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, 1997
                          --------------------

[ ] 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)

701 Western Avenue, Glendale, California                91201-2397
-----------------------------------------          -------------------------
(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
9.75% 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
Depositary Shares Each Representing 1/1,000 of a Share of 8-5/8% Cumulative
    Preferred Stock, Series I, $.01 par value.......................................            New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 8% Cumulative Preferred
    Stock, Series J, $.01 par value.................................................            New York Stock Exchange
8.25% Convertible Preferred Stock, $.01 par value...................................            New York Stock Exchange,
                                                                                                    Pacific Exchange
Common Stock, $.10 par value........................................................            New York Stock Exchange,
                                                                                                    Pacific 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 February 27, 1998:

Common  Stock,  $0.10  Par  Value -  $2,166,879,325  (computed  on the  basis of
$30.8125  per share which was the reported  closing sale price of the  Company's
Common Stock on the New York Stock Exchange on February 27, 1998).

The number of shares outstanding of the registrant's  classes of common stock as
of February 27, 1998:

Common Stock, $.10 Par Value - 111,723,882 shares
--------------------------------------------------

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

Equity Stock, Series A, $.01 Par Value - 225,000 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 1997
fiscal year, which information is incorporated by reference into Part III.




                                        2
<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
primarily self-storage facilities. The Company is the largest owner and operator
of  self-storage  space in the United  States  with direct and  indirect  equity
investments in 1,073 self-storage facilities containing approximately 64 million
square feet of net rentable space at December 31, 1997. In addition, the Company
has ownership interests in 63 commercial  properties  containing  commercial and
industrial  space for rent.  At  December  31,  1997,  the  Company  also had an
interest in 49 portable self-storage  facilities that rent storage containers to
customers for storage in a central warehouse.

     The Company has  elected to be taxed 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.

MANAGEMENT
----------
     The  Company's  senior  management  team is headed by B. Wayne Hughes (64),
Chairman and Chief Executive Officer.  Mr. Hughes established the Public Storage
Organization  in 1972 and has  successfully  managed the Company through several
market cycles. The Company's executive management includes:  Harvey Lenkin (61),
President;  John Reyes (37), Senior Vice President and Chief Financial  Officer;
Carl B. Phelps (58),  Senior Vice  President -  Development;  and Marvin M. Lotz
(55), Senior Vice President-Operations.

     The Company's senior management has a significant ownership position in the
Company  with  executive   officers,   directors  and  their   families   owning
approximately  41.4 million shares or 37% of the common stock as of February 27,
1998.

REIT STRUCTURE
--------------
     The Company has elected to operate as a REIT for income tax purposes.  This
structure  provides the Company with two  principal  benefits  which it believes
enhance shareholder value:

     1)   REIT  status  effectively  eliminates  a  corporate  level  tax on the
          earnings from the Company's  business  operations that are distributed
          to  shareholders. As long as the  Company  meets  certain  tests,  the
          Company's distributed earnings are not subject to "double taxation".

     2)   REIT  qualification  also facilitates the financial  leveraging of the
          Company's business with "permanent capital" i.e.,  perpetual preferred
          stock,  versus debt.  Operating as a REIT,  the Company  obtains a tax
          deduction for the  dividends it pays on preferred  stock much like the
          tax  deductions  generally  available  for interest  payments on debt.
          However, unlike debt, perpetual preferred stock carries no refinancing
          risks.


INVESTMENT OBJECTIVE
--------------------
     The Company's  primary  objective is to maximize  shareholder value through
internal  growth (by  increasing  funds from  operations  and cash available for
distribution)  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 this objective.

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. Recent increases in development
of self-storage  facilities is intensifying the competition  among  self-storage
operators in many market areas.
                                       3
<PAGE>

     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.

     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  self-storage
industry. In addition to the Company, there are four other publicly traded REITs
and numerous private regional and local operators  operating in the self-storage
industry.  The Company believes that it is well-positioned to capitalize on this
consolidation  trend due to its  demonstrated  access to  capital  and  national
presence.

BUSINESS ATTRIBUTES
-------------------
     The Company believes it possesses  several  distinguishing  characteristics
which  enable  it to  compete  effectively  in the  self-storage  industry.  The
Company's   facilities  are  part  of  a   comprehensive   distribution   system
encompassing  standardized  procedures,  integrated  reporting  and  information
networks and centralized  marketing.  The Company believes it possesses the most
experienced facility management staff in the self-storage industry.

     This  distribution  system is designed to maximize  revenue through pricing
and  occupancy.  In addition,  the Company's  subsidiaries  are able to generate
incremental  revenue  from sales of  ancillary  products  such as truck  rental,
locks, boxes and most recently portable  self-storage.  The distribution  system
was significantly  enhanced during 1996 with the introduction and implementation
of the  national  telephone  reservation  center  and  new  facility  management
software. These distinguishing characteristics are as follows:

     NATIONAL  TELEPHONE  RESERVATION  SYSTEM:  Commencing  in early  1996,  the
Company began to implement a national  telephone  reservation system designed to
provide added customer service. Customers calling either the Company's toll-free
telephone  referral  system,  (800)  44-STORE,  or a  self-storage  facility are
directed to the national  reservation  system where a  representative  discusses
with the customer space  requirements,  price and location  preferences and also
informs the customer of other products and services  provided by the Company and
its  subsidiaries.  The  national  telephone  reservation  system  was not fully
operational  for most of the Company's  facilities  until the latter part of the
fourth quarter of 1996.

     The Company  believes that the national  telephone  reservation  system has
enhanced the  Company's  ability to  effectively  market both  self-storage  and
portable self-storage  facilities and is primarily responsible for the Company's
increasing  occupancy  levels  and  realized  rental  rates  experienced  at the
self-storage facilities during 1997 and 1996 compared to the same periods in the
prior year.

     SELF-STORAGE OPTIONS: Historically, the Company offered self-storage spaces
for rent through its traditional self-storage facilities whereby customers would
transport  their goods to the facility and rent a space to store their goods. In
late 1996, the Company  organized Public Storage Pickup and Delivery,  Inc. as a
separate  corporation and a related partnership (the corporation and partnership
are  collectively  referred to as  "PSPUD")  to operate a portable  self-storage
business  that rents  storage  containers  to  customers  for storage in central
warehouses.

     The  concept  of PSPUD  is to  provide  an  alternative  to a  self-storage
facility.  PSPUD will deliver a storage  container(s) to the customer's location
where  the  customer,  at his  convenience,  packs his  goods  into the  storage
container. PSPUD will subsequently return to the customer's location to retrieve
the storage container(s) for storage in a central warehouse.

     RETAIL  CENTERS:  In an effort to attract a wider variety of customers,  to
further  differentiate  the Company  from its  competition  and to generate  new
sources of  revenue,  additional  products  are being  offered by the  Company's
subsidiaries.  These products and services include the sale of locks,  boxes and
packing supplies and the rental of trucks and other moving equipment through the
implementation of a retail expansion program.

     The  strategic  objective  of the retail  expansion  program is to create a
"Retail Store" that will (i) rent spaces for the attached self-storage facility,
(ii)  rent  spaces  for  the  other  Public   Storage   facilities  in  adjacent

                                        4
<PAGE>

neighborhoods,  (iii) sell  locks,  boxes and  packing  materials  and (iv) rent
trucks  and  other  moving  equipment,  all in an  environment  that  is  retail
oriented.  Retail  stores will be  retro-fitted  to some  existing  self-storage
facility  rental  offices  or  "built-in"  as  part  of the  development  of new
self-storage facilities, both in high traffic, high visibility locations.

     ECONOMIES  OF SCALE:  The Company is the largest  provider of  self-storage
space in the industry.  The Company operates more  self-storage  facilities than
the other four publicly traded  self-storage REITs in the self-storage  industry
combined.  As of December  31, 1997,  the Company  operated  1,107  self-storage
facilities  (including  34 managed for third  parties) in 37 states and had over
566,000  spaces  rented.  The size and scope of the  Company's  operations  have
enabled it to achieve a consistently  high level of profit margins and low level
of administrative costs relative to revenues in its industry.

     BRAND NAME  RECOGNITION:  The Company's  operations are conducted under the
"Public  Storage" brand name,  which the Company believes is the most recognized
and established name in the self-storage  industry.  The Company's  self-storage
operations  are  conducted  in 37 states,  giving it  national  recognition  and
prominence.  The Company focuses its operations within those states in the major
metropolitan markets.  This concentration  establishes the Company as one of the
dominant  providers  of storage  space in each  market  that it  operates in and
enables it to use a variety of  promotional  activities,  such as television and
radio  advertising  as well as targeted  discounting  and  referrals,  which are
generally not economically viable to its competitors.

GROWTH STRATEGIES
-----------------
     The  Company's   growth   strategies   focus  on  improving  the  operating
performance  of its  existing  properties  and on  increasing  its  ownership of
self-storage facilities 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 occupied  square foot. The Company  believes that its property
management   personnel  and  systems   combined  with  the  national   telephone
reservation system will enhance the Company's ability to meet these goals.

     ACQUIRE PROPERTIES OPERATED AND PARTIALLY OWNED BY THE COMPANY. In addition
to 533 wholly  owned  self-storage  facilities,  the Company also  operates,  on
behalf of approximately 64 ownership entities in which the Company has a partial
equity interest,  540  self-storage  facilities under the "Public Storage" name.
From time to time,  some of these  self-storage  facilities 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  self-storage facilities 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.

     DEVELOP PROPERTIES IN SELECTED MARKETS.  During 1995, the Company commenced
construction  of self-storage  facilities.  Since 1995, the Company has opened a
total  of seven  facilities,  one in 1995,  four in 1996,  and two in 1997.  The
Company is evaluating  the  feasibility  of developing  additional  self-storage
facilities  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.

     In April  1997,  the Company  formed a joint  venture  partnership  with an
unaffiliated  partner to participate in the  development of  approximately  $220
million of self-storage facilities.  At December 31, 1997, the joint venture had
completed  construction  on seven  self-storage  facilities with a total cost of
approximately  $40.8 million,  and had 17 facilities under  construction with an
aggregate cost incurred through December 31, 1997 of approximately $48.9 million
and total additional estimated cost to complete of $29.3 million. The venture is
funded  solely with equity  capital  consisting  of 30% from the Company and 70%
from the institutional  investor. The Company accounts for its investment in the
joint venture using the equity method.

     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 self-storage
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
self-storage  facilities in the United States, the Company believes that the ten
largest  operators  manage less than 20% of the total space.  During  1997,  the
Company  acquired 4 self-storage  facilities  from  unaffiliated  third parties.
Similar to 1997,  the Company  does not expect  third party  acquisitions  to be
significant during fiscal 1998, unless attractive  investment  opportunities are
available.

                                       5
<PAGE>
     EXPAND THE PORTABLE  SELF-STORAGE  BUSINESS:  During 1997,  PSPUD opened 45
facilities which combined with its previously  opened  facilities  increased the
number of opened  facilities  to 49 as of December  31, 1997.  Since  January 1,
1998,  PSPUD has opened an  additional  five  facilities  in markets where PSPUD
facilities are currently  operating.  All of the facilities are currently leased
from  third  parties.   The  number  of  new  store  openings  in  1998  is  not
determinable. However, future openings will predominantly be in existing markets
in which PSPUD currently  operates.  By opening in existing markets,  PSPUD will
seek to gain benefits from economies of scale. PSPUD is currently developing ten
facilities  and has also  identified  an additional  five sites for  development
which collectively have an aggregate estimated cost of $67.5 million.

     Due to the  start-up  nature of this  business,  PSPUD  incurred  operating
losses  totaling  approximately  $31.7  million and $826,000 for the years ended
December  31, 1997 and 1996,  respectively.  PSPUD  continues to expend funds in
personnel,  training,  equipment,  computer  software and  professional  fees in
organizing this business. Until the facilities are operating profitably, PSPUD's
operations are expected to continue to adversely impact the Company's  earnings.
PSPUD  believes  that its  business is likely to be more  successful  in certain
markets than in others.

     The  rate of  fill-up  varies  from  facility  to  facility.  As  with  the
traditional   self-storage   facilities,   PSPUD   believes  that  the  portable
self-storage business experiences some seasonal fluctuations in occupancy levels
with  occupancies  generally higher in the summer months than the winter months.
There can be no assurances as to the level of PSPUD's expansion,  level of gross
rentals, level of move-outs or profitability.

     COMMERCIAL  PROPERTIES:  On January 2, 1997,  the Company  reorganized  its
commercial  property  operations into a separate  private REIT. The private REIT
contributed its assets to a newly created operating  partnership (the "Operating
Partnership")  in  exchange  for a  general  partnership  interest  and  limited
partnership  interests.  During 1997,  the Company and certain  partnerships  in
which the Company has a controlling  interest  contributed  substantially all of
their commercial properties to the Operating Partnership in exchange for limited
partnership interests or to the private REIT in exchange for common stock.

     In 1997, the private REIT and Operating Partnership acquired ten commercial
properties from third parties.  The aggregate purchase price of these facilities
consisted  of cash,  common  stock of the private  REIT and limited  partnership
interests of the Operating Partnership.

     At December 31, 1997, the private REIT and the Operating  Partnership owned
49 properties located in 10 states.  The Operating  Partnership also managed the
commercial  properties  owned by the  Company  and  affiliated  entities.  As of
December 31, 1997, the Company owned approximately 53% of the private REIT which
owned  approximately  19% of  the  Operating  Partnership.  The  balance  of the
Operating  Partnership  is  primarily  owned  by the  Company  and  partnerships
controlled by the Company.

     On January 21, 1998,  the private  REIT  entered  into an agreement  with a
group of unaffiliated  institutional  investors under which it would issue up to
$155,000,000  of common  stock.  $50,000,000  of this common stock was issued on
January  21,  1998,  with the  remainder  to be issued as funds are  required to
purchase commercial properties.

     On March 17, 1998, the private REIT merged into Public  Storage  Properties
XI, Inc., a publicly traded REIT and an affiliate of the Company and the name of
the surviving  corporation was changed to PS Business Parks, Inc.  ("PSBP").  In
connection  with the merger,  PSBP  exchanged 13 self storage  facilities for 11
commercial  properties owned by the Company. Upon completion of the merger, PSBP
and the Operating Partnership owned 64 commercial properties  (approximately 7.3
million square feet), and managed the commercial properties owned by the Company
and  affiliated  partnerships.  Upon  completion of the merger,  the Company and
partnerships  controlled by the Company owned  approximately 58% of PSBP and the
Operating Partnership on a combined basis.

     Due to the  Company's  controlling  ownership  interest  in  PSBP  and  the
Operating Partnership,  the Company included the operations of these entities in
the  Company's  consolidated  financial  statements  as of  December  31,  1997.
However,  as a result of the March 17,  1998 merger and the  agreement  to issue
additional  shares of common  stock to the group of  unaffiliated  institutional
investors,  the  Company  believes  that its  reduced  ownership  will no longer
warrant the consolidation of these entities effective March 31, 1998.

     The  Company  believes  that  the   concentration  of  all  the  commercial
properties and the property  manager into one entity will create a vehicle which
should facilitate future growth in this segment of the real estate industry. The
Company will participate in the entity's growth through the Company's  ownership
interest in PSBP and the Operating Partnership.

                                       6
<PAGE>
FINANCING OF THE COMPANY'S GROWTH STRATEGIES
--------------------------------------------

     RETAINED OPERATING CASH FLOW: 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, 1997, the
Company distributed 44% of its funds from operations ("FFO") allocable to common
stock and retained  $78.5  million  ($110.2  million after adding back the $31.7
million in losses from PSPUD) which was available for principal payments on debt
and  reinvestment  into real estate  assets.  See  "Management's  Discussion and
Analysis of Financial Condition and Results of Operations-Liquidity  and Capital
Resources."

     REVOLVING  LINE  OF  CREDIT:  The  Company  currently  has a  $150  million
unsecured  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  capital to eliminate
refinancing  and  interest  rate  risk.  As of March  27,  1998,  there  were no
borrowings on this credit facility.

     ACCESS  TO  ACQUISITION  CAPITAL:  The  Company  believes  that its  strong
financial  position  enables it to access  capital to finance its growth.  Since
January  1,  1995,  the  Company  has  issued  approximately  $767.3  million of
preferred  and $1.4 billion of common  equity to finance its  acquisitions.  The
Company's debt as a percentage of shareholders'  equity was 3.6% at December 31,
1997, 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.  The Company  targets a 40% leverage ratio;
debt and preferred stock as a percentage of total shareholders' equity.

     DEVELOPMENT  JOINT  VENTURE:  In April  1997,  the  Company  formed a joint
venture  partnership  with  an  unaffiliated   partner  to  participate  in  the
development  of  approximately  $220  million  of  self-storage  facilities.  At
December  31,  1997,  the joint  venture  had  completed  construction  on seven
self-storage  facilities with a total cost of approximately  $40.8 million,  and
had 17 facilities under  construction with an aggregate cost incurred to date of
approximately  $48.9 million and total additional  estimated cost to complete of
$29.3 million.  The venture is funded solely with equity  capital  consisting of
30%  from the  Company  and 70% from the  institutional  investor.  The  Company
accounts for its investment in the joint venture using the equity method.

     COMMERCIAL  PROPERTIES:   As  indicated  above,  in  January  1998,  PSBP's
predecessor  entered  into an  agreement  to issue up to $155  million of common
stock to a group of  institutional  investors.  In January 1998,  $50 million of
this common  stock was issued.  The  remaining  $105  million is to be issued as
funds are required to purchase commercial properties.

INVESTMENTS IN REAL ESTATE FACILITIES
-------------------------------------
     The  Company  has  invested   directly  and   indirectly  in   self-storage
facilities,  and to a much  smaller  extent in  existing  commercial  properties
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 self-storage
facilities  and/or  commercial  properties  and (iii) the  acquisition of common
stock  of  other  REITs  owning   self-storage   facilities   and/or  commercial
properties.  The following  table outlines the Company's  ownership  interest in
self-storage facilities and commercial properties:
<TABLE>
<CAPTION>
                                                                    At December 31, 1997
                                            ---------------------------------------------------------------------
                                                                                       Net Rentable Square Feet
                                            Number of Real Estate Facilities                (in thousands)
                                            --------------------------------       ------------------------------
                                            Self-storage         Commercial        Self-storage        Commercial
                                            ------------         -----------       ------------        ----------
Consolidated facilities:
<S>                                              <C>                 <C>             <C>                   <C>
  Wholly-owned                                   533                 12              32,635                652
  Joint Venture and other                        361                 49              20,936              6,035
                                            ------------         -----------       ------------        ----------
                                                 894                 61              53,571              6,687
                                            ------------         -----------       ------------        ----------
Unconsolidated facilities:
  Institutional partnerships                      59                  -               3,679                  -
  Foreign partnerships                            36                  -               2,080                  -
  Other partnerships                              57                  -               3,054                  -
  Development joint venture                        7                  -                 412                  -
  REITs                                           20                  2               1,228                191
                                            ------------         -----------       ------------        ----------
                                                 179                  2              10,453                191
                                            ------------         -----------       ------------        ----------
     Totals                                    1,073                 63              64,024              6,878
                                            ============         ===========       ============        ==========
</TABLE>
                                       7
<PAGE>


     WHOLLY-OWNED  FACILITIES:  As of December 31, 1997, the Company had a total
of  545  wholly-owned  real  estate  facilities  compared  to  450  wholly-owned
facilities  at December  31, 1996.  The  increase in the number of  wholly-owned
facilities was primarily due to the merger of affiliated REITs into the Company.
(See Note 3 to the Company's consolidated financial statements.)

     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").  At December 31, 1996, the PSP Partnerships
had 29 real estate facilities which were  wholly-owned by the  partnerships.  In
January 1997,  the Joint Ventures  contributed 11 commercial  facilities and the
PSP   Partnerships   contributed  3  commercial   facilities  to  the  Operating
Partnership.  At December 31, 1997 the Joint  Ventures and the PSP  Partnerships
had a total of 200 and 26 self-storage facilities, respectively. 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 controlling
interest in each of the PSP Partnerships.  Accordingly, the Company consolidates
the assets,  liabilities,  and results of operations of these eight partnerships
in the Company's financial statements.

     At December 31, 1997, the private REIT and the Operating  Partnership owned
49 properties located in 10 states.  The Operating  Partnership also managed the
commercial  properties  owned by the  Company  and  affiliated  entities.  As of
December 31, 1997, the Company owned approximately 53% of the private REIT which
owned  approximately  19% of  the  Operating  Partnership.  The  balance  of the
Operating  Partnership  is  primarily  owned  by the  Company  and  partnerships
controlled by the Company.

     The Company also has significant ownership interests in and control both as
limited partner and general partner of 25 other limited  partnerships  which own
in  aggregate  135  self-storage  facilities.  The  accounts of these 25 limited
partnerships  are  also  included  in  the  Company's   consolidated   financial
statements.

UNCONSOLIDATED REAL ESTATE ENTITIES
-----------------------------------
     At December 31,  1997,  the Company had  ownership  interests in 29 limited
partnerships   (consisting  of  5  institutional   partnerships  that  owned  59
properties, 14 partnerships with foreign investors that owned 36 properties, and
ten other  partnerships  that owned 64  properties)  and two REITs that owned 22
properties (collectively the "Unconsolidated Entities"). The Company's ownership
interest  in these  entities  is less than  50%.  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 and
accounts for such investments using the equity method.

     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.
                                       8
<PAGE>

     DEVELOPMENT  JOINT  VENTURE:  In April  1997,  the  Company  formed a joint
venture  partnership  with  an  unaffiliated   partner  to  participate  in  the
development  of  approximately  $220  million of  self-storage  facilities.  The
venture is funded solely with equity capital  consisting of 30% from the Company
and 70% from the institutional investor.

     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.

     REIT  INVESTMENTS:  The  Company  owns  shares of common  stock in PSBP and
Public Storage  Properties XX, Inc. (See "Proposed  Merger with Affiliated REIT"
below).

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.

BORROWINGS
----------
     The Company has an unsecured $150 million  credit  facility with a group of
commercial  banks which  expires on July 31, 2001.  The  expiration  date may be
extended by one year on each  anniversary of the credit  agreement.  Interest on
outstanding  borrowings on the credit facility 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 0.40% to LIBOR plus 1.10%  depending on the  Company's  coverage
ratios,  as  defined.  In  addition,  the Company is required to pay a quarterly
commitment  fee of 0.250%  (per  annum) of the unused  portion of the  revolving
credit  facility.  The credit  facility also  includes a bid feature,  for up to
$50 million,  which allows  the Company, at  its option, to request the group of
banks to propose the  interest  rate they would  charge on specific  borrowings.
However,  in no case may the  interest  rate  bid be  greater  than  the  amount
provided by the credit agreement.

     Under  covenants  of the credit  facility,  the  Company is required to (i)
maintain a balance sheet  leverage ratio (as defined) of less than 0.40 to 1.00,
(ii) maintain net income of not less than $1.00 for each fiscal  quarter,  (iii)
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) maintain a minimum total
shareholders'  equity (as defined).  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 than three
times the  Company's  unsecured  recourse  debt) or sell  assets.  There were no
borrowings outstanding under the credit facility at March 27, 1997.

     As of December 31, 1997, the Company had outstanding  note payable balances
of  approximately  $96.6  million  and   $7  million  outstanding  on the credit
facility,  See  Notes 6 and 7 to the  consolidated  financial  statements  for a
summary of the Company's borrowings at December 31, 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.

                                       9
<PAGE>
     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,  1997,  the Debt Ratio was  approximately  3.1%.  "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 self-storage facilities. 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 re-insurance.

     A subsidiary of the Company,  sells locks and boxes and rents trucks to the
general  public and tenants to be used in securing their spaces and moving their
goods.  The Company  believes that the  availability of locks and boxes for sale
and the  rental of trucks  promotes  the rental of  spaces.  The  balance of the
equity of this subsidiary, representing all of the voting stock, is owned by the
Hughes Family.

EMPLOYEES
---------
     There are approximately  3,800 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.

 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.

IMPACT OF YEAR 2000
-------------------
     The Company has completed an initial  assessment  of its computer  systems.
The majority of the computer  programs were  installed or upgraded over the past
few years  and are Year 2000  compliant.  Some of the  older  computer  programs
utilized by the Company  were  written  without  regard for Year 2000 issues and
could cause a system  failure or  miscalculations  with  possible  disruption of
operations. Each of these computer programs and systems has been evaluated to be
upgraded or replaced as part of the Company's Year 2000 project.

     The cost of the Year 2000 project  will be  allocated to all entities  that
use the Company  computer  systems.  The cost of the Year 2000 project  which is
expected to be allocated to the Company is approximately $2.8 million.  The cost
of the new software will be capitalized and the cost of the software maintenance
will be expensed as incurred.
                                       10
<PAGE>

     The project is expected to be completed by March 31, 1999 which is prior to
any  anticipated  impact on operating  systems.  The Company  believes that with
modifications to existing software and, in some instances, the conversion to new
software,  the Year 2000 issue will not pose significant  operational  problems.
However,  if such  modifications are not made, or are not completed timely,  the
Year 2000 issue could have a material impact on the operations of the Company.

     The costs of the project and the date on which the Company believes it will
complete the Year 2000  modifications  are based on management's best estimates,
which were derived utilizing numerous assumptions of future events. There can be
no guarantee  that these  estimates  will be achieved and actual  results  could
differ materially from those anticipated.

PROPOSED MERGER WITH AFFILIATED REIT
------------------------------------
     In February 1998,  Public Storage  Properties  XX, Inc.  ("Properties  20")
agreed,  subject to  certain  conditions,  to merge  with and into the  Company.
Properties  20 is an  affiliated  publicly  traded  equity  REIT.  The merger is
conditioned  on approval by the  shareholders  of Properties 20. At December 31,
1997, the Company owned  approximately 24% of Properties 20. The Company expects
that,  if  approved  by the  Properties  20  shareholders,  the merger  would be
completed in the second quarter of 1998.

     The  estimated  value of the  Properties 20 merger is  approximately  $23.3
million.  Properties 20 has 860,734 outstanding shares of common stock series A,
90,859  outstanding  shares of common  stock  series B, and 257,432  outstanding
shares of common stock series C. The Company owns 13,700  shares of common stock
series A, 72,687  shares of common stock series B, and 205,946  shares of common
stock series C of Properties 20. Upon completion of the merger, each outstanding
share of common stock series A of  Properties  20 (other than shares held by the
Company) would be converted,  at the election of the  shareholders of Properties
20, into either  shares of the  Company's  common  stock with a market  value of
$22.57 or, with respect to up to 20% of the Properties 20 common stock series A,
$22.57 in cash.  In addition,  each share of Properties 20 series B and C (other
than shares held by the  Company)  will be  converted  into the right to receive
$10.90  in  the  Company's  common  stock,  plus  the  estimated  required  REIT
distributions  attributable  to Properties 20 common stock series B of $0.93 per
share.  The shares of  Properties  20 common stock series A, B and C held by the
Company  will be  canceled  in the  merger.  Properties  20 owns 7  self-storage
facilities (approximately 402,000 square feet) located in five states.



                                       11
<PAGE>
ITEM 2.   PROPERTIES
          ----------
     At  December  31,  1997,  the  Company had direct  ownership  interests  or
partnership  interests  in 1,136  properties  located  in 38 states  (the  1,073
self-storage facilities are located in 37 states):
<TABLE>
<CAPTION>
                                                                At December 31, 1997
                                            ---------------------------------------------------------------
                                                                                  Net Rentable Square Feet
                                                 Number of Facilities                  (in thousands)
                                            -----------------------------      ----------------------------
                                            Self-storage       Commercial      Self-storage      Commercial
                                            ------------       ----------      ------------      ----------
California:
<S>                                                 <C>                 <C>           <C>              <C>
  Northern                                          129                 8             7,172            891
  Southern                                          149                23             9,443          3,083
Texas                                               122                 8             8,029            843
Florida                                              98                 -             5,705              -
Illinois                                             65                 -             4,074              -
Colorado                                             37                 -             2,329              -
Washington                                           36                 1             2,226             28
Georgia                                              36                 -             1,957              -
Virginia                                             33                 8             2,040            712
New Jersey                                           35                 -             2,018              -
Maryland                                             32                 3             1,802            419
New York                                             29                 -             1,692              -
Ohio                                                 27                 -             1,650              -
Oregon                                               25                 2             1,171            102
Nevada                                               22                 -             1,409              -
Pennsylvania                                         18                 -             1,224              -
Missouri                                             18                 -               954              -
Other states (22 states)                            162                10             9,129            800
                                            ------------       ----------      ------------      ----------
     Totals                                       1,073                63            64,024          6,878
                                            ============       ==========      ============      ==========
</TABLE>

     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, 1997, the weighted average
occupancy  level and the  weighted  average  annual  realized  rent per rentable
square foot for the Company's  self-storage  facilities were approximately 91.2%
and $9.24,  respectively,  and for the commercial properties approximately 95.3%
and $9.12, respectively.

     None of the Company's  facilities involve 1% or more of the Company's total
assets,  gross  revenues  or net  income,  other  than one  commercial  property
purchased in 1997 which comprises 1.6% of total assets.

     SELF-STORAGE FACILITIES:  Self-storage facilities,  which comprise the vast
majority  of the  Company's  investments  (approximately  89%  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
self-storage  facilities  also  include  rentable  uncovered  parking  areas for
vehicle storage.  Leases for self-storage facilities 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  self-storage  facilities are operated under
the "Public Storage" name.

     Users of space in  self-storage  facilities  include both  individuals  and
large and small businesses. Individuals usually employ this space for storage of
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.

     Self-storage facilities 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.

                                       12
<PAGE>

     The Company experiences minor seasonal fluctuations in the occupancy levels
of  self-storage  facilities  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  self-storage  facilities  are  geographically  diversified,
located primarily in or near major metropolitan markets in 37 states.  Generally
the Company's self-storage facilities 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 self-storage facilities,  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
self-storage   facility   interests  have  generally  shown  a  high  degree  of
consistency in generating cash flows, despite changing economic conditions.  The
Company   believes   that   its   self-storage    facilities   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.

     COMMERCIAL PROPERTIES:  The Company may invest in all types of real estate.
Most of the Company's  non-self-storage  facilities investments are interests in
business parks and low-rise  office  buildings,  primarily  through PSBP and the
Operating  Partnership.  A commercial  property 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 commercial property 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 commercial  property is
not expected to be significant.


     PORTABLE SELF-STORAGE  FACILITIES:  At December 31, 1997, PSPUD operated 49
facilities;  17 in  California,  8 in Texas,  4 in Florida,  3 in Georgia,  3 in
Illinois and the remaining 14 facilities are located in 11 other states.  Of the
49 facilities  opened as of December 31, 1997, 32 facilities  had been opened in
excess of seven months. The capacity of these 32 facilities ranges from 1,600 to
3,500 containers (averaging 2,140), and as of December 31, 1997 these facilities
had  occupancy  levels  ranging  from  17%  to  97%  (averaging  43%).  As  with
mini-warehouses,   PSPUD  believes  that  the  portable   self-storage  business
experiences  some seasonal  fluctuations  in occupancy  levels with  occupancies
generally  higher in the summer months than the winter months.  Currently all of
the PSPUD  facilities  are  operated  in  buildings  which are leased from third
parties.

     ENVIRONMENTAL  MATTERS:  The  Company's  current  practice  is  to  conduct
environmental  investigations  in connection  with property  acquisitions.  As a
result of  environmental  investigations  of its properties,  which commenced in
1995, the Company 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. The Company believes that amounts accrued in 1995 are
still sufficient to satisfy anticipated costs and therefore no additional amount
has been accrued in 1997.


                                       13
<PAGE>
ITEM 3.   LEGAL PROCEEDINGS
          -----------------
     Anderson v. Public  Storage,  Inc.,  San  Francisco  Superior  Court
     ----------------------------------
     (filed September 19, 1997)

     Grant v. Public  Storage,  Inc., San Diego Superior Court
     --------------------------------
     (filed October 6, 1997)

     Wren v. Public Storage,  Inc., San Francisco  Superior Court
     ------------------------------
     (filed October 16, 1997)

     Each of the  plaintiffs  in these cases is suing the Company on behalf of a
purported class of California tenants who rented storage spaces from the Company
and  contends  that the  Company's  fees  for late  payments  under  its  rental
agreements for storage space constitutes  unlawful  "penalties" under California
law. None of the plaintiffs has assigned any dollar amount to the claims.

     The lower court has  dismissed  one of the cases and the  plaintiff in that
case is in the process of appealing that dismissal.  The plaintiffs in the other
two cases have  voluntarily  dismissed  their cases,  reserving  their rights to
refile their cases.  The Company is continuing to vigorously  contest the claims
in all three cases.

     There are no other material  proceedings pending against the Company or any
of its subsidiaries.


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
          ----------------------------------------------------
     The Company held an annual  meeting of  shareholders  on November 11, 1997.
Proxies for the annual  meeting were  solicited  pursuant to Regulation 14 under
the Securities  Exchange Act of 1934. The annual meeting  involved the following
matter:

         ELECTION OF DIRECTORS


                                       Number of Shares of Common Stock
                                       --------------------------------
               Name                      Voted For           Withheld
------------------------------           ---------           --------
B. Wayne Hughes                          85,978,118          339,068
Harvey Lenkin                            85,986,674          330,512
Robert J. Abernethy                      85,988,386          328,800
Dann V. Angeloff                         85,972,054          345,132
William C. Baker                         85,984,923          332,263
Uri P. Harkham                           85,973,217          343,969


                                       14
<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 and on the Pacific Exchange since December 26, 1996.

          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
-------------       ------------        ------------         ----------
  1996                  1st               $21-7/8              $18-7/8
                        2nd                21-1/2               19-3/8
                        3rd                22-5/8               19-7/8
                        4th                31-3/8               22-1/4

  1997                  1st                30-7/8               26-1/2
                        2nd                29-1/4               25-7/8
                        3rd                30-7/8                27
                        4th                30-5/8               26-1/8

          As of March 2, 1998, there were approximately 23,716 holders of record
     of the Common Stock.

     b. Class B Common Stock

          The Class B Common Stock issued in connection with the PSMI Merger (as
     defined under Item 7 below) 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  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").

                                       15
<PAGE>

               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 $1.85 for the year ended December 31, 1997.

                  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 1997 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, $0.88 and $0.88 for 1997, 1996 and 1995,  respectively and
               in each case represents ordinary income.


     c. Equity Stock

                  The  Company  is  authorized  to issue  200,000,000  shares of
               Equity  Stock.  The  Articles of  Incorporation  provide that the
               Equity  Stock  may be  issued  from  time  to time in one or more
               series and gives the Board of  Directors  broad  authority to fix
               the  dividend  and  distribution  rights,  conversion  and voting
               rights,  redemption  provisions  and  liquidation  rights of each
               series of Equity Stock.

                  In June 1997,  the Company  contributed  $22,500,000  (225,000
               shares)  of its  Equity  Stock,  Series A  ("Equity  Stock") to a
               partnership  in which the  Company is the general  partner.  As a
               result of this  contribution,  the Company obtained a controlling
               interest in the Partnership and began to consolidate the accounts
               of the  Partnership.  The  Equity  Stock  ranks on a parity  with
               Common  Stock  and  junior  to the  Company's  Cumulative  Senior
               Preferred Stock and  Convertible  Preferred Stock with respect to
               general  preference  rights and has a  liquidation  amount of ten
               times the  amount  paid to each  Common  Share up to a maximum of
               $100 per share.  Quarterly  distributions per share on the Equity
               Stock are equal to the lesser of (i) 10 times the amount paid per
               Common Stock or (ii) $2.20.


     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 1997,  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  1997,  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 1997,  the Company paid  dividends
               totaling $2,213,000 ($1.844 per preferred share).


                                     16
<PAGE>

                  On September 1, 1994, the Company  completed a public offering
               of  1,200,000  shares  ($25  stated  value  per  share)  of 9.50%
               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 1997,  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 1997,  the Company paid  dividends
               totaling $5,488,000 ($2.50 per preferred share).

                  On May 3, 1995,  the Company  completed  a public  offering of
               2,300,000 shares ($25 stated value per share) of 9.75% 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  1997,  the  Company  paid  dividends  totaling
               $5,606,000 ($2.437 per preferred share).

                  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  1997,  the  Company  paid  dividends  totaling
               $15,309,000 ($2.219 per preferred depositary share).

                  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.  During  1997,  the  Company  paid  dividends  totaling
               $14,259,000 ($2.112 per preferred share).

                  On November 1, 1996, the Company  completed a public  offering
               of 4,000,000  depositary  shares each  representing  1/1,000 of a
               share of 8-5/8% Cumulative  Preferred Stock,  Series I ("Series I
               Preferred  Stock")($25  stated value per depositary  share).  The
               Series I Preferred Stock has general  preference  rights over the
               Common  Stock  with  respect  to  distributions  and  liquidation
               proceeds.  During  1997,  the  Company  paid  dividends  totaling
               $8,625,000 ($2.156 per preferred share).

                  On August 25, 1997, the Company completed a public offering of
               6,000,000  depositary shares each representing 1/1,000 of a share
               of 8% Cumulative  Preferred Stock,  Series J ("Series J Preferred
               Stock")($25  stated  value per  depositary  share).  The Series J
               Preferred  Stock has  general  preference  rights over the Common
               Stock with respect to  distributions  and  liquidation  proceeds.
               During  1997,  the Company  paid  dividends  totaling  $4,133,000
               ($0.689  per  preferred  share,  pro rated from  August 25,  1997
               through  December 31, 1997,  the period during which the Series J
               Preferred Stock was outstanding).

                  The Series A,  Series B,  Series C, Series D, Series E, Series
               F, Series G, Series H, Series I and Series J Preferred  Stock are
               collectively 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
               1997 the Company paid dividends  totaling  $4,531,000 ($2.062 per
               preferred share).

                  In April 1996, the Company issued $58,955,000  (58,955 shares)
               of its  Convertible  Preferred  Stock,  Series CC (the "Series CC
               Preferred  Stock") to an  unaffiliated  investor  to acquire  the
               investor's  limited  partnership  interest in an affiliated  real
               estate  partnership.  In June 1997, the Series CC Preferred Stock
               was exchanged into 2,184,250 shares of common stock.

                                       17


<PAGE>
ITEM 6.   SELECTED FINANCIAL DATA
          ------------------------
<TABLE>
<CAPTION>
                                                                   For the year ended December 31,
                                                 ----------------------------------------------------------------------
                                                  1997 (1)       1996 (1)       1995 (1)         1994           1993
                                                 --------        --------      ---------        --------       --------
                                                                (In thousands, except per share data)
Revenues:
<S>                                              <C>             <C>            <C>            <C>            <C>
  Rental income                                  $434,008        $294,426       $202,134       $141,845       $109,203
  Equity in earnings of real estate entities       17,569          22,121          3,763            764            563
  Facility management fees                         10,141          14,428          2,144              -              -
  Interest and other income                         9,126           7,976          4,509          4,587          4,914
                                                 --------        --------      ---------        --------       --------
                                                  470,844         338,951        212,550        147,196        114,680
                                                 --------        --------      ---------        --------       --------
Expenses:
  Cost of operations                              174,186          94,491         72,247         52,816         42,116
  Cost of facility management                       1,793           2,575            352              -              -
  Depreciation and amortization                    91,356          64,967         40,760         28,274         24,998
  General and administrative                        6,384           5,524          3,982          2,631          2,541
  Interest expense                                  6,792           8,482          8,508          6,893          6,079
  Environmental cost                                    -               -          2,741              -              -
  Advisory fee                                          -               -          6,437          4,983          3,619
                                                 --------        --------      ---------        --------       --------
                                                  280,511         176,039        135,027         95,597         79,353
                                                 --------        --------      ---------        --------       --------
Income before minority interest                   190,333         162,912         77,523         51,599         35,327
Minority interest in income                       (11,684)         (9,363)        (7,137)        (9,481)        (7,291)
                                                 --------        --------      ---------        --------       --------
Net income                                       $178,649        $153,549      $  70,386        $42,118        $28,036
                                                 ========        ========      =========        ========       ========
------------------------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE (2):
---------------------
  Distributions                                     $0.88           $0.88          $0.88          $0.85          $0.84

  Net income - Basic                                $0.92           $1.10          $0.96          $1.05          $0.98
  Net income - Diluted                              $0.91           $1.10          $0.95          $1.05          $0.98

  Weighted average common shares - Basic           98,446          77,117         41,039         23,978         17,483
  Weighted average common shares - Diluted         98,961          77,358         41,171         24,077         17,558
------------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
------------------
Total assets                                   $3,311,645      $2,572,152     $1,937,461       $820,309      $ 666,133
Total debt                                     $  103,558      $  108,443     $  158,052       $ 77,235      $  84,076
Minority interest                              $  288,479      $  116,805     $  112,373       $141,227      $ 193,712
Shareholders' equity                           $2,848,960      $2,305,437     $1,634,503       $587,786       $376,066
------------------------------------------------------------------------------------------------------------------------------------
OTHER DATA:
-----------
Net cash provided by operating activities      $  293,163      $  245,329     $  123,579     $   79,180     $   59,477
Net cash used in investing activities          $ (408,313)     $ (479,626)    $ (248,672)    $ (169,590)    $ (137,429)
Net cash provided by financing activities      $  129,749      $  180,717     $  185,378     $  100,029     $   80,100
Funds from operations (3)                      $  272,234      $  224,476     $  105,199     $   56,143     $   35,830

</TABLE>

(1)  During  1997,  1996 and  1995 the  Company  completed  several  significant
     business  combinations and equity  transactions.  See Notes 3 and 10 to the
     Company's consolidated financial statements.

(2)  The net  income  per share  amounts  prior to 1997 have  been  restated  as
     required to comply with  Statement of Financial  Accounting  Standards  No.
     128, Earnings Per Share. For further discussion of net income per share and
     the impact of Statement No. 128, see Note 2 to the  Company's  consolidated
     financial statements.

(3)  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.
                                       18

<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:  The self-storage  industry is highly  fragmented and is composed
predominantly  of numerous  local and  regional  operators.  Competition  in the
markets in which the Company  operates is  significant  and is  increasing  from
additional  development  of  self-storage  facilities  in many markets which may
negatively   impact   occupancy   levels  and  rental  rates  at  the  Company's
self-storage  facilities.  However,  the Company  believes it possesses  several
distinguishing characteristics which enable it to compete effectively with other
owners and operators.

     The Company  believes it is the largest owner and operator of  self-storage
facilities in the United States with ownership  interests in 1,073  self-storage
facilities containing  approximately 64 million net rentable square feet. All of
the Company's  facilities  are operated  under the "Public  Storage" brand name,
which the Company  believes is the most recognized and  established  name in the
self-storage  industry.  Located in the major metropolitan markets of 37 states,
the Company's  self-storage  facilities are  geographically  diverse,  giving it
national recognition and prominence.  This concentration establishes the Company
as one of the  dominant  providers  of  storage  space  in each  market  that it
operates in and enables it to use a variety of promotional  activities,  such as
television and radio advertising as well as targeted  discounting and referrals,
which are generally not economically  viable for its  competitors.  In addition,
the Company  believes that  geographic  diversity of the  portfolio  reduces the
impact from regional economic downturns and provides a greater degree of revenue
stability.

     In  an  effort  to  attract  a  wider  variety  of  customers,  to  further
differentiate  the Company from its  competition  and to generate new sources of
revenue,  additional  products  are  being  offered  to  enhance  the  Company's
self-storage business. In late 1996, the Company organized Public Storage Pickup
and Delivery,  Inc. as a separate  corporation  and a related  partnership  (the
corporation and partnership are collectively  referred to as "PSPUD") to operate
a portable  self-storage business that rents storage containers to customers for
storage in central warehouses. The concept of PSPUD is to provide an alternative
to a traditional  self-storage  facility wherein customers transport their goods
to the  facility  and rent a space to store their  goods.  PSPUD will  deliver a
storage  container(s)  to the  customer's  location  where the customer,  at his
convenience, packs his goods into the storage container. PSPUD will subsequently
return to the  customer's  location to retrieve  the  storage  container(s)  for
storage in a central warehouse. PSPUD is not intended to replace the traditional
self-storage  facility  but is designed  to  complement  and provide  additional
services to the customers not offered at the self-storage facilities.

     During 1997,  PSPUD opened 45 facilities,  which  combined with  facilities
opened as of the beginning of the year brought the total number of facilities to
49. The  facilities are located in 24 greater  metropolitan  areas in 16 states.
Averaging  approximately  2,000  containers  per facility,  a facility  provides
approximately  70,000 net rentable  square feet which is slightly  larger than a
average self-storage  facility which contains  approximately 65,000 net rentable
square feet. Currently, all of the PSPUD facilities operate in facilities leased
from third parties which has provided the Company with an efficient and flexible
means of expanding rapidly into markets.

     At December 31, 1997, the PSPUD facilities in aggregate had 36,000 occupied
containers,  representing  approximately  1,256,000  square  feet.  The  Company
believes, that to some extent, the portable self-storage business may negatively
impact  the  occupancy  levels of  self-storage  facilities  located in the same
markets.  However, the Company's average self-storage  occupancy level is higher
than at any comparable  period in prior years,  despite the promotion and rental
activity of the portable  self-storage  business in the same markets. In the Los
Angeles,  California  market,  for  example,  where the Company  has  operated a
consistent pool of 138 self-storage  facilities since 1993, the occupancy levels
of these  facilities  increased from 87.8% (7.3 million occupied square feet) at
January  31, 1997 to 93.1% (7.7  million  occupied  square  feet) at January 31,
1998,  representing an increase of approximately 5.3%. During the same period of
time,  the newly opened PSPUD  facilities  in the Los Angeles  market  increased
their  aggregate  occupied  containers  from 957 (33,495 square feet) at January
1997 to 8,830 (309,050 square feet) at January 1998.  Accordingly,  in aggregate
(self-storage  and portable  self-storage  combined),  occupied  square  footage
increased  from 7.3  million at January  31,  1997 to 8.0 million at January 31,
1998, representing an increase of approximately 700,000 square feet. The Company
is seeking to  replicate  this  performance  in other major  markets in which it
operates.  However,  there  can  be  no  assurance  that  the  Company  will  be
successful.
                                       19
<PAGE>

     Due to the start-up  nature of the new business  venture,  PSPUD  generated
operating losses which materially impacted the Company's earnings in 1997 and is
expected to continue to generate  losses  during  1998.  The  Company,  however,
continues  to  believe  that it  should  invest in PSPUD,  which  responds  to a
promising  business  opportunity in at least certain markets and complements the
Company's  existing  self-storage  operations  through  joint use of a  national
telephone  reservation  system  and  a  coordinated  media  advertising  program
designed to increase consumer  awareness and rental activity of both traditional
self-storage facilities and portable self-storage.

     One of the keys to the successful  operation of  self-storage  and portable
self-storage  businesses has been and will continue to be the national telephone
reservation system. Commencing in early 1996, the Company implemented a national
telephone  reservation  system  designed  to  provide  added  customer  service.
Customers  calling either the Company's  toll-free  telephone  referral  system,
(800)  44-STORE,  or a  self-storage  facility  are  directed  to  the  national
reservation  system where a  representative  discusses  with the customer  space
requirements,  price and location  preferences  and also informs the customer of
other products and services  provided by the Company and its  subsidiaries.  The
national telephone  reservation system was not fully operational for most of the
Company's  facilities  until the  latter  part of the  fourth  quarter  of 1996.
Currently,  the national  telephone  reservation  system receives  approximately
160,000 calls per month and has approximately 200  representatives.  The Company
believes  that the  national  telephone  reservation  system  permits  effective
marketing for both  self-storage  and portable  self-storage  facilities  and is
primarily  responsible for increasing occupancy levels and realized rental rates
experienced  at the  self-storage  facilities  during 1997  compared to the same
period in the prior year.

     The Company will continue to focus its growth  strategies on: (i) improving
the  operating  performance  of  its  existing  portfolio  of  properties,  (ii)
increasing its ownership of  self-storage  facilities  through  acquisitions  of
facilities owned by affiliates or third party owners,  (iii)  development of new
self-storage  facilities,  (iv)  expansion and  improvement of the operations of
PSPUD,  and (v) to a limited extent , through its existing  ownership  interest,
will  participate in the growth of PS Business  Parks,  Inc., a publicly  traded
real  estate  investment  trust  focusing  on the  ownership  and  operation  of
commercial properties.

     The Company  seeks to increase the  operating  performance  of its existing
portfolio of  properties  by (i)  increasing  average  occupancy  rates and (ii)
achieving  higher levels of realized monthly rents per occupied square foot. The
Company  believes that its property  management  personnel and systems  combined
with the national  telephone  reservation  system and  marketing  programs  will
enhance the Company's ability to meet these goals.

     In addition to 533 wholly owned self-storage  facilities,  the Company also
operates,  on behalf of approximately 64 ownership entities in which the Company
has a partial equity  interest,  540  self-storage  facilities under the "Public
Storage"  name.  From time to time,  some of these  self-storage  facilities  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  self-storage
facilities 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.  During
1996 and 1997,  the Company  acquired 100 and 99  self-storage  facilities  from
affiliated entities in connection with mergers,  respectively, and increased its
ownership interest in 54 and 69 self-storage  facilities by acquiring additional
interests   in   affiliated   partnerships   owning   self-storage   facilities,
respectively.  During 1996 and 1997, the Company  acquired 47 and 4 self-storage
facilities from third parties,  respectively.  Similar to 1997, the Company does
not expect third party acquisitions to be significant during fiscal 1998, unless
attractive investment opportunities are available.

     Since  1995,  the  Company  has  developed  and  opened  a total  of  seven
self-storage facilities, one in 1995, four in 1996, and two in 1997. At December
31, 1997, four self-storage  facilities and ten portable self-storage facilities
were under construction.  Since April 1997, the Company's  development  activity
with respect to the self-storage  facilities,  has been  concentrated in a joint
venture  partnership  between the Company and a major state pension plan.  Under
the joint venture  arrangement,  the state pension plan  contributes  70% of the
equity with the  remaining  30% of the equity  being  provided by the Company to
finance  development.  There  is no debt  included  in the  partnership  and the
Company,  after a specified  period of time,  has an option to acquire the state
pension plan's interest in the partnership. Due to the Company's non-controlling
ownership  interest,  the joint venture  partnership is not  consolidated in the
Company's  financial  statements.  The  partnership is expected to develop up to
$220 million of properties  (approximately  50  facilities)  with expected store
openings through  mid-1999.  During 1997, the joint venture developed and opened
seven  self-storage  facilities  (approximately  412,000 square feet) and had 17
facilities under development (approximately 1,169,000 square feet).

     The  feasibility  of  developing   additional   self-storage  and  portable
self-storage  facilities is ongoing.  The focus is on selected  markets in which
there are few, if any,  facilities to acquire at attractive prices and where the
                                       20
<PAGE>

scarcity  of  other  undeveloped   parcels  of  land  or  other  impediments  to
development make it difficult to construct additional competing facilities.

     In January and  February  1998,  PSPUD opened five  additional  facilities.
PSPUD  is  currently  developing  ten  facilities  and has  also  identified  an
additional  five sites for  development  which  collectively  have an  aggregate
estimated  cost of $67.5  million.  All such  facilities are located in existing
markets in which PSPUD currently operates.

     On  January  2, 1997,  the  Company  reorganized  its  commercial  property
operations into a separate private REIT. The private REIT contributed its assets
to a newly  created  operating  partnership  (the  "Operating  Partnership")  in
exchange for a general partnership  interest and limited partnership  interests.
The  Company  and certain  partnerships  in which the Company has a  controlling
interest contributed  substantially all of their commercial properties to either
the Operating  Partnership in exchange for limited  partnership  interests or to
the private REIT in exchange for common  stock.  The Company  believes  that the
concentration of all the commercial properties and the property manager into one
entity will  create a vehicle  which  should  facilitate  future  growth in this
segment  of the real  estate  industry.  The  Company  will  participate  in the
entity's growth through the Company's ownership interest.

     In 1997, the private REIT and Operating Partnership acquired ten commercial
properties from third parties.  The aggregate purchase price of these facilities
consisted  of cash,  common  stock of the private  REIT and limited  partnership
interests of the Operating Partnership.

     At December 31, 1997, the private REIT and the Operating  Partnership owned
49 properties located in 10 states.  The Operating  Partnership also managed the
commercial  properties  owned by the  Company  and  affiliated  entities.  As of
December 31, 1997, the Company owned approximately 53% of the private REIT which
owned  approximately  19% of  the  Operating  Partnership.  The  balance  of the
Operating  Partnership  is  primarily  owned  by the  Company  and  partnerships
controlled by the Company.


     On January 21, 1998,  the private  REIT  entered  into an agreement  with a
group of unaffiliated  institutional investors under which up to $155,000,000 in
common  stock would be issued.  $50,000,000  of this common  stock was issued on
January  21,  1998,  with the  remainder  to be issued as funds are  required to
purchase commercial properties.

     On March 17, 1998, the private REIT merged into Public  Storage  Properties
XI, Inc., a publicly  traded REIT and an affiliate of the Company,  and the name
of the surviving corporation was changed to PS Business Parks, Inc. ("PSBP"). In
connection  with the merger,  PSBP exchanged 13  self-storage  facilities for 11
commercial  properties owned by the Company. Upon completion of the merger, PSBP
and the Operating Partnership owned 64 commercial properties  (approximately 7.3
million square feet), and managed the commercial properties owned by the Company
and  affiliated  partnerships.  Upon  completion of the merger,  the Company and
partnerships  controlled by the Company owned  approximately 58% of PSBP and the
Operating Partnership on a combined basis.

     Due to the  Company's  controlling  ownership  interest  in  PSBP  and  the
Operating Partnership,  the Company included the operations of these entities in
the  Company's  consolidated  financial  statements  as of  December  31,  1997.
However,  as a result of the March 17,  1998 merger and the  agreement  to issue
additional  shares of common  stock to the group of  unaffiliated  institutional
investors,  the  Company  believes  that its  reduced  ownership  will no longer
warrant the consolidation of these entities effective March 31, 1998.

     Since  1994,  the Company has  significantly  increased  both its asset and
capital base through the  investment in additional  real estate assets  financed
predominantly with the issuance of equity. As a result, the increased asset base
has  translated  into  significant  growth in the  Company's  overall  operating
results.  The comparative  growth in operating  results between 1997 and 1996 is
principally due to mergers with affiliated  REITs combined with  acquisitions of
additional real estate  facilities and investments in real estate entities.  The
comparative growth in operating results between 1996 and 1995 is principally due
to the impact of the  Company's  merger 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
(the "PSMI Merger").

                                       21

<PAGE>
--------------------------------------------------------------------------------
                            RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

     NET INCOME AND EARNINGS  PER COMMON  SHARE:  Net income for 1997,  1996 and
1995 was $178,649,000,  $153,549,000 and $70,386,000, respectively, representing
increases  over the prior year of 16.4% for 1997 and 118.2% for 1996. Net income
allocable to common shareholders (net income less preferred stock dividends) for
1997, 1996 and 1995 was $90,256,000, $84,950,000 and $39,262,000,  respectively,
representing increases over the prior year of 6.3% for 1997 and 116.4% for 1996.
On a diluted  basis,  net income per common  share was $0.91  (based on weighted
average  shares  outstanding  of  98,961,000)  for 1997,  $1.10 per common share
(based on weighted average shares  outstanding of 77,358,000) for 1996 and $0.95
per common share (based on weighted  average  shares  outstanding of 41,171,000)
for 1995.

     The  decrease  in net  income  per  share  for  1997  compared  to 1996 was
principally the result of losses  generated from PSPUD's  portable  self-storage
business which  generated  operating  losses  totaling  $31,665,000 or $0.32 per
common  share and the  effect of the  special  dividend,  discussed  below.  The
increase in net income per share for 1996 compared to 1995 was  principally  the
result of improved  real estate  operations,  partially  offset by the operating
losses generated by PSPUD's portable  self-storage business totaling $826,000 or
$0.01 per common share.

     Net income allocable to common shareholders and net income per common share
for the year  ended  December  31,  1997 was  negatively  impacted  by a special
dividend  totaling  $13,412,000,  paid on the  Company's  Series CC  Convertible
Preferred  Stock  ("Series CC") during the first quarter of 1997. As a result of
this special  dividend,  the Company would not have been required to pay another
dividend  with  respect to this stock  until the quarter  ended March 31,  1999.
During the second  quarter of 1997,  the Series CC stock  converted  into common
stock of the Company. Accordingly during 1997, all of the $13,412,000 ($0.14 per
common share,  on a diluted basis) of dividends were treated as an allocation of
net income to the preferred  shareholders  in determining  the allocation of net
income to the common shareholders. The special dividend eliminated the quarterly
dividend of $1.9 million (annual fixed charges of $7.6 million).

     Net  income  includes  depreciation  and  amortization  expense  (including
depreciation  included  in  equity  in  earnings  of real  estate  entities)  of
approximately  $93,585,000 ($0.95 per common share) for 1997, $70,927,000 ($0.92
per common  share) for 1996 and  $31,562,000  ($0.77 per common share) for 1995.
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).

--------------------------------------------------------------------------------
                             REAL ESTATE OPERATIONS
--------------------------------------------------------------------------------

     At December 31, 1997, the Company's  investment  portfolio consisted of (i)
its  wholly-owned  properties,  (ii)  properties  owned by real estate  entities
consolidated with the Company (the "Consolidated Entities") and (iii) properties
owned by real estate  entities 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, 1997:
<TABLE>
<CAPTION>
                                                  Number of Facilities in which the        Net Rentable Square Footage
                                                 Company has an ownership interest               (in thousands)
                                                 -------------------------------------  ------------------------------------
                                                 Self-storage  Commercial               Self-storage   Commercial
                                                 facilities    properties     Total     facilities     properties    Total
                                                 ------------  -----------  ----------  ------------   -----------  ----------
<S>                                                    <C>          <C>        <C>        <C>              <C>       <C>
Wholly-owned facilities......................          533          12         545         32,635           652       33,287
Facilities owned by Consolidated Entities....          361          49         410         20,936         6,035       26,971
                                                 ------------  -----------  ----------  ------------   -----------  ----------
    Total consolidated facilities............          894          61         955         53,571         6,687       60,258

Facilities owned by Unconsolidated Entities..          179           2         181         10,453           191       10,644
                                                 ------------  -----------  ----------  ------------   -----------  ----------

    Total facilities in which the Company has
      an ownership interest..................        1,073          63       1,136         64,024         6,878       70,902
                                                 ============  ===========  ==========  ============   ===========  ==========
</TABLE>
     SELF-STORAGE OPERATIONS:  The self-storage operations is by far the largest
component of the Company's operations,  representing  approximately 82% of total
revenues  generated  during 1997.  At the  beginning of 1994,  the Company had a
                                       22
<PAGE>
total of 368  self-storage  facilities  included in its  consolidated  financial
statements.  Since that time, the Company  through  acquisition  and development
activities  has increased the number of  self-storage  facilities by 526 (1995 -
152 facilities,  1996 - 201 facilities and 1997 - 173 facilities).  Self-storage
rental income and cost of operations presented on the consolidated statements of
income reflect the operations of all the 894  self-storage  facilities  owned by
the Company and the Consolidated  Entities.  For year to year  comparisons,  the
following table summarizes the operating results (before  depreciation) of those
facilities  owned  throughout  each of the past three  years and those  acquired
during the past three years:

          Self-storage operations:
<TABLE>
<CAPTION>
                                  Year Ended December 31,                      Year Ended December 31,
                                -------------------------                      -----------------------
                                                          Percentage                                   Percentage
                                  1997          1996        Change             1996          1995        Change
                                --------      --------    -------------     --------       --------    -----------
                                           (Dollar amounts in thousands, except rents per square foot)
Rental income:
--------------
<S>                             <C>           <C>                <C>        <C>            <C>              <C>
    Consistent group......      $162,376      $153,566           5.7%       $153,566       $147,178         4.3%
    Post 1994 acquisitions       223,164       116,863          91.0%        116,863         36,922       216.5%
                                --------      --------    -------------     --------       --------    -----------
                                 385,540       270,429          42.6%        270,429        184,100        46.9%
                                --------      --------    -------------     --------       --------    -----------
Cost of operations:
-------------------
    Consistent group......        49,392        47,317           4.4%         47,317         50,960        (7.2)%
    Post 1994 acquisitions        68,571        35,177          94.9%         35,177         12,436       182.9%
                                --------      --------    -------------     --------       --------    -----------
                                 117,963        82,494          43.0%         82,494         63,396        30.1%
                                --------      --------    -------------     --------       --------    -----------
Net operating income:
---------------------
    Consistent group......       112,984       106,249           6.3%        106,249         96,218        10.4%
    Post 1994 acquisitions       154,593        81,686          89.3%         81,686         24,486       233.6%
                                --------      --------    -------------     --------       --------    -----------
                                $267,577      $187,935          42.4%       $187,935       $120,704        55.7%
                                ========      ========    =============     ========       ========    ===========

Consistent group data:
----------------------
    Gross margin..........         69.6%          69.2%          0.4%           69.2%          65.4%        3.8%
    Weighted average
      occupancy...........         90.9%          90.3%          0.6%           90.3%          89.3%        1.0%
    Average realized annual
      rent per occupied
      square foot.........         $8.28          $7.92          4.6%           $7.92          $7.68        3.1%
    Average scheduled
      annual rent per
      square foot.........         $8.76          $8.04          9.0%           $8.04          $7.44        8.1%

Number of facilities (at
 the end of the period):
    Consistent group......           368           368              -            368            368         -
    Cumulative post 1994
      acquisitions........           526           353          49.0%            353            152       132.2%

Net rentable square feet (at the end of the period):
    Consistent group......        21,662        21,662              -         21,662         21,662         -
    Cumulative post 1994
      acquisitions........        31,909        21,755          46.7%         21,755          9,116       138.7%
</TABLE>
     For the consistent  group of facilities  owned throughout each of the three
fiscal years,  year-over-year  improvements in rental income of 5.7% in 1997 and
4.3% in 1996 are the  result of  increased  realized  rent per  square  foot and
increased  weighted average  occupancy  levels, as reflected in the table above.
The Company  believes that the  improvement in each of these areas is due to (i)
the national telephone  reservation system which was implemented during 1996 and
the first part of 1997,  (ii)  increased  rental  rates put into  effect  during
second half of 1996, and (iii) media advertising  implemented  during the second
half of 1997.

     As  indicated   above,  the  Company   implemented  a  national   telephone
reservation  system to provide added customer service.  Customers calling either
the Company's  toll-free telephone referral system,  (800) 44-STORE,  or a local
Public Storage facility, are directed to the national reservation system where a
trained representative discusses with the customer space requirements, price and
location  preferences  and also  informs  the  customer  of other  products  and
services provided by the Company and its subsidiaries.
                                       23
<PAGE>
     In the second half of 1996,  the Company  began to increase  its  scheduled
rents charged to new customers (prior to promotional  discounts) and to existing
tenants  where  warranted.  As a result,  for fiscal 1997,  scheduled  rents per
square  foot  increased  compared  to 1996.  In  connection  with  the  national
telephone   reservation  system,  the  Company  experimented  with  pricing  and
promotional  discounts  designed  to  increase  rental  activity.   Accordingly,
promotional  discounts  (which are  included  as a  reduction  to gross rents to
arrive  at rental  income)  increased  significantly  from  $303,000  in 1995 to
$4,031,000 in 1996 and $14,244,000 in 1997. Despite the increased discounts, the
Company's  facilities  experienced  increased  realized rents per square foot of
4.6% in 1997 compared to 1996 and 3.1% in 1996 compared to 1995.

     With the exception of property  management  fees, most of the  self-storage
operating costs (i.e. payroll,  property taxes,  repairs and maintenance,  etc.)
are generally fixed. As a result of becoming self-managed in connection with the
PSMI Merger,  the Company no longer incurs  property  management  fees.  Cost of
operations  for 1996 decreased  compared to 1995  principally as a result of the
elimination of property management fees for 1996. Included in cost of operations
for 1995 were  management  fees totaling  $9,421,000.  However,  offsetting  the
decrease in property  management fees in 1997 and 1996 are expenses with respect
to the national telephone reservation system totaling $3,875,000 and $1,257,000,
respectively.

     DEVELOPMENT  OF  SELF-STORAGE  FACILITIES:  Commencing in 1995, the Company
began to construct  self-storage  facilities.  Through  December  31, 1997,  the
Company  constructed  and opened for operation  seven  facilities,  one of which
began operations in August 1995 (approximately 64,000 net rentable square feet),
four in 1996  (approximately  244,000 net rentable  square feet) and two in 1997
(approximately  118,000 net rentable  square  feet).  At December 31, 1997,  the
Company had four  self-storage  facilities  (approximately  273,000 net rentable
square  feet) under  construction  with an  aggregate  cost  incurred to date of
approximately  $10.3 million and total additional  estimated cost to complete of
$14.6 million.  Generally the construction  period takes 9 to 12 months followed
by a 18 to 24 month fill-up process until the newly constructed facility reaches
a stabilized occupancy level of approximately 90%.

     In April 1997, the Company formed a joint venture  partnership with a state
pension fund to participate in the development of approximately  $220 million of
self-storage  facilities.  The Company  expects  that  substantially  all of its
development  activities will be conducted in the joint venture partnership until
the $220 million is fully  committed.  At December 31, 1997,  the joint  venture
partnership  had  completed   construction  on  seven  self-storage   facilities
(approximately   412,000  net  rentable  square  feet)  with  a  total  cost  of
approximately   $40.8  million,   and  had  17  facilities  under   construction
(approximately  1,169,000  net  rentable  square  feet) with an  aggregate  cost
incurred to date of approximately  $48.9 million and total additional  estimated
cost to complete of $29.3 million.  The partnership is funded solely with equity
capital  consisting of 30% from the Company and 70% from the state pension fund.
The Company  accounts for its  investment  in the joint venture using the equity
method.  The following  summarizes  selected  financial data of the  development
joint venture partnership:

                                                                  (in thousands)
Period from inception (April 10, 1997) to December 31, 1997
-----------------------------------------------------------
   Rental income................................................        $   952
   Total revenues...............................................        $ 1,125
   Cost of operations...........................................        $   664
   Depreciation.................................................        $   456
   Net loss.....................................................        $   (22)

At December 31, 1997
--------------------
   Construction in progress.....................................        $48,888
   Total assets.................................................        $96,076
   Total equity.................................................        $91,184


     COMMERCIAL   PROPERTY   OPERATIONS:   The  Company's   commercial  property
operations  represent  approximately  9% of the Company's  operations  (based on
total revenues  generated during 1997). The commercial  properties are generally
composed of multi-tenant office/industrial space and to a lesser extent suburban
office.  Commercial  property rental income and cost of operations  presented on
the  consolidated  statements  of  income  reflect  the  operations  of  the  61
facilities  owned by the Company and the  Consolidated  Entities.  The following
table summarizes the operating results (before depreciation) of these facilities
for each of the past three years:
                                       24
<PAGE>
COMMERCIAL PROPERTY OPERATIONS:
-------------------------------
<TABLE>
<CAPTION>
                                    Year Ended December 31,                      Year Ended December 31,
                                ---------------------------                      -----------------------
                                                          Percentage                                   Percentage
                                  1997          1996        Change             1996          1995        Change
                                --------      --------    -------------     --------       --------    -----------
                                           (Dollar amounts in thousands, except rents per square foot)
Rental income:
<S>                              <C>           <C>               <C>         <C>            <C>               <C>
    Consistent group......       $17,723       $17,117           3.5%        $17,117        $16,974           0.8%
    Post-1994 Acquisitions        22,852         6,459         253.8%          6,459          1,060         509.3%
                                --------      --------    -------------     --------       --------    -----------
                                  40,575        23,576          72.1%         23,576         18,034          30.7%
                                --------      --------    -------------     --------       --------    -----------
Cost of operations:
    Consistent group......         8,018         8,046         (0.3)%          8,046          8,326         (3.4)%
    Post-1994 Acquisitions         8,647         2,704         219.8%          2,704            525         415.0%
                                --------      --------    -------------     --------       --------    -----------
                                  16,665        10,750          55.0%         10,750          8,851          21.5%
                                --------      --------    -------------     --------       --------    -----------
Net operating income:
    Consistent group......         9,705         9,071           7.0%          9,071          8,648           4.9%
    Post-1994 Acquisitions        14,205         3,755         278.3%          3,755            535         601.9%
                                --------      --------    -------------     --------       --------    -----------
                                 $23,910       $12,826          86.4%        $12,826        $ 9,183          39.7%
                                ========      ========    =============     ========       ========    ===========

Consistent Group data:
    Gross margin..........         54.8%          53.0%          3.6%           53.0%        51.0%            2.0%
    Weighted average
      occupancy...........         95.5%          96.0%        (0.5)%           96.0%        95.9%            0.1%
    Average realized annual
      rent per square foot         $9.12          $8.76          4.1%           $8.76        $8.64            1.4%

Number of facilities (at
 the end of the period):
    Consistent group......            17            17              -             17             17              -
    Cumulative Post-1994
    Acquisitions..........            44            18         144.4%             18              3         500.0%

Net rentable square feet (at the end of the period):
    Consistent group......         1,925         1,925              -          1,925          1,925              -
    Cumulative Post-1994
    Acquisitions..........         4,762         1,120        325.2 %          1,120             79        1317.7%
</TABLE>
     As  indicated  in  the  above  table,  the  Company's  commercial  property
operations have grown  principally as a result of the addition of new properties
over the past three years.  The  operating  results of the  consistent  group of
properties  over the past three  years has been  improving,  with net  operating
income  increasing  principally  due  to  improved  realized  rental  rates  and
declining operating expenses.

     As discussed  above,  effective  March 31, 1998, the Company will no longer
consolidate  PSBP and the  Operating  Partnership.  This will have the effect of
reducing commercial property revenue and cost of operations for those properties
owned by PSBP and the Operating Partnership.

     EQUITY IN EARNINGS OF REAL ESTATE  ENTITIES:  As of December 31, 1997,  the
Company had ownership  interests in 29 affiliated  limited  partnerships and two
affiliated  REITs which  comprise the  Unconsolidated  Entities.  The  Company's
ownership  interest  in these  entities is less than 50%.  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.

     Equity in earnings of real estate  entities  represents  the  Company's pro
rata share of earnings of the  Unconsolidated  Entities using the equity method.
Similar to the Company, the Unconsolidated  Entities generate  substantially all
of their  income  from their  ownership  of  self-storage  facilities  which are
managed by the Company.  In the  aggregate,  the  Unconsolidated  Entities own a
total of 181 real estate facilities,  179 of which are self-storage  facilities.
The  following  table  summarizes  the  components  of the  Company's  equity in
earnings of real estate entities:
                                       25
<PAGE>
<TABLE>
<CAPTION>
                                       Year Ended December                         Year Ended December
                                      ----------------------                      ----------------------
                                                                  Dollar                                    Dollar
                                        1997          1996        Change            1996          1995       Change
                                      --------      --------  -------------       --------      --------   -----------
                                                                (Amounts in thousands)

<S>                                   <C>           <C>          <C>              <C>             <C>        <C>
Self-storage operations (a)......     $31,026       $41,722      $(10,696)        $41,722         $6,573     $35,149
Commercial property operations...       1,428         2,667        (1,239)          2,667            269       2,398
Depreciation:
  Self-storage facilities........     (10,935)      (15,709)        4,774         (15,709)        (1,909)    (13,800)
  Commercial properties..........        (539)       (1,741)        1,202          (1,741)          (136)     (1,605)
Other (b)........................      (3,411)       (4,818)        1,407          (4,818)        (1,034)     (3,784)
                                      --------      --------  -------------       --------      --------   -----------
    Total equity in earnings of
    real estate entities              $17,569       $22,121      $ (4,552)        $22,121         $3,763     $18,358
                                      ========      ========  =============       ========      ========   ===========
</TABLE>
(a)  the fiscal 1997 amount  includes the Company's share of operations from the
     joint venture partnership performing development activities of $288,000.
(b)  principally  the  Company's  pro rata share of general  and  administrative
     expense and interest expense.

     The decrease in 1997 earnings compared to 1996 is principally the result of
certain business  combinations  occurring in 1996 and 1997 whereby the Company's
existing ownership interest in certain entities were converted into wholly-owned
real estate facilities (See Note 3 to the consolidated financial statements).

     The  increase in  earnings in 1996  compared to 1995 is due to (i) the 1996
earnings reflecting a full year's operations for those interests acquired in the
PSMI  Merger  as  opposed  to just one and  one-half  months  in 1995,  (ii) the
Company's  acquisition of additional interests during 1996 in the Unconsolidated
Entities which resulted in increased earnings from these entities (See Note 5 to
the  consolidated   financial  statements)  offset  by  (iii)  certain  business
combinations occurring in 1996 whereby the Company's existing ownership interest
in certain entities were converted into wholly-owned real estate facilities (See
Note 3 to the consolidated financial statements).

     The following table summarizes the combined  operating data for fiscal 1997
(historical) with respect to those Unconsolidated  Entities in which the Company
had an ownership interest as of December 31, 1997:

                                                               (in thousands)
Rental income............................................         $94,652
Total revenues...........................................         $96,650
Cost of operations.......................................         $33,077
Depreciation.............................................         $12,805
Net income...............................................         $40,775


--------------------------------------------------------------------------------
                        PORTABLE SELF-STORAGE OPERATIONS
--------------------------------------------------------------------------------

     In August 1996, PSPUD, a subsidiary of the Company,  made its initial entry
into the portable  self-storage  business  through its  acquisition  of a single
facility  operator  located in  Irvine,  California.  In the latter  part of the
fourth  quarter of 1996,  PSPUD opened 3 facilities  in the Los Angeles  market.
During 1997,  PSPUD opened a total of 45 facilities (9 facilities  opened during
the first  quarter of 1997,  21 during the  second  quarter,  9 during the third
quarter, and 6 during the fourth quarter of fiscal 1997).
                                       26
<PAGE>
     Due to the start-up nature of the business, PSPUD incurred operating losses
totaling  approximately  $31.7 million and $826,000 for the years ended December
31, 1997 and 1996, respectively, summarized as follows.

PORTABLE SELF-STORAGE:
----------------------

                                       Year Ended December 31,       Dollar
                                        1997          1996           Change
                                      --------      --------      -------------
                                          (Dollar amounts in thousand)

Rental and other income ..........     $7,893         $421            $7,472
                                      --------      --------      -------------

Cost of operations:
    Direct operating costs........     20,645        1,022            19,623
    Marketing and advertising.....     10,441           19            10,422
    Depreciation..................      1,394           32             1,362
    General and administrative....      7,078          174             6,904
                                      --------      --------      -------------
                                       39,558        1,247            38,311
                                      --------      --------      -------------
Operating losses..................   $(31,665)       $(826)        $(30,839)
                                     =========      ========      =============

     PSPUD's  facilities had a total of 36,000  occupied  containers at December
31, 1997. Occupancy levels at the facilities varies  significantly  depending on
opening  date,  size of the facility and rental  activity.  Of the 49 facilities
opened as of December 31, 1997, 32 facilities had been opened in excess of seven
months.  The  capacity  of  these  32  facilities  ranges  from  1,600  to 3,500
containers  (averaging  2,140), and as of December 31, 1997 these facilities had
occupancy   levels   ranging  from  17%  to  97%   (averaging   43%).   As  with
mini-warehouses,   PSPUD  believes  that  the  portable   self-storage  business
experiences  some seasonal  fluctuations  in occupancy  levels with  occupancies
generally higher in the summer months than the winter months.

     During 1997,  PSPUD  experimented  with monthly  container rental rates and
transportation  fees charged to customers.  At December 31, 1997, monthly rental
rates for the 32  facilities  ranged  from $45 to $69 per  container  per month.
Transportation  fees charged to customers ranged from $19 to $49 for each of the
move-in and move-out process. However, during 1997, PSPUD waived the move-in fee
to customers.

     PSPUD believes that marketing and advertising  activities positively impact
move-in  activity.  Commencing  in the third  quarter  of 1997,  PSPUD  began to
advertise the portable  self-storage  product on television in selected markets.
Customers   are  directed  to  call  the  national   reservation   system  where
representatives  discuss the  customers'  storage needs and are able to schedule
delivery of containers to customers locations.  During 1997,  approximately $9.2
million and $1.2 million was incurred in television and yellow page advertising,
respectively.  Marketing and advertising  activities have not been  consistently
implemented  in all markets.  PSPUD  believes  there may be markets in which its
business will not be successful despite consistent marketing and advertising and
is evaluating the advisability of continuing to operate in certain markets.

     Currently all of the PSPUD  facilities are operated in buildings  which are
leased from third parties. A typical facility generally has 6 personnel (manager
and truck  drivers),  2 to 4 trucks,  and a  corresponding  number of forklifts.
Substantially  all the equipment is leased.  Direct operating costs  principally
includes payroll, facility and equipment (truck and forklift) lease expense.

     During 1997, PSPUD incurred  significant  general and administrative  costs
related to recruiting and training personnel,  equipment,  computer software and
professional  fees in organizing  this  business.  PSPUD will continue to expend
funds during 1998 in connection with these activities.  However,  the amounts of
which are expected to be less than in 1997.

     During 1998,  PSPUD has opened an  additional 5 facilities in markets where
PSPUD  facilities  are currently  operating.  The number of new store opening in
1998 is not  determinable,  however,  future  opening will  predominantly  be in
existing  markets in which  PSPUD  currently  operates.  By opening in  existing
markets, PSPUD will seek to gain benefits from economies of scale. PSPUD is also
developing 10 facilities and has identified 5 additional  sites for development.
All of these development  projects are located in existing markets with expected
opening dates commencing during the second half of 1998.

     Until the PSPUD facilities are operating profitably, PSPUD's operations are
expected to continue to adversely impact the Company's earnings.  PSPUD believes
that its  business is likely to be more  successful  in certain  markets than in
others.  There can be no assurances as to the level of PSPUD's expansion,  level
of gross rentals, level of move-outs or profitability.
                                       27
<PAGE>
--------------------------------------------------------------------------------
                         PROPERTY MANAGEMENT OPERATIONS
--------------------------------------------------------------------------------

     In  connection  with  the  PSMI  Merger,   the  Company  acquired  property
management  contracts,  exclusive  of  facilities  owned  by  the  Company,  for
self-storage facilities and, through a subsidiary,  the management contracts for
commercial  properties.  These  facilities  constitute  all of the United States
self-storage  facilities  and  commercial  properties  doing  business under the
"Public  Storage"  name and all those in which the Company has an  interest.  At
December 31, 1997,  the Company  managed 1,107  self-storage  facilities  (1,073
owned by  affiliates  of the  Company  and 34 owned  by third  parties)  and the
Operating Partnership managed 63 commercial  properties,  all of which are owned
by the Company or affiliates of the Company.

     The property management  contracts generally provide for compensation equal
to 6%, in the case of the  self-storage  facilities,  and 5%, in the case of the
commercial  properties,  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.

PROPERTY MANAGEMENT  OPERATIONS:
--------------------------------
<TABLE>
<CAPTION>
                                   Year Ended December                         Year Ended December
                                  ----------------------                      ----------------------
                                                              Dollar                                    Dollar
                                    1997          1996        Change            1996          1995       Change
                                  --------      --------  -------------       --------      --------   -----------
                                                            (Amounts in thousands)
Facility management fees:
<S>                              <C>           <C>         <C>                <C>            <C>       <C>
    Self-storage..........       $ 9,706       $13,474     $(3,768)           $13,474        $1,976    $11,498
    Commercial properties.           435           954        (519)               954           168        786
                                  --------      --------  -------------       --------      --------   -----------
                                  10,141        14,428      (4,287)            14,428         2,144     12,284
                                  --------      --------  -------------       --------      --------   -----------
Cost of operations:
    Self-storage..........         1,449         1,820        (371)             1,820           264      1,556
    Commercial properties.           344           755        (411)               755            88        667
                                  --------      --------  -------------       --------      --------   -----------
                                   1,793         2,575        (782)             2,575           352      2,223
                                  --------      --------  -------------       --------      --------   -----------
Net operating income:
    Self-storage..........         8,257        11,654      (3,397)            11,654         1,712      9,942
    Commercial properties.            91           199        (108)               199            80        119
                                  --------      --------  -------------       --------      --------   -----------
                                 $ 8,348       $11,853     $(3,505)           $11,853        $1,792    $10,061
                                 =========     =========  =============       ========      ========   ===========
</TABLE>
     Because the Company has  significant  ownership  interests in all but 34 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.  However,  because the
Company  has  acquired in the past,  and may  continue to seek to acquire in the
future,  real  estate  facilities  owned  by the  Unconsolidated  Entities,  the
Company's  facility  management income should decrease in 1998 compared to 1997.
The  acquisitions  of  such  facilities  will  reduce   management  fee  income.

     Effective March 31, 1998, the Company will no longer  consolidate PSBP, the
commercial  properties  manager.  This  will  have  the  effect  of  eliminating
commercial properties management fee income and cost of operations.

--------------------------------------------------------------------------------
                         OTHER INCOME AND EXPENSE ITEMS
--------------------------------------------------------------------------------

     INTEREST  AND OTHER  INCOME:  In an effort to  attract a wider  variety  of
customers,  to further  differentiate  the Company from its  competition  and to
generate  new sources of revenues,  additional  businesses  are being  developed
though the Company's  subsidiaries  that  complement the Company's  self-storage
                                     28
<PAGE>
business.  These products include the sale of locks,  boxes and packing supplies
and the rental of trucks and other moving equipment  through the  implementation
of a retail expansion program and truck rental program. The net results of these
businesses are presented along with interest and other income,  as "interest and
other  income."  The  components  of interest  and other  income are detailed as
follows:
<TABLE>
<CAPTION>
                                                  Year ended December 31,              Year ended December 31,
                                             -----------------------------            ------------------------
                                                                        Dollar                               Dollar
                                               1997        1996         Change      1996        1995         Change
                                             --------    --------   -------------  --------   --------    -----------
                                                                         (Amounts in thousands)
Sales of Packaging Material and Truck
Rental Income:
<S>                                            <C>        <C>           <C>        <C>          <C>         <C>
Revenues                                       $5,272     $ 3,083       $2,189     $ 3,083      $  112      $ 2,971
Cost of operations                              4,134       2,171        1,963       2,171         100        2,071
                                             --------    --------   -------------  --------   --------    -----------
    Net operating income                        1,138         912          226         912          12          900

Interest and other income                       7,988       7,064          924       7,064       4,497        2,567
                                             --------    --------   -------------  --------   --------    -----------

    Total interest and other income            $9,126      $7,976       $1,150      $7,976      $4,509       $3,467
                                             ========    ========   =============  ========   ========    ===========
</TABLE>
     The  strategic  objective  of the retail  expansion  program is to create a
"Retail Store" that will (i) rent spaces for the attached self-storage facility,
(ii)  rent  spaces  for  the  other  Public   Storage   facilities  in  adjacent
neighborhoods,  (iii) sell  locks,  boxes and packing  materials  to the general
public,  including tenants and (iv) rent trucks and other moving equipment,  all
in  an  environment  that  is  more  retail  oriented.  Retail  stores  will  be
retro-fitted to existing  self-storage  facility rental offices or "built-in" as
part of the development of new  self-storage  facilities,  both in high traffic,
high visibility locations.

     Interest and other income is primarily  attributable  to interest income on
cash  balances and interest  income from  mortgage  notes  receivable.  Interest
income from mortgage notes receivable was $2,938,000,  $2,710,000 and $1,974,000
in 1997,  1996 and 1995,  respectively.  The  Company  canceled  mortgage  notes
receivable  of  approximately  $700,000  in  1996  and  $16,435,000  in  1995 in
connection with the acquisition of real estate  facilities  securing such notes.
The Company also acquired  notes  receivable of $6,667,000 in the PSMI Merger in
1995  and  an  additional   $12,355,000   and   $3,709,000  in  1995  and  1996,
respectively,  from affiliated  parties.  The other increases in interest income
are  primarily  attributable  to  fluctuations  in the  level of  invested  cash
balances,  which are caused by the timing of investing equity offering  proceeds
in real estate assets.

     DEPRECIATION AND  AMORTIZATION:  Depreciation and amortization  expense was
$91,356,000  in  1997,  $64,967,000  in 1996  and  $40,760,000  in  1995.  These
increases are  principally  due to the  acquisition  of  additional  real estate
facilities  in each  period;  the increase  from 1995 to 1996 also  includes the
effect of amortization of intangible assets acquired in connection with the PSMI
Merger.  Depreciation  expense  with respect to the real estate  facilities  was
$82,047,000 in 1997,  $55,689,000 in 1996 and $39,376,000 in 1995; the increases
are due to the acquisition of additional real estate  facilities in 1995 through
1997.  Amortization  expense with respect to intangible  assets  acquired in the
PSMI Merger  totaled  $9,309,000 in 1997,  $9,309,000 in 1996 and  $1,164,000 in
1995 (the 1995 amount  representing  a pro rated  amount from  November 16, 1995
through the end of the year).

     GENERAL AND ADMINISTRATIVE EXPENSE:  General and administrative expense was
$6,384,000 in 1997,  $5,524,000 in 1996 and  $3,982,000 in 1995. The Company has
experienced  and  expects  to  continue  to  experience  increased  general  and
administrative  costs due to the  following:  (i) the  growth in the size of the
Company,  (ii) the Company's property  acquisition  activities have 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 became self-advised,  resulting in the Company internalizing
management  functions which previously were provided by the Company's investment
adviser. However, offsetting the increases in general and administrative expense
has been 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
overhead  associated  with  the  acquisition  and  development  of  real  estate
facilities.

     INTEREST  EXPENSE:  Interest expense was $6,792,000 in 1997,  $8,482,000 in
1996 and $8,508,000 in 1995.  Reflecting the Company's reluctance to finance its
growth with debt,  debt and related  interest  expense  remains  relatively  low
compared to the Company's overall asset base. The Company  capitalized  interest
expense  of  $2,428,000  in 1997,  $1,861,000  in 1996 and  $307,000  in 1995 in
connection with the Company's  development  activities.  Interest expense before
the  capitalization of interest was $9,220,000 in 1997,  $10,343,000 in 1996 and
$8,815,000 in 1995.  The decrease in interest  expense in 1997 compared to 1996,
principally  is due to the  retirement  of debt in 1997 of  approximately  $11.9
million.  The increase in interest  expense in 1996 compared to 1995 principally
is due to the  assumption of a $65.5  million,  7.08%  unsecured  senior note in
connection with the PSMI Merger on November 16, 1995.
                                       29
<PAGE>
     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  Entities  conducted  independent  environmental  investigations of
their real estate facilities.  As a result of these investigations,  the Company
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.  The Company believes that amounts accrued
in 1995 are sufficient to satisfy anticipated costs.

     ADVISORY  FEES:  Advisory fees were  $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  represent  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 no longer  incurs
advisory fees.

     MINORITY  INTEREST IN INCOME:  Minority  interest in income  represents the
income  allocable to equity  interests in  Consolidated  Entities  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  Entities.  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  Entities' income.  However,  offsetting
the  reduction  in  minority  interest  in 1997  caused  by the  acquisition  of
additional equity interests are the inclusion of additional  partnerships in the
Company's  consolidated  financial  statements  as  well  as  improved  property
operations.  During 1997, the Company acquired sufficient ownership interest and
control in twelve  partnerships  and  commenced  including the accounts of these
partnerships in the Company's  consolidated  financial statements which amounted
to an increase in minority  interest in income of  approximately  $1,961,000  in
1997.

     In determining income allocable to the minority interest for 1997, 1996 and
1995  consolidated   depreciation  and  amortization  expense  of  approximately
$9,245,000, $11,490,000  and  $11,243,000,  respectively,  was  allocated to the
minority  interest.  The  changes  in  depreciation  allocated  to the  minority
interest was principally  the result of the  acquisition of limited  partnership
units in the Consolidated  Entities by the Company  throughout fiscal 1995, 1996
and 1997 offset by an increase resulting from the above mentioned  consolidation
of partnerships.

IMPACT OF YEAR 2000
-------------------
     The Company has completed an initial  assessment  of its computer  systems.
The majority of the computer  programs were  installed or upgraded over the past
few years  and are Year 2000  compliant.  Some of the  older  computer  programs
utilized by the Company  were  written  without  regard for Year 2000 issues and
could cause a system  failure or  miscalculations  with  possible  disruption of
operations. Each of these computer programs and systems has been evaluated to be
upgraded or replaced as part of the Company's Year 2000 project.

     The cost of the Year 2000 project  will be  allocated to all entities  that
use the Company  computer  systems.  The cost of the Year 2000 project  which is
expected to be allocated to the Company is approximately $2.8 million.  The cost
of new software will be capitalized and the cost of software maintenance will be
expensed as incurred.

     The project is expected to be completed by March 31, 1999 which is prior to
any  anticipated  impact on operating  systems.  the Company  believes that with
modifications to existing software and, in some instances, the conversion to new
software,  the Year 2000 issue will not pose significant  operational  problems.
However,  if such  modifications are not made, or are not completed timely,  the
Year 2000 issue could have a material impact on the operations of the Company.

     The costs of the project and the date on which the Company believes it will
complete the Year 2000  modifications  are based on management's best estimates,
which were derived utilizing numerous assumptions of future events. There can be
no guarantee  that these  estimates  will be achieved and actual  results  could
differ materially from those anticipated.
                                       30
<PAGE>
-------------------------------------------------------------------------------
                      SUPPLEMENTAL PROPERTY DATA AND TRENDS
-------------------------------------------------------------------------------

     There are  approximately  69 ownership  entities  owning in aggregate 1,073
self-storage facilities,  including the facilities which the Company owns and/or
operates.  At  December  31,  1997,  179  of  these  facilities  were  owned  by
Unconsolidated Entities, entities in which the Company has an ownership interest
and uses the equity method for financial statement  presentation.  The remaining
894 facilities are owned by the Company and Consolidated  Entities many of which
were acquired through business  combinations  with affiliates  during 1997, 1996
and 1995.

     In order to evaluate how the Company's  overall  portfolio  has  performed,
management  analyzes  the  operating   performance  of  a  consistent  group  of
self-storage facilities representing 951 (55.8 million net rentable square feet)
of the  1,073  self-storage  facilities  (herein  referred  to as  "Same  Store"
self-storage  facilities).  The 951 facilities  represents a consistent  pool of
properties  which have been  operated  under the  "Public  Storage"  name,  at a
stabilized  level, by the Company since January 1, 1993. The Same Store group of
properties includes 780 consolidated facilities (many of which were not included
in the Company's  consolidated financial statements throughout each of the three
years  presented)  and 171  facilities  owned by  Unconsolidated  Entities.  The
following table summarizes the pre-depreciation  historical operating results of
the Same Store self-storage facilities:

SAME STORE SELF-STORAGE FACILITIES:
-----------------------------------
(historical property operations)
<TABLE>
<CAPTION>
                                Year Ended December 31,                      Year Ended December 31,
                                ------------------------   Percentage        -----------------------  Percentage
                                   1997          1996       Change             1996          1995       Change
                                 --------      --------  -------------       --------      --------   -----------
                                           (Dollar amounts in thousands except rent per square foot)

<S>                               <C>          <C>             <C>           <C>           <C>            <C>
Rental income..............       475,171      $445,586        6.6%          $445,586      $422,933       5.4%
Cost of operations(1)......       167,650       158,212        6.0%           158,212       149,660       5.7%
                                 --------      --------  -------------       --------      --------   -----------

Net operating income.......      $307,521      $287,374        7.0%          $287,374      $273,273       5.2%
                                 ========      ========  =============       ========      ========   ===========

Gross profit margin(3).....         64.7%         64.5%        0.2%             64.5%           64.6%    (0.1)%

Weighted Ave. Occupancy....         91.8%         91.2%        0.6%             91.2%           90.1%     1.1%

Weighted Ave. realized
  annual rent per sq. ft(2)..       $9.24         $8.76        5.5%             $8.76           $8.40     4.3%

Weighted Ave. scheduled
  annual rent per sq. ft(2)..       $9.84         $9.00        9.3%             $9.00           $8.16    10.3%
</TABLE>
-----------
1.   Assumes payment of property  management  fees on all facilities,  including
     those facilities owned by the Company for which effective November 16, 1995
     no fee is paid. Cost of operations consists of the following:
<TABLE>
<CAPTION>
                                           1997                1996                1995
                                     -------------        -------------      -------------
<S>                                    <C>                 <C>                <C>
 Payroll expense                       $ 44,233            $ 43,490           $ 42,545
 Property taxes                          44,476              40,799             38,325
 Property management fees                28,490              26,139             25,391
 Advertising                              4,859               3,851              3,502
 Telephone  center costs                  4,506               1,956                  -
 Other (4)                               41,086              41,977             39,897
                                     -------------        -------------      -------------
                                       $167,650            $158,212           $149,660
                                     =============        =============      =============
</TABLE>
2.   Realized  rent  per  square  foot  as  presented   throughout  this  report
     represents the actual revenue earned per occupied  square foot.  Management
     believes this is a more relevant  measure then the scheduled  rental rates,
     since scheduled 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.  Cost of  operations
     includes  a 6%  management  fee.  The gross  profit  margin  excluding  the
     facility  management fee was 70.7%, 70.5% and 70.6% in 1997, 1996 and 1995,
     respectively.  On November  16,  1995,  the Company  acquired  its facility
     manager and no longer incurs such fees on the  properties it owns.
4.   Other expenses principally include utilities,  repairs and maintenance, and
     other items such as office expenses.
                                       31
<PAGE>
     As  indicated  above,  in early 1996,  the Company  implemented  a national
telephone  reservation system designed to provide added customer service for all
the  self-storage  facilities  under  management  by the  Company.  The  Company
believes that the improved operating  results,  as indicated in the above table,
in large  part are due to the  success  of the  national  telephone  reservation
system.  However,  the  national  telephone  reservation  system  was not  fully
operational for most of the self-storage facilities until the latter part of the
fourth quarter of 1996.

     Rental income for the Same Store facilities included promotional  discounts
totaling  $16,708,000  in 1997  compared to  $6,000,000  in 1996 and $729,000 in
1995,  respectively.  The  significant  increase in 1997 was  principally due to
experimentation  with  pricing and  promotional  discounts  designed to increase
rental activity.

     The  self-storage  facilities  experience  minor seasonal  fluctuations  in
occupancy levels 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 activities during the summer.



                                       32
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                      SAME-STORE OPERATING TRENDS BY REGION
-----------------------------------------------------------------------------------------------------------------------------------
              Northern California.    Southern California.           Texas                  Florida
              --------------------    --------------------    --------------------     --------------------
                         % change                % change                % change                % change
                         from                    from                    from                    from
               Amount    prior year    Amount    prior year    Amount    prior year    Amount    prior year
               ------    ----------    ------    ----------    ------    ----------    ------    ----------
Rental Revenues:
      <S>    <C>           <C>      <C>            <C>      <C>            <C>      <C>            <C>
       1997   $71,406       9.5%     $85,944        8.1%     $41,435        4.4%     $29,248        4.8%
       1996   $65,222       8.6%     $79,524        4.9%     $39,704        1.3%     $27,908        3.1%
       1995   $60,053       5.8%     $75,826        3.6%     $39,191        2.7%     $27,066        3.1%

Cost of operations

       1997   $20,239       9.7%     $25,862        5.2%     $17,239        4.6%     $11,638        8.0%
       1996   $18,457       3.4%     $24,580        5.7%     $16,482        5.8%     $10,772        3.5%
       1995   $17,856       3.4%     $23,250       (1.6)%    $15,574        1.5%     $10,412        1.1%

Net operating income:

       1997   $51,167       9.4%     $60,082        9.4%     $24,196        4.2%     $17,610        2.8%
       1996   $46,765      10.8%     $54,944        4.5%     $23,222       (1.7)%    $17,136        2.9%
       1995   $42,197       6.8%     $52,576        6.1%     $23,617        3.5%     $16,654        4.5%

Weighted avg. occupancy

       1997    96.1%        1.6%       91.5%        4.2%       92.3%        2.7%       90.6%        1.9%
       1996    94.5%        3.4%       87.3%        2.1%       89.6%        1.2%       88.7%        0.2%
       1995    91.1%        3.5%       85.2%        2.4%       88.4%        -          88.5%       (1.3)%

Weighted avg. annual realized rents per occupied sq. ft.

       1997   $11.04        8.2%      $10.56        2.3%       $6.96        1.8%       $8.28        3.0%
       1996   $10.20        4.9%      $10.32        2.4%       $6.84        -          $8.04        3.1%
       1995  $  9.72        2.5%      $10.08        1.2%       $6.84        1.8%       $7.80        4.8%
</TABLE>
<TABLE>
<CAPTION>
                     Illinois              Other states               Total
                 --------------------     --------------------    --------------------
                           % change               % change                % change
                           from                   from                    from
                 Amount    prior        Amount    prior year    Amount    prior year
                 ------    -----        ------    ----------    ------    ----------
Rental Revenues:
      <S>     <C>           <C>      <C>            <C>      <C>            <C>
       1997   $34,404       10.6%    $212,734       5.3%     $475,171       6.6%
       1996   $31,123        9.0%    $202,105       5.1%     $445,586       5.4%
       1995   $28,552        7.6%    $192,245       5.4%     $422,933       4.9%

Cost of operations

       1997   $16,105        8.2%    $76,567        3.5%     $167,650       6.0%
       1996   $14,887        5.5%    $73,034        6.7%     $158,212       5.7%
       1995   $14,115       16.9%    $68,453        3.5%     $149,660       3.4%

Net operating income:

       1997   $18,299       12.7%    $136,167       5.5%     $307,521       7.0%
       1996   $16,236       12.5%    $129,071       4.3%     $287,374       5.2%
       1995   $14,437       (0.1)%   $123,792       6.5%     $273,273       5.7%

Weighted avg. occupancy

       1997   91.5%         (1.3)%       90.9%     (1.3)%        91.8%      0.6%
       1996   92.8%           -          92.2%      0.5%         91.2%      1.1%
       1995   92.8%          2.0%        91.7%      0.3%         90.1%      1.0%

Weighted avg. annual realized rents per occupied sq. ft.

       1997   $9.84         10.8%        $9.00      7.1%         $9.24      5.5%
       1996   $8.88          8.8%        $8.40      4.5%         $8.76      4.3%
       1995   $8.16          4.6%        $8.04      4.7%         $8.40      2.9%

</TABLE>
                                       33
<PAGE>
--------------------------------------------------------------------------------
                       LIQUIDITY AND CAPITAL RESOURCES
--------------------------------------------------------------------------------

     The Company  believes  that its  internally  generated net cash provided by
operating  activities  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.  Net cash provided by
operating  activities  (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.

     Operating as a real estate investment trust ("REIT"), the Company's ability
to retain cash flow for reinvestment is restricted.  In order for the Company to
maintain its favored REIT status,  a substantial  portion of its operating  cash
flow must be used to make  distributions to its shareholders  (see "REIT STATUS"
below). 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 generated 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,
                                                                                   1997            1996           1995
                                                                                  --------      --------        --------
                                                                                        (Amounts in thousands)
<S>                                                                               <C>           <C>              <C>
 Net income.............................................................          $178,649      $153,549         $70,386
 Depreciation and amortization..........................................            91,356        64,967          40,760
 Depreciation from Unconsolidated Entities..............................            11,474        17,450           2,045
 Minority interest in income............................................            11,684         9,363           7,137
 Environmental accrual..................................................                 -             -           3,251
                                                                                  --------      --------        --------
    Net cash provided by operating activities...........................           293,163       245,329         123,579

 Distributions from operations to minority interests....................           (20,929)      (20,853)        (18,380)
                                                                                  --------      --------        --------

 Cash from operations allocable to the Company's shareholders...........           272,234       224,476         105,199
 Less: preferred stock dividends........................................           (88,393)      (68,599)        (31,124)
 Add: Non-recurring payment of dividends with respect to the Series CC
    convertible stock...................................................            13,412             -               -
                                                                                  --------      --------        --------

 Cash from operations available to common shareholders..................           197,253       155,877          74,075

 Capital improvements to maintain facilities:
   Self-storage facilities..............................................           (30,834)      (15,957)         (8,509)
   Commercial properties................................................            (4,283)       (4,409)         (2,852)
   Add back: minority interest share of capital improvements to maintain
    facilities..........................................................             2,513         3,159           3,219
                                                                                  --------      --------        --------

Funds available for principal payments on debt, common dividends and
   reinvestment........................................................            164,649       138,670          65,933

Cash distributions to common shareholders..............................            (86,181)      (67,709)        (38,586)
                                                                                   --------      --------        --------

Funds available for principal payments on debt and reinvestment........            $78,468       $70,961         $27,347
                                                                                   ========      ========        ========
</TABLE>
     The  fiscal  1997  funds  available  for  principal  payments  on debt  and
reinvestment  includes  the  start-up  operating  losses  related to PSPUD's new
portable self-storage business of $31.7 million. Management views such losses as
part of the  reinvestment  of the Company's  internally  generated cash flows in
PSPUD.

     DISTRIBUTIONS REQUIREMENTS:  The Company's conservative distribution policy
has been the principal  reason for the Company's  ability to retain  significant
operating  cash flows which have been used to make  additional  investments  and
debt reductions.  During 1995, 1996 and 1997, the Company  distributed to common
shareholders  approximately  52% ,  43%  and  44%  of its  cash  available  from
operations allocable to common shareholders, respectively.

     During 1997, the Company paid dividends totaling $68,534,000 to the holders
of the  Company's  Senior  Preferred  Stock,  $4,531,000  to the  holders of the
Convertible  Preferred  Stock,  $15,328,000  to the  holders  of the  Series  CC
                                       34
<PAGE>

Convertible  Preferred Stock (which  converted to common stock during the second
quarter of 1997) and $86,181,000 to the holders of Common Stock.  Dividends with
respect to the Senior Preferred Stock include  pro-rated  amounts for securities
issued during 1997.  The Company  estimates the  distribution  requirements  for
fiscal 1998 with respect to Senior Preferred Stock and the Convertible Preferred
Stock to be  approximately  $80.7  million.  Distributions  with  respect to the
common  stock will be  determined  based upon the  Company's  REIT  distribution
requirements  after taking into  consideration  distributions  to the  Company's
preferred shareholders.

     CAPITAL  IMPROVEMENT  REQUIREMENTS:  During 1998,  the Company has budgeted
approximately  $27.4  million for capital  improvements  ($22.9  million for its
self-storage  facilities  and $4.5 million for its commercial  properties).  The
minority interests' share of the budgeted capital  improvements is approximately
$3.8 million.

     During 1995, the Company commenced a program to enhance its visual icon and
modernize the appearance of its self-storage facilities, including modernization
of signs, paint color schemes, and rental offices.  Included in the 1998 capital
improvement   budget  is  approximately  $3.2  million  with  respect  to  these
expenditures.

     The  significant   increase  in  capital   improvements  in  1997  for  the
self-storage  facilities  (as  reflected  in  the  table  above)  is  due to the
acquisition of new facilities in 1997.

     DEBT  SERVICE  REQUIREMENTS:  The  Company  does  not  believe  it has  any
significant refinancing risks with respect to its mortgage debt, all of which is
fixed rate.  At December  31,  1997,  the  Company had total  outstanding  notes
payable of approximately  $96.6 million and $7 million outstanding on the credit
facility.  See Note 7 to the consolidated  financial  statements for approximate
principal maturities of such borrowings.

     The Company uses its $150 million of bank credit facility (all of which was
unused  as of  March  27,  1998)  primarily  to fund  acquisitions  and  provide
financial  flexibility  and  liquidity.  The  credit  facility  currently  bears
interest at LIBOR plus 0.40% based on the Company's current financial ratios.

     GROWTH  STRATEGIES:  During 1998, the Company intends to continue to expand
its asset and  capital  base  principally  through the (i)  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,  (ii) development of additional  self-storage  facilities and (iv)
the  expected  expansion  in the  operations  of PSPUD's  portable  self-storage
business.

     MERGERS WITH  AFFILIATES:  As indicated above, in March 1998, the Company's
private REIT merged with and into  Properties 11, a publicly  traded real estate
investment trust affiliated with the Company. In connection with the merger, the
Company  exchanged  11 wholly owned  commercial  properties  with the  surviving
corporation  for 13 self-storage  facilities.  At December 31, 1997, the Company
and the Consolidated  Entities owned approximately a 68% interest in the private
REIT and the  Operating  Partnership  on a combined  basis and a 37% interest in
Properties 11. Upon completion of the merger,  the Company and the  Consolidated
Entities own  approximately  58% of the surviving  corporation and the Operating
Partnership on a combined basis.

     In February 1998,  Public Storage  Properties  XX, Inc.  ("Properties  20")
agreed,  subject to  certain  conditions,  to merge  with and into the  Company.
Properties  20 is an  affiliated  publicly  traded  equity  REIT.  The merger is
conditioned  on approval by the  shareholders  of Properties 20. At December 31,
1997, the Company owned  approximately 24% of Properties 20. The Company expects
that,  if approved by the  shareholders,  the merger  would be  completed in the
second  quarter of 1998.  Properties 20 is the last  remaining  affiliated  REIT
involved in the ownership of self-storage facilities.

     In  addition  to 533 wholly  owned  self-storage  facilities,  the  Company
operates,  on behalf of  approximately 64 ownership  entities,  540 self-storage
facilities  under the "Public  Storage"  name in which the Company has a partial
equity  interest.  From time to time, some of these  self-storage  facilities or
interests  in them are  available  for  purchase,  providing  the Company with a
source of additional acquisition opportunities.

     DEVELOPMENT  OF  SELF-STORAGE  FACILITIES:  Commencing in 1995, the Company
began to construct self-storage facilities. Since 1995, the Company has opened a
total  of seven  facilities,  one in 1995,  four in 1996,  and two in 1997.  The
Company is evaluating  the  feasibility  of developing  additional  self-storage
facilities  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.

     In April 1997, the Company formed a joint venture  partnership with a state
pension fund to participate in the development of approximately  $220 million of

                                       35
<PAGE>
self-storage facilities. At December 31, 1997, the joint venture partnership had
completed construction of seven self-storage  facilities  (approximately 412,000
net rentable square feet) with a total cost of approximately $40.8 million,  and
had 17  facilities  under  construction  (approximately  1,169,000  net rentable
square  feet) with an aggregate  cost  incurred to date of  approximately  $48.9
million and total  additional  estimated cost to complete of $29.3 million.  The
partnership  is funded  solely with equity  capital  consisting  of 30% from the
Company and 70% from the state pension fund.

     PORTABLE  SELF-STORAGE  BUSINESS:  As indicated  above, in 1996 the Company
organized  PSPUD as a separate  corporation  to operate a portable  self-storage
business  that rents  storage  containers  to  customers  for storage in central
warehouses.  As of December 31, 1997, PSPUD operated a total of 49 facilities in
24 greater  metropolitan areas in 16 states. In January and February 1998, PSPUD
opened five  additional  facilities.  PSPUD has also identified an additional 15
sites in existing  markets for  development of PSPUD  facilities at an aggregate
estimated cost of $67.5 million.

     FINANCING THE COMPANY'S GROWTH STRATEGIES:  The Company expects to fund its
growth strategies with cash on hand at December 31, 1997,  internally  generated
retained cash flows and borrowings under its $150 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 equity
securities.

     The Company believes that its size and financial  flexibility enables 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 by each of the three major credit  agencies are Baa2 by
Moody's and BBB+ by Standard and Poors and Duff & Phelps.

     The Company's  portfolio of real estate  facilities  remains  substantially
unencumbered. At December 31, 1997, the Company had mortgage debt outstanding of
$43.3 million and had consolidated  real estate  facilities with a book value of
$2.7 billion.  The Company has been reluctant to finance 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).  The
Company has elected to use  preferred  stock  despite the fact that the dividend
rates of its preferred  stock exceeds  current  interest  rates on  conventional
debt. The Company has chosen this method of financing for the following reasons:
(i) the Company's perpetual preferred stock has no sinking fund requirement,  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)  like  interest  payments,  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.

     Since January 1, 1998, the Company has issued an aggregate of approximately
6.4 million shares of common stock,  raising net proceeds of approximately  $189
million.  The Company  intends to use the net proceeds  from these  offerings to
make  investments in real estate,  primarily  self-storage,  including  mortgage
loans and interest in real estate  partnerships,  to satisfy  cash  elections in
connection with mergers with affiliated REITs and to fund investments in PSPUD.

     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,  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.

     FUNDS FROM  OPERATIONS:  Total funds from  operations or "FFO" increased to
$272,234,000  for the year ended December 31, 1997 compared to  $224,476,000  in
1996 and  $105,199,000  in 1995.  FFO  available to common  shareholders  (after
deducting  preferred stock  dividends)  increased to  $197,253,000  for the year
ended  December 31, 1997 compared to  $155,877,000  in 1996 and  $74,075,000  in
1995.  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 PSMI
Merger,  including property management  agreements and goodwill),  and (ii) less
FFO attributable to minority interest.

                                       36
<PAGE>
     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  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.





                                       37
<PAGE>
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
          -----------------------------------------------------------
     To limit the  Company's  exposure to market risk,  the Company  principally
finances its  operations and growth with  permanent  equity  capital  consisting
either of common or preferred stock. At December 31, 1997, the Company's debt as
a percentage of total shareholders' equity (based on book values) was 3.6%.

     The Company's  preferred  stock is not  redeemable  by the holders.  Except
under certain conditions relating to the Company's  qualification as a REIT, the
Senior  Preferred Stock are not redeemable by the Company 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,
Series I -  October  31,  2001,  Series J - August  31,  2002.  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
(or  depositary  share in the case of the Series H, Series I and Series J), plus
accrued and unpaid dividends.

     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. The Convertible
Preferred Stock is not redeemable for cash.

     The Company's market risk sensitive instruments include notes payable which
totaled  $103,558,000 at December 31, 1997 (included $7,000,000 of borrowings on
the  Company's  revolving  line  of  credit  which  were  subsequently  repaid).
Substantially  all of the Company's  notes payable bear interest at fixed rates.
See Note 7 for terms,  valuations and  approximate  principal  maturities of the
notes payable as of December 31, 1997.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
          -------------------------------------------

     The  financial  statements of the Company at December 31, 1997 and December
31, 1996 and for each of the three years in the period  ended  December 31, 1997
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.



                                       38

<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 1997 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 1997 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 1997 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 1997 fiscal year.


                                       39
<PAGE>


                                     PART IV


 ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
          --------------------------------------------------------------
 10.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.

10.b.    Reports on Form 8-K

            The Company  filed a Current  Report on Form 8-K dated  November 17,
            1997,  pursuant to Item 5, which filed certain exhibits  relating to
            the Company's public offering of common stock.

            The Company  filed a Current  Report on Form 8-K dated  December 24,
            1997  (filed  January  12,  1998),  as amended  by Form 8-K/A  dated
            December 24, 1997 (filed January 15, 1998), each pursuant to Item 5,
            which filed  statements of revenues and certain  operating  expenses
            for  Acquired  Properties,  Largo  Property,  Acquiport  Properties,
            Gunston Property and Proposed  Acquisition  Properties and Pro Forma
            Consolidated Financial Statements.

10.c.    Exhibits:
         See Index to Exhibits contained herein.



                                       40
<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 by 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.     Certificate of  Determination  for the  Convertible  Preferred  Stock,
          Series  CC.  Filed  with  Registrant's   Registration   Statement  No.
          333-03749 and incorporated herein by reference.

3.15.     Certificate  of Correction of  Certificate  of  Determination  for the
          Convertible  Participating  Preferred Stock.  Filed with  Registrant's
          Registration  Statement  No.  333-08791  and  incorporated  herein  by
          reference.

                                       41
<PAGE>

3.16.     Certificate of Determination  for 8-5/8%  Cumulative  Preferred Stock,
          Series I. Filed with  Registrant's Form 8-A/A  Registration  Statement
          relating  to the  8-5/8%  Cumulative  Preferred  Stock,  Series  I and
          incorporated herein by reference.

3.17.     Certificate  of  Amendment  of Articles of  Incorporation.  Filed with
          Registrant's  Registration  Statement No.  333-18395 and  incorporated
          herein by reference.

3.18.     Certification of Determination for Equity Stock,  Series A. Filed with
          Registrant's  Form 10-Q for the  quarterly  period ended June 30, 1997
          and incorporated herein by reference.

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

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

3.21.     Amendment to Bylaws  adopted on May 9, 1996.  Filed with  Registrant's
          Registration  Statement  No.  333-03749  and  incorporated  herein  by
          reference.

3.22.     Amendment to Bylaws adopted on June 26, 1997. Filed with  Registrant's
          Registration  Statement  No.  333-41123  and  incorporated  herein  by
          reference.

3.23.     Amendment   to  Bylaws   adopted  on  January  6,  1998.   Filed  with
          Registrant's  Registration  Statement No.  333-41123 and  incorporated
          herein by reference.

3.24.     Amendment  to  Bylaws  adopted  on  February  10,  1998.   Filed  with
          Registrant's  Current  Report on Form 8-K dated  February 10, 1998 and
          incorporated herein by reference.

10.25.    Second  Amended  and  Restated  Management   Agreement  by  and  among
          Registrant  and the entities  listed  therein dated as of November 16,
          1995.  Filed with PS Partners,  Ltd.'s  Annual Report on Form 10-K for
          the year ended December 31, 1996 and incorporated herein by reference.

10.26.    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.

10.27.    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.

10.28.    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.

10.29.    Second Amended and Restated Credit Agreement by and among  Registrant,
          Wells Fargo Bank,  National  Association,  as agent, and the financial
          institutions  party thereto dated as of February 25, 1997.  Filed with
          Registrant's  Registration  Statement No.  333-22665 and  incorporated
          herein by reference.

10.30.    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.

10.7*     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.

                                       42
<PAGE>
10.8*     Registrant's 1994 Stock Option Plan. Filed herewith.

10.9*     Registrant's 1996 Stock Option and Incentive Plan. Filed herewith.

10.10.    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.

10.11.    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.

10.12.    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.

10.13**   Employment  Agreement between  Registrant and B. Wayne Hughes dated as
          of November 16, 1995.  Filed with  Registrant's  Annual Report on Form
          10-K for the year ended December 31, 1995 and  incorporated  herein by
          reference.

10.14.    Agreement and Plan of  Reorganization  between  Registrant and Storage
          Properties,  Inc. dated as of March 4, 1996.  Filed with  Registrant's
          Registration  Statement  No.  333-03749  and  incorporated  herein  by
          reference.

10.15.    Agreement and Plan of  Reorganization  between  Registrant  and Public
          Storage  Properties  X, Inc.  dated as of June 20,  1996.  Filed  with
          Registrant's  Registration  Statement No.  333-08671 and  incorporated
          herein by reference.

10.16.    Agreement and Plan of  Reorganization  between  Registrant  and Public
          Storage  Properties  XII, Inc.  dated as of June 20, 1996.  Filed with
          Registrant's  Registration  Statement No.  333-08791 and  incorporated
          herein by reference.

10.17.    Agreement  and  Plan  of  Reorganization  among  Registrant,  Partners
          Preferred Yield, Inc.,  Partners Preferred Yield II, Inc. and Partners
          Preferred  Yield III,  Inc..  dated as of August 15, 1996.  Filed with
          Registrant's  Registration  Statement No.  333-14161 and  incorporated
          herein by reference.

10.18.    Deposit Agreement dated as of November 1, 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 8-5/8%  Cumulative  Preferred  Stock,  Series I. Filed with
          Registrant's  Form  8-A/A  Registration   Statement  relating  to  the
          Depositary  Shares  Each  Representing  1/1000th  of a Share of 8-5/8%
          Cumulative  Preferred  Stock,  Series  I and  incorporated  herein  by
          reference.

10.19.    Agreement and Plan of Reorganization among Registrant,  Public Storage
          Properties XIV, Inc. and, Public Storage  Properties XV, Inc. dated as
          of December 5, 1996. Filed with  Registrant's  Registration  Statement
          No. 333-22665 and incorporated herein by reference.

10.20.    Agreement and Plan of Reorganization among Registrant,  Public Storage
          Properties XVI, Inc. , Public Storage  Properties  XVII, Inc. , Public
          Storage Properties XVIII, Inc. and Public Storage Properties XIX, Inc.
          dated  as of April  9,  1997.  Filed  with  Registrant's  Registration
          Statement No. 333-26959 and incorporated herein by reference.

10.21.    Limited  Partnership  Agreement of PSAF  Development  Partners,  L. P.
          between PSAF  Development,  Inc. and the Limited  Partner  dated as of
          April 10, 1997.  Filed with  Registrant's  Form 10-Q for the quarterly
          period ended March 31, 1997 and incorporated herein by reference.

10.22.    Deposit  Agreement dated as of August 28, 1997 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%  Cumulative  Preferred  Stock,  Series  J.  Filed  with
          Registrant's  Form  8-A/A  Registration   Statement  relating  to  the
          Depositary  Shares  Each  Representing   1/1,000  of  a  Share  of  8%
          Cumulative  Preferred  Stock,  Series  J and  incorporated  herein  by
          reference.

10.23.    Agreement and Plan of  Reorganization  between  Registrant  and Public
          Storage  Properties XX, Inc. dated as of December 13, 1997. Filed with
          Public  Storage  Properties  XX, Inc.'s Annual Report on Form 10-K for
          the year ended December 31, 1997 and incorporated herein by reference.

10.24.    Second  Amended  and  Restated  Agreement  of Limited  Partnership  of
          American Office Park  Properties,  L.P. dated as of February 24, 1998.
          Filed with Public Storage  Properties XI, Inc.'s Annual Report on Form
          10-K for the year ended December 31, 1997 and  incorporated  herein by
          reference.

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.


                                       44
<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   30, 1998               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  30, 1998
----------------------------------     Executive Officer and Director
B.    Wayne Hughes                     (principal executive officer)


  /s/ Harvey Lenkin                    President and Director                           March  30, 1998
----------------------------------
Harvey Lenkin

  /s/ B. Wayne Hughes, Jr.             Vice President and Director                      March  30, 1998
----------------------------------
B.    Wayne Hughes, Jr.

  /s/ John Reyes                       Senior Vice President and                        March  30, 1998
----------------------------------     Chief Financial Officer
John Reyes                             (principal financial officer and principal
                                        accounting officer)


  /s/ Robert J. Abernethy              Director                                         March  30, 1998
----------------------------------
Robert J. Abernethy

  /s/ Dann V. Angeloff                 Director                                         March  30, 1998
----------------------------------
Dann V. Angeloff

  /s/ William C. Baker                 Director                                         March  30, 1998
----------------------------------
William C. Baker


----------------------------------     Director
Thomas J. Barrack, Jr.

  /s/ Uri P. Harkham                   Director                                         March  30, 1998
----------------------------------
Uri P. Harkham
</TABLE>
                                       45
<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, 1997 and 1996........    F-2

For each of the three years in the period ended December 31, 1997:

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-25


Schedule:


III - Real estate and accumulated depreciation...................... F-26 - F-50




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.

                                       46
<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, 1997 and 1996, and the related  consolidated  statements
of income,  shareholders'  equity, and cash flows for each of the three years in
the period  ended  December  31, 1997.  Our audits also  included the  financial
statement  schedule  listed  in the  Index  at  Item  14  (a).  These  financial
statements  and  financial  statement  schedule  are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements and financial statement schedule 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, 1997 and 1996, and the consolidated results of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 1997, in conformity with generally accepted accounting  principles.
Also, in our opinion, the related financial statement schedule,  when considered
in relation to the basic financial statements taken as a whole,  presents fairly
in all material respects the information set forth therein.




                                                      ERNST & YOUNG  L L P
Los Angeles, California

February 23, 1998, except for Notes 10 and 12, as to which the date
is March 17, 1998.


                                      F-1
<PAGE>
<TABLE>
<CAPTION>
                              PUBLIC STORAGE, INC.
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1997 and 1996
                    (amounts in thousands, except share data)

                                                                                       December 31,           December 31,
         ASSETS                                                                            1997                   1996
         ------                                                                    ---------------        ---------------
<S>                                                                                 <C>                    <C>
Cash and cash equivalents....................................................       $      41,455          $      26,856
Real estate facilities, at cost:
   Land......................................................................             845,299                596,141
   Buildings.................................................................           2,232,230              1,589,357
                                                                                    ---------------        ---------------
                                                                                        3,077,529              2,185,498
   Accumulated depreciation..................................................            (378,248)              (297,655)
                                                                                    ---------------        ---------------
                                                                                        2,699,281              1,887,843
   Construction in process...................................................              42,635                 35,815
                                                                                    ---------------        ---------------
                                                                                        2,741,916              1,923,658

Investment in real estate entities...........................................             225,873                350,190
Intangible assets, net.......................................................             212,944                222,253
Mortgage notes receivable from affiliates....................................              21,807                 25,016
Other assets.................................................................              67,650                 24,179
                                                                                    ---------------        ---------------
              Total assets...................................................         $ 3,311,645            $ 2,572,152
                                                                                    ===============        ===============
         LIABILITIES AND SHAREHOLDERS' EQUITY
         ------------------------------------
Revolving line of credit.....................................................       $       7,000          $           -
Notes payable................................................................              96,558                108,443
Accrued and other liabilities................................................              70,648                 41,467
                                                                                    ---------------        ---------------
         Total liabilities...................................................             174,206                149,910
Minority interest............................................................             288,479                116,805
Commitments and contingencies
Shareholders' equity:
   Preferred Stock, $0.01 par value, 50,000,000 shares authorized, 13,261,984
     shares issued and outstanding (13,421,580 issued and outstanding at
     December 31, 1996), at liquidation preference:
         Cumulative Preferred Stock, issued in series........................             868,900                718,900
         Convertible Preferred Stock.........................................              53,308                114,929
   Common stock, $0.10 par value, 200,000,000 shares authorized, 105,102,145
     shares issued and outstanding (88,362,026 at December 31, 1996).........              10,511                  8,837

   Class B Common Stock, $0.10 par value, 7,000,000 shares authorized and
     issued..................................................................                 700                    700
   Paid-in capital...........................................................           1,903,782              1,454,387
   Cumulative net income.....................................................             575,069                396,420
   Cumulative distributions paid.............................................            (563,310)              (388,736)
                                                                                    ---------------        ---------------
         Total shareholders' equity..........................................           2,848,960              2,305,437
                                                                                    ---------------        ---------------
              Total liabilities and shareholders' equity.....................         $ 3,311,645            $ 2,572,152
                                                                                    ===============        ===============
</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, 1997
                  (amounts in thousands, except per share data)


                                                                            1997                1996                1995
                                                                        -------------      -------------       -------------
REVENUES:
   Rental income:
<S>                                                                      <C>                 <C>                 <C>
      Self-storage facilities...................................         $385,540            $270,429            $184,100
      Commercial properties.....................................           40,575              23,576              18,034
      Portable self-storage.....................................            7,893                 421                   -
   Equity in earnings of real estate entities...................           17,569              22,121               3,763
   Facility management fee......................................           10,141              14,428               2,144
   Interest and other income....................................            9,126               7,976               4,509
                                                                        -------------      -------------       -------------
                                                                          470,844             338,951             212,550
                                                                        -------------      -------------       -------------

EXPENSES:
  Cost of operations:
      Self-storage facilities...................................          117,963              82,494              63,396
      Commercial properties.....................................           16,665              10,750               8,851
      Portable self-storage.....................................           39,558               1,247                   -
  Cost of facility management...................................            1,793               2,575                 352
  Depreciation and amortization ................................           91,356              64,967              40,760
  General and administrative....................................            6,384               5,524               3,982
  Interest expense..............................................            6,792               8,482               8,508
  Environmental cost............................................                -                   -               2,741
  Advisory fee .................................................                -                   -               6,437
                                                                        -------------      -------------       -------------
                                                                          280,511             176,039             135,027
                                                                        -------------      -------------       -------------
Income before minority interest.................................          190,333             162,912              77,523

Minority interest in income.....................................          (11,684)             (9,363)             (7,137)
                                                                        -------------      -------------       -------------

Net income......................................................         $178,649            $153,549             $70,386
                                                                        =============      =============       =============

Net income allocation:
   Allocable to preferred shareholders..........................        $  88,393           $  68,599             $31,124
   Allocable to common shareholders.............................           90,256              84,950              39,262
                                                                        -------------      -------------       -------------
                                                                         $178,649            $153,549             $70,386
                                                                        =============      =============       =============


PER COMMON SHARE:

Basic net income per share......................................       $      0.92        $       1.10         $      0.96
                                                                        =============      =============       =============
Diluted net income per share....................................       $      0.91        $       1.10         $      0.95
                                                                        =============      =============       =============

Basic weighted average common shares outstanding................           98,446              77,117              41,039
                                                                        =============      =============       =============
Diluted weighted average common shares outstanding..............           98,961              77,358              41,171
                                                                        =============      =============       =============
</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, 1997
           (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, 1994.......................      $165,275       $57,500         $2,883      $       -       $372,361
   Issuance of Preferred Stock, net of issuance costs:
     Series E, F, and 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
   Issuance of Preferred Stock, net of issuance costs:
     Series H and I (10,750 shares).................       268,750             -              -              -         (8,972)
     Convertible, Series CC (58,955 shares).........             -        58,955              -              -              -
    Issuance of Common Stock (15,134,241 shares)....             -             -          1,514              -        333,956
   Conversion of Convertible Participating Preferred
     Stock into Common Stock (1,611,265 shares).....             -       (28,470)           161              -         27,799
   Conversion of 8.25% Convertible Preferred Stock
     into Common Stock (102,721 shares).............             -        (1,526)            10              -          1,516
   Net income.......................................             -             -              -              -              -
   Cash distributions:
     Preferred Stock................................             -             -              -              -              -
     Common Stock, $0.88 per share..................             -             -              -              -              -
                                                       -------------  -------------   -------------  -------------  -------------
Balances at December 31, 1996.......................       718,900       114,929          8,837            700      1,454,387
   Issuance of Preferred Stock, net of issuance costs:
     Series J (6,000 shares)........................       150,000             -              -              -         (5,075)
   Issuance of Common Stock (14,376,218 shares).....             -             -          1,438              -        393,085
   Conversion of Series CC Convertible Preferred
     Stock into Common Stock (2,184,250 shares).....             -       (58,955)           218              -         58,737
   Conversion of 8.25% Convertible Preferred Stock
     into Common Stock (179,651 shares).............             -        (2,666)            18              -          2,648
   Net income.......................................             -             -              -              -              -
   Cash distributions:
     Preferred Stock................................             -             -              -              -              -
     Common Stock, $0.88 per share..................             -             -              -              -              -
                                                       -------------  -------------   -------------  -------------  -------------
Balances at December 31, 1997.......................      $868,900       $53,308        $10,511           $700     $1,903,782
                                                       =============  =============   =============  =============  =============

</TABLE>
<TABLE>
<CAPTION>

                              PUBLIC STORAGE, INC.
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
       For each of the three years in the period ended December 31, 1997
           (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, 1994.......................      $172,485        $(182,718)       $587,786
   Issuance of Preferred Stock, net of issuance costs:
     Series E, F, and 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
   Issuance of Preferred Stock, net of issuance costs:
     Series H and I (10,750 shares).................             -                -         259,778
     Convertible, Series CC (58,955 shares).........             -                -          58,955
    Issuance of Common Stock (15,134,241 shares)....             -                -         335,470
   Conversion of Convertible Participating Preferred
     Stock into Common Stock (1,611,265 shares).....             -                -            (510)
   Conversion of 8.25% Convertible Preferred Stock
     into Common Stock (102,721 shares).............             -                -               -
   Net income.......................................       153,549                -         153,549
   Cash distributions:
     Preferred Stock................................             -          (68,599)        (68,599)
     Common Stock, $0.88 per share..................             -          (67,709)        (67,709)
                                                         -------------  -------------   -------------
Balances at December 31, 1996.......................       396,420         (388,736)      2,305,437
   Issuance of Preferred Stock, net of issuance costs:
     Series J (6,000 shares)........................             -                -         144,925
   Issuance of Common Stock (14,376,218 shares).....             -                -         394,523
   Conversion of Series CC Convertible Preferred
     Stock into Common Stock (2,184,250 shares).....             -                -               -
   Conversion of 8.25% Convertible Preferred Stock
     into Common Stock (179,651 shares).............             -                -               -
   Net income.......................................       178,649                -         178,649
   Cash distributions:
     Preferred Stock................................             -          (88,393)        (88,393)
     Common Stock, $0.88 per share..................             -          (86,181)        (86,181)
                                                         -------------  -------------   -------------
Balances at December 31, 1997.......................      $575,069        $(563,310)     $2,848,960
                                                         =============  =============   =============
</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, 1997
                             (amounts in thousands)


                                                                                     1997            1996            1995
                                                                                ------------     ------------    ------------
Cash flows from operating activities:
<S>                                                                               <C>             <C>             <C>
   Net income...............................................................      $178,649        $153,549        $ 70,386
   Adjustments to reconcile net income to net cash provided by operating
     activities:
     Depreciation and amortization..........................................        91,356          64,967          40,760
     Depreciation included in equity in earnings of real estate entities....        11,474          17,450           2,045
     Environmental accrual (including $510 from equity in earnings of real
       estate entities).....................................................             -               -           3,251
     Minority interest in income............................................        11,684           9,363           7,137
                                                                                ------------     ------------    ------------

       Total adjustments....................................................       114,514          91,780          53,193
                                                                                ------------     ------------    ------------

       Net cash provided by operating activities............................       293,163         245,329         123,579
                                                                                ------------     ------------    ------------

Cash flows from investing activities:
     Principal payments received on mortgage notes receivable...............           409           1,784           2,063
     Acquisition of minority interests in consolidated real estate
       partnerships.........................................................       (21,559)        (15,419)        (32,683)
     Acquisition of mortgage notes receivable...............................             -          (3,709)        (12,355)
     Acquisition of real estate facilities..................................       (65,225)       (198,404)       (103,061)
     Acquisition cost of business combinations..............................      (164,808)       (113,522)        (57,374)
     Acquisition of interests in real estate entities.......................       (46,151)        (83,893)        (20,657)
     Investment in portable self- storage business .........................       (29,997)              -               -
     Construction in process................................................       (45,865)        (46,097)        (13,244)
     Capital improvements to real estate facilities.........................       (35,117)        (20,366)        (11,361)
                                                                                ------------     ------------    ------------

       Net cash used in investing activities................................      (408,313)       (479,626)       (248,672)
                                                                                ------------     ------------    ------------

Cash flows from financing activities:
     Net borrowings (paydowns) on revolving line of credit..................         7,000               -         (37,607)
     Net proceeds from the issuances of preferred stock.....................       144,925         259,778         275,157
     Net proceeds from the issuances of common stock........................       182,523         130,538          80,526
     Principal payments on mortgage notes payable...........................       (11,885)        (51,310)        (39,212)
     Distributions paid to shareholders.....................................      (174,574)       (136,308)        (69,072)
     Distributions from operations to minority interests in consolidated
       real estate partnerships.............................................       (20,929)        (20,853)        (18,380)
     Net reinvestment by minority interests in consolidated real estate
       partnerships.........................................................         3,527           3,976          (1,739)
     Other..................................................................          (838)         (5,104)         (4,295)
                                                                                ------------     ------------    ------------

       Net cash provided by financing activities............................       129,749         180,717         185,378
                                                                                ------------     ------------    ------------

Net increase (decrease) in cash and cash equivalents........................        14,599         (53,580)         60,285

Cash and cash equivalents at the beginning of the year......................        26,856          80,436          20,151
                                                                                ------------     ------------    ------------

Cash and cash equivalents at the end of the year............................       $41,455        $ 26,856        $ 80,436
                                                                                ============     ============    ============
</TABLE>
                             See accompanying notes.
                                       F-5
<PAGE>
<TABLE>
<CAPTION>
                             PUBLIC STORAGE, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
        For each of the three years in the period ended December 31, 1997
                             (amounts in thousands)
                                  (Continued)


                                                                                     1997            1996            1995
                                                                                ------------     ------------    ------------
 Supplemental schedule of non cash investing and financing activities:
   INVESTING ACTIVITIES:
   Acquisition of real estate facilities in exchange for minority interests,
     common stock, the assumption of mortgage notes payable, the
     cancellation of mortgage notes receivable and the reduction of
<S>                                                                              <C>               <C>            <C>
     investment in real estate entities.....................................     $(119,279)        $(4,292)       $(87,941)
   Business combinations (Note 3):
       Real estate facilities...............................................      (657,347)       (531,794)       (230,519)
       Investment in real estate entities...................................       189,400         124,696        (385,222)
       Mortgage notes receivable............................................             -               -          (6,667)
       Other assets.........................................................        (4,119)         (5,849)         (8,862)
       Intangible assets....................................................             -               -        (232,726)
       Accrued and other liabilities........................................        21,190          15,399          17,134
       Notes payable........................................................             -               -          96,728
       Minority interest....................................................        74,068          20,139          17,034

   Reduction of investment in real estate entities in exchange for real
     estate facilities.....................................................              -           1,891               -
   Investment in real estate entities.......................................        30,406               -               -
   Acquisition of partnership interests in real estate entities in exchange
     for common stock.......................................................             -               -          (4,034)

   FINANCING ACTIVITIES:
   Cancellation of mortgage notes receivable to acquire real estate                      -             700          16,435
     facilities.............................................................
   Assumption of mortgage notes payable upon the acquisition of real estate
     facilities.............................................................             -           1,701          60,908
   Reduction in construction in process - contribution to joint venture.....       (30,406)              -               -
   Minority interest issued in exchange for real estate facilities .........       119,279               -               -
   Accrued and unpaid distributions ........................................             -               -             638
   Issuance of Preferred Stock:
       Mandatory Convertible Preferred Stock, Series CC to acquire interest
         in consolidated real estate partnerships...........................             -          58,955               -
       Mandatory Convertible Participating Preferred Stock to acquire
         interest in consolidated real estate partnerships..................             -               -          28,470
   Issuance of Common Stock:
       In connection with mergers...........................................       212,000         204,932         573,756
       Acquire real estate facilities.......................................             -               -          10,598
       Acquire partnership interests in real estate entities................             -               -           4,034
       In connection with conversion of Convertible Preferred Stock.........        61,621          29,486               -
   Issuance of Class B Common Stock in connection with mergers..............             -               -          73,500
   Conversion of 8.25% Convertible Preferred Stock..........................        (2,666)         (1,526)              -
   Conversion of Mandatory Convertible Preferred Stock......................       (58,955)        (28,470)              -

</TABLE>
                             See accompanying notes.
                                       F-6
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997

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-storage   facilities   which  offer
     self-storage  spaces for  lease,  usually on a  month-to-month  basis,  for
     personal  and  business  use.  The  Company,   through  a  majority   owned
     subsidiary,   also  owns  and  operates  commercial  properties  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 self-storage  facilities property operator and by Public
     Storage  Commercial   Properties  Group,  Inc.,  its  commercial   property
     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.

          In 1996 and 1997,  the Company  organized  Public  Storage  Pickup and
     Delivery,  Inc. as a separate  corporation and a related  partnership  (the
     corporation  and partnership  are  collectively  referred to as "PSPUD") to
     operate a portable  self-storage  business that rents storage containers to
     customers for storage in central  warehouses.  At December 31, 1997,  PSPUD
     operated 49 facilities in 16 states.

          On January 2, 1997, the Company  reorganized  its commercial  property
     operations into a separate private REIT (the "Private  REIT").  The Private
     REIT contributed its assets to a newly created  operating  partnership (the
     "Operating Partnership") in exchange for a general partnership interest and
     limited  partnership  interests.  The Company and certain  partnerships  in
     which the Company has a controlling interest contributed  substantially all
     of their commercial properties to the Operating Partnership in exchange for
     limited partnership interests or to the Private REIT in exchange for common
     stock. At December 31, 1997, the Private REIT and the Operating Partnership
     owned 49 properties  located in 10 states.  The Operating  Partnership also
     managed the  commercial  properties  owned by the  Company  and  affiliated
     entities.  As of December 31, 1997, the Company owned  approximately 53% of
     the  Private  REIT  which  owned   approximately   19%  of  the   Operating
     Partnership. The balance of the Operating Partnership is primarily owned by
     the Company and partnerships  controlled by the Company. On March 17, 1998,
     the Private  REIT  merged  into Public  Storage  Properties  XI,  Inc.,  an
     affiliated  publicly traded REIT and the name of the surviving  corporation
     was changed to PS Business Parks, Inc. ("PSBP").

          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, 1997, the Company had direct and indirect equity  interests in
     1,136  properties  located  in  38  states,  including  1,073  self-storage
     facilities  and 63  commercial  properties.  All of  these  facilities  are
     operated by the Company under the "Public Storage" name.

2.   Summary of significant accounting policies
     ------------------------------------------
          Basis of presentation
          ---------------------
          The  consolidated  financial  statements  include the  accounts of the
     Company,   PSPUD,  the  Private  REIT,  the  Operating   Partnership,   and
     thirty-three controlled limited partnerships (the "Consolidated Entities").
     Collectively,  the Company, the Operating  Partnership and the Consolidated
     Entities  own a total  of 955 real  estate  facilities,  consisting  of 894
     self-storage facilities and 61 commercial properties.

          At December 31, 1997,  the Company also has equity  investments  in 29
     other affiliated limited partnerships and two REITs owning in aggregate 181
     real  estate  facilities  (179  self-storage  facilities  and 2  commercial
                                      F-7
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997


     properties)  which are  managed by the  Company.  The  Company's  ownership
     interest in such real estate  entities is less than 50% of the total equity
     interest and the Company's  investments in these entities are accounted for
     using the equity method.

          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 1997,  1996 and 1995;  accordingly,  no provision  for income
     taxes has been made in the accompanying financial statements.

          Financial instruments
          ---------------------
          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.

          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  applicable  interest rates  approximate  market
     rates for these 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.

          Real estate facilities
          ----------------------
          Real estate facilities are recorded at cost.  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.

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

          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, 1997 and 1996, intangible assets are net of accumulated amortization of
     $19,782,000 and  $10,473,000,  respectively.  Included in depreciation  and
     amortization  expense  is  $9,309,000  in  1997,  $9,309,000  in  1996  and
     $1,164,000 in 1995 (for the period from November 16, 1995 through  December
     31, 1995) related to the amortization of intangible assets.

                                      F-8
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997

          Revenue and 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.
     Advertising costs are expensed as incurred.

          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 Entities conducted  independent  environmental
     investigations  of their  real  estate  facilities.  As a  result  of these
     investigations,  the Company recorded an amount which, in management's best
     estimate and based upon  independent  analysis,  was  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" in 1995.  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.

          Net income per common share
          ---------------------------
          In 1997, the Financial Accounting Standards Board issued Statement No.
     128,  Earning per Share.  Statement 128 replaced the calculation of primary
     and fully  diluted  net income per share with basic and  diluted net income
     per share.  Unlike primary net income per share, basic net income per share
     excludes  any  dilutive  effects  of  options,   warrants  and  convertible
     securities.  Diluted net income per share is very similar to the previously
     reported  fully  diluted  net income  per  share.  All net income per share
     amounts for all periods have been presented and where appropriate, restated
     to conform to Statement 128 requirements.

          Diluted  net income per common  share is computed  using the  weighted
     average common shares outstanding (adjusted for stock options). The Class B
     Common Stock is not included in the  determination of net income per common
     share because all contingencies required for the conversion to common stock
     have not been satisfied as of December 31, 1997. In addition, the inclusion
     of the Company's  convertible  preferred stock in the  determination of net
     income per common share has been determined to be anti-dilutive.

          In computing  earnings per common  share,  preferred  stock  dividends
     totaling  $88,393,000,  $68,599,000  and  $31,124,000  for the years  ended
     December 31, 1997, 1996 and 1995, respectively, reduced income available to
     common stockholders.

          Stock-based compensation
          ------------------------
          In  October  1995,  the FASB  issued  SFAS  No.  123  "Accounting  for
     Stock-Based  Compensation"  ("Statement  123") which provides  companies an
     alternative to accounting for stock-based  compensation as prescribed under
     APB Opinion No. 25 (APB 25). Statement 123 encourages, but does not require
     companies to recognize  expense for stock-based  awards based on their fair
     value at date of grant.  Statement  123 allows  companies  to  continue  to
     follow  existing  accounting  rules  (intrinsic  value method under APB 25)
     provided  that  pro-forma  disclosures  are  made of what  net  income  and
     earnings per share would have been had the new fair value method been used.
     The Company has elected to adopt the disclosure  requirements  of Statement
     123 but will continue to account for stock-based compensation under APB 25.
     Statement  123's  disclosure  requirements  are  applicable to  stock-based
     awards granted in fiscal years beginning after December 15, 1994.

                                      F-9
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997

          Reclassifications
          -----------------
          Certain  reclassification have been made to the consolidated financial
     statements  for the  years  ended  December  31,  1996 and 1995 in order to
     conform with the 1997 presentation.

3.   Business combinations
     ---------------------

          Mergers with affiliated REITs
          -----------------------------
          During  1997,  the  Company  completed  merger  transactions  with six
     affiliated  public REITs whereby the Company  acquired all the  outstanding
     stock of the REITs which it did not previously own in exchange for cash and
     common  stock  of the  Company.  The  aggregate  acquisition  cost of these
     mergers is summarized as follows:
<TABLE>
<CAPTION>


                                                                              Merger consideration
                                                                 --------------------------------------------
                                                                  Common                 Pre-existing
Entity                                    Date of merger          Stock        Cash      investment    Total
-------------------------------------     ------------------   ----------- ----------   -----------  ---------
                                                                           (Amounts in thousands)
<S>                                       <C>                  <C>          <C>          <C>         <C>
Public Storage Properties XIV, Inc.       April 11, 1997       $  34,450    $  9,145     $ 19,977    $ 63,572
Public Storage Properties XV, Inc.        April 11, 1997          29,764       8,883       18,137      56,784
Public Storage Properties XVI, Inc.       June 24, 1997           41,060      10,804       22,225      74,089
Public Storage Properties XVII, Inc.      June 24, 1997           34,590      15,793       25,862      76,245
Public Storage Properties XVIII, Inc.     June 24, 1997           39,727      17,570       19,841      77,138
Public Storage Properties XIX, Inc.       June 24, 1997           32,409       6,667       18,003      57,079
                                                               ----------- ----------   -----------  ---------
                                                                $212,000     $68,862     $124,045    $404,907
                                                               =========== ==========   ===========  =========
</TABLE>
          During 1996,  the Company  completed  merger  transactions  with eight
     affiliated  public REITs whereby the Company  acquired all the  outstanding
     stock of the REITs for an aggregate cost of $356,835,000, consisting of the
     issuance of 8,839,181 shares of the Company's common stock  ($204,932,000),
     $79,461,000  reduction  of  the  Company's   pre-existing   investment  and
     $72,442,000 in cash.

          Affiliated Partnership acquisitions:
          ------------------------------------
          During 1997,  the Company  increased its ownership  interest in twelve
     affiliated  limited  partnerships  in  which  the  Company  is the  general
     partner.  Prior  to  the  acquisitions,   the  Company  accounted  for  its
     investment in each of the twelve partnerships using the equity method. As a
     result of increasing  its ownership  interest and obtaining  control of the
     partnerships,  the  Company  began  to  consolidate  the  accounts  of  the
     partnerships  in the Company's  consolidated  financial  statements.  These
     transactions are summarized as follows:
<TABLE>
<CAPTION>

                                           Economic
                                        Interest after     Date                 Pre-existing
Entity                                   Acquisition    Purchased      Cash      investment        Total
------------------------------       ------------------ ----------- -----------  -----------    ---------
                                                                    (Amounts in thousands)
<S>                                          <C>               <C>      <C>        <C>          <C>
PS Institutional Fund II                     75%         Sept. 1997     $52,124    $ 44,262     $ 96,386
PS Miniwarehouses Funds I-IX                 95%         Oct. 1997       28,244       4,582       32,826
PS Co-Investment Partnership                 52%         Nov. 1997       15,578      16,511       32,089
                                                                    -----------  -----------    ---------
                                                                        $95,946     $65,355     $161,301
                                                                    ===========  ===========    =========
</TABLE>


          During 1996, the Company increased its ownership interest and obtained
     control of three limited partnerships. As a result, commencing in 1996, the
     Company  began  to  consolidate  the  accounts  of these  partnerships  for
     financial  statement  purposes.  The  aggregate  amount  of  the  interests
     acquired totaled $145,270,000  consisting of the issuance of $58,955,000 of
     Series  CC  Convertible  Preferred  Stock,  $45,235,000  reduction  of  the
     Company's pre-existing investment and cash of $41,080,000.

                                      F-10
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997


          Each of the above mergers with affiliated  REIT's and  acquisitions of
     partnership interests discussed above 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.  The fair market values of
     the  assets   acquired  and   liabilities   assumed  with  respect  to  the
     transactions occurring in 1997 and 1996 are summarized as follows:
<TABLE>
<CAPTION>

                                                 REIT         Partnership
                                                mergers      Acquisitions       Total
                                             ------------   --------------    -----------
                                                       (Amounts in thousands)
1997 BUSINESS COMBINATIONS:
---------------------------
<S>                                          <C>               <C>            <C>
    Real estate facilities...............    $  413,597        $ 243,750      $ 657,347
    Other assets.........................         2,424            1,695          4,119
    Accrued and other liabilities........       (11,114)         (10,076)       (21,190)
    Minority interest....................             -          (74,068)       (74,068)
                                             ------------   --------------    -----------
                                              $ 404,907        $ 161,301      $ 566,208
                                             ============   ==============    ===========

1996 BUSINESS COMBINATIONS:
---------------------------
    Real estate facilities...............      $364,984         $166,810       $531,794
    Other assets.........................         5,032              817          5,849
    Accrued and other liabilities........       (13,181)          (2,218)       (15,399)
    Minority interest....................             -          (20,139)       (20,139)
                                             ------------   --------------    -----------
                                               $356,835         $145,270       $502,105
                                             ============   ==============    ===========
</TABLE>


          The historical  operating results of the above  acquisitions  prior to
     each  respective  acquisition  date have not been included in the Company's
     historical  operating  results.  Pro forma data  (unaudited)  for the years
     ended December 31, 1997 and 1996 as though the business  combinations above
     had been effective at the beginning of fiscal 1996 are as follows:
<TABLE>
<CAPTION>
                                                                    For the Year
                                                                 Ended December 31,
                                                      ------------------------------------
                                                               1997               1996
                                                      -----------------    ---------------
                                                      (in thousands except per share data)

          <S>                                              <C>                 <C>
          Revenues....................................      $515,286            $453,940
          Net income..................................      $181,678            $173,542

          Net income per common share (Basic).........         $0.92               $1.13
          Net income per common share (Diluted).......         $0.91               $1.13
</TABLE>
          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 fiscal 1996 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 and (iii)  estimated  increase in
     depreciation and amortization expense.


                                      F-11
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997


4.   Real Estate Facilities
     ----------------------
          Activity in  real estate  facilities during 1997, 1996 and 1995 is as
     follows:
<TABLE>
<CAPTION>

                                                           1997                   1996                1995
                                                       ----------            ----------             ---------
                                                                     (Amounts in thousands)
Operating facilities, at cost:
<S>                                                    <C>                   <C>                     <C>
   Beginning balance..........................         $2,185,498            $1,405,155              $967,718
   Property acquisitions
     Business combinations (Note 3) ..........            657,347               531,794               230,519
     Other  acquisitions......................            184,504               202,696               191,002
  Developed facilities........................              8,639                18,261                 5,265
   Acquisition of minority interest (Note 8)..              8,904                 7,226                  (223)
  Capital improvements........................             35,117                20,366                11,361
  Property dispositions.......................             (2,480)                    -                  (487)
                                                       ----------            ----------            ----------
   Ending balance.............................          3,077,529             2,185,498             1,405,155
                                                       ----------            ----------            ----------


Accumulated depreciation:
  Beginning balance..............................        (297,655)             (241,966)             (202,745)
  Additions during the year......................         (82,047)              (55,689)              (39,376)
  Property dispositions .........................           1,454                     -                   155
                                                       ----------            ----------            ----------
   Ending balance................................        (378,248)             (297,655)             (241,966)
                                                       ----------            ----------            ----------

Construction in progress:
  Beginning balance..............................          35,815                 7,979                     -
  Current development cost.......................          45,865                46,097                13,244
  Property contribution to real estate entities..         (30,406)                    -                     -
  Newly opened development facilities............          (8,639)              (18,261)               (5,265)
                                                       ----------            ----------            ----------
   Ending balance................................          42,635                35,815                 7,979
                                                       ----------            ----------            ----------

Total real estate facilities.....................      $2,741,916            $1,923,658            $1,171,168
                                                       ==========            ==========            ==========
</TABLE>
          During  1997,  the  Company  acquired  a  total  of  176  real  estate
     facilities for an aggregate cost of $657,347,000 in connection with certain
     business  combinations (Note 3). The Company also acquired an additional 14
     real estate  facilities  from third  parties with an aggregate  acquisition
     cost of  $184,504,000  consisting  of the  issuance of  minority  interests
     ($119,279,000) and cash ($65,225,000).

          During  1996,  the  Company  acquired  a  total  of  154  real  estate
     facilities  for an  aggregate  cost of  $531,794,000,  in  connection  with
     certain  business  combinations  (Note 3). The  Company  also  acquired  an
     additional 58 real estate  facilities  from third parties with an aggregate
     acquisition cost of $202,696,000 consisting of the cancellation of mortgage
     notes  receivable  ($700,000),  cancellation  of  pre-existing  investments
     ($1,891,000),  assumption of mortgage notes payable ($1,701,000),  and cash
     ($198,404,000).

          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.  During 1995, the Company also acquired an additional 57 real
     estate  facilities for an aggregate cost of $191,002,000  consisting of the
     cancellation of mortgage notes receivable ($16,435,000),  the assumption of
     mortgage   notes   payable   ($60,908,000),   issuance   of  common   stock
     ($10,598,000) and cash ($103,061,000).

                                   F-12
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997

          Commencing  in  1995,  the  Company  began to  construct  self-storage
     facilities   and  in  1997  PSPUD   commenced   construction   of  portable
     self-storage facilities. Through December 31, 1997, the Company constructed
     and opened for operation seven self-storage facilities,  one of which began
     operations  in  August  1995,  four in 1996  and two in 1997.  Included  in
     construction  in  progress at December  31, 1997  are costs  related to the
     construction of four self-storage  facilities and ten portable self-storage
     facilities  and an additional  17  self-storage  facilities  and 5 portable
     self-storage facilities planned for development.

          A substantial  number of the real estate  facilities  acquired  during
     1997,  1996 and 1995 were  acquired  from  affiliates  in  connection  with
     business  combinations with an aggregate  acquisition cost of approximately
     $657,347,000, $531,794,000 and $230,519,000 respectively.

          In April 1997,  the Company and a state  pension  fund created a joint
     venture  partnership  for the purpose of  developing  up to $220 million of
     self-storage  facilities.  The Company owns 30% of the partnership interest
     and the state pension fund owns the  remaining 70% interest.  In connection
     with  the  formation  of  the  joint  venture   partnership,   the  Company
     contributed  8  self-storage  facilities  ($30,406,000),  which  were under
     construction,  to  the  joint  venture  partnership  in  exchange  for  its
     partnership  interest.  The  Company's  investment  in  the  joint  venture
     partnership is accounted for using the equity method (See Note 5).

          At December 31, 1997, the adjusted basis of real estate facilities for
     Federal income tax purposes was approximately  $2.3 billion which is net of
     accumulated depreciation of $733 million.

 5.  Investments in real estate entities
     -----------------------------------
          During 1997 and 1996, the Company's investment in real estate entities
     decreased  principally  as a result of  business  combinations  whereby the
     Company  eliminated  approximately  $189.4  million  and $124.7  million of
     pre-existing  equity  in  real  estate  entity  investments,  respectively.
     Offsetting  these  decreases are  additional  investments in numerous other
     unconsolidated  affiliates  for $46.2 million and $83.9 million in 1997 and
     1996, respectively, in cash.

          During 1995, the Company (i) acquired limited and general  partnership
     interests 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,  1997,  the  Company's  investments  in real  estate
     entities  consist  generally  of  ownership   interests  in  29  affiliated
     partnerships  and  common  stock  in 2  affiliated  REITs.  Such  interests
     consists of  ownership  interests  of less than 50% 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  governing  documents  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.

          During 1997, 1996 and 1995, the Company  recognized  earnings from its
     investments of $17,569,000,  $22,121,000 and $3,763,000,  respectively, and
     received  cash   distributions   totaling   $15,673,000,   $27,326,000  and
     $5,580,000,  respectively.  Included  in equity in  earnings of real estate
     entities for 1997,  1996 and 1995 is the  Company's  share of  depreciation

                                   F-13
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997

     expense  ($11,474,000,   $17,450,000  and  $2,045,000,   respectively)  and
     environmental costs ($510,000 in 1995) of the real estate entities.

          Summarized  combined  financial  data (based on historical  cost) with
     respect to those real estate entities in which the Company had an ownership
     interest at December 31, 1997 are as follows:

                                                          ----------------------
                                                             1997          1996
                                                          ----------  ----------
                                                               (in thousands)
Year ended December 31,
   Rental income......................................... $  94,652    $  86,581
   Total revenues........................................ $  96,650    $  87,945
   Cost of operations.................................... $  33,077    $  30,306
   Depreciation.......................................... $  12,805    $  11,648
   Net income............................................ $  40,775    $  35,660

At December 31,
   Total assets, net of accumulated depreciation......... $ 467,002    $ 363,490
   Total debt............................................ $  77,513    $  80,549
   Total equity.......................................... $ 370,546    $ 271,623

          As indicated  above,  in April 1997,  the Company and a state  pension
     fund formed a joint venture partnership for the purpose of developing up to
     $220 million of self-storage facilities. As of December 31, 1997, the joint
     venture had completed construction on seven self-storage  facilities with a
     total cost of  approximately  $40.8  million,  and had 17 facilities  under
     construction with an aggregate cost incurred to date of approximately $48.9
     million and total  additional  estimated cost to complete of $29.3 million.
     The venture is funded solely with equity capital consisting of 30% from the
     Company and 70% from the state pension fund.


 6.  Revolving line of credit
     ------------------------
          As of December  31,  1997,  the Company had  borrowings  of $7 million
     (none at March 27, 1998) on its unsecured  credit agreement with a group of
     commercial  banks.  The credit  agreement  (the  "Credit  Facility")  has a
     borrowing  limit of $150 million and an  expiration  date of July 31, 2001.
     The expiration date may be extended by one year on each  anniversary of the
     credit agreement. Interest on outstanding borrowings is payable monthly. At
     the option of the Company, the rate of interest charged is equal to (i) the
     prime rate or (ii) a rate  ranging from the London  Interbank  Offered Rate
     ("LIBOR") plus 0.40% to LIBOR plus 1.10% depending on the Company's  credit
     ratings and  coverage  ratios,  as  defined.  In  addition,  the Company is
     required  to pay a  quarterly  commitment  fee of 0.250% (per annum) of the
     unused  portion of the Credit  Facility.  The  Credit  Facility  allows the
     Company,  at its  option,  to  request  the group of banks to  propose  the
     interest  rate they would charge on specific  borrowings  not to exceed $50
     million; however, in no case may the interest rate proposal be greater than
     the amount provided by the Credit Facility.

          Under covenants of the Credit Facility, the Company is required to (i)
     maintain a balance  sheet  leverage  ratio of less than 0.40 to 1.00,  (ii)
     maintain net income of not less than $1.00 for each fiscal  quarter,  (iii)
     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)  maintain  a
     minimum total shareholders' equity (as defined).  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 than three times the Company's  unsecured  recourse  debt) or
     sell assets. The Company was in compliance with the covenants of the Credit
     Facility at December 31, 1997.
                                      F-14
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997

7.   Notes payable
     -------------
          Notes payable at December 31, 1997 and 1996 consist of the following:

<TABLE>
<CAPTION>


                                                                          1997                          1996
                                                                 -------------------------    -------------------------
                                                                 Carrying                     Carrying
                                                                  amount      Fair value       amount        Fair value
                                                                 ----------  -------------    ----------  -------------
                                                                                 (Amounts in thousands)
<C>                                                               <C>         <C>              <C>             <C>
7.08% unsecured senior notes, due November 2003......             $53,250     $  53,250        $59,750         $59,750

Mortgage notes payable:
     10.55% mortgage notes secured by real estate
         facilities, principal and interest payable
         monthly, due August 2004....................              30,355        34,571         32,115          34,964

     7.07% to  11.00%  mortgage  notes  secured  by real  estate
         facilities, principal and interest payable monthly, due
         at varying dates between
         July 1998 and September 2028................              12,953        12,953         16,578          16,578
                                                                 ----------  -------------    ----------  -------------
                                                                  $96,558      $100,774       $108,443        $111,292
                                                                 ==========  =============    ==========  =============
</TABLE>
          During 1995, 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, 1997.

          The  10.55%   mortgage   notes   consist  of  five  notes   which  are
     cross-collateralized  by 19  properties  and  are  due to a life  insurance
     company. 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.

          Mortgage  notes payable are secured by 26 of the Company's real estate
     facilities  having an aggregate net book value of $60.5 million at December
     31, 1997.


                                      F-15
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997

          At  December  31,  1997,  approximate  principal  maturities  of notes
     payable are as follows:
<TABLE>
<CAPTION>
                                                           Fixed Rate
                                                         Mortgage debt
                                   7.08% Unsecured     (weighted average
                                    Senior Notes         rate of 9.77%)            Total
                                   ----------------   -------------------      -----------
                                                      (in thousands)
          <S>                           <C>               <C>                    <C>
          1998................           $ 7,250           $ 7,881                $15,131
          1999 ...............             8,000             6,398                 14,398
          2000................             8,750             2,622                 11,372
          2001................             9,500             2,910                 12,410
          2002................             9,750             3,229                 12,979
          Thereafter..........            10,000            20,268                 30,268
                                   ----------------   -------------------      -----------
                                         $53,250           $43,308                $96,558
                                   ================   ===================      ===========
</TABLE>
          Interest paid  (including  interest  related to the  borrowings on the
     Credit Facility) during 1997, 1996 and 1995 was $8,884,000, $10,312,000 and
     $8,595,000,  respectively. In addition, in 1997, 1996 and 1995, the Company
     capitalized   interest  totaling   $2,428,000,   $1,861,000  and  $307,000,
     respectively, related to construction of real estate facilities.

8.  Minority interest
    -----------------
          In consolidation,  the Company  classifies  ownership  interests other
     than its own in the net  assets  of each of the  Consolidated  Entities  as
     minority  interest  on  the  consolidated  financial  statements.  Minority
     interest  in  income  consists  of the  minority  interests'  share  of the
     operating results of the Company relating to the consolidated operations of
     the Consolidated Entities.

          During 1997, the Company acquired limited partnership interests in the
     Consolidated  Entities in several  transactions  for an  aggregate  cost of
     $21,559,000.  These  transactions  had  the  effect  of  reducing  minority
     interest by  approximately  $12,655,000  (the historical book value of such
     interests in the underlying net assets of the partnerships).  The excess of
     the cost over the underlying book value  ($8,904,000) has been allocated to
     real estate  facilities  in  consolidation.  In 1996 and 1995,  the Company
     acquired  interests in the  Consolidated  Entities at an aggregate  cost of
     $15,419,000 and $32,683,000,  respectively,  reducing  minority interest by
     approximately $8,193,000 and $32,906,000,  respectively. The excess of cost
     over  underlying  book values was  allocated to real estate  facilities  in
     consolidation.

          During 1997,  the Private  REIT issued  shares of its common stock and
     the  Operating  Partnership  issued  limited  partnership  units  to  third
     parties,  primarily  in  exchange  for real estate  facilities,  increasing
     minority interest approximately $117.1 million.

          During  1997,  1996 and 1995,  in  connection  with  certain  business
     combinations  (Note 3) minority  interest  was  increased  by  $74,068,000,
     $20,139,000  and  $17,034,000,  respectively,  representing  the  remaining
     partners'  equity interests in the aggregate net assets of the Consolidated
     Entities.

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

          Prior to the PSMI Merger,  PSMI provided property  operation  services
     for a fee to the Company  under a management  agreement and an affiliate of
     PSMI administered the day-to-day  investment  operations for a fee pursuant
     to an advisory contract.  Pursuant to the management agreement,  PSMI or an

                                      F-16
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997

     affiliate  of PSMI  operated  all of the  properties  in which the  Company
     invested  in for a fee  which is equal to 6% of the gross  revenues  of the
     self-storage  facilities spaces managed and 5% of the gross revenues of the
     commercial  properties operated.  Management fees relating to the Company's
     real estate facilities, which are included in cost of operations,  amounted
     to $10,232,000 in 1995.  During 1995 (from January 1, 1995 through November
     16, 1995),  the Company paid advisory fees equal to $6,437,000  pursuant to
     the advisory contract.

          In  connection  with the PSMI Merger,  the Company  acquired  property
     management  contracts for (i)  self-storage  facilities owned by affiliated
     entities and, to a lesser extent,  third parties and (ii) through ownership
     in a subsidiary,  commercial properties. These facilities constitute all of
     the United States self-storage  facilities and commercial  properties doing
     business  under the "Public  Storage" name and, with the exception of third
     party  properties,  all  those in which the  Company  had an  interest.  At
     December 31, 1997, the Company managed 1,107  self-storage  facilities (894
     owned by consolidated  facilities,  179 owned by unconsolidated  affiliates
     and 34 owned by third parties) and 63 commercial properties were managed by
     the Operating Partnership (61 owned by consolidated affiliates  and 2 owned
     by unconsolidated affiliates).

          The property  management  contracts generally provide for compensation
     equal to 6%,  in the case of the  self-storage  facilities,  and 5%, in the
     case of the  commercial  properties  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.


                                      F-17
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997


10.  Shareholders' equity
     --------------------
          Preferred Stock
          ---------------
          At December 31, 1997 and 1996, the Company had the following series of
     Preferred Stock outstanding:
<TABLE>
<CAPTION>


                                                        At December 31, 1997                 At December 31, 1996
                                                   ------------------------------        ------------------------------
                                      Dividend        Shares          Carrying             Shares       Carrying Amount
               Series                    Rate       Outstanding        Amount            Outstanding
-------------------------------     -------------  --------------  --------------        --------------  --------------
<S>                                      <C>           <C>         <C>                     <C>          <C>
 Series A                                10.000%       1,825,000   $  45,625,000           1,825,000    $  45,625,000
 Series B                                 9.200%       2,386,000      59,650,000           2,386,000       59,650,000
 Series C                             Adjustable       1,200,000      30,000,000           1,200,000       30,000,000
 Series D                                 9.500%       1,200,000      30,000,000           1,200,000       30,000,000
 Series E                                10.000%       2,195,000      54,875,000           2,195,000       54,875,000
 Series F                                 9.750%       2,300,000      57,500,000           2,300,000       57,500,000
 Series G                                 8.875%           6,900     172,500,000               6,900      172,500,000
 Series H                                 8.450%           6,750     168,750,000               6,750      168,750,000
 Series I                                 8.625%           4,000     100,000,000               4,000      100,000,000
 Series J                                 8.000%           6,000     150,000,000                   -                -
                                                   --------------  --------------        --------------  --------------
   Total Senior Preferred Stock                       11,129,650     868,900,000          11,123,650      718,900,000
                                                   --------------  --------------        --------------  --------------

 Convertible                               8.25%       2,132,334      53,308,000           2,238,975       55,974,000
 Mandatory Convertible  - Series CC       13.00%               -               -              58,955       58,955,000
                                                   --------------  --------------        --------------  --------------
   Total Convertible Preferred Stock                   2,132,334      53,308,000           2,297,930      114,929,000
                                                   --------------  --------------        --------------  --------------
                                                      13,261,984    $922,208,000          13,421,580     $833,829,000
                                                   ==============  ==============        ==============  ==============
</TABLE>
          During 1997,  the Company  issued  6,000,000  depositary  shares (each
     representing  1/1,000  of a share) of its 8.00%  Series J  Preferred  Stock
     (August 25, 1997) raising net proceeds of approximately $144.9 million.

          During 1996,  the Company  issued  6,750,000  depositary  shares (each
     representing  1/1,000  of a share) of its 8.45%  Series H  Preferred  Stock
     (January 25, 1996) raising net proceeds of approximately $163.1 million and
     4,000,000  depositary shares (each representing  1/1,000 of a share) of its
     8-5/8% Series I Preferred  Stock (November 1, 1996) raising net proceeds of
     approximately $96.7 million.

          In  April  1996,  in  connection   with  the  acquisition  of  limited
     partnership  interests  (Note 3), the Company  issued  $58,955,000  (58,955
     shares)  of its  Mandatory  Convertible  Preferred  Stock,  Series  CC (the
     "Series CC Preferred  Stock").  During the second  quarter of 1997, all the
     Series CC Convertible  Preferred Stock was converted into 2,184,250  shares
     of common stock.

          The Series A through Series J  (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,  all of the Company's  Convertible
     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.

          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 less,

                                      F-18
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997

     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, 1997,  there were no dividends in
     arrears and the Debt Ratio was 3.1%.

          Except   under   certain   conditions   relating   to  the   Company's
     qualification  as a REIT,  the Senior  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, Series I - October 31, 2001, Series
     J - August 31, 2002. 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 (or  depositary  share in the case of
     the Series H, Series I and Series J), plus accrued and unpaid dividends.

          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.  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.


          Common stock
          ------------
          During 1997,  1996 and 1995,  the Company  issued shares of its common
     stock as follows:
<TABLE>
<CAPTION>

                                        1997                        1996                         1995
                              -------------------------    ------------------------- -------------------------
                                Shares        Amount         Shares        Amount        Shares       Amount
                              -----------   -----------    -----------   ----------- -----------   -----------
                                                 (Dollar amounts in thousands)
<S>                            <C>            <C>          <C>           <C>           <C>             <C>
Public offerings.............. 6,600,000      $181,448     6,151,200     $ 128,501     5,482,200       $82,068
In connection with mergers
  (Note 3).................... 7,681,432       212,000     8,839,181       204,932    36,113,800       573,756
Issuance costs of mergers.....         -             -             -             -             -        (2,527)
Exercise of stock options.....    94,786         1,075       100,663         1,037        46,670           403
Issuance to affiliates........         -             -        43,197         1,000        40,000           582
Conversion of Mandatory
  Convertible Preferred
  Stock.......................         -             -     1,611,265        27,960             -             -
Conversion of Series CC
  Convertible Preferred
  Stock....................... 2,184,250        58,955             -             -             -             -
Acquisition of interests in
  real estate entities........         -             -             -             -       257,067         4,034
Acquisition of real estate
  facilities (Note 4).........         -             -             -             -       747,355        10,598
Conversion of 8.25%
  Convertible Preferred Stock.   179,651         2,666       102,721         1,526             -             -
                              -----------   -----------    -----------   ----------- -----------   -----------
                              16,740,119      $456,144    16,848,227      $364,956    42,687,092      $668,914
                              ===========   ===========   ============   =========== ===========   ===========
</TABLE>
          Shares of common stock  issued to  affiliates  in 1996 and 1995,  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.

                                      F-19
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997


          At December 31, 1997, the Company had 5,155,238 shares of common stock
     reserved in connection  with the Company's stock option plans (Note 11) and
     10,589,662  shares of  common  stock  reserved  for the  conversion  of the
     Convertible Preferred Stock and the Class B Common Stock.

          From  January  1, 1998  through  March 2,  1998,  the  Company  issued
     approximately  6.4 million  shares of common stock  raising an aggregate of
     approximately  $189  million.  The Company  intends to use the net proceeds
     from  this  offering  to make  investments  in real  estate  and  fund  the
     activities of its portable self-storage operations.

          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.  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
     $1.85 for the year ended December 31, 1997.

          Equity Stock
          ------------
          The Company is authorized to issue 200,000,000 shares of Equity Stock.
     The Articles of  Incorporation  provide that the Equity Stock may be issued
     from time to time in one or more  series  and gives the Board of  Directors
     broad authority to fix the dividend and distribution rights, conversion and
     voting rights,  redemption provisions and liquidation rights of each series
     of Equity Stock.

          In June 1997, the Company contributed  $22,500,000 (225,000 shares) of
     its Equity Stock,  Series A ("Equity  Stock") to a partnership in which the
     Company  is the  general  partner.  As a result of this  contribution,  the
     Company  obtained a controlling  interest in the  Partnership  and began to
     consolidate  the accounts of the Partnership and therefore the equity stock
     is  eliminated  in  consolidation.  The Equity Stock ranks on a parity with
     Common Stock and junior to the Company's  Cumulative Senior Preferred Stock
     and Convertible  Preferred Stock with respect to general  preference rights
     and has a  liquidation  amount of ten times the amount  paid to each Common
     Share up to a maximum of $100 per share. Quarterly  distributions per share
     on the Equity Stock are equal to the lesser of (i) 10 times the amount paid
     per Common Stock or (ii) $2.20.

                                      F-20
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997


          Dividends
          ---------
          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 1997, 1996
     and 1995 were characterized as ordinary income.

          The following  summarizes  dividends  paid during 1997,  1996 and 1995
     (with the  exception of the Series G Preferred  Stock  distributions  which
     were accrued and unpaid at December 31, 1995):
<TABLE>
<CAPTION>
                                  1997                       1996                       1995
                       -------------------------    ------------------------- -------------------------
                        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         5,488      $  2.300         5,488
Series C                 $  1.844       2,213       $  1.840         2,212      $  1.970         2,364
Series D                 $  2.375       2,850       $  2.375         2,850      $  2.375         2,850
Series E                 $  2.500       5,488       $  2.500         5,488      $  2.292         5,030
Series F                 $  2.437       5,606       $  2.437         5,606      $  1.618         3,721
Series G                 $  2.219      15,309       $  2.219        15,479      $  0.092           638
Series H                 $  2.112      14,259       $  1.978        13,348            -              -
Series I                 $  2.156       8,625       $  0.359         1,438            -              -
Series J                 $  0.689       4,133             -              -            -              -
Convertible              $  2.062       4,531       $  2.063         4,679      $  2.063         4,744
Series CC                $260.000      15,328        $97.500         5,748            -              -
Mandatory Convertible
  Participating                -            -        $54.487         1,700       $55.322         1,726
                                     ----------                  -----------               -----------
                                       88,393                       68,599                      31,124

Common                     $0.880      86,181         $0.880        67,709      $  0.880        38,586
                                     ----------                  -----------               -----------
                                     $174,574                     $136,308                     $69,710
                                     ==========                  ===========               ===========
</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
     1998 will be equal to 6.75% per annum.

          The Mandatory Convertible  Participating Preferred Stock was issued in
     connection with the acquisition of all of the limited partnership interests
     in a real estate limited partnership in 1995. Dividends with respect to the
     Mandatory  Convertible  Participating  Preferred Stock varied  depending on
     operating   results  of  the  underlying  real  estate  facilities  of  the
     partnership.  During June 1996,  the  Mandatory  Convertible  Participating
     Preferred Stock was exchanged for common stock of the Company.

11.  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) (the
     "1990 Plan") 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) (the "1994 Plan") and a
                                      F-21
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997


     1996 Stock  Option and  Incentive  Plan  (which was adopted by the Board of
     Directors and approved by the shareholders in 1996 (the "1996 Plan"),  each
     of which  provides  for the grant of  non-qualified  options and  incentive
     stock  options.  (The  1990  Plan,  the 1994  Plan  and the  1996  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 and 1996  Plan,  ten years  after the date of
     grant.  The 1996 Plan also  provides for the grant of  restricted  stock to
     officers,  key employees and service  providers on terms  determined by the
     Audit  Committee of the Board of Directors;  no shares of restricted  stock
     have been granted.

          Information  with  respect  to the  Plans  during  1997 and 1996 is as
     follows:
<TABLE>
<CAPTION>
                                                        1997                           1996
                                            -----------------------------  ------------------------------
                                                Number         Average        Number         Average
                                                  of          Price per         of          Price per
                                               Options          Share         Options         Share
                                            ------------   ---------------  -------------  ---------------
<S>                                          <C>                <C>           <C>             <C>
Options outstanding January 1                1,752,169          $19.02        693,667         $13.61
  Granted                                      111,000           28.59      1,183,000          21.39
  Exercised                                    (94,786)          11.34       (100,663)         10.29
  Canceled                                     (72,168)          20.73        (23,835)         16.02
                                            ------------   ---------------  -------------  ---------------
Options outstanding December 31              1,696,215          $20.03      1,752,169         $19.02
                                                           ===============                 ===============

                                                $8.125                         $8.125
Option price range at December 31            to $30.00                     to $25.875

Options exercisable at December 31             778,012          $17.74        367,947         $13.05
                                            ============   ===============  =============  ===============

Options available for grant at December 31   3,459,003                      3,497,835
                                            ============                    =============
</TABLE>
         In 1996, the Company adopted the disclosure  requirement  provision of
     SFAS 123 in accounting for stock-based compensation issued to employees. As
     of December 31, 1997 and 1996 there were  1,412,734 and  1,391,500  options
     outstanding,  respectively,  that  were  subject  to  SFAS  123  disclosure
     requirements.  The fair  value of these  options  was  estimated  utilizing
     prescribed  valuation  models and assumptions as of each  respective  grant
     date.  Based on the results of such estimates,  management  determined that
     there was no material  effect on net income or  earnings  per share for the
     years ended  December 31, 1997 and 1996.  The remaining  contractual  lives
     were 7.9 years and 8.6 years, respectively, at December 31, 1997 and 1996.

12.  Events subsequent to December 31, 1997
     --------------------------------------
          On January 21, 1998, the Private REIT entered into an agreement with a
     group of unaffiliated institutional investors under which it would issue up
     to $155,000,000 of common stock. An initial $50,000,000 of common stock was
     issued  on  January  21,  1998 upon the  closing  of the  transaction.  The
     remaining $105,000,000 of common stock will be issued as funds are required
     to purchase commercial properties.

          In connection  with the merger of the Private REIT into Public Storage
     Properties  XI,  Inc. on March 17, 1998 (the  surviving  entity  renamed PS
     Business Parks,  Inc. - "PSBP"). PSBP exchanged 13 self-storage  facilities
     for 11 commercial  properties owned by the Company.  Upon completion of the
     merger, the Company and its Consolidated  Entities owned  approximately 58%
     of PSBP and the Operating  Partnership on a combined  basis. As a result of
     the March 17, 1998 merger and the agreement to issue  additional  shares of

                                      F-22
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997


     common  stock to the group of  unaffiliated  institutional  investors,  the
     Company  believes  that its reduced  ownership  will no longer  warrant the
     consolidation  of these  entities  effective  March 31, 1998. The Company's
     consolidated   financial   statements  include  the  following   summarized
     condensed  financial data associated with the consolidation of PSBP and the
     Operating Partnership:

                                                             (in thousands)
                                                            ----------------
     Year ended December 31, 1997
          Rental income.................................      $  30,169
          Total revenues................................      $  31,578
          Cost of operations............................      $  12,519
          Depreciation..................................      $   6,973
          Net income before minority interest...........      $  10,623
          Net income after minority interest............      $   9,247

     At December 31, 1997
          Total assets, net of accumulated depreciation.      $ 344,706

          Total minority interest.......................      $ 117,731
          Total net assets before minority interest.....      $ 335,904

          In February 1998, Public Storage Properties XX, Inc. ("Properties 20")
     agreed, subject to certain conditions,  to merge with and into the Company.
     Properties 20 is an affiliated  publicly  traded equity REIT. The merger is
     conditioned on approval by the shareholders of Properties 20. The estimated
     value  of  the  Properties  20  merger  is  approximately   $23.3  million.
     Properties 20 owns 7 self-storage facilities  (approximately 402,000 square
     feet)  located in five  states.  At December 31,  1997,  the Company  owned
     approximately  24% of Properties 20. The Company  expects that, if approved
     by the  Properties  20  shareholders,  the merger would be completed in the
     second quarter of 1998.

13.  Recent Accounting Pronouncements
     --------------------------------
          In June 1997, the Financial Accounting Standards Board ("FASB") issued
     Statement   of  Financial   Accounting   Standards   No.  130,   "Reporting
     Comprehensive   Income"  ("FAS  130"),  which  establishes   standards  for
     reporting  and display of  comprehensive  income and its  components.  This
     statement  requires  a  separate  statement  to report  the  components  of
     comprehensive  income for each  period  reported.  The  provisions  of this
     statement are effective for fiscal years beginning after December 15, 1997.
     The Company will  implement FAS 130 for the fiscal year ended  December 31,
     1998, but the Company does not expect the impact of FAS 130 to be material.

          In July  1997,  the FASB  issued  Statement  of  Financial  Accounting
     Standards No. 131, "Disclosures about Segments of an Enterprise and Related
     Information   ("FAS 131"),  which  establishes  standards  for the way that
     public business  enterprises report information about operating segments in
     annual  financial  statements  and requires that those  enterprises  report
     selected  information about operating segments in interim financial reports
     issued  to   shareholders.   This  statement  is  effective  for  financial
     statements for periods  beginning after December 15, 1997.  Management does
     not  expect  FAS  131 to  have a  significant  impact  upon  the  Company's
     reporting presentation.


                                      F-23
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997



14.  Commitments and Contingencies
     -----------------------------

          Lease obligations
          -----------------
          Each of the 49  facilities  operated by PSPUD as of December  31, 1997
     are located in buildings  leased from third parties.  The lease terms range
     from four to nine years with  renewal  options  at  varying  terms.  Future
     minimum lease payments at December 31, 1997 under noncancellable  operating
     leases are as follows:

                                                    (in thousands)
                          1998                         $11,413
                          1999                          10,752
                          2000                          10,313
                          2001                           9,633
                          2002                           6,336
                          Thereafter                     3,135
                                                    ------------
                              Total                    $51,582
                                                    ============

          Legal proceedings
          -----------------
          During 1997,  three cases were filed against the Company.  Each of the
     plaintiffs  in these  cases is suing the  Company on behalf of a  purported
     class of California  tenants who rented storage spaces from the Company and
     contends  that the  Company's  fees  for late  payments  under  its  rental
     agreements  for  storage  space  constitutes   unlawful  "penalties"  under
     California  law. None of the  plaintiffs  has assigned any dollar amount to
     the claims.

          The lower court has  dismissed  one of the cases and the  plaintiff in
     that case is in the process of appealing that dismissal.  The plaintiffs in
     the other two cases have voluntarily dismissed their cases, reserving their
     rights to refile  their  cases.  The Company is  continuing  to  vigorously
     contest the claims in all three cases.

          There are no other material proceedings pending against the Company or
     any of its subsidiaries.


                                      F-24
<PAGE>
                              PUBLIC STORAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997



15.  Supplementary quarterly financial data (unaudited)
     --------------------------------------------------
<TABLE>
<CAPTION>


                                                      Three months ended
                                 ---------------------------------------------------------------
                                   March 31,        June 30,       September 30,    December 31,
                                    1997             1997             1997             1997
                                 ------------  ---------------  ---------------  -------------------
                                            (in thousands, except per share data)
<S>                                  <C>             <C>              <C>              <C>
Revenues                             $100,740        $109,362         $126,008         $134,734
                                 ============  ===============  ===============  ===================
Net income                           $ 42,318        $ 44,251         $ 46,548         $ 45,532
                                 ============  ===============  ===============  ===================
Per Common Share (Note 2):
   Net income -  Basic               $   0.26        $   0.14(A)      $   0.27         $   0.24
                                 ============  ===============  ===============  ===================
   Net income -  Diluted             $   0.26        $   0.14(A)      $   0.27         $   0.24
                                 ============  ===============  ===============  ===================

                                                      Three months ended
                                   March 31,        June 30,       September 30,    December 31,
                                    1996             1996             1996             1996
                                 ------------  ---------------  ---------------  -------------------
                                            (in thousands, except per share data)
Revenues                             $ 74,527        $ 82,688         $ 87,518         $ 94,218
                                 ============  ===============  ===============  ===================
Net income                           $ 32,341        $ 37,739         $ 40,366         $ 43,103
                                 ============  ===============  ===============  ===================
Per Common Share (Note 2):
   Net income - Basic                $   0.24        $   0.27         $   0.30         $   0.29
                                 ============  ===============  ===============  ===================
   Net income - Diluted              $   0.24        $   0.27         $   0.30         $   0.29
                                 ============  ===============  ===============  ===================
</TABLE>
-------
(A)  Includes  the  effect  of a  $13,412,000  special  dividend  on  Series  CC
     Convertible Preferred Stock.

          Revenues for each of the three month  periods in 1997 and 1996 reflect
     reclassification to conform with the fiscal 1997 presentation. The 1996 and
     the first  three  quarters of 1997  earnings  per share  amounts  have been
     restated to comply with  Statement of Financial  Accounting  Standards 128-
     Earnings Per Share.

                                      F-25
<PAGE>
<TABLE>
<CAPTION>
                              PUBLIC STORAGE, INC.
                            SCHEDULE III- REAL ESTATE
                          AND ACCUMULATED DEPRECIATION



                                                                                                            Adjustment
                                                                                                            resulting
                                                                             Initial Cost                   from the
                                                              --------------------------------    Costs    acquisition
  Date                                        Encumbrances                   Building &      Subsequent    of minority
Acquired             Description                                Land        Improvements   to Acquisition   interests
----------------------------------------------------------------------------------------------------------------------
SELF -STORAGE FACILITIES
 <S>     <C>                                     <C>            <C>            <C>              <C>
1/1/81    Newport News / Jefferson Avenue I        924,000        108,000        1,071,000        427,000
1/1/81    Virginia Beach / Diamond Springs       1,015,000        186,000        1,094,000        410,000
8/1/81    San Jose / Snell                                        312,000        1,815,000        289,000
10/1/81   Tampa / Lazy Lane                                       282,000        1,899,000        480,000
6/1/82    San Jose / Tully I                     1,302,000        645,000        1,579,000        373,000
6/1/82    San Carlos / Storage                   1,587,000        780,000        1,387,000        395,000
6/1/82    Mountain View                          2,241,000      1,180,000        1,182,000        467,000
6/1/82    Cupertino / Storage                    1,758,000        572,000        1,270,000        311,000
10/1/82   Sorrento Valley                        1,615,000      1,002,000        1,343,000        138,000
10/1/82   Northwood                              2,437,000      1,034,000        1,522,000        115,000
3/1/85    Houston / Westheimer                     778,000        850,000        1,179,000        647,000
3/3/86    Tampa / 56Th                             688,000        450,000        1,360,000        325,000
12/31/86  Monrovia / Myrtle Avenue               1,812,000      1,149,000        2,446,000        125,000
12/31/86  Chatsworth / Topanga                   1,195,000      1,447,000        1,243,000        200,000
12/31/86  Houston / Larkwood                       412,000        247,000          602,000        306,000
12/31/86  Northridge                             2,720,000      3,624,000        1,922,000        260,000
12/31/86  Santa Clara / Duane                    1,120,000      1,950,000        1,004,000        268,000
12/31/86  Oyster Point                                          1,569,000        1,490,000        243,000
12/31/86  Walnut A                                                767,000          613,000        155,000
6/7/88    Mesquite / Sorrento Drive                               928,000        1,011,000        633,000
1/1/92    Costa Mesa II                                           533,000          980,000        571,000
3/1/92    Dallas / Walnut St.                                     537,000        1,008,000        162,000
5/1/92    Camp Creek                                              576,000        1,075,000        108,000
8/1/92    Tampa/N.Dale Mabry                                      809,000        1,537,000        207,000
9/1/92    Orlando/W. Colonial                                     368,000          713,000         51,000
9/1/92    Jacksonville/Arlington                                  554,000        1,065,000        106,000
10/1/92   Stockton/Mariners                                       381,000          730,000         72,000
11/18/92  Virginia Beach/General Booth Blvd                       599,000        1,119,000        131,000
 1/1/93   Redwood City/Storage                                    907,000        1,684,000        142,000
 1/1/93   City Of Industry                                      1,611,000        2,991,000        499,000
 1/1/93   San Jose/Felipe Ii                                    1,124,000        2,088,000        175,000
 1/1/93   Baldwin Park/Garvey Ave                                 840,000        1,561,000        140,000
 3/19/93  Westminister / W. 80Th                                  840,000        1,586,000         82,000
 4/26/93  Costa Mesa / Newport                     961,000      2,141,000        3,989,000        150,000
 5/13/93  Austin /N. Lamar                                        919,000        1,695,000        120,000
 5/28/93  Jacksonville/Phillips Hwy.                              406,000          771,000        103,000
 5/28/93  Tampa/Nebraska Avenue                                   550,000        1,043,000         44,000
 6/9/93   Calabasas / Ventura Blvd.                             1,762,000        3,269,000        115,000
</TABLE>
<TABLE>
<CAPTION>
                                                           Gross Carrying Value
                                                           At December 31, 1997
                                                --------------------------------------------
  Date                                                                                       Accumulated
Acquired             Description                    Land       Buildings         Total      Depreciation
----------------------------------------------------------------------------------------------------------
SELF -STORAGE FACILITIES
 <S>     <C>                                       <C>          <C>             <C>             <C>
 1/1/81   Newport News / Jefferson Avenue I          108,000      1,498,000       1,606,000       996,000
 1/1/81   Virginia Beach / Diamond Springs           186,000      1,504,000       1,690,000       989,000
 8/1/81   San Jose / Snell                           312,000      2,104,000       2,416,000     1,347,000
 10/1/81  Tampa / Lazy Lane                          282,000      2,379,000       2,661,000     1,535,000
 6/1/82   San Jose / Tully I                         645,000      1,952,000       2,597,000     1,200,000
 6/1/82   San Carlos / Storage                       780,000      1,782,000       2,562,000     1,139,000
 6/1/82   Mountain View                            1,180,000      1,649,000       2,829,000     1,046,000
 6/1/82   Cupertino / Storage                        572,000      1,581,000       2,153,000       978,000
 10/1/82  Sorrento Valley                          1,002,000      1,481,000       2,483,000       907,000
 10/1/82  Northwood                                1,034,000      1,637,000       2,671,000     1,008,000
 3/1/85   Houston / Westheimer                       850,000      1,826,000       2,676,000       901,000
 3/3/86   Tampa / 56Th                               450,000      1,685,000       2,135,000       796,000
12/31/86  Monrovia / Myrtle Avenue                 1,149,000      2,571,000       3,720,000     1,151,000
12/31/86  Chatsworth / Topanga                     1,447,000      1,443,000       2,890,000       703,000
12/31/86  Houston / Larkwood                         247,000        908,000       1,155,000       353,000
12/31/86  Northridge                               3,624,000      2,182,000       5,806,000       880,000
12/31/86  Santa Clara / Duane                      1,950,000      1,272,000       3,222,000       610,000
12/31/86  Oyster Point                             1,569,000      1,733,000       3,302,000       766,000
12/31/86  Walnut A                                   767,000        768,000       1,535,000       335,000
 6/7/88   Mesquite / Sorrento Drive                  928,000      1,644,000       2,572,000       809,000
 1/1/92   Costa Mesa II                              535,000      1,549,000       2,084,000       762,000
 3/1/92   Dallas / Walnut St.                        537,000      1,170,000       1,707,000     1,095,000
 5/1/92   Camp Creek                                 576,000      1,183,000       1,759,000       280,000
 8/1/92   Tampa/N.Dale Mabry                         809,000      1,744,000       2,553,000       408,000
 9/1/92   Orlando/W. Colonial                        368,000        764,000       1,132,000       188,000
 9/1/92   Jacksonville/Arlington                     554,000      1,171,000       1,725,000       271,000
 10/1/92  Stockton/Mariners                          381,000        802,000       1,183,000       171,000
11/18/92  Virginia Beach/General Booth Blvd          599,000      1,250,000       1,849,000       272,000
 1/1/93   Redwood City/Storage                       907,000      1,826,000       2,733,000       379,000
 1/1/93   City Of Industry                         1,611,000      3,490,000       5,101,000       797,000
 1/1/93   San Jose/Felipe Ii                       1,124,000      2,263,000       3,387,000       462,000
 1/1/93   Baldwin Park/Garvey Ave                    840,000      1,701,000       2,541,000       335,000
 3/19/93  Westminister / W. 80Th                     840,000      1,668,000       2,508,000       337,000
 4/26/93  Costa Mesa / Newport                     2,141,000      4,139,000       6,280,000       799,000
 5/13/93  Austin /N. Lamar                           919,000      1,815,000       2,734,000       345,000
 5/28/93  Jacksonville/Phillips Hwy.                 406,000        874,000       1,280,000       174,000
 5/28/93  Tampa/Nebraska Avenue                      550,000      1,087,000       1,637,000       214,000
 6/9/93   Calabasas / Ventura Blvd.                1,762,000      3,384,000       5,146,000       656,000

                                   F-26
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                                              Adjustment
                                                                                                              resulting
                                                                       Initial Cost                            from the
                                                              --------------------------------    Costs       acquisition
     Date                                        Encumbrances                   Building &      Subsequent    of minority
   Acquired             Description                                Land        Improvements   to Acquisition   interests
-------------------------------------------------------------------------------------------------------------------------
    <S>     <C>                                                      <C>            <C>               <C>
    6/9/93   Carmichael / Fair Oaks                                  573,000        1,052,000         84,000
    6/9/93   Santa Clara / Duane Ii                                  454,000          834,000         38,000
    6/10/93  Citrus Heights / Sylvan Road                            438,000          822,000        105,000
    6/25/93  Trenton / Allen Road                                    623,000        1,166,000         84,000
    6/30/93  Los Angeles/W.Jefferson Blvd                          1,085,000        2,017,000         36,000
    7/16/93  Austin / So. Congress Ave                               777,000        1,445,000        218,000
    8/1/93   Gaithersburg / E. Diamond                               602,000        1,139,000         79,000
    8/11/93  Atlanta / Northside                                   1,150,000        2,149,000         89,000
    8/11/93  Smyrna/ Rosswill Rd                                     446,000          842,000         77,000
    8/13/93  So. Brunswick/Highway 1                               1,076,000        2,033,000        117,000
    8/31/93  Austin / N. Lamar Iv                                    502,000          941,000         77,000
    10/1/93  Denver / Federal Blvd                                   875,000        1,633,000         56,000
    10/1/93  Citrus Heights                                          527,000          987,000         56,000
    10/1/93  Lakewood / 6Th Ave                                      798,000        1,489,000         52,000
   10/27/93  Houston / S Shaver St                                   481,000          896,000         86,000
    11/3/93  Upland/S. Euclid Ave.                                   431,000          807,000        333,000
   11/16/93  Norcross / Jimmy Carter                                 627,000        1,167,000         74,000
   11/16/93  Seattle / 13Th                                        1,085,000        2,015,000        244,000
    12/9/93  Salt Lake City                                          765,000        1,422,000        198,000
   12/16/93  West Valley City                                        683,000        1,276,000         80,000
   12/21/93  Pinellas Park / 34Th St. W                              607,000        1,134,000        100,000
   12/28/93  New Orleans / S. Carrollton Ave                       1,575,000        2,941,000         78,000
   12/29/93  Orange / Main Ii                                      1,238,000        2,317,000      1,297,000
   12/29/93  Sunnyvale / Wedell                                      554,000        1,037,000        662,000
   12/29/93  El Cajon / Magnolia                                     421,000          791,000        464,000
   12/29/93  Orlando / S. Semoran Blvd.                              462,000          872,000        526,000
   12/29/93  Tampa / W. Hillsborough Ave                             352,000          665,000        321,000
   12/29/93  Irving / West Loop 12                                   341,000          643,000         84,000
   12/29/93  Fullerton / W. Commonwealth                             904,000        1,687,000        931,000
   12/29/93  N. Lauderdale / Mcnab Rd                                628,000        1,182,000        636,000
   12/29/93  Los Alimitos / Cerritos                                 695,000        1,299,000        646,000
   12/29/93  Frederick / Prospect Blvd.                              573,000        1,082,000        446,000
   12/29/93  Indianapolis / E. Washington                            403,000          775,000        388,000
   12/29/93  Gardena / Western Ave.                                  552,000        1,035,000        507,000
   12/29/93  Palm Bay / Bobcock Street                               409,000          775,000        416,000
    1/10/94  Hialeah / W. 20Th Ave.                                1,855,000        3,497,000        125,000
    1/12/94  Sunnyvale / N. Fair Oaks Ave                            689,000        1,285,000        261,000
    1/12/94  Honolulu / Iwaena                                             0        3,382,000        590,000
    1/12/94  Miami / Golden Glades                                   579,000        1,081,000        297,000
</TABLE>
<TABLE>
<CAPTION>
                                                              Gross Carrying Value
                                                              At December 31, 1997
                                                   --------------------------------------------
     Date                                                                                       Accumulated
   Acquired             Description                    Land       Buildings         Total      Depreciation
-------------------------------------------------------------------------------------------------------------
    <S>     <C>                                         <C>         <C>            <C>               <C>
    6/9/93   Carmichael / Fair Oaks                     573,000      1,136,000       1,709,000       218,000
    6/9/93   Santa Clara / Duane Ii                     454,000        872,000       1,326,000       162,000
    6/10/93  Citrus Heights / Sylvan Road               438,000        927,000       1,365,000       211,000
    6/25/93  Trenton / Allen Road                       623,000      1,250,000       1,873,000       228,000
    6/30/93  Los Angeles/W.Jefferson Blvd             1,085,000      2,053,000       3,138,000       376,000
    7/16/93  Austin / So. Congress Ave                  777,000      1,663,000       2,440,000       331,000
    8/1/93   Gaithersburg / E. Diamond                  602,000      1,218,000       1,820,000       220,000
    8/11/93  Atlanta / Northside                      1,150,000      2,238,000       3,388,000       415,000
    8/11/93  Smyrna/ Rosswill Rd                        446,000        919,000       1,365,000       178,000
    8/13/93  So. Brunswick/Highway 1                  1,076,000      2,150,000       3,226,000       395,000
    8/31/93  Austin / N. Lamar Iv                       502,000      1,018,000       1,520,000       184,000
    10/1/93  Denver / Federal Blvd                      875,000      1,689,000       2,564,000       290,000
    10/1/93  Citrus Heights                             527,000      1,043,000       1,570,000       179,000
    10/1/93  Lakewood / 6Th Ave                         798,000      1,541,000       2,339,000       263,000
   10/27/93  Houston / S Shaver St                      481,000        982,000       1,463,000       175,000
    11/3/93  Upland/S. Euclid Ave.                      508,000      1,063,000       1,571,000       178,000
   11/16/93  Norcross / Jimmy Carter                    627,000      1,241,000       1,868,000       212,000
   11/16/93  Seattle / 13Th                           1,085,000      2,259,000       3,344,000       406,000
    12/9/93  Salt Lake City                             765,000      1,620,000       2,385,000       324,000
   12/16/93  West Valley City                           683,000      1,356,000       2,039,000       235,000
   12/21/93  Pinellas Park / 34Th St. W                 607,000      1,234,000       1,841,000       219,000
   12/28/93  New Orleans / S. Carrollton Ave          1,575,000      3,019,000       4,594,000       492,000
   12/29/93  Orange / Main Ii                         1,593,000      3,259,000       4,852,000       491,000
   12/29/93  Sunnyvale / Wedell                         725,000      1,528,000       2,253,000       227,000
   12/29/93  El Cajon / Magnolia                        542,000      1,134,000       1,676,000       169,000
   12/29/93  Orlando / S. Semoran Blvd.                 601,000      1,259,000       1,860,000       193,000
   12/29/93  Tampa / W. Hillsborough Ave                436,000        902,000       1,338,000       140,000
   12/29/93  Irving / West Loop 12                      355,000        713,000       1,068,000       115,000
   12/29/93  Fullerton / W. Commonwealth              1,160,000      2,362,000       3,522,000       356,000
   12/29/93  N. Lauderdale / Mcnab Rd                   798,000      1,648,000       2,446,000       247,000
   12/29/93  Los Alimitos / Cerritos                    874,000      1,766,000       2,640,000       263,000
   12/29/93  Frederick / Prospect Blvd.                 692,000      1,409,000       2,101,000       221,000
   12/29/93  Indianapolis / E. Washington               505,000      1,061,000       1,566,000       157,000
   12/29/93  Gardena / Western Ave.                     695,000      1,399,000       2,094,000       204,000
   12/29/93  Palm Bay / Bobcock Street                  525,000      1,075,000       1,600,000       165,000
    1/10/94  Hialeah / W. 20Th Ave.                   1,590,000      3,887,000       5,477,000       604,000
    1/12/94  Sunnyvale / N. Fair Oaks Ave               657,000      1,578,000       2,235,000       236,000
    1/12/94  Honolulu / Iwaena                                0      3,972,000       3,972,000       548,000
    1/12/94  Miami / Golden Glades                      557,000      1,400,000       1,957,000       215,000

</TABLE>
                                      F-27
<PAGE>
<TABLE>
<CAPTION>
                                                                                                             Adjustment
                                                                                                              resulting
                                                                        Initial Cost                         from the
                                                             --------------------------------    Costs       acquisition
    Date                                        Encumbrances                   Building &      Subsequent    of minority
  Acquired             Description                                Land        Improvements   to Acquisition   interests
------------------------------------------------------------------------------------------------------------------------
   <S>     <C>                                                      <C>            <C>               <C>
   1/21/94  Herndon / Centreville Road                            1,584,000        2,981,000         54,000
   2/8/94   Las Vegas/ Martin Luther King Blvd.                   1,383,000        2,592,000        938,000
   2/28/94  Arlingtn/Old Jeffersn Davishwy                          735,000        1,399,000        121,000
   3/8/94   Beaverton / Sw Barnes Road                              942,000        1,810,000         57,000
   3/21/94  Austin / Arboretum                                      473,000          897,000         53,000
   3/25/94  Tinton Falls / Shrewsbury Ave                         1,074,000        2,033,000        105,000
   3/25/94  East Brunswick / Milltown Road                        1,282,000        2,411,000        128,000
   3/25/94  Mercerville / Quakerbridge Road                       1,109,000        2,111,000         44,000
   3/31/94  Hypoluxo                                                735,000        1,404,000      1,685,000
   4/26/94  No. Highlands / Roseville Road                          980,000        1,835,000         91,000
   5/12/94  Fort Pierce/Okeechobee Road                             438,000          842,000         82,000
   5/24/94  Hempstead/Peninsula Blvd.                             2,053,000        3,832,000         75,000
   5/24/94  La/Huntington                                           483,000          905,000         53,000
   6/9/94   Chattanooga / Brainerd Road                             613,000        1,170,000         59,000
   6/9/94   Chattanooga / Ringgold Road                             761,000        1,433,000         99,000
   6/18/94  Las Vegas / S. Valley View Blvd                         837,000        1,571,000         67,000
   6/23/94  Las Vegas / Tropicana Ii                                750,000        1,408,000         86,000
   6/23/94  Henderson / Green Valley Pkwy                         1,047,000        1,960,000         72,000
   6/24/94  Las Vegas / N. Lamb Blvd.                               869,000        1,629,000         97,000
   6/30/94  Birmingham / W. Oxmoor Road                             532,000        1,004,000        243,000
   7/20/94  Milpitas / Dempsey Road                               1,260,000        2,358,000         90,000
   8/17/94  New Orleans/I-10                                        784,000        1,470,000         58,000
   8/17/94  Beaverton / S.W. Denny Road                             663,000        1,245,000         18,000
   8/17/94  Irwindale / Central Ave.                                674,000        1,263,000         23,000
   8/17/94  Suitland / St. Barnabas Rd                            1,530,000        2,913,000         61,000
   8/17/94  North Brunswick / How Lane                            1,238,000        2,323,000         16,000
   8/17/94  Lombard / 64Th                                          847,000        1,583,000         41,000
   8/17/94  Alsip / 27Th                                            406,000          765,000         43,000
   9/15/94  Huntsville / Old Monrovia Road                          613,000        1,157,000         69,000
   9/27/94  West Haven / Bull Hill Lane                             455,000          873,000         62,000
   9/30/94  San Francisco / Marin St.                             1,227,000        2,339,000      1,103,000
   9/30/94  Baltimore / Hillen Street                               580,000        1,095,000         62,000
   9/30/94  San Francisco /10Th & Howard                          1,423,000        2,668,000         56,000
   9/30/94  Montebello / E. Whittier                                383,000          732,000         44,000
   9/30/94  Arlington / Collins                                     228,000          435,000        118,000
   9/30/94  Miami / S.W. 119Th Ave                                  656,000        1,221,000         14,000
   9/30/94  Blackwood / Erial Road                                  774,000        1,437,000         33,000
   9/30/94  Concord / Monument                                    1,092,000        2,027,000         98,000
</TABLE>
<TABLE>
<CAPTION>
                                                             Gross Carrying Value
                                                             At December 31, 1997
                                                  --------------------------------------------
    Date                                                                                       Accumulated
  Acquired             Description                    Land       Buildings         Total      Depreciation
------------------------------------------------------------------------------------------------------------
   <S>     <C>                                      <C>             <C>            <C>               <C>
   1/21/94  Herndon / Centreville Road              1,358,000      3,261,000       4,619,000       353,000
   2/8/94   Las Vegas/ Martin Luther King Blvd.     1,436,000      3,477,000       4,913,000       519,000
   2/28/94  Arlingtn/Old Jeffersn Davishwy            630,000      1,625,000       2,255,000       264,000
   3/8/94   Beaverton / Sw Barnes Road                807,000      2,002,000       2,809,000       334,000
   3/21/94  Austin / Arboretum                        405,000      1,018,000       1,423,000       173,000
   3/25/94  Tinton Falls / Shrewsbury Ave             921,000      2,291,000       3,212,000       379,000
   3/25/94  East Brunswick / Milltown Road          1,099,000      2,722,000       3,821,000       436,000
   3/25/94  Mercerville / Quakerbridge Road           950,000      2,314,000       3,264,000       372,000
   3/31/94  Hypoluxo                                  630,000      3,194,000       3,824,000       710,000
   4/26/94  No. Highlands / Roseville Road            840,000      2,066,000       2,906,000       335,000
   5/12/94  Fort Pierce/Okeechobee Road               375,000        987,000       1,362,000       160,000
   5/24/94  Hempstead/Peninsula Blvd.               1,763,000      4,197,000       5,960,000       615,000
   5/24/94  La/Huntington                             414,000      1,027,000       1,441,000       151,000
   6/9/94   Chattanooga / Brainerd Road               525,000      1,317,000       1,842,000       201,000
   6/9/94   Chattanooga / Ringgold Road               653,000      1,640,000       2,293,000       257,000
   6/18/94  Las Vegas / S. Valley View Blvd           718,000      1,757,000       2,475,000       269,000
   6/23/94  Las Vegas / Tropicana Ii                  643,000      1,601,000       2,244,000       244,000
   6/23/94  Henderson / Green Valley Pkwy             898,000      2,181,000       3,079,000       335,000
   6/24/94  Las Vegas / N. Lamb Blvd.                 745,000      1,850,000       2,595,000       288,000
   6/30/94  Birmingham / W. Oxmoor Road               461,000      1,318,000       1,779,000       267,000
   7/20/94  Milpitas / Dempsey Road                 1,080,000      2,628,000       3,708,000       400,000
   8/17/94  New Orleans/I-10                          672,000      1,640,000       2,312,000       227,000
   8/17/94  Beaverton / S.W. Denny Road               568,000      1,358,000       1,926,000       189,000
   8/17/94  Irwindale / Central Ave.                  578,000      1,382,000       1,960,000       191,000
   8/17/94  Suitland / St. Barnabas Rd              1,312,000      3,192,000       4,504,000       462,000
   8/17/94  North Brunswick / How Lane              1,062,000      2,515,000       3,577,000       349,000
   8/17/94  Lombard / 64Th                            726,000      1,745,000       2,471,000       243,000
   8/17/94  Alsip / 27Th                              348,000        866,000       1,214,000       125,000
   9/15/94  Huntsville / Old Monrovia Road            525,000      1,314,000       1,839,000       193,000
   9/27/94  West Haven / Bull Hill Lane               390,000      1,000,000       1,390,000       156,000
   9/30/94  San Francisco / Marin St.               1,371,000      3,298,000       4,669,000       445,000
   9/30/94  Baltimore / Hillen Street                 497,000      1,240,000       1,737,000       162,000
   9/30/94  San Francisco /10Th & Howard            1,221,000      2,926,000       4,147,000       386,000
   9/30/94  Montebello / E. Whittier                  329,000        830,000       1,159,000       114,000
   9/30/94  Arlington / Collins                       195,000        586,000         781,000        93,000
   9/30/94  Miami / S.W. 119Th Ave                    563,000      1,328,000       1,891,000       175,000
   9/30/94  Blackwood / Erial Road                    663,000      1,581,000       2,244,000       208,000
   9/30/94  Concord / Monument                        936,000      2,281,000       3,217,000       310,000
</TABLE>
                                      F-28
<PAGE>
<TABLE>
<CAPTION>
                                                                                                           Adjustment
                                                                                                            resulting
                                                                       Initial Cost                         from the
                                                           --------------------------------    Costs       acquisition
  Date                                        Encumbrances                   Building &      Subsequent    of minority
Acquired             Description                                Land        Improvements   to Acquisition   interests
----------------------------------------------------------------------------------------------------------------------
 <S>     <C>                                                      <C>            <C>               <C>
 9/30/94  Rochester / Lee Road                                    469,000          871,000         40,000
 9/30/94  Houston / Bellaire                                      623,000        1,157,000         49,000
 9/30/94  Austin / Lamar Blvd I                                   781,000        1,452,000         55,000
 9/30/94  Milwaukee / Lovers Lane Rd                              469,000          871,000         53,000
 9/30/94  Monterey / Del Rey Oaks                               1,093,000        1,897,000         44,000
 9/30/94  St. Petersburg / 66Th St.                               427,000          793,000         41,000
 9/30/94  Dayton Bch / N. Nova Road                               396,000          735,000         62,000
 9/30/94  Maple Shade / Route 38                                  994,000        1,846,000         52,000
 9/30/94  Marlton / Route 73 N.                                   938,000        1,742,000         35,000
 9/30/94  Naperville / E. Ogden Ave                               683,000        1,268,000         40,000
 9/30/94  Long Beach / South Street                             1,778,000        3,307,000        108,000
 9/30/94  Aloha / S.W. Shaw                                       805,000        1,495,000         33,000
 9/30/94  Alexandria / S. Pickett                               1,550,000        2,879,000         41,000
 9/30/94  Houston / Highway 6 North                             1,120,000        2,083,000        103,000
 9/30/94  San Antonio/Nacogdoches Rd                              571,000        1,060,000         39,000
 9/30/94  San Ramon/San Ramon Valley                            1,530,000        2,840,000        158,000
 9/30/94  San Rafael / Merrydale Rd                             1,705,000        3,165,000         59,000
 9/30/94  San Antonio / Austin Hwy                                592,000        1,098,000         85,000
 9/30/94  Sharonville / E. Kemper                                 574,000        1,070,000         50,000
 10/7/94  Alcoa / Airport Plaza Drive                             543,000        1,017,000         59,000
10/13/94  Davie / State Road 84                                   744,000        1,467,000        799,000
10/13/94  Carrollton / Marsh Lane                                 770,000        1,437,000      1,327,000
10/31/94  Sherman Oaks / Van Nuys Blvd                          1,278,000        2,461,000        857,000
12/19/94  Salt Lake City/West North Temple                        490,000          917,000         72,000
12/27/94  Knoxville / Chapman Highway                             753,000        1,411,000        122,000
12/28/94  Milpitas / Watson Ii                                  1,575,000        2,925,000        102,000
12/28/94  Las Vegas / Jones Blvd                                1,208,000        2,243,000         49,000
12/28/94  Venice / Guthrie                                        578,000        1,073,000         29,000
12/30/94  Apple Valley / Foliage Ave                              910,000        1,695,000         78,000
 1/4/95   Chula Vista / Main Street                               735,000        1,802,000         89,000
 1/5/95   Pantego / West Park                                     315,000          735,000         87,000
 1/12/95  Roswell / Alpharetta                                    423,000          993,000         61,000
 1/23/95  North Bergen / Tonne                                  1,564,000        3,772,000         55,000
 1/23/95  San Leandro / Hesperian                                 734,000        1,726,000         41,000
 1/24/95  Nashville / Elm Hill                                    338,000          791,000        167,000
 2/3/95   Reno / S. Mccarron Blvd                               1,080,000        2,537,000         68,000
 2/15/95  Schiller Park                                         1,688,000        3,939,000         97,000
 2/15/95  Lansing                                               1,514,000        3,534,000         27,000
</TABLE>
<TABLE>
<CAPTION>
                                                           Gross Carrying Value
                                                           At December 31, 1997
                                                --------------------------------------------
  Date                                                                                       Accumulated
Acquired             Description                    Land       Buildings         Total      Depreciation
----------------------------------------------------------------------------------------------------------
 <S>     <C>                                         <C>          <C>              <C>             <C>
 9/30/94  Rochester / Lee Road                        402,000        978,000       1,380,000       130,000
 9/30/94  Houston / Bellaire                          534,000      1,295,000       1,829,000       169,000
 9/30/94  Austin / Lamar Blvd I                       669,000      1,619,000       2,288,000       214,000
 9/30/94  Milwaukee / Lovers Lane Rd                  402,000        991,000       1,393,000       132,000
 9/30/94  Monterey / Del Rey Oaks                     903,000      2,131,000       3,034,000       303,000
 9/30/94  St. Petersburg / 66Th St.                   366,000        895,000       1,261,000       126,000
 9/30/94  Dayton Bch / N. Nova Road                   339,000        854,000       1,193,000       111,000
 9/30/94  Maple Shade / Route 38                      852,000      2,040,000       2,892,000       272,000
 9/30/94  Marlton / Route 73 N.                       804,000      1,911,000       2,715,000       255,000
 9/30/94  Naperville / E. Ogden Ave                   585,000      1,406,000       1,991,000       192,000
 9/30/94  Long Beach / South Street                 1,524,000      3,669,000       5,193,000       502,000
 9/30/94  Aloha / S.W. Shaw                           690,000      1,643,000       2,333,000       223,000
 9/30/94  Alexandria / S. Pickett                   1,329,000      3,141,000       4,470,000       416,000
 9/30/94  Houston / Highway 6 North                   960,000      2,346,000       3,306,000       320,000
 9/30/94  San Antonio/Nacogdoches Rd                  489,000      1,181,000       1,670,000       158,000
 9/30/94  San Ramon/San Ramon Valley                1,311,000      3,217,000       4,528,000       460,000
 9/30/94  San Rafael / Merrydale Rd                 1,461,000      3,468,000       4,929,000       458,000
 9/30/94  San Antonio / Austin Hwy                    507,000      1,268,000       1,775,000       168,000
 9/30/94  Sharonville / E. Kemper                     492,000      1,202,000       1,694,000       161,000
 10/7/94  Alcoa / Airport Plaza Drive                 465,000      1,154,000       1,619,000       197,000
10/13/94  Davie / State Road 84                       638,000      2,372,000       3,010,000       297,000
10/13/94  Carrollton / Marsh Lane                   1,022,000      2,512,000       3,534,000       296,000
10/31/94  Sherman Oaks / Van Nuys Blvd              1,423,000      3,173,000       4,596,000       416,000
12/19/94  Salt Lake City/West North Temple            420,000      1,059,000       1,479,000       142,000
12/27/94  Knoxville / Chapman Highway                 645,000      1,641,000       2,286,000       219,000
12/28/94  Milpitas / Watson Ii                      1,350,000      3,252,000       4,602,000       399,000
12/28/94  Las Vegas / Jones Blvd                    1,035,000      2,465,000       3,500,000       299,000
12/28/94  Venice / Guthrie                            495,000      1,185,000       1,680,000       144,000
12/30/94  Apple Valley / Foliage Ave                  780,000      1,903,000       2,683,000       251,000
 1/4/95   Chula Vista / Main Street                   735,000      1,891,000       2,626,000       265,000
 1/5/95   Pantego / West Park                         315,000        822,000       1,137,000       107,000
 1/12/95  Roswell / Alpharetta                        423,000      1,054,000       1,477,000       139,000
 1/23/95  North Bergen / Tonne                      1,564,000      3,827,000       5,391,000       402,000
 1/23/95  San Leandro / Hesperian                     734,000      1,767,000       2,501,000       196,000
 1/24/95  Nashville / Elm Hill                        338,000        958,000       1,296,000       163,000
 2/3/95   Reno / S. Mccarron Blvd                   1,080,000      2,605,000       3,685,000       308,000
 2/15/95  Schiller Park                             1,688,000      4,036,000       5,724,000       283,000
 2/15/95  Lansing                                   1,514,000      3,561,000       5,075,000       244,000
</TABLE>
                                      F-29
<PAGE>
<TABLE>
<CAPTION>

                                                                                                            Adjustment
                                                                                                            resulting
                                                                    Initial Cost                            from the
                                                           --------------------------------    Costs       acquisition
  Date                                        Encumbrances                   Building &      Subsequent    of minority
Acquired             Description                                Land        Improvements   to Acquisition   interests
----------------------------------------------------------------------------------------------------------------------
 <S>     <C>                                                    <C>              <C>                <C>
 2/15/95  Pleasanton                                            1,257,000        2,932,000          5,000
 2/15/95  LA/Sepulveda                                          1,453,000        3,390,000         31,000
 2/28/95  Decatur / Flat Shoal                                    970,000        2,288,000        132,000
 2/28/95  Smyrna / S. Cobb                                        663,000        1,559,000         62,000
 2/28/95  Downey / Bellflower                                     916,000        2,158,000         16,000
 2/28/95  Vallejo / Lincoln                                       445,000        1,052,000         56,000
 2/28/95  Lynnwood / 180Th St                                     516,000        1,205,000         94,000
 2/28/95  Kent / Pacific Hwy                                      728,000        1,711,000         37,000
 2/28/95  Kirkland                                              1,254,000        2,932,000         30,000
 2/28/95  Federal Way/Pacific                                     785,000        1,832,000        141,000
 2/28/95  Tampa / S. Dale                                         791,000        1,852,000        101,000
 2/28/95  Burlingame/Adrian Rd                                  2,280,000        5,349,000         52,000
 2/28/95  Miami / Cloverleaf                                      606,000        1,426,000         54,000
 2/28/95  Pinole / San Pablo                                      639,000        1,502,000         84,000
 2/28/95  South Gate / Firesto                                  1,442,000        3,449,000        119,000
 2/28/95  San Jose / Mabury                                       892,000        2,088,000          8,000
 2/28/95  La Puente / Valley Blvd                                 591,000        1,390,000         86,000
 2/28/95  San Jose / Capitol E                                  1,215,000        2,852,000         39,000
 2/28/95  Milwaukie / 40Th Street                                 576,000        1,388,000        (11,000)
 2/28/95  Portland / N. Lombard                                   812,000        1,900,000          5,000
 2/28/95  Miami / Biscayne                                      1,313,000        3,076,000         42,000
 2/28/95  Chicago / Clark Street                                  442,000        1,031,000         89,000
 2/28/95  Palatine / Dundee                                       698,000        1,643,000         48,000
 2/28/95  Williamsville/Transit                                   284,000          670,000         32,000
 2/28/95  Amherst / Sheridan                                      484,000        1,151,000         31,000
 3/2/95   Everett / Highway 99                                    859,000        2,022,000        135,000
 3/2/95   Burien / 1St Ave South                                  763,000        1,783,000        186,000
 3/2/95   Kent / South 238Th Street                               763,000        1,783,000        153,000
 3/31/95  Cheverly / Central Ave                                  911,000        2,164,000         18,000
 5/1/95   Sandy / S. State Street                               1,043,000        2,442,000        143,000
 5/3/95   Largo / Ulmerton Roa                                    263,000          654,000         83,000
 5/8/95   Fairfield/Western Street                                439,000        1,030,000         33,000
 5/8/95   Dallas / W. Mockingbird                               1,440,000        3,371,000         45,000
 5/8/95   East Point / Lakewood                                   884,000        2,071,000         94,000
 5/25/95  Falls Church / Gallo                                    350,000          835,000        112,000
 6/12/95  Baltimore / Old Waterloo                                769,000        1,850,000          7,000
 6/12/95  Pleasant Hill / Hookston                                766,000        1,848,000         32,000
 6/12/95  Mountain View/Old Middlefield                         2,095,000        4,913,000         17,000
 6/30/95  San Jose / Blossom Hill                               1,467,000        3,444,000         31,000
 6/30/95  Fairfield / Kings Highway                             1,811,000        4,273,000         75,000
</TABLE>
<TABLE>
<CAPTION>
                                                           Gross Carrying Value
                                                           At December 31, 1997
                                                --------------------------------------------
  Date                                                                                       Accumulated
Acquired             Description                    Land       Buildings         Total      Depreciation
----------------------------------------------------------------------------------------------------------
 <S>     <C>                                        <C>            <C>             <C>             <C>
 2/15/95  Pleasanton                                1,257,000      2,937,000       4,194,000       208,000
 2/15/95  LA/Sepulveda                              1,453,000      3,421,000       4,874,000       229,000
 2/28/95  Decatur / Flat Shoal                        970,000      2,420,000       3,390,000       298,000
 2/28/95  Smyrna / S. Cobb                            663,000      1,621,000       2,284,000       193,000
 2/28/95  Downey / Bellflower                         916,000      2,174,000       3,090,000       253,000
 2/28/95  Vallejo / Lincoln                           445,000      1,108,000       1,553,000       131,000
 2/28/95  Lynnwood / 180Th St                         516,000      1,299,000       1,815,000       166,000
 2/28/95  Kent / Pacific Hwy                          728,000      1,748,000       2,476,000       204,000
 2/28/95  Kirkland                                  1,254,000      2,962,000       4,216,000       339,000
 2/28/95  Federal Way/Pacific                         785,000      1,973,000       2,758,000       247,000
 2/28/95  Tampa / S. Dale                             791,000      1,953,000       2,744,000       223,000
 2/28/95  Burlingame/Adrian Rd                      2,280,000      5,401,000       7,681,000       614,000
 2/28/95  Miami / Cloverleaf                          606,000      1,480,000       2,086,000       171,000
 2/28/95  Pinole / San Pablo                          639,000      1,586,000       2,225,000       192,000
 2/28/95  South Gate / Firesto                      1,442,000      3,568,000       5,010,000       436,000
 2/28/95  San Jose / Mabury                           892,000      2,096,000       2,988,000       238,000
 2/28/95  La Puente / Valley Blvd                     591,000      1,476,000       2,067,000       181,000
 2/28/95  San Jose / Capitol E                      1,215,000      2,891,000       4,106,000       334,000
 2/28/95  Milwaukie / 40Th Street                     579,000      1,374,000       1,953,000       161,000
 2/28/95  Portland / N. Lombard                       812,000      1,905,000       2,717,000       216,000
 2/28/95  Miami / Biscayne                          1,313,000      3,118,000       4,431,000       356,000
 2/28/95  Chicago / Clark Street                      442,000      1,120,000       1,562,000       125,000
 2/28/95  Palatine / Dundee                           698,000      1,691,000       2,389,000       198,000
 2/28/95  Williamsville/Transit                       284,000        702,000         986,000        83,000
 2/28/95  Amherst / Sheridan                          484,000      1,182,000       1,666,000       144,000
 3/2/95   Everett / Highway 99                        859,000      2,157,000       3,016,000       272,000
 3/2/95   Burien / 1St Ave South                      763,000      1,969,000       2,732,000       262,000
 3/2/95   Kent / South 238Th Street                   763,000      1,936,000       2,699,000       251,000
 3/31/95  Cheverly / Central Ave                      911,000      2,182,000       3,093,000       240,000
 5/1/95   Sandy / S. State Street                   1,043,000      2,585,000       3,628,000       303,000
 5/3/95   Largo / Ulmerton Roa                        263,000        737,000       1,000,000       100,000
 5/8/95   Fairfield/Western Street                    439,000      1,063,000       1,502,000       115,000
 5/8/95   Dallas / W. Mockingbird                   1,440,000      3,416,000       4,856,000       361,000
 5/8/95   East Point / Lakewood                       884,000      2,165,000       3,049,000       240,000
 5/25/95  Falls Church / Gallo                        350,000        947,000       1,297,000       115,000
 6/12/95  Baltimore / Old Waterloo                    769,000      1,857,000       2,626,000       193,000
 6/12/95  Pleasant Hill / Hookston                    766,000      1,880,000       2,646,000       203,000
 6/12/95  Mountain View/Old Middlefield             2,095,000      4,930,000       7,025,000       510,000
 6/30/95  San Jose / Blossom Hill                   1,467,000      3,475,000       4,942,000       352,000
 6/30/95  Fairfield / Kings Highway                 1,811,000      4,348,000       6,159,000       449,000
</TABLE>
                                      F-30
<PAGE>
<TABLE>
<CAPTION>

                                                                                                            Adjustment
                                                                                                            resulting
                                                                    Initial Cost                            from the
                                                           --------------------------------    Costs       acquisition
  Date                                        Encumbrances                   Building &      Subsequent    of minority
Acquired             Description                                Land        Improvements   to Acquisition   interests
----------------------------------------------------------------------------------------------------------------------
 <S>      <C>                                    <C>              <C>            <C>               <C>
 6/30/95  Pacoima / Paxton Street                1,453,000        840,000        1,976,000         24,000
 6/30/95  Portland / Prescott                                     647,000        1,509,000         46,000
 6/30/95  St. Petersburg                                          352,000          827,000         48,000
 6/30/95  Dallas / Audelia Road                                 1,166,000        2,725,000        185,000
 6/30/95  Miami Gardens                                           823,000        1,929,000         48,000
 6/30/95  Grand Prairie / 19Th                                    566,000        1,329,000         53,000
 6/30/95  Joliet / Jefferson Street                               501,000        1,181,000         60,000
 6/30/95  Bridgeton / Pennridge                                   283,000          661,000         62,000
 6/30/95  Portland / S.E.92Nd                                     638,000        1,497,000         54,000
 6/30/95  Houston / S.W. Freeway                                  537,000        1,254,000         39,000
 6/30/95  Milwaukee / Brown                                       358,000          849,000         50,000
 6/30/95  Orlando / W. Oak Ridge                                  698,000        1,642,000         56,000
 6/30/95  Lauderhill / State Road                                 644,000        1,508,000         48,000
 6/30/95  Orange Park /Blanding Blvd                              394,000          918,000         48,000
 6/30/95  St. Petersburg /Joe'S Creek                             704,000        1,642,000         48,000
 6/30/95  St. Louis / Page Service Drive                          531,000        1,241,000         45,000
 6/30/95  Independence /E. 42Nd                                   438,000        1,023,000         82,000
 6/30/95  Cherry Hill / Dobbs Lane                                716,000        1,676,000          9,000
 6/30/95  Edgewater Park / Route 130                              683,000        1,593,000         24,000
 6/30/95  Beaverton / S.W. 110                                    572,000        1,342,000         22,000
 6/30/95  Markham / W. 159Th Place                                230,000          539,000         36,000
 6/30/95  Houston / N.W. Freeway                                  447,000        1,066,000         67,000
 6/30/95  Portland / Gantenbein                                   537,000        1,262,000         10,000
 6/30/95  Upper Chichester/Market St.                             569,000        1,329,000         22,000
 6/30/95  Fort Worth / Hwy 80                                     379,000          891,000         43,000
 6/30/95  Greenfield/ S. 108Th                                    728,000        1,707,000         67,000
 6/30/95  Altamonte Springs                                       566,000        1,326,000         19,000
 6/30/95  East Hazel Crest / Halsted I                            483,000        1,127,000         38,000
 6/30/95  Seattle / Delridge Way                                  760,000        1,779,000         63,000
 6/30/95  Elmhurst / Lake Frontage Rd                             748,000        1,758,000         49,000
 6/30/95  Los Angeles / Beverly Blvd                              787,000        1,886,000        118,000
 6/30/95  Lawrenceville / Brunswick                               841,000        1,961,000         30,000
 6/30/95  Richmond / Carlson                                      865,000        2,025,000         66,000
 6/30/95  Liverpool / Oswego Road                                 545,000        1,279,000         31,000
 6/30/95  Rochester / East Ave                                    578,000        1,375,000         35,000
 6/30/95  Pasadena / E. Beltway                                   757,000        1,767,000         47,000
 7/13/95  Tarzana / Burbank Blvd                                2,895,000        6,823,000        219,000
 7/31/95  Orlando / Lakehurst                    1,077,000        450,000        1,063,000         33,000
 7/31/95  Livermore / Portola                    1,447,000        921,000        2,157,000         75,000
 7/31/95  San Jose / Tully Ii                    1,788,000        912,000        2,137,000         73,000
</TABLE>
<TABLE>
<CAPTION>
                                                           Gross Carrying Value
                                                           At December 31, 1997
                                                --------------------------------------------
  Date                                                                                       Accumulated
Acquired             Description                    Land       Buildings         Total      Depreciation
----------------------------------------------------------------------------------------------------------
 <S>      <C>                                       <C>          <C>             <C>             <C>
 6/30/95  Pacoima / Paxton Street                   840,000      2,000,000       2,840,000       206,000
 6/30/95  Portland / Prescott                       647,000      1,555,000       2,202,000       157,000
 6/30/95  St. Petersburg                            352,000        875,000       1,227,000        91,000
 6/30/95  Dallas / Audelia Road                   1,166,000      2,910,000       4,076,000       301,000
 6/30/95  Miami Gardens                             823,000      1,977,000       2,800,000       195,000
 6/30/95  Grand Prairie / 19Th                      566,000      1,382,000       1,948,000       142,000
 6/30/95  Joliet / Jefferson Street                 501,000      1,241,000       1,742,000       130,000
 6/30/95  Bridgeton / Pennridge                     283,000        723,000       1,006,000        70,000
 6/30/95  Portland / S.E.92Nd                       638,000      1,551,000       2,189,000       155,000
 6/30/95  Houston / S.W. Freeway                    537,000      1,293,000       1,830,000       126,000
 6/30/95  Milwaukee / Brown                         358,000        899,000       1,257,000        99,000
 6/30/95  Orlando / W. Oak Ridge                    698,000      1,698,000       2,396,000       174,000
 6/30/95  Lauderhill / State Road                   644,000      1,556,000       2,200,000       153,000
 6/30/95  Orange Park /Blanding Blvd                394,000        966,000       1,360,000        93,000
 6/30/95  St. Petersburg /Joe'S Creek               704,000      1,690,000       2,394,000       168,000
 6/30/95  St. Louis / Page Service Drive            531,000      1,286,000       1,817,000       130,000
 6/30/95  Independence /E. 42Nd                     438,000      1,105,000       1,543,000       111,000
 6/30/95  Cherry Hill / Dobbs Lane                  716,000      1,685,000       2,401,000       166,000
 6/30/95  Edgewater Park / Route 130                683,000      1,617,000       2,300,000       158,000
 6/30/95  Beaverton / S.W. 110                      572,000      1,364,000       1,936,000       133,000
 6/30/95  Markham / W. 159Th Place                  230,000        575,000         805,000        61,000
 6/30/95  Houston / N.W. Freeway                    447,000      1,133,000       1,580,000       126,000
 6/30/95  Portland / Gantenbein                     537,000      1,272,000       1,809,000       126,000
 6/30/95  Upper Chichester/Market St.               569,000      1,351,000       1,920,000       133,000
 6/30/95  Fort Worth / Hwy 80                       379,000        934,000       1,313,000        95,000
 6/30/95  Greenfield/ S. 108Th                      728,000      1,774,000       2,502,000       176,000
 6/30/95  Altamonte Springs                         566,000      1,345,000       1,911,000       133,000
 6/30/95  East Hazel Crest / Halsted I              483,000      1,165,000       1,648,000       114,000
 6/30/95  Seattle / Delridge Way                    760,000      1,842,000       2,602,000       182,000
 6/30/95  Elmhurst / Lake Frontage Rd               748,000      1,807,000       2,555,000       182,000
 6/30/95  Los Angeles / Beverly Blvd                787,000      2,004,000       2,791,000       224,000
 6/30/95  Lawrenceville / Brunswick                 841,000      1,991,000       2,832,000       198,000
 6/30/95  Richmond / Carlson                        865,000      2,091,000       2,956,000       211,000
 6/30/95  Liverpool / Oswego Road                   545,000      1,310,000       1,855,000       131,000
 6/30/95  Rochester / East Ave                      578,000      1,410,000       1,988,000       145,000
 6/30/95  Pasadena / E. Beltway                     757,000      1,814,000       2,571,000       173,000
 7/13/95  Tarzana / Burbank Blvd                  2,895,000      7,042,000       9,937,000       733,000
 7/31/95  Orlando / Lakehurst                       450,000      1,096,000       1,546,000       107,000
 7/31/95  Livermore / Portola                       921,000      2,232,000       3,153,000       221,000
 7/31/95  San Jose / Tully Ii                       912,000      2,210,000       3,122,000       217,000
</TABLE>
                                      F-31
<PAGE>
<TABLE>
<CAPTION>
                                                                                                            Adjustment
                                                                                                            resulting
                                                                    Initial Cost                            from the
                                                           --------------------------------    Costs       acquisition
  Date                                        Encumbrances                   Building &      Subsequent    of minority
Acquired             Description                                Land        Improvements   to Acquisition   interests
----------------------------------------------------------------------------------------------------------------------
 <S>     <C>                                     <C>            <C>              <C>              <C>
 7/31/95  Mission Bay                            4,441,000      1,617,000        3,785,000        287,000
 7/31/95  Las Vegas / Decatur                                   1,147,000        2,697,000         52,000
 7/31/95  Pleasanton / Stanley                   3,187,000      1,624,000        3,811,000         43,000
 7/31/95  Castro Valley / Grove                                   757,000        1,772,000         21,000
 7/31/95  Honolulu / Kaneohe                                    1,215,000        2,846,000         97,000
 7/31/95  Chicago / Wabash Ave                                    645,000        1,535,000         98,000
 7/31/95  Springfield / Parker                                    765,000        1,834,000         52,000
 7/31/95  Huntington Bch/Gotham                                   765,000        1,808,000         76,000
 7/31/95  Tucker / Lawrenceville                                  630,000        1,480,000         75,000
 7/31/95  Marietta / Canton Road                                  600,000        1,423,000         46,000
 7/31/95  Wheeling / Hintz                                        450,000        1,054,000         45,000
 8/1/95   Gresham / Division                                      607,000        1,428,000         24,000
 8/1/95   Tucker / Lawrenceville                                  600,000        1,405,000         68,000
 8/1/95   Decatur / Covington                                     720,000        1,694,000         75,000
 8/11/95  Studio City/Ventura                                   1,285,000        3,015,000         24,000
 8/12/95  Smyrna / Hargrove Road                                1,020,000        3,038,000        203,000
 9/1/95   Hayward / Mission Blvd                                1,020,000        2,383,000         29,000
 9/1/95   Park City / Belvider                                    600,000        1,405,000         24,000
 9/1/95   New Castle/Dupont Parkway                               990,000        2,369,000         25,000
 9/1/95   Las Vegas / Rainbow                                   1,050,000        2,459,000         44,000
 9/1/95   Mountain View / Reng                                    945,000        2,216,000         32,000
 9/1/95   Venice / Cadillac                                       930,000        2,182,000         99,000
 9/1/95   Simi Valley /Los Angeles                              1,590,000        3,724,000         73,000
 9/1/95   Spring Valley/Foreman                                 1,095,000        2,572,000         18,000
 9/6/95   Darien / Frontage Road                                  975,000        2,321,000         38,000
 9/30/95  Van Nuys/Balboa Blvd                                  1,920,000        4,504,000        249,000
10/31/95  San Lorenzo /Hesperian                                1,590,000        3,716,000         54,000
10/31/95  Chicago / W. 47Th Street                                300,000          708,000         51,000
10/31/95  Los Angeles / Eastern                                   455,000        1,070,000         73,000
11/15/95  Costa Mesa - B                                          522,000        1,218,000         19,000
11/15/95  Plano / E. 14Th                                         705,000        1,646,000         22,000
11/15/95  Citrus Heights/Sunrise                                  520,000        1,213,000         60,000
11/15/95  Modesto/Briggsmore Ave                                  470,000        1,097,000         46,000
11/15/95  So San Francisco/Spruce                               1,905,000        4,444,000         52,000
11/15/95  Pacheco/Buchanan Circle                4,085,000      1,681,000        3,951,000         33,000
11/16/95  Palm Beach Gardens                                      657,000        1,540,000         66,000
11/16/95  Delray Beach                                            600,000        1,407,000         69,000
 1/3/96   San Gabriel                                           1,005,000        2,345,000        150,000
 1/5/96   San Francisco, Second St.                             2,880,000        6,814,000         41,000
 1/12/96  San Antonio, TX                                         912,000        2,170,000         43,000
</TABLE>
<TABLE>
<CAPTION>
                                                           Gross Carrying Value
                                                           At December 31, 1997
                                                --------------------------------------------
  Date                                                                                       Accumulated
Acquired             Description                    Land       Buildings         Total      Depreciation
----------------------------------------------------------------------------------------------------------
 <S>     <C>                                      <C>            <C>             <C>             <C>
 7/31/95  Mission Bay                             1,617,000      4,072,000       5,689,000       416,000
 7/31/95  Las Vegas / Decatur                     1,147,000      2,749,000       3,896,000       272,000
 7/31/95  Pleasanton / Stanley                    1,624,000      3,854,000       5,478,000       379,000
 7/31/95  Castro Valley / Grove                     757,000      1,793,000       2,550,000       175,000
 7/31/95  Honolulu / Kaneohe                      1,215,000      2,943,000       4,158,000       296,000
 7/31/95  Chicago / Wabash Ave                      645,000      1,633,000       2,278,000       165,000
 7/31/95  Springfield / Parker                      765,000      1,886,000       2,651,000       189,000
 7/31/95  Huntington Bch/Gotham                     765,000      1,884,000       2,649,000       194,000
 7/31/95  Tucker / Lawrenceville                    630,000      1,555,000       2,185,000       160,000
 7/31/95  Marietta / Canton Road                    600,000      1,469,000       2,069,000       151,000
 7/31/95  Wheeling / Hintz                          450,000      1,099,000       1,549,000       109,000
 8/1/95   Gresham / Division                        607,000      1,452,000       2,059,000       145,000
 8/1/95   Tucker / Lawrenceville                    600,000      1,473,000       2,073,000       149,000
 8/1/95   Decatur / Covington                       720,000      1,769,000       2,489,000       179,000
 8/11/95  Studio City/Ventura                     1,285,000      3,039,000       4,324,000       303,000
 8/12/95  Smyrna / Hargrove Road                  1,020,000      3,241,000       4,261,000       299,000
 9/1/95   Hayward / Mission Blvd                  1,020,000      2,412,000       3,432,000       227,000
 9/1/95   Park City / Belvider                      600,000      1,429,000       2,029,000       136,000
 9/1/95   New Castle/Dupont Parkway                 990,000      2,394,000       3,384,000       224,000
 9/1/95   Las Vegas / Rainbow                     1,050,000      2,503,000       3,553,000       238,000
 9/1/95   Mountain View / Reng                      945,000      2,248,000       3,193,000       212,000
 9/1/95   Venice / Cadillac                         930,000      2,281,000       3,211,000       219,000
 9/1/95   Simi Valley /Los Angeles                1,590,000      3,797,000       5,387,000       359,000
 9/1/95   Spring Valley/Foreman                   1,095,000      2,590,000       3,685,000       244,000
 9/6/95   Darien / Frontage Road                    975,000      2,359,000       3,334,000       239,000
 9/30/95  Van Nuys/Balboa Blvd                    1,920,000      4,753,000       6,673,000       166,000
10/31/95  San Lorenzo /Hesperian                  1,590,000      3,770,000       5,360,000       112,000
10/31/95  Chicago / W. 47Th Street                  300,000        759,000       1,059,000        27,000
10/31/95  Los Angeles / Eastern                     455,000      1,143,000       1,598,000        35,000
11/15/95  Costa Mesa - B                            522,000      1,237,000       1,759,000        89,000
11/15/95  Plano / E. 14Th                           705,000      1,668,000       2,373,000       117,000
11/15/95  Citrus Heights/Sunrise                    520,000      1,273,000       1,793,000        94,000
11/15/95  Modesto/Briggsmore Ave                    470,000      1,143,000       1,613,000        84,000
11/15/95  So San Francisco/Spruce                 1,905,000      4,496,000       6,401,000       321,000
11/15/95  Pacheco/Buchanan Circle                 1,681,000      3,984,000       5,665,000       291,000
11/16/95  Palm Beach Gardens                        657,000      1,606,000       2,263,000       150,000
11/16/95  Delray Beach                              600,000      1,476,000       2,076,000       139,000
 1/3/96   San Gabriel                             1,005,000      2,495,000       3,500,000       199,000
 1/5/96   San Francisco, Second St.               2,880,000      6,855,000       9,735,000       533,000
 1/12/96  San Antonio, TX                           912,000      2,213,000       3,125,000       175,000
 </TABLE>
                                      F-32
<PAGE>
<TABLE>
<CAPTION>
                                                                                                            Adjustment
                                                                                                            resulting
                                                                    Initial Cost                            from the
                                                           --------------------------------    Costs       acquisition
  Date                                        Encumbrances                   Building &      Subsequent    of minority
Acquired             Description                                Land        Improvements   to Acquisition   interests
----------------------------------------------------------------------------------------------------------------------
 <S>     <C>                                                    <C>            <C>               <C>
 2/29/96  Naples, FL/Old US 41                                    849,000        2,016,000         32,000
 2/29/96  Lake Worth, FL/S. Military Tr.                        1,782,000        4,723,000         66,000
 2/29/96  Brandon, FL/W Brandon Blvd.                           1,928,000        4,523,000        645,000
 2/29/96  Coral Springs FL/W Sample Rd.                         3,480,000        8,148,000         79,000
 2/29/96  Delray Beach FL/S Military Tr                           941,000        2,222,000        116,000
 2/29/96  Jupiter FL/Military Trail                             2,280,000        5,347,000         26,000
 2/29/96  Lakeworth FL/Lake Worth Rd                              737,000        1,742,000         85,000
 2/29/96  New Port Richey FL/State rd 54                          857,000        2,025,000         69,000
 2/29/96  Pompano Beach FL/ W Copans                            1,601,000        3,756,000         77,000
 2/29/96  Sanford FL/S Orlando Dr                                 734,000        1,749,000      1,787,000
 3/8/96   Atlanta/Roswell                                         898,000        3,649,000         26,000
 3/31/96  Oakland, CA                                           1,065,000        2,764,000         65,000
 3/31/96  Saratoga, CA                                          2,339,000        6,081,000         25,000
 3/31/96  Randallstown, MD                                      1,359,000        3,527,000         54,000
 3/31/96  Plano, TX                                               650,000        1,682,000         43,000
 3/31/96  Houston, TX                                             543,000        1,402,000         25,000
 3/31/96  Irvine, CA                                            1,920,000        4,975,000        186,000
 3/31/96  Milwaukee, WI                                           542,000        1,402,000         30,000
 3/31/96  Carrollton, TX                                          578,000        1,495,000         23,000
 3/31/96  Torrance, CA                                          1,415,000        3,675,000         59,000
 3/31/96  Jacksonville, FL                                        713,000        1,845,000         45,000
 3/31/96  Dallas, TX                                              315,000          810,000         28,000
 3/31/96  Houston, TX                                             669,000        1,724,000        125,000
 3/31/96  Baltimore, MD                                           842,000        2,180,000         30,000
 3/31/96  New Haven, CT                                           740,000        1,907,000         20,000
 4/1/96   Chicago/Pulaski                                         764,000        1,869,000         57,000
 4/1/96   Las Vegas/Desert Inn                                  1,115,000        2,729,000         36,000
 4/1/96   Torrance/Crenshaw                                       916,000        2,243,000         23,000
 4/1/96   Weymouth, WA state                                      485,000        1,187,000         18,000
 4/1/96   St. Louis/Barrett Station Road                          630,000        1,542,000         14,000
 4/1/96   Rockville/Randolph                                    1,153,000        2,823,000          7,000
 4/1/96   Simi Valley/East Street                                 970,000        2,374,000          8,000
 4/1/96   Houston/Westheimer III                                1,390,000        3,402,000        230,000
 4/3/96   Naples, FL                                            1,187,000        2,809,000         80,000
 6/26/96  Boca Raton FL MINI                                    3,180,000        7,468,000        151,000
 6/28/96  Venice FL                                               669,000        1,575,000         76,000
 6/30/96  Las Vegas, NV                                           921,000        2,155,000         65,000
 6/30/96  Bedford Park, IL                                        606,000        1,419,000         69,000
 6/30/96  Los Angeles, CA                                         692,000        1,616,000         21,000
 6/30/96  Silver Spring, MD                                     1,513,000        3,535,000         41,000
</TABLE>
<TABLE>
<CAPTION>
                                                           Gross Carrying Value
                                                           At December 31, 1997
                                                --------------------------------------------
  Date                                                                                       Accumulated
Acquired             Description                    Land       Buildings         Total      Depreciation
----------------------------------------------------------------------------------------------------------
 <S>     <C>                                        <C>          <C>             <C>             <C>
 2/29/96  Naples, FL/Old US 41                        849,000      2,048,000       2,897,000       147,000
 2/29/96  Lake Worth, FL/S. Military Tr.            1,782,000      4,789,000       6,571,000       338,000
 2/29/96  Brandon, FL/W Brandon Blvd.               1,928,000      5,168,000       7,096,000       351,000
 2/29/96  Coral Springs FL/W Sample Rd.             3,480,000      8,227,000      11,707,000       582,000
 2/29/96  Delray Beach FL/S Military Tr               941,000      2,338,000       3,279,000       175,000
 2/29/96  Jupiter FL/Military Trail                 2,280,000      5,373,000       7,653,000       379,000
 2/29/96  Lakeworth FL/Lake Worth Rd                  737,000      1,827,000       2,564,000       136,000
 2/29/96  New Port Richey FL/State rd 54              857,000      2,094,000       2,951,000       154,000
 2/29/96  Pompano Beach FL/ W Copans                1,601,000      3,833,000       5,434,000       278,000
 2/29/96  Sanford FL/S Orlando Dr                     975,000      3,295,000       4,270,000       165,000
 3/8/96   Atlanta/Roswell                             898,000      3,675,000       4,573,000       261,000
 3/31/96  Oakland, CA                               1,065,000      2,829,000       3,894,000       191,000
 3/31/96  Saratoga, CA                              2,339,000      6,106,000       8,445,000       408,000
 3/31/96  Randallstown, MD                          1,359,000      3,581,000       4,940,000       247,000
 3/31/96  Plano, TX                                   650,000      1,725,000       2,375,000       122,000
 3/31/96  Houston, TX                                 543,000      1,427,000       1,970,000        95,000
 3/31/96  Irvine, CA                                1,920,000      5,161,000       7,081,000       355,000
 3/31/96  Milwaukee, WI                               542,000      1,432,000       1,974,000        96,000
 3/31/96  Carrollton, TX                              578,000      1,518,000       2,096,000       103,000
 3/31/96  Torrance, CA                              1,415,000      3,734,000       5,149,000       259,000
 3/31/96  Jacksonville, FL                            713,000      1,890,000       2,603,000       127,000
 3/31/96  Dallas, TX                                  315,000        838,000       1,153,000        58,000
 3/31/96  Houston, TX                                 669,000      1,849,000       2,518,000       142,000
 3/31/96  Baltimore, MD                               842,000      2,210,000       3,052,000       149,000
 3/31/96  New Haven, CT                               740,000      1,927,000       2,667,000       130,000
 4/1/96   Chicago/Pulaski                             764,000      1,926,000       2,690,000        50,000
 4/1/96   Las Vegas/Desert Inn                      1,115,000      2,765,000       3,880,000       120,000
 4/1/96   Torrance/Crenshaw                           916,000      2,266,000       3,182,000        76,000
 4/1/96   Weymouth, WA state                          485,000      1,205,000       1,690,000       (23,000)
 4/1/96   St. Louis/Barrett Station Road              630,000      1,556,000       2,186,000        32,000
 4/1/96   Rockville/Randolph                        1,153,000      2,830,000       3,983,000        84,000
 4/1/96   Simi Valley/East Street                     970,000      2,382,000       3,352,000        87,000
 4/1/96   Houston/Westheimer III                    1,390,000      3,632,000       5,022,000       143,000
 4/3/96   Naples, FL                                1,187,000      2,889,000       4,076,000       210,000
 6/26/96  Boca Raton FL MINI                        3,180,000      7,619,000      10,799,000       441,000
 6/28/96  Venice FL                                   669,000      1,651,000       2,320,000       106,000
 6/30/96  Las Vegas, NV                               921,000      2,220,000       3,141,000       137,000
 6/30/96  Bedford Park, IL                            606,000      1,488,000       2,094,000        95,000
 6/30/96  Los Angeles, CA                             692,000      1,637,000       2,329,000       102,000
 6/30/96  Silver Spring, MD                         1,513,000      3,576,000       5,089,000       214,000
</TABLE>
                                      F-33
<PAGE>
<TABLE>
<CAPTION>
                                                                                                            Adjustment
                                                                                                            resulting
                                                                    Initial Cost                            from the
                                                           --------------------------------    Costs       acquisition
  Date                                        Encumbrances                   Building &      Subsequent    of minority
Acquired             Description                                Land        Improvements   to Acquisition   interests
----------------------------------------------------------------------------------------------------------------------
<S>       <C>                                                   <C>              <C>               <C>
 6/30/96  Newark, CA                                            1,051,000        2,458,000         15,000
 6/30/96  Brooklyn, NY                                            783,000        1,830,000         57,000
 7/2/96   Glen Burnie/Furnace Br Rd MD                          1,755,000        4,150,000         48,000
 7/22/96  Lakewood/W Hampton CO                                   717,000        2,092,000         39,000
 8/13/96  Norcross/Holcomb Bridge Rd                              955,000        3,117,000         18,000
 9/5/96   Spring Valley/S Pascack rd NY                         1,260,000        2,966,000        107,000
 9/16/96  Dallas/Royal Lane                                     1,008,000        2,426,000         65,000
 9/16/96  Colorado Springs/Tomah Drive                            731,000        1,759,000         34,000
 9/16/96  Lewisville/S. Stemmons                                  603,000        1,451,000         39,000
 9/16/96  Las Vegas/Boulder Hwy.                                  947,000        2,279,000         34,000
 9/16/96  Sarasota/S. Tamiami Trail                               584,000        1,407,000         20,000
 9/16/96  Willow Grove/Maryland Road                              673,000        1,620,000         16,000
 9/16/96  Houston/W. Montgomery Rd.                               524,000        1,261,000         36,000
 9/16/96  Denver/W. Hampden                                     1,084,000        2,609,000         35,000
 9/16/96  Littleton/Southpark Way                                 922,000        2,221,000         22,000
 9/16/96  Petaluma/Baywood Drive                                  861,000        2,074,000         19,000
 9/16/96  Canoga Park/Sherman Way                               1,543,000        3,716,000         35,000
 9/16/96  Jacksonville/South Lane Ave.                            554,000        1,334,000         60,000
 9/16/96  Newport News/Warwick Blvd.                              575,000        1,385,000         24,000
 9/16/96  Greenbrook/Route 22                                   1,227,000        2,954,000         45,000
 9/16/96  Monsey/Route 59                                       1,068,000        2,572,000         19,000
 9/16/96  Santa Rosa/Santa Rosa Ave.                              575,000        1,385,000         11,000
 9/16/96  Fort Worth/Brentwood Stair                              823,000        2,016,000         57,000
 9/16/96  Glendale/San Fernando Road                            2,500,000        6,124,000         15,000
 9/16/96  Houston/Harwin                                          549,000        1,344,000         48,000
 9/16/96  Irvine/Cowan Street                                   1,890,000        4,631,000         54,000
 9/16/96  Fairfield/Dixie Highway                                 427,000        1,046,000         17,000
 9/16/96  Mesa/Country Club Drive                                 701,000        1,718,000         10,000
 9/16/96  San Francisco/Geary Blvd.                             2,957,000        7,244,000         16,000
 9/16/96  Houston/Gulf Freeway                                    701,000        1,718,000         44,000
 9/16/96  Las Vegas/S. Decatur Blvd.                            1,037,000        2,539,000         36,000
 9/16/96  Tempe/McKellips Road                                    823,000        1,972,000         77,000
 9/16/96  Richland Hills/Airport Fwy.                             473,000        1,158,000         38,000
10/11/96  Virginia Beach/Southern Blvd                            282,000          610,000        127,000
10/11/96  Chesapeake/Military Hwy                                 912,000        1,974,000        205,000
10/11/96  Hampton/Pembroke Road                                 1,080,000        2,346,000        232,000
10/11/96  Norfolk/Widgeon Road                                  1,110,000        2,405,000        182,000
10/11/96  Richmond/Bloom Lane                                   1,188,000        2,512,000        128,000
10/11/96  Richmond/Midlothian Park                                762,000        1,588,000        274,000
10/11/96  Roanoke/Peters Creek Road                               819,000        1,776,000        102,000
</TABLE>
<TABLE>
<CAPTION>
                                                           Gross Carrying Value
                                                           At December 31, 1997
                                                --------------------------------------------
  Date                                                                                       Accumulated
Acquired             Description                    Land       Buildings         Total      Depreciation
----------------------------------------------------------------------------------------------------------
 <S>     <C>                                      <C>            <C>             <C>             <C>
 6/30/96  Newark, CA                              1,051,000      2,473,000       3,524,000       149,000
 6/30/96  Brooklyn, NY                              783,000      1,887,000       2,670,000       115,000
 7/2/96   Glen Burnie/Furnace Br Rd MD            1,755,000      4,198,000       5,953,000       242,000
 7/22/96  Lakewood/W Hampton CO                     716,000      2,132,000       2,848,000       122,000
 8/13/96  Norcross/Holcomb Bridge Rd                955,000      3,135,000       4,090,000       169,000
 9/5/96   Spring Valley/S Pascack rd NY           1,260,000      3,073,000       4,333,000       169,000
 9/16/96  Dallas/Royal Lane                       1,008,000      2,491,000       3,499,000       104,000
 9/16/96  Colorado Springs/Tomah Drive              731,000      1,793,000       2,524,000        83,000
 9/16/96  Lewisville/S. Stemmons                    603,000      1,490,000       2,093,000        64,000
 9/16/96  Las Vegas/Boulder Hwy.                    947,000      2,313,000       3,260,000       103,000
 9/16/96  Sarasota/S. Tamiami Trail                 584,000      1,427,000       2,011,000        61,000
 9/16/96  Willow Grove/Maryland Road                673,000      1,636,000       2,309,000        72,000
 9/16/96  Houston/W. Montgomery Rd.                 524,000      1,297,000       1,821,000        53,000
 9/16/96  Denver/W. Hampden                       1,084,000      2,644,000       3,728,000       117,000
 9/16/96  Littleton/Southpark Way                   922,000      2,243,000       3,165,000        96,000
 9/16/96  Petaluma/Baywood Drive                    861,000      2,093,000       2,954,000        91,000
 9/16/96  Canoga Park/Sherman Way                 1,543,000      3,751,000       5,294,000       163,000
 9/16/96  Jacksonville/South Lane Ave.              554,000      1,394,000       1,948,000        63,000
 9/16/96  Newport News/Warwick Blvd.                575,000      1,409,000       1,984,000        60,000
 9/16/96  Greenbrook/Route 22                     1,227,000      2,999,000       4,226,000       129,000
 9/16/96  Monsey/Route 59                         1,068,000      2,591,000       3,659,000       112,000
 9/16/96  Santa Rosa/Santa Rosa Ave.                575,000      1,396,000       1,971,000        58,000
 9/16/96  Fort Worth/Brentwood Stair                823,000      2,073,000       2,896,000        92,000
 9/16/96  Glendale/San Fernando Road              2,500,000      6,139,000       8,639,000       274,000
 9/16/96  Houston/Harwin                            549,000      1,392,000       1,941,000        60,000
 9/16/96  Irvine/Cowan Street                     1,890,000      4,685,000       6,575,000       205,000
 9/16/96  Fairfield/Dixie Highway                   427,000      1,063,000       1,490,000        44,000
 9/16/96  Mesa/Country Club Drive                   701,000      1,728,000       2,429,000        75,000
 9/16/96  San Francisco/Geary Blvd.               2,957,000      7,260,000      10,217,000       325,000
 9/16/96  Houston/Gulf Freeway                      701,000      1,762,000       2,463,000        77,000
 9/16/96  Las Vegas/S. Decatur Blvd.              1,037,000      2,575,000       3,612,000       115,000
 9/16/96  Tempe/McKellips Road                      823,000      2,049,000       2,872,000        92,000
 9/16/96  Richland Hills/Airport Fwy.               473,000      1,196,000       1,669,000        51,000
10/11/96  Virginia Beach/Southern Blvd              282,000        737,000       1,019,000        42,000
10/11/96  Chesapeake/Military Hwy                   912,000      2,179,000       3,091,000       103,000
10/11/96  Hampton/Pembroke Road                   1,080,000      2,578,000       3,658,000       137,000
10/11/96  Norfolk/Widgeon Road                    1,110,000      2,587,000       3,697,000       134,000
10/11/96  Richmond/Bloom Lane                     1,188,000      2,640,000       3,828,000       133,000
10/11/96  Richmond/Midlothian Park                  762,000      1,862,000       2,624,000       108,000
10/11/96  Roanoke/Peters Creek Road                 819,000      1,878,000       2,697,000        95,000
</TABLE>
                                          F-34

<PAGE>
<TABLE>
<CAPTION>
                                                                                                            Adjustment
                                                                                                            resulting
                                                                    Initial Cost                            from the
                                                           --------------------------------    Costs       acquisition
  Date                                        Encumbrances                   Building &      Subsequent    of minority
Acquired             Description                                Land        Improvements   to Acquisition   interests
----------------------------------------------------------------------------------------------------------------------
<S>     <C>                                                      <C>            <C>               <C>
10/11/96  Orlando/E Oakridge Rd                                   927,000        2,020,000         74,000
10/11/96  Orlando/South Hwy 17-92                               1,170,000        2,549,000         60,000
10/25/96  Austin/Renelli                                        1,710,000        3,990,000         66,000
10/25/96  Austin/Santiago                                         900,000        2,100,000         62,000
10/25/96  Dallas/East N.W. Highway                                698,000        1,628,000         20,000
10/25/96  Dallas/Denton Drive                                     900,000        2,100,000         58,000
10/25/96  Houston/Hempstead                                       518,000        1,207,000         84,000
10/25/96  Pasadena/So. Shaver                                     420,000          980,000         26,000
10/31/96  Houston/Joel Wheaton Rd                                 465,000        1,085,000         26,000
10/31/96  Mt Holly/541 Bypass                                     360,000          840,000         10,000
11/13/96  Big A/Forest Park                                       270,000          630,000        929,000
11/13/96  Town East/Mesquite                                      330,000          770,000         17,000
11/14/96  Bossier City LA                                         633,000        1,488,000         50,000
 12/5/96  Lake Forest/Bake Parkway                                971,000        2,173,000        536,000
12/16/96  Cherry Hill/Old Cuthbert                                645,000        1,505,000         49,000
12/16/96  Oklahoma City/SW 74th Exprw.                            375,000          875,000         50,000
12/16/96  Oklahoma City/S Santa Fe                                360,000          840,000         45,000
12/16/96  Oklahoma City/S. May                                    360,000          840,000         47,000
12/16/96  Arlington/S. Watson Rd.                                 930,000        2,170,000         58,000
12/16/96  Richardson/E. Arapaho                                 1,290,000        3,010,000         68,000
12/23/96  Upper Darby/Lansdowne                                   899,000        2,272,000         13,000
12/23/96  Plymouth Meeting /Chemical                            1,109,000        2,802,000         10,000
12/23/96  Philadelphia/Byberry                                  1,019,000        2,575,000         37,000
12/23/96  Ft. Lauderdale/State Road                             1,199,000        3,030,000         27,000
12/23/96  Englewood/Costilla                                    1,739,000        4,393,000          6,000
12/23/96  Lilburn/Beaver Ruin Road                                600,000        1,515,000          7,000
12/23/96  Carmichael/Fair Oaks IL                                 809,000        2,045,000         28,000
12/23/96  Portland/Division Street                                989,000        2,499,000          7,000
12/23/96  Napa/Industrial                                         660,000        1,666,000         43,000
12/23/96  Wheatridge/W. 44th Avenue IL                          1,439,000        3,636,000         12,000
12/23/96  Las Vegas/Charleston IL                               1,049,000        2,651,000         21,000
12/23/96  Las Vegas/South Arvill                                  929,000        2,348,000         24,000
12/23/96  Los Angeles/Santa Monica II                           3,328,000        8,407,000         46,000
12/23/96  Warren/Schoenherr Rd.                                   749,000        1,894,000         28,000
12/23/96  Portland/N.E. 71st Avenue                               869,000        2,196,000         40,000
12/23/96  Seattle/Pacific Hwy. South                              689,000        1,742,000         13,000
12/23/96  Broadview/S. 25th Avenue                              1,289,000        3,257,000         31,000
12/23/96  Winter Springs/W. St. Rte 434                           689,000        1,742,000         20,000
12/23/96  Tampa/15th Street                                       420,000        1,060,000         27,000
12/23/96  Pompano Beach/S. Dixie Hwy.                             930,000        2,292,000         70,000
</TABLE>
<TABLE>
<CAPTION>
                                                           Gross Carrying Value
                                                           At December 31, 1997
                                                --------------------------------------------
  Date                                                                                       Accumulated
Acquired             Description                    Land       Buildings         Total      Depreciation
----------------------------------------------------------------------------------------------------------
<S>     <C>                                         <C>          <C>             <C>             <C>
10/11/96  Orlando/E Oakridge Rd                      927,000      2,094,000       3,021,000       103,000
10/11/96  Orlando/South Hwy 17-92                  1,170,000      2,609,000       3,779,000       126,000
10/25/96  Austin/Renelli                           1,710,000      4,056,000       5,766,000       195,000
10/25/96  Austin/Santiago                            900,000      2,162,000       3,062,000       106,000
10/25/96  Dallas/East N.W. Highway                   698,000      1,648,000       2,346,000        77,000
10/25/96  Dallas/Denton Drive                        900,000      2,158,000       3,058,000       101,000
10/25/96  Houston/Hempstead                          518,000      1,291,000       1,809,000        61,000
10/25/96  Pasadena/So. Shaver                        420,000      1,006,000       1,426,000        47,000
10/31/96  Houston/Joel Wheaton Rd                    465,000      1,111,000       1,576,000        48,000
10/31/96  Mt Holly/541 Bypass                        360,000        850,000       1,210,000        37,000
11/13/96  Big A/Forest Park                          270,000      1,559,000       1,829,000       126,000
11/13/96  Town East/Mesquite                         330,000        787,000       1,117,000        35,000
11/14/96  Bossier City LA                            633,000      1,538,000       2,171,000        68,000
 12/5/96  Lake Forest/Bake Parkway                   971,000      2,709,000       3,680,000        21,000
12/16/96  Cherry Hill/Old Cuthbert                   645,000      1,554,000       2,199,000        63,000
12/16/96  Oklahoma City/SW 74th Exprw.               375,000        925,000       1,300,000        36,000
12/16/96  Oklahoma City/S Santa Fe                   360,000        885,000       1,245,000        35,000
12/16/96  Oklahoma City/S. May                       360,000        887,000       1,247,000        35,000
12/16/96  Arlington/S. Watson Rd.                    930,000      2,228,000       3,158,000        89,000
12/16/96  Richardson/E. Arapaho                    1,290,000      3,078,000       4,368,000       127,000
12/23/96  Upper Darby/Lansdowne                      899,000      2,285,000       3,184,000        92,000
12/23/96  Plymouth Meeting /Chemical               1,109,000      2,812,000       3,921,000        41,000
12/23/96  Philadelphia/Byberry                     1,019,000      2,612,000       3,631,000       106,000
12/23/96  Ft. Lauderdale/State Road                1,199,000      3,057,000       4,256,000       123,000
12/23/96  Englewood/Costilla                       1,739,000      4,399,000       6,138,000       177,000
12/23/96  Lilburn/Beaver Ruin Road                   600,000      1,522,000       2,122,000        61,000
12/23/96  Carmichael/Fair Oaks IL                    809,000      2,073,000       2,882,000        84,000
12/23/96  Portland/Division Street                   989,000      2,506,000       3,495,000       101,000
12/23/96  Napa/Industrial                            660,000      1,709,000       2,369,000        71,000
12/23/96  Wheatridge/W. 44th Avenue IL             1,439,000      3,648,000       5,087,000       147,000
12/23/96  Las Vegas/Charleston IL                  1,049,000      2,672,000       3,721,000       108,000
12/23/96  Las Vegas/South Arvill                     929,000      2,372,000       3,301,000        97,000
12/23/96  Los Angeles/Santa Monica II              3,328,000      8,453,000      11,781,000       341,000
12/23/96  Warren/Schoenherr Rd.                      749,000      1,922,000       2,671,000        77,000
12/23/96  Portland/N.E. 71st Avenue                  869,000      2,236,000       3,105,000        90,000
12/23/96  Seattle/Pacific Hwy. South                 689,000      1,755,000       2,444,000        71,000
12/23/96  Broadview/S. 25th Avenue                 1,289,000      3,288,000       4,577,000       132,000
12/23/96  Winter Springs/W. St. Rte 434              689,000      1,762,000       2,451,000        73,000
12/23/96  Tampa/15th Street                          420,000      1,087,000       1,507,000        44,000
12/23/96  Pompano Beach/S. Dixie Hwy.                930,000      2,362,000       3,292,000       100,000
</TABLE>
                                      F-35
<PAGE>
<TABLE>
<CAPTION>
                                                                                                            Adjustment
                                                                                                            resulting
                                                                    Initial Cost                            from the
                                                           --------------------------------    Costs       acquisition
  Date                                        Encumbrances                   Building &      Subsequent    of minority
Acquired             Description                                Land        Improvements   to Acquisition   interests
----------------------------------------------------------------------------------------------------------------------
<S>      <C>                                                      <C>            <C>               <C>
12/23/96  Overland Park/Mastin                                    990,000        2,440,000         26,000
12/23/96  Nashville/Dickerson Pike                                990,000        2,440,000         38,000
12/23/96  Madison/Gallatin Road                                   780,000        1,922,000         45,000
12/23/96  Auburn/R Street                                         690,000        1,700,000         15,000
12/23/96  Federal Heights/W. 48th Ave.                            720,000        1,774,000          8,000
12/23/96  Decatur/Covington IL                                    930,000        2,292,000         13,000
12/23/96  Forest Park/Jonesboro Rd.                               540,000        1,331,000         50,000
12/23/96  Mangonia Park/Australian Ave.                           840,000        2,070,000         16,000
12/23/96  Whittier/Colima                                         540,000        1,331,000         21,000
12/23/96  Kent/Pacific Hwy South                                  930,000        2,292,000         39,000
12/23/96  Topeka/8th Street                                       150,000          370,000         35,000
12/23/96  Denver East Evans                                     1,740,000        4,288,000         35,000
12/23/96  Pittsburgh/California Ave.                              630,000        1,552,000         36,000
12/23/96  Ft. Lauderdale/Powerline                                660,000        1,626,000         49,000
12/23/96  Philadelphia/Oxford                                     900,000        2,218,000         21,000
12/23/96  Dallas/Lemmon Ave. (arlington)                        1,710,000        4,214,000         15,000
12/23/96  Eagle Rock/Colorado                                     330,000          813,000          5,000
12/23/96  Alsip/115th Street                                      750,000        1,848,000         61,000
12/23/96  Green Acres/Jog Road                                    600,000        1,479,000         18,000
12/23/96  Pompano Beach/Sample Road                             1,320,000        3,253,000         38,000
12/23/96  Wyndmoor/Ivy Hill                                     2,160,000        5,323,000         25,000
12/23/96  W. Palm Beach/Belvedere                                 960,000        2,366,000         22,000
12/23/96  Renton  174th St.                                       960,000        2,366,000         44,000
12/23/96  Sacramento/Northgate                                  1,021,000        2,647,000         41,000
12/23/96  Phoenix/19th Avenue                                     991,000        2,569,000          5,000
12/23/96  Bedford Park/Cicero                                   1,321,000        3,426,000         22,000
12/23/96  Lake Worth/Lk Worth                                   1,111,000        2,880,000         21,000
12/23/96  Arlington/Algonquin                                     991,000        2,569,000         68,000
12/23/96  Seattle/15th Avenue NE                                  781,000        2,024,000         17,000
12/23/96  Southington/Spring                                      811,000        2,102,000         36,000
12/23/96  Clifton/Broad Street                                  1,411,000        3,659,000         (1,000)
12/23/96  Hillside/Glenwood B                                     563,000        4,051,000         23,000
12/30/96  Concorde/Treat                                        1,396,000        3,258,000         31,000
12/30/96  Virginia Beach                                          535,000        1,248,000         32,000
12/30/96  San Mateo                                             2,408,000        5,619,000         67,000
 1/22/97  Austin, 1033 E. 41 Street                               257,000        3,633,000          5,000
 4/12/97  Annandale / Backlick                                    955,000        2,229,000        208,000
 4/12/97  Ft. Worth / West Freeway                                667,000        1,556,000        171,000
 4/12/97  Campbell / S. Curtner                                 2,550,000        5,950,000        550,000
 4/12/97  Aurora / S. Idalia                                    1,002,000        2,338,000        232,000
</TABLE>
<TABLE>
<CAPTION>
                                                           Gross Carrying Value
                                                           At December 31, 1997
                                                --------------------------------------------
  Date                                                                                       Accumulated
Acquired             Description                    Land       Buildings         Total      Depreciation
----------------------------------------------------------------------------------------------------------
<S>      <C>                                           <C>          <C>             <C>             <C>
12/23/96  Overland Park/Mastin                         990,000      2,466,000       3,456,000       102,000
12/23/96  Nashville/Dickerson Pike                     990,000      2,478,000       3,468,000       101,000
12/23/96  Madison/Gallatin Road                        780,000      1,967,000       2,747,000        80,000
12/23/96  Auburn/R Street                              690,000      1,715,000       2,405,000        69,000
12/23/96  Federal Heights/W. 48th Ave.                 720,000      1,782,000       2,502,000        72,000
12/23/96  Decatur/Covington IL                         930,000      2,305,000       3,235,000        92,000
12/23/96  Forest Park/Jonesboro Rd.                    540,000      1,381,000       1,921,000        61,000
12/23/96  Mangonia Park/Australian Ave.                840,000      2,086,000       2,926,000        85,000
12/23/96  Whittier/Colima                              540,000      1,352,000       1,892,000        56,000
12/23/96  Kent/Pacific Hwy South                       930,000      2,331,000       3,261,000        93,000
12/23/96  Topeka/8th Street                            150,000        405,000         555,000        17,000
12/23/96  Denver East Evans                          1,740,000      4,323,000       6,063,000       174,000
12/23/96  Pittsburgh/California Ave.                   630,000      1,588,000       2,218,000        65,000
12/23/96  Ft. Lauderdale/Powerline                     660,000      1,675,000       2,335,000        68,000
12/23/96  Philadelphia/Oxford                          900,000      2,239,000       3,139,000        92,000
12/23/96  Dallas/Lemmon Ave. (arlington)             1,710,000      4,229,000       5,939,000       170,000
12/23/96  Eagle Rock/Colorado                          330,000        818,000       1,148,000        33,000
12/23/96  Alsip/115th Street                           750,000      1,909,000       2,659,000        82,000
12/23/96  Green Acres/Jog Road                         600,000      1,497,000       2,097,000        62,000
12/23/96  Pompano Beach/Sample Road                  1,320,000      3,291,000       4,611,000       133,000
12/23/96  Wyndmoor/Ivy Hill                          2,160,000      5,348,000       7,508,000       215,000
12/23/96  W. Palm Beach/Belvedere                      960,000      2,388,000       3,348,000        96,000
12/23/96  Renton  174th St.                            960,000      2,410,000       3,370,000        97,000
12/23/96  Sacramento/Northgate                       1,021,000      2,688,000       3,709,000       110,000
12/23/96  Phoenix/19th Avenue                          991,000      2,574,000       3,565,000       104,000
12/23/96  Bedford Park/Cicero                        1,321,000      3,448,000       4,769,000       139,000
12/23/96  Lake Worth/Lk Worth                        1,111,000      2,901,000       4,012,000       117,000
12/23/96  Arlington/Algonquin                          991,000      2,637,000       3,628,000       108,000
12/23/96  Seattle/15th Avenue NE                       781,000      2,041,000       2,822,000        82,000
12/23/96  Southington/Spring                           811,000      2,138,000       2,949,000        88,000
12/23/96  Clifton/Broad Street                       1,411,000      3,658,000       5,069,000       147,000
12/23/96  Hillside/Glenwood B                          563,000      4,074,000       4,637,000       177,000
12/30/96  Concorde/Treat                             1,396,000      3,289,000       4,685,000       132,000
12/30/96  Virginia Beach                               535,000      1,280,000       1,815,000        52,000
12/30/96  San Mateo                                  2,408,000      5,686,000       8,094,000       229,000
 1/22/97  Austin, 1033 E. 41 Street                    257,000      3,638,000       3,895,000       109,000
 4/12/97  Annandale / Backlick                         955,000      2,437,000       3,392,000        61,000
 4/12/97  Ft. Worth / West Freeway                     667,000      1,727,000       2,394,000        43,000
 4/12/97  Campbell / S. Curtner                      2,550,000      6,500,000       9,050,000       162,000
 4/12/97  Aurora / S. Idalia                         1,002,000      2,570,000       3,572,000        65,000
</TABLE>
                                      F-36
<PAGE>
<TABLE>
<CAPTION>
                                                                                                            Adjustment
                                                                                                            resulting
                                                                    Initial Cost                            from the
                                                           --------------------------------    Costs       acquisition
  Date                                        Encumbrances                   Building &      Subsequent    of minority
Acquired             Description                                Land        Improvements   to Acquisition   interests
----------------------------------------------------------------------------------------------------------------------
 <S>     <C>                                                    <C>              <C>              <C>
 4/12/97  Santa Cruz / Capitola                                 1,037,000        2,420,000        235,000
 4/12/97  Indianapolis / Lafayette Road                           682,000        1,590,000        175,000
 4/12/97  Indianapolis / Route 31                                 619,000        1,444,000        166,000
 4/12/97  Farmingdale / Broad Hollow Rd.                        1,568,000        3,658,000        395,000
 4/12/97  Tyson's Corner / Springhill Rd.                       3,861,000        9,010,000        852,000
 4/12/97  Fountain Valley / Newhope                             1,137,000        2,653,000        243,000
 4/12/97  Dallas / Winsted                                      1,375,000        3,209,000        334,000
 4/12/97  Columbia / Broad River Rd.-B                            121,000          282,000         69,000
 4/12/97  Livermore / S. Front Road                               876,000        2,044,000        125,000
 4/12/97  Garland / Plano                                         889,000        2,073,000        134,000
 4/12/97  San Jose / Story Road                                 1,352,000        3,156,000        189,000
 4/12/97  Aurora / Abilene                                      1,406,000        3,280,000        176,000
 4/12/97  Antioch / Sunset Drive                                1,035,000        2,416,000        141,000
 4/12/97  Rancho Cordova / Sunrise                              1,048,000        2,445,000        150,000
 4/12/97  Berlin / Wilbur Cross                                   756,000        1,764,000        128,000
 4/12/97  Whittier / Whittier Blvd.                               648,000        1,513,000         92,000
 4/12/97  Peabody / Newbury Street                              1,159,000        2,704,000        159,000
 4/12/97  Denver / Blake                                          602,000        1,405,000         74,000
 4/12/97  Evansville / Green River Road                           470,000        1,096,000         84,000
 4/12/97  Burien / First Ave. So.                                 792,000        1,847,000        116,000
 4/12/97  Rancho Cordova / Mather Field                           494,000        1,153,000         91,000
 4/12/97  Sugar Land / Eldridge                                   705,000        1,644,000        120,000
 4/12/97  Columbus / Eastland Drive                               602,000        1,405,000        107,000
 4/12/97  Slickerville / Black Horse Pike                         539,000        1,258,000         75,000
 4/12/97  Seattle / Aurora                                      1,145,000        2,671,000        155,000
 4/12/97  Gaithersburg / Christopher Ave.                         972,000        2,268,000        132,000
 4/12/97  Manchester / Tolland Turnpike                           807,000        1,883,000        116,000
 5/12/97  New Orleans, St. Charles                              1,407,000        2,632,000         63,000
 6/25/97  Kirkland-Totem                                        2,131,000        4,972,000        (96,000)
 6/25/97  Idianapolis                                             471,000        1,098,000        (10,000)
 6/25/97  Dallas                                                  699,000        1,631,000        (35,000)
 6/25/97  Atlanta                                               1,183,000        2,761,000        (61,000)
 6/25/97  Bensalem                                              1,159,000        2,705,000        (48,000)
 6/25/97  Evansville                                              429,000        1,000,000        (20,000)
 6/25/97  Austin                                                  813,000        1,897,000        (41,000)
 6/25/97  Harbor City                                           1,244,000        2,904,000        (64,000)
 6/25/97  Birmingham                                              539,000        1,258,000        (16,000)
 6/25/97  Sacramento                                              489,000        1,396,000       (275,000)
 6/25/97  Carrollton                                              441,000        1,029,000        (20,000)
 6/25/97  La Habra                                                822,000        1,918,000        (42,000)
</TABLE>
<TABLE>
<CAPTION>
                                                           Gross Carrying Value
                                                           At December 31, 1997
                                                --------------------------------------------
  Date                                                                                       Accumulated
Acquired             Description                    Land       Buildings         Total      Depreciation
----------------------------------------------------------------------------------------------------------
 <S>     <C>                                          <C>            <C>             <C>              <C>
 4/12/97  Santa Cruz / Capitola                       1,037,000      2,655,000       3,692,000        66,000
 4/12/97  Indianapolis / Lafayette Road                 682,000      1,765,000       2,447,000        45,000
 4/12/97  Indianapolis / Route 31                       619,000      1,610,000       2,229,000        42,000
 4/12/97  Farmingdale / Broad Hollow Rd.              1,568,000      4,053,000       5,621,000       101,000
 4/12/97  Tyson's Corner / Springhill Rd.             3,861,000      9,862,000      13,723,000       245,000
 4/12/97  Fountain Valley / Newhope                   1,137,000      2,896,000       4,033,000        72,000
 4/12/97  Dallas / Winsted                            1,375,000      3,543,000       4,918,000        88,000
 4/12/97  Columbia / Broad River Rd.-B                  121,000        351,000         472,000        10,000
 4/12/97  Livermore / S. Front Road                     876,000      2,169,000       3,045,000        54,000
 4/12/97  Garland / Plano                               889,000      2,207,000       3,096,000        56,000
 4/12/97  San Jose / Story Road                       1,352,000      3,345,000       4,697,000        84,000
 4/12/97  Aurora / Abilene                            1,406,000      3,456,000       4,862,000        86,000
 4/12/97  Antioch / Sunset Drive                      1,035,000      2,557,000       3,592,000        65,000
 4/12/97  Rancho Cordova / Sunrise                    1,048,000      2,595,000       3,643,000        65,000
 4/12/97  Berlin / Wilbur Cross                         756,000      1,892,000       2,648,000        48,000
 4/12/97  Whittier / Whittier Blvd.                     648,000      1,605,000       2,253,000        41,000
 4/12/97  Peabody / Newbury Street                    1,159,000      2,863,000       4,022,000        71,000
 4/12/97  Denver / Blake                                602,000      1,479,000       2,081,000        37,000
 4/12/97  Evansville / Green River Road                 470,000      1,180,000       1,650,000        31,000
 4/12/97  Burien / First Ave. So.                       792,000      1,963,000       2,755,000        49,000
 4/12/97  Rancho Cordova / Mather Field                 494,000      1,244,000       1,738,000        33,000
 4/12/97  Sugar Land / Eldridge                         705,000      1,764,000       2,469,000        45,000
 4/12/97  Columbus / Eastland Drive                     602,000      1,512,000       2,114,000        38,000
 4/12/97  Slickerville / Black Horse Pike               539,000      1,333,000       1,872,000        34,000
 4/12/97  Seattle / Aurora                            1,145,000      2,826,000       3,971,000        70,000
 4/12/97  Gaithersburg / Christopher Ave.               972,000      2,400,000       3,372,000        60,000
 4/12/97  Manchester / Tolland Turnpike                 807,000      1,999,000       2,806,000        50,000
 5/12/97  New Orleans, St. Charles                    1,407,000      2,695,000       4,102,000        90,000
 6/25/97  Kirkland-Totem                              2,131,000      4,876,000       7,007,000        94,000
 6/25/97  Idianapolis                                   471,000      1,088,000       1,559,000        21,000
 6/25/97  Dallas                                        699,000      1,596,000       2,295,000        31,000
 6/25/97  Atlanta                                     1,183,000      2,700,000       3,883,000        52,000
 6/25/97  Bensalem                                    1,159,000      2,657,000       3,816,000        52,000
 6/25/97  Evansville                                    429,000        980,000       1,409,000        19,000
 6/25/97  Austin                                        813,000      1,856,000       2,669,000        36,000
 6/25/97  Harbor City                                 1,244,000      2,840,000       4,084,000        55,000
 6/25/97  Birmingham                                    539,000      1,242,000       1,781,000        24,000
 6/25/97  Sacramento                                    489,000      1,121,000       1,610,000        22,000
 6/25/97  Carrollton                                    441,000      1,009,000       1,450,000        20,000
 6/25/97  La Habra                                      822,000      1,876,000       2,698,000        36,000
</TABLE>
                                      F-37
<PAGE>
<TABLE>
<CAPTION>
                                                                                                            Adjustment
                                                                                                            resulting
                                                                    Initial Cost                            from the
                                                           --------------------------------    Costs       acquisition
  Date                                        Encumbrances                   Building &      Subsequent    of minority
Acquired             Description                                Land        Improvements   to Acquisition   interests
----------------------------------------------------------------------------------------------------------------------
 <S>     <C>                                                   <C>              <C>             <C>
 6/25/97  Lombard                                               1,527,000        3,564,000       (79,000)
 6/25/97  Fairfield                                               740,000        1,727,000       (28,000)
 6/25/97  Seattle                                               1,498,000        3,494,000       (62,000)
 6/25/97  Bellevue                                              1,653,000        3,858,000       (55,000)
 6/25/97  Citrus Heights                                          642,000        1,244,000       243,000
 6/25/97  San Jose                                              1,273,000        2,971,000       (61,000)
 6/25/97  Stanton                                                 948,000        2,212,000       (46,000)
 6/25/97  Garland                                                 486,000        1,135,000       (13,000)
 6/25/97  Westford                                                857,000        1,999,000       (11,000)
 6/25/97  Dallas                                                1,627,000        3,797,000       429,000
 6/25/97  Wheat Ridge                                           1,054,000        2,459,000       246,000
 6/25/97  Berlin                                                  825,000        1,925,000       196,000
 6/25/97  Gretna                                                1,069,000        2,494,000       287,000
 6/25/97  Spring                                                  461,000        1,077,000       115,000
 6/25/97  Sacramento                                              592,000        1,380,000       142,000
 6/25/97  Houston/South Dairyashford                              856,000        1,997,000       220,000
 6/25/97  Naperville                                            1,108,000        2,585,000       273,000
 6/25/97  Carrollton                                            1,158,000        2,702,000       319,000
 6/25/97  Waipahu                                               1,620,000        3,780,000       415,000
 6/25/97  Davis                                                   628,000        1,465,000       154,000
 6/25/97  Decatur                                                 951,000        2,220,000       218,000
 6/25/97  Jacksonville                                            653,000        1,525,000       186,000
 6/25/97  Chicoppe                                                663,000        1,546,000       177,000
 6/25/97  Alexandria                                            1,533,000        3,576,000       355,000
 6/25/97  Houston/Veterans Memorial Dr.                           458,000        1,070,000       113,000
 6/25/97  Los Angeles/Olympic                                   4,392,000       10,247,000     1,097,000
 6/25/97  Littleton                                             1,340,000        3,126,000       332,000
 6/25/97  Metairie                                              1,229,000        2,868,000       340,000
 6/25/97  Louisville                                              717,000        1,672,000       187,000
 6/25/97  East Hazel Crest                                        753,000        1,757,000       185,000
 6/25/97  Edmonds                                               1,187,000        2,770,000       299,000
 6/25/97  Foster City                                           1,064,000        2,483,000       260,000
 6/25/97  Chicago                                               1,160,000        2,708,000       297,000
 6/25/97  Philadelphia                                            924,000        2,155,000       228,000
 6/25/97  Dallas/Vilbig Rd.                                       508,000        1,184,000       125,000
 6/25/97  Staten Island                                         1,676,000        3,910,000       414,000
 6/25/97  Pelham Manor                                          1,209,000        2,820,000       297,000
 6/25/97  Irving                                                  469,000        1,093,000       132,000
 6/25/97  Elk Grove                                               642,000        1,497,000       170,000
 6/25/97  LAX                                                   1,312,000        3,062,000       341,000
</TABLE>
<TABLE>
<CAPTION>
                                                           Gross Carrying Value
                                                           At December 31, 1997
                                                --------------------------------------------
  Date                                                                                       Accumulated
Acquired             Description                    Land       Buildings         Total      Depreciation
----------------------------------------------------------------------------------------------------------
 <S>     <C>                                      <C>            <C>             <C>              <C>
 6/25/97  Lombard                                  1,527,000      3,485,000       5,012,000        67,000
 6/25/97  Fairfield                                  740,000      1,699,000       2,439,000        33,000
 6/25/97  Seattle                                  1,498,000      3,432,000       4,930,000        66,000
 6/25/97  Bellevue                                 1,653,000      3,803,000       5,456,000        73,000
 6/25/97  Citrus Heights                             642,000      1,487,000       2,129,000        29,000
 6/25/97  San Jose                                 1,273,000      2,910,000       4,183,000        57,000
 6/25/97  Stanton                                    948,000      2,166,000       3,114,000        42,000
 6/25/97  Garland                                    486,000      1,122,000       1,608,000        22,000
 6/25/97  Westford                                   857,000      1,988,000       2,845,000        39,000
 6/25/97  Dallas                                   1,627,000      4,226,000       5,853,000        84,000
 6/25/97  Wheat Ridge                              1,054,000      2,705,000       3,759,000        52,000
 6/25/97  Berlin                                     825,000      2,121,000       2,946,000        41,000
 6/25/97  Gretna                                   1,069,000      2,781,000       3,850,000        55,000
 6/25/97  Spring                                     461,000      1,192,000       1,653,000        23,000
 6/25/97  Sacramento                                 592,000      1,522,000       2,114,000        30,000
 6/25/97  Houston/South Dairyashford                 856,000      2,217,000       3,073,000        43,000
 6/25/97  Naperville                               1,108,000      2,858,000       3,966,000        56,000
 6/25/97  Carrollton                               1,158,000      3,021,000       4,179,000        60,000
 6/25/97  Waipahu                                  1,620,000      4,195,000       5,815,000        84,000
 6/25/97  Davis                                      628,000      1,619,000       2,247,000        31,000
 6/25/97  Decatur                                    951,000      2,438,000       3,389,000        47,000
 6/25/97  Jacksonville                               653,000      1,711,000       2,364,000        34,000
 6/25/97  Chicoppe                                   663,000      1,723,000       2,386,000        34,000
 6/25/97  Alexandria                               1,533,000      3,931,000       5,464,000        76,000
 6/25/97  Houston/Veterans Memorial Dr.              458,000      1,183,000       1,641,000        23,000
 6/25/97  Los Angeles/Olympic                      4,392,000     11,344,000      15,736,000       221,000
 6/25/97  Littleton                                1,340,000      3,458,000       4,798,000        67,000
 6/25/97  Metairie                                 1,229,000      3,208,000       4,437,000        63,000
 6/25/97  Louisville                                 717,000      1,859,000       2,576,000        36,000
 6/25/97  East Hazel Crest                           753,000      1,942,000       2,695,000        38,000
 6/25/97  Edmonds                                  1,187,000      3,069,000       4,256,000        60,000
 6/25/97  Foster City                              1,064,000      2,743,000       3,807,000        53,000
 6/25/97  Chicago                                  1,160,000      3,005,000       4,165,000        58,000
 6/25/97  Philadelphia                               924,000      2,383,000       3,307,000        46,000
 6/25/97  Dallas/Vilbig Rd.                          508,000      1,309,000       1,817,000        25,000
 6/25/97  Staten Island                            1,676,000      4,324,000       6,000,000        84,000
 6/25/97  Pelham Manor                             1,209,000      3,117,000       4,326,000        60,000
 6/25/97  Irving                                     469,000      1,225,000       1,694,000        24,000
 6/25/97  Elk Grove                                  642,000      1,667,000       2,309,000        33,000
 6/25/97  LAX                                      1,312,000      3,403,000       4,715,000        67,000
</TABLE>
                                      F-38

<PAGE>
<TABLE>
<CAPTION>
                                                                                                            Adjustment
                                                                                                            resulting
                                                                    Initial Cost                            from the
                                                           --------------------------------    Costs       acquisition
  Date                                        Encumbrances                   Building &      Subsequent    of minority
Acquired             Description                                Land        Improvements   to Acquisition   interests
----------------------------------------------------------------------------------------------------------------------
 <S>      <C>                                                   <C>              <C>              <C>       <C>
 6/25/97  Denver                                                1,316,000        3,071,000        334,000
 6/25/97  Plano                                                 1,369,000        3,193,000        341,000
 6/25/97  Lynnwood                                                839,000        1,959,000        204,000
 6/25/97  Lilburn                                                 507,000        1,182,000        208,000
 6/25/97  Parma                                                   881,000        2,055,000        356,000
 6/25/97  Davie                                                 1,086,000        2,533,000        493,000
 6/25/97  Allen Park                                              953,000        2,223,000        394,000
 6/25/97  Aurora                                                  808,000        1,886,000        326,000
 6/25/97  San Diego/16th Street                                   932,000        2,175,000        416,000
 6/25/97  Sterling Heights                                        766,000        1,787,000        320,000
 6/25/97  East L.A./Boyle Heights                                 957,000        2,232,000        389,000
 6/25/97  Springfield/Alban Station                             1,317,000        3,074,000        541,000
 6/25/97  Littleton                                               868,000        2,026,000        354,000
 6/25/97  Sacramento/57th Street                                  869,000        2,029,000        356,000
 6/25/97  L.A./Venice Blvd.                                       523,000        1,221,000        211,000
 6/25/97  Miami                                                 1,762,000        4,111,000        736,000
 8/13/97  Santa Monica / Wilshire Blvd.                         2,040,000        4,760,000         37,000
11/02/97  Lansing, IL                                             758,000        1,768,000          3,000
11/07/97  Phoenix, AZ                                           1,197,000        2,793,000         10,000
11/13/97  Tinley Park, IL                                       1,422,000        3,319,000          4,000
  1/83    Platte                                                  409,000          953,000        208,000       115,000
  5/83    Delta Drive                                              67,000          481,000        130,000        60,000
  12/82   Port/Halsey                                             357,000        1,150,000       (461,000)       68,000
  12/82   Sacto/Folsom                                            396,000          329,000        563,000        88,000
  1/83    Semoran                                                 442,000        1,882,000        124,000       198,000
  3/83    Blackwood                                               213,000        1,559,000        136,000       167,000
  10/83   Orlando J. Y. Parkway                                   383,000        1,512,000        227,000       172,000
  9/83    Southington                                             124,000        1,233,000        234,000       145,000
  4/83    Vailsgate                                               103,000          990,000        321,000       129,000
  6/83    Ventura                                                 658,000        1,734,000         54,000       176,000
  9/83    Southhampton                                            331,000        1,738,000        472,000       218,000
  9/83    Webster/Keystone                                        449,000        1,688,000        614,000       227,000
  9/83    Dover                                                   107,000        1,462,000        310,000       175,000
  9/83    Newcastle                                               227,000        2,163,000        279,000       241,000
  9/83    Newark                                                  208,000        2,031,000        150,000       215,000
  9/83    Langhorne                                               263,000        3,549,000        219,000       372,000
  8/83    Hobart                                                  215,000        1,491,000        412,000       188,000
  9/83    Ft. Wayne/W. Coliseum                                   160,000        1,395,000         53,000       143,000
  9/83    Ft. Wayne/Bluffton                                       88,000          675,000        116,000        78,000
  11/83   Aurora                                                  505,000          758,000        193,000        94,000
</TABLE>
<TABLE>
<CAPTION>
                                                           Gross Carrying Value
                                                           At December 31, 1997
                                                --------------------------------------------
  Date                                                                                       Accumulated
Acquired             Description                    Land       Buildings         Total      Depreciation
----------------------------------------------------------------------------------------------------------
 <S>      <C>                                        <C>            <C>             <C>              <C>
 6/25/97  Denver                                     1,316,000      3,405,000       4,721,000        66,000
 6/25/97  Plano                                      1,369,000      3,534,000       4,903,000        68,000
 6/25/97  Lynnwood                                     839,000      2,163,000       3,002,000        42,000
 6/25/97  Lilburn                                      507,000      1,390,000       1,897,000        27,000
 6/25/97  Parma                                        881,000      2,411,000       3,292,000        46,000
 6/25/97  Davie                                      1,086,000      3,026,000       4,112,000        60,000
 6/25/97  Allen Park                                   953,000      2,617,000       3,570,000        50,000
 6/25/97  Aurora                                       808,000      2,212,000       3,020,000        42,000
 6/25/97  San Diego/16th Street                        932,000      2,591,000       3,523,000        51,000
 6/25/97  Sterling Heights                             766,000      2,107,000       2,873,000        41,000
 6/25/97  East L.A./Boyle Heights                      957,000      2,621,000       3,578,000        50,000
 6/25/97  Springfield/Alban Station                  1,317,000      3,615,000       4,932,000        69,000
 6/25/97  Littleton                                    868,000      2,380,000       3,248,000        45,000
 6/25/97  Sacramento/57th Street                       869,000      2,385,000       3,254,000        46,000
 6/25/97  L.A./Venice Blvd.                            523,000      1,432,000       1,955,000        27,000
 6/25/97  Miami                                      1,762,000      4,847,000       6,609,000        92,000
 8/13/97  Santa Monica / Wilshire Blvd.              2,040,000      4,797,000       6,837,000        64,000
11/02/97  Lansing, IL                                  758,000      1,771,000       2,529,000        18,000
11/07/97  Phoenix, AZ                                1,197,000      2,803,000       4,000,000        28,000
11/13/97  Tinley Park, IL                            1,422,000      3,323,000       4,745,000        11,000
  1/83    Platte                                       409,000      1,276,000       1,685,000       670,000
  5/83    Delta Drive                                   67,000        671,000         738,000       350,000
  12/82   Port/Halsey                                  357,000        757,000       1,114,000       405,000
  12/82   Sacto/Folsom                                 396,000        980,000       1,376,000       486,000
  1/83    Semoran                                      442,000      2,204,000       2,646,000     1,210,000
  3/83    Blackwood                                    213,000      1,862,000       2,075,000       990,000
  10/83   Orlando J. Y. Parkway                        383,000      1,911,000       2,294,000       997,000
  9/83    Southington                                  124,000      1,612,000       1,736,000       814,000
  4/83    Vailsgate                                    103,000      1,440,000       1,543,000       709,000
  6/83    Ventura                                      658,000      1,964,000       2,622,000     1,045,000
  9/83    Southhampton                                 331,000      2,428,000       2,759,000     1,276,000
  9/83    Webster/Keystone                             449,000      2,529,000       2,978,000     1,265,000
  9/83    Dover                                        107,000      1,947,000       2,054,000       981,000
  9/83    Newcastle                                    227,000      2,683,000       2,910,000     1,408,000
  9/83    Newark                                       208,000      2,396,000       2,604,000     1,244,000
  9/83    Langhorne                                    263,000      4,140,000       4,403,000     2,162,000
  8/83    Hobart                                       215,000      2,091,000       2,306,000       992,000
  9/83    Ft. Wayne/W. Coliseum                        160,000      1,591,000       1,751,000       829,000
  9/83    Ft. Wayne/Bluffton                            88,000        869,000         957,000       439,000
  11/83   Aurora                                       505,000      1,045,000       1,550,000       535,000
</TABLE>
                                      F-39
<PAGE>
<TABLE>
<CAPTION>
                                                                                                            Adjustment
                                                                                                            resulting
                                                                    Initial Cost                            from the
                                                           --------------------------------    Costs       acquisition
  Date                                        Encumbrances                   Building &      Subsequent    of minority
Acquired             Description                                Land        Improvements   to Acquisition   interests
----------------------------------------------------------------------------------------------------------------------
  <S>     <C>                                                      <C>              <C>            <C>             <C>
  11/83   Campbell                                              1,379,000        1,849,000       (664,000)      117,000
  11/83   Col Springs/Ed  (Coulter)                               471,000        1,640,000         19,000       164,000
  11/83   Col Springs/Mv  (Coulter)                               320,000        1,036,000        115,000       114,000
  11/83   Thorton (Coulter)                                       418,000        1,400,000         16,000       140,000
  11/83   Oklahoma City   (Coulter)                               454,000        1,030,000        605,000       161,000
  11/83   Tucson (Coulter)                                        343,000          778,000        454,000       122,000
  11/83   Webster/Nasa                                          1,570,000        2,457,000        972,000       338,000
  12/83   Charlotte                                               165,000        1,274,000        320,000        55,000
  12/83   Greensboro/Market                                       214,000        1,653,000        473,000        73,000
  12/83   Greensboro/Electra                                      112,000          869,000        248,000        38,000
  1/83    Raleigh/Yonkers                                         203,000          914,000        361,000        44,000
  12/83   Columbia                                                171,000        1,318,000        442,000        60,000
  12/83   Richmond                                                176,000        1,360,000        318,000        58,000
  12/83   Augusta                                                  97,000          747,000        240,000        34,000
  4/84    Providence                                               92,000        1,087,000        313,000        48,000
  1/85    Cranston                                                175,000          722,000        272,000        34,000
  3/84    Marrietta/Cobb                                           73,000          542,000        223,000        26,000
  1/84    Fremont/Albrae                                          636,000        1,659,000        417,000        71,000
  12/83   Tacoma                                                  553,000        1,173,000        341,000        52,000
  1/84    Belton                                                  175,000          858,000        458,000        45,000
  1/84    Gladstone                                               275,000        1,799,000        374,000        75,000
  1/84    Hickman/112                                             257,000        1,848,000        382,000        77,000
  1/84    Holmes                                                  289,000        1,333,000        240,000        54,000
  1/84    Independence                                            221,000        1,848,000        267,000        73,000
  1/84    Merriam                                                 255,000        1,469,000        323,000        62,000
  1/84    Olathe                                                  107,000          992,000        270,000        43,000
  1/84    Shawnee                                                 205,000        1,420,000        337,000        60,000
  1/84    Topeka                                                   75,000        1,049,000        195,000        43,000
  2/84    Unicorn/Nkoxville                                       662,000        1,887,000        421,000        79,000
  2/84    Central/Knoxville                                       449,000        1,281,000        242,000        52,000
  3/84    Manassas                                                320,000        1,556,000        325,000        65,000
  3/84    Pico Rivera                                             743,000          807,000        302,000        38,000
  5/84    Raleigh/Departure                                       302,000        2,484,000        412,000        99,000
  4/84    Milwaukie/Oregon                                        289,000          584,000        225,000        28,000
  7/84    Trevose/Old Lincoln                                     421,000        1,749,000        347,000        72,000
  5/84    Virginia Beach                                          509,000        2,121,000        598,000        93,000
  5/84    Philadelphia/Grant                                    1,041,000        3,262,000        400,000       126,000
  6/84    Lorton                                                  435,000        2,040,000        461,000        86,000
  6/84    Baltimore                                               382,000        1,793,000        531,000        80,000
  6/84    Laurel                                                  501,000        2,349,000        611,000       102,000
</TABLE>
<TABLE>
<CAPTION>
                                                           Gross Carrying Value
                                                           At December 31, 1997
                                                --------------------------------------------
  Date                                                                                       Accumulated
Acquired             Description                    Land       Buildings         Total      Depreciation
----------------------------------------------------------------------------------------------------------
  <S>     <C>                                        <C>            <C>             <C>             <C>
  11/83   Campbell                                1,379,000      1,302,000       2,681,000       639,000
  11/83   Col Springs/Ed  (Coulter)                 471,000      1,823,000       2,294,000       973,000
  11/83   Col Springs/Mv  (Coulter)                 320,000      1,265,000       1,585,000       682,000
  11/83   Thorton (Coulter)                         418,000      1,556,000       1,974,000       845,000
  11/83   Oklahoma City   (Coulter)                 454,000      1,796,000       2,250,000       954,000
  11/83   Tucson (Coulter)                          343,000      1,354,000       1,697,000       673,000
  11/83   Webster/Nasa                            1,570,000      3,767,000       5,337,000     2,076,000
  12/83   Charlotte                                 165,000      1,649,000       1,814,000       881,000
  12/83   Greensboro/Market                         214,000      2,199,000       2,413,000     1,197,000
  12/83   Greensboro/Electra                        112,000      1,155,000       1,267,000       614,000
  1/83    Raleigh/Yonkers                           203,000      1,319,000       1,522,000       697,000
  12/83   Columbia                                  171,000      1,820,000       1,991,000       984,000
  12/83   Richmond                                  176,000      1,736,000       1,912,000       925,000
  12/83   Augusta                                    97,000      1,021,000       1,118,000       537,000
  4/84    Providence                                 92,000      1,448,000       1,540,000       760,000
  1/85    Cranston                                  175,000      1,028,000       1,203,000       529,000
  3/84    Marrietta/Cobb                             73,000        791,000         864,000       402,000
  1/84    Fremont/Albrae                            636,000      2,147,000       2,783,000     1,171,000
  12/83   Tacoma                                    553,000      1,566,000       2,119,000       840,000
  1/84    Belton                                    175,000      1,361,000       1,536,000       698,000
  1/84    Gladstone                                 275,000      2,248,000       2,523,000     1,170,000
  1/84    Hickman/112                               257,000      2,307,000       2,564,000     1,214,000
  1/84    Holmes                                    289,000      1,627,000       1,916,000       854,000
  1/84    Independence                              221,000      2,188,000       2,409,000     1,172,000
  1/84    Merriam                                   255,000      1,854,000       2,109,000       949,000
  1/84    Olathe                                    107,000      1,305,000       1,412,000       669,000
  1/84    Shawnee                                   205,000      1,817,000       2,022,000       948,000
  1/84    Topeka                                     75,000      1,287,000       1,362,000       675,000
  2/84    Unicorn/Nkoxville                         662,000      2,387,000       3,049,000     1,251,000
  2/84    Central/Knoxville                         449,000      1,575,000       2,024,000       835,000
  3/84    Manassas                                  320,000      1,946,000       2,266,000     1,040,000
  3/84    Pico Rivera                               743,000      1,147,000       1,890,000       632,000
  5/84    Raleigh/Departure                         302,000      2,995,000       3,297,000     1,564,000
  4/84    Milwaukie/Oregon                          289,000        837,000       1,126,000       441,000
  7/84    Trevose/Old Lincoln                       421,000      2,168,000       2,589,000     1,109,000
  5/84    Virginia Beach                            509,000      2,812,000       3,321,000     1,442,000
  5/84    Philadelphia/Grant                      1,041,000      3,788,000       4,829,000     2,041,000
  6/84    Lorton                                    435,000      2,587,000       3,022,000     1,363,000
  6/84    Baltimore                                 382,000      2,404,000       2,786,000     1,264,000
  6/84    Laurel                                    501,000      3,062,000       3,563,000     1,586,000
</TABLE>
                                      F-40
<PAGE>
<TABLE>
<CAPTION>
                                                                                                            Adjustment
                                                                                                            resulting
                                                                    Initial Cost                            from the
                                                           --------------------------------    Costs       acquisition
  Date                                        Encumbrances                   Building &      Subsequent    of minority
Acquired             Description                                Land        Improvements   to Acquisition   interests
----------------------------------------------------------------------------------------------------------------------
  <S>     <C>                                                     <C>            <C>              <C>            <C>
  6/84    Delran                                                  279,000        1,472,000        237,000        92,000
  5/84    Garland                                                 356,000          844,000        185,000        56,000
  6/84    Orange Blossom                                          226,000          924,000        179,000        60,000
  6/84    Safe Place (Cincinnati)                                 402,000        1,573,000        444,000       109,000
  6/84    Safe Place (Florence)                                   185,000          740,000        319,000        57,000
  8/84    Medley                                                  584,000        1,016,000        298,000        71,000
  8/84    Oklahoma City                                           340,000        1,310,000        357,000        90,000
  8/84    Newport News                                            356,000        2,395,000        528,000       158,000
  8/84    Kaplan (Irving)                                         677,000        1,592,000        320,000       103,000
  8/84    Kaplan (Walnut Hill)                                    971,000        2,359,000        602,000       160,000
  9/84    Cockrell Hill                                           380,000          913,000        994,000       103,000
  11/84   Omaha                                                   109,000          806,000        402,000        65,000
  11/84   Manchester                                              164,000        1,643,000        211,000       100,000
  12/84   Austin (Ben White)                                      325,000          474,000        184,000        36,000
  12/84   Austin (Lamar)                                          643,000          947,000        334,000        69,000
  12/84   Pompano                                                 399,000        1,386,000        454,000        99,000
  12/84   Fort Worth                                              122,000          928,000         (3,000)       50,000
  11/84   Hialeah                                                 886,000        1,784,000        234,000       109,000
  12/84   Montgomeryville                                         215,000        2,085,000        252,000       126,000
  1/85    Bossier City                                            184,000        1,542,000        267,000        98,000
  2/85    Simi Valley                                             737,000        1,389,000        248,000        88,000
  3/85    Chattanooga                                             202,000        1,573,000        303,000       101,000
  2/85    Hurst                                                   231,000        1,220,000        183,000        76,000
  3/85    Portland                                                285,000          941,000        184,000        61,000
  5/85    Longwood                                                355,000        1,645,000        217,000       101,000
  3/85    Fern Park                                               144,000        1,107,000        179,000        70,000
  3/85    Fairfield                                               338,000        1,187,000        336,000        82,000
  4/85    Laguna Hills                                          1,224,000        3,303,000        345,000       197,000
  7/85    Columbus (Morse Rd.)                                    195,000        1,510,000        211,000        93,000
  7/85    Columbus (Kenney Rd.)                                   199,000        1,531,000        257,000        97,000
  5/85    Columbus (Busch Blvd.)                                  202,000        1,559,000        238,000        97,000
  5/85    Columbus (Kinnear Rd.)                                  241,000        1,865,000        220,000       113,000
  6/85    Grove City/ Marlane Drive                               150,000        1,157,000        231,000        75,000
  6/85    Reynoldsburg                                            204,000        1,568,000        222,000        97,000
  5/85    Worthington                                             221,000        1,824,000        217,000       110,000
  7/85    Westerville                                             199,000        1,517,000        281,000        97,000
  5/85    Arlington                                               201,000        1,497,000        262,000        95,000
  7/85    Springfield                                              90,000          699,000        169,000        47,000
  7/85    Dayton (Needmore Road)                                  144,000        1,108,000        275,000        75,000
  7/85    Dayton (Executive Blvd.)                                160,000        1,207,000        295,000        81,000
</TABLE>
<TABLE>
<CAPTION>
                                                           Gross Carrying Value
                                                           At December 31, 1997
                                                --------------------------------------------
  Date                                                                                       Accumulated
Acquired             Description                    Land       Buildings         Total      Depreciation
----------------------------------------------------------------------------------------------------------
  <S>     <C>                                       <C>          <C>             <C>             <C>
  6/84    Delran                                    279,000      1,801,000       2,080,000       925,000
  5/84    Garland                                   356,000      1,085,000       1,441,000       536,000
  6/84    Orange Blossom                            226,000      1,163,000       1,389,000       599,000
  6/84    Safe Place (Cincinnati)                   402,000      2,126,000       2,528,000     1,056,000
  6/84    Safe Place (Florence)                     185,000      1,116,000       1,301,000       558,000
  8/84    Medley                                    584,000      1,385,000       1,969,000       705,000
  8/84    Oklahoma City                             340,000      1,757,000       2,097,000       895,000
  8/84    Newport News                              356,000      3,081,000       3,437,000     1,528,000
  8/84    Kaplan (Irving)                           677,000      2,015,000       2,692,000     1,023,000
  8/84    Kaplan (Walnut Hill)                      971,000      3,121,000       4,092,000     1,540,000
  9/84    Cockrell Hill                             380,000      2,010,000       2,390,000     1,008,000
  11/84   Omaha                                     109,000      1,273,000       1,382,000       654,000
  11/84   Manchester                                164,000      1,954,000       2,118,000       969,000
  12/84   Austin (Ben White)                        325,000        694,000       1,019,000       349,000
  12/84   Austin (Lamar)                            643,000      1,350,000       1,993,000       657,000
  12/84   Pompano                                   399,000      1,939,000       2,338,000       951,000
  12/84   Fort Worth                                122,000        975,000       1,097,000       481,000
  11/84   Hialeah                                   886,000      2,127,000       3,013,000     1,062,000
  12/84   Montgomeryville                           215,000      2,463,000       2,678,000     1,219,000
  1/85    Bossier City                              184,000      1,907,000       2,091,000       950,000
  2/85    Simi Valley                               737,000      1,725,000       2,462,000       845,000
  3/85    Chattanooga                               202,000      1,977,000       2,179,000       949,000
  2/85    Hurst                                     231,000      1,479,000       1,710,000       718,000
  3/85    Portland                                  285,000      1,186,000       1,471,000       597,000
  5/85    Longwood                                  355,000      1,963,000       2,318,000       953,000
  3/85    Fern Park                                 144,000      1,356,000       1,500,000       657,000
  3/85    Fairfield                                 338,000      1,605,000       1,943,000       768,000
  4/85    Laguna Hills                            1,224,000      3,845,000       5,069,000     1,875,000
  7/85    Columbus (Morse Rd.)                      195,000      1,814,000       2,009,000       849,000
  7/85    Columbus (Kenney Rd.)                     199,000      1,885,000       2,084,000       865,000
  5/85    Columbus (Busch Blvd.)                    202,000      1,894,000       2,096,000       893,000
  5/85    Columbus (Kinnear Rd.)                    241,000      2,198,000       2,439,000     1,038,000
  6/85    Grove City/ Marlane Drive                 150,000      1,463,000       1,613,000       674,000
  6/85    Reynoldsburg                              204,000      1,887,000       2,091,000       897,000
  5/85    Worthington                               221,000      2,151,000       2,372,000     1,019,000
  7/85    Westerville                               199,000      1,895,000       2,094,000       880,000
  5/85    Arlington                                 201,000      1,854,000       2,055,000       862,000
  7/85    Springfield                                90,000        915,000       1,005,000       430,000
  7/85    Dayton (Needmore Road)                    144,000      1,458,000       1,602,000       695,000
  7/85    Dayton (Executive Blvd.)                  160,000      1,583,000       1,743,000       745,000
</TABLE>
                                      F-41
<PAGE>
<TABLE>
<CAPTION>
                                                                                                            Adjustment
                                                                                                            resulting
                                                                    Initial Cost                            from the
                                                           --------------------------------    Costs       acquisition
  Date                                        Encumbrances                   Building &      Subsequent    of minority
Acquired             Description                                Land        Improvements   to Acquisition   interests
----------------------------------------------------------------------------------------------------------------------
  <S>    <C>                                                       <C>              <C>            <C>            <C>
  7/85    Lilburn                                                 331,000          969,000        150,000        60,000
  4/85    Austin/ S. First                                        778,000        1,282,000        221,000       120,000
  4/85    Cincinnati/ E. Kemper                                   232,000        1,573,000        232,000       144,000
  4/85    Cincinnati/ Colerain                                    253,000        1,717,000        260,000       158,000
  4/85    Florence/ Tanner Lane                                   218,000        1,477,000        281,000       141,000
  5/85    Tacoma/ Phillips Rd.                                    396,000        1,204,000        182,000       111,000
  5/85    Milwaukie/ Mcloughlin II                                458,000          742,000        275,000        81,000
  7/85    San Diego/ Kearny Mesa Rd                               783,000        1,750,000        308,000       165,000
  5/85    Manchester/ S. Willow II                                371,000        2,129,000       (229,000)      152,000
  6/85    N. Hollywood/ Raymer                                    967,000          848,000        243,000        87,000
  7/85    Scottsdale/ 70th St                                     632,000        1,368,000        194,000       125,000
  7/85    Concord/ Hwy 29                                         150,000          750,000        226,000        78,000
  10/85   N. Hollywood/ Whitsett  (A)                           1,524,000        2,576,000        275,000       228,000
  10/85   Portland/ SE 82nd St                                    354,000          496,000        244,000        59,000
  9/85    Madison/ Copps Ave.                                     450,000        1,150,000        331,000       119,000
  9/85    Columbus/ Sinclair                                      307,000          893,000        168,000        85,000
  9/85    Philadelphia/ Tacony St                                 118,000        1,782,000        158,000       155,000
  10/85   Perrysburg/ Helen Dr.                                   110,000        1,590,000       (137,000)      116,000
  10/85   Columbus/ Ambleside                                     124,000        1,526,000       (179,000)      108,000
  10/85   Indianapolis/ Pike Place                                229,000        1,531,000        204,000       139,000
  10/85   Indianapolis/ Beach Grove                               198,000        1,342,000        191,000       123,000
  10/85   Hartford/ Roberts                                       219,000        1,481,000        356,000       147,000
  10/85   Wichita/ S. Rock Rd.                                    501,000        1,478,000        (19,000)      105,000
  10/85   Wichita/ E. Harry                                       313,000        1,050,000        (42,000)       81,000
  10/85   Wichita/ S. Woodlawn                                    263,000          905,000        (56,000)       68,000
  10/85   Wichita/ E. Kellogg                                     185,000          658,000        (98,000)       45,000
  10/85   Wichita/ S. Tyler                                       294,000        1,004,000         47,000        84,000
  10/85   Wichita/ W. Maple                                       234,000          805,000       (141,000)       53,000
  10/85   Wichita/ Carey Lane                                     192,000          674,000        (90,000)       47,000
  10/85   Wichita/ E. Macarthur                                   220,000          775,000       (155,000)       50,000
  10/85   Joplin/ S. Range Line                                   264,000          904,000        (66,000)       67,000
  12/85   Milpitas                                              1,623,000        1,577,000        287,000       149,000
  12/85   Pleasanton/ Santa Rita   (A)                          1,226,000        2,078,000        313,000       191,000
  7/88    Fort Wayne                                              101,000        1,524,000         (4,000)      122,000
  10/85   San Antonio/ Wetmore Rd.                                306,000        1,079,000        391,000        (5,000)
  10/85   San Antonio/ Callaghan                                  288,000        1,016,000        329,000        (4,000)
  10/85   San Antonio/ Zarzamora                                  364,000        1,281,000        404,000        (5,000)
  10/85   San Antonio/ Hackberry                                  388,000        1,367,000        358,000        (5,000)
  10/85   San Antonio/ Fredericksburg                             287,000        1,009,000        352,000        (4,000)
  10/85   Dallas/ S. Westmoreland                                 474,000        1,670,000        154,000        (6,000)
</TABLE>
<TABLE>
<CAPTION>
                                                           Gross Carrying Value
                                                           At December 31, 1997
                                                --------------------------------------------
  Date                                                                                       Accumulated
Acquired             Description                    Land       Buildings         Total      Depreciation
----------------------------------------------------------------------------------------------------------
  <S>    <C>                                        <C>          <C>             <C>             <C>
  7/85    Lilburn                                  331,000      1,179,000       1,510,000       555,000
  4/85    Austin/ S. First                         778,000      1,623,000       2,401,000       755,000
  4/85    Cincinnati/ E. Kemper                    232,000      1,949,000       2,181,000       907,000
  4/85    Cincinnati/ Colerain                     253,000      2,135,000       2,388,000     1,000,000
  4/85    Florence/ Tanner Lane                    218,000      1,899,000       2,117,000       866,000
  5/85    Tacoma/ Phillips Rd.                     396,000      1,497,000       1,893,000       691,000
  5/85    Milwaukie/ Mcloughlin II                 458,000      1,098,000       1,556,000       513,000
  7/85    San Diego/ Kearny Mesa Rd                783,000      2,223,000       3,006,000     1,054,000
  5/85    Manchester/ S. Willow II                 371,000      2,052,000       2,423,000       969,000
  6/85    N. Hollywood/ Raymer                     967,000      1,178,000       2,145,000       560,000
  7/85    Scottsdale/ 70th St                      632,000      1,687,000       2,319,000       779,000
  7/85    Concord/ Hwy 29                          150,000      1,054,000       1,204,000       482,000
  10/85   N. Hollywood/ Whitsett  (A)            1,524,000      3,079,000       4,603,000     1,389,000
  10/85   Portland/ SE 82nd St                     354,000        799,000       1,153,000       385,000
  9/85    Madison/ Copps Ave.                      450,000      1,600,000       2,050,000       733,000
  9/85    Columbus/ Sinclair                       307,000      1,146,000       1,453,000       508,000
  9/85    Philadelphia/ Tacony St                  118,000      2,095,000       2,213,000       958,000
  10/85   Perrysburg/ Helen Dr.                    110,000      1,569,000       1,679,000       704,000
  10/85   Columbus/ Ambleside                      124,000      1,455,000       1,579,000       661,000
  10/85   Indianapolis/ Pike Place                 229,000      1,874,000       2,103,000       840,000
  10/85   Indianapolis/ Beach Grove                198,000      1,656,000       1,854,000       725,000
  10/85   Hartford/ Roberts                        219,000      1,984,000       2,203,000       855,000
  10/85   Wichita/ S. Rock Rd.                     642,000      1,423,000       2,065,000       644,000
  10/85   Wichita/ E. Harry                        313,000      1,089,000       1,402,000       502,000
  10/85   Wichita/ S. Woodlawn                     263,000        917,000       1,180,000       406,000
  10/85   Wichita/ E. Kellogg                      185,000        605,000         790,000       268,000
  10/85   Wichita/ S. Tyler                        294,000      1,135,000       1,429,000       531,000
  10/85   Wichita/ W. Maple                        234,000        717,000         951,000       309,000
  10/85   Wichita/ Carey Lane                      192,000        631,000         823,000       274,000
  10/85   Wichita/ E. Macarthur                    220,000        670,000         890,000       299,000
  10/85   Joplin/ S. Range Line                    264,000        905,000       1,169,000       446,000
  12/85   Milpitas                               1,623,000      2,013,000       3,636,000       888,000
  12/85   Pleasanton/ Santa Rita   (A)           1,226,000      2,582,000       3,808,000     1,120,000
  7/88    Fort Wayne                               101,000      1,642,000       1,743,000       585,000
  10/85   San Antonio/ Wetmore Rd.                 306,000      1,465,000       1,771,000       688,000
  10/85   San Antonio/ Callaghan                   288,000      1,341,000       1,629,000       635,000
  10/85   San Antonio/ Zarzamora                   364,000      1,680,000       2,044,000       776,000
  10/85   San Antonio/ Hackberry                   388,000      1,720,000       2,108,000       811,000
  10/85   San Antonio/ Fredericksburg              287,000      1,357,000       1,644,000       640,000
  10/85   Dallas/ S. Westmoreland                  474,000      1,818,000       2,292,000       899,000
</TABLE>
                                      F-42
<PAGE>
<TABLE>
<CAPTION>
                                                                                                            Adjustment
                                                                                                            resulting
                                                                    Initial Cost                            from the
                                                           --------------------------------    Costs       acquisition
  Date                                        Encumbrances                   Building &      Subsequent    of minority
Acquired             Description                                Land        Improvements   to Acquisition   interests
----------------------------------------------------------------------------------------------------------------------
  <S>     <C>                                                      <C>            <C>              <C>           <C>
  10/85   Dallas/ Alvin St.                                       359,000        1,266,000        152,000       (4,000)
  10/85   Fort Worth/ W. Beach St.                                356,000        1,252,000        151,000       (4,000)
  10/85   Fort Worth/ E. Seminary                                 382,000        1,346,000        173,000       (5,000)
  10/85   Fort Worth/ Cockrell St.                                323,000        1,136,000        157,000       (4,000)
  11/85   Everett/ Evergreen                                      706,000        2,294,000        440,000       (9,000)
  11/85   Seattle/ Empire Way                                   1,652,000        5,348,000        572,000      (18,000)
  12/85   Amherst/ Niagra Falls                                   132,000          701,000        208,000       (3,000)
  12/85   West Sams Blvd.                                         164,000        1,159,000       (294,000)      (3,000)
  3/86    Jacksonville/ Wiley                                     140,000          510,000        225,000       (2,000)
  12/85   MacArthur Rd.                                           204,000        1,628,000        143,000       (6,000)
  2/86    Costa Mesa/ Pomona                                    1,405,000        1,520,000        327,000       (6,000)
  12/85   Brockton/ Main                                          153,000        2,020,000       (257,000)      (5,000)
  1/86    Mapleshade/ Rudderow                                    362,000        1,811,000        226,000       (6,000)
  1/86    Bordentown/ Groveville                                  196,000          981,000        130,000       (3,000)
  12/85   Eatontown/ Hwy 35                                       308,000        4,067,000        413,000      (14,000)
  2/86    Brea/ Imperial Hwy                                    1,069,000        2,165,000        331,000       (8,000)
  12/85   Denver/ Leetsdale                                       603,000          847,000        187,000       (3,000)
  2/86    Skokie/ McCormick                                       638,000        1,912,000        224,000       (7,000)
  1/86    Sun Valley/ Sheldon                                     544,000        1,836,000        326,000       (7,000)
  3/86    St. Louis/ Forder                                       517,000        1,133,000        251,000       (4,000)
  1/86    Las Vegas/ Highland                                     432,000          848,000        217,000       (3,000)
  5/86    Westlake Village                                      1,205,000          995,000        210,000       (4,000)
  2/86    Colorado Springs/ Sinton                                535,000        1,115,000        175,000       (4,000)
  2/86    Oklahoma City/ Penn                                     146,000          829,000        140,000       (3,000)
  2/86    Oklahoma City/ 39th Expressway                          238,000          812,000        279,000       (3,000)
  4/86    Reno/ Telegraph                                         649,000        1,051,000        434,000       (5,000)
  7/86    Colorado Springs/ Hollow Tree                           574,000          726,000        230,000       (3,000)
  4/86    St. Louis/Kirkham                                       199,000        1,001,000        193,000      (54,000)
  4/86    St. Louis/Reavis                                        192,000          958,000        196,000      (53,000)
  4/86    Fort Worth/East Loop                                    196,000          804,000        212,000      (46,000)
  6/86    Richland Hills                                          543,000          857,000        420,000      (58,000)
  5/86    Sacramento/Franklin Blvd.                               872,000          978,000        461,000      (65,000)
  6/86    West Valley/So. 3600                                    208,000        1,552,000        365,000      (87,000)
  7/86    West LA/Purdue Ave.                                   2,415,000        3,585,000        241,000     (174,000)
  7/86    Capital Heights/Central Ave.                            649,000        3,851,000        280,000     (188,000)
  10/86   Peralta/Fremont                                         851,000        1,074,000        272,000      (61,000)
  7/86    Pontiac/Dixie Hwy.                                      259,000        2,091,000         39,000      (97,000)
  8/86    Laurel/Ft. Meade Rd.                                    475,000        1,475,000        204,000      (76,000)
  9/86    Kansas City/S. 44th.                                    509,000        1,906,000        456,000     (108,000)
  10/86   Birmingham/Highland                                      89,000          786,000        207,000      (45,000)
</TABLE>
<TABLE>
<CAPTION>
                                                           Gross Carrying Value
                                                           At December 31, 1997
                                                --------------------------------------------
  Date                                                                                       Accumulated
Acquired             Description                    Land       Buildings         Total      Depreciation
----------------------------------------------------------------------------------------------------------
  <S>     <C>                                       <C>          <C>             <C>             <C>
  10/85   Dallas/ Alvin St.                        359,000      1,414,000       1,773,000       687,000
  10/85   Fort Worth/ W. Beach St.                 356,000      1,399,000       1,755,000       680,000
  10/85   Fort Worth/ E. Seminary                  382,000      1,514,000       1,896,000       731,000
  10/85   Fort Worth/ Cockrell St.                 323,000      1,289,000       1,612,000       626,000
  11/85   Everett/ Evergreen                       706,000      2,725,000       3,431,000     1,382,000
  11/85   Seattle/ Empire Way                    1,652,000      5,902,000       7,554,000     2,929,000
  12/85   Amherst/ Niagra Falls                    132,000        906,000       1,038,000       469,000
  12/85   West Sams Blvd.                          164,000        862,000       1,026,000       425,000
  3/86    Jacksonville/ Wiley                      140,000        733,000         873,000       342,000
  12/85   MacArthur Rd.                            204,000      1,765,000       1,969,000       863,000
  2/86    Costa Mesa/ Pomona                     1,405,000      1,841,000       3,246,000       888,000
  12/85   Brockton/ Main                           153,000      1,758,000       1,911,000       878,000
  1/86    Mapleshade/ Rudderow                     362,000      2,031,000       2,393,000       979,000
  1/86    Bordentown/ Groveville                   196,000      1,108,000       1,304,000       531,000
  12/85   Eatontown/ Hwy 35                        308,000      4,466,000       4,774,000     2,167,000
  2/86    Brea/ Imperial Hwy                     1,069,000      2,488,000       3,557,000     1,236,000
  12/85   Denver/ Leetsdale                        603,000      1,031,000       1,634,000       508,000
  2/86    Skokie/ McCormick                        638,000      2,129,000       2,767,000     1,007,000
  1/86    Sun Valley/ Sheldon                      544,000      2,155,000       2,699,000     1,019,000
  3/86    St. Louis/ Forder                        517,000      1,380,000       1,897,000       642,000
  1/86    Las Vegas/ Highland                      432,000      1,062,000       1,494,000       507,000
  5/86    Westlake Village                       1,205,000      1,201,000       2,406,000       563,000
  2/86    Colorado Springs/ Sinton                 535,000      1,286,000       1,821,000       605,000
  2/86    Oklahoma City/ Penn                      146,000        966,000       1,112,000       457,000
  2/86    Oklahoma City/ 39th Expressway           238,000      1,088,000       1,326,000       482,000
  4/86    Reno/ Telegraph                          649,000      1,480,000       2,129,000       700,000
  7/86    Colorado Springs/ Hollow Tree            574,000        953,000       1,527,000       434,000
  4/86    St. Louis/Kirkham                        199,000      1,140,000       1,339,000       548,000
  4/86    St. Louis/Reavis                         192,000      1,101,000       1,293,000       531,000
  4/86    Fort Worth/East Loop                     196,000        970,000       1,166,000       455,000
  6/86    Richland Hills                           543,000      1,219,000       1,762,000       630,000
  5/86    Sacramento/Franklin Blvd.                872,000      1,374,000       2,246,000       656,000
  6/86    West Valley/So. 3600                     208,000      1,830,000       2,038,000       836,000
  7/86    West LA/Purdue Ave.                    2,415,000      3,652,000       6,067,000     1,800,000
  7/86    Capital Heights/Central Ave.             649,000      3,943,000       4,592,000     1,930,000
  10/86   Peralta/Fremont                          851,000      1,285,000       2,136,000       607,000
  7/86    Pontiac/Dixie Hwy.                       259,000      2,033,000       2,292,000       995,000
  8/86    Laurel/Ft. Meade Rd.                     475,000      1,603,000       2,078,000       783,000
  9/86    Kansas City/S. 44th.                     509,000      2,254,000       2,763,000     1,105,000
  10/86   Birmingham/Highland                       89,000        948,000       1,037,000       417,000
</TABLE>
                                      F-43
<PAGE>
<TABLE>
<CAPTION>
                                                                                                             Adjustment
                                                                                                             resulting
                                                                     Initial Cost                            from the
                                                            --------------------------------    Costs       acquisition
   Date                                        Encumbrances                   Building &      Subsequent    of minority
 Acquired             Description                                Land        Improvements   to Acquisition   interests
-----------------------------------------------------------------------------------------------------------------------
 <S>     <C>                                                     <C>            <C>              <C>          <C>
   10/86   Birmingham/Riverchase                                   262,000        1,338,000        357,000      (77,000)
   10/86   Birmingham/Eastwood                                     166,000        1,184,000        211,000      (63,000)
   10/86   Birmingham/Forestdale                                   152,000          948,000        152,000      (50,000)
   10/86   Birmingham/Centerpoint                                  265,000        1,305,000        234,000      (70,000)
   10/86   Birmingham/Roebuck Plaza                                101,000          399,000        243,000      (29,000)
   10/86   Birmingham/Greensprings                                 347,000        1,173,000        289,000      (67,000)
   10/86   Birmingham/Hoover-Lorna                                 372,000        1,128,000        324,000      (66,000)
   10/86   Midfield/Bessemer                                       170,000          355,000        272,000      (29,000)
   10/86   Huntsville/Leeman Ferry Rd.                             158,000          992,000        233,000      (56,000)
   10/86   Huntsville/Drake                                        253,000        1,172,000        224,000      (64,000)
   10/86   Anniston/Whiteside                                       59,000          566,000        171,000      (34,000)
   10/86   Houston/Glenvista                                       595,000        1,043,000        492,000      (70,000)
   10/86   Houston/I-45                                            704,000        1,146,000        729,000      (85,000)
   10/86   Houston/Rogerdale                                     1,631,000        2,792,000        454,000     (148,000)
   10/86   Houston/Gessner                                       1,032,000        1,693,000        836,000     (115,000)
   10/86   Houston/Richmond-Fairdale                             1,502,000        2,506,000        863,000     (153,000)
   10/86   Houston/Gulfton                                       1,732,000        3,036,000        858,000     (177,000)
   10/86   Houston/Westpark                                        503,000          854,000        145,000      (45,000)
   10/86   Jonesboro                                               157,000          718,000        188,000      (41,000)
   9/86    Lakewood/W. 6th Ave.                                  1,070,000        3,155,000        479,000      (25,000)
   10/86   Pilgrim/Houston/Loop 610                              1,299,000        3,491,000        927,000      (30,000)
   10/86   Pilgrim/Houston/S.W. Freeway                            904,000        2,319,000        539,000      (20,000)
   10/86   Pilgrim/Houston/FM 1960                                 719,000        1,987,000          2,000      (14,000)
   10/86   Pilgrim/Houston/Old Katy Rd.                          1,365,000        3,431,000        918,000      (30,000)
   10/86   Pilgrim/Houston/Long Point                              451,000        1,187,000        469,000      (11,000)
   10/86   Austin/Red Rooster                                    1,390,000        1,710,000        393,000      (14,000)
   12/86   Lynnwood/196th SW                                     1,063,000        1,602,000        314,000      (13,000)
   12/86   Auburn/Auburn Way North                                 606,000        1,144,000        325,000      (10,000)
   12/86   Gresham/Burnside                                        351,000        1,056,000        335,000      (10,000)
   12/86   Denver/Sheridan Rd.                                   1,033,000        2,792,000        589,000      (23,000)
   12/86   Marietta/Cobb Pkwy.                                     536,000        2,764,000        548,000      (23,000)
   12/86   Hillsboro/Tualatin Hwy.                                 461,000          574,000        207,000       (5,000)
   11/86   Arleta/Osborne St.                                      987,000          663,000        230,000       (6,000)
   4/87    City of Industry/Amar Rd.                               748,000        2,052,000        363,000      (17,000)
   3/87    Annandale/Ravensworth                                   679,000        1,621,000        185,000      (12,000)
   5/87    OK City/Hefner                                          459,000          941,000        206,000       (8,000)
   12/86   San Antonio/Sunst Rd.                                 1,206,000        1,594,000        474,000      (14,000)
   8/86    Hammond/Calumet                                          97,000          751,000        470,000       (8,000)
   7/86    Portland/Moody                                          663,000        1,637,000        (68,000)     (11,000)
   7/87    Oakbrook Terrace                                        912,000        2,688,000        628,000     (494,000)
</TABLE>
<TABLE>
<CAPTION>
                                                            Gross Carrying Value
                                                            At December 31, 1997
                                                 --------------------------------------------
   Date                                                                                       Accumulated
 Acquired             Description                    Land       Buildings         Total      Depreciation
-----------------------------------------------------------------------------------------------------------
  <S>     <C>                                     <C>          <C>             <C>             <C>
   10/86   Birmingham/Riverchase                   262,000      1,618,000       1,880,000       808,000
   10/86   Birmingham/Eastwood                     166,000      1,332,000       1,498,000       630,000
   10/86   Birmingham/Forestdale                   152,000      1,050,000       1,202,000       506,000
   10/86   Birmingham/Centerpoint                  265,000      1,469,000       1,734,000       689,000
   10/86   Birmingham/Roebuck Plaza                101,000        613,000         714,000       264,000
   10/86   Birmingham/Greensprings                 347,000      1,395,000       1,742,000       674,000
   10/86   Birmingham/Hoover-Lorna                 372,000      1,386,000       1,758,000       651,000
   10/86   Midfield/Bessemer                       170,000        598,000         768,000       252,000
   10/86   Huntsville/Leeman Ferry Rd.             158,000      1,169,000       1,327,000       581,000
   10/86   Huntsville/Drake                        253,000      1,332,000       1,585,000       631,000
   10/86   Anniston/Whiteside                       59,000        703,000         762,000       335,000
   10/86   Houston/Glenvista                       595,000      1,465,000       2,060,000       653,000
   10/86   Houston/I-45                            704,000      1,790,000       2,494,000       849,000
   10/86   Houston/Rogerdale                     1,631,000      3,098,000       4,729,000     1,475,000
   10/86   Houston/Gessner                       1,032,000      2,414,000       3,446,000     1,037,000
   10/86   Houston/Richmond-Fairdale             1,502,000      3,216,000       4,718,000     1,513,000
   10/86   Houston/Gulfton                       1,732,000      3,717,000       5,449,000     1,959,000
   10/86   Houston/Westpark                        503,000        954,000       1,457,000       453,000
   10/86   Jonesboro                               157,000        865,000       1,022,000       411,000
   9/86    Lakewood/W. 6th Ave.                  1,070,000      3,609,000       4,679,000     1,718,000
   10/86   Pilgrim/Houston/Loop 610              1,299,000      4,388,000       5,687,000     2,002,000
   10/86   Pilgrim/Houston/S.W. Freeway            904,000      2,838,000       3,742,000     1,277,000
   10/86   Pilgrim/Houston/FM 1960                 662,000      2,032,000       2,694,000       898,000
   10/86   Pilgrim/Houston/Old Katy Rd.          1,365,000      4,319,000       5,684,000     1,909,000
   10/86   Pilgrim/Houston/Long Point              451,000      1,645,000       2,096,000       782,000
   10/86   Austin/Red Rooster                    1,390,000      2,089,000       3,479,000       937,000
   12/86   Lynnwood/196th SW                     1,063,000      1,903,000       2,966,000       854,000
   12/86   Auburn/Auburn Way North                 606,000      1,459,000       2,065,000       689,000
   12/86   Gresham/Burnside                        351,000      1,381,000       1,732,000       621,000
   12/86   Denver/Sheridan Rd.                   1,033,000      3,358,000       4,391,000     1,497,000
   12/86   Marietta/Cobb Pkwy.                     536,000      3,289,000       3,825,000     1,495,000
   12/86   Hillsboro/Tualatin Hwy.                 461,000        776,000       1,237,000       385,000
   11/86   Arleta/Osborne St.                      987,000        887,000       1,874,000       398,000
   4/87    City of Industry/Amar Rd.               748,000      2,398,000       3,146,000       654,000
   3/87    Annandale/Ravensworth                   679,000      1,794,000       2,473,000       811,000
   5/87    OK City/Hefner                          459,000      1,139,000       1,598,000       505,000
   12/86   San Antonio/Sunst Rd.                 1,206,000      2,054,000       3,260,000       882,000
   8/86    Hammond/Calumet                          97,000      1,213,000       1,310,000       502,000
   7/86    Portland/Moody                          663,000      1,558,000       2,221,000       672,000
   7/87    Oakbrook Terrace                        912,000      2,822,000       3,734,000     1,456,000
</TABLE>
                                      F-44

<PAGE>
<TABLE>
<CAPTION>
                                                                                                             Adjustment
                                                                                                             resulting
                                                                     Initial Cost                            from the
                                                            --------------------------------    Costs       acquisition
   Date                                        Encumbrances                   Building &      Subsequent    of minority
 Acquired             Description                                Land        Improvements   to Acquisition   interests
-----------------------------------------------------------------------------------------------------------------------
  <S>      <C>                                 <C>                <C>            <C>              <C>         <C>
   10/87   Plantation/S. State Rd.                                 924,000        1,801,000        252,000      (306,000)
   2/88    Anaheim/Lakeview                                        995,000        1,505,000        467,000      (294,000)
   8/87    San Antonio/Austin Hwy.                                 400,000          850,000        182,000      (154,000)
   10/87   Rockville/Fredrick Rd.                                1,695,000        3,305,000        643,000      (588,000)
  9/30/95  Whittier                                                215,000          384,000         31,000       658,000
  9/30/95  Van Nuys                                                295,000          657,000         62,000     1,124,000
  9/30/95  Huntington Beach                                        176,000          321,000         39,000       748,000
  9/30/95  Monterey Park                            287,000        124,000          346,000         53,000       787,000
  9/30/95  Downey                                                  191,000          317,000         19,000       781,000
  9/30/95  Balboa                                                   85,000          346,000         79,000       774,000
  9/30/95  Stockton                                 361,000        151,000          402,000         38,000       682,000
  9/30/95  Del Amo                                                 474,000          742,000         44,000     1,102,000
  9/30/95  Fresno                                   100,000         44,000          206,000         56,000       636,000
  9/30/95  Carson                                                  375,000          735,000              0       555,000
  7/1/95   Artesia/Artesia                                         668,000          874,000         12,000       363,000
  7/1/95   Arcadia/Lower Azusa                                     878,000          813,000         42,000       350,000
  7/1/95   Dallas/Kingsly IV                                     1,171,000          998,000         57,000       432,000
  7/1/95   Manassas/Centreville                                    433,000        1,308,000         20,000       544,000
  7/1/95   Los Angeles/San Pedro                                 1,719,000        2,071,000         27,000       859,000
  7/1/95   Bellevue/Northup                                      1,317,000        1,980,000         49,000       831,000
  7/1/95   Hollywood/Willoughby                                  1,701,000        1,100,000         14,000       456,000
  7/1/95   Atlanta/John Wesley                                   1,319,000          873,000        166,000       426,000
  7/1/95   Montebello/S. Maple                                   1,362,000        1,403,000         32,000       588,000
  7/1/95   Lake City/Forest                                        266,000          832,000         59,000       365,000
  7/1/95   Baltimore/W Patap                                       430,000        1,629,000         26,000       678,000
  7/1/95   Fraser/Groesbeck                                        393,000        1,089,000         33,000       459,000
  7/1/95   Vallejo/Mini Drive                                      599,000        1,086,000         32,000       458,000
  1/1/96   Bensenville/York Rd.                                    667,000        1,602,000         33,000       530,000
  1/1/96   Louisville/Preston                                      211,000        1,060,000         24,000       351,000
  1/1/96   San Jose/Aborn Road                                     615,000        1,342,000          6,000       437,000
  1/1/96   Englewood/Federal                                       481,000        1,395,000         32,000       462,000
  1/1/96   W. Hollywood/Santa Monica                             3,415,000        4,577,000         83,000     1,510,000
  1/1/96   Orland Hills/W. 159th                                   917,000        2,392,000         25,000       783,000
  1/1/96   Merrionette Park                                        818,000        2,020,000         26,000       663,000
  1/1/96   Denver/S Quebec                                       1,849,000        1,941,000         42,000       643,000
  1/1/96   Tigard/S.W. Pacific                                     633,000        1,206,000         18,000       397,000
  1/1/96   Coram/Middle Count                                      507,000        1,421,000         21,000       467,000
  1/1/96   Houston/FM 1960                                         635,000        1,294,000        104,000       453,000
  1/1/96   Kent/Military Trail                                     409,000        1,670,000         45,000       556,000
  1/1/96   Turnersville/Black                                      165,000        1,360,000          8,000       443,000
</TABLE>
<TABLE>
<CAPTION>
                                                            Gross Carrying Value
                                                            At December 31, 1997
                                                 --------------------------------------------
   Date                                                                                       Accumulated
 Acquired             Description                    Land       Buildings         Total      Depreciation
-----------------------------------------------------------------------------------------------------------
  <S>      <C>                                          <C>          <C>             <C>             <C>
   10/87   Plantation/S. State Rd.                    924,000      1,747,000       2,671,000       861,000
   2/88    Anaheim/Lakeview                           995,000      1,678,000       2,673,000       791,000
   8/87    San Antonio/Austin Hwy.                    400,000        878,000       1,278,000       435,000
   10/87   Rockville/Fredrick Rd.                   1,695,000      3,360,000       5,055,000     1,653,000
  9/30/95  Whittier                                   215,000      1,073,000       1,288,000       296,000
  9/30/95  Van Nuys                                   295,000      1,843,000       2,138,000       455,000
  9/30/95  Huntington Beach                           176,000      1,108,000       1,284,000       264,000
  9/30/95  Monterey Park                              124,000      1,186,000       1,310,000       284,000
  9/30/95  Downey                                     191,000      1,117,000       1,308,000       272,000
  9/30/95  Balboa                                      85,000      1,199,000       1,284,000       247,000
  9/30/95  Stockton                                   151,000      1,122,000       1,273,000       228,000
  9/30/95  Del Amo                                    474,000      1,888,000       2,362,000       502,000
  9/30/95  Fresno                                      44,000        898,000         942,000       157,000
  9/30/95  Carson                                     375,000      1,290,000       1,665,000       222,000
  7/1/95   Artesia/Artesia                            668,000      1,249,000       1,917,000        85,000
  7/1/95   Arcadia/Lower Azusa                        878,000      1,205,000       2,083,000        97,000
  7/1/95   Dallas/Kingsly IV                        1,171,000      1,487,000       2,658,000       111,000
  7/1/95   Manassas/Centreville                       433,000      1,872,000       2,305,000       127,000
  7/1/95   Los Angeles/San Pedro                    1,719,000      2,957,000       4,676,000       211,000
  7/1/95   Bellevue/Northup                         1,317,000      2,860,000       4,177,000       179,000
  7/1/95   Hollywood/Willoughby                     1,701,000      1,570,000       3,271,000       113,000
  7/1/95   Atlanta/John Wesley                      1,319,000      1,465,000       2,784,000       135,000
  7/1/95   Montebello/S. Maple                      1,362,000      2,023,000       3,385,000       152,000
  7/1/95   Lake City/Forest                           266,000      1,256,000       1,522,000        88,000
  7/1/95   Baltimore/W Patap                          430,000      2,333,000       2,763,000       146,000
  7/1/95   Fraser/Groesbeck                           393,000      1,581,000       1,974,000       106,000
  7/1/95   Vallejo/Mini Drive                         599,000      1,576,000       2,175,000       116,000
  1/1/96   Bensenville/York Rd.                       667,000      2,165,000       2,832,000       165,000
  1/1/96   Louisville/Preston                         211,000      1,435,000       1,646,000       106,000
  1/1/96   San Jose/Aborn Road                        615,000      1,785,000       2,400,000       138,000
  1/1/96   Englewood/Federal                          481,000      1,889,000       2,370,000       148,000
  1/1/96   W. Hollywood/Santa Monica                3,415,000      6,170,000       9,585,000       437,000
  1/1/96   Orland Hills/W. 159th                      917,000      3,200,000       4,117,000       249,000
  1/1/96   Merrionette Park                           818,000      2,709,000       3,527,000       199,000
  1/1/96   Denver/S Quebec                          1,849,000      2,626,000       4,475,000       189,000
  1/1/96   Tigard/S.W. Pacific                        633,000      1,621,000       2,254,000       119,000
  1/1/96   Coram/Middle Count                         507,000      1,909,000       2,416,000       134,000
  1/1/96   Houston/FM 1960                            635,000      1,851,000       2,486,000       132,000
  1/1/96   Kent/Military Trail                        409,000      2,271,000       2,680,000       153,000
  1/1/96   Turnersville/Black                         165,000      1,811,000       1,976,000       133,000
</TABLE>
                                      F-45
<PAGE>
<TABLE>
<CAPTION>
                                                                                                             Adjustment
                                                                                                             resulting
                                                                     Initial Cost                            from the
                                                            --------------------------------    Costs       acquisition
   Date                                        Encumbrances                   Building &      Subsequent    of minority
 Acquired             Description                                Land        Improvements   to Acquisition   interests
-----------------------------------------------------------------------------------------------------------------------
 <S>     <C>                                                     <C>            <C>               <C>          <C>
  1/1/96   Sewell/Rts. 553                                         323,000        1,138,000         31,000       378,000
  1/1/96   Maple Shade/Fellowship                                  331,000        1,421,000         25,000       468,000
  1/1/96   Hyattsville/Kenilworth                                  509,000        1,757,000          4,000       571,000
  1/1/96   Waterbury/Captain                                       434,000        2,089,000         18,000       683,000
  1/1/96   Bedford Hts/Miles                                       835,000        1,577,000         29,000       520,000
  1/1/96   Livonia/Newburgh                                        635,000        1,407,000         27,000       464,000
  1/1/96   Sunland/Sunland Blvd.                                   631,000        1,965,000         25,000       644,000
  1/1/96   Des Moines                                              448,000        1,350,000         14,000       442,000
  1/1/96   Oxonhill/Indianhead                                     772,000        2,017,000         28,000       662,000
  1/1/96   Sacramento/N. 16th                                      582,000        2,610,000         30,000       855,000
  1/1/96   Houston/Westheimer                                    1,508,000        2,274,000         28,000       746,000
  1/1/96   San Pablo/San Pablo                                     565,000        1,232,000         32,000       410,000
  1/1/96   Bowie/Woodcliff                                         718,000        2,336,000          6,000       758,000
  1/1/96   Milwaukee/S. 84th                                       444,000        1,868,000         29,000       615,000
  1/1/96   Clinton/Malcolm Road                                    593,000        2,123,000         15,000       692,000
  4/1/96   San Diego/54th & E                                      880,000        2,429,000         22,000        78,000
  4/1/96   Miami/5th Street                                      2,151,000        3,018,000         92,000        99,000
  4/1/96   Silver Springs                                          852,000        1,972,000         30,000        64,000
  4/1/96   Chicago/E. 95th Street                                  367,000        2,197,000         72,000        72,000
  4/1/96   Chicago/S. Harlem                                       731,000        1,344,000         26,000        44,000
  4/1/96   St. Charles/Highway                                     576,000        1,430,000         14,000        46,000
  4/1/96   Chicago/Burr Ridge                                      389,000        2,055,000         23,000        66,000
  4/1/96   St. Louis/Hwy. 141                                      609,000        1,543,000         24,000        50,000
  4/1/96   Island Park/Austin                                    2,138,000        2,862,000         40,000        92,000
  4/1/96   Yonkers/Route 9A                                      1,767,000        3,633,000       (128,000)      116,000
  4/1/96   Los Angeles/Glendale                                  2,139,000        5,220,000         31,000       167,000
  4/1/96   Akron/Brittain Rd.                                      254,000        2,130,000         33,000        69,000
  4/1/96   Chicago/Harlem Ave.                                   1,322,000        2,752,000        173,000        93,000
  4/1/96   Bethesda/Butler Road                                  1,059,000        2,410,000          6,000        77,000
  4/1/96   Dundalk/Wise Avenue                                     413,000        1,893,000         38,000        61,000
  10/1/97  Marietta /Austell                                       398,000        1,326,000        156,000       305,000
  10/1/97  Denver / Leetsdale                                    1,407,000        1,682,000         67,000       387,000
  10/1/97  Baltimore / York                                      1,538,000        1,952,000        114,000       449,000
  10/1/97  Bolingbrook /E. Boug                                    737,000        1,776,000        110,000       409,000
  10/1/97  Kent / Central                                          483,000        1,321,000         95,000       304,000
  10/1/97  Geneva / Roosevelt                                      355,000        1,302,000         75,000       299,000
  10/1/97  Denver / Sheridan                                       429,000        1,105,000         40,000       254,000
  10/1/97  Mountlake Terrace                                     1,017,000        1,783,000        144,000       410,000
  10/1/97  Carol Stream/ St.Charles                                185,000        1,187,000         74,000       273,000
  10/1/97  Marietta / Cobb Park                                    420,000        1,131,000        112,000       260,000
</TABLE>
<TABLE>
<CAPTION>
                                                            Gross Carrying Value
                                                            At December 31, 1997
                                                 --------------------------------------------
   Date                                                                                       Accumulated
 Acquired             Description                    Land       Buildings         Total      Depreciation
-----------------------------------------------------------------------------------------------------------
 <S>     <C>                                       <C>          <C>             <C>             <C>
  1/1/96   Sewell/Rts. 553                           323,000      1,547,000       1,870,000       112,000
  1/1/96   Maple Shade/Fellowship                    331,000      1,914,000       2,245,000       130,000
  1/1/96   Hyattsville/Kenilworth                    509,000      2,332,000       2,841,000       158,000
  1/1/96   Waterbury/Captain                         434,000      2,790,000       3,224,000       166,000
  1/1/96   Bedford Hts/Miles                         835,000      2,126,000       2,961,000       149,000
  1/1/96   Livonia/Newburgh                          635,000      1,898,000       2,533,000       131,000
  1/1/96   Sunland/Sunland Blvd.                     631,000      2,634,000       3,265,000       164,000
  1/1/96   Des Moines                                448,000      1,806,000       2,254,000       129,000
  1/1/96   Oxonhill/Indianhead                       772,000      2,707,000       3,479,000       174,000
  1/1/96   Sacramento/N. 16th                        582,000      3,495,000       4,077,000       199,000
  1/1/96   Houston/Westheimer                      1,508,000      3,048,000       4,556,000       209,000
  1/1/96   San Pablo/San Pablo                       565,000      1,674,000       2,239,000       109,000
  1/1/96   Bowie/Woodcliff                           718,000      3,100,000       3,818,000       184,000
  1/1/96   Milwaukee/S. 84th                         444,000      2,512,000       2,956,000       156,000
  1/1/96   Clinton/Malcolm Road                      593,000      2,830,000       3,423,000       163,000
  4/1/96   San Diego/54th & E                        880,000      2,529,000       3,409,000       218,000
  4/1/96   Miami/5th Street                        2,151,000      3,209,000       5,360,000       234,000
  4/1/96   Silver Springs                            852,000      2,066,000       2,918,000       172,000
  4/1/96   Chicago/E. 95th Street                    367,000      2,341,000       2,708,000       207,000
  4/1/96   Chicago/S. Harlem                         731,000      1,414,000       2,145,000       122,000
  4/1/96   St. Charles/Highway                       576,000      1,490,000       2,066,000       130,000
  4/1/96   Chicago/Burr Ridge                        389,000      2,144,000       2,533,000       193,000
  4/1/96   St. Louis/Hwy. 141                        609,000      1,617,000       2,226,000       131,000
  4/1/96   Island Park/Austin                      2,138,000      2,994,000       5,132,000       250,000
  4/1/96   Yonkers/Route 9A                        1,592,000      3,796,000       5,388,000       296,000
  4/1/96   Los Angeles/Glendale                    2,139,000      5,418,000       7,557,000       412,000
  4/1/96   Akron/Brittain Rd.                        254,000      2,232,000       2,486,000       165,000
  4/1/96   Chicago/Harlem Ave.                     1,322,000      3,018,000       4,340,000       229,000
  4/1/96   Bethesda/Butler Road                    1,059,000      2,493,000       3,552,000       169,000
  4/1/96   Dundalk/Wise Avenue                       413,000      1,992,000       2,405,000       124,000
  10/1/97  Marietta /Austell                         398,000      1,787,000       2,185,000        22,000
  10/1/97  Denver / Leetsdale                      1,407,000      2,136,000       3,543,000        28,000
  10/1/97  Baltimore / York                        1,538,000      2,515,000       4,053,000        31,000
  10/1/97  Bolingbrook /E. Boug                      737,000      2,295,000       3,032,000        29,000
  10/1/97  Kent / Central                            483,000      1,720,000       2,203,000        21,000
  10/1/97  Geneva / Roosevelt                        355,000      1,676,000       2,031,000        21,000
  10/1/97  Denver / Sheridan                         429,000      1,399,000       1,828,000        19,000
  10/1/97  Mountlake Terrace                       1,017,000      2,337,000       3,354,000        28,000
  10/1/97  Carol Stream/ St.Charles                  185,000      1,534,000       1,719,000        19,000
  10/1/97  Marietta / Cobb Park                      420,000      1,503,000       1,923,000        18,000
</TABLE>
                                      F-46
<PAGE>
<TABLE>
<CAPTION>
                                                                                                             Adjustment
                                                                                                             resulting
                                                                     Initial Cost                            from the
                                                            --------------------------------    Costs       acquisition
   Date                                        Encumbrances                   Building &      Subsequent    of minority
 Acquired             Description                                Land        Improvements   to Acquisition   interests
-----------------------------------------------------------------------------------------------------------------------
 <S>     <C>                                                    <C>              <C>              <C>         <C>
  10/1/97  Venice / Rose                                         5,468,000        5,478,000        489,000     1,260,000
  10/1/97  Ventura / Ventura Bl                                    911,000        2,227,000        110,000       512,000
  10/1/97  Studio City/ Ventura                                  2,421,000        1,610,000        106,000       370,000
  10/1/97  Madison Heights/ John                                   428,000        1,686,000      1,985,000       388,000
  10/1/97  Lax / Imperial & Lake                                 1,662,000        2,079,000         71,000       478,000
  10/1/97  Justice / Industrial                                    233,000        1,181,000         72,000       272,000
  10/1/97  Burbank / San Fernando                                1,825,000        2,210,000        111,000       508,000
  10/1/97  Pinole / Appian Way                                     728,000        1,827,000        100,000       420,000
  10/1/97  Denver / Tamarac Park                                 2,545,000        1,692,000         50,000       389,000
  10/1/97  Gresham / Powell                                        322,000        1,298,000        142,000       299,000
  10/1/97  Warren / Mound Road                                     268,000        1,025,000        107,000       236,000
  10/1/97  Woodside/Brooklyn-Queens                              5,016,000        3,950,000         72,000       909,000
  10/1/97  Enfield / Elm Street                                    399,000        1,900,000        183,000       437,000
  10/1/97  Roselle / Lake Street                                   312,000        1,411,000         96,000       325,000
  10/1/97  Milwaukee / Appleton                                    324,000        1,385,000        107,000       319,000
  10/1/97  Emeryville / Bay Street                               1,602,000        1,830,000         72,000       421,000
  10/1/97  Monterey / Del Rey                                      257,000        1,048,000        152,000       241,000
  10/1/97  San Leandro / Washington                                660,000        1,142,000         93,000       263,000
  10/1/97  Boca Raton / N.W. 20                                  1,140,000        2,256,000        249,000       519,000
  10/1/97  Washington DC/So Capital                              1,437,000        4,489,000        250,000     1,033,000
  10/1/97  Lynn / Lynnway                                          463,000        3,059,000        136,000       704,000
  10/1/97  Pompano Beach                                         1,077,000        1,527,000        414,000       351,000
  10/1/97  Lake Oswego/ N.State                                    465,000        1,956,000        173,000       450,000
  10/1/97  Daly City / Mission                                     389,000        2,921,000         85,000       671,000
  10/1/97  Odenton / Route 175                                     456,000        2,104,000        114,000       484,000
  10/1/97  Schiller Prk/River Rd.                                  524,000        1,089,000              0       334,000
  10/1/97  Chicago / Cuyler                                      1,291,000        2,014,000         92,000       618,000
  10/1/97  Chicago Hghts/Western                                   431,000        1,353,000         61,000       415,000
  10/1/97  Arlington Hts/Univ.Drive                                618,000        2,255,000         99,000       692,000
  10/1/97  Cicero / Ogden                                        1,546,000        1,701,000         74,000       522,000
  10/1/97  Chicago/W. Howard St.                                   897,000        2,109,000        135,000       647,000
  10/1/97  Chicago/N.Western Ave                                 1,339,000        2,266,000        221,000       695,000
  10/1/97  Chicago/Northwest                                       853,000        1,752,000        133,000       537,000
  10/1/97  Chicago/N.Wells St                                    1,333,000        2,183,000         34,000       669,000
  10/1/97  Chicago / Pulaski                                     1,176,000        2,072,000        168,000       636,000
  10/1/97  Novato / Landing                                      2,416,000        3,496,000        109,000        52,000
  10/1/97  St. Louis / Lindberg                                    584,000        1,508,000         75,000        23,000
  10/1/97  Oakland/International                                   358,000        1,568,000        105,000        23,000
  10/1/97  Stockton / March Lane                                   663,000        1,398,000         55,000        21,000
  10/1/97  Des Plaines / Golf Rd.                                1,363,000        3,093,000        148,000        46,000
</TABLE>
<TABLE>
<CAPTION>
                                                            Gross Carrying Value
                                                            At December 31, 1997
                                                 --------------------------------------------
   Date                                                                                       Accumulated
 Acquired             Description                    Land       Buildings         Total      Depreciation
-----------------------------------------------------------------------------------------------------------
 <S>     <C>                                    <C>            <C>            <C>               <C>
  10/1/97  Venice / Rose                         5,468,000      7,227,000      12,695,000        75,000
  10/1/97  Ventura / Ventura Bl                    911,000      2,849,000       3,760,000        34,000
  10/1/97  Studio City/ Ventura                  2,421,000      2,086,000       4,507,000        26,000
  10/1/97  Madison Heights/ John                   428,000      4,059,000       4,487,000        25,000
  10/1/97  Lax / Imperial & Lake                 1,662,000      2,628,000       4,290,000        32,000
  10/1/97  Justice / Industrial                    233,000      1,525,000       1,758,000        19,000
  10/1/97  Burbank / San Fernando                1,825,000      2,829,000       4,654,000        33,000
  10/1/97  Pinole / Appian Way                     728,000      2,347,000       3,075,000        28,000
  10/1/97  Denver / Tamarac Park                 2,545,000      2,131,000       4,676,000        29,000
  10/1/97  Gresham / Powell                        322,000      1,739,000       2,061,000        20,000
  10/1/97  Warren / Mound Road                     268,000      1,368,000       1,636,000        16,000
  10/1/97  Woodside/Brooklyn-Queens              5,016,000      4,931,000       9,947,000        49,000
  10/1/97  Enfield / Elm Street                    399,000      2,520,000       2,919,000        28,000
  10/1/97  Roselle / Lake Street                   312,000      1,832,000       2,144,000        21,000
  10/1/97  Milwaukee / Appleton                    324,000      1,811,000       2,135,000        20,000
  10/1/97  Emeryville / Bay Street               1,602,000      2,323,000       3,925,000        27,000
  10/1/97  Monterey / Del Rey                      257,000      1,441,000       1,698,000        16,000
  10/1/97  San Leandro / Washington                660,000      1,498,000       2,158,000        17,000
  10/1/97  Boca Raton / N.W. 20                  1,140,000      3,024,000       4,164,000        33,000
  10/1/97  Washington DC/So Capital              1,437,000      5,772,000       7,209,000        49,000
  10/1/97  Lynn / Lynnway                          463,000      3,899,000       4,362,000        39,000
  10/1/97  Pompano Beach                         1,077,000      2,292,000       3,369,000        22,000
  10/1/97  Lake Oswego/ N.State                    465,000      2,579,000       3,044,000        27,000
  10/1/97  Daly City / Mission                     389,000      3,677,000       4,066,000        38,000
  10/1/97  Odenton / Route 175                     456,000      2,702,000       3,158,000        23,000
  10/1/97  Schiller Prk/River Rd.                  524,000      1,423,000       1,947,000         8,000
  10/1/97  Chicago / Cuyler                      1,291,000      2,724,000       4,015,000        31,000
  10/1/97  Chicago Hghts/Western                   431,000      1,829,000       2,260,000        22,000
  10/1/97  Arlington Hts/Univ.Drive                618,000      3,046,000       3,664,000        27,000
  10/1/97  Cicero / Ogden                        1,546,000      2,297,000       3,843,000        26,000
  10/1/97  Chicago/W. Howard St.                   897,000      2,891,000       3,788,000        36,000
  10/1/97  Chicago/N.Western Ave                 1,339,000      3,182,000       4,521,000        32,000
  10/1/97  Chicago/Northwest                       853,000      2,422,000       3,275,000        21,000
  10/1/97  Chicago/N.Wells St                    1,333,000      2,886,000       4,219,000        21,000
  10/1/97  Chicago / Pulaski                     1,176,000      2,876,000       4,052,000        21,000
  10/1/97  Novato / Landing                      2,416,000      3,657,000       6,073,000        41,000
  10/1/97  St. Louis / Lindberg                    584,000      1,606,000       2,190,000        17,000
  10/1/97  Oakland/International                   358,000      1,696,000       2,054,000        17,000
  10/1/97  Stockton / March Lane                   663,000      1,474,000       2,137,000        15,000
  10/1/97  Des Plaines / Golf Rd.                1,363,000      3,287,000       4,650,000        33,000
</TABLE>
                                      F-47
<PAGE>
<TABLE>
<CAPTION>
                                                                                                             Adjustment
                                                                                                             resulting
                                                                     Initial Cost                            from the
                                                            --------------------------------    Costs       acquisition
   Date                                        Encumbrances                   Building &      Subsequent    of minority
 Acquired             Description                                Land        Improvements   to Acquisition   interests
-----------------------------------------------------------------------------------------------------------------------
 <S>     <C>                                                    <C>              <C>               <C>           <C>
  10/1/97  Morton Grove                                          2,658,000        3,232,000         52,000        48,000
  10/1/97  Los Angeles / Jefferson                               1,090,000        1,580,000        149,000        24,000
  10/1/97  Los Angeles / Martin                                    869,000        1,152,000         51,000        17,000
  10/1/97  San Leandro / E. 14th                                   627,000        1,289,000         50,000        19,000
  10/1/97  Tucson / Tanque                                         345,000        1,709,000         75,000        26,000
  10/1/97  Randolph / Warren St.                                 2,330,000        1,914,000        345,000        29,000
  10/1/97  Forrestville / Penn.                                  1,056,000        2,347,000        105,000        35,000
  10/1/97  Bridgeport                                            4,877,000        2,739,000        287,000        41,000
  10/1/97  North Hollywood/Vine                                    906,000        2,379,000        105,000        36,000
  10/1/97  Santa Cruz / Portola                                    535,000        1,526,000         64,000        23,000
  10/1/97  Hyde Park / River St.                                   626,000        1,748,000        138,000        26,000
  10/1/97  Dublin / San Ramon Rd.                                  942,000        1,999,000         73,000        30,000
  10/1/97  Vallejo / Humboldt                                      473,000        1,651,000         64,000        25,000
  10/1/97  Fremont/Warm Springs                                    848,000        2,885,000        127,000        43,000
  10/1/97  Seattle / Stone Way                                     829,000        2,180,000        172,000        33,000
  10/1/97  W. Olympia / Blacklane                                  149,000        1,096,000        169,000        16,000
  10/1/97  Mercer/Parkside Ave                                     359,000        1,763,000        104,000        26,000
  10/1/97  Bridge Water / Main                                     445,000        2,054,000        182,000        31,000
  10/1/97  Norwalk / Hoyt Street                                 2,369,000        3,049,000        202,000        46,000

 Commercial Properties

 11/15/95  Camarillo/Ventura Blvd                                  180,000          420,000         19,000
  6/25/97  San Diego-Kearny Mesa - Office                        1,851,000        4,318,000        (60,000)
  6/25/97  San Diego-Kearny Mesa - R & D                         1,087,000        2,536,000        (36,000)
  6/25/97  Fairfax/Bren Mar - Office                               581,000        2,677,000        143,000
  6/25/97  San Diego/Lusk                                        1,932,000        4,508,000        457,000
  6/25/97  Fairfax/Bren Mar - R & D                              1,649,000        2,525,000        381,000
  6/25/97  San Diego/Lusk II - R & D                               679,000        1,583,000        575,000
  6/25/97  San Diego/Lusk II - Office                            1,662,000        3,878,000         56,000
  6/25/97  San Ramon/Norris Cyn -Office                            785,000        3,359,000        326,000
  6/25/97  Fairfax/Alban Rd. - Office                            1,002,000        2,785,000        595,000
  6/25/97  San Ramon/Norris Cyn - Retail                           724,000          161,000        304,000
  6/25/97  Fairfax/Alban Rd. - R & D                               961,000        1,794,000        439,000
   10/85   San Antonio/One Park Ten                              2,365,000        6,215,000        (15,000)
   10/85   San Antonio/Park Terrace                                943,000        2,477,000      4,546,000
  5/2/94   Monterey Park                                         3,150,000        5,860,000        181,000
  9/30/94  Monterey/Calle Del                                      249,000          604,000         56,000
  3/1/96   San Jose                                              3,458,000        8,563,000        222,000
   10/96   Little Rk/John Barrw                                    780,000        1,820,000         49,000
</TABLE>
<TABLE>
<CAPTION>
                                                            Gross Carrying Value
                                                            At December 31, 1997
                                                 --------------------------------------------
   Date                                                                                       Accumulated
 Acquired             Description                    Land       Buildings         Total      Depreciation
-----------------------------------------------------------------------------------------------------------
 <S>     <C>                                     <C>            <C>             <C>              <C>
  10/1/97  Morton Grove                           2,658,000      3,332,000       5,990,000        37,000
  10/1/97  Los Angeles / Jefferson                1,090,000      1,753,000       2,843,000        18,000
  10/1/97  Los Angeles / Martin                     869,000      1,220,000       2,089,000        13,000
  10/1/97  San Leandro / E. 14th                    627,000      1,358,000       1,985,000        13,000
  10/1/97  Tucson / Tanque                          345,000      1,810,000       2,155,000        17,000
  10/1/97  Randolph / Warren St.                  2,330,000      2,288,000       4,618,000        19,000
  10/1/97  Forrestville / Penn.                   1,056,000      2,487,000       3,543,000        26,000
  10/1/97  Bridgeport                             4,877,000      3,067,000       7,944,000        28,000
  10/1/97  North Hollywood/Vine                     906,000      2,520,000       3,426,000        23,000
  10/1/97  Santa Cruz / Portola                     535,000      1,613,000       2,148,000        15,000
  10/1/97  Hyde Park / River St.                    626,000      1,912,000       2,538,000        16,000
  10/1/97  Dublin / San Ramon Rd.                   942,000      2,102,000       3,044,000        26,000
  10/1/97  Vallejo / Humboldt                       473,000      1,740,000       2,213,000        16,000
  10/1/97  Fremont/Warm Springs                     848,000      3,055,000       3,903,000        26,000
  10/1/97  Seattle / Stone Way                      829,000      2,385,000       3,214,000        19,000
  10/1/97  W. Olympia / Blacklane                   149,000      1,281,000       1,430,000        11,000
  10/1/97  Mercer/Parkside Ave                      359,000      1,893,000       2,252,000        17,000
  10/1/97  Bridge Water / Main                      445,000      2,267,000       2,712,000        20,000
  10/1/97  Norwalk / Hoyt Street                  2,369,000      3,297,000       5,666,000        27,000

 Commercial Properties

 11/15/95  Camarillo/Ventura Blvd                   180,000        439,000         619,000        34,000
  6/25/97  San Diego-Kearny Mesa - Office         1,851,000      4,258,000       6,109,000        82,000
  6/25/97  San Diego-Kearny Mesa - R & D          1,086,000      2,501,000       3,587,000        48,000
  6/25/97  Fairfax/Bren Mar - Office                581,000      2,820,000       3,401,000        29,000
  6/25/97  San Diego/Lusk                         1,932,000      4,965,000       6,897,000        96,000
  6/25/97  Fairfax/Bren Mar - R & D               1,649,000      2,906,000       4,555,000        82,000
  6/25/97  San Diego/Lusk II - R & D                679,000      2,158,000       2,837,000        34,000
  6/25/97  San Diego/Lusk II - Office             1,662,000      3,934,000       5,596,000        84,000
  6/25/97  San Ramon/Norris Cyn -Office             785,000      3,685,000       4,470,000        41,000
  6/25/97  Fairfax/Alban Rd. - Office             1,002,000      3,380,000       4,382,000        54,000
  6/25/97  San Ramon/Norris Cyn - Retail            723,000        466,000       1,189,000        38,000
  6/25/97  Fairfax/Alban Rd. - R & D                961,000      2,233,000       3,194,000        51,000
   10/85   San Antonio/One Park Ten               1,447,000      7,118,000       8,565,000     4,311,000
   10/85   San Antonio/Park Terrace               1,860,000      6,106,000       7,966,000     2,549,000
  5/2/94   Monterey Park                          2,700,000      6,491,000       9,191,000       964,000
  9/30/94  Monterey/Calle Del                       249,000        660,000         909,000        87,000
  3/1/96   San Jose                               3,458,000      8,785,000      12,243,000       591,000
   10/96   Little Rk/John Barrw                     780,000      1,869,000       2,649,000        81,000
</TABLE>
                                      F-48
<PAGE>
<TABLE>
<CAPTION>
                                                                                                             Adjustment
                                                                                                             resulting
                                                                     Initial Cost                            from the
                                                            --------------------------------    Costs       acquisition
   Date                                        Encumbrances                   Building &      Subsequent    of minority
 Acquired             Description                                Land        Improvements   to Acquisition   interests
-----------------------------------------------------------------------------------------------------------------------
  <S>     <C>                                                     <C>              <C>             <C>
   10/96   Tulsa/S. Peoria                                         375,000          875,000         15,000
   10/96   La Prada                                                495,000        1,155,000         25,000
   10/96   Eastgate/N.W. Hgwy                                      480,000        1,120,000         49,000
   10/96   Quail Valley                                            360,000          840,000         43,000
   11/96   Downtown Center                                         660,000        1,540,000         67,000
   11/96   Airport South                                           660,000        1,540,000         23,000
   11/96   Woodbridge/Great Oaks                                 1,350,000        3,150,000         36,000
   12/81   S. Houston/S. Shaver                                    354,000        1,981,000        203,000
   12/83   Signal Hill/Junipero                                  1,195,000        2,220,000        946,000
   12/83   Lakewood/Watson Plaza                                 2,513,000        4,238,000      1,880,000
   12/96   Broken Arrow/W. Concord                                 840,000        1,960,000         20,000
   2/86    San Diego/Camino Del Rio S.                           1,967,000        6,783,000      2,436,000
   2/95    Milwaukie                                               600,000        1,444,000        448,000
   2/96    Studio City/Ventura Blvd. II                            916,000        2,244,000        369,000
   3/84    Austin/Lamar Blvd.                                    4,321,000        5,937,000      3,352,000
   3/85    Sacremento/Northgate Blvd.                            1,536,000        5,689,000      2,386,000
   3/86    Culver City/Uplander                                  7,544,000       11,656,000      4,153,000
   3/86    Tempe/University                                      4,201,000        5,099,000      2,926,000
   5/86    Signal Hill/E. 28th St.                               2,463,000        4,837,000      1,437,000
   5/87    Carson/Leapwood Ave.                                  2,535,000        3,165,000      1,158,000
   6/95    Cerritos/Edwards                                        516,000        1,265,000        315,000
   6/95    Milwaukie II/SE Intl                                    411,000          999,000        335,000
   6/95    Renton/Rainier                                          295,000          698,000        114,000
   7/85    Houston/N. Baker's Landing                            2,221,000       12,179,000      2,913,000
   7/86    Mesa/W. Main                                          1,333,000        2,935,000        845,000
   7/86    Tempe/ S. Edward                                      1,419,000        3,123,000        997,000
   9/96    San Diego/Lusk                                        1,522,000        3,664,000         99,000
   9/96    Alexandria/Eisenhower                                 1,463,000        3,585,000        194,000
   9/96    Tempe/McKellips                                         198,000          530,000         13,000
   9/96    Torrance/Crenshaw                                       457,000        1,120,000         57,000
  4/12/97  Torrance / Crenshaw II                                1,868,000        4,358,000        477,000
  4/12/97  So. San Francisco / Airport                             899,000        2,097,000        220,000
  4/12/97  Gaithersburg / Christopher Ave.                         475,000        1,109,000         88,000
  8/1/97   Herndon Pkwy                                          5,926,000       13,815,000        237,000
  8/1/97   Baltimore/N. Charles St.                              4,067,000        9,490,000         29,000
  9/24/97  Largo Park / Mercantile Lane                          3,085,000        7,198,000        145,000
 12/10/97  Northpoint/Le Bourget                                 1,156,000        2,698,000              0
 12/24/97  Buena Park Industrial Center                          3,245,000        7,571,000              0
 12/24/97  Cerritos Business Park                                4,218,000        9,843,000              0
 12/24/97  Parkway Commercial Center                             4,398,000       10,261,000              0
</TABLE>
<TABLE>
<CAPTION>
                                                            Gross Carrying Value
                                                            At December 31, 1997
                                                 --------------------------------------------
   Date                                                                                       Accumulated
 Acquired             Description                    Land       Buildings         Total      Depreciation
-----------------------------------------------------------------------------------------------------------
  <S>     <C>                                      <C>            <C>           <C>              <C>
   10/96   Tulsa/S. Peoria                          375,000        890,000       1,265,000        35,000
   10/96   La Prada                                 495,000      1,180,000       1,675,000        52,000
   10/96   Eastgate/N.W. Hgwy                       480,000      1,169,000       1,649,000        51,000
   10/96   Quail Valley                             360,000        883,000       1,243,000        40,000
   11/96   Downtown Center                          660,000      1,607,000       2,267,000        69,000
   11/96   Airport South                            660,000      1,563,000       2,223,000        67,000
   11/96   Woodbridge/Great Oaks                  1,350,000      3,186,000       4,536,000       138,000
   12/81   S. Houston/S. Shaver                     354,000      2,184,000       2,538,000     1,374,000
   12/83   Signal Hill/Junipero                   1,195,000      3,166,000       4,361,000     1,657,000
   12/83   Lakewood/Watson Plaza                  2,513,000      6,118,000       8,631,000     3,777,000
   12/96   Broken Arrow/W. Concord                  840,000      1,980,000       2,820,000        79,000
   2/86    San Diego/Camino Del Rio S.            1,967,000      9,219,000      11,186,000     4,829,000
   2/95    Milwaukie                                597,000      1,895,000       2,492,000       263,000
   2/96    Studio City/Ventura Blvd. II             916,000      2,613,000       3,529,000       165,000
   3/84    Austin/Lamar Blvd.                     4,321,000      9,289,000      13,610,000     5,219,000
   3/85    Sacremento/Northgate Blvd.             1,535,000      8,076,000       9,611,000     4,361,000
   3/86    Culver City/Uplander                   7,544,000     15,809,000      23,353,000     8,020,000
   3/86    Tempe/University                       4,202,000      8,024,000      12,226,000     4,175,000
   5/86    Signal Hill/E. 28th St.                2,463,000      6,274,000       8,737,000     2,978,000
   5/87    Carson/Leapwood Ave.                   2,536,000      4,322,000       6,858,000     1,953,000
   6/95    Cerritos/Edwards                         516,000      1,580,000       2,096,000       227,000
   6/95    Milwaukie II/SE Intl                     411,000      1,334,000       1,745,000       168,000
   6/95    Renton/Rainier                           295,000        812,000       1,107,000       110,000
   7/85    Houston/N. Baker's Landing             2,221,000     15,092,000      17,313,000     8,116,000
   7/86    Mesa/W. Main                           1,333,000      3,780,000       5,113,000     1,924,000
   7/86    Tempe/ S. Edward                       1,419,000      4,120,000       5,539,000     2,040,000
   9/96    San Diego/Lusk                         1,522,000      3,763,000       5,285,000       151,000
   9/96    Alexandria/Eisenhower                  1,463,000      3,779,000       5,242,000       152,000
   9/96    Tempe/McKellips                          198,000        543,000         741,000        22,000
   9/96    Torrance/Crenshaw                        457,000      1,177,000       1,634,000        50,000
  4/12/97  Torrance / Crenshaw II                 1,868,000      4,835,000       6,703,000       121,000
  4/12/97  So. San Francisco / Airport              899,000      2,317,000       3,216,000        59,000
  4/12/97  Gaithersburg / Christopher Ave.          475,000      1,197,000       1,672,000        29,000
  8/1/97   Herndon Pkwy                           5,926,000     14,052,000      19,978,000       186,000
  8/1/97   Baltimore/N. Charles St.               4,067,000      9,519,000      13,586,000       127,000
  9/24/97  Largo Park / Mercantile Lane           3,085,000      7,343,000      10,428,000             0
 12/10/97  Northpoint/Le Bourget                  1,156,000      2,698,000       3,854,000             0
 12/24/97  Buena Park Industrial Center           3,245,000      7,571,000      10,816,000             0
 12/24/97  Cerritos Business Park                 4,218,000      9,843,000      14,061,000             0
 12/24/97  Parkway Commercial Center              4,398,000     10,261,000      14,659,000             0
</TABLE>
                                      F-49
<PAGE>
<TABLE>
<CAPTION>
                                                                                                             Adjustment
                                                                                                             resulting
                                                                     Initial Cost                            from the
                                                            --------------------------------    Costs       acquisition
   Date                                        Encumbrances                   Building &      Subsequent    of minority
 Acquired             Description                                Land        Improvements   to Acquisition   interests
-----------------------------------------------------------------------------------------------------------------------
<S>       <C>                                  <C>              <C>             <C>          <C>           <C>
 12/24/97  Canada Business Center                                5,508,000       12,851,000     0             0
 12/24/97  Laguna Hill Comm. Center                             16,261,000       37,943,000     0             0
 12/24/97  Lake Forest Comm. Center                              2,037,000        4,754,000     0             0

 Other Properties

           Glendale/Western Avenue                               1,622,000        3,771,000      5,514,000             0
           Construction in Progress                                      0                0     42,635,000             0
           Vacant Land                                             696,000                0              0             0
           Other encumbrances                     2,517,000                                              0

                                              ===========================================================================
                                               $43,308,000  $851,134,000    $1,975,039,000    $230,394,000   $63,597,000
                                              ===========================================================================


                                                            Gross Carrying Value
                                                            At December 31, 1997
                                                 --------------------------------------------
   Date                                                                                       Accumulated
 Acquired             Description                    Land       Buildings         Total      Depreciation
-----------------------------------------------------------------------------------------------------------
<S>       <C>                                 <C>           <C>             <C>             <C>
 12/24/97  Canada Business Center               5,508,000     12,851,000      18,359,000      0
 12/24/97  Laguna Hill Comm. Center            16,261,000     37,943,000      54,204,000      0
 12/24/97  Lake Forest Comm. Center             2,037,000      4,754,000       6,791,000      0

 Other Properties

           Glendale/Western Avenue              1,622,000      9,285,000      10,907,000     1,385,000
           Construction in Progress                     0     42,635,000      42,635,000             0
           Vacant Land                            696,000              0         696,000             0
           Other encumbrances

                                             ==========================================================
                                             $845,299,000 $2,274,865,000  $3,120,164,000  $378,248,000
                                             ==========================================================

                                      F-50
</TABLE>