UNITED STATES
                       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
                          -----------------

                                       or

[ ] 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 0-16876
                       -------

            PS PARTNERS VIII, LTD., a California Limited Partnership
            --------------------------------------------------------
             (Exact name of registrant as specified in its charter)

   California                                           95-4029178
 --------------------                                 ---------------
(State or other jurisdiction of                       (I.R.S. Employer
 incorporation or organization)                       Identification Number)

  701 Western Avenue
 Glendale, California                                      91201-2394
 --------------------                                      ----------
(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:

                                      NONE

Securities registered pursuant to Section 12(g) of the Act:

                      Units of Limited Partnership Interest
                      -------------------------------------
                                (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.

                                    Yes X No
                                       --   --

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. [X]
-------------------------------------------------------------------------------

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      NONE

<PAGE>


                                     PART I

ITEM 1.   BUSINESS.
          --------
General
-------
     PS Partners  VIII,  Ltd.  (the  "Partnership")  is a publicly  held limited
partnership  formed  under  the  California  Revised  Limited  Partnership  Act.
Commencing in March 1987, up to 150,000  units of limited  partnership  interest
("Units") were offered to the public in an interstate offering. The offering was
completed in December 1987 with 52,751 Units sold.

     The Partnership was formed to invest in and operate  existing  self-service
facilities   offering   storage   space  for  personal  and  business  use  (the
"mini-warehouses")  and to invest up to 45% of the net  proceeds of the offering
in and operate  existing  office and industrial  properties.  The  Partnership's
investments were made through direct purchase of properties.

     In 1995,  there was a series of mergers  among Public  Storage  Management,
Inc. (which was the Partnership's mini-warehouse operator), Public Storage, Inc.
and their  affiliates  (collectively,  "PSMI"),  culminating in the November 16,
1995 merger (the "PSMI Merger") of PSMI into Storage Equities,  Inc. In the PSMI
Merger, Storage Equities,  Inc. was renamed Public Storage, Inc. and it acquired
substantially  all of PSMI's United States real estate operations and became the
operator of the Partnership's mini-warehouse properties.

     The Partnership's  general partners (the "General Partners") are PSI and B.
Wayne Hughes ("Hughes"). PSI became a co-general partner in September 1993, when
PSI acquired the interest of PSI Associates, Inc. ("PSA"), an affiliate of PSMI,
relating to PSA's  general  partner  capital  contribution  in the  Partnership.
Hughes has been a general partner of the Partnership since its inception. Hughes
is the chairman of the board and chief executive  officer of PSI, and Hughes and
members of his family (the "Hughes  Family") are the major  shareholders of PSI.
The Partnership is managed,  and its investment decisions are made by Hughes and
the  executive  officers  and  directors  of PSI.  The  limited  partners of the
Partnership  have no right to  participate  in the  management or conduct of its
business affairs.

     The Partnership's  mini-warehouse properties are managed by PSI pursuant to
a  Management  Agreement.  PSI  believes  that  it is the  largest  operator  of
mini-warehouse facilities in the United States.

     Through 1996, the Partnership's  commercial  property was managed by Public
Storage  Commercial  Properties Group, Inc.  ("PSCPG")  pursuant to a Management
Agreement.   In  January  1997,  the  Partnership  and  PSI  and  other  related
partnerships transferred a total of 35 business parks to PS Business Parks, L.P.
("PSBPLP"),  formerly  known  as  American  Office  Park  Properties,  L.P.,  an
operating  partnership formed to own and operate business parks in which PSI has
a  significant  interest.  Included  among the  properties  transferred  was the
Partnership's  business park in exchange for a  partnership  interest in PSBPLP.
Until March 17, 1998,  the general  partner of PSBPLP was  American  Office Park
Properties,  Inc., an affiliate of PSI. On March 17, 1998,  American Office Park
Properties,  Inc. was merged into Public  Storage  Properties  XI,  Inc.,  which
changed its name to PS Business Parks, Inc. ("PSBP").  PSBP is a REIT affiliated
with PSI, and is publicly traded on the American Stock Exchange.  As a result of
the merger,  PSBP became the general  partner of PSBPLP (which  changed its name
from American Office Park Properties, L.P. to PS Business Parks, L.P.). See Item
13.

     PSI's  current  relationship  with the  Partnership  includes  (i) PSI is a
co-general  partner  along with  Hughes,  who is chairman of the board and chief
executive officer of PSI, (ii) as of December 31, 1997, PSI owned  approximately
53.56%  of the  Partnership's  limited  partnership  units  and (iii) PSI is the
operator of the Partnership's mini-warehouse facilities.

Investments in Facilities
-------------------------
     The Partnership  owns 5 properties  (excluding the property  transferred to
PSBPLP  in  January  1997).  The  Partnership  purchased  its last  property  in
February,  1988.  Reference  is made to the  table  in Item 2 for a  summary  of
information about the Partnership's properties.

                                       2
<PAGE>

     The  Partnership  believes that its operating  results have  benefited from
favorable   industry   trends  and  conditions.   Notably,   the  level  of  new
mini-warehouse  construction  has decreased since 1988 while consumer demand has
increased.  In  addition,  in recent  years  consolidation  has  occurred in the
fragmented mini-warehouse industry.

Mini-warehouses
---------------
     Mini-warehouses,   which   comprise  the  majority  of  the   Partnership's
investments,  are designed to offer  accessible  storage  space for personal and
business use at a relatively low cost. A user rents a fully enclosed space which
is for the  user's  exclusive  use and to which  only the user has  access on an
unrestricted   basis   during   business   hours.   On-site   operation  is  the
responsibility  of resident  managers who are supervised by area managers.  Some
mini-warehouses  also  include  rentable  uncovered  parking  areas for  vehicle
storage.  Leases for  mini-warehouse  space may be on a long-term or  short-term
basis,  although typically spaces are rented on a month-to-month  basis.  Rental
rates vary according to the location of the property and the size of the storage
space.

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

     Mini-warehouses  in which the Partnership has invested generally consist of
three to seven  buildings  containing an aggregate of between 368 to 740 storage
spaces, most of which have between 25 and 400 square feet and an interior height
of approximately 8 to 12 feet.

     The Partnership  experiences  minor seasonal  fluctuations in the occupancy
levels of  mini-warehouses  with occupancies higher in the summer months than in
the winter months. The Partnership  believes that these  fluctuations  result in
part from increased moving activity during the summer.

     The Partnership's  mini-warehouses  are geographically  diversified and are
generally  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.

     As with most other types of real estate,  the conversion of mini-warehouses
to  alternative  uses in  connection  with a sale or otherwise  would  generally
require  substantial  capital  expenditures.  However,  the Partnership does not
intend to convert its mini-warehouses to other uses.

Commercial Properties
---------------------
     Through  1996,  the  Partnership  owned and  operated  a single  commercial
property; a business park located in Carson, California which was transferred to
PSBPLP in January 1997 in exchange for a partnership interest in PSBPLP.

Investment Objectives and Polices; Sale or Financing of Investments
-------------------------------------------------------------------
     The  Partnership's  objectives  are to (i)  preserve  and protect  invested
capital,   (ii)  maximize  the  potential  for  appreciation  in  value  of  its
properties, (iii) provide Federal income tax deductions so that during the early
years of property operations a portion of cash distributions may be treated as a
return of capital for tax purposes,  and  therefore,  may not represent  taxable
income to the limited  partners  and (iv)  provide for cash  distributions  from
operations. The Partnership will terminate on December 31, 2038 unless dissolved
earlier.
                                       3
<PAGE>

Operating Strategies
--------------------
     The  Partnership's  mini-warehouses  are  operated by PSI under the "Public
Storage" name, which the Partnership believes is the most recognized name in the
mini-warehouse  industry.  The major  elements  of the  Partnership's  operating
strategies are as follows:

     *    Capitalize on Public Storage's name  recognition.  PSI,  together with
          its predecessor, has more than 20 years of operating experience in the
          mini-warehouse  business.  PSI has informed the Partnership that it is
          the largest  mini-warehouse  facility operator in the United States in
          terms of both number of facilities  and rentable space  operated.  PSI
          believes  that its  marketing  and  advertising  programs  improve its
          competitive  position in the market. PSI's in-house Yellow Pages staff
          designs and places  advertisements  in approximately  700 directories.
          Commencing  in early 1996,  PSI began to  experiment  with a telephone
          reservation   system  designed  to  provide  added  customer  service.
          Customers  calling  either  PSI's  toll-free  referral  system,  (800)
          44-STORE,   or  a  mini-warehouse   facility  are  directed  to  PSI's
          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 PSI.
          As  of  December  31,  1997,  the  telephone  reservation  system  was
          supporting  rental  activity at all of the  Partnership's  properties.
          PSI's  toll-free  telephone  referral  system  services  approximately
          160,000 calls per month from potential  customers  inquiring as to the
          nearest Public Storage mini-warehouse.

     *    Maintain high occupancy levels and increase realized rents. Subject to
          market conditions,  the Partnership generally seeks to achieve average
          occupancy levels in excess of 90% and to eliminate promotions prior to
          increasing rental rates. The monthly realized rent per occupied square
          foot for the mini-warehouse  facilities averaged $.80 in 1997 compared
          to  $.76  in  1996.   Weighted   average   occupancy   levels  at  the
          mini-warehouse  facilities  increased to 93% in 1997 from 91% in 1996.
          The  Partnership  has increased  rental rates in many markets where it
          has  achieved  high  occupancy  levels  and  eliminated  or  minimized
          promotions.

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

     *    Professional property operation.  In addition to the approximately 150
          support personnel at the Public Storage corporate  offices,  there are
          approximately  2,700  on-site  personnel  who  manage  the  day-to-day
          operations of the mini-warehouses in the Public Storage system.  These
          on-site personnel are supervised by 110 district managers, 15 regional
          managers  and 3  divisional  managers  (with  an  average  of 13 years
          experience in the mini-warehouse industry) who report to the president
          of  the  mini-warehouse   property  operator  (who  has  14  years  of
          experience  with  the  Public  Storage  organization).  PSI  carefully
          selects and extensively  trains the operational and support  personnel
          and  offers  them  a  progressive  career  path.  See  "Mini-warehouse
          Property Operator."

Mini-warehouse Property Operator
--------------------------------
     The Partnership's  mini-warehouse properties are managed by PSI pursuant to
a Management Agreement.

     Under the supervision of the Partnership,  PSI coordinates the operation of
the  facilities,  establishes  rental  policies  and  rates,  directs  marketing
activity  and  directs the  purchase  of  equipment  and  supplies,  maintenance
activity,  and  the  selection  and  engagement  of all  vendors,  supplies  and
independent contractors.

     PSI engages, at the expense of the Partnership, employees for the operation
of  the  Partnership's  facilities,   including  resident  managers,   assistant
managers, relief managers, and billing and maintenance personnel. Some or all of
these employees may be employed on a part-time basis and may also be employed by
other persons, partnerships,  REITs or other entities owning facilities operated
by PSI.
                                       4

<PAGE>

     In the  purchasing of services  such as  advertising  (including  broadcast
media advertising) and insurance, PSI attempts to achieve economies by combining
the resources of the various facilities that it operates. Facilities operated by
PSI  have  historically  carried   comprehensive   insurance,   including  fire,
earthquake, liability and extended coverage.

     PSI has  developed  systems for space  inventory,  accounting  and handling
delinquent  accounts,  including a  computerized  network  linking PSI  operated
facilities. Each project manager is furnished with detailed operating procedures
and typically  receives  facilities  management  training from PSI. Form letters
covering a variety of circumstances are also supplied to the project managers. A
record of actions  taken by the project  managers  when  delinquencies  occur is
maintained.

     The Partnership's  facilities are typically advertised via signage,  yellow
pages,  flyers  and  broadcast  media  advertising  (television  and  radio)  in
geographic  areas in which many of the  Partnership's  facilities  are  located.
Broadcast  media and other  advertising  costs are charged to the  Partnership's
facilities located in geographic areas affected by the advertising. From time to
time, PSI adopts  promotional  programs,  such as temporary rent reductions,  in
selected areas or for individual facilities.

     For as long as the Management  Agreement is in effect,  PSI has granted the
Partnership  a  non-exclusive  license to use two PSI service  marks and related
designs,  including the "Public  Storage" name, in  conjunction  with rental and
operation of  facilities  managed  pursuant to the  Management  Agreement.  Upon
termination of the Management  Agreement,  the Partnership  would no longer have
the right to use the service  marks and related  designs.  The General  Partners
believe that the loss of the right to use the service marks and related  designs
could have a material adverse effect on the Partnership's business.

     The Management  Agreement between the Partnership and PSI provides that the
Management Agreement may be terminated without cause upon 60 days written notice
by either party.

Commercial Property Operator
----------------------------
     Through 1996, the Partnership's  commercial  property was managed by PSCPG,
now known as PS Business Parks,  Inc.,  pursuant to a Management  Agreement.  In
January 1997, the Partnership  transferred its commercial  property to PSBPLP in
exchange for a partnership interest.

Competition
-----------
     Competition  in the  market  areas in which  the  Partnership  operates  is
significant,  and affects the  occupancy  levels,  rental  rates,  and operating
expenses  of  certain  of  the  Partnership's  facilities.  Competition  may  be
accelerated  by any increase in  availability  of funds for  investment  in real
estate.  Recent  increases  in plans  for  development  of  mini-warehouses  are
expected to further  intensify  competition  among  mini-warehouse  operators in
certain market areas. In addition to competition from  mini-warehouses  operated
by PSI,  there are three other  national  firms and numerous  regional and local
operators. The Partnership believes that the significant operating and financial
experience of PSI's  executive  officers and directors and the "Public  Storage"
name should enable the Partnership to continue to compete effectively with other
entities.

Other Business Activities
-------------------------
     A corporation owned by the Hughes Family reinsures  policies against losses
to goods stored by tenants in the Partnership's mini-warehouses. The Partnership
believes that the availability of insurance  reduces the potential  liability of
the  Partnership to tenants for losses to their goods from theft or destruction.
This  corporation  receives the premiums and bears the risks associated with the
insurance.

     A  corporation,  in which PSI had a 95%  economic  interest  and the Hughes
Family has a 5% economic interest, sells locks, boxes, and tape to tenants to be
used in securing  their  spaces and moving their  goods.  PSI believes  that the
availability of locks, boxes, and tape for sale promotes the rental of spaces.

                                       5
<PAGE>
Employees
---------
     There are 21 persons  who  render  services  on behalf of the  Partnership.
These persons include resident managers,  assistant  managers,  relief managers,
district managers, and administrative  personnel. Some of these employees may be
employed  on a  part-time  basis  and may also be  employed  by  other  persons,
partnerships,  REITs,  or other entities  owning  facilities  operated by PSI or
PSBPLP.

Impact of Year 2000
-------------------
     PSI 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 PSI 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 PSI's Year 2000 project.

     The cost of the Year 2000 project  will be  allocated to all entities  that
use the PSI  computer  systems.  The  cost of the  Year  2000  project  which is
expected to be allocated to the Partnership is approximately  $15,000.  The cost
of new software  will be  capitalized  and the cost of  maintenance  to existing
systems 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.   PSI  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
Partnership.

     The  costs  of the  project  and the  date on which  PSI  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.


ITEM 2.   PROPERTIES.
          ----------
     The following table sets forth  information as of December 31, 1997,  about
properties owned by the Partnership. All of these properties are wholly-owned by
the Partnership.
<TABLE>
<CAPTION>


                                    Net Rentable              Number of          Date of
Location                             Square Feet               Spaces          Acquisition
-----------------------------       ----------------        -------------     --------------
CALIFORNIA
<S>                                       <C>                    <C>             <C>   <C>
Anaheim                                   66,600                 621             02-25-88
   Lakeview Ave.
FLORIDA
Plantation                                51,400                 510             10-16-87
   South State Road 7
ILLINOIS
Oakbrook Terrace                          64,700                 740             07-15-87
   Roosevelt Road
MARYLAND
Rockville                                 56,300                 641             10-01-87
   Frederick Road
TEXAS
San Antonio                               52,200                 368             08-20-87
   Austin Hwy.
</TABLE>

     The weighted average occupancy level for the mini-warehouse  facilities was
93% in 1997  compared to 91% in 1996.  The  monthly  average  realized  rent per
square foot for the mini-warehouse  facilities was $.80 in 1997 compared to $.76
in 1996.

                                       6
<PAGE>

     Substantially  all of the  Partnership's  facilities were acquired prior to
the time  that it was  customary  to  conduct  environmental  investigations  in
connection  with property  acquisitions.  During the fourth  quarter of 1995, an
independent environmental consulting firm completed environmental assessments on
the  Partnership's  properties to evaluate the  environmental  condition of, and
potential   environmental   liabilities  of,  such  properties.   Based  on  the
assessments,  the  Partnership  believes  that it is probable that it will incur
costs  totaling  $120,000  after  December  31,  1997  for  known  environmental
remediation requirements. Although there can be no assurance, the Partnership is
not aware of any unaccrued  environmental  contamination  of any of its property
sites  which  individually  or  in  the  aggregate  would  be  material  to  the
Partnership's overall business, financial condition, or results of operations.

ITEM 3.   LEGAL PROCEEDINGS.
          ------------------
     No material legal proceeding is pending against the Partnership.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
          ---------------------------------------------------
     No matters were  submitted to a vote of security  holders during the fourth
quarter of 1997.



                                     PART II

ITEM 5.   MARKET FOR THE PARTNERSHIP'S COMMON EQUITY AND RELATED STOCKHOLDER
          MATTERS.
          ------------------------------------------------------------------
     The Partnership has no common stock.

     The Units are not listed on any national  securities  exchange or quoted on
the NASDAQ  System,  and there is no  established  public trading market for the
Units. Secondary sales activity for the Units has been limited and sporadic. The
General Partners monitor transfers of the Units (a) because the admission of the
transferee as a substitute  limited partner  requires the consent of the General
Partners  under the  Partnership's  Amended and  Restated  Agreement  of Limited
Partnership,  (b) in order to ensure  compliance with safe harbor  provisions to
avoid  treatment  as a "publicly  traded  partnership"  for tax purposes and (c)
because PSI has  purchased  Units.  However,  the  General  Partners do not have
information regarding the prices at which all secondary sale transactions in the
Units have been effectuated.  Various  organizations  offer to purchase and sell
limited  partnership  interests  (including  securities  of the type such as the
Units) in secondary sales transactions. Various publications such as The Stanger
Report  summarize  and  report  information  (on a  monthly,  bimonthly  or less
frequent basis) regarding  secondary sales  transactions in limited  partnership
interests  (including  the Units),  including the prices at which such secondary
sales transactions are effectuated.

     Exclusive  of the  General  Partners'  interest in the  Partnership,  as of
December 31, 1997, there were approximately 1,241 record holders of Units.

     The Partnership  makes quarterly  distributions  of all "Cash Available for
Distribution"   and  will  make   distributions  of  all  "Cash  from  Sales  or
Refinancing." Cash Available for Distribution is cash flow from all sources less
cash necessary for any obligations or capital improvements, or reserves.

     Reference is made to Items 6 and 7 hereof for  information on the amount of
such distributions.

                                       7
<PAGE>

ITEM 6.   SELECTED FINANCIAL DATA.
          ------------------------
<TABLE>
<CAPTION>


                                                                 For the Years Ended December 31,
                                             -----------------------------------------------------------------------
                                                1997           1996            1995            1994           1993
                                             --------        --------       --------        --------        --------
                                                                  (In thousands, except per Unit data)

<S>                                          <C>             <C>            <C>             <C>             <C>
Revenues                                     $  2,811        $  2,922       $  2,828        $  2,802        $  2,657

Depreciation and amortization                     559             808            758             735             694

Net income                                      1,358           1,099            877           1,042             963

     Limited partners' share                    1,186             929            650             912             838

     General partners' share                      172             170            227             130             125

Limited partners' per unit data(a)

     Net income                              $  22.48        $  17.61       $  12.32        $  17.29        $  15.89

     Cash distributions (b)                  $  27.04        $  27.04       $  37.18        $  20.40        $  19.70

As of December 31,
------------------

Cash and cash equivalents                    $    249        $    209       $    217        $    888        $    510

Total assets                                 $ 17,590        $ 17,858       $ 18,426        $ 19,594        $ 19,771

</TABLE>

(a)  Limited  Partners' per unit data is based on the weighted average number of
     units outstanding during the period (52,751 for all periods presented).
(b)  The General Partners distributed,  concurrent with the distribution for the
     third  quarter  of  1995,  a  portion  of  the  operating  reserve  of  the
     Partnership estimated to be $10.14 per Unit.


                                       8
<PAGE>

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS
          ---------------------------------------------------------------

Results of Operation
--------------------

     YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996:

     The  Partnership's net income was $1,358,000 in 1997 compared to $1,099,000
in 1996,  representing  an  increase of  $259,000,  or 24%.  Excluding  the 1996
operations for the Partnership's  business park facility as compared to the 1997
equity  in  income  of  real  estate  partnership,  the  increase  is  primarily
attributable to an increase in the Partnership's mini-warehouse operations.

     Rental  income  for  the   Partnership's   mini-warehouse   operations  was
$2,599,000 during 1997 compared to $2,394,000 in 1996,  representing an increase
of $205,000, or 9%. The increase in rental income was primarily  attributable to
increased rental rates at the mini-warehouse facilities, combined with increased
occupancy  levels.  The monthly  average  realized  rent per square foot for the
mini-warehouse  facilities  was  $.80 in 1997  compared  to $.76 for  1996.  The
weighted average  occupancy levels at the  mini-warehouse  facilities  increased
from 91% in 1996 to 93% during 1997.  Cost of operations  (including  management
fees) increased $81,000, or 11%, to $821,000 during 1997 from $740,000 for 1996.
This  increase  was  primarily   attributable  to  increases  in  property  tax,
advertising,   and  payroll   expenses.   Accordingly,   for  the  Partnership's
mini-warehouse operations,  property net operating income increased $124,000, or
8%, from $1,654,000 in 1996 to $1,778,000 during 1997.

     The following table summarizes the Partnership's  operating income,  net of
depreciation,  from its investment in PSBPLP during 1997 compared to that of the
exchanged business park facility for 1996:


                                                        1997             1996
                                                  ------------    -------------
Equity in earnings of real estate partnership      $  199,000      $         -
Rental income                                               -          513,000
Cost of operations                                          -          206,000
                                                  ------------    -------------
Net operating income                                  199,000          307,000
Depreciation                                                -          267,000
                                                  ------------    -------------
Operating income, net of depreciation              $  199,000        $  40,000
                                                   ==========        =========

     The difference in operating income,  net of depreciation,  in 1997 and 1996
is primarily due to the effect of  depreciation  and an  improvement in property
operations.

     Depreciation   and   amortization   attributable   to   the   Partnership's
mini-warehouse facilities increased $18,000 from $541,000 in 1996 to $559,000 in
1997. This increase was primarily  attributable  to the  depreciation of capital
expenditures made during 1996 and 1997.

     YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995:

     The Partnership's net income in 1996 was $1,099,000 compared to $877,000 in
1995, representing an increase of $222,000, or 25%. The increase was primarily a
result of decreased  environmental costs,  combined with an increase in property
operating results, partially offset by an increase in depreciation expense and a
decrease in interest income.

     Property net operating  income  (rental  income less cost of operations and
management  fees and excluding  depreciation  expense)  increased  approximately
$134,000,  or 7%, in 1996  compared  to 1995,  as  rental  income  increased  by
$124,000, or 4%, and cost of operations (including management fees) decreased by
$10,000.

                                       10
<PAGE>

     Rental  income  for  the   Partnership's   mini-warehouse   operations  was
$2,394,000 in 1996 compared to $2,264,000 in 1995,  representing  an increase of
$130,000,  or 6%. The increase in rental  income was primarily  attributable  to
increased  rental rates and occupancy levels at the  mini-warehouse  facilities.
The  monthly  realized  rent per square foot for the  mini-warehouse  facilities
averaged  $.76 in 1996  compared  to $.73 in 1995.  Weighted  average  occupancy
levels at the  mini-warehouse  facilities  increased  to 91% in 1996 from 89% in
1995.  Cost of  operations  (including  management  fees)  decreased  $1,000  to
$740,000  in 1996 from  $741,000  in 1995.  Accordingly,  for the  Partnership's
mini-warehouse  operations,  property net operating income increased by $131,000
to $1,654,000 in 1996 from $1,523,000 in 1995.

     Rental income for the  Partnership's  business park operations was $513,000
in 1996  compared to $519,000 in 1995,  representing  a decrease of $6,000.  The
decrease in rental income was primarily  attributable  to reduced  rental rates,
partially  offset by increased  occupancy  rates.  The monthly realized rent per
square foot for the business  park  facility  averaged  $.58 in 1996 compared to
$.59 in 1995.  Weighted  average  occupancy levels at the business park facility
increased  to 95% in  1996  from  93% in  1995.  Cost of  operations  (including
management fees) decreased  $9,000,  or 4%, to $206,000 in 1996 from $215,000 in
1995. The decrease in cost of operations was primarily attributable to decreases
in property tax and lease commissions expenses,  partially offset by an increase
in payroll expense.  Accordingly,  for the Partnership's business park facility,
property  net  operating  income  increased  by $3,000 to  $307,000 in 1996 from
$304,000 in 1995.

     Interest  income  decreased  in 1996 over 1995 as a result of a decrease in
average invested cash balances.

     Depreciation  and amortization  increased  $50,000 to $808,000 in 1996 from
$758,000 in 1995.  This increase is principally  attributable to depreciation of
capital expenditures made during 1995 and 1996.

Liquidity and Capital Resources
-------------------------------
     The  Partnership  has adequate  sources of cash to finance its  operations,
both on a short-term and long-term basis, primarily by internally generated cash
from  property  operations  combined  with cash  on-hand at December 31, 1997 of
approximately $249,000.

     Cash  flows  from  operating  activities  ($1,706,000  for the  year  ended
December 31, 1997) have been  sufficient to meet all current  obligations of the
Partnership. Capital improvements were $145,000, $229,000, and $272,000 in 1997,
1996,  and  1995,   respectively.   During  1998,  the  Partnership  anticipates
approximately $188,000 of capital improvements.

     The Partnership expects to continue making quarterly  distributions.  Total
distributions  paid to the General Partners and the limited partners  (including
per Unit amounts) for 1997 and prior years were as follows:

                                             Total                 Per Unit
                                          -----------             -----------
            1997                           $1,601,000                $27.04
            1996                            1,600,000                 27.04
            1995                            2,201,000                 37.18
            1994                            1,208,000                 20.40
            1993                            1,166,000                 19.70
            1992                            1,625,000                 27.45
            1991                            1,778,000                 30.02
            1990                            1,554,000                 26.24
            1989                            1,517,000                 25.63
            1988                            1,480,000                 25.01
            1987                              476,000                 14.55

     The General Partners  distributed,  concurrently  with the distribution for
the fourth quarter of 1991, a portion of the operating  reserve and adjusted the
ongoing  distribution  level.  The operating  reserve that was  distributed  was
estimated at $7.45 per Unit. The General Partners distributed, concurrently with

                                     10
<PAGE>

the  distribution  for the third  quarter of 1995,  a portion  of the  operating
reserve of the Partnership  estimated to be $10.14 per Unit. Future distribution
levels will be based on cash  available  for  distributions  (cash flow from all
sources,  less cash  necessary  for capital  improvement  needs and to establish
reserves).

Impact of Year 2000
-------------------
     PSI 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 PSI 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 PSI's Year 2000 project.

     The cost of the Year 2000 project  will be  allocated to all entities  that
use the PSI  computer  systems.  The  cost of the  Year  2000  project  which is
expected to be allocated to the Partnership is approximately  $15,000.  The cost
of new software  will be  capitalized  and the cost of  maintenance  to existing
systems 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.   PSI  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
Partnership.

     The  costs  of the  project  and the  date on which  PSI  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.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
          --------------------------------------------
     The  Partnership's  financial  statements  are included  elsewhere  herein.
Reference is made to the Index to Financial  Statements and Financial  Statement
Schedules in Item 14(a).

ITEM 9.   DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
          -----------------------------------------------------
     None.




                                       11
<PAGE>
                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP.
          ---------------------------------------------------
     The Partnership has no directors or executive officers.

     The Partnership's General Partners are PSI and B. Wayne Hughes. PSI, acting
through its  directors and  executive  officers,  and Mr. Hughes manage and make
investment  decisions  for the  Partnership.  The  Partnership's  mini-warehouse
properties are managed by PSI pursuant to a Management Agreement.  Through 1996,
the  Partnership's  commercial  property  was managed by PSCPG,  now known as PS
Business Parks,  Inc., pursuant to a Management Agreement.  In January 1997, the
Partnership   transferred  its  business  park  to  PSBPLP  in  exchange  for  a
partnership interest in PSBPLP.

     The names of all directors and executive  officers of PSI, the offices held
by each of them with PSI, and their ages and business experience during the past
five years are as follows:
<TABLE>
<CAPTION>


                          Name                                                 Positions with PSI
-----------------------------------------------           ----------------------------------------------------
<S>                                                       <C>
B. Wayne Hughes                                           Chairman of the Board and Chief Executive Officer
Harvey Lenkin                                             President and Director
B. Wayne Hughes, Jr.                                      Vice President and Director
John Reyes                                                Senior Vice President and Chief Financial Officer
Carl B. Phelps                                            Senior Vice President
Obren B. Gerich                                           Senior Vice President
Marvin M. Lotz                                            Senior Vice President
David Goldberg                                            Senior Vice President and General Counsel
A. Timothy Scott                                          Senior Vice President and Tax Counsel
David P. Singelyn                                         Vice President and Treasurer
Sarah Hass                                                Vice President and Secretary
Robert J. Abernethy                                       Director
Dann V. Angeloff                                          Director
William C. Baker                                          Director
Thomas J. Barrack, Jr.                                    Director
Uri P. Harkham                                            Director
</TABLE>

     B. Wayne Hughes,  age 64, a general partner of the Partnership,  has been a
director of PSI since its  organization  in 1980 and was  President and Co-Chief
Executive  Officer from 1980 until November 1991 when he became  Chairman of the
Board and sole Chief Executive  Officer.  Mr. Hughes has been active in the real
estate  investment field for over 25 years. He is the father of B. Wayne Hughes,
Jr.

     Harvey  Lenkin,  age 61, has been  employed  by PSI for 20 years and became
President  and a director of PSI in November  1991.  Mr. Lenkin is a director of
the National Association of Real Estate Investment Trusts (NAREIT).

     B. Wayne Hughes,  Jr., age 38, became a director of PSI in January 1998. He
has been Vice President - Acquisitions  of the Company since 1992. He is the son
of B. Wayne Hughes.

     John Reyes, age 37, a certified public  accountant,  joined PSI in 1990 and
was  controller  of PSI from 1992  until  December  1996  when he  became  Chief
Financial  Officer.  He became a Vice  President  of PSI in November  1995 and a
Senior Vice President of PSI in December 1996.  From 1983 to 1990, Mr. Reyes was
employed by Ernst & Young.

     Carl B. Phelps,  age 58,  became a Senior Vice  President of PSI in January
1998 with overall responsibility for property acquisition and development.  From
June 1991  until  joining  PSI,  he was a partner  in the law firm of  Andrews &
Kurth,  L.L.P.,  which  performed  legal  services for PSI.  From  December 1982
through May 1991, his professional  corporation was a partner in the law firm of
Sachs & Phelps, then counsel to PSI.
                                       12
<PAGE>

     Obren B. Gerich,  age 59, a certified  public  accountant,  has been a Vice
President of PSI since 1980 and became Senior Vice  President of PSI in November
1995. He was Chief Financial Officer of PSI until November 1991.

     Marvin M. Lotz, age 55, has had overall responsibility for Public Storage's
mini-warehouse  operations  since 1988. He became a Senior Vice President of PSI
in  November  1995.  Mr.  Lotz was an  officer  of PSI with  responsibility  for
property acquisitions from 1983 until 1988.

     David  Goldberg,  age 48,  joined PSI's legal staff in June 1991. He became
Senior Vice President and General Counsel of PSI in November 1995. From December
1982 until May 1991,  he was a partner  in the law firm of Sachs & Phelps,  then
counsel to PSI.

     A. Timothy Scott, age 46, became a Senior Vice President and Tax Counsel of
PSI and Vice  President and Tax Counsel of the Public  Storage REITs in November
1996.  From June 1991  until  joining  PSI,  Mr.  Scott  practiced  tax law as a
shareholder  of the law firm of Heller,  Ehrman,  White & McAuliffe,  counsel to
PSI. Prior to June 1991, his  professional  corporation was a partner in the law
firm of Sachs & Phelps, then counsel to PSI.

     David P. Singelyn, age 36, a certified public accountant, has been employed
by PSI since 1989 and became Vice  President  and  Treasurer  of PSI in November
1995. From 1987 to 1989, Mr. Singelyn was Controller of Winchell's Donut Houses,
L.P.

     Sarah Hass, age 42, became  Secretary of PSI in February 1992. She became a
Vice  President of PSI in November  1995.  She joined PSI's legal  department in
June 1991,  rendering  services on behalf of PSI. From 1987 until May 1991,  her
professional  corporation was a partner in the law firm of Sachs & Phelps,  then
counsel to PSI,  and from April 1986 until June 1987,  she was  associated  with
that firm,  practicing in the area of securities  law. From September 1979 until
September 1985, Ms. Hass was associated with the law firm of Rifkind & Sterling,
Incorporated.

     Robert J.  Abernethy,  age 58,  has been  President  of  American  Standard
Development Company and of Self-Storage  Management  Company,  which develop and
operate mini-warehouses,  since 1976 and 1977,  respectively.  Mr. Abernethy has
been a director  of PSI since its  organization  in 1980.  He is a member of the
board of directors of Johns  Hopkins  University  and of the Los Angeles  County
Metropolitan  Transportation  Authority  and a  former  member  of the  board of
directors of the Metropolitan Water District of Southern California.

     Dann V.  Angeloff,  age 62, has been President of the Angeloff  Company,  a
corporate  financial  advisory  firm,  since  1976.  The  Angeloff  Company  has
rendered,  and is  expected  to  continue  to  render,  financial  advisory  and
securities  brokerage services for PSI. Mr. Angeloff is the general partner of a
limited partnership that owns a mini-warehouse operated by PSI and which secures
a note  owned  by PSI.  Mr.  Angeloff  has  been a  director  of PSI  since  its
organization  in 1980. He is a director of Compensation  Resource  Group,  Eagle
Lifestyle   Nutrition,    Inc.,    Nicholas/Applegate    Growth   Equity   Fund,
Nicholas/Applegate  Investment Trust,  ReadyPac Produce,  Inc. and Royce Medical
Company.

     William C. Baker,  age 64, became a director of PSI in November 1991. Since
November  1997,  Mr.  Baker has been  Chairman of the Board and Chief  Executive
Officer of The Santa  Anita  Companies,  Inc.,  which  operates  the Santa Anita
Racetrack and is a wholly-owned  subsidiary of Meditrust Operating Company. From
August  1996  until  November  1997,  he was  Chairman  of the  Board  and Chief
Executive  Officer of Santa Anita Operating Company and Chairman of the Board of
the Board of Santa Anita Realty  Enterprises,  Inc.,  the  companies  which were
merged with  Meditrust in November  1992.  From April 1993 through May 1995, Mr.
Baker was President of Red Robin International, Inc., an operator and franchiser
of casual dining restaurants in the United States and Canada.  From January 1992
through  December 1995, he was Chairman and Chief Executive  Officer of Carolina
Restaurant  Enterprises,  Inc., a franchisee  of Red Robin  International,  Inc.
Since 1991,  he has been Chairman of the Board of Coast  Newport  Properties,  a
real estate brokerage company. From 1976 to 1988, he was a principal shareholder
and  Chairman and Chief  Executive  Officer of Del Taco,  Inc.,  an operator and
franchiser of fast food  restaurants in  California.  Mr. Baker is a director of
Callaway Golf Company and Meditrust Operating Company.

                                       13
<PAGE>

     Thomas J. Barrack,  Jr., age 50, became a director of PSI in February 1998.
Mr. Barrack has been the Chairman and Chief Executive Officer of Colony Capital,
Inc.  since  September  1991.  Colony  Capital,  Inc. is one of the largest real
estate investors in America,  having acquired properties in the U.S., Europe and
Asia. Prior to founding Colony Capital, Inc., from 1987 to 1991, Mr. Barrack was
a  principal  with the Robert M. Bass  Group,  Inc.,  the  principal  investment
vehicle for Robert M. Bass of Fort Worth,  Texas. From 1985 to 1987, Mr. Barrack
was President of Oxford Ventures, Inc., a Canadian-based real estate development
company.  From  1984 to  1985,  he was  Senior  Vice  President  at E.F.  Hutton
Corporate  Finance in New York.  Mr.  Barrack was appointed by President  Ronald
Reagan as Deputy Under  Secretary at the U.S.  Department  of the Interior  from
1982 to 1983. Mr. Barrack currently is a director of Continental Airlines,  Inc.
and Virgin Entertainment Group, Ltd.

     Uri P. Harkham, age 49, became a director of PSI in March 1993. Mr. Harkham
has been the  President  and Chief  Executive  Officer  of the  Jonathan  Martin
Fashion  Group,  which  specializes  in designing,  manufacturing  and marketing
women's  clothing,  since its  organization in 1976. Since 1978, Mr. Harkham has
been the  Chairman  of the  Board of  Harkham  Properties,  a real  estate  firm
specializing  in buying and  managing  fashion  warehouses  in Los  Angeles  and
Australia.

     Pursuant to Articles 16 and 17 of the  Partnership's  Amended and  Restated
Agreement of Limited Partnership (the "Partnership Agreement"),  a copy of which
is  included  in the  Partnership's  prospectus  included  in the  Partnership's
Registration Statement, File No. 33-5892, each of the General Partners continues
to serve until (i) death, insanity, insolvency,  bankruptcy or dissolution, (ii)
withdrawal  with the consent of the other general partner and a majority vote of
the  limited  partners,  or (iii)  removal  by a  majority  vote of the  limited
partners.

     Each  director of PSI serves  until he resigns or is removed from office by
PSI, and may resign or be removed from office at any time with or without cause.
Each  officer  of PSI  serves  until he  resigns  or is  removed by the board of
directors  of PSI.  Any such officer may resign or be removed from office at any
time with or without cause.

     There  have  been  no  events  under  any   bankruptcy   act,  no  criminal
proceedings,  and no judgments or injunctions  material to the evaluation of the
ability of any director or executive officer of PSI during the past five years.

ITEM 11.  EXECUTIVE COMPENSATION.
          ----------------------
     The Partnership has no subsidiaries, directors or officers. See Item 13 for
a description of certain  transactions  between the  Partnership and the General
Partners and their affiliates.


                                       14
<PAGE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
          ---------------------------------------------------------------

     (a) At December 31, 1997, PSI beneficially  owned more than 5% of the Units
         of the Partnership:

<TABLE>
<CAPTION>

         Title                                                                        Amount of             Percent
           of                             Name and Address of                         Beneficial               of
         Class                             Beneficial Owner                           Ownership              Class
--------------------      ------------------------------------------------        ------------------       ----------
<S>                       <C>                                                     <C>                        <C>
Units of Limited          Public Storage, Inc.
Partnership               701 Western Avenue
Interest                  Glendale, CA 91201-2394  (1)                             28,253 Units (1)          53.56%

</TABLE>

---------
(1)  These  Units  are  held  of  record  by  SEI   Arlington   Acquisition
     Corporation, a wholly-owned subsidiary of PSI.

     The Partnership is not aware of any other beneficial owners of more than 5%
of the Units.

          (b) The Partnership has no officers and directors.

               The  General  Partners  (or their  predecessor-in-interest)  have
          contributed $266,000 to the capital of the Partnership representing 1%
          of the aggregate capital  contributions and as a result participate in
          the  distributions  to the limited  partners and in the  Partnership's
          profits and losses in the same proportion  that the general  partners'
          capital   contribution  bears  to  the  total  capital   contribution.
          Information  regarding  ownership  of the  Units  by  PSI,  a  General
          Partner,  is set forth under  section  (a) above.  The  directors  and
          executive officers of PSI, as a group, do not own any units.

          (c)  The  Partnership  knows  of  no  contractual  arrangements,   the
          operation of the terms of which may at a  subsequent  date result in a
          change in control of the  Partnership,  except for articles 16, 17 and
          21.1 of the Partnership Agreement,  which provide, in substance,  that
          the limited partners shall have the right, by majority vote, to remove
          a general partner and that a general partner may designate a successor
          with the  consent of the other  general  partner and a majority of the
          limited partners.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
          ----------------------------------------------
     The  Partnership  Agreement  provides  that the General  Partners and their
affiliates are entitled to the following compensation:

          1.   Incentive   distributions   equal  to  10%  of  Cash   Flow  from
               Operations.
          2.   Provided the limited partners have received  distributions  equal
               to 100% of their  investment  plus a cumulative  8% per year (not
               compounded) on their investment  (reduced by distributions  other
               than  from Cash Flow  from  Operations),  subordinated  incentive
               distributions  equal  to 15% of  remaining  Cash  from  Sales  or
               Refinancings.
          3.   Provided the limited partners have received  distributions  equal
               to 100% of their capital  contributions  plus a cumulative 6% per
               year  (not   compounded)   on  their   investment   (reduced   by
               distributions  other  than  distributions  from  Cash  Flow  from
               Operations),  brokerage  commissions  at the  lesser of 3% of the
               sales price of a property or 50% of a competitive commission.

     During 1997,  approximately  $160,000 was paid to PSI with respect to items
1, 2, and 3 above.

     The Partnership  has a Management  Agreement with PSI pursuant to which the
Partnership  pays PSI a fee of 6% of the gross  revenues  of the  mini-warehouse
spaces operated for the  Partnership.  During 1997, the Partnership paid fees of
$156,000 to PSI pursuant to the Management Agreement.

                                       15


<PAGE>

     Through 1996, the  Partnership's  commercial  property was managed by PSCPG
pursuant to a Management  Agreement  which  provides for the payment of a fee by
the Partnership of 5% of the gross revenues of the commercial space operated for
the  Partnership.  In January 1997,  the  Partnership  and PSI and other related
partnerships  transferred a total of 35 business  parks to PSBPLP,  an operating
partnership  formed  to own  and  operate  business  parks  in  which  PSI has a
significant  interest.   Included  among  the  properties  transferred  was  the
Partnership's  business park in exchange for a  partnership  interest in PSBPLP.
The general partner of PSBPLP is PS Business  Parks,  Inc., a REIT traded on the
American Stock Exchange.

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
          ----------------------------------------------------------------
         (a)   List of Documents filed as part of the Report.
               1.   Financial  Statements:  See Index to Consolidated  Financial
                    Statements and Financial Statement Schedules.
               2.   Financial  Statement  Schedules:  See Index to  Consolidated
                    Financial Statements and Financial Statement Schedules.
               3.   Exhibits: See Exhibit Index contained herein.

         (b)   Reports on Form 8-K.
               None

         (c)   Exhibits:  See Exhibit Index contained herein.


                                       16
<PAGE>


                             PS PARTNERS VIII LTD.,
                        a California Limited Partnership
                                INDEX TO EXHIBITS



3.1       Amended and  Restated  Agreement  of Limited  Partnership.  Previously
          filed with the Securities and Exchange Commission as an Exhibit to the
          Storage  Equities,   Inc.  Registration  Statement  No.  33-43750  and
          incorporated herein by reference.

10.1      Second Amended and Restated  Management  Agreement  dated November 16,
          1995,  between the  Partnership  and Public Storage  Management,  Inc.
          Previously  filed with the  Securities  and Exchange  Commission as an
          exhibit to PS Partners, Ltd.'s Annual Report on Form 10-K for the year
          ended December 31, 1996 and incorporated herein by reference.

10.2      Amended  Management  Agreement dated February 21, 1995 between Storage
          Equities,  Inc. and Public Storage  Commercial  Properties Group, Inc.
          Previously  filed with the  Securities  and Exchange  Commission as an
          exhibit to the  Partnership's  Annual Report on Form 10-K for the year
          ended December 31, 1994, and incorporated herein by reference.

27.       Financial data schedule. Filed herewith.

                                       17
<PAGE>

                                   SIGNATURES


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


                                  PS PARTNERS VIII, LTD.,
                                  a California Limited Partnership
Dated:  March 26, 1998        By: Public Storage, Inc., General Partner


                              By: /s/ B Wayne Hughes
                                  --------------------------------------
                                  B. Wayne Hughes, Chairman of the Board

                              By: /s/ B Wayne Hughes
                                  --------------------------------------
                                  B. Wayne Hughes, General Partner


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Partnership in the capacities and on the dates indicated.
<TABLE>
<CAPTION>

                Signature                                       Capacity                                    Date
--------------------------------------     ----------------------------------------------    --------------------------------------
<S>                                       <C>                                                  <C>
/s/ B. Wayne Hughes                        Chairman of the Board and Chief                      March 26, 1998
--------------------------------------     Executive Officer of Public Storage, Inc. and
B. Wayne Hughes                            General Partner (principal executive officer)


/s/ Harvey Lenkin                          President and Director                               March 26, 1998
--------------------------------------     of Public Storage, Inc.
Harvey Lenkin

/s/ B. Wayne Hughes, Jr.                   Vice President and Director                          March 26, 1998
--------------------------------------     of Public Storage, Inc.
B. Wayne Hughes, Jr.

/s/ John Reyes                             Senior Vice President and Chief Financial Officer    March 26, 1998
--------------------------------------     of Public Storage, Inc. (principal financial
John Reyes                                 officer and principal accounting officer)


/s/ Robert J. Abernethy                    Director of Public Storage, Inc.                     March 26, 1998
--------------------------------------
Robert J. Abernethy

/s/ Dann V. Angeloff                       Director of Public Storage, Inc.                     March 26, 1998
--------------------------------------
Dann V. Angeloff

/s/ William C. Baker                       Director of Public Storage, Inc.                     March 26, 1998
--------------------------------------
William C. Baker


/s/ Uri P. Harkham                         Director of Public Storage, Inc.                     March 26, 1998
--------------------------------------
Uri P. Harkham
</TABLE>

                                       18

<PAGE>
                             PS PARTNERS VIII, LTD.,
                        a California Limited Partnership

                          INDEX TO FINANCIAL STATEMENTS
                        AND FINANCIAL STATEMENT SCHEDULES

                                  (Item 14 (a))


                                                                       Page
                                                                    References


Report of Independent Auditors                                          F-1

Financial Statements and Schedules:

Balance Sheets as of December 31, 1997
   and 1996                                                             F-2

For the years ended December 31, 1997, 1996 and 1995:
                                                                        F-3
   Statements of Income

   Statements of Partners' Equity                                       F-4

   Statements of Cash Flows                                          F-5 - F-6

   Notes to Financial Statements                                     F-7 - F-9

Schedule

   III - Real Estate and Accumulated Depreciation                   F-10 - F-11


     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  financial
statements or the notes thereto.


                                       19
<PAGE>

                         Report of Independent Auditors



The Partners
PS Partners VIII, Ltd., a California Limited Partnership


We have  audited the balance  sheets of PS Partners  VIII,  Ltd.,  a  California
Limited  Partnership as of December 31, 1997 and 1996 and the related statements
of income,  partners' 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
schedule  are  the   responsibility   of  the  Partnership's   management.   Our
responsibility  is to  express  an opinion  on these  financial  statements  and
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 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 financial  statements  referred to above present fairly, in
all material  respects,  the  financial  position of PS Partners  VIII,  Ltd., a
California Limited Partnership at December 31, 1997 and 1996, and the 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 LLP




February 23, 1998
Los Angeles, California

                                      F-1
<PAGE>
<TABLE>
<CAPTION>
                             PS PARTNERS VIII, LTD.
                        a California Limited Partnership
                                 BALANCE SHEETS
                           December 31, 1997 and 1996

                                                                                               1997               1996
                                                                                         ------------      ------------
                                     ASSETS


<S>                                                                                         <C>               <C>
Cash and cash equivalents                                                                   $ 249,000         $ 209,000

Rent and other receivables                                                                     11,000            10,000

Real estate facilities, at cost:
    Land                                                                                    4,926,000         7,461,000
    Buildings and equipment                                                                12,320,000        16,442,000
                                                                                         ------------      ------------
                                                                                           17,246,000        23,903,000

    Less accumulated depreciation                                                          (5,081,000)       (6,309,000)
                                                                                         ------------      ------------
                                                                                           12,165,000        17,594,000

Investment in real estate partnership                                                       5,134,000                 -

Other assets                                                                                   31,000            45,000
                                                                                         ------------      ------------

                                                                                         $ 17,590,000      $ 17,858,000
                                                                                         ============      ============



                        LIABILITIES AND PARTNERS' EQUITY

Accounts payable                                                                            $ 223,000         $ 259,000

Advance payments from renters                                                                 121,000           110,000

Partners' equity:
    Limited partners' equity,
       $500 per unit, 150,000 units authorized,
       52,751 issued and outstanding                                                       17,039,000        17,279,000
    General partners' equity                                                                  207,000           210,000
                                                                                         ------------      ------------
       Total partners' equity                                                              17,246,000        17,489,000
                                                                                         ------------      ------------
                                                                                         $ 17,590,000      $ 17,858,000
                                                                                         ============      ============
</TABLE>
                             See accompanying notes.
                                      F-2

<PAGE>
<TABLE>
<CAPTION>
                             PS PARTNERS VIII, LTD.
                        a California Limited Partnership
                             STATEMEMENTS OF INCOME
              For the years ended December 31, 1997, 1996, and 1995




                                                                            1997              1996               1995
                                                                         ---------          ---------         ---------

REVENUE:

<S>                                                                    <C>                <C>               <C>
Rental income                                                          $ 2,599,000        $ 2,907,000       $ 2,783,000
Equity in income of real estate partnership                                199,000                  -                 -
Interest income                                                             13,000             15,000            45,000
                                                                         ---------          ---------         ---------
                                                                         2,811,000          2,922,000         2,828,000
                                                                         ---------          ---------         ---------

COSTS AND EXPENSES:

Cost of operations                                                         665,000            777,000           794,000
Management fees                                                            156,000            169,000           162,000
Depreciation and amortization                                              559,000            808,000           758,000
Administrative                                                              73,000             69,000            68,000
Environmental costs                                                              -                  -           169,000
                                                                         ---------          ---------         ---------
                                                                         1,453,000          1,823,000         1,951,000
                                                                         ---------          ---------         ---------

NET INCOME                                                             $ 1,358,000        $ 1,099,000         $ 877,000
                                                                       ===========        ===========         =========

Limited partners' share of net income
   ($22.48, $17.61, and $12.32 per unit in
   1997, 1996, and 1995, respectively)                                 $ 1,186,000          $ 929,000         $ 650,000
General partners' share of net income                                      172,000            170,000           227,000
                                                                         ---------          ---------         ---------
                                                                       $ 1,358,000        $ 1,099,000         $ 877,000
                                                                       ===========        ===========         =========

</TABLE>
                             See accompanying notes.
                                      F-3

<PAGE>
<TABLE>
<CAPTION>
                             PS PARTNERS VIII, LTD.
                        a California Limited Partnership
                        STATEMEMENTS OF PARTNERS' EQUITY
             For the years ended December 31, 1997, 1996, and 1995





                                                                        Limited             General
                                                                        Partners            Partners          Total
                                                                      ------------          ---------      ------------

<S>                                                                   <C>                   <C>            <C>
Balances at December 31, 1994                                         $ 19,087,000          $ 227,000      $ 19,314,000

Net income                                                                 650,000            227,000           877,000

Distributions                                                           (1,961,000)          (240,000)       (2,201,000)
                                                                      ------------          ---------      ------------

Balances at December 31, 1995                                           17,776,000            214,000        17,990,000

Net income                                                                 929,000            170,000         1,099,000

Distributions                                                           (1,426,000)          (174,000)       (1,600,000)
                                                                      ------------          ---------      ------------

Balances at December 31, 1996                                           17,279,000            210,000        17,489,000

Net income                                                               1,186,000            172,000         1,358,000

Distributions                                                           (1,426,000)          (175,000)       (1,601,000)
                                                                      ------------          ---------      ------------

Balances at December 31, 1997                                         $ 17,039,000          $ 207,000      $ 17,246,000
                                                                      ============          =========      ============

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

                             PS PARTNERS VIII, LTD.
                        a California Limited Partnership
                           STATEMEMENTS OF CASH FLOWS
             For the years ended December 31, 1997, 1996, and 1995


                                                                           1997              1996              1995
                                                                         ---------         ---------          ---------

Cash flows from operating activities:

<S>                                                                    <C>               <C>                 <C>
   Net income                                                          $ 1,358,000       $ 1,099,000         $ 877,000

   Adjustments to reconcile net income to net cash
       provided by operating activities

       Depreciation and amortization                                       559,000           808,000           758,000
       (Increase) decrease in rent and other receivables                    (1,000)           (1,000)            3,000
       Decrease (increase) in other assets                                  14,000           (18,000)            8,000
       (Decrease) increase in accounts payable                             (36,000)          (65,000)          171,000
       Increase (decrease) in advance payments from renters                 11,000            (2,000)          (15,000)
       Equity in income of real estate partnership                        (199,000)                -                 -
                                                                         ---------         ---------          ---------

          Total adjustments                                                348,000           722,000           925,000
                                                                         ---------         ---------          ---------

          Net cash provided by operating activities                      1,706,000         1,821,000         1,802,000
                                                                         ---------         ---------          ---------

Cash flows from investing activities:

   Distributions from real estate partnership                               82,000                 -                 -
   Investment in real estate partnership                                    (2,000)                -                 -
   Additions to real estate facilities                                    (145,000)         (229,000)         (272,000)
                                                                         ---------         ---------          ---------

          Net cash used in investing activities                            (65,000)         (229,000)         (272,000)
                                                                         ---------         ---------          ---------

Cash flows from financing activities:

   Distributions to partners                                            (1,601,000)       (1,600,000)       (2,201,000)
                                                                         ---------         ---------          ---------

          Net cash used in financing activities                         (1,601,000)       (1,600,000)       (2,201,000)
                                                                         ---------         ---------          ---------

Net increase (decrease) in cash and cash equivalents                        40,000            (8,000)         (671,000)

Cash and cash equivalents at the beginning of the period                   209,000           217,000           888,000
                                                                         ---------         ---------          ---------

Cash and cash equivalents at the end of the period                       $ 249,000         $ 209,000          $ 217,000
                                                                         =========         =========          =========
</TABLE>

                             See accompanying notes.
                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                             PS PARTNERS VIII, LTD.
                        a California Limited Partnership
                           STATEMEMENTS OF CASH FLOWS
             For the years ended December 31, 1997, 1996, and 1995
                                   (Continued)




                                                                                 1997              1996              1995
                                                                               ---------         ---------          ---------

Supplemental schedule of noncash investing and financing activities:


<S>                                                                            <C>                      <C>           <C>
   Investment in real estate partnership                                       $ (5,015,000)            $ -           $ -

   Transfer of real estate facilities for interest in real estate                 5,015,000               -             -
     partnership, net


</TABLE>
                             See accompanying notes.
                                      F-6

<PAGE>
                             PS PARTNERS VIII, LTD.,
                        a California Limited Partnership
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1997


1.       Summary of Significant Accounting Policies and Partnership Matters
         ------------------------------------------------------------------

         Description of Partnership
         --------------------------
               PS Partners VIII,  Ltd., a California  Limited  Partnership  (the
          "Partnership")  was formed with the proceeds of an  interstate  public
          offering.  PSI  Associates  II, Inc.  ("PSA"),  an affiliate of Public
          Storage  Management,  Inc.,  organized the  Partnership  along with B.
          Wayne Hughes ("Hughes").  In September 1993,  Storage Equities,  Inc.,
          now known as Public Storage,  Inc. ("PSI"), a California  corporation,
          acquired the interest of PSA relating to its general  partner  capital
          contribution  in the  Partnership  and was substituted as a co-general
          partner in place of PSA.

               In 1995,  there  was a series of  mergers  among  Public  Storage
          Management,   Inc.   (which  was  the   Partnership's   mini-warehouse
          operator),  Public Storage,  Inc. and their affiliates  (collectively,
          "PSMI"),  culminating  in the  November  16,  1995  merger  (the "PSMI
          Merger")  of PSMI into  Storage  Equities,  Inc.  In the PSMI  Merger,
          Storage  Equities,  Inc.  was  renamed  Public  Storage,  Inc.  and it
          acquired  substantially  all  of  PSMI's  United  States  real  estate
          operations and became the operator of the Partnership's mini-warehouse
          properties.

               The Partnership has invested in existing  mini-warehouse  storage
          facilities which offer self-service  storage spaces for lease, usually
          on a  month-to-month  basis,  to the  general  public and, to a lesser
          extent,  in an existing business park facility which offers industrial
          and office space for lease. The Partnership has ownership interests in
          5 properties in 5 states,  which exclude 1 property  transferred to PS
          Business Parks, L.P. ("PSBPLP") in January 1997.

          Real Estate Facilities
          ----------------------
               The  Partnership  depreciates  the  buildings  and equipment on a
          straight-line  method over  estimated  useful lives of 25 and 5 years,
          respectively. Leasing commissions relating to business park properties
          are expensed when incurred.

               In  1995,  the  Financial   Accounting   Standards  Board  issued
          Statement of Financial Accounting Standards No. 121 ("Statement 121"),
          "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
          Assets to be Disposed of." Statement 121 requires impairment losses to
          be recorded on long-lived assets used in operations when indicators of
          impairment are present and the undiscounted cash flows estimated to be
          generated by those assets are less than the assets'  carrying  amount.
          Statement 121 also  addresses the method of accounting  for long-lived
          assets  that are  expected to be  disposed.  The  Partnership  adopted
          Statement 121 in 1996 and the adoption had no effect.

               In  January  1997,  the  Partnership  and PSI and  other  related
          partnerships  transferred a total of 35 business  parks to PSBPLP,  an
          operating  partnership  formed to own and  operate  business  parks in
          which PSI has a significant  interest.  Included  among the properties
          transferred  was the  Partnership's  business  park in exchange  for a
          partnership  interest in PSBPLP.  The general  partner of PSBPLP is PS
          Business Parks, Inc.

          Revenue Recognition
          -------------------
               Property rents are recognized as earned.

          Allocation of Net Income
          ------------------------
               The General  Partners'  share of net income consists of an amount
          attributable  to  their  1%  capital  contribution  and an  additional
          percentage of cash flow (as defined,  see note 2) which relates to the
          General  Partners'  share of cash  distributions  as set  forth in the
          Partnership  Agreement.  All  remaining net income is allocated to the
          limited partners.


                                      F-7
<PAGE>
                             PS PARTNERS VIII, LTD.,
                        a California Limited Partnership
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1997


1.       Summary of Significant Accounting Policies and Partnership Matters
         (continued)
         ------------------------------------------------------------------

         Per Unit Data
         -------------
               Per unit data is based on the weighted  average number of limited
          partnership units (52,751) outstanding during the year.

         Environmental Cost
         ------------------
               Substantially all of the  Partnership's  facilities were acquired
          prior  to  the  time  that  it  was  customary  to  conduct  extensive
          environmental   investigations   in   connection   with  the  property
          acquisitions.  During  the  fourth  quarter  of 1995,  an  independent
          environmental  consulting firm completed environmental  assessments on
          the Partnership's  properties to evaluate the environmental  condition
          of, and potential environmental liabilities of such properties.  Based
          on the assessments,  the Partnership believes that it is probable that
          it will incur costs  totaling  $120,000  after  December  31, 1997 for
          known environmental remediation  requirements.  During 1997, 1996, and
          1995,   the   Partnership   paid   $12,000,   $21,000,   and  $16,000,
          respectively,  in  connection  with  the  environmental  remediations.
          Although  there can be no assurance,  the  Partnership is not aware of
          any unaccrued  environmental  contamination  of its  facilities  which
          individually   or  in  the   aggregate   would  be   material  to  the
          Partnership's  overall business,  financial  condition,  or results of
          operations.

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

         Cash Distributions
         ------------------
               The Partnership Agreement provides for quarterly distributions of
          cash flow from operations (as defined).  Cash  distributions  per unit
          were  $27.04,   $27.04,  and  $37.18  during  1997,  1996,  and  1995,
          respectively.

         Cash and Cash Equivalents
         -------------------------
               For financial statement purposes,  the Partnership  considers all
          highly liquid investments purchased with a maturity of three months or
          less to be cash equivalents.

2.       General Partners' Equity
         ------------------------
               The General  Partners have a 1% interest in the  Partnership.  In
          addition,   the  General   Partners   have  a  10%  interest  in  cash
          distributions  attributable to operations,  exclusive of distributions
          attributable to sales and refinancing proceeds.

               Proceeds from sales and refinancings will be distributed entirely
          to the limited  partners  until the  limited  partners  recover  their
          investment  plus a  cumulative  8%  annual  return  (not  compounded).
          Thereafter,  the General  Partners  have a 15%  interest in  remaining
          proceeds.

3.       Related Party Transactions
         --------------------------
               The Partnership  has a management  agreement with PSI whereby PSI
          operates the Partnership's  mini-warehouse  facilities for a fee equal
          to 6% of the facilities' monthly gross revenue (as defined).

                                      F-8
<PAGE>
                             PS PARTNERS VIII, LTD.,
                        a California Limited Partnership
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1997

3.       Related Party Transactions (continued)
         --------------------------------------
               In January 1997, the  Partnership  transferred  its business park
          facility to PSBPLP in exchange for a partnership interest in PSBPLP.

               PSI has a significant economic interest in PSBPLP and PSBP.

4.       Leases
         ------
               The  Partnership   has  invested   primarily  in  existing  mini-
          warehouse storage facilities which offer self-storage spaces for lease
          to the  general  public.  Leases  for  such  space  are  usually  on a
          month-to-month basis.

5.       Taxes Based on Income
         ---------------------
               Taxes based on income are the  responsibility  of the  individual
          partners and, accordingly,  the Partnership's  consolidated  financial
          statements do not reflect a provision for such taxes.

               Taxable net income was $1,511,000,  $1,315,000 and $1,153,000 for
          the years ended December 31, 1997,  1996 and 1995,  respectively.  The
          difference between taxable income and book income is primarily related
          to timing differences in depreciation expense.

                                      F-8
<PAGE>
<TABLE>
<CAPTION>
                          PS PARTNERS VIII, LTD.
                        A CALIFORNIA LIMITED PARTNERSHIP
                           SCHEDULE III - REAL ESTATE
                          AND ACCUMULATED DEPRECIATION

                                                                                               Costs
                                                                                             subsequent
                                                                   Initial Cost            to acquisition
Date                                                                        Building &       Building &
Acquired          Description              Encumbrances        Land         Improvement     Improvements
---------------------------------------------------------------------------------------------------------
    Mini-warehouse
<S>   <C>                                           <C>       <C>            <C>               <C>
7/87  Oakbrook Terrace                              $ -       $ 912,000      $ 2,688,000       $ 628,000
10/87 Plantation/S. State Rd.                         -         924,000        1,801,000         252,000
2/88  Anaheim/Lakeview                                -         995,000        1,505,000         467,000
8/87  San Antonio/Austin Hwy.                         -         400,000          850,000         182,000
10/87 Rockville/Fredrick Rd.                          -       1,695,000        3,305,000         642,000
                                            ------------   -------------    ------------     ------------
                                                    $ -     $ 4,926,000     $ 10,149,000     $ 2,171,000

</TABLE>
<TABLE>
<CAPTION>
                          PS PARTNERS VIII, LTD.
                        A CALIFORNIA LIMITED PARTNERSHIP
                           SCHEDULE III - REAL ESTATE
                          AND ACCUMULATED DEPRECIATION


                                                            Gross Carrying Amount
                                                               At December 31, 1997
                                            -------------------------------------------------------------
Date                                                          Building &                    Accumulated
Acquired          Description                   Land         Improvements       Total      Depreciation
---------------------------------------------------------------------------------------------------------
    Mini-warehouse
<S>   <C>                                       <C>            <C>            <C>            <C>
7/87  Oakbrook Terrace                          $ 912,000      $ 3,316,000    $ 4,228,000    $ 1,424,000
10/87 Plantation/S. State Rd.                     924,000        2,053,000      2,977,000        842,000
2/88  Anaheim/Lakeview                            995,000        1,972,000      2,967,000        773,000
8/87  San Antonio/Austin Hwy.                     400,000        1,032,000      1,432,000        425,000
10/87 Rockville/Fredrick Rd.                    1,695,000        3,947,000      5,642,000      1,617,000
                                              ------------   -------------   ------------    -----------
                                              $ 4,926,000     $ 12,320,000   $ 17,246,000    $ 5,081,000

</TABLE>

                                      F-10
<PAGE>
<TABLE>
<CAPTION>

                             PS PARTNERS VIII, LTD.
                        A CALIFORNIA LIMITED PARTNERSHIP
                           REAL ESTATE RECONCILIATION
                            SCHEDULE III (CONTINUED)

(a)  The following is a reconciliation of cost and related accumulated depreciation.


                                           GROSS CARRYING COST RECONCILIATION

                                                                                For the year ended December 31,
                                                                          ------------------------------------------------
                                                                            1997             1996              1995
                                                                          ------------------------------------------------
<S>                                                                       <C>              <C>               <C>
Balance at the beginning of the period                                    $ 23,903,000     $ 23,674,000      $ 23,402,000

Additions during the period:
     Improvements, etc.                                                        145,000          229,000           272,000

Deductions during the period:
     Disposition of real estate                                             (6,802,000)               -                 -
                                                                          ------------------------------------------------
Balance at the end of the period                                          $ 17,246,000     $ 23,903,000      $ 23,674,000
                                                                         =================================================

                                         ACCUMULATED DEPRECIATION RECONCILIATION

                                                                                For the year ended December 31,
                                                                          ------------------------------------------------
                                                                            1997             1996              1995
                                                                          ------------------------------------------------

Balance at the beginning of the period                                    $ 6,309,000      $ 5,501,000       $ 4,743,000

Additions during the period:
     Depreciation                                                             559,000          808,000           758,000

Deductions during the period:
     Disposition of real estate                                            (1,787,000)              -                 -
                                                                          ------------------------------------------------
Balance at the end of the period                                          $ 5,081,000      $ 6,309,000       $ 5,501,000
                                                                         =================================================

</TABLE>

(b) The  aggregate  cost of real  estate  for  Federal  Income Tax  purposes  is
    $17,079,000.


                                      F-11