  outstanding  share of SPI common
stock would be  converted,  at the  election of the  shareholders  of SPI,  into
either  shares of the  Company's  common  stock with a market value of $7.31 or,
with  respect  to up to 20% of the SPI  common  stock,  $7.31 in  cash.  SPI has
3,348,167  outstanding  shares of common stock and an  estimated  value of $24.5
million.  The merger  agreement is  conditioned  on,  among other  requirements,
receipt  of  satisfactory   fairness   opinions  by  SPI  and  approval  by  the
shareholders  of SPI.  The  Company  has an  advisory  agreement  and a property
management  agreement with SPI. SPI owns seven  mini-warehouses  (371,465 square
feet).
                                       14
<PAGE>
ITEM 2.  PROPERTIES
         ----------
     At  December  31,  1995,  the  Company had direct  ownership  interests  or
partnership interests in 1,050 properties located in 37 states:

                                             At December 31, 1995
                           -----------------------------------------------------
                                                       Net Rentable Square Feet
                           Number of Facilities               (in thousands)
                           --------------------        ------------------------

                              Mini       BP                Mini             BP
                              ----      ---                ----            ---
California:
     Northern                 129         4               7,211            291
     Southern                 146        16               9,419          1,434
Texas                         109         5               7,092            670
Florida                        81         -               4,491              -
Illinois                       62         -               3,899              -
Colorado                       36         -               2,275              -
Washington                     36         1               2,228             28
Georgia                        33         -               1,727              -
New Jersey                     32         -               1,846              -
Maryland                       31         -               1,772              -
Virginia                       28         3               1,921            213
New York                       27         -               1,584              -
Ohio                           27         -               1,651              -
Oregon                         25         1               1,232             40
Nevada                         22         -               1,410              -
Pennsylvania                   18         -               1,227              -
Other states (22 states)      174         4               9,734            406
     Totals                 1,016        34              60,719          3,082

     The  Company's  facilities  are  generally  operated to maximize  cash flow
through the regular review and, when warranted by market conditions,  adjustment
of scheduled  rents.  For the year ended December 31, 1995, the weighted average
occupancy  level and the weighted  average  monthly  realized  rent per rentable
square foot for the Company's mini-warehouse facilities were approximately 89.8%
and $0.71,  respectively,  and for the business  park  facilities  approximately
95.0% and $0.74, respectively.

     None  of the  Company's  current  investments  involves  1% or  more of the
Company's total assets, gross revenues or net income.

     MINI-WAREHOUSE:.  Mini-warehouses,  which comprise the vast majority of the
Company's  investments  (approximately 91% based on rental income), are designed
to offer accessible  storage space for personal and business use at a relatively
low cost. A user rents a fully enclosed space which is for the user's  exclusive
use and to which  only  the user has  access  on an  unrestricted  basis  during
business hours. On-site operation is the responsibility of resident managers who
are  supervised by area managers.  Some  mini-warehouses  also include  rentable
uncovered parking areas for vehicle storage. Leases for mini-warehouse space may
be on a long-term or short-term basis, although typically spaces are rented on a
month-to-month  basis.  Rental  rates  vary  according  to the  location  of the
property and the size of the storage space.  The Company's  mini-warehouses  are
all operated under the "Public Storage" name.

     Users of space in  mini-warehouses  include both  individuals and large and
small  businesses.  Individuals  usually employ this space for storage of, among
other  things,  furniture,  household  appliances,  personal  belongings,  motor
vehicles,  boats,  campers,  motorcycles and other household  goods.  Businesses
normally employ this space for storage of excess  inventory,  business  records,
seasonal goods, equipment and fixtures.

     Mini-warehouses  in which the Company  has  invested  generally  consist of
three to seven  buildings  containing an aggregate of between 350 to 750 storage
spaces, most of which have between 25 and 400 square feet and an interior height
of approximately 8 to 12 feet.
                                       15
<PAGE>
     The Company experiences minor seasonal fluctuations in the occupancy levels
of mini-warehouses  with occupancies  generally higher in the summer months than
in the winter months.  The Company  believes that these  fluctuations  result in
part from increased moving activity during the summer.

     The  Company's  mini-warehouses  are  geographically   diversified  located
primarily  in or near major  metropolitan  markets in 37 states.  Generally  the
Company's  mini-warehouses  are located in heavily  populated areas and close to
concentrations of apartment  complexes,  single family residences and commercial
developments. However, there may be circumstances in which it may be appropriate
to own a property in a less  populated  area,  for  example,  in an area that is
highly  visible  from a major  thoroughfare  and  close to,  although  not in, a
heavily populated area. Moreover,  in certain population centers, land costs and
zoning  restrictions  may  create a demand  for space in nearby  less  populated
areas.

     Since the Company's investments are primarily mini-warehouses,  the ability
of the Company to  preserve  its  investments  and  achieve  its  objectives  is
dependent in large part upon success in this field. Historically,  the Company's
mini-warehouse  property  interests  have  generally  shown  a  high  degree  of
consistency in generating cash flows, despite changing economic conditions.  The
Company  believes  that  its  mini-warehouses  have  attractive  characteristics
consisting of high profit margins, high average occupancy levels, a broad tenant
base and low levels of capital  expenditures  to maintain  their  condition  and
appearance.

     During the year ended  December 31,  1995,  the Public  Storage  Same-store
mini-warehouses  had an  average  occupancy  of 90%  compared  with  an  average
break-even  occupancy  level (before  depreciation  expense and debt service) of
only  28%  resulting  in  an  operating  margin  (net  operating  income  before
depreciation  and  amortization  expense  divided by rental  income) of 71%. The
Company's tenant base,  which is comprised of more than 500,000  individuals and
businesses,   has  an  average   occupancy  term  of  12  months,   and  no  one
mini-warehouse accounts for more than 1% of revenues.

     COMMERCIAL  PROPERTIES:  Subject to the  prohibitions  on  investments  and
activities  described below, the Company may invest in all types of real estate.
Most of the Company's  non-mini-warehouse  investments are interests in business
parks and low-rise office buildings. A business park may include both industrial
and office space.  Industrial  space may be used for, among other things,  light
manufacturing and assembly,  storage and warehousing,  distribution and research
and development  activities.  The Company believes that most of the office space
is occupied by tenants who are also  renting  industrial  space.  The  remaining
office  space is used for  general  office  purposes.  A business  park may also
include  facilities  for  commercial  uses  such  as  banks,   travel  agencies,
restaurants,  office supply  shops,  professionals  or other  tenants  providing
services to the  public.  The amount of retail  space in a business  park is not
expected to be significant.

     The  Company's  business  parks  typically  consist of one to ten buildings
located  on three to  twelve  acres and  contain  from  approximately  55,000 to
175,000  square feet of rentable  space.  A business  park property is typically
divided into units ranging in size from 600 to 5,000 square feet.  However,  the
Company may acquire business parks that do not have these  characteristics.  The
larger facilities have on-site management.  Parking is open or covered,  and the
ratio of spaces to rentable  square  feet  ranges from one to four per  thousand
square feet,  depending  upon the use of the property and its  location.  Office
space generally requires a greater parking ratio than most industrial uses.

     ENVIRONMENTAL  MATTERS:  The  Company's  current  practice  is  to  conduct
environmental  investigations  in connection  with property  acquisitions.  As a
result of recent environmental investigations of its properties, the Company has
recorded an amount which, in management's  best estimate,  will be sufficient to
satisfy anticipated costs of known  investigation and remediation  requirements.
At December 31, 1995, the Company accrued $2,741,000 for estimated environmental
remediation  costs.  In  addition,  during  1995,  entities in which the Company
accounts for on the equity method also accrued amounts for estimated environment
remediation costs of which the Company's share is approximately $510,000.

ITEM 3.  LEGAL PROCEEDINGS
         -----------------
     There are no material legal proceedings pending against the Company.

     A purported stockholder class and derivative action complaint was commenced
on November 2, 1995 in regard to the PSMI Merger against all of the directors of
the Company (Crandon  Capital Partners v. Hughes,  et al., Case No. BC138405) in
the Superior Court of the State of California for the County of Los Angeles (the
"Crandon Complaint").

     The Crandon  Complaint seeks  certification of the action as a class action
on behalf of plaintiff  and all others  similarly  situated;  an  accounting  by
defendants for all alleged damages;  declaratory relief, including a declaration
that  defendants  have breached  their  fiduciary  duties to the Company and its
shareholders;  compensatory  damages in an unspecified amount; an award of costs
and attorneys' fees; and such other relief as may be just and proper.
                                       16
<PAGE>
     The Crandon  Complaint  alleges,  among other things,  that the  defendants
breached their fiduciary duties to the Company by impairing shareholders' voting
rights through amendment of the Company's Articles of Incorporation; by diluting
shareholder   equity  through  the  issuance  of  additional  Common  Stock;  by
entrenching the Hughes Family by failing to meaningfully  consider  alternatives
to the PSMI  Merger;  by  failing  to obtain an  independent  entity to  perform
valuations  of the assets to be acquired by the Company in the PSMI  Merger;  by
agreeing to a transaction  that benefits the Hughes Family at the expense of the
Company's public shareholders;  by wasting corporate assets by purchasing assets
in the PSMI  Merger at an  artificially  high  price;  by relying on the special
committee of independent  directors of the Company , which was not disinterested
because of relationships  with the Hughes Family and the participation of Hughes
and  others in the  process  to approve  the PSMI  Merger;  by relying on Arthur
Andersen LLP and Robertson,  Stephens & Company,  L.P. who were not  independent
and did not independently  verify  information;  and by exposing the Company and
its  shareholders  to  certain  risks  and  detriments  described  in the  Proxy
Statement  dated October 11, 1995  pursuant to which the Company's  shareholders
approved the PSMI Merger.

     The Crandon Complaint appears to be based entirely on information disclosed
in the Proxy Statement  dated October 11, 1995 and in two published  articles in
the national press.

     Defendants believe that this lawsuit is completely without merit and intend
to defend the action vigorously.
                                       17
<PAGE>
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
         ---------------------------------------------------
     The Company held a joint annual meeting and special meeting of shareholders
on November 13, 1995. Proxies for the annual meeting and proxies for the special
meeting were solicited  pursuant to Regulation 14 under the Securities  Exchange
Act of 1934. The annual meeting and the special  meeting  involved the following
matters:

     1.     ANNUAL MEETING

            ELECTION OF DIRECTORS

                                               Number of Shares of Common Stock
                                               --------------------------------
     Name                                      Voted For           Withheld
     ----                                      ---------           --------
     B. Wayne Hughes                           34,194,283           474,518
     Harvey Lenkin                             34,215,605           453,196
     Robert J. Abernethy                       34,237,610           431,191
     Dann V. Angeloff                          34,217,374           451,427
     William C. Baker                          34,241,430           427,371
     Uri P. Harkham                            34,235,362           433,439
     Berry Holmes                              34,238,254           430,547
     Michael M. Sachs                          34,237,317           431,484


     2.     SPECIAL MEETING

          a. Approval of Agreement and Plan of  Reorganization  by and among the
             Company,  Public Storage, Inc. and Public Storage Management,  Inc.
             described in the Proxy  Statement dated October 11, 1995 - approval
             of this proposal  required the affirmative vote of the holders of a
             majority of the outstanding  shares of the Company's  Common Stock,
             and this proposal was approved by the following vote:

                     For           Against          Abstain            No Vote
                     ---           -------          -------            -------
                  30,006,794       886,041          572,433               0


          b. Adoption of a related  amendment  to Article  III of the  Company's
             articles of  incorporation in the form of Appendix E-1 to the Proxy
             Statement dated October 11, 1995 to authorize  additional shares of
             Common  Stock and a new  Class B Common  Stock -  approval  of this
             proposal required the affirmative vote of the holders of a majority
             of the outstanding  shares of the Company's  Common Stock, and this
             proposal was approved by the following vote:

                     For           Against          Abstain            No Vote
                     ---           -------          -------            -------
                 29,576,480       1,237,849         650,938                1
     

          c. Adoption  of  an  amendment  adding  Article  IV to  the  Company's
             articles of  incorporation in the form of Appendix E-2 to the Proxy
             Statement  dated  October  11,  1995 to  create  certain  ownership
             limitations  with respect to all classes of the  Company's  capital
             stock - approval of this proposal  required the affirmative vote of
             the  holders  of a  majority  of  the  outstanding  shares  of  the
             Company's  Common  Stock,  and this  proposal  was  approved by the
             following vote:

                     For           Against         Abstain             No Vote
                     ---           -------         -------             -------
                29,715,998        1,074,495        674,774                1


                                       18
<PAGE>

                                     PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
          MATTERS
          -----------------------------------------------------------------
a.     Market Price of the Registrant's Common Equity:

               The Common  Stock has been listed on the New York Stock  Exchange
          since October 19, 1984.

               The  following  table sets forth the high and low sales prices of
          the Common Stock on the New York Stock  Exchange  composite  tapes for
          the applicable periods.

                                                      Range
                                             -------------------------
          Year         Quarter                High                 Low
      ------------  --------------         --------------     --------------
          1994           1st                  $16               $13-1/2
                         2nd                16-3/4               13-3/8
                         3rd                15-3/4               14-1/4
                         4th                  15                   13

          1995           1st                17-1/8               13-1/2
                         2nd                17-1/8               15-1/4
                         3rd                18-3/4               16-3/8
                         4th                19-3/4               17-3/8


               As of March 7, 1996, there were  approximately  13,114 holders of
          record of the Common Stock.

b.     Related Common Stockholder Matters:

               Inconnection with the PSMI Merger,  the Company (a) increased the
          number of shares of Common  Stock that the  Company is  authorized  to
          issue from 60,000,000 to  200,000,000,  a portion of which were issued
          in the PSMI Merger, and authorized  7,000,000 shares of Class B Common
          Stock, all of which was issued in the PSMI Merger, and (b) established
          an ownership  limitation for the Company's  capital stock to assist in
          preserving its REIT status.

c.     Class B Common Stock

               The  Class B Common  Stock  issued  in  connection  with the PSMI
          Merger has the following characteristics:

          -    The  Class  B  Common   Stock   will   (i) not   participate   in
               distributions  until the later to occur of funds from  operations
               ("FFO")  per Common  Share as defined  below,  aggregating  $1.80
               during  any  period of four  consecutive  calendar  quarters,  or
               January  1,  2000,  thereafter  the  Class B  Common  Stock  will
               participate   in    distributions    (other   than    liquidating
               distributions), at the rate of 97% of the per share distributions
               on the Common Stock, provided that cumulative distributions of at
               least  $.22 per  quarter  per share  have been paid on the Common
               Stock, (ii) not participate in liquidating  distributions,  (iii)
               not  be  entitled  to  vote  (except  as  expressly  required  by
               California law) and (iv) automatically convert into Common Stock,
               on a share  for share  basis,  upon the later to occur of FFO per
               Common  Share   aggregating  $3.00  during  any  period  of  four
               consecutive calendar quarters or January 1, 2003.

          For these purposes:

          1)   FFO, means net income (loss)  (computed in accordance  with GAAP)
               before   (i) gain  (loss)  on  early   extinguishment   of  debt,
               (ii) minority   interest  in  income  and  (iii) gain  (loss)  on
               disposition  of  real  estate,  adjusted  as  follows:  (i)  plus
               depreciation and amortization  (including the Company's  pro-rata
               share of depreciation and amortization of  unconsolidated  equity
               interests and amortization of assets acquired in the PSMI Merger,
               including property management 
                                       19
<PAGE>
               agreements  and  goodwill),  and (ii)  less FFO  attributable  to
               minority interest. FFO is a supplemental  performance measure for
               equity  REITs as  defined  by the  National  Association  of Real
               Estate Investment Trusts, Inc. ("NAREIT").  The NAREIT definition
               does not specifically  address the treatment of minority interest
               in the  determination of FFO or the treatment of the amortization
               of property  management  agreements and goodwill.  In the case of
               the  Company,   FFO  represents   amounts   attributable  to  its
               shareholders after deducting amounts attributable to the minority
               interests and before  deductions for the amortization of property
               management agreements and goodwill. FFO is presented because many
               industry   analysts  consider  FFO  to  be  one  measure  of  the
               performance  of the  Company and it is used in  establishing  the
               terms of the  Class B  Common  Stock.  FFO  does  not  take  into
               consideration  scheduled  principal  payments  on  debt,  capital
               improvements, distributions and other obligations of the Company.
               Accordingly,  FFO is not a substitute for the Company's cash flow
               or  net  income  as a  measure  of  the  Company's  liquidity  or
               operating performance or ability to pay distributions.

          2)   FFO per Common  Share means FFO less  preferred  stock  dividends
               (other than dividends on convertible  preferred stock) divided by
               the outstanding  weighted average shares of Common Stock assuming
               conversion  of all  outstanding  convertible  securities  and the
               Class B Common Stock.

               For these  purposes,  FFO per share of Common  Stock (as defined)
               was $1.72 for the year ended December 31, 1995.

               The Company has paid quarterly  distributions to its shareholders
          since 1981, its first full year of operations.  Distributions paid per
          share of Common Stock for 1995 amounted to $0.88.

               Holders of Common  Stock are  entitled  to receive  distributions
          when and if declared by the  Company's  Board of Directors  out of any
          funds legally  available for that purpose.  The Company is required to
          distribute  at least 95% of its net taxable  ordinary  income prior to
          the filing of the  Company's  tax  return and 85%,  subject to certain
          adjustments, during the calendar year, to maintain its REIT status for
          federal  income tax  purposes.  It is  management's  intention  to pay
          distributions of not less than this required amount.

               For Federal  tax  purposes,  distributions  to  shareholders  are
          treated as  ordinary  income,  capital  gains,  return of capital or a
          combination thereof.  Distributions to common shareholders were $0.88,
          $0.85,  and $0.84 for 1995,  1994 and 1993,  respectively  and in each
          case represents ordinary income.


d.     Registrant's Preferred Equity:

               On October 26, 1992, the Company  completed a public  offering of
          1,825,000  shares  ($25  stated  value per  share)  of 10%  Cumulative
          Preferred Stock,  Series A ("Series A Preferred Stock").  The Series A
          Preferred  Stock has general  preference  rights over the Common Stock
          with respect to distributions and liquidation  proceeds.  During 1995,
          the Company paid dividends  totaling  $4,563,000  ($2.50 per preferred
          share).

               On March 25,  1993,  the Company  completed a public  offering of
          2,300,000  shares  ($25  stated  value per share) of 9.20%  Cumulative
          Preferred Stock,  Series B ("Series B Preferred Stock").  The Series B
          Preferred  Stock has general  preference  rights over the Common Stock
          with respect to distributions and liquidation  proceeds.  During 1995,
          the Company paid dividends  totaling  $5,488,000  ($2.30 per preferred
          share).

               On June 30,  1994,  the Company  completed  a public  offering of
          1,200,000  shares  ($25  stated  value per share) of  Adjustable  Rate
          Cumulative Preferred Stock, Series C ("Series C Preferred Stock"). The
          Series C Preferred Stock has general preference rights over the Common
          Stock with respect to distributions and liquidation  proceeds.  During
          1995,  the  Company  paid  dividends  totaling  $2,364,000  ($1.97 per
          preferred share)

               On September 1, 1994, the Company  completed a public offering of
          1,200,000  shares  ($25  stated  value per  share) of 9.5%  Cumulative
          Preferred Stock,  Series D ("Series D Preferred Stock").  The Series D
          Preferred  Stock has general  preference  rights over the Common Stock
          with respect to distributions and liquidation  proceeds.  During 1995,
          the Company paid dividends  totaling  $2,850,000 ($2.375 per preferred
          share).

               On February 1, 1995, the Company  completed a public  offering of
          2,195,000  shares  ($25  stated  value per  share)  of 10%  Cumulative
          Preferred Stock,  Series E ("Series E Preferred Stock").  The Series E
          Preferred  Stock has general  preference  rights over the Common Stock
          with respect to distributions and liquidation  proceeds.  During 1995,
          the Company paid dividends  totaling  $5,030,000 ($2.292 per preferred
          share,  pro rated from February 1, 1995 through December 31, 1995, the
          period during which the Series E Preferred Stock was outstanding).
                                       20
<PAGE>
               On May 3,  1995,  the  Company  completed  a public  offering  of
          2,300,000  shares  ($25  stated  value per share) of 9.50%  Cumulative
          Preferred Stock,  Series F ("Series F Preferred Stock").  The Series F
          Preferred  Stock has general  preference  rights over the Common Stock
          with respect to distributions and liquidation  proceeds.  During 1995,
          the Company paid dividends  totaling  $3,721,000 ($1.618 per preferred
          share,  pro rated from May 3, 1995  through  December  31,  1995,  the
          period during which the Series F Preferred Stock was outstanding).

               On December 13, 1995, the Company  completed a public offering of
          6,900,000  depositary shares each  representing  1/1,000 of a share of
          8-7/8%  Cumulative  Preferred  Stock,  Series G ("Series  G  Preferred
          Stock")($25 stated value per depositary share). The Series G Preferred
          Stock has general preference rights over the Common Stock with respect
          to distributions  and liquidation  proceeds.  During 1995, the Company
          accrued dividends  totaling  $638,000 ($0.09 per preferred  depositary
          share, pro rated from December 13, 1995 through December 31, 1995, the
          period during which the Series G Preferred Stock was outstanding).

               On January 25, 1996, the Company  completed a public  offering of
          6,750,000  depositary shares each  representing  1/1,000 of a share of
          8.45%  Cumulative  Preferred  Stock,  Series H  ("Series  H  Preferred
          Stock")($25 stated value per depositary share). The Series H Preferred
          Stock has general preference rights over the Common Stock with respect
          to distributions and liquidation proceeds.

               The Series A,  Series B,  Series C, Series D, Series E, Series F,
          Series G, and Series H Preferred Stock collectively are referred to as
          the "Senior Preferred Stock."

               On July 15,  1993,  the Company  completed  a public  offering of
          2,300,000  shares  ($25 stated  value per share) of 8.25%  Convertible
          Preferred  Stock  ("Convertible  Preferred  Stock").  The  Convertible
          Preferred  Stock has general  preference  rights over the Common Stock
          (and  ranks  junior to the Senior  Preferred  Stock)  with  respect to
          distributions and liquidation  proceeds.  During 1995 the Company paid
          dividends totaling $4,744,000 ($2.064 per preferred share).

               Effective  July 1, 1995,  the Company issued 31,200 shares of its
          Mandatory Convertible Participating Preferred Stock to an unaffiliated
          investor to acquire the investor's limited partnership  interest in an
          affiliated  real estate  partnership.  On June 30, 2002, the Mandatory
          Convertible  Participating  Preferred Stock will automatically convert
          into common  stock of the Company.  However,  prior to that time it is
          convertible at the option of the holder. At conversion,  the number of
          common shares to be issued to the holder will be determined based upon
          the  Company's  acquired  partnership  interest in the then  aggregate
          property values of the real estate partnership  divided by the average
          market price of the  Company's  common stock at the time of conversion
          (if  converted  prior to June 30,  2000 the  lesser  of  $18.00 or the
          average  market  price of the  Company's  common  stock at the time of
          conversion  will  be  used).  At  December  31,  1995,  the  Mandatory
          Convertible   Participating   Preferred  Stock  was  convertible  into
          approximately  1,553,647  shares of the Company's  common stock (based
          upon a conversion price of $18.00 per share).
                                       21
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA
         -----------------------
<TABLE>
<CAPTION>        
                                                                               For the year ended December 31,
                                                            -----------------------------------------------------------------------
                                                            1995 (1)         1994           1993             1992             1991
                                                            --------         ----           ----             ----             ----
                                                                        (In thousands, except per share data)
<S>                                                      <C>             <C>             <C>              <C>              <C>   
Revenues:
  Rental income                                           $ 202,134       $ 141,845       $ 109,203       $  95,886       $  91,695
  Equity in earnings of real estate                           3,763             764             563            --              --
     entities
  Facility management fees                                    2,144            --              --              --              --
  Interest and other income                                   4,609           4,587           4,914           1,562           1,833
                                                              -----           -----           -----           -----           -----
                                                            212,650         147,196         114,680          97,448          93,528
Expenses:
  Cost of operations                                         72,247          52,816          42,116          38,348          37,074
  Cost of facility management                                   452            --              --              --              --
  Depreciation and amortization                              40,760          28,274          24,998          22,405          21,773
  General and administrative                                  3,982           2,631           2,541           2,629           2,644
  Environmental cost                                          2,741            --              --              --              --
  Advisory fee                                                6,437           4,983           3,619           2,612           2,769
  Interest expense                                            8,508           6,893           6,079           9,834          10,621
                                                              -----           -----           -----           -----          ------
                                                            135,127          95,597          79,353          75,828          74,881
                                                            -------          ------          ------          ------          ------

Income before minority interest and gain
  on disposition of real estate                              77,523          51,599          35,327          21,620          18,647

Minority interest in income                                  (7,137)         (9,481)         (6,895)         (6,693)
                                                             ------          ------          ------          ------ 
                                                                                                                             (7,291)
Income before gain on disposition of real
  estate                                                     70,386          42,118           28,036         14,725           11,954

Gain on disposition of real estate, net
  of disposition fees                                           --             --               --              398              --
                                                              -----           -----           -----           -----           -----

Net income                                                 $ 70,386        $ 42,118       $   28,036       $ 15,123         $ 11,954
                                                           ========        ========       ==========       ========         ========

Funds from operations (2)                                  $105,086        $ 56,143       $   35,830       $ 21,133         $ 17,176
                                                           ========        ========       ==========       ========         ========
------------------------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE:
  Income before gain on disposition of
     real estate
                                                           $   0.95        $   1.05         $   0.98        $   0.88         $  0.81
  Gain on disposition of real estate
                                                                --               --               --            0.02             -- 
                                                              -----           -----           -----           -----           -----

  Net income                                                $   0.95       $   1.05         $   0.98        $   0.90         $  0.81
                                                            ========       ========         ========        ========         =======

Distributions per common share                              $   0.88       $   0.85         $   0.84        $   0.84         $  0.82
                                                            ========       ========         ========        ========        ========

            Weighted average common shares                  $ 41,171       $ 24,077         $ 17,558        $ 15,981        $ 14,751
                                                            ========       ========         ========        ========        ========

Total assets                                              $1,937,461     $  820,309       $  666,133      $  537,724        $548,220
Total debt                                                $  158,052     $   77,235       $   84,076      $   69,478        $104,244
Minority interest                                         $  112,373     $  141,227       $  193,712      $  202,797        $243,903
Shareholders' equity                                      $1,634,503     $  587,786       $  376,066      $  253,669        $188,113


<FN>
(1)  During 1995 the Company completed several significant business combinations
     and equity transactions.  See Notes 3 and 11 to the Company's  consolidated
     financial statements.
(2)  Funds  from  operations  ("FFO"),  means net  income  (loss)  (computed  in
     accordance  with GAAP)  before (i) gain (loss) on early  extinguishment  of
     debt, (ii) minority interest in income and (iii) gain (loss) on disposition
     of real estate, adjusted as follows: (i) plus depreciation and amortization
     (including the Company's pro-rata share of depreciation and amortization of
     unconsolidated  equity interests and amortization of assets acquired in the
     PSMI Merger,  including property management  agreements and excess purchase
     cost over net assets acquired),  and (ii) less FFO attributable to minority
     interest.  FFO is a  supplemental  performance  measure for equity REITs as
     defined by the National  Association of Real Estate Investment Trusts, Inc.
     ("NAREIT").  The  NAREIT  definition  does  not  specifically  address  the
     treatment of minority interest in the determination of FFO or the treatment
     of the amortization of property  management  agreements and excess purchase
     cost over net assets acquired.  In the case of the Company,  FFO represents
     amounts   attributable  to  its   shareholders   after  deducting   amounts
     attributable  to the  minority  interests  and  before  deductions  for the
     amortization  of property  management  agreements and excess  purchase cost
     over net assets acquired.  FFO is presented  because many analysts consider
     FFO to be one measure of the  performance  of the Company and it is used in
     certain aspects of the terms of the Class B Common Stock. FFO does not take
     into   consideration   scheduled   principal   payments  on  debt,  capital
     improvements   distributions   and  other   obligations   of  the  Company.
     Accordingly,  FFO is not a substitute  for the  Company's  cash flow or net
     income as a measure of the Company's liquidity or operating  performance or
     ability to pay distributions.
</FN>
</TABLE>
                                       22
<PAGE>
ITEM 7. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations
        ------------------------------------------------------------------------

     The following  discussion and analysis  should be read in conjunction  with
the Company's consolidated financial statements and notes thereto.

     OVERVIEW:  Over the past two  years,  the  Company  completed  a number  of
transactions  which have had and will continue to have significant impact to the
Company.  Since 1993, the Company's  total assets and  shareholders'  equity has
more than doubled as total assets  increased from $666.1 million at December 31,
1993 to $1.9 billion at December 31, 1995, while shareholders'  equity increased
from $376.1  million at December  31, 1993 to $1.6 billion at December 31, 1995.
Among the more significant  transactions  that the Company completed during 1994
and 1995 were as follows:

     -    the  Company's  ownership  interest  in  real  estate  facilities  has
          increased  from  331 at the end of 1993 to  1,050  at the end of 1995,
          through the acquisition of wholly-owned  facilities  combined with the
          acquisition of interests in real estate entities,

     -    the Company completed three mergers with affiliated REITs, one in 1994
          with  an  aggregate  cost of  $55.8  million  and two in 1995  with an
          aggregate cost of $135.4 million,

     -    the Company completed the merger with Public Storage Management,  Inc.
          ("PSMI") during 1995 with an aggregate cost of $549.3 million,

     -    the Company issued approximately $332.9 million of preferred stock and
          $190.2 million of common stock in public offerings, and

     -    the Company issued  approximately $30.6 million of preferred stock and
          $623.2  million of common  stock in  connection  with mergers and real
          estate acquisitions.

     The significant  increases in both the Company' asset and capital base has
translated into significant  growth in the Company' overall operating  results.
Historically,  this growth was due to the acquisition of wholly-owned facilities
and the  acquisition of ownership  interests  held by minority  interests in the
Company'  existing  portfolio  of  facilities.  The  growth  in the  historical
operating  results,  however,  do not  fully  reflect  the  effects  of the most
significant  transaction  that the Company has completed in its entire history -
the merger with PSMI (the "PSMI  Merger")  which was  completed  on November 16,
1995.

     In the PSMI Merger,  the Company acquired all the real estate operations of
PSMI,  including  (i) general and limited  partnership  interests  in 47 limited
partnerships owning an aggregate of 286  mini-warehouses,  (ii) shares of common
stock in 16 REITs owning an aggregate of 218  mini-warehouses  and 14 commercial
properties,  (iii) seven wholly-owned  properties,  (iv) all-inclusive  deeds of
trust  secured  by  ten  mini-warehouses,  (v)  property  management  contracts,
exclusive  of  facilities  owned by the  Company,  for 563  mini-warehouses  and
through  ownership  of 95%  economic  interest in a  subsidiary,  24  commercial
properties and (vi) a 95% economic interest in another subsidiary that currently
sells locks and boxes in mini-warehouses operated by the Company.

     The PSMI Merger not only doubled the size of the Company and  significantly
expanded the Company's  ownership interest in mini-warehouse  facilities it also
provided the  following  benefits:  (i) the Company  became a  fully-integrated,
self-advised and  self-managed  commercial real estate company with expertise in
development, construction, acquisition, operation and leasing services, (ii) the
Company  is now able to expand its  property  holdings  without a  proportionate
increase in advisory and property management fees, which would have resulted had
its current  advisory  contract and  management  agreements  remained in effect,
(iii) conflicts of interest  between the Company and its executive  officers and
directors who were also affiliated with PSMI were reduced,  and (iv) the Company
significantly  increased  it  ownership  interest in the real estate  facilities
operated under the "Public Storage" name.

     As noted above, the historical  operations do not fully reflect significant
transactions which occurred during 1994 and 1995. The following table summarizes
historical  and unaudited  pro forma  operating  data assuming that  significant
transactions (described below) were completed at the beginning of 1994:
                                       23
<PAGE>
<TABLE>
<CAPTION>
                                                            For the Year Ended December 31,
                                               ---------------------------------------------------------------------------
                                                  Pro forma (unaudited)                          Historical
                                                ------------------------        ------------------------------------------

                                                1995             1994            1995             1994             1993
                                                ----             ----            ----             ----             ----
                                                                 (in thousands, except per share data)

<S>                                           <C>              <C>             <C>             <C>               <C>    

Rental income                                 $229,026         $218,370        $202,134         $141,845         $109,203
Equity in earnings of real estate entities      20,769           16,352           3,763                -                -
 Facility management fee                        13,708           12,863           2,144                -                -
Interest and other income                        4,573            3,256           4,609            5,351            5,477
                                                 -----            -----           -----            -----            -----
                                               268,076          250,841         212,650          147,196          114,680
                                               -------          -------         -------          -------          -------

Cost of operations                              70,158           67,466          72,247           52,816           42,116
Cost of facility management                      4,766            4,742             452                -                -
Depreciation and amortization                   53,727           50,932          40,760           28,274           24,998
General and administrative                       5,319            4,659           3,982            2,631            2,541
Environmental costs                              2,741                -           2,741                -                -
Advisory fee                                         -                -           6,437            4,983            3,619
Interest expense                                15,930           17,262           8,508            6,893            6,079
                                                ------           ------           -----            -----            -----
                                               152,641          145,061         135,127           95,597           79,353
                                               -------          -------         -------           ------           ------

     Income before gain on disposition of 
      real estate and minority interest        115,435          105,780          77,523           51,599           35,327

Gain on disposition of real estate                   -              203               -                -                -
Minority interest in income                     (6,992)          (6,918)         (7,137)          (9,481)          (7,291)
                                                ------           ------          ------           ------           ------ 

Net income                                    $108,443          $99,065         $70,386          $42,118          $28,036
                                              ========          =======         =======          =======          =======

Weighted average common shares                  71,736           71,294          41,171           24,077           17,558
                                                ======           ======          ======           ======           ======

Earnings per common share                        $1.05            $0.95            $0.95           $1.05            $0.98
                                                 =====            =====            =====           =====            =====
</TABLE>


     The pro forma  financial data for 1995 and 1994 has been prepared  assuming
(i) the  issuance of  preferred  and Common Stock during 1994 and 1995 (with the
exception of the Series G Preferred Stock which was issued on December 13, 1995)
and the utilization of the proceeds therefrom, (ii) the merger transactions with
affiliated  REITs  during 1994 and 1995,  and (iii) the PSMI  Merger,  were each
completed  at the  beginning  of  1994.  Pro  forma  adjustments  were  made  by
management  based upon available  information and upon certain  assumptions that
the  Company  believes  are  reasonable  in the  circumstances.  The  pro  forma
financial  data does not  purport to  represent  what the  Company's  results of
operations  would actually have been if the transactions in fact had occurred at
the beginning of 1994 or to project the Company's  results of operations for any
future date or period.

HISTORICAL RESULTS OF OPERATIONS
--------------------------------

     NET  INCOME:   Net  income  for  1995,  1994  and  1993  was   $70,386,000,
$42,118,000,  and  $28,036,000,  respectively,  representing  increases over the
prior year of 67.1% for 1995 and 50.5% for 1994.  These  increases  reflect  the
continued  growth in the Company's  asset base from $537.7 million at the end of
1992 to $1.9 billion at the end of 1995 combined with improvements of operations
generated by the Company's asset base existing at the end of 1992.

     Net income  allocable  to common  shareholders  (net income less  preferred
stock  dividends)  for 1995,  1994 and 1993 was  $39,262,000,  $25,272,000,  and
$17,148,000,  respectively,  representing increases over the prior year of 55.4%
for 1995 and 47.4% for 1994.  On a per share  basis,  net  income  was $0.95 per
share (based on weighted  average shares  outstanding  of 41,171,000)  for 1995,
$1.05 per share (based on weighted average shares outstanding of 24,077,000) for
1994,  and $0.98 per shares (based on weighted  average  shares  outstanding  of
17,558,000)  for 1993. The decrease in net income per share for 1995 compared to
1994 was principally  due to increasing  depreciation  expense  allocable to the
common  shareholders  combined  with  the  accrual  of  estimate   environmental
remediation costs at the end of 1995.

     Net income allocable to the common shareholders  includes  depreciation and
amortization  expense of approximately  $31,449,000 ($0.77 per common share) for
1995,  $14,025,000  ($0.58 per common share) for 1994, and $7,794,000 ($0.44 per
common share) for 1993. The remaining  depreciation and amortization expense has
been  allocated to the minority  
                                       24
<PAGE>
interest. The fiscal 1995 earnings per common share also includes a reduction of
approximately  $0.08 per common  share  relating  to the  accrual  of  estimated
environmental remediation costs (discussed below).

     As a REIT, the Company's real estate  operations  account for substantially
all of the Company operating activities.  During 1995,  approximately 95% of the
Company's   sources  of  operating   income  (income  prior  to  deductions  for
depreciation,  general and administrative  expenses,  advisory fees and interest
expense)  was  generated  from  property  operations.  The Company  expects that
property  operations  will  continue  to generate a  substantial  portion of the
Company's  operations  with property  management  operations and interest income
from mortgage note investments generating a much lesser amount.

     At December 31, 1995 the  Company's  investment  portfolio  consists of (i)
wholly-owned  properties  owned by the Company,  (ii)  properties  owned by real
estate  partnerships  in which the Company has significant  ownership  interests
(the  "Consolidated  Partnerships"),  and (iii)  properties owned by real estate
entities  (partnership and REITs) in which the Company's  ownership interest and
control are not  sufficient to warrant the  consolidation  of such entities (the
"Unconsolidated   Entities").  The  following  table  summarizes  the  Company's
investment in real estate facilities as of December 31, 1995:
<TABLE>
<CAPTION>

                                                              Number of Facilities in which the         Net Rentable Square Footage
                                                            Company has an ownership interest in              (in thousands)
                                                            ------------------------------------   --------------------------------
                                                                             
                                                                Mini-      Business                   Mini-       Business
                                                             warehouses     Parks       Total      warehouses      Parks      Total
                                                             ----------     -----       -----      ----------      -----      -----


<S>                                                                <C>        <C>       <C>          <C>          <C>        <C>

Wholly-owned facilities ....................................       267         6         273         15,970         462      16,432

Facilities owned by Consolidated Partnerships ..............       253        14         267         14,808       1,542      16,350
                                                                   ---        --         ---         ------       -----      ------

    Total consolidated facilities ..........................       520        20         540         30,778       2,004      32,782



Facilities owned by Unconsolidated Entities ................       496        14         510         29,941       1,078      31,019
                                                                   ---        --         ---         ------       -----      ------



    Total facilities in which the Company has
      an ownership interest in .............................     1,016        34       1,050         60,719       3,082      63,801
                                                                 =====        ==       =====         ======       =====      ======
</TABLE>
     The  facilities  in which the  Company  has an  ownership  interest  in are
located in or near major metropolitan markets in 37 states. The Company believes
that geographic  diversity reduces the impact from regional  economic  downturns
and provides a greater degree of stability to revenues.

     PROPERTY OPERATIONS:  Rental income and cost of operations presented on the
consolidated statements of income reflect the operations of the 540 consolidated
properties owned by the Company and the Consolidated Partnerships. The following
table summarizes the operating results of these facilities:
                                       25
<PAGE>
<TABLE>
<CAPTION>

                                  Year Ended December 31,                     Year Ended December 31,
                                  -----------------------                     -----------------------
                                  1995           1994      Change              1994           1993       Change
                                  ----           ----      ------              ----           ----       ------
                                                       (dollar amounts in thousands)

<S>                             <C>           <C>            <C>            <C>              <C>          <C>
Rental income:
    Mini-warehouse........      $184,100       $126,997      45.0%          $126,997         $95,837      32.5%
    Business park.........        18,034         14,848      21.5%            14,848          13,366      11.1%
                                  ------         ------      ----             ------          ------      ---- 
                                 202,134        141,845      42.5%           141,845         109,203      29.9%
                                 -------        -------      ----            -------         -------      ---- 
Cost of operations: (a)
    Mini-warehouse........        64,807         45,266      43.2%            45,266          34,759      30.2%
    Business park.........         8,896          7,550      17.8%             7,550           7,357       2.6%
                                   -----          -----      ----              -----           -----       --- 
                                  73,703         52,816      39.5%            52,816          42,116      25.4%
                                  ------         ------      ----             ------          ------      ---- 
Net operating income:
    Mini-warehouse........       119,293         81,731      46.0%            81,731          61,078      33.8%
    Business park.........         9,138          7,298      25.2%             7,298           6,009      21.5%
                                   -----          -----      ----              -----           -----      ---- 
                                $128,431        $89,029      44.3%           $89,029         $67,087      32.7%
                                ========        =======      ====            =======         =======      ==== 

Gross profit margin:
    Mini-warehouse (b)....        64.8%         64.4%         0.5%            64.4%          63.7%         1.1%
    Business park (b).....        50.7%         49.2%         3.1%            49.2%          45.0%         9.3%

Number of facilities (at
 the end of the period):
    Mini-warehouse........          520            365      42.5%               365             294       24.2%
    Business park.........           20             16      25.0%                 16             15        6.7%

<FN>
 (a) Included  in cost of  operations  are  property  management  fees  totaling
     $10,232,000,   $8,355,000,   and  $6,411,000  for  1995,   1994  and  1993,
     respectively.  For financial statement  purposes,  property management fees
     from the period from  November  16,  1995  through  December  31, 1995 (the
     period the  Company  became  self-managed)  totaling  $1,723,000  have been
     reclassified as a reduction to "Property management fees."

 (b) Gross  profit  margins  are  after   management  fees  of  6%  and  5%  for
     mini-warehouse and business park facilities, respectively. Giving effect to
     the PSMI Merger and the elimination of such management  fees, the pro forma
     gross profit margins, net of costs of providing management services,  would
     have been as follows:
</FN>
</TABLE>
                                       1995           1994             1993
                                       ----           ----             ----
           Mini-warehouses            69.5%           69.1%            68.1%
           Business parks             54.6%           53.1%            48.7%



     The  significant   increase  in  property   operations  for  the  Company's
mini-warehouses  is principally due to the acquisition of additional  facilities
during 1995 (153  facilities),  1994 (71 facilities)  and 1993 (41  facilities).
Excluding such  acquisitions,  246  mini-warehouse  facilities  have been in the
Company's  portfolio since the beginning of 1993. The operating  results (rental
income less cost of operations)  of these 246  facilities  improved 3.6% in 1995
and 6.6% in 1994 compared to prior period.  These  increases are principally due
to improve  rental  rates,  as average  realized  monthly  rent per square  foot
increased from $0.56 in 1993, to $0.59 in 1994,  and to $0.61 in 1995.  Weighted
average  occupancy  levels for these 246 facilities were 89.5% in 1993, 90.3% in
1994 and 89.8% in 1995.

     The  increase in property  operations  with  respect to the  business  park
facilities is principally due to the acquisition of 5 facilities during 1994 and
1995. Excluding such acquisitions,  15 business park facilities have been in the
Company's  portfolio since the beginning of 1993. The operating  results (rental
income less cost of operations) of these 15 facilities improved 5.0% in 1995 and
6.8% in 1994 compared to prior period.  These  increases are  principally due to
reductions  in  operating  expense  and to  improved  rental  rates,  as average
realized  monthly rent per square foot increased from $0.69 in 1993, to $0.71 in
1994,  to  $0.70  in  1995.  Weighted  average  occupancy  levels  for  these 15
facilities were 95.3% in 1993, 96.3% in 1994 and 95.7% in 1995.

     EQUITY IN  EARNINGS  OF REAL  ESTATE  ENTITIES:  Equity in earnings of real
estate  entities was  $3,763,000,  $764,000 and $563,000 in 1995, 1994 and 1993,
respectively.  For 1993 and 1994,  equity in earnings  of real  estate  entities
principally  consists of earnings from partnerships  which,  commencing in 1995,
are now consolidated with the Company and, accordingly are no longer included in
equity in  earnings  of real  estate  entities.  The 1995  earnings  principally
consists  of earnings  related 
                                       26
<PAGE>
to the interests acquired pursuant to the PSMI Merger. The Company currently has
ownership  interests in 47 limited  partnerships and 16 REITs which comprise the
Unconsolidated  Entities.  The Company's  ownership  interest in these  entities
ranges from 15% to 45%, but  generally  averages  approximately  25%. Due to the
Company's limited ownership interest and control of these entities,  the Company
does not  consolidate  the accounts of these  entities for  financial  reporting
purposes.

     Similar to the Company, the Unconsolidated  Entities generate substantially
all of their  income  from their  ownership  of  mini-warehouse  facilities.  In
aggregate,  the  Unconsolidated  Entities own a total of 510 facilities,  496 of
which are mini-warehouse facilities. The following summarizes combined operating
data with respect to the Unconsolidated Entities for the year ended December 31,
1995:

    Rental income.......................................$251,000,000
    Total revenues......................................$254,505,000
    Cost of operations..................................$ 91,387,000
    Depreciation........................................$ 41,027,000
    Net income..........................................$103,217,000

     Equity  in  earnings  of real  estate  entities  for 1995  consists  of the
Company's  pro  rata  share  of  earnings  (including  the  Company's  share  of
depreciation  expense - $926,000  and  environmental  costs -  $510,000)  of the
Unconsolidated  Entities based upon the Company's ownership interest in each for
the period from  November  16, 1995  through the end of the year.  In  addition,
equity in  earnings  of real  estate  entities  for 1995  includes  amortization
totaling  $1,119,000  representing  the amortization of the Company's cost basis
over the underlying  book value of the Company's  equity interest in each of the
entities.

     PROPERTY  MANAGEMENT  OPERATIONS:  In connection with the PSMI Merger,  the
Company acquired property management contracts, exclusive of facilities owned by
the  Company,  for 563  mini-warehouses  and through  ownership  of 95% economic
interest in a subsidiary, 24 commercial properties.  These facilities constitute
all of the United States mini-warehouses and business parks doing business under
the "Public  Storage"  name and all those in which the Company has an  interest,
which  include  all  the  facilities  owned  by the  Consolidated  Partnerships,
Unconsolidated  Entities,  and 75 facilities owned by third parties in which the
Company has no equity interest.

     The property management  contracts generally provide for compensation equal
to 6%, in the case of the  mini-warehouses,  and 5%, in the case of the business
parks, of gross revenues of the facilities managed. Under the supervision of the
property owners,  the Company  coordinates  rental policies,  rent  collections,
marketing  activities,  the  purchase of  equipment  and  supplies,  maintenance
activity, and the selection and engagement of vendors, suppliers and independent
contractors. In addition, the Company assists and advises the property owners in
establishing  policies for the hire,  discharge and supervision of employees for
the  operation  of these  facilities,  including  resident  managers,  assistant
managers, relief managers and billing and maintenance personnel.

     During 1995, the Company's  property  management  operations  generated net
operating  income of  $1,692,000  on  revenues  of  $2,144,000  and  expenses of
$452,000  for the period from  November  16, 1995  through  December  31,  1995.
Because the Company has  significant  ownership  interests  in all but 75 of the
facilities  it manages,  the revenues  generated  from its  property  management
operations are generally predictable and are dependent upon the future growth of
rental income for those facilities the Company manages.

     The  Company  has in the past,  and may  continue to seek to acquire in the
future,  real estate  facilities owned by the Consolidated  Partnerships and the
Unconsolidated Entities. Acquisitions of such facilities will have the affect of
reducing  management  fee income with a  corresponding  reduction in the cost of
property operations.

     INTEREST AND OTHER  INCOME:  Interest and other  income was  $4,914,000  in
1993,  $4,587,000  in 1994 and  $4,609,000  in 1995.  This  revenue is primarily
attributable  to interest income on the cash balances (as a result of uninvested
net equity  offering  proceeds  during 1995) and interest  income from  mortgage
notes receivable. The Company canceled approximately  $11,968,000,  $24,441,000,
and  $16,435,000  of  mortgage  notes  receivable  during  1993,  1994 and 1995,
respectively,  in  connection  with the  acquisition  of real estate  facilities
securing  such  notes.  As a result,  interest  income from the  mortgage  notes
receivable  decreased  from  $4,315,000  in 1993,  to  $4,333,000 in 1994 and to
$1,974,000 in 1995, as the average outstanding mortgage notes receivable balance
was significantly lower.

     DEPRECIATION AND  AMORTIZATION:  Depreciation and amortization  expense has
increased from $24,988,000 in 1993, to $28,274,000 in 1994 and to $40,760,000 in
1995.  These increases are principally due to the acquisition of additional real
estate facilities in each period combined with amortization of intangible assets
acquired in connection with the PSMI Merger.  Depreciation  expense with respect
to the real estate facilities  increased from $24,924,000 in 1993 to $28,099,000
in 1994 and 
                                       27

<PAGE>
to $39,376,000 in 1995 as a result of the  acquisition of additional real estate
facilities in 1993 through 1995. Amortization expense with respect to intangible
assets  acquired in the PSMI Merger totaled  $1,164,000 in 1995,  representing a
pro rated amount from November 16, 1995 through the end of the year.

     GENERAL AND ADMINISTRATIVE EXPENSE:  General and administrative expense was
$2,541,000 in 1993,  $2,631,000 in 1994, and $3,982,000 in 1995. The Company has
experienced  and  expects  to  continue  to  experience  increased  general  and
administrative  costs  during 1996 due to the  following:  (i) the growth in the
size of the  Company has  resulted in  increased  expenses,  (ii) the  Company's
property  acquisition  activities has continued to expand,  resulting in certain
additional  costs incurred in connection with the acquisition of additional real
estate facilities, and (iii) pursuant to the PSMI Merger, the Company has become
self-advised,  resulting in the Company internalizing management functions which
previously  was  provided  by the  Adviser.  However,  offsetting  the  expected
increases in general and  administrative  expenses  will be the  elimination  of
advisory fee expense. General and administrative costs for each year principally
consist  of  state   income  taxes  (for  states  in  which  the  Company  is  a
non-resident),  investor  relation  expenses,  and certain costs incurred in the
acquisition and development of real estate facilities.

     ENVIRONMENTAL  COSTS:  The  Company's  policy  is to  accrue  environmental
assessments  and/or  remediation cost when it is probable that such efforts will
be required and the related costs can  reasonably be estimated.  The majority of
the Company's real estate facilities were acquired prior to the time when it was
customary to conduct environmental assessments. During 1995, the Company and the
Consolidated Partnerships conducted independent environmental  investigations of
their real estate facilities.  As a result of these investigations,  the Company
has recorded an amount which, in management's best estimate,  will be sufficient
to satisfy anticipated costs of known remediation requirements.  At December 31,
1995, the Company  accrued  $2,741,000 for estimated  environmental  remediation
costs.  Although  there can be no  assurance,  the  Company  is not aware of any
environmental  contamination of any of its facilities  which  individually or in
the aggregate  would be material to the Company's  overall  business,  financial
condition, or results of operations.

     ADVISORY FEES:  Advisory fees were $3,619,000 in 1993,  $4,983,000 in 1994,
and  $6,437,000  in 1995.  The advisory  fee,  which was based on a  contractual
computation, increased as a result of increased adjusted net income (as defined)
per common share  combined with the issuance of additional  preferred and common
stock during each of the periods.  Advisory fees for fiscal 1995 represents such
amounts  from the  beginning of the year  through  November  16, 1995,  when the
Company became self-advised pursuant to the PSMI Merger. As a result of becoming
self-advised, the Company will no longer incur advisory fees.

     MINORITY  INTEREST IN INCOME:  Minority  interest in income  represents the
income allocable to equity interests in the Consolidated  Partnerships which are
not owned by the Company. Since 1990, the Company has acquired portions of these
equity  interests  through its  acquisition  of limited and general  partnership
interests in the Consolidated Partnerships.  These acquisitions have resulted in
reductions  to the  "Minority  interest in income" from what it would  otherwise
have been in the absence of such acquisitions,  and accordingly,  have increased
the Company's share of the  Consolidated  Partnerships'  income.  In determining
income allocable to the minority  interest for 1995, 1994 and 1993  consolidated
depreciation and amortization expense of approximately $11,243,000, $13,556,000,
and  $16,356,000,  respectively,  was  allocated to the minority  interest.  The
decrease in depreciation  allocated to the minority interest was principally the
result of the  acquisition  of  limited  partnership  units in the  Consolidated
Partnerships by the Company throughout fiscal 1994 and 1995.


PRO FORMA RESULTS OF OPERATIONS
-------------------------------
     PROPERTY  OPERATIONS:  Although  not  consolidated  with the  Company,  the
operating results of the properties owned by the Unconsolidated  Entities are no
less  important  to  management  than the  results of the  properties  which are
consolidated.  The Company's  operating  results are highly  dependent  upon the
overall performance of the Company's investment in mini-warehouse facilities for
the following reasons:  (i) at December 31, 1995, the Company owned interests in
a total of 1,050 real estate  facilities which consists of 1,016  mini-warehouse
facilities (520 which are consolidated  with the Company and 496 which are owned
by entities in which the Company has an ownership interest) and 34 business park
facilities and (ii) growth in revenues of the Company's  mini-warehouse property
management  operations  is  directly  related to the growth in revenues of these
mini-warehouse facilities.

     On a pro forma basis, the Company's  significant  revenue sources (property
net operating  income,  equity in earnings of real estate  entities and property
management  activities)  have all  increased in 1995  compared to 1994.  Each of
these revenue sources is principally dependent upon the operating results of the
mini-warehouses  owned and/or  managed.  In order to evaluate how the  Company's
overall portfolio is performing,  management analyzes the operating  performance
of a consistent group of mini-warehouse facilities representing 951 of the 1,016
mini-warehouse  facilities  in which the  Company 
                                       28

<PAGE>
has an ownership interest in (herein referred to as "Same Store"  mini-warehouse
facilities)  which have been  operated  under the "Public  Storage"  name for at
least the past three years.  This group of  properties  includes 466  facilities
owned by the Company and the Consolidated  Partnerships and 485 facilities owned
by Unconsolidated  Entities. The following table summarizes the pre-depreciation
historical operating results of the Same Store mini-warehouse facilities:



SAME STORE MINI-WAREHOUSE FACILITIES:
-------------------------------------
(historical property operations)
<TABLE>
<CAPTION>

                                 Year Ended December 31,                      Year Ended December 31,
                                 -----------------------                      -----------------------
                                 1995          1994       Change              1994          1993       Change
                                 ----          ----       ------              ----          ----       ------
                                                         (dollar amounts in thousands)

<S>                            <C>             <C>           <C>             <C>           <C>            <C>
Rental income..............    $422,933        $403,295      4.9%           $403,295       $374,356       7.7%
Cost of operations(1)......     149,660         144,752      3.4%            144,752        138,176       4.8%
                                -------         -------      ---             -------        -------       --- 

Net operating income.......    $273,273        $258,543      5.7%           $258,543       $236,180       9.5%
                               ========        ========      ===            ========       ========       === 

Weighted Ave. Occupancy....       90.1%          89.2%       1.0%              89.2%          87.0%       2.5%

Weighted Ave. realized
  rent per sq. ft(2).......       $0.70          $0.68       2.9%              $0.68          $0.64       6.3%

Gross profit margin(3).....       64.6%          64.1%       0.8%              64.1%          63.1%       1.6%

Number of facilities.......         951            951         -                951             951         -

</TABLE>
-----------
1.   Assumes payment of property  management  fees on all facilities,  including
     those facilities owned by the Company which effective  November 16, 1995 no
     fee is paid. Cost of operations consists of the following:

                                  1995                1994                1993
                                  ----                ----                ----
Payroll expense                $ 42,545           $ 41,092             $ 37,293
Property taxes                   38,325             36,941               37,899
Property management fees         25,391             24,214               22,444
Other                            43,399             42,505               40,540
                                 ------             ------               ------
                               $149,660           $144,752             $138,176
                               ========           ========             ========

2.   Realized  rent per square foot  represents  the actual  revenue  earned per
     occupied square foot.  Management  believes this is a more relevant measure
     then the posted rental rates,  since posted rates can be discounted through
     the use of  promotions.

3.   Gross profit margin is computed by dividing  property net operating  income
     (before depreciation expense) by rental revenues.

     In addition to evaluating property operating trends in occupancy,  realized
rents,  expenses  and net  operating  income on a Same Store  basis,  management
evaluates  trends by geographic  regions.  Operating trends for the 951 group of
facilities for the five largest regions are shown in the following table:
                                       29
<PAGE>
<TABLE>
<CAPTION>

              Northern California.    Southern California.          Texas      
             ---------------------   ---------------------   ------------------
                         % change                % change              % change
                         from prior              from prior           from prior
             Amount        year     Amount         year      Amount        year
             ------      ---------  ------       ----------  ------   ---------
                                                                               
<S> <C>      <C>          <C>       <C>           <C>      <C>            <C>
Rental Revenues:
----------------
    1995     $60,053       5.77%    $75,826        3.60%    $39,191        2.69%
    1994     $56,777       4.40%    $73,191        6.73%    $38,163        4.32%
    1993     $54,386       5.34%    $68,573        4.04%    $36,583        3.18%

Cost of operations
------------------
    1995     $17,856       3.39%    $23,250       (1.62)%   $15,574        1.51%
    1994     $17,271       5.68%    $23,633        5.52%    $15,342        9.35%
    1993     $16,343       1.48%    $22,396       (0.20)%   $14,030      (1.08)%

Net operating income:
---------------------
    1995     $42,197       6.81%    $52,576        6.03%    $23,617        3.49%
    1994     $39,506       3.85%    $49,588        7.39%    $22,821        1.19%
    1993     $38,043       7.08%    $46,177        6.23%    $22,553        3.02%

Weighted avg. occupancy
-----------------------
    1995      91.1%        3.52%      85.2%        2.40%      88.4%        -    
    1994      88.0%        0.57%      83.2%        3.35%      88.4%        1.61%
    1993      87.5%        2.82%      80.5%        2.68%      87.0%        0.35%

Weighted avg. realized 
---------------------- 
rents per sq. ft.
-----------------
    1995      $0.81        2.53%      $0.84        1.20%      $0.57        1.79%
    1994      $0.79        2.60%      $0.83        3.75%      $0.56        3.70%
    1993      $0.77        2.67%      $0.80        -          $0.54        1.89%

</TABLE>
<TABLE>
<CAPTION>
                   Florida                 Illinois              Other states              Total
             ---------------------   ---------------------   ------------------    -----------------------
                         % change                % change              % change                 % change    
                         from prior              from prior           from prior                 from prior
             Amount        year     Amount         year      Amount        year     Amount         year  
             ------      ---------  ------       ----------  ------   ---------   ----------   ------------
                                                                               
<S> <C>     <C>            <C>       <C>           <C>      <C>           <C>      <C>            <C>
Rental Revenues:
----------------
    1995     $27,066       3.14%    $28,552        7.67%   $192,245       5.39%    $422,933       4.87%
    1994     $26,241       3.45%    $26,518       12.64%   $182,405       9.94%    $403,295       7.73%
    1993     $25,365      11.33%    $23,542       14.98%   $165,907      13.70%    $374,356       9.41%

Cost of operations
------------------
    1995     $10,412       1.06%    $14,115       16.94%   $68,453        3.51%    $149,660       3.39%
    1994     $10,303       4.03%    $12,070        0.32%   $66,133        4.19%    $144,752       4.76%
    1993     $ 9,904       3.95%    $12,031        7.48%   $63,472        3.17%    $138,176       2.12%

Net operating income:
---------------------
    1995     $16,654       4.49%    $14,437       (0.08)%  $123,792       6.47%    $273,273       5.70%
    1994     $15,938       3.09%    $14,448       25.51%   $116,272      13.51%    $258,543       9.47%
    1993     $15,461      19.68%    $11,511       24.04%   $102,435      21.37%    $236,180      14.17%

Weighted avg. occupancy
-----------------------
    1995       88.5%      (1.34)%     92.8%        1.98%     91.7%        0.33%      90.1%        1.01%
    1994       89.7%      (1.32)%     91.0%        7.44%     91.4%        2.81%      89.2%        2.53%
    1993       90.9%       4.72%      84.7%       12.16%     88.9%        7.09%      87.0%        5.58%

Weighted avg. realized 
---------------------- 
rents per sq. ft.
-----------------
    1995       $0.65       4.84%      $0.68        4.62%     $0.67        4.69%      $0.70        2.94%
    1994       $0.62       3.33%      $0.65        4.84%     $0.64        6.67%      $0.68        6.25%
    1993       $0.60       7.14%      $0.62        -         $0.60        5.26%      $0.64        3.22%
</TABLE>
---------
Factors affecting regional trends in revenues and expenses include;
     -    acts of nature,  including  Hurricane Andrew  (Florida,  1993) and the
          Northridge earthquake (Southern California, 1994).
     -    new competition from property development (Texas)
     -    property valuations and related reassessments for purposes of property
          taxes (Illinois, 1995)
These  factors  have and are expected to continue to affect  regional  operating
trends.  During 1996, management expects additional property tax assessments due
to higher valuations/rates,  resulting in increased property taxes. In addition,
due to severe winter weather, snow removal expense is expected to increase.
                                       30
<PAGE>
     
     PRO FORMA  EQUITY IN EARNINGS OF REAL ESTATE  ENTITIES/PROPERTY  MANAGEMENT
OPERATIONS:  The improvement in the historical operating performance of the Same
Store  facilities  in 1995  compared  to 1994  has  translated  into  pro  forma
increases  in the  Company's  equity in  earnings of real  estate  entities  and
property management operations,  assuming the Company owned such interests as of
the beginning of 1994. As noted above, a substantial  portion of the real estate
facilities owned by the Unconsolidated Entities is represented in the Same Store
operations  included  in  the  above  table.  Improvements  in  the  Same  Store
operations  generally  translates  into  increased  equity in earnings  from the
Unconsolidated  Entities.  Accordingly,  the increase in the pro forma equity in
earnings  during 1995  compared to 1994 was  principally  the result of improved
operations for the facilities owned by the Unconsolidated Entities.

     Since the Company's  property  management fees are directly  related to the
growth in revenues of the  facilities it manages,  the growth in the revenues of
the  Same  Store  facilities   generally   translates  into  increased  property
management   fees.  The  pro  forma  property   management   income  fee  (after
consolidation  adjustments  to  eliminate  management  fees with  respect to the
consolidated  properties)  increased from $12.9 million in 1994 to $13.7 million
in 1995,  representing  an increase of 6.2%.  This increase is  principally  the
result  of  increased   rental  income  for  those   facilities   owned  by  the
Unconsolidated Entities.

     The  following  table  summarizes  the  operating  results of the  property
management operations on a stand alone basis prior to consolidation  adjustments
to  eliminate  management  fees  with  respect  to the  consolidated  properties
(including the period from November 16, 1995 through the end of the 1995):

<TABLE>
<CAPTION>
                                  Year Ended December 31,                      Year Ended December 31,
                                  -----------------------                      -----------------------
                                   1995           1994         Change           1994            1993            Change
                                   ----           ----         ------           ----            ----            ------
                                                                  (dollar amounts in thousands)

<S>                               <C>             <C>               <C>        <C>             <C>                <C> 
Facility management               $30,220         $28,356           6.6%       $28,356         $26,070            8.8%
   fee
Cost of facility
   management                       6,361           6,291           1.1%         6,291           6,734           (6.6)%

Net operating income              $23,859         $22,065           8.1%       $22,065         $19,336           13.9%

</TABLE>

     PRO FORMA ADVISORY FEE AND INTEREST EXPENSE: As a result of the PSMI Merger
the Company  became  self-advised  and will no longer incur  advisory  fees. Pro
forma interest  expense for 1995 and 1994 indicates a substantial  increase with
respect to the historical amounts for the same periods.  These increases reflect
the additional debt ($93.3 million) which the Company assumed in connection with
the PSMI Merger. The pro forma amounts,  however,  do not reflect the prepayment
of $36.4 million of mortgage debt during  January 1996 and the related pro forma
reduction to interest expense.


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

     The  Company  has  operated  and  intends  to  continue  to  operate  in  a
self-sufficient manner without reliance on external sources of financing to fund
its  ongoing  operating  needs.  The  Company  believes  that  funds  internally
generated from ongoing operations will continue to be sufficient to enable it to
meet its operating expenses, capital improvements, debt service requirements and
distributions  to shareholders for the foreseeable  future.  Over the past three
years, funds internally  generated from ongoing operations were in excess of the
Company's  operating  needs,  allowing the Company to retain cash flow, which it
used to invest in the acquisition of additional real estate  investments or make
optional principal repayments on debt.

     Despite  the  Company's  ability  to  retain a  portion  of its  internally
generated cash flow, the Company's  growth  strategies have required the Company
to  seek  external  financing.  The  Company  has an  unsecured  $125.0  million
revolving  credit  facility  with a group of banks  which it uses as a temporary
source of  acquisition  financing.  The Company,  however,  seeks to  ultimately
finance all acquisitions  with permanent  sources of capital.  As a result,  the
Company  has raised  capital  through  the public  issuance  of both  common and
preferred  stock  which  was  used  to  repay  borrowings  and  make  additional
investments in real estate assets.
                                       31
<PAGE>
     INTERNALLY  GENERATED  CASH FLOWS:  The  Company  believes  that  important
measures  of its  performance  as well as its  liquidity  are cash  provided  by
operations,  funds from operations  ("FFO") and the ability of these measures to
fund the Company's operating requirements (i.e. capital improvements,  principal
payments on debt, and distribution requirements).

     Net cash provided by operations (as determined in accordance with generally
accepted accounting  principles)  reflects the cash generated from the Company's
business before distributions to various equity holders, including the preferred
shareholders,  capital expenditures or mandatory principal payments on debt. Net
cash provided by operations  has increased  over the past three years from $59.5
million in 1993 to $123.5 million in 1995.

     The following  table  summarizes the Company's  ability to pay the minority
interests'  distributions,  its  dividends  to the  preferred  shareholders  and
capital improvements to maintain the facilities through the use of cash provided
by operating activities.  The remaining cash flow is available to the Company to
make both scheduled and optional  principal  payments on debt, pay distributions
to common shareholders and for reinvestment.

<TABLE>
<CAPTION>
                                                                                     For the Year Ended December 31,
                                                                       -------------------------------------------------------
                                                                         1995
                                                                      (pro forma)         1995           1994           1993
                                                                      -----------         ----           ----           ----
                                                                                        (amounts in thousands)
     
<S>                                                                     <C>             <C>             <C>           <C>    
Net income......................................................        $108,443        $70,386         $42,118       $28,036
Depreciation and amortization...................................          53,703         40,760          28,274        24,998
Depreciation from Unconsolidated Entities.......................          18,320          2,045               -             -
Minority interest in income.....................................           6,992          7,137           9,481         7,291
Environmental accrual...........................................           3,251          3,251               -             -
Amortization of discounts on mortgage notes receivable..........               -           (113)           (693)         (848)
                                                                         -------        -------          ------        ------ 
      Net cash provided by operating activities.................         190,709        123,466          79,180        59,477

Distributions from operations to minority interests.............         (17,994)       (18,380)        (23,037)      (23,647)
                                                                         -------        -------         -------       ------- 

Cash from operations/FFO allocable to the Company's shareholders         172,715        105,086          56,143        35,830
Less: preferred stock dividends.................................         (33,466)       (31,124)        (16,846)      (10,888)
                                                                         -------        -------         -------       ------- 

Cash from operations/FFO available to common shareholders.......         139,249         73,962          39,297        24,942

Capital improvements to maintain facilities:
   Mini-warehouses..............................................          (9,323)        (8,509)         (6,360)       (3,520)
   Business parks...............................................          (2,852)        (2,852)         (1,952)       (2,915)
  Add back: minority interest share of capital improvements to
     maintain facilities........................................           1,428          3,219           2,948         2,935
                                                                           -----          -----           -----         -----

Funds available for principal payments on debt, common dividends
   and reinvestment.............................................         128,502         65,820          33,933        21,442

Cash distributions to common shareholders.......................         (63,122)       (38,586)        (21,249)      (14,728)
                                                                         -------        -------         -------       ------- 

Funds available for principal payments on debt and reinvestment.         $65,380        $27,234        $ 12,684      $  6,714
                                                                         =======        =======        ========      ========
</TABLE>

     See the  consolidated  statements  of cash  flows for the each of the three
years in the period ended December 31, 1995 for additional information regarding
the Company's investing and financing activities.

     Total FFO increased to  $105,086,000  for the year ended  December 31, 1995
compared to $56,143,000  in 1994 and  $35,830,000 in 1993. FFO applicable to the
common  shareholders  (after deducting  preferred stock dividends)  increased to
$73,962,000 for the year ended December 31, 1995 compared to $39,297,000 in 1994
and  $24,942,000  in 1993.  FFO means net income (loss)  (computed in accordance
with GAAP) before (i) gain (loss) on early extinguishment of debt, (ii) minority
interest in income and (iii) gain (loss) on disposition of real estate, adjusted
as follows:  (i) plus  depreciation  and  amortization  (including the Company's
pro-rata  share  of  depreciation  and  amortization  of  unconsolidated  equity
interests  and  amortization  of assets  acquired in the PSMI Merger,  including
property management agreements and goodwill),  and (ii) less FFO attributable to
minority interest. FFO is a supplemental performance measure for equity REITs as
defined by the  National  Association  of Real Estate  Investment  Trusts,  Inc.
("NAREIT"). The NAREIT definition does not specifically address the treatment of
minority  interest  in  the  determination  of  FFO  or  the  treatment  of  the
amortization of property management  agreements and goodwill. In the case of the
Company, FFO represents amounts attributable to its shareholders after deducting
amounts  attributable  to the minority  interests and before  deductions for the
amortization of property  management  agreements and goodwill.  FFO is presented
because many industry analysts consider FFO to be one measure of the 
                                       32
<PAGE>
performance of the Company and it is used in establishing the terms of the Class
B Common  Stock.  FFO does not take  into  consideration  capital  improvements,
scheduled principal payments on debt, distributions and other obligations of the
Company. Accordingly, FFO is not a substitute for the Company's cash flow or net
income (as discussed above) as a measure of the Company's liquidity or operating
performance.

     The  Company  accounts  for the  Unconsolidated  Entities  using the equity
method of accounting,  and  accordingly,  earnings are recognized based upon the
Company's  interest in each of the  partnerships  and REITs.  The interest for a
period is based upon the Company's  share of the increase or decrease in the net
assets of the entities.  Provisions of these  partnerships  and REITs,  however,
provide for the  payment of  preferred  cash  distributions  to other  investors
(until certain  specified amounts have been paid) without regard to the pro rata
interest  of all  investors  in  current  earnings.  As a  result,  actual  cash
distributions to be paid to the Company's for a period of time will be less than
the Company's  FFO, as defined,  from these  entities.  On a pro forma basis for
1995, FFO distributed to the Company was  approximately  $16.1 million less than
the Company's share of FFO. Preferred cash distributions paid to other investors
during each period have the effect of increasing the Company's economic interest
in each of the respective  entities and reducing the amount of future preference
payments which must be paid to other investors before cash distributions will be
shared on a pro rata basis with respect to each investor's actual interest.  The
aggregate future preference payments to other investors is approximately  $125.0
million  and  is  expected  to  be  paid  over   approximately  15  years,  with
approximately 50% of the amount being paid over the next 3.5 years.

     RETENTION  OF OPERATING CASH FLOWS:  Operating  as a REIT,  the  Company's
ability to retain cash flow for  reinvestment is  restrictive.  In order for the
Company to maintain its REIT status, a substantial portion of its operating cash
flows must be used to make distributions to its shareholders (see "REIT status"
below).  Remaining cash flows must then be sufficient to fund necessary  capital
improvements and scheduled debt service requirements. Accordingly, the Company's
ability  to  be  self-sufficient  is  predicated  on  its  ability  to  generate
sufficient  operating cash flows to satisfy its REIT distribution  requirements,
capital  improvement  requirements,  scheduled  debt service  requirements,  and
provide funds for additional investments.

     Over the past four years, the Company's  conservative  distribution  policy
has enabled it to retain significant funds (after capital  improvements) to make
additional  investments and debt  reductions.  During 1993,  1994, and 1995, the
Company distributed to common shareholders approximately 59%, 54% and 52% of its
FFO  available  to  common  shareholders,  respectively,  allowing  it to retain
approximately  $46.6  million  over this  period of time  after  satisfying  its
capital improvements and preferred stock dividend requirements.

     DISTRIBUTIONS  REQUIREMENTS:   During  1995,  the  Company  paid  dividends
totaling  $24,654,000 to the holders of the Company's  Senior  Preferred  Stock,
$6,470,000 to the holders of the Convertible Preferred Stock, and $38,586,000 to
the holders of Common  Stock.  Dividends  with  respect to the Senior  Preferred
Stock  and  the  Convertible  Preferred  Stock  include  pro-rated  amounts  for
securities issued during 1995. In January 1996, the Company issued approximately
$165.0 million of additional  Senior  Preferred  Stock (8.45% Series H Preferred
Stock). The Company estimates that the distribution requirements for fiscal 1996
with respect to Senior  Preferred  Stock  (including the Senior  Preferred Stock
issued in January 1996) and the Convertible  Preferred Stock to be approximately
$63.9 million.

     CAPITAL  IMPROVEMENT  REQUIREMENTS:  During 1996,  the Company has budgeted
approximately  $14.1  million for capital  improvements  ($10.6  million for its
mini-warehouse and $3.5 million for its business park facilities).  The minority
interests'  share of the budgeted  capital  improvements is  approximately  $2.8
million.

     During 1995, the Company commenced a program to enhance its visual icon and
modernize  the   appearance   of  its   mini-warehouse   facilities,   including
modernization of signs, paint color schemes, and rental offices. Included in the
1996 capital  improvement  budget is approximately  $4.0 million with respect to
these expenditures.

     The significant  increases in capital improvements in 1995 and 1994 for the
mini-warehouse  facilities  (as  reflected in the table above) is due to (i) the
acquisition  of new  facilities  in 1995,  1994  and  1993,  (ii)  approximately
$800,000  of  non-recurring  expenditures  the Company  incurred  during 1994 to
upgrade certain  facilities in Texas to provide for climate  controlled  storage
units, and (iii) approximately $2.0 million of visual enhancements during 1995.

     DEBT  SERVICE  REQUIREMENTS:  The  Company  does  not  believe  it has  any
significant  refinancing  risks with  respect to its  mortgage  debt and nominal
interest rate risks associated with its variable rate mortgage debt. The Company
uses its $125.0  million of bank credit  facility (all of which was unused as of
March 15, 1996) primarily to fund acquisitions and provide financial flexibility
and liquidity. The credit facility currently bears interest at LIBOR plus 1.00%.

     At December  31,  1995,  the Company had total  outstanding  borrowings  of
approximately  $158.1  million.  During January 1996, the Company  retired early
approximately  $36.4  million of debt with the  proceeds  of a  preferred  stock
offering. 
                                       33

<PAGE>
Approximate  principal  maturities of notes payable,  as adjusted to reflect the
early retirement of mortgage debt totaling $36.4 million in January 1996, are as
follows:

                                                 Mortgage Debt
                                          ------------------------
                          7.08% Unsecured                Variable
                           Senior Notes   Fixed Rate       Rate          Total
                           ------------   ----------       ----          -----
                                                  (in thousands)
  

1996 ...............       $  5,750       $  5,173       $    17        $ 10,940
1997 ...............          6,500          6,105           804          13,409
1998 ...............          7,250          8,006           --           15,256
1999 ...............          8,000          6,467           --           14,467
2000 ...............          8,750          2,707           --           11,457
Thereafter .........         29,250         26,879           --           56,129
                             ------         ------        ------          ------
                           $ 65,500       $ 55,337       $   821        $121,658
                           ========       ========       =======        ========
  

     EXTERNAL FINANCING: The Company intends to continue to expand its asset and
capital base through the acquisition of real estate assets and interests in real
estate assets from both  unaffiliated  and  affiliated  parties  through  direct
purchases, mergers, tender offers or other transactions.  The Company expects to
fund  these  transactions  with  internally  generated  retained  cash flows and
borrowings  under its $125.0 million  credit  facility.  The Company  intends to
repay amounts  borrowed under the credit facility from  undistributed  operating
cash flow or, as market conditions permit and are determined to be advantageous,
from the public or private placement of securities.

     During 1995 and 1994,  the Company  publicly  issued  approximately  $332.9
million of preferred stock and $190.2 million of common stock.  In addition,  in
January 1996, the Company issued $163.2 million of its Series H Preferred Stock.
The following table summarizes the Company's historic  capitalization at the end
of 1995,  1994 and as adjusted to reflect the issuance of the Series H Preferred
Stock in January 1996 and the use of proceeds therefrom to retire mortgage debt:
<TABLE>
<CAPTION>

                                                                            At December 31,
                                                             -----------------------------------------
                                                               1995            1995             1994
                                                            (as adjusted)   (historical)    (historical)
                                                             -----------    -----------      --------- 
                                                                            (in thousands)
<S>                                                         <C>             <C>             <C>      

Total debt
  Lines of credit                                           $         -      $       -      $  25,447
  Unsecured senior debt                                          65,500         65,500              -
  Mortgage notes                                                 56,158         92,552         51,788
     Total debt                                                 121,658        158,052         77,235
                                                             -----------    -----------      --------- 

Minority interests                                              112,373        112,373        141,227
Total shareholders' equity:
  Senior Preferred Stock                                        618,900        450,150        165,275
  Convertible Preferred Stock                                    85,970         85,970         57,500
  Common Stock                                                1,092,867      1,098,383        365,011
                                                             -----------    -----------      --------- 
                                                              1,797,737      1,634,503        587,786
                                                             -----------    -----------      --------- 

     Total capitalization (book value)                       $2,031,768     $1,904,928       $806,248

Ratio of debt to total capitalization                               6.0%           8.3%           9.6%
                                                             ===========    ===========      ========= 

Ratio of debt to total shareholders' equity                         6.8%           9.7%          13.1%
                                                             ===========    ===========      ========= 

Ratio of debt and preferred stock to total capitalization          40.7%          36.4%          37.2%
                                                             ===========    ===========      ========= 
</TABLE>

     The Company believes that its size and financial  flexibility  enable it to
access capital for growth when appropriate.  The Company's  financial profile is
characterized  by a low level of debt to total  capitalization,  increasing  net
income, increasing cash flow from operations, and a conservative dividend payout
ratio with respect to the common  stock.  The  Company's  credit  ratings on its
Senior Preferred Stock were recently  upgraded by each of the three major credit
agencies  (Baa2 by Moody's  and BBB+ by  Standard  and Poors and Duff & Phelps).
                                       34
<PAGE>


     The Company's  portfolio of real estate  facilities  remains  substantially
unencumbered. At December 31, 1995, the Company had mortgage debt outstanding of
$56.2 million (as adjusted) and had consolidated  real estate  facilities with a
book value of $1.2 billion. The Company,  however, has been adverse to financing
its  acquisitions  with debt and  generally  will  only  increase  its  mortgage
borrowing  through the assumption of  pre-existing  debt on acquired real estate
facilities.

     Over the past three years the Company has funded  substantially  all of its
acquisitions with permanent  capital (both common and preferred  stock).  Unlike
many other real estate companies, the Company has elected to use preferred stock
despite the fact that the coupon rates of its preferred  stock  exceeds  current
rates on conventional  debt. The Company has chosen this route for the following
reasons:  (i) the  Company's  perpetual  preferred  stock  has no  sinking  fund
requirements,  or maturity  date and does not require  redemption,  all of which
eliminate any future  refinancing risks, (ii) preferred stock allows the Company
to leverage the common stock without the attendant  interest rate or refinancing
risks of debt, and (iii)  dividends on the preferred stock can be applied to the
Company's  REIT  distributions  requirements,  which have  helped the Company to
maintain a low common stock dividend payout ratio and retain cash flow.

     Subsequent to December 31, 1995,  the Company issued  approximately  $163.2
million  of its  8.45%  Series H  Preferred  Stock.  The net  proceeds  from the
offering  have been used to repay debt  ($36.2  million),  acquire  real  estate
facilities  ($71.8  million),  and  acquire  limited  partnership  interests  in
Unconsolidated  Entities  ($42.7  million).  The Company  believes that its cash
reserves at March 31, 1996 will be approximately of $55 million.

     PROPOSED  MERGERS:  On March 19, 1996, the  shareholders  of each of Public
Storage  Properties  IX,  Inc.  ("Properties  9") and PS  Business  Parks,  Inc.
("PSBP")  approved the mergers of the respective  corporations  into the Company
and it is expected that the mergers will be completed  during March 1996. In the
mergers, it is estimated that the Company will issue an aggregate of 1.5 million
shares of Common Stock and pay an additional $11.5 million in cash. Properties 9
owns and operates 15 properties:  14  mini-warehouses  (881,000 square feet) and
one  business  parks  (72,000  square  feet).  PSBP owns and  operates  a single
business park (173,000 square feet).

     In March 1996 the Company and Storage Properties,  Inc. ("SPI"), a publicly
traded  equity  real  estate   investment  trust  agreed,   subject  to  certain
conditions,  to merge.  Upon the merger,  each  outstanding  share of SPI common
stock would be  converted,  at the  election of the  shareholders  of SPI,  into
either  shares of the  Company's  common  stock with a market value of $7.31 or,
with  respect  to up to 20% of the SPI  common  stock,  $7.31 in  cash.  SPI has
3,348,167  outstanding  shares of common stock and an  estimated  value of $24.5
million.  The merger  agreement is  conditioned  on,  among other  requirements,
receipt  of  satisfactory   fairness   opinions  by  SPI  and  approval  by  the
shareholders  of SPI.  The  Company  has as  advisory  agreement  and a property
management  agreement with SPI. SPI owns seven  mini-warehouses  (371,465 square
feet).

     DEVELOPMENT ACTIVITIES:  Historically,  the Company only acquired interests
in existing/operating real estate facilities. During 1995, the Company began the
development of three mini-warehouse facilities, one of which began operations in
1995.   The  Company   currently   has  plans  to  develop  an   additional   14
mini-warehouses in various locations at an estimated cost of approximately $60.0
million.  The Company is evaluating  the  feasibility  of developing  additional
mini-warehouses  in selected markets in which there are few, if any,  facilities
to acquire at  attractive  prices and where the  scarcity  of other  undeveloped
parcels  of land or  other  impediments  to  development  make it  difficult  to
construct additional competing facilities.

     Generally the construction  period takes 9 months followed by a 18-24 month
fill-up  process  until  the newly  constructed  facility  reaches a  stabilized
occupancy level. Due to the timing of the employment of the capital to construct
the  facilities and the  relatively  long "fill-up"  period until the facilities
reach a stabilized  occupancy level, the Company's believes that its development
plans may create earnings dilution in the short-term.

     REIT STATUS:  The Company  believes  that it has  operated,  and intends to
continue to operate, in such a manner as to qualify as a REIT under the Internal
Revenue Code of 1986, but no assurance can be given that it will at all times so
qualify.  To the extent that the Company continues to qualify as a REIT, it will
not be taxed,  with certain  limited  exceptions,  on the taxable income that is
distributed to its shareholders.

     As a REIT,  the Company is not taxed on that portion of its taxable  income
which is  distributed  to its  shareholders  provided  that at least  95% of its
taxable  income is so  distributed  prior to filing of the Company's tax return.
The Company has satisfied the REIT distribution requirement since 1980.

     In addition to certain  asset tests,  the Company must meet several  annual
gross income tests to retain its REIT qualification.  Under the 95% gross income
test,  the  Company  must  derive at least 95% of its total  gross  income  from
specified  classes of income  related to real property,  dividends,  interest or
gains from the sale or other  distribution of stock or other  securities that do
not  constitute  "dealer  property."  If the Company  fails to meet the 95% test
during any taxable  year,  its 
                                       35
<PAGE>
REIT status would  terminate  for that year and future years unless it qualifies
for the "good cause" exception. Generally, if the Company fails the 95% test but
still retains its qualification as a REIT under the "good cause"  exception,  it
would be subject to a 100% excise tax on the amount of the excess  nonqualifying
income  multiplied by a fraction,  the numerator of which would be the Company's
taxable income (computed without its distribution deduction) and the denominator
of which would be the Company's  gross income from all sources.  This excise tax
would have the  general  effect of causing  the  Company to pay all net  profits
generated from this excess nonqualifying income to the Internal Revenue Service.

     Subsequent  to the PSMI  Merger,  the  Company  assumed  and is  performing
property management  activities for the various  partnerships and REITs in which
the Company has an interest.  The Company receives property management fees from
such  partnerships,  REITs and other owners in exchange for the  performance  of
such management activities.  The gross income received by the Company from these
property  management  activities  with respect to the facilities  owned by third
party entities and REITs in which the Company has an ownership  interest will be
treated  as income  not  qualifying  under the 95% test.  A portion of the gross
income  (representing a pro rata amount  allocated to partnership  interests not
owed by the Company) received by the Company from property management activities
with respect to the facilities owned by partnerships in which the Company has an
ownership  interest will also be treated as income not qualifying  under the 95%
test.

     At the time of the PSMI Merger, if there were no change in current revenues
of the  Company  and  PSMI  and  the  Company  took  no  action  to  reduce  its
nonqualifying  income,  the Company estimated it would not satisfy the 95% gross
income test for 1996.  However,  the percentage of  nonqualifying  income may be
reduced in a variety of ways:  (i) through the  prepayment of  management  fees,
(ii)  through  increase in overall  gross  income that result from  increases in
qualifying  rents will reduce the percentage of  nonqualifying  income (i.e. the
acquisition of additional  real estate  investments  which  generate  qualifying
rents), and (iii) through the acquisition of properties currently managed by the
Company,  thereby the management  fees received by the Company would cease to be
nonqualifying income.

     In order to reduce the amount of  nonqualifying  income the  Company  would
earn in 1996,  certain  entities prepaid during 1995 to the Company a portion of
the  management  fees that the  Company  otherwise  would have  received in 1996
discounted for early payment.  The amount prepaid during 1995 was  approximately
$4.5 million.  In addition,  subsequent to the PSMI Merger, the Company publicly
issued  preferred stock raising net offering  proceeds of  approximately  $330.1
million.  The net proceeds  have been used to repay debt and acquire  additional
real  estate  investments  including  interests  in  properties  managed  by the
Company.  The Company  believes that the prepayment of management  fees combined
with the  acquisition  of  additional  real estate  investments  will enable the
Company to meet the 95% test for 1996 and subsequent years.
                                       36
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
         -------------------------------------------
     The  financial  statements of the Company at December 31, 1995 and December
31, 1994 and for each of the three years in the period  ended  December 31, 1995
and the  report of Ernst & Young  LLP,  Independent  Auditors,  thereon  and the
related financial statement schedules,  are included elsewhere herein. Reference
is made to the Index to Financial Statements and Schedules in Item 14.



ITEM 9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
         ----------------------------------------------------
     Not applicable.

                                       37
<PAGE>
                                    PART III
                                    --------


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
         --------------------------------------------------
     Incorporated by reference herein is the information  required by this item,
which is to be  included in an  amendment  on Form 10-K/A to the Form 10-K filed
within 120 days of the end of the Company's 1995 fiscal year.



ITEM 11. EXECUTIVE COMPENSATION
         ----------------------
     Incorporated by reference herein is the information  required by this item,
which is to be  included in an  amendment  on Form 10-K/A to the Form 10-K filed
within 120 days of the end of the Company's 1995 fiscal year.



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
         --------------------------------------------------------------
     Incorporated by reference herein is the information  required by this item,
which is to be  included in an  amendment  on Form 10-K/A to the Form 10-K filed
within 120 days of the end of the Company's 1995 fiscal year.



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
         ----------------------------------------------
     Incorporated by reference herein is the information  required by this item,
which is to be  included in an  amendment  on Form 10-K/A to the Form 10-K filed
within 120 days of the end of the Company's 1995 fiscal year.
                                       38


<PAGE>

                                     PART IV


ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
         ----------------------------------------------------------------
(a)      1. Financial Statements

         The financial statements listed in the accompanying Index to Financial
Statements and Schedules hereof are filed as part of this report.


         2. Financial Statement Schedules

         The financial statements schedules listed in the accompanying Index to
Financial Statements and Schedules are filed as part of this report.


         3. Exhibits 
         See Index to Exhibits contained herein.


(b)      Reports on Form 8-K

         The  Company  filed a Current  Report on Form 8-K dated  November  16,
1995, (filed November 29, 1995), pursuant to Item 2 relating to the PSMI Merger,
and  pursuant  to  Item 5  which  filed  the  following  financial information
relating to the PSMI Merger:

               -  Combined  Statements of Assets,  Liabilities and Equity of the
                  Property  Management  and Advisory  Businesses and Real Estate
                  Assets of Public Storage,  Inc. (Operating  Companies and Real
                  Estate   Interests)
               -  Pro Forma Consolidated Financial Statements

(c)      Exhibits:
         See Index to Exhibits contained herein.
                                       39
<PAGE>


                              PUBLIC STORAGE, INC.
                                INDEX TO EXHIBITS
                           (Items 14(a)(3) and 14(c))

 3.1   Restated Articles of Incorporation.  Filed with Registrant's Registration
       Statement No. 33-54557 and incorporated herein by reference.

 3.2   Certificate  of  Determination  for the 10% Cumulative  Preferred  Stock,
       Series A. Filed with Registrant's Registration Statement No. 33-54557 and
       incorporated herein by reference.

 3.3   Certificate of Determination  for the 9.20%  Cumulative  Preferred Stock,
       Series B. Filed with Registrant's Registration Statement No. 33-54557 and
       incorporated herein by reference.

 3.4   Amendment  to  Certificate  of  Determination  for the  9.20%  Cumulative
       Preferred Stock, Series B. Filed with Registrant's Registration Statement
       No. 33-56925 and incorporated herein by reference.

 3.5   Certificate of Determination for the 8.25%  Convertible  Preferred Stock.
       Filed  with   Registrant's   Registration   Statement  No.  33-54557  and
       incorporated herein by reference.

 3.6   Certificate of Determination for the Adjustable Rate Cumulative Preferred
       Stock,  Series C.  Filed with  Registrant's  Registration  Statement  No.
       33-54557 and incorporated herein by reference.

 3.7   Certificate of Determination  for the 9.50%  Cumulative  Preferred Stock,
       Series D.  Filed  with  Registrant's  Form 8-A/A  Registration  Statement
       relating  to  the  9.50%  Cumulative   Preferred  Stock,   Series  D  and
       incorporated herein by reference.

 3.8   Certificate  of  Determination  for the 10% Cumulative  Preferred  Stock,
       Series E.  Filed with  Registrant's  Form  8-A/A  Registration  Statement
       relating to the 10% Cumulative Preferred Stock, Series E and incorporated
       herein by reference.

 3.9   Certificate of Determination  for the 9.75%  Cumulative  Preferred Stock,
       Series F. Filed with  Registration's  Form 8-A/A  Registration  Statement
       relating  to  the  9.75%  Cumulative   Preferred  Stock,   Series  F  and
       incorporated herein by reference.

 3.10  Certificate of Determination for the Convertible  Participating Preferred
       Stock.  Filed with Registrant's  Registration  Statement No. 33-63947 and
       incorporated herein by reference.

 3.11  Certificate  of  Amendment  of  Articles  of  Incorporation,  Filed  with
       Registrant's  Registration Statement No. 33-63947 and incorporated herein
       by reference.

 3.12  Certificate of Determination for the 8-7/8%  Cumulative  Preferred Stock,
       Series G. Filed with  Registration's  Form 8-A/A  Registration  Statement
       relating to the Depositary Shares Each Representing  1/1,000th of a Share
       of 8-7/8% Cumulative  Preferred Stock,  Series G and incorporated  herein
       reference..

 3.13  Certificate of Determination  for the 8.45%  Cumulative  Preferred Stock,
       Series H.  Filed with  Registrant's  Form  8-A/A  Registration  Statement
       relating to the Depositary Shares Each Representing  1/1,000th of a Share
       of 8.45% Cumulative  Preferred Stock, Series H and incorporated herein by
       reference.

 3.14  Bylaws, as amended. Filed with Registration's  Registration Statement No.
       33-64971 and incorporated herein by reference.

<PAGE>

                                       40

 10.1     Amended and Restated Advisory  Contract between  Registrant and Public
          Storage  Advisers,  Inc.  dated as of September  30, 1991.  Filed with
          Registrant's  Current  Report  on Form 8-K dated  October  2, 1991 and
          incorporated herein by reference.

 10.2     First  Amendment to Amended and  Restated  Advisory  Contract  between
          Registrant  and Public Storage  Advisers,  Inc. dated as of October 1,
          1991. Filed with Registrant's  Registration Statement No. 33-43750 and
          incorporated herein by reference.

 10.3     Second  Amendment to Amended and Restated  Advisory  Contract  between
          Registrant and Public Storage Advisers, Inc. dated as of May 14, 1992.
          Filed with Registrant's  Current Report on Form 8-K dated May 14, 1992
          and incorporated herein by reference.

 10.4     Third  Amendment to Amended and  Restated  Advisory  Contract  between
          Registrant and Public Storage Advisers,  Inc. dated as of February 25,
          1993. Filed with the  Registrant's  Annual Report on Form 10-K for the
          year ended December 31, 1992 and incorporated herein by reference.

 10.5     Fourth  Amendment to Amended and Restated  Advisory  Contract  between
          Registrant and Public Storage Advisers, Inc. dated as of June 7, 1994.
          Filed with Registrant's Current Report on Form 8-K dated June 23, 1994
          and incorporated herein by reference.

 10.6     Fifth  Amendment to Amended and  Restated  Advisory  Contract  between
          Registrant  and Public  Storage  Advisers,  Inc. dated as of August 9,
          1994. Filed with Registrant's  Current Report on Form 8-K dated August
          24, 1994 and incorporated herein by reference.

 10.7     Sixth  Amendment to Amended and  Restated  Advisory  Contract  between
          Registrant and Public Storage  Advisers,  Inc. dated as of January 12,
          1995. Filed with Registrant's Current Report on Form 8-K dated January
          24, 1995 and incorporated herein reference.

 10.8     Seventh  Amendment to Amended and Restated  Advisory  Contract between
          Registrant  and Public  Storage  Advisers,  Inc. dated as of April 13,
          1995. Filed with  Registrant's  Current Report on Form 8-K dated April
          25, 1995 and incorporated herein by reference.

 10.9     Amended  Management  Agreement  between  Registrant and Public Storage
          Management,   Inc.   dated  as  of  February  21,  1995.   Filed  with
          Registrant's  Annual  Report on Form 10-K for the year ended  December
          31, 1994 and incorporated herein by reference.

 10.10    Amended  Management  Agreement  between  Registrant and Public Storage
          Commercial Properties Group, Inc. dated as of February 21, 1995. Filed
          with  Registrant's  Annual  Report  on Form  10-K for the  year  ended
          December 31, 1994 and incorporated herein by reference.

 10.11    Loan Agreement  between  Registrant  and Aetna Life Insurance  Company
          dated as of July 11, 1988. Filed with  Registrant's  Current Report on
          Form 8-K dated July 14, 1988 and incorporated herein by reference.

 10.12    Amendment  to  Loan  Agreement  between   Registrant  and  Aetna  Life
          Insurance   Company  dated  as  of  September  1,  1993.   Filed  with
          Registrant's  Annual  Report on Form 10-K for the year ended  December
          31, 1993 and incorporated herein by reference.

 10.13    Credit Agreement by and among Registrant,  Wells Fargo Bank,  National
          Association,  as agent, and the financial  institutions  party thereto
          dated as of May 22, 1995. Filed with Registrant's  Quarterly Report on
          Form 10-Q for the period ended June 30, 1995 and  incorporated  herein
          by reference.

 10.14    Note  Assumption  and Exchange  Agreement by and among Public  Storage
          Management,  Inc., Public Storage, Inc., Registrant and the holders of
          the notes  dated as of  November  13,  1995.  Filed with  Registrant's
          Registration   Statement  No.  33-64971  and  incorporated  herein  by
          reference. 
                                       41
<PAGE>

 10.15+   Registrant's  1990 Stock Option Plan. Filed with  Registrant's  Annual
          Report  on  Form  10-K  for the  year  ended  December  31,  1994  and
          incorporated herein by reference.

 10.16+   Registrant's 1994 Stock  Option Plan. Filed with  Registrant's  Annual
          Report  on  Form  10-K  for the  year  ended  December  31,  1994  and
          incorporated herein by reference.

 10.17    Agreement and Plan of  Reorganization  between  Registrant  and Public
          Storage Properties VI, Inc. dated as of September 26, 1994. Filed with
          Registrant's  Registration  Statement  No.  33-56925 and  incorporated
          herein by reference.

 10.18    Agreement and Plan of  Reorganization  between  Registrant  and Public
          Storage  Properties VII, Inc. dated as of February 2, 1995. Filed with
          Registrant's  Registration  Statement  No.  33-58893 and  incorporated
          herein by reference.

 10.19    Agreement  and Plan of  Reorganization  by and among  Public  Storage,
          Inc., Public Storage Management,  Inc. and Registrant dated as of June
          30, 1995.  Filed as Appendix A to  Registrant's  Proxy Statement dated
          October 11, 1995 (filed October 13, 1995) and  incorporated  herein by
          reference.

 10.20    Amendment to Agreement and Plan of  Reorganization by and among Public
          Storage, Inc., Public Storage Management, Inc. and Registrant dated as
          of November 13, 1995. Filed with  Registrant's  Current Report on Form
          8-K dated November 16, 1995 and incorporated herein by reference.

 10.21    Agreement and Plan of Reorganization among Registrant,  Public Storage
          Properties IX, Inc., and PS Business Parks,  Inc. dated as of December
          13, 1995. Filed with Registrant's Registration Statement No. 333-00591
          and incorporated herein by reference.

 10.22    Deposit Agreement dated as of December 13, 1995, among Registrant, The
          First  National  Bank of Boston,  and the  holders  of the  depositary
          receipts evidencing the Depositary Shares Each Representing 1/1,000 of
          a Share of 8-7/8  Cumulative  Preferred  Stock,  Series G.  Filed with
          Registrant's  Form  8-A/A  Registration   Statement  relating  to  the
          Depositary  Shares  Each  Representing  1/1000th  of a Share  of 8-7/8
          Cumulative  Preferred  Stock,  Series  G and  incorporated  herein  by
          reference.

 10.23    Deposit Agreement dated as of January 25, 1996, among Registrant,  The
          First  National  Bank of Boston,  and the  holders  of the  depositary
          receipts evidencing the Depositary Shares Each Representing 1/1,000 of
          a Share of 8.45%  Cumulative  Preferred  Stock,  Series H.  Filed with
          Registrant's  Form  8-A/A  Registration   Statement  relating  to  the
          Depositary  Shares  Each  Representing  1/1000th  of a Share  of 8.45%
          Cumulative  Preferred  Stock,  Series  H and  incorporated  herein  by
          reference.

 10.24++  Employment  Agreement between  Registrant and B. Wayne Hughes dated as
          of November 16, 1995. Filed herewith.

 11       Statement Re Computation of Earnings Per Share. Filed herewith.

 12       Statement Re Computation of Ratio of Earnings to Fixed Charges.  Filed
          herewith.

 23       Consent of Independent Auditors. Filed herewith.

 27       Financial data schedule. Filed herewith.

       --------
       +     Compensatory benefit plan.
       ++    Management contract.
                                       42
<PAGE>


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, as amended,  the Registrant has duly caused this report to
be signed on its behalf by the undersigned,  thereunto duly  authorized.  

                                               PUBLIC STORAGE, INC.

Date: March  22, 1996                          By:  /s/ Harvey Lenkin
      ---------------                               ------------------------
                                                    Harvey Lenkin, President

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

     Signature                                    Title                                 Date
     ---------                                    -----                                 ----
<S>                                     <C>                                      <C>

  /s/ B. Wayne Hughes                  Chairman of the Board, Chief              March 22, 1996
  -------------------                  Executive Officer and Director            ---------------
  B. Wayne Hughes                      (principal executive officer)

  /s/ Harvey Lenkin                    President and Director                    March 22, 1996  
  -------------------                                                            ---------------
  Harvey Lenkin

  /s/ Ronald L. Havner, Jr.            Senior Vice President and                 March 22, 1996
  -------------------                  Chief Financial Officer                   ---------------
  Ronald L. Havner, Jr.                (principal financial officer)
                                       

  /s/ John Reyes                       Vice President and Controller             March 22, 1996
  -------------------                  (principal accounting officer)            ---------------
  John Reyes                             

  /s/ Robert J. Abernethy              Director                                  March 22, 1996
  -------------------                                                            ---------------
  Robert J. Abernethy

  /s/ Dann V. Angeloff                 Director                                  March 22, 1996
  -------------------                                                            ---------------
  Dann V. Angeloff

  /s/ William C. Baker                 Director                                  March 22, 1996
  -------------------                                                            ---------------
  William C. Baker

                                       Director                                  
  -------------------                                                            ---------------
  Uri P Harkham

  /s/ Berry Holmes                     Director                                  March 22, 1996
  -------------------                                                            ---------------
  Berry Holmes

</TABLE>
                                       43
<PAGE>



                              PUBLIC STORAGE, INC.
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                  AND SCHEDULES

                                  (Item 14 (a))


                                                                         Page
                                                                      References


Report of Independent Auditors............................................F-1

Consolidated balance sheets as of December 31, 1995 and 1994..............F-2

For each of the three years in the period ended
   December 31, 1995:

   Consolidated statements of income......................................F-3

   Consolidated statements of shareholders' equity .......................F-4

   Consolidated statements of cash flows..............................F-5 - F-6

Notes to consolidated financial statements............................F-7 - F-21

Schedules:


   III - Real estate and accumulated depreciation....................F-22 - F-35

   IV - Mortgage loans on real estate................................F-36 - F-37


All other  schedules  have been omitted  since the required  information  is not
present or not  present  in amounts  sufficient  to  require  submission  of the
schedule,  or because the information  required is included in the  consolidated
financial statements or notes thereto.

                                       44
<PAGE>


                         REPORT OF INDEPENDENT AUDITORS
                         ------------------------------




The Board of Directors and Shareholders
Public Storage, Inc.


We have audited the accompanying  consolidated balance sheets of Public Storage,
Inc. as of December 31, 1995 and 1994, and the related  consolidated  statements
of income,  shareholders'  equity, and cash flows for each of the three years in
the period  ended  December  31, 1995.  Our audits also  included the  financial
statement  schedules  listed  in the  Index  at  Item 14  (a).  These  financial
statements  and  financial  statement  schedules are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements and financial statement schedules based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated financial position of Public
Storage, Inc. at December 31, 1995 and 1994, and the consolidated results of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 1995, in conformity with generally accepted accounting  principles.
Also, in our opinion, the related financial statement schedules, when considered
in relation to the basic financial  statements taken as a whole,  present fairly
in all material respects the information set forth therein.




                                               ERNST & YOUNG  L L P
Los Angeles, California

February 26, 1996


                                      F-1
<PAGE>
<TABLE>
<CAPTION>

                              PUBLIC STORAGE, INC.
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1995 and 1994
                    (amounts in thousands, except share data)

                                                                                       December 31,           December 31,
         ASSETS                                                                            1995                   1994
         ------                                                                        -----------            ------------

<S>                                                                                  <C>                      <C>

Cash and cash equivalents....................................................        $     80,436             $    20,151

Real estate facilities, at cost:
   Land......................................................................             382,144                 267,039
   Buildings.................................................................           1,030,990                 700,679
                                                                                        ---------                 -------
                                                                                        1,413,134                 967,718
   Accumulated depreciation..................................................            (241,966)               (202,745)
                                                                                         --------                -------- 

                                                                                        1,171,168                 764,973



Investment in real estate entities...........................................             416,216                   8,858

Intangible assets, net.......................................................             231,562                       -

Mortgage notes receivable from affiliates....................................              23,699                  23,062

Other assets.................................................................              14,380                   3,265
                                                                                           ------                   -----

              Total assets...................................................         $ 1,937,461               $ 820,309
                                                                                      ===========               =========

         LIABILITIES AND SHAREHOLDERS' EQUITY
         ------------------------------------

Revolving line of credit.....................................................         $         -              $   25,447

Notes payable................................................................             158,052                  51,788

Accrued and other liabilities................................................              32,533                  14,061
                                                                                           ------                  ------

         Total liabilities...................................................             190,585                  91,296

Minority interest............................................................             112,373                 141,227

Commitments and contingencies

Shareholders' equity:

   Preferred Stock, $.01 par value, 50,000,000 shares authorized, 13,444,100
     shares issued and outstanding (8,911,000 at December 31, 1994), at
     liquidation preference:

         Cumulative Preferred Stock, issued in series........................             450,150                 165,275
         Convertible Preferred Stock.........................................              85,970                  57,500

   Common stock, $.10 par value, 200,000,000 shares authorized, 71,513,799
     shares issued and outstanding (28,826,707 at December 31, 1994).........               7,152                   2,883
   Class B Common Stock, $.10 par value, 7,000,000 shares authorized and
     issued (none at December 31, 1994)......................................                 700                       -
   Paid-in capital...........................................................           1,100,088                 372,361
   Cumulative net income.....................................................             242,871                 172,485
   Cumulative distributions paid.............................................            (252,428)               (182,718)
                                                                                         --------                -------- 
         Total shareholders' equity..........................................           1,634,503                 587,786
                                                                                        ---------                 -------
              Total liabilities and shareholders' equity.....................         $ 1,937,461                $820,309

                                                                                      ===========                ========

</TABLE>        
                    See accompanying notes.
                                      F-2
<PAGE>
<TABLE>
<CAPTION>



                              PUBLIC STORAGE, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
        For each of the three years in the period ended December 31, 1995
                  (amounts in thousands, except per share data)


                                                                           1995                1994                1993
                                                                        ---------           ---------           ---------
<S>                                                                     <C>                 <C>                  <C>       

Revenues:
   Rental income................................................         $202,134            $141,845            $109,203
   Equity in earnings of real estate entities...................            3,763                 764                 563
   Facility management fee......................................            2,144                   -                   -
   Interest and other income....................................            4,609               4,587               4,914
                                                                         ---------           ---------           ---------
                                                                          212,650             147,196             114,680
                                                                         ---------           ---------           ---------

Expenses:
  Cost of operations............................................           72,247              52,816              42,116
  Cost of facility management...................................              452                   -                   -
  Depreciation and amortization ................................           40,760              28,274              24,998
  General and administrative....................................            3,982               2,631               2,541
  Environmental cost............................................            2,741                   -                   -
  Advisory fee .................................................            6,437               4,983               3,619
  Interest expense..............................................            8,508               6,893               6,079
                                                                         ---------           ---------           ---------
                                                                          135,127              95,597              79,353
                                                                         ---------           ---------           ---------

Income before minority interest.................................           77,523              51,599              35,327


Minority interest in income.....................................           (7,137)             (9,481)             (7,291)


Net income......................................................          $70,386             $42,118             $28,036


Net income allocation:
   Allocable to preferred shareholders..........................          $31,124             $16,846             $10,888
   Allocable to common shareholders.............................           39,262              25,272              17,148
                                                                         ---------           ---------           ---------
                                                                          $70,386             $42,118             $28,036
                                                                         =========           =========           =========



Per common share:

Net income......................................................          $  0.95              $ 1.05              $ 0.98
                                                                         =========           =========           =========

Weighted average common shares outstanding......................           41,171              24,077              17,558
                                                                         =========           =========           =========
</TABLE>


                     See accompanying notes.
                               F-3
<PAGE>
<TABLE>
<CAPTION>

                              PUBLIC STORAGE, INC.
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
        For each of the three years in the period ended December 31, 1995
           (Amounts in thousands, except share and per share amounts)

                                                                                                      Class B                    
                                                             Preferred Stock            Common        Common         Paid-in     
                                                        Cumulative    Convertible       Stock          Stock         Capital     
                                                        ----------    -----------       -----          -----         -------     

<S>                                                       <C>        <C>                 <C>         <C>            <C>          
BALANCES AT DECEMBER 31, 1992.......................      $45,625    $        -          $1,732      $      -       $222,988     
   Issuance of Preferred Stock, net of issuance
     costs:
       Series B (2,300,000 shares)..................       57,500             -               -             -         (2,297)    
       Convertible (2,300,000 shares)...............            -        57,500               -             -         (2,424)    

   Issuance of Common Stock (741,199 shares)........            -             -              74             -          9,624     
   Net income.......................................            -             -               -             -              -     
   Cash distributions:
       Preferred Stock..............................            -             -               -             -              -     
       Common Stock, $0.84 per share................            -                             -             -              -
                                                        ---------     ---------       ---------     ---------      ---------

BALANCES AT DECEMBER 31, 1993.......................      103,125        57,500           1,806             -        227,891     
   Issuance of Preferred Stock, net of issuance
   costs:
     Series B, C and D (2,486,000 shares)...........       62,150             -               -             -         (2,300)    

   Issuance of Common Stock (10,770,437 shares).....            -             -           1,077             -        146,770     
   Net income.......................................            -             -               -             -              -     
   Cash distributions:
     Preferred Stock................................            -             -               -             -              -     
     Common Stock, $0.85 per share..................            -             -               -             -              -   

BALANCES AT DECEMBER 31, 1994.......................      165,275        57,500           2,883             -        372,361
                                                        ---------     ---------       ---------     ---------      ---------
   Issuance of Preferred Stock, net of issuance
   costs:
     Series E, F, G (4,501,900 shares)..............      284,875             -               -             -         (9,718)    
     Convertible Participating (31,200 shares)......                     28,470                                                  

   Issuance of Common Stock (42,687,092 shares).....            -             -           4,269             -        664,645     

   Issuance of Class B Common Stock (7,000,000
     shares)........................................            -             -               -           700         72,800     

   Net income.......................................            -             -               -             -              -     
   Cash distributions:
     Preferred Stock................................            -             -               -             -              -     
     Common Stock, $0.88 per share..................            -             -               -             -              -
                                                        ---------     ---------       ---------     ---------      ---------   

BALANCES AT DECEMBER 31, 1995.......................     $450,150       $85,970          $7,152          $700     $1,100,088
                                                        =========     =========       =========     =========      =========


</TABLE>
<TABLE>
<CAPTION>

                              PUBLIC STORAGE, INC.
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
        For each of the three years in the period ended December 31, 1995
           (Amounts in thousands, except share and per share amounts)


                                                      
                                                                                          Total
                                                      Cumulative      Cumulative      Shareholders'
                                                      Net Income      Distributions      Equity
                                                      ----------      -------------      ------
<S>                                                     <C>            <C>              <C>     
BALANCES AT DECEMBER 31, 1992.......................    $102,331       $(119,007)       $253,669
   Issuance of Preferred Stock, net of issuance
     costs:
       Series B (2,300,000 shares)..................           -               -          55,203
       Convertible (2,300,000 shares)...............           -               -          55,076

   Issuance of Common Stock (741,199 shares)........           -               -           9,698
   Net income.......................................      28,036               -          28,036
   Cash distributions:
       Preferred Stock..............................           -         (10,888)        (10,888)
       Common Stock, $0.84 per share................           -         (14,728)        (14,728)
                                                       ---------        ---------       ---------


BALANCES AT DECEMBER 31, 1993.......................     130,367        (144,623)        376,066
   Issuance of Preferred Stock, net of issuance
   costs:
     Series B, C and D (2,486,000 shares)...........           -               -          59,850

   Issuance of Common Stock (10,770,437 shares).....           -               -         147,847
   Net income.......................................      42,118               -          42,118
   Cash distributions:
     Preferred Stock................................           -         (16,846)        (16,846)
     Common Stock, $0.85 per share..................           -         (21,249)        (21,249)
                                                       ---------        ---------       ---------

BALANCES AT DECEMBER 31, 1994.......................     172,485        (182,718)        587,786
   Issuance of Preferred Stock, net of issuance
   costs:
     Series E, F, G (4,501,900 shares)..............           -               -         275,157
     Convertible Participating (31,200 shares)......                                      28,470

   Issuance of Common Stock (42,687,092 shares).....           -               -         668,914

   Issuance of Class B Common Stock (7,000,000
     shares)........................................           -               -          73,500

   Net income.......................................      70,386               -          70,386
   Cash distributions:
     Preferred Stock................................           -         (31,124)        (31,124)
     Common Stock, $0.88 per share..................           -         (38,586)        (38,586)
                                                       ---------        ---------       ---------

BALANCES AT DECEMBER 31, 1995.......................    $242,871       $(252,428)     $1,634,503
                                                       =========        =========      ==========

</TABLE>

                            See accompanying notes.
                                      F-4
<PAGE>
<TABLE>
<CAPTION>

                              PUBLIC STORAGE, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
        For each of the three years in the period ended December 31, 1995
                             (amounts in thousands)

                                                                                    1995            1994            1993
                                                                                    ----            ----            ----

<S>                                                                               <C>              <C>             <C>   
Cash flows from operating activities:
   Net income...............................................................       $70,386         $42,118         $28,036
   Adjustments to reconcile net income to net cash provided by operating
     activities:
     Depreciation and amortization (net of amortization of  mortgage notes
       receivable discounts)................................................        40,647          27,581          24,150
     Depreciation included in equity in earnings of real estate entities....         2,045               -               -
     Environmental accrual (including $510 from equity in earnings of real
       estate entities).....................................................         3,251               -               -
     Minority interest in income............................................         7,137           9,481           7,291
                                                                                     -----           -----           -----

       Total adjustments....................................................        53,080          37,062          31,441
                                                                                    ------          ------          ------

       Net cash provided by operating activities............................       123,466          79,180          59,477
                                                                                   -------          ------          ------

Cash flows from investing activities:
     Principal payments received on mortgage notes receivable...............         2,063           6,785           7,957
     Proceeds from disposition of real estate facilities, net...............             -           1,666           1,292
     Acquisition of minority interests in consolidated real estate                 (32,683)        (51,711)         (7,681)
       partnerships.........................................................
     Acquisition of mortgage notes receivable...............................       (12,355)         (4,020)        (61,325)
     Acquisition of real estate facilities..................................      (108,326)        (93,026)        (66,887)
     Acquisition cost of business combinations (cash portion)...............       (57,374)        (20,972)              -
     Acquisition of interests in real estate entities.......................       (19,919)              -               -
     Reinvestment in real estate entities...................................          (738)              -               -
     Construction in process................................................        (7,979)              -               -
     Capital improvements to real estate facilities.........................       (11,361)         (8,312)         (6,435)
     Deposits on pending real estate acquisitions...........................             -               -          (4,350)
                                                                                   --------         -------         -------

       Net cash used in investing activities................................      (248,672)       (169,590)       (137,429)
                                                                                  --------        --------        -------- 

Cash flows from financing activities:
     Net (pay downs) proceeds from revolving line of credit.................       (37,607)        (10,323)         33,740
     Net proceeds from the issuances of preferred stock.....................       275,157          57,899         110,279
     Net proceeds from the issuances of common stock........................        80,526         110,280           2,598
     Principal payments on mortgage notes payable...........................       (39,212)         (8,233)        (25,603)
     Distributions paid to shareholders.....................................       (69,072)        (38,095)        (25,616)
     Distributions from operations to minority interests in consolidated
       real estate partnerships.............................................       (18,380)        (23,037)        (23,647)
     Reinvestment by minority interests in consolidated real estate
       partnerships.........................................................        (1,739)          7,962          11,120
     Other..................................................................        (4,182)          3,576          (2,771)
                                                                                    ------           -----          ------ 

       Net cash provided by financing activities............................       185,491         100,029          80,100
                                                                                   -------         -------          ------

Net increase in cash and cash equivalents...................................        60,285           9,619           2,148

Cash and cash equivalents at the beginning of the year......................        20,151          10,532           8,384
                                                                                    ------          ------           -----

Cash and cash equivalents at the end of the year............................       $80,436         $20,151         $10,532
                                                                                   =======         =======         =======
</TABLE>
                            See accompanying notes.
                                      F-5

<PAGE>
<TABLE>

                                                                                (Continued)
                                                                                    1995            1994            1993
                                                                                    ----            ----            ----
<S>                                                                                <C>            <C>             <C>
Supplemental schedule of noncash investing and financing activities:
   Investing activities:

   Acquisition of real estate facilities in exchange for common stock, the
     assumption of mortgage notes payable and the cancellation of mortgage
     notes receivable.......................................................      $(87,941)        $(42,656)      $(20,161)

   Business combinations (Note 3):
       Real estate facilities...............................................      (230,519)         (57,415)             -
       Investment in real estate entities...................................      (385,222)               -              -
       Mortgage notes receivable............................................        (6,667)               -              -
       Other assets.........................................................        (8,862)          (1,620)             -
       Intangible assets....................................................      (232,726)               -              -
       Accrued and other liabilities........................................        17,134              695              -
       Notes Payable........................................................        96,728                -              -
       Minority interest....................................................        17,034                -              -
   Acquisition of minority interests in consolidated real estate
     partnerships in exchange for common stock..............................             -                -         (3,496)
   Acquisition of partnership interests in real estate entities in exchange
     for common stock.......................................................        (4,034)               -         (1,873)
   Reduction in other assets - deposits on pending real estate acquisitions.             -            4,350              -
   Financing activities:
   Cancellation of mortgage notes receivable to acquire real estate                 16,435           24,441         11,968
     facilities.............................................................
   Assumption of mortgage notes payable upon the acquisition of real estate
     facilities.............................................................        60,908           11,715          6,461
   Accrued and unpaid distributions ........................................           638                -              -
   Issuance of Preferred Stock:
       Series B Preferred Stock to acquire real estate facilities...........             -            2,150              -
       Mandatory Convertible Preferred Stock to acquire interest in
         consolidated real estate partnerships..............................        28,470                -              -
   Issuance of Common Stock:
       Issued in connection with mergers....................................       573,756           37,369              -
       Acquire minority interests in real estate partnerships...............             -                -          3,496
       Acquire real estate facilities.......................................        10,598                -          1,732
       Acquire partnership  interests in real estate entities...............         4,034                -          1,873
   Issuance of Class B Common Stock:
       Issued in connection with mergers....................................        73,500                -              -

                            See accompanying notes.
                                      F-6
</TABLE>
<PAGE>

                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1995


1. Description of the business
   ---------------------------
     Public Storage, Inc. (the "Company") is a California  corporation which was
organized  in 1980.  The Company is a fully  integrated,  self-administered  and
self-managed real estate investment trust ("REIT") that acquires, develops, owns
and operates  self-service  mini-warehouse  facilities which offer  self-storage
spaces for lease,  usually on a month-to-month  basis, for personal and business
use. The Company,  to a lesser  extent,  also owns and  operates  business  park
facilities containing commercial and industrial rental space.

     Prior to November 16, 1995, the Company's operations were managed, pursuant
to contractual  arrangements,  by Public Storage Advisers, Inc. (the "Adviser"),
the Company's  investment advisor, by Public Storage Management,  Inc. ("PSMI"),
its mini-warehouse property operator and by Public Storage Commercial Properties
Group, Inc. ("PSCP"), its business park facility operator.

     On November 16, 1995, in a series of mergers among PSMI and its affiliates,
culminating  in the merger of PSMI into the Company (the ''PSMI  Merger''),  the
Company became self-administered and self-managed and acquired substantially all
of the United States real estate operations of PSMI (Note 3). As a result of the
PSMI Merger,  the  Company's  name was changed from  Storage  Equities,  Inc. to
Public Storage, Inc.

     The  Company  invests  in real  estate  facilities  primarily  through  the
acquisition of wholly-owned  facilities  combined with the acquisition of equity
interests in real estate entities owning real estate facilities. At December 31,
1995, the Company had direct and indirect equity  interests in 1,050  properties
located in 37 states, including 1,016 mini-warehouse  facilities and 34 business
parks.  All of these  facilities  are operated by the Company  under the "Public
Storage"  name.  In addition,  the Company  operates  real estate  facilities on
behalf  of  various   ownership   entities,   substantially  all  of  which  are
partnerships and REITs in which the Company has an ownership interest.

2. Summary of significant accounting policies
   ------------------------------------------

     Basis of presentation
     ---------------------
     The consolidated  financial statements include the accounts of the Company,
majority owned subsidiaries,  and twenty limited partnerships (the "Consolidated
Partnerships")  in which the Company has  significant  economic  interest and is
able to  exercise  significant  control  through  its  ownership  of limited and
general partnership interests. The Company and the Consolidated Partnerships own
a total of 540 real  estate  facilities  (273  which  are  owned  wholly  by the
Company) consisting of 520 mini-warehouses and 20 business parks.

     The  Consolidated  Partnerships  principally  consist  of a series of eight
partnerships  owning a total of 240 real  estate  facilities,  211 of which  are
owned jointly between the partnerships and the Company. During 1995, the Company
increased   its  ownership   interest  and  control  in  the  remaining   twelve
Consolidated  Partnerships (owning in aggregate 27 real estate facilities),  and
as a result,  the  accounts  of these  partnerships  have been  included  in the
Company's  consolidated  financial  statements  during 1995.  Prior to 1995, the
Company  either had no  ownership  interest or such  interest  was de minimis in
these partnerships.

     The  Company's   aggregate  cost  of  its  interests  in  the  Consolidated
Partnerships  is less than the historical  carrying amount of the underlying net
assets  of the  Consolidated  Partnerships.  In  consolidation,  the  difference
between the Company's cost and the  historical  carrying value of the underlying
properties  has  been  allocated  to the  real  estate  facilities  and is being
amortized over the remaining lives of the real estate facilities (Note 4).

     The Company also has equity  investments in limited  partnerships and other
REITs owning in aggregate 510 real estate facilities (496 mini-warehouses and 14
business park facilities).  Substantially all of these investments are accounted
for using the equity method. See Note 5.

                                      F-7
<PAGE>

                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1995

     Use of estimates
     ----------------
     The preparation of the consolidated financial statements in conformity with
generally accepted  accounting  principles requires management to make estimates
and assumptions that affect the amounts  reported in the consolidated  financial
statements  and  accompanying  notes.  Actual  results  could  differ from those
estimates.

     Income taxes
     ------------
     For all taxable years subsequent to 1980, the Company qualified and intends
to  continue  to qualify as a REIT,  as defined in Section  856 of the  Internal
Revenue Code. As a REIT, the Company is not taxed on that portion of its taxable
income which is distributed to its shareholders  provided that the Company meets
certain tests. The Company believes it has met these tests during 1995, 1994 and
1993;  accordingly,  no  provision  for  income  taxes  has  been  made  in  the
accompanying financial statements.

     Allowance for possible losses
     -----------------------------
     The Company has no  allowance  for possible  losses  relating to any of its
real estate investments,  including mortgage notes receivable. The need for such
an  allowance is evaluated  by  management  by means of periodic  reviews of its
investment portfolio.

     Cash and cash equivalents
     -------------------------
     For purposes of financial statement presentation, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.

     Real estate facilities
     ----------------------
     In  March  1995,  FASB  issued  Statement  No.  121,  "Accounting  for  the
Impairment of  Long-Lived  Assets and for  Long-Lived  Assets to Be Disposed Of,
which requires  impairment of losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the  undiscounted  cash
flows  estimated  to be  generated  by those  assets  are less than the  assets'
carrying  amount.  Statement 121 also  addresses the  accounting  for long-lived
assets that are expected to be disposed of. The Company adopted Statement 121 in
1995 and the adoption has no effect.

     Depreciation is computed using the straight-line  method over the estimated
useful lives of the buildings and  improvements,  which are generally  between 5
and 25 years.

     Intangible assets
     -----------------
     Intangible assets consist of property management  contracts  ($165,000,000)
and the cost over the fair value of net  tangible  and  identifiable  intangible
assets  ($67,726,000)  acquired  in  the  PSMI  Merger.  Intangible  assets  are
amortized  straight-line  over 25 years. At December 31, 1995 intangible  assets
are net of accumulated amortization of $1,164,000.  Included in depreciation and
amortization  expense  in 1995 is  $1,164,000  related  to the  amortization  of
intangible  assets (for the period from  November 16, 1996 through  December 31,
1995).

     Environmental costs
     -------------------
     The  Company's  policy  is  to  accrue  environmental   assessments  and/or
remediation  cost when it is probable that such efforts will be required and the
related costs can be reasonably  estimated.  The majority of the Company's  real
estate  facilities  were  acquired  prior to the time that it was  customary  to
conduct environmental assessments. During 1995, the Company and the Consolidated
Partnerships  conducted independent  environmental  investigations of their real
estate facilities. As a result of these investigations, the Company has recorded
an amount  which,  in  management's  best  estimate  and based upon  independent
analysis,  will be sufficient to satisfy  anticipated costs of known remediation
requirements. At December 31, 1995, the Company accrued $2,741,000 for estimated
environmental remediation costs. Similar to the Company, real estate entities in
which the Company  accounts for using the equity method  recorded  environmental
accruals  at the end of  1995.  The  Company's  pro  rata  share,  based  on its
ownership  interest,  totaled $510,000 and is included in "Equity in earnings of
real estate  entities."  Although there can be no assurance,  the Company is not
aware  of  any  environmental  contamination  of any  of  its  facilities  which
individually  or in the  aggregate  would be material to the  Company's  overall
business, financial condition, or results of operations.

                                      F-8
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1995

     Net income per common share
     ---------------------------
     Net income per common share is computed  using the weighted  average common
shares  outstanding  (adjusted for stock options).  The inclusion of the Class B
Common  Stock  in the  determination  of  earnings  per  common  share  has been
determined to be anti-dilutive  (after giving effect to the pro forma additional
income  required to satisfy  certain  contingencies  (Note 11)  required for the
Class B common  stock  to  convert  into  common  stock)  and  accordingly,  the
conversion of the Class B common stock into common stock has not been assumed.

     The Company's  preferred  stocks (Note 11) were determined not to be common
stock  equivalents.  In computing  earnings per common  share,  preferred  stock
dividends totaling $31,124,000,  $16,846,000, and $10,888,000 for the year ended
December 31, 1995,  1994, and 1993,  respectively,  reduced income  available to
common stockholders.

     Fully  diluted  earnings  per  common  are not  presented,  as the  assumed
conversion  of the  Company's  convertible  preferred  stock  (Note 11) would be
anti-dilutive.

     Revenue/expense recognition
     ---------------------------
     Property rents are recognized as earned.  Equity in earnings of real estate
entities  are  recognized  based  on the  Company's  ownership  interest  in the
earnings of each of the unconsolidated real estate entities. Leasing commissions
relating to the business park operations are expensed as incurred.

     Financial instruments
     ---------------------
     The  carrying  amount  of cash  and cash  equivalents  and  mortgage  notes
receivable  approximates  fair  value  because  with  respect  to cash  and cash
equivalents  maturities  are less than  three  months  and with  respect  to the
mortgage notes receivable  interest rates approximate  market rates for the type
of real estate  securing such loans.  The carrying amount of the Company's fixed
rate long-term debt is estimated  using  discounted  cash flow analyses based on
incremental  borrowing  rates the Company  believes it could obtain with similar
terms and maturities.

3.  Business combinations
   ---------------------
     On February  28, 1995 and June 30,  1995,  the Company  completed  separate
merger transactions with Public Storage Properties VI, Inc. ("Properties 6") and
Public Storage Properties VII, Inc. ("Properties 7"), respectively,  whereby the
Company  acquired all the outstanding  stock of Properties 6 and Properties 7 in
exchange for cash and common stock of the Company. Properties 6 and Properties 7
were REITs and affiliates of the Adviser.

     Pursuant to the merger with  Properties 6, the Company  acquired all of the
outstanding  stock of Properties 6 at a cost of  $65,342,000,  consisting of the
issuance of 3,147,015  shares of the  Company's  common stock (with an aggregate
value of  $43,915,000)  and  $21,427,000  in cash. The fair market values of the
assets  acquired and  liabilities  assumed  were:  (i) real estate  facilities -
$66,475,000,  (ii)  other  assets  -  $279,000,  and  (iii)  accrued  and  other
liabilities - $1,412,000.

     Pursuant to the merger with  Properties 7, the Company  acquired all of the
outstanding  stock of Properties 7 at a cost of  $70,064,000,  consisting of the
issuance of 3,517,272  shares of the  Company's  common stock (with an aggregate
value of $56,057,000)  and $14,007,000 in cash.  Properties 6 owned and operated
23  mini-warehouses  and  Properties  7 owned  and  operated  35  mini-warehouse
facilities  and three  business  parks.  The fair  market  values of the  assets
acquired and liabilities assumed were: (i) real estate facilities - $74,300,000,
(ii) other  assets -  $1,161,000,  and (iii)  accrued  and other  liabilities  -
$5,397,000.
                                      F-9
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1995

     The aggregate consideration paid by the Company for the net assets acquired
in the PSMI  Merger  (including  expenses  of $2.0  million)  was  $549,284,000,
consisting of 29,449,513 shares of common stock ($473,784,000), 7,000,000 shares
of Class B  common stock  ($73,500,000)  (Note 11).  The real estate  operations
acquired  in the PSMI Merger  included  (1) the  ''Public  Storage''  name,  (2)
general and limited partnership  interests in 47 limited  partnerships owning an
aggregate of 286 mini-warehouses,  (3) shares of common stock in 16 REITs owning
an aggregate of 218 mini-warehouses  and 14 business park properties,  (4) seven
wholly-owned  properties,  (5)  all-inclusive  deeds  of  trust  secured  by ten
mini-warehouses,  (6) property  management  contracts,  exclusive of  facilities
owned by the Company,  for 563  mini-warehouses  and, through ownership of a 95%
economic  interest in a subsidiary,  24 business park  properties  and (7) a 95%
economic interest in another  subsidiary that currently sells locks and boxes in
mini-warehouses operated by the Company.

     During 1995 the Company  increased  its  ownership  interest and control of
twelve limited partnerships.  As a result, commencing in 1995, the Company began
to  consolidate  the  accounts of these  partnerships  for  financial  statement
purposes.  The aggregate amount of the interests  acquired  totaled  $48,410,000
consisting of the issuance of $28,470,000 of Mandatory Convertible Participating
Preferred Stock and cash of $19,940,000.

     Each of the  above  transactions  has  been  accounted  for as a  purchase;
accordingly,  allocations  of the  total  acquisition  cost  to the  net  assets
acquired were made based on the fair value of such assets and  liabilities as of
the dates of each respective  transaction.  In the case of the PSMI Merger,  the
purchase  price  exceeded  the  fair  value  of the  tangible  and  identifiable
intangible net assets  acquired by  approximately  $67,726,000.  The fair market
values of the  assets  acquired  and  liabilities  assumed  with  respect to the
transactions occurring in 1995 are summarized as follows:
<TABLE>
<CAPTION>

                                             Properties 6    PSMI        Other
                                            and 7 mergers   Merger   Acquisitions    Total
                                            -------------   ------   ------------    -----
                                                                (in thousands)
   
<S>                                         <C>          <C>          <C>         <C>    

Real estate facilities ..................   $ 140,775    $  19,943    $  69,801    $ 230,519
Investments in real estate entities .....        --        389,686       (4,464)     385,222
Mortgage notes receivable ...............        --          6,667         --          6,667
Other assets ............................       1,440        4,571        2,851        8,862
Intangible assets (including property
  management contracts of $165 million) .        --        232,726         --        232,726
Accrued and other liabilities ...........      (6,809)      (9,624)        (701)     (17,134)
Notes payable ...........................        --        (93,341)      (3,387)     (96,728)
Minority interest .......................        --         (1,344)     (15,690)     (17,034)
                                                            ------      -------      ------- 
                                            $ 135,406    $ 549,284    $  48,410    $ 733,100
                                            =========    =========    =========    =========
</TABLE>

     On September 30, 1994,  the Company  completed a merger with Public Storage
Properties VIII, Inc.  ("Properties 8"), a REIT and an affiliate of the Adviser,
whereby the Company  acquired all the  outstanding  stock of Properties 8 for an
aggregate cost of $55,839,000, consisting of the issuance of 2,593,914 shares of
common stock (with an aggregate value of  $38,498,000)  and $17,341,000 in cash.
The merger was accounted for as a purchase. The fair market values of the assets
acquired  and  liabilities   assumed  were:  (i)  real  estate   facilities  (23
mini-warehouses)  -  $57,415,000,  (ii)  other  assets -  $1,620,000,  and (iii)
accrued and other liabilities - $3,196,000.

     The historical  operating results of Properties 6 - 8, PSMI, and the twelve
limited  partnerships  prior to each respective  transaction  date have not been
included  in  the  Company's   historical  operating  results.  Pro  forma  data
(unaudited) for the year ended December 31, 1995 and 1994 as though (i) business
combinations  and (ii) the public issuances of common and preferred stock during
1994 and 1995 (with the  exception of the Series G, issued on December 13, 1995)
and the use of the proceeds  therefrom  had been  effective at the  beginning of
each period follows:
                                      F-10
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1995



                                   
                                                       For the Year
                                                    Ended December 31,
                                           ------------------------------------
                                              1995                      1994
                                           ------------------------------------
                                           (in thousands except per share data)


Revenues...........................         $268,076                  $250,841
Net income.........................         $108,443                   $99,065
Net income per common share........            $1.05                     $0.95

     The pro forma data does not purport to be  indicative  either of results of
operations  that  would  have  occurred  had the  transactions  occurred  at the
beginning of each period or future results of operations of the Company. Certain
pro forma  adjustments were made to the combined  historical  amounts to reflect
(i) expected reductions in general and administrative  expenses,  (ii) estimated
increased  interest  expense from bank borrowings to finance the cash portion of
the acquisition cost, (iii) estimated  increase in depreciation and amortization
expense, and (iv) elimination of advisory fee expense.

4. Real estate facilities
   ----------------------
     Activity in real estate facilities during 1995,1994 and 1993 is as follows:


                                             1995         1994            1993
                                             ----         ----            ----
                                                    (in thousands)

Cost:
 Beginning balance........................  $ 967,718  $ 764,126      $ 664,906
 Property acquisitions....................    426,786    193,097         87,048
 Improvements.............................     11,361      8,312          6,435
 Construction in process..................      7,979          -              -
 Adjustment resulting from the acquisition
  of minority interests (Note 2)..........      (223)      4,820          7,329
 Property dispositions....................      (487)    (2,637)         (1,592)
                                            ---------   --------      ----------

  Ending balance.......................... $1,413,134   $967,718       $764,126
                                            =========   ========      ==========

Accumulated depreciation:
 Beginning balance........................   $202,745   $175,621       $150,996
 Additions during the year................     39,376     28,099         24,924
 Property dispositions ...................      (155)      (975)          (299)
                                            ---------   --------      ----------

  Ending balance..........................   $241,966   $202,745       $175,621
                                            =========   ========      ==========

     During 1995, the Company acquired a total of 95 real estate  facilities for
an  aggregate  cost  of  $230,519,000,   in  connection  with  certain  business
combinations  (Note 3). The Company also  acquired an  additional 58 real estate
facilities with an aggregate acquisition cost of $184,861,000  consisting of the
cancellation of mortgage notes receivable ($16,435,000),  assumption of mortgage
notes payable ($60,908,000), and cash ($107,518,000).

     At December 31, 1994, affiliates of the Adviser had participation interests
of up to 25% in 21 mini-warehouse  facilities owned by the Company. During 1995,
the Company acquired these  participation  interests from such affiliates for an
aggregate  cost of  $11,406,000,  consisting  of  $10,598,000  in  common  stock
(747,355  shares) and cash totaling  $808,000.  The cost of these  participation
interests has been included in real estate facilities as part of the acquisition
cost of the respective facilities.
                                      F-11
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1995


     In 1995, the Company began construction of six  mini-warehouse  facilities,
one of which has been  completed  and put into  operation  during  August  1995.
Included  in real  estate  facilities  at  December  31,  1995 is  approximately
$7,979,000 of costs (including  capitalized interest of $307,000) related to the
remaining five facilities under construction.

     During 1994,  the Company  acquired 71  mini-warehouse  facilities  and one
business park facility  (including  the real estate  facilities  acquired in the
Properties 8 merger) for an aggregate  cost of  $193,097,000,  consisting of the
issuance of preferred stock totaling  $2,150,000,  the  cancellation of mortgage
notes receivable totaling $24,441,000,  the assumption of mortgage notes payable
totaling $11,715,000 and cash.

     During  1993,  the Company  acquired 41  mini-warehouse  facilities  for an
aggregate cost of  $87,048,000,  consisting of the issuance of 142,021 shares of
common  stock,   the   cancellation  of  mortgage  notes   receivable   totaling
$11,968,000,  the assumption of mortgage notes payable  totaling  $6,461,000 and
cash.

     A substantial amount of the mini-warehouse facilities acquired during 1995,
1994 and 1993 were acquired from affiliates with an aggregate  acquisition  cost
of $300,193,000, $119,211,000 and $25,728,000, respectively.

     At December 31,  1995,  the adjusted  basis of real estate  facilities  for
Federal income tax purposes was approximately  $884.5 million net of accumulated
depreciation of $379.0 million.

5. Investments in real estate entities
   -----------------------------------


     Prior to 1995, the Company's  investment in real estate entities  generally
consisted of limited and general  partnership  interests in real estate  limited
partnerships  which were  accounted for using the cost method.  During 1995, the
Company (i) acquired limited and general partnership interest in 47 partnerships
and common stock in 16 REITs in connection  with the PSMI Merger at an aggregate
cost of  $389,686,000,  (ii) acquired  additional  interests in some of the same
partnerships  and REITs for an  aggregate  cost of  $23,953,000,  consisting  of
Common  Stock  ($4,034,000)  and  cash  ($19,919,000),  and  (iii)  reclassified
investments in partnerships  which commencing in 1995 are consolidated  with the
Company ($4,464,000).

     At  December  31,  1995,  the  Company's  investments  in these real estate
entities consists  generally of ownership  interests ranging from 15% to 45% and
are accounted for using the equity method of accounting.  Accordingly,  earnings
are  recognized by the Company based upon the  Company's  ownership  interest in
each of the  partnerships  and REITs.  Provisions of the  partnerships and REITs
provide for the  payment of  preferred  cash  distributions  to other  investors
(until certain  specified amounts have been paid) without regard to the pro rata
interest of investors in current earnings.

     Equity in earnings of real estate entities for 1995 principally consists of
the  Company's  pro rata share of earnings for those  interests  acquired in the
PSMI Merger.  During 1995, the Company recognized  earnings from its investments
of $3,763,000 and received cash distributions  totaling $5,580,000.  Included in
equity in earnings of real estate  entities for 1995 is the  Company's  share of
depreciation  expense ($926,000) and environmental  costs ($510,000) of the real
estate  entities.  In  addition,  equity in  earnings  of real  estate  entities
includes  amortization totaling $1,119,000 (from date of the PSMI Merger through
the end of the year)  representing  the amortization of the Company's cost basis
over the underlying  book value of the Company's  equity interest in each of the
entities.  At  December  31,  1995,  the  unamortized  excess  of the  Company's
investment  over its equity in the  underlying  net assets of these real  estate
entities at the date of acquisition was approximately $222.7 million.

     Summarized  combined  financial  data (based on historical  cost) for these
real estate entities are as follows:
                                      F-12
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1995

                                                  Year ended
                                           --------------------------
                                               December 31, 1995
                                                (in thousands)

Rental income................................... $  251,546
Total revenues..................................    254,505
Cost of operations..............................     91,387
Depreciation....................................     41,027
Net income......................................    103,217

Total assets, net of accumulated depreciation...  1,203,923
Total debt......................................    101,955
Total equity....................................  1,048,206

6. Mortgage notes receivable from affiliates
   ----------------------------------------- 
     At December 31, 1995,  mortgage notes receivable  balance of $23,699,000 is
net of related discounts totaling $403,000.  The mortgage notes bear interest at
stated rates  ranging from 8.50% to 10.75% and are secured by 14  mini-warehouse
facilities owned by affiliates of the Company.

     In connection  with the PSMI Merger,  the Company  acquired  mortgage notes
receivable  totaling  $6,667,000 which are secured by mini-warehouse  facilities
owned by affiliated  entities.  In addition,  during 1995, the Company  acquired
$4,094,000  of  mortgage  notes   receivable  from  third  parties  (secured  by
mini-warehouse  owned by  affiliated  entities)  and  provided  a loan  totaling
$8,261,000  to an  affiliated  limited  partnership.  During 1994 and 1993,  the
Company acquired an aggregate of $4,020,000 (face amount) and $61,088,000  (face
amount),  respectively, of mortgage notes receivable from unaffiliated financial
institutions.  The mortgage  notes acquired in 1994 were acquired at face amount
while the mortgage notes acquired during 1993 were acquired for $56,325,000.

     During 1995, 1994 and 1993, the Company canceled  mortgage notes with a net
carrying value of $16,435,000,  $24,441,000 and  $11,968,000,  respectively,  as
part of the acquisition cost of the underlying real estate  facilities  securing
the mortgage notes (Note 4).

7. Revolving line of credit
   ------------------------

     The Company has an unsecured  $125.0 million credit  agreement (the "Credit
Agreement"),  as amended,  with a group of banks which  expires  April 30, 1998.
Subject to certain  limitations,  the credit  facility is available  for general
working capital purposes and real estate related acquisitions.

     Interest  on  outstanding  borrowings  on the Credit  Agreement  is payable
monthly.  At the  option  of the  Company,  the  rate  of  interest  charged  on
borrowings  is equal to (i) the  prime  rate,  or (ii) a rate  ranging  from the
London Interbank  Offered Rate ("LIBOR") plus .75% to LIBOR plus 1.50% depending
on the Company's  coverage ratios, as defined (at December 31, 1995 the rate was
7.44%). In addition,  the Company is required to pay a quarterly  commitment fee
ranging  from 0.375% to 0.250%  (per annum,  depending  on coverage  ratios,  as
defined) of the unused portion of the revolving credit facility.

     At December  31,  1995,  the Company had no amounts  outstanding  under the
Credit Agreement.

     Under  covenants  of the Credit  Agreement,  the Company is required to (i)
maintain  minimum total  shareholders'  equity (as defined),  (ii) to maintain a
ratio of total debt to net worth (as defined) not greater than .30 to 1.0, (iii)
to maintain  certain cash flow and interest  coverage ratios (as defined) of not
less than 1.0 to 1.0 and 5.0 to 1.0,  respectively,  (iv) net income of not less
than $1.00 for each fiscal quarter.  In addition,  the Company is limited in its
ability to incur  additional  borrowings  (the  Company is  required to maintain
unencumbered  assets with an aggregate book value equal to or greater the $500.0
million) or sell assets. The Company was in compliance with the covenants of the
Credit Agreement at December 31, 1995.
                                      F-13
<PAGE>
                           PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1995

   
8. Notes payable
   -------------

     Notes payable at December 31, 1995 and 1994 consist of the following:
<TABLE>
<CAPTION>

                                                                    1995                          1994
                                                          -----------------------      -------------------------
                                                          Carrying                     Carrying
                                                           amount      Fair value       amount        Fair value
                                                           ------      ----------       ------        ----------
                                                                              (in thousands)

<S>                                                        <C>            <C>       <C>             <C>   
7.08% unsecured senior notes, due November 2003.........   $65,500        $65,500   $               $
                                                                                               -               -

Mortgage notes payable:
     10.55% mortgage notes secured by real estate
         facilities, principal and interest payable
         monthly, due August 2004........................   33,699         36,959         25,802          25,802

     7.07% to 11.10% mortgage notes secured by real
         estate facilities, principal and interest
         payable monthly, due at varying dates between
         May 1996 and September 2028.....................   22,875         22,875          7,619           7,619

     Variable rate mortgage notes secured by real
         estate facilities...............................   35,978         35,978         18,367          18,367
                                                            ------         ------         ------          ------

                                                          $158,052       $161,312        $51,788         $51,788
                                                          ========       ========        =======         =======
</TABLE>


     In connection with the PSMI Merger, the Company assumed the 7.08% unsecured
senior notes payable.  The senior notes require interest and principal  payments
to be paid semi-annually and have various  restrictive  covenants,  all of which
have been met at December 31, 1995.

     The   10.55%   mortgage   notes   consist   of   five   notes   which   are
cross-collateralized  by 19 properties and are due to a life insurance  company.
At December  31, 1994,  the Company held four of these notes with the  remaining
note held by an affiliated limited partnership.  In 1995, in connection with the
acquisition  of the  partnership's  four  properties,  the  Company  assumed the
remaining note which totaled  $9,240,000.  Although  there is a negative  spread
between the carrying value and the estimated fair value of the notes,  the notes
provide for the  prepayment  of  principal  subject to the payment of  penalties
which exceed this negative spread. Accordingly,  prepayment of the notes at this
time would not be economically practicable.

     In January  1996,  the  Company  repaid  early  mortgage  notes which had a
principal balance of $36,394,000 at December 31, 1995, including  $35,157,000 of
variable rate notes.  The remaining  $821,000  balance of variable rate mortgage
debt at December 31, 1995 bears interest at the 11th District Cost of Funds plus
2.50%  adjusted  semi-annually.  Principal  and  interest  payments  are payable
monthly with final maturity in January 1997.

     Mortgage  notes  payable  are  secured by 56 of the  Company's  real estate
facilities  having an aggregate net book value of $161.7 million at December 31,
1995.

     At December 31, 1995, approximate principal maturities of notes payable, as
adjusted to reflect the early  repayment of $36,394,000 of debt in January 1996,
are as follows:
                                      F-14
<PAGE>
                           PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1995

                                                  (in thousands)
      1996....................................        $10,940
      1997....................................         13,409
      1998....................................         15,256
      1999 ...................................         14,467
      2000....................................         11,457
      Thereafter..............................         56,129
                                                     $121,658


     Interest  paid  (including  interest  related to the notes payable to bank)
during  1995,  1994  and  1993  was   $8,595,000,   $5,940,000  and  $6,116,000,
respectively.  During 1995,  the Company  capitalized  interest  costs  totaling
$307,000 related to construction of real estate facilities.

9. Minority interest
   -----------------
     In consolidation,  the Company classifies outsiders' ownership interests in
the net assets of each of the Consolidated  Partnerships as minority interest on
the Company's  consolidated  financial  statements.  Minority interest in income
consists  of such  outsiders'  share of the  operating  results  of the  Company
relating to the consolidated operations of the Consolidated Partnerships.

     In determining  income allocable to the minority interests for fiscal 1995,
1994  and  1993   consolidated   depreciation   and   amortization   expense  of
approximately  $11,243,000,  $13,556,000  and  $16,357,000,   respectively,  was
allocated to the minority interest.  In addition,  the 1994 minority interest in
income includes $224,000 of allocated gain in connection with the disposition of
real estate.

     During 1995,  the Company  acquired  limited  partnership  interests in the
Consolidated   Partnerships   for  an  aggregate  cost  of  $32,683,000.   These
transactions  had the effect of  reducing  minority  interest  by  approximately
$32,906,000  (the  historical book value of such interests in the underlying net
assets of the  partnerships).  The excess of the underlying book value over cost
($223,000) has been  allocated to real estate  facilities in  consolidation.  In
1994 and 1993, the Company acquired  interests in the Consolidated  Partnerships
at an  aggregate  cost  of  $51,711,000  and  $594,000,  respectively,  reducing
minority interest by approximately $46,891,000 and $353,000,  respectively.  The
excess  of cost  over  underlying  book  values  was  allocated  to real  estate
facilities in consolidation.

     During 1995,  in connection  with certain  business  combinations  (Note 3)
minority interest was increased by $17,034,000, representing the equity in those
entities which the Company did not acquire.

10. Advisory and management contracts
    ----------------------------------
     Since the  Company's  organization,  the  Adviser,  pursuant to an advisory
contract,  has administered the day-to-day  investment operations of the Company
and has advised and consulted with the Board of Directors in connection with the
acquisition and disposition of  investments.  The Amended and Restated  Advisory
Contract (the  "Advisory  Contract")  with the Adviser  provided for the monthly
payment  of  advisory  fees  equal  to the sum of (i)  12.75%  of the  Company's
Adjusted  Income (as  defined)  per share of Common  Stock based on Common Stock
outstanding  at  September  30,  1991  (14,989,454  shares)  plus (ii) 6% of the
Company's  Adjusted Income per share on shares in excess of 14,989,454 shares of
Common Stock.  During 1993, 1994 and 1995 (from January 1, 1995 through November
16, 1995),  the Company paid advisory fees equal to  $3,619,000,  $4,983,000 and
$6,437,000 to the Advisor pursuant to the Advisory Contract.

     Since the Company's  organization,  PSMI,  which was organized in 1973, has
provided property operation services to the Company under a Management Agreement
between the Company and PSMI (as amended, the "Management Agreement").  Pursuant
to the Management Agreement, PSMI or PSCP operate all of the assets in which the
Company has invested for a fee which is equal to 6% of the gross revenues of the
mini-warehouse  spaces managed and 5% of the gross revenues of the business park
facilities  operated.  Management  fees  relating to the  Company's  real estate
facilities,  which are included in cost of operations,  amounted to $10,232,000,
$8,355,000 and $6,411,000 in 1995, 1994 and 1993, respectively.
                                      F-15
<PAGE>
                           PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1995


     Pursuant  to  the  PSMI  Merger,   the  Company  became   self-advised  and
self-managed,  accordingly,  effective  November 16,  1995,  the Company will no
longer incur either advisory fees or property management fees.

     In  connection  with  the  PSMI  Merger,   the  Company  acquired  property
management  contracts,  exclusive of  facilities  owned by the Company,  for 563
mini-warehouses  and through ownership of 95% economic interest in a subsidiary,
24 commercial  properties.  These facilities constitute all of the United States
mini-warehouses  and business parks doing business  under the "Public  Storage"
name and all those in which the Company has an interest and 70 facilities  owned
by third parties in which the Company has no equity interest.

     The property management  contracts generally provide for compensation equal
to 6%, in the case of the  mini-warehouses,  and 5%, in the case of the business
parks of gross revenues of the facilities managed.  Under the supervision of the
property owners,  the Company  coordinates  rental policies,  rent  collections,
marketing  activities,  the  purchase of  equipment  and  supplies,  maintenance
activity, and the selection and engagement of vendors, suppliers and independent
contractors. In addition, the Company assists and advises the property owners in
establishing  policies for the hire,  discharge and supervision of employees for
the  operation  of these  facilities,  including  resident  managers,  assistant
managers, relief managers and billing and maintenance personnel.

11. Shareholders' equity
    --------------------
     Preferred Stock
     ---------------
     At December  31, 1995 and 1994,  the  Company had the  following  series of
Preferred Stock outstanding:
<TABLE>
<CAPTION>

                                                           Shares Outstanding                    Carrying Amount
                                                       -----------------------------        ----------------------------
                                         Dividend       December 31,     December 31,       December 31,     December 31,
                Series                      Rate            1995             1994               1995             1994
----------------------------------       --------       -----------      -----------        -----------       ----------

<S>                                         <C>           <C>              <C>              <C>              <C>         
Series A                                    10.000%       1,825,000        1,825,000        $  45,625,000    $ 45,625,000
Series B                                     9.200%       2,386,000        2,386,000           59,650,000      59,650,000
Series C                                 Adjustable       1,200,000        1,200,000           30,000,000      30,000,000
Series D                                     9.500%       1,200,000        1,200,000           30,000,000      30,000,000
Series E                                    10.000%       2,195,000                -           54,875,000               -
Series F                                     9.750%       2,300,000                -           57,500,000               -
Series G                                     8.875%           6,900                -          172,500,000               -
                                                         ----------        ---------          -----------     -----------
  Total Senior Preferred Stock                           11,112,900        6,611,000          450,150,000     165,275,000
                                                         ----------        ---------          -----------     -----------


Convertible                                   8.25%       2,300,000        2,300,000           57,500,000      57,500,000
Mandatory Convertible Participating        Variable          31,200                -           28,470,000               -
                                                         ----------        ---------          -----------     -----------
  Total Convertible Preferred Stock                       2,331,200        2,300,000           85,970,000      57,500,000
                                                         ----------        ---------          -----------     -----------

                                                         13,444,100        8,911,000         $536,120,000    $222,775,000
                                                         ==========        =========          ===========     ===========
</TABLE>

     The carrying amounts are equivalent to the liquidation preference, with the
exception  of  the  Convertible   Participating  Preferred  Stock  which  has  a
liquidation preference equal to $31,200,000.

     In  connection  with the  issuance  of the Series G  Preferred  Stock,  the
Company issued 6,900,000  depositary shares,  representing 1/1,000 of a share of
Preferred  Stock.  In January,  1996,  the Company issued  6,750,000  depositary
shares (depositary  shares,  each representing  1/1,000 of a share) of its 8.45%
Series H Preferred Stock raising net proceeds of approximately $163.2 million.
    
                                  F-16
<PAGE>

                           PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1995

     The Series A through Series H Preferred Stock (collectively the "Cumulative
Senior  Preferred  Stock")  have  general  preference  rights  with  respect  to
liquidation  and  quarterly  distributions.  With  respect  to  the  payment  of
dividends  and  amounts  upon  liquidation,   the  Convertible  Preferred  Stock
(including the Mandatory Convertible Participating Preferred Stock) ranks junior
to the Cumulative Senior Preferred Stock and any other shares of preferred stock
of the  Company  ranking  on a parity  with or senior to the  Cumulative  Senior
Preferred  Stock.  The  Convertible  Preferred  Stock ranks senior to the common
stock,  any additional  class of common stock and any series of preferred  stock
expressly  made  junior  to  the  Convertible  Preferred  Stock.  The  Mandatory
Convertible  Participating Preferred Stock has the same voting rights on a share
for share basis as the common stock.

     Holders of the Company's  preferred stock,  except under certain conditions
and as noted above,  will not be entitled to vote on most matters.  In the event
of a  cumulative  arrearage  equal to six  quarterly  dividends  or  failure  to
maintain a Debt Ratio (as  defined) of 50% or more,  holders of all  outstanding
series of preferred  stock (voting as a single class  without  regard to series)
will have the right to elect two  additional  members to serve on the  Company's
Board of  Directors  until  events of default  have been cured.  At December 31,
1995, there were no dividends in arrears and the Debt Ratio was 8.2%.

     Except under certain conditions relating to the Company's  qualification as
a REIT,  the Senior  Preferred  Stock and  Convertible  Preferred  Stock are not
redeemable prior to the following dates: Series A - September 30, 2002, Series B
- March 31,  2003,  Series C - June 30,  1999,  Series D - September  30,  2004,
Series E - January 31, 2005,  Series F - April 30, 2005, Series G - December 31,
2000 Series H - January 31, 2001. On or after the respective  dates, each of the
series  of  Senior  Preferred  Stock  will be  redeemable  at the  option of the
Company,  in  whole  or in part,  at $25 per  share,  plus  accrued  and  unpaid
dividends.  On or after July 1, 1998, the  Convertible  Stock will be redeemable
for shares of the Company's common stock at the option of the Company,  in whole
or in part,  at a  redemption  price of 1.6835  shares of common  stock for each
share of Convertible Stock (subject to adjustment in certain circumstances),  if
for 20 trading days within any period of 30 consecutive  trading days (including
the last trading day of such  period),  the closing price of the common stock on
its principal  trading market exceeds $14.85 per share (subject to adjustment in
certain  circumstances).  The Convertible  Preferred Stock is not redeemable for
cash.

     The Convertible Preferred Stock is convertible at any time at the option of
the  holders  of such  stock  into  shares of the  Company's  common  stock at a
conversion  rate of 1.6835 shares of common stock for each share of  Convertible
Preferred Stock, subject to adjustment in certain circumstances.

     Effective  July 1, 1995,  the Company issued 31,200 shares of its Mandatory
Convertible Participating Preferred Stock to an unaffiliated investor to acquire
the investor's limited partnership interest in an affiliated real estate limited
partnership. On June 30, 2002, the Mandatory Convertible Participating Preferred
Stock will  automatically  convert into common  stock of the  Company.  However,
prior to that time it is convertible at the option of the holder. At conversion,
the number of common shares to be issued to the holder will be determined  based
upon the Company's acquired  partnership interest in the then aggregate property
values of the real estate partnership divided by the average market price of the
Company's common stock at the time of conversion (if converted prior to June 30,
2000 the lesser of $18.00 or the average  market price of the  Company's  common
stock at the time of  conversion  will be  used).  At  December  31,  1995,  the
Mandatory  Convertible   Participating  Preferred  Stock  was  convertible  into
approximately  1,553,647  shares of the  Company's  common  stock  (based upon a
conversion price of $18.00 per share).
                                      F-17
<PAGE>

                           PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1995

Common stock
------------
     During 1995, 1994 and 1993, the Company issued shares of its common stock
as follows:
<TABLE>
<CAPTION>

                                        1995                        1994                         1993
                                ----------------------    -------------------------     ----------------------
                                Shares        Amount         Shares        Amount        Shares       Amount
                                ------        ------         ------        ------        ------       ------
                                                 (dollar amounts in thousands)

<S>                            <C>             <C>         <C>            <C>                       <C>       
Public offerings.............  5,482,200       $82,068     7,984,000      $108,083             -    $        -
In connection with mergers
  (Note 3)................... 36,113,800       573,756     2,593,914        38,498             -             -
Issuance costs of mergers....          -        (2,527)            -        (1,124)            -             -
Exercise of stock options....     46,670           403        82,666           689        20,000           162
Issuance to affiliates.......     40,000           582       109,857         1,701       170,000         2,435
Acquisition of interests in
  real estate entities.......    257,067         4,034             -             -       137,468         1,873
Acquisition of real estate
  facilities (Note 4)........    747,355        10,598             -             -       142,021         1,732
Acquisition of minority
  interests..................          -             -             -             -       271,710         3,496
                              ----------       -------    -----------      --------      --------       ------
                              42,687,092      $668,914    10,770,437      $147,847       741,199        $9,698
                              ==========       =======    ===========      ========      ========  
</TABLE>


     Shares of common stock issued to  affiliates in 1995,  1994 and 1993,  were
issued  for cash.  All the shares of common  stock,  with the  exception  of the
shares issued in connection  with the exercise of stock options,  were issued at
the prevailing market price at the time of issuance.

     At December  31,  1995,  the Company had  1,500,667  shares of common stock
reserved in  connection  with the  Company's  stock  option  plans (Note 12) and
12,605,388 shares of common stock reserved for the conversion of the Convertible
Preferred Stock and Class B Common Stock.

     Class B Common Stock
     --------------------
     The Class B Common  Stock was issued in  connection  with the PSMI  Merger.
Under the terms of the  merger  agreement,  the  issuance  of the Class B Common
Stock was subject to certain  conditions  which were  satisfied in December 1995
and the Class B Common  Stock was issued on January 2,  1996.  The  Company  has
reflected the Class B Common Stock as outstanding as of December 31, 1995.

     The Class B Common Stock will (i) not  participate in  distributions  until
the later to occur of funds from operations  ("FFO") per Common Share as defined
below,  aggregating  $1.80  during  any  period  of  four  consecutive  calendar
quarters,  or  January  1,  2000;  thereafter,  the  Class B Common  Stock  will
participate in distributions (other than liquidating distributions), at the rate
of 97% of the  per  share  distributions  on the  Common  Stock,  provided  that
cumulative  distributions of at least $0.22 per quarter per share have been paid
on the Common Stock,  (ii) not participate in liquidating  distributions,  (iii)
not be entitled to vote (except as  expressly  required by  California  law) and
(iv)  automatically  convert into Common Stock, on a share for share basis, upon
the later to occur of FFO per Common Share  aggregating  $3.00 during any period
of four consecutive calendar quarters or January 1, 2003.

     For these  purposes FFO,  means net income  (loss)  (computed in accordance
with generally accepted  accounting  principles) before (i) gain (loss) on early
extinguishment of debt,  (ii) minority  interest in income and (iii) gain (loss)
on disposition of real estate,  adjusted as follows:  (i) plus  depreciation and
amortization  (including  the  Company's  pro-rata  share  of  depreciation  and
amortization  of  unconsolidated  equity  interests and  amortization  of assets
acquired in the Merger,  including property management agreements and goodwill),
and (ii) less FFO attributable to minority interest.
    
                                  F-18
<PAGE>

                           PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1995

     For these  purposes,  FFO per Common Share means FFO less  preferred  stock
dividends  (other than dividends on convertible  preferred stock) divided by the
outstanding  weighted average shares of Common Stock assuming  conversion of all
outstanding convertible securities and the Class B Common Stock.

     For these  purposes,  FFO per share of Common  Stock (as defined) was $1.72
for the year ended December 31, 1995.

     Distributions
     -------------
     The  characterization  of dividends for Federal income tax purposes is made
based upon  earnings  and  profits of the  Company,  as defined by the  Internal
Revenue  Code.  Distributions  declared  by the  Board of  Directors  (including
distributions  to the holders of  preferred  stock) in 1995,  1994 and 1993 were
characterized as ordinary income.

     The following  summarizes  dividends paid during 1995,  1994 and 1993 (with
the exception of the Series G Preferred Stock  distributions  which were accrued
and unpaid at December 31, 1995):
<TABLE>
<CAPTION>

                                 1995                       1994                       1993
                         --------------------       -------------------        ----------------------
                        Per share       Total       Per share      Total       Per share        Total
                        ---------       -----       ---------      -----       ---------        -----
                                              (in thousands, except per share data)

<S>                      <C>           <C>            <C>         <C>            <C>          <C>     
Series A                 $  2.500      $4,563         $ 2.500     $  4,563       $ 2.500      $  4,563
Series B                 $  2.300       5,488         $ 2.300        5,340       $ 1.803         4,147
Series C                 $  1.970       2,364         $ 1.042        1,250             -             -
Series D                 $  2.375       2,850         $ 0.792          950             -             -
Series E                 $  2.292       5,030               -            -             -             -
Series F                 $  1.618       3,721               -            -             -             -
Series G                 $  0.092         638               -            -             -             -
Convertible              $  2.063       4,744         $ 2.063        4,743       $ 0.947         2,178
Mandatory Convertible     $55.322       1,726               -            -             -             -
                                       ------                      -------                      ------
  Participating
                                       31,124                       16,846                      10,888

Common                   $  0.880      38,586         $ 0.850       21,249       $ 0.840        14,728
                                       ------                      -------                      ------
                                      $69,710                      $38,095                     $25,616
                                       ======                      =======                      ======
</TABLE>


     The dividend rate on the Series C Preferred Stock is adjusted quarterly and
is equal to the highest of one of three U.S.  Treasury  indices  (Treasury  Bill
Rate, Ten Year Constant  Maturity Rate, and Thirty Year Constant  Maturity Rate)
multiplied by 110%. However,  the dividend rate for any dividend period will not
be less than 6.75% per annum nor  greater  than 10.75% per annum.  The  dividend
rate with respect to the first quarter of 1996 will be equal to 6.75% per annum.


     Dividends with respect to the Series E, F and G Preferred  Stock which were
issued during 1995 are pro-rated from the date issued through December 31, 1995.
Annual  distribution  requirements  with respect to each of these series and the
Series H, which was issued in January 1996, are: Series E - $5,488,000, Series F
- $5,606,000, Series G - $15,309,000, and Series H - $14,259,000.

     The  Mandatory  Convertible  Participating  Preferred  Stock was  issued in
connection  with the  acquisition  of limited  partnership  interests  in a real
estate limited  partnership.  Quarterly  dividends on the Mandatory  Convertible
Participating  Preferred  Stock vary depending on operating  results of the real
estate facilities of the partnership. For the first eight quarters dividends are
equal to $390,000 plus the Company's  acquired  interest in property cash flows,
as  defined,  in  excess  of a base  amount  of  $45,000.  Thereafter  quarterly
dividends  will be equal to $390,000  plus the  Company's  acquired  interest in
property cash flows, as defined, in excess of a base amount of $525,000.
                                      F-19
<PAGE>

                           PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1995


12. Stock options
    -------------
     The Company has a 1990 Stock Option Plan (which was adopted by the Board of
Directors in 1990 and approved by the  shareholders  in 1991) which provides for
the grant of  non-qualified  stock options.  The Company has a 1994 Stock Option
Plan  (which  was  adopted  by  the  Board  of  Directors  and  approved  by the
shareholders in 1994) which provides for the grant of non-qualified  options and
incentive  stock options.  (the 1990 Stock Option Plan and the 1994 Stock Option
Plan are collectively referred to as the "Plans").  Under the Plans, the Company
has  granted  non-qualified  options  to  certain  directors,  officers  and key
employees and service providers to purchase shares of the Company's common stock
at a price  equal to the fair  market  value of the common  stock at the date of
grant. Generally, options under the Plans vest over a three-year period from the
date of grant at the rate of  one-third  per year and  expire (i) under the 1990
Plan, five years after the date they became  exercisable and (ii) under the 1994
Plan, ten years after the date of grant.

     Information with respect to the Plans during 1995 and 1994 is as follows:
<TABLE>
<CAPTION>

                                                         1995                           1994
                                                 ----------------------        -----------------------  
                                                 Number         Average        Number         Average
                                                   of          Price per         of          Price per
                                                Options          Share         Options         Share
                                                -------          -----         -------         -----

<S>                                             <C>             <C>            <C>             <C>   
Options outstanding January 1                   512,834         $11.879        390,000         $9.522
  Granted                                       227,500           16.48        205,500         14.929
  Exercised                                     (46,667)           8.63        (82,666)         8.345
  Canceled                                            -               -              -              -
Options outstanding December 31                 693,667          $13.61        512,834        $11.879
                                                =======          ======        =======        =======



                                                  $8.125                        $8.125

Option price range at December 31              to $18.00                    to $15.005


Options exercisable at December 31              302,485                        220,667
                                                =======                        =======

Options available for grant at December 31      807,000                      1,034,500
                                                =======                      =========
</TABLE>

     In  October  1995,  the  FASB  issued  Statement  of  Financial  Accounting
Standards No. 123, "Accounting for Stock-Based  Compensation," which provides an
alternative to APB Opinion No. 25, "Accounting  for Stock Issued to Employees,"
in accounting for stock-based  compensation  issued to employees.  The Statement
encourages,  but does not require  financial  reporting to reflect  compensation
expense for grants of stock,  stock  options  and other  equity  instruments  to
employees based on change in the fair value of the underlying stock. The Company
intends to continue to apply the  existing  accounting  rules  contained  in APB
Opinion No. 25,  "Accounting for Stock Issued to Employees."  While  recognition
for  employee  stock-based  compensation  is not  mandatory,  SFAS 123  requires
companies  that  choose  not to adopt  the new fair  value  accounting  rules to
disclose pro forma net income and  earnings per share under the new method.  The
Company will comply with the disclosure requirements beginning January 1, 1996.

13. Events subsequent to December 31, 1995
    --------------------------------------

     Proposed Mergers
     ----------------
     On March 19, 1996, the  shareholders  of each of Public Storage  Properties
IX, Inc.  ("Properties  9") and PS Business Parks,  Inc.  ("PSBP")  approved the
mergers of the respective  corporations into the Company and it is expected that
the mergers will be completed during March 1996. In the mergers, it is estimated
that the Company will issue an  aggregate of 1.5 million  shares of Common Stock
and pay an additional  $11.5 million in cash.  Properties 9 owns and operates 15
properties:  14 mini-warehouses and one business parks. PSBP owns and operates a
single business park.

                                      F-20
<PAGE>


                           PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1995

     In March 1996, the Company and Storage Properties, Inc. ("SPI"), a publicly
traded  equity  real  estate   investment  trust  agreed,   subject  to  certain
conditions,  to merge.  Upon the merger,  each  outstanding  share of SPI common
stock would be  converted,  at the  election of the  shareholders  of SPI,  into
either  shares of the  Company's  common  stock with a market value of $7.31 or,
with  respect  to up to 20% of the SPI  common  stock,  $7.31 in  cash.  SPI has
3,348,167  outstanding  shares of common stock and an  estimated  value of $24.5
million.  The merger  agreement is  conditioned  on,  among other  requirements,
receipt  of  satisfactory   fairness   opinions  by  SPI  and  approval  by  the
shareholders  of SPI.  The  Company  has as  advisory  agreement  and a property
management agreement with SPI. SPI owns seven mini-warehouses.

14. Supplementary quarterly financial data (unaudited)
    --------------------------------------------------

<TABLE>
<CAPTION>

                                                            Three months ended
                                       --------------------------------------------------------------
                                       March 31,        June 30,       September 30,    December 31,
                                         1995             1995             1995             1995
                                       ----------      ---------      --------------    -------------
                                                  (in thousands, except per share data)
<S>                                        <C>              <C>              <C>              <C>    
Revenues                                   $43,198          $47,912          $56,938          $64,602
                                           =======          =======          =======          =======

Net income                                 $13,200          $16,551          $19,470          $21,165
                                           =======          =======          =======          =======

Per Common Share (Note 2):

   Net income                             $   0.24         $   0.26         $   0.26         $   0.20
                                          ========         ========         ========         ========
</TABLE>
<TABLE>
<CAPTION>

                                                            Three months ended
                                       --------------------------------------------------------------
                                       March 31,        June 30,       September 30,    December 31,
                                         1994             1994             1994             1994
                                       ----------      ---------      --------------    -------------
                                                  (in thousands, except per share data)

<S>                                        <C>              <C>              <C>              <C>    
Revenues                                   $32,949          $35,591          $37,549          $41,107
                                           =======          =======          =======          =======

Net income                                $  8,746          $10,194          $10,943          $12,235
                                          ========          =======          =======          =======

Per Common Share (Note 2):

   Net income                             $   0.24        $    0.28        $    0.27         $   0.26
                                          ========        =========        =========         ========
</TABLE>

       The three  months  ended  December  31,  1995  reflects  the effects of 
       the PSMI Merger.
                                      F-21
<PAGE>
<TABLE>
<CAPTION>
                              PUBLIC STORAGE, INC.
                           SCHEDULE III - REAL ESTATE
                          AND ACCUMULATED DEPRECIATION


                                                                                                   
                                                              INITIAL COST                         
                                                          ------------------------      COSTS      
  DATE                                                                  BUILDING &   SUBSEQUENT TO 
ACQUIRED     DESCRIPTION                 ENCUMBRANCES      LAND       IMPROVEMENTS   ACQUISITION   
-------- ------------------------------- ------------  -----------  --------------  -------------- 

MINI-WAREHOUSES
<S>      <C>                             <C>             <C>           <C>           <C>           
1/1/81    Newport News/Jefferson AvenueI  $1,059,000      $108,000     $1,071,000     $321,000     
1/1/81    Virginia Beach/Diamond Springs   1,153,000       186,000      1,094,000      313,000     
8/1/81    San Jose/Snell                           -       312,000      1,815,000      164,000     
10/1/81   Tampa/Lazy Lane                          -       282,000      1,899,000      413,000     
11/1/81   Hayward/Whipple                          -       463,000      1,970,000      213,000     
6/1/82    San Jose/Tully I                 1,481,000       645,000      1,579,000      324,000     
6/1/82    San Carlos/Storage               1,807,000       780,000      1,387,000      321,000     
6/1/82    Mountain View                    2,548,000     1,179,000      1,182,000      372,000     
6/1/82    Cupertino/Storage                1,998,000       572,000      1,270,000      283,000     
10/1/82   Sorrento Valley                  1,839,000     1,002,000      1,343,000      110,000     
10/1/82   Northwood                        2,735,000     1,034,000      1,522,000       94,000     
3/1/85    Houston/Westheimer                 885,000       850,000      1,179,000      581,000     
3/3/86    Tampa/56Th                         781,000       450,000      1,360,000      263,000     
12/31/86  Monrovia/Myrtle Avenue           2,064,000     1,149,000      2,446,000      111,000     
12/31/86  Chatsworth/Topanga               1,361,000     1,447,000      1,243,000      154,000     
12/31/86  Houston/Larkwood                   454,000       246,000        602,000      242,000     
12/31/86  Northridge                       3,108,000     3,624,000      1,922,000      219,000     
12/31/86  Santa Clara/Duane                1,278,000     1,950,000      1,004,000      230,000     
12/31/86  Oyster Point                             -     1,569,000      1,490,000      205,000     
12/31/86  Walnut A                                 -       767,000        613,000      104,000     
6/7/88    Mesquite/Sorrento Drive                  -       928,000      1,011,000      546,000     
3/1/92    Dallas/Walnut St.                        -       537,000      1,008,000      105,000     
5/1/92    Camp Creek                               -       576,000      1,075,000       50,000     
8/1/92    Tampa/N.Dale Mabry                       -       809,000      1,537,000       92,000     
9/1/92    Orlando/W. Colonial                      -       368,000        713,000       32,000     
9/1/92    Jacksonville/Arlington                   -       554,000      1,065,000       50,000     
10/1/92   Stockton/Mariners                        -       380,000        730,000       16,000     
1/1/92    Costa Mesa Ii                            -       533,000        980,000      545,000     
11/18/92  Virginia Beach/General Booth Blvd        -       599,000      1,119,000       45,000     
1/1/93    Redwood City/Storage                     -       907,000      1,684,000      102,000     
1/1/93    City Of Industry                         -     1,611,000      2,991,000      347,000     
1/1/93    San Jose/Felipe Ii                       -     1,124,000      2,088,000       97,000     
1/1/93    Baldwin Park/Garvey Ave                  -       840,000      1,561,000       53,000     
3/19/93   Westminister/W. 80Th                     -       840,000      1,586,000       47,000     
5/13/93   Austin/N. Lamar                          -       919,000      1,695,000       53,000     
7/16/93   Austin/So. Congress Ave                  -       777,000      1,445,000      132,000     
6/10/93   Citrus Heights/Sylvan Road               -       438,000        822,000       72,000     
5/28/93   Jacksonville/Phillips Hwy.               -       406,000        771,000       36,000     
5/28/93   Tampa/Nebraska Avenue                    -       550,000      1,043,000       22,000     
4/26/93   Costa Mesa/Newport                 977,000     2,141,000      3,989,000       64,000     
6/9/93    Calabasas/Ventura Blvd.                  -     1,762,000      3,269,000       88,000     
6/9/93    Carmichael/Fair Oaks                     -       573,000      1,052,000       24,000     
6/9/93    Santa Clara/Duane Ii                     -       454,000        834,000        7,000     
6/25/93   Trenton/Allen Road                       -       623,000      1,166,000       54,000     
<PAGE>
                              PUBLIC STORAGE, INC.
                           SCHEDULE III - REAL ESTATE
                          AND ACCUMULATED DEPRECIATION


                                                                                                   
                                                              INITIAL COST                         
                                                          ------------------------      COSTS      
  DATE                                                                  BUILDING &   SUBSEQUENT TO 
ACQUIRED     DESCRIPTION                 ENCUMBRANCES      LAND       IMPROVEMENTS   ACQUISITION   
-------- ------------------------------- ------------  -----------  --------------  -------------- 

6/30/93   Los Angeles/W.Jefferson Blvd             -     1,085,000      2,017,000        9,000     
8/13/93   So. Brunswick/Highway 1                  -     1,076,000      2,033,000       93,000     
8/11/93   Atlanta/Northside                        -     1,150,000      2,149,000       28,000     
8/11/93   Smyrna/Rosswill Rd                       -       446,000        842,000       20,000     
8/1/93    Gaithersburg/E. Diamond            630,000       602,000      1,139,000       66,000     
8/31/93   Austin/N. Lamar Iv                       -       502,000        941,000       25,000     
10/1/93   Denver/Federal Blvd                      -       875,000      1,633,000        8,000     
10/1/93   Citrus Heights                           -       527,000        987,000        3,000     
10/1/93   Lakewood/6Th Ave                         -       798,000      1,489,000       15,000     
11/3/93   Upland/S. Euclid Ave.                    -       431,000        807,000      286,000     
10/27/93  Houston/S. Shaver St                     -       481,000        896,000       45,000     
12/9/93   Salt Lake City                   1,280,000       765,000      1,422,000      146,000     
12/16/93  West Valley City                         -       683,000      1,276,000       39,000     
11/16/93  Norcross/Jimmy Carter                    -       627,000      1,167,000       37,000     
11/16/93  Seattle/13Th                     1,622,000     1,085,000      2,015,000      211,000     
12/21/93  Pinellas Park/34Th St. W                 -       607,000      1,134,000       67,000     
1/21/94   Herndon/Centreville Road                 -     1,584,000      2,981,000       31,000     
12/28/93  New Orleans/S. Carrollton Ave            -     1,575,000      2,941,000       41,000     
12/29/93  Orange/Main Ii                           -     1,238,000      2,317,000    1,228,000     
12/29/93  Sunnyvale/Wedell                         -       554,000      1,037,000      592,000     
12/29/93  El Cajon/Magnolia                        -       421,000        791,000      412,000     
12/29/93  Orlando/S. Semoran Blvd.                 -       462,000        872,000      485,000     
12/29/93  Tampa/W. Hillsborough Ave                -       352,000        665,000      299,000     
12/29/93  Irving/West Loop 12                      -       341,000        643,000       56,000     
12/29/93  Fullerton/W. Commonwealth                -       904,000      1,687,000      890,000     
12/29/93  N. Lauderdale/Mcnab Rd                   -       628,000      1,182,000      584,000     
12/29/93  Los Alimitos/Cerritos                    -       695,000      1,299,000      617,000     
12/29/93  Frederick/Prospect Blvd.                 -       573,000      1,082,000      421,000     
12/29/93  Indianapolis/E. Washington               -       403,000        775,000      341,000     
12/29/93  Gardena/Western Ave.                     -       552,000      1,035,000      478,000     
12/29/93  Palm Bay/Bobcock Street                  -       409,000        775,000      396,000     
1/10/94   Hialeah/W. 20Th Ave.                     -     1,855,000      3,497,000       43,000     
1/12/94   Sunnyvale/N. Fair Oaks Ave               -       689,000      1,285,000      234,000     
1/12/94   Honolulu/Iwaena                          -     1,182,000      2,200,000      437,000     
1/12/94   Miami/Golden Glades                      -       579,000      1,081,000      224,000     
2/8/94    Las Vegas/S. Martin Luther King Blvd.    -     1,383,000      2,592,000      854,000     
2/28/94   Arlingtn/Old Jefferson Davis Hwy         -       735,000      1,399,000       41,000     
3/8/94    Beaverton/Sw Barnes Road                 -       942,000      1,810,000       37,000     
3/31/94   Hypoluxo                                 -       735,000      1,404,000      568,000     
3/21/94   Austin/Arboretum                         -       473,000        897,000       30,000     
3/25/94   Tinton Falls/Shrewsbury Ave              -     1,074,000      2,033,000       85,000     
3/25/94   East Brunswick/Milltown Road             -     1,282,000      2,411,000       76,000     
3/25/94   Mercerville/Quakerbridge Road            -     1,109,000      2,111,000       25,000     
4/26/94   No. Highlands/Roseville Road             -       980,000      1,835,000       44,000     
5/12/94   Fort Pierce/Okeechobee Road              -       438,000        842,000       29,000     
<PAGE>
                              PUBLIC STORAGE, INC.
                           SCHEDULE III - REAL ESTATE
                          AND ACCUMULATED DEPRECIATION


                                                                                                   

                                                              INITIAL COST                         
                                                          ------------------------      COSTS      
  DATE                                                                  BUILDING &   SUBSEQUENT TO 
ACQUIRED     DESCRIPTION                 ENCUMBRANCES      LAND       IMPROVEMENTS   ACQUISITION   
-------- ------------------------------- ------------  -----------  --------------  -------------- 

6/9/94    Chattanooga/Brainerd Road                -       613,000      1,170,000       31,000     
6/9/94    Chattanooga/Ringgold Road                -       761,000      1,433,000       43,000     
5/24/94   Hempstead/Peninsula Blvd.        3,367,000     2,053,000      3,832,000       51,000     
5/24/94   La/Huntington                            -       483,000        905,000        3,000     
6/23/94   Las Vegas/Tropicana Ii                   -       750,000      1,408,000       39,000     
6/23/94   Henderson/Green Valley Pkwy              -     1,047,000      1,960,000       54,000     
6/18/94   Las Vegas/S. Valley View Blvd            -       837,000      1,571,000       42,000     
6/24/94   Las Vegas/N. Lamb Blvd.                  -       869,000      1,629,000       53,000     
6/30/94   Birmingham/W. Oxmoor Road                -       532,000      1,004,000      166,000     
7/20/94   Milpitas/Dempsey Road                    -     1,260,000      2,358,000       78,000     
9/15/94   Huntsville/Old Monrovia Road             -       613,000      1,157,000       41,000     
9/27/94   West Haven/Bull Hill Lane                -       455,000        873,000       37,000     
3/2/95    Everett/Highway 99                       -       859,000      2,022,000       76,000     
3/2/95    Burien/1St Ave South                     -       763,000      1,783,000       89,000     
3/2/95    Kent/South 238Th Street                  -       763,000      1,783,000       56,000     
10/13/94  Davie/State Road 84                      -       744,000      1,467,000      756,000     
10/7/94   Alcoa/Airport Plaza Drive                -       543,000      1,017,000       20,000     
10/13/94  Carrollton/Marsh Lane                    -       770,000      1,437,000    1,229,000     
10/31/94  Sherman Oaks/Van Nuys Blvd               -     1,278,000      2,461,000       20,000     
12/19/94  Salt Lake City/West North Temple         -       490,000        917,000       42,000     
5/1/95    Sandy/S. State Street                    -     1,043,000      2,442,000       73,000     
8/17/94   New Orleans/I-10                         -       784,000      1,470,000       18,000     
8/17/94   Beaverton/S.W. Denny Road                -       663,000      1,245,000       10,000     
8/17/94   Irwindale/Central Ave.                   -       674,000      1,263,000        4,000     
8/17/94   Suitland/St. Barnabas Rd                 -     1,530,000      2,913,000        1,000     
8/17/94   North Brunswick/How Lane                 -     1,238,000      2,323,000        7,000     
8/17/94   Lombard/64Th                             -       847,000      1,583,000       11,000     
8/17/94   Alsip/27Th                               -       406,000        765,000        7,000     
1/24/95   Nashville/Elm Hill                       -       338,000        791,000      137,000     
1/23/95   North Bergen/Tonne                       -     1,564,000      3,772,000       15,000     
1/23/95   San Leandro/Hesperian                    -       734,000      1,726,000        5,000     
9/30/94   San Francisco/Marin St.                  -     1,227,000      2,339,000    1,070,000     
2/3/95    Reno/S. Mccarron Blvd                    -     1,080,000      2,537,000       39,000     
1/5/95    Pantego/West Park                        -       315,000        735,000       20,000     
1/12/95   Roswell/Alpharetta                       -       423,000        993,000       29,000     
9/30/94   Baltimore/Hillen Street                  -       580,000      1,095,000        4,000     
9/30/94   San Francisco/10Th & Howard              -     1,423,000      2,668,000        5,000     
9/30/94   Montebello/E. Whittier                   -       383,000        732,000        5,000     
9/6/95    Darien/Frontage Road                     -       975,000      2,321,000            -     
1/4/95    Chula Vista/Main Street                  -       735,000      1,802,000            -     
8/11/95   Studio City/Ventura                      -     1,285,000      3,015,000      (2,000)     
12/30/94  Apple Valley/Foliage Ave                 -       910,000      1,695,000       43,000     
9/30/94   Arlington/Collins                        -       228,000        435,000       24,000     
9/30/94   Miami/S.W. 119Th Ave                     -       656,000      1,221,000        3,000     
<PAGE>
                              PUBLIC STORAGE, INC.
                           SCHEDULE III - REAL ESTATE
                          AND ACCUMULATED DEPRECIATION


                                                                                                   

                                                              INITIAL COST                         
                                                          ------------------------      COSTS      
  DATE                                                                  BUILDING &   SUBSEQUENT TO 
ACQUIRED     DESCRIPTION                 ENCUMBRANCES      LAND       IMPROVEMENTS   ACQUISITION   
-------- ------------------------------- ------------  -----------  --------------  -------------- 

9/30/94   Blackwood/Erial Road                     -       774,000      1,437,000        7,000     
9/30/94   Concord/Monument                         -     1,092,000      2,027,000       26,000     
9/30/94   Rochester/Lee Road                       -       469,000        871,000        9,000     
9/30/94   Houston/Bellaire                         -       623,000      1,157,000       10,000     
9/30/94   Austin/Lamar Blvd I                      -       781,000      1,452,000        6,000     
9/30/94   Milwaukee/Lovers Lane Rd                 -       469,000        871,000        8,000     
9/30/94   Monterey/Del Rey Oaks                    -     1,342,000      2,501,000       14,000     
9/30/94   St. Petersburg/66Th St.                  -       427,000        793,000       19,000     
9/30/94   Dayton Bch/N. Nova Road                  -       396,000        735,000        2,000     
9/30/94   Maple Shade/Route 38                     -       994,000      1,846,000       16,000     
9/30/94   Marlton/Route 73 N.                      -       938,000      1,742,000       13,000     
9/30/94   Naperville/E. Ogden Ave                  -       683,000      1,268,000       20,000     
9/30/94   Long Beach/South Street                  -     1,778,000      3,307,000       38,000     
9/30/94   Aloha/S.W. Shaw                          -       805,000      1,495,000       23,000     
9/30/94   Alexandria/S. Pickett                    -     1,550,000      2,879,000       14,000     
9/30/94   Houston/Highway 6 North                  -     1,120,000      2,083,000        7,000     
9/30/94   San Antonio/Nacogdoches Rd               -       571,000      1,060,000        5,000     
9/30/94   San Ramon/San Ramon Valley               -     1,530,000      2,840,000       14,000     
9/30/94   San Rafael/Merrydale Rd                  -     1,705,000      3,165,000       46,000     
9/30/94   San Antonio/Austin Hwy                   -       592,000      1,098,000        2,000     
9/30/94   Sharonville/E. Kemper                    -       574,000      1,070,000            -     
12/27/94  Knoxville/Chapman Highway                -       753,000      1,411,000       66,000     
7/13/95   Tarzana/Burbank Blvd                     -     2,895,000      6,823,000            -     
12/28/94  Milpitas/Watson Ii               2,461,000     1,575,000      2,925,000       37,000     
12/28/94  Las Vegas/Jones Blvd             1,802,000     1,208,000      2,243,000       14,000     
12/28/94  Venice/Guthrie                           -       578,000      1,073,000        9,000     
5/3/95    Largo/Ulmerton Roa                       -       263,000        654,000            -     
3/31/95   Cheverly/Central Ave                     -       911,000      2,164,000            -     
5/25/95   Falls Church/Gallo                       -       350,000        835,000            -     
5/8/95    Fairfield/Western Street                 -       439,000      1,030,000            -     
5/8/95    Dallas/W. Mockingbird                    -     1,440,000      3,371,000            -     
5/8/95    East Point/Lakewood                      -       884,000      2,071,000            -     
6/12/95   Baltimore/Old Waterloo                   -       769,000      1,850,000            -     
6/12/95   Pleasant Hill/Hookston                   -       766,000      1,848,000            -     
6/12/95   Mountain View/Old Middlefield            -     2,095,000      4,913,000            -     
11/16/95  Palm Beach Gardens                       -       657,000      1,540,000            -     
11/16/95  Delray Beach                             -       600,000      1,407,000            -     
6/30/95   San Jose/Blossom Hill                    -     1,467,000      3,444,000            -     
6/30/95   Fairfield/Kings Highway                  -     1,811,000      4,273,000            -     
6/30/95   Pacoima/Paxton Street            1,588,000       840,000      1,976,000            -     
8/12/95   Smyrna/Hargrove Road                     -     1,020,000      3,038,000            -     
7/31/95   Orlando/Lakehurst                1,127,000       450,000      1,063,000            -     
<PAGE>
                              PUBLIC STORAGE, INC.
                           SCHEDULE III - REAL ESTATE
                          AND ACCUMULATED DEPRECIATION


                                                                                                   

                                                              INITIAL COST                         
                                                          ------------------------      COSTS      
  DATE                                                                  BUILDING &   SUBSEQUENT TO 
ACQUIRED     DESCRIPTION                 ENCUMBRANCES      LAND       IMPROVEMENTS   ACQUISITION   
-------- ------------------------------- ------------  -----------  --------------  -------------- 

7/31/95   Livermore/Portola                1,513,000       921,000      2,157,000            -     
7/31/95   San Jose/Tully Ii                1,870,000       912,000      2,137,000            -     
7/31/95   Mission Bay                      4,642,000     1,617,000      3,785,000            -     
7/31/95   Las Vegas/Decatur                1,530,000     1,147,000      2,697,000            -     
7/31/95   Pleasanton/Stanley               3,340,000     1,624,000      3,811,000            -     
7/31/95   Castro Valley/Grove                807,000       757,000      1,772,000            -     
7/31/95   Honolulu/Kaneohe                 2,527,000     1,215,000      2,846,000            -     
7/31/95   Chicago/Wabash Ave               1,852,000       645,000      1,535,000            -     
7/31/95   Springfield/Parker               2,254,000       765,000      1,834,000            -     
7/31/95   Huntington Bch/Gotham            1,915,000       765,000      1,808,000            -     
8/1/95    Gresham/Division                         -       607,000      1,428,000            -     
8/1/95    Tucker/Lawrenceville                     -       600,000      1,405,000            -     
8/1/95    Decatur/Covington                        -       720,000      1,694,000            -     
7/31/95   Tucker/Lawrenceville                     -       630,000      1,480,000            -     
7/31/95   Marietta/Canton Road                     -       600,000      1,423,000            -     
7/31/95   Wheeling/Hintz                     586,000       450,000      1,054,000            -     
9/1/95    Hayward/Mission Blvd                     -     1,020,000      2,383,000            -     
9/1/95    Park City/Belvider               1,244,000       600,000      1,405,000            -     
9/1/95    New Castle/Dupont Parkway        1,852,000       990,000      2,369,000            -     
9/1/95    Las Vegas/Rainbow                1,865,000     1,050,000      2,459,000            -     
9/1/95    Mountain View/Reng               1,797,000       945,000      2,216,000            -     
9/1/95    Venice/Cadillac                          -       930,000      2,182,000            -     
2/28/95   Decatur/Flat Shoal                       -       970,000      2,288,000            -     
2/28/95   Smyrna/S. Cobb                           -       663,000      1,559,000            -     
2/28/95   Downey/Bellflower                        -       916,000      2,158,000            -     
2/28/95   Vallejo/Lincoln                          -       445,000      1,052,000            -     
2/28/95   Lynnwood/180Th St                        -       516,000      1,205,000            -     
2/28/95   Kent/Pacific Hwy                         -       728,000      1,711,000            -     
2/28/95   Kirkland                                 -     1,254,000      2,932,000            -     
2/28/95   Federal Way/Pacific                      -       785,000      1,832,000            -     
2/28/95   Tampa/S. Dale                            -       791,000      1,852,000            -     
2/28/95   Burlingame/Adrian Rd                     -     2,280,000      5,349,000            -     
2/28/95   Miami/Cloverleaf                         -       606,000      1,426,000            -     
2/28/95   Pinole/San Pablo                         -       639,000      1,502,000            -     
2/28/95   South Gate/Firesto                       -     1,442,000      3,449,000            -     
2/28/95   San Jose/Mabury                          -       892,000      2,088,000            -     
2/28/95   La Puente/Valley Blvd                    -       591,000      1,390,000            -     
2/28/95   San Jose/Capitol E                       -     1,215,000      2,852,000            -     
2/28/95   Milwaukie/40Th Street                    -       579,000      1,368,000            -     
2/28/95   Portland/N. Lombard                      -       812,000      1,900,000            -     
2/28/95   Miami/Biscayne                           -     1,313,000      3,076,000            -     
2/28/95   Chicago/Clark Street                     -       442,000      1,031,000            -     
2/28/95   Palatine/Dundee                          -       698,000      1,643,000            -     
2/28/95   Williamsville/Transit                    -       284,000        670,000            -     
2/28/95   Amherst/Sheridan                         -       484,000      1,151,000            -     
<PAGE>
                              PUBLIC STORAGE, INC.
                           SCHEDULE III - REAL ESTATE
                          AND ACCUMULATED DEPRECIATION


                                                                                                   

                                                              INITIAL COST                         
                                                          ------------------------      COSTS      
  DATE                                                                  BUILDING &   SUBSEQUENT TO 
ACQUIRED     DESCRIPTION                 ENCUMBRANCES      LAND       IMPROVEMENTS   ACQUISITION   
-------- ------------------------------- ------------  -----------  --------------  -------------- 

2/28/95   Milwaukie I/Se                           -       597,000      1,464,000            -     
9/1/95    Simi Valley/Los Angeles                  -     1,590,000      3,724,000            -     
9/1/95    Spring Valley/Foreman                    -     1,095,000      2,572,000            -     
9/30/95   Van Nuys/Balboa Blvd                     -     1,920,000      4,504,000        4,000     
10/31/95  San Lorenzo/Hesperian            3,993,000     1,590,000      3,716,000            -     
10/31/95  Chicago/W. 47Th Street                   -       300,000        708,000            -     
10/31/95  Los Angeles/Eastern                      -       455,000      1,070,000            -     
6/30/95   Portland/Prescott                        -       647,000      1,509,000            -     
6/30/95   St. Petersburg                           -       352,000        827,000            -     
6/30/95   Dallas/Audelia Road                      -       677,000      1,579,000            -     
6/30/95   Miami Gardens                            -       823,000      1,929,000            -     
6/30/95   Grand Prairie/19Th                       -       566,000      1,329,000            -     
6/30/95   Joliet/Jefferson Street                  -       501,000      1,181,000            -     
6/30/95   Bridgeton/Pennridge                      -       283,000        661,000            -     
6/30/95   Portland/S.E.92Nd                        -       638,000      1,497,000            -     
6/30/95   Houston/S.W. Freeway                     -       537,000      1,254,000            -     
6/30/95   Milwaukee/Brown                          -       358,000        849,000            -     
6/30/95   Orlando/W. Oak Ridge                     -       698,000      1,642,000            -     
6/30/95   Lauderhill/State Road                    -       644,000      1,508,000            -     
6/30/95   Orange Park/Blanding Blvd                -       394,000        918,000            -     
6/30/95   St. Petersburg/Joe'S Creek               -       704,000      1,642,000            -     
6/30/95   St. Louis/Page Service Drive             -       531,000      1,241,000            -     
6/30/95   Independence/E. 42Nd                     -       438,000      1,023,000            -     
6/30/95   Cherry Hill/Dobbs Lane                   -       716,000      1,676,000            -     
6/30/95   Edgewater Park/Route 130                 -       683,000      1,593,000            -     
6/30/95   Beaverton/S.W. 110                       -       572,000      1,342,000            -     
6/30/95   Markham/W. 159Th Place                   -       230,000        539,000            -     
6/30/95   Houston/N.W. Freeway                     -       447,000      1,066,000            -     
6/30/95   Portland/Gantenbein                      -       537,000      1,262,000            -     
6/30/95   Upper Chichester/Market St.              -       569,000      1,329,000            -     
6/30/95   Fort Worth/Hwy 80                        -       379,000        891,000            -     
6/30/95   Greenfield/S. 108Th                      -       728,000      1,707,000            -     
6/30/95   Dallas/Audelia Road                      -       489,000      1,146,000            -     
6/30/95   Cerritos/Edwards Road                    -       516,000      1,265,000            -     
6/30/95   Milwaukie 11/Se International Way        -       411,000        999,000            -     
6/30/95   Altamonte Springs                        -       566,000      1,326,000            -     
6/30/95   East Hazel Crest/Halsted I               -       483,000      1,127,000            -     
6/30/95   Seattle/Delridge Way                     -       760,000      1,779,000            -     
6/30/95   Elmhurst/Lake Frontage Rd                -       748,000      1,758,000            -     
6/30/95   Los Angeles/Beverly Blvd                 -       787,000      1,886,000            -     
6/30/95   Lawrenceville/Brunswick                  -       841,000      1,961,000            -     
6/30/95   Renton/Rainier                           -       295,000        698,000            -     
6/30/95   Richmond/Carlson                         -       865,000      2,025,000            -     
<PAGE>
                              PUBLIC STORAGE, INC.
                           SCHEDULE III - REAL ESTATE
                          AND ACCUMULATED DEPRECIATION


                                                                                                   

                                                              INITIAL COST                         
                                                          ------------------------      COSTS      
  DATE                                                                  BUILDING &   SUBSEQUENT TO 
ACQUIRED     DESCRIPTION                 ENCUMBRANCES      LAND       IMPROVEMENTS   ACQUISITION   
-------- ------------------------------- ------------  -----------  --------------  -------------- 

6/30/95   Liverpool/Oswego Road                    -       545,000      1,279,000            -     
6/30/95   Rochester/East Ave                       -       578,000      1,375,000            -     
6/30/95   Pasadena/E. Beltway                      -       757,000      1,767,000            -     
11/15/95  Costa Mesa - B                     532,000       522,000      1,218,000            -     
11/15/95  Plano/E. 14Th                            -       705,000      1,646,000            -     
11/15/95  Citrus Heights/Sunrise                   -       520,000      1,213,000            -     
11/15/95  Modesto/Briggsmore Ave                   -       470,000      1,097,000            -     
11/15/95  Camarillo/Ventura Blvd                   -       180,000        420,000            -     
11/15/95  So San Francisco/Spruce             65,000     1,905,000      4,444,000            -     
11/15/95  Pacheco/Buchanan Circle          4,166,000     1,681,000      3,951,000            -     
1/1/83    Platte                                   -       409,000        953,000      122,000     
5/1/83    Delta Drive                              -        67,000        481,000       94,000     
12/1/82   Port/Halsey                              -       357,000      1,150,000    (476,000)     
12/1/82   Sacto/Folsom                             -       396,000        329,000      406,000     
12/1/83   Semoran                                  -       442,000      1,882,000      100,000     
3/1/83    Blackwood                                -       213,000      1,559,000       97,000     
10/1/83   Orlando J. Y. Parkway                    -       383,000      1,512,000      172,000     
9/1/83    Southington                              -       124,000      1,233,000      171,000     
4/1/83    Vailsgate                                -       103,000        990,000      180,000     
6/1/83    Ventura                                  -       658,000      1,734,000       34,000     
8/1/83    Southhampton                             -       331,000      1,738,000      377,000     
9/1/83    Webster/Keystone                         -       449,000      1,688,000      386,000     
9/1/83    Dover                                    -       107,000      1,462,000      249,000     
9/1/83    Newcastle                                -       227,000      2,163,000      246,000     
9/1/83    Newark                                   -       208,000      2,031,000      121,000     
9/1/83    Langhorne                                -       263,000      3,549,000      165,000     
9/1/83    Hobart                                   -       215,000      1,491,000      206,000     
9/1/83    Ft. Wayne/W. Coliseum                    -       160,000      1,395,000       15,000     
9/1/83    Ft. Wayne/Bluffton                       -        88,000        675,000       84,000     
11/1/83   Webster/Nasa                             -     1,570,000      2,457,000      843,000     
11/1/83   Aurora                                   -       505,000        758,000      172,000     
11/1/83   Campbell                                 -     1,820,000      1,408,000    (749,000)     
11/1/83   Col Springs/Ed  (Coulter)                -       471,000      1,640,000     (71,000)     
11/1/83   Col Springs/Mv  (Coulter)                -       320,000      1,036,000       69,000     
11/1/83   Thorton (Coulter)                        -       418,000      1,400,000     (13,000)     
11/1/83   Oklahoma City   (Coulter)                -       454,000      1,030,000      559,000     
11/1/83   Tucson (Coulter)                         -       343,000        778,000      416,000     
12/1/83   Charlotte                                -       165,000      1,274,000      268,000     
12/1/83   Greensboro/Market                        -       214,000      1,653,000      368,000     
12/1/83   Greensboro/Electra                       -       112,000        869,000      207,000     
12/1/83   Raleigh/Yonkers                          -       203,000        914,000      252,000     
12/1/83   Columbia                                 -       171,000      1,318,000      398,000     
12/1/83   Richmond                                 -       176,000      1,360,000      282,000     
12/1/83   Augusta                                  -        97,000        747,000      195,000     
<PAGE>
                              PUBLIC STORAGE, INC.
                           SCHEDULE III - REAL ESTATE
                          AND ACCUMULATED DEPRECIATION


                                                                                                   

                                                              INITIAL COST                         
                                                          ------------------------      COSTS      
  DATE                                                                  BUILDING &   SUBSEQUENT TO 
ACQUIRED     DESCRIPTION                 ENCUMBRANCES      LAND       IMPROVEMENTS   ACQUISITION   
-------- ------------------------------- ------------  -----------  --------------  -------------- 

4/1/84    Providence                               -        92,000      1,087,000      219,000     
1/24/85   Cranston                                 -       175,000        722,000      235,000     
3/1/84    Marrietta/Cobb                           -        73,000        542,000      160,000     
1/1/84    Fremont/Albrae                           -       636,000      1,659,000      336,000     
1/1/84    Tacoma                                   -       553,000      1,173,000      272,000     
1/1/84    Belton                                   -       175,000        858,000      344,000     
1/1/84    Gladstone                                -       275,000      1,799,000      256,000     
1/1/84    Hickman/112                              -       257,000      1,848,000      309,000     
1/1/84    Holmes                                   -       289,000      1,333,000      181,000     
1/1/84    Independence                             -       221,000      1,848,000      216,000     
1/1/84    Merriam                                  -       255,000      1,469,000      200,000     
1/1/84    Olathe                                   -       107,000        992,000      189,000     
1/1/84    Shawnee                                  -       205,000      1,420,000      290,000     
1/1/84    Topeka                                   -        75,000      1,049,000      162,000     
2/1/84    Unicorn/Nkoxville                        -       662,000      1,887,000      278,000     
2/1/84    Central/Knoxville                        -       449,000      1,281,000      169,000     
3/1/84    Manassas                                 -       320,000      1,556,000      289,000     
2/1/84    Pico Rivera                              -       743,000        807,000      256,000     
5/1/84    Raleigh/Departure                        -       302,000      2,484,000      317,000     
4/1/84    Milwaukie/Oregon                         -       289,000        584,000      188,000     
7/1/84    Trevose/Old Lincoln                      -       421,000      1,749,000      267,000     
5/1/84    Virginia Beach                           -       509,000      2,121,000      501,000     
5/1/84    Philadelphia/Grant               2,260,000     1,041,000      3,262,000      350,000     
6/1/84    Lorton                                   -       435,000      2,040,000      411,000     
6/1/84    Baltimore                                -       382,000      1,793,000      491,000     
6/1/84    Laurel                                   -       501,000      2,349,000      509,000     
6/1/84    Delran                                   -       279,000      1,472,000      204,000     
5/1/84    Garland                                  -       356,000        844,000      127,000     
6/1/84    Orange Blossom                           -       226,000        924,000      158,000     
6/1/84    Safe Place (Cincinatti)                  -       402,000      1,573,000      322,000     
6/1/84    Safe Place (Florence)                    -       185,000        740,000      248,000     
8/1/84    Medley                                   -       584,000      1,016,000      253,000     
8/1/84    Oklahoma City                            -       340,000      1,310,000      319,000     
8/1/84    Newport News                             -       356,000      2,395,000      367,000     
9/1/84    Kaplan (Irving)                          -       677,000      1,592,000      275,000     
9/1/84    Kaplan (Walnut Hill)                     -       971,000      2,359,000      434,000     
9/1/84    Cockrell Hill                            -       380,000        913,000      927,000     
11/1/84   Omaha                                    -       109,000        806,000      336,000     
11/1/84   Manchester                               -       164,000      1,643,000      184,000     
12/1/84   Austin (Ben White)                       -       325,000        474,000      174,000     
12/1/84   Austin (Lamar)                           -       643,000        947,000      274,000     
12/1/84   Pompano                                  -       399,000      1,386,000      378,000     
12/1/84   Forth Worth                              -       122,000        928,000     (66,000)     
<PAGE>
                              PUBLIC STORAGE, INC.
                           SCHEDULE III - REAL ESTATE
                          AND ACCUMULATED DEPRECIATION


                                                                                                   

                                                              INITIAL COST                         
                                                          ------------------------      COSTS      
  DATE                                                                  BUILDING &   SUBSEQUENT TO 
ACQUIRED     DESCRIPTION                 ENCUMBRANCES      LAND       IMPROVEMENTS   ACQUISITION   
-------- ------------------------------- ------------  -----------  --------------  -------------- 

11/1/84   Hialeah                                  -       886,000      1,784,000      142,000     
12/1/84   Montgomeryville                          -       215,000      2,085,000      209,000     
12/1/84   Bossier City                             -       184,000      1,542,000      200,000     
2/1/85    Simi Valley                              -       737,000      1,389,000      214,000     
3/6/85    Chattanooga                              -       202,000      1,573,000      235,000     
2/1/85    Hurst                                    -       231,000      1,220,000      131,000     
3/1/85    Portland                                 -       285,000        941,000      166,000     
5/3/85    Longwood                                 -       355,000      1,645,000      164,000     
3/19/85   Fern Park                                -       144,000      1,107,000      142,000     
3/14/85   Fairfield                                -       338,000      1,187,000      286,000     
4/10/85   Laguna Hills                             -     1,224,000      3,303,000      274,000     
7/11/85   Columbus (Morse Rd.)                     -       195,000      1,510,000      144,000     
7/11/85   Columbus (Kenney Rd.)                    -       199,000      1,531,000      140,000     
6/1/85    Columbus (Busch Blvd.)                   -       202,000      1,559,000      183,000     
6/1/85    Columbus (Kinnear Rd.)                   -       241,000      1,865,000      170,000     
6/7/85    Grove City/ Marlane Drive                -       150,000      1,157,000      153,000     
6/7/85    Reynoldsburg                             -       204,000      1,568,000      171,000     
6/1/85    Worthington                              -       221,000      1,824,000      174,000     
7/11/85   Westerville                              -       199,000      1,517,000      182,000     
6/1/85    Arlington                                -       201,000      1,497,000      178,000     
7/11/85   Springfield                              -        90,000        699,000      117,000     
7/11/85   Dayton (Executive Blvd.)                 -       144,000      1,108,000      241,000     
7/11/85   Dayton (Needmore Road)                   -       160,000      1,207,000      225,000     
7/11/85   Lilburn                                  -       331,000        969,000      106,000     
4/18/85   Austin/ S. First                         -       778,000      1,282,000      152,000     
4/18/85   Cincinnati/E. Kemper                     -       232,000      1,573,000      180,000     
5/1/85    Cincinnati/Colerain                      -       253,000      1,717,000      217,000     
5/1/85    Florence/Tanner Lane                     -       218,000      1,477,000      179,000     
5/23/85   Tacoma/Phillips Rd.                      -       396,000      1,204,000      148,000     
5/17/85   Milwaukie/Mcloughlin II                  -       458,000        742,000      253,000     
7/11/85   San Diego/Kearney Mesa Rd                -       783,000      1,750,000      266,000     
5/20/85   Manchester/S. Willow II                  -       371,000      2,129,000    (262,000)     
6/1/85    N. Hollywood/Raymer                      -       967,000        848,000      227,000     
7/12/85   Scottsdale/70th St                       -       632,000      1,368,000      176,000     
7/26/85   Concord/Hwy 29                           -       150,000        750,000      176,000     
10/1/85   N. Hollywood/Whitsett  (A)       1,818,000     1,524,000      2,576,000      193,000     
10/1/85   Portland/SE 82nd St                      -       354,000        496,000      197,000     
9/18/85   Madison/Copps Ave.                       -       450,000      1,150,000      275,000     
9/25/85   Columbus/Sinclair                        -       307,000        893,000      118,000     
9/12/85   Philadelphia/Tacony St                   -       118,000      1,782,000      132,000     
11/1/85   Perrysburg/Helen Dr.                     -       110,000      1,590,000    (195,000)     
10/3/85   Columbus/Ambleside                       -       124,000      1,526,000    (207,000)     
11/1/85   Indianapolis/Pike Place                  -       229,000      1,531,000      154,000     
11/1/85   Indianapolis/Beach Grove                 -       198,000      1,342,000      122,000     
10/17/85  Hartford/Roberts                         -       219,000      1,481,000      251,000     
<PAGE>
                              PUBLIC STORAGE, INC.
                           SCHEDULE III - REAL ESTATE
                          AND ACCUMULATED DEPRECIATION


                                                                                                   

                                                              INITIAL COST                         
                                                          ------------------------      COSTS      
  DATE                                                                  BUILDING &   SUBSEQUENT TO 
ACQUIRED     DESCRIPTION                 ENCUMBRANCES      LAND       IMPROVEMENTS   ACQUISITION   
-------- ------------------------------- ------------  -----------  --------------  -------------- 

10/17/85  Wichita/S. Rock Rd.                      -       501,000      1,478,000     (89,000)     
10/9/85   Wichita/E. Harry                         -       313,000      1,050,000    (138,000)     
10/9/85   Wichita/S. Woodlawn                      -       263,000        905,000    (178,000)     
10/9/85   Wichita/E. Kellogg                       -       185,000        658,000    (159,000)     
10/9/85   Wichita/S. Tyler                         -       294,000      1,004,000     (15,000)     
10/9/85   Wichita/W. Maple                         -       234,000        805,000    (210,000)     
10/9/85   Wichita/Carey Lane                       -       192,000        674,000    (143,000)     
10/9/85   Wichita/E. Macarthur                     -       220,000        775,000    (202,000)     
10/9/85   Joplin/S. Range Line                     -       264,000        904,000     (79,000)     
12/24/85  Milpitas                                 -     1,623,000      1,577,000      203,000     
12/1/85   Pleasanton/Santa Rita (A)        2,215,000     1,226,000      2,078,000      193,000     
7/1/88    Forth Wayne                              -       101,000      1,524,000     (24,000)     
10/3/85   San Antonio/Wetmore Rd.                  -       306,000      1,079,000      354,000     
10/3/85   San Antonio/Callaghan                    -       288,000      1,016,000      283,000     
10/3/85   San Antonio/Zarzamora                    -       364,000      1,281,000      328,000     
10/3/85   San Antonio/Hackberry                    -       388,000      1,367,000      307,000     
10/3/85   San Antonio/Fredericksburg               -       287,000      1,009,000      297,000     
10/3/85   Dallas/S. Wetmoreland                    -       474,000      1,670,000      135,000     
10/3/85   Dallas/Alvin St.                         -       359,000      1,266,000      112,000     
10/3/85   Forth Worth/W. Beach St.                 -       356,000      1,252,000      110,000     
10/3/85   Forth Worth/E. Seminary                  -       382,000      1,346,000      119,000     
10/3/85   Forth Worth/Cockrell St.                 -       323,000      1,136,000      116,000     
11/7/85   Everett/Evergreen                        -       706,000      2,294,000      308,000     
11/7/85   Seattle/Empire Way                       -     1,652,000      5,348,000      508,000     
12/1/85   Amherst/Niagra Falls                     -       132,000        701,000      191,000     
12/18/85  West Sams Blvd.                          -       164,000      1,159,000    (325,000)     
3/11/86   Jacksonville/Wiley                       -       140,000        510,000      186,000     
12/1/85   McArthur Rd.                             -       204,000      1,628,000      124,000     
2/21/86   Costa Mesa/Pomona                        -     1,405,000      1,520,000      246,000     
12/1/85   Brockton/Main                            -       153,000      2,020,000    (270,000)     
1/1/86    Mapleshade/Rudderow                      -       362,000      1,811,000      198,000     
1/1/86    Bordontown/Groveville                    -       196,000        981,000      117,000     
12/31/85  Eatontown/Hwy 35                         -       308,000      4,067,000      336,000     
3/3/86    Brea/Imperial Hwy                        -     1,069,000      2,165,000      302,000     
12/1/85   Denver/Leetsdale                         -       603,000        847,000      177,000     
2/1/86    Skokie/McCormick                         -       638,000      1,912,000      189,000     
1/8/86    Sun Valley/Sheldon                       -       544,000      1,836,000      243,000     
3/28/86   St. Louis/Forder                         -       517,000      1,133,000      190,000     
1/1/86    Las Vegas/Highland                       -       432,000        848,000      180,000     
5/1/86    Westlake Village                         -     1,205,000        995,000      181,000     
2/19/86   Colorado Springs/Sinton                  -       535,000      1,115,000      132,000     
2/20/86   Oklahoma City/Penn                       -       146,000        829,000      112,000     
2/20/86   Oklahoma City/39th Expressway            -       238,000        812,000      176,000     
<PAGE>
                              PUBLIC STORAGE, INC.
                           SCHEDULE III - REAL ESTATE
                          AND ACCUMULATED DEPRECIATION


                                                                                                   

                                                              INITIAL COST                         
                                                          ------------------------      COSTS      
  DATE                                                                  BUILDING &   SUBSEQUENT TO 
ACQUIRED     DESCRIPTION                 ENCUMBRANCES      LAND       IMPROVEMENTS   ACQUISITION   
-------- ------------------------------- ------------  -----------  --------------  -------------- 

4/1/86    Reno/Telegraph                           -       649,000      1,051,000      354,000     
7/15/86   Colorado Springs/Hollow Tree             -       574,000        726,000      178,000     
4/11/86   Kirkham                                  -       199,000      1,001,000      142,000     
4/11/86   Reavis                                   -       192,000        958,000      144,000     
4/10/86   Fort Worth/East Loop                     -       196,000        804,000      157,000     
6/1/86    Richlan Hills                            -       543,000        857,000      353,000     
5/29/86   Sacramento/Franklin Blvd.                -       872,000        978,000      311,000     
6/10/86   West Valley/So. 3600                     -       208,000      1,552,000      211,000     
7/1/86    West LA/Purdue Ave.                      -     2,415,000      3,585,000      284,000     
7/15/86   Capital Heights/Central Ave.             -       649,000      3,851,000      249,000     
10/24/86  Perleta/Fremont                          -       851,000      1,074,000      232,000     
7/1/86    Pontiac/Dixie hwy.                       -       259,000      2,091,000       28,000     
8/1/86    Laurel/Ft. Meade Rd.                     -       475,000      1,475,000      209,000     
9/10/86   Kansas City/S. 44th.                     -       509,000      1,906,000      359,000     
10/1/86   Birmingham/Highland                      -        89,000        786,000       78,000     
10/1/86   Birmingham/Riverchase                    -       262,000      1,338,000      313,000     
10/1/86   Birmingham/Eastwood                      -       166,000      1,184,000      144,000     
10/1/86   Birmingham/Forestdale                    -       152,000        948,000      124,000     
10/1/86   Birmingham/Centerpoint                   -       265,000      1,305,000      191,000     
10/1/86   Birmingham/Roebuck Plaza                 -       101,000        399,000      125,000     
10/1/86   Birmingham/Greensprings                  -       347,000      1,173,000      275,000     
10/1/86   Birmingham/Hoover                        -       372,000      1,128,000      279,000     
10/1/86   Birmingham/Midfield                      -       170,000        355,000      159,000     
10/1/86   Birmingham/Huntsville-Leeman             -       158,000        992,000      212,000     
10/1/86   Birmingham/Huntsville-Drake              -       253,000      1,172,000      196,000     
10/1/86   Birmingham/Anniston                      -        59,000        566,000      105,000     
10/1/86   Pilgrim/Monroe                           -       595,000      1,043,000      227,000     
10/1/86   Pilgrim/I-45                             -       704,000      1,146,000      437,000     
10/1/86   Pilgrim/Rogerdale                        -     1,631,000      2,792,000      404,000     
10/1/86   Pilgrim/Gessner                          -     1,032,000      1,693,000      276,000     
10/1/86   Pilgrim/Richmond                         -     1,502,000      2,506,000      450,000     
<PAGE>
                              PUBLIC STORAGE, INC.
                           SCHEDULE III - REAL ESTATE
                          AND ACCUMULATED DEPRECIATION


                                                                                                   

                                                              INITIAL COST                         
                                                          ------------------------      COSTS      
  DATE                                                                  BUILDING &   SUBSEQUENT TO 
ACQUIRED     DESCRIPTION                 ENCUMBRANCES      LAND       IMPROVEMENTS   ACQUISITION   
-------- ------------------------------- ------------  -----------  --------------  -------------- 

10/1/86   Pilgrim/Gulfton                          -     1,732,000      3,036,000      806,000     
10/1/86   Pilgrim/West Park                        -       503,000        854,000      127,000     
10/23/86  Jonesboro                                -       157,000        718,000      145,000     
9/12/86   Lakewood/W. 6th Ave.                     -     1,070,000      3,155,000      448,000     
10/1/86   Pilgrim/Houston/Loop 610                 -     1,299,000      3,491,000      658,000     
10/1/86   Pilgrim/Houston/S.W. Freeway             -       904,000      2,319,000      341,000     
10/1/86   Pilgrim/Houston/FM 1960                  -       719,000      1,987,000    (212,000)     
10/1/86   Pilgrim/Houston/Old Katy Rd.             -     1,365,000      3,431,000      432,000     
10/1/86   Pilgrim/Houston/Long Point               -       451,000      1,187,000      436,000     
10/1/86   Austin/Red Rooster                       -     1,390,000      1,710,000      274,000     
12/31/86  Lynnwood/196th SW                        -     1,063,000      1,602,000      291,000     
12/10/86  Auburn/Auburn Way North                  -       606,000      1,144,000      293,000     
12/18/86  Gresham/Burnside                         -       351,000      1,056,000      297,000     
12/19/86  Denver/Sheridan Rd.                      -     1,033,000      2,792,000      471,000     
12/10/86  Marietta/Cobb Pkwy.                      -       536,000      2,764,000      484,000     
12/10/86  Hillsboro/Tualatin Hwy.                  -       461,000        574,000      225,000     
11/26/86  Arleta/Osborne St.                       -       987,000        663,000      206,000     
4/1/87    City of Industry/Amar Rd.                -       748,000      2,052,000      302,000     
3/16/87   Annandale/Ravensworth                    -       679,000      1,621,000      160,000     
5/28/87   OK City/Hefner                           -       459,000        941,000      201,000     
12/23/86  San Antonio/Sunst Rd.                    -     1,206,000      1,594,000      361,000     
8/11/87   Hammond/Calumet                          -        97,000        751,000      419,000     
7/1/88    Portland/Moody                           -       663,000      1,637,000     (97,000)     
7/16/87   Oakbrook Terrace                         -       912,000      2,688,000      538,000     
10/17/87  Plantation/S. State Rd.                  -       924,000      1,801,000      223,000     
3/1/88    Anaheim/Lakeview                         -       995,000      1,505,000      440,000     
8/20/87   San Antonio/Austin Hwy.                  -       400,000        850,000      124,000     
10/1/87   Rockville/Fredrick Rd.                   -     1,695,000      3,305,000      590,000     
2/15/95   Schiller Park/W. Irving                  -     1,815,000      2,467,000    1,201,948     
2/15/95   Lansing/173rd Street                     -       601,000      2,084,000    1,015,347     
2/15/95   Pleasanton/Boulder                       -     1,003,000      1,548,000      754,202     
2/15/95   Los Angeles/S. Sepulveda                 -     1,649,000      2,189,000    1,066,504     
7/1/95    Artesia/Artesia                          -       668,000        874,000      525,000     
7/1/95    Arcadia/Lower Azusa                      -       878,000        813,000      488,000     
7/1/95    Dallas/Kingsly IV                        -     1,171,000        998,000      599,000     
7/1/95    Manassas/Centreville                     -       433,000      1,308,000      786,000     
7/1/95    Los Angeles/San Pedro                    -     1,719,000      2,071,000    1,244,000     
7/1/95    Bellevue/Northup                         -     1,317,000      1,980,000    1,189,000     
7/1/95    Hollywood/Willoughby                     -     1,701,000      1,100,000      661,000     
<PAGE>
                              PUBLIC STORAGE, INC.
                           SCHEDULE III - REAL ESTATE
                          AND ACCUMULATED DEPRECIATION


                                                                                                   

                                                              INITIAL COST                         
                                                          ------------------------      COSTS      
  DATE                                                                  BUILDING &   SUBSEQUENT TO 
ACQUIRED     DESCRIPTION                 ENCUMBRANCES      LAND       IMPROVEMENTS   ACQUISITION   
-------- ------------------------------- ------------  -----------  --------------  -------------- 

7/1/95    Atlanta/John Wesley                      -     1,319,000        873,000      524,000     
7/1/95    Montebello/S. Maple                      -     1,362,000      1,403,000      843,000     
7/1/95    Lake City/Forest P.                      -       266,000        832,000      500,000     
7/1/95    Baltimore/W Patap.                       -       430,000      1,629,000      978,000     
7/1/95    Fraser/Groesbeck                         -       393,000      1,089,000      654,000     
7/1/95    Vellejo/Mini Drive                       -       599,000      1,086,000      652,000     
9/30/95   Whittier                                 -       215,000        384,000            -     
9/30/95   Van Nuys                                 -       295,000        657,000            -     
9/30/95   Huntington Beach                   449,000       176,000        321,000            -     
9/30/95   Monterey Park                      344,000       124,000        346,000            -     
9/30/95   Downey                             367,000       191,000        317,000            -     
9/30/95   Balboa                                   -        85,000        346,000            -     
9/30/95   Stockton                           435,000       151,000        402,000            -     
9/30/95   Del Amo                            234,000       474,000        742,000            -     
9/30/95   Carson                                   -       375,000        735,000            -     
9/30/95   Fresno                             122,000        44,000        206,000            -     
          Construction in Progress                 -             -              -            -     
        
BUSINESS PARKS
12/1/81   South Houston/So. Shaver                 -       354,000      1,981,000      136,000     
5/2/94    Monterey Park                            -     3,150,000      5,860,000       47,000     
1/1/84    Signal Hill/Bus. Park                    -     1,195,000      2,220,000      708,000     
1/1/84    Lakewood                                 -     2,513,000      4,238,000    1,656,000     
4/1/84    Austin                                   -     4,321,000      5,937,000    2,943,000     
3/29/85   Pacific Scene                            -     1,536,000      5,689,000    2,036,000     
7/10/85   Timberway                                -     2,221,000     12,179,000    2,510,000     
10/4/85   One Park Ten                             -     2,365,000      6,215,000    2,815,000     
10/4/85   Park Terrace                             -       943,000      2,477,000      723,000     
2/28/86   San Diego/ Knoll Mission                 -     1,967,000      6,783,000    2,189,000     
3/28/86   Fox Hills/ Culver City           2,935,000     7,544,000     11,656,000    3,507,000     
3/27/86   Silvergate                               -     4,201,000      5,099,000    2,644,000     
5/30/86   Signal Hill/Parkway                      -     2,463,000      4,837,000    1,221,000     
7/25/86   Mesa West Commercial Plaza               -     1,333,000      2,935,000      782,000     
7/25/86   University Corp. Center                  -     1,419,000      3,123,000      829,000     
5/27/87   Carson/Leapwood                          -     2,535,000      3,165,000      984,000     
          Other Encumbrances               3,618,000 
                                          =========================================================
                                         $92,552,000  $390,005,000   $905,791,000 $109,069,000     
                                          =========================================================
</TABLE> 
<PAGE>
<TABLE>
        
<CAPTION>
                              PUBLIC STORAGE, INC.
                           SCHEDULE III - REAL ESTATE
                          AND ACCUMULATED DEPRECIATION


                                            ADJUSTMENTS                                                                
                                          RESULTING FROM              GROSS CARRYING AMOUNT                             
                                          THE ACQUISITION             AT DECEMBER 31, 1995                              
                                                 OF           ---------------------------------             ACCUMULATED       
                                         MINORITY INTEREST    LAND       BUILDINGS         TOTAL            DEPRECIATION      
                                         -----------------   ------     -----------     -----------        --------------
                                                                               
MINI-WAREHOUSES                                                                               
<S>      <C>                                     <C>         <C>          <C>             <C>               <C>          
1/1/81    Newport News/Jefferson Avenue I         -          $108,000     $1,392,000      $1,500,000         $837,000    
1/1/81    Virginia Beach/Diamond Springs          -           186,000      1,407,000       1,593,000          839,000    
8/1/81    San Jose/Snell                          -           312,000      1,979,000       2,291,000        1,136,000    
10/1/81   Tampa/Lazy Lane                         -           282,000      2,312,000       2,594,000        1,311,000    
11/1/81   Hayward/Whipple                         -           463,000      2,183,000       2,646,000        1,239,000    
6/1/82    San Jose/Tully I                        -           645,000      1,903,000       2,548,000        1,026,000    
6/1/82    San Carlos/Storage                      -           780,000      1,708,000       2,488,000          947,000    
6/1/82    Mountain View                           -         1,179,000      1,554,000       2,733,000          877,000    
6/1/82    Cupertino/Storage                       -           572,000      1,553,000       2,125,000          837,000    
10/1/82   Sorrento Valley                         -         1,002,000      1,453,000       2,455,000          769,000    
10/1/82   Northwood                               -         1,034,000      1,616,000       2,650,000          863,000    
3/1/85    Houston/Westheimer                      -           850,000      1,760,000       2,610,000          737,000    
3/3/86    Tampa/56Th                              -           450,000      1,623,000       2,073,000          642,000    
12/31/86  Monrovia/Myrtle Avenue                  -         1,149,000      2,557,000       3,706,000          931,000    
12/31/86  Chatsworth/Topanga                      -         1,447,000      1,397,000       2,844,000          549,000    
12/31/86  Houston/Larkwood                        -           246,000        844,000       1,090,000          286,000    
12/31/86  Northridge                              -         3,624,000      2,141,000       5,765,000          728,000    
12/31/86  Santa Clara/Duane                       -         1,950,000      1,234,000       3,184,000          512,000    
12/31/86  Oyster Point                            -         1,569,000      1,695,000       3,264,000          623,000    
12/31/86  Walnut A                                -           767,000        717,000       1,484,000          275,000    
6/7/88    Mesquite/Sorrento Drive                 -           928,000      1,557,000       2,485,000          657,000    
3/1/92    Dallas/Walnut St.                       -           537,000      1,113,000       1,650,000          734,000    
5/1/92    Camp Creek                              -           576,000      1,125,000       1,701,000          164,000    
8/1/92    Tampa/N.Dale Mabry                      -           809,000      1,629,000       2,438,000          229,000    
9/1/92    Orlando/W. Colonial                     -           368,000        745,000       1,113,000          117,000    
9/1/92    Jacksonville/Arlington                  -           554,000      1,115,000       1,669,000          165,000    
10/1/92   Stockton/Mariners                       -           380,000        746,000       1,126,000          100,000    
1/1/92    Costa Mesa Ii                           -           534,000      1,524,000       2,058,000          623,000    
11/18/92  Virginia Beach/General Booth Blvd       -           599,000      1,164,000       1,763,000          157,000    
1/1/93    Redwood City/Storage                    -           907,000      1,786,000       2,693,000          210,000    
1/1/93    City Of Industry                        -         1,611,000      3,338,000       4,949,000          398,000    
1/1/93    San Jose/Felipe Ii                      -         1,124,000      2,185,000       3,309,000          255,000    
1/1/93    Baldwin Park/Garvey Ave                 -           840,000      1,614,000       2,454,000          178,000    
3/19/93   Westminister/W. 80Th                    -           840,000      1,633,000       2,473,000          181,000    
5/13/93   Austin/N. Lamar                         -           919,000      1,748,000       2,667,000          185,000    
7/16/93   Austin/So. Congress Ave                 -           777,000      1,577,000       2,354,000          151,000    
6/10/93   Citrus Heights/Sylvan Road              -           438,000        894,000       1,332,000          112,000    
5/28/93   Jacksonville/Phillips Hwy.              -           406,000        807,000       1,213,000           88,000    
5/28/93   Tampa/Nebraska Avenue                   -           550,000      1,065,000       1,615,000          116,000    
4/26/93   Costa Mesa/Newport                      -         2,141,000      4,053,000       6,194,000          430,000    
6/9/93    Calabasas/Ventura Blvd.                 -         1,762,000      3,357,000       5,119,000          355,000    
6/9/93    Carmichael/Fair Oaks                    -           573,000      1,076,000       1,649,000          114,000    
6/9/93    Santa Clara/Duane Ii                    -           454,000        841,000       1,295,000           89,000    
6/25/93   Trenton/Allen Road                      -           623,000      1,220,000       1,843,000          122,000    
6/30/93   Los Angeles/W.Jefferson Blvd            -         1,085,000      2,026,000       3,111,000          204,000    
8/13/93   So. Brunswick/Highway 1                 -         1,076,000      2,126,000       3,202,000          197,000    
8/11/93   Atlanta/Northside                       -         1,150,000      2,177,000       3,327,000          221,000    
8/11/93   Smyrna/Rosswill Rd                      -           446,000        862,000       1,308,000           90,000    
8/1/93    Gaithersburg/E. Diamond                 -           602,000      1,205,000       1,807,000          115,000    
8/31/93   Austin/N. Lamar Iv                      -           502,000        966,000       1,468,000           92,000    
10/1/93   Denver/Federal Blvd                     -           875,000      1,641,000       2,516,000          148,000    
10/1/93   Citrus Heights                          -           527,000        990,000       1,517,000           89,000    
10/1/93   Lakewood/6Th Ave                        -           798,000      1,504,000       2,302,000          136,000    
11/3/93   Upland/S. Euclid Ave.                   -           508,000      1,016,000       1,524,000           80,000    
10/27/93  Houston/S. Shaver St                    -           481,000        941,000       1,422,000           80,000    
12/9/93   Salt Lake City                          -           765,000      1,568,000       2,333,000          143,000    
12/16/93  West Valley City                        -           683,000      1,315,000       1,998,000          111,000    
11/16/93  Norcross/Jimmy Carter                   -           627,000      1,204,000       1,831,000          102,000    
11/16/93  Seattle/13Th                            -         1,085,000      2,226,000       3,311,000          186,000    
12/21/93  Pinellas Park/34Th St. W                -           607,000      1,201,000       1,808,000          100,000    
1/21/94   Herndon/Centreville Road                -         1,358,000      3,238,000       4,596,000          149,000    
12/28/93  New Orleans/S. Carrollton Ave           -         1,575,000      2,982,000       4,557,000          240,000    
12/29/93  Orange/Main Ii                          -         1,593,000      3,190,000       4,783,000          213,000    
12/29/93  Sunnyvale/Wedell                        -           725,000      1,458,000       2,183,000           95,000    
12/29/93  El Cajon/Magnolia                       -           542,000      1,082,000       1,624,000           72,000    
12/29/93  Orlando/S. Semoran Blvd.                -           601,000      1,218,000       1,819,000           81,000    
12/29/93  Tampa/W. Hillsborough Ave               -           436,000        880,000       1,316,000           60,000    
12/29/93  Irving/West Loop 12                     -           355,000        685,000       1,040,000           54,000    
12/29/93  Fullerton/W. Commonwealth               -         1,159,000      2,322,000       3,481,000          153,000    
12/29/93  N. Lauderdale/Mcnab Rd                  -           798,000      1,596,000       2,394,000          108,000    
12/29/93  Los Alimitos/Cerritos                   -           874,000      1,737,000       2,611,000          116,000    
12/29/93  Frederick/Prospect Blvd.                -           692,000      1,384,000       2,076,000           98,000    
12/29/93  Indianapolis/E. Washington              -           505,000      1,014,000       1,519,000           68,000    
12/29/93  Gardena/Western Ave.                    -           695,000      1,370,000       2,065,000           92,000    
12/29/93  Palm Bay/Bobcock Street                 -           525,000      1,055,000       1,580,000           73,000    
1/10/94   Hialeah/W. 20Th Ave.                    -         1,589,000      3,806,000       5,395,000          274,000    
1/12/94   Sunnyvale/N. Fair Oaks Ave              -           657,000      1,551,000       2,208,000          104,000    
1/12/94   Honolulu/Iwaena                         -                 0      3,819,000       3,819,000          196,000    
1/12/94   Miami/Golden Glades                     -           557,000      1,327,000       1,884,000           90,000    
2/8/94    Las Vegas/S. Martin Luther King Blvd.   -         1,436,000      3,393,000       4,829,000          216,000    
2/28/94   Arlingtn/Old Jefferson Davis Hwy        -           630,000      1,545,000       2,175,000          115,000    
3/8/94    Beaverton/Sw Barnes Road                -           807,000      1,982,000       2,789,000          149,000    
3/31/94   Hypoluxo                                -           630,000      2,077,000       2,707,000          145,000    
3/21/94   Austin/Arboretum                        -           405,000        995,000       1,400,000           77,000    
3/25/94   Tinton Falls/Shrewsbury Ave             -           921,000      2,271,000       3,192,000          167,000    
3/25/94   East Brunswick/Milltown Road            -         1,098,000      2,671,000       3,769,000          191,000    
3/25/94   Mercerville/Quakerbridge Road           -           950,000      2,295,000       3,245,000          167,000    
4/26/94   No. Highlands/Roseville Road            -           840,000      2,019,000       2,859,000          147,000    
5/12/94   Fort Pierce/Okeechobee Road             -           375,000        934,000       1,309,000           66,000    
6/9/94    Chattanooga/Brainerd Road               -           525,000      1,289,000       1,814,000           80,000    
6/9/94    Chattanooga/Ringgold Road               -           653,000      1,584,000       2,237,000          100,000    
5/24/94   Hempstead/Peninsula Blvd.               -         1,763,000      4,173,000       5,936,000          260,000    
5/24/94   La/Huntington                           -           414,000        977,000       1,391,000           61,000    
6/23/94   Las Vegas/Tropicana Ii                  -           643,000      1,554,000       2,197,000           98,000    
6/23/94   Henderson/Green Valley Pkwy             -           898,000      2,163,000       3,061,000          138,000    
6/18/94   Las Vegas/S. Valley View Blvd           -           718,000      1,732,000       2,450,000          110,000    
6/24/94   Las Vegas/N. Lamb Blvd.                 -           745,000      1,806,000       2,551,000          116,000    
6/30/94   Birmingham/W. Oxmoor Road               -           456,000      1,246,000       1,702,000           94,000    
7/20/94   Milpitas/Dempsey Road                   -         1,079,000      2,617,000       3,696,000          161,000    
9/15/94   Huntsville/Old Monrovia Road            -           525,000      1,286,000       1,811,000           69,000    
9/27/94   West Haven/Bull Hill Lane               -           390,000        975,000       1,365,000           55,000    
3/2/95    Everett/Highway 99                      -           859,000      2,098,000       2,957,000           68,000    
3/2/95    Burien/1St Ave South                    -           763,000      1,872,000       2,635,000           59,000    
3/2/95    Kent/South 238Th Street                 -           763,000      1,839,000       2,602,000           58,000    
10/13/94  Davie/State Road 84                     -           638,000      2,329,000       2,967,000           93,000    
10/7/94   Alcoa/Airport Plaza Drive               -           465,000      1,115,000       1,580,000           96,000    
10/13/94  Carrollton/Marsh Lane                   -         1,022,000      2,414,000       3,436,000           84,000    
10/31/94  Sherman Oaks/Van Nuys Blvd              -         1,110,000      2,649,000       3,759,000          131,000    
12/19/94  Salt Lake City/West North Temple        -           420,000      1,029,000       1,449,000           43,000    
5/1/95    Sandy/S. State Street                   -         1,043,000      2,515,000       3,558,000           60,000    
8/17/94   New Orleans/I-10                        -           672,000      1,600,000       2,272,000           88,000    
8/17/94   Beaverton/S.W. Denny Road               -           568,000      1,350,000       1,918,000           75,000    
8/17/94   Irwindale/Central Ave.                  -           578,000      1,363,000       1,941,000           75,000    
8/17/94   Suitland/St. Barnabas Rd                -         1,312,000      3,132,000       4,444,000          182,000    
8/17/94   North Brunswick/How Lane                -         1,062,000      2,506,000       3,568,000          138,000    
8/17/94   Lombard/64Th                            -           726,000      1,715,000       2,441,000           95,000    
8/17/94   Alsip/27Th                              -           348,000        830,000       1,178,000           47,000    
1/24/95   Nashville/Elm Hill                      -           338,000        928,000       1,266,000           37,000    
1/23/95   North Bergen/Tonne                      -         1,564,000      3,787,000       5,351,000           87,000    
1/23/95   San Leandro/Hesperian                   -           734,000      1,731,000       2,465,000           49,000    
9/30/94   San Francisco/Marin St.                 -         1,369,000      3,267,000       4,636,000          159,000    
2/3/95    Reno/S. Mccarron Blvd                   -         1,080,000      2,576,000       3,656,000           85,000    
1/5/95    Pantego/West Park                       -           315,000        755,000       1,070,000           29,000    
1/12/95   Roswell/Alpharetta                      -           423,000      1,022,000       1,445,000           39,000    
9/30/94   Baltimore/Hillen Street                 -           497,000      1,182,000       1,679,000           59,000    
9/30/94   San Francisco/10Th & Howard             -         1,219,000      2,877,000       4,096,000          145,000    
9/30/94   Montebello/E. Whittier                  -           329,000        791,000       1,120,000           40,000    
9/6/95    Darien/Frontage Road                    -           975,000      2,321,000       3,296,000           31,000    
1/4/95    Chula Vista/Main Street                 -           735,000      1,802,000       2,537,000           69,000    
8/11/95   Studio City/Ventura                     -         1,283,000      3,015,000       4,298,000           50,000    
12/30/94  Apple Valley/Foliage Ave                -           780,000      1,868,000       2,648,000           78,000    
9/30/94   Arlington/Collins                       -           195,000        492,000         687,000           27,000    
9/30/94   Miami/S.W. 119Th Ave                    -           563,000      1,317,000       1,880,000           67,000    
9/30/94   Blackwood/Erial Road                    -           663,000      1,555,000       2,218,000           78,000    
9/30/94   Concord/Monument                        -           936,000      2,209,000       3,145,000          114,000    
9/30/94   Rochester/Lee Road                      -           402,000        947,000       1,349,000           48,000    
9/30/94   Houston/Bellaire                        -           534,000      1,256,000       1,790,000           63,000    
9/30/94   Austin/Lamar Blvd I                     -           669,000      1,570,000       2,239,000           79,000    
9/30/94   Milwaukee/Lovers Lane Rd                -           402,000        946,000       1,348,000           47,000    
9/30/94   Monterey/Del Rey Oaks                   -         1,151,000      2,706,000       3,857,000          142,000    
9/30/94   St. Petersburg/66Th St.                 -           366,000        873,000       1,239,000           46,000    
9/30/94   Dayton Bch/N. Nova Road                 -           339,000        794,000       1,133,000           40,000    
9/30/94   Maple Shade/Route 38                    -           852,000      2,004,000       2,856,000          102,000    
9/30/94   Marlton/Route 73 N.                     -           804,000      1,889,000       2,693,000           95,000    
9/30/94   Naperville/E. Ogden Ave                 -           585,000      1,386,000       1,971,000           70,000    
9/30/94   Long Beach/South Street                 -         1,524,000      3,599,000       5,123,000          188,000    
9/30/94   Aloha/S.W. Shaw                         -           690,000      1,633,000       2,323,000           83,000    
9/30/94   Alexandria/S. Pickett                   -         1,329,000      3,114,000       4,443,000          157,000    
9/30/94   Houston/Highway 6 North                 -           960,000      2,250,000       3,210,000          113,000    
9/30/94   San Antonio/Nacogdoches Rd              -           489,000      1,147,000       1,636,000           58,000    
9/30/94   San Ramon/San Ramon Valley              -         1,311,000      3,073,000       4,384,000          172,000    
9/30/94   San Rafael/Merrydale Rd                 -         1,461,000      3,455,000       4,916,000          173,000    
9/30/94   San Antonio/Austin Hwy                  -           507,000      1,185,000       1,692,000           60,000    
9/30/94   Sharonville/E. Kemper                   -           492,000      1,152,000       1,644,000           58,000    
12/27/94  Knoxville/Chapman Highway               -           645,000      1,585,000       2,230,000           65,000    
7/13/95   Tarzana/Burbank Blvd                    -         2,895,000      6,823,000       9,718,000          118,000    
12/28/94  Milpitas/Watson Ii                      -         1,350,000      3,187,000       4,537,000          129,000    
12/28/94  Las Vegas/Jones Blvd                    -         1,035,000      2,430,000       3,465,000           97,000    
12/28/94  Venice/Guthrie                          -           495,000      1,165,000       1,660,000           47,000    
5/3/95    Largo/Ulmerton Roa                      -           263,000        654,000         917,000           17,000    
3/31/95   Cheverly/Central Ave                    -           911,000      2,164,000       3,075,000           64,000    
5/25/95   Falls Church/Gallo                      -           350,000        835,000       1,185,000           19,000    
5/8/95    Fairfield/Western Street                -           439,000      1,030,000       1,469,000           27,000    
5/8/95    Dallas/W. Mockingbird                   -         1,440,000      3,371,000       4,811,000           89,000    
5/8/95    East Point/Lakewood                     -           884,000      2,071,000       2,955,000           55,000    
6/12/95   Baltimore/Old Waterloo                  -           769,000      1,850,000       2,619,000           43,000    
6/12/95   Pleasant Hill/Hookston                  -           766,000      1,848,000       2,614,000           44,000    
6/12/95   Mountain View/Old Middlefield           -         2,095,000      4,913,000       7,008,000          114,000    
11/16/95  Palm Beach Gardens                      -           657,000      1,540,000       2,197,000           10,000    
11/16/95  Delray Beach                            -           600,000      1,407,000       2,007,000            9,000    
6/30/95   San Jose/Blossom Hill                   -         1,467,000      3,444,000       4,911,000           69,000    
6/30/95   Fairfield/Kings Highway                 -         1,811,000      4,273,000       6,084,000           88,000    
6/30/95   Pacoima/Paxton Street                   -           840,000      1,976,000       2,816,000           40,000    
8/12/95   Smyrna/Hargrove Road                    -         1,020,000      3,038,000       4,058,000           40,000    
7/31/95   Orlando/Lakehurst                       -           450,000      1,063,000       1,513,000           18,000    
7/31/95   Livermore/Portola                       -           921,000      2,157,000       3,078,000           36,000    
7/31/95   San Jose/Tully Ii                       -           912,000      2,137,000       3,049,000           36,000    
7/31/95   Mission Bay                             -         1,617,000      3,785,000       5,402,000           63,000    
7/31/95   Las Vegas/Decatur                       -         1,147,000      2,697,000       3,844,000           45,000    
7/31/95   Pleasanton/Stanley                      -         1,624,000      3,811,000       5,435,000           64,000    
7/31/95   Castro Valley/Grove                     -           757,000      1,772,000       2,529,000           29,000    
7/31/95   Honolulu/Kaneohe                        -         1,215,000      2,846,000       4,061,000           47,000    
7/31/95   Chicago/Wabash Ave                      -           645,000      1,535,000       2,180,000           25,000    
7/31/95   Springfield/Parker                      -           765,000      1,834,000       2,599,000           31,000    
7/31/95   Huntington Bch/Gotham                   -           765,000      1,808,000       2,573,000           30,000    
8/1/95    Gresham/Division                        -           607,000      1,428,000       2,035,000           25,000    
8/1/95    Tucker/Lawrenceville                    -           600,000      1,405,000       2,005,000           23,000    
8/1/95    Decatur/Covington                       -           720,000      1,694,000       2,414,000           28,000    
7/31/95   Tucker/Lawrenceville                    -           630,000      1,480,000       2,110,000           25,000    
7/31/95   Marietta/Canton Road                    -           600,000      1,423,000       2,023,000           24,000    
7/31/95   Wheeling/Hintz                          -           450,000      1,054,000       1,504,000           18,000    
9/1/95    Hayward/Mission Blvd                    -         1,020,000      2,383,000       3,403,000           32,000    
9/1/95    Park City/Belvider                      -           600,000      1,405,000       2,005,000           19,000    
9/1/95    New Castle/Dupont Parkway               -           990,000      2,369,000       3,359,000           31,000    
9/1/95    Las Vegas/Rainbow                       -         1,050,000      2,459,000       3,509,000           33,000    
9/1/95    Mountain View/Reng                      -           945,000      2,216,000       3,161,000           29,000    
9/1/95    Venice/Cadillac                         -           930,000      2,182,000       3,112,000           29,000    
2/28/95   Decatur/Flat Shoal                      -           970,000      2,288,000       3,258,000           76,000    
2/28/95   Smyrna/S. Cobb                          -           663,000      1,559,000       2,222,000           50,000    
2/28/95   Downey/Bellflower                       -           916,000      2,158,000       3,074,000           70,000    
2/28/95   Vallejo/Lincoln                         -           445,000      1,052,000       1,497,000           35,000    
2/28/95   Lynnwood/180Th St                       -           516,000      1,205,000       1,721,000           41,000    
2/28/95   Kent/Pacific Hwy                        -           728,000      1,711,000       2,439,000           56,000    
2/28/95   Kirkland                                -         1,254,000      2,932,000       4,186,000           95,000    
2/28/95   Federal Way/Pacific                     -           785,000      1,832,000       2,617,000           59,000    
2/28/95   Tampa/S. Dale                           -           791,000      1,852,000       2,643,000           60,000    
2/28/95   Burlingame/Adrian Rd                    -         2,280,000      5,349,000       7,629,000          168,000    
2/28/95   Miami/Cloverleaf                        -           606,000      1,426,000       2,032,000           47,000    
2/28/95   Pinole/San Pablo                        -           639,000      1,502,000       2,141,000           50,000    
2/28/95   South Gate/Firesto                      -         1,442,000      3,449,000       4,891,000          114,000    
2/28/95   San Jose/Mabury                         -           892,000      2,088,000       2,980,000           68,000    
2/28/95   La Puente/Valley Blvd                   -           591,000      1,390,000       1,981,000           45,000    
2/28/95   San Jose/Capitol E                      -         1,215,000      2,852,000       4,067,000           92,000    
2/28/95   Milwaukie/40Th Street                   -           579,000      1,368,000       1,947,000           46,000    
2/28/95   Portland/N. Lombard                     -           812,000      1,900,000       2,712,000           61,000    
2/28/95   Miami/Biscayne                          -         1,313,000      3,076,000       4,389,000           98,000    
2/28/95   Chicago/Clark Street                    -           442,000      1,031,000       1,473,000           35,000    
2/28/95   Palatine/Dundee                         -           698,000      1,643,000       2,341,000           55,000    
2/28/95   Williamsville/Transit                   -           284,000        670,000         954,000           24,000    
2/28/95   Amherst/Sheridan                        -           484,000      1,151,000       1,635,000           40,000    
2/28/95   Milwaukie I/Se                          -           597,000      1,464,000       2,061,000           54,000    
9/1/95    Simi Valley/Los Angeles                 -         1,590,000      3,724,000       5,314,000           50,000    
9/1/95    Spring Valley/Foreman                   -         1,095,000      2,572,000       3,667,000           34,000    
9/30/95   Van Nuys/Balboa Blvd                    -         1,920,000      4,508,000       6,428,000                -    
10/31/95  San Lorenzo/Hesperian                   -         1,590,000      3,716,000       5,306,000                -    
10/31/95  Chicago/W. 47Th Street                  -           300,000        708,000       1,008,000                -    
10/31/95  Los Angeles/Eastern                     -           455,000      1,070,000       1,525,000                -    
6/30/95   Portland/Prescott                       -           647,000      1,509,000       2,156,000           25,000    
6/30/95   St. Petersburg                          -           352,000        827,000       1,179,000           14,000    
6/30/95   Dallas/Audelia Road                     -           677,000      1,579,000       2,256,000           26,000    
6/30/95   Miami Gardens                           -           823,000      1,929,000       2,752,000           33,000    
6/30/95   Grand Prairie/19Th                      -           566,000      1,329,000       1,895,000           22,000    
6/30/95   Joliet/Jefferson Street                 -           501,000      1,181,000       1,682,000           20,000    
6/30/95   Bridgeton/Pennridge                     -           283,000        661,000         944,000           11,000    
6/30/95   Portland/S.E.92Nd                       -           638,000      1,497,000       2,135,000           25,000    
6/30/95   Houston/S.W. Freeway                    -           537,000      1,254,000       1,791,000           21,000    
6/30/95   Milwaukee/Brown                         -           358,000        849,000       1,207,000           14,000    
6/30/95   Orlando/W. Oak Ridge                    -           698,000      1,642,000       2,340,000           27,000    
6/30/95   Lauderhill/State Road                   -           644,000      1,508,000       2,152,000           25,000    
6/30/95   Orange Park/Blanding Blvd               -           394,000        918,000       1,312,000           15,000    
6/30/95   St. Petersburg/Joe'S Creek              -           704,000      1,642,000       2,346,000           27,000    
6/30/95   St. Louis/Page Service Drive            -           531,000      1,241,000       1,772,000           21,000    
6/30/95   Independence/E. 42Nd                    -           438,000      1,023,000       1,461,000           17,000    
6/30/95   Cherry Hill/Dobbs Lane                  -           716,000      1,676,000       2,392,000           28,000    
6/30/95   Edgewater Park/Route 130                -           683,000      1,593,000       2,276,000           27,000    
6/30/95   Beaverton/S.W. 110                      -           572,000      1,342,000       1,914,000           22,000    
6/30/95   Markham/W. 159Th Place                  -           230,000        539,000         769,000            9,000    
6/30/95   Houston/N.W. Freeway                    -           447,000      1,066,000       1,513,000           17,000    
6/30/95   Portland/Gantenbein                     -           537,000      1,262,000       1,799,000           21,000    
6/30/95   Upper Chichester/Market St.             -           569,000      1,329,000       1,898,000           22,000    
6/30/95   Fort Worth/Hwy 80                       -           379,000        891,000       1,270,000           15,000    
6/30/95   Greenfield/S. 108Th                     -           728,000      1,707,000       2,435,000           29,000    
6/30/95   Dallas/Audelia Road                     -           489,000      1,146,000       1,635,000           20,000    
6/30/95   Cerritos/Edwards Road                   -           516,000      1,265,000       1,781,000           24,000    
6/30/95   Milwaukie 11/Se International Wa        -           411,000        999,000       1,410,000           17,000    
6/30/95   Altamonte Springs                       -           566,000      1,326,000       1,892,000           22,000    
6/30/95   East Hazel Crest/Halsted I              -           483,000      1,127,000       1,610,000           19,000    
6/30/95   Seattle/Delridge Way                    -           760,000      1,779,000       2,539,000           30,000    
6/30/95   Elmhurst/Lake Frontage Rd               -           748,000      1,758,000       2,506,000           30,000    
6/30/95   Los Angeles/Beverly Blvd                -           787,000      1,886,000       2,673,000           33,000    
6/30/95   Lawrenceville/Brunswick                 -           841,000      1,961,000       2,802,000           33,000    
6/30/95   Renton/Rainier                          -           295,000        698,000         993,000           11,000    
6/30/95   Richmond/Carlson                        -           865,000      2,025,000       2,890,000           34,000    
6/30/95   Liverpool/Oswego Road                   -           545,000      1,279,000       1,824,000           22,000    
6/30/95   Rochester/East Ave                      -           578,000      1,375,000       1,953,000           24,000    
6/30/95   Pasadena/E. Beltway                     -           757,000      1,767,000       2,524,000           29,000    
11/15/95  Costa Mesa - B                          -           522,000      1,218,000       1,740,000                -    
11/15/95  Plano/E. 14Th                           -           705,000      1,646,000       2,351,000                -    
11/15/95  Citrus Heights/Sunrise                  -           520,000      1,213,000       1,733,000                -    
11/15/95  Modesto/Briggsmore Ave                  -           470,000      1,097,000       1,567,000                -    
11/15/95  Camarillo/Ventura Blvd                  -           180,000        420,000         600,000                -    
11/15/95  So San Francisco/Spruce                 -         1,905,000      4,444,000       6,349,000                -    
11/15/95  Pacheco/Buchanan Circle                 -         1,681,000      3,951,000       5,632,000                -    
1/1/83    Platte                             62,000           409,000      1,137,000       1,546,000          550,000    
5/1/83    Delta Drive                        33,000            67,000        608,000         675,000          283,000    
12/1/82   Port/Halsey                        39,000           357,000        713,000       1,070,000          334,000    
12/1/82   Sacto/Folsom                       42,000           396,000        777,000       1,173,000          366,000    
12/1/83   Semoran                           114,000           442,000      2,096,000       2,538,000        1,022,000    
3/1/83    Blackwood                          95,000           213,000      1,751,000       1,964,000          834,000    
10/1/83   Orlando J. Y. Parkway              97,000           383,000      1,781,000       2,164,000          821,000    
9/1/83    Southington                        80,000           124,000      1,484,000       1,608,000          683,000    
4/1/83    Vailsgate                          67,000           103,000      1,237,000       1,340,000          563,000    
6/1/83    Ventura                           101,000           658,000      1,869,000       2,527,000          880,000    
8/1/83    Southhampton                      121,000           331,000      2,236,000       2,567,000        1,027,000    
9/1/83    Webster/Keystone                  119,000           449,000      2,193,000       2,642,000          972,000    
9/1/83    Dover                              98,000           107,000      1,809,000       1,916,000          806,000    
9/1/83    Newcastle                         138,000           227,000      2,547,000       2,774,000        1,158,000    
9/1/83    Newark                            123,000           208,000      2,275,000       2,483,000        1,041,000    
9/1/83    Langhorne                         213,000           263,000      3,927,000       4,190,000        1,811,000    
9/1/83    Hobart                             97,000           215,000      1,794,000       2,009,000          804,000    
9/1/83    Ft. Wayne/W. Coliseum              81,000           160,000      1,491,000       1,651,000          691,000    
9/1/83    Ft. Wayne/Bluffton                 44,000            88,000        803,000         891,000          364,000    
11/1/83   Webster/Nasa                      189,000         1,570,000      3,489,000       5,059,000        1,647,000    
11/1/83   Aurora                             53,000           505,000        983,000       1,488,000          433,000    
11/1/83   Campbell                           63,000         1,379,000      1,163,000       2,542,000          520,000    
11/1/83   Col Springs/Ed  (Coulter)          90,000           471,000      1,659,000       2,130,000          762,000    
11/1/83   Col Springs/Mv  (Coulter)          63,000           320,000      1,168,000       1,488,000          545,000    
11/1/83   Thorton (Coulter)                  80,000           418,000      1,467,000       1,885,000          674,000    
11/1/83   Oklahoma City   (Coulter)          91,000           454,000      1,680,000       2,134,000          749,000    
11/1/83   Tucson (Coulter)                   68,000           343,000      1,262,000       1,605,000          541,000    
12/1/83   Charlotte                         (4,000)           165,000      1,538,000       1,703,000          724,000    
12/1/83   Greensboro/Market                 (6,000)           214,000      2,015,000       2,229,000          976,000    
12/1/83   Greensboro/Electra                (3,000)           112,000      1,073,000       1,185,000          502,000    
12/1/83   Raleigh/Yonkers                   (3,000)           203,000      1,163,000       1,366,000          540,000    
12/1/83   Columbia                          (5,000)           171,000      1,711,000       1,882,000          798,000    
12/1/83   Richmond                          (4,000)           176,000      1,638,000       1,814,000          772,000    
12/1/83   Augusta                           (3,000)            97,000        939,000       1,036,000          436,000    
4/1/84    Providence                        (4,000)            92,000      1,302,000       1,394,000          616,000    
1/24/85   Cranston                          (3,000)           175,000        954,000       1,129,000          432,000    
3/1/84    Marrietta/Cobb                    (2,000)            73,000        700,000         773,000          312,000    
1/1/84    Fremont/Albrae                    (5,000)           636,000      1,990,000       2,626,000          965,000    
1/1/84    Tacoma                            (4,000)           553,000      1,441,000       1,994,000          680,000    
1/1/84    Belton                            (3,000)           175,000      1,199,000       1,374,000          536,000    
1/1/84    Gladstone                         (6,000)           275,000      2,049,000       2,324,000          968,000    
1/1/84    Hickman/112                       (6,000)           257,000      2,151,000       2,408,000          996,000    
1/1/84    Holmes                            (4,000)           289,000      1,510,000       1,799,000          710,000    
1/1/84    Independence                      (6,000)           221,000      2,058,000       2,279,000          975,000    
1/1/84    Merriam                           (5,000)           255,000      1,664,000       1,919,000          784,000    
1/1/84    Olathe                            (3,000)           107,000      1,178,000       1,285,000          550,000    
1/1/84    Shawnee                           (5,000)           205,000      1,705,000       1,910,000          778,000    
1/1/84    Topeka                            (3,000)            75,000      1,208,000       1,283,000          561,000    
2/1/84    Unicorn/Nkoxville                 (6,000)           662,000      2,159,000       2,821,000        1,021,000    
2/1/84    Central/Knoxville                 (4,000)           449,000      1,446,000       1,895,000          692,000    
3/1/84    Manassas                          (5,000)           320,000      1,840,000       2,160,000          858,000    
2/1/84    Pico Rivera                       (3,000)           743,000      1,060,000       1,803,000          493,000    
5/1/84    Raleigh/Departure                 (8,000)           302,000      2,793,000       3,095,000        1,289,000    
4/1/84    Milwaukie/Oregon                  (2,000)           289,000        770,000       1,059,000          356,000    
7/1/84    Trevose/Old Lincoln               (5,000)           421,000      2,011,000       2,432,000          905,000    
5/1/84    Virginia Beach                    (7,000)           509,000      2,615,000       3,124,000        1,198,000    
5/1/84    Philadelphia/Grant               (10,000)         1,041,000      3,602,000       4,643,000        1,691,000    
6/1/84    Lorton                            (7,000)           435,000      2,444,000       2,879,000        1,112,000    
6/1/84    Baltimore                         (6,000)           382,000      2,278,000       2,660,000        1,033,000    
6/1/84    Laurel                            (8,000)           501,000      2,850,000       3,351,000        1,287,000    
6/1/84    Delran                             13,000           279,000      1,689,000       1,968,000          770,000    
5/1/84    Garland                             8,000           356,000        979,000       1,335,000          446,000    
6/1/84    Orange Blossom                      8,000           226,000      1,090,000       1,316,000          497,000    
6/1/84    Safe Place (Cincinatti)            15,000           402,000      1,910,000       2,312,000          851,000    
6/1/84    Safe Place (Florence)               8,000           185,000        996,000       1,181,000          438,000    
8/1/84    Medley                             10,000           584,000      1,279,000       1,863,000          564,000    
8/1/84    Oklahoma City                      13,000           340,000      1,642,000       1,982,000          725,000    
8/1/84    Newport News                       21,000           356,000      2,783,000       3,139,000        1,243,000    
9/1/84    Kaplan (Irving)                    14,000           677,000      1,881,000       2,558,000          844,000    
9/1/84    Kaplan (Walnut Hill)               22,000           971,000      2,815,000       3,786,000        1,252,000    
9/1/84    Cockrell Hill                      14,000           380,000      1,854,000       2,234,000          772,000    
11/1/84   Omaha                               9,000           109,000      1,151,000       1,260,000          501,000    
11/1/84   Manchester                         14,000           164,000      1,841,000       2,005,000          801,000    
12/1/84   Austin (Ben White)                  5,000           325,000        653,000         978,000          279,000    
12/1/84   Austin (Lamar)                      9,000           643,000      1,230,000       1,873,000          535,000    
12/1/84   Pompano                            14,000           399,000      1,778,000       2,177,000          761,000    
12/1/84   Forth Worth                         7,000           122,000        869,000         991,000          385,000    
11/1/84   Hialeah                            15,000           886,000      1,941,000       2,827,000          849,000    
12/1/84   Montgomeryville                    18,000           215,000      2,312,000       2,527,000        1,013,000    
12/1/84   Bossier City                       13,000           184,000      1,755,000       1,939,000          775,000    
2/1/85    Simi Valley                        12,000           737,000      1,615,000       2,352,000          680,000    
3/6/85    Chattanooga                        14,000           202,000      1,822,000       2,024,000          772,000    
2/1/85    Hurst                              10,000           231,000      1,361,000       1,592,000          589,000    
3/1/85    Portland                            9,000           285,000      1,116,000       1,401,000          487,000    
5/3/85    Longwood                           14,000           355,000      1,823,000       2,178,000          780,000    
3/19/85   Fern Park                          10,000           144,000      1,259,000       1,403,000          535,000    
3/14/85   Fairfield                          11,000           338,000      1,484,000       1,822,000          630,000    
4/10/85   Laguna Hills                       28,000         1,224,000      3,605,000       4,829,000        1,520,000    
7/11/85   Columbus (Morse Rd.)               13,000           195,000      1,667,000       1,862,000          697,000    
7/11/85   Columbus (Kenney Rd.)              13,000           199,000      1,684,000       1,883,000          704,000    
6/1/85    Columbus (Busch Blvd.)             13,000           202,000      1,755,000       1,957,000          733,000    
6/1/85    Columbus (Kinnear Rd.)             16,000           241,000      2,051,000       2,292,000          856,000    
6/7/85    Grove City/ Marlane Drive          10,000           150,000      1,320,000       1,470,000          542,000    
6/7/85    Reynoldsburg                       13,000           204,000      1,752,000       1,956,000          734,000    
6/1/85    Worthington                        15,000           221,000      2,013,000       2,234,000          832,000    
7/11/85   Westerville                        13,000           199,000      1,712,000       1,911,000          703,000    
6/1/85    Arlington                          13,000           201,000      1,688,000       1,889,000          698,000    
7/11/85   Springfield                         6,000            90,000        822,000         912,000          340,000    
7/11/85   Dayton (Executive Blvd.)           10,000           144,000      1,359,000       1,503,000          560,000    
7/11/85   Dayton (Needmore Road)             11,000           160,000      1,443,000       1,603,000          589,000    
7/11/85   Lilburn                             8,000           331,000      1,083,000       1,414,000          452,000    
4/18/85   Austin/ S. First                   24,000           778,000      1,458,000       2,236,000          610,000    
4/18/85   Cincinnati/E. Kemper               30,000           232,000      1,783,000       2,015,000          739,000    
5/1/85    Cincinnati/Colerain                33,000           253,000      1,967,000       2,220,000          817,000    
5/1/85    Florence/Tanner Lane               28,000           218,000      1,684,000       1,902,000          701,000    
5/23/85   Tacoma/Phillips Rd.                23,000           396,000      1,375,000       1,771,000          564,000    
5/17/85   Milwaukie/Mcloughlin II            17,000           458,000      1,012,000       1,470,000          407,000    
7/11/85   San Diego/Kearney Mesa Rd          34,000           783,000      2,050,000       2,833,000          838,000    
5/20/85   Manchester/S. Willow II            32,000           371,000      1,899,000       2,270,000          800,000    
6/1/85    N. Hollywood/Raymer                18,000           967,000      1,093,000       2,060,000          447,000    
7/12/85   Scottsdale/70th St                 26,000           632,000      1,570,000       2,202,000          633,000    
7/26/85   Concord/Hwy 29                     16,000           150,000        942,000       1,092,000          364,000    
10/1/85   N. Hollywood/Whitsett  (A)         47,000         1,524,000      2,816,000       4,340,000        1,130,000    
10/1/85   Portland/SE 82nd St                12,000           354,000        705,000       1,059,000          281,000    
9/18/85   Madison/Copps Ave.                 24,000           450,000      1,449,000       1,899,000          591,000    
9/25/85   Columbus/Sinclair                  17,000           307,000      1,028,000       1,335,000          408,000    
9/12/85   Philadelphia/Tacony St             32,000           118,000      1,946,000       2,064,000          787,000    
11/1/85   Perrysburg/Helen Dr.               24,000           110,000      1,419,000       1,529,000          574,000    
10/3/85   Columbus/Ambleside                 22,000           124,000      1,341,000       1,465,000          547,000    
11/1/85   Indianapolis/Pike Place            28,000           229,000      1,713,000       1,942,000          684,000    
11/1/85   Indianapolis/Beach Grove           25,000           198,000      1,489,000       1,687,000          589,000    
10/17/85  Hartford/Roberts                   29,000           219,000      1,761,000       1,980,000          695,000    
10/17/85  Wichita/S. Rock Rd.                21,000           642,000      1,269,000       1,911,000          532,000    
10/9/85   Wichita/E. Harry                   15,000           313,000        927,000       1,240,000          381,000    
10/9/85   Wichita/S. Woodlawn                12,000           263,000        739,000       1,002,000          312,000    
10/9/85   Wichita/E. Kellogg                  8,000           185,000        507,000         692,000          214,000    
10/9/85   Wichita/S. Tyler                   17,000           294,000      1,006,000       1,300,000          377,000    
10/9/85   Wichita/W. Maple                   10,000           234,000        605,000         839,000          257,000    
10/9/85   Wichita/Carey Lane                  9,000           192,000        540,000         732,000          222,000    
10/9/85   Wichita/E. Macarthur               10,000           220,000        583,000         803,000          247,000    
10/9/85   Joplin/S. Range Line               14,000           264,000        839,000       1,103,000          328,000    
12/24/85  Milpitas                           30,000         1,623,000      1,810,000       3,433,000          712,000    
12/1/85   Pleasanton/Santa Rita (A)          38,000         1,226,000      2,309,000       3,535,000          898,000    
7/1/88    Forth Wayne                        25,000           101,000      1,525,000       1,626,000          459,000    
10/3/85   San Antonio/Wetmore Rd.          (33,000)           306,000      1,400,000       1,706,000          546,000    
10/3/85   San Antonio/Callaghan            (30,000)           288,000      1,269,000       1,557,000          500,000    
10/3/85   San Antonio/Zarzamora            (37,000)           364,000      1,572,000       1,936,000          623,000    
10/3/85   San Antonio/Hackberry            (39,000)           388,000      1,635,000       2,023,000          651,000    
10/3/85   San Antonio/Fredericksburg       (30,000)           287,000      1,276,000       1,563,000          492,000    
10/3/85   Dallas/S. Wetmoreland            (42,000)           474,000      1,763,000       2,237,000          741,000    
10/3/85   Dallas/Alvin St.                 (32,000)           359,000      1,346,000       1,705,000          561,000    
10/3/85   Forth Worth/W. Beach St.         (32,000)           356,000      1,330,000       1,686,000          559,000    
10/3/85   Forth Worth/E. Seminary          (34,000)           382,000      1,431,000       1,813,000          597,000    
10/3/85   Forth Worth/Cockrell St.         (29,000)           323,000      1,223,000       1,546,000          510,000    
11/7/85   Everett/Evergreen                (60,000)           706,000      2,542,000       3,248,000        1,090,000    
11/7/85   Seattle/Empire Way              (136,000)         1,652,000      5,720,000       7,372,000        2,386,000    
12/1/85   Amherst/Niagra Falls             (21,000)           132,000        871,000       1,003,000          364,000    
12/18/85  West Sams Blvd.                  (19,000)           164,000        815,000         979,000          344,000    
3/11/86   Jacksonville/Wiley               (16,000)           140,000        680,000         820,000          265,000    
12/1/85   McArthur Rd.                     (41,000)           204,000      1,711,000       1,915,000          705,000    
2/21/86   Costa Mesa/Pomona                (41,000)         1,405,000      1,725,000       3,130,000          712,000    
12/1/85   Brockton/Main                    (41,000)           153,000      1,709,000       1,862,000          720,000    
1/1/86    Mapleshade/Rudderow              (47,000)           362,000      1,962,000       2,324,000          794,000    
1/1/86    Bordontown/Groveville            (25,000)           196,000      1,073,000       1,269,000          432,000    
12/31/85  Eatontown/Hwy 35                (102,000)           308,000      4,301,000       4,609,000        1,764,000    
3/3/86    Brea/Imperial Hwy                (57,000)         1,069,000      2,410,000       3,479,000          988,000    
12/1/85   Denver/Leetsdale                 (24,000)           603,000      1,000,000       1,603,000          407,000    
2/1/86    Skokie/McCormick                 (49,000)           638,000      2,052,000       2,690,000          817,000    
1/8/86    Sun Valley/Sheldon               (48,000)           544,000      2,031,000       2,575,000          813,000    
3/28/86   St. Louis/Forder                 (31,000)           517,000      1,292,000       1,809,000          513,000    
1/1/86    Las Vegas/Highland               (24,000)           432,000      1,004,000       1,436,000          401,000    
5/1/86    Westlake Village                 (27,000)         1,205,000      1,149,000       2,354,000          442,000    
2/19/86   Colorado Springs/Sinton          (29,000)           535,000      1,218,000       1,753,000          487,000    
2/20/86   Oklahoma City/Penn               (22,000)           146,000        919,000       1,065,000          367,000    
2/20/86   Oklahoma City/39th Expressway    (23,000)           238,000        965,000       1,203,000          370,000    
4/1/86    Reno/Telegraph                   (33,000)           649,000      1,372,000       2,021,000          534,000    
7/15/86   Colorado Springs/Hollow Tree     (21,000)           574,000        883,000       1,457,000          342,000    
4/11/86   Kirkham                          (65,000)           199,000      1,078,000       1,277,000          442,000    
4/11/86   Reavis                           (63,000)           192,000      1,039,000       1,231,000          423,000    
4/10/86   Fort Worth/East Loop             (55,000)           196,000        906,000       1,102,000          357,000    
6/1/86    Richlan Hills                    (69,000)           543,000      1,141,000       1,684,000          504,000    
5/29/86   Sacramento/Franklin Blvd.        (74,000)           872,000      1,215,000       2,087,000          501,000    
6/10/86   West Valley/So. 3600            (101,000)           208,000      1,662,000       1,870,000          669,000    
7/1/86    West LA/Purdue Ave.             (221,000)         2,415,000      3,648,000       6,063,000        1,465,000    
7/15/86   Capital Heights/Central Ave.    (234,000)           649,000      3,866,000       4,515,000        1,566,000    
10/24/86  Perleta/Fremont                  (75,000)           851,000      1,231,000       2,082,000          479,000    
7/1/86    Pontiac/Dixie hwy.              (121,000)           259,000      1,998,000       2,257,000          807,000    
8/1/86    Laurel/Ft. Meade Rd.             (96,000)           475,000      1,588,000       2,063,000          624,000    
9/10/86   Kansas City/S. 44th.            (130,000)           509,000      2,135,000       2,644,000          861,000    
10/1/86   Birmingham/Highland              (49,000)            89,000        815,000         904,000          317,000    
10/1/86   Birmingham/Riverchase            (94,000)           262,000      1,557,000       1,819,000          608,000    
10/1/86   Birmingham/Eastwood              (76,000)           166,000      1,252,000       1,418,000          482,000    
10/1/86   Birmingham/Forestdale            (61,000)           152,000      1,011,000       1,163,000          392,000    
10/1/86   Birmingham/Centerpoint           (86,000)           265,000      1,410,000       1,675,000          544,000    
10/1/86   Birmingham/Roebuck Plaza         (30,000)           101,000        494,000         595,000          189,000    
10/1/86   Birmingham/Greensprings          (83,000)           347,000      1,365,000       1,712,000          532,000    
10/1/86   Birmingham/Hoover                (80,000)           372,000      1,327,000       1,699,000          520,000    
10/1/86   Birmingham/Midfield              (29,000)           170,000        485,000         655,000          188,000    
10/1/86   Birmingham/Huntsville-Leeman     (69,000)           158,000      1,135,000       1,293,000          432,000    
10/1/86   Birmingham/Huntsville-Drake      (78,000)           253,000      1,290,000       1,543,000          501,000    
10/1/86   Birmingham/Anniston              (38,000)            59,000        633,000         692,000          263,000    
10/1/86   Pilgrim/Monroe                   (73,000)           595,000      1,197,000       1,792,000          473,000    
10/1/86   Pilgrim/I-45                     (91,000)           704,000      1,492,000       2,196,000          557,000    
10/1/86   Pilgrim/Rogerdale               (183,000)         1,631,000      3,013,000       4,644,000        1,182,000    
10/1/86   Pilgrim/Gessner                 (113,000)         1,032,000      1,856,000       2,888,000          722,000    
10/1/86   Pilgrim/Richmond                (169,000)         1,502,000      2,787,000       4,289,000        1,077,000    
10/1/86   Pilgrim/Gulfton                 (220,000)         1,732,000      3,622,000       5,354,000        1,423,000    
10/1/86   Pilgrim/West Park                (56,000)           503,000        925,000       1,428,000          363,000    
10/23/86  Jonesboro                        (49,000)           157,000        814,000         971,000          312,000    
9/12/86   Lakewood/W. 6th Ave.             (93,000)         1,070,000      3,510,000       4,580,000        1,350,000    
10/1/86   Pilgrim/Houston/Loop 610        (107,000)         1,299,000      4,042,000       5,341,000        1,515,000    
10/1/86   Pilgrim/Houston/S.W. Freeway     (69,000)           904,000      2,591,000       3,495,000          985,000    
10/1/86   Pilgrim/Houston/FM 1960          (47,000)           662,000      1,785,000       2,447,000          665,000    
10/1/86   Pilgrim/Houston/Old Katy Rd.    (100,000)         1,365,000      3,763,000       5,128,000        1,419,000    
10/1/86   Pilgrim/Houston/Long Point       (42,000)           451,000      1,581,000       2,032,000          553,000    
10/1/86   Austin/Red Rooster               (51,000)         1,390,000      1,933,000       3,323,000          736,000    
12/31/86  Lynnwood/196th SW                (49,000)         1,063,000      1,844,000       2,907,000          676,000    
12/10/86  Auburn/Auburn Way North          (37,000)           606,000      1,400,000       2,006,000          516,000    
12/18/86  Gresham/Burnside                 (35,000)           351,000      1,318,000       1,669,000          495,000    
12/19/86  Denver/Sheridan Rd.              (84,000)         1,033,000      3,179,000       4,212,000        1,152,000    
12/10/86  Marietta/Cobb Pkwy.              (84,000)           536,000      3,164,000       3,700,000        1,183,000    
12/10/86  Hillsboro/Tualatin Hwy.          (21,000)           461,000        778,000       1,239,000          281,000    
11/26/86  Arleta/Osborne St.               (22,000)           987,000        847,000       1,834,000          305,000    
4/1/87    City of Industry/Amar Rd.        (61,000)           748,000      2,293,000       3,041,000          565,000    
3/16/87   Annandale/Ravensworth            (46,000)           679,000      1,735,000       2,414,000          638,000    
5/28/87   OK City/Hefner                   (29,000)           459,000      1,113,000       1,572,000          401,000    
12/23/86  San Antonio/Sunst Rd.            (50,000)         1,206,000      1,905,000       3,111,000          683,000    
8/11/87   Hammond/Calumet                  (30,000)            97,000      1,140,000       1,237,000          383,000    
7/1/88    Portland/Moody                   (40,000)           663,000      1,500,000       2,163,000          533,000    
7/16/87   Oakbrook Terrace                (364,000)           912,000      2,862,000       3,774,000        1,109,000    
10/17/87  Plantation/S. State Rd.         (229,000)           924,000      1,795,000       2,719,000          673,000    
3/1/88    Anaheim/Lakeview                (220,000)           995,000      1,725,000       2,720,000          616,000    
8/20/87   San Antonio/Austin Hwy.         (110,000)           400,000        864,000       1,264,000          327,000    
10/1/87   Rockville/Fredrick Rd.          (440,000)         1,695,000      3,455,000       5,150,000        1,295,000    
2/15/95   Schiller Park/W. Irving           688,000         1,815,000      4,356,948       6,171,948           74,406    
2/15/95   Lansing/173rd Street              581,000           601,000      3,680,347       4,281,347           60,795    
2/15/95   Pleasanton/Boulder                432,000         1,003,000      2,734,202       3,737,202           46,549    
2/15/95   Los Angeles/S. Sepulveda          610,000         1,649,000      3,865,504       5,514,504           60,250    
7/1/95    Artesia/Artesia                 (300,000)           668,000      1,099,000       1,767,000            8,000    
7/1/95    Arcadia/Lower Azusa             (279,000)           878,000      1,022,000       1,900,000            8,000    
7/1/95    Dallas/Kingsly IV               (343,000)         1,171,000      1,254,000       2,425,000           10,000    
7/1/95    Manassas/Centreville            (449,000)           433,000      1,645,000       2,078,000           12,000    
7/1/95    Los Angeles/San Pedro           (711,000)         1,719,000      2,604,000       4,323,000           19,000    
7/1/95    Bellevue/Northup                (680,000)         1,317,000      2,489,000       3,806,000           17,000    
7/1/95    Hollywood/Willoughby            (378,000)         1,701,000      1,383,000       3,084,000           11,000    
7/1/95    Atlanta/John Wesley             (300,000)         1,319,000      1,097,000       2,416,000           10,000    
7/1/95    Montebello/S. Maple             (482,000)         1,362,000      1,764,000       3,126,000           14,000    
7/1/95    Lake City/Forest P.             (286,000)           266,000      1,046,000       1,312,000            8,000    
7/1/95    Baltimore/W Patap.              (559,000)           430,000      2,048,000       2,478,000           14,000    
7/1/95    Fraser/Groesbeck                (374,000)           393,000      1,369,000       1,762,000           10,000    
7/1/95    Vellejo/Mini Drive              (373,000)           599,000      1,365,000       1,964,000           10,000    
9/30/95   Whittier                          694,000           215,000      1,078,000       1,293,000           35,000    
9/30/95   Van Nuys                        1,188,000           295,000      1,845,000       2,140,000           54,000    
9/30/95   Huntington Beach                  581,000           176,000        902,000       1,078,000           25,000    
9/30/95   Monterey Park                     626,000           124,000        972,000       1,096,000           34,000    
9/30/95   Downey                            573,000           191,000        890,000       1,081,000           24,000    
9/30/95   Balboa                            626,000            85,000        972,000       1,057,000           27,000    
9/30/95   Stockton                          727,000           151,000      1,129,000       1,280,000           30,000    
9/30/95   Del Amo                         1,342,000           474,000      2,084,000       2,558,000           50,000    
9/30/95   Carson                          1,329,000           375,000      2,064,000       2,439,000           23,000    
9/30/95   Fresno                            373,000            44,000        579,000         623,000           12,000    
          Construction in Progress                -                -       7,980,000       7,980,000                -    
                                                                                                                         
                                                                                                                         
BUSINESS PARKS                                                                                                           
12/1/81   South Houston/So. Shaver                -          354,000       2,117,000       2,471,000        1,186,000    
5/2/94    Monterey Park                           -        2,700,000       6,357,000       9,057,000          435,000    
1/1/84    Signal Hill/Bus. Park             168,000        1,195,000       3,096,000       4,291,000        1,354,000    
1/1/84    Lakewood                         (16,000)        2,513,000       5,878,000       8,391,000        3,280,000    
4/1/84    Austin                           (22,000)        4,321,000       8,858,000      13,179,000        4,370,000    
3/29/85   Pacific Scene                      61,000        1,536,000       7,786,000       9,322,000        3,660,000    
7/10/85   Timberway                         248,000        2,221,000      14,937,000      17,158,000        6,857,000    
10/4/85   One Park Ten                      153,000        2,365,000       9,183,000      11,548,000        3,610,000    
10/4/85   Park Terrace                       54,000          943,000       3,254,000       4,197,000        2,115,000    
2/28/86   San Diego/ Knoll Mission        (208,000)        1,967,000       8,764,000      10,731,000        4,030,000    
3/28/86   Fox Hills/ Culver City          (350,000)        7,544,000      14,813,000      22,357,000        6,667,000    
3/27/86   Silvergate                      (443,000)        4,201,000       7,300,000      11,501,000        3,483,000    
5/30/86   Signal Hill/Parkway             (347,000)        2,463,000       5,711,000       8,174,000        2,399,000    
7/25/86   Mesa West Commercial Plaza       (96,000)        1,333,000       3,621,000       4,954,000        1,647,000    
7/25/86   University Corp. Center         (100,000)        1,419,000       3,852,000       5,271,000        1,701,000    
5/27/87   Carson/Leapwood                 (468,000)        2,535,000       3,681,000       6,216,000        1,530,000    
                                                                                                                         
                                          ============================================================================== 
                                          $289,000      $382,154,000  $1,030,980,000  $1,413,134,000     $241,966,000    
                                          ============================================================================== 

</TABLE>
<PAGE>

                              PUBLIC STORAGE, INC.

                   SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
                              At December 31, 1995
<TABLE>
<CAPTION>
                                                                                                                                    
                                                                                                                                    
                                                                                                           Prior     Face Amount   
           Description               Interest Rate    Final Maturity Date      Periodic Payment Terms      Liens        of Loans    
           -----------               -------------    -------------------      ----------------------      -----     -----------    

                                                                                                                


<S>                                      <C>                 <C>          <C>                            <C>         <C>           
One mortgage note receivable due         7.440%             Sep-99        Interest payable monthly       None        700,000       
   from a third party  (1)



One mortgage note receivable due         8.500%             Jun-00        Interest and principal         None      1,240,000        
   from a private limited                                                 payable monthly
   partnership  (1)



One mortgage note receivable due        10.500%             Oct-96        Interest payable monthly       None      8,272,000       
   from a public limited
   partnership (2)



One mortgage note receivable due         9.000%             May-04        Interest and principal         None        916,000        
   from a third party (1)                                                 payable monthly



One mortgage note receivable due        10.180%             Sep-99        Interest and principal         None      3,951,000       
   from a private limited                                                 payable monthly
   partnership (1)



One mortgage note receivable due        10.750%             Oct-96        Interest and principal         None      3,047,000       
   from a private limited                                                 payable monthly
   partnership (1)



One all inclusive trust deed             9.250%             Jul-98        Interest and principal         None        363,000     
   receivable due from a private                                          payable monthly
   limited partnership (1)



One all inclusive trust deed            10.000%             Jul-96        Interest payable monthly       None         63,000      
   receivable due from a third
   party (1)



One all inclusive trust deed            14.000%             Jan-97        Interest and principal         None        592,000       
   receivable due from a third                                            payable monthly
   party (1)



One all inclusive trust deed             9.900%             Oct-98        Interest payable monthly       None      3,200,000      
   receivable due from a third
   party (1)



One all inclusive trust deed            10.750%             Jul-00        Interest and principal         None      1,562,000     
   receivable due from a third                                            payable monthly
   party (1)



One all inclusive trust deed             9.500%             Feb-96        Interest and principal         None       146,000      
   receivable due from a third                                             payable monthly                          -------      
   party (1)

</TABLE>
<TABLE>
<CAPTION>
                                                         Principal Amount of
                                        Book and tax       Loans subject to
                                       Carrying amount   delinquent principal
           Description                     of Loans            or interest
           -----------                     --------            -----------

                                    


<S>                                        <C>                        <C>  
One mortgage note receivable due           700,000                     -
   from a third party  (1)



One mortgage note receivable due         1,018,000                     -
   from a private limited           
   partnership  (1)



One mortgage note receivable due         8,272,000                     -
   from a public limited
   partnership (2)



One mortgage note receivable due           916,000                     -
   from a third party (1)           



One mortgage note receivable due         3,878,000                     -
   from a private limited           
   partnership (1)



One mortgage note receivable due         2,989,000                     -
   from a private limited           
   partnership (1)



One all inclusive trust deed               363,000                     -
   receivable due from a private    
   limited partnership (1)



One all inclusive trust deed                63,000                     -
   receivable due from a third
   party (1)



One all inclusive trust deed               592,000                     -
   receivable due from a third      
   party (1)



One all inclusive trust deed             3,200,000                     -
   receivable due from a third
   party (1)



One all inclusive trust deed             1,562,000                     -
   receivable due from a third      
   party (1)



One all inclusive trust deed             
   receivable due from a third      
   party (1)                              146,000                      -
                                       -----------              ---------------


                                       $23,699,000               $     -      
                                       ===========               ==============

</TABLE>

(1)  Secured by one mini-warehouse located in California.
(2)  Secured by three mini-warehouse located in California.


Activity in mortgage notes receivable during 1995, 1994 and 1993 is as follows:
<TABLE>
<CAPTION>

                                         1995              1994              1993
                                         ----              ----              ----


<S>                                  <C>                 <C>                <C>       
Beginning balance                    $23,062,00          $49,575,000        $7,327,000


Investment in mortgage notes         19,022,000            4,020,000        56,325,000


Investment in unsecured notes                 -                    -         5,000,000


Amortization of discounts               113,000              693,000           848,000

Cancellation of mortgage notes
in connection with the
acquisition of real estate
facilities                          (16,435,000)         (24,441,000)      (11,968,000)


Collection of principal              (2,063,000)          (6,785,000)       (7,957,000)
                                   ----------------- ----------------- -----------------

Ending balance                      $23,699,000          $23,062,000       $49,575,000
                                    ===========          ===========       ===========
</TABLE>
                                      F-37